Federal regulatory agency takes action to dissolve New Jersey-based credit union, seizing its assets.
Unilever Federal Credit Union Liquidated by NCUA
The National Credit Union Administration (NCUA) has taken the rare step of liquidating Unilever Federal Credit Union (UFCU) on Wednesday, marking the first credit union liquidation by the NCUA in 2025. The decision was made due to the credit union's insolvency and unsafe and unsound business practices that violated provisions of the Federal Credit Union Act and NCUA regulations.
The liquidation of UFCU comes after a series of losses. At the end of 2023, the credit union reported a loss of $134,891, which increased to $336,490 at the end of last year. These losses, combined with unsound business practices, led to the NCUA's decision to declare UFCU insolvent and liquidate it.
The key causes behind the liquidation include financial insolvency with no prospect of restoring viable operations, unsafe and unsound business practices that breached regulatory requirements, and increasing credit risk concerns faced by the credit union system as a whole.
The liquidation signals a more stringent enforcement approach by the NCUA as part of its mission to protect the safety and soundness of the credit union system. This tougher stance is reflected in the organizational shifts within the NCUA, such as staff downsizing and prioritization of exams essential for oversight.
The liquidation of UFCU has spurred calls to reconsider the structure and role of the NCUA, including proposals to separate deposit insurance from regulatory functions and to promote credit union autonomy and innovation. There have also been calls for moratoria on mergers and stricter merger rules.
Members of UFCU are advised to contact the NCUA if they do not receive a letter within 10 days of the liquidation. The NCUA has asked all creditors with claims to submit their completed forms, along with supporting documents, in writing to the agency by Aug. 28.
The NCUA's Asset Management and Assistance Center will contact individuals with verified accounts from UFCU within one week. The $22 billion Share Insurance Fund, which backs the credit union industry, ensures that each member's account is insured up to $250,000.
The decision to liquidate UFCU came roughly two weeks after President Donald Trump fired the NCUA's two Democratic board members, Todd Harper and Tanya Otsuka. The fired board members are currently suing Trump and other government officials over their "patently unlawful removal[s]."
Prior to its liquidation, UFCU had around 1,450 members and served primarily employees of Unilever's U.S. operations and its subsidiaries. The credit union's expense on professional and outside services was around $171,805, according to Credit Union Times. The five full-time employees of UFCU had a total salary and benefits of $700,000, with an average of $140,000, which is nearly twice the peer average of $73,008.
Two consent orders were issued against credit union employees, prohibiting them from participating in the affairs of any federally insured depository institution. The NCUA declined to provide further comment on the liquidation of Unilever Federal Credit Union.
The liquidation of Unilever Federal Credit Union (UFCU) signifies the NCUA's involvement in the banking-and-insurance sector, as the liquidation was initiated due to the credit union's insolvency and unsound business practices. The insolvency and business practices violations led to losses that amounted to $336,490 by the end of 2024, which undermined the safety and soundness of the credit union system, a key responsibility of the NCUA in the finance industry.
