The Dallas Educators Federal Credit Union has been taken over by federal officials due to its financial condition and significant record-keeping issues, according to the National Credit Union Administration.

The NCUA placed the Highland Avenue credit union into conservatorship on April 19. The move transfers management to the federal agency in order to protect assets and restore the financial state of the institution.

“Ultimately, the goal of the NCUA will be to return control back to the credit union’s members,” said NCUA spokesperson Molly Schar.

Conservatorship of a credit union enables the institution to continue operations with expert management assistance from the NCUA to correct previous service and operational weakness.

According to Schar, service at Dallas Educators Federal Credit Union will not be changed during the take over.

“Members can continue to conduct financial transactions, deposit and access funds, and make loan payments,” Schar said.

In a press release, NCUA Atlanta-based Regional Director Alonzo Swann said the credit union is critically undercapitalized.

The three-member NCUA board is required by federal law to take prompt corrective action when a federal credit union’s net worth falls below specified capital levels.

The most recent financial performance report available shows the Dallas Educators Federal Credit Union’s net income is about $45,154.

The report also shows the credit union having a negative balance of $1,973 in cash and equivalents during December of 2003, with most of its assets made up of $537,344 in unsecured-or no collateral-loans.

Schar says member funds are safe and fully insured up to $100,000 by the National Credit Union Share Insurance Fund, a federal fund managed by the NCUA and backed by the U.S. government.

The Dallas Educators Federal Credit Union was charted in 1961 and serves employees of the Dallas County Board of Education, employees of the credit union, and their immediate families.

The credit union was the center of a controversy involving the city’s finances nearly a year ago.

Selma Mayor James Perkins Jr. had placed over $200,000 of the city’s money in the credit union.

The move was against state law that requires municipalities to keep their money in institutions involved in the S.A.F.E. program, which eliminates all credit unions.

The error was pointed out by members of the City Council and eventually the money was removed.

“The relationship we had was nothing more than fair and favorable,” Perkins said. “There was no money lost.”

Rumors have been spreading that the FBI is investigating the institution’s financial problems, and specifically the credit union’s CEO Ollis Grayson.

However, John Wesley Kelly IV, whose family firm is representing the credit union, said he is not aware of any involvement by the FBI.

“As far as any investigation, I’m aware of none whatsoever,” Kelly said.

Attempts to reach Grayson, the credit union’s manager, were unsuccessful.

There will be a

press conference at Kelly’s office today at 2 p.m.

– John Gullion contributed to this story.