Action against People Trust Community Federal Credit Union follows recent interventions as regulators confront mounting losses and thin capital at the smallest lenders.

The National Credit Union Administration on Friday placed People Trust Community Federal Credit Union, a small lender based in North Little Rock, Ark., into conservatorship, citing unsafe and unsound practices, in the latest sign of growing stress among the nation’s smallest federally insured credit unions.

The move comes just over three years after the agency granted People Trust a federal charter and coverage from the National Credit Union Share Insurance Fund, in September 2022. The credit union serves Pulaski and Saline Counties and has 1,796 members and roughly $3.3 million in assets, according to its most recent call report.

The NCUA said member services will continue while it works to resolve operational issues at the credit union. Members may still conduct normal financial transactions, including depositing and withdrawing funds, making loan payments and accessing their shares.

Despite its recent charter, People Trust’s financial condition has deteriorated sharply. The Arkansas credit union lost $356,500 through Sept. 30, 2025, after reporting a loss of nearly $109,000 in 2024. At the end of the third quarter, its net worth ratio stood at 2.05%, well below the 7% level generally considered “well capitalized” under regulatory standards.

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The conservatorship places People Trust among a small but growing group of credit unions that have required direct regulatory intervention. In November, the NCUA placed Copper & Glass Federal Credit Union in Glassport, Pa., into conservatorship. That institution, which had about 1,255 members and $7.1 million in assets, was one of three credit unions conserved by the agency in 2025.

The regulator also closed five credit unions last year, underscoring the fragility of the smallest institutions in the system. Before 2025, the last such closure occurred in March 2023, when the NCUA shuttered Inter-American Federal Credit Union of Brooklyn.

Industry data point to a steady contraction among the tiniest lenders. Federally insured credit unions with less than $10 million in assets declined to 820 in the third quarter of 2025, from 886 a year earlier. Together, they held $3.4 billion in assets, or just 0.1% of total system assets.

These credit unions also showed signs of weakening fundamentals. Loans fell 9.5% over the year, membership declined 6.4%, and net worth dropped 4.2%, according to NCUA data.

While such institutions make up a shrinking share of the credit union system, they often serve narrowly defined communities and membership groups. The recent conservatorships suggest that, amid rising costs, regulatory demands and persistent operating losses, the margin for error has narrowed considerably for the smallest players.