Monday, February 20, 2017

MAPS CU Serving Oregon Marijuana Industry

Jefferson Public Radio is reporting that MAPS Credit Union (Salem, OR) is providing banking services to marijuana businesses.

The story notes that MAPS Credit Union has opened more than 100 accounts for marijuana businesses.

According to the story, the credit union extensively vets account holders, including visiting their businesses to make sure they are not doing anything illegal.

This extra work to vet account holders has allowed the credit union to charge relatively high fees to these accounts.

The credit union, however, stated it will stop serving these accounts, if the Federal government starts to crack down on financial institutions serving the marijuana business.

Read the story.

Sunday, February 19, 2017

Rhode Island Treasurer Announces Bank Local Program to Fund Small Business Loans

Rhode Island General Treasurer Seth Magaziner on February 16th announced "Bank Local", a community deposit program.

"Bank Local" program will move state deposits to local banks and credit unions to encourage loans to Rhode Island small businesses.

Currently, six Rhode Island banks and credit unions have joined the program, and in recent weeks more than $4.5 million has been deposited to in-state accounts for 47 qualifying local small business loans.

Qualifying loans are made by banks and credit unions to small businesses of up to 100 employees. Loan amounts cannot exceed $250,000. Loans can be secured or unsecured, term loans or credit lines. Participating financial institutions must meet minimum requirements for financial soundness, including proof of FDIC or NCUA insurance. All state deposits must be fully collateralized.

The amount deposited in each institution is based on loans made to small businesses in the community.

Read the press release.

Friday, February 17, 2017

Additional Thoughts on Melrose

While I have commented on Melrose Credit Union's solvency, I have not focused enough attention on Melrose's liquidity position.

During the fourth quarter, Melrose, which is in conservatorship, had a deposit outflow of $102 million, as deposits fell from almost $1.716 billion to approximately $1.614 billion.

The credit union has $737.1 million in deposits that mature in less than one year.

In addition, it reported uninsured deposits of almost $41 million. These uninsured deposits pose a flight risk.

On the other hand, Melrose Credit union had $58.6 million in cash at the end of 2016. Its cash on hand fell by almost $124 million during the quarter

Cash and short-term investments were 3.92 percent of assets at the end of 2016. This was down from 9.66 percent on September 30, 2016; but higher than the 1.50 percent at the end of 2015.

The credit union reported uncommitted lines of credit of $175.7 million. This is down from $249.3 million from a year earlier. However, I am not sure that these lines of credit will be available.

Also, Melrose should have established a contingent emergency borrowing authority with either the Central Liquidity Facility (CLF) or the Federal Reserve.

The National Credit Union Administration does not comment on whether a credit union is a member of the CLF.

Furthermore, the conservatorship of Melrose may have closed its access the Federal Reserve's Discount Window.

Moreover, Melrose as of the end of 2016 has borrowed $55,643,796 from a Federal Home Loan Bank (FHLB). These advances from a FHLB are secured with assets and over-collateralized.

If Melrose is liquidated by NCUA, these advances from a FHLB would increase the size of the loss to the National Credit Union Share Insurance Fund, as FHLBs have super lien priority. This means that FHLBs claims come before the NCUSIF.

Thursday, February 16, 2017

How Are Other CUs with Exposure to Taxi Medallion Loans Performing?

My earlier posts have looked at the three large New York City taxi medallion lending credit unions. However, there are several other credit unions within the greater New York metropolitan region that have some exposure to taxi medallion loans -- Quorum Federal Credit Union (Purchase, NY), Bay Ridge Federal Credit Union (Brooklyn, NY), Aspire Federal Credit Union (Clark, NJ), and First Jersey Credit Union (Wayne, NJ).

Quorum Federal Credit Union
While Quorum did not originate taxi medallion loans, it purchased taxi medallion participation loans. According to its 2015 Annual Report, it had $76.3 million in taxi medallion loans. The credit union stated that it stopped its tax medallion participation purchase program in 2013.

Quorum Federal Credit Union reported a 2016 loss of $6.7 million, driven by an increase in loan loss provisions. Loan loss provisions rose from $7.9 million at the end of 2015 to $24.5 million at the end of 2016.

The credit union saw its net worth fall from $72.2 million to $65.5 million. The credit union had a net worth ratio of 7.25 percent at the end of 2016.

The credit union has almost $35 million in delinquent loans. Its delinquency rate was 4.67 percent on December 2016. Delinquent loans represent 53.43 percent of the credit union's net worth.

Early delinquencies (30 days to 59 days past due) were slightly less than $8.1 million.

Quorum FCU reported almost $30.8 million in Troubled Debt Restructured TDR) loans, of which $24.5 million were business loans. TDR loans as a percent of total loans and net worth were 4.10 percent and 46.97 percent, respectively.

The credit union reported allowance for loan and lease losses of $27.8 million. Its coverage ratio was 79.51 percent at the end of 2016.

Bay Ridge Federal Credit Union
Bay Ridge Federal Credit Union posted a profit for 2016 of $434,189. As a result, the credit union's net worth rose to almost $19 million as of December 2016.

Its net worth ratio at the end of 2016 was 9.47 percent.

Loans 60 days or more past due were $6.6 million -- up from $3.8 million at the end of the third quarter and $4 million at the end of 2015. Approximately, $4 million were member business loans (MBLs). The delinquency rate on December 31, 2016 was 3.74 percent. Delinquent loans to net worth was 34.81 percent.

In addition, early delinquencies were $5.2 million at year end.

Bay Ridge FCU stated as of the end of 2016 it had $23.1 million in TDR loans, of which $21.3 million were MBLs. TDRs were 13.05 percent of loans and 121.48 percent of net worth.

The credit union reported holding allowance for loan and lease losses of $3.8 million. Its coverage ratio was 57.17 percent.

Aspire Federal Credit Union
Aspire Federal Credit Union has a taxi medallion lending credit union service organization (CUSO).

The credit union reported a full-year loss of $1.6 million. As a result of the loss, the credit union's net worth fell from $19.1 million to $17.5 million during 2016. Its net worth ratio of 10.11 percent as of December 2016, down from 10.48 percent a year earlier; but up from the prior quarter.

The credit union reported almost $7.3 million in delinquent loans, of which $3.3 million were member business loans (MBLs). The delinquency rate was 5.18 percent on December 31, 2016. Delinquent loans comprised 41.37 percent of the credit union's net worth.

In addition, the credit union is reporting early delinquencies of $3.7 million at the end of 2016.

Outstanding TDR loans were $5.9 million, of which $3.6 million are business loans. TDR loans were 4.22 percent of all loans and 33.71 percent of net worth.

The credit union reported allowances for loan and lease losses of $4.3 million. Its coverage ratio was 59.45 percent.

First Jersey Credit Union
First Jersey Credit Union also has a taxi medallion lending CUSO.

The credit union reported a loss of almost $2.6 million for 2016, after posting a loss of slightly less than $2.7 million for 2015.

As a result, the credit union's net worth fell from $12.3 million on December 2015 to $9.7 million on December 2016. Over the year, the net worth ratio fell by 30 basis points to 8.24 percent.

At the end of 2016, almost $5.7 million loans were 60 days or more past due and its delinquency ratio was 7.82 percent. Delinquent MBLs were $3.2 million.

Early delinquent loans were $2.8 million.

Outstanding TDR loans were $4.5 million, of which almost $2.9 million were business loans. TDR loans were 6.24 percent of loans and 46.73 percent of net worth.







Wednesday, February 15, 2017

Affinity Plus FCU Sponsors University's Athletic Program

Affinity Plus Federal Credit Union (St. Paul, MN) has entered into a new three-year sponsorship agreement with St. Cloud State University Huskies Athletics.

The sponsorship includes:
  • Opportunities to use the SCSU Huskies logo in credit union signage, advertisements and customized promotions for students, faculty, alumni and the greater St. Cloud community;
  • Visibility through radio and digital advertising, e-mail communications to students and season-ticket holders, and arena signage in the Herb Brooks National Hockey Center and Halenbeck Hall.
  • Creation of the Community Organization of the Night program. During the 2017-2018 season Huskies’ hockey games, Affinity Plus will spotlight and feature nominated Central Minnesota Region organizations and community groups.
The financial terms of the sponsorship was not disclosed.

Read the press release.

Landmark CU Sued over Unfair Overdraft Fees

Landmark Credit Union (New Berlin, WI) is being sued for charging its customers overdraft fees in a way that violates the Electronic Funds Transfer Act and various state laws.

The plaintiff alleges that she was a victim of an unfair overdraft fee policy that violates the terms of the credit union's contracts with depositors and the Consumer Financial Protection Bureau’s Regulation E.

The complaint seeks restitution and damages for two potential subclasses of credit union members who were allegedly harmed by Landmark's overdraft policies over the past six years.

The case is Behrens v. Landmark Credit Union and was filed in the U.S. District Court for the Western District of Wisconsin.

Read the story.

Tuesday, February 14, 2017

Charge-Offs Jump in Q4 at Taxi Medallion Lender Progressive CU

Taxi medallion lender Progressive Credit Union (New York, NY) posted a small profit of $265 thousand for the fourth quarter of 2016; but a loss of $52.1 million for the full year of 2016.

The credit union had set aside provisions of almost $61.7 million at the end of 2016 to help cover expected taxi medallion loan losses.

Progressive Credit Union's net worth was $200.3 million at the end of 2016 and had a net worth ratio of 33.5 percent.

The credit union reported approximately $66.5 million in delinquent loans at the end of 2016, which was down $4.1 million from the prior quarter. As a result, delinquency rate on loans edged lower from 11.62 percent as of September 2016 to 11.45 percent at the end of 2016; but was well above the delinquency rate of 3.45 percent as of December 2015.


The credit union at the end of 2016 had a delinquent loan to net worth ratio of 33.18 percent.

Early delinquencies (loans 30 to 59 days past due) rose by 3.1 percent during the fourth quarter to $14.64 million.

The credit union recorded a jump in charged off loans during the fourth quarter. Net charge-offs went from $10.8 million as of September 2016 to $37.4 million as of December 2016. The net charge-off rate rose 2.37 percent to 6.32 percent over the same time period.

Outstanding Troubled Debt Restructured (TDR) loans at the end of 2016 were $124.3 million -- up 0.7 percent from the prior quarter. TDR loans as a percent of total loans and net worth were 21.41 percent and 62.06 percent, respectively.

Due to the increase in charge-offs, the credit union's allowance for loan and lease losses (ALLL) fell by $25.3 million during the fourth quarter to $65.8 million. As a result, the coverage ratio (ALLL to delinquent loans) was 99.05 percent at the end of 2016. The portion of ALLL allocated to TDR loans was $21.1 million at the end of 2016.

At the end of 2016, the credit union had a buffer of $266.1 million to absorb expected and unexpected losses.





 

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