Friday, May 22, 2015

Technology CU to Launch Asset-Based Business Lending Program

San Jose, California-based Technology Credit Union announced that it will now provide asset-based loans, including accounts receivable and inventory financing. The credit union will provide small- and mid-size companies revolving credit facilities between $100,000 and $5 million, to be used for debt refinancing and equipment purchases, as well as to supplement working capital.

Read more.

Thursday, May 21, 2015

Landmark CU Granted Exception to MBL Cap

Almost a year after denying Landmark Credit Union's request for an exception to the aggregate member business loan (MBL) cap, the Wisconsin Office of Credit Unions approved Landmark Credit Union's application for an exception to the aggregate MBL limit.

On April 8, 2015, the Office of Credit Unions approved Landmark's exception. The credit union can grant MBLs up to 15 percent of its assets.

Kim Santos, Director for the Office of Credit Unions, wrote that the exception can be revoked for safety and soundness reasons. She noted that at Landmark's next exam the Office of Credit Unions will evaluate the new limit of 15 percent of assets.

Wednesday, May 20, 2015

Lawsuit Accuses Scott Credit Union of Fraud

Former NFL player Dave Butz and Eugene Schill have filed a lawsuit against Scott Credit Union and its officers alleging fraud.

The Madison-St. Clair Record reports that the complaint alleges "Scott Credit Union removed currency and opened unsecured lines of credit from the plaintiffs’ accounts. The suit also claims the defendants falsified documents, forged signatures, attempted to collect millions from past due accounts that were unauthorized and unsupported and that they willfully used the plaintiffs’ names to extend commercial lines of credit to fictitious and/or random companies unrelated to the plaintiffs.

Butz and Schill says they endured obstacles in their ability to legitimately borrow money, start new business ventures and uphold their professional reputations. They claim they are now personal guarantors for millions of dollars in fraudulent lines of credit that are now in arrears. They further claim violations of the Illinois Credit Union Act and breach of fiduciary duty."

Read the story.

Tuesday, May 19, 2015

NCUA's Lawsuit Dismissed

U.S. District Judge Katherine Forrest in Manhattan dismissed the National Credit Union Administration's lawsuit against U.S. Bancorp and Bank of America Corp accusing them of breaching their duties as trustees for residential mortgage-backed securities that suffered losses tied to the global financial crisis.

Forrest said the National Credit Union Administration lacked standing to sue US Bancorp and Bank of America over 74 RMBS trusts from which five corporate credit unions that later failed had bought certificates, because the certificates had been re-securitized.

However, the Judge will give NCUA a chance to amend its complaint.

Tom Brown: Let's Tax Credit Unions

If you missed Tom Brown's an excellent column "Let's Tax Credit Unions," it is a must read.

Brown is responding to an opinion piece written by Alex Sanchez, CEO of the Florida Bankers Association, that appeared in the Wall Street Journal.

Tom Brown states upfront that there is a place for credit unions in our financial system. But then proceeds to make the case for taxing credit unions. He points out that credit unions are highly valued by their customers and tend to score better than banks in customer satisfaction surveys.

However after praising credit unions, Brown proceeds to make the case for taxation.

He notes that common bond, which was the foundation of credit unions, has become largely meaningless. He wrote:

The problem is that the definition of the “common bond” that members of a given credit union are supposed to have has become so broad as to be meaningless. Thus many big credit unions have become sizable financial institutions that are indistinguishable from banks.

He points out that "CUs have made a clear, concerted effort to find ways to expand their potential customer base to include basically everyone in the country. Some have set up shell associations and charities that new customers can “join” by paying a token fee."

He then comments on credit union buying naming rights to arenas. In his opinion, these credit unions have changed their spots.

My rule of thumb: when you start paying out money to slap your name on a sports arena, you’ve completed your transition from high-minded, communitarian do-goodism to plain old capitalism.

He concludes that now "many [credit unions] are turning into large multi-line institutions, they should be forced to play by the same rules banks do."

Monday, May 18, 2015

2013 Compensation for Large State Chartered CU CEOs

The chief executive officers of state chartered credit unions with at least $1 billion in assets earned on average a total compensation package of slightly more than $965,000 in 2013. The median chief executive officer (CEO) compensation package was $768,888.

The information is pulled from the Form 990s filed by these large state chartered credit unions with the Internal Revenue Service.

The table does not include information for Federal credit unions, which are not required to file Form 990s. Also, the Form 990s for Texans and DFCU Financial Credit Unions did not provide any information on CEO pay. Suncoast Credit Union (which switched from a federal to state charter in December 2013) had not filed a Form 990 for 2013.

Thirty-two CEOs had total compensation packages of $1 million or more. Larry Scott of Campus USA Credit Union in Gainesville (FL) was the highest compensated CEO at over $5.56 million.

The average base CEO salary was almost $457,000 and the average bonus was nearly $151,000.

The following table provides information on the 2013 compensation for the CEOs of state chartered credit unions with at least $1 billion in assets at the end of 2013. (click on images to enlarge)

Sunday, May 17, 2015

Jury Awards Developer $3.2 Million after CU Fails to Close on Loan

A Worcester Superior Court jury last week awarded the developer of an abandoned Shrewsbury hotel project $3.2 million after finding that Central One Federal Credit Union intentionally misled him about the status of a loan that fell through.

According to the plaintiff's lawyer, the judgment could increase significantly, if the judge finds the credit union engaged in unfair or deceptive practices.

The lawsuit claimed that the project fell apart after Central One failed to close on an $8 million loan despite repeated assurances the deal would go through.

Read the story.

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