Friday, January 30, 2015

American Bakery Workers FCU Closed

The National Credit Union Administration liquidated American Bakery Workers Federal Credit Union of Philadelphia.

TruMark Financial Credit Union of Trevose, Pennsylvania, immediately assumed American Bakery Workers’ members, deposits and a majority of the loan portfolio.

NCUA made the decision to liquidate American Bakery Workers and discontinue operations after determining the credit union was insolvent with no prospect for restoring viable operations.

At the time of liquidation and subsequent purchase and assumption by TruMark Financial Credit Union, American Bakery Workers Federal Credit Union served 1,457 members and had assets of $4.2 million, according to the credit union’s most recent Call Report.

At the end of 2014, the credit union reported a loss of almost $494 thousand. The credit union was critically undercapitalized at the end of 2014 with a net worth ratio of 0.31 percent. For all of 2014, the credit union's net charge off ratio was 19.6 percent.

American Bakery Workers Federal Credit Union is the first federally insured credit union liquidation in 2015.

Read the press release.

Spire Credit Union Buys Naming Rights to Home Run Porch

Spire Credit Union bought the naming rights to the St. Paul Saints' right field home run porch, which will be called the SPIRE Credit Union Home Run Porch.

The sponsorship will last eight years. The price tag of the deal was not disclosed.

Once again, this is an example of a credit union abusing its preferential tax treatment.

Read the article.

Thursday, January 29, 2015

ABA, Trade Groups Call for Patent Reform in New Congress

Legislation to deal with “patent trolls” should more equitably distribute the cost of litigation, enhance transparency and improve patent quality, several financial trade groups told Congress yesterday.

The groups noted that financial firms are frequently harassed by letters demanding licensing fees for using common technology described by low-quality patents that are held by non-practicing entities, also known as patent trolls. Effective legislation would increase the legal costs borne by patent trolls and provide more information about the entities asserting the patents.

“[P]atent trolls continue to assert low-quality patents through vaguely worded demand letters with the full knowledge that their targets, our members, are more likely to pay unnecessary licensing agreements then engage in lengthy, costly litigation,” the groups said. “The deadweight cost of compliance with demand letters and the threat of litigation is ultimately borne by our customers.”

Read the letter.

Tuesday, January 27, 2015

Activist Depositors and Associational Groups

I've written regularly about credit unions abusing associational groups as a vehicle to circumvent field of membership limitations.

However, a credit union that uses associational groups to allow anyone to join also opens itself to a small cadre of like-minded depositors to seize control of the credit union -- although it may take a couple of years to do so, as board of director terms are staggered.

The reason why a small group of like-minded members can take control of a credit union is that few credit union members actually participate in the governance of their institution and vote for board members.

So, why is this important?

Credit unions are sitting on a significant amount of undistributed retained earnings, which members currently cannot tap except in a voluntary liquidation.

While it might be difficult, activist depositors can use the associational membership loophole to potentially gain access to this undistributed retained earnings.

Friday, January 23, 2015

Thirty-one CUs Fined for Late Filing 3rd Quarter Call Report

Thirty-one federally insured credit unions will pay civil money penalties for missing the third-quarter 2014 Call Report filing deadline.

The late filers will pay a total of $12,820 in penalties. Individual penalties will range from $138 to $1,878. The median penalty was $176.

Nineteen credit unions had assets of less than $10 million; 7 credit unions had assets between $10 million and $50 million; and five credit unions had assets between $50 million and $250 million.

Read the press release. Link to list of late filers.

Thursday, January 22, 2015

Washington CU Regulator Adds S to CAMEL

The Washington Division of Credit Unions is the latest state regulator to announce that it was adding sensitivity to market risk (S) to CAMEL.

The Division of Credit Unions made the decision so that it can better evaluate the impact of interest rate changes on a credit union’s earnings and economic capital.

In addition, this change will allow the Division of Credit Unions to provide information to credit unions delineating between liquidity and interest rate risks.

It is anticipated that this will improve its discussion of interest rate risk with state chartered credit unions.

This begs the question -- why is the National Credit Union Administration such a laggard in adding sensitivity to market risk to CAMEL?

Read the Bulletin.

Tuesday, January 20, 2015

Suncoast Credit Union Pledges $5 Million for Naming Rights to Arena

Suncoast Credit Union (Tampa, FL), the largest credit union in the country with a low-income designation, is pledging $5 million to help construct a $22-$24 million, 3,300-seat arena at Florida SouthWestern State College.

In return, the arena will be named Suncoast Credit Union Arena.

The 75,000-square foot arena is planned to open in October of 2016.

But should a low-income designated credit union be buying the naming rights to an arena?

Read the story.
 

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