Friday, January 19, 2018

Wings Financial CU Buys Three Branches and Depositors from Minnesota Bank

Wings Financial Credit Union (Apple Valley, MN) has agreed to purchase three branches from KleinBank (Chaska, MN).

As part of the deal, the credit union will buy branches in the Minnesota communities of Coon Rapids, Otsego and Plymouth. In addition, 4,500 customer of KleinBank will become members of the credit union.

Roughly $40 million in deposits and $10 million in loans will be transferred to Wings Financial.

Wings Financial did not disclose the price of the deal, which is expected to close in the second quarter.

Read the story.

Thursday, January 18, 2018

Credit Unions Have Tapped Taxpayers' Funds

Credit unions have received taxpayer money, despite statements to the contrary.

Recently, Richard T. Webb wrote Credit Union Times that "[c]redit unions have never cost the tax payers [sic] a single penny and will not going forward."

The comment was made with respect to credit unions being subject to the Consumer Financial Protection Bureau (CFPB) and the controversy over CFPB leadership.

However, this statement fails to take into consideration that credit unions have been beneficiaries of Congressional appropriations.

For example, credit unions can receive funds from the National Credit Union Administration's Community Development Revolving Loan Fund and the U.S. Treasury's Community Development Financial Institution (CDFI) Fund. For example, 56 credit unions in 2017 were awarded $39.5 million in CDFI Funds. Both programs receive taxpayer funding from Congress.

In addition, credit unions can receive free office space and services in government facilities (see Section 1770 of the Federal Credit Union Act). This use of free space constitutes a cost to taxpayers.

For example, a December 18, 2017 blog post noted that the National Labor Relations Board (NLRB) provided space and associated services free of charge to the NLRB Federal Credit Union since it was established in 1938 until 2015. A 2008 NLRB Inspector General report found that in calendar year 2007 the agency provided an estimated $88,778 in support to the credit union.

The Government Accountability Office in 1984 wrote that federal agencies may grant administrative leave to federal employees to render limited support and advice to federal credit unions. This means that federal employees can be excused from their official duties without suffering a loss of pay or leave to provide services to credit unions. This administrative leave is a cost to taxpayers.

In 1987, the Government Accountability Office opined that the Internal Revenue Service could purchase an Automatic Teller Machine for a credit union serving the Atlanta Service Center. This is another example of appropriated funds being used to benefit a credit union and its members.

These examples illustrate that credit unions have tapped taxpayers' funds.

This does not count borrowings from the U.S. Treasury by the National Credit Union Administration associated with the failure of corporate credit unions during the financial crisis and recession or credit unions participating in the Community Development Capital Initiative of the Troubled Asset Relief Program.

Wednesday, January 17, 2018

Credit Unions Fund $112.6 Million Biofuel Loan

A consortium of credit unions funded a $112.6 million loan guaranteed by the United States Department of Agriculture to Ryze Renewables Reno, LLC.

The loan will help support the construction of a biorefinery in Storey County, Nevada.

The loan is the largest to date funded by the USDA Rural Development Biorefinery, Renewable Chemical and Bio based Product Manufacturing Assistance Program.

CU Capital Market Solutions (CMS), an Atlanta-based credit union service organization (CUSO), was the lead loan participation agent for the deal. The loan will be serviced by Greater Commercial Lending, a CUSO owned by the $825 million Greater Nevada Credit Union (Carson City, NV).

Jefferson Financial Federal Credit Union (Metarie, LA) was part of the credit union consortium. In 2017, Jefferson Financial received an injection of $12 million in secondary capital.

Given the size of the loan, this loan should be subject to the Shared National Credit program.

Read more.

NYC Taxi Medallions Sold for Under $200,000 at January 16 Auction

There is mounting evidence that taxi medallion prices in New York City are less than $200,000..

Crain's New York Business is reporting that on January 16th, 7 taxi medallions in possession of Aspire Federal Credit Union (Clark, NJ) were sold in auction for less than $200,000.

Crain's New York Business reported that "a stalking-horse bid of $875,000 for a block of five medallions ended up winning. Two additional medallions not included in the bulk sale sold for $189,000 and $199,000."

So at the low end, taxi medallions were valued at $175,000 each.

This is not good news for credit unions that have specialized in taxi medallion loans or participated in New York City taxi medallion loans.

Read the story.

Tuesday, January 16, 2018

CU Tax Subsidy Going to Wealthy Savers

A Winston-Salem (NC) credit union's certificate of deposit promotion targets wealthy savers.

Allegacy Federal Credit Union is advertising in large bold font a seven-month certificate with an annual percentage yield (APY) of 1.15 percent for balances of $250,000 or more.

Buried in the fine print of the advertisement the credit union states that the seven-month certificate is a tiered rate account. The highest rate is only available for savers meeting the highest tier requirement. To get this favorable rate, funds must not come from an existing Allegacy account.

In addition, a minimum deposit of $1,000 is required to open this certificate. Unfortunately, a majority of Americans could not avail themselves of the lowest tiered requirement with an APY of 0.95 percent, because they don't have enough in savings to open the account.

While credit union industry's tax exemption is tied to its public policy mission to meet the financial needs of people of modest or small means, it appears that Allegacy is diverting its tax subsidy to wealthier savers.

This is another illustration that the credit union industry's tax exemption is poorly targeted and is going to people who don't need taxpayer subsidized savings products.

Below is the ad (click on image to enlarge).


Monday, January 15, 2018

Primary Financial Institutions for Retail Customers and Small Businesses

Below is a chart from Raddon that looks at which institutions are the primary financial institutions for retail customers and small businesses.

According to Raddon, 19 percent of retail customers identify credit unions as their primary financial institution; but only 4 percent of small businesses state that credit unions are their primary financial institution.

Sunday, January 14, 2018

NYC Taxi Medallion Sold at Auction for High Bid of $185,000

Recent auctions indicate that New York City (NYC) taxi medallions are valued around $185,000 per medallion.

On January 11th, six NYC taxi medallions in possession of First Jersey Credit Union (Wayne, NJ) were auctioned for a high bid of $185,000 per medallion, according to the president of Maltz Auctions.

This price of $185,000 per medallion is in-line with the value of 46 NYC taxi medallions sold at auction in September 2017 for $186,000 each.

This coming week, more details on the value of NYC taxi medallions will be revealed as nine NYC taxi medallions in possession of Aspire Federal Credit Union (Clark, NJ) will be auctioned on January 16. The minimum opening bid is $150,000 per medallion.

These valuations indicate more pain awaits credit unions that financed taxi medallion loans and higher reserving for losses by the National Credit Union Share Insurance Fund.



 

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