Thursday, October 30, 2014

Self-Help FCU Can Pay for Branch in Underserved Fresno Community

The Fresno Bee is reporting that the Fresno Economic Opportunities Commission has signed an agreement with the Self-Help Federal Credit Union (Durham, N.C.) to open a branch in south Fresno.

According to the article, the Fresno Economic Opportunities Commission has raised $400,000 of the $600,000 needed to open the branch. The organization is seeking donations for the remaining $200,000.

However Self-Help FCU's financial statements show that the credit union does not need this subsidy from the Fresno Economic Opportunities Commission to open a south Fresno branch.

The credit union has $550 million in assets. For 2013, it reported a profit of $4.4 million and a return on average assets of 0.91 percent. Through the first six months of 2014, Self-Help FCU is reporting a profit of $2.9 million, which translates into a return on average assets of 1.06 percent.

Does it make sense for this poverty-fighting organization to use its scarce resources to provide a branch to a credit union that has the wherewithal to fund its own facility?

Wednesday, October 29, 2014

OCC: Auto Lending Risk Growing

In a speech to the 22nd Annual Financial Services Collections and Credit Risk Conference, Darrin Benhart, Deputy Comptroller for Supervision Risk Management for the Office of the Comptroller of the Currency (OCC), spoke about the increased risk the OCC is seeing in auto finance.

While the OCC regulates national banks and federal thrifts, Benhart's comments should resonate with credit unions.

He noted that increased comeptition is causing an easing of underwriting standards.

Benhart said:
Competitive pressure is driving some auto lenders to pursue growth by lengthening terms, increasing advance rates, and originating loans to borrowers with lower credit scores. The marketing of these loans is focusing more on monthly payment, with little attention to the overall debt of the borrower. Average loan-to-value, or LTV rates for both new and used vehicles are getting more liberal and exceeded 100 percent for all major lender categories at the end of 2013. These high LTVs reflect both rising car prices and a greater bundling of add-on products such as extended warranties, credit life insurance, and aftermarket accessories into the financing.

While Benhart acknowledges that there has not been a large-scale deterioration in loan performance at the portfolio level, the agency is clearly seeing increased signs of risk.

In addition, Benhart pointed out another troubling trend -- the average loss per vehicle has risen significantly over the past 24 months across all types of lenders. He stated that this is a by-product of higher LTVs and longer terms on auto loans.

Read Benhart's speech.

Tuesday, October 28, 2014

Island FCU Enters into $7 Million Sponsorship Agreement with Stony Brook University

Stony Brook University and Island Federal Credit Union (Hauppauge, NY) have agreed to a $7 million, 10-year corporate advertising sponsorship agreement.

The deal will give the credit union the exclusive naming rights to the school's new 4,000-seat arena. The new arena will be called Island Federal Credit Union Arena.

The credit union will also be the title sponsor of the film festival at Staller Center and several other campus programs for the next decade. Additionally, the agreement calls for two retail banking branches and ATMs at various locations on campus.

While the sponsorship agreement will probably enhance the credit union's brand, it also represents a misuse of the credit union's tax exemption.

Read the press release.

CUNA Spending Big This Election Cycle

Forget about the image of credit unions being the little guy, credit unions have become a big-time special interest group in Washington, D.C.

According to a story in The Hill, the Credit Union National Association (CUNA) and its political action committee, the Credit Union Legislative Action Council, have spent $5.6 million during the 2014 election cycle.

The article notes that "[s]o far, $3 million has been spent on direct PAC contributions, $1.2 million on independent expenditures and $1.4 million on partisan communications.

More than 80 separate pieces of direct mail, resulting in more than 2.1 million individual mailings, have been sent to more than 417,000 credit union members" in several tight races."

Beyond direct mailings, the article also points out that CUNA is running television, radio and online advertisements for candidates.

Clearly, if tax-exempt credit unions can spend almost $6 million to influence election outcomes, then credit unions can afford to pay corporate income taxes.

Read the article.

Monday, October 27, 2014

SECU Foundation to Pay $1.5 Million for Naming Rights to Asheville Plaza

The Asheville Art Museum is seeking approval from Asheville City Council to sell the naming rights of its outdoor plaza in the heart of downtown to the North Carolina State Employees’ Credit Union Foundation.

The tentative deal calls for renaming the public space at the corner of Biltmore and Patton Avenue “SECU Plaza.” The SECU Foundation would pay $1.5 million to the museum in exchange for the designation and an accompanying sign.

Council will consider the naming rights proposal at its October 28 meeting. A report from city staff recommends that Council approve the request, noting: “This naming rights opportunity will assist the Art Museum in raising the funds it needs.”

If approved, the “SECU Plaza” name would apply for the entirety of the museum’s current 30-year lease with the city.

Earlier this year, SECU Foundation bought the naming rights to a state-of-the-art education center at the NC Museum of Arts and a memorial walkway around the Battleship North Carolina.

Update: Asheville City Council unanimously approved the deal on October 28.

Read the story.

Read the staff report.

Thursday, October 23, 2014

Problem Credit Union Update, Q3 2014

The number of problem credit unions declined by 7 during the third quarter of 2014 to 288 credit unions.

A problem credit union is defined as a credit union with a CAMEL rating of 4 or 5.

Assets at problem credit unions declined from $14.9 billion as of June 2014 to $14 billion as of September 2014. Deposits (shares) at problem credit unions fell from $13.2 billion at the start of the third quarter to $12.4 billion at the end of the quarter.

According to NCUA, problem credit unions held 1.38 percent of the industry's insured deposits and 1.3 percent of the industry's assets.

While the vast majority of problem credit unions are smaller institutions, the bulk of the shares are in credit unions with $100 million or more in assets.

The number of problem credit unions with $500 million or more in assets declined from 8 to 6 during the third quarter. At the end of the quarter, these 6 problem credit unions held $4.5 billion in shares.

The number of problem credit unions with between $100 million and $500 million in assets increased by 3 to 22 credit unions with total shares of $4.2 billion.

NCUA Fines 44 Credit Unions for Late Filing Their Call Reports​

The National Credit Union Administration fined 44 credit unions for missing the deadline to file their second-quarter Call Reports.

The late filers will pay a total of $17,111 in penalties. Individual penalties range from $52 to $1,824. The median penalty was $256.

The size of the civil penalty depended on three factors: the credit union’s asset size, its recent Call Report filing history and the length of the delay.

Four of the credit unions assessed penalties had been late in the previous quarter.

Read the press release.

For a list of late filers, click here..

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