Thursday, August 28, 2014

ASI Announces No Special Premium Assessment

American Mutual Share Insurance Corporation (ASI) announced to its member credit unions that there would be no Special Premium Assessment in 2014.

ASI noted that partial recoveries from its $26.4 million in capital assistance to Silver State Schools Credit Union (Las Vegas, NV) allowed the insurer to forgo a special assessment this year.

Read the press release.

Quality Control Review of Associational Common Bonds

The American Consumer Council (ACC) revealed this month that the National Credit Union Administration (NCUA) has for nearly a year been conducting a “quality control review” of the organization and other associations that partner with federal credit unions for purposes of growing membership. NCUA’s review comes after ABA advocacy last year.

In a July 8, 2013 letter to NCUA, ABA pointed out that almost 50 FCUs were allowing anyone to join through ACC. ABA wrote: “These federal credit unions have partnered with ACC for the express purpose of qualifying individuals who otherwise are ineligible for credit union membership.”

NCUA is reviewing ACC to see whether it complies with the agency’s “totality of the circumstances” test for associational common bonds.

During the review period, NCUA has not acted on between 12 and 15 applications from credit unions to add ACC as an associational select employee group. According to ACC, thousands of people who are otherwise ineligible for credit union membership have been blocked from joining during the audit.

The fact that NCUA is conducting this review is frustrating ACC.

Thomas Hinton, president of ACC, told members at the association’s June annual meeting, “For the past ten months, ACC has voluntarily responded to every question asked of us by the NCUA in an effort to demonstrate our full compliance with their associational SEG requirements."

He goes on to say: "It should not be the purview of the NCUA to dictate to ACC how we manage or operate our association. That is the Board of Director’s purview."

While Hinton is correct in saying that NCUA should not dictate how the association is managed or operated, it is NCUA's responsibility to see if the association meets the associational common bond requirements.

As NCUA's Chartering and Field of Membership Manual states, "[t]he common bond for an associational group cannot be established simply on the basis that the association exists."

Wednesday, August 27, 2014

PenFed Discloses Senior Management Pay, Other FCUs Should Do the Same

As readers of this blog know, I have be an advocate of credit union transparency with regard to the pay of senior executives.

State chartered credit unions disclose the compensation of their senior management in their Form 990 filings with the Internal Revenue Service.

On the other hand, federal credit unions are not required to file Form 990s. As a result, credit union members and taxpayers do not have the ability to evaluate the pay of senior management and to determine if this valuable tax exemption that credit unions receive is being diverted into excessive compensation of senior federal credit union officials.

However, I was very pleased to see that Pentagon Federal Credit Union is disclosing the pay of senior management.

In Note 15 of its 2013 Annual Report, Pentagon Federal Credit Union discloses the compensation package of its CEO and 8 other senior executives.

Also, Note 15 discusses how the credit union sets the pay for senior management at the credit union.

The only criticism is that Pentagon Federal Credit Union could have provided more granularity with regard to pay by separating salary (or base pay) from bonus.

Other federal credit unions should follow Pentagon Federal Credit Union's example and disclose the compensation of their senior management.

Tuesday, August 26, 2014

How Much Did NCUA Recover from Former Texans CEO?

On Friday, the National Credit Union Administration (NCUA) announced a lifetime ban against David Addison, the former CEO of Texans Credit Union (TCU) in Richardson, Texas, from becoming an employee of, holding any office in or serving as a board member of any federally insured credit union or credit union service organization.

Addison consent to the cease and desist order without admitting fault.

NCUA also announced the settlement of its lawsuit against Mr. Addison.

When NCUA announced its lawsuit against Mr. Addison on December 20, 2012, NCUA Chairman Matz said the following:

"NCUA is required by statute to take every action we can to recover TCU’s losses, including legal action. Any recoveries in this case will go directly to TCU, assisting in NCUA’s rehabilitation efforts at TCU. Mr. Addison’s actions were very costly to the credit union, and financial institution regulators have a responsibility to hold accountable those parties—institutions or individuals—when they undermine safety and soundness."

However, the cease and desist order did not include any information on recoveries and a NCUA spokesperson was not able to comment on any monetary settlement with Mr. Addison.

So, one can only speculate -- did NCUA trade-off a lifetime ban for not pursuing damages against Mr. Addison?

We may never know.

Read the cease and desist order.

Monday, August 25, 2014

75 Federally Insured CUs Late in Filing Call Report

The National Credit Union Administration (NCUA) announced today that 75 federally insured credit unions were late filing their Call Reports for the second quarter and now face potential civil money penalties.

Four credit unions that filed late in the second quarter also missed the first quarter deadline.

According to NCUA, sixty-three of the late filers had less than $50 million in assets, while 4 had total assets in excess of $250,000.

In addition, almost 30 percent of the late filers were more than 3 dates late in filing their call reports with 5 credit unions more than 10 days late.

NCUA will use three factors to determine the penalty: size of the credit union, lateness in filing the Call Report and history of violations.

Read the press release.

Texas Adds S to CAMEL, Where is NCUA?

The Texas Credit Union Department announced in its August newsletter that it will add Sensitivity to market risk (S) to its CAMEL rating system. As a result, the updated rating system now will be referred to as the CAMELS rating system. The revised rating system will be used on all examinations beginning on or after September 1, 2014.

Texas joins credit union regulators for the states of Connecticut, Michigan and Maine, which have added “S” to the CAMEL.

However, not all state credit union regulators are pushing forward with adding S to CAMEL rating system. For example, the Kansas Department of Credit Unions in its third quarter newsletter has decided to wait until NCUA moves forward.

It appears that the ball is in NCUA's court.

NCUA needs to exhibit some leadership and move forward with adding Sensitivity to market risk to its CAMEL ratings system like the other federal banking regulators and state credit union regulators.

Thursday, August 21, 2014

Credit Union Overdraft Fees Up 14 Percent Since 2009

According to a MarketWatch article, credit unions have raised their overdraft fees 14 percent since 2009 to a median fee of $28.50 in 2014, while banks have only raised their fees 3 percent over that same time period.

Read the article.

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.