Friday, February 3, 2012

Overstating the Number of CUs Approaching MBL Cap

In a February 1 letter to the House Committee on Small Business, CUNA's President and CEO Bill Cheney wrote that "approximately 525 credit unions are either approaching or very close to the business lending cap."

CUNA gets to this number by defining a credit union as approaching or very near the cap as any credit union with a member business loan to total asset ratio of 5 percent or more. (see page 16 of CUNA's October 12, 2011 testimony).

However, CUNA is exaggerating the number of credit unions that are approaching the business loan cap of 12.25 percent of assets.

I doubt that a credit union with a member business loan to asset ratio of 5 percent would be viewed as approaching the cap. I'm not sure a member business loan to asset ratio of 9 percent would be considered approaching the cap.

Moreover, I was unable to come up with the 525 number. I divided the call report entry associated with account code 400A in Schedule A by the entry associated with account code 010 from the Statement on Condition to derive the member business loan to asset ratio. I excluded grandfathered credit unions and credit unions with a low-income designation.

The number of credit unions with a member business loan to total asset ratio at or above 5 percent was approximately 350 -- so CUNA is overstating the number of credit unions appproaching the cap by almost 50 percent.

1 comment:

  1. Keith - Com on now be kind. Isn't CUNA the same group that said approximately 1 Billion folks opened new accounts on Bank Transfer Day? Only days later they re-state the number to be more like 150 folks. You need to remember the CUNA CEO is Bill Cheney. Remember Bill? Bill is a former defendant in the NCUA lawsuit against WesCorp FCU. A corporate credit union in conservatorship that also had a terrible time doing simple math to the point even the NCUA had to take it over and eventually shut it down. How many of these credit unions are doing a good job at Business Lending? I am thinking Call Reports like TELESIS & KINECTA & EVANGELICAL CHRISTIAN CU. How do you serve a NOD - Notice Of Default on G-d's House? It appears from the Evangelical Christian CU even G-d is experiencing credit structure challenges. At Evangelical Christian CU does PTL stand for Praise The Lord or PASS THE LOOT?
    Go ahead increase the cap - perhaps they can make it up in volume.



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