TimeshareLeaks.com has recently dug into the timeshare loans made by Quorum FCU of Purchase, New York.
TimeshareLeaks.com has looked at Quorum's relationship with Diamond Resorts International, The Berkley Group, and Bluegreen Corp.
From the public SEC filings of Diamond Resorts International and Bluegreen Corporation's parent company, BFC Financial, we are able to see the extent of Quorum's lending to the timeshare industry.
For example, the August 10-Q filing for Diamond Resorts International noted that Diamond Resorts had an $80 million credit facility through Quorum, which initially started as a $40 million credit facility dated on April 30, 2010. As of June 30, 2013, only $26.3 million of the $80 million funding facility was still available.
Bluegreen Corporation had entered into a $30 million credit facility with Quorum FCU. As of June 30, 2013, slightly less than $10.4 million of the credit facility was still available for borrowing.
Interestingly, the credit union only has $65.5 million in net worth, as of June 2013.
It appears that Quorum FCU is both overly exposed to a single borrower and also a single industry.
It does make you wonder if Quorum has been granted a waiver by NCUA Region I Regional Director from the aggregate loan to one borrower limit.
Subscribe to:
Post Comments (Atom)
I am a Credit Union Exec and true believer in the movement, but this story is simply baffling for multiple, multiple reasons!
ReplyDeleteI am also a CU lifer. Even if NCUA approved of this, it appears neither the regulator nor Quorum stepped back and looked at the overall risk. A third grader could figure out that a credit line in excess of net worth isn't a sound business move. Timeshares are only slightly less risky than sky diving without a parachute.
ReplyDeleteIf the credit union industry had a real regulator, there would be no fighting between industries. The battle over the tax exemption started because the regulator let a handful of credit unions act like banks without converting their charter and paying taxes. To quote a federal judge, the NCUA is a rogue regulator, a rubber stamp and a cheerleader.
ReplyDelete20+ years of margin compression due to intense warfare on loan and deposit rates.
ReplyDeleteJoin that with extremely low rates for the last 5+ years and increased compliance costs and an arms race on branching...but not enough growth to carry all the costs.
Throw in credit risk and the coming interest rate risk....just one huge reputation risk that will come from credit unions and banks strrrreeeetchingggg for yield.
Quorom?
Just the beginning.
Banks and credit unions ought to be merging like crazy, but they aren't.