The Illinois Division of Financial Institutions suspended the operations of St. Elizabeth's Credit Union (Chicago, IL) for 60 days in an order issued on August 9.
The Division of Financial Institutions found that the credit union was in danger of insolvency.
The order noted there were serious financial and management deficiencies at the credit union and that the true financial condition of the credit union could not be ascertained.
The credit union has 196 members and less than $125,000 in assets.
Northstar Credit Union was appointed as Manager-Trustee.
Read the order.
Thursday, August 31, 2017
Wednesday, August 30, 2017
Study: Paying Board Members Reduces Likelihood of CU Insolvency
A study published earlier this year provides support for paying credit union directors.
The issue of whether or not to pay a credit union's board of directors is a controversial one within the credit union industry. There are those who argue that volunteer boards represent the cooperative nature of credit unions, while others argue that paying board members is necessary to attract qualified members to the board and ensure directors fulfill their duties.
The paper, To Pay or Not Pay: Directors’ Remuneration and Insolvency Risk in Credit Unions, hypothesized that highly compensated directors will have an incentive to more carefully monitor management behavior. The paper found that director pay reduced the likelihood of a credit union becoming insolvent, but only when board members are highly paid.
The research examined a sample of Australian credit unions, where the majority of institutions have moved from a traditional volunteer board nature to one that compensates directors.
The paper also concludes that director pay should be large enough to have a significant impact. If the remuneration is not quite sufficient, then it is better to not-to-pay at all.
The paper's findings have important implications, especially as more states enact laws allowing state chartered credit unions to pay their directors.
The trend is for more credit unions to move away from volunteer boards to paid boards.
The question confronting credit unions and regulators -- is what constitutes reasonable compensation for directors?
Based upon this study's finding, higher director pay should be encouraged.
But are these results only applicable to Australian credit unions?
The study of director pay and credit union insolvency risk needs to be replicated for the United States.
Read the paper.
The issue of whether or not to pay a credit union's board of directors is a controversial one within the credit union industry. There are those who argue that volunteer boards represent the cooperative nature of credit unions, while others argue that paying board members is necessary to attract qualified members to the board and ensure directors fulfill their duties.
The paper, To Pay or Not Pay: Directors’ Remuneration and Insolvency Risk in Credit Unions, hypothesized that highly compensated directors will have an incentive to more carefully monitor management behavior. The paper found that director pay reduced the likelihood of a credit union becoming insolvent, but only when board members are highly paid.
The research examined a sample of Australian credit unions, where the majority of institutions have moved from a traditional volunteer board nature to one that compensates directors.
The paper also concludes that director pay should be large enough to have a significant impact. If the remuneration is not quite sufficient, then it is better to not-to-pay at all.
The paper's findings have important implications, especially as more states enact laws allowing state chartered credit unions to pay their directors.
The trend is for more credit unions to move away from volunteer boards to paid boards.
The question confronting credit unions and regulators -- is what constitutes reasonable compensation for directors?
Based upon this study's finding, higher director pay should be encouraged.
But are these results only applicable to Australian credit unions?
The study of director pay and credit union insolvency risk needs to be replicated for the United States.
Read the paper.
Tuesday, August 29, 2017
Less Than 20 Percent of CUs That Became Significantly Undercapitalized Are Still Active
Less than 20 percent of credit unions that become significantly undercapitalized are still active or independent, according to the National Credit Union Administration.
Over a 20 year period ranging from the second quarter of 1996 through the second quarter of 2016, 2,502 federally insured credit unions fell below the well-capitalized threshold (net worth ratio below 7 percent) after having a net worth ratio above that threshold for at least one quarter.
This indicates that over the 20 year period approximately one in five credit unions fell below the well-capitalized threshold.
The net worth ratio of 825 of these 2,502 credit unions fell below 4 percent -- the threshold for being significantly undercapitalized. Only 151 of these credit unions (18 percent) remained active.
The net worth ratio of 490 of these 2,502 credit unions eventually fell below two percent -- critically undercapitalized. Importantly, only 15 percent of those credit unions whose net worth dropped below two percent sometime in this period remain active.
Over a 20 year period ranging from the second quarter of 1996 through the second quarter of 2016, 2,502 federally insured credit unions fell below the well-capitalized threshold (net worth ratio below 7 percent) after having a net worth ratio above that threshold for at least one quarter.
This indicates that over the 20 year period approximately one in five credit unions fell below the well-capitalized threshold.
The net worth ratio of 825 of these 2,502 credit unions fell below 4 percent -- the threshold for being significantly undercapitalized. Only 151 of these credit unions (18 percent) remained active.
The net worth ratio of 490 of these 2,502 credit unions eventually fell below two percent -- critically undercapitalized. Importantly, only 15 percent of those credit unions whose net worth dropped below two percent sometime in this period remain active.
Monday, August 28, 2017
SRP FCU Buys Naming Rights to Minor League Ballpark
SRP Federal Credit Union (North Augusta, GA) has agreed to buy the naming rights for a new stadium being built by the Augusta GreenJackets.
The new ballpark will be closed SRP Park.
The new ballpark is scheduled to open next April.
The price of the naming rights deal was not disclosed.
Read the story.
The new ballpark will be closed SRP Park.
The new ballpark is scheduled to open next April.
The price of the naming rights deal was not disclosed.
Read the story.
CFPB Temporarily Raises HELOC Reporting Threshold, Makes HMDA Technical Corrections
The Consumer Financial Protection Bureau (CFPB) on Thursday issued a final rule making several technical corrections and clarifications to the expanded data collection under Regulation C, which implements the Home Mortgage Disclosure Act, as well as temporarily raising the threshold at which banks and credit unions are required to report data on home equity lines of credit (HELOC).
Under the rule as originally written, banks and credit unions originating more than 100 HELOCs would have been generally required to report under HMDA, but the final rule temporarily raises that threshold to 500 HELOCS for calendar years 2018 and 2019, allowing the bureau time to assess whether to make the adjusted threshold permanent.
The final rule contains a number of clarifications, technical corrections, and minor changes to the HMDA regulation. In finalizing the technical corrections, the CFPB backtracked on a proposal to define multifamily dwellings as including properties in multiple locations. The CFPB also clarified certain key terms, such as “temporary financing” and “automated underwriting system.”
Read the press release.
Under the rule as originally written, banks and credit unions originating more than 100 HELOCs would have been generally required to report under HMDA, but the final rule temporarily raises that threshold to 500 HELOCS for calendar years 2018 and 2019, allowing the bureau time to assess whether to make the adjusted threshold permanent.
The final rule contains a number of clarifications, technical corrections, and minor changes to the HMDA regulation. In finalizing the technical corrections, the CFPB backtracked on a proposal to define multifamily dwellings as including properties in multiple locations. The CFPB also clarified certain key terms, such as “temporary financing” and “automated underwriting system.”
Read the press release.
Friday, August 25, 2017
Advia CU Seeking Approval for 150,000-Square Foot Office Building
Advia Credit Union (Parchment, MI) plans to build a three-story, 150,000-square foot administration building in Oshtemo Township, as it has outgrown its space in Parchment.
However, the project needs the approval of the Township Board of Trustees, which sent a conditional zoning request back to the Planning Commission.
Advia will work on a revised application, which is expected to be on the September 14 agenda.
The credit union has not purchased the property.
The cost of the project was not disclosed.
Read the story.
However, the project needs the approval of the Township Board of Trustees, which sent a conditional zoning request back to the Planning Commission.
Advia will work on a revised application, which is expected to be on the September 14 agenda.
The credit union has not purchased the property.
The cost of the project was not disclosed.
Read the story.
Thursday, August 24, 2017
Consultant: Service Charges Are Vital for CUs
Research by Michael Moebs, Economist & CEO of Moebs $ervices, found that credit unions are more reliant on service charges than other depository institutions.
According to Moebs, service charges on deposit accounts include transaction fees - money orders, check cashing, etc., maintenance fees, ATM fees, overdraft fees, and other overdraft related items.
According to Moebs' analysis, service charges as a percent of assets were 0.59 percent for credit union in 2017 versus 0.22 percent for banks and 0.09 percent for thrifts.
Moreover, Moebs found that service charges at credit unions represented 83.6 percent of total net income. In comparison, service charges as a percent of net income for banks and thrifts were significantly lower at 21.4 percent and 8.1 percent, respectively.
Michael Moebs said: "Strategies such as price and account design are essential to credit unions in determining what will generate the most service charge revenue, while staying consumer friendly."
According to Moebs, service charges on deposit accounts include transaction fees - money orders, check cashing, etc., maintenance fees, ATM fees, overdraft fees, and other overdraft related items.
According to Moebs' analysis, service charges as a percent of assets were 0.59 percent for credit union in 2017 versus 0.22 percent for banks and 0.09 percent for thrifts.
Moreover, Moebs found that service charges at credit unions represented 83.6 percent of total net income. In comparison, service charges as a percent of net income for banks and thrifts were significantly lower at 21.4 percent and 8.1 percent, respectively.
Michael Moebs said: "Strategies such as price and account design are essential to credit unions in determining what will generate the most service charge revenue, while staying consumer friendly."
Tuesday, August 22, 2017
Canadian Regulator Suspends Advisory Restricting Use of Terms Bank, Banker, and Banking to Only Banks
The Canadian Office of the Superintendent of Financial Institutions on August 11 suspended its compliance expectations regarding the use of the terms "bank", "banker", and "banking" set forth in a June 30, 2017 advisory.
The Bank Act limits the use of these terms to only banks.
The decision to suspend compliance expectations arose from the issuance of a second consultation paper by the Department of Finance, which seeks views on the Bank Act restrictions on the use of the words "bank", "banker", and "banking".
Canadian credit unions have stated that they would be at a competitive disadvantage, if the could not use banking-related terms to describe their business activities.
Read the press release.
Read the second consultation paper.
The Bank Act limits the use of these terms to only banks.
The decision to suspend compliance expectations arose from the issuance of a second consultation paper by the Department of Finance, which seeks views on the Bank Act restrictions on the use of the words "bank", "banker", and "banking".
Canadian credit unions have stated that they would be at a competitive disadvantage, if the could not use banking-related terms to describe their business activities.
Read the press release.
Read the second consultation paper.
Monday, August 21, 2017
Justice Department Ends Operation Chokepoint
In a letter to House Judiciary Committee Chairman Bob Goodlatte (R-Va.) on August 16, Assistant Attorney General Stephen Boyd formally confirmed that the agency has ended the misguided Operation Choke Point initiative.
Operation Chokepoint was launched under the Obama administration. The initiative sought to curtail legal but politically disfavored businesses by working through bank regulators to pressure financial institutions to end customer relationships with those businesses.
“All of the Department’s bank investigations conducted as part of Operation Choke Point are now over, the initiative is no longer in effect, and it will not be undertaken again,” wrote Assistant Attorney General Stephen Boyd. “The Department will not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities."
Read the letter.
Operation Chokepoint was launched under the Obama administration. The initiative sought to curtail legal but politically disfavored businesses by working through bank regulators to pressure financial institutions to end customer relationships with those businesses.
“All of the Department’s bank investigations conducted as part of Operation Choke Point are now over, the initiative is no longer in effect, and it will not be undertaken again,” wrote Assistant Attorney General Stephen Boyd. “The Department will not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities."
Read the letter.
Wednesday, August 16, 2017
Other CUs Impacted by Troubled Taxi Medallion Loans
While the remaining three New York City taxi medallion lending credit unions garner most of the attention, there are other credit unions that have been affected by the disruption of the taxi industry. The following discussion looks at several of these credit unions.
First Jersey Credit Union (Wayne, NJ)
First Jersey Credit Union has a credit union service organization, USA Medallion Funding LLC, that specialized in taxi medallion lending.
First Jersey recorded a loss of almost $4.1 million through the first half of 2017, as it increased provision for loan and lease losses to $4.2 million.
As a result of the loss, the $101 million credit union's net worth fell from $8 million at the end of 2016 to $3.9 million as of June 2017. The credit union's net worth ratio fell from 6.91 percent to 3.87 percent over the same time period. As of the end of second quarter, the credit union was significantly undercapitalized.
Delinquent loans increased by 54.7 percent during the second quarter to $6.3 million as of June 30. As of the end of the second quarter, the delinquency rate on loans was 9.41 percent -- up from 5.80 percent at the end of the first quarter.
Most of the credit union's delinquent loans were member business loans. Almost $5.3 million in delinquent loans were in member business loans, presumably these loans were taxi medallion loans. The credit union reported that 36.74 percent of its member business loans not secured by real estate were 60 days or more past due.
In addition, almost $3.8 million in member business loans not secured by real estate were recorded as troubled debt restructured (TDR) loans at the end of the second quarter -- an increase of almost 31 percent from the prior quarter. As of June, almost a quarter (24.25 percent) of these loans were 60 days or more delinquent.
First Jersey charged off almost $1.3 million in non-real estate secured member business loans through the first half of 2017.
Due to the increase in provision for loan and lease losses, allowances for loan and lease losses rose from $4.5 million at the end of 2016 to $7.2 million at the end of June 2017. The credit union's coverage ratio was 114.63 percent at the end of the second quarter of 2017.
As of June 2017, the credit union has a buffer (net worth and allowance for loan and lease losses) of approximately $11.2 million to absorb expected and unexpected losses.
Bay Ridge Federal Credit Union (Brooklyn, NY)
Bay Ridge FCU reported a loss of almost $2.1 million through the first half of 2017, as the credit union increased its provision for loan and lease losses.
Provision for loan and lease losses increased from $500,000 at the end of the first quarter to $3.1 million as of June 2017, as the credit union builds its loan loss reserves.
Due to its loss, the credit union's net worth fell from $19 million to $16.9 million. Its net worth ratio fell 90 basis points to 8.44 percent during the second quarter.
Loans 60 days or more delinquent increased by 24.1 percent during the second quarter to just below $8 million. The delinquency rate at the end of June 2017 was 4.53 percent, up from 3.65 percent for the prior quarter.
A majority of the delinquent loans were member business loans not secured by real estate, most likely taxi medallion loans. As of June 30, delinquent member business loans were almost $5.8 million. The percentage of non-real estate secured member business loans that were delinquent as of June was 7.23 percent.
Net charge-offs were negligible.
Troubled debt restructured (TDR) business loans were $23.1 million as of June, up $479,298 from the prior quarter. As of June 30, 19.34 percent of TDR business loans were 60 days or more past due.
Due to the increase in provision for loan and lease losses, allowance for loan and lease losses increased by $2.6 million to $6.8 million.
Bay Ridge FCU has $200 million in assets as of June 2017.
Aspire Federal Credit Union (Wayne, NJ)
Aspire Federal Credit Union has a taxi medallion lending credit union service organization (CUSO).
At the end of June 2017, Aspire reported a mid-year loss of almost $2.8 million. The loss was due to a $3.4 million increase in provision for loan and lease losses.
As a result of the loss, the credit union's net worth fell from $17.5 million at the end of 2016 to slightly less than $14.8 million as of June 2017.
Over the same time period, the credit union'd net worth ratio declined from 10.11 percent to 8.73 percent.
Delinquent loans increased by 44.8 percent during the second quarter to $8.2 million. As of June, 6.15 percent of the loans were delinquent.
A majority of the delinquent loans were business loans not secured by real estate, as $4.75 million were past past due. These loans are most likely taxi medallion loans. The percentage of these business loans past due were 31.95 percent, this is up from 15.98 percent from the prior quarter.
Troubled debt restructured (TDR) business loans were $4.2 million at mid-year. This is down 1.9 percent from the previous quarter. As of June 2017, over one-third (35 percent) of all TDR business loans were delinquent.
Due to the increase in loan loss provisions, allowance for loan and lease losses increased by $1.8 million this year to $6.15 million.
Aspire FCU has $168.9 million in assets as of June 2017.
First Jersey Credit Union (Wayne, NJ)
First Jersey Credit Union has a credit union service organization, USA Medallion Funding LLC, that specialized in taxi medallion lending.
First Jersey recorded a loss of almost $4.1 million through the first half of 2017, as it increased provision for loan and lease losses to $4.2 million.
As a result of the loss, the $101 million credit union's net worth fell from $8 million at the end of 2016 to $3.9 million as of June 2017. The credit union's net worth ratio fell from 6.91 percent to 3.87 percent over the same time period. As of the end of second quarter, the credit union was significantly undercapitalized.
Delinquent loans increased by 54.7 percent during the second quarter to $6.3 million as of June 30. As of the end of the second quarter, the delinquency rate on loans was 9.41 percent -- up from 5.80 percent at the end of the first quarter.
Most of the credit union's delinquent loans were member business loans. Almost $5.3 million in delinquent loans were in member business loans, presumably these loans were taxi medallion loans. The credit union reported that 36.74 percent of its member business loans not secured by real estate were 60 days or more past due.
In addition, almost $3.8 million in member business loans not secured by real estate were recorded as troubled debt restructured (TDR) loans at the end of the second quarter -- an increase of almost 31 percent from the prior quarter. As of June, almost a quarter (24.25 percent) of these loans were 60 days or more delinquent.
First Jersey charged off almost $1.3 million in non-real estate secured member business loans through the first half of 2017.
Due to the increase in provision for loan and lease losses, allowances for loan and lease losses rose from $4.5 million at the end of 2016 to $7.2 million at the end of June 2017. The credit union's coverage ratio was 114.63 percent at the end of the second quarter of 2017.
As of June 2017, the credit union has a buffer (net worth and allowance for loan and lease losses) of approximately $11.2 million to absorb expected and unexpected losses.
Bay Ridge Federal Credit Union (Brooklyn, NY)
Bay Ridge FCU reported a loss of almost $2.1 million through the first half of 2017, as the credit union increased its provision for loan and lease losses.
Provision for loan and lease losses increased from $500,000 at the end of the first quarter to $3.1 million as of June 2017, as the credit union builds its loan loss reserves.
Due to its loss, the credit union's net worth fell from $19 million to $16.9 million. Its net worth ratio fell 90 basis points to 8.44 percent during the second quarter.
Loans 60 days or more delinquent increased by 24.1 percent during the second quarter to just below $8 million. The delinquency rate at the end of June 2017 was 4.53 percent, up from 3.65 percent for the prior quarter.
A majority of the delinquent loans were member business loans not secured by real estate, most likely taxi medallion loans. As of June 30, delinquent member business loans were almost $5.8 million. The percentage of non-real estate secured member business loans that were delinquent as of June was 7.23 percent.
Net charge-offs were negligible.
Troubled debt restructured (TDR) business loans were $23.1 million as of June, up $479,298 from the prior quarter. As of June 30, 19.34 percent of TDR business loans were 60 days or more past due.
Due to the increase in provision for loan and lease losses, allowance for loan and lease losses increased by $2.6 million to $6.8 million.
Bay Ridge FCU has $200 million in assets as of June 2017.
Aspire Federal Credit Union (Wayne, NJ)
Aspire Federal Credit Union has a taxi medallion lending credit union service organization (CUSO).
At the end of June 2017, Aspire reported a mid-year loss of almost $2.8 million. The loss was due to a $3.4 million increase in provision for loan and lease losses.
As a result of the loss, the credit union's net worth fell from $17.5 million at the end of 2016 to slightly less than $14.8 million as of June 2017.
Over the same time period, the credit union'd net worth ratio declined from 10.11 percent to 8.73 percent.
Delinquent loans increased by 44.8 percent during the second quarter to $8.2 million. As of June, 6.15 percent of the loans were delinquent.
A majority of the delinquent loans were business loans not secured by real estate, as $4.75 million were past past due. These loans are most likely taxi medallion loans. The percentage of these business loans past due were 31.95 percent, this is up from 15.98 percent from the prior quarter.
Troubled debt restructured (TDR) business loans were $4.2 million at mid-year. This is down 1.9 percent from the previous quarter. As of June 2017, over one-third (35 percent) of all TDR business loans were delinquent.
Due to the increase in loan loss provisions, allowance for loan and lease losses increased by $1.8 million this year to $6.15 million.
Aspire FCU has $168.9 million in assets as of June 2017.
Tuesday, August 15, 2017
Taxi Medallion Participation Loan Defaults Rose at Quorum FCU during Q2 2017
Quorum Federal Credit Union (Purchase, NY) reported an increase in delinquent loans during the second quarter of 2017 driven by poor performing participation loans -- presumably most, if not all, were taxi medallion loans.
The 874.1 million credit union reported $49.6 million in delinquent loans, of which $39.2 million were participation loans.
According to Quorum's financial data, delinquent participation loans increased by 26 percent during the second quarter.
As of June 30, 2017, the percent of participation loans that were 60 days or more past due was 35.08 percent. This was up from 27.36 percent at the end of the first quarter of 2017 and 14.12 percent from a year ago.
If all delinquent participation loans are taxi medallion participation loans, then the delinquency rate of taxi medallion participation loans was 54.3 percent as of June 30.
Additionally, the credit union reported $24.3 million in troubled debt restructured (TDR) business loans, as of June 30, 2017. TDR business loans in accrual status were $13.5 million, while almost $10.9 million of these loans were in nonaccrual status. Total TDR loans were $30.4 million.
According to the credit union's Financial Performance Report, 56.92 percent of TDR business loans not secured by real estate were delinquent.
However, the credit union currently has a combined buffer of net worth and allowances for loan and lease losses of $97.1 million to absorb expected and unexpected losses.
The 874.1 million credit union reported $49.6 million in delinquent loans, of which $39.2 million were participation loans.
According to Quorum's financial data, delinquent participation loans increased by 26 percent during the second quarter.
As of June 30, 2017, the percent of participation loans that were 60 days or more past due was 35.08 percent. This was up from 27.36 percent at the end of the first quarter of 2017 and 14.12 percent from a year ago.
If all delinquent participation loans are taxi medallion participation loans, then the delinquency rate of taxi medallion participation loans was 54.3 percent as of June 30.
Additionally, the credit union reported $24.3 million in troubled debt restructured (TDR) business loans, as of June 30, 2017. TDR business loans in accrual status were $13.5 million, while almost $10.9 million of these loans were in nonaccrual status. Total TDR loans were $30.4 million.
According to the credit union's Financial Performance Report, 56.92 percent of TDR business loans not secured by real estate were delinquent.
However, the credit union currently has a combined buffer of net worth and allowances for loan and lease losses of $97.1 million to absorb expected and unexpected losses.
Monday, August 14, 2017
Overwhelming Majority of CUs that Received Section 208 Assistance No Longer Active
The National Credit Union Administration (NCUA) reported that an overwhelming number of credit unions that received Section 208 assistance exited the credit union industry, according to the agency's emergency merger proposal.
In recent years, Section 208 assistance has taken the form of capital notes, cash advances, and non-cash guarantees.
Between the first quarter of 2001 and the fourth quarter of 2016, 181 credit unions received at least one type of section 208 assistance. Out of these 181 credit unions, 165 credit unions stopped filing Call Reports.
NCUA further noted that a vast majority of the credit unions that received Section 208 assistance exited the credit union industry prior to or shortly after receiving this assistance.
Of these 165 credit unions, 152 credit unions, or 92.1 percent, stopped filing Call Reports prior to or within 15 months of receiving the section 208 assistance.
Specifically, NCUA found that:
In recent years, Section 208 assistance has taken the form of capital notes, cash advances, and non-cash guarantees.
Between the first quarter of 2001 and the fourth quarter of 2016, 181 credit unions received at least one type of section 208 assistance. Out of these 181 credit unions, 165 credit unions stopped filing Call Reports.
NCUA further noted that a vast majority of the credit unions that received Section 208 assistance exited the credit union industry prior to or shortly after receiving this assistance.
Of these 165 credit unions, 152 credit unions, or 92.1 percent, stopped filing Call Reports prior to or within 15 months of receiving the section 208 assistance.
Specifically, NCUA found that:
- 13.9 percent of the credit unions that received section 208 assistance began receiving such assistance after they filed their last Call Report.
- An additional 61 credit unions filed their final Call Report in the same quarter in which they first began receiving section 208 assistance.
- Another 68 credit unions filed their final Call Report within one year after the quarter they first received section 208 assistance
Saturday, August 12, 2017
United Texas CU Abandons Federal Charter and Becomes Privately Insured
United Texas Credit Union (San Antonio, TX) has switched from a federal to state charter and converted from federal to private share insurance.
The $254 million credit union will now be insured by American Share Insurance.
The credit union's CEO stated that one of the main reasons for the charter conversion is Texas' flexible Field of Membership (FOM) rules.
Also, local supervision and lower regulatory fees played a role in the credit union's decision to change charters and insurers.
Read the press release.
The $254 million credit union will now be insured by American Share Insurance.
The credit union's CEO stated that one of the main reasons for the charter conversion is Texas' flexible Field of Membership (FOM) rules.
Also, local supervision and lower regulatory fees played a role in the credit union's decision to change charters and insurers.
Read the press release.
Friday, August 11, 2017
NCUA Replies to ABA's FOM Lawsuit
The National Credit Union Administration (NCUA) filed a reply brief on August 9 to an American Banker Association (ABA) lawsuit challenging NCUA’s field of membership (FOM) final rule.
NCUA's reply brief reiterated the agency’s claim that it acted within its statutory authority and that its rulemaking was reasonable, and called for the dismissal of ABA’s case.
ABA's lawsuit contended that the final rule expanded credit union fields of membership far beyond the limitations imposed by Congress.
Specifically, ABA challenged the inclusions of combined statistical areas -- which encompass multiple metropolitan statistical areas -- as “local communities”; the ability of credit unions to serve core-based statistical areas without serving the urban core that defines the area; the ability to add “adjacent areas” to existing community fields of membership; and the dramatic expansion of what constitutes a rural district.
With NCUA’s reply, the case is now fully briefed. A decision is expected from Judge Ketanji Jackson in the near future on whether to hold oral arguments.
Read NCUA's reply.
NCUA's reply brief reiterated the agency’s claim that it acted within its statutory authority and that its rulemaking was reasonable, and called for the dismissal of ABA’s case.
ABA's lawsuit contended that the final rule expanded credit union fields of membership far beyond the limitations imposed by Congress.
Specifically, ABA challenged the inclusions of combined statistical areas -- which encompass multiple metropolitan statistical areas -- as “local communities”; the ability of credit unions to serve core-based statistical areas without serving the urban core that defines the area; the ability to add “adjacent areas” to existing community fields of membership; and the dramatic expansion of what constitutes a rural district.
With NCUA’s reply, the case is now fully briefed. A decision is expected from Judge Ketanji Jackson in the near future on whether to hold oral arguments.
Read NCUA's reply.
Marine CU to Acquire 5 Branches from Bank Mutual on August 25
Marine Credit Union (La Crosse, WI) has received regulatory approval to acquire five Bank Mutual branches through a purchase agreement.
According to the agreement, approximately 3,000 bank customers, along with $52.6 million in deposits and $13.2 million in loans, will be acquired by the credit union.
The acquisition will take place on August 25.
Read the press release.
According to the agreement, approximately 3,000 bank customers, along with $52.6 million in deposits and $13.2 million in loans, will be acquired by the credit union.
The acquisition will take place on August 25.
Read the press release.
Thursday, August 10, 2017
Taxi Medallion Lender Progressive CU Recorded YTD Loss of $45 Million
Progressive Credit Union (New York, NY) reported a loss of $45 million through the first six months of 2017, as troubled taxi medallion loans weigh on its operation.
The loss arose from the credit union increasing provisions for loan and lease losses to build its reserves to cover problem taxi medallion loans. The credit union increased provisions for loan losses in the second quarter of 2017 by almost $14 million to $40.4 million.
As a result of the loss, the credit union's net worth fell from $169.4 million as of March 31, 2017 to slightly less than $150 million at the end of the second quarter. Its net worth ratio over the same period dropped from 31.10 percent to 29.31 percent.
Delinquent loans rose during the quarter by $13.3 million to almost $59.5 million. The delinquency rate went from 9.16 percent to 12.24 percent.
Early delinquencies (loans 30 days to 59 days past due) were $16 million as of June 30, down from prior quarter's $21.1 million.
Net charge-offs jumped during the second quarter to $42.8 million from $34.8 million. One year earlier, net charge-offs were $4.3 million.
As of June 30, 2017, the net charge-off rate was 16.05 percent.
Over the last year, foreclosed and repossessed other assets (taxi medallions) rose from less than $1 million to $24.8 million, although it fell from its March 2017 level of $29.9 million.
Troubled debt restructured (TDR) business loans were $120.4 million at the end of the second quarter of 2017. TDR loans were 24.79 percent of its total loans and 80.28 percent.
Thirteen percent of TDR loans were 60 days or more past due as of June 30, up from 5.44 percent the prior quarter.
The credit union's allowance for loan and lease losses (ALLL) rose by $6 million during the quarter to almost $68.7 million. The credit union's coverage ratio was 115.54 percent. However, the coverage ratio is overstated, as $26.4 million was dedicated to TDR loans.
As of June 30, 2017, Progressive Credit Union has a buffer of net worth and ALLL of almost $218.7 million to cover both expected and unexpected losses.
The loss arose from the credit union increasing provisions for loan and lease losses to build its reserves to cover problem taxi medallion loans. The credit union increased provisions for loan losses in the second quarter of 2017 by almost $14 million to $40.4 million.
As a result of the loss, the credit union's net worth fell from $169.4 million as of March 31, 2017 to slightly less than $150 million at the end of the second quarter. Its net worth ratio over the same period dropped from 31.10 percent to 29.31 percent.
Delinquent loans rose during the quarter by $13.3 million to almost $59.5 million. The delinquency rate went from 9.16 percent to 12.24 percent.
Early delinquencies (loans 30 days to 59 days past due) were $16 million as of June 30, down from prior quarter's $21.1 million.
Net charge-offs jumped during the second quarter to $42.8 million from $34.8 million. One year earlier, net charge-offs were $4.3 million.
As of June 30, 2017, the net charge-off rate was 16.05 percent.
Over the last year, foreclosed and repossessed other assets (taxi medallions) rose from less than $1 million to $24.8 million, although it fell from its March 2017 level of $29.9 million.
Troubled debt restructured (TDR) business loans were $120.4 million at the end of the second quarter of 2017. TDR loans were 24.79 percent of its total loans and 80.28 percent.
Thirteen percent of TDR loans were 60 days or more past due as of June 30, up from 5.44 percent the prior quarter.
The credit union's allowance for loan and lease losses (ALLL) rose by $6 million during the quarter to almost $68.7 million. The credit union's coverage ratio was 115.54 percent. However, the coverage ratio is overstated, as $26.4 million was dedicated to TDR loans.
As of June 30, 2017, Progressive Credit Union has a buffer of net worth and ALLL of almost $218.7 million to cover both expected and unexpected losses.
Wednesday, August 9, 2017
Melrose CU Sinks Under the Weight of Bad Taxi Medallion Loans
Melrose Credit Union (Briarwood, NY) saw its performance deteriorate during the second quarter as problem taxi medallion loans weight on its operations.
The $1.6 billion credit union reported a year-to-date loss of almost $58.4 million, which was up $20.2 million from the first quarter.
Provisions for loan and lease losses increased from $40.8 million as of March 2017 to nearly $62 million as of June 2017.
As a result of the second quarter loss, the credit union's net worth fell from $64 million on March 31 to $43.9 million on June 30. The net worth ratio declined during the quarter by 105 basis points to 2.70 percent. The credit union was significantly undercapitalized, as of June 30.
Delinquent loans increased by 11.3 percent during the quarter to almost $643 million. Almost all delinquencies are tied to taxi medallion loans.
The credit union reported that at the end of the second quarter 37.85 percent of loans were 60 days or more past due. Delinquency rate of member business loans not secured by real estate (most likely taxi medallion loans) was 51.73 percent as of June, up from 46.21 percent in March.
Troubled debt restructured (TDR) business loans as of June were down from a year ago, but up from the first quarter. TDR business loans were almost $283 million at the end of the second quarter of 2017, up $29.2 million from the first quarter of 2017.
The credit union reported that over 83 percent of its TDR business loans were 60 days or more past due.
TDR business loans were 16.66 percent of all loans and 645.21 percent of net worth.
Allowances for loan and lease losses rose by 11.8 percent during the quarter to $210.3 million. However, the credit union was under-reserved with a coverage ratio of 32.71 percent, as of June 2017.
The $1.6 billion credit union reported a year-to-date loss of almost $58.4 million, which was up $20.2 million from the first quarter.
Provisions for loan and lease losses increased from $40.8 million as of March 2017 to nearly $62 million as of June 2017.
As a result of the second quarter loss, the credit union's net worth fell from $64 million on March 31 to $43.9 million on June 30. The net worth ratio declined during the quarter by 105 basis points to 2.70 percent. The credit union was significantly undercapitalized, as of June 30.
Delinquent loans increased by 11.3 percent during the quarter to almost $643 million. Almost all delinquencies are tied to taxi medallion loans.
The credit union reported that at the end of the second quarter 37.85 percent of loans were 60 days or more past due. Delinquency rate of member business loans not secured by real estate (most likely taxi medallion loans) was 51.73 percent as of June, up from 46.21 percent in March.
Troubled debt restructured (TDR) business loans as of June were down from a year ago, but up from the first quarter. TDR business loans were almost $283 million at the end of the second quarter of 2017, up $29.2 million from the first quarter of 2017.
The credit union reported that over 83 percent of its TDR business loans were 60 days or more past due.
TDR business loans were 16.66 percent of all loans and 645.21 percent of net worth.
Allowances for loan and lease losses rose by 11.8 percent during the quarter to $210.3 million. However, the credit union was under-reserved with a coverage ratio of 32.71 percent, as of June 2017.
Tuesday, August 8, 2017
Taxi Medallion Lender LOMTO FCU is Critically Undercapitalized as of Q2 2017
LOMTO Federal Credit Union (Woodside, NY) is critically undercapitalized as the credit union was battered by nonperforming taxi medallion loans.
The 219 million credit union reported a loss of $10.8 million through the first six months of 2017.
The loss was driven by an increase in provisions for loan and lease losses in the second quarter, after the credit union had recaptures some loan loss reserves in the first quarter. Year-to-date provisions for loan and lease losses were almost $10.5 million.
As a result of the loss, the credit union's net worth fell from $14.1 million as of March 2017 to $2.9 million as of June 2017. As a result, its net worth ratio fell from 5.97 percent to 1.31 percent.
Delinquent loans were $38.4 million as of June 2017, down from $42.8 million the previous quarter.
The delinquency rate edged lower from 20.55 percent at the end of the first quarter to 20.50 percent as of June 2017. However, delinquent loans as a percent of net worth was 1,337.80 percent as of June 2017
Early delinquencies fell during the quarter by 28.5 percent to almost $9.1 million.
Net charge-offs soared during the second quarter from $2.9 million to $13.8 million. At the end of June 2017, the net charge-off rate was 13.70 percent.
At the end of the second quarter, troubled debt restructured (TDR) business loans were $22.6 million. The percent age of TDR loans that were 6o days or more past due was 59.88 percent at the end of the most current quarter.
TDR business loans were 12.08 percent of all loans and 788.34 percent of net worth.
Foreclosed and repossessed other assets (taxi medallions) increased by 71.2 percent during the second quarter to $23.5 million.
Allowances for loan and lease losses (ALLL) increased by approximately $2 million during the quarter to $23.9 million. As a result, the coverage ratio increased from 51.21 percent as of March to 62.39 percent as of June. However, the portion of the ALLL allocated to TDR loans was $10.4 million.
The 219 million credit union reported a loss of $10.8 million through the first six months of 2017.
The loss was driven by an increase in provisions for loan and lease losses in the second quarter, after the credit union had recaptures some loan loss reserves in the first quarter. Year-to-date provisions for loan and lease losses were almost $10.5 million.
As a result of the loss, the credit union's net worth fell from $14.1 million as of March 2017 to $2.9 million as of June 2017. As a result, its net worth ratio fell from 5.97 percent to 1.31 percent.
Delinquent loans were $38.4 million as of June 2017, down from $42.8 million the previous quarter.
The delinquency rate edged lower from 20.55 percent at the end of the first quarter to 20.50 percent as of June 2017. However, delinquent loans as a percent of net worth was 1,337.80 percent as of June 2017
Early delinquencies fell during the quarter by 28.5 percent to almost $9.1 million.
Net charge-offs soared during the second quarter from $2.9 million to $13.8 million. At the end of June 2017, the net charge-off rate was 13.70 percent.
At the end of the second quarter, troubled debt restructured (TDR) business loans were $22.6 million. The percent age of TDR loans that were 6o days or more past due was 59.88 percent at the end of the most current quarter.
TDR business loans were 12.08 percent of all loans and 788.34 percent of net worth.
Foreclosed and repossessed other assets (taxi medallions) increased by 71.2 percent during the second quarter to $23.5 million.
Allowances for loan and lease losses (ALLL) increased by approximately $2 million during the quarter to $23.9 million. As a result, the coverage ratio increased from 51.21 percent as of March to 62.39 percent as of June. However, the portion of the ALLL allocated to TDR loans was $10.4 million.
Lake Michigan CU to Purchase Encore Bank
Lake Michigan Credit Union (Grand Rapids, MI) has announced that it will acquire Encore Bank (Naples, FL).
Lake Michigan Credit Union has $5.2 billion in assets.
Encore Bank has $418 million in assets and 6 offices.
The agreement has been approved by the board of directors of each organization. The acquisition is expected to be completed in the first quarter of 2018, pending state and federal regulator approvals.
This is the largest transaction of a credit union buying a bank by asset size to date.
Terms of the deal were not disclosed.
Read the Tampa Bay Business Journal.
See the story at CU Today.
Lake Michigan Credit Union has $5.2 billion in assets.
Encore Bank has $418 million in assets and 6 offices.
The agreement has been approved by the board of directors of each organization. The acquisition is expected to be completed in the first quarter of 2018, pending state and federal regulator approvals.
This is the largest transaction of a credit union buying a bank by asset size to date.
Terms of the deal were not disclosed.
Read the Tampa Bay Business Journal.
See the story at CU Today.
Puerto Rico Oversight Board Certifies Fiscal Plan for Island's Credit Union Regulator and Insurer
The Financial Oversight and Management Board for Puerto Rico has certified a fiscal plan for the Public Corporation for the Supervision & Insurance of Cooperatives in Puerto Rico (COSSEC).
COSSEC is responsible for overseeing and insuring the island's 116 credit unions or cooperatives. These credit unions have $8.5 billion in assets and $7.9 billion in deposits
The fiscal plan acknowledges the risks coops face amid Puerto Rico’s fiscal crisis, as there is a high level of concentration in Puerto Rico’s debt among some cooperatives that could compromise the solvency of some.
The 116 cooperatives on the island have invested almost $965 million in Puerto Rico bonds, or 65 percent of their total investments totaling $1.5 billion. According to the document, Government Development Bank (GDB) notes comprise the greatest percentage of the Puerto Rican bonds held by the coooperatives. GDB bonds are worth 84 percent less than their original, or par, value.
In total, Puerto Rico bonds held by cooperatives are listed at 49.2 percent of their par value.
However, the plan states that given enough time, most cooperatives will be able to absorb losses arising from Puerto Rico bonds.
According to carribbeanbusiness.com, four credit unions are experiencing liquidity problems, but said options are being explored to take care of these, including a possible takeover by a large co-op.
COSSEC’s fiscal plan includes a capital injection program that would see roughly $533 million into the system to help address possible losses resulting from the restructuring of Puerto Rico’s debt. The amount would come from $383 million in capital and $155 million from the sale of certain loan portfolios, according to the document.
The fiscal plan also recommends changing the governance structure of COSSEC to eliminate conflicting regulatory and insurance mission. This could involve having the island's credit unions move to a federal charter and be regulated and insured by the National Credit Union Administration or another agency with expertise in financial regulation.
In addition, the oversight board called for legislation to allow the sale of credit unions assets to other non-coop entities, if COSSEC determines that a liquidation is necessary. The fiscal plan is seeking legislation to allow credit unions to issue preferred shares.
The document can be found here.
COSSEC is responsible for overseeing and insuring the island's 116 credit unions or cooperatives. These credit unions have $8.5 billion in assets and $7.9 billion in deposits
The fiscal plan acknowledges the risks coops face amid Puerto Rico’s fiscal crisis, as there is a high level of concentration in Puerto Rico’s debt among some cooperatives that could compromise the solvency of some.
The 116 cooperatives on the island have invested almost $965 million in Puerto Rico bonds, or 65 percent of their total investments totaling $1.5 billion. According to the document, Government Development Bank (GDB) notes comprise the greatest percentage of the Puerto Rican bonds held by the coooperatives. GDB bonds are worth 84 percent less than their original, or par, value.
In total, Puerto Rico bonds held by cooperatives are listed at 49.2 percent of their par value.
However, the plan states that given enough time, most cooperatives will be able to absorb losses arising from Puerto Rico bonds.
According to carribbeanbusiness.com, four credit unions are experiencing liquidity problems, but said options are being explored to take care of these, including a possible takeover by a large co-op.
COSSEC’s fiscal plan includes a capital injection program that would see roughly $533 million into the system to help address possible losses resulting from the restructuring of Puerto Rico’s debt. The amount would come from $383 million in capital and $155 million from the sale of certain loan portfolios, according to the document.
The fiscal plan also recommends changing the governance structure of COSSEC to eliminate conflicting regulatory and insurance mission. This could involve having the island's credit unions move to a federal charter and be regulated and insured by the National Credit Union Administration or another agency with expertise in financial regulation.
In addition, the oversight board called for legislation to allow the sale of credit unions assets to other non-coop entities, if COSSEC determines that a liquidation is necessary. The fiscal plan is seeking legislation to allow credit unions to issue preferred shares.
The document can be found here.
Monday, August 7, 2017
Consumer Credit at CUs Grew in June
The Federal Reserve reported today outstanding consumer credit at credit unions expanded in June.
Total outstanding consumer credit at credit unions rose by about $2.8 billion for June to $404.3 billion, according to the Federal Reserve's G.19 report.
Revolving consumer credit edged higher by almost $100 million to $53.3 billion.
Nonrevolving consumer credit grew by approximately $2.6 billion to $350.9 billion.
Read the G.19 report.
Total outstanding consumer credit at credit unions rose by about $2.8 billion for June to $404.3 billion, according to the Federal Reserve's G.19 report.
Revolving consumer credit edged higher by almost $100 million to $53.3 billion.
Nonrevolving consumer credit grew by approximately $2.6 billion to $350.9 billion.
Read the G.19 report.
Georgia CU Regulator to Add S to CAMEL Rating
The Georgia Department of Banking and Finance (Department) announced that beginning January 1, 2018 the Sensitivity to Market Risk, or S component will become a separate and distinct regulatory examination component, rather than a factor in the Liquidity component.
In making the announcement, the Department noted that regulatory agencies in 17 states already have added the S component to the credit union CAMEL rating system.
Adoption of S will provide greater clarity in identifying interest rate risk and allow the Department to better allocate specialized resources to address interest rate risk outliers.
The Department believes the implementation of a distinct S rating is prudent at this time.
Read the Department Bulletin.
In making the announcement, the Department noted that regulatory agencies in 17 states already have added the S component to the credit union CAMEL rating system.
Adoption of S will provide greater clarity in identifying interest rate risk and allow the Department to better allocate specialized resources to address interest rate risk outliers.
The Department believes the implementation of a distinct S rating is prudent at this time.
Read the Department Bulletin.
Saturday, August 5, 2017
Two Conserved CUs Have Wiped Out Their Net Worth
Riverdale Credit Union (Selma, AL) and Shreveport Federal Credit Union (Shreveport, LA), which were placed into conservatorship during the second quarter, are critically undercapitalized and have wiped out their net worth.
Shreveport Federal Credit Union
Shreveport Federal Credit Union with almost $86.7 million in assets saw its net worth fall from slightly more than $15.4 million at the end of 2016 to nearly -1.5 million as of June 2017. As a result, the credit union's net worth ratio fell from 14.65 percent at the end of 2016 to -1.68 percent as of June 30, 2017.
The decline in net worth was due to large losses incurred by the credit union. The credit union reported a loss of negative $17.1 million through the first two quarters of 2017. Most of the loss was due to $14.9 million in other non-operating expenses.
The credit union is also reporting other comprehensive income of almost minus 2.2 million. The credit union has negative equity capital just shy of minus $3.7 million.
Riverdale Credit Union
Riverdale Credit Union with $63.1 million in assets reported a loss of almost $10.5 million through the first six months of 2017.
The loss was due to a dramatic increase its provisions for loan and lease losses during the first six months of 2017. Provisions for loan and lease losses were almost $11.5 million as of June 2017. In comparison, provisions for loan and lease losses were $761.6 thousand a year earlier.
The loss wiped out the credit union's net worth, which fell from almost $8.9 million at the end of 2016 to minus $1.6 million at the end of the second quarter of 2017. The credit union's net worth ratio tumbled from 12.21 percent at the end of 2016 to negative 2.56 percent as of June 2017.
In addition, the credit union recorded a sharp increase in delinquent and charged off loans. The credit union reported having $7.7 million in delinquent loans at the end of the second quarter of 2017. As a result, 13.80 percent of its loans were 60 days or more past due.
Net charge-offs were almost $6.9 million for the first two quarters of 2017. The credit union reported a net charge-off rate of 23.45 percent for the first two quarters of 2017.
According to the Administrative Order, the NCUA Board determined that conservatorship was necessary because the credit union concealed books, papers, records, and assets of Riverdale Credit Union, and evidence exists of illegal and unsafe practices and NCUA staff cannot determine the full ramification of this activity.
Shreveport Federal Credit Union
Shreveport Federal Credit Union with almost $86.7 million in assets saw its net worth fall from slightly more than $15.4 million at the end of 2016 to nearly -1.5 million as of June 2017. As a result, the credit union's net worth ratio fell from 14.65 percent at the end of 2016 to -1.68 percent as of June 30, 2017.
The decline in net worth was due to large losses incurred by the credit union. The credit union reported a loss of negative $17.1 million through the first two quarters of 2017. Most of the loss was due to $14.9 million in other non-operating expenses.
The credit union is also reporting other comprehensive income of almost minus 2.2 million. The credit union has negative equity capital just shy of minus $3.7 million.
Riverdale Credit Union
Riverdale Credit Union with $63.1 million in assets reported a loss of almost $10.5 million through the first six months of 2017.
The loss was due to a dramatic increase its provisions for loan and lease losses during the first six months of 2017. Provisions for loan and lease losses were almost $11.5 million as of June 2017. In comparison, provisions for loan and lease losses were $761.6 thousand a year earlier.
The loss wiped out the credit union's net worth, which fell from almost $8.9 million at the end of 2016 to minus $1.6 million at the end of the second quarter of 2017. The credit union's net worth ratio tumbled from 12.21 percent at the end of 2016 to negative 2.56 percent as of June 2017.
In addition, the credit union recorded a sharp increase in delinquent and charged off loans. The credit union reported having $7.7 million in delinquent loans at the end of the second quarter of 2017. As a result, 13.80 percent of its loans were 60 days or more past due.
Net charge-offs were almost $6.9 million for the first two quarters of 2017. The credit union reported a net charge-off rate of 23.45 percent for the first two quarters of 2017.
According to the Administrative Order, the NCUA Board determined that conservatorship was necessary because the credit union concealed books, papers, records, and assets of Riverdale Credit Union, and evidence exists of illegal and unsafe practices and NCUA staff cannot determine the full ramification of this activity.
Friday, August 4, 2017
CU Board Buys Season Tickets to Professional Football Team
During the May 25 National Credit Union Administration Board meeting, it was disclosed that a small credit union used credit union funds to buy season tickets for all its board members to a professional football team for three years.
According to the transcript, Board Member Metsger stated:
According to the transcript, Board Member Metsger stated:
"[T]he CEO of a large credit union ... told me that they discovered after bringing in a smaller credit union that the board had approved the purchase of tickets for the next three years for all of the board members to a very expensive professional football team."The purchase of tickets to a very expensive professional sports team by credit union directors is a form of non-monetary compensation and is an abuse of the credit union tax exemption.
Thursday, August 3, 2017
Study Claims that CUs Lack Incentive to Control Expenses
Credit unions are less efficient than other depository institutions, according to research from Moebs $ervices.
The study notes that banks and thrifts have an incentive to keep expenses low to pay for taxes, while credit unions, who are not taxed, lack a similar incentive to keep expenses low.
It should also be noted that credit union industry is overwhelmingly comprised of small institutions that are not able to take advantage of economies of scale.
The following chart compares the median non-interest expenses to assets for banks, thrifts, and credit unions.
The study notes that banks and thrifts have an incentive to keep expenses low to pay for taxes, while credit unions, who are not taxed, lack a similar incentive to keep expenses low.
It should also be noted that credit union industry is overwhelmingly comprised of small institutions that are not able to take advantage of economies of scale.
The following chart compares the median non-interest expenses to assets for banks, thrifts, and credit unions.
Wednesday, August 2, 2017
NCUA's $1 Billion Legal Contingency Fee In Crosshairs of Republican Lawmakers
POLITICO PRO is reporting that Republican lawmakers are probing more than $1 billion in contingency fees paid by the National Credit Union Administration (NCUA) to two law firms.
NCUA has recouped more than $5 billion from investment banks over the sale of faulty mortgage-backed securities to five failed corporate credit unions.
"The payment of over one billion dollars in legal fees to private counsel raises serious questions about the propriety of the NCUA's legal fee arrangements, including whether the arrangements were in the best interest of the NCUA," Representative Ann Wagner (R-MO) said in a March 1 letter to the agency's chairman, Mark McWatters. Wagner chairs the House Financial Services subcommittee on oversight.
Wagner is seeking information from NCUA regarding the agreement with the two law firms, including all records related to the selection of the law firms and all communications between the agency and the two law firms.
The two law firms are Korein Tillery and Kellogg, Huber, Hansen, Todd, Evans & Figel.
In comparison, the Federal Housing Finance Agency recovered more than $25 billion on behalf of mortgage giants Fannie Mae and Freddie Mac; but paid two different law firms, based on an hourly fee basis, more than $400 million.
The article notes NCUA met at least once with the law firms in an attempt to renegotiate the terms of the agreement.
Read the story (subscription required).
Update: Below is the Representative Wagner's letter to NCUA (click on image to enlarge). Unfortunately, the image quality of the letter is poor.
NCUA has recouped more than $5 billion from investment banks over the sale of faulty mortgage-backed securities to five failed corporate credit unions.
"The payment of over one billion dollars in legal fees to private counsel raises serious questions about the propriety of the NCUA's legal fee arrangements, including whether the arrangements were in the best interest of the NCUA," Representative Ann Wagner (R-MO) said in a March 1 letter to the agency's chairman, Mark McWatters. Wagner chairs the House Financial Services subcommittee on oversight.
Wagner is seeking information from NCUA regarding the agreement with the two law firms, including all records related to the selection of the law firms and all communications between the agency and the two law firms.
The two law firms are Korein Tillery and Kellogg, Huber, Hansen, Todd, Evans & Figel.
In comparison, the Federal Housing Finance Agency recovered more than $25 billion on behalf of mortgage giants Fannie Mae and Freddie Mac; but paid two different law firms, based on an hourly fee basis, more than $400 million.
The article notes NCUA met at least once with the law firms in an attempt to renegotiate the terms of the agreement.
Read the story (subscription required).
Update: Below is the Representative Wagner's letter to NCUA (click on image to enlarge). Unfortunately, the image quality of the letter is poor.
Large CU CEOs in 2015 Earned 13.15 Times More Than Their Employees
CEOs of federally insured state chartered credit unions with at least $1 billion in assets earned on average almost 13.15 times more than their average employee compensation in 2015.
The median executive compensation to average employee compensation ratio was 10.19.
Total CEO compensation is pulled from Schedule J of a credit union's Form 990.
To calculate average credit union employee compensation, the analysis divided the Call Report line item Employee Compensation & Benefits by Full Time Equivalent Employees. Full Time Equivalent Employees = The Number of Full Time Employees + (0.5 times the Number of Part Time Employees).
The following graph shows that there is a positive relationship between CEO compensation and the ratio of CEO compensation to average employee compensation.
The credit union with the highest multiple of CEO compensation to average employee pay in 2015 was San Diego County Credit Union. Teresa Halleck, CEO of the credit union, earned 71.93 times the average compensation of San Diego County Credit Union's employee.
The following table lists the ten credit unions with the highest multiple of CEO compensation to average employee compensation in 2015 (click on the image to enlarge).
The median executive compensation to average employee compensation ratio was 10.19.
Total CEO compensation is pulled from Schedule J of a credit union's Form 990.
To calculate average credit union employee compensation, the analysis divided the Call Report line item Employee Compensation & Benefits by Full Time Equivalent Employees. Full Time Equivalent Employees = The Number of Full Time Employees + (0.5 times the Number of Part Time Employees).
The following graph shows that there is a positive relationship between CEO compensation and the ratio of CEO compensation to average employee compensation.
The credit union with the highest multiple of CEO compensation to average employee pay in 2015 was San Diego County Credit Union. Teresa Halleck, CEO of the credit union, earned 71.93 times the average compensation of San Diego County Credit Union's employee.
The following table lists the ten credit unions with the highest multiple of CEO compensation to average employee compensation in 2015 (click on the image to enlarge).
