S&P Global Market Intelligence released its annual rankings for the top performing credit unions in 2019.
S&P Global Market Intelligence ranked the nation's credit unions using five core financial performance metrics: member growth, market growth, operating expense as a percentage of operating revenue, net charge-offs as a percentage of average loans, and delinquent loans as a percentage of total loans. To be eligible for the ranking, a credit union had to report more than $500 million in total assets and a net worth ratio of at least 7.0% as of Dec. 31, 2019.
This year's top performing credit union was Lake Michigan Credit Union (Byron Center, MI). The credit union outperformed the industry median in all five ranking metrics allowing it to surpass its 2018 second place ranking.
MidFlorida Credit Union (Lakeland, FL) was the second ranked credit union. S&P Global Market Intelligence cited that the credit union benefits from its merger and acquisition activity in 2019, including the acquisition of the Florida assets of First American Bank (Fort Dodge, IA) and Community Bank and Trust of Florida.
Rounding out the top 5 were Stanford Federal Credit Union (Palo Alto, CA), Idaho Central Credit Union (Chubbuck, ID), and Eastman Credit Union (Kingsport, TN).
Read more.
Tuesday, March 31, 2020
Monday, March 30, 2020
Aspiring Low-Income or Complex CUs
The National Credit Union Administration (NCUA) Board is proposing to allow aspiring low-income credit unions (LICU) and non-LICU complex credit unions to issue subordinated debt.
Currently, the Federal Credit Union Act only allows LICUs to issue secondary capital.
An aspiring LICU or non-LICU complex credit union is defined as a credit union that anticipates being designated as a LICU or Nnn-LICU Complex Credit Union within 24 months following their planned issuance of the subordinated debt.
For example, there are 40 credit unions with total assets between $450 and $500 million of which 21 are non-LICUs. NCUA expects this number of credit unions may increase over time. This means more non-LICUs could be designated as aspiring complex credit unions.
However, these aspiring LICUs and non-LICU complex credit unions would not be allowed to count this subordinated debt as regulatory capital for prompt corrective action purposes until they become either an LICU or non-LICU complex credit union.
But allowing these aspiring credit unions to issue subordinated debt will fuel rapid growth. This will allow these credit unions to achieve the complex credit union threshold -- permitting these credit unions to count this subordinated debt as regulatory capital.
This proposal would subvert the purpose of prompt corrective action, which is meant to curb aggressive growth.
Moreover, this proposal regarding aspiring credit unions is troubling. The Federal Credit Union Act only discusses low-income credit unions and complex credit unions. It does not mention aspiring LICUs or non-LICU complex credit unions.
This is another case of this agency engaging in regulatory fiat.
Currently, the Federal Credit Union Act only allows LICUs to issue secondary capital.
An aspiring LICU or non-LICU complex credit union is defined as a credit union that anticipates being designated as a LICU or Nnn-LICU Complex Credit Union within 24 months following their planned issuance of the subordinated debt.
For example, there are 40 credit unions with total assets between $450 and $500 million of which 21 are non-LICUs. NCUA expects this number of credit unions may increase over time. This means more non-LICUs could be designated as aspiring complex credit unions.
However, these aspiring LICUs and non-LICU complex credit unions would not be allowed to count this subordinated debt as regulatory capital for prompt corrective action purposes until they become either an LICU or non-LICU complex credit union.
But allowing these aspiring credit unions to issue subordinated debt will fuel rapid growth. This will allow these credit unions to achieve the complex credit union threshold -- permitting these credit unions to count this subordinated debt as regulatory capital.
This proposal would subvert the purpose of prompt corrective action, which is meant to curb aggressive growth.
Moreover, this proposal regarding aspiring credit unions is troubling. The Federal Credit Union Act only discusses low-income credit unions and complex credit unions. It does not mention aspiring LICUs or non-LICU complex credit unions.
This is another case of this agency engaging in regulatory fiat.
Friday, March 27, 2020
Agencies Encourage Banks and CUs to Engage in Responsible Small-Dollar Lending
The federal financial regulators on March 26 issued a joint statement urging financial institutions to offer “responsible small-dollar loans to both consumers and small businesses.” Such offerings should be made in accordance with safe and sound banking practices, and should ensure fair treatment of consumers and comply with applicable statutes and regulations, including consumer protection laws, the agencies said.
“The current regulatory framework allows financial institutions to make responsible small-dollar loans. Such loans can be offered through a variety of loan structures that may include, for example, open-end lines of credit, closed-end installment loans, or appropriately structured single payment loans,” the agencies said. “For borrowers who experience unexpected circumstances and cannot repay a loan as structured, financial institutions are encouraged to consider workout strategies designed to help enable the borrower to repay the principal of the loan while mitigating the need to re-borrow.”
The agencies also signaled that they plan to issue additional guidance on small-dollar loans to help banks and credit unions continue to meet the needs of customers who may be facing extreme financial hardships.
Read the letter.
“The current regulatory framework allows financial institutions to make responsible small-dollar loans. Such loans can be offered through a variety of loan structures that may include, for example, open-end lines of credit, closed-end installment loans, or appropriately structured single payment loans,” the agencies said. “For borrowers who experience unexpected circumstances and cannot repay a loan as structured, financial institutions are encouraged to consider workout strategies designed to help enable the borrower to repay the principal of the loan while mitigating the need to re-borrow.”
The agencies also signaled that they plan to issue additional guidance on small-dollar loans to help banks and credit unions continue to meet the needs of customers who may be facing extreme financial hardships.
Read the letter.
Thursday, March 26, 2020
Enforcement Actions Issued in 2019 by NCUA
The National Credit Union Administration stated that the number of preliminary warning letters (PWLs) and unpublished Letters of Understanding and Agreement (LUAs) fell in 2019 compared to 2018, but the number of Cease and Desist Orders (CDOs) increased in 2019.
The following chart shows the number of PWLS, LUAs, and CDOs from 2013 to 2019.
The information on the number of PWLS, LUAs, and CDOs was obtained from a Freedom of Information Act request to the agency.
The two credit unions that were issued Orders to Cease and Desist were Defense Logistics Federal Credit Union (Dover, NJ) and Phi Beta Sigma Federal Credit Union (Washington, D.C.).
The following chart shows the number of PWLS, LUAs, and CDOs from 2013 to 2019.
The information on the number of PWLS, LUAs, and CDOs was obtained from a Freedom of Information Act request to the agency.
The two credit unions that were issued Orders to Cease and Desist were Defense Logistics Federal Credit Union (Dover, NJ) and Phi Beta Sigma Federal Credit Union (Washington, D.C.).
Wednesday, March 25, 2020
Coronavirus and Liquidity Planning
The Texas Credit Union Department in its March Newsletter is encouraging credit unions to review their liquidity outlook, asset liability management practices and Liquidity Contingency Funding Plan to ensure that they have adequate liquidity to meet member loan demand and share withdrawal requests.
The regulator wrote that "[a] number of your members will likely need lending assistance or will be making savings withdrawals to get thru these challenging times."
As part of the credit union's Contingent Funding Plan, each credit union should address:
The regulator wrote that "[a] number of your members will likely need lending assistance or will be making savings withdrawals to get thru these challenging times."
As part of the credit union's Contingent Funding Plan, each credit union should address:
- its policies to manage a range of stress environments, identification of some possible stress events, and identification of likely liquidity responses to such events;
- its lines of responsibility within the credit union to respond to liquidity events;
- its management processes that include clear implementation and escalation procedures for liquidity events;
- its outside sources of liquidity for contingency needs; and
- the frequency the credit union will test and update the plan.
Tuesday, March 24, 2020
GOP Lawmakers Ask FinCEN for Extension in Filing CTRs
A group of House Republican lawmakers on March 23 asked Financial Crimes Enforcement Network (FinCEN) Director Ken Blanco for an extension for institutions filing currency transaction reports (CTRs) until at least after the coronavirus national emergency has concluded.
The lawmakers wrote that the regulatory compliance teams at small to mid-size institutions "are stretched thin with trying to stay on top of all of the demands associated with the pandemic."
The lawmakers noted that CTRs represent a major regulatory compliance burden for small community banks and credit unions and that such an extension “would help banks and credit unions focus on their most urgent and important priorities during this public health emergency, which are serving consumers and keeping credit flowing to the economy.”
The lawmakers wrote that the regulatory compliance teams at small to mid-size institutions "are stretched thin with trying to stay on top of all of the demands associated with the pandemic."
The lawmakers noted that CTRs represent a major regulatory compliance burden for small community banks and credit unions and that such an extension “would help banks and credit unions focus on their most urgent and important priorities during this public health emergency, which are serving consumers and keeping credit flowing to the economy.”
CUs in 22 States and DC Had Negative Median Membership Growth in 2019
At least half of the federally-insured credit unions in 22 states and the District of Columbia reported a decline in membership for 2019, according to the National Credit Union Administration.
At the median, credit union membership declined the most in Pennsylvania at minus 1.2 percent for 2019, followed by credit unions in Arkansas at negative 1 percent.
The data show that there is a positive relationship between median state membership growth and median state deposit (share) growth in 2019. The R-squared is 0.4793. This indicates that almost half of the observed variation in median state share growth can be explained by median state membership growth. (click on image to enlarge)
Nationally, year-over-year membership growth at the median credit union was unchanged for 2019.
Most credit unions that reported a year-over-year decline in membership tend to be small with over 70 percent of the credit unions reporting a decline in membership have less than $50 million in assets.
Read more.
At the median, credit union membership declined the most in Pennsylvania at minus 1.2 percent for 2019, followed by credit unions in Arkansas at negative 1 percent.
The data show that there is a positive relationship between median state membership growth and median state deposit (share) growth in 2019. The R-squared is 0.4793. This indicates that almost half of the observed variation in median state share growth can be explained by median state membership growth. (click on image to enlarge)
Nationally, year-over-year membership growth at the median credit union was unchanged for 2019.
Most credit unions that reported a year-over-year decline in membership tend to be small with over 70 percent of the credit unions reporting a decline in membership have less than $50 million in assets.
Read more.
Monday, March 23, 2020
Agencies Provide Guidance on Loans Modified Due to COVID-19
Loan modifications for borrowers affected by the coronavirus pandemic will not generally be required to be treated as troubled debt restructurings (TDRs), federal financial institution agencies and state banking regulators said on March 22.
The agencies said they had confirmed with FASB staff that “short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.” This includes short-term modifications like payment deferrals, fee waivers and repayment term extensions.
Meanwhile, the agencies said that examiners will “exercise judgment” in reviewing loan modifications and “not automatically adversely risk rate credits that are affected by COVID-19,” including those that are designated as TDRs.
The guidance also addresses past-due reporting, nonaccrual status, charge-offs, and the eligibility of modified loans as discount window collateral.
Read the interagency statement.
The agencies said they had confirmed with FASB staff that “short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.” This includes short-term modifications like payment deferrals, fee waivers and repayment term extensions.
Meanwhile, the agencies said that examiners will “exercise judgment” in reviewing loan modifications and “not automatically adversely risk rate credits that are affected by COVID-19,” including those that are designated as TDRs.
The guidance also addresses past-due reporting, nonaccrual status, charge-offs, and the eligibility of modified loans as discount window collateral.
Read the interagency statement.
CUNA Uses Coronavirus to Push Legislative Priorities
Rahm Emanuel is quoted as saying "You never want a serious crisis to go to waste."
It appears that the Credit Union National Association (CUNA) has taken his quote to heart.
The credit union trade group is using the coronavirus to push their agenda to increase the ability of credit unions to make business loans and gain access to secondary capital.
In a March 19 letter to Congress, CUNA urged Congress to:
Read the letter.
It appears that the Credit Union National Association (CUNA) has taken his quote to heart.
The credit union trade group is using the coronavirus to push their agenda to increase the ability of credit unions to make business loans and gain access to secondary capital.
In a March 19 letter to Congress, CUNA urged Congress to:
- Enact legislation exempting credit union business loans made during federally declared disasters and emergencies from the Credit Union Member Business Lending Cap;
- Enact legislation to exempt fully government-guaranteed loans made through programs at the Small Business Administration, Department of Agriculture and other agencies from the Credit Union Member Business Lending Cap; and
- Ensure that any new small business lending programs created through the Small Business Administration or other government agencies include an opportunity for credit unions to participate.
Read the letter.
Sunday, March 22, 2020
Kemba CU to Build New 147,000 Square-Foot HQ
Kemba Credit Union will build a 147,000 square-foot, eight-story corporate headquarters building in West Chester Township, Ohio.
The project will cost more than $28 million.
Groundbreaking is scheduled for May this year.
The $1 billion credit union had initially planned to build a 90,000 square-foot building.
Butler County in 2019 approved a seven-year, 75 percent property tax abatement for the project through the enterprise zone program.
Read more.
The project will cost more than $28 million.
Groundbreaking is scheduled for May this year.
The $1 billion credit union had initially planned to build a 90,000 square-foot building.
Butler County in 2019 approved a seven-year, 75 percent property tax abatement for the project through the enterprise zone program.
Read more.
Friday, March 20, 2020
Sen. Brown Calls on Financial Regulators to Cease Non-Coronavirus Rulemaking
U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – on March 17 sent letters to the Department of Housing and Urban Development (HUD) and independent financial regulators, including the National Credit Union Administration (NCUA), demanding that they suspend all rulemaking that could impede the federal response to the COVID-19 pandemic.
In a letter to NCUA, Senator Brown wrote: “The NCUA should focus its resources on providing reliable guidance and responding to the health and economic effects of this crisis rather than processing other rulemakings. During this period, all rulemaking and comment periods closing after March 1, 2020 that are not related to the virus response...should be suspended or extended for at least 45 days.”
There are two rulemakings scheduled to close after March 1 -- the Business Combination proposed rule on March 30 and Subordinated Debt rulemaking on July 8.
Read the letter to National Credit Union Administration.
In a letter to NCUA, Senator Brown wrote: “The NCUA should focus its resources on providing reliable guidance and responding to the health and economic effects of this crisis rather than processing other rulemakings. During this period, all rulemaking and comment periods closing after March 1, 2020 that are not related to the virus response...should be suspended or extended for at least 45 days.”
There are two rulemakings scheduled to close after March 1 -- the Business Combination proposed rule on March 30 and Subordinated Debt rulemaking on July 8.
Read the letter to National Credit Union Administration.
Thursday, March 19, 2020
Commercial Share Accounts Up 16.6 Percent in 2019
Commercial share (deposit) accounts at credit unions grew by 16.6 percent during 2019 to $40.8 billion.
At the end of 2013, credit unions reported $16.3 billion in commercial share accounts.
The following graph shows the growth of commercial accounts between 2013 and 2019, which is up 150 percent.
At the end of 2013, credit unions reported $16.3 billion in commercial share accounts.
The following graph shows the growth of commercial accounts between 2013 and 2019, which is up 150 percent.
Wednesday, March 18, 2020
Banking and CU Trade Groups Detail COVID-19 Response in Senate Letter
In a March 17 letter to several Democratic members of the Senate Banking Committee, banking and credit union trade groups detailed what their industries are doing to help customers, communities and the broader economy through the coronavirus crisis.
“At this time of significant challenge to the nation, we can report that the American financial system is strong and resilient,” the groups said. “Banks and credit unions across the country stand ready to support their customers and members and are working to help those affected.”
Actions taken by financial institutions have included fee waivers, deferred payments, loan modifications and emergency low-rate and zero-rate loans. Banks and credit unions are also helping customer fully employ mobile and online banking platforms, as well as donating to public health relief and response efforts, the groups said. The letter also detailed actions taken to assist bank and credit union employees.
The trade groups signing the letter were the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Credit Union National Association, Financial Services Forum, Independent Community Bankers of America, and National Association of Federally Insured Credit Unions.
Read the letter.
“At this time of significant challenge to the nation, we can report that the American financial system is strong and resilient,” the groups said. “Banks and credit unions across the country stand ready to support their customers and members and are working to help those affected.”
Actions taken by financial institutions have included fee waivers, deferred payments, loan modifications and emergency low-rate and zero-rate loans. Banks and credit unions are also helping customer fully employ mobile and online banking platforms, as well as donating to public health relief and response efforts, the groups said. The letter also detailed actions taken to assist bank and credit union employees.
The trade groups signing the letter were the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Credit Union National Association, Financial Services Forum, Independent Community Bankers of America, and National Association of Federally Insured Credit Unions.
Read the letter.
WI CU Regulator Removes MBL Cap for Community First CU
The Wisconsin Office of Credit Unions approved an application of Community First Credit Union (Neenah, WI) to remove the aggregate member business loan (MBL) cap, according to the Office's Credit Union Activities Report.
The credit union applied for the removal of the cap on December 9, 2019.
On January 14, 2019, the member business loan cap for Community First CU was increased to 25 percent of assets.
As of December 2019, the credit union's member business loan to asset ratio was almost 16 percent.
The credit union applied for the removal of the cap on December 9, 2019.
On January 14, 2019, the member business loan cap for Community First CU was increased to 25 percent of assets.
As of December 2019, the credit union's member business loan to asset ratio was almost 16 percent.
Tuesday, March 17, 2020
ABA Appeals Credit Union Field of Membership Case to Supreme Court
The American Bankers Association (ABA) last week petitioned the U.S. Supreme Court to review a lower court ruling in the association’s challenge of the National Credit Union Administration’s 2016 field of membership rule.
In August, a three-judge panel of the D.C. Circuit Court of Appeals upheld much of rule while remanding a portion related to redlining concerns. The court will grant the petition only if four of the nine justices vote to accept the case.
ABA argued that the three-judge panel’s decision “stretches Chevron deference past the breaking point” in ruling that NCUA could define a “local community” as a combined statistical area inhabited by up to 2.5 million people or define an entire state as a “rural district.” Under the Supreme Court’s Chevron doctrine, courts defer to administrative agencies’ interpretation of statutes they administer where Congress has not specifically addressed the question at issue.
Chevron cannot be applied to the statute granting NCUA authority to define terms like “local community” and “rural district” in its regulations in such a way that neglects the “reasonableness” test of the agency interpretation, ABA argued, calling for the Supreme Court to hear the case and “make clear that an express delegation of definitional authority does not authorize an agency to interpret a term in ways that exceed its ordinary range of permissible meanings.”
Read the petition.
In August, a three-judge panel of the D.C. Circuit Court of Appeals upheld much of rule while remanding a portion related to redlining concerns. The court will grant the petition only if four of the nine justices vote to accept the case.
ABA argued that the three-judge panel’s decision “stretches Chevron deference past the breaking point” in ruling that NCUA could define a “local community” as a combined statistical area inhabited by up to 2.5 million people or define an entire state as a “rural district.” Under the Supreme Court’s Chevron doctrine, courts defer to administrative agencies’ interpretation of statutes they administer where Congress has not specifically addressed the question at issue.
Chevron cannot be applied to the statute granting NCUA authority to define terms like “local community” and “rural district” in its regulations in such a way that neglects the “reasonableness” test of the agency interpretation, ABA argued, calling for the Supreme Court to hear the case and “make clear that an express delegation of definitional authority does not authorize an agency to interpret a term in ways that exceed its ordinary range of permissible meanings.”
Read the petition.
Monday, March 16, 2020
First Community CU Plans to Buy 3 Branches from Umpqua Bank
First Community Credit Union (Coquille, OR) announced on March 11 that it has entered into a purchase and assumption agreement with Umpqua Bank (Roseburg, OR) to acquire three store (branch) locations in Oregon.
The branch locations included in the transaction are located in John Day, Burns, and Lakeview.
According to the June 2019 Summary of Deposits data, the John Day branch had $28.6 million in deposits, the Burns branch had $32.6 million in deposits, and the Lakeview branch had $37 million in deposits.
The agreement is subject to regulatory approval and is expected to close in June of this year.
The price tag of the transaction was not disclosed.
Read the press release.
The branch locations included in the transaction are located in John Day, Burns, and Lakeview.
According to the June 2019 Summary of Deposits data, the John Day branch had $28.6 million in deposits, the Burns branch had $32.6 million in deposits, and the Lakeview branch had $37 million in deposits.
The agreement is subject to regulatory approval and is expected to close in June of this year.
The price tag of the transaction was not disclosed.
Read the press release.
Sunday, March 15, 2020
3 CUs Announce Sponsorships with Pro Sports Teams
Three credit unions have recently announced sponsorship agreements with professional sports teams.
First Entertainment Credit Union (Hollywood, CA) inked a multi-year sponsorship agreement with the Los Angeles Lakers. First Entertainment will be the Official Credit Union of Lakers. The sponsorship includes extensive in-arena branding and promotions during Lakers home games and at Lakers-related events at L.A. Live. In addition to becoming the team’s Official Credit Union, First Entertainment is launching an individual partnership with Lakers forward Anthony Davis.
Arizona Federal Credit Union (Phoenix, AZ) renewed its partnership with Phoenix Rising Football Club for three years, as its official credit union. As part of the partnership agreement, the credit union will offer exclusive co-branded products.
Philadelphia Union II and Sun East Federal Credit Union (Aston, PA) announced a multiyear partnership which includes making Sun East the official jersey sponsor of Union ll. Sun East Federal Credit Union will appear on both the home and away jerseys beginning with the 2020 USL Championship season.
However, the price tag of these sponsorship agreements were not disclosed.
First Entertainment Credit Union (Hollywood, CA) inked a multi-year sponsorship agreement with the Los Angeles Lakers. First Entertainment will be the Official Credit Union of Lakers. The sponsorship includes extensive in-arena branding and promotions during Lakers home games and at Lakers-related events at L.A. Live. In addition to becoming the team’s Official Credit Union, First Entertainment is launching an individual partnership with Lakers forward Anthony Davis.
Arizona Federal Credit Union (Phoenix, AZ) renewed its partnership with Phoenix Rising Football Club for three years, as its official credit union. As part of the partnership agreement, the credit union will offer exclusive co-branded products.
Philadelphia Union II and Sun East Federal Credit Union (Aston, PA) announced a multiyear partnership which includes making Sun East the official jersey sponsor of Union ll. Sun East Federal Credit Union will appear on both the home and away jerseys beginning with the 2020 USL Championship season.
However, the price tag of these sponsorship agreements were not disclosed.
Saturday, March 14, 2020
Navy FCU to Pay $9.25 Million to Settle Unwanted Robotext Lawsuit
Law360 is reporting that Navy Federal Credit Union (Vienna, VA) has agreed to pay $9.25 million to settle a lawsuit that the credit union sent numerous unwanted robotexts to nonconsenting members, according to a settlement agreement filed on March 11.
The lawsuit, Hawkins v. Navy Federal Credit Union, was filed in U.S. District Court, the Eastern Division of Virginia.
Read more (subscription required).
The lawsuit, Hawkins v. Navy Federal Credit Union, was filed in U.S. District Court, the Eastern Division of Virginia.
Read more (subscription required).
Friday, March 13, 2020
Trade Groups: G-Fees Should Not Be Used as Budget Offsets
A broad coalition of housing and finance trade organizations in a letter to congressional leaders on March 6 urged them not to use Fannie Mae and Freddie Mac guarantee fees as a source of funding offsets. The groups warned lawmakers increasing g-fees for that purpose would effectively serve as a tax on potential homebuyers and homeowners seeking to refinance their mortgages.
“G-fees should only be used as originally intended: as a critical risk management tool to protect against potential mortgage credit losses,” the groups wrote. “Our organizations have united to emphatically let lawmakers know that homeownership cannot, and must not, be used as the nation’s ‘piggy bank.’”
The groups urged lawmakers to consider bipartisan legislation that was introduced in the 116th Congress by Sens. David Perdue (R-Ga.), Robert Menendez (D-N.J.), Reps. Brad Sherman (D-Calif.) and Lee Zeldin (R-N.Y.) that would prohibit the use of g-fees as a budgetary offset.
Read the letter.
“G-fees should only be used as originally intended: as a critical risk management tool to protect against potential mortgage credit losses,” the groups wrote. “Our organizations have united to emphatically let lawmakers know that homeownership cannot, and must not, be used as the nation’s ‘piggy bank.’”
The groups urged lawmakers to consider bipartisan legislation that was introduced in the 116th Congress by Sens. David Perdue (R-Ga.), Robert Menendez (D-N.J.), Reps. Brad Sherman (D-Calif.) and Lee Zeldin (R-N.Y.) that would prohibit the use of g-fees as a budgetary offset.
Read the letter.
Wednesday, March 11, 2020
Fee Income at Civic FCU Was $886 Per Member for 2019
A reader recently pointed out that Civic Federal Credit Union (Raleigh, NC) is reporting fee income from services of almost $886 per member for 2019.
Fee income from services include overdraft fees, ATM fees, credit card fees, wire fees, account research fees, late fees, statement production fees, dormant account fees, transaction service fees, safekeeping fees, etc.
According to the credit union's December 2019 Call Report, it had $601,678 in fee income from 679 members.
Its fee income per member was the second highest among all credit unions -- only topped by North Bay Credit Union (Santa Rosa, CA) at $936.25 per member.
The credit union's fee income per member is well above the industry's standards.
The average fee income per member for the industry was $57.05. The median fee income per member was $49.56.
Additionally, fee income for 2019 as a percent of assets was 1.42 percent. In comparison, the industry average for 2019 was 0.66 percent with the median fee income to asset ratio of 0.52 percent.
Civic FCU's fee income as a percent of assets is in the industry's top quartile.
This credit union was chartered in December 2017 by the National Credit Union Administration for the purpose of making member business loans. It is possible that the credit union's business model accounts for the higher fee income per member.
Fee income from services include overdraft fees, ATM fees, credit card fees, wire fees, account research fees, late fees, statement production fees, dormant account fees, transaction service fees, safekeeping fees, etc.
According to the credit union's December 2019 Call Report, it had $601,678 in fee income from 679 members.
Its fee income per member was the second highest among all credit unions -- only topped by North Bay Credit Union (Santa Rosa, CA) at $936.25 per member.
The credit union's fee income per member is well above the industry's standards.
The average fee income per member for the industry was $57.05. The median fee income per member was $49.56.
Additionally, fee income for 2019 as a percent of assets was 1.42 percent. In comparison, the industry average for 2019 was 0.66 percent with the median fee income to asset ratio of 0.52 percent.
Civic FCU's fee income as a percent of assets is in the industry's top quartile.
This credit union was chartered in December 2017 by the National Credit Union Administration for the purpose of making member business loans. It is possible that the credit union's business model accounts for the higher fee income per member.
Tuesday, March 10, 2020
Joint Trades Letter Urges FCC Action to Prevent Erroneously Blocked Calls
A broad coalition of trade associations, including bank and credit union trade groups, wrote the Federal Communications Commission (FCC) on March 4 asking the FCC to protect outbound calls placed by legitimate businesses from telephone companies’ call-blocking programs.
To ensure legitimate calls are not blocked, the FCC should require telephone companies to provide notification of mislabeling and blocking and to provide a robust challenge mechanism that permits a legitimate business whose calls are being blocked to have the block removed promptly, the groups said. They also recommended that telephone companies be required to share information with each other on phone numbers that have been mislabeled or mistakenly blocked and also report that information to the FCC.
The trade groups were American Association of Healthcare Administrative Management, American Bankers Association, American Financial Services Association, ACA International, Consumer Bankers Association, Credit Union National Association, Edison Electric Institute, Mortgage Bankers Association, National Association of Federally Insured Credit Unions, and National Council of Higher Education Resources.
Read the letter.
To ensure legitimate calls are not blocked, the FCC should require telephone companies to provide notification of mislabeling and blocking and to provide a robust challenge mechanism that permits a legitimate business whose calls are being blocked to have the block removed promptly, the groups said. They also recommended that telephone companies be required to share information with each other on phone numbers that have been mislabeled or mistakenly blocked and also report that information to the FCC.
The trade groups were American Association of Healthcare Administrative Management, American Bankers Association, American Financial Services Association, ACA International, Consumer Bankers Association, Credit Union National Association, Edison Electric Institute, Mortgage Bankers Association, National Association of Federally Insured Credit Unions, and National Council of Higher Education Resources.
Read the letter.
Sunday, March 8, 2020
Settlement Agreement Ends Dispute on Bank Selling to CU
On March 6, First American Bank and the Iowa Division of Banking entered into a settlement agreement allowing the bank to sell its Iowa assets and branches to a credit union.
Both parties decided it was in the best interest of all, especially First American Bank's customers, to settle this dispute. Both parties recognized that litigation could take months, if not years, to resolve the issue to the detriment of First American Bank's customers.
As background, GreenState Credit Union (North Liberty, IA) completed its acquisition of First American Bank (Fort Dodge, IA) on February 28.
However, the Iowa Division of Banking on March 2 blocked the sale of First American Bank’s remaining Iowa-based assets and branches to GreenState Credit Union. The banking regulator also directed the bank and the credit union to maintain separate records until the matter is resolved.
But First American Bank asserted that it did not need the prior approval of the Superintendent before the transaction closed and disputed the Superintendent's decision to deny the bank's application and effectively block the sale.
As part of the settlement, a state chartered bank must obtain the approval of the Superintendent before voluntarily ceasing the business of banking.
The superintendent understands that First American Bank was confused about whether it needed the approval of the Superintendent before closing the deal with GreenState CU. Part of the confusion arose from First American Bank in 2019 selling its Florida branches and assets to MID-FLORIDA Credit Union without the prior approval of the Iowa Division of Banking. But the Division of Banking did not object to the sale, because the bank still had significant assets and deposits and was still actively engaged in the business of banking.
Due to the unique circumstances of this transaction, the Superintendent agreed to approve First American Bank's application. But the approval of this application should not be construed as setting precedent where an Iowa state-chartered bank can sell substantially all its assets and liabilities to a credit union.
First American Bank agreed to pay $110,700 to cover cost incurred by the Division of Banking associated with the application.
First American Bank does not necessarily agree with the Superintendent's position on the legal issues addressed in the settlement agreement. The settlement agreement should not be interpreted as an admission of wrongdoing by the bank. Both parties have agreed to disagree regarding their respective positions.
Both parties decided it was in the best interest of all, especially First American Bank's customers, to settle this dispute. Both parties recognized that litigation could take months, if not years, to resolve the issue to the detriment of First American Bank's customers.
As background, GreenState Credit Union (North Liberty, IA) completed its acquisition of First American Bank (Fort Dodge, IA) on February 28.
However, the Iowa Division of Banking on March 2 blocked the sale of First American Bank’s remaining Iowa-based assets and branches to GreenState Credit Union. The banking regulator also directed the bank and the credit union to maintain separate records until the matter is resolved.
But First American Bank asserted that it did not need the prior approval of the Superintendent before the transaction closed and disputed the Superintendent's decision to deny the bank's application and effectively block the sale.
As part of the settlement, a state chartered bank must obtain the approval of the Superintendent before voluntarily ceasing the business of banking.
The superintendent understands that First American Bank was confused about whether it needed the approval of the Superintendent before closing the deal with GreenState CU. Part of the confusion arose from First American Bank in 2019 selling its Florida branches and assets to MID-FLORIDA Credit Union without the prior approval of the Iowa Division of Banking. But the Division of Banking did not object to the sale, because the bank still had significant assets and deposits and was still actively engaged in the business of banking.
Due to the unique circumstances of this transaction, the Superintendent agreed to approve First American Bank's application. But the approval of this application should not be construed as setting precedent where an Iowa state-chartered bank can sell substantially all its assets and liabilities to a credit union.
First American Bank agreed to pay $110,700 to cover cost incurred by the Division of Banking associated with the application.
First American Bank does not necessarily agree with the Superintendent's position on the legal issues addressed in the settlement agreement. The settlement agreement should not be interpreted as an admission of wrongdoing by the bank. Both parties have agreed to disagree regarding their respective positions.
Saturday, March 7, 2020
Investigation Found that Former NCUA GC and Deputy GC Drank Alcohol and Went to Strip Clubs During Work Hours
The Inspector General (IG) for the National Credit Union Administration (NCUA) launched an investigation that found then-NCUA General Counsel Michael McKenna and then-NCUA Deputy General Counsel Lara Daly-Sims drank alcohol and went to strip clubs during work hours.
According to the report, Daly-Sims and McKenna first started drinking and going to strip clubs during the workday on February 16, 2017. McKenna and Daly-Sims went together to strip clubs seven times over a 22-month period, the last time in December 2018.
Twice during this time period, they drank alcohol heavily during the workday without visiting a strip club.
Daly-Sims said that going out drinking or to a strip club was always McKenna's idea. She commented that she did not like it, but she felt she had to go.
The IG reported that Daly-Sims stated that she and McKenna consumed edible marijuana during work hours while they were on work-related travel in New York City. During the New York City trip, they visited a strip club twice.
In addition, the investigation of Daly-Sims's time and attendance determined that Daly-Sims worked 374 fewer hours than what she claimed on her timesheets for the period of April 3, 2017, through November 9, 2019, which amounted to $46,951.96 in salary that she should not have received. The hours she spent drinking and going to strip clubs with McKenna during the workday was not part of, but on top of, her 374-hour shortage, except for 45 minutes on June 9, 2017.
Both McKenna and Daly-Sims are no longer with NCUA. Daly-Sims resigned on January 10, 2020, while on administrative leave. McKenna retired in November 19, 2019 after being informed by NCUA Executive Director Mark Treichel that he would be drug tested and placed on administrative leave.
On November 25, 2019, the United States Attorney's Office for the Eastern District of Virginia declined to prosecute McKenna and Daly-Sims for drinking alcohol and going to strip clubs during the workday.
On January 23, 2020, the United States Attorney's Office for the Eastern District of Virginia declined to prosecute Daly-Sims for time and attendance fraud.
Read the investigative report.
According to the report, Daly-Sims and McKenna first started drinking and going to strip clubs during the workday on February 16, 2017. McKenna and Daly-Sims went together to strip clubs seven times over a 22-month period, the last time in December 2018.
Twice during this time period, they drank alcohol heavily during the workday without visiting a strip club.
Daly-Sims said that going out drinking or to a strip club was always McKenna's idea. She commented that she did not like it, but she felt she had to go.
The IG reported that Daly-Sims stated that she and McKenna consumed edible marijuana during work hours while they were on work-related travel in New York City. During the New York City trip, they visited a strip club twice.
In addition, the investigation of Daly-Sims's time and attendance determined that Daly-Sims worked 374 fewer hours than what she claimed on her timesheets for the period of April 3, 2017, through November 9, 2019, which amounted to $46,951.96 in salary that she should not have received. The hours she spent drinking and going to strip clubs with McKenna during the workday was not part of, but on top of, her 374-hour shortage, except for 45 minutes on June 9, 2017.
Both McKenna and Daly-Sims are no longer with NCUA. Daly-Sims resigned on January 10, 2020, while on administrative leave. McKenna retired in November 19, 2019 after being informed by NCUA Executive Director Mark Treichel that he would be drug tested and placed on administrative leave.
On November 25, 2019, the United States Attorney's Office for the Eastern District of Virginia declined to prosecute McKenna and Daly-Sims for drinking alcohol and going to strip clubs during the workday.
On January 23, 2020, the United States Attorney's Office for the Eastern District of Virginia declined to prosecute Daly-Sims for time and attendance fraud.
Read the investigative report.
Friday, March 6, 2020
Consumer Credit at CUs Barely Grows in January 2020
The Federal Reserve reported on March 6 that outstanding consumer credit at credit unions barely grew in January 2020, according to its G.19 report.
Total outstanding credit at credit unions was $482.5 billion in January 2020, up slightly from $482.4 billion in December 2019.
Between December 2019 and January 2020, revolving credit unions fell by almost $1.9 billion to $65.9 billion.
Nonrevolving credit increased by almost $1.9 billion during January 2020 to approximately $416.6 billion -- reversing a three consecutive month decline.
Total outstanding credit at credit unions was $482.5 billion in January 2020, up slightly from $482.4 billion in December 2019.
Between December 2019 and January 2020, revolving credit unions fell by almost $1.9 billion to $65.9 billion.
Nonrevolving credit increased by almost $1.9 billion during January 2020 to approximately $416.6 billion -- reversing a three consecutive month decline.
Senate Bill Will Increase Maturity Cap on Certain CU Loans
U.S. Senators Tim Scott (R-SC) and Catherine Cortez Masto (D-NV) introduced the Expanding Access to Lending Options Act (S.3389) on March 4.
The bill amends the Federal Credit Union Act allowing the maturity on certain credit union loans to be adjusted from the current loan maturity cap of 15 years to 20 years at the discretion of the National Credit Union Administration Board.
Read the press release.
The bill amends the Federal Credit Union Act allowing the maturity on certain credit union loans to be adjusted from the current loan maturity cap of 15 years to 20 years at the discretion of the National Credit Union Administration Board.
Read the press release.
Thursday, March 5, 2020
FICUs Post Solid Performance for 2019
The National Credit Union Administration is reporting that federally insured credit union (FICU) assets grew by 7.8 percent in 2019 to $1.57 trillion.
Total loans were up 6.2 percent year-over-year to $1.1 trillion.
Shares and deposits at FICUs grew by 8.2 percent in 2019 to $1.32 trillion.
Due to shares (deposits) growing faster than loans, the loan-to-share ratio fell from 85.6 percent at the end of 2018 to 84 percent at the end of 2019.
Membership in FICUs increased by 4.2 million members during 2019 to 120.4 million as of the end of the fourth quarter 2019.
Net Income Rose by 8.8 Percent in 2019
FICUs reported a net income of $14.1 billion for 2019 -- up 8.8 percent from 2018.
During 2019, total interest income was up 13.4 percent, provisions for loan and lease losses or total credit loss expenses fell by less than 1 percent, interest expense jumped by 38.4 percent, non-interest income increased by 7.3 percent, and non-interest expense rose by 8.7 percent.
The industry's return on average assets was 94 basis points at the end of 2019, which was up 2 basis points from a year ago. The median return on average assets rose by 4 basis points in 2019 to 60 basis points.
Factors contributing to the year-over-year improvement in return on average assets were higher net interest margins, a decline in provisions for loan and lease losses, and higher non-operating income. Factors that negatively affected return on average assets were lower fee and other income and higher operating expenses.
FICU Net Worth Ratio Up from a Year Ago
The industry's net worth increased by 8.5 percent in 2019 to $178.3 billion on the growth in net income.
Secondary capital and subordinated debt counting as net worth increased by 14 percent in 2019 to $301 million at the end of 2019.
The industry's aggregate net worth ratio grew by 7 basis points during 2019 to 11.37 percent as of December 2019.
The vast majority (98.55 percent) of all FICUs have a net worth ratio of at least 7 percent of assets. Only 37 credit unions have a net worth ratio below 6 percent with 3 credit unions having a net worth ratio below 2 percent.
Delinquency Rate Unchanged from a Year Ago, Net Charge-Off Rate Slightly Lower
Total delinquent loans were $7.85 billion at the end of 2019 -- up from $7.3 billion at the end of the third quarter of 2019 and $7.4 billion at the end of 2018. The percent of loans 60 days or more past due were unchanged at 0.71 percent as of December 2019 from a year ago; but up from 0.67 percent at the end of the third quarter of 2019.
Net charge-offs were up 5.02 percent for 2019 to $6.05 billion. The net charge-off rate as of December 2019 was 0.56 percent -- down 2 basis points from a year ago, but up 1 basis points from the prior quarter.
Allowances for loan and lease losses increased by 3.2 percent during 2019 to almost $9.57 billion. The industry's coverage ratio (allowance for loan and lease losses divided by delinquent loans) was 121.83 percent at the end of 2019, down from 124.78 percent at the end of 2018.
Large CUs Outperform Smaller CUs
FICUs with at least $1 billion in assets reported the strongest growth in loans, net worth, and membership in 2019, while FICUs with less than $500 million in assets recorded declines in those categories over the year.
Read Data Summary.
View Financial Trends Chart Book.
Total loans were up 6.2 percent year-over-year to $1.1 trillion.
Shares and deposits at FICUs grew by 8.2 percent in 2019 to $1.32 trillion.
Due to shares (deposits) growing faster than loans, the loan-to-share ratio fell from 85.6 percent at the end of 2018 to 84 percent at the end of 2019.
Membership in FICUs increased by 4.2 million members during 2019 to 120.4 million as of the end of the fourth quarter 2019.
Net Income Rose by 8.8 Percent in 2019
FICUs reported a net income of $14.1 billion for 2019 -- up 8.8 percent from 2018.
During 2019, total interest income was up 13.4 percent, provisions for loan and lease losses or total credit loss expenses fell by less than 1 percent, interest expense jumped by 38.4 percent, non-interest income increased by 7.3 percent, and non-interest expense rose by 8.7 percent.
The industry's return on average assets was 94 basis points at the end of 2019, which was up 2 basis points from a year ago. The median return on average assets rose by 4 basis points in 2019 to 60 basis points.
Factors contributing to the year-over-year improvement in return on average assets were higher net interest margins, a decline in provisions for loan and lease losses, and higher non-operating income. Factors that negatively affected return on average assets were lower fee and other income and higher operating expenses.
FICU Net Worth Ratio Up from a Year Ago
The industry's net worth increased by 8.5 percent in 2019 to $178.3 billion on the growth in net income.
Secondary capital and subordinated debt counting as net worth increased by 14 percent in 2019 to $301 million at the end of 2019.
The industry's aggregate net worth ratio grew by 7 basis points during 2019 to 11.37 percent as of December 2019.
The vast majority (98.55 percent) of all FICUs have a net worth ratio of at least 7 percent of assets. Only 37 credit unions have a net worth ratio below 6 percent with 3 credit unions having a net worth ratio below 2 percent.
Delinquency Rate Unchanged from a Year Ago, Net Charge-Off Rate Slightly Lower
Total delinquent loans were $7.85 billion at the end of 2019 -- up from $7.3 billion at the end of the third quarter of 2019 and $7.4 billion at the end of 2018. The percent of loans 60 days or more past due were unchanged at 0.71 percent as of December 2019 from a year ago; but up from 0.67 percent at the end of the third quarter of 2019.
Net charge-offs were up 5.02 percent for 2019 to $6.05 billion. The net charge-off rate as of December 2019 was 0.56 percent -- down 2 basis points from a year ago, but up 1 basis points from the prior quarter.
Allowances for loan and lease losses increased by 3.2 percent during 2019 to almost $9.57 billion. The industry's coverage ratio (allowance for loan and lease losses divided by delinquent loans) was 121.83 percent at the end of 2019, down from 124.78 percent at the end of 2018.
Large CUs Outperform Smaller CUs
FICUs with at least $1 billion in assets reported the strongest growth in loans, net worth, and membership in 2019, while FICUs with less than $500 million in assets recorded declines in those categories over the year.
Read Data Summary.
View Financial Trends Chart Book.
Atlantic FCU Pays $18.1 Million for New HQ
Atlantic Regional Federal Credit Union (Brunswick, ME) paid $18.1 million for an office building in South Portland that will become its new headquarters, according to MaineBiz.
The three-story 97,376-square-foot building was built in 1992.
About 81,000 square feet of the building is currently leased to four insurance companies. The credit union will initially occupy 16,000 square feet; but as tenants' leases expire, the credit union will occupy that space.
The rental income from tenants will not be subject to federal income tax, as federal credit unions are exempt from unrelated business income taxes.
Read more.
The three-story 97,376-square-foot building was built in 1992.
About 81,000 square feet of the building is currently leased to four insurance companies. The credit union will initially occupy 16,000 square feet; but as tenants' leases expire, the credit union will occupy that space.
The rental income from tenants will not be subject to federal income tax, as federal credit unions are exempt from unrelated business income taxes.
Read more.
Wednesday, March 4, 2020
CUSO Allegedly Hacked
CU Today is reporting that a credit union service organization (CUSO), CU Collections based in Manassas, Virginia, was allegedly hacked by by a criminal organization called Maze.
The alleged data breach was reported by security firm Emsisoft to CU Today.
The stolen sensitive member information included home addresses, Social Security numbers, work and cell phone numbers, and member numbers, as well as other information in the collection files.
CU Today wrote that the company did not comment on the alleged data breach.
Currently, the National Credit Union Administration (NCUA) does not have the authority to examine third party vendors.
This alleged hack of sensitive member data at a third party vendor shows why the NCUA needs to be added to the Bank Service Company Act.
Read more.
The alleged data breach was reported by security firm Emsisoft to CU Today.
The stolen sensitive member information included home addresses, Social Security numbers, work and cell phone numbers, and member numbers, as well as other information in the collection files.
CU Today wrote that the company did not comment on the alleged data breach.
Currently, the National Credit Union Administration (NCUA) does not have the authority to examine third party vendors.
This alleged hack of sensitive member data at a third party vendor shows why the NCUA needs to be added to the Bank Service Company Act.
Read more.
Tuesday, March 3, 2020
St. Anne's CU Provides $3 Million Commercial Loan to Restaurant Project
St. Anne's Credit Union (Fall River, MA) provided over $3 million in financing for restaurant project in New Bedford, Massachusetts.
The restaurant, Cisco New Bedford, will be the largest investment in a restaurant project in New Bedford's history.
The owner of the Cisco New Bedford is Stephen Silverstein, who owns to two other restaurants.
The $1 billion credit union will provide nearly $5 million in funding to the three restaurants owned by Silverstein in the New Bedford area.
Read more.
The restaurant, Cisco New Bedford, will be the largest investment in a restaurant project in New Bedford's history.
The owner of the Cisco New Bedford is Stephen Silverstein, who owns to two other restaurants.
The $1 billion credit union will provide nearly $5 million in funding to the three restaurants owned by Silverstein in the New Bedford area.
Read more.
Monday, March 2, 2020
GreenState CU Completes Acquisition of Iowa Bank
GreenState Credit Union (North Liberty, IA) completed its acquisition of First American Bank (Fort Dodge, IA) on February 28.
GreenState CU has almost $5.8 billion in assets. First American Bank had $675 million in assets, as of its last Call Report.
Michael Bell, a lawyer at Howard & Howard, advised on this deal.
GreenState CU has almost $5.8 billion in assets. First American Bank had $675 million in assets, as of its last Call Report.
Michael Bell, a lawyer at Howard & Howard, advised on this deal.
3 CU Bills Introduced to Modernize CU Governance
Three credit union bills were introduced during the last week of February in Congress addressing credit union governance issues.
Senators Tina Smith (D-MN) and Ben Sasse (R-NE) introduced bipartisan legislation -- the Credit Union Governance Modernization Act (S. 3323) -- that would make credit unions safer for employees and members, and simplify rules for credit union operations.
The measure would allow federal credit unions to expel members for violations of credit union policies, without requiring a vote of membership. Under current law, a federal credit union must hold of a vote of its entire membership before it can expel a member who engages in unacceptable, sometimes dangerous behavior. (Read the press release).
In addition, Senators Thom Tillis (R-NC) and Richard Burr (R-NC)introduced a bill -- the Credit Union Modernization Act (S. 3326) -- that would remove outdated responsibilities of boards of directors of Federal credit unions.
Representatives Katie Porter (D-CA) and Mark Amodei (R-NV) introduced the Credit Union Board Modernization Act (H.R. 5981) on February 26. The bill would modify the Federal Credit Union Act requirement that credit union boards meet once a month to not more than six times per year. The bill also requires that credit union boards meet at least once each fiscal quarter.
Senators Tina Smith (D-MN) and Ben Sasse (R-NE) introduced bipartisan legislation -- the Credit Union Governance Modernization Act (S. 3323) -- that would make credit unions safer for employees and members, and simplify rules for credit union operations.
The measure would allow federal credit unions to expel members for violations of credit union policies, without requiring a vote of membership. Under current law, a federal credit union must hold of a vote of its entire membership before it can expel a member who engages in unacceptable, sometimes dangerous behavior. (Read the press release).
In addition, Senators Thom Tillis (R-NC) and Richard Burr (R-NC)introduced a bill -- the Credit Union Modernization Act (S. 3326) -- that would remove outdated responsibilities of boards of directors of Federal credit unions.
Representatives Katie Porter (D-CA) and Mark Amodei (R-NV) introduced the Credit Union Board Modernization Act (H.R. 5981) on February 26. The bill would modify the Federal Credit Union Act requirement that credit union boards meet once a month to not more than six times per year. The bill also requires that credit union boards meet at least once each fiscal quarter.
Sunday, March 1, 2020
Collins Community New HQ Building to Open in June
Collins Community Credit Union (Cedar Rapids, IA) will open its new 101,000 square-foot headquarters building this June, according to The Gazette.
The estimated cost for the headquarters project is $25 million.
The new headquarters building will include a first floor branch with second and third floor office spaces. Other features include a gym and rooftop studio.
The credit union also plans to lease 9,500 square feet of space.
Read more.
The estimated cost for the headquarters project is $25 million.
The new headquarters building will include a first floor branch with second and third floor office spaces. Other features include a gym and rooftop studio.
The credit union also plans to lease 9,500 square feet of space.
Read more.