Netflix on June 30 announced a $10 million deposit in Hope Credit Union (Jackson, MS).
This deposit is part of a $100 million initiative launched by Netflix to invest in Black communities.
According to Hope CU, this deposit from Netflix will support more than 2,500 entrepreneurs, homebuyers and consumers of color.
Read the press release.
Showing posts with label Low-Income Credit Unions. Show all posts
Showing posts with label Low-Income Credit Unions. Show all posts
Wednesday, July 1, 2020
Friday, June 19, 2020
Op-Ed Calls for Equal Treatment of Banks and CUs on Military Bases
In a BankThink op-ed in the American Banker, the CEOs of the American Bankers Association and the Association of Military Banks of America wrote that if Congress truly wanted to help military personnel and their families, it should expand the financial service choices for service members by incentivizing more banks to operate on military bases.
Currently, tax-exempt credit unions are permitted to operate rent-free on military bases, while taxpaying banks do not. The authors argued that banks and credit unions should be granted equal treatment with regard to serving service members.
“As the Senate and House begin their work reauthorizing the National Defense Authorization Act, lawmakers must make this sensible change and push back against credit union lobbying that only limits the financial choices for service members and their families.”
The op-ed also noted that the recent decision by the National Credit Union Administration to presume all active duty military personnel as low-income does not provide any tangible benefits to struggling service members.
Read the op-ed.
Currently, tax-exempt credit unions are permitted to operate rent-free on military bases, while taxpaying banks do not. The authors argued that banks and credit unions should be granted equal treatment with regard to serving service members.
“As the Senate and House begin their work reauthorizing the National Defense Authorization Act, lawmakers must make this sensible change and push back against credit union lobbying that only limits the financial choices for service members and their families.”
The op-ed also noted that the recent decision by the National Credit Union Administration to presume all active duty military personnel as low-income does not provide any tangible benefits to struggling service members.
Read the op-ed.
Tuesday, June 2, 2020
NCUA Should Publish Its Analysis
In a May letter to credit unions, the National Credit Union Administration (NCUA) stated that it will no longer exclude military personnel with APO and FPO mailing addresses from calculating whether a credit union qualifies for low-income designation.
This decision was based upon analysis by the agency's Office of Chief Economist, which determined that the majority of military personnel would qualify as low-income members.
However, NCUA has not published the analysis of the Office of Chief Economist.
If NCUA had subjected this action to the rulemaking process, it would have had to disclose details of this analysis.
The agency needs to make public its analysis. It should also make public the data behind the analysis.
This decision was based upon analysis by the agency's Office of Chief Economist, which determined that the majority of military personnel would qualify as low-income members.
However, NCUA has not published the analysis of the Office of Chief Economist.
If NCUA had subjected this action to the rulemaking process, it would have had to disclose details of this analysis.
The agency needs to make public its analysis. It should also make public the data behind the analysis.
Friday, May 8, 2020
NCUA Includes Military Personnel in Calculation of Low-Income Designation
The National Credit Union Administration (NCUA) announced on May 7 that it will include military personnel in its determination of whether a credit union qualifies for a low-income designation.
Under the new approach, military personnel will now be considered in a similar manner as students attending colleges, universities, vocational or technical schools when the NCUA evaluates a federally insured credit union’s low-income designation.
In other words, all military personnel will be treated as presumptive low-income individuals.
However, not all military personnel are low-income. Are admirals and generals low-income?
Credit unions receiving a low-income designation are exempt from the statutory member business loan cap of 12.25 percent of assets, are authorized to obtain secondary capital, are able to accept deposits from non-members, and are eligible for grants and loans from the Community Development Revolving Loan Fund.
But this pronouncement from this rogue regulator appears to violate the Administrative Procedures Act, as this represents a major change in its rules and regulations.
Read the press release.
Under the new approach, military personnel will now be considered in a similar manner as students attending colleges, universities, vocational or technical schools when the NCUA evaluates a federally insured credit union’s low-income designation.
In other words, all military personnel will be treated as presumptive low-income individuals.
However, not all military personnel are low-income. Are admirals and generals low-income?
Credit unions receiving a low-income designation are exempt from the statutory member business loan cap of 12.25 percent of assets, are authorized to obtain secondary capital, are able to accept deposits from non-members, and are eligible for grants and loans from the Community Development Revolving Loan Fund.
But this pronouncement from this rogue regulator appears to violate the Administrative Procedures Act, as this represents a major change in its rules and regulations.
Read the press release.
Tuesday, January 21, 2020
Credit Union Odds and Ends
You might have missed the following news from around the country about credit unions.
The City of Sarasota announced a partnership with Manatee Community Federal Credit Union, a Bradenton, Florida-based Community Development Financial Institution, on December 30 to provide financial services and programs to unbanked, underbanked and underserved residents. Through the “Reliable Ride” program, residents will have an opportunity to open an account with the credit union and take advantage of low-interest vehicle loans in order to secure reliable transportation. Credit union members will also be able to apply for business startup loans through participation in Community Entrepreneur Opportunity courses.
Union Township Board of Trustees at its December 19 meeting approved a new tax increment financing district for Cincinnati, Ohio-based General Electric CU property. The amount of the tax increment financing was not disclosed.
On December 31, the Chillicothe City School District (OH) and Homeland Credit Union (Chillicothe, OH) entered into a naming rights agreement for a fitness center, according to the Highland County Press. In early 2019, the Chillicothe City School District obtained ownership of the Chillicothe Fitness and Racquet Club, which was in dire need of repairs and modernization. The credit union paid $250,000 for the naming rights to help cover the cost of repairs at the fitness center.
In other news, two credit unions spent millions of dollars on new office buildings. Financial Partners Credit Union (Downey, CA) paid $13 million for a 51,176-square-foot, two-story building in a Costa Mesa, California office park. Arkansas Federal Credit Union (Jacksonville, AR) purchased a 97,000-square-foot headquarters building in Little Rock (AR) for slightly more than $12 million.
Old Hickory Credit Union (Nashville, TN) last year agreed to pay $500,000 to settle a class action overdraft fees lawsuit. The credit union was alleged to improperly charge overdraft fees on available balances between January 1, 2013 and December 31, 2018, when the account's ledger balances were positive. Despite settling the lawsuit, the credit union claims it did nothing wrong.
The City of Sarasota announced a partnership with Manatee Community Federal Credit Union, a Bradenton, Florida-based Community Development Financial Institution, on December 30 to provide financial services and programs to unbanked, underbanked and underserved residents. Through the “Reliable Ride” program, residents will have an opportunity to open an account with the credit union and take advantage of low-interest vehicle loans in order to secure reliable transportation. Credit union members will also be able to apply for business startup loans through participation in Community Entrepreneur Opportunity courses.
Union Township Board of Trustees at its December 19 meeting approved a new tax increment financing district for Cincinnati, Ohio-based General Electric CU property. The amount of the tax increment financing was not disclosed.
On December 31, the Chillicothe City School District (OH) and Homeland Credit Union (Chillicothe, OH) entered into a naming rights agreement for a fitness center, according to the Highland County Press. In early 2019, the Chillicothe City School District obtained ownership of the Chillicothe Fitness and Racquet Club, which was in dire need of repairs and modernization. The credit union paid $250,000 for the naming rights to help cover the cost of repairs at the fitness center.
In other news, two credit unions spent millions of dollars on new office buildings. Financial Partners Credit Union (Downey, CA) paid $13 million for a 51,176-square-foot, two-story building in a Costa Mesa, California office park. Arkansas Federal Credit Union (Jacksonville, AR) purchased a 97,000-square-foot headquarters building in Little Rock (AR) for slightly more than $12 million.
Old Hickory Credit Union (Nashville, TN) last year agreed to pay $500,000 to settle a class action overdraft fees lawsuit. The credit union was alleged to improperly charge overdraft fees on available balances between January 1, 2013 and December 31, 2018, when the account's ledger balances were positive. Despite settling the lawsuit, the credit union claims it did nothing wrong.
Tuesday, November 5, 2019
NCUA Board Upholds Denials of Secondary Capital Plans
The National credit Union Administration Board in October upheld the Supervisory Review Committees (SRC) affirmation of the denials of two unnamed low-income credit unions' applications to accept secondary capital by Regional Directors.
In one appeal, the Board on September 9, 2019 denied a request for an oral hearing from a low-income credit union (LICU); but agreed to consider the merits of the appeal on the basis of the written record.
Chairman Hood and Board Member Harper considered this appeal. Board Member McWatters was recused from this matter.
In its October 24 decision, the Board found that there was ample evidence that the LICU's secondary capital plan was unsound.
The Board viewed that the LICU's secondary plan reflected inadequate due diligence.
The pro forma financial statements lacked detail and had material omissions, which did not allow the agency to properly evaluate the safety and soundness of the plan.
Moreover, the secondary capital plan failed to adequately align with the LICU’s forecasts and strategic plan. Specifically, both the Region and the SRC have determined, and the Board agrees, that because there is a negative spread between the projected interest rate for the secondary capital loan and the average rate of return for the assets in the safety net plan, this negative spread will become a stress on earnings and a duration mismatch between funding sources.
The Board concluded the SRC was correct in affirming the Regional Director's denial.
In the other appeal, the Board on August 8, 2019 granted the LICU's request to present its case orally before the Board. The hearing was held on September 24.
Chairman Hood and Board Member Harper considered this appeal. Board Member McWatters was recused from this matter.
The credit union contended that its secondary capital plan that met the criteria in §701.34(b)(1). Therefore it should receive the requested capital. The LICU stated that the three deficiencies identified by the Region were subjective and should not be a valid basis for denying the secondary capital plan.
The Region, on the other hand, argued that the five enumerated criteria provide for the minimum components that are required to be included in a secondary capital application.
The SRC found ample support for the Region’s assessments that the LICU's secondary capital plan was not sound, and concluded the denial of the plan was reasonable.
In its October 11 decision, the Board did not find the LICU's arguments to be persuasive. The Board stated it should not substitute its judgment for the SRC. Therefore, the Board affirmed the SRC decision.
The Board stated that in both cases the credit unions choose to reapply for secondary capital. But if they decide to re-apply, the agency encourages ongoing dialogue to address deficiencies discussed in previous denials.
In one appeal, the Board on September 9, 2019 denied a request for an oral hearing from a low-income credit union (LICU); but agreed to consider the merits of the appeal on the basis of the written record.
Chairman Hood and Board Member Harper considered this appeal. Board Member McWatters was recused from this matter.
In its October 24 decision, the Board found that there was ample evidence that the LICU's secondary capital plan was unsound.
The Board viewed that the LICU's secondary plan reflected inadequate due diligence.
The pro forma financial statements lacked detail and had material omissions, which did not allow the agency to properly evaluate the safety and soundness of the plan.
Moreover, the secondary capital plan failed to adequately align with the LICU’s forecasts and strategic plan. Specifically, both the Region and the SRC have determined, and the Board agrees, that because there is a negative spread between the projected interest rate for the secondary capital loan and the average rate of return for the assets in the safety net plan, this negative spread will become a stress on earnings and a duration mismatch between funding sources.
The Board concluded the SRC was correct in affirming the Regional Director's denial.
In the other appeal, the Board on August 8, 2019 granted the LICU's request to present its case orally before the Board. The hearing was held on September 24.
Chairman Hood and Board Member Harper considered this appeal. Board Member McWatters was recused from this matter.
The credit union contended that its secondary capital plan that met the criteria in §701.34(b)(1). Therefore it should receive the requested capital. The LICU stated that the three deficiencies identified by the Region were subjective and should not be a valid basis for denying the secondary capital plan.
The Region, on the other hand, argued that the five enumerated criteria provide for the minimum components that are required to be included in a secondary capital application.
The SRC found ample support for the Region’s assessments that the LICU's secondary capital plan was not sound, and concluded the denial of the plan was reasonable.
In its October 11 decision, the Board did not find the LICU's arguments to be persuasive. The Board stated it should not substitute its judgment for the SRC. Therefore, the Board affirmed the SRC decision.
The Board stated that in both cases the credit unions choose to reapply for secondary capital. But if they decide to re-apply, the agency encourages ongoing dialogue to address deficiencies discussed in previous denials.
Tuesday, September 17, 2019
NCUA Issues Guidance on Secondary Capital Plans
The National Credit Union Administration (NCUA) issued guidance to staff on credit unions offering secondary capital.
NCUA wrote that many low-income credit unions (LICUs) have a record of prudently using secondary capital; however, some planned uses of secondary capital can be complex and involve higher risk.
NCUA re-iterated in its letter to staff that there is no "one size fits all" secondary capital plan for LICUs.
The supervisory letter should help LICUs to better understand the secondary capital plan submission process.
The letter also explains the safety and soundness expectations of the agency regarding secondary capital plans.
Appendix A includes examiner review questions. A LICU should be prepared to discuss these questions with their examiner and address these questions in its written plan.
This letter makes it clear that if a LICU plans to offer secondary capital, the LICU will need to follow NCUA's lead.
Read the letter.
NCUA wrote that many low-income credit unions (LICUs) have a record of prudently using secondary capital; however, some planned uses of secondary capital can be complex and involve higher risk.
NCUA re-iterated in its letter to staff that there is no "one size fits all" secondary capital plan for LICUs.
The supervisory letter should help LICUs to better understand the secondary capital plan submission process.
The letter also explains the safety and soundness expectations of the agency regarding secondary capital plans.
Appendix A includes examiner review questions. A LICU should be prepared to discuss these questions with their examiner and address these questions in its written plan.
This letter makes it clear that if a LICU plans to offer secondary capital, the LICU will need to follow NCUA's lead.
Read the letter.
Sunday, September 15, 2019
155 LICUs Receive $1.9 Million in Grants from NCUA
The National Credit Union Administration (NCUA) reported that it awarded $1.9 million in grants to 155 low-income credit unions.
Grants ranged from $1,900 to $100,000.
The NCUA made awards in four categories:
Funding for the grants is provided by the Community Development Revolving Loan Fund, which receives appropriations from Congress.
Here is the list of grant recipients and the amount awarded.
Read the press release.
Grants ranged from $1,900 to $100,000.
The NCUA made awards in four categories:
- Underserved outreach: 11 grants totaling $972,742;
- Digital services and security: 73 grants totaling $550,612;
- Training: 46 grants totaling $217,369; and
- Counselor certification: 35 grants totaling $161,925.
Funding for the grants is provided by the Community Development Revolving Loan Fund, which receives appropriations from Congress.
Here is the list of grant recipients and the amount awarded.
Read the press release.
Tuesday, August 27, 2019
NCUA Board Dismisses Secondary Capital Plan Appeal by LICU
The National Credit Union Administration (NCUA) Board dismissed an appeal of a low-income state chartered credit union's secondary capital plan on procedural grounds.
The unnamed low-income credit union on January 11, 2019 applied to a unspecified NCUA Region for the authority to accept secondary capital. This unnamed credit union may be Freedom Northwest Credit Union (Kamiah, ID), which had its secondary capital plan denied earlier this year.
The NCUA Region on February 25 denied the credit union'e request. On March 18, 2019, the low-income credit union made a written request for reconsideration. Upon reconsideration, the Region upheld its initial decision and denied the credit union's request to accept secondary capital in a letter dated April 24, 2019.
The credit union on May 17, 2019 appealed the decision to NCUA's Supervisory Review Committee. The credit union stated that the approval or disapproval of a secondary capital plan resided with the state regulator and only required the concurrence of NCUA.
On June 4, 2019, the Region issued a letter to the credit union stating that it had erred in its determination of the credit union's secondary capital plan without a prior approval or disapproval of the state regulator and rescinded its findings.
Because the Region had rescinded its determination, the Supervisory Review Committee on June 5, 2019 concluded it did not have jurisdiction to review the matter.
On July 1, 2019, the credit union appealed to the NCUA Board the decision by the Supervisory Review Committee stating that its findings were inconsistent with applicable law and should be reversed. The credit union also requested an oral hearing.
The NCUA Board on July 18, 2019 denied the request for an oral hearing and affirmed the decision of the Supervisory Review Committee.
Read more.
The unnamed low-income credit union on January 11, 2019 applied to a unspecified NCUA Region for the authority to accept secondary capital. This unnamed credit union may be Freedom Northwest Credit Union (Kamiah, ID), which had its secondary capital plan denied earlier this year.
The NCUA Region on February 25 denied the credit union'e request. On March 18, 2019, the low-income credit union made a written request for reconsideration. Upon reconsideration, the Region upheld its initial decision and denied the credit union's request to accept secondary capital in a letter dated April 24, 2019.
The credit union on May 17, 2019 appealed the decision to NCUA's Supervisory Review Committee. The credit union stated that the approval or disapproval of a secondary capital plan resided with the state regulator and only required the concurrence of NCUA.
On June 4, 2019, the Region issued a letter to the credit union stating that it had erred in its determination of the credit union's secondary capital plan without a prior approval or disapproval of the state regulator and rescinded its findings.
Because the Region had rescinded its determination, the Supervisory Review Committee on June 5, 2019 concluded it did not have jurisdiction to review the matter.
On July 1, 2019, the credit union appealed to the NCUA Board the decision by the Supervisory Review Committee stating that its findings were inconsistent with applicable law and should be reversed. The credit union also requested an oral hearing.
The NCUA Board on July 18, 2019 denied the request for an oral hearing and affirmed the decision of the Supervisory Review Committee.
Read more.
Monday, May 20, 2019
NCUA Charters Otoe-Missouria FCU
The National Credit Union Administration (NCUA) chartered on May 20th the Otoe-Missouria Federal Credit Union in Red Rock, Oklahoma.
The federal credit union will serve approximately 4,200 members and employees of the Otoe-Missouria Tribe as well as 17 tribal-owned businesses.
The Otoe-Missouria Federal Credit Union was designated by NCUA as a low-income credit union, based on its potential membership. This designation gives the credit union the ability to accept non-member deposits, obtain grants and loans from the Community Development Revolving Loan Fund, offer secondary capital accounts, and qualify for exemptions from statutory limits on member business lending.
This is the first federal credit union to be chartered in 2019.
Read the press release.
The federal credit union will serve approximately 4,200 members and employees of the Otoe-Missouria Tribe as well as 17 tribal-owned businesses.
The Otoe-Missouria Federal Credit Union was designated by NCUA as a low-income credit union, based on its potential membership. This designation gives the credit union the ability to accept non-member deposits, obtain grants and loans from the Community Development Revolving Loan Fund, offer secondary capital accounts, and qualify for exemptions from statutory limits on member business lending.
This is the first federal credit union to be chartered in 2019.
Read the press release.
Wednesday, May 1, 2019
Union Yes FCU Seeks to Raise $4 Million in Secondary Capital
The American Banker is reporting that a undercapitalized credit union in Orange, California, is looking to raise $4 million in secondary capital.
The $63.4 million-asset Union Yes Federal Credit Union recently launched a capital campaign, offering subordinated debt with fixed and variable interest rates of 4 percent to 4.5 percent with maturities of five to seven years.
The minimum size of the investment is $250,000.
While many credit unions can only build capital through retained earnings, low-income credit unions, such as Union Yes FCU, are permitted to raise secondary capital from investors.
According to the prospectus, the credit union has been experiencing very strong growth and needs the capital to fund new membership growth.
However, investors are going to receive a higher rate of return on their investment than credit union members. For example, the highest current rate for the 60-month CD is 0.35 percent.
This higher rate of return is compensation to investors for potential credit risk, if the credit union fails.
But it also means that the credit union tax subsidy is going to investors instead of the members.
Read the article (subscription required).
The $63.4 million-asset Union Yes Federal Credit Union recently launched a capital campaign, offering subordinated debt with fixed and variable interest rates of 4 percent to 4.5 percent with maturities of five to seven years.
The minimum size of the investment is $250,000.
While many credit unions can only build capital through retained earnings, low-income credit unions, such as Union Yes FCU, are permitted to raise secondary capital from investors.
According to the prospectus, the credit union has been experiencing very strong growth and needs the capital to fund new membership growth.
However, investors are going to receive a higher rate of return on their investment than credit union members. For example, the highest current rate for the 60-month CD is 0.35 percent.
This higher rate of return is compensation to investors for potential credit risk, if the credit union fails.
But it also means that the credit union tax subsidy is going to investors instead of the members.
Read the article (subscription required).
Saturday, November 3, 2018
203 Low-Income CUs Awarded $2 Million in Grants
The National Credit Union Administration announced that it has awarded $2 million in grants to help 203 low-income credit unions improve digital services and security, increase outreach to underserved communities, and train employees.
Grant awards ranged from $1,300 to $20,000.
The NCUA made awards in three categories:
However, is the awarding of grants to large credit unions, which probably have the resources to fund these initiatives on their own, the best use of these grants?
Read the press release.
Grant awards ranged from $1,300 to $20,000.
The NCUA made awards in three categories:
- Digital services and security: 141 grants totaling $1,251,670;
- Leadership development: 40 grants totaling $350,760; and
- Underserved outreach: 22 grants totaling $397,570.
However, is the awarding of grants to large credit unions, which probably have the resources to fund these initiatives on their own, the best use of these grants?
Read the press release.
Friday, July 13, 2018
Subordinated Debt at LICUs Up 57 Percent, Since the End of 2016
Since the end of 2016, subordinated debt counting as net worth has increased by almost 57 percent or $84.4 million.
As of March 2018, total subordinated debt placed with low-income credit unions (LICUs) was $232.8 million. This is up from $148.4 million at the end of 2016.
A number of large LICUs have issued subordinated debt (the dollar amount in parentheses) since the end of 2016, including Advia Credit Union ($5 million), Self-Help Credit Union ($13 million), Self-Help FCU ($5 million), Carter FCU ($6 million), Jefferson Financial FCU ($11,597), and Notre Dame FCU ($12 million).
Carter FCU's issuance of subordinated debt was partially used to repurchase subordinated debt issued from the U.S. Treasury Department as part of the Community Development Capital Initiative.
The following table lists the 10 LICUs holding the most subordinated debt as of March 31, 2018.
It is my belief that this trend of large LICUs issuing subordinated debt will continue.
As of March 2018, total subordinated debt placed with low-income credit unions (LICUs) was $232.8 million. This is up from $148.4 million at the end of 2016.
A number of large LICUs have issued subordinated debt (the dollar amount in parentheses) since the end of 2016, including Advia Credit Union ($5 million), Self-Help Credit Union ($13 million), Self-Help FCU ($5 million), Carter FCU ($6 million), Jefferson Financial FCU ($11,597), and Notre Dame FCU ($12 million).
Carter FCU's issuance of subordinated debt was partially used to repurchase subordinated debt issued from the U.S. Treasury Department as part of the Community Development Capital Initiative.
The following table lists the 10 LICUs holding the most subordinated debt as of March 31, 2018.
It is my belief that this trend of large LICUs issuing subordinated debt will continue.
Monday, July 9, 2018
Advia Issued $5 Million in Subordinated Debt in Q2 2017
During the second quarter of 2017, Advia Credit Union (Parchment, MI) issued $5 million in subordinated debt with a 10 year term.
Advia Credit Union has a low-income designation, which allowed the credit union to raise secondary capital.
On September 1, 2017, Advia Credit Union acquired Peoples Bank (Elkhorn, WI).
While the issuance of subordinated debt and the merger are closely timed, this appears to be a coincidence.
According to Jeff Fielder, EVP of Finance at Advia Credit Union, "[t]he issuance of this debt was not a condition of the acquisition of Peoples Bank. However, our management team and board saw value in raising capital to reduce the minor dilution that would occur with the acquisition."
As of March 2018, the issuance of subordinated debt boosted the $1.7 billion credit union's net worth by almost 30 basis points.
In addition, Fielder noted that Advia saw value in diversifying its capital base, which would position the credit union for future growth.
Fielder further commented that the credit union, at this time, does not plan to issue any additional subordinated debt.
Going forward, more large, low-income designated credit unions will issue subordinated debt.
Advia Credit Union has a low-income designation, which allowed the credit union to raise secondary capital.
On September 1, 2017, Advia Credit Union acquired Peoples Bank (Elkhorn, WI).
While the issuance of subordinated debt and the merger are closely timed, this appears to be a coincidence.
According to Jeff Fielder, EVP of Finance at Advia Credit Union, "[t]he issuance of this debt was not a condition of the acquisition of Peoples Bank. However, our management team and board saw value in raising capital to reduce the minor dilution that would occur with the acquisition."
As of March 2018, the issuance of subordinated debt boosted the $1.7 billion credit union's net worth by almost 30 basis points.
In addition, Fielder noted that Advia saw value in diversifying its capital base, which would position the credit union for future growth.
Fielder further commented that the credit union, at this time, does not plan to issue any additional subordinated debt.
Going forward, more large, low-income designated credit unions will issue subordinated debt.
Friday, December 22, 2017
Notre Dame FCU Raises $12 Million in Secondary Capital
Notre Dame FCU (Notre Dame, IN) received $12 million in secondary capital from the newly formed CU Secondary Capital Fund (CUSCF).
CUSCF is a private vehicle created in a joint effort by CU Capital Market Solutions, LLC and Olden Lane Advisors LLC.
Notre Dame FCU is a low-income designated credit union. Low-income credit unions are authorized to issue secondary capital.
The $530 million credit union plans to use the proceeds to enhance its capital base, increase earnings through loan and deposit growth, and to fund its national expansion efforts.
This is the second credit union in recent months to raise secondary capital.
Read the press release.
CUSCF is a private vehicle created in a joint effort by CU Capital Market Solutions, LLC and Olden Lane Advisors LLC.
Notre Dame FCU is a low-income designated credit union. Low-income credit unions are authorized to issue secondary capital.
The $530 million credit union plans to use the proceeds to enhance its capital base, increase earnings through loan and deposit growth, and to fund its national expansion efforts.
This is the second credit union in recent months to raise secondary capital.
Read the press release.
Tuesday, November 14, 2017
Low-Income CU Secures $12 Million in Secondary Capital
Jefferson Financial Federal Credit Union (Metairie, LA) recently completed the first funding installment of its National Credit Union Administration-approved $12 million secondary capital plan.
The $563 million low-income credit union worked with CU Capital Market Solutions (CMS) of Overland Park, Kansas to develop a secondary capital plan, prepare its NCUA application and fund the capital.
The second installment of Jefferson’s secondary capital will be provided by CMS through an exclusive arrangement with CU Secondary Capital Fund.
Read the press release.
The $563 million low-income credit union worked with CU Capital Market Solutions (CMS) of Overland Park, Kansas to develop a secondary capital plan, prepare its NCUA application and fund the capital.
The second installment of Jefferson’s secondary capital will be provided by CMS through an exclusive arrangement with CU Secondary Capital Fund.
Read the press release.
Thursday, July 28, 2016
Several Large CUs Receive Grants from NCUA
The National Credit Union Administration (NCUA) this week reported that 309 low-income credit unions received almost $2.5 million in grants.
The grants were awarded in four initiative areas -- capacity and growth, cybersecurity, student internships, and staff training.
Among the grant recipients were some very large credit unions with low-income designations.
For example, $1.2 billion Goldenwest FCU (Ogden, UT) received a grant of $15,000.
Other large credit union grant recipients are the $2.4 billion Safe CU (Folsom, CA), the $1.3 billion Selco Community Credit Union (Eugene, OR), the $2.3 billion Grow Financial Credit Union (Tampa, FL), and the $2.3 billion Spokane Teachers Credit Union (Liberty Lake, WA). This list is not meant to be exhaustive.
While the amounts awarded to these large credit unions were relatively small, I believe that these grants would have made a bigger impact to small credit unions serving low-income and underserved markets.
NCUA’s Office of Small Credit Union Initiatives administers the grant funding provided by the Community Development Revolving Loan Fund, which is appropriated by Congress.
Read the press release.
Review the list of grant recipients.
The grants were awarded in four initiative areas -- capacity and growth, cybersecurity, student internships, and staff training.
Among the grant recipients were some very large credit unions with low-income designations.
For example, $1.2 billion Goldenwest FCU (Ogden, UT) received a grant of $15,000.
Other large credit union grant recipients are the $2.4 billion Safe CU (Folsom, CA), the $1.3 billion Selco Community Credit Union (Eugene, OR), the $2.3 billion Grow Financial Credit Union (Tampa, FL), and the $2.3 billion Spokane Teachers Credit Union (Liberty Lake, WA). This list is not meant to be exhaustive.
While the amounts awarded to these large credit unions were relatively small, I believe that these grants would have made a bigger impact to small credit unions serving low-income and underserved markets.
NCUA’s Office of Small Credit Union Initiatives administers the grant funding provided by the Community Development Revolving Loan Fund, which is appropriated by Congress.
Read the press release.
Review the list of grant recipients.
Friday, June 24, 2016
CEO Worries that Some CUs Seeking Low-Income Designation for Wrong Reason
According to Credit Union Times, Todd Lane, CEO of California Coast Credit Union (San Diego, CA), is worried that some larger credit unions are seeking a low-income designation for the wrong reason.
Instead of serving low-income members, Lane believes that the real motivation of these credit unions to pursue a low-income designation is to circumvent the member business loan cap of 12.25 percent of assets. Low-income designated credit unions are exempt from the member business loan cap.
Speaking on a panel at the Southern California Credit Union Alliance 2016 Conference, Lane stated:
Lane noted that this behavior is chipping "away at a credit union being a credit union" and believes that the credit union industry is at the tipping point with regard to taxation.
Read Lane's comments.
Instead of serving low-income members, Lane believes that the real motivation of these credit unions to pursue a low-income designation is to circumvent the member business loan cap of 12.25 percent of assets. Low-income designated credit unions are exempt from the member business loan cap.
Speaking on a panel at the Southern California Credit Union Alliance 2016 Conference, Lane stated:
"Another thing that bothers me is the low-income designation. I’ve seen larger credit unions seek and get low-income designation and I wonder what their real purpose is behind it. I think in some cases, I don't want to paint everyone with a broad brush here, but I've heard – people talk about these things – we hear they're doing it to get around regulation. In particular, the member business lending cap."
Lane noted that this behavior is chipping "away at a credit union being a credit union" and believes that the credit union industry is at the tipping point with regard to taxation.
Read Lane's comments.
Wednesday, May 18, 2016
Massachussets Study: Tax Subsidy Going to Higher Expenses
Credit unions in Massachusetts provide insufficient member benefits to offset the favorable tax and regulatory treatment they enjoy, according to a study released this week by research firm PolEcon.
"The benefits to Massachusetts consumers do not appear significant enough to warrant laws and regulations that, by design, or as a consequence, result in credit unions capturing a larger share of the banking market in Massachusetts," the study found.
The report noted that Massachusetts credit unions have grown in part by gaming the low-income credit union designation, which provides substantial regulatory relief. The number of low-income designated credit unions in Massachusetts has risen from 11 in 2012 to 57 in 2016, in part by counting students within their low-income footprints. However, the study found little benefit to members from the low-income designations.
The four Massachusetts low-income credit unions with assets of more than $1 billion were more likely than banks to make mortgage loans to high-income borrowers and less likely than banks to serve low-income mortgage customers. In addition, since 2002, Massachusetts’ banks have received higher CRA ratings for meeting the needs of lower- and moderate-income individuals than have Massachusetts’ state-chartered credit unions.
Moreover, the study estimated that the corporate tax subsidy provides Massachusetts credit unions with an approximately 32 to 44 basis point annual subsidy that can be allocated toward higher deposit and lower interest rates on loans, higher expense ratios (more overhead expenses), or in greater retained earnings that provide capital for growth. Evidence indicates that while some of the subsidy benefits depositors and borrowers, a greater share goes to retained earnings and higher expense ratios. In fact, Massachusetts’ mutual banks, which have a similar governance structure as credit unions, have significantly lower expense ratios than Massachusetts credit unions.
The study also found that Massachusetts’ largest credit unions are more profitable than Massachusetts’ banks.
The study was funded by the Massachusetts Bankers Association.
Read the study.
"The benefits to Massachusetts consumers do not appear significant enough to warrant laws and regulations that, by design, or as a consequence, result in credit unions capturing a larger share of the banking market in Massachusetts," the study found.
The report noted that Massachusetts credit unions have grown in part by gaming the low-income credit union designation, which provides substantial regulatory relief. The number of low-income designated credit unions in Massachusetts has risen from 11 in 2012 to 57 in 2016, in part by counting students within their low-income footprints. However, the study found little benefit to members from the low-income designations.
The four Massachusetts low-income credit unions with assets of more than $1 billion were more likely than banks to make mortgage loans to high-income borrowers and less likely than banks to serve low-income mortgage customers. In addition, since 2002, Massachusetts’ banks have received higher CRA ratings for meeting the needs of lower- and moderate-income individuals than have Massachusetts’ state-chartered credit unions.
Moreover, the study estimated that the corporate tax subsidy provides Massachusetts credit unions with an approximately 32 to 44 basis point annual subsidy that can be allocated toward higher deposit and lower interest rates on loans, higher expense ratios (more overhead expenses), or in greater retained earnings that provide capital for growth. Evidence indicates that while some of the subsidy benefits depositors and borrowers, a greater share goes to retained earnings and higher expense ratios. In fact, Massachusetts’ mutual banks, which have a similar governance structure as credit unions, have significantly lower expense ratios than Massachusetts credit unions.
The study also found that Massachusetts’ largest credit unions are more profitable than Massachusetts’ banks.
The study was funded by the Massachusetts Bankers Association.
Read the study.
Thursday, February 26, 2015
Are Generals and Admirals Low-Income?
Apparently, National Credit Union Administration (NCUA) Board member Rick Metsger thinks so.
In remarks to the Northern Virginia Chapter of the Virginia Credit Union League in January, Mr. Metsger advocated "[a]llowing active-duty military personnel and their families to automatically qualify as low-income households."
However, I seriously doubt admirals and generals qualify for low-income designation. The same could probably be said for many active-duty military personnel.
This is a cynical ploy by NCUA to expand the number of credit unions that have a low-income designation.
This would exempt these credit unions from the member business loan cap of 12.25 percent of assets and would give them access to supplemental capital.
It is obvious that NCUA is trying to use regulatory fiat to do what it cannot get through legislation.
Read the NCUA press release.
In remarks to the Northern Virginia Chapter of the Virginia Credit Union League in January, Mr. Metsger advocated "[a]llowing active-duty military personnel and their families to automatically qualify as low-income households."
However, I seriously doubt admirals and generals qualify for low-income designation. The same could probably be said for many active-duty military personnel.
This is a cynical ploy by NCUA to expand the number of credit unions that have a low-income designation.
This would exempt these credit unions from the member business loan cap of 12.25 percent of assets and would give them access to supplemental capital.
It is obvious that NCUA is trying to use regulatory fiat to do what it cannot get through legislation.
Read the NCUA press release.
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