Resource One's FOM Changes Denied

The Texas Credit Union Department denied Resource One Credit Union's applications to serve individuals who work and reside in Harris County and individuals who live, worship, attend school or work in Denton, and Collin Counties.

According to documents obtained from the Texas Credit Union Department through a Public Information Request, Resource One did not show that the proposed members were within reasonable proximity of their existing offices. The Department concluded that the credit union could not realistically serve the proposed members from its existing offices.

Specifically, in the application for Denton and Collin Counties, the state regulator noted that Resource One had one office in Denton County and no office in Collin County. The regulator stated that the credit union did not establish that the proposed community was within the credit union's local service area. The regulator found that the credit union could not extend services to all persons within the proposed community though its existing office and thus the existing office could not meet the convenience and need of all people in the proposed geographic community.

In the application for Harris County, the credit union had two offices in the county; but once again failed to establish that the proposed community was within its local service area. The regulator concluded that the credit union could not meet the financial needs of all people within the proposed geographic area.

Understatement of Allowance for Loan Losses

The Texas Credit Union Department noted that it is continuing to see an understatement of loan loss reserves by some credit unions.

The Department wrote in its April newsletter:

"The Department continues to see instances where a credit union’s Allowance for Loan and Lease Losses (ALLL) is materially understated based on management’s own internal analysis of the loan loss exposure. The failure to accurately record the appropriate loan loss expense is frequently the result of budgetary or other earnings considerations. Credit unions should be aware that any intentional failure to fund the ALLL in a timely manner may be classified as an effort to falsify the accounting records."

Texas Credit Union Department Proposing to be Reimbursed for Excessive Cost from Problem Credit Unions

The Texas Credit Union Commission is proposing that a credit union that engages in questionable behavior be responsible for the excessive cost it imposes on the Texas Credit Union Department. The proposed rule, according to the Commission, is designed to ensure that the Department’s fees and assessments are more equitable for all credit unions. To read the proposed rule, click here.