Friday, February 28, 2020

Event Center Named After American 1 CU Opens on February 28

American 1 Credit Union Event Center at Keeley Park opened on Friday, February 28.

The new 30,000 square foot American 1 Credit Union Event Center is a multi-use facility that can seat as many as 800 guests.

American 1 Credit Union (Jackson, MI) provided $4 million for the $6.4 million event center.

Read more.

Thursday, February 27, 2020

ABA: CRA Should Be Applied to Large CUs

Congress must do more to ensure that the nation’s largest credit unions are accountable to their statutory mission to serve individuals in low- to moderate-income areas, the American Bankers Association (ABA) said in a new ABA Data Bank post.

Citing data from S&P Global, ABA Chief Economist James Chessen noted that among large credit unions with more than $500 million in assets, the majority of branches—73%—are currently concentrated in middle- and upper-income communities, while just 6% are located in low-income areas.‌

“These largest credit unions receive the highest dollar benefit from the tax exemption, yet they have chosen to focus their resources on the well-to-do rather than using their tax advantage to help expand cheaper credit to those who need it most,” Chessen wrote. “Simply put, they are using their tax-exempt status to make profitable consumer and business loans to people who do not need taxpayer-subsidized financial services and can afford to shop around for financial products elsewhere.” By contrast, he noted that of all the credit union branches headquartered in low-income communities, two out of three are operated by small credit unions.‌

One way Congress could ensure greater accountability for large credit unions would be to require them to comply with the Community Reinvestment Act (CRA), as taxpaying banks are required to do, Chessen said. “If these credit unions are in fact meeting the needs of low- and moderate-income people, they should have no fear of demonstrating that explicitly as banks must do.”‌

ABA’s blog post echoed findings from a report issued last year by Federal Financial Analytics that highlighted the need to impose mission-related requirements on credit unions. In recent days, writings by the National Taxpayers Union and the Tax Foundation have also emphasized the immediate need for Congress to revisit the credit union tax exemption.

Read the blog post.

Wednesday, February 26, 2020

NCUA's Harper Discusses Liquidity, Consumer Debt, and Succession Planning

Speaking before the Credit Union National Association Government Affairs Conference on February 26, National Credit Union Administration Board Member Todd Harper discussed three issues on the horizon that will impact credit unions.

First, Harper focused on liquidity. Harper noted that the industry's loans-to-shares ratio bottomed out in 2012 and 2013 at approximately 66 percent, but it has since rebounded due to strong loan growth. The ratio now is about 84 percent nationally and in some states like Vermont and Wisconsin, it exceeds 90 percent. He cautioned that credit unions of all sizes need to maintain ample access to cash to withstand unexpected emergencies.

Second, Harper addressed the issue of consumer debt. He pointed out the total household debt is higher than before the Great Recession. While he stated that asset quality remains good at credit unions, there are some warning signs. The percentage of credit cards that are 90 days or more past due exceeded 5 percent. He warned that if a recession occurs, delinquencies and charge-offs will rise. He told the credit union attendees that they should be carefully evaluating new credit risk and taking steps to mitigate delinquencies in their consumer loan portfolios.

Third, Harper addressed the issue of succession planning. He stated that approximately 20 percent of credit unions do not have a succession plan. He commented the lack of succession plan is one of the top two reasons for credit union mergers. He then pointed out that a large proportion of credit union CEOs and executives are Baby Boomers, who will be part of a retirement wave. He encouraged the credit union officials to raise the issue of succession planning in board discussions to ensure the survival of their credit unions.

Other topics he discussed included diversity and inclusion and compliance with consumer financial protection.

Read the speech.

NCUA's Hood Discusses the Process for Selling Off Taxi Medallion Portfolio

National Credit Union Administration (NCUA) Board Chairman Rodney Hood on September 25 provided more insights into the agency's process in selling off its tax medallion portfolio it assumed from failed credit unions.

Addressing the Credit Union National Association Government Affairs Conference, Chairman Hood commented that NCUA evaluated a number of options, but came to the determination that a singular bulk sale would be in the best interest to the National Credit Union Share Insurance Fund.

Hood told the audience that NCUA received bids for a portion of the medallion portfolio from interested bidders, but concluded that the sum of the subset bids were less than the bids for the overall portfolio.

He noted that NCUA in consultation with its financial advisors reached out to 23 firms with experience in handling distressed commercial assets. Six of these firms submitted bids. NCUA allowed two firms go through to the final due diligence bid round and received two independent offers. The agency turned away some firms because it lacked confidence that the firms would treat borrowers in a fair way.

Hood cautioned credit unions that "[h]olding these medallion assets beyond a reasonable period" could result in the agency repeating past mistakes. The past mistake is referencing the properties in Florida that were assumed by NCUA with the failure of Norlarco and Huron River Area Credit Unions.

Read the speech.

Tuesday, February 25, 2020

NCUA's McWatters Defends Selling Taxi Medallion Portfolio

At the Credit Union National Association's Government Affairs Conference, National Credit Union Administration (NCUA) Board Member McWatters on February 24 defended the agency's decision to sell its portfolio of taxi medallion loans.

McWatters was responding to criticism the agency should have waited for a possible initiative from the New York Taxi Workers Alliance to form a public/private partnership to purchase the agency’s medallion loan portfolio.

However, McWatters stated that postponing the sale would have been inappropriate.

McWatters claims that if the agency postponed the sale, it would have lost the winning, least cost bidder.

The winning bidder, Marblegate Asset Management, was ready, willing, and able to close on the transaction, according to McWatters.

Postponing the sale would have most likely resulted in additional material losses for the National Credit Union Share Insurance Fund (NCUSIF), which would cause NCUA to "forgo distributions to credit unions for the intermediate future, if not longer."

McWatters told the crowd that NCUA "retained the services of outside consultants and investment advisors who assisted us in developing a plan to sell the taxi medallion loan portfolio pursuant to an open and transparent auction process."

In addition, McWatters addressed the topics of credit unions acquiring community banks and credit unions maintaining adequate capital and liquidity levels.

Read the speech.

Washington CU Regulator Expects CUs to Measure Consumer Complaints

The Washington Division of Credit Unions is expecting that credit union board of directors and senior management should receive periodic reports regarding consumer complaints.

The state regulator stated that these periodic reports should include the following:
  • The volume and types of complaints received;
  • The channels in which complaints are received (e.g. social media, email, in person);
  • The reimbursements paid for potential violations of consumer protection laws; and
  • Any identified trends.
In addition, credit unions should clearly define procedures for processing member complaints, including complaints pertaining to third party service providers.

Sunday, February 23, 2020

Congressman Meeks Critical of NCUA's Decision to Sell Taxi Medallion Loans

Representative Gregory Meeks (D - NY) on February 20 stated he stands strongly against the sale of taxi medallion loans by the National Credit Union Administration (NCUA) to Marblegate Asset Management LLC.

In a statement, Meeks commented that while "some banks are recognizing the unsustainable bubble of medallion debt and providing debt forgiveness, it is discouraging to see NCUA move in the opposite and wrong direction."

Read the press release.

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