Reuters is reporting that UBS AG has agreed to pay $33 million to resolve claims that it sold toxic mortgage-backed securities (MBS) to two corporate credit unions that later failed.
The lawsuit dealt with MBS underwritten and sold by UBS to Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union.
The National Credit Union Administration (NCUA) alleged that the securities' offering documents contained untrue statements that the loans were originated in accordance with underwriting guidelines
The deal, disclosed in a filing in Manhattan federal court, will settle one of several lawsuits by NCUA over the sale of mortgage-backed securities before the 2008 financial crisis.
The deal boosts to nearly $2.46 billion the amount the NCUA has recovered from banks through lawsuits it began filing in 2011.
The court filing would not have any effect on a separate lawsuit by the NCUA against UBS pending in Kansas.
In related news, U.S. District Judge Katherine Forrest in Manhattan rejected claims by NCUA that the banks failed in their roles as trustees for 98 residential mortgage-backed securities trusts.
Forrest said the NCUA lacked standing to sue over 89 trusts because the right to sue had been previously assigned, leaving the regulator with only an interest in payment streams.
The judge also dismissed claims that the banks breached their fiduciary duties or acted in bad faith with the other nine trusts. The only surviving claims are those of breach of contract on the nine trusts, which the banks did not seek to dismiss.
Read the Reuters' article.
Read article on Judge Forrest's decision.
Friday, February 26, 2016
CU Was Slow to Respond to Hack of Online Banking Site
KrebsonSecurity is reporting that the online banking site of Coast Central Credit Union (Eureka, CA) "was compromised and apparently had been for nearly two months."
The "crooks had hacked the credit union’s site and retrofitted it with a “Web shell,” a simple backdoor program that allows an attacker to remotely control the Web site and server using nothing more than a Web browser."
According to the report, the credit union was contacted on February 23 about the hack; but did not immediately fix the problem.
The author wrote that when he contacted the credit union he explained who he was, how they’d likely been hacked, how they could verify the hack, and how they could fix the problem. Two days later when he noticed the site was still hacked, he contacted the credit union again, only to find they still didn’t believe he.
Eventually, the credit union believed him and disabled the Web shell.
Read the KrebsonSecurity.
The "crooks had hacked the credit union’s site and retrofitted it with a “Web shell,” a simple backdoor program that allows an attacker to remotely control the Web site and server using nothing more than a Web browser."
According to the report, the credit union was contacted on February 23 about the hack; but did not immediately fix the problem.
The author wrote that when he contacted the credit union he explained who he was, how they’d likely been hacked, how they could verify the hack, and how they could fix the problem. Two days later when he noticed the site was still hacked, he contacted the credit union again, only to find they still didn’t believe he.
Eventually, the credit union believed him and disabled the Web shell.
Read the KrebsonSecurity.
Thursday, February 25, 2016
Legal Opinion Letter on Merging Credit Unions into A Network
In a legal opinion letter to Hoosier Hills Credit Union, the National Credit Union Administration (NCUA) stated that it is permissible for merging multiple group federal credit unions to operate as a network of credit unions.
NCUA stated that the merged credit union (non-surviving credit union) can continue to operate under the merged credit union's name. However, NCUA cautioned that credit union operating under more than one name must ensure its members understand they are dealing with one credit union rather than different credit unions.
The letter also stated that the Federal Credit Union Act permits the continuing credit union to appoint an advisory committee comprised of officials of the merged credit union to serve in an advisory role.
Finally, the continuing credit union may reserve one seat on its nominating committee for a representative of the merged credit union.
Read the letter.
NCUA stated that the merged credit union (non-surviving credit union) can continue to operate under the merged credit union's name. However, NCUA cautioned that credit union operating under more than one name must ensure its members understand they are dealing with one credit union rather than different credit unions.
The letter also stated that the Federal Credit Union Act permits the continuing credit union to appoint an advisory committee comprised of officials of the merged credit union to serve in an advisory role.
Finally, the continuing credit union may reserve one seat on its nominating committee for a representative of the merged credit union.
Read the letter.
Wednesday, February 24, 2016
Tiny WV Credit Union Liquidated
The National Credit Union Administration liquidated the Mildred Mitchell-Bateman Hospital Federal Credit Union of Huntington, West Virginia.
NCUA made the decision to liquidate Mildred Mitchell-Bateman Hospital Federal Credit Union and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations. However, the most recent Financial Performance Report for the credit union indicated that it was well-capitalized and profitable with no asset problems.
Chartered in 1980, Mildred Mitchell-Bateman Hospital Federal Credit Union served 57 members and had assets of $27,039, according to the credit union’s most recent Call Report.
This is the second credit union to be liquidated this year.
Read the press release.
NCUA made the decision to liquidate Mildred Mitchell-Bateman Hospital Federal Credit Union and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations. However, the most recent Financial Performance Report for the credit union indicated that it was well-capitalized and profitable with no asset problems.
Chartered in 1980, Mildred Mitchell-Bateman Hospital Federal Credit Union served 57 members and had assets of $27,039, according to the credit union’s most recent Call Report.
This is the second credit union to be liquidated this year.
Read the press release.
FOM Policies, Just Not Reg Burden, Threaten Small CU Survival
In an opinion piece in The Hill, former Representative Jim Nussle, president and CEO of the Credit Union National Association (CUNA), wrote that regulatory burden is threatening the survival of small credit unions.
It is true that small credit unions, as well as small community banks, lack the economies of scale to spread out the cost of complying with all the new regulations and may cause these institutions not to be viable.
But regulatory burden is only part of the story.
Changes in field of membership (FOM) policies and practices that have fueled expansive community charters and permit anyone to join a credit union through an association have allowed large credit unions to poach smaller credit union members.
But this has not always been the case. Historically smaller credit unions received overlap protection with regard to their fields of membership. Overlap protection was designed to protect smaller credit unions operating in the same market as larger credit unions.
However, overlap protection has largely disappeared.
This is leading to increase competition between smaller and larger credit unions hastening the demise of small credit unions.
As Paul Harvey used to say, "And now you know the rest of the story."
It is true that small credit unions, as well as small community banks, lack the economies of scale to spread out the cost of complying with all the new regulations and may cause these institutions not to be viable.
But regulatory burden is only part of the story.
Changes in field of membership (FOM) policies and practices that have fueled expansive community charters and permit anyone to join a credit union through an association have allowed large credit unions to poach smaller credit union members.
But this has not always been the case. Historically smaller credit unions received overlap protection with regard to their fields of membership. Overlap protection was designed to protect smaller credit unions operating in the same market as larger credit unions.
However, overlap protection has largely disappeared.
This is leading to increase competition between smaller and larger credit unions hastening the demise of small credit unions.
As Paul Harvey used to say, "And now you know the rest of the story."
Monday, February 22, 2016
Matz: We Reset the Default Switch to Yes
In a speech to the Credit Union National Association's Government Affairs Conference, National Credit Union Administration (NCUA) Chairman Debbie Matz stated that NCUA had to reset the default switch to yes.
Chairman Matz told the credit union audience that to make it easier for credit unions to serve their members, NCUA needed to reset the default switch to "yes."
She noted that "[t]oo often in the past, that default switch was set to "no.""
Chairman Matz said:
This eagerness to accommodate the requests of credit unions will only re-enforce bankers' views that NCUA is a cheerleader regulator.
Also, Chairman Matz in her remarks identified two crucial issues that will determine the future of credit unions -- making millennials into members and adopting strong cybersecurity.
Read the speech.
Chairman Matz told the credit union audience that to make it easier for credit unions to serve their members, NCUA needed to reset the default switch to "yes."
She noted that "[t]oo often in the past, that default switch was set to "no.""
Chairman Matz said:
You asked us to remove the fixed-assets limit. So, yes, we did. You asked us to remove member-business lending limits not required by law. So, yes, we did. You asked us to expand the definition of a "small credit union." So, yes, we did. Now, three out of every four credit unions can qualify for regulatory relief in any future NCUA rulemaking.She further stated that NCUA will continue to listen to credit unions and will make changes that will benefit you.
If your credit union meets the criteria for a low-income designation, now all you have to do is say yes. By flipping that regulatory switch to yes, we’ve doubled the number of low-income credit unions over the past four years.
And, incidentally, by earning a low-income designation, nearly half of all federally chartered credit unions are now exempt from the statutory member-business lending cap.
This eagerness to accommodate the requests of credit unions will only re-enforce bankers' views that NCUA is a cheerleader regulator.
Also, Chairman Matz in her remarks identified two crucial issues that will determine the future of credit unions -- making millennials into members and adopting strong cybersecurity.
Read the speech.
CUs Lobby Congress, Avoid Paying DC Hotel Occupancy Tax
The Credit Union National Association's Government Affairs Conference (GAC) kicked off on Sunday. The GAC runs from February 21 thru February 25.
It is estimated that nearly 5,000 individuals will attend the GAC.
Credit union officials from around the country are descending on Washington, D.C. to lobby Congress about preserving the credit union industry's tax exemption, which is estimated to cost almost $27 billion over the next decade, and for greater powers, such as expanded business lending authority.
In addition, officials from federal credit unions attending the GAC are exempt from state and local taxes assessed to room charges, as long as the final payment is made by a federal credit union-issued check, share draft or credit card.
The hotel occupancy tax rate in Washington, D.C. is 14.5 percent. The price for a room per night at official GAC hotels ranges from a low of $265 to a high of $329. This means that each night the District of Columbia could lose between $38.43 and $47.71 in occupancy tax revenue per room.
It is outrageous that officials from federal credit unions can come to Washington to lobby Congress about preserving their tax exemption, while avoiding paying local hotel taxes.
It is estimated that nearly 5,000 individuals will attend the GAC.
Credit union officials from around the country are descending on Washington, D.C. to lobby Congress about preserving the credit union industry's tax exemption, which is estimated to cost almost $27 billion over the next decade, and for greater powers, such as expanded business lending authority.
In addition, officials from federal credit unions attending the GAC are exempt from state and local taxes assessed to room charges, as long as the final payment is made by a federal credit union-issued check, share draft or credit card.
The hotel occupancy tax rate in Washington, D.C. is 14.5 percent. The price for a room per night at official GAC hotels ranges from a low of $265 to a high of $329. This means that each night the District of Columbia could lose between $38.43 and $47.71 in occupancy tax revenue per room.
It is outrageous that officials from federal credit unions can come to Washington to lobby Congress about preserving their tax exemption, while avoiding paying local hotel taxes.
Friday, February 19, 2016
360 Federal Credit Union Settles ADA Complaint
U.S. Attorney’s Office for the District of Connecticut has reached a settlement with 360 Federal Credit Union (Windsor Locks, CT) to ensure equal access for individuals with disabilities at all 360 Federal Credit Union locations, pursuant to the Americans with Disabilities Act (“ADA”).
An individual, who is hard of hearing, alleged in a complaint that 360 Federal Credit Union would not accept his video relay calls.
Under the agreement, 360 Federal Credit Union will pay a small monetary sum to compensate the individual for the expenses he incurred as a result of the credit union’s failure to accept his video relay calls. The agreement also requires 360 Federal Credit Union to accept video relay calls in all of its credit union locations and amend its policies, practices, and training to ensure the removal of barriers to access at its branch offices.
Title III of the ADA prohibits discrimination against individuals with disabilities by businesses that serve the public. Among other things, the ADA requires financial institutions, accountants, lawyers, doctors and other businesses to provide auxiliary aids and services that are necessary for effective communication. For individuals who are deaf or hard of hearing, auxiliary aids include qualified sign language or oral interpreters, use of relay services, computer-assisted real time transcription, and, for simple communications, the exchange of written notes.
Read the press release.
An individual, who is hard of hearing, alleged in a complaint that 360 Federal Credit Union would not accept his video relay calls.
Under the agreement, 360 Federal Credit Union will pay a small monetary sum to compensate the individual for the expenses he incurred as a result of the credit union’s failure to accept his video relay calls. The agreement also requires 360 Federal Credit Union to accept video relay calls in all of its credit union locations and amend its policies, practices, and training to ensure the removal of barriers to access at its branch offices.
Title III of the ADA prohibits discrimination against individuals with disabilities by businesses that serve the public. Among other things, the ADA requires financial institutions, accountants, lawyers, doctors and other businesses to provide auxiliary aids and services that are necessary for effective communication. For individuals who are deaf or hard of hearing, auxiliary aids include qualified sign language or oral interpreters, use of relay services, computer-assisted real time transcription, and, for simple communications, the exchange of written notes.
Read the press release.
Thursday, February 18, 2016
Advia Credit Union to Acquire Wisconsin Bank
Advia Credit Union (Parchment, MI) has announced that it has signed a definitive agreement to acquire Mid America Bank, a Wisconsin-based bank headquartered in Janesville.
At the end of 2015, Advia Credit Union reported almost $1.2 billion in assets. Mid America Bank had nearly $88 million in assets.
The acquisition is expected to be completed in the second or third quarter of 2016.
Upon completion of the acquisition, Advia will have approximately $1.3 Billion in assets, 400 employees, and 28 branches.
Terms of the deal were not disclosed.
Read the press release.
At the end of 2015, Advia Credit Union reported almost $1.2 billion in assets. Mid America Bank had nearly $88 million in assets.
The acquisition is expected to be completed in the second or third quarter of 2016.
Upon completion of the acquisition, Advia will have approximately $1.3 Billion in assets, 400 employees, and 28 branches.
Terms of the deal were not disclosed.
Read the press release.
Number of Problem CUs Fell During Q4 2015; Assets and Shares Edge Higher
The National Credit Union Administration (NCUA) reported that the number of problem credit unions fell during the fourth quarter; but assets and shares in problem credit unions edged higher.
At the end of the fourth quarter, there were 220 problem credit unions. In comparison, there were 233 problem credit unions at the end of the third quarter of 2015 and 276 credit unions at the end of 2014.
A problem credit union has a composite CAMEL rating of 4 or 5.
During the fourth quarter both total shares (deposits) and assets in problem credit unions rose. Shares in problem credit unions increased from $7.6 billion as of September 30, 2015 to $7.7 billion at the end of 2015. Over the same time period, assets in problem credit unions rose from $8.5 billion to $8.6 billion. A year earlier, problem credit unions held $10.2 billion in shares and $11.5 billion in assets.
According to NCUA, 0.80 percent of total insured shares and 0.7 percent of industry assets were in problem credit unions at the end of the fourth quarter.
According to NCUA, 92 percent of all problem credit unions had less than $100 million in assets, while just over 1 percent of the problem credit unions had assets of $500 million or more.
NCUA reported that no credit union with at least $1 billion in assets was a problem credit union at the end of 2015. The number of problem credit unions with between $500 million and $1 billion in assets was unchanged during the quarter at 3 credit unions.
At the end of the fourth quarter, there were 220 problem credit unions. In comparison, there were 233 problem credit unions at the end of the third quarter of 2015 and 276 credit unions at the end of 2014.
A problem credit union has a composite CAMEL rating of 4 or 5.
During the fourth quarter both total shares (deposits) and assets in problem credit unions rose. Shares in problem credit unions increased from $7.6 billion as of September 30, 2015 to $7.7 billion at the end of 2015. Over the same time period, assets in problem credit unions rose from $8.5 billion to $8.6 billion. A year earlier, problem credit unions held $10.2 billion in shares and $11.5 billion in assets.
According to NCUA, 0.80 percent of total insured shares and 0.7 percent of industry assets were in problem credit unions at the end of the fourth quarter.
According to NCUA, 92 percent of all problem credit unions had less than $100 million in assets, while just over 1 percent of the problem credit unions had assets of $500 million or more.
NCUA reported that no credit union with at least $1 billion in assets was a problem credit union at the end of 2015. The number of problem credit unions with between $500 million and $1 billion in assets was unchanged during the quarter at 3 credit unions.
Wednesday, February 17, 2016
Report: AMAC Can Improve Restitution Process
The National Credit Union Administration's Office of the Inspector General (IG) earlier this month released a report critical of the restitution process of the Asset Management and Assistance Center (AMAC). The report points out that AMAC management was not maximizing restitution recovery opportunities.
As of December 11, 2014, AMAC accounted for 117 restitution orders totaling approximately $334 million.
The IG determined that "AMAC management could improve the restitution orders process by following up and assisting the Department of Justice (DOJ) to potentially improve collections and confirm accuracy when accounting for restitution orders owed to liquidation estates."
The report noted that AMAC management does not assist the DOJ through systematic follow-up regarding the status of offenders and receipt of payments. For example, AMAC does not take advantage of an available federal resource for assistance with the collection of restitution orders or conduct periodic reconciliations with the DOJ on the number of restitutions ordered and the amount of restitution owed to liquidation estates.
AMAC management offered numerous explanations as to why they do not regularly assist the DOJ in restitution collection efforts, including lack of resources at AMAC, uncertain earnings of most criminals after release from prison, and little or no return on investment.
However, the IG disagreed with AMAC management's excuses. The IG found that AMAC does very little to proactively pursue monies owed to the NCUA, but rather relies on the DOJ to forward additional restitution payments.
The report benchmarked AMAC's restitution process to the practices of the Federal Deposit Insurance Corporation (FDIC). The report states that FDIC has a robust restitution program and found that FDIC with the assistance of the Financial Litigation Unit at DOJ actually collect more restitution after the completion of an offender’s prison term. According to the report, FDIC monitors an offender throughout the life of the restitution and regularly conducts asset searches, searches for property, and any fraudulent conveyances, particularly after the offender is released, not just before sentencing during the prosecution phase.
In addition, the report recommends that AMAC explore working with the Treasury Offset Program, which has resulted in an additional $35.6 million in collections for FDIC between 2009 and 2013.
Read the report.
As of December 11, 2014, AMAC accounted for 117 restitution orders totaling approximately $334 million.
The IG determined that "AMAC management could improve the restitution orders process by following up and assisting the Department of Justice (DOJ) to potentially improve collections and confirm accuracy when accounting for restitution orders owed to liquidation estates."
The report noted that AMAC management does not assist the DOJ through systematic follow-up regarding the status of offenders and receipt of payments. For example, AMAC does not take advantage of an available federal resource for assistance with the collection of restitution orders or conduct periodic reconciliations with the DOJ on the number of restitutions ordered and the amount of restitution owed to liquidation estates.
AMAC management offered numerous explanations as to why they do not regularly assist the DOJ in restitution collection efforts, including lack of resources at AMAC, uncertain earnings of most criminals after release from prison, and little or no return on investment.
However, the IG disagreed with AMAC management's excuses. The IG found that AMAC does very little to proactively pursue monies owed to the NCUA, but rather relies on the DOJ to forward additional restitution payments.
The report benchmarked AMAC's restitution process to the practices of the Federal Deposit Insurance Corporation (FDIC). The report states that FDIC has a robust restitution program and found that FDIC with the assistance of the Financial Litigation Unit at DOJ actually collect more restitution after the completion of an offender’s prison term. According to the report, FDIC monitors an offender throughout the life of the restitution and regularly conducts asset searches, searches for property, and any fraudulent conveyances, particularly after the offender is released, not just before sentencing during the prosecution phase.
In addition, the report recommends that AMAC explore working with the Treasury Offset Program, which has resulted in an additional $35.6 million in collections for FDIC between 2009 and 2013.
Read the report.
Tuesday, February 16, 2016
NCUA Needs to Upgrade Its Call Report Custom Query Function
The National Credit Union Administration (NCUA) recently upgraded its website. Unfortunately, the agency did not upgrade its custom query function.
The biggest drawback is the lack of data items that can downloaded.
NCUA's custom query function allows for only 59 Call Report line items to be downloaded. This means a number of critical call report line items are not available for download.
Lending data that cannot be accessed through the custom query function includes member business loans, nonguaranteed student loans, and payday alternative loans.
On the liability side, information on share certificates and money market shares is not available.
The custom query function does not include information on a credit union's low income designation.
While the custom query allows for the downloading of total delinquencies, it does not provide information on the aging of delinquencies or information on delinquencies by loan type. Moreover, downloading information on troubled debt restructurings is not an option.
Also, any performance or condition ratios, including measures of profitability, asset quality, and capitalization, are not available.
NCUA should look at upgrading its custom query function by adding a greater number of data elements that can be downloaded. This will benefit credit unions and other end users of credit union financial information.
The biggest drawback is the lack of data items that can downloaded.
NCUA's custom query function allows for only 59 Call Report line items to be downloaded. This means a number of critical call report line items are not available for download.
Lending data that cannot be accessed through the custom query function includes member business loans, nonguaranteed student loans, and payday alternative loans.
On the liability side, information on share certificates and money market shares is not available.
The custom query function does not include information on a credit union's low income designation.
While the custom query allows for the downloading of total delinquencies, it does not provide information on the aging of delinquencies or information on delinquencies by loan type. Moreover, downloading information on troubled debt restructurings is not an option.
Also, any performance or condition ratios, including measures of profitability, asset quality, and capitalization, are not available.
NCUA should look at upgrading its custom query function by adding a greater number of data elements that can be downloaded. This will benefit credit unions and other end users of credit union financial information.
Thursday, February 11, 2016
Bay Ridge Federal Credit Union and Taxi Medallion Loans
Bay Ridge Federal Credit Union (Brooklyn, NY) has some exposure to taxi medallion loans and it appears that these medallion loans are starting to affect the performance of this $201.6 million credit union.
The credit union recorded a small profit of $76,413 for 2015. This was down from $1.6 million for 2014.
This decline in profits is associated with a significant increase in provisions for loan and lease losses. Provisions for loan and lease losses were $1.7 million for 2015 compared to $346,564 for 2014.
This increase in provisions for loan and lease losses caused Bay Ridge to build its allowance for loan and lease losses account from $1.16 million at the end of 2014 to almost @2.5 million at the end of 2015.
Bay Ridge reported an equity capital position of $18.2 million at the end of 2015. Its net worth ratio was 9.20 percent as of December 31, 2015.
Bay Ridge at the end of 2015 had a buffer of $20.7 million to absorb expected and unexpected losses.
Delinquent loans at Bay Ridge credit union increased by 73.9 percent during the fourth quarter to slightly more than $4 million. This means 2.42 percent of loans were 60 days or more past due -- a 102 basis points increase during the quarter. Delinquent loans represent almost 22 percent of the credit union's net worth.
In addition, early delinquencies (30 to 59 days past due) were $9.8 million at the end of 2015. In comparison, $3.4 million in loans were in early stages of becoming delinquent as of mid-year 2015.
Furthermore, troubled debt restructured (TDR) loans increased by 605 percent during the fourth quarter to almost $5.6 million as of December 2015. TDR loans accounted for 30.54 percent of the credit union's net worth.
Bay Ridge reported its coverage ratio (allowance for loan and lease losses to delinquent loans) was 61.53 percent as of December 2015.
Bay Ridge's management and board needs to communicate with its members about its total exposure to taxi medallion loans and how this loan portfolio of taxi medallion loans is performing.
In conclusion, as I become aware of credit unions with exposure to the taxi medallion industry, I will report on the credit union's financial performance.
The credit union recorded a small profit of $76,413 for 2015. This was down from $1.6 million for 2014.
This decline in profits is associated with a significant increase in provisions for loan and lease losses. Provisions for loan and lease losses were $1.7 million for 2015 compared to $346,564 for 2014.
This increase in provisions for loan and lease losses caused Bay Ridge to build its allowance for loan and lease losses account from $1.16 million at the end of 2014 to almost @2.5 million at the end of 2015.
Bay Ridge reported an equity capital position of $18.2 million at the end of 2015. Its net worth ratio was 9.20 percent as of December 31, 2015.
Bay Ridge at the end of 2015 had a buffer of $20.7 million to absorb expected and unexpected losses.
Delinquent loans at Bay Ridge credit union increased by 73.9 percent during the fourth quarter to slightly more than $4 million. This means 2.42 percent of loans were 60 days or more past due -- a 102 basis points increase during the quarter. Delinquent loans represent almost 22 percent of the credit union's net worth.
In addition, early delinquencies (30 to 59 days past due) were $9.8 million at the end of 2015. In comparison, $3.4 million in loans were in early stages of becoming delinquent as of mid-year 2015.
Furthermore, troubled debt restructured (TDR) loans increased by 605 percent during the fourth quarter to almost $5.6 million as of December 2015. TDR loans accounted for 30.54 percent of the credit union's net worth.
Bay Ridge reported its coverage ratio (allowance for loan and lease losses to delinquent loans) was 61.53 percent as of December 2015.
Bay Ridge's management and board needs to communicate with its members about its total exposure to taxi medallion loans and how this loan portfolio of taxi medallion loans is performing.
In conclusion, as I become aware of credit unions with exposure to the taxi medallion industry, I will report on the credit union's financial performance.
Tuesday, February 9, 2016
Credit Union Tax Expenditure Equals $26.75 Billion over Next 10 Fiscal Years
In President Obama's 2017 Budget, the credit union tax expenditure is estimated at $26.75 billion for fiscal years 2016 thru 2025.
Congressional Letter: NCUA's FOM Proposal Should Call Into Question CU Tax Exemption
Fifty-three state bankers associations wrote to the congressional taxation committees on February 5 and urged them to “investigate the tax implications of the latest increase in powers” NCUA has proposed for credit unions.
According to the letter, this sweeping field of membership (FOM) proposal will "exponentially explode this already-sizeable tax subsidy."
“The proposed changes should call into question whether the 82 year-old tax exemption is appropriate in the modern era,” the groups said, calling for Congress to level the playing field between taxpaying banks and tax-exempt credit unions that are otherwise virtually identical.
Read the letter.
According to the letter, this sweeping field of membership (FOM) proposal will "exponentially explode this already-sizeable tax subsidy."
“The proposed changes should call into question whether the 82 year-old tax exemption is appropriate in the modern era,” the groups said, calling for Congress to level the playing field between taxpaying banks and tax-exempt credit unions that are otherwise virtually identical.
Read the letter.
Monday, February 8, 2016
Q4 Update on Taxi Medallion Lender Progressive CU
Despite the growth of bad taxi medallion loans, Progressive Credit Union (New York, NY) built loan loss reserves and maintained its large capital cushion. This gives the credit union the strength to ride out the disruptions impacting the taxi industry.
In the last quarter of 2015, Progressive CU increased its provisions for loan losses by $9 million to almost $16.3 million. This increase in provisions caused the credit union's allowance for loan and lease losses to grow from $12.86 million as of September 2015 to $21.8 million at the end of 2015.
Progressive CU reported a strong capital position of $268.5 million at the end of 2015. As a result, its net worth ratio at the end of 2015 was 40.91 percent -- up from 38.83 percent a year earlier. This lack of leverage at Progressive CU means it currently has the capacity to manage defaulting taxi medallion loans.
Asset quality at the $665 million credit union deteriorated during the fourth quarter. Delinquent loans at Progressive Credit Union grew by $14.3 million during the quarter to $20.8 million at the end of 2015. This more than tripling of delinquent loans caused the delinquency ratio to jump from 1.05 percent as of September 30, 2015 to 3.45 percent at the end of 2015.
The credit union also reported almost doubling of troubled debt restructured (TDR) loans during the fourth quarter to $47.9 million as of December 2015. TDR loans represented 17.58 percent of the credit union's net worth.
The good news for Progressive is that the pipeline of early delinquencies fell during the fourth quarter from almost $13.5 million at the end of the third quarter to approximately $9.9 million as of December 2015.
Progressive's coverage ratio (allowance for loan and lease losses to delinquent loans) was 104.89 percent at the end of 2015. This means that all loans 60 days delinquent or more could be completely written off and Progressive would still have some leftover loan loss reserves.
In the last quarter of 2015, Progressive CU increased its provisions for loan losses by $9 million to almost $16.3 million. This increase in provisions caused the credit union's allowance for loan and lease losses to grow from $12.86 million as of September 2015 to $21.8 million at the end of 2015.
Progressive CU reported a strong capital position of $268.5 million at the end of 2015. As a result, its net worth ratio at the end of 2015 was 40.91 percent -- up from 38.83 percent a year earlier. This lack of leverage at Progressive CU means it currently has the capacity to manage defaulting taxi medallion loans.
Asset quality at the $665 million credit union deteriorated during the fourth quarter. Delinquent loans at Progressive Credit Union grew by $14.3 million during the quarter to $20.8 million at the end of 2015. This more than tripling of delinquent loans caused the delinquency ratio to jump from 1.05 percent as of September 30, 2015 to 3.45 percent at the end of 2015.
The credit union also reported almost doubling of troubled debt restructured (TDR) loans during the fourth quarter to $47.9 million as of December 2015. TDR loans represented 17.58 percent of the credit union's net worth.
The good news for Progressive is that the pipeline of early delinquencies fell during the fourth quarter from almost $13.5 million at the end of the third quarter to approximately $9.9 million as of December 2015.
Progressive's coverage ratio (allowance for loan and lease losses to delinquent loans) was 104.89 percent at the end of 2015. This means that all loans 60 days delinquent or more could be completely written off and Progressive would still have some leftover loan loss reserves.
Saturday, February 6, 2016
CTK Credit Union Closed
The Wisconsin Office of Credit Unions served an order of liquidation on CTK Credit Union of Milwaukee and immediately appointed the National Credit Union Administration as liquidating agent.
The Wisconsin Office of Credit Unions made the decision to liquidate CTK Credit Union and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations.
CTK Credit Union was a federally insured, state-chartered credit union that served 397 members and had assets of $163,197, according to the credit union’s most recent Call Report.
CTK Credit Union reported 4 consecutive years of losses. As of the end of 2015, the credit union was undercapitalized with a net worth ratio of 5.88 percent and had a delinquent loan ratio of 22.98 percent.
CTK Credit union is the first credit union to be liquidated in 2016.
Read NCUA's press release.
The Wisconsin Office of Credit Unions made the decision to liquidate CTK Credit Union and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations.
CTK Credit Union was a federally insured, state-chartered credit union that served 397 members and had assets of $163,197, according to the credit union’s most recent Call Report.
CTK Credit Union reported 4 consecutive years of losses. As of the end of 2015, the credit union was undercapitalized with a net worth ratio of 5.88 percent and had a delinquent loan ratio of 22.98 percent.
CTK Credit union is the first credit union to be liquidated in 2016.
Read NCUA's press release.
Friday, February 5, 2016
Bad Taxi Medallion Loans Weigh on LOMTO FCU
LOMTO FCU (Woodside, NY) flipped from a profit in 2014 to a loss in 2015 as problems with taxi medallion loans affected the performance of the credit union.
LOMTO went from a profit of $4 million for 2014 to a loss of almost $3 million for 2015, as the credit union significantly increased provisions for loan and lease losses.
During the fourth quarter, LOMTO increased provisions for loan losses by $2.5 million to slightly less than $6.8 million at the end of 2015. In comparison, provisions for loan losses were 534,400 a year earlier.
The increase in provisions boosted the credit union's allowance for loan and lease losses. Allowances for loan and lease losses jumped by $2.3 million during the fourth quarter to almost $10.2 million as of December 31, 2015.
Due to the 2015 loss, the equity capital of the credit union dropped from $44.5 million at the end of 2014 to $40.6 million at the end of 2015. As a result, the net worth ratio of the credit union fell by 114 basis points during the year to 15.56 percent.
Delinquent loans (60 days or more past due) grew by $2.7 million during the fourth quarter of 2015 to $6.4 million. As a result, the delinquent loan ratio rose from 1.53 percent at the end of the third quarter to 2.65 percent at the end of 2015.
The pipeline of early stage delinquent loans increased by $4.1 million during the fourth quarter to almost $9.5 million.
Troubled debt restructured (TDR) loans as od December 2015 was $37.9 million. A year earlier, the credit union reported no TDR loans. Roughly $18.3 million in TDR loans were in accrual status, while slightly less than $19.7 million of the TDR loans were in nonaccrual status. The credit union is reporting that at the end of 2015 the TDR portion of allowances for loan and lease losses was $6.7 million -- up from $2.4 million from the previous quarter. Also, TDR loans as of December 2015 were 89.13 percent of the credit union's net worth.
The credit union reported almost $1 million in net charge-offs for 2015.
Thee credit union's coverage ratio (allowance for loan losses to delinquent loans) was 158.36 percent at the end of 2015; but is down from 210 percent at the end of the third quarter.
At the end of 2015, the credit union's buffer (allowance for loan and lease losses and equity capital) to absorb the expected and unexpected losses was approximately $50.8 million.
LOMTO went from a profit of $4 million for 2014 to a loss of almost $3 million for 2015, as the credit union significantly increased provisions for loan and lease losses.
During the fourth quarter, LOMTO increased provisions for loan losses by $2.5 million to slightly less than $6.8 million at the end of 2015. In comparison, provisions for loan losses were 534,400 a year earlier.
The increase in provisions boosted the credit union's allowance for loan and lease losses. Allowances for loan and lease losses jumped by $2.3 million during the fourth quarter to almost $10.2 million as of December 31, 2015.
Due to the 2015 loss, the equity capital of the credit union dropped from $44.5 million at the end of 2014 to $40.6 million at the end of 2015. As a result, the net worth ratio of the credit union fell by 114 basis points during the year to 15.56 percent.
Delinquent loans (60 days or more past due) grew by $2.7 million during the fourth quarter of 2015 to $6.4 million. As a result, the delinquent loan ratio rose from 1.53 percent at the end of the third quarter to 2.65 percent at the end of 2015.
The pipeline of early stage delinquent loans increased by $4.1 million during the fourth quarter to almost $9.5 million.
Troubled debt restructured (TDR) loans as od December 2015 was $37.9 million. A year earlier, the credit union reported no TDR loans. Roughly $18.3 million in TDR loans were in accrual status, while slightly less than $19.7 million of the TDR loans were in nonaccrual status. The credit union is reporting that at the end of 2015 the TDR portion of allowances for loan and lease losses was $6.7 million -- up from $2.4 million from the previous quarter. Also, TDR loans as of December 2015 were 89.13 percent of the credit union's net worth.
The credit union reported almost $1 million in net charge-offs for 2015.
Thee credit union's coverage ratio (allowance for loan losses to delinquent loans) was 158.36 percent at the end of 2015; but is down from 210 percent at the end of the third quarter.
At the end of 2015, the credit union's buffer (allowance for loan and lease losses and equity capital) to absorb the expected and unexpected losses was approximately $50.8 million.
Thursday, February 4, 2016
Low-Income Cleveland-based CU Conserved
The Superintendent of the Ohio Division of Financial Institutions on February 4 placed Cory Methodist Church Credit Union, of Cleveland, into conservatorship and appointed the National Credit Union Administration as conservator.
The Superintendent placed Cory Methodist Church Credit Union into conservatorship because of unsafe and unsound practices at the credit union. While continuing normal member services, NCUA will work to resolve issues affecting the credit union’s operations.
The credit union reported a loss of approximately $145 thousand for 2015, after posting a 2014 loss of almost $50 thousand. According to its December Call Report, the credit union had a net worth ratio of 21.94 percent and a delinquent loan ratio of 33.90 percent. The credit union had a net charge-off ratio for 2015 of 5.32 percent.
Members of Cory Methodist Church CU will be able to conduct normal financial transactions at Steel Valley Federal Credit Union
Cory Methodist Church Credit Union is a federally insured, state-chartered credit union with a low-income designation that has 710 members and assets of $1.6 million, according to the credit union’s most recent Call Report.
Read NCUA's press release.
The Superintendent placed Cory Methodist Church Credit Union into conservatorship because of unsafe and unsound practices at the credit union. While continuing normal member services, NCUA will work to resolve issues affecting the credit union’s operations.
The credit union reported a loss of approximately $145 thousand for 2015, after posting a 2014 loss of almost $50 thousand. According to its December Call Report, the credit union had a net worth ratio of 21.94 percent and a delinquent loan ratio of 33.90 percent. The credit union had a net charge-off ratio for 2015 of 5.32 percent.
Members of Cory Methodist Church CU will be able to conduct normal financial transactions at Steel Valley Federal Credit Union
Cory Methodist Church Credit Union is a federally insured, state-chartered credit union with a low-income designation that has 710 members and assets of $1.6 million, according to the credit union’s most recent Call Report.
Read NCUA's press release.
Melrose CU Reports $176.7 Million Loss due to Bad Taxi Medallion Loans
Problem taxi medallion loans cause Melrose Credit Union (Briarwood, NY) to post $176.7 million loss for 2015.
According to Melrose's Financial Performance Report, the credit union posted a loss of $155.5 million for the fourth quarter as the credit union significantly increased provisions for loan and lease losses. During the fourth quarter, Melrose increased provisions for loan and lease losses by almost $162.9 million. As a result, provisions for loan and lease losses for all of 2015 were $206.4 million.
Melrose at the end of 2015 reported that allowance for loan and lease losses were $230.3 million, up from $68.1 million as of the third quarter of 2015.
Due to its large loss in the fourth quarter, Melrose's net worth ratio dropped sharply from 17.30 percent at the end of the third quarter of 2015 to 10.69 percent as of December 31, 2015.
Bad taxi medallion loans caused delinquencies to rise at the credit union. Melrose reported that $155.34 million loans were 60 days or more past due at the end of 2015. This translates into 7.80 percent of the credit union's loans being delinquent.
Also, there is a sizeable portion of loans in the early stages of becoming delinquent. Melrose is reporting that $103.6 million loans are 30 to 59 days delinquent at the end of 2015.
As of December 2015, Melrose is reporting $374.7 million in troubled debt restructured (TDR) loans, which are all in nonaccrual status. This is up from $219.5 million at the end of the third quarter of 2015.
TDR loans at the end of 2015 were 182.70 percent of net worth and the TDR portion of loan loss reserves was $144.4 million.
The increase in loan loss reserves during the fourth quarter caused the coverage ratio for Melrose to increase to 148.25 percent from 54.15 percent as of the third quarter of 2015.
Melrose at the end of 2015 had a buffer (allowance for loan and lease losses and equity) of $421.7 million to absorb expected and unexpected losses.
According to Melrose's Financial Performance Report, the credit union posted a loss of $155.5 million for the fourth quarter as the credit union significantly increased provisions for loan and lease losses. During the fourth quarter, Melrose increased provisions for loan and lease losses by almost $162.9 million. As a result, provisions for loan and lease losses for all of 2015 were $206.4 million.
Melrose at the end of 2015 reported that allowance for loan and lease losses were $230.3 million, up from $68.1 million as of the third quarter of 2015.
Due to its large loss in the fourth quarter, Melrose's net worth ratio dropped sharply from 17.30 percent at the end of the third quarter of 2015 to 10.69 percent as of December 31, 2015.
Bad taxi medallion loans caused delinquencies to rise at the credit union. Melrose reported that $155.34 million loans were 60 days or more past due at the end of 2015. This translates into 7.80 percent of the credit union's loans being delinquent.
Also, there is a sizeable portion of loans in the early stages of becoming delinquent. Melrose is reporting that $103.6 million loans are 30 to 59 days delinquent at the end of 2015.
As of December 2015, Melrose is reporting $374.7 million in troubled debt restructured (TDR) loans, which are all in nonaccrual status. This is up from $219.5 million at the end of the third quarter of 2015.
TDR loans at the end of 2015 were 182.70 percent of net worth and the TDR portion of loan loss reserves was $144.4 million.
The increase in loan loss reserves during the fourth quarter caused the coverage ratio for Melrose to increase to 148.25 percent from 54.15 percent as of the third quarter of 2015.
Melrose at the end of 2015 had a buffer (allowance for loan and lease losses and equity) of $421.7 million to absorb expected and unexpected losses.
Wednesday, February 3, 2016
Taxi Medallion Lender Montauk Records $17.7 Million Loss, Is Critically Undercapitalized
Taxi medallion lender Montauk Credit Union (New York, NY), which was placed into conservatorship on September 18, 2015, recorded a 2015 loss of $17.692 million.
According to Montauk's Financial Performance Report, the credit union increased provisions for loan and lease losses by $20 million in 2015. In the last quarter of 2015, provisions for loan losses jumped by $16.4 million.
This increase in provisions caused the credit union's allowance for loan and lease losses to balloon during the fourth quarter to $21.96 million from $5.58 million at the end of the third quarter. Almost $10.8 million in allowance for loan and lease losses was for troubled debt restructured (TDR) loans.
Due to the loss, Montauk's net worth ratio plummeted from 10.54 percent on September 30 to 1.74 percent on December 31. As a result, Montauk Credit Union became critically undercapitalized.
Loans 60 days or more past due swelled at Montauk Credit Union. Delinquent loans grew from almost $16.3 million at the end of the third quarter to $40,4 million at the end of 2015. This means almost a quarter (24.39 percent) of Montauk's loans were at least 60 days past due.
In addition, $17.1 million in loans were in the early stage of becoming delinquent (30 - 59 days past due).
Montauk also reported that $33.1 million in loans were TDRs loans at the end of 2015. That means TDRs represent 1,172.46 percent of the credit union's net worth.
Furthermore, Montauk actively participated taxi medallion loans to other credit unions. At the end of 2015, Montauk was reporting that 20.10 percent of its participation loans were delinquent. This would indicate that other credit unions that had bought these participations from Montauk will be feeling pain.
Montauk is probably under-reserved given its level of nonperforming loans. Montauk's coverage ratio (allowance for loan losses to delinquent loans) was 54.32 percent at the end of 2015.
At the end of 2015, Montauk had a total buffer (allowance for loan and lease losses and equity) of almost $24.8 million to absorb both expected and unexpected losses.
According to NCUA, Montauk has modified $60.6 million in loans.
Read NCUA's press release.
According to Montauk's Financial Performance Report, the credit union increased provisions for loan and lease losses by $20 million in 2015. In the last quarter of 2015, provisions for loan losses jumped by $16.4 million.
This increase in provisions caused the credit union's allowance for loan and lease losses to balloon during the fourth quarter to $21.96 million from $5.58 million at the end of the third quarter. Almost $10.8 million in allowance for loan and lease losses was for troubled debt restructured (TDR) loans.
Due to the loss, Montauk's net worth ratio plummeted from 10.54 percent on September 30 to 1.74 percent on December 31. As a result, Montauk Credit Union became critically undercapitalized.
Loans 60 days or more past due swelled at Montauk Credit Union. Delinquent loans grew from almost $16.3 million at the end of the third quarter to $40,4 million at the end of 2015. This means almost a quarter (24.39 percent) of Montauk's loans were at least 60 days past due.
In addition, $17.1 million in loans were in the early stage of becoming delinquent (30 - 59 days past due).
Montauk also reported that $33.1 million in loans were TDRs loans at the end of 2015. That means TDRs represent 1,172.46 percent of the credit union's net worth.
Furthermore, Montauk actively participated taxi medallion loans to other credit unions. At the end of 2015, Montauk was reporting that 20.10 percent of its participation loans were delinquent. This would indicate that other credit unions that had bought these participations from Montauk will be feeling pain.
Montauk is probably under-reserved given its level of nonperforming loans. Montauk's coverage ratio (allowance for loan losses to delinquent loans) was 54.32 percent at the end of 2015.
At the end of 2015, Montauk had a total buffer (allowance for loan and lease losses and equity) of almost $24.8 million to absorb both expected and unexpected losses.
According to NCUA, Montauk has modified $60.6 million in loans.
Read NCUA's press release.
CFPB Urges Banks and CUs to Improve Checking Account Access
The Consumer Financial Protection Bureau (CFPB) is taking steps to improve checking account access amidst Bureau concerns that consumers are being sidelined by the lack of account options and by inaccurate information used to screen potential customers.
CFPB Director Cordray stated: "Today, for a wide variety of reasons, there are nearly 10 million unbanked households that have no checking or savings account."
To address the issue of checking account access, the CFPB sent a letter to the 25 largest retail banks encouraging them to make available and widely market lower-risk deposit accounts that help consumers avoid overdrafts and fees. The CFPB is also urging banks and credit unions to offer consumers accounts that do not authorize them to spend money they don’t have and to prominently advertise the availability of these accounts.
The CFPB notes that these lower-risk accounts may include prepaid cards, as well as no overdraft checking accounts.
In addition, the CFPB issued a bulletin warning banks and credit unions that failure to meet accuracy obligations when they report negative account histories to credit reporting companies could result in enforcement actions.
Finally, the CFPB is providing consumers with resources to help navigate the deposit account system.
Read press release.
Read CFPB Director Cordray's Prepared Remarks.
CFPB Director Cordray stated: "Today, for a wide variety of reasons, there are nearly 10 million unbanked households that have no checking or savings account."
To address the issue of checking account access, the CFPB sent a letter to the 25 largest retail banks encouraging them to make available and widely market lower-risk deposit accounts that help consumers avoid overdrafts and fees. The CFPB is also urging banks and credit unions to offer consumers accounts that do not authorize them to spend money they don’t have and to prominently advertise the availability of these accounts.
The CFPB notes that these lower-risk accounts may include prepaid cards, as well as no overdraft checking accounts.
In addition, the CFPB issued a bulletin warning banks and credit unions that failure to meet accuracy obligations when they report negative account histories to credit reporting companies could result in enforcement actions.
Finally, the CFPB is providing consumers with resources to help navigate the deposit account system.
Read press release.
Read CFPB Director Cordray's Prepared Remarks.
Tuesday, February 2, 2016
Texans Repays Section 208 Net Worth Assistance, Earns Almost $27 Million
Texans Credit Union (Richardson, TX), a state-chartered, federally insured credit union operating under the conservatorship of the National Credit Union Administration, posted year-end 2015 net income of $26.63 million.
This marks the 48th consecutive month of positive earnings.
During the third quarter of 2015, Texans repaid the remaining $40 million of Section 208 assistance, including interest, to the National Credit Union Share Insurance Fund three years ahead of schedule. Section 208 of the Federal Credit Union Act authorizes NCUA to provide assistance to a credit union to protect the Share Insurance Fund or the interests of a credit union’s members.
Texans was significantly undercapitalized with a net worth ratio at year’s end of 3.48 percent.
The National Credit Union Administration (NCUA) placed Texans into conservatorship in April 2011 to address service and operational weaknesses.
Read the press release.
This marks the 48th consecutive month of positive earnings.
During the third quarter of 2015, Texans repaid the remaining $40 million of Section 208 assistance, including interest, to the National Credit Union Share Insurance Fund three years ahead of schedule. Section 208 of the Federal Credit Union Act authorizes NCUA to provide assistance to a credit union to protect the Share Insurance Fund or the interests of a credit union’s members.
Texans was significantly undercapitalized with a net worth ratio at year’s end of 3.48 percent.
The National Credit Union Administration (NCUA) placed Texans into conservatorship in April 2011 to address service and operational weaknesses.
Read the press release.
Avadian CU Adds 18 Counties to FOM
Avadian Credit Union (Birmingham, AL) announced that it has added 18 new counties to its membership base.
Avadian has added the following Alabama counties -- Blount, Cherokee, Colbert, Cullman, Dallas, DeKalb, Etowah, Jackson, Lauderdale, Lawrence, Lee, Limestone, Marion, Marshall, Morgan, Randolph, Walker and Winston.
These addition almost double the number of counties the credit union serves, bringing the total to 34 Alabama counties.
Read the story.
Avadian has added the following Alabama counties -- Blount, Cherokee, Colbert, Cullman, Dallas, DeKalb, Etowah, Jackson, Lauderdale, Lawrence, Lee, Limestone, Marion, Marshall, Morgan, Randolph, Walker and Winston.
These addition almost double the number of counties the credit union serves, bringing the total to 34 Alabama counties.
Read the story.
Monday, February 1, 2016
NCUA Assisted in Merging Conserved Montgomery County CU into Bridge CU
The National Credit Union Administration (NCUA) announced today that Montgomery County Credit Union of Dayton, Ohio, was merged into Bridge Credit Union of Columbus, Ohio, effective January 31, 2016 with NCUA's assistance.
Superintendent of the Ohio Division of Financial Institutions placed Montgomery County Credit Union into conservatorship on April 23, 2015, and appointed NCUA as agent for the conservator.
Montgomery County CU reported a loss of almost $540,000 for all of 2015. In the fourth quarter of 2015, the credit union reported negative share (deposit), asset, membership, loan, and net worth growth.
The two agencies worked together to address issues affecting the credit union’s safety and soundness and determined that merging Montgomery County Credit Union into Bridge Credit Union was in the best interests of members.
The assisted merger resulted in no cost to the National Credit Union Share Insurance Fund.
Read the press release.
Superintendent of the Ohio Division of Financial Institutions placed Montgomery County Credit Union into conservatorship on April 23, 2015, and appointed NCUA as agent for the conservator.
Montgomery County CU reported a loss of almost $540,000 for all of 2015. In the fourth quarter of 2015, the credit union reported negative share (deposit), asset, membership, loan, and net worth growth.
The two agencies worked together to address issues affecting the credit union’s safety and soundness and determined that merging Montgomery County Credit Union into Bridge Credit Union was in the best interests of members.
The assisted merger resulted in no cost to the National Credit Union Share Insurance Fund.
Read the press release.
Rebutting NAFCU's Absurd FOM Claim
In a Bank Think piece in the American Banker, Carrie Hunt, the National Association of Federal Credit Unions' Executive Vice President of Government Affairs and General Counsel, wrote "[i]t has been over 15 years since the NCUA last tackled the field-of-membership issue."
But this statement lacks credibility.
In fact, over the last fifteen years the National Credit Union Administration (NCUA) has made numerous changes to its field-of-membership (FOM) rule.
NCUA has several times expanded the population size threshold for a well-defined local community and a rural district.
For example, NCUA initially set the population size threshold for a rural district at 200,000 individuals in 2010. The agency in 2013 raised the population limit to 250,000 or 3 percent of the state's population. Now, NCUA is proposing to raise the population size to 1 million residents.
In 2003, NCUA for the first time defined a metropolitan statistical area (MSA) as a well-defined local community as long as the population did not exceed 1 million. In 2010, the population threshold for a MSA or a Metropolitan Division of a MSA was increased to 2.5 million people.
In addition, NCUA in 2003 defined a single political jurisdiction regardless of population size as a presumptive well-defined local community. Prior to the 2003 change, the population size was 300,000.
Also, in 2000 contiguous political jurisdictions qualified as a local community as long as the population did not exceed 200,000 residents. In 2003, the population threshold for contiguous political jurisdictions was raised to 500,000.
NCUA in 2003 expanded the scope of a single common-bond credit union by authorizing a trade-wide, industry-wide, or profession-wide common bond.
Furthermore, NCUA last year made it easier for credit unions to add associations to a federal credit union's FOM.
To claim that NCUA has not addressed FOM issues over the last 15 years is simply wrong.
But this statement lacks credibility.
In fact, over the last fifteen years the National Credit Union Administration (NCUA) has made numerous changes to its field-of-membership (FOM) rule.
NCUA has several times expanded the population size threshold for a well-defined local community and a rural district.
For example, NCUA initially set the population size threshold for a rural district at 200,000 individuals in 2010. The agency in 2013 raised the population limit to 250,000 or 3 percent of the state's population. Now, NCUA is proposing to raise the population size to 1 million residents.
In 2003, NCUA for the first time defined a metropolitan statistical area (MSA) as a well-defined local community as long as the population did not exceed 1 million. In 2010, the population threshold for a MSA or a Metropolitan Division of a MSA was increased to 2.5 million people.
In addition, NCUA in 2003 defined a single political jurisdiction regardless of population size as a presumptive well-defined local community. Prior to the 2003 change, the population size was 300,000.
Also, in 2000 contiguous political jurisdictions qualified as a local community as long as the population did not exceed 200,000 residents. In 2003, the population threshold for contiguous political jurisdictions was raised to 500,000.
NCUA in 2003 expanded the scope of a single common-bond credit union by authorizing a trade-wide, industry-wide, or profession-wide common bond.
Furthermore, NCUA last year made it easier for credit unions to add associations to a federal credit union's FOM.
To claim that NCUA has not addressed FOM issues over the last 15 years is simply wrong.
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