Southern Utah University announced that America First Credit Union (Riverdale, UT) will pay $1.5 million for the naming rights to the 5,300 seat Centrum Arena.
The agreement is for 10 years.
The arena will now be called America First Events Center.
America First is the largest credit union in the state of Utah with almost $9 billion in assets.
Read the story.
Friday, September 29, 2017
Thursday, September 28, 2017
TCCUSF to Close in 2017, NCUSIF NOL Increased to 1.39 Percent
The National Credit Union Administration (NCUA) Board voted to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) in 2017.
The funds, property, and other assets and liabilities of the TCCUSF will be transferred to the National Credit Union Share Insurance Fund (NCUSIF) on October 1, 2017.
In addition, the NCUA Board raised the normal operating level (NOL) for NCUSIF from 1.30 percent to 1.39 of insured shares, despite the objection of many credit union commenters.
The NCUA Board spent part of the meeting challenging the false narrative that an NCUSIF equity ratio of 1.30 percent would withstood the financial crisis. The Board presentation noted that even without the corporate credit union losses, the NCUSIF equity ratio in 2009 and 2010 would have fallen below 1.20 percent, the threshold requiring premium assessments. Without the premium assessment, the NCUSIF equity ratio would have dropped to 1.07 percent.
The Board also adopted a policy for setting the normal operating level.
Any change to the normal operating level of more than 1 basis point shall be made only after a public announcement of the proposed adjustment and opportunity for comment. In soliciting comment, the NCUA will issue a public report, including data supporting the proposal.
When setting the normal operating level, the Board will seek to satisfy the following objectives:
The funds, property, and other assets and liabilities of the TCCUSF will be transferred to the National Credit Union Share Insurance Fund (NCUSIF) on October 1, 2017.
In addition, the NCUA Board raised the normal operating level (NOL) for NCUSIF from 1.30 percent to 1.39 of insured shares, despite the objection of many credit union commenters.
The NCUA Board spent part of the meeting challenging the false narrative that an NCUSIF equity ratio of 1.30 percent would withstood the financial crisis. The Board presentation noted that even without the corporate credit union losses, the NCUSIF equity ratio in 2009 and 2010 would have fallen below 1.20 percent, the threshold requiring premium assessments. Without the premium assessment, the NCUSIF equity ratio would have dropped to 1.07 percent.
The Board also adopted a policy for setting the normal operating level.
Any change to the normal operating level of more than 1 basis point shall be made only after a public announcement of the proposed adjustment and opportunity for comment. In soliciting comment, the NCUA will issue a public report, including data supporting the proposal.
When setting the normal operating level, the Board will seek to satisfy the following objectives:
- Retain public confidence in federal share insurance;
- Prevent impairment of the one percent contributed capital deposit; and
- Ensure the Insurance Fund can withstand a moderate recession without the equity ratio declining below 1.20 percent over a five-year period.
Wednesday, September 27, 2017
Tech CU Funds $3 Million Commercial Real Estate Loan
Technology Credit Union (San Jose, CA) on September 5 announced that it was originating a $3 million commercial real estate loan.
The loan will assist infunding the purchase of a 12,800 square foot, Class B commercial property in downtown San Jose, as well as provide for minor tenant improvement work and miscellaneous expenditures.
Technology Credit Union will finance commercial real estate loans up to $15 million.
Read the press release.
The loan will assist infunding the purchase of a 12,800 square foot, Class B commercial property in downtown San Jose, as well as provide for minor tenant improvement work and miscellaneous expenditures.
Technology Credit Union will finance commercial real estate loans up to $15 million.
Read the press release.
Tuesday, September 26, 2017
Credit Human to Receive $8.8 Million in Incentives to Relocate HQ
The City of San Antonio and Bexar County will provide Credit Human Federal Credit Union $8.8 million in tax and other incentives to move its headquarters to an office tower to be constructed at the Pearl.
Credit Human, formerly known as San Antonio Federal Credit Union, is the third largest credit union in San Antonio (TX).
The city has proposed offering up to $5.2 million in tax abatements and a $1.5 million tax rebate for the project, but the total value of both incentives would be capped at about $5.8 million, according to the Midtown Tax Increment Reinvestment Zone agenda.
The county is proposing a ten-year tax abatement worth a total of just under $3 million.
The project is expected to consist of two multi-story buildings, with the largest building being used for headquarters use for the credit union and mixed office and retail use. The 3.13 acre site on Broadway Avenue will comprise a total of 310,000 square feet of usable space and the construction of a total of 958 surface and underground parking spaces.
According to news reports, the price tag for the project is estimated at $113 million.
Under the incentive deal, the credit union would be required to pay its employees more than $11.83 an hour. After a year, 70 percent of the employees would have to make at least $15.68 an hour.
Read the agenda item.
Read story (subscription required).
Read an earlier story.
Credit Human, formerly known as San Antonio Federal Credit Union, is the third largest credit union in San Antonio (TX).
The city has proposed offering up to $5.2 million in tax abatements and a $1.5 million tax rebate for the project, but the total value of both incentives would be capped at about $5.8 million, according to the Midtown Tax Increment Reinvestment Zone agenda.
The county is proposing a ten-year tax abatement worth a total of just under $3 million.
The project is expected to consist of two multi-story buildings, with the largest building being used for headquarters use for the credit union and mixed office and retail use. The 3.13 acre site on Broadway Avenue will comprise a total of 310,000 square feet of usable space and the construction of a total of 958 surface and underground parking spaces.
According to news reports, the price tag for the project is estimated at $113 million.
Under the incentive deal, the credit union would be required to pay its employees more than $11.83 an hour. After a year, 70 percent of the employees would have to make at least $15.68 an hour.
Read the agenda item.
Read story (subscription required).
Read an earlier story.
Research: Mixed Evidence that CU Tax Exemption Serves Intended Purpose
The Federal Reserve Bank of Richmond recently published an article, Credit Unions: A Taxing Question that suggests there is mixed findings as to whether the continuation of the credit union tax exemption is justified.
The paper analyzes the findings of various research papers on the credit union tax exemption.
The paper argues that there are two legislative justifications for the credit union tax exemption -- their mutual structure and their purpose of assisting those of modest means.
The paper points out that "[c]ritics of the credit union tax exemption have long used the repeal of the mutual savings bank tax exemption as evidence that credit unions should lose theirs." However, mutual savings banks lost their tax exemption because they were no longer "self-contained cooperative organizations." Despite the similarities between mutual savings banks and credit unions, the paper states credit unions still retain more of their cooperative qualities than mutual savings banks.
But I would note that the erosion of common bond is undermining the linkage between credit union borrowers and savers.
The paper then examines at the incidence of the tax subsidy. In other words, where does the tax subsidy go?
Citing work by Robert DeYoung and others, the authors found that the majority, but not all, of the tax subsidy was passed through to credit union members in the form of higher deposit rates. The authors also stated that an economically substantial amount of the subsidy was diverted away from credit union members, mainly by hiring too many workers and earning below marketr returns on investment securities.
While the credit union subsidy appears to be flowing to members, the other justification for the tax exemption is that credit unions target those of modest means. The evidence is mixed on whether this policy goal is being met. Credit unions claim that their common bond requirements may result in a selection bias that makes it harder for them to serve people of modest means. However, research looking at large Wisconsin credit unions with broad fields of membership found that large credit unions were targeting wealthier customers, as evidenced by the markets in which they locate branches and the income level of mortgage borrowers.
The paper concludes that "research performed on credit unions and the tax exemption reveals mixed results as to whether, on the whole, credit unions still serve the same purposes today as they did when they were first chartered in the early 20th century."
The paper analyzes the findings of various research papers on the credit union tax exemption.
The paper argues that there are two legislative justifications for the credit union tax exemption -- their mutual structure and their purpose of assisting those of modest means.
The paper points out that "[c]ritics of the credit union tax exemption have long used the repeal of the mutual savings bank tax exemption as evidence that credit unions should lose theirs." However, mutual savings banks lost their tax exemption because they were no longer "self-contained cooperative organizations." Despite the similarities between mutual savings banks and credit unions, the paper states credit unions still retain more of their cooperative qualities than mutual savings banks.
But I would note that the erosion of common bond is undermining the linkage between credit union borrowers and savers.
The paper then examines at the incidence of the tax subsidy. In other words, where does the tax subsidy go?
Citing work by Robert DeYoung and others, the authors found that the majority, but not all, of the tax subsidy was passed through to credit union members in the form of higher deposit rates. The authors also stated that an economically substantial amount of the subsidy was diverted away from credit union members, mainly by hiring too many workers and earning below marketr returns on investment securities.
While the credit union subsidy appears to be flowing to members, the other justification for the tax exemption is that credit unions target those of modest means. The evidence is mixed on whether this policy goal is being met. Credit unions claim that their common bond requirements may result in a selection bias that makes it harder for them to serve people of modest means. However, research looking at large Wisconsin credit unions with broad fields of membership found that large credit unions were targeting wealthier customers, as evidenced by the markets in which they locate branches and the income level of mortgage borrowers.
The paper concludes that "research performed on credit unions and the tax exemption reveals mixed results as to whether, on the whole, credit unions still serve the same purposes today as they did when they were first chartered in the early 20th century."
Monday, September 25, 2017
CU Taxi Medallion Lender Likened to Last Decade's Predatory Subprime Lenders
The Philadelphia Inquirer is compares the collapsing of the Philadelphia taxi market to the mortgage meltdown last decade and has some harsh comments about Melrose Credit Union (Briarwood, NY).
The article states:
This sounds so familiar to the the subprime mortgage crisis.
At their peak in October 2013, taxi medallion prices were $530,000. However, after Uber and Lyft entered the market, taxi medallion prices dropped precipitously and as of August 2017 were at $52,000.
According to the Inquirer story, Melrose financed medallion loans through a broker to borrowers with bad or no credit history and who neither understand or spoke English. A complaint against Melrose alleges that underwriting of taxi medallion loans was non-existent.
It is estimated that Melrose lent more than $120 million to Philadelphia medallion owners.
Because the financing of medallion loans were through thee year balloon loans, that meant every three years borrowers needed new loans to pay off those balloon loans. This also ensured new fee revenues for Melrose.
The article further notes that after Melrose was seized by the New York regulator, the credit union exacerbated the decline in medallion values as it stopped lending in the market.
Read the article.
The article states:
"[L]enders drew up medallion loans with huge balloon payments, made to people who couldn’t afford them but who never worried about paying them off when they came due in three years. Why? Because the taxi business was golden, generating ample revenue. Meanwhile, just as with real estate, the value of medallions kept rising.
Besides, there was always another chance to refinance.
Until, suddenly, there wasn’t."
This sounds so familiar to the the subprime mortgage crisis.
At their peak in October 2013, taxi medallion prices were $530,000. However, after Uber and Lyft entered the market, taxi medallion prices dropped precipitously and as of August 2017 were at $52,000.
According to the Inquirer story, Melrose financed medallion loans through a broker to borrowers with bad or no credit history and who neither understand or spoke English. A complaint against Melrose alleges that underwriting of taxi medallion loans was non-existent.
It is estimated that Melrose lent more than $120 million to Philadelphia medallion owners.
Because the financing of medallion loans were through thee year balloon loans, that meant every three years borrowers needed new loans to pay off those balloon loans. This also ensured new fee revenues for Melrose.
The article further notes that after Melrose was seized by the New York regulator, the credit union exacerbated the decline in medallion values as it stopped lending in the market.
Read the article.
Friday, September 22, 2017
56 CUs Awarded $39.5 Million from CDFI Fund
The National Credit Union Administration (NCUA) is reporting that 56 federally-insured credit unions will receive awards from the Community Development Financial Institutions (CDFI) Fund.
The total amount of the awards were $39.5 million.
According to the press release, 27 credit unions were a first-time awardee.
Read the press release.
The total amount of the awards were $39.5 million.
According to the press release, 27 credit unions were a first-time awardee.
Read the press release.
Thursday, September 21, 2017
To Get Tax Reform Right Treat Credit Unions Like Banks
Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, a senior fellow at the Manhattan Institute and an adjunct professor at George Washington University, wrote in U.S. News and World Report that tax reform should include ending the credit union industry's outdated tax exemption.
Furchtgott-Roth wrote that the credit union tax exemption does not make sense, since one principle of taxation is that similar businesses should be taxed the same.
Furchtgott-Roth noted that credit unions with $1 billion or more in assets are 4 percent of the credit union industry; but account for almost 75 percent of the tax benefit.
The opinion piece also stated the recent trend of tax-exempt credit unions buying taxpaying banks. Furchtgott-Roth pointed out: "This is no different from corporate inversions, except that no company has moved to Ireland."
Furchtgott-Roth concluded "[a]s Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers. Taxpayers should not have to subsidize a credit union's name on a stadium, or people's purchases of aircraft and boats."
Read the opinion piece.
Furchtgott-Roth wrote that the credit union tax exemption does not make sense, since one principle of taxation is that similar businesses should be taxed the same.
Furchtgott-Roth noted that credit unions with $1 billion or more in assets are 4 percent of the credit union industry; but account for almost 75 percent of the tax benefit.
The opinion piece also stated the recent trend of tax-exempt credit unions buying taxpaying banks. Furchtgott-Roth pointed out: "This is no different from corporate inversions, except that no company has moved to Ireland."
Furchtgott-Roth concluded "[a]s Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers. Taxpayers should not have to subsidize a credit union's name on a stadium, or people's purchases of aircraft and boats."
Read the opinion piece.
Fox Communities CU Receives Waivers for Financing Exposition Center
The Wisconsin Office of Credit Unions on August 17, 2017 granted a waiver to Fox Communities Credit Union (Appleton, WI) with regard to construction and development loans and security and collateral requirements.
The National Credit Union Administration had no objections to the waiver approval as long as three contingencies were met.
According to information obtained in an Open Records Request, Fox Community was approved to provide $10.175 million in funding for a publicly owned exposition center, which would result in a loan-to-value ratio of 100 percent. However, the credit union management believes that its share of the funding is more likely to be $8 million. At $10 million, the loan will represent 6.67 percent of the credit union's net worth.
The total funding for the project is $31.5 million with the remainder of the financing coming from local/regional banks.
WI DFI-CU 72.04 2(a) requires a 25 percent equity interest in construction projects or 20 percent equity interest in a project being financed if the loan is for construction.
In addition, WI DFI-CU 72.07 (2) requires "[f]or a member business loan secured by collateral on which the credit union will have a first lien, a credit union may grant the loan with an LTV ratio in excess of 80% only where the value in excess of 80 percent is as follows:
(a) Covered through acquisition of private mortgage or equivalent type insurance provided by an insurer acceptable to the credit union, and the LTV ratio does not exceed 95 percent; or
(b) Insured or guaranteed, or subject to advance commitment to purchase, by an agency of the federal government, state, or any of its political subdivisions, and the LTV ratio does not exceed 95 percent.
The loan will be collateralized by a secured interest in a hotel room tax. Thirty percent of the 10 percent hotel room tax will be allocated to repay the loan. In addition, the borrower will establish a $1.5 million reserve account that can be used if hotel room tax revenues are insufficient.
The National Credit Union Administration had no objections to the waiver approval as long as three contingencies were met.
According to information obtained in an Open Records Request, Fox Community was approved to provide $10.175 million in funding for a publicly owned exposition center, which would result in a loan-to-value ratio of 100 percent. However, the credit union management believes that its share of the funding is more likely to be $8 million. At $10 million, the loan will represent 6.67 percent of the credit union's net worth.
The total funding for the project is $31.5 million with the remainder of the financing coming from local/regional banks.
WI DFI-CU 72.04 2(a) requires a 25 percent equity interest in construction projects or 20 percent equity interest in a project being financed if the loan is for construction.
In addition, WI DFI-CU 72.07 (2) requires "[f]or a member business loan secured by collateral on which the credit union will have a first lien, a credit union may grant the loan with an LTV ratio in excess of 80% only where the value in excess of 80 percent is as follows:
(a) Covered through acquisition of private mortgage or equivalent type insurance provided by an insurer acceptable to the credit union, and the LTV ratio does not exceed 95 percent; or
(b) Insured or guaranteed, or subject to advance commitment to purchase, by an agency of the federal government, state, or any of its political subdivisions, and the LTV ratio does not exceed 95 percent.
The loan will be collateralized by a secured interest in a hotel room tax. Thirty percent of the 10 percent hotel room tax will be allocated to repay the loan. In addition, the borrower will establish a $1.5 million reserve account that can be used if hotel room tax revenues are insufficient.
Wednesday, September 20, 2017
46 NYC Taxi Medallions Sell for Under $200,000 in Auction
Crain's New York Business is reporting that 46 foreclosed New York City (NYC) taxi medallions sold at auction for $186,000 each.
The foreclosed tax medallions were bought by the hedge fund -- MPGE, Inc.
The $186,000-per medallion bid was for all 46 of the placards, which prevented the auction house from accepting one-off bids that would have priced a single medallion north of $200,000.
According to the story, taxi medallion prices have not been this low since the mid-1990s.
This would suggest additional losses await credit unions that originated or participated in NYC taxi medallion financing.
Read the press release.
The foreclosed tax medallions were bought by the hedge fund -- MPGE, Inc.
The $186,000-per medallion bid was for all 46 of the placards, which prevented the auction house from accepting one-off bids that would have priced a single medallion north of $200,000.
According to the story, taxi medallion prices have not been this low since the mid-1990s.
This would suggest additional losses await credit unions that originated or participated in NYC taxi medallion financing.
Read the press release.
Tuesday, September 19, 2017
NCUA Charters Clean Energy FCU
The National Credit Union Administration (NCUA) has granted a federal charter and Share Insurance Fund coverage to Clean Energy Federal Credit Union in Boulder, Colorado.
Clean Energy will have an association common bond serving the 4,300 members of the American Solar Energy Society (ASES).
The credit union’s primary mission will be meeting the financing needs of ASES members for the purchase and installation of solar panels and high-efficiency home energy improvements as well as the purchase of electric and hybrid vehicles.
But the credit union plans to expand its product offerings, once the credit union has the ability to support additional services.
Read the press release.
Clean Energy will have an association common bond serving the 4,300 members of the American Solar Energy Society (ASES).
The credit union’s primary mission will be meeting the financing needs of ASES members for the purchase and installation of solar panels and high-efficiency home energy improvements as well as the purchase of electric and hybrid vehicles.
But the credit union plans to expand its product offerings, once the credit union has the ability to support additional services.
Read the press release.
New Horizons CU Under Cease and Desist Order
The Alabama Credit Union Administration issued a cease and desist order against New Horizons Credit Union (Mobile, AL).
The cease and desist order found that the $221.5 million credit union and one or more of its institution-affiliated parties have engaged in unsafe or unsound practices, violation of law, rule, and regulations, and have violated the conditions set forth in an February 23, 2017 Letter of Understanding and Agreement (LUA).
Specifically, the cease and desist order found:
The cease and desist order required the credit union to address corporate governance deficiencies. The credit union's board is expected to improve its oversight of the credit union's affairs.
The credit union is further required to form a director's committee. One of its duties is to identify at least 3 potential merger partners. Discussions with potential merger partners are to be reported to the credit union's board and the credit union's regulator in writing no later than October 1, 2017.
The credit union will implement a prompt corrective action plan to become well-capitalized.
The credit union must also address credit risk and compliance risk problems. For example, credit union management must immediately charge off all loans that meet or exceed the credit union's charge off policy. If loans 90 days or more past due are not charged off, management must document the reason why these loans are not charged off. the collateral repossessed, and the collateral is in the process of foreclosure and repossession.
The cease and desist order became effective on September 3, 2017.
Read the order.
The cease and desist order found that the $221.5 million credit union and one or more of its institution-affiliated parties have engaged in unsafe or unsound practices, violation of law, rule, and regulations, and have violated the conditions set forth in an February 23, 2017 Letter of Understanding and Agreement (LUA).
Specifically, the cease and desist order found:
- The credit union failed to comply with full and fair disclosure of its financial and operating conditions.
- The board of directors failed to adequately supervise and direct credit union's management.
- The credit union had inadequate management.
- The credit union failed to address a number of material deficiencies listed in the Document of Resolution Status Report in a March 2017 Examination Report and comply with terms and conditions specified in the LUA.
- The credit union operated with capital that was classified as adequately capitalized.
- The credit union had ineffective credit risk management practice and poor underwriting practices that resulted in poor asset quality and high net charge offs.
- The credit union did not timely charge off uncollectible loans.
- The credit union failed to follow Generally Accepted Accounting Principles to calculate its allowance for loan and lease losses.
The cease and desist order required the credit union to address corporate governance deficiencies. The credit union's board is expected to improve its oversight of the credit union's affairs.
The credit union is further required to form a director's committee. One of its duties is to identify at least 3 potential merger partners. Discussions with potential merger partners are to be reported to the credit union's board and the credit union's regulator in writing no later than October 1, 2017.
The credit union will implement a prompt corrective action plan to become well-capitalized.
The credit union must also address credit risk and compliance risk problems. For example, credit union management must immediately charge off all loans that meet or exceed the credit union's charge off policy. If loans 90 days or more past due are not charged off, management must document the reason why these loans are not charged off. the collateral repossessed, and the collateral is in the process of foreclosure and repossession.
The cease and desist order became effective on September 3, 2017.
Read the order.
Monday, September 18, 2017
Half of CUs Report Declining Year-over-Year Membership
The National Credit Union Administration reported that 50.3 percent of federally insured credit unions had fewer members at the end of the second quarter of 2017 than a year earlier.
At the median, the membership growth rate was negative one-tenth of a percent.
In 23 states, more than half of the credit unions had fewer members than a year ago. Excluding the territories of Guam and Virgin Islands, Pennsylvania had the lowest median year-over-year membership growth rate of minus 1.4 percent.
About 75 percent of credit unions with declining membership had assets of less than $50 million.
Read the press release.
Read the NCUA Quarterly Map Review.
At the median, the membership growth rate was negative one-tenth of a percent.
In 23 states, more than half of the credit unions had fewer members than a year ago. Excluding the territories of Guam and Virgin Islands, Pennsylvania had the lowest median year-over-year membership growth rate of minus 1.4 percent.
About 75 percent of credit unions with declining membership had assets of less than $50 million.
Read the press release.
Read the NCUA Quarterly Map Review.
Saturday, September 16, 2017
San Diego County Credit Union to Bid $500,000 for Stadium's Naming Rights
San Diego County Credit Union (SDCCU) is bidding $500,000 for the naming rights to a stadium.
On September 19, the San Diego City Council will vote on a proposal to rename its stadium from QUALCOMM Stadium to SDCCU Stadium.
According to the City's Stadium Sponsorship Sales Agreement, the city will receive 75 percent for the revenue.
If approved, the naming rights agreement wil run through the end of 2018.
SDCCU is currently the primary sponsor of the Holiday Bowl college football game that's held in the stadium.
Read the meeting agenda item.
Read the story.
On September 19, the San Diego City Council will vote on a proposal to rename its stadium from QUALCOMM Stadium to SDCCU Stadium.
According to the City's Stadium Sponsorship Sales Agreement, the city will receive 75 percent for the revenue.
If approved, the naming rights agreement wil run through the end of 2018.
SDCCU is currently the primary sponsor of the Holiday Bowl college football game that's held in the stadium.
Read the meeting agenda item.
Read the story.
Friday, September 15, 2017
Guardian CU Buys Two Branches from SouthCrest Financial Group
SouthCrest Financial Group, Inc. (Atlanta, GA) announced that the company has completed the sale of its two branches in Alabama and all related deposits and assets to Guardian Credit Union (Montgomery, AL).
The sale closed on September 8.
The two branches are located in Chilton County.
According to an earlier press release, Guardian CU would pay a 5 percent deposit premium on the total deposits transferred, which as of June 2016 were about $45.7 million, and purchase over $6 million worth of loans.
As of June 2016, the Summary of Deposit data reported that SouthCrest Bank had a deposit market share of 12.33 percent in Chilton County.
Read the press release.
The sale closed on September 8.
The two branches are located in Chilton County.
According to an earlier press release, Guardian CU would pay a 5 percent deposit premium on the total deposits transferred, which as of June 2016 were about $45.7 million, and purchase over $6 million worth of loans.
As of June 2016, the Summary of Deposit data reported that SouthCrest Bank had a deposit market share of 12.33 percent in Chilton County.
Read the press release.
Thursday, September 14, 2017
Auction of Foreclosed Taxi Medallions Did Not Get Any Bidder at $300,000
An auction of 49 foreclosed New York City taxi medallions held by Capital One did not get any bids.
According to Crain's New York Business, "the bank started the bidding at more than $300,000, did not get the bids it was looking for and bought the medallions itself for $335,000 apiece."
The article quotes Andrew Murstein, president of Medallion Financial, as saying "[w]e were prepared to bid, but not at the prices they were looking for."
The failure to get a bid indicates that taxi medallion prices are less than $300,000.
However, the article does suggest that taxi medallion prices may be bottoming, which is attracting the interest of wealthy investors.
Read the story.
According to Crain's New York Business, "the bank started the bidding at more than $300,000, did not get the bids it was looking for and bought the medallions itself for $335,000 apiece."
The article quotes Andrew Murstein, president of Medallion Financial, as saying "[w]e were prepared to bid, but not at the prices they were looking for."
The failure to get a bid indicates that taxi medallion prices are less than $300,000.
However, the article does suggest that taxi medallion prices may be bottoming, which is attracting the interest of wealthy investors.
Read the story.
DCU Paying $12 Million for 129,000 Square Foot Office Building
Digital Federal Credit Union (Marlborough, MA) paid $12 million for the former headquarters building of Kronos located in Chelmsford, Massachusetts.
The three story 129,000 square foot office building will provide the $8 billion credit union with the needed space to address its rapidly growing employee base.
DCU plans to start renovations as early as this month and expects to occupy the space in the first quarter of 2018.
Read the story.
The three story 129,000 square foot office building will provide the $8 billion credit union with the needed space to address its rapidly growing employee base.
DCU plans to start renovations as early as this month and expects to occupy the space in the first quarter of 2018.
Read the story.
Wednesday, September 13, 2017
Horizon FCU Gets Rural District FOM Expansion
The National Credit Union Administration recently approved an expansion in the field of membership (FOM) of Horizon Federal Credit Union (Williamsport, PA).
The credit union in 2011 converted to a community charter serving Lycoming and Clinton Counties in Pennsylvania.
The credit union added 9 additional counties to its existing community charter in July 2017.
Today, Horizon FCU can serve persons who live, work, worship, or attend school in, and businesses and other legal entities in the rural district of Bradford, Centre, Clinton, Columbia, Lycoming, Montour, Northumberland, Potter, Sullivan, Tioga, or Union Counties. The potential increase in membership for the credit union is 666,077.
But the only way Horizon could add these 9 counties to Horizon's existing FOM was by using the rural district.
However, this region appears to be rural in name only.
Eight of the 11 counties belong to seven different core bases statistical areas. The region includes three distinct metropolitan statistical areas and four micropolitan statistical areas.
Only three counties are not part of a core based statistical area -- Potter, Sullivan, and Tioga.
Five counties have population densities in excess of 100 persons per square mile.
According to the U.S. Census Bureau, almost 54 percent of the people in this so-called rural district live in urbanized areas or urban clusters.
Six of the counties have a majority of their residents residing in urban areas and clusters.
It appears that the agency has disregarded information that would have suggested that this region is not a rural district.
Once again, the agency has abused its discretion in designating this region as a rural district.
The credit union in 2011 converted to a community charter serving Lycoming and Clinton Counties in Pennsylvania.
The credit union added 9 additional counties to its existing community charter in July 2017.
Today, Horizon FCU can serve persons who live, work, worship, or attend school in, and businesses and other legal entities in the rural district of Bradford, Centre, Clinton, Columbia, Lycoming, Montour, Northumberland, Potter, Sullivan, Tioga, or Union Counties. The potential increase in membership for the credit union is 666,077.
But the only way Horizon could add these 9 counties to Horizon's existing FOM was by using the rural district.
However, this region appears to be rural in name only.
Eight of the 11 counties belong to seven different core bases statistical areas. The region includes three distinct metropolitan statistical areas and four micropolitan statistical areas.
Only three counties are not part of a core based statistical area -- Potter, Sullivan, and Tioga.
Five counties have population densities in excess of 100 persons per square mile.
According to the U.S. Census Bureau, almost 54 percent of the people in this so-called rural district live in urbanized areas or urban clusters.
Six of the counties have a majority of their residents residing in urban areas and clusters.
It appears that the agency has disregarded information that would have suggested that this region is not a rural district.
Once again, the agency has abused its discretion in designating this region as a rural district.
Tuesday, September 12, 2017
12 CUs Consent to Penalties for Late Filing Q1 Call Reports
Twelve credit unions consented to penalties totaling $2,853 for late filing their Call Reports in the first quarter of 2017, according to the National Credit Union Administration.
A year earlier, 30 credit unions agreed to penalties.
Individual penalties for the first quarter ranged from $74 to $382. The median penalty was $229.
Of the 12 credit unions agreeing to pay penalties for the first quarter, 11 had assets of less than $10 million, and one had assets between $10 million and $50 million. No credit unions with assets of more than $50 million filed late Call Reports.
Six of the late-filing credit unions had been late in a previous quarter.
Read the press release.
A year earlier, 30 credit unions agreed to penalties.
Individual penalties for the first quarter ranged from $74 to $382. The median penalty was $229.
Of the 12 credit unions agreeing to pay penalties for the first quarter, 11 had assets of less than $10 million, and one had assets between $10 million and $50 million. No credit unions with assets of more than $50 million filed late Call Reports.
Six of the late-filing credit unions had been late in a previous quarter.
Read the press release.
Monday, September 11, 2017
CU Business Lending Posted Robust Growth in the Second Quarter
The National Credit Union Administration (NCUA) is reporting strong business lending growth at federally insured credit unions during the second quarter of 2017.
Outstanding business loans plus unfunded commitments increased from $68.9 billion at the end of the first quarter to $72.5 billion as of June 2017. The quarterly change in business loans was 5.2 percent.
Over the last year, business loans grew at an annualized rate of 17.4 percent.
During the second quarter member business loans increased by 5.1 percent to almost $64 billion, while purchased business loans or participations to nonmembers jumped by 6.1 percent to $8.5 billion.
As of June 2017, business loans less unfunded commitments were 5.02 percent of the credit union industry's assets. This is up 40 basis points from a year ago.
Approximately 88 percent of business loans were real estate secured. During the second quarter, business loans secured by real estate grew by 5.8 percent to $63.5 billion. The fastest growing component of business lending secured by real estate during the second quarter was construction and development loans with dollar outstanding expanding by 11.8 percent and number of loans growing by 9.8 percent.
It appears the growth in construction and development loans benefited from recent regulatory changes to NCUA's Member Business Loan regulation. The NCUA Board removed the aggregate limit on construction and development loans of 15 percent of net worth and the minimum equity requirement of 25 percent.
Outstanding business loans plus unfunded commitments increased from $68.9 billion at the end of the first quarter to $72.5 billion as of June 2017. The quarterly change in business loans was 5.2 percent.
Over the last year, business loans grew at an annualized rate of 17.4 percent.
During the second quarter member business loans increased by 5.1 percent to almost $64 billion, while purchased business loans or participations to nonmembers jumped by 6.1 percent to $8.5 billion.
As of June 2017, business loans less unfunded commitments were 5.02 percent of the credit union industry's assets. This is up 40 basis points from a year ago.
Approximately 88 percent of business loans were real estate secured. During the second quarter, business loans secured by real estate grew by 5.8 percent to $63.5 billion. The fastest growing component of business lending secured by real estate during the second quarter was construction and development loans with dollar outstanding expanding by 11.8 percent and number of loans growing by 9.8 percent.
It appears the growth in construction and development loans benefited from recent regulatory changes to NCUA's Member Business Loan regulation. The NCUA Board removed the aggregate limit on construction and development loans of 15 percent of net worth and the minimum equity requirement of 25 percent.
Saturday, September 9, 2017
Consumer Credit Surges at CUs in July
The Federal Reserve reported a strong increase in outstanding consumer credit union at credit unions in July.
Outstanding consumer credit grew by $7.4 billion during July to $411.7 billion. This translates into an annual pace of growth of $89.3 billion for the month of July.
Revolving credit outstanding increased by approximately $800 million during July to $54.1 billion.
Outstanding nonrevolving credit rose from $350.9 billion in June to $357.6 billion in July.
Read the G.19 Report.
Outstanding consumer credit grew by $7.4 billion during July to $411.7 billion. This translates into an annual pace of growth of $89.3 billion for the month of July.
Revolving credit outstanding increased by approximately $800 million during July to $54.1 billion.
Outstanding nonrevolving credit rose from $350.9 billion in June to $357.6 billion in July.
Read the G.19 Report.
Friday, September 8, 2017
Ahead of Auction, Minimum Bid for 46 New York City Taxi Medallions Set at $165,000 Each
The Wall Street Journal is reporting that trustee liquidating part of New York taxi mogul Evgeny “Gene” Freidman’s holdings has found a bidder offering $165,000 for each of 46 taxi medallions ahead of a planned auction.
The stalking-horse offer, which requires bankruptcy court approval, would put a floor under the medallions’ price at a public auction scheduled to take place on September 18.
Even if bids come in higher than the floor of $165,000, this will probably be bad news for credit unions holding New York City taxi medallion loans, as they will see a significant mark down in the collateral backing these loans.
Read the story (subscription required).
The stalking-horse offer, which requires bankruptcy court approval, would put a floor under the medallions’ price at a public auction scheduled to take place on September 18.
Even if bids come in higher than the floor of $165,000, this will probably be bad news for credit unions holding New York City taxi medallion loans, as they will see a significant mark down in the collateral backing these loans.
Read the story (subscription required).
Thursday, September 7, 2017
First Tech FCU Partners with NBA's Portland Trail Blazers
The National Basketball Association’s (NBA) Portland Trail Blazers announced a multi-year partnership deal with First Tech Federal Credit Union.
First Tech will become the Trail Blazers' first ever credit union partner.
Benefits of the deal for First Tech includes signage at the team’s Moda Center, digital media assets linked to Trail Blazers game broadcasts and social media platforms, and sponsorship of the ‘Block Party’ seating area.
First Tech FCU will also launch a Trail Blazers-branded affinity card.
First Tech Federal Credit Union is a $9.4 billion institution headquartered in Mountain View, California.
The price of the partnership deal was not disclosed.
Read the story.
First Tech will become the Trail Blazers' first ever credit union partner.
Benefits of the deal for First Tech includes signage at the team’s Moda Center, digital media assets linked to Trail Blazers game broadcasts and social media platforms, and sponsorship of the ‘Block Party’ seating area.
First Tech FCU will also launch a Trail Blazers-branded affinity card.
First Tech Federal Credit Union is a $9.4 billion institution headquartered in Mountain View, California.
The price of the partnership deal was not disclosed.
Read the story.
Wednesday, September 6, 2017
Federally-Insured CUs Post Y-o-Y Double Digit Loan Growth
The National Credit Union Administration reported an increase in asset, loans, and shares at federally-insured credit unions during the second quarter.
Assets at credit unions increased by 1 percent during the second quarter to $1.35 trillion as of June 2017.
Loans increased at a double digit year-over-year (Y-o-Y) rate at the end of the second quarter of 2017. Year-over-year loan growth was 10.9 percent.
However, the pace of loan growth accelerated during the second quarter. Total loans increased by almost $28.5 billion or 3.2 percent during the second quarter to $913 billion. All major loan categories grew in second quarter.
Indirect loans grew by almost 5 percent during the quarter to $181.1 billion. As of June 2017, indirect loans accounted for 19.83 percent of loans.
Total shares and deposits rose by 0.7 percent during the second quarter to approximately $1.146 trillion dollars.
Because loan growth outpaced share growth, the loan to share (deposit) ratio increased from 77.73 percent at the end of the first quarter of 2017 to 79.70 percent as of June 2017.
Net Income on Annual Pace to Top $10 Billion
Net income for federally-insured credit unions was almost $5.1 billion for the first six months of 2017.
The industry's return on average assets (ROA) was 0.77 percent as of June 2017 -- up 6 basis points from March 2017. The median return on average assets across all federally insured credit unions was 36 basis points.
Factors positively impacting ROA during the quarter were net interest margin and fees and other income, while those factors that negatively affected ROA were operating expenses and provisions for loan and lease losses.
Net Worth Increased by 2 Percent During the Second Quarter
During the second quarter of 2017, the industry's net worth increased by $2.8 billion to $145.9 billion.
While the industry's net worth ratio fell by 5 basis points from a year ago, it was up 11 basis points to 10.80 percent compared to the first quarter.
As of June 2017, 97.51 percent of credit unions had a net worth ratio of at least 7 percent -- the minimum requirement for being well capitalized. However, 6 credit unions were critically undercapitalized with a net worth ratio below 2 percent. In comparison, no credit union was critically undercapitalized at the end of the first quarter.
Delinquency Rate Rose, Net Charge-off Rate Virtually Unchanged
Delinquent loans increased 12.3 percent during the second quarter of 2017 to $6.84 billion. The delinquency rate rose 6 basis points during the second quarter to 0.75 percent.
As of mid-year, credit unions reported $2.5 billion in net charge-offs. The net charge-off rate was 0.57 percent -- virtually unchanged from the the first quarter.
Federally-insured credit unions reported a 2.5 percent increase in their allowance for loan and lease losses (ALLL). As of June 2017, the industry reported ALLL of $8.15 billion.
As of June 2017, the industry's coverage ratio (ALLL to delinquent loans) was 119.08 percent.
Large Credit Unions Prospered, While Smaller Credit Unions Struggled
The National Credit Union Administration reported that credit unions with assets of at least $1 billion reported the strongest growth in loans, membership and net worth over the year ending in the second quarter of 2017. On the other hand, credit unions with less than $50 million in assets reported declines in loans, membership and net worth over the year.
Read the financial trends report.
Read the press release.
Assets at credit unions increased by 1 percent during the second quarter to $1.35 trillion as of June 2017.
Loans increased at a double digit year-over-year (Y-o-Y) rate at the end of the second quarter of 2017. Year-over-year loan growth was 10.9 percent.
However, the pace of loan growth accelerated during the second quarter. Total loans increased by almost $28.5 billion or 3.2 percent during the second quarter to $913 billion. All major loan categories grew in second quarter.
Indirect loans grew by almost 5 percent during the quarter to $181.1 billion. As of June 2017, indirect loans accounted for 19.83 percent of loans.
Total shares and deposits rose by 0.7 percent during the second quarter to approximately $1.146 trillion dollars.
Because loan growth outpaced share growth, the loan to share (deposit) ratio increased from 77.73 percent at the end of the first quarter of 2017 to 79.70 percent as of June 2017.
Net Income on Annual Pace to Top $10 Billion
Net income for federally-insured credit unions was almost $5.1 billion for the first six months of 2017.
The industry's return on average assets (ROA) was 0.77 percent as of June 2017 -- up 6 basis points from March 2017. The median return on average assets across all federally insured credit unions was 36 basis points.
Factors positively impacting ROA during the quarter were net interest margin and fees and other income, while those factors that negatively affected ROA were operating expenses and provisions for loan and lease losses.
Net Worth Increased by 2 Percent During the Second Quarter
During the second quarter of 2017, the industry's net worth increased by $2.8 billion to $145.9 billion.
While the industry's net worth ratio fell by 5 basis points from a year ago, it was up 11 basis points to 10.80 percent compared to the first quarter.
As of June 2017, 97.51 percent of credit unions had a net worth ratio of at least 7 percent -- the minimum requirement for being well capitalized. However, 6 credit unions were critically undercapitalized with a net worth ratio below 2 percent. In comparison, no credit union was critically undercapitalized at the end of the first quarter.
Delinquency Rate Rose, Net Charge-off Rate Virtually Unchanged
Delinquent loans increased 12.3 percent during the second quarter of 2017 to $6.84 billion. The delinquency rate rose 6 basis points during the second quarter to 0.75 percent.
As of mid-year, credit unions reported $2.5 billion in net charge-offs. The net charge-off rate was 0.57 percent -- virtually unchanged from the the first quarter.
Federally-insured credit unions reported a 2.5 percent increase in their allowance for loan and lease losses (ALLL). As of June 2017, the industry reported ALLL of $8.15 billion.
As of June 2017, the industry's coverage ratio (ALLL to delinquent loans) was 119.08 percent.
Large Credit Unions Prospered, While Smaller Credit Unions Struggled
The National Credit Union Administration reported that credit unions with assets of at least $1 billion reported the strongest growth in loans, membership and net worth over the year ending in the second quarter of 2017. On the other hand, credit unions with less than $50 million in assets reported declines in loans, membership and net worth over the year.
Read the financial trends report.
Read the press release.
NCUSIF Equity Ratio of 1.30 Percent Is Not Normal
The National Credit Union Administration (NCUA) Board is proposing to increase the normal operating level of the National Credit Union Share Insurance Fund (NCUSIF) to 1.39 percent from its current level of 1.30 percent.
The Board will pay for the increase in the normal operating level to 1.39 percent by closing the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) in 2017, prior to its scheduled closing date in June 2021, and distributing all assets, property, and funds of TCCUSF to the NCUSIF.
By law, the normal operating level must be set by the NCUA Board between 1.20 percent and 1.50 percent of insured shares.
However, this proposal has been greeted by most of the credit union community like a skunk at the church picnic.
The Credit Union National Association (CUNA) believes a normal operating level of 1.39 percent is too high. But CUNA stated it is willing to accept a temporary 4 basis point increase in the equity ratio to insulate the NCUSIF from legacy asset volatility.
Joining the chorus, the National Association of Federally-Insured Credit Unions believes the current normal operating level for the NCUSIF is appropriate and a dramatic increase in the NCUSIF equity ratio to 1.39 percent in unnecessary.
Some credit unions commented that a normal operating level of 1.30 percent was sufficient to weather the recession and financial crisis.
However, this viewpoint that a normal operating level of 1.30 percent was sufficient to weather the financial crisis is not supported by the evidence.
The TCCUSF was created by Congress in 2009, because credit unions were looking at a 91 basis point hit to the NCUSIF in 2009. This means that credit unions would have been required to immediately expense a portion of their one percent NCUSIF capitalization deposit, as well as pay a premium assessment.
According to a September 2013 White Paper on the NCUSIF, the agency staff concluded that going forward a 1.3 percent equity ratio for the NCUSIF cannot be viewed as normal. The White Paper stated that "the NCUSIF needs an equity ratio of at least 2 percent to provide an asset base that would better enable the NCUSIF to withstand the types of pressure that arose during the recent financial crisis and recession." The agency estimated that the NCUSIF equity ratio needed to be at 2.17 percent of insured shares to prevent any depletion of a credit union's one percent NCUSIF capitalization deposit during the recent financial crisis and recession.
Moreover, there will be inevitable comparison between the NCUSIF to the Federal Deposit Insurance Corporation's Deposit Insurance Fund (DIF). The Federal Deposit Insurance Corporation has stated that a designated reserve ratio of at least 2 percent is an integral part of its comprehensive, long-range management plan for the DIF.
While credit unions will oppose any increase in the NCUSIF normal operating level, there will be political pressure on NCUA to increase the normal operating level.
As a first step, the NCUA Board should raise the normal operating level to its maximum level permitted by law of 1.50 percent, instead of the proposed 1.39 percent.
A second step would require legislation removing the statutory cap on the NCUSIF normal operating level.
Removing the statutory cap on the normal operating level would provide the NCUA Board with greater flexibility to manage the NCUSIF normal operating level. An equity ratio of 2 percent for the NCUSIF would provide an asset base, which could withstand losses that arose during the financial crisis and the Great Recession. It would also ensure parity between the NCUSIF and the DIF.
The Board will pay for the increase in the normal operating level to 1.39 percent by closing the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) in 2017, prior to its scheduled closing date in June 2021, and distributing all assets, property, and funds of TCCUSF to the NCUSIF.
By law, the normal operating level must be set by the NCUA Board between 1.20 percent and 1.50 percent of insured shares.
However, this proposal has been greeted by most of the credit union community like a skunk at the church picnic.
The Credit Union National Association (CUNA) believes a normal operating level of 1.39 percent is too high. But CUNA stated it is willing to accept a temporary 4 basis point increase in the equity ratio to insulate the NCUSIF from legacy asset volatility.
Joining the chorus, the National Association of Federally-Insured Credit Unions believes the current normal operating level for the NCUSIF is appropriate and a dramatic increase in the NCUSIF equity ratio to 1.39 percent in unnecessary.
Some credit unions commented that a normal operating level of 1.30 percent was sufficient to weather the recession and financial crisis.
However, this viewpoint that a normal operating level of 1.30 percent was sufficient to weather the financial crisis is not supported by the evidence.
The TCCUSF was created by Congress in 2009, because credit unions were looking at a 91 basis point hit to the NCUSIF in 2009. This means that credit unions would have been required to immediately expense a portion of their one percent NCUSIF capitalization deposit, as well as pay a premium assessment.
According to a September 2013 White Paper on the NCUSIF, the agency staff concluded that going forward a 1.3 percent equity ratio for the NCUSIF cannot be viewed as normal. The White Paper stated that "the NCUSIF needs an equity ratio of at least 2 percent to provide an asset base that would better enable the NCUSIF to withstand the types of pressure that arose during the recent financial crisis and recession." The agency estimated that the NCUSIF equity ratio needed to be at 2.17 percent of insured shares to prevent any depletion of a credit union's one percent NCUSIF capitalization deposit during the recent financial crisis and recession.
Moreover, there will be inevitable comparison between the NCUSIF to the Federal Deposit Insurance Corporation's Deposit Insurance Fund (DIF). The Federal Deposit Insurance Corporation has stated that a designated reserve ratio of at least 2 percent is an integral part of its comprehensive, long-range management plan for the DIF.
While credit unions will oppose any increase in the NCUSIF normal operating level, there will be political pressure on NCUA to increase the normal operating level.
As a first step, the NCUA Board should raise the normal operating level to its maximum level permitted by law of 1.50 percent, instead of the proposed 1.39 percent.
A second step would require legislation removing the statutory cap on the NCUSIF normal operating level.
Removing the statutory cap on the normal operating level would provide the NCUA Board with greater flexibility to manage the NCUSIF normal operating level. An equity ratio of 2 percent for the NCUSIF would provide an asset base, which could withstand losses that arose during the financial crisis and the Great Recession. It would also ensure parity between the NCUSIF and the DIF.
Tuesday, September 5, 2017
OMB Stays EEOC Revised Data Collection Requirement
The Office of Management and Budget (OMB) on August 29 stayed an Equal Employment Opportunity Commission (EEOC) rule that would have required the collection data on wages and hour worked by race/ethnicity and gender, while the OMB conducts a review to determine whether the revised form meets the standards of the Paperwork Reduction Act.
The stay on this data collection requirement will provide needed regulatory relief for banks and credit unions that are required to file the EEO-1 form.
The old EEO-1 required federal contractors and any company with more than 100 employees to submit data about their workforces — including breakdowns by race, ethnicity, gender and job category.
The new EEO-1 form would have lead to a 20-fold increase in data points to be collected to 3,660 data items per report.
The new data collection requirements were scheduled to go into effect on March 2018.
In announcing the stay, OMB expressed concerns that the revised data collection "lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues."
Credit unions and banks will be required to complete the old EEO-1 form for fiscal year 2017.
Read the stay memorandum.
The stay on this data collection requirement will provide needed regulatory relief for banks and credit unions that are required to file the EEO-1 form.
The old EEO-1 required federal contractors and any company with more than 100 employees to submit data about their workforces — including breakdowns by race, ethnicity, gender and job category.
The new EEO-1 form would have lead to a 20-fold increase in data points to be collected to 3,660 data items per report.
The new data collection requirements were scheduled to go into effect on March 2018.
In announcing the stay, OMB expressed concerns that the revised data collection "lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues."
Credit unions and banks will be required to complete the old EEO-1 form for fiscal year 2017.
Read the stay memorandum.
Sunday, September 3, 2017
Federal Court Overturns Obama Administration Overtime Rule
A federal judge in Texas on August 31 overturned the Obama administration’s final rule doubling the salary level used to determine whether employees are classified as exempt from overtime under the Fair Labor Standards Act (FLSA).
The rule -- which would more than double the salary level for exemptions from $23,660 to $47,476, regardless of whether the employee would qualify for exemption under the test of “executive, administrative or professional” duties -- has been prevented from taking effect for nearly nine months pending litigation.
District Judge Amos Mazzant has now granted summary judgment for the plaintiffs in a lawsuit brought by 21 states and several business groups, invalidating the final overtime rule. It remains to be seen whether the Department of Labor will appeal the ruling; under the Trump administration, Labor Secretary Alex Acosta was expected to revisit the overtime rule and is currently seeking public comments on its projected impact.
Judge Mazzant ruled that in doubling the salary test, the Obama administration’s interpretation of the FLSA was not “reasonable” and therefore not warranting the “deference” otherwise shown by courts to regulatory actions under the Chevron precedent. “The Department has exceeded its authority and gone too far with the Final Rule,” he ruled. “Nothing in [FLSA] Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a ‘bona fide executive, administrative, or professional capacity’ employee should be exempt from overtime pay.”
Read the order.
The rule -- which would more than double the salary level for exemptions from $23,660 to $47,476, regardless of whether the employee would qualify for exemption under the test of “executive, administrative or professional” duties -- has been prevented from taking effect for nearly nine months pending litigation.
District Judge Amos Mazzant has now granted summary judgment for the plaintiffs in a lawsuit brought by 21 states and several business groups, invalidating the final overtime rule. It remains to be seen whether the Department of Labor will appeal the ruling; under the Trump administration, Labor Secretary Alex Acosta was expected to revisit the overtime rule and is currently seeking public comments on its projected impact.
Judge Mazzant ruled that in doubling the salary test, the Obama administration’s interpretation of the FLSA was not “reasonable” and therefore not warranting the “deference” otherwise shown by courts to regulatory actions under the Chevron precedent. “The Department has exceeded its authority and gone too far with the Final Rule,” he ruled. “Nothing in [FLSA] Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a ‘bona fide executive, administrative, or professional capacity’ employee should be exempt from overtime pay.”
Read the order.
Saturday, September 2, 2017
Advia CU Completes Acquisition of Peoples Bank
Advia Credit Union (Parchment, MI) completed its acquisition of Peoples Bank (Elkhorn, WI).
People’s Bank had $230 million in assets and had four Wisconsin locations.
Advia Credit Union has $1.5 billion in assets and 28 branch locations.
Read the story.
People’s Bank had $230 million in assets and had four Wisconsin locations.
Advia Credit Union has $1.5 billion in assets and 28 branch locations.
Read the story.
Friday, September 1, 2017
Alabama CU Regulator Issues Cease and Desist Order to Craig Credit Union
The Alabama Credit Union Administration issued a cease and desist order against Craig Credit Union (Selma, AL).
The cease and desist order found that the $12.8 million credit union and one or more of its institution-affiliated parties have engaged in unsafe or unsound practices, violation of law, rule, and regulations, and have violated the conditions set forth in an April 24, 2017 Letter of Understanding and Agreement (LUA).
Among the items enumerated by the cease and desist order are the following:
The credit union is expected to retained qualified management.
The enforcement order further mandates a 50 percent reduction in delinquent loans by December 31, 2017 from December 31, 2016 levels.
Read the order.
The cease and desist order found that the $12.8 million credit union and one or more of its institution-affiliated parties have engaged in unsafe or unsound practices, violation of law, rule, and regulations, and have violated the conditions set forth in an April 24, 2017 Letter of Understanding and Agreement (LUA).
Among the items enumerated by the cease and desist order are the following:
- The board of directors failed to adequately supervise and direct credit union's management.
- The credit union had inadequate management.
- The credit union failed to address material deficiencies and comply with terms and conditions specified in the LUA.
- The credit union operated with a net loss or insufficient income to support net worth growth.
- The credit union had declining net worth.
- The credit union had ineffective loan and collection policies and practices.
- The credit union failed to reduce delinquencies by 25 percent as specified in the LUA.
The credit union is expected to retained qualified management.
The enforcement order further mandates a 50 percent reduction in delinquent loans by December 31, 2017 from December 31, 2016 levels.
Read the order.
Progressive CU CEO Familant Compensation Topped $10 Million in 2015
Taxi medallion lender Progressive Credit Union (New York, NY) reported that its chief executive officer/treasurer, Robert Familant, had a total compensation package of approximately $10.6 million in 2015.
Progressive Credit Union had total assets of $646 million at the end of 2015.
According to Progressive Credit Union's 2015 Form 990, Familant had base compensation of $1,977,204 and other reportable compensation of $8,569,406, which included $7,940,990 from the disbursement of funds from two 457(F) deferred compensation plans and a payment of $628,416 to cover his 2014 tax liability associated with imputed income from the transfer of ownership of non-cash keyman life insurance.
In 2014, Familant's total compensation was $5.9 million with a base pay of $999,727 and bonus and incentive compensation of $4,778,416.
Progressive Credit Union had total assets of $646 million at the end of 2015.
According to Progressive Credit Union's 2015 Form 990, Familant had base compensation of $1,977,204 and other reportable compensation of $8,569,406, which included $7,940,990 from the disbursement of funds from two 457(F) deferred compensation plans and a payment of $628,416 to cover his 2014 tax liability associated with imputed income from the transfer of ownership of non-cash keyman life insurance.
In 2014, Familant's total compensation was $5.9 million with a base pay of $999,727 and bonus and incentive compensation of $4,778,416.
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