Thursday, February 28, 2019

Commissioners Hit Pause on CU's Naming Rights to TRAC Center

Franklin County Commissioners delayed for one week Richland, Washington-based HAPO Community Credit Union's naming rights deal to the TRAC Center, according to the Tri-City Herald.

As I reported on February 24, the deal was for a total of $1 million over 10 years.

The naming rights deal was an attempt by county commissioners to narrow the operating losses at the TRAC Center.

However, people objected to dropping the name TRAC from the event and meeting center, which stands for Trade, Recreation and Agriculture Center.

Read the story.

Wednesday, February 27, 2019

PenFed's CEO Admits Anyone Can Join

In a January 25, 2019 opinion piece in Credit Union Times, James Schenck, President and CEO of Pentagon Federal Credit Union (McLean, VA), acknowledged that the credit union already had nationwide membership eligibility prior to its emergency merger with Progressive Credit Union (New York, NY).

The opinion piece was in response to banking trade associations criticisms of the acquisition of Progressive CU, which had an open charter, by Pentagon FCU (PenFed).

Schenck wrote:
Despite the criticism from bankers, PenFed already had nationwide membership eligibility through our existing field of membership, as well as a presence in all 50 states as a multiple-common-bond credit union.

In other words, PenFed's CEO is admitting that anyone can join.

This admission that anyone throughout the United States can join shows that the concept of common bond has become a joke.

This is just another example as to why policymakers should end the preferential tax treatment of large credit unions like PenFed.

Read the opinion piece.

Tuesday, February 26, 2019

State Economic Development Board Approves $750,000 in Tax Incentives for Dupaco's HQ

The Iowa Economic Development Authority board members voted unanimously on February 22 to award up to $750,000 in tax incentives to Dupaco Community Credit Union (Dubuque, IA).

The tax benefits are associated with Dupaco Community Credit Union's headquarters project.

In January 2019, the Dubuque City Council members approved a development agreement that included 15 years of tax-increment financing rebates totaling $5.2 million. Initial estimates of the tax-increment financing rebates were $2 million.

Read the story.

Monday, February 25, 2019

Two CU Bills Introduced in Nebraska

Two credit union bills have been filed in the Nebraska legislature.

LB453 would require the Director for the Department of Banking and Finance to publish a notice of a credit union's application to expand its field of membership when the Director determines that a hearing is not warranted. The notice of the application would be required in a paper of general circulation in the county or counties in which the expanded field of membership has been requested. Also, a notice of the filing will be sent to the Nebraska Bankers Association and the Nebraska Independent Community Bankers Association.

If the Director receives substantive objection to the field of membership application, the Director would be required to hold a hearing. The Director would publish a notice of the hearing in a newspaper of general circulation in the county or counties of the proposed field of membership and notify the Nebraska Bankers Association and The Nebraska Independent Community Bankers Association of the hearing.

LB407 would provide parity to Nebraska state-chartered credit unions with a credit union chartered in another state operating one or more branches in the state. The Nebraska state-chartered credit union would have to apply with the Department of Banking and Finance for approval to engage in an activity that is permissible for a credit union charters in another state operating in Nebraska. A credit union seeking the authority to engage in this activity must be well capitalized as of the most recent examination.

There will be a hearing on both bills before the Banking, Insurance, and Commerce Committee on February 26.

NCUA Sued for Breach of Contracts

A lawsuit filed on February 11, 2019 by large banks and their affiliates that alleges breach of contract by the National Credit Union Administration (NCUA).

In March 2013, NCUA entered into a settlement agreement with Plaintiffs and certain affiliates addressing claims arising out of the purchases of mortgage-backed securities (MBS) by Texans Credit Union and five failed corporate credit unions that were underwritten, sponsored, sold, or issued by Plaintiffs or their affiliates.

As part of the settlement agreement, if NCUA later entered into a settlement with certain third parties involved with Plaintiffs MBS, the NCUA was required to “use good faith, best efforts to obtain from the Third Party a release of [Plaintiffs] as to all claims for contribution, indemnification, or any other liability arising out of or relating in any way to such claims then being settled with such Third Party.”

The lawsuit claims that while the Plaintiffs have fulfilled their obligations under the NCUA settlement agreement, NCUA repeatedly breached its contractual obligation to use its “good faith, best efforts” to obtain releases when settling claims with Third Parties as liquidator/conservator of the credit unions.

The Plaintiffs are seeking monetary damages in an amount to be determined at trial, including attorneys’ fees and other costs and expenses.

The complaint was filed with United States District Court for the District of Columbia.

Sunday, February 24, 2019

HAPO Community to Buy Naming Rights to Event and Meeting Center

HAPO Community Credit Union (Richland, WA) is poised to purchase the naming rights to The Trade, Recreation and Agricultural Center (TRAC) in Pasco (WA).

HAPO Community Credit Union will pay $100,000 annually under the naming rights agreement for the event and meeting center.

The TRAC will be renamed The HAPO Center under the agreement.

The deal is for 10 years.

The Franklin County Commission is scheduled to vote on the deal on February 26.

Read the naming rights agreement.

Thursday, February 21, 2019

Interdependency Risk and An Emergency Merger

The current narrative from the credit union industry is that the emergency merger of Progressive Credit Union (New York, NY) into Pentagon Federal Credit Union (McLean, VA) saved the National Credit Union Share Insurance Fund (NCUSIF) from the loss that would have arisen from the failure of Progressive.

However, an untold story is about the interdependency risk associated with credit unions trying to prop up Progressive CU.

As I previously pointed out, Progressive Credit Union received an exemption from the nonmember deposit cap in 2015.

A document From the National Credit Union Administration (NCUA) noted that Progressive CU in recent years primarily funded itself through nonmember deposits, which were all from credit unions.

As of December 2018, the number of nonmember accounts at Progressive were 246. These dollar value of these nonmember deposits were slightly more than $76.8 million. Nonmember deposits comprised almost 32 percent of total deposits and shares at Progressive.

In addition, Progressive CU had $52 million in uninsured shares and deposits, of which $36.25 million were nonmember deposits.

Under the scenario where Progressive CU was liquidated in an insured depositor payoff, these uninsured deposits would absorb losses before the NCUSIF.

It is possible that some credit unions that funded Progressive CU could have become impaired. But only NCUA would know if this is the case.

This emergency merger seems to have more to do with keeping losses at Progressive from cascading to other credit unions.

The NCUA needs to seriously examine this issue of interdependency risk within the credit union industry.









Wednesday, February 20, 2019

Fairwinds CU to Acquire $95 Million Bank

The Orlando Business Journal is reporting that $2.2 billion-asset Fairwinds Credit Union (Orlando, FL) has agreed to buy the $95 million-asset Friends Bank (New Smyrna Beach, VA).

Fairwinds CU has 30 branches, while Friends Bank has 3 locations.

Fairwinds CU did not disclose the price of the deal. The deal is expected to close in the third quarter and is subject to regulatory and shareholder approval.

This the third announced deal of credit union acquiring a bank in 2019.

All of the transactions involved Florida institutions.

Read the story.



Numerica CU Buys Naming Rights to Two Riverfront Park Attractions

The Spokane (WA) Park Board on February 14th approved a naming rights deal with Numerica Credit Union and the Riverfront Skate Ribbon and SkyRide.

Numerica CU will pay $90,000 per year for the naming rights. The length of the deal is from 2019 to 2028.

The deal will also allow Numerica to secure the naming rights for the Christmas Tree Lighting ceremony and will give the credit union the first right of refusal for an ATM at the location.

The agreement also provides the title sponsor the option of paying $10,000 per year for the naming rights to the Parkway.

Read more.

Read the sponsorship agreement.

Tuesday, February 19, 2019

Community First CU's Aggregate MBL Limit Raised to 25 Percent of Assets

The Wisconsin Office of Credit Unions granted Community First Credit Union (Neenah, WI) an exception to the aggregate member business loan (MBL) cap, according to the Credit Union Activities Report.

The credit union applied for the exception from the aggregate MBL limit on August 28, 2018 and the Wisconsin Office of Credit Unions approved the exception on January 14, 2019.

The new aggregate MBL to asset ratio for the credit union is 25 percent of assets.

This is the second exception to the aggregate MBL cap for Community First CU.

On February 24, 2014, the Wisconsin Credit Union supervisor approved an exception to the aggregate MBL limit for Community First CU to make member business loans up to 18 percent of the credit union's assets, instead of the statutory limit of 12.25 percent of assets.

At the end of the 2018, the credit union was approaching the 18 percent cap with a MBL-to-Asset ratio of 17.85 percent.

This approval comes almost two years after Community First CU was denied a request on Janaury 23, 2017 for an exception from the aggregate MBL cap.



Sunday, February 17, 2019

NCUSIF Equity Ratio Above Normal Operating Level at the End of 2018

The National Credit Union Administration (NCUA) on February 15 released the audited financial statements for the National Credit Union Share Insurance Fund (NCUSIF).

Below are some highlights from the report.

As of December 31, 2018, equity in the NCUSIF was $15.72 billion. The equity ratio for the NCUSIF was 1.39 percent, which was above the Normal Operating Level of 1.38 percent.

For 2018, there were eight credit union failures compared to 10 failures in 2017. The cost of these failures, or the estimated cost of resolution at the time of liquidation, for 2018 is $785.0 million compared to $24.4 million for failures that occurred in 2017.

The NCUSIF ended 2018 with Insurance and Guarantee Program Liabilities of $119.1 million to cover probable losses as compared with $925.5 million for the previous year-end. The decline in reserves were primarily due to the resolution of certain troubled credit unions.

At the end of 2018, specific reserves were $7.3 million. Specific reserves are identified for those credit unions where failure is probable and additional information is available to make a reasonable estimate of losses. General reserves were $111.8 million.

At the end of 2018, NCUA did not guarantee any line-of-credit to a third-party lender.

Additionally, the NCUSIF did not provide any indemnifications as part of merger assistance or purchase and assumption agreements with acquiring credit unions.

Thursday, February 14, 2019

PenFed to Get Up to $380,000 in Incentives from Bexar County for Proposed Regional Finance Center

Bexar County (Texas) Commissioners on February 12th approved an incentive package worth up to $380,000 to Pentagon Federal Credit Union (McLean, VA) for a proposed regional finance center to be opened in San Antonio.

The San Antonio Express-News noted that the incentive package "includes an economic development grant of more than $130,000 and a skills development grant of up to $250,000 based on PenFed creating 250 jobs that will pay at least $50,000 annually."

Bexar County Commissioners will vote on the final incentive package at a later date, after negotiations between county economic development officials and Pentagon FCU on the incentive package are completed.

Earlier, Pentagon FCU received a $2.5 million grant for the regional finance center from the State of Texas.

Wednesday, February 13, 2019

Fewer Credit Unions Offering Free Checking Accounts

Fewer credit unions in 2018 offered free checking accounts.

The percent of credit unions providing free checking accounts fell from almost 75 percent in 2017 to 49 percent in 2018.

Moebs Services defines free checking as an account with no periodic fees, no minimum balance, no requirements for transactions, reward sign-ups, or enrollment in other products.

As free checking declines, Mike Moebs, Economist and CEO of Moebs Services, stated that credit union are struggling with how to address this issue with consumers and want to avoid the topic like the plague.

The following graph shows the percentage of credit unions offering free checking accounts from 2000 through 2018.



Tuesday, February 12, 2019

Phishing Attack Targets CU AML Officers

Krebs on Security is reporting that on January 30 a highly targeted, malware-laced phishing campaign landed in the inboxes of anti-money laundering (AML) officers at multiple credit unions.

The USA Patriot Act requires all financial institutions to appoint at least two Bank Secrecy Act (BSA) contacts responsible for reporting suspicious financial transactions that may be associated with money laundering.

These BSA contacts at credit unions are registered with the National Credit Union Administration (NCUA). This information is not publicly available.

Given the targeted nature of the spear phishing attack, some within the credit union industry speculated that NCUA may have been compromised.

However, NCUA denied the allegation. NCUA in a February 8 press release stated:
Upon learning of the recent spear phishing campaign targeting Bank Secrecy Act officers at credit unions, the NCUA conducted a comprehensive review of its security logs and alerts. This review is completed, and it did not find any indication that information was compromised.
It appears that the spear phishing campaign has spread beyond credit unions to other financial institutions.

This does raise the question of how did these phishers obtain this non-public information about BSA officers?

Monday, February 11, 2019

Two Large CUs Seek to Defect from Federal Charter

Two billion-dollar plus credit unions are in the process of defecting from the federal charter to state charters.

$1.9 billion Central Florida Educators Federal Credit Union (Lake Mary, FL) and $1.1 billion Potlatch No. 1 Federal Credit Union (Lewiston, ID) are in the process of converting to state charters.

Both credit unions stated that switching to a state charter will give them a greater ability to expand.

The Orlando Business Journal is reporting the Central Florida Educators wrote its members that by switching to a state charter would allow it to expand beyond central Florida. The credit union will also change its name to Addition Financial on May 1.

Potlatch No. 1 Federal Credit Union in its conversion notice stated that "a state charter will allow us to serve persons in geographic areas we desire, which are not currently permissible as a federal charter."

Potlatch No. 1 FCU estimates after switching from a federal charter to a state charter it will save almost $100,000 on regulatory fees. However, the credit union would be subject to state income taxes.

Potlatch No.1 FCU has already received preliminary approval from the Idaho Department of Finance. Members of Potlatch No. 1 FCU voted on the conversion at the end of January, but the results of the vote have not been disclosed. The National Credit Union Administration (NCUA) also needs to approve the charter change.

These defections are likely to set off alarm bells at NCUA.

Read the Orlando Business Journal.

Read The Lewiston Tribune.



Sunday, February 10, 2019

Black Hills FCU and CMFG Life Insurance Agree to Pay $3 Million to Settle Class Action Lawsuit

Black Hills Federal Credit Union (Rapid City, SD) and a Wisconsin-based insurance company, CMFG Life Insurance Company (formerly CUNA Mutual Insurance Society or CUMIS), have agreed to pay a total of $3 million to settle allegations that they improperly raised insurance premiums associated with 4,461 loans, according to the Rapid City Journal.

On May 1, 2013, I reported on the lawsuit (Read the blog post).

The proposed settlement, which is scheduled to be considered by a judge, would resolve the eight-year-old class action lawsuit.

CMFG Life Insurance’s parent entity is CUNA Mutual Financial Group Inc.

Read the story.

Friday, February 8, 2019

Proposal Would Have Vystar Pay $9.76 Million for Naming Rights to Jacksonville Veterans Memorial Arena

Jacksonville Mayor Lenny Curry is proposing a change in the name of Jacksonville Veteran Memorial Arena to Vystar Veterans Memorial Arena, according to The Florida Times-Union.

Under the proposed agreement, VyStar Credit Union (Jacksonville, FL) would pay $9.76 million for the naming rights to the arena over 15 years. The city would put 10 percent of those annual payments into a trust fund that would support veterans programs in Jacksonville.

In addition, Vystar would provide financial support directly to veterans program.

The City Council will need to approve the name change and overturn a 2002 ordinance that said the arena “shall not bear the name of any individual or company or any other thing as part of any title.”

Read the story.

San Diego County CU Extends Naming Rights Deal for Stadium

The City of San Diego extended its naming rights deal with San Diego County Credit Union to SDCCU Stadium.

SDCCU Stadium is the former Qualcomm Stadium.

The credit union had paid $500,000 for the naming rights from September 2017 through the end of 2018.

The two-year extension, which runs through the end of 2020, will cost the credit union at least $1.512 million.

As part of the naming rights deal, San Diego County CU will receive additional venue signage.

Read the staff report.

Thursday, February 7, 2019

Growth in Consumer Credit at CUs Slowed in December

The Federal Reserve reported that outstanding consumer credit at credit unions for December 2018 grew, but at a slower pace than November.

The deceleration in the growth in consumer credit was driven by a slowing in the growth of nonrevolving credit.

The outstanding consumer credit at credit unions was $474.2 billion for December compared to $471.4 billion for November.

Revolving credit at credit unions increased by $1.3 billion during December to $62.6 billion.

Nonrevolving credit grew by $1.5 billion for the month of December to $411.6 billion. For the month of November, nonrevolving credit expanded by $2.3 billion.

Read the G.19 Report.

Advia CU to Construct 150,000-Square-Foot HQ Building

Advia Credit Union (Parchment, MI) is planning a new corporate headquarters on a 38-acre site in Oshtemo Township, Michigan.

The $1.7 billion credit union will break ground on a three-story, 150,000-square-foot building this spring.

The new headquarters will initially house nearly 240 employees, but has the capacity to house 460 employees.

The new headquarters building will include retail space for lease on the first floor.

Outdoor terraces will overlook a landscaped water feature.

The price tag for the project was not disclosed.

Read the press release.

Wednesday, February 6, 2019

CU Satisfaction Index Edges Higher in 2018

Member satisfaction with credit unions edged higher in 2018.

According to the CFI Group, the Credit Union Satisfaction Index rose by 2 points to 86 in 2018.

The study found the biggest driver of satisfaction was the improvement in the branch experience. Branch Convenience and Branch Staff were up 4 and 3 points respectively. The only area to slip from last year was Online Banking.

The study notes that "to thrive in 2019, credit unions will need to compete beyond just rates and fees." Only 18 percent of credit union members stated reasonable rates and fees were their primary reason for joining a credit union.

The number one reason for joining a credit union was a recommendation from someone I trust.

The study found that 1 in 10 credit union members reported an issue or problem in the last 60 days; but one-third did not report it.

Credit union members who have an issue or problem within the last 60 days were less satisfied, less likely to use additional products, less likely to recommend the credit union, and less likely to remain a member.

CFI Group recommended that credit unions need to develop processes that quickly and successfully address member issues.

Read the press release.



Tuesday, February 5, 2019

Ohio CU Buys Branch and Deposits from United Fidelity Bank

The American Banker is reporting that Superior Credit Union (Lima, OH) has agreed to buy a Cincinnati branch from United Fidelity Bank (Evansville, IN).

The deal includes about $19 million in deposits and an undisclosed amount of assets.

The transaction is expected to close in the second quarter.

Read the story (subscription required).

Taxi Medallion Loans Provide a Bumpy Ride for Several NJ CUs

Several New Jersey credit unions continue to be affected by the disruption of the taxi industry by ride sharing companies. These credit unions either originated or participated in taxi medallion loans.

Aspire Federal Credit Union (Clark, NJ)

After posting a loss of almost $6.1 million for 2017, Aspire Federal Credit Union reported a loss of approximately $3.5 million for 2018. the credit union posted a loss of $1.95 million for the fourth quarter of 2018.

The fourth quarter loss was primary due to a 17.7 percent increase in provision for loan and lease losses. At the end of 2018, total provision for loan and lease losses was $3.87 million.

The $142.8 million credit union had approximately $7.3 million in commercial loans not secured by real estate -- presumably most, if not all, of these loans were to finance taxi medallions.

Due to the fourth quarter loss, the credit union's net worth fell from $9.9 million as of September 30 to just shy of $8 million at the end of 2018. Its net worth ratio over the same time period fell from 6.77 percent to 5.59 percent. As of the end of 2018, Aspire FCU was undercapitalized.

During the fourth quarter of 2018, fewer loans were delinquent. Delinquent loans fell by 23.2 percent during the quarter to $4.4 million. The percent of loans 60 days or more fell by 100 basis points to 4.07 percent.

Over half (52.4 percent) of the delinquent loans were commercial loans not secured by real estate. The percent of commercial loans non-real estate secured loans past due 60 days was 31.63 percent.

In addition, early delinquencies (loans 30 to 59 days past due) were $3.2 million -- up 20.5 percent from September 2018.

The credit union reported net charge-offs of $5.7 million at the end of 2018. The net charge-off rate was 4.91 percent at the end of 2018. Aspire wrote off almost $3.2 million in commercial real estate loans not secured by real estate during 2018.

Aspire's allowance for loan and lease losses account was $6.58 million. Its coverage ratio (allowance for loan and lease losses divided by delinquent loans) was 148.78 percent, which means it could write off all delinquent loans and still have some loan loss reserves left over.

First Financial Federal Credit Union (Freehold, NJ)

First Financial Federal Credit Union reported a loss of almost $2.38 million for 2018. The loss was due to provision for loan and lease losses of $3.9 million at the end of 2018.

First Financial had assets of $175.3 million at the end of 2018, down from nearly $190 million at the end of 2017.

At the end of 2018, the credit union reported $8.7 million in commercial loans not secured by real estate -- most, if not all, these loans were to finance taxi medallion participation loans. A year earlier, the credit union reported $16.16 million in non-real estate secured commercial loans.

During 2018, the credit union's net worth fell 20.5 percent to $9.2 million. Over the same time period, the credit union's net worth ratio fell from 6.09 percent to 5.24 percent. The credit union at the end of 2018 was undercapitalized.

Over the course of the year, delinquent loans fell from $6.27 million at the end of 2017 to $4.35 million at the end of 2018.

In addition, the delinquency rate on loans fell from 4.49 percent to 3.40 percent over the same time period.

At the end of 2018, $1.47 million in nonmember commercial loans not secured by real estate were 60 days or more past due. Roughly 16.90 percent of these loans were delinquent.

Net charge-offs were $3.31 million at the end of 2018. The net charge-off rate was 2.48 percent.

For 2018, the credit union wrote off $1.85 million in participation commercial loans not secured by real estate.

At the end of 2018, allowance for loan and lease losses was $3.92 million. The credit union's coverage ratio was 90.13 percent.

United Teletech Financial Federal Credit Union (Tinton Falls, NJ)

While United Teletech Financial Federal Credit Union posted a loss for 2018, it recorded a profit for the fourth quarter of 2018.

The credit union had a full year loss of almost $355 thousand; but a fourth quarter profit of $401 thousand. A year earlier, the credit union recorded a loss of $9.62 million.

The improvement in profitability was due to a decline in provisioning for loan and lease losses. Provision for loan and lease losses were down from $11.7 million for 2017 to $4.96 million for 2018.

However over the last year, assets at United Teletech Financial FCU fell from $319.8 million at the end of 2017 to $302 million at the end of 2018.

Its portfolio of commercial loans not secured by real estate dropped by 19.2 percent during 2018 to $20 million. Presumably most, if not all, of these loans were to finance taxi medallion participation loans.

As of December 31, 2018, the credit union's net worth was $22.8 million. Its net worth ratio was 7.54 percent at the end of 2018.

At the end of 2018, delinquent loans were down from the previous quarter, but up from a year ago. On December 31, 2018, delinquent loans were $13.97 million -- down 12.2 percent from September 2018, but up 67.4 percent from a year ago.

As of December 2018, the delinquency rate was 5.74 percent.

At the end of 2018, $8.48 million in nonmember commercial loans not secured by real estate were 60 days or more past due. Almost 61 percent of all delinquent loans were nonmember commercial loans.

In addition, the credit union reported that almost $8 million in early delinquency (30 to 59 days past due).

In the fourth quarter net charge-offs surged by 41.7 percent to $5.23 million. The net charge-off rate was 2.04 percent.

The credit union wrote off $3 million in taxi medallion participation loans during 2018.

Because net charge-offs rose more than provision for loan and lease losses during the fourth quarter, the credit union's allowance for loan and lease losses fell 15.1 percent to slightly less than $10.1 million. At the end of 2018, the coverage ratio was 72.03 percent.




Monday, February 4, 2019

Administration to Nominate Todd Harper to be a Member of the NCUA Board

President Donald Trump announced on February 1 his intention to nominate Todd Harper to be a member of the National Credit Union Administration (NCUA) Board.

From 2011 to 2017, he led the Office of Public and Congressional Affairs and served as the chief policy advisor to the Chairman of the NCUA.

Mr. Harper also served as staff director for the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises in the U.S. House of Representatives

He worked as legislative director for former Congressman Paul Kanjorski of Pennsylvania.

He will serve the remainder of a six-year term expiring April 10, 2021.

President Trump earlier nominated Rodney Hood for the NCUA Board. He previously served on the NCUA Board and will fill the seat currently occupied by board member Rick Metsger. Metsger's term expired in August 2017.

Read more.





Friday, February 1, 2019

Quorum FCU Loses Almost $8.3 Million in 2018, as It Deals with Bad Taxi Medallion Loans

Troubled taxi medallion participation loans contributed to a large 2018 loss at Quorum Federal Credit Union (Purchase, NY).

The credit union contracted by almost 5 percent during 2018 to $817.5 million at the end of 2018.

Its portfolio of commercial loans not secured by real estate fell by $14.5 million during 2018 to $49.9 million. Presumably all or most of these loans were taxi medallion participation loans. Quorum FCU ended its taxi medallion participation loan in 2013.

After recording a profit of $1.8 million for 2017, Quorum FCU reported a full year loss just shy of $8.3 million. During the fourth quarter, the credit union saw a loss of $4.16 million.

The loss was driven by a $5.8 million increase in provision for loan and lease losses during the fourth quarter of 2018 to $21.1 million.

Due to the loss, the credit union's net worth fell from $67.3 million at the end of 2017 to $59 million at the end of 2018. The credit union's net worth ratio dropped by 60 basis points over the same time period to 7.22 percent.

As of December 2018, the credit union reported almost $38.7 million in delinquent loans -- down 11.9 percent from the prior quarter. This translates to 5.50 percent of its loan portfolio being 60 days or more past due.

Almost 71 percent of the delinquent loans were nonmember commercial loans not secured by real estate.

In addition, 58.28 percent of nonmember commercial loans not secured by real estate were 180 days or more delinquent with the vast majority of these loans being at least 360 days past due.

Net charge-offs at Quorum were almost $18.4 million for 2018. This was up from $8.1 million for 2017. At the end of 2018, the net charge off rate was 2.55 percent.

Taxi medallion participation loans accounted for almost $11.17 million of the net charge-offs for 2018.

At the end of 2018, allowance for loan and lease losses at Quorum were $36.8 million. Its coverage ratio (allowance for loan and lease losses to delinquent loans) was 95.11 percent.