Monday, September 30, 2019

38 Pages of Heavily Redacted Documents on Progressive-PenFed Merger

On January 7, 2019, I filed a Freedom of Information Act request with the National Credit Union Administration (NCUA) regarding the emergency merger of Progressive Credit Union (New York, NY) into Pentagon Federal Credit Union (McLean, VA).

Specifically, I requested 2018 agency records regarding 1) the merger application, agreement, and NCUA approval documents; 2) communications between the NCUA and potential credit union suitors of Progressive; and 3) internal NCUA communications of potential merger partners with Progressive.

On September 25, NCUA granted my request in part and denied it in part.

The agency did provide 38 pages in response to my request, which were heavily redacted, on the unassisted emergency merger between Progressive and Pentagon FCU.

NCUA wrote that the "[r]edacted and withheld information is exempt from FOIA release under one or more of the exemptions at 5 U.S.C. § 552(b)(4), (5), (6), and (8)."

NCUA did not provide any information on potential credit union suitors for Progressive Credit Union other than Pentagon FCU. .

One section of a September 18 letter to NCUA and the New York Department of Financial Services from Robert Familiant, CEO of Progressive, on Progressive's emergency required expeditious action and a lack of reasonably available alternatives for Progressive was totally redacted. What does the lack of reasonably available alternatives mean?

In addition, the September 18 letter stated that there were seven reasons why this emergency merger with Pentagon FCU was in the public interest. However, 3 reasons were totally redacted and parts of the other 4 reasons were partially redacted.

The partially redacted reasons that the emergency merger was in the public interest were:
  • the merger would eliminate the risk of a loss to the National Credit Union Share Insurance Fund;
  • the merger would benefit Progressive members by expanding products and services available to them;
  • the merger would eliminate duplicate positions and expenses; and
  • Pentagon FCU wanted to merge now.
The section in the application detailing the reasons for the merger were extensively redacted.

Outside of saying the merger was in both credit unions' best interest, the record was pretty thin on how the merger benefited Pentagon FCU or its members.

Another redaction was the analysis of the adequacy of Progressive's allowance for loan and lease losses.

The document further redacted other financial information including the combined financials after merger adjustments.

Friday, September 27, 2019

Alliant CU Sued over Overdraft Practices

Alliant Credit Union (Chicago, IL) is being sued for improperly charging overdraft (OD) fees.

The proposed class action lawsuit accuses Alliant Credit Union of assessing non sufficient Funds (NSF) fees or overdraft fees on transactions in which the consumers’ accounts had enough funds to pay for the transactions.

Additionally, the credit union is accused of charging multiple NSF fees on the same electronic transaction which, according to the plaintiffs. This is a violation of the contract that the credit union has with their members.

The proposed class action lawsuit seeks restitution, monetary damages and injunctive relief associated with allegedly unlawful overdraft charges.

The lawsuit was filed with the US District Court, Northern District of Illinois, Eastern Division.

Thursday, September 26, 2019

House Passes the SAFE Banking Act

By a bipartisan vote of 321 to 103 last night, the House passed the SAFE Banking Act (H.R. 1595).

The bill will provide clarity to financial institutions seeking to serve legitimate cannabis businesses.

With cannabis now legal in some form in 33 states, the bill would allow financial institutions to serve cannabis-related businesses in those states, and prohibit federal regulators from taking action against a bank or credit union solely because cannabis is involved.

The bill now heads to the Senate, where Banking Committee Chairman Mike Crapo (R-ID) has signaled a willingness in recent days to advance a cannabis banking bill.

Here is the vote on the bill.

Wednesday, September 25, 2019

Florida Regulator Approves MidFlorida's Acquisition of CB&T

The Florida Office of Financial Regulation on September 12 issued a Notice of Intent to Approve the application of MidFlorida Credit Union (Lakeland, FL) to acquire Community Bank & Trust of Florida (CB&T) of Ocala, Florida.

Under the agreement, MidFlorida CU stated "it does not intend to acquire, own, or retain CB&T's stock or the power to conduct commercial banking business granted under its charter."

In addition, MidFlorida will use a credit union service organization to acquire the trust assets of CB&T. MidFlorida submitted an application on August 5 to organize Southeast Trust Company< LLC. On September 12, the state regulator approved the application.

Upon the merger being consummated, Hugh Dailey of CB&T will join the credit union as an executive officer.

Within six months, borrowers and depositors of CB&T will need to opt-in to become members of MidFlorida; did not opt-in, but maintains a non-member deposit account at the credit union, or whose loans have been transferred to another financial institution, or whose account relationship has closed, moved to another financial institution, or paid off their loans.

The transaction still needs the approval of the National Credit Union Administration and the Federal Deposit Insurance Corporation.

Tuesday, September 24, 2019

Allegacy Pays $2 Million for Naming Rights to University Center

Allegacy Federal Credit Union (Winston-Salem, NC) purchased the naming rights to a Center at Wake Forest University.

The credit union will pay $2 million over 10 years for the naming rights to the School of Business Center for Leadership and Character.

The Center will now be called the Allegacy Center for Leadership and Character.

Read more.

Founders FCU Buys Naming Rights to "The Zone"

Founders Federal Credit Union (Lancaster, SC) has bought the naming rights to "The Zone" at William Brice Stadium, the home of the University of South Carolina Gamecocks.

The Zone will now be called the Founders Zone.

The zone is an 11,000-square-foot indoor space at the south end zone of Williams-Brice Stadium.

The price for the naming rights deal was no disclosed.

Read more.

Monday, September 23, 2019

NCUA Should Propose the Equivalent of the Community Bank Leverage Ratio

On June 20, 2019, the National Credit Union Administration (NCUA) Board delayed the effective date of the agency’s risk-based capital rule to January 1, 2022.

The delay was meant to provide the NCUA Board time to consider additional improvements to credit union capital standards, including the equivalent of a community bank leverage ratio for credit unions.

On September 17, the Federal Deposit Insurance Corporation finalized the community bank leverage ratio rule.

The final rule implements a section of the S. 2155 regulatory reform law that directed the agencies to set a community bank leverage ratio between 8 percent and 10 percent.

Under the final rule, banks with less than $10 billion in assets may elect the community bank leverage ratio framework if they meet the 9 percent ratio and if they hold 25 percent or less of assets in off-balance sheet exposures, and 5 percent or less of assets in trading assets and liabilities.

Community banks with a leverage capital ratio of at least 9 percent will be considered to have met the well-capitalized ratio requirements under the Prompt Corrective Action regulations and will not be required to report or calculate risk-based capital.

The final rule has a two-quarter grace period for a qualifying community bank that fails to meet any of the qualifying criteria. For example, if the leverage ratio slips under 9 percent, but remains above 8 percent, the community bank will be deemed to be well-capitalized during the grace period. However, there is no grace period for a community bank if its leverage ratio falls below 8 percent.

The final rule goes into effect on January 1, 2020.

Section 1790d(c)2 of the Federal Credit Union Act states that if Federal banking agencies increase or decrease the required minimum level for the leverage limit, the NCUA Board may correspondingly adjust one or more of its Prompt Corrective Action net worth ratios in consultation with the Federal banking agencies.

The NCUA Board should use its authority to issue a proposed rule this year that is equivalent to the community bank leverage ratio.

By doing so, strongly capitalized, complex credit unions could elect to receive regulatory relief from the agency's risk-based capital rule.

Read more.

Sunday, September 22, 2019

Guardian CU Sponsors Professional Golf Tournament

Guardian Credit Union (Montgomery, AL) is sponsoring this weekend the Guardian Championship on the LPGA's Symetra Tour in Prattville, Alabama.

The Symetra Tour is the official qualifying tour of the LPGA Tour.

Guardian CU has almost $510 million in assets as of June 2019.

The price tag of this sponsorship was not disclosed.

Credit unions also sponsored the Danielle Downey Credit Union Classic in Rochester, NY on the Symetra Tour in July.

However, I doubt policymakers intended for the credit union tax exemption to be used to sponsor a professional golf tournament.

Read more.

Saturday, September 21, 2019

Financial Trade Groups Urge House to Pass the Safe Banking Act

With the House expected to vote on the SAFE Banking Act (H.R. 1595) as early as next week, four financial trade associations urged lawmakers to pass the bill, which would allow depository institutions to serve the needs of customers in states where cannabis is legal.

‌“The SAFE Banking Act of 2019 provides a mechanism for the cannabis industry and its service providers to deposit their cash in regulated financial institutions, which allows our members to meet the needs of their communities and helps those communities reduce cash-motivated crimes, increase the efficiency of tax collections and improve the financial transparency of the cannabis industry,” the groups wrote.

The bill was introduced by Reps. Ed Perlmutter (D-Colo.), Steve Stivers (R-Ohio), Denny Heck (D-Wash.) and Warren Davidson (R-Ohio), the bipartisan bill is supported by more than 200 cosponsors.

The financial trade groups signing the letter were the American Bankers Association, Credit Union National Association, Independent Community Bankers of America, and National Bankers Association.

Read the letter.

Friday, September 20, 2019

Mountain America CU Sponsoring Dixie State University Athletics

Mountain America Credit Union (Sandy, UT) is the exclusive credit union sponsor of Dixie State University Athletics (St. George, UT).

Funds from this multi-year sponsorship will go to new videoboards inside Burns Arena and at Trailblazers Stadium.

In return, $9 billion Mountain America will have its brand prominently displayed at all home athletic games including football, basketball, women's volleyball, men's and women's soccer, softball, and baseball.

The price of the sponsorship agreement was not disclosed.

Read more.

Thursday, September 19, 2019

Problem CUs Rose in 2nd Quarter, But Shares and Assets Fell

The number of problem credit unions edged higher during the second quarter of 2019, according to the National Credit Union Administration (NCUA).

At the end of the second quarter of 2019, there were 204 problem credit unions. In comparison, there were 202 problem credit unions at the end of the first quarter of 2018.

A problem credit union has a composite CAMEL rating of 4 or 5.

Total assets in problem credit unions were $11 billion during the second quarter. Assets in problem credit unions were $11.8 billion at the end of the first quarter.

Shares (deposits) in problem credit unions fell during the second quarter to $9.8 billion from $10.4 billion as of March 2019. At the end of the second quarter, 0.82 percent of total insured shares were in problem credit unions. In comparison, 0.91 percent of total insured shares were in problem credit unions as of March 2019.

Most problem credit unions were small credit unions.

The number of problem credit unions with less than $100 million in assets rose by 8 to 182 during the first quarter. But the number of problem credit unions with more than $100 million in assets fell during the quarter by 6 to 22.

NCUA reported that 89.2 percent of problem credit unions have less than $100 million in assets, while 1.47 percent of problem credit unions have more than $500 million in assets.

Wednesday, September 18, 2019

Sharonview FCU Partners with Topgolf

Sharonview Federal Credit Union (Fort Mill, SC) announced a partnership with Topgolf Entertainment Group.

The $1.6 billion credit union signed a two-year contract with Topgolf venues in Charlotte (NC) and Greenville (SC).

The partnership will include Sharonview branding on the second level of the Charlotte venue and advertising, social media presence and digital signage for both venues.

The price tag of the partnership was not disclosed.

Read the press release.

Tuesday, September 17, 2019

First Commerce CU to Acquire Georgia Bank

First Commerce Credit Union (Tallahassee, FL) announced on September 16 that it would purchase and assume certain assets and liabilities of The Citizens Bank (Nashville, GA).

The purchase has been approved by the boards of directors of both institutions and is expected to close in the second quarter of 2020, subject to customary closing conditions and shareholder and regulatory approvals.

First Commerce CU has $620 million in assets.

The Citizens Bank has $248 million in assets and $212 million in deposits and almost 15,000 customers. The bank has 4 offices -- 2 in Berrien County and 1 each in Cook and Lowndes Counties.

The price of the transaction was not disclosed.

Read more.

Read FAQ.

NCUA Issues Guidance on Secondary Capital Plans

The National Credit Union Administration (NCUA) issued guidance to staff on credit unions offering secondary capital.

NCUA wrote that many low-income credit unions (LICUs) have a record of prudently using secondary capital; however, some planned uses of secondary capital can be complex and involve higher risk.

NCUA re-iterated in its letter to staff that there is no "one size fits all" secondary capital plan for LICUs.

The supervisory letter should help LICUs to better understand the secondary capital plan submission process.

The letter also explains the safety and soundness expectations of the agency regarding secondary capital plans.

Appendix A includes examiner review questions. A LICU should be prepared to discuss these questions with their examiner and address these questions in its written plan.

This letter makes it clear that if a LICU plans to offer secondary capital, the LICU will need to follow NCUA's lead.

Read the letter.

Monday, September 16, 2019

Kitsap CU Buys Naming Rights to High School Outdoor Athletic Complex

Central Kitsap School District entered into a naming rights agreement with Kitsap Credit Union (Bremerton, WA) for the new high school outdoor athletic facilities.

The credit union paid $500,000 for the naming rights of the outdoor athletic complex.

The agreement includes naming rights and advertising space in the athletic facilities for six years.

The outdoor athletic facilities includes football field and track, baseball field, softball field, and tennis courts on the Central Kitsap High School campus.

The outdoor facilities will be known as the “Kitsap Credit Union Athletic Complex.”

The funds will go for new bleachers.

Read more.

NCUA's Harper Says the Agency Lacks Rigor on Consumer Compliance

The National Credit Union Administration’s current method of examining and enforcing consumer protection laws and regulations for institutions with less than $10 billion in assets is “not comparable to our sister agencies,” NCUA Board Member Todd Harper said in a Washington speech on September 10. He noted that bank regulators conduct regular risk-focused consumer compliance exams and assign separate consumer compliance ratings.

“Decades ago, the NCUA conducted full consumer financial protection compliance reviews as part of its examination program, but the agency has increasingly focused on safety and soundness over time,” Harper said. “NCUA’s different approach to consumer financial protection reviews runs counter to the congressionally mandated mission of the Federal Financial Institutions Examination Council.”

Harper noted that more rigorous examination and enforcement of consumer compliance regulations could potentially address principal-agent issues at credit unions by aligning management’s actions with the best interests of members.

Harper also criticized the NCUA board’s recent vote to delay its 2015 risk-based capital rule, cautioning that without it, a potential economic downturn could amplify losses to the National Credit Union Share Insurance Fund. He added that he is concerned about the liquidity of federally insured credit unions.

Read the speech.

Sunday, September 15, 2019

155 LICUs Receive $1.9 Million in Grants from NCUA

The National Credit Union Administration (NCUA) reported that it awarded $1.9 million in grants to 155 low-income credit unions.

Grants ranged from $1,900 to $100,000.

The NCUA made awards in four categories:
  • Underserved outreach: 11 grants totaling $972,742;
  • Digital services and security: 73 grants totaling $550,612;
  • Training: 46 grants totaling $217,369; and
  • Counselor certification: 35 grants totaling $161,925.
Several large credit unions were grant recipients, including $1.8 billion Dupaco Community Credit Union (Dubuque, IA), $1.2 billion Greylock FCU (Pittsfield, MA), $397 million Pelican State CU (Baton Rouge, LA), and $469 million Global Credit Union (Spokane, WA).

Funding for the grants is provided by the Community Development Revolving Loan Fund, which receives appropriations from Congress.

Here is the list of grant recipients and the amount awarded.

Read the press release.

Friday, September 13, 2019

CUs O-fer in Secondary Capital Plan Appeals to SRC

Credit unions have a zero batting average for secondary capital plan appeals to the Supervisory Review Committee (SRC) of the National Credit Union Administration (NCUA) during the first seven months of 2019.

Five credit unions appealed the denial of their secondary capital plans from the NCUA Region Directors. Four of the appeals involved applications to accept secondary capital and one appeal was to increase the amount of secondary capital accepted by the credit union.

The SRC upheld the denial of the Region Directors in all five cases.

Below are some of the highlights from the SRC decisions.

In several cases, credit unions stated that they met the five requirements of the rule and should be allowed to accept secondary capital. (12 C.F.R. § 701.34) However, the SRC opined that "there is no duty for the Regional Director to approve a secondary capital application simply because the plan meets the five requirements of the rule." The SRC concluded that it is within the authority and discretion of the Regional Director to review the safety and soundness exposure of the credit unions.

The SRC found deficiencies in various credit union's plans, which in some cases were overly simplistic or inadequate. In a couple cases, the credit unions stated the secondary capital was meant to support loan growth without specifying the types of loans the credit union will add to their balance sheets. The SRC believed that subject ambiguity posed a safety and soundness concern.

In one case, the Region Director sought to reduce the amount of secondary capital that the credit union could accept because of safety and soundness concerns due to interest rate risk associated from concentration in real estate secured assets. The Regional Director wanted to reduce the amount of balance sheet leverage at the credit union. In addition, the credit union should not make unsecured secondary capital loans to other credit unions. (Read the decision SRC-03-19).

Another credit union's secondary capital plan posed safety and soundness concerns due to inadequate liquidity risk assessment, incomplete interest rate risk assessment, and no exit or stop-loss strategy. (Read the letter SRC-02-19).

In another decision, the SRC concluded that "the credit union failed to assess key risks arising from the plan’s reliance on high levels of market sensitive wholesale funding (nonmember deposits and borrowing) and deployment of funds into higher risk assets." Here is letter SRC-01-19.

Furthermore, as part of a credit union's board of directors due diligence, the board is expected to address the pros and cons of the specific secondary capital plan, not a generic discussion about the pros and cons of secondary capital. In one case, there was not evidence that the board discussed the specifics of the secondary capital plan.

Read SRC-06-19.

Read SRC-05-19.

Thursday, September 12, 2019

Half of CUs Reported a Y-o-Y Drop in Membership

The National Credit Union Administration reported on September 11 that almost half of all federally insured credit unions had fewer members at the end of the second quarter of 2019 compared to a year ago.

Credit unions that are experiencing a decline in their membership tend to be smaller. Approximately 70 percent of credit unions reporting an annual decline in membership had less than $50 million in assets.

In 18 states, the median membership growth rate was negative. At the median, 3 states had the weakest membership growth rates of negative 1.3 percent -- Illinois, Pennsylvania, and New Jersey.

Other states reporting negative median year-over-year growth rates are North Dakota (-0.9%), Connecticut (-0.8%), Arkansas (-0.5%), Rhodes Island (-0.5%), Massachusetts (-0.4%), Oklahoma (-0.4%), Indiana (-0.3%), Kentucky (-0.3%), Maryland (-0.3%), Michigan (-0.3%), Nebraska (-0.3%), District of Columbia (-0.3%), New York (-0.2%), Vermont (-0.2%), and Louisiana (-0.1%).

In addition, credit unions in Arkansas and New Jersey reported that the median year-over-year growth rate of loans and shares (deposits) were negative.

Wednesday, September 11, 2019

Groups Call for Changes to QM Framework Ahead of GSE Patch Expiration

A broad coalition of financial industry stakeholders, civil rights groups and other advocacy organizations wrote the Consumer Financial Protection Bureau (CFPB) on September 9 offering feedback on the expiration of the temporary “GSE patch,” which grants Qualified Mortgage (QM) status to loans eligible to be purchased or guaranteed by Fannie Mae or Freddie Mac.

The letter was sent in response to an advanced notice of proposed rulemaking by the CFPB.

With the CFPB poised to allow the GSE patch to expire as scheduled in January 2021, “or after a short extension,” the groups proposed several changes to the QM framework. The groups called on the CFPB to eliminate from the general QM category the debt-to-income ratio and the associated Appendix Q. They noted that doing so is “the best way to enable fair market competition across all lending channels while also ensuring that these creditworthy individuals can be served in a safe and sound manner under the existing ATR-QM framework.”

The groups also called on the bureau to maintain and enhance the existing Ability-to-Repay Rule’s regulatory language and maintain the existing QM statutory safe product restrictions that prohibit certain risky loan features—such as loan terms over 30 years, negative amortization or interest-only payments—and clarify provisions related to documentation and verification of income.

Both the American Bankers Association and the Credit Union National Association signed the letter.

Read the letter.

Tuesday, September 10, 2019

Michigan Charters LGBTQ CU

Multiple news outlets are reporting that Michigan Department of Insurance and Financial Services has approved a charter for a credit union serving the LGBTQ community.

The credit union, Superbia, expects to begin operations in early 2020.

The credit union will offer traditional banking products and services, but will also tailor products and services to the specific needs of the LGBTQ community.

Federal Prosecutors Open Probe into New York City Taxi Medallion Lending

The New York Times is reporting that the United States Attorney’s Office for the Southern District of New York has opened an investigation into possible lending fraud in the New York City taxi industry.

Federal agents have started to interview cabdrivers, who took on massive amounts of debt to purchase taxi medallions and were not fluent in English.

The investigation appears to be focused on possible crimes including bank, wire or mail fraud.

Read the story.

FL Regulator Approves Purchase of Certain Bank Assets and Liabilities by MidFlorida CU

The Florida Office of Financial Regulation on August 19 issued a Notice of Intent to Approve the application of MidFlorida Credit Union (Lakeland, FL) to purchase certain assets and liabilities of First American Bank (Fort Dodge, IA).

On April 26, the bank entered into a branch purchase agreement with the credit union.

The credit union would acquire 3 branches -- one in Lee County and two in Collier County -- and one loan production office in Boca Raton, Palm Beach County..

MidFlorida CU will purchase approximately $250 million in assets and assume almost $122 million in liabilities.

The transaction is contingent upon the approval or non-objection by the National Credit Union Administration.

Monday, September 9, 2019

Outstanding Consumer Credit at CUs Grew by $2 Billion During July

The Federal Reserve reported on September 9 that outstanding consumer credit at credit unions grew by $2 billion during July to $478.1 billion.

Outstanding consumer credit grew at a slightly slower annual pace in July compared to June.

Revolving credit balances grew by approximately $800 million during July to $64.5 billion.

Nonrevolving credit advanced by $1.2 billion in July to $413.6 billion.

Read the G. 19 Report.

Addition Financial CU Completes Acquisition of Fidelity Bank of Florida

On September 1, Addition Financial Credit union, the former CFE Federal Credit Union, (Lake Mary, FL) completed its acquisition of Fidelity Bank of Florida, N.A. (Merritt Island, FL).

Fidelity Bank of Florida had almost $169 million in assets and $137 million in deposits. The bank had two offices.

Addition Financial CU had $1.9 billion in assets.

Under the agreement, Addition Financial stated "it does not intend to acquire, own, or retain Fidelity's stock or the power to conduct commercial banking business granted under its charter."

The state credit union regulator approved the transaction in May.

Saturday, September 7, 2019

Michigan State University FCU to Build 3-Story Administrative Office Building

Michigan State University Federal Credit Union (East Lansing, MI) is planning to construct a three-story administrative building in Auburn Hills, Michigan.

According to The Oakland Press, the City Council recently approved the multi-million dollar project.

The new facility will become the regional office for $4.5 billion credit union and will house support services, such a a call center, IT help desk and human resources. The building will also include four guest suites and a community meeting room.

Read the story.

Friday, September 6, 2019

Little to No Progress in Reforming COSSEC

Two years later, The Financial Oversight and Management Board for Puerto Rico reported little to no progress in reforming the Public Corporation for the Supervision & Insurance of Cooperatives in Puerto Rico (COSSEC).

COSSEC is responsible for overseeing and insuring the island's credit unions or cooperatives.

On August 4, 2017, The Financial Oversight and Management Board had certified the Fiscal Plan for COSSEC. On August 19, 2018, COSSEC issued its revised Fiscal Plan for COSSEC, which was never certified by The Financial Oversight and Management Board.

The Financial Oversight and Management Board wrote in its Fiscal Year 2019 Annual Report that "there is a need for COSSEC to have stronger and independent governance in order to to exercise its role as a regulator and insurer."

Reforms would also include adopting regulatory and accounting reporting standards and capital levels more consistent with to that of Federal regulators.

Without meaningful reforms, federally-insured credit unions could face potential reputation risk from bad headlines about COSSEC.

Go here to read the Annual Report.

Wednesday, September 4, 2019

CU Profitability Improved in the 2nd Quarter of 2019

The credit union industry reported net income of $7.19 billion through the first two quarter of 2019, according to the National Credit Union Administration.

A vast majority of credit unions posted a profit through mid-year 2019 with only 610 federally-insured credit unions reporting a loss through the first two quarter.

Return on average assets for federally-insured credit unions was 0.97 as of June 2019. This was up 2 basis points from the prior quarter. The median return on average assets was 0.63 percent -- this is up 7 basis points from the first quarter of 2019.

Net interest margins improved by 7 basis points during the second quarter to 3.18 percent. Non-operating income as a percent of average assets edged lower by 1 basis points between the first quarter and the second quarter to 0.06 percent. However, operating expenses as a percent of average assets rose by 4 basis points during the quarter to 3.16 percent.

At the end of June 2019, industry net worth was $171.41 billion, up from $167.78 billion at the end of March 2019. The net worth ratio for the credit union industry rose from 11.13 percent as of March 2019 to 11.27 percent as of June 2019.

At the end of June 2019, 98.42 percent of credit unions had a net worth ratio of at least 7 percent, the minimum requirement for being well-capitalized. On the other hand, 0.59 percent of credit unions or 31 credit unions had a capital ratio below 6 percent.

Assets, Loans, Shares, and Members Increase

Total assets were $1.5203 trillion at the end of the quarter, up $14.3 billion during the quarter.

Outstanding loans at credit unions were $1.0664 trillion at the end of the second quarter. This was up $18.1 billion from March 2019. All major loan categories posted a gain during the second quarter.

Shares (deposits) at credit unions increased by $7 billion during the quarter to $1.2798 trillion.

Since loan growth outpaced share growth during the second quarter of 2019, the loan-to-share ratio rose from 82.4 percent at the end of the first quarter to 83.3 percent at the end of the second quarter. The loan-to-share ratio exceeded the 10-year average of 76.32 percent.

There were 118.3 million credit union members as of June 2019, up from 117.2 million members as of March 2019.

Delinquencies Rise, Net Charge-offs Lower

Delinquent loans increased from $6 billion as of March 2019 to $6.8 billion as of June 2019. The industry's delinquent loan ratio went from 0.58 percent to 0.63 percent.

Over the same period, net charge-offs fell from $6 billion to 5.9 billion. The net charge-off rate declined by 1 basis point to 0.56 percent at the end of June 2019.

Fewer Credit Unions, But More Are Low-Income

The number of credit unions fell by 27 during the second quarter to 5,308. The number of low-income credit unions increased by 47 during the second quarter to 2,618.

Review the quarterly data summary.

Read the Trend Chartbook.

Elevations CU to Acquire Cache Bank & Trust

Elevations Credit Union (Boulder, CO) has announced its intention to acquire the assets of Cache Bank & Trust (Greeley, CO).

Elevations CU has almost $2.1 billion in assets. Cache Bank & Trust has $121.7 million in assets and three locations in Denver, Fort Collins, and Greeley, Colorado.

It is anticipated that the acquisition will be finalized in the first quarter of 2020 with full integration of the two organizations by the third quarter of 2020. The acquisition is subject to regulatory approval.

The price tag of the deal was not disclosed.

This deal will be the first community bank in Colorado to be acquired by a credit union.

Press release can be found here.

Tuesday, September 3, 2019

The Wall Street Journal Reports on CUs' Bank Buying Spree

Credit unions buying banks have attracted the attention of The Wall Street Journal.

The story notes that while most credit union mergers are with other credit unions, credit unions have recently gone on a buying spree.

Since the beginning of 2018, credit unions have announced 21 banks deals. In comparison, there were only 12 deals announced during the prior five years.

In fact, this year a record number of deals have been announced.

Critics point out these "deals illustrate how competitive credit unions have become, given their tax advantages, lack of shareholders and diminishing constraints on growth."

Credit unions contend that these deals allows them to expand their footprint and product offerings. In addition, credit unions claim these acquisitions represent a good return on their investment.

Making news, National Credit Union Administration (NCUA) Chairman Rodney Hood told The Wall Street Journal that the agency plans to introduce a proposed rule later this year clarifying the regulatory responsibilities of credit unions when acquiring banks.

I will be interested in reading what NCUA proposes. Hopefully, the agency will remove many of the barriers that keep banks from acquiring credit unions.

Read the story (subscription required).

Average CEO Compensation at Large State Chartered CUs Was $1.16 Million for 2017

The average total compensation for CEOs at large state chartered credit unions with at least $1 billion in assets was $1.16 million for 2017. This is the fourth consecutive year were the average compensation topped $1 million.

The median total compensation for 2017 was almost $803 thousand.

Total compensation includes base salary, bonus and incentives, other reportable income, retirement and deferred compensation, and nontaxable benefits.

Compensation information was obtained from Form 990s filed by 154 state chartered credit unions with at least $1 billion in assets.

At the time this blog post was being written, Form 990s for 2017 were not available for the following credit unions -- Collins Community Credit Union (IA), CFCU Community Credit Union (NY), Melrose Credit Union (NY), Municipal Credit Union (NY), Public Service Employees Credit Union (CO), and Rogue Credit Union (OR).

Mean and median base compensation was $512,148 and $489,783, respectively. The CEO with the highest base salary was Crystal Long of GECU (El Paso, TX) at $1,680,474.

Mean and median incentives and bonuses were $212,134 and $116,416, respectively. Most large CU CEOs received some sort of incentive or bonus compensation.

The data on base compensation and incentives and bonuses excludes information from Lake Michigan Credit Union (MI), because Lake Michigan CU combined base compensation with bonuses and incentives.

Fifty-eight credit union CEOs earned total compensation of $1 million or more in 2017.

The highest paid CEO was R. Heldebrant of Star One Credit Union (CA) with total compensation of $12,465,866 for 2017.


The Form 990s are now available for Canvas CU, CFCU Community CU, Collins Community CU, and Rogue CU. This information has not been incorporated into the statistical analysis of CEO compensation.

Darryl Marksberry of Canvas CU (CO) had total compensation of $771,721 with base pay of $500,941 and bonus and incentive compensation of $225,000.

Lisa Whitaker of CFCU Community CU (NY) had total compensation of $1,283,914. Base compensation was $498,687 and incentive and bonus compensation was $173,918.

Stephanie Rupert of Collins Community CU (IA) had total compensation of $476,183 with a base pay of $308,653 and incentive and bonus pay of $112,499.

Eugene Pelham of Rogue CU (OR) had total compensation of $940,376. Base pay was $472,885. Bonus and incentive pay was $117,248.

The following table lists the 10 highest paid large state chartered credit union CEOs in 2017.

Below is the list of CEO compensation at state chartered credit unions with at least $1 billion in assets (click on images to enlarge).

Monday, September 2, 2019

First Community CU Pays $2.3 Million for Naming Rights to University Arena

First Community Credit Union (Chesterfield, MO) has acquired the naming rights for the arena within Southern Illinois University Edwardsville’s Vadalabene Center for $2.3 million over the next 10 years.

The facility will be known as First Community Arena at the Vadalabene Center.

The naming rights deal can be extended for an additional two years.

Read the press release.

Sunday, September 1, 2019

Alliant CU Provides $12.1 Million in Commercial Real Estate Financing

Alliant Credit Union (Chicago, IL) refinanced three-property self-storage portfolio for the principal amount of $12.1 million.

According to RE Journal, the properties in Evansville (IN) and Pine Bluff (AR) encompass 1,565 total units, including a mix of standard units, climate-controlled units and outdoor vehicle storage.

Read the story.

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