Fee Income at Civic FCU Was $886 Per Member for 2019

A reader recently pointed out that Civic Federal Credit Union (Raleigh, NC) is reporting fee income from services of almost $886 per member for 2019.

Fee income from services include overdraft fees, ATM fees, credit card fees, wire fees, account research fees, late fees, statement production fees, dormant account fees, transaction service fees, safekeeping fees, etc.

According to the credit union's December 2019 Call Report, it had $601,678 in fee income from 679 members.

Its fee income per member was the second highest among all credit unions -- only topped by North Bay Credit Union (Santa Rosa, CA) at $936.25 per member.

The credit union's fee income per member is well above the industry's standards.

The average fee income per member for the industry was $57.05. The median fee income per member was $49.56.

Additionally, fee income for 2019 as a percent of assets was 1.42 percent. In comparison, the industry average for 2019 was 0.66 percent with the median fee income to asset ratio of 0.52 percent.

Civic FCU's fee income as a percent of assets is in the industry's top quartile.

This credit union was chartered in December 2017 by the National Credit Union Administration for the purpose of making member business loans. It is possible that the credit union's business model accounts for the higher fee income per member.

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.

NCUA Charters New CU in Maine

The National Credit Union Administration granted a federal charter and share insurance coverage to Maine Harvest Federal Credit Union (Unity, ME) on August 14, 2019.

The credit union will serve the employees and roughly 13,000 members of the Maine Organic Farmers and Gardeners Association and the Maine Farmland Trust.

The credit union was chartered for the purpose to offer business loans to small farms, farmers, and other food producers. The credit union will be exempt from the member business loan cap of 12.25 percent of assets.

Read the press release.

NCUA Charters Otoe-Missouria FCU

The National Credit Union Administration (NCUA) chartered on May 20th the Otoe-Missouria Federal Credit Union in Red Rock, Oklahoma.

The federal credit union will serve approximately 4,200 members and employees of the Otoe-Missouria Tribe as well as 17 tribal-owned businesses.

The Otoe-Missouria Federal Credit Union was designated by NCUA as a low-income credit union, based on its potential membership. This designation gives the credit union the ability to accept non-member deposits, obtain grants and loans from the Community Development Revolving Loan Fund, offer secondary capital accounts, and qualify for exemptions from statutory limits on member business lending.

This is the first federal credit union to be chartered in 2019.

Read the press release.

Minneapolis City Council to Provide Up to $500,000 to New Minority CU

The Ways and Means Committee of the Minneapolis City Council will provide up to $500,000 in funding for a new credit union serving minority residents in north Minneapolis.

The contract is with the Association for Black Economic Power, which is a community-led nonprofit organization. The organization is seeking to establish Minnesota's only black-led financial institution, the Village Financial Cooperative (VFC).

VFC has obtained approval to form a credit union from the state in late 2018 and is in the late stages of its application for insurance/authorization from the National Credit Union Administration.

The city will provide up to $400,000 in a 10-year, interest-free forgivable loan. The loan can be used for occupancy, leasehold improvements and equipment expenses for retail space located in North Minneapolis.

The loan will be forgiven if the following conditions are met:

• VFC will open a brick and mortar store in North Minneapolis in 2019.
• VFC will provide a financial literacy program for the residents of the City of Minneapolis, with at least 30 classes (300 attendees) in 2019.
• VFC will enroll at least 500 members in checking or savings accounts in 2019.VFC will hold at least six major community outreach events to promote VFC and recruit members.

An additional grant up to $90,000 will be used to cover operating expenses associated with the provision of banking services to, and financial literacy education for, Minneapolis residents.

The credit union expects to open in June 2019.

Read more.

NCUA Charters New CU to Serve Nepali-American Community

The National Credit Union Administration (NCUA) on August 28 granted a federal charter and Share Insurance Fund coverage to Everest Federal Credit Union in Jackson Heights, New York.

The credit union will serve the approximately 15,000 members of the Non Resident Nepalis National Coordination Council of USA.

Everest Federal Credit Union is the first credit union chartered by NCUA this year.

Read the press release.

Data Indicate NCUA Bias Against New Charters

The National Credit Union Administration (NCUA) only chartered four federal credit unions in 2017.

Only three of the charters were de novo credit unions. One credit union was privately-insured, state charter that flipped to a federal charter with federal share insurance.

In comparison, the agency added 90 groups with at least 3,000 potential members to existing multiple common bond credit unions, despite Congress' encouraging the agency to form new credit unions instead of adding the groups to existing credit unions.

As I wrote last year, Congress granted NCUA an exception to adding groups with at least 3,000 potential members to existing credit unions, if the agency determined that the group is unlikely to succeed as a new credit union.

The following table shows the number of new charters versus groups with at least 3,000 potential members added to existing credit unions between 2008 - 2017.

The data would suggest a bias against the formation of new credit unions by NCUA.

Do you mean to tell me that none of these groups could form a successful credit union?

NCUA Charters Civic FCU

The National Credit Union Administration (NCUA) chartered Civic Federal Credit Union (Raleigh, NC).

The de novo credit union will serve local government employees in North Carolina. The credit union will be permitted to serve an estimated 283,000 potential members.

In addition, the credit union is being chartered for the purpose of making member business loans.

Read the press release.

Chartered for the Purpose of Making Member Business Loans

The National Credit Union Administration's Office of Consumer Financial Protection and Access is providing guidance to insured credit unions on the eligibility and qualifications for being chartered for the purpose of making member business loans.

The Federal Credit Union Act provides an exemption from the member business loan (MBL) aggregate cap of 12.25 percent of assets to an insured credit union chartered for the purpose of making member business loans to its members, as determined by the NCUA Board.

According to the document, new federal credit unions, new federally insured state credit unions (FISCUs), FISCUs converting to a federal charter, federal charters converting to a FISCU, and all credit unions considering a spin-off of their field of membership may be eligible for this exemption of being chartered for the purpose of making business loans to its members.

To qualify, the insured credit union must

• submit plans showing one or more discrete groups within its field of membership with unique commercial or business financing needs;
• demonstrate a commitment to investing in the infrastructure to safely originate, service, and administer the anticipated business loan volume; and
• ensure that management meets the experience and governance requirements currently outlined in NCUA's regulations.

Finally, the NCUA states that financial projections must reflect sufficient loan originations to support the exemption. However, the document notes that "a credit union seeking the exception is not required to demonstrate or propose that its MBL portfolio will be its only lending component, or even an overwhelming majority of total loans or new loan volume."

While I understand how a de novo could be chartered for the purpose of making business loans, I find it troubling that a credit union, which flips its charter from a state to federal charter or vice-a-versa, could all of a sudden become chartered for the purpose of making member business loans. These credit unions are ongoing institutions. Their purpose has not changed.

It seems to me that the National Credit Union Administration is allowing existing credit unions to game the system so as to evade the member business loan cap of 12.25 percent of assets.

Read the document.

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.

Company Chartering a Credit Union to Finance Loans to Its Customers Raises Policy Concerns

A clean energy company is looking to charter a new credit union to fund clean energy loans for its customers.

According to BizWest, Namasté Solar, an employee-owned solar-energy firm, has been working about three years to secure a federal charter.

Blake Jones, co-founder of Namasté Solar, stated that the he expects "to receive our charter sometime this summer."

Part of its motivation to start a credit union is due to the difficulty its customers have in securing loans for clean-energy projects.

Namasté Solar designs, installs and maintains solar-electric systems throughout the United States for commercial, nonprofit, government and residential customers.

If a charter is granted, the credit union will finance residential and commercial solar installations. Also, loans will be made for purchases of used electric vehicles and energy-efficient home-improvement projects.

While the credit union will be located in Colorado, it will operate nationwide.

However, it seems that the primary purpose of the credit union is to finance Namasté Solar projects to future customers.

Unfortunately, being a customer of this clean energy company is not a valid common bond.

But I suspect the National Credit Union Administration can creatively identify an association that would allow customers of the company to become eligible for membership.

Moreover, this proposed credit union charter raises a policy concern as it appears to breach the separation between banking and commerce.

In closing, this proposed credit union should not be allowed to become nothing more than a captive finance company of this clean energy company.

Read the story.

Dearth of De Novo CUs

On March 21, the House Financial Services Committee held a hearing on the dearth of de novo charters.

Between 2000 and 2016 there were 93 new credit unions chartered. Pre-Dodd Frank Act, the number of new charters average 7.7 credit unions per year. After Dodd Frank the number of new charters averaged only 2.3 credit unions per year.

According to the testimony of Keith Stone, President and CEO of The Finest Federal Credit Union, starting a new credit union is an altruistic endeavor. He pointed out that the initial capital infusion and cash outlays are often too great for many communities and associations, thereby hindering the formation of new credit unions. He also blamed the rising cost of compliance for deterring many potential credit union start ups.

But National Credit Union Administration (NCUA) should also be held accountable for the dearth of new credit unions charters.

The Senate Report on the Credit Union Membership Access Act of 1998 encouraged the formation of new credit unions. The Senate Report stated:

The NCUA Board ("Board") shall encourage the formation of a separately chartered credit union instead of approving an additional group within the field of membership of an existing multiple common-bond or single common-bond credit union.

However, the Senate Report provided an exception to a multiple common-bond credit union to add a group with 3,000 or more potential members, if NCUA determines the group is unlikely to succeed as a new credit union.

But it appears that this exception has become the norm. For example, NCUA in 2016 approved adding 89 groups with 3,000 or more potential members to an existing multiple common-bond credit union, while only one credit union was chartered.

The following table shows the trend between the number of new charters compared to the number of groups with 3,000 plus potential members from 2008 through 2016.

In fact, NCUA now believes that a new credit union with fewer than 5,000 potential members is not viable.

It is likely that the drought of new charters will continue without a change in direction at NCUA.

NY Times: CU Start-Up Frustrated with Bureaucracy

The New York Times reported on the problem one credit union start-up had with the National Credit Union Administration (NCUA).

The credit union -- Internet Archive Federal Credit Union (New Brunswick, NJ) -- opened its door in 2012.

Credit union officials stated that they were frustrated by "a barrage of regulatory audits and limitations on its operations."

However, the article pointed out that this de novo credit union sought on several occasions to alter its business plans, including serving Bitcoin companies and providing international remittances for immigrant workers.

In my opinion, these changes in business plans at this start-up raised red flags with regulators and warranted increased oversight.

Read the story.

NCUA and ECOA

The National Credit Union Administration (NCUA) has recently chartered credit unions to serve people that belong to certain religious groups and native American tribes.

For example, on August 28, 2015, NCUA's Office of Consumer Protection chartered a federal credit union to serve members and employees of the Redeemed Christian Church of God North America, Inc. NCUA also chartered a federal credit union on July 7 of this year to serve employees, members, synods and member congregations of the Evangelical Lutheran Church in America.

While these two credit unions have a common bond, it is unclear to me how these institutions' common bonds are in compliance with the Equal Credit Opportunity Act (ECOA).

ECOA makes it unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex or marital status, or age.

Does NCUA give these credit unions a waiver with respect to complying with ECOA? Or does the agency not even consider ECOA when considering a charter application from a group for a credit union?

It is my opinion that NCUA should not charter a credit union that would appear to be out of compliance with ECOA.

NCUA Charters ELCA FCU

The National Credit Union Administration chartered ELCA Federal Credit Union to serve employees, members, synods and member congregations of the Evangelical Lutheran Church in America.

The Evangelical Lutheran Church in America has almost 4 million members.

The credit union’s headquarters will be located in Chicago and it expects to open in the first quarter of 2016.

This is the third federal credit union to be chartered this year and the first new federal credit union in Illinois since 2006.

Read the press release.

NCUA Charters Lutheran FCU

The National Credit Union Administration’s Office of Consumer Protection granted a charter to Lutheran Federal Credit Union to serve employees, active members and volunteers of the Lutheran Church – Missouri Synod and its affiliated districts, member congregations, seminaries and other closely aligned entities.

The credit union’s headquarters will be located in St. Louis, and the credit union expects to open in the second quarter of 2015.

Lutheran Federal Credit Union is the third new federally chartered credit union of 2014 and the first new federal charter in Missouri since 2005.

Read the press release.