Credit union increased their market share of auto financing in the fourth quarter of 2011 compared to the prior year, according to a report released by Experian.
Credit unions accounted for 17.34 percent of all autos financed in the fourth quarter of 2011, which is comparable to the market share for the captive auto finsnce companies. Credit unions had 11.04 percent of the new vehicle market and 21.10 percent of the used car market.
According to the Experian report, 33.2 percent of all credit union auto borrowers were nonprime or below in the fourth quarter with 11.09 percent subprime and 3.88 percent deep subprime (a credit score below 550). In comparison, banks reported a slightly higher percentage of subprime and deep subprime borrowers (16.02 percent versus 14.97 percent).
The average loan to value (LTV) for new car loans financed by credit unions in the fourth quarter was 112.39 percent and for used car loans, the LTV was 150.48 percent (the highest among all lenders).
Friday, April 13, 2012
Wednesday, April 11, 2012
Maus' Pay Package Stuns CU Industry
The Denver Post is reporting on the compensation package for Dave Maus, President and CEO of Public Service Credit Union. The sum of the 2010 pay package -- $11 million -- is so large that it has shocked some within the credit union industry.
Read the story here.
Read the story here.
Kansas Court Rules that CU Due Refund on Sales Tax
The Kansas Court of Appeals overturned a Kansas Court of Tax Appeals' decision and said that Cessna Employees Credit Union should be granted a refund on the state's retail sales tax.
At issue is whether the retail sales tax can be applied to the reimbursement of travel, hotel and meals expenses passed on to the credit union as part of its final invoice from a third party vendor.
Cessna Employees CU contracted with Jack Henry and Associates (JHA) for a computer upgrade. JHA invoiced the credit union for the services, hardware and software and separately invoiced the credit union for the Travel Purchases (JHA employees' transportation, meals, and lodging).
Cessna Employees CU was seeking a refund from the Kansas retail sales tax in the amount of $3,333.05 it paid to JHA on the costs of the Travel Purchases. The credit union claimed that JHA's travel expenses were not taxable as part of JHA's gross receipts.
The Kansas Court of Tax Appeals found that that the reimbursement of the seller's travel expenses was part of the total amount of consideration in the transaction for which the taxable goods and services were sold by JHA and thus subject to the retail sales tax.
However, the state appellate court disagreed. The state appellate court found that the reimbursement for travel expenses does not constitute a retail sale and thus not subject to the retail sales tax.
The court wrote: "the reimbursement and associated tax amounts are not ... subject to retail sales tax in Kansas because they were not sold at retail, they were not a part of the sale of goods and services, and they were not a part of the selling price of the goods and services."
Read the decision.
At issue is whether the retail sales tax can be applied to the reimbursement of travel, hotel and meals expenses passed on to the credit union as part of its final invoice from a third party vendor.
Cessna Employees CU contracted with Jack Henry and Associates (JHA) for a computer upgrade. JHA invoiced the credit union for the services, hardware and software and separately invoiced the credit union for the Travel Purchases (JHA employees' transportation, meals, and lodging).
Cessna Employees CU was seeking a refund from the Kansas retail sales tax in the amount of $3,333.05 it paid to JHA on the costs of the Travel Purchases. The credit union claimed that JHA's travel expenses were not taxable as part of JHA's gross receipts.
The Kansas Court of Tax Appeals found that that the reimbursement of the seller's travel expenses was part of the total amount of consideration in the transaction for which the taxable goods and services were sold by JHA and thus subject to the retail sales tax.
However, the state appellate court disagreed. The state appellate court found that the reimbursement for travel expenses does not constitute a retail sale and thus not subject to the retail sales tax.
The court wrote: "the reimbursement and associated tax amounts are not ... subject to retail sales tax in Kansas because they were not sold at retail, they were not a part of the sale of goods and services, and they were not a part of the selling price of the goods and services."
Read the decision.
Tuesday, April 10, 2012
Cost of Resolutions
Unlike FDIC, NCUA does not publish the estimated cost to the insurance fund at the time a credit union is placed into conservatorship or receivership.
Presumably, NCUA has analyzed various cost estimates for different courses of action to the National Credit Union Share Insurance Fund (NCUSIF), as it determines which approach will result in the least cost to the NCUSIF.
In its February 23 letter to the Texas Bankers Association about the conservatorship of Texans Credit Union, this seems to be the case. NCUA Chairman Matz wrote:
Since NCUA has already done these calculations, as a matter of transparency it should include the estimated cost to the NCUSIF in the press release when it places a credit union into receivership or conservatorship.
Presumably, NCUA has analyzed various cost estimates for different courses of action to the National Credit Union Share Insurance Fund (NCUSIF), as it determines which approach will result in the least cost to the NCUSIF.
In its February 23 letter to the Texas Bankers Association about the conservatorship of Texans Credit Union, this seems to be the case. NCUA Chairman Matz wrote:
"NCUA's goal is to achieve the least-cost resolution ... We carefully evaluated all options before charting this course."
Since NCUA has already done these calculations, as a matter of transparency it should include the estimated cost to the NCUSIF in the press release when it places a credit union into receivership or conservatorship.
Friday, April 6, 2012
SELCO Community and the Exception to the Business Loan Cap
The March 28, 2012 issue of Credit Union Times had a story about how SELCO Community Credit Union (Eugene, OR) had to turn away business customers because of the current member business lending limit of 12.25 percent of assets.
I did some research and discovered that SELCO Community has a low-income designation.
Credit unions that have a low-income designation have an exception to the aggregate member business loan cap.
To obtain the exception, SELCO Community must submit documentation to its state supervisor that it is a low-income credit union. The state supervisor will forward its decision to NCUA. Once granted an exception, it does not expire unless revoked by the state supervisory authority.
The missing detail from the story is whether SELCO Community submitted documentation to its state regulator requesting an exception.
If it had not, SELCO Community only has itself to blame for turning away business owners.
I did some research and discovered that SELCO Community has a low-income designation.
Credit unions that have a low-income designation have an exception to the aggregate member business loan cap.
To obtain the exception, SELCO Community must submit documentation to its state supervisor that it is a low-income credit union. The state supervisor will forward its decision to NCUA. Once granted an exception, it does not expire unless revoked by the state supervisory authority.
The missing detail from the story is whether SELCO Community submitted documentation to its state regulator requesting an exception.
If it had not, SELCO Community only has itself to blame for turning away business owners.
Thursday, April 5, 2012
No Plans for Texans
On February 17, I posed the question -- "What Is NCUA's Plan for Texans Credit Union?"
Based upon a February 23 letter NCUA Chairman Debbie Matz sent to Eric Sandberg of the Texas Bankers Association (see below, click to enlarge the image), beyond removing culpable management and the board of directors, NCUA is not in any hurry to resolve this failed credit union.
Chairman Matz wrote that NCUA does "not have any plan to merge this credit union at this time and ... has set no timeframe for completing this resolution process."
So, Texans will for the foreseeable future be among the walking dead.
Based upon a February 23 letter NCUA Chairman Debbie Matz sent to Eric Sandberg of the Texas Bankers Association (see below, click to enlarge the image), beyond removing culpable management and the board of directors, NCUA is not in any hurry to resolve this failed credit union.
Chairman Matz wrote that NCUA does "not have any plan to merge this credit union at this time and ... has set no timeframe for completing this resolution process."
So, Texans will for the foreseeable future be among the walking dead.
Tuesday, April 3, 2012
Nonmember Business Loan Delinquencies
At the end of 2011, there were 829 credit unions that reported holding approximately $6.7 billion in purchased business loans or participation interests to nonmembers.
There were 121 credit unions that reported having at least one nonmember business loan at least 60 days past due. These 121 credit unions had $274 million in delinquent nonmember business loans for a delinquency rate of 4.08 percent. In addition, over 25 percent ($77.7 million) of all delinquent nonmember business loans have been in default for over one year.
The Credit Union of Texas reported holding the most delinquent nonmember business loans at $23.6 million for a delinquency rate of 47.54 percent. Other credit union reporting a large dollar volume of nonperforming nonmember business loans include Patelco with $18.2 million, Royal with $16.6 million, Premier American with $14.2 million and America First with $14 million.
See the table below for the 25 credit unions with the most delinquent nonmember business loans on their books.
There are 44 credit unions that are reporting that at least 10 percent of their nonmember business loans are 60 days past due. Nine credit unions report that more than half of their nonmember business loans are in default.
There were 121 credit unions that reported having at least one nonmember business loan at least 60 days past due. These 121 credit unions had $274 million in delinquent nonmember business loans for a delinquency rate of 4.08 percent. In addition, over 25 percent ($77.7 million) of all delinquent nonmember business loans have been in default for over one year.
The Credit Union of Texas reported holding the most delinquent nonmember business loans at $23.6 million for a delinquency rate of 47.54 percent. Other credit union reporting a large dollar volume of nonperforming nonmember business loans include Patelco with $18.2 million, Royal with $16.6 million, Premier American with $14.2 million and America First with $14 million.
See the table below for the 25 credit unions with the most delinquent nonmember business loans on their books.
There are 44 credit unions that are reporting that at least 10 percent of their nonmember business loans are 60 days past due. Nine credit unions report that more than half of their nonmember business loans are in default.
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