The core credit union business model is consumer lending, not business lending - that is the message from two recent NCUA press releases regarding A. E. A. FCU and Texans CU.
NCUA stated that the agency was in the process of returning these two conserved credit unions "to the core credit union business model."
What these two credit unions have in common is that they both shifted their focus from being consumer lenders and embarked into a disastrous foray in commercial lending. This ultimately required the NCUA to seize the credit unions and to porvide both credit unions with capital assistance.
Read Texans CU preass release. Read A. E. A. FCU press release.
Thursday, May 10, 2012
Tuesday, May 8, 2012
NCUA Chairman Comments on HarborOne's Charter Decision
NCUA Chairman Debbie Matz in an article appearing in the Boston Globe has inappropriately weighed in on HarborOne Credit Union's decision to seek a mutual bank charter.
The article quotes her as saying "[t]here is no reason to think that members will be better served by a bank than a credit union."
She makes additional comments regarding HarborOne's justification for seeking a mutual bank charter. She points out that the credit union is not near its member business loan cap and the credit union could petition its state regulator for a larger community charter.
NCUA Chairman Debbie Matz also seems disappointed that there is not organized opposition to obstruct this charter conversion. It almost appears that she is trying to incite opposition.
While Chairman Matz may not like a credit union opting for a mutual savings bank charter, it is the law.
Credit unions and their members have the right to choose whether they want to remain credit unions or to become banks.
As the regulator that oversees this process, NCUA needs to be impartial and Chairman Matz should have said no comment -- keeping her opinions to herself.
Read the Boston Globe story.
The article quotes her as saying "[t]here is no reason to think that members will be better served by a bank than a credit union."
She makes additional comments regarding HarborOne's justification for seeking a mutual bank charter. She points out that the credit union is not near its member business loan cap and the credit union could petition its state regulator for a larger community charter.
NCUA Chairman Debbie Matz also seems disappointed that there is not organized opposition to obstruct this charter conversion. It almost appears that she is trying to incite opposition.
While Chairman Matz may not like a credit union opting for a mutual savings bank charter, it is the law.
Credit unions and their members have the right to choose whether they want to remain credit unions or to become banks.
As the regulator that oversees this process, NCUA needs to be impartial and Chairman Matz should have said no comment -- keeping her opinions to herself.
Read the Boston Globe story.
Monday, May 7, 2012
Debt as Net Worth
If you have not read yesterday's Bank Lawyer's Blog, you should.
The blog takes aim at NCUA's Section 208 net worth assistance that is being used to keep insolvent credit unions open.
Read the post.
The blog takes aim at NCUA's Section 208 net worth assistance that is being used to keep insolvent credit unions open.
"Counting debt as net worth is a great trick. The FSLIC used it in connection with the Southwest Plan in the late 1980s, which allowed the FSLIC to hide the fact that it was technically insolvent, until Congress finally caught on and punished the FSLIC by merging it out of existence and transforming its operating head, the independent Federal Home Loan Bank Board, into the OTS (recently abolished by Dodd-Frank). Could the NCUA be following down FSLIC's weed-strewn road to perdition?"
Read the post.
Saturday, May 5, 2012
Chetco Update
Chetco FCU (Harbor, OR) released its first quarter financial data and reported a massive loss and was insolvent.
Chetco, which is currently under NCUA conservatorship, reported a loss of $19.4 million for the first quarter, as the credit union added almost $18.4 million in provisions for loan losses.
The credit union is insolvent with a negative net worth of $18.4 million. Its net worth ratio was minus 6.94 percent.
Chetco reported $66.7 million in loans that were 60 days or more past due with over $33 million in loans 12 months or more past due. As of March 31, over 24 percent of its loans were delinquent.
Additionally, Chetco reported $11.5 million in other real estate owned.
Credit Union Journal is reporting that NCUA has provided Chetco with $10 million in capital assistance.
Chetco, which is currently under NCUA conservatorship, reported a loss of $19.4 million for the first quarter, as the credit union added almost $18.4 million in provisions for loan losses.
The credit union is insolvent with a negative net worth of $18.4 million. Its net worth ratio was minus 6.94 percent.
Chetco reported $66.7 million in loans that were 60 days or more past due with over $33 million in loans 12 months or more past due. As of March 31, over 24 percent of its loans were delinquent.
Additionally, Chetco reported $11.5 million in other real estate owned.
Credit Union Journal is reporting that NCUA has provided Chetco with $10 million in capital assistance.
Thursday, May 3, 2012
Developer Sues Bethpage FCU
A homebuilder is suing Bethpage Federal Credit Union for $55 million claiming that the credit union reneged on a promise to fund a condominium project in Port Jefferson.
The complaint alleges that Bethpage FCU pulled out of its commitment to provide a $10 million construction loan for a 43-condo development called Liberty Meadows and caused a 15 month delay in the project.
The developer notes that the credit union provided both verbal and e-mailed promises that it would fund the project.
The project moved forward with a loan from Valley National Bank.
Read the story in the Long Island Business News.
The complaint alleges that Bethpage FCU pulled out of its commitment to provide a $10 million construction loan for a 43-condo development called Liberty Meadows and caused a 15 month delay in the project.
The developer notes that the credit union provided both verbal and e-mailed promises that it would fund the project.
The project moved forward with a loan from Valley National Bank.
Read the story in the Long Island Business News.
Wednesday, May 2, 2012
Silver State Schools Posts Loss of $3.5 Million
Silver State Schools Credit Union reported a $3.5 million loss in the first quarter as the credit union continues to struggle with its portfolio of delinquent mortgage loans.
During the first quarter, Silver State Schools charged off $15 million in loans and increased provisions for loan losses by $6.8 million.
At the end of the first quarter, the credit union reported that $37.1 million in loans were 60 days or more past due.
Read the story in the Las Vegas Review-Journal.
During the first quarter, Silver State Schools charged off $15 million in loans and increased provisions for loan losses by $6.8 million.
At the end of the first quarter, the credit union reported that $37.1 million in loans were 60 days or more past due.
Read the story in the Las Vegas Review-Journal.
Tuesday, May 1, 2012
BECU Surpasses $10 Billion in Assets
Boeing Employees Credit Union (BECU) of Tukwila, Washington is the fourth credit union to exceed the $10 billion asset threshold.
As of March 31, 2011, BECU reported almost $10.6 billion in assets – an increase of almost $620 million during the quarter.
The other three credit unions that are greater than $10 billion in assets are Navy FCU (VA), State Employees’ CU (NC), and Pentagon FCU (VA).
As of March 31, 2011, BECU reported almost $10.6 billion in assets – an increase of almost $620 million during the quarter.
The other three credit unions that are greater than $10 billion in assets are Navy FCU (VA), State Employees’ CU (NC), and Pentagon FCU (VA).
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