Evangelical Christian Credit Union (Brea, CA) evicted a Georgia megachurch from its 4,000 seat sanctuary before Christmas over nearly $22 million in debt.
The sanctuary of Higher Living Christian Church (McDonough, GA) will be sold in public auction to the highest bidder for cash on January 3, 2017.
The church building includes a multi-purpose sanctuary with removable seating. It could be modified to accommodate trade shows, graduation ceremonies, cultural events, art displays, or a fellowship hall. The facility also boasted eight classrooms, indoor children's play area, administrative offices, and choir rehearsal room.
Evangelical Christian Credit Union is currently under an enforcement order with the the California Department of Business Oversight.
Read the story.
Wednesday, December 28, 2016
Tuesday, December 27, 2016
Visions FCU to Double Size of Corporate HQ
Visions Federal Credit Union (Endwell, NY) will more than double the size of its corporate headquarters over the next two years.
The credit union is constructing a new 91,000-square-foot building behind its current 79,000-square-foot building.
The credit union expects to double in size from $3.5 billion in assets to $7 billion in assets by 2025.
The cost of the project is to be determined.
Read the story.
The credit union is constructing a new 91,000-square-foot building behind its current 79,000-square-foot building.
The credit union expects to double in size from $3.5 billion in assets to $7 billion in assets by 2025.
The cost of the project is to be determined.
Read the story.
Thursday, December 22, 2016
Metsger: Contingent Legal Fee Was the Best Available Option
In a December 20th letter to Rep. Mick Mulvaney (R - SC), National Credit Union Administration (NCUA) Chairman Metsger wrote that "the decision to pursue legal action using a contingency fee arrangement was the best available option" for the agency over the failure of five corporate credit unions that had bought faulty mortgage-backed securities.
The letter was in response to a November 21 letter from Rep. Mulvaney.
NCUA has paid more than $1 billion in legal fees on $4.3 billion in recoveries from legal settlements.
In pursuing its contingent fee arrangement, Chairman Metsger stated that NCUA did not have the in-house resources or expertise to independently pursue its legal strategy.
He also noted that the agency lacked resources to hire law firms on a hourly basis. Therefore, an hourly fee arrangement would have required increased assessments on credit unions, which credit unions would have had difficulty paying.
Metsger contended that a contingency fee arrangement insulated credit unions from most expenses, if the lawsuits failed, and provided significant upside benefit to credit unions, if the agency's legal strategy was successful.
Metsger claimed that the agency could not have brought these complex lawsuits without the contingency fee arrangement.
Metsger pointed out that the recoveries from NCUA's lawsuits "enabled the agency to stop assessing credit unions the cost of the repayment of the Stabilization Fund since 2012."
Metsger also stated that the agency created a website for credit unions to get information regarding the legal settlements.
The letter also addressed the agency's efforts to control expenses and to increase budget transparency.
The letter appears below (click on image to enlarge)
The letter was in response to a November 21 letter from Rep. Mulvaney.
NCUA has paid more than $1 billion in legal fees on $4.3 billion in recoveries from legal settlements.
In pursuing its contingent fee arrangement, Chairman Metsger stated that NCUA did not have the in-house resources or expertise to independently pursue its legal strategy.
He also noted that the agency lacked resources to hire law firms on a hourly basis. Therefore, an hourly fee arrangement would have required increased assessments on credit unions, which credit unions would have had difficulty paying.
Metsger contended that a contingency fee arrangement insulated credit unions from most expenses, if the lawsuits failed, and provided significant upside benefit to credit unions, if the agency's legal strategy was successful.
Metsger claimed that the agency could not have brought these complex lawsuits without the contingency fee arrangement.
Metsger pointed out that the recoveries from NCUA's lawsuits "enabled the agency to stop assessing credit unions the cost of the repayment of the Stabilization Fund since 2012."
Metsger also stated that the agency created a website for credit unions to get information regarding the legal settlements.
The letter also addressed the agency's efforts to control expenses and to increase budget transparency.
The letter appears below (click on image to enlarge)
NCUA Fines 24 CUs for Late Filing 2nd Quarter 2016 Call Reports
The National Credit Union Administration (NCUA) announced that 24 credit unions have agreed to pay civil monetary penalties for late filing their 2nd quarter 2016 Call Reports.
In comparison, 14 credit unions consented to civil monetary penalties a year ago.
The total amount of fines paid were $9,364. Individual penalties ranged from $150 to $1,057. The median penalty was $303.
Of the 24 credit unions agreeing to pay penalties for the second quarter of 2016:
NCUA informed late filing credit unions that their fines could be reduced if they signed a consent agreement.
Read the press release.
In comparison, 14 credit unions consented to civil monetary penalties a year ago.
The total amount of fines paid were $9,364. Individual penalties ranged from $150 to $1,057. The median penalty was $303.
Of the 24 credit unions agreeing to pay penalties for the second quarter of 2016:
- Sixteen had assets of less than $10 million;
- Five had assets between $10 million and $50 million; and
- Three had assets between $50 million and $250 million.
NCUA informed late filing credit unions that their fines could be reduced if they signed a consent agreement.
Read the press release.
Wednesday, December 21, 2016
Corporate CUs Are Required to Disclose Executive Pay, Then Why Not All FCUs
It is time for the National Credit Union Administration (NCUA) to require natural person federal credit unions to disclose senior management compensation.
Let's look at the facts, state-chartered credit unions are required to disclose senior management compensation via Form 990s. Also, NCUA requires a corporate credit union to annually prepare and maintain a disclosure of the dollar amount of compensation paid to its most highly compensated employees, including compensation paid to the corporate credit union's chief executive officer (read the regulation).
NCUA's corporate credit union regulation states that a corporate credit union "must distribute the most current disclosure to all its members at least once a year, either in the annual report or in some other manner of the corporate's choosing."
The regulation also states that "[a]ny member may obtain a copy of the most current disclosure, and all disclosures for the previous three years, on request made in person or in writing. The corporate credit union must provide the disclosure(s), at no cost to the member, within five business days of receiving the request."
The rule allows a corporate credit union to provide supplemental information to add context, such as salary surveys.
If NCUA believes that it is appropriate for corporate credit unions to disclose compensation information to its members, then why hasn't NCUA required natural person federal credit unions to do the same thing.
Clearly, requiring such a disclosure would improve accountability and transparency and would promote good corporate governance.
Let's look at the facts, state-chartered credit unions are required to disclose senior management compensation via Form 990s. Also, NCUA requires a corporate credit union to annually prepare and maintain a disclosure of the dollar amount of compensation paid to its most highly compensated employees, including compensation paid to the corporate credit union's chief executive officer (read the regulation).
NCUA's corporate credit union regulation states that a corporate credit union "must distribute the most current disclosure to all its members at least once a year, either in the annual report or in some other manner of the corporate's choosing."
The regulation also states that "[a]ny member may obtain a copy of the most current disclosure, and all disclosures for the previous three years, on request made in person or in writing. The corporate credit union must provide the disclosure(s), at no cost to the member, within five business days of receiving the request."
The rule allows a corporate credit union to provide supplemental information to add context, such as salary surveys.
If NCUA believes that it is appropriate for corporate credit unions to disclose compensation information to its members, then why hasn't NCUA required natural person federal credit unions to do the same thing.
Clearly, requiring such a disclosure would improve accountability and transparency and would promote good corporate governance.
Monday, December 19, 2016
Supreme Court to Hear Important Patent Troll Case
The Supreme Court last week announced that it would hear the case of TC Heartland v. Kraft, which will be closely watched by banks and credit unions due to its implications for financial institutions facing litigation from patent trolls.
The case hinges on whether patent trolls -- entities that hold patents, often of dubious quality, but use them primarily as the basis for threats of litigation -- can bring cases in any federal court district or must bring them only where defendants are incorporated or doing business.
Last year, 40 percent of patent suits were filed in just one of 94 federal judicial districts: the Eastern District of Texas, known for its friendliness to patent trolls.
The appellate court’s decision in TC Heartland upholds a broad understanding of corporate residence -- rejected by the Supreme Court in a different case -- that would allow patent trolls to continue cherry-picking friendly courts for patent cases against faraway defendants, which increases the pressure on defendants to settle cases.
Read more.
The case hinges on whether patent trolls -- entities that hold patents, often of dubious quality, but use them primarily as the basis for threats of litigation -- can bring cases in any federal court district or must bring them only where defendants are incorporated or doing business.
Last year, 40 percent of patent suits were filed in just one of 94 federal judicial districts: the Eastern District of Texas, known for its friendliness to patent trolls.
The appellate court’s decision in TC Heartland upholds a broad understanding of corporate residence -- rejected by the Supreme Court in a different case -- that would allow patent trolls to continue cherry-picking friendly courts for patent cases against faraway defendants, which increases the pressure on defendants to settle cases.
Read more.
Friday, December 16, 2016
Leasing of Excess Space by FCUs Should Be Subject to UBIT
Federal credit unions (FCUs) are leasing their excess space; but the income from such leasing arrangements is not subject to unrelated business income taxes (UBIT).
Recent examples of FCUs announcing plans to lease excess space include:
This trend should continue as the National Credit Union Administration yesterday finalized a rule eliminating the requirement that FCUs plan for, and eventually achieve, full occupancy of acquired premises. The final rule modifies the definition of “partially occupy” to mean occupation and use, on a full-time basis, of at least 50 percent of a premises by an FCU or by a combination of the FCU and a credit union service organization in which the FCU has a controlling interest.
This would allow an FCU to venture into real estate activities, which are outside the mission and purpose of an FCU's tax exemption.
Therefore, Congress should repeal Section 1768 of the Federal Credit Union Act. This would permit the income from unrelated activities such as the leasing of excess space be subject to UBIT.
Recent examples of FCUs announcing plans to lease excess space include:
- Apple Federal Credit Union with $2.1 billion in assets is building a six-story, 150,000 square-foot headquarters building in Fairfax, Virginia. Apple FCU plans to occupy three floors and will lease the remaining office space.
- Pentagon Federal Credit Union has paid $164.1 million for a new 11-story, 307,634 square-foot headquarters building in Tysons, Virginia. The credit union plans to initially occupy about half of the office building. Pentagon FCU will lease about 150,000 square feet to LMI.
This trend should continue as the National Credit Union Administration yesterday finalized a rule eliminating the requirement that FCUs plan for, and eventually achieve, full occupancy of acquired premises. The final rule modifies the definition of “partially occupy” to mean occupation and use, on a full-time basis, of at least 50 percent of a premises by an FCU or by a combination of the FCU and a credit union service organization in which the FCU has a controlling interest.
This would allow an FCU to venture into real estate activities, which are outside the mission and purpose of an FCU's tax exemption.
Therefore, Congress should repeal Section 1768 of the Federal Credit Union Act. This would permit the income from unrelated activities such as the leasing of excess space be subject to UBIT.
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