The Federal Reserve reported on May 7 that outstanding consumer credit at credit unions grew in March, according to its G.19 report.
Outstanding consumer credit at credit unions increased by $4.1 billion in March to $489 billion.
Revolving credit at credit unions fell by $900 million in March to $64.3 billion.
However, outstanding nonrevolving credit rose by $5 billion in March to $424.7 billion.
Thursday, May 7, 2020
Wednesday, May 6, 2020
Merger Would Create $3 Billion CU
Firefly Credit Union (Burnsville, MN) and TruStone Financial Federal Credit Union (Plymouth, MN) on May 5 announced their intent to merge subject to regulatory approval and a member vote.
TruStone Financial FCU has almost $1.6 billion in assets at the end of 2019.
Firefly CU has $1.4 billion in assets.
In conjunction with the merger, TruStone Financial will switch from a federal to a state charter.
TruStone Financial stated that as a state-chartered credit union it will have greater ability to expand into new counties throughout Minnesota and Wisconsin.
Read more.
TruStone Financial FCU has almost $1.6 billion in assets at the end of 2019.
Firefly CU has $1.4 billion in assets.
In conjunction with the merger, TruStone Financial will switch from a federal to a state charter.
TruStone Financial stated that as a state-chartered credit union it will have greater ability to expand into new counties throughout Minnesota and Wisconsin.
Read more.
Tuesday, May 5, 2020
Conserved Tennessee CU Is Insolvent as of March 31, 2020
At the end of the first quarter, Mid East Tennessee Community Credit Union (Decatur, TN) was insolvent.
The National Credit Union Administration placed the $10 million credit union into conservatorship on April 23, 2019.
The credit union's net worth was negative $134,539, as of March 31, 2020. It net worth ratio was minus 1.34 percent. The credit union has been critically undercapitalized based upon Call Report information since June 2019.
The credit union posted a loss of $154,819 for the first quarter of 2020, after recording a loss of almost $734 thousand for 2019.
The credit union reported that 3.55 percent of its loans were delinquent or $216,866 of loans were 60 days or more past due.
The credit union reported an annualized net charge-off rate of 10.11 percent for the first quarter, as net charge-offs were $169,853 for the first quarter of 2020. The credit union posted net charge-offs of almost $264 thousand for 2019.
NCUA in 2019 found that two former officials at the credit union had filed false Call Reports containing inaccurate financial information with the intent of manipulating the credit union's net worth ratio. Both individuals consented to orders of prohibition.
The National Credit Union Administration placed the $10 million credit union into conservatorship on April 23, 2019.
The credit union's net worth was negative $134,539, as of March 31, 2020. It net worth ratio was minus 1.34 percent. The credit union has been critically undercapitalized based upon Call Report information since June 2019.
The credit union posted a loss of $154,819 for the first quarter of 2020, after recording a loss of almost $734 thousand for 2019.
The credit union reported that 3.55 percent of its loans were delinquent or $216,866 of loans were 60 days or more past due.
The credit union reported an annualized net charge-off rate of 10.11 percent for the first quarter, as net charge-offs were $169,853 for the first quarter of 2020. The credit union posted net charge-offs of almost $264 thousand for 2019.
NCUA in 2019 found that two former officials at the credit union had filed false Call Reports containing inaccurate financial information with the intent of manipulating the credit union's net worth ratio. Both individuals consented to orders of prohibition.
Monday, May 4, 2020
NCUA Calls on Exempting CUs from CECL, Provides Guidance on Strategies for Working with Borrowers Affected by COVID-19
In an April 30 letter, National Credit Union Administration (NCUA) Chairman Rodney E. Hood urged the Financial Accounting Standards Board to exempt credit unions from complying with the current expected credit losses (CECL) methodology.
Hood wrote that "compliance costs associated with implementing CECL overwhelmingly exceed the benefits."
In addition, he argued that implementing CECL will have a chilling effect on lending, especially loans to low-income borrowers, and will negatively impact the net worth position of credit unions.
He noted that most credit unions are small and would face data collection challenges required by CECL.
Read the letter.
In a letter to credit unions, NCUA described various strategies that credit unions can employ to work with borrowers who experience financial hardship because of the COVID-19 pandemic.
The letter offers suggestions ranging from providing borrowers new funds to temporarily or permanently modifying loans.
The letter also describes how credit unions should monitor and report loan modifications.
Read the letter.
Hood wrote that "compliance costs associated with implementing CECL overwhelmingly exceed the benefits."
In addition, he argued that implementing CECL will have a chilling effect on lending, especially loans to low-income borrowers, and will negatively impact the net worth position of credit unions.
He noted that most credit unions are small and would face data collection challenges required by CECL.
Read the letter.
In a letter to credit unions, NCUA described various strategies that credit unions can employ to work with borrowers who experience financial hardship because of the COVID-19 pandemic.
The letter offers suggestions ranging from providing borrowers new funds to temporarily or permanently modifying loans.
The letter also describes how credit unions should monitor and report loan modifications.
Read the letter.
Sunday, May 3, 2020
New Buffalo Savings Bank and Teachers CU Adjust Price of the Transaction
New Buffalo Savings Bank (New Buffalo, MI) and Teachers Credit Union (South Bend, IN) announced on May 1 an update on the previously-announced purchase and assumption transaction.
The original terms of the transaction had shareholders receiving $28.42 per share in cash for each share of outstanding New Bancorp common stock. Under the revised terms, New Bancorp shareholders will receive $26.00 per share in cash for each share of outstanding New Bancorp common stock.
The adjustment in the per share price was based primarily on a significant increase in the termination cost of New Buffalo’s defined pension plan due to the unprecedented decline in long-term interest rates, as well as significant economic and market uncertainties related to the COVID-19 pandemic.
The transaction has received all regulatory approvals required to complete the transaction and expects to close the transaction on June 5, 2020, subject to obtaining the approval of the New Bancorp stockholders at a special meeting to be held on June 4, 2020 and the satisfaction of customary closing conditions.
Read the press release.
The original terms of the transaction had shareholders receiving $28.42 per share in cash for each share of outstanding New Bancorp common stock. Under the revised terms, New Bancorp shareholders will receive $26.00 per share in cash for each share of outstanding New Bancorp common stock.
The adjustment in the per share price was based primarily on a significant increase in the termination cost of New Buffalo’s defined pension plan due to the unprecedented decline in long-term interest rates, as well as significant economic and market uncertainties related to the COVID-19 pandemic.
The transaction has received all regulatory approvals required to complete the transaction and expects to close the transaction on June 5, 2020, subject to obtaining the approval of the New Bancorp stockholders at a special meeting to be held on June 4, 2020 and the satisfaction of customary closing conditions.
Read the press release.
Saturday, May 2, 2020
CP FCU to Seek State Charter
CP Federal Credit Union (Jackson, MI) has started the process of converting to a state charter.
According to the credit union's winter newsletter, the credit union filed an application with the state regulator to switch from a federal to state charter.
The credit union stated that as a state charter the credit union will be able to serve all persons who live, work, worship, or attend school in the State of Michigan. The credit union noted that as a federal credit union it could not serve such a broad field of membership.
The credit union wrote that this decision to become a state charter was to ensure the long-term viability of the credit union.
The Michigan Department of Insurance and Financial Services tentatively approved the credit union's application on March 12, 2020.
The next step is to have the membership vote on this conversion.
CP Federal Credit Union has $468 million in assets.
According to the credit union's winter newsletter, the credit union filed an application with the state regulator to switch from a federal to state charter.
The credit union stated that as a state charter the credit union will be able to serve all persons who live, work, worship, or attend school in the State of Michigan. The credit union noted that as a federal credit union it could not serve such a broad field of membership.
The credit union wrote that this decision to become a state charter was to ensure the long-term viability of the credit union.
The Michigan Department of Insurance and Financial Services tentatively approved the credit union's application on March 12, 2020.
The next step is to have the membership vote on this conversion.
CP Federal Credit Union has $468 million in assets.
Friday, May 1, 2020
NCUA Writes Senator Crapo with Legislative Recommendations
In an April 29 letter to Senator Crapo (R-ID), National Credit Union Administration (NCUA) Chairman Rodney Hood identified legislative changes that would benefit the agency during the coronavirus-induced recession.
The recommended legislative changes can be divided into four areas: improving liquidity for credit unions, providing capital relief to credit unions, enhancing community lending activities, and increasing access for remote financial services delivery for credit unions.
Some of these recommended changes are temporary, while others are permanent.
For example, some of the temporary legislative recommendations sought by NCUA are:
Other permanent changes to the Federal Credit Union Act include allowing all federal credit unions, just not multiple common-bond federal credit unions, to add underserved areas and to eliminate or significantly modify the reasonable proximity requirement to a service facility for a multiple common-bond federal credit union to serve select employee groups and associations.
Read the letter.
The recommended legislative changes can be divided into four areas: improving liquidity for credit unions, providing capital relief to credit unions, enhancing community lending activities, and increasing access for remote financial services delivery for credit unions.
Some of these recommended changes are temporary, while others are permanent.
For example, some of the temporary legislative recommendations sought by NCUA are:
- to lower the net worth ratio for credit unions to be well capitalized and adequately capitalized from 7 percent to 6 percent and from 6 percent to 5 percent, respectively.
- to raise the member business loan cap from 12.25 percent of assets to 20 percent assets during the recovery period.
Other permanent changes to the Federal Credit Union Act include allowing all federal credit unions, just not multiple common-bond federal credit unions, to add underserved areas and to eliminate or significantly modify the reasonable proximity requirement to a service facility for a multiple common-bond federal credit union to serve select employee groups and associations.
Read the letter.
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