GFA Completes Acquisition of Stock Savings Bank

GFA Credit Union, based in Gardner, Mass., has completed the acquisition of Monadnock Community Bank in Peterborough, New Hampshire.

This is the first credit union acquisition of a stock bank in the United States.

Read the story.

Chetco Closed by NCUA

The National Credit Union Administration (NCUA) announced the liquidation of Chetco Federal Credit Union (Chetco) effective December 31. Business loans played a significant role in the credit union's liquidation.

Rogue Federal Credit Union (Rogue) of Medford, Oregon will purchase and assume Chetco’s five Oregon branches and memberships and Coast Central Credit Union (Coast Central) of Eureka, California will purchase and assume the Crescent City branch and California memberships.

NCUA placed Chetco into conservatorship on September 23, 2011 and made the decision to liquidate Chetco and discontinue its operations after determining the credit union was insolvent with no prospect for restoring viable operations on its own.

Chetco had a net worth ratio of minus 7.31 percent as of September 30, 2012. The credit union reported 23.81 percent of its loans were 60 days or more delinquent. Over half ($33 million) of the $60.2 million in delinquent loans were member business loans.

At the time of liquidation, Chetco served 24,926 members and had approximately $259 million in deposits.

Chetco is the fourteenth federally insured credit union liquidation in 2012. NCUA did not disclose the cost of Chetco's failure to the NCUSIF.

Read the press release.

CU Volunteer Junkets

While credit unions talk about how their board members are volunteers, many of these volunteers are handsomely rewarded with perks, such as trips to conferences in exotic locations.

For example, CUNA is offering its Volunteer Institute in Punta Cana, Dominican Republic at the Paradisus Palma Real Golf and Spa Resort. The Institute will run from May 19 through 22, 2013.

If a credit union volunteer cannot attend CUNA's Volunteer Institute, there are plenty of other junkets available.

Volunteers can get their credit unions to pay for an all inclusive junket on The Panama Canal Credit Union Educational Cruise Conference (February 15 - 25, 2013). The educational cruise will stop in the Bahamas, Aruba, Curacao, Panama, and Costa Rica. The cost of the cruise begins at a price of more than $3,000 and does not include airfare.

Another possibility for credit union volunteers is to explore the Galapagos Islands with CU EduCruises. This educational excursion will take place during June of next year at a tidy price of over $7,000 per one volunteer per cabin. If the volunteer brings a guest, the price per cabin jumps to over $12,000.

CU EduCruises also offers a cruise to the Canary Islands.

Barred from Corporate CUs; But Not Retail CUs

I was reviewing NCUA's administrative orders associated with the personnel at the two costliest credit union failures -- Western Corporate FCU and U.S. Central FCU.

The orders with one exception had the same language barring the individual from:

• becoming an employee, holding any office in, or otherwise participating in any manner in the conduct of the affairs of any federally-insured corporate credit unions;
• consulting or advising any federally-insured corporate credit unions on any matters involving or related to investment securities, investment policy, or invesment strategy; or
• selling any investment securities ... to any federally insured corporate credit unions.

However, these prohibition orders with one execption did not bar these individuals from becoming an employee or participating in the affairs of a natural person or retail credit union.

If these individuals are not qualified to work for or to participate in the affairs of federally-insured corporate credit unions, then how are these individuals qualified to participate in the affairs of or work for a natural person credit union?

And I am not the only person asking this question.

I was carbon copied along with The Wall Street Journal and The Washington Post on a letter to the NCUA Board that raised the same question.

Law Will Protect Banks and Credit Unions from Frivolous Lawsuits

President Obama signed into law on December 20 a bill (HR 4367) that would protect banks and credit unions from frivolous lawsuits by repealing an outdated, duplicative requirement that a placard must be attached to ATMs stating that a fee may be charged.

If the placard was not attached to an ATM, a consumer may recover statutory damages of between $100 and $1,000 for each transaction. Successful class-action plaintiffs could recover up to $500,000. As a result, a cottage industry developed where some people were removing placards, photographing ATMs without them and filing lawsuits.

However, the placard requirement is unnecessary because ATM operators are required to disclose fees on ATM screens and consumers have the right to decline the transaction without being charged.

NCUA Sues Former Texans CU CEO Addison

The National Credit Union Administration (NCUA) today filed suit in Federal District Court in Dallas against David Addison, former CEO of Texans Credit Union (TCU), alleging Addison breached his fiduciary duty to members and was “grossly negligent” in his management of the credit union, which is now in conservatorship.

Read the press release.

Read the complaint.

2000 Credit Unions Reported a Loss During Q3

According to data from NCUA, 2,000 federally insured credit unions (or 29 percent of the industry) reported a loss during the third quarter of 2012.

A vast majority of the credit unions reporting losses during the third quarter were smaller institutions. The following information shows the number of credit unions posting a loss by asset size group.

• 989 credit unions with less than $10 million in assets;
• 703 credit unions with between $10 million and $50 million in assets;
• 162 credit unions with between $50 million and $100 million in assets;
• 134 credit unions with between $100 million and $500 million in assets;
• 8 credit unions with between $500 million and $1 billion in assets; and
• 4 credit unions with more than $1 billion in assets.

Six credit unions reported third quarter losses in excess of $1 million. Carolina Trust FCU (Myrtle Beach, SC) reported the largest third quarter loss at $3.9 million.

The other credit unions with more than $1 million in losses during the third quarter were:

• Empower CU (West Allis, WI), loss of almost $3.2 million;
• Liberty Bay (Baintree, MA), loss of $2.4 million;
• Southeast Financial Credit Union (Franklin, TN), loss of $1.9 million;
• Alabama One (Tuscaloosa, AL), loss of $1.3 million; and
• P E F FCU (Highland Heights, OH), loss of $1.1 million.