Southern Utah University announced that America First Credit Union (Riverdale, UT) will pay $1.5 million for the naming rights to the 5,300 seat Centrum Arena.
The agreement is for 10 years.
The arena will now be called America First Events Center.
America First is the largest credit union in the state of Utah with almost $9 billion in assets.
Read the story.
Friday, September 29, 2017
Thursday, September 28, 2017
TCCUSF to Close in 2017, NCUSIF NOL Increased to 1.39 Percent
The National Credit Union Administration (NCUA) Board voted to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) in 2017.
The funds, property, and other assets and liabilities of the TCCUSF will be transferred to the National Credit Union Share Insurance Fund (NCUSIF) on October 1, 2017.
In addition, the NCUA Board raised the normal operating level (NOL) for NCUSIF from 1.30 percent to 1.39 of insured shares, despite the objection of many credit union commenters.
The NCUA Board spent part of the meeting challenging the false narrative that an NCUSIF equity ratio of 1.30 percent would withstood the financial crisis. The Board presentation noted that even without the corporate credit union losses, the NCUSIF equity ratio in 2009 and 2010 would have fallen below 1.20 percent, the threshold requiring premium assessments. Without the premium assessment, the NCUSIF equity ratio would have dropped to 1.07 percent.
The Board also adopted a policy for setting the normal operating level.
Any change to the normal operating level of more than 1 basis point shall be made only after a public announcement of the proposed adjustment and opportunity for comment. In soliciting comment, the NCUA will issue a public report, including data supporting the proposal.
When setting the normal operating level, the Board will seek to satisfy the following objectives:
The funds, property, and other assets and liabilities of the TCCUSF will be transferred to the National Credit Union Share Insurance Fund (NCUSIF) on October 1, 2017.
In addition, the NCUA Board raised the normal operating level (NOL) for NCUSIF from 1.30 percent to 1.39 of insured shares, despite the objection of many credit union commenters.
The NCUA Board spent part of the meeting challenging the false narrative that an NCUSIF equity ratio of 1.30 percent would withstood the financial crisis. The Board presentation noted that even without the corporate credit union losses, the NCUSIF equity ratio in 2009 and 2010 would have fallen below 1.20 percent, the threshold requiring premium assessments. Without the premium assessment, the NCUSIF equity ratio would have dropped to 1.07 percent.
The Board also adopted a policy for setting the normal operating level.
Any change to the normal operating level of more than 1 basis point shall be made only after a public announcement of the proposed adjustment and opportunity for comment. In soliciting comment, the NCUA will issue a public report, including data supporting the proposal.
When setting the normal operating level, the Board will seek to satisfy the following objectives:
- Retain public confidence in federal share insurance;
- Prevent impairment of the one percent contributed capital deposit; and
- Ensure the Insurance Fund can withstand a moderate recession without the equity ratio declining below 1.20 percent over a five-year period.
Wednesday, September 27, 2017
Tech CU Funds $3 Million Commercial Real Estate Loan
Technology Credit Union (San Jose, CA) on September 5 announced that it was originating a $3 million commercial real estate loan.
The loan will assist infunding the purchase of a 12,800 square foot, Class B commercial property in downtown San Jose, as well as provide for minor tenant improvement work and miscellaneous expenditures.
Technology Credit Union will finance commercial real estate loans up to $15 million.
Read the press release.
The loan will assist infunding the purchase of a 12,800 square foot, Class B commercial property in downtown San Jose, as well as provide for minor tenant improvement work and miscellaneous expenditures.
Technology Credit Union will finance commercial real estate loans up to $15 million.
Read the press release.
Tuesday, September 26, 2017
Credit Human to Receive $8.8 Million in Incentives to Relocate HQ
The City of San Antonio and Bexar County will provide Credit Human Federal Credit Union $8.8 million in tax and other incentives to move its headquarters to an office tower to be constructed at the Pearl.
Credit Human, formerly known as San Antonio Federal Credit Union, is the third largest credit union in San Antonio (TX).
The city has proposed offering up to $5.2 million in tax abatements and a $1.5 million tax rebate for the project, but the total value of both incentives would be capped at about $5.8 million, according to the Midtown Tax Increment Reinvestment Zone agenda.
The county is proposing a ten-year tax abatement worth a total of just under $3 million.
The project is expected to consist of two multi-story buildings, with the largest building being used for headquarters use for the credit union and mixed office and retail use. The 3.13 acre site on Broadway Avenue will comprise a total of 310,000 square feet of usable space and the construction of a total of 958 surface and underground parking spaces.
According to news reports, the price tag for the project is estimated at $113 million.
Under the incentive deal, the credit union would be required to pay its employees more than $11.83 an hour. After a year, 70 percent of the employees would have to make at least $15.68 an hour.
Read the agenda item.
Read story (subscription required).
Read an earlier story.
Credit Human, formerly known as San Antonio Federal Credit Union, is the third largest credit union in San Antonio (TX).
The city has proposed offering up to $5.2 million in tax abatements and a $1.5 million tax rebate for the project, but the total value of both incentives would be capped at about $5.8 million, according to the Midtown Tax Increment Reinvestment Zone agenda.
The county is proposing a ten-year tax abatement worth a total of just under $3 million.
The project is expected to consist of two multi-story buildings, with the largest building being used for headquarters use for the credit union and mixed office and retail use. The 3.13 acre site on Broadway Avenue will comprise a total of 310,000 square feet of usable space and the construction of a total of 958 surface and underground parking spaces.
According to news reports, the price tag for the project is estimated at $113 million.
Under the incentive deal, the credit union would be required to pay its employees more than $11.83 an hour. After a year, 70 percent of the employees would have to make at least $15.68 an hour.
Read the agenda item.
Read story (subscription required).
Read an earlier story.
Research: Mixed Evidence that CU Tax Exemption Serves Intended Purpose
The Federal Reserve Bank of Richmond recently published an article, Credit Unions: A Taxing Question that suggests there is mixed findings as to whether the continuation of the credit union tax exemption is justified.
The paper analyzes the findings of various research papers on the credit union tax exemption.
The paper argues that there are two legislative justifications for the credit union tax exemption -- their mutual structure and their purpose of assisting those of modest means.
The paper points out that "[c]ritics of the credit union tax exemption have long used the repeal of the mutual savings bank tax exemption as evidence that credit unions should lose theirs." However, mutual savings banks lost their tax exemption because they were no longer "self-contained cooperative organizations." Despite the similarities between mutual savings banks and credit unions, the paper states credit unions still retain more of their cooperative qualities than mutual savings banks.
But I would note that the erosion of common bond is undermining the linkage between credit union borrowers and savers.
The paper then examines at the incidence of the tax subsidy. In other words, where does the tax subsidy go?
Citing work by Robert DeYoung and others, the authors found that the majority, but not all, of the tax subsidy was passed through to credit union members in the form of higher deposit rates. The authors also stated that an economically substantial amount of the subsidy was diverted away from credit union members, mainly by hiring too many workers and earning below marketr returns on investment securities.
While the credit union subsidy appears to be flowing to members, the other justification for the tax exemption is that credit unions target those of modest means. The evidence is mixed on whether this policy goal is being met. Credit unions claim that their common bond requirements may result in a selection bias that makes it harder for them to serve people of modest means. However, research looking at large Wisconsin credit unions with broad fields of membership found that large credit unions were targeting wealthier customers, as evidenced by the markets in which they locate branches and the income level of mortgage borrowers.
The paper concludes that "research performed on credit unions and the tax exemption reveals mixed results as to whether, on the whole, credit unions still serve the same purposes today as they did when they were first chartered in the early 20th century."
The paper analyzes the findings of various research papers on the credit union tax exemption.
The paper argues that there are two legislative justifications for the credit union tax exemption -- their mutual structure and their purpose of assisting those of modest means.
The paper points out that "[c]ritics of the credit union tax exemption have long used the repeal of the mutual savings bank tax exemption as evidence that credit unions should lose theirs." However, mutual savings banks lost their tax exemption because they were no longer "self-contained cooperative organizations." Despite the similarities between mutual savings banks and credit unions, the paper states credit unions still retain more of their cooperative qualities than mutual savings banks.
But I would note that the erosion of common bond is undermining the linkage between credit union borrowers and savers.
The paper then examines at the incidence of the tax subsidy. In other words, where does the tax subsidy go?
Citing work by Robert DeYoung and others, the authors found that the majority, but not all, of the tax subsidy was passed through to credit union members in the form of higher deposit rates. The authors also stated that an economically substantial amount of the subsidy was diverted away from credit union members, mainly by hiring too many workers and earning below marketr returns on investment securities.
While the credit union subsidy appears to be flowing to members, the other justification for the tax exemption is that credit unions target those of modest means. The evidence is mixed on whether this policy goal is being met. Credit unions claim that their common bond requirements may result in a selection bias that makes it harder for them to serve people of modest means. However, research looking at large Wisconsin credit unions with broad fields of membership found that large credit unions were targeting wealthier customers, as evidenced by the markets in which they locate branches and the income level of mortgage borrowers.
The paper concludes that "research performed on credit unions and the tax exemption reveals mixed results as to whether, on the whole, credit unions still serve the same purposes today as they did when they were first chartered in the early 20th century."
Monday, September 25, 2017
CU Taxi Medallion Lender Likened to Last Decade's Predatory Subprime Lenders
The Philadelphia Inquirer is compares the collapsing of the Philadelphia taxi market to the mortgage meltdown last decade and has some harsh comments about Melrose Credit Union (Briarwood, NY).
The article states:
This sounds so familiar to the the subprime mortgage crisis.
At their peak in October 2013, taxi medallion prices were $530,000. However, after Uber and Lyft entered the market, taxi medallion prices dropped precipitously and as of August 2017 were at $52,000.
According to the Inquirer story, Melrose financed medallion loans through a broker to borrowers with bad or no credit history and who neither understand or spoke English. A complaint against Melrose alleges that underwriting of taxi medallion loans was non-existent.
It is estimated that Melrose lent more than $120 million to Philadelphia medallion owners.
Because the financing of medallion loans were through thee year balloon loans, that meant every three years borrowers needed new loans to pay off those balloon loans. This also ensured new fee revenues for Melrose.
The article further notes that after Melrose was seized by the New York regulator, the credit union exacerbated the decline in medallion values as it stopped lending in the market.
Read the article.
The article states:
"[L]enders drew up medallion loans with huge balloon payments, made to people who couldn’t afford them but who never worried about paying them off when they came due in three years. Why? Because the taxi business was golden, generating ample revenue. Meanwhile, just as with real estate, the value of medallions kept rising.
Besides, there was always another chance to refinance.
Until, suddenly, there wasn’t."
This sounds so familiar to the the subprime mortgage crisis.
At their peak in October 2013, taxi medallion prices were $530,000. However, after Uber and Lyft entered the market, taxi medallion prices dropped precipitously and as of August 2017 were at $52,000.
According to the Inquirer story, Melrose financed medallion loans through a broker to borrowers with bad or no credit history and who neither understand or spoke English. A complaint against Melrose alleges that underwriting of taxi medallion loans was non-existent.
It is estimated that Melrose lent more than $120 million to Philadelphia medallion owners.
Because the financing of medallion loans were through thee year balloon loans, that meant every three years borrowers needed new loans to pay off those balloon loans. This also ensured new fee revenues for Melrose.
The article further notes that after Melrose was seized by the New York regulator, the credit union exacerbated the decline in medallion values as it stopped lending in the market.
Read the article.
Friday, September 22, 2017
56 CUs Awarded $39.5 Million from CDFI Fund
The National Credit Union Administration (NCUA) is reporting that 56 federally-insured credit unions will receive awards from the Community Development Financial Institutions (CDFI) Fund.
The total amount of the awards were $39.5 million.
According to the press release, 27 credit unions were a first-time awardee.
Read the press release.
The total amount of the awards were $39.5 million.
According to the press release, 27 credit unions were a first-time awardee.
Read the press release.
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