Franklin County Commissioners delayed for one week Richland, Washington-based HAPO Community Credit Union's naming rights deal to the TRAC Center, according to the Tri-City Herald.
As I reported on February 24, the deal was for a total of $1 million over 10 years.
The naming rights deal was an attempt by county commissioners to narrow the operating losses at the TRAC Center.
However, people objected to dropping the name TRAC from the event and meeting center, which stands for Trade, Recreation and Agriculture Center.
Read the story.
Thursday, February 28, 2019
Wednesday, February 27, 2019
PenFed's CEO Admits Anyone Can Join
In a January 25, 2019 opinion piece in Credit Union Times, James Schenck, President and CEO of Pentagon Federal Credit Union (McLean, VA), acknowledged that the credit union already had nationwide membership eligibility prior to its emergency merger with Progressive Credit Union (New York, NY).
The opinion piece was in response to banking trade associations criticisms of the acquisition of Progressive CU, which had an open charter, by Pentagon FCU (PenFed).
Schenck wrote:
In other words, PenFed's CEO is admitting that anyone can join.
This admission that anyone throughout the United States can join shows that the concept of common bond has become a joke.
This is just another example as to why policymakers should end the preferential tax treatment of large credit unions like PenFed.
Read the opinion piece.
The opinion piece was in response to banking trade associations criticisms of the acquisition of Progressive CU, which had an open charter, by Pentagon FCU (PenFed).
Schenck wrote:
Despite the criticism from bankers, PenFed already had nationwide membership eligibility through our existing field of membership, as well as a presence in all 50 states as a multiple-common-bond credit union.
In other words, PenFed's CEO is admitting that anyone can join.
This admission that anyone throughout the United States can join shows that the concept of common bond has become a joke.
This is just another example as to why policymakers should end the preferential tax treatment of large credit unions like PenFed.
Read the opinion piece.
Tuesday, February 26, 2019
State Economic Development Board Approves $750,000 in Tax Incentives for Dupaco's HQ
The Iowa Economic Development Authority board members voted unanimously on February 22 to award up to $750,000 in tax incentives to Dupaco Community Credit Union (Dubuque, IA).
The tax benefits are associated with Dupaco Community Credit Union's headquarters project.
In January 2019, the Dubuque City Council members approved a development agreement that included 15 years of tax-increment financing rebates totaling $5.2 million. Initial estimates of the tax-increment financing rebates were $2 million.
Read the story.
The tax benefits are associated with Dupaco Community Credit Union's headquarters project.
In January 2019, the Dubuque City Council members approved a development agreement that included 15 years of tax-increment financing rebates totaling $5.2 million. Initial estimates of the tax-increment financing rebates were $2 million.
Read the story.
Monday, February 25, 2019
Two CU Bills Introduced in Nebraska
Two credit union bills have been filed in the Nebraska legislature.
LB453 would require the Director for the Department of Banking and Finance to publish a notice of a credit union's application to expand its field of membership when the Director determines that a hearing is not warranted. The notice of the application would be required in a paper of general circulation in the county or counties in which the expanded field of membership has been requested. Also, a notice of the filing will be sent to the Nebraska Bankers Association and the Nebraska Independent Community Bankers Association.
If the Director receives substantive objection to the field of membership application, the Director would be required to hold a hearing. The Director would publish a notice of the hearing in a newspaper of general circulation in the county or counties of the proposed field of membership and notify the Nebraska Bankers Association and The Nebraska Independent Community Bankers Association of the hearing.
LB407 would provide parity to Nebraska state-chartered credit unions with a credit union chartered in another state operating one or more branches in the state. The Nebraska state-chartered credit union would have to apply with the Department of Banking and Finance for approval to engage in an activity that is permissible for a credit union charters in another state operating in Nebraska. A credit union seeking the authority to engage in this activity must be well capitalized as of the most recent examination.
There will be a hearing on both bills before the Banking, Insurance, and Commerce Committee on February 26.
LB453 would require the Director for the Department of Banking and Finance to publish a notice of a credit union's application to expand its field of membership when the Director determines that a hearing is not warranted. The notice of the application would be required in a paper of general circulation in the county or counties in which the expanded field of membership has been requested. Also, a notice of the filing will be sent to the Nebraska Bankers Association and the Nebraska Independent Community Bankers Association.
If the Director receives substantive objection to the field of membership application, the Director would be required to hold a hearing. The Director would publish a notice of the hearing in a newspaper of general circulation in the county or counties of the proposed field of membership and notify the Nebraska Bankers Association and The Nebraska Independent Community Bankers Association of the hearing.
LB407 would provide parity to Nebraska state-chartered credit unions with a credit union chartered in another state operating one or more branches in the state. The Nebraska state-chartered credit union would have to apply with the Department of Banking and Finance for approval to engage in an activity that is permissible for a credit union charters in another state operating in Nebraska. A credit union seeking the authority to engage in this activity must be well capitalized as of the most recent examination.
There will be a hearing on both bills before the Banking, Insurance, and Commerce Committee on February 26.
NCUA Sued for Breach of Contracts
A lawsuit filed on February 11, 2019 by large banks and their affiliates that alleges breach of contract by the National Credit Union Administration (NCUA).
In March 2013, NCUA entered into a settlement agreement with Plaintiffs and certain affiliates addressing claims arising out of the purchases of mortgage-backed securities (MBS) by Texans Credit Union and five failed corporate credit unions that were underwritten, sponsored, sold, or issued by Plaintiffs or their affiliates.
As part of the settlement agreement, if NCUA later entered into a settlement with certain third parties involved with Plaintiffs MBS, the NCUA was required to “use good faith, best efforts to obtain from the Third Party a release of [Plaintiffs] as to all claims for contribution, indemnification, or any other liability arising out of or relating in any way to such claims then being settled with such Third Party.”
The lawsuit claims that while the Plaintiffs have fulfilled their obligations under the NCUA settlement agreement, NCUA repeatedly breached its contractual obligation to use its “good faith, best efforts” to obtain releases when settling claims with Third Parties as liquidator/conservator of the credit unions.
The Plaintiffs are seeking monetary damages in an amount to be determined at trial, including attorneys’ fees and other costs and expenses.
The complaint was filed with United States District Court for the District of Columbia.
In March 2013, NCUA entered into a settlement agreement with Plaintiffs and certain affiliates addressing claims arising out of the purchases of mortgage-backed securities (MBS) by Texans Credit Union and five failed corporate credit unions that were underwritten, sponsored, sold, or issued by Plaintiffs or their affiliates.
As part of the settlement agreement, if NCUA later entered into a settlement with certain third parties involved with Plaintiffs MBS, the NCUA was required to “use good faith, best efforts to obtain from the Third Party a release of [Plaintiffs] as to all claims for contribution, indemnification, or any other liability arising out of or relating in any way to such claims then being settled with such Third Party.”
The lawsuit claims that while the Plaintiffs have fulfilled their obligations under the NCUA settlement agreement, NCUA repeatedly breached its contractual obligation to use its “good faith, best efforts” to obtain releases when settling claims with Third Parties as liquidator/conservator of the credit unions.
The Plaintiffs are seeking monetary damages in an amount to be determined at trial, including attorneys’ fees and other costs and expenses.
The complaint was filed with United States District Court for the District of Columbia.
Sunday, February 24, 2019
HAPO Community to Buy Naming Rights to Event and Meeting Center
HAPO Community Credit Union (Richland, WA) is poised to purchase the naming rights to The Trade, Recreation and Agricultural Center (TRAC) in Pasco (WA).
HAPO Community Credit Union will pay $100,000 annually under the naming rights agreement for the event and meeting center.
The TRAC will be renamed The HAPO Center under the agreement.
The deal is for 10 years.
The Franklin County Commission is scheduled to vote on the deal on February 26.
Read the naming rights agreement.
HAPO Community Credit Union will pay $100,000 annually under the naming rights agreement for the event and meeting center.
The TRAC will be renamed The HAPO Center under the agreement.
The deal is for 10 years.
The Franklin County Commission is scheduled to vote on the deal on February 26.
Read the naming rights agreement.
Thursday, February 21, 2019
Interdependency Risk and An Emergency Merger
The current narrative from the credit union industry is that the emergency merger of Progressive Credit Union (New York, NY) into Pentagon Federal Credit Union (McLean, VA) saved the National Credit Union Share Insurance Fund (NCUSIF) from the loss that would have arisen from the failure of Progressive.
However, an untold story is about the interdependency risk associated with credit unions trying to prop up Progressive CU.
As I previously pointed out, Progressive Credit Union received an exemption from the nonmember deposit cap in 2015.
A document From the National Credit Union Administration (NCUA) noted that Progressive CU in recent years primarily funded itself through nonmember deposits, which were all from credit unions.
As of December 2018, the number of nonmember accounts at Progressive were 246. These dollar value of these nonmember deposits were slightly more than $76.8 million. Nonmember deposits comprised almost 32 percent of total deposits and shares at Progressive.
In addition, Progressive CU had $52 million in uninsured shares and deposits, of which $36.25 million were nonmember deposits.
Under the scenario where Progressive CU was liquidated in an insured depositor payoff, these uninsured deposits would absorb losses before the NCUSIF.
It is possible that some credit unions that funded Progressive CU could have become impaired. But only NCUA would know if this is the case.
This emergency merger seems to have more to do with keeping losses at Progressive from cascading to other credit unions.
The NCUA needs to seriously examine this issue of interdependency risk within the credit union industry.
However, an untold story is about the interdependency risk associated with credit unions trying to prop up Progressive CU.
As I previously pointed out, Progressive Credit Union received an exemption from the nonmember deposit cap in 2015.
A document From the National Credit Union Administration (NCUA) noted that Progressive CU in recent years primarily funded itself through nonmember deposits, which were all from credit unions.
As of December 2018, the number of nonmember accounts at Progressive were 246. These dollar value of these nonmember deposits were slightly more than $76.8 million. Nonmember deposits comprised almost 32 percent of total deposits and shares at Progressive.
In addition, Progressive CU had $52 million in uninsured shares and deposits, of which $36.25 million were nonmember deposits.
Under the scenario where Progressive CU was liquidated in an insured depositor payoff, these uninsured deposits would absorb losses before the NCUSIF.
It is possible that some credit unions that funded Progressive CU could have become impaired. But only NCUA would know if this is the case.
This emergency merger seems to have more to do with keeping losses at Progressive from cascading to other credit unions.
The NCUA needs to seriously examine this issue of interdependency risk within the credit union industry.
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