Some credit unions are providing taxpayer subsidized student loans to international students to attend prestigious business schools in the United States.
At least, four credit unions are participating with graduate business school programs in offering these private student loans to international students.
Quorum FCU (Purchase, NY) is participating in a student loan program for international students seeking an MBA from either the University of Pennsylvania's Wharton School or Cornell's Johnson Graduate School of Management.
Anderson School of Management at UCLA has partnered with Eli Lilly Credit Union (Indianapolis, IN) to provide loans up to $85000 to international students without needing a cosigner.
Kenan-Flagler School at UNC will permit students to borrow from Coastal Federal Credit Union (Raleigh, NC) without a cosigner. The loan amount is limited to a maximum amount of $45,000 per year. Coastal FCU has also partnered with Duke's Fuqua School of Business.
Stanford University's Graduate School of Business has partnered with the Star One Credit Union (Sunnyvale, CA) to provide loans to international business students.
But should the credit union tax subsidy go to fund loans for international students attending graduate business schools in the United States?
It also appears that these credit unions are using gimmicks to qualify these international students for credit union membership.
Wednesday, June 11, 2014
Monday, June 9, 2014
Vikings to Czars Junket
Here is another example of a credit union conference boondoggle.
EduCruises Credit Union Conference has a Scandinavia/Russian Voyage, which runs from August 1 through August 13.
Conference participants and their guests will travel the Baltic on Celebrity Constellation®.
Looking at the program, it seems that there will be four classroom days of the 13 day trip. The bulk of the trip involves sightseeing.
The cost for conference attendees ranges from $4,842.24 to $7,526.24. The companion rate ranges from $3,042.24 to $5,726.24.
However, if cruising the Baltic is not your cup of tea, you can plan to cruise the French Wine Country next year.
But should credit union members be paying for credit union officials to take a Baltic or French Wine Country junket?
For more info click here.
EduCruises Credit Union Conference has a Scandinavia/Russian Voyage, which runs from August 1 through August 13.
Conference participants and their guests will travel the Baltic on Celebrity Constellation®.
Looking at the program, it seems that there will be four classroom days of the 13 day trip. The bulk of the trip involves sightseeing.
The cost for conference attendees ranges from $4,842.24 to $7,526.24. The companion rate ranges from $3,042.24 to $5,726.24.
However, if cruising the Baltic is not your cup of tea, you can plan to cruise the French Wine Country next year.
But should credit union members be paying for credit union officials to take a Baltic or French Wine Country junket?
For more info click here.
Friday, June 6, 2014
Wall Street Journal: Credit Unions Are Assuming More Risk
Credit unions in search of higher returns are loosening lending standards and piling into longer-term assets, exposing the firms to potentially significant losses if interest rates rise and worrying regulators in the process.
Read the story (paid subscription).
Read the story (paid subscription).
Pennsylvania State Employees Credit Union
Pennsylvania State Employees Credit Union recently built this 238,000 square foot corporate office building at a reported cost of $71 million. The credit union at the end of 2013 had $4.1 billion in assets and reported a profit of almost $17.5 million. However, the credit union paid ZERO corporate income taxes.
Wednesday, June 4, 2014
Florida Central Credit Union to Buy Bank Branch and Deposits
The Tampa Bay Business Journal is reporting that Florida Central Credit Union is seeking regulatory approval to buy a Sarasota branch along with the deposits from First Federal Bank of Florida.
The credit union plans to acquire the First Federal Bank branch office at 3451 Cattleman Road in Sarasota. The transaction would include the deposit accounts of about 600 bank customers, if they choose to opt in to credit union membership.
The bank branch had about $14.9 million in deposits as of June 30, 2013.
If approved by regulators, the deal should close in July.
Read the story.
The credit union plans to acquire the First Federal Bank branch office at 3451 Cattleman Road in Sarasota. The transaction would include the deposit accounts of about 600 bank customers, if they choose to opt in to credit union membership.
The bank branch had about $14.9 million in deposits as of June 30, 2013.
If approved by regulators, the deal should close in July.
Read the story.
Tuesday, June 3, 2014
Credit Unions Post Solid Growth for Q1, Earn $2.1 Billion
The National Credit Union Administration (NCUA) is reporting that credit unions posted solid growth over the last year.
Total assets grew $42.6 billion, or 4.0 percent, from the first quarter of 2013, reaching $1.1 trillion.
Share and deposit accounts rose 3.6 percent over the year to $943.1 billion, compared to $910 billion at the end of the first quarter of 2013.
In the first quarter of 2014, outstanding loan balances were up 8.8 percent from the first quarter of 2013 to $652.7 billion. The increase in loans was broad-based. Year-over-year, new auto loans were up 13.9 percent; used auto loans grew 11.3 percent; member business loans rose 11.1 percent.
However, higher interest rates slowed the pace of mortgage origination during the first quarter. Credit unions originated an annualized $42.6 billion in fixed-rate, first real estate loans in the first quarter, down from $102.9 billion in the first quarter of 2013.
The growth in total loans contributed to a 3.3 percentage point rise in the overall loans-to-shares ratio relative to a year ago, to 69.2 percent, the highest first-quarter ratio since 2010.
However, NCUA expressed concern about credit unions adding long-term investments to their portfolios. Investments with maturities of three years or less fell $22 billion, while investments with maturities greater than three years grew $20.5 billion. The net long-term asset ratio was 35.49 percent at the end of the first quarter of 2014.
Credit unions reported net income of $2.1 billion for the first three months of 2014. Interest income was up $226 million from a year ago to almost $9 billion. Total interest expenses fell by 9 percent over the year to slightly more than $1.43 billion. But non-interest income fell by roughly $234 million year-over-year to almost $3.4 billion.
The return on average assets was 78 basis points at the end of the first quarter, which was equal to the 2013 year-end figure and down 5 basis points from a year earlier.
The aggregate net worth ratio fell 16 basis points from the end of 2013 to 10.61 percent at the end of the first quarter, but was 31 basis points higher than the end of the first quarter of 2013. Ninety-six percent of federally insured credit unions were well-capitalized with a net worth ratio at or above the statutorily required 7.0 percent.
Asset quality continued to improve as both net charge-offs and delinquencies fell. The delinquency rate on credit union loans was 0.81 percent as of March 31, 2014. Net charge-off rate was 0.50 percent for the first quarter of 2014.
NCUA noted a bifurcation in the credit union industry performance. Large credit unions continue to prosper, while small credit unions are struggling financially. Small credit unions with less than $10 million in assets reported a decline in loan, net worth, and membership growth during the first quarter of 2014.
Read the press release.
Total assets grew $42.6 billion, or 4.0 percent, from the first quarter of 2013, reaching $1.1 trillion.
Share and deposit accounts rose 3.6 percent over the year to $943.1 billion, compared to $910 billion at the end of the first quarter of 2013.
In the first quarter of 2014, outstanding loan balances were up 8.8 percent from the first quarter of 2013 to $652.7 billion. The increase in loans was broad-based. Year-over-year, new auto loans were up 13.9 percent; used auto loans grew 11.3 percent; member business loans rose 11.1 percent.
However, higher interest rates slowed the pace of mortgage origination during the first quarter. Credit unions originated an annualized $42.6 billion in fixed-rate, first real estate loans in the first quarter, down from $102.9 billion in the first quarter of 2013.
The growth in total loans contributed to a 3.3 percentage point rise in the overall loans-to-shares ratio relative to a year ago, to 69.2 percent, the highest first-quarter ratio since 2010.
However, NCUA expressed concern about credit unions adding long-term investments to their portfolios. Investments with maturities of three years or less fell $22 billion, while investments with maturities greater than three years grew $20.5 billion. The net long-term asset ratio was 35.49 percent at the end of the first quarter of 2014.
Credit unions reported net income of $2.1 billion for the first three months of 2014. Interest income was up $226 million from a year ago to almost $9 billion. Total interest expenses fell by 9 percent over the year to slightly more than $1.43 billion. But non-interest income fell by roughly $234 million year-over-year to almost $3.4 billion.
The return on average assets was 78 basis points at the end of the first quarter, which was equal to the 2013 year-end figure and down 5 basis points from a year earlier.
The aggregate net worth ratio fell 16 basis points from the end of 2013 to 10.61 percent at the end of the first quarter, but was 31 basis points higher than the end of the first quarter of 2013. Ninety-six percent of federally insured credit unions were well-capitalized with a net worth ratio at or above the statutorily required 7.0 percent.
Asset quality continued to improve as both net charge-offs and delinquencies fell. The delinquency rate on credit union loans was 0.81 percent as of March 31, 2014. Net charge-off rate was 0.50 percent for the first quarter of 2014.
NCUA noted a bifurcation in the credit union industry performance. Large credit unions continue to prosper, while small credit unions are struggling financially. Small credit unions with less than $10 million in assets reported a decline in loan, net worth, and membership growth during the first quarter of 2014.
Read the press release.
Monday, June 2, 2014
Matz's Letter to Reps. King and Meeks on Risk-Based Capital Proposal
On May 30th, NCUA Chairman Debbie Matz wrote Representatives King and Meeks regarding their May 15 letter about NCUA's risk-based capital proposal. (Read the King-Meeks letter)
The King-Meeks letter encouraged the NCUA Board to take into account the cost and burden of implementing the new risk-based capital requirements beyond the current leverage ratio; to provide a justification for the proposed risk-weights and why the proposed risk-weights differ from those for community banks; and to give credit unions more than 18 months to comply with the risk-based capital requirements, when finalized.
In her letter, Chairman Matz pointed out the need for the proposed rule and sets forth why the risk-weights for some asset classes diverge from those for community banks.
She noted that "[b]y law, NCUA must adopt a risk-based capital rule that is comparable to the rules for banks but that also takes into account any material risks to credit unions, such as interest rate risk and concentration risk in addition to credit risk."
She does appear to be sympathetic to giving credit unions an adequate amount of time to comply with the regulation, when it is finalized.
However, the letter makes it pretty clear that she has taken an exception to the dissemination of misinformation about the costs of the proposed rule from some trade associations.
Below is Chairman Matz's letter.
The King-Meeks letter encouraged the NCUA Board to take into account the cost and burden of implementing the new risk-based capital requirements beyond the current leverage ratio; to provide a justification for the proposed risk-weights and why the proposed risk-weights differ from those for community banks; and to give credit unions more than 18 months to comply with the risk-based capital requirements, when finalized.
In her letter, Chairman Matz pointed out the need for the proposed rule and sets forth why the risk-weights for some asset classes diverge from those for community banks.
She noted that "[b]y law, NCUA must adopt a risk-based capital rule that is comparable to the rules for banks but that also takes into account any material risks to credit unions, such as interest rate risk and concentration risk in addition to credit risk."
She does appear to be sympathetic to giving credit unions an adequate amount of time to comply with the regulation, when it is finalized.
However, the letter makes it pretty clear that she has taken an exception to the dissemination of misinformation about the costs of the proposed rule from some trade associations.
Below is Chairman Matz's letter.
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