280% Increase In New Accounts For Local Credit Union (2)

Credit UnionAll credit unions will typically have similar reasons for being because they all typically subscribe to the universal co-operative principles To generalize, a credit union will want to be financially strong and sustainable in order to be able to serve members’ financial needs as well as to assist in improving the communities of its members. CLF policies and procedures need to be designed to ensure that any lending program or facility is for the purpose of providing liquidity and not aiding a failing credit union. The Federal Credit Union Act (FCUA) states that loans may be advanced to a member of the CLF on terms and conditions prescribed by the Board after giving due consideration to creditworthiness.

Former National Credit Union Administration (NCUA) Board member Michael Fryzel is urging the NCUA Board to retain the member business loan (MBL) personal guarantee requirement. Among the most active borrowers were Franklin Mint FCU and Educational Employees CU. Both credit unions visited the Discount Window 22 times during the quarter. The Florida Office of Financial Regulation approved the merger of Calusa Bank (Punta Gorda, FL) into Achieva Credit Union (Dunedin, FL).

The order requires the consent of the National Credit Union Administration and the Federal Deposit Insurance Corporation. During the second quarter of 2015, Progressive Credit Union saw a 74 percent increase in loans 60-days or more past due to $6.5 million. As of the end of the second quarter, the credit union reported that 1.04 percent of all loans were delinquent. As of June, the credit union has allowances for loan and lease losses (ALLL) of almost $11.7 million up from $9.1 million from the previous quarter. This indicates that the credit union is well reserved with a coverage ratio (ALLL to Delinquent Loans) of 179.53 percent.

This means the credit union has a buffer (capital plus ALLL) of over $285 million to absorb expected and unexpected losses. Today, I will look at Montauk Credit Union, which is the smallest of the New York taxi medallion credit unions with $178.5 million in assets. As of the end of the second quarter, the credit union reported that 3.83 percent of all loans were delinquent.

Early delinquencies fell from $53.1 million as of March 2015 to almost $28.1 million as of June 2015. As of June, troubled debt restructurings were equal to 154.4 percent of the credit union’s net worth. As a result, the credit union reported a loss of approximately $2.9 million for the second quarter and had a year-to-date loss of $2 million. As of June, the credit union has built its allowances for loan and lease losses (ALLL) to almost $5.6 million up from $2 million from the previous quarter. Trailblazer FCU was the second credit union in Pennsylvania to be liquidated this year.

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