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Although the Texas Credit Union Department said conservatorship for the $106 million Edinburg Teachers Credit Union was necessary to protect the public interest, the regulator cited no specific reason – not even the usual unsafe or unsound practices – for taking over the credit union. The Texas regulator appointed the NCUA as the conservator to the Edinburg, Texas-based credit union. The announcement from the independent federal agency that it was appointed conservator was released shortly before 6 p.m. EST on Friday. While ETCU’s financial performance reports showed the credit union was not struggling financially or losing money, the credit union’s 2019 IRS 990 return showed that its former President/CEO Jeffrey B. Moats was paid a total compensation of $1,611,821, which was four times the median base salary and bonus pay for CEOs across all asset sizes in 2019. According to the 2020 CUES Executive Compensation Survey, the median base salary and bonus compensation package totaled $412...

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BOSTON–The financial markets need to pick up the pace when it comes to migrating away from LIBOR, according to a new report from a Federal Reserve committee. According to the Fed, the move away from the most popular interest rate reference tool and the widely used benchmark will need to “materially accelerate” for the market to be adequately prepared to use the new base measure, the Fed said. According to the Fed analysis, some products, such as business loans, have not diminished the use of the London Interbank Offer Rate (LIBOR) in setting interest rates. “With essentially nine months left to end-2021, it is critical that market participants are actively taking steps to support the transition using the tools available now,” said Tom Wipf, chairman of the Fed Bank of Boston’s Alternative Reference Rates Committee (ARRC,) in a statement accompanying release of the report. In the Fed report the ARRC stated use of one alternative rate – the Secured Overnight Financing Rate (SOFR), which ...

WASHINGTON—New-home sales fell 18.2% in February from January's upwardly revised rate of 948,000 annualized units to 775,000 units during the month. This represents the sharpest month-over-month decline since 2013, noted NAFCU's Curt Long. "Severe weather across the country had a chilling effect, especially in the Midwest, which dropped 37.5%," explained Long, NAFCU's chief economist and vice president of research. "This is temporary, though, as this month's existing home sales numbers showed the resilient demand for real estate will simply push sales into March or April. New homes listed for sale rose slightly to its highest level since April 2020, but will likely tighten back up in the next release. "Regardless of the blip, tailwinds are still strong and demand for new homes continues, especially as inventory in the existing home market remains extremely tight,” continued Long. “Rising mortgage rates are becoming a headwind, but they still remain l...

ALEXANDRIA, Va.–When it comes to credit risk, credit unions were offered insights from NCUA on areas at which examiners will be looking, forbearance extension reporting, plans that need to be developed, and even the neighborhoods in which CUs might want to hand out their business cards. Those issues and others were addressed during a webinar hosted Wednesday by the agency. Victoria Bennett, senior credit specialist in NCUA’s Office of Examination and Insurance, emphasized the agency wants to know what credit unions will be actively doing regarding the institution’s credit risk. “We want to see your documentation on it. Who, what, when, where, why and how,” said Bennett. “Document what you have going on. We are going to want to know how strong your capital and earnings are. If you are dealing with high credit risk, your capital and earnings is what’s going to carry you through.” In addition, Bennett said the agency will be monitoring any credit unions getting into what it believes to be...

Editor's Note: This piece was originally published on ChipFilson.com By Chip Filson Filson, Chip This observation on America’s credit unions is from Leo Sammallahti​, Marketing Manager, for the Coop Exchange.  Leo lives  in Finland. “When I first read about a “Credit Union Governance Modernization Act” I was optimistic that this would help ensure there is more democratic accountability in the form of open and contested elections. Unfortunately this seems not be the case.  Rather the focus is making expelling credit union members easier. “I totally support being able to expel abusive and violent members to protect the staff.  If there has been cases where this has been made too difficult they should be tackled with better legislation. If the new act is limited to cases like this, I totally support it. “However, I’m concerned whether the act could be used by incumbents to solidify their positions by expelling critical members seeking to challenge them? I’m not saying t...

WASHINGTON–Mortgage rates continued to rise last week just as the spring buying season is approaching, but even though home prices have also been skyrocketing, the two trends are not expected to put much of a dent in a hot market. The rising rates and prices, however, are expected to delay many potential buyers looking to purchase their first home. After the average rate on the 30-year fixed mortgage hit a low of 2.75% at the end of January, it had risen to 3.45% as of last week, according to the Mortgage Bankers Association. The average rate on the 30-year mortgage now stands at the same point at which it stood one year ago.  The same can’t be said for home prices, which are now up over 10% from this time in 2020, according to CoreLogic. Prices are expected to remain high due to the record low supply of homes for sale, noted MSNBC in its analysis. MSNBC noted Homebuilders are not stepping up as much as hoped, because they are facing higher costs for land, labor and materials. They...

I was heartened recently to see past and present members of the National Credit Union Administration board express their concerns surrounding the need to charter new credit unions. It was especially encouraging to see them link the issue to considerations of diversity, equity and inclusion. For nearly 30 years, I helped organize CDCUs, community development credit unions that serve low-income and minority communities. With my colleague, Linda Levy, former CEO of the Lower East Side People’s Federal Credit Union in New York City, we wroteOrganizing Credit Unions: A Manual. But often, we had to advise community groupsagainstpursuing a credit union — even though credit unions are a compelling answer for communities long disempowered by the mainstream banking system. Why? First of all, as any credit union manager can tell you, it’s tough to operate a highly regulated business. A credit union’s day-to-day operations are generally far more demanding than a nonprofit’s. Moreover, chartering a...

By Rodney E. Hood Last week, as I prepared to receive my COVID-19 vaccination, I marveled to think of how far we’ve come in just the last year. The public health emergency that arose in early 2020, spiraling into a full-on pandemic crisis by March of last year, was unlike any challenge we’d faced in recent memory. Our understanding of the virus as it spread was limited; as the sense of uncertainty and foreboding mounted, the forecasts of the pandemic’s full impact were anything but reassuring. The potential threat to human life, to our economy and to our way of life was difficult to calculate. Virtually overnight, we had entered a new environment of risk that required clear thinking and rapid decision-making. A key lesson we can take from last year’s events is that there are few qualities more important in a time of adversity than resiliency – the ability to withstand and respond to stress. The last year has been a critical test of our system’s resiliency, and while that test certainly...

SWEETWATER, Fla.–Dade County FCU has renewed its partnership with the NFL’s Miami Dolphins and is now the “Official Credit Union” of the team. In a statement, the $1-billion CU said the multi-year arrangement relationship enables Dade County Federal to continue year-round initiatives featuring member, community, and marketing programs with the oldest major-league professional sports franchise in the state of Florida. Terms of the deal were not disclosed. “We couldn’t be more pleased to expand our partnership with the Miami Dolphins,” said George Joseph, CEO of Dade County Federal, in a statement. “We have worked closely with the team to strengthen bonds with current and potential credit union members, and we are proud to work with an organization that helps us champion financial literacy in Miami-Dade County.” Partnering on Events According to Dade County FCU it will serve as a partner on a variety of Miami Dolphins events, including some surrounding youth financial education and food ...

RANCHO CUCAMONGA, Calif.—Should credit unions consider reissuing their plastic cards with vertical designs? A literal shift is occurring, with a growing number of issuers adopting vertical, or portrait, designs on their cards due to consumers now dipping their chips or tapping their cards at the point of sale. The vertical designs better mimic how customers typically handle their cards when dipping or tapping, according to advocates. The change, most popular with younger consumers, is worth CUs’ attention. But decisions regarding the design change will be influenced by costs, members’ payments habits and demographics, and the number of card not present transactions within the portfolio each month, experts say. PayPal recently joined several other banks in releasing credit and debit cards with vertical designs for its Venmo app. “The vertical cards will make for a smoother user experience, as they will mimic how customers typically handle their cards when they either tap to pay or dip t...

ALEXANDRIA, Va.­–More than a decade after the failure of five corporate credit unions, when any potential recoveries and distributions seemed so far away that many in credit unions wrote off their capital investments as a complete loss, more than $368-million is about to be distributed to more than 2,000 credit unions. The funds will be paid out in April  Read More   Concerns CUs are Unaware With one NCUA board member expressing concerns that many among the 2,000 CUs that are to see the funds are unaware the money is coming and haven’t planned for it, NCUA said it plans to send letters to distribution recipients notifying them of their amount and other payment details. The distribution will be made to credit unions generally through an electronic funds transferand additional information will be available  here .

WASHINGTON–As expected, the Federal Reserve’s Open Market Committee has adjourned its two-day meeting without making any changes to rates—but it did indicate it sees brighter economic days ahead. “The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak,” the Fed said. “Inflation continues to run below 2%. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses. “The path of the economy will depend significantly on the course of the virus, including progress on vaccinations,” the FOMC statement continued. “The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses consider...

  Weekly News Summary Here are some things that were in the news last week. Please share these articles with your Supervisory Committee and Board of Directors. If you missed previous editions of the weekly news, summaries of those can be viewed at our  archive .   Have a great week! Mike Richards, CPA     Economic and Industry Issues Knowledge is the key to effective corporate governance. Staying abreast of economic and industry issues affecting your credit union will prepare you for those responsibilities.  NCUA Quarterly U.S. Map Review – Fourth Quarter 2020...