Posted by Bruen
at 12:01 AM PDT
Saturday, 31 July 2010
I always wondered what the dog did when we weren't at home!
Tom Glatt's performance at Realtors Federal Credit Union
The credit union trades have reported on Glatt’s exit from Realtors FCU. What observations can we make from the Call Report data?
First Tom says that he is leaving Realtors FCU because of a relocation … to join his wife in New Jersey. Do the financials hint at any other reasons?
The credit union had been in operation a little more than a year. Realtors FCU started with $10 million and then the realtors association made a second capital infusion in the fourth quarter of 2009 for $5 million. The June 30th Call Report shows that the Credit Union has blown through $7.5 million of that capital.
No doubt the realtors are getting a bit restless. Probably even testy because the model doesn’t seem to be sustainable. Their share deposit growth this year is 250%. In other years that could be a great story for Glatt to tell at one of his many conference appearances. But today most everybody else is trying to keep the lid on growth and many are purposefully shrinking deposits. It is not difficult to chase deposits in this interest rate environment.
Where has the $7.5 million of capital gone? Well salaries and benefits have eaten up a whopping $4 million. $2.2 million has gone to Professional and Outside Services.
The Credit Union definitely has had difficulty generating earnings even though they’ve bought member business loan and real estate loan participations. Total income since the Realtors FCU opened has only been $1.5 million (about 1/3 of the salary expense).
The point is that salaries and benefits and other costs were eating up the Realtors money and no material return was coming in on that investment. The Credit Union will likely need additional capital infusions if the current rapid growth and high expense trend continues. It is easy to assume that the realtors are having second thoughts about their commitment.
Tom Glatt is quoted as saying, “It’s very bittersweet,” Glatt said on leaving. “But we’ve done something here that has never been done before. We opened a virtual credit union in the worst economic time.”
Yes, true enough that it hasn’t been done before. Equally true, given the financial performance of Realtors FCU, it may not be done again.
I've received a flurry of emails reminding me that Tom Glatt's tenure at Continental FCU wasn't an easy ride either. The Credit Union had over 16% networth when he started and has seen a steady decline since. Today the Credit Union's networth is less than 5% (Call Report 3-31-10).
The email rumors about what went on at Realtors FCU can't be publically posted. But many folks seem to have strong feelings about how the Credit Union was managed.
Chuck Bruen
Posted by Bruen
at 12:01 AM PDT
Updated: Friday, 30 July 2010 8:57 PM PDT
Friday, 30 July 2010
Which U.S. credit union has the worst new worth ratio?
I’m not making this up. I doubt that anyone will get close to this number. I’m just guessing that it is the lowest but it is a pretty fair bet.
How about negative -17.11%.
Certified Federal Credit Union (6140), Commerce, California ($41 million in assets).
Chuck Bruen
I’m not making this up. I doubt that anyone will get close to this number. I’m just guessing that it is the lowest but it is a pretty fair bet.
How about negative -17.11%.
Certified Federal Credit Union (6140), Commerce, California ($41 million in assets).
Chuck Bruen
Posted by Bruen
at 12:01 AM PDT
Mark Udall ... credit union hero
Senator Mark Udall (D-Colo) ... He urged his colleagues to “avoid the associational infighting that would have us believe that this is about banks or about credit unions–because this truly is about small businesses.”
Comparing the fight between credit unions and banks to the feud between two 19th Century families in West Virginia and Kentucky, Sen. Mark Udall today urged his colleagues to ignore the objections of the banking lobby and raise the cap on member business loans. “We all know the national associations for banks and credit unions regularly snipe at each other. It’s like the Hatfields and McCoys, but this is not a bank or credit union issue. This is a small business issue,” Udall (D-Colo.) said during a floor speech, in support of his amendment to raise the cap on MBLs from 12.35% of assets to as much as 27.5% of assets. [as reported in the Credit Union Times]
Posted by Bruen
at 12:01 AM PDT
Updated: Thursday, 29 July 2010 8:51 AM PDT
Thursday, 29 July 2010
ANOTHER ALERT: Stay in the car!!!
Posted by Bruen
at 12:01 AM PDT
Why does the NCUA need a Chief Economist?
Why would they even need this position? These costs come out of our pockets. This is not only one person but a department. You know he will hire a staff. Someone should investigate and ask questions here. Is the NCUA serious? After 18 years it now comes to light we need a Chief Economist. This will solve all our problems. The NCUA should have thought of this sooner.
Stuart Perlitsh
Why would they even need this position? These costs come out of our pockets. This is not only one person but a department. You know he will hire a staff. Someone should investigate and ask questions here. Is the NCUA serious? After 18 years it now comes to light we need a Chief Economist. This will solve all our problems. The NCUA should have thought of this sooner.
Stuart Perlitsh
ALEXANDRIA, Va. – NCUA announced today it has reestablished an office of the chief economist for the first time in 18 years and hired John Worth, policy manager for the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, to head it.
NCUA has not had a chief economist since the 1992 death of Charles Bradford and agency officials have been discussing recreating the office ever since then. Because of that, NCUA has always had to rely on comprehensive economic forecasts and projections from CUNA, NAFCU and industry groups. [Read story at Credit Union Journal].
Posted by Bruen
at 12:01 AM PDT
Updated: Wednesday, 28 July 2010 10:18 AM PDT
Excellent … way to go CUNA!!!
The situation is unbelievable. The ICBA has been aggressively opposing the Udall amendment to the Small Business Lending Fund bill. In a letter to Senator Harry Reid, the ICBA said they would oppose this legislation if it included the amendment to that would permit additional small lending by credit unions.
The ICBA wants the $30 billion son of tarp taxpayer handout while opposing a solution that would provide more lending by credit unions at no cost to taxpayers. You have to wonder how these people sleep at night.
I strongly commend CUNA for taking this position: If the amendment isn’t included Congress would leave “$10 billion in new small business lending on the table and 100,000 new jobs uncreated,” and CUNA “would be compelled to oppose the legislation.”
Charles Bruen
The situation is unbelievable. The ICBA has been aggressively opposing the Udall amendment to the Small Business Lending Fund bill. In a letter to Senator Harry Reid, the ICBA said they would oppose this legislation if it included the amendment to that would permit additional small lending by credit unions.
The ICBA wants the $30 billion son of tarp taxpayer handout while opposing a solution that would provide more lending by credit unions at no cost to taxpayers. You have to wonder how these people sleep at night.
I strongly commend CUNA for taking this position: If the amendment isn’t included Congress would leave “$10 billion in new small business lending on the table and 100,000 new jobs uncreated,” and CUNA “would be compelled to oppose the legislation.”
Charles Bruen
Posted by Bruen
at 12:01 AM PDT
Updated: Wednesday, 28 July 2010 10:17 AM PDT
Wednesday, 28 July 2010
The ugliest bank robber ever
Man dressed as a woman?
Posted by Bruen
at 12:01 AM PDT
Updated: Tuesday, 27 July 2010 10:17 AM PDT
Overdraft fees vs. payday loan advances
Mike Moebs on overdraft and payroll advance pricing
As usual, Mike Moebs makes some brilliant comments about overdraft and payday loan pricing. His advice is very smart and just plain makes sense.
From a recent Credit Union Journal article, Mike Moebs is quoted as saying that consumers who are frequent users of overdraft fees could save money by bridging their cash gap with a 14-day payday advance loan rather than paying checking account overdraft fees. He goes on to demonstrate how the cost of the payday is on average considerably less than accumulated overdraft fees.
Moebs recommends that credit unions and banks lower their overdraft charges to $20 to make the fees more economical than a payday loan. Banks and credit unions can make up for any lost revenue by increasing the volume of their overdraft transactions.
Moebs says that there are 19 million consumers who use payday lenders, compared to 13 million consumers who frequently use overdraft. Of course, if the leftist Credit for Responsible Lending and other strident consumer activists had their way, neither payday advances nor overdrafts would be available to consumers. In Marvin Umholtz’s words, “These are the same sanctimonious activists that championed the overreaching Consumer Financial Protection Bureau (CFPB) that will soon take over all consumer-focused regulation-making from the NCUA.”
Chuck Bruen
Posted by Bruen
at 12:01 AM PDT
Updated: Wednesday, 28 July 2010 7:57 AM PDT
Tuesday, 27 July 2010
The future of TINY credit unions
Below is a Credit Union Times op-ed piece written by Shirley Spruill in response to my comments about a tiny credit union that failed in May. The Convent Credit Union in New York had assets of $270,000. I questioned how a TINY credit union could survive in today’s challenging economic environment and in a world of ever increasing compliance and other challenges. I observed that some credit unions are probably too small to exist and defined TINY as less than one million in asset size.
Shirley Spruill’s rebuttal to my comment is passionate and thoughtful but the facts don’t support her position. Here is the financial performance information from the NCUA’s website for her $880,000 Renaissance Community Development Credit Union:
Net worth 5.70% (peer average 9.5%)
Net worth growth -29.8%
Net income has been negative for the last 5 quarters.
Salaries: The credit union has two part time employees. The credit union does not generate sufficient net income to pay these salaries which are about $30,000 annually.
I know that community development credit unions can get TARP money. In addition to TARP money, CDCUs can also seek alternative capital like long-term subordinated debt from outside investors or foundations. And local credit unions will often provide support to their tiny neighbor credit unions. But the reality is that their operation is not sustainable were in not for continued outside support. The credit union is undercapitalized and unable to generate enough earnings to even pay their salaries.
I wish it weren’t so because I know that folks like Shirley Spruill are very dedicated, committed and determined to serve their members.
Chuck Bruen
A Passion for Member Services Will Help Small CUs Survive (7/28/2010)
I was deeply disturb and disappointed at the letter that appeared in the July 7 issue from Charles Bruen, president/CEO of First Entertainment CU, voicing his views of the survival of small credit unions.
Working at a small credit union that is 14 years old with less than $1 million in assets, I take exception to his analysis that small credit unions are too small to survive in today’s environment. Perhaps Bruen forgot that every credit union started small, and need I remind him that large credit unions fully staffed with unlimited resources (compliance officers, etc.) are failing too?
Small credit unions, especially CDCU’s and faith-based credit unions, are passionate about the needs of the people they serve. The commitment is much more than numbers on paper but about the people.
It’s true we face monstrous regulations and compliance issues that seem to be changing daily, but that does not cloud our vision of make us lose our focus to continue providing services to our members and the community. Many small credit unions are faith-based or have close relationships with houses of worship and believe that walking by faith and not by sight is one reason to continue despite the many challenges and obstacles we face.
Unfortunately, not enough attention is given to what a great job and the tremendous service some of our small credit unions are doing. The focus is on big. The concept because your assets are small you can’t provide the services is just not true.
Instead of predicting our demise, perhaps Bruen should go back to the history and philosophy of the credit union movement and while at it review the credit union motto. "people helping people" and reach out and look for ways to support and help us survive. In other words, lend a helping hand–and not spread doom and gloom–by offering his compliance officer to help small credit unions. I’m glad Bruen is not voicing the sentiments of other large credit unions because many of them do help small credit unions. Several large credit unions have reached out to help us and continue to do so.
Will some small credit unions close? Yes. But the bottom line is many will survive because they are run by dedicated, committed individuals (many volunteers) that have a deep passion for what they are doing and will do what is necessary to survive.
Posted by Bruen
at 12:01 AM PDT
Updated: Monday, 26 July 2010 12:32 PM PDT
Monday, 26 July 2010
Confidentiality Agreements
[Read story at Berkshire Eagle/by Clarence Fanto].
This article is a follow-up to the Greylock FCU Angelo Stracuzzi story. Members and others assume they have a right to know about the governance of their credit union. They were expecting the details of the termination severance package to eventually be reported and disclosed. But instead a veil of secrecy continues to surround the severance package because the agreement included a legally binding CONFIDENTIALITY clause. So instead rumors will continue to abound regarding the amount and terms of the agreement.
The SVP marketing person quoted in the article tries to downplay the concern and calls the statement that Stracuzzi got millions as "wildly inaccurate." A Pittsfield weekly newspaper op-ed columnist had stated the golden parachute was worth $2 million.
Should credit union have used a confidentiality agreement to prevent disclosure of the settlement?
What purpose does the confidentiality serve other than to hide the actions of the board?
Are confidentiality agreements appropriate for member owned credit unions?
Chuck Bruen
Posted by Bruen
at 12:01 AM PDT
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