Jones Methodist Church Credit Union in San Francisco has been ordered by California’s Department of Business Oversight to address a number of “unsafe or unsound practices.”
The Golden State DBO ordered the $590,000-asset credit union to address what it said were several “concerns” relating to “unsafe or unsound practices” as detailed in a Dec. 31, 2017, Report of Examination.
Among regulators’ orders:
- The credit union must hold and document monthly board meetings as required in its bylaws
- Credit union officials must establish a comprehensive succession plan that identifies a chain of command and responsibilities for management, board and supervisory committee chairs. The plan must also specify what training will be provided to ensure availability of replacements
- Potential merger partners must be identified as part of a contingency plan, along with timelines stating when management will contact those partners, complete on-site due diligence reviews and begin the merger process
- An updated business plan must include “key ratio goals” for net worth, return on average assets, operating expenses to gross income, total loans to total shares and “other key ratios the board determines to show unfavorable trends.” The CU was ordered to develop “action plans” to achieve these key ratio goals
- Monthly written progress reports must be submitted to Jan Lynn Owen, California’s commissioner of business oversight.
Nothing but red ink
A review of recent call reports for Jones Methodist Church CU show nine consecutive years of negative net income – although all annual losses were small dollar amounts and the credit union’s net worth ratio remained firmly in “well capitalized” territory.
In 2017, the CU lost $12,555. Its net worth ratio as of Dec. 31, 2017 was 21.27 percent. From 2016 to 2009, the credit union’s annual reported losses were: $2,999, $7,927, $6,569, $8,000, $4,097, $8,645, $3,729 and $7,680, respectively. The total for losses from 2009 through 2017 was $62,201.
The credit union reported $530 in net income in 2008, with a net worth ratio as of Dec. 31, 2008 of 22.74 percent.
Over the past decade, the credit union’s year-end net worth ratio varied from a high of 23.3 percent as of Dec. 31, 2010, to 20.76 percent as of Dec. 31, 2014.
Year-end 2017 report data showed the credit union with 296 members out of a potential 500 members. Those 296 members held $319,994 in regular shares. The CU only had six loans on its books for a total of $38,085 – and one of those loans, in the amount of $22,245, was 60-to-179 days delinquent as of Dec. 31, 2017.
In 2017, Jones Methodist Church CU only granted two loans for a total of $10,000.
