Number Of Troubled CUs Is Continuing To Grow
ALEXANDRIA, Va.-More storm clouds surfaced among credit unions last month with two more failures and the number of troubled institutions increasing by six, to a total of 357, NCUA said.
But even as the number of troubled credit unions - those rated either CAMEL 4 or 5 - is up from 271 a year ago, more problematic is that the total shares in this year's troubled credit unions is more than double from last year, now $5.8 billion, meaning far more deposits are involved. NCUA has set aside $760 million, its most ever, to deal with potential losses in those credit unions, according to Mary Ann Woodson, chief financial officer for the agency. "We expect that 2010 will be a difficult year, just as 2009 was," she told the NCUA Board during a briefing last week.
The growing loss projections make it increasingly likely NCUA will charge another premium later this year to replenish reserves for the National CU Share Insurance Fund. CUs paid a total of $1.1 billion last year to replenish the fund and to capitalize the newly created Corporate CU Stabilization Fund.
Last month, the NCUSIF spent $34.3 million to resolve past CU failures, and projected another $5.7 million in costs to resolve the two newest failures. The agency spent $124.4 million in 2009 to resolve 28 failed CUs.
The $760-million set-aside for reserves is based on losses experienced last year, Woodson said. "There's no way to predict that number (for 2010)," she explained. "That estimate is based on what happened last year."
Members Approve Another Giant Merger In Michigan
LANSING, Mich.-Members of NuUnion CU last night approved the combination of the $850 million credit union with Detroit Edison CU, cretaing the state's fourth-largest credit union with $1.5 billion in assets. Pending approval from state and national regulators, Michigan Office of Finance and Insurance Regulation, NCUA, the Federal Trade Commission, and Department of Justice, the merger is expected to be final in early April. The new credit union will be known as Lake Trust CU and will reserve residnets in 29 Michigan counties. NuUnion's CEO Stephan L. Winninger will be the CEO of the new organization and DECU's CEO, William J. Thiess, will be the President.
Court Upholds NCUA Firing Of Examiner
WASHINGTON-In a rare court challenge to an NCUA personnel action, a federal appeals court has upheld a 2008 firing by NCUA of one of its examiners.
The U.S. Court of Appeals for the Federal Circuit turned away claims by Margaret Considine that she was fired in retaliation for prior complaints against superiors and upheld a ruling by an administrative law judge that NCUA acted properly in her termination, according to the court record.
In its decision, the appeals court ruled it must uphold the NCUA's termination unless it could be showed the action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; obtained without procedures required by law, rule, or regulation having been followed; or unsupported by substantial evidence."
"Under this standard of review, this court will not overturn an agency decision supported by such relevant evidence as a reasonable mind might accept as adequate to support a conclusion," ruled the appeals court.
Considine was an examiner in NCUA's northeast Region I office when she was cited in March 2008 with a Notice of Unacceptable Performance that put her on a 120-day performance improvement plan and she would be demotde or removed if she failed to raise her performance. In September, the Regional Director determined that Considine had not improved her performance so he gave her a 60-day notice of termination.
Conversion Bill Advances in Virginia
RICHMOND, Va.-A charter conversion bill that would allow state-chartered credit unions to convert to mutual savings banks in the same way federal charters can appears well on its way to passage.
The bill, which originally was crafted to allow banks to acquire credit unions and vice versa, was approved by the state Senate. The House already passed an identical bill. The two chambers must vote on the legislation one more time.
"We're pleased with the final version of this legislation and we believe it represents a victory for the member-owners of Virginia's credit unions," Virginia CU League President Rick Pillow said. "We viewed the original version of this legislation as nothing less than an acquisition bill, designed to give for-profit banks the authority to buy up not-for-profit credit unions, without providing adequate protections for member-owners."
