The weekly recap features news on regulatory actions, mergers and other issues facing the credit union space. Send tips, ideas and chatter to ken.mccarthy@spglobal.com.
In the spotlight
Last week saw the first federally insured credit union liquidation of 2018.
The Illinois Department of Financial and Professional Regulation liquidated Chicago-based St. Elizabeth’s CU with the National Credit Union Administration serving as liquidating agent. The institution had approximately $140,000 in assets and 196 members, according to its most recent call report.
Scott Earl, president and CEO of the Mountain West Credit Union Association, said in an interview there are some encouraging signs that the Trump administration is supporting a less burdensome regulatory environment, and that could help small credit unions survive. He said the association supports Senate bill S. 2155, because it would ease mortgage lending and free up capital for small businesses — two essential ways to grow an economy that has suffered from both a financial crisis and the regulations put in place in response to it.
"By granting credit unions parity with banks on certain types of apartment loans, $4 billion in capital will become available to Main Street businesses to expand operations, hire additional staff and invest in their communities," he said.
Additionally, the bill marks a "major step" forward in moving away from a system that treats credit unions and small banks the same as the biggest banks, he said. It would push them, Earl said, into a more tailored regulatory climate that gives credit unions ways to more efficiently serve their consumers. The bill would also help to protect seniors vulnerable to elder financial abuse and could push the Treasury to study ways to better combat cyber crime.
And, Earl said, the bill strengthens consumer protections while leaving those put into place by the Dodd-Frank Act that instituted reforms for Wall Street.
"This bill is the farthest thing from the gift to Wall Street some opponents claim it is," Earl said. "Nothing in it helps the big banks. Nothing in this bill takes away important consumer protections put in place due to the actions of Wall Street and other bad actors."
In other news
* Credit unions are increasingly willing to spend big money for upgrades to their drive-thrus that enable members to bank "face-to-face" with a live teller from the comfort of their cars. Interactive teller-enabled ATMs, or ITMs, allow credit unions to offer access to teller services from a drive-thru during nontraditional banking hours. NCR Corp., which works with credit unions on solutions including interactive teller software, says that on a year-over-year basis it has seen double-digit growth in the demand for drive-up ITMs at credit unions. But the technology is not cheap. One industry source said each ITM costs between $80,000 and $100,000.
* Senate Finance Committee Chairman Orrin Hatch said he is concerned that some credit unions are evolving away from their original tax-exempt purpose, and he requested a wide range of information from the National Credit Union Administration regarding its oversight of the industry. In a Jan. 31 letter to NCUA Chairman J. Mark McWatters, Hatch said some credit unions are offering a variety of services that may be beyond the scope of their original mission, including insurance products and wealth management.
* One of the six deals announced in 2017 that involved a credit union buying a bank has been called off. Berrien Springs, Mich.-based Honor CU and Ontonagon, Mich.-based Citizens State Bank of Ontonagon have terminated their proposed merger, the Credit Union Times reported Jan. 31, citing a statement from the two institutions. Honor CU's proposed acquisition of the bank was announced in May 2017.
* The Consumer Financial Protection Bureau's single-director structure was ruled constitutional by a panel of judges on the U.S. Court of Appeals for the District of Columbia Circuit on Jan. 31. But Jim Nussle, president and CEO of the Credit Union National Association, said CUNA maintains the best structure at the CFPB is a multi-member commission, which would have provided certainty over the financial services marketplace and "avoided this legal wrangling from the beginning."
* The NCUA approved 49 credit union mergers during the fourth quarter of 2017, down from 53 in the third quarter, but up from 47 in the 2016 fourth quarter. The 49 "merging" credit unions held a combined $1.07 billion in assets according to the NCUA, compared to $2.16 billion for the mergers approved in the fourth quarter of 2016. For the full year, the NCUA approved 195 credit union mergers in 2017, compared to 196 in 2016.
