This week, CreditUnions.com reports the latest in secondary capital, shows how a new headquarters can make a difference, and offers several takeaways from third quarter credit union data.
Here are five can’t-miss data points:
12 CFR 701.34
Self-Help Credit Union was the first credit union to obtain secondary capital when the enabling legislation 12 CFR 701.34 went into effect in 1996 and made the option available to low-income credit unions (LICUs). For several years, the two North Carolina-based institutions (Self-Help Credit Union and Self-Help FCU) held the majority of secondary capital that was in the credit union system. Even today, the duo holds $148 million of the $292 million of secondary capital in the market. The genesis of Self-Help dates back to 1980, when Martin Eakes, a young lawyer from Durham, NC, began working to establish worker, food, housing, and farm cooperatives to help low-income North Carolinians buy homes and start businesses. Eakes took his endeavors a step further in 1984 when he worked with these cooperatives to create a new credit union that provided a full range of financial services.
Read: How Martin Eakes Became The Most Hated Man In America (By Payday Lenders)
Since the 1990s, the federal government has allowed low-income credit unions (LICUs) to accept non-member deposits and secondary capital. As of June 30, 2019, more than 40% of all credit unions held a low-income designation; however, only 68 reported using secondary capital. That number might reflect regulatory hurdles more than strategic interest, though. According to CU Capital Market Solutions, a CUSO that supports secondary capital applications, the NCUA has denied 15 of 18 secondary capital requests it has made since late 2017. Proponents say secondary capital could potentially inject $16 billion in capital and $160 billion in asset growth to eligible LICUs. Regulators are pushing back on the size of the secondary capital requests, growth projections, and investment strategies denying them on safety and soundness reasons. At stake is the role of secondary capital across the industry.
Read: What Is The State Of Secondary Capital At U.S. Credit Unions?
40,000 Sq. Ft.
Bettendorf, IA, is the smallest of the Quad Cities, a collection of communities on a stretch of the Illinois-Iowa border bisected by the Mississippi River, with Davenport and Bettendorf in Iowa and Rock Island and Moline in Illinois. In the 1940s, the Alcoa Corporation one of the world’s largest aluminum producers built the world’s largest aluminum mill in an enclave of Bettendorf, bringing to the city economic growth and thousands of jobs. It was in the basement of this plant that in 1950 that Alcoa Credit Union was founded. Both the plant and the credit union have since rebranded the plant to Arconic and the credit union to Ascentra Credit Union but the financial cooperative still has deep ties to its hometown. Those ties were on full display during the construction of its new 40,000-square-foot headquarters building, which Ascentra refers to as its home office.
Read: How To Make A New HQ Make A Difference
Callahan & Associates hosted its quarterly Trendwatch webinar on Wednesday, providing an overview of third quarter credit union trends for 2019. Of note, loan originations hit a new record high ($151.1 billion), the loan-to-share ratio falls, and the net interest margin grows. Learn more from this must-watch event.
Read: 3 Takeaways from Trendwatch 3Q 2019
Competition is intensifying as banks big and small plus fintech disruptors vie with member-owned credit unions for wallet share and consumers hearts. In this rapidly changing environment, how can industry leaders determine how their institutions are faring? For starters, by understanding their credit union’s financial performance against the context of the wider financial services industry. The interactive dashboard in this blog does just that. It provides a baseline review of loan performance for any credit union plus an asset group, whether you have $10 million in assets or $10 billion.
Read: How Does Lending At Your Credit Union Perform Against Peers?