NEWS ARCHIVES: 2010

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NOVEMBER

• November 3, 2010



Supportive Congressional candidates, SC CUs are Election Day winners

COLUMBIA, SC (11/3/10)--Final results of Tuesday’s elections offer a bright future for the Palmetto State’s not-for-profit financial cooperatives, as credit union friends were confirmed in key races. Among them are four new members of the U.S. House of Representatives—one who replaces longtime adversary Bob Inglis in the 4th Congressional District.

“We are confident in the relationships we have with each member of our Congressional delegation,” South Carolina Credit Union League President and CEO Steve Fowler commented. “Now credit unions across the state can set to our own campaign for credit unions and consumers, helping these elected officials understand and assert to their peers the true impact of legislative and regulatory measures.”

Incumbent Senator Jim DeMint (R) retains his seat with 62% of the vote among four candidates. Likewise, Congressman Jim Clyburn (D, 6th District) rode his tenure to 60% of the vote. However, he will relinquish his position as House Majority Whip as Republican challengers assumed control of that chamber.

Aiding that change was the successful campaign of former S.C. Senator Mick Mulvaney (R), who garnered 54.5% of votes in the 5th District seat that had been held by longtime credit union friend Congressman John Spratt (D). Mulvaney—a friend while in the State House—will have the same support provided to Spratt as incumbent and keeps open the valuable lines of communication among area credit unions.

In the most heated contest of the day, Congressman Joe Wilson (R-2nd District) defeated challenger Rob Miller with just under 54% of votes, which for the strong credit union supporter was a larger margin than in their contest two years ago.
Joining Mulvaney as freshmen in Congress will be Tim Scott (R-1st District), Jeff Duncan (R-3rd District), and Trey Gowdy (R-4th District).

Scott assumed the 1st District seat held by retiring Congressman Henry Brown with the largest margin at 67.75% of the vote despite six others in opposition. His former service as a volunteer with Heritage Trust Federal Credit Union promises a strong credit union connection.

Duncan moves from the S.C. House into the seat held by Gresham Barrett, who lost his gubernatorial bid in the primary to fellow Republican and Governor-Elect Nikki Haley. Like Mulvaney, Duncan—who received nearly 63% of the vote—is familiar with credit unions from his tenure in the General Assembly and welcomes credit union perspective as he begins his Congressional term.

Perhaps most highly anticipated was the 63.48%-of-votes confirmation of Trey Gowdy, a former solicitor who unseated longtime adversary Bob Inglis in the primary. His doing so opens new avenues for Upstate credit unions whose best communication with bank-friend Inglis often matched the timing of election season.
For other election results, visit www.scvotes.org.

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SEPTEMBER

• September 1, 2010

  League, CUNA monitoring administration's response to tax panel report

  WASHINGTON, DC (9/1/10)--Credit union trade associations are wary of a presidential advisory panel report on potential tax revisions that includes elimination of credit unions' tax exemption. While leaders have been quick to put the findings into perspective, advocates should be prepared for swift action.

  The 16-member Presidential Economic Recovery Advisory Board (PERAB) is not part of the Obama administration, but its report offers suggested action for tax revision and reform. Among the subsection "Eliminate Other Tax Expenditures" appears the suggestion of eliminating the federal credit union tax exemption. Also present is the ever-present banker call to "level the playing field."

  In a news item, CUNA President/CEO Bill Cheney notes, "Credit unions should be aware that the advisory board report is simply an exploration of all policy-change options." Cheney further reminds that banker rhetoric and attacks are nearly constant, as will be CUNA's persistence in asserting the credit union difference.

  "Those who operate for profit are sure to seek every opportunity for advantage," added South Carolina Credit Union League President and CEO Steve Fowler, "and the growing federal deficit will make it increasingly incumbent on government to find revenue sources."

  Noting CUNA's position, he suggests South Carolina credit unions strike a balanced posture.

  "We have seen this kind of situation before, yet we've also seen government move unusually quickly at times," Fowler said. "Considering the report's use of a known catch phrase among for-profits, credit unions should remain proactive for now and poised should this develop into a perfect storm."

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AUGUST

• August 2, 2010

  At midyear, foreclosures up in SC's metro areas

  CHARLESTON (8/2/10)—The Charleston region continued to have the highest rate of foreclosures in South Carolina for the first six months of 2010, according to a quarterly report from a national real estate tracking firm. Read more...

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APRIL

• April 27, 2010

  SC credit unions elect smaller League board

  COLUMBIA, SC (4/27/10)—South Carolina credit unions elected seven directors to a new, downsized South Carolina Credit Union League (SCCUL) Board of Directors, replacing the fourteen-member group that existed for decades. Election results were announced at the Saturday, April 24 business session of the SCCUL & Affiliates 2010 Annual Meeting in Myrtle Beach, SC.

  New to the 2010-2011 SCCUL board of directors are Rick Hammond, president and CEO of S.C. State Credit Union (Columbia); and Robert Harris, CEO of Health Facilities Federal Credit Union (Florence). Re-elected from the 2009 body are: Faye Crocker, CEO of Greater Abbeville Federal Credit Union (Abbeville); Jerry Miller, president and CEO of Carolina Trust Federal Credit Union (Myrtle Beach); Ray Partain, chairman of the board for Anderson Federal Credit Union (Anderson); Ed Templeton, president and CEO of SRP Federal Credit Union (North Augusta); and Linda Weatherford, vice president at SPC Cooperative CU (Hartsville).

  Following the business session, the new board named its officers: Weatherford, chairman; Templeton, first vice chairman; Crocker, secretary; and Miller, treasurer. As former chairman, Scott Woods—president and CEO of SC Federal Credit Union (N. Charleston)—remains as an ex officio member of the board, as is SCCUL President and CEO Steve Fowler.

  League-member credit unions had voted on October 28, 2009 to reduce the SCCUL board size in light of changes in organizational complexity, including spin-off of some services to a limited-liability corporation and the slowly diminishing number of in-state credit unions.

  Of the seventy-seven member credit unions eligible to vote for the new directors, fifty-four sent ballots to independent accounting firm Cantey, Tiller, Pierce, & Green, LLP of Camden, S.C.

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MARCH

• March 24, 2010

  Bankers' MBL attacks fail scrutiny

WASHINGTON (3/24/10)--Credit unions have been attacked by bankers with eight general claims against raising credit unions' member business lending (MBL) cap, but those claims do not stack up under scrutiny, according to an analysis by the Credit Union National Association (CUNA).

The claims and the facts that poke holes in the bankers' arguments are the topic of a feature this week in CUNA's online legislative/regulative news analysis publication, Credit Union NewsWatch, which is published twice a month.

One of the arguments centers on safety and soundness. Bankers say that raising the MBL cap to 25% of a credit union's assets (up from 12.25%) would undermine credit union safety and soundness.

But data collected by the National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corp. show that credit unions have a long history of engaging in safe and sound business lending, and that business lending is actually much safer at credit unions than at other institutions, says CUNA's Research and Policy Analysis.

The data indicate:

Credit union MBL net charge-off rates have been significantly lower than bank rates year-in and year-out for over a decade. Since 1997, credit union MBL net charge-off rates have averaged 0.15%, a figure that is roughly one-sixth of the 0.82% bank average during the same period.

More recently, with the increased losses at all lenders from the financial crisis and recession, the increase in loss rates at credit unions pales in comparison to bank results. During 2009, credit unions charged off business loans at a 0.59% rate--about one-fourth the 2.36% rate reported by banks over the same period. In 2008, credit unions charged off 0.33% compared with banks' 1.01%. and in 2007, the figures were 0.09% for credit unions and 0.52% for banks.

Compared to other loans at credit unions, business loan net charge-off rates are lower than net charge-off rates on credit union consumer loans and essentially identical to the net charge-off rates in credit union real estate loan portfolios.

Most credit unions have excess liquidity today that is depressing their overall earnings. Moving assets from low-yielding investments into higher-yielding MBLs, even after accounting for credit losses on those loans, will increase earnings, capital contributions and overall safety and soundness.

If the MBL cap were increased or eliminated, NCUA has indicated it would revise its regulation to ensure additional capacity in the credit union system would not result in unintended safety and soundness concerns.

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JANUARY

• January 6, 2010

  CUNA: Bankruptcies up, CUs in 'maintenance phase'

  MADISON, Wis. (1/6/10)--Personal bankruptcy filings hit 1.41 million last year--an increase of 32% over 2008. And credit unions can expect more chargeoffs during the post-recession, say Credit Union National Association (CUNA) economists.
  
  CUNA economist Steve Rick pointed out that the numbers will continue to go up because bankruptcies and chargeoffs lag behind a recession. "During a recession, people are existing for a while on their savings, and when that's used up they begin charging more, getting into debt." They make it through most of the recession. Then, it catches up and chargeoffs occur, he noted.

According to the National Bankruptcy Research Center, which compiles and analyzes bankruptcy data, 2009's bankruptcy filings are at their highest level since 2005 (The Wall Street Journal Jan. 5).

More people filed for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of other debts. Chapter 7 filings were up more than 42% as of November 2009, compared with November 2008. Chapter 13 filings increased by 12% and accounted for less than one-third of the 2009 filings as of November, the latest month statistics were available.

"You could see the increase coming with the last quarter's data," Mike Schenk, CUNA senior economist and vice president of economics and statistics, told News Now. "There naturally would be more bankruptcies after the recession than before."

He noted that consumers rushed to file bankruptcies in 2005 before new bankruptcy laws took effect that October. The laws make it more difficult to file for a Chapter 7 bankruptcy. Filers are required to under go a means test to determine if the filer can pay back at least a portion of the debt after it is restructured.

Rick agreed that credit unions could anticipate the losses and be prepared for them. "Credit unions for years have been in the building phase, building their allowances for loan losses (ALL) provisions in anticipation for an increase in chargeoffs. Now they're in the maintenance phase, where they will see a drop in provisions for ALL."

For credit unions, chargeoffs are still a small number, said Schenk. Both delinquencies and net chargeoffs remain substantially lower than bank norms, according to the U.S. Credit Union Profile's Third Quarter 2009 results.

In 2005, before the new law, credit unions experienced four bankruptcies per 1,000 members. That number tapered off to 1.4 bankruptcies per 1,000 members in 2006, followed by 1.8 in 2007, then 2.6 in 2008 and 3.7 as of September 2009.

The average number of bankruptcies per credit union has increased slightly from 39.3 in 2005 to 43 as of in September 2009, according to the profile report. Half of credit unions' chargeoffs are due to bankruptcies.

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