Credit Union Newsletter #27
Anurag Mukherjee
Credit Union & Community Bank C-Suite Advisor | P&L and GTM | Data Scientist | Fintech Advisor & Podcaster
The nation’s largest credit unions lost ground again on net income as loan quality deteriorated in the fourth quarter, but they held onto their net interest margins even as borrowings rose from September to December.
The Top 10 credit unions generated $487.3 million in net income in the three months ending Dec. 31, or an annualized 0.47% of average assets. ROA was down by 73 basis points from a year earlier and 17 bps from the third quarter.
One factor was a previously reported $65.3 million fourth-quarter loss by the nation’s third-largest credit union: Pentagon Federal Credit Union of Tysons, Va. It was the only loss among the group and cut 6 basis points from the group’s fourth-quarter income.
The share of US mortgage borrowers who are equity-rich declined for a second quarter, with owners in the West and South taking the biggest hit in 2023, according to a new study.
Equity-rich mortgages — those that have a loan-to-value ratio of 50% or lower, meaning the borrower’s equity stake is at least half the property’s value — decreased to 46.1% from 47.4% the prior quarter, according to the US Home Equity & Underwater Report published by real estate data firm ATTOM.
The measure closed the year down almost 2 percentage points from the end of 2022 — though it’s still at a historically high level, after owners reaped gains from the pandemic housing boom. The biggest declines last year were in the South and West regions, while the Northeast had the best gains.
Officials with the National Institute of Standards and Technology (NIST) are in the early days of trying to craft and create regulations for artificial intelligence, and credit unions are looking for some kind of clarity in how to deal with AI. According to a letter filed last week, in short, credit union leaders want that help, but with as few regulatory burdens as possible that are tailored to the needs of credit unions.?
The NIST asked for comments after President Joe Biden signed an Executive Order in October on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” In response to the NIST, America’s Credit Unions submitted a letter Friday stating that credit unions are already “highly regulated” and “are aware of the potential legal and operational risks associated with AI.
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The board of directors for the $11.3 billion GreenState Credit Union in North Liberty, Iowa on Tuesday announced the appointment of a new president/CEO, Vikram Israni. He succeeds Todd Fanning, who was named interim CEO last September when Jeff Disterhoft retired.
Israni previously served as CFO for the $9.6 billion Wings Financial Federal Credit Union in Apple Valley, Minn., for more than nine years.?
Partner Colorado Credit Union lost $4 million in the fourth quarter, raising its cumulative losses to $10.6 million since spinning off its cannabis CUSO in September 2022.
The Denver-area credit union’s loss for the three months ending Dec. 31 was an annualized loss of -2.46% of average assets.?
Partner Colorado ($633.7 million, 34,970 members) has attributed its losses this year to its September 2022 spinoff of its cannabis CUSO to a public company called Safe Harbor Financial.
The credit union posted a gain of about $50 million on the sale in December 2022. It then posted losses from Safe Harbor of $44.4 million in the first quarter (gains elsewhere reduced the first-quarter net loss to $41.5 million) and $9.3 million in the second quarter and $9 million in the third quarter.
The $1.5 billion Beacon Credit Union in Wabash, Ind., is planning to acquire the $265 million Mid-Southern Savings Bank in Salem, Ind., for an estimated $45,198,789 in cash.
Mid-Southern Bancorp Inc., the holding company for Mid-Southern Savings Bank, and Beacon signed a definitive purchase and assumption agreement last week, according to a joint prepared statement. If approved by regulators and shareholders, the proposed acquisition agreement is expected to close during the fourth quarter.
Founded in 1891, Mid-Southern’s 44 employees operate three branches and two loan production offices that serve approximately 7,500 customers.