A new blog post spotlights a growth-focused credit union that has rapidly expanded its footprint and obscured its declining net worth by acquiring smaller credit unions and issuing subordinated debt.
New Blog Post: The Just a Member post from Callahan & Associates co-founder and former National Credit Union Administration Central Liquidity Fund President Chip Filson spotlights Credit Union 1, a low-income-designated institution in Lombard, Ill.
About the Credit Union: In the post, Filson notes that the credit union:
Was privately insured until 2022 and has acquired 11 smaller credit unions since, essentially one per quarter.
Has closed six branches and laid off nearly 70 employees during its acquisition spree.
Markets itself via stadium naming rights and relationships with Notre Dame athletics and the Mountain West Conference, stating in its promotions that anyone can join.
Facilitates acquisitions through large member-funded payouts to top executives.
Approves acquisitions via proxy votes from directors who can routinely reappoint themselves to the board without any member vote.
Turns to non-operating gains, such as acquisitions and borrowed capital, to disguise its poor internal rate of return because it cannot generate a normal operating net income from its own balance sheet assets.
Latest ICBA Advocacy: ICBA continues working to raise awareness of the harmful impact of acquisition-focused credit unions and insufficient oversight of the industry. For instance, ICBA has:
Said a new regulatory action against VyStar Credit Union for harming consumers through its botched rollout of an online banking system exemplifies the risks posed by lagging credit union regulation.
Called on the NCUA to curb the abuse of its subordinated debt rule.
Released polling showing U.S. adults increasingly support equal consumer protections for credit union customers.
Lauded the FDIC’s ICBA-advocated inclusion of credit unions in its merger guidance.
Grassroots Resources: Community bankers can use ICBA’s Be Heard grassroots action center to call on members of Congress to hold a hearing on credit union policy. Additional resources are available on the ICBA website.