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TCUD Meeting: Texas CUs Benefitting from Sound Economy; Amendments Approved
Tuesday, October 16, 2018 6:55 AM

During Monday's Texas Credit Union Commission public meeting, Deputy Commissioner Robert Etheredge reported the operating environment for Texas credit unions continues to be good benefitting from a sound Texas economy. Texas credit unions continue to perform well and realize positive loan growth, sound asset quality trends, strong earnings performance, and increasing net worth positions.

Trends through the 2nd quarter of 2018 reflect a continued improvement in credit unions' bottom lines, driven primarily by increased gross income levels from higher investment yields and lower provision for loan and lease losses expenses because of sound loan underwriting. The current level of earnings for Texas credit unions is at its highest level since 2015.

During the meeting, the Commission approved the following previously proposed amendments:

  • Rule 91.121 pertaining to a system to handle complaints filed with the Department promptly and efficiently.
  • Rule 91.403 to update standards governing debt cancellation products, giving state credit unions parity with federal credit unions.
  • Rule 91.709, which modifies the definition of Member Business Loans with respect to 1-4 family dwellings, providing state credit unions parity with federal credit unions. The NCUA approved the Department's changes to the MBL rule at its board meeting on September 20, 2018. The rules takes effect 20 days after notice is given to the Secretary of State's office, estimated to be early November per Commissioner Feeney.
  • Rule 91.712, allowing a plastic card to be activated by logging into the card issuer's website.

Commissioner Harold Feeney reported the Department ended fiscal year 2018 with excess funds of approximately $98,000, which will be returned to credit unions as a reduction in fees.

As of June 30, 2018, there are 185 state-chartered credit unions in Texas with:

  • Assets totaling $41.45 billion, an increase of $2.09 billion since June 30, 2017, for an annualized growth rate of 5.3 percent.
  • The average net worth ratio rose to 10.50 percent, up from the June 30, 2017, level of 10.15 percent.
  • Loans totaling $30.84 billion, an increase of $2.29 billion since June 30, 2017, for an annualized growth rate of 8.0 percent.
  • Shares totaling $35.62 billion, an increase of $1.61 billion, or 4.7 percent since June 30, 2017.
  • The average loan delinquency ratio was 0.61 percent, compared to a ratio of 0.63 percent as of June 30, 2017.

As of June 30, 2018, 29 state-chartered credit unions reported year-to-date net operating losses of $1.90 million while the remaining 156 credit unions reported aggregate net income of $180.95 million. There were 24 credit unions assigned a CAMEL rating of 3 or higher as of Aug. 31, 2018, compared to 21 credit unions at Aug. 31, 2017.

The Commission readopted 7 TAC, Part 5, Chapter 94, concerning share and depositor insurance protection and readopted the department's equal employment and workforce diversity plan.

The pilot program being developed by the Department and NCUA to make the exam process more efficient is still in process, with an anticipated start date of early 2019.

Contact Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop for more information.