Credit Union Exam Solutions Presents With Flying Colors

Hey everyone, this is Mark TriCal with
an emergency episode with flying colors.

It's an emergency because NCA
conserved a credit union today,

and they just announced it.

I got an email, let's see,
when did my email come in?

I got an email.

I.

Nsu a express at 1203.

I'm recording this one
hour and 15 minutes later.

One 18 on Wednesday and they conserved
a credit union by the name of it's

in the Western re region, alders
Gate Charter number 1 5 0 6 8 2.

Assets listed of $10,577,000.

811 members.

And the CEO's name is Marilyn Sullens,
and the credit union was conserved and

which used to only happen on Fridays
because it was easy to close the books.

This might be a church credit union
potentially and maybe they weren't

open, so it made it easier to do it
in the middle of the day on Wednesday.

Or at the close of business on Wednesday,
which may have been noon or the morning.

In any event the press release, June
18th, the NCA today placed Alders

Gate Federal Credit Union in Marion,
Illinois into conservatorship Member

Services will continue while the NCA
works to resolve issues affecting

the credit union's operations member
deposits at Alter Gate Federal Credit

Union remain protected by the NCUA.

Share Insurance Fund the National
Credit Union Share Insurance

Fund administered by the NCUA.

The Share Insurance Fund protects
individual accounts at federally

insured credit unions up to $250,000.

Member's interest in all joint accounts
combined is also insured up to $250,000.

The Share Insurance Fund
separately protects IRA and Keo

retirement accounts up to $250,000.

The Share insurance Fund has the
backing of the full faith and credit

of the United States, although that's
actually implied if you go back to the

NGN days, but that's another story.

They do have the full credit, but
it's a nuanced interpretation of the

full credit, not as clean as the FDA's
full faith and credit, but I digress.

It talks about how the members make.

Conduct financial transactions via phone.

By calling the NCA Assistant
Management Center Monday through

Thursday, those calls will be routed
to the appropriate specialist.

Members can continue to conduct financial
transactions such as depositing funds,

making loan payments, and requesting share
withdrawals during the conservatorship.

Members, members with questions about
the conservatorship may review The

Elder Gates, federal Credit Union's
frequently asked questions posted on

the NCA website members with questions
about their share insurance can.

Find more information at the share
insurance coverage section of the NCA

website, and then it goes on to say,
aldersgate Federal Credit Union is a

federally insured credit union with
811 members and reports assets of 10.6

million.

According to the credit union's most
recent call report, aldersgate Federal

Credit Union serves the ministerial and
probationary members, full-time employees,

local pastors, clergy persons, and.

DD Diacon Diaconal.

How my diocese Dia.

So it's diocese, I don't
know the word Diaconal.

Ministers under appointment of the
Bishop of the Illinois Great Rivers

Conference of the United Methodist Church.

So they took it over.

And looking at the financial
statement, let's see, I pulled

down the FPR as of March.

They had.

10.3

million in loans, 260,000 in total cash.

They.

Key ratios, net worth ratio, 10.9%

compared to the pier of about 15.

So then the 27th percentile.

There is one stat that does speak volumes.

Their income 1.27%,

127 basis points.

And as of March, December
was 55 basis points.

The previous December 65,
previous December 58, previous

December 46, so it's making money.

High loan to asset ratio March.

It was 97%, 98, 97, 93 85.

Going back to the end of years in 2021.

And let's see if this
number stands out to you.

Listeners and Watchers Delinquent Loans.

The one, the first percentile.

Nobody's better.

At the end of March, they
had zero delinquencies.

The end of December 20,
24, 0 delinquencies.

End of December, 2020.

Three, zero delinquencies.

End of December, 2022, zero delinquencies.

End of December 20, 21.

Zero delinquencies.

What are the odds of that?

What are the odds of flipping a coin?

15 times in a row and it
always coming up heads.

What are the odds of having a family of 13
and they're all girls or they're all boys.

What are the odds that there's zero
delinquency at this credit union

and it was conserved on a Wednesday.

And it's a church credit union.

I think there's a little bit
more delinquency than zero.

And that is a.

Something that nsu a watches they watch.

If somebody reports zero delinquency
or they used to and it would seem

to be a red flag that would've
caused potentially a deeper dive.

Or I could be wrong.

The credit union could
have been abandoned.

Maybe the field membership decided they
didn't want the want, the credit union.

But my gut is telling me the numbers are
not what they seem, my gut is telling me.

The worst case scenario in some
of these instances is there's two

case of two sets of records, and
the credit union isn't 10 million.

It's much bigger, and there's a
second set where the manager was

stealing money or someone at the
credit union was stealing money.

I don't wanna indicate anybody
in particular here, but those

are the typical scenarios.

Now, another big takeaway for me.

Is that this is the first live action
where we've seen Chairman Holtman

take an action as the full board.

This a conservatorship action has
to be signed off on the board.

They're saying, they've said
publicly, he has the full authority.

Now, not that this credit union
will, but a credit union could sue.

They can't use the funds of
the credit union 'cause they're

no longer the credit union.

But you can contest, I
think it's a 10 day window.

You have to file a con
contestant in court.

You could argue that Huffman doesn't have
the authority because he's not a quorum.

Meanwhile, they could liquidate the
credit union and have nothing left.

But the reality is this is really in
my mind, the first public position

where Huffman is saying, yep.

I've been saying I've got these
authorities, and I just took

an action of the full board.

I guess it's a good test
case 'cause it's small.

I would still argue that there's
a pretty compelling argument.

One argued by Halman, excuse
me, by Harper and Otsuka, that

a quorum is more than one.

And NCA had previously, if you listened
to some of my past podcasts, I talked

about how when Dennis Dollar was there
and I was there as the deputy executive

director, they started doing briefings.

That's where the insurance.

Fund briefing was born but they advised
dollar not to take any actions on

regulations because they didn't believe
he had the authority to do that.

Now, legal opinions changed.

The act hasn't changed
substantively, but I.

When you have a board member who wants
to get to one position, sometimes

they stretch their interpretations.

And I'm not saying that's
what's happened here.

Maybe general counsel is saying, Hey,
we've taken another fresh look at it.

And you do have these authorities.

In any event, conservatorship
action takes a vote of the

board which is very interesting.

So it's gonna be interesting to watch.

They don't say a lot publicly about these.

There might be a PO post-mortem
that gets, that gets released if

there's a certain dollar across cost.

The the Inspector General of NCUA will
have to do a postmortem if the cost,

I believe theirs is over 10 million
NCOs division of insurance does it.

I think if it's over two or 4 million.

In any event, it's gonna be a long
time before we see any details here.

Hopefully it's not something
that costs the insurance fund

too much, but my guess is.

It's very possible, probable, likely,
potentially, that there could be

fraud here that led to this 'cause
zero delinquency in five years.

I'm not gonna buy that.

That just doesn't make sense.

Let's see.

And charge offs.

Charge offs?

No.

No charge offs either.

I.

Amazing.

Quite amazing.

All right in that regard
I saw another thing.

I went over to LinkedIn while I
was looking at that, and the FDIC

announced that they are having a full
board meeting on June 26th at 10:00

AM and they published their agenda.

I went to the link of the
agenda and something caught

my eye as it relates to NCA.

Anyway, they're going to talk about
minutes of a previous board meeting

and some customer identification
program rule exemption order.

Their third item is a summary
report, status report, and report of

actions taken pursuant to authority
delegated by the board of directors.

So they're going to talk about actions
that the office took, talk about

actions that the general counsel took,
talk about actions at the regens.

Took, I've talked about here publicly
there's, it's essentially the Bible

of what the NCA board is delegated.

They say the regional directors
have the authority to write letters

to credit unions and supervise
the credit unions to do the exams.

They say the general counsel has
the authority to do X, y, and z.

The e and i director can do this.

The office of the executive director
and the executive director can do this,

and they talk about, by the way, how all
these delegations throw flow through the.

Chain of command, which is a way to put
political pressure on the individual

areas of operations if they don't
believe they're following the delegations

or doing what needs to be done.

But what.

This also triggered me to think
about was actions taken by the

NCA Board by notation vote.

Those things are not public.

And I, some of those things they say
they have to be done in a closed session.

There's so many things
since Harper came in.

Todd Harper, previous board chair,
previous board member, still suing to

get back on the board where they started
basically not having closed session

board meetings where you could see they
were taking a personnel action, or you

could see they were doing an appeal.

They've done all those behind the
scenes and there should be some method

of getting that information reported.

I don't know, I'm gonna watch this
FDIC board meeting or the follow

up on it to see if that's something
where they report something there.

Maybe I'll make a request to NCUA
saying, Hey, what's going on with

all your notation votes lately?

All right, so what else?

There was one other thing
that popped up here.

I talked about the
conservatorship I talked about.

The FDIC and their agenda NCUA is
not having a board meeting in June

because they I've talked about
this in a previous board meeting.

They are going to have one in July
where they'll probably talk about

the budget and such, potentially
maybe do a cybersecurity briefing.

If it were me, I would have at least
one briefing each board meeting to

show that we're relevant, however.

Conserving to Credit Union definitely
shows the relevance of the board.

And I'm a bit surprised that
they decided to do that.

There must have been something so
compelling that they felt they needed to.

It wasn't tie goes to the
runner type conservatorship.

It must have been something that really
needed to happen and they decided,

okay, this is the one we're gonna test.

That Houtman really, truly does have
the ability to vote for a full board.

And I guess one out of
one is a quorum, right?

That's their argument.

We'll see if that gets
addressed in the lawsuits.

By Harper and Ska.

I'm not really gonna go
into the lawsuits on Harper.

And Osky did some research on it.

But again, they went to court.

They made their positions.

The administration made their positions.

They didn't say when
they'd make a decision.

The administration did
argue, I guess that even I.

If they were wrong to fire him, that they
shouldn't put Harper and ska back so they

could win by default, if that's where
the, what the judge decides makes sense.

And I'm hearing some rumblings about
who the next board members could

be and I'll just leave it at that.

But I think if what I heard
on the grapevine is true,

I think it could be cool.

Alright I have a couple
other announcements I'm

going to make on a podcast.

Tuesday on some changes.

Some.

I like to reinvent what the podcast
does every year to keep it fresh fresh

for me and hopefully fresh for you.

Which part of the thing is we're
doing more of these YouTube

videos linked to the podcast.

I'm gonna be doing a little bit more
of that and I'll have it podcast

on Tuesday, which we'll announce
another couple nuances to the

podcast that I think you will enjoy.

Enjoy.

I know I'm going to enjoy doing
them and stay tuned for that.

All right.

I'm gonna get back to work here, but
I wanted to get this podcast out.

As always, I appreciate you listening.

I hope you'll listen again soon or watch.

And this is Mark Rele signing
off with flying colors.

I.