Texas credit unions overall are faring well, with the notable exception of Texans Credit Union and its overextension on business loans according to the newest member of the Texas Credit Union Commission.
Gary Tuma, president/CEO of the $450 million Smart Financial CU of Houston, was named to the oversight panel by Gov. Rick Perry, the credit union announced Wednesday.
Tuma said Lone Star State credit unions “have survived the recession in so much better shape” than their peers in the sand states even amidst scrutiny over CU business lending, a fallout of NCUA’s April 15 conservatorship of the $1.6 billion Texans, based in the Dallas suburb of Richardson.
As for Smart Financial, it retains an $18 million portfolio of small business/mortgage loans and they “have been a great addition for us,” said Tuma.
The loans have been performing well though Smart said he “does not look at business lending as a replacement” for basic consumer business.
Until two years ago “when they changed direction” Texans had a stellar CU reputation in the state with Texas Instruments Co. as the original sponsor, Tuma said.
But “apparently things got out of control and the bottom fell out. It turned out it was impossible for them to recover,” he said. He said he and other credit union managers remain in the dark on how soon Texans might be restored to financial health under NCUA management.
NCUA’s “game plan,” he said, seems to be to take Texans back to a healthy condition but “we just don’t know if they intend to sell off some of the assets” in the process, said Tuma.
Right now CUs like Smart Financial, he said, simply “have to keep our nose to the grindstone and gird for the many challenges” which lie ahead, and there seems to plenty of those. For instance, NCUA assessments are taking away 20% of CU income on top of the expected 40% loss on interchange income, Tuma said.
His own CU stands to lose $1 million in interchange income, a significant sum, he concluded.