Telesis May Have Been Unprepared for Niche Market Fluctuations
With a heavy concentration in member business loans, Telesis Community Credit Union may not have been prepared for fluctuations in that market.
News Update, April 2, 2012, Telesis Management Taken Over By Premier America
That’s part of the analysis from Glatt Consulting LLC, a credit union consulting firm in Wilmington, N.C., looking at Telesis’ HealthScore calculation, which is a composite financial performance score reflecting the overall financial health of a credit union. Telesis took a substantial hit in 2007 to its operations and has since failed to recover.
“When you serve a niche market, as did Telesis with its concentration on member business lending, you must be prepared for fluctuations in that market,” wrote Tom Glatt Jr. in his analysis. “Much as I hate to agree with the NCUA, understanding concentration risks, and mitigating those risks, is an important responsibility for both boards and management teams.”
The firm said its HealthScore is not a predictor of future performance and while it typically does not release score data on individual credit unions, it will make public scores of those under conservatorship.
In Telesis’ case, Glatt Consulting said the credit union’s performance data showed the value of contingency planning for credit unions – especially those with sustained, above-average performance due in large part to a niche market focus.
“They had some early warning signs, but the deteriorating economy seems not to have given them enough time to offset the escalating problems in their MBL portfolio,” Glatt told Credit Union Times.