Why My Credit Union Charges Stupid Fees

I went into my credit union (Michigan Coastal) last week to deposit a check. Didn't need to cash it, just deposit it. This was going into my business account. Normally, I deposit business checks into this account and eventually transfer the funds to my personal account when the check has cleared. This time, I was told that I would be charged a $5 fee to deposit the check since my business account didn't have $100 in it. I said "Well, there's that much in my personal account", to which the teller replied "but it has to be in THIS account". I wasn't thinking, otherwise I would have just had her transfer $100 to that account. Instead, I took the check back and told them that I would go to a shared branch to deposit it.

I find it ironic that I have to go to a shared branch (i.e. Muskegon Governmental Employees Credit Union) to avoid a ridiculous fee.

I want so bad to just leave that credit union, but it's MY credit union. Credit unions aren't like banks. They are made up of members like me who pool their money together to provide each other with financial services at a discounted rate. I have been part of this pool since the beginning; since they were located in what was pretty much a closet at (the now closed) Viking Foods. No, I'm not leaving (yet). As I said, this is MY credit union.

So, I wanted to address the board because this is only one of three issues I have with them. When I inquired about the board and it's next meeting, I was told that Board Meetings are closed to the public. Wait. Did you refer to me as being part of the "Public"? Really?

I started to do some research about how the system works. I got side tracked by the financial data that I found, which is nothing short of amazing. Below, you will find a financial analysis, step by step, of my credit union and how it compares to other local credit unions. I think it is fairly obvious why they have resorted to implementing ridiculous fees. It is my opinion, based on the data below, that my credit union is being mismanaged, and those in charge are rather close to breaching their fiduciary duties.

But, before I present the data, a disclaimer. The information below is believed to be accurate and every attempt has been made to ensure its accuracy. I am not a professional typist so it may contain errors. I am also not a professional financial analyst, so the opinions expressed are just that, my own personal opinions. Like the data, they too, are subject to mistakes.

So, here it is:

Why does my credit union charge stupid fees? Are they going broke? Is it the latest trend among credit unions? We're fixin' to find out....

First, let's look at their asset structure. We'll follow that with a look at their expense:

Assets/Liquidity
Net Worth/Total Assets
What this ratio measures:
This ratio results from dividing Net Worth (assets - liabilities) into Total Assets. You might call this the equity of the credit union.
Credit Union	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Peer Avg.
Community Schools FISCU	19.5	21.0	19.4	20.6	21.0	11.0
First General	26.5	26.8	23.5	17.3	17.2	11.0
Lakeshore FCU	24.5	23.1	19.2	17.4	17.1	12.4
Shoreline FCU	16	16.89	16	14.86	14	12.4
Family Financial	20.4	18.5	15.8	15.7	13.5	11.0
Muskegon Co Op	13	12.1	11	11.57	12	12.4
Muskegon Governmental Emp	12.7	12.4	11.5	11.2	11.1	12.4
Michigan Coastal FISCU	14.9	12.5	11.3	10.3	7.7	12.4
Narrative:
Michigan Coastal's very low ranking could mean one of two things. First, it could mean deteriorating liquidity which would raise the most serious of red flags. Or, it could mean that their loan portfolio is over leveraged. Our next two analysis will investigate both.
Solvency Evaluation
What this ratio measures:
This takes net profit + depreciation (think of it as real cash profit) and divides it into the credit union's liabilities. It measures a credit union's ability to meet it's debt obligations, both to creditors and shareholders alike.
Credit Union	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Peer Avg.
Community Schools FISCU	125	126.75	124	124.73	125	112.55
First General	136	136.23	130	120.98	121	112.55
Lakeshore FCU	132.87	130.46	123.91	121.26	120.77	114.63
Shoreline FCU	119.81	120.56	118.61	117.63	116.85	114.63
Family Financial	125	121.51	118	118.62	116	112.55
Muskegon Co Op	115.21	114.03	112.37	113.31	113.32	114.63
Muskegon Governmental Emp	114.59	114.17	112.99	112.65	112.48	114.63
Michigan Coastal FISCU	117	114.32	113	111.38	108	114.63
Narrative:
Here we have generated our first red flag. Michigan Coastal ranked last again, and furthermore ranked well behind the peer average. We won't stop here and assume that this is the reason for the low Net Worth to Total Assets ranking. We will now evaluate the loan portfolio.
Total Loans/Total Assets
What this ratio measures:
This ratio divides the total value of outstanding loans into the Total Assets. This tells us how much of the credit union's assets have been loaned out.
Credit Union	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Peer Avg.
Lakeshore FCU	54	47.18	34	32.08	33	49.58
Muskegon Governmental Emp	59	59.55	54	50.36	46	49.58
Family Financial	56	64.29	59	54.33	52	54.51
Shoreline FCU	60.29	57.89	57.66	61.29	58.08	49.58
First General	42.18	40.96	47.56	70.49	59.3	54.51
Community Schools FISCU	71	73.48	65	60.19	62	54.51
Muskegon Co Op	63.64	62.45	66.59	75.95	71.88	49.58
Michigan Coastal FISCU	72	59.63	59	62.33	73	49.58
Narrative:
Michigan Coastal's ranked highest in terms of percentage of assets tied up in loans. It could be considered risky to have a large percentage of assets tied up in loans. Now that we know that Michigan Coastal has a substantial loan portfolio, we will now look at it's performance.
Delinquent Loans / Total Loans
What this ratio measures:
This measures current delinquency. At some point (I believe either at the 90 day mark or the 180 day mark) loans are moved from delinquency status to charge off status.
Credit Union	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Peer Avg.
Muskegon Co Op	0.68	0.52	0.36	0.55	0.44	1.64
Muskegon Governmental Emp	1	0.24	1	0.72	1	1.64
Family Financial	2	1.43	2	2.06	1	1.44
First General	0	3.25	1	0.45	1	1.44
Lakeshore FCU	3.74	3.1	3.52	2.1	1.08	1.64
Community Schools FISCU	0	0.98	1	2	2	1.44
Shoreline FCU	0.99	0.48	0.49	0.59	1.87	1.64
Michigan Coastal FISCU	1	0.8	1	1.04	4	1.64
Narrative:
Michigan Coastal once again ranked worst when it comes to delinquency status. Since older loans get moved to charge off status, we will need to look at those figures for a more complete picture.
Net Charge Offs / Average Loans
What this ratio measures:
This measures current delinquency. At some point (I believe either at the 90 day mark or the 180 day mark) loans are moved from delinquency status to charge off status.
Credit Union	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Peer Avg.
Muskegon Co Op	1.26	0.55	0.75	0.58	0.37	0.66
Shoreline FCU	0.16	0.36	0.37	0.24	0.53	0.66
Lakeshore FCU	0.22	0.62	1.62	1.75	0.57	0.66
Family Financial	0.53	0.45	1.18	1.17	0.57	0.67
Muskegon Governmental Emp	0.81	0.65	0.63	0.39	0.58	0.66
First General	0.26	0.08	0.62	0.64	0.87	0.67
Community Schools FISCU	0.33	0.72	0.82	1.20	0.96	0.79
Michigan Coastal FISCU	0.79	0.92	1.13	1.36	0.98	0.66
Narrative:
Michigan Coastal again ranked worst not only when it comes to delinquency status, but charge offs as well. This means that they have engaged in what some may consider to be very risky lending practices. This is probably what has led to the decreased liquidity and substantial operating losses. Next, let's look at their expenses in relation to other credit unions.
Expenses
Operating Expenses / Average Assets
What this ratio measures:
This ratio divides the total operating expenses into the average assets. In other words, it evaluates whether or not you are living within your means.
Credit Union	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Peer Avg.
First General	3.17	3.30	3.96	3.43	3.07	3.97
Lakeshore FCU	4.38	4.01	3.92	3.43	3.46	3.94
Muskegon Governmental Emp	3.81	4.03	4.15	3.59	3.53	3.94
Family Financial	4.59	4.35	4.53	3.96	3.76	3.97
Shoreline FCU	5.66	5.30	5.85	5.16	4.85	3.94
Muskegon Co Op	5.63	6.37	5.01	4.87	5.12	3.94
Community Schools FISCU	6.97	7.45	6.47	5.80	5.89	4.73
Michigan Coastal FISCU	7.84	7.03	7.26	6.77	5.95	3.94
Narrative:
Michigan Coastal ranked dead last in this category as well. Operating expenses include loan losses (and/or the provision thereof), so I am going to dig into some of the expenses by category.
Salary & Benefits / Full Time Employees
What this ratio measures:
This divides both the Total Salary and the Total Benefits into the number of full time employees. It gives what is believed to be an average salary per employee. Part-time employee's may be considered separately.
Credit Union	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Peer Avg.
Shoreline FCU	$35,212	$35,400	$32,991	$36,651	$37,388	$52,729
First General	$48,761	$46,700	$41,529	$43,490	$42,686	$55,615
Community Schools FISCU	$39,789	$42,132	$37,992	$46,544	$42,835	$55,615
Family Financial	$43,384	$49,088	$46,620	$50,099	$47,309	$55,615
Lakeshore FCU	$37,534	$40,290	$44,826	$46,633	$47,733	$52,729
Muskegon Co Op	$44,124	$45,616	$48,701	$46,996	$50,504	$52,729
Michigan Coastal FISCU	$42,349	$44,803	$47,180	$58,127	$51,906	$52,729
Muskegon Governmental Emp	$44,719	$52,124	$52,807	$52,314	$52,450	$52,729
Narrative:
Michigan Coastal has the second highest payroll/benefits expense of all the credit unions sampled here. When you consider that Muskegon County Governmental has multiple branches, you can probably expect a higher payroll/benefit expense because of the additional layers of management required to operate multiple branches.

My Conclusion (which is an OPINION)


After compiling this data (once again, data that may contain errors), I believe (and this is only an opinion) that my credit union has:

1) Made too many loans, causing the liquidity to drop below a level that could possibly jeopardize it's ability to continue as a going concern, either now or in the future.

2) Made too many loans to too many people who may not have the ability to repay, further reducing liquidity.

3) Paid the employees and/or the management of the credit union salaries and/or provided benefits that are not consistent with the other Muskegon County credit unions randomly sampled in this analysis.

It is no wonder why they charge stupid fees. They need to recoup OUR losses from risky loans THEY made and so that they can continue to provide themselves salaries & compensation that exceeds the average of the other local credit unions randomly sampled in the above analysis.

I would love to see someone from the board respond to this, I know they'll see it.

And one more disclaimer, I can only recall interactions with 3 current (or very recently current employees). My interactions with Lexi and Allie are always very pleasant, but I am not too fond of another female employee, who I will not name. This is not a personal attack against the employees, but it is personal. It's personal because I have been a member for 30 years and I am sickened by what has become of Michigan Coastal Credit Union.