Given that it was suggested that Bantry might takeover Berehaven Credit Union, I thought it useful to look at Bantry's accounts for the year to September 2013.
Members' shares| €44m
Members' Reserves|€9m
Total Members' funds|€53m
|
Loans to members|€ 11m
Less bad debt provisions|€1.6m
Net loans to members|€9.4m
As a percentage of funds available |18%
How protected are they against bad debts?
Loans to members|€11m
Provisions for bad debts|€1.6m
Members' reserves|€9m
Total provisions and reserves |€10.6m
Percentage of loans|96.4%
In other words, if they recover only 4% of all money due, they would still be solvent.
As some of the loans to members are backed by shares, there is in fact, no risk whatsoever to members from loan default.
Bantry is fulfilling its purpose as a social lender to the local community very well. It categorises its loans by purpose and amount. Here are some examples:
Purpose|#|total amount
Car loans|172|€1.2m
Savers' loans|241|593k
Home improvement|158|€583k
Building|21|€231k
Farm buildings |21|€162k
|
|
Total|1,278|€4.5m
Average loan:€3,538
There is no evidence of big loans for property development or investment.
Investment income|€1.3m
Deposits and investments|€43m
Return|3%
Dividend to members|1%
It's paying its members 1% and putting the money on deposit across the road in AIB at 3%. The members should withdraw their shares and put the money on deposit directly.
Bantry does not need this money and it's destroying value for its members.
There is also risk in Bantry having such high investments which it does not need. It has €11m in "managed funds, unit trusts and growth bonds". It is highly unlikely that the board members have the expertise to understand these products. There is no indication that they have made any losses on them, but in the past, other credit unions have suffered extensive losses by investing in products which they did not understand e.g. Perpetual Bonds.
Bantry meets its primary purpose very well - it is a great social lender. It should stop acting as a savings club as it does not need to.
