CURRENT Newsletter | 14 May 2021 - Virginia Credit Union League

For the past two years, your League has been part of the Commonwealth Connect Coalition, which has brought together more than 80 groups dedicated to bringing universal broadband to Virginia within a decade.

On May 19 (9:30 a.m.-10:30 a.m.), the Coalition will join us for a virtual informational meeting on the role credit unions can play in advancing universal broadband access.

Access to high-speed internet touches almost every aspect of daily life and is a necessity for participating in modern life, a point driven home during the pandemic. Broadband access was a recurring theme in the calls we hosted with federal lawmakers and state lawmakers debated a half-dozen broadband bills this past session, half of which became law.

The Coalition is now soliciting financial support from businesses across all industries to gain access to federal funding to support the expansion of and access to broadband service.

“We believe this is an important initiative that supports our communities -- providing resources, access to services, education and so much more, including easier access to the wealth of services offered at our credit unions,” notes League President Rick Pillow. “As this initiative advances at both the state and federal levels, we believe it’s critical that credit unions are engaged and active supporters.”

CU PolicyPro Training Available On-Demand

The all-new CU PolicyPro provides great model policy content with a fully redesigned policy management system!

The new system includes a modern and easy-to-navigate design to help all users easily find, view and print both model policies and the credit union’s own customized policies. System admins and policy editors will now have a whole new toolbox to create, maintain and distribute policies, assign and track policy updates and reviews, upload and share additional documents, view and confirm relevant model policy updates, and manage user access to the policy level.

We recently held virtual training sessions for the new system. The first offered an overview of the new system and basics on navigation and management. The second offers a deeper dive into the system and its various management and content creation features.

Session 1:

The slide deck is available here.
You can also access the recording of the session here.

Session 2:

The PPT can be accessed here.
The recording of the session is available here.

Social Responsibility Awards: Get Recognized for Your Good Works!

The League-CUNA Social Responsibility awards are a way for you to showcase the extraordinary efforts you are taking to serve your members. The deadline is June 30!

There are four entry categories:

Desjardins Youth Financial Education Award for excellence in youth financial education
Desjardins Adult Financial Education Award for excellence in adult financial education
Louise Herring Philosophy in Action Award for excellence in member service.
Dora Maxwell Social Responsibility Award for excellence in community service and outreach.

Start your entry here. The time period covered for your application should be the calendar year through June 30, 2021. If you have additional questions after reading this FAQ, please don't hesitate to contact your League’s Mary Amyx - 800.768.3344, ext. 630.

Your First Step Toward the C-Suite: SRCUS Registration Open Through May 21

Time is running out to register as a new first year student for the Southeast Regional Credit Union School (SRCUS) taking place online June 7-11.

If your goals include advancing to C-Suite and upper management, this three-year course is the path you want to be on! The first-year curriculum includes coursework in business writing, understanding ratios, financial analysis, negotiations and, most importantly, unparalleled networking with like-minded peers from across the southeast region.

This year’s virtual opportunity allows you to start your three-year journey at reduced tuition expense and no travel cost with the ease of a slightly reduced time commitment. Ready to join the 118 credit union professionals who have successfully completed the immersive program?

Learn more

Regulators to Hold Webinar on Emergency Capital Investment Program

NCUA encourages credit unions interested in learning more about the Treasury Department’s Emergency Capital Investment Program to join an “Ask the Regulators” webinar hosted by NCUA and other federal financial regulators. Registration is now open for the 75-minute webinar, “An Overview of the Emergency Capital Investment Program,” which will take place May 24, beginning at 3 p.m. (ET).

Participants may submit questions in advance by email at asktheregulators@stls.frb.org. Questions submitted by May 18 will receive priority.

Eligible credit unions interested in applying for the Emergency Capital Investment Program now have until July 6 to submit their applications.

Under the Emergency Capital Investment Program, Treasury will provide up to $9 billion in capital directly to depository institutions that are certified Community Development Financial Institutions or minority depository institutions. This funding may be used to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers—especially those in low-income and underserved communities—that may be disproportionately impacted by the economic effects of the COVID-19 pandemic.

Treasury will set aside $2 billion for CDFIs and MDIs with less than $500 million in assets and an additional $2 billion for CDFIs and MDIs with less than $2 billion in assets.

Credit unions can review the Treasury Department’s ECIP information page in advance of the May 24 webinar to learn more about the program.

Learn more

NCUA, CISA to Conduct Cybersecurity Webinar May 26

The National Credit Union Administration will host a webinar on Wednesday, May 26, to provide credit unions with important information about protecting their organizations and their members from cyberattacks. Online registration for the webinar, “Critical Security Controls and Cyber Hygiene,” is open now. The webinar is scheduled to begin at 2 p.m. (ET) and will run for approximately 60 minutes.

Participants will be able to log into the webinar and view it on their computers or mobile devices using the registration link and should allow pop-ups from this website to ensure easier access to the webinar.

Learn more

CUNA Mutual Group Webinar: Navigating the Regulatory Landscape

CUNA Mutual Group is offering the following training opportunity on May 19: Navigating the Regulatory Landscape. Join this session to get tips for managing the latest regulatory and compliance trends.

Advocacy / Governmental Affairs

House Bill Aims to Protect Consumers from Debt Collector Harassment

The House passed a bill Thursday to ease the economic consequences for service members, medical patients and others from rising consumer debts.

The Comprehensive Debt Collection Improvement Act, which passed 215-207, would place new restrictions on debt collectors and credit bureaus. The legislation has been championed by consumer advocates and congressional Democrats but sharply criticized by Republicans and the banking industry.

The bill, which has been endorsed by the Biden administration, would require debt collectors to seek consent from consumers before sending them electronic communications. It would also prohibit debt collectors from representing to military service members that failure to cooperate with debt collection could jeopardize their military rank or status.

The bill would also prohibit credit reporting agencies from including debt arising from medically necessary procedures on consumers’ credit reports. And it would require the discharge of a consumer’s private student loan in the event of death or total and permanent disability. (American Banker, May 13)

Senate Votes to Repeal CUNA-Opposed ‘True Lender’ Proposal

The Senate voted 52-47 Tuesday night in favor of a CUNA-backed repeal of the Office of the Comptroller of the Currency’s “true lender” rulemaking. CUNA wrote Senate leadership Tuesday supporting the repeal, which was done via the Congressional Review Act (CRA).

“CUNA has significant concerns with the ‘true lender’ proposal as it could be exploited to promote ‘rent-a-charter’ arrangements between payday lenders and national banks, which can be used to evade state restrictions on high interest rates or loan terms,” wrote CUNA President/CEO Jim Nussle. “We believe the OCC’s final rule is not in the best interest of consumers and should be withdrawn. Instead, the OCC, in coordination with its sister banking regulators, should focus its relief efforts on facilitating and promoting the fair and reasonable loan options that are offered by local-community based lenders like credit unions.”

Learn more

Compliance / Regulatory Affairs

NCUA Should Finalize Interest Capitalization, CECL Transition

NCUA should finalize pending rulemakings aimed at providing credit unions regulatory relief as soon as possible, CUNA President/CEO Jim Nussle wrote members of the NCUA board Thursday. Nussle also thanked NCUA for the steps it has taken over the past year to address pandemic-related pressures on credit unions.

“The NCUA can provide additional regulatory relief by finalizing two outstanding rulemakings in particular: the Capitalization of Interest in Connection with Loan Workouts and Modifications proposal, and the Transition to the Current Expected Credit Loss Methodology proposal,” the letter reads. “Given the urgency of the pandemic, the ensuing economic crisis, and the adverse impact these events are having on consumers’ financial well-being, we strongly urge the Board to approve these proposals as soon as possible.”

Learn more

NOL Policy, Final Derivatives Rule on NCUA’s May 20 Agenda

The NCUA will issue a request for comment on the Normal Operating Level (NOL) policy at its May 20 meeting. The meeting will take place at 10 a.m. via live audio stream at NCUA.gov.

The NOL is the desired equity ratio for the National Credit Union Share Insurance Fund. The board sets it at between 1.20% and 1.50%, and CUNA supports NCUA working to maintain the NOL at 1.30% whenever possible.

CUNA supports the derivatives rule as proposed, believing the proposed changes retain key components while providing flexibility.

The complete agenda is:

Board briefing, share insurance fund quarterly report.
Request for comment, share insurance fund Normal Operating Level policy.
Final rule, Parts 701, 703, 741, and 746, derivatives.

CUNA wrote to NCUA Thursday calling on it to finalize pending rulemakings on the Capitalization of Interest in Connection with Loan Workouts and Modifications proposal, and the Transition to the CECL Methodology, CUNA wrote members of the NCUA board Thursday.

Learn more

NCUA's Hood Expresses Openness to Digital Currency for CUs at NAFCU Conference

During a speech on Wednesday, NCUA Board Member Rodney Hood said he sees a potential promising future for credit unions and technology in the form of digital products such as Bitcoin and cryptocurrency; but for now, there’s no rush to get there.

The comments came during NAFCU’s CEOs and Senior Executive Conference in Key West, Fla., being held this week as a hybrid event of in-person and virtual attendees. Hood said it’s the first time he’s given an in-person speech since the pandemic began last year.

He said jokingly, “Please be patient with me today, because I’ve spent so much time video-conferencing this last year, I fear my public speaking skills have atrophied.”

At the heart of his speech, Hood focused on the potential fintech opportunities credit unions might have with the growing popularity and member-service value of digital currency products. To make his point, he relayed a story of a small financial institution’s president in Charlottesville, Va., who launched Bitcoin access at branches and ATMs after customers expressed interest in using cryptocurrency.

Learn more

Education & Training

NCUA, CDFI Fund to Cohost Webinar on Small-Dollar Loan Program

Credit unions are invited to learn more about the Department of the Treasury’s Community Development Financial Institutions Fund’s Small-Dollar Loan Program during a webinar scheduled for Thursday, May 27, beginning at 2 p.m.

Learn more

Home Prices Still Going Up Almost Everywhere Across the US

The beginning of 2021 has seen home prices continue to climb to new record-breaking heights, with prices rising in almost every major metro area.

While that has boosted value for many homeowners, it has made buying a home ridiculously hard for buyers.

In 99% of metro areas tracked by the he National Association of Realtors, prices in the first quarter of 2021 increased over the same period last year, according to a NAR report. Nationally, the median sale price for existing homes climbed 16% from the first quarter of 2020 to $319,200, both record highs since NAR began tracking city data quarterly in 1989.

"Significant price increases throughout the country simply illustrate strong demand and record-low housing supply," said Lawrence Yun, NAR's chief economist. "The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off-the-radar in prior years for many home seekers."

Learn more

Community Bankers Bullish on Loan Growth, Torn on Infrastructure Plan

More community bankers are upbeat about the upcoming year’s prospects for loan demand than at any point since 2017, as the U.S. economy recovers from the COVID-19 pandemic, a new industry survey found.

About 68% of executives said they believe demand for new loans will improve over the next 12 months, up from 47% who reported the same outlook at the end of last year, according to the IntraFi Network survey of CEOs, presidents and chief financial officers of more than 500 banks with up to $10 billion of assets.

The findings come as executives of large, publicly traded banks are split on the timing for a resumption of loan growth — with some anticipating a second half surge in new business while others are more cautious. (American Banker, May 11)

Court Decision Muddies Debt Collector Communications

A recent appeals court ruling is threatening to wreak havoc on the debt collection industry while raising questions about the viability of the Consumer Financial Protection Bureau’s debt collection rule set to take effect within months.

In a surprise ruling in April, a three-judge panel of the 11th U.S. Circuit Court of Appeals said a debt collector violated the Fair Debt Collection Practices Act when it used a third-party vendor to issue an official notice to a consumer about an outstanding debt.

The decision reversed a lower court's ruling to dismiss the lawsuit, meaning the case could be sent back to reach an eventual outcome. Still, the appeals court said the collector ran afoul of the prohibition on disclosing a debtor's information to a third party.

Companies that routinely use third-party letter vendors, particularly mortgage servicers, say the decision has far-reaching consequences. For now, the ruling only applies to debt collectors in Florida, Georgia and Alabama, but some have raised the possibility that it could be applied more broadly. (American Banker, May 11)

Financial Services / Economy

How COVID-19 Has Changed the Financial Course for Women

Adversity often shapes a person’s financial philosophies, and the COVID-19 pandemic is expected to become one of those defining events, like the Great Depression and the financial crisis of 2007-2009, that changes the way generations feel about money.

This is particularly true for women, many of whom are prioritizing financial security and resiliency as a result of the pandemic, according to a new study by Capital Group titled Women’s Financial Futures: New financial philosophies taking shape post-COVID-19. The report, which surveyed 2,000 American women and 500 men, found that women — especially women of color and millennials — have been unevenly impacted by the pandemic. Since the beginning of the pandemic, women have been more likely to lose their jobs and remain out of work months later, spotlighting the fact that the health crisis has also been a financial crisis for women, said the study.

Learn more

Pandemic Issues Cause Drop in Consumer Satisfaction for Credit Unions, Banks

Satisfaction among credit union members and bank customers with their primary financial institution during the pandemic dropped considerably, and members and customers who are planning to switch to a new financial institution has nearly doubled, according to a new study from Foresight Research in Rochester Hills, Mich.

“The average decline on specific satisfaction metrics dropped 4% – considerably less than expectations,” reported Foresight Research, which surveyed more than 10,000 randomly sampled households in 44 metropolitan markets from December 2019 to March 2020. “Customers and members are less satisfied with ATMs and digital banking, which may reflect higher frequency of use or frustration as digital falls short of branch capability during this time of closed lobbies and limited hours. Further, handling problems and good reputation have taken a hit likely resulting from limited face-to-face interaction with personnel.”

Foresight Research also reported that customers of community banks are considerably more dissatisfied while credit unions have generally maintained pre-COVID levels of satisfaction.

Learn more

U.S. Households Borrow More Than Ever, Just Not on Credit Cards

Americans increased their borrowing to a record of $14.6 trillion in March, driven by home and auto loans. But the growth masked what Federal Reserve Bank of New York researchers called a “confounding” decline in credit-card balances during a quarter when retail sales soared and travel resumed.

The New York Fed report, the first snapshot of household balance sheets as the economy started to rebound from the pandemic, shows that mortgage, auto and student loan balances have continued to increase. So did the quality of new borrowers, many of whom were taking advantage of low-interest rates to refinance their home loans.

Credit-card balances shrunk by $49 billion in the first quarter, the second-largest quarterly decline since the data started being compiled in 1999 — the largest was in the second quarter of 2020, when business activity was frozen by lockdowns.

An influx of pandemic relief cash from the government and payment moratoriums on student loans and other bills has enabled people to pay down their credit-card balances for months now. Still, the magnitude of the decline in the first quarter is “remarkable” in light of the strong economic recovery, Fed researchers wrote.

“Surging retail sales volumes suggest that a combination of stimulus checks, increased consumer confidence, and pent-up demand are both supporting consumption and also helping borrowers reduce revolving debt balances,” said Andrew Haughwout, senior vice president at the New York Fed.

Credit-card balances are now $157 billion lower than they were at the end of 2019, before the Covid-19 health crisis hit.

Learn more

U.S. CUs Flush with Liquidity

Like their banking counterparts, U.S. credit unions are experiencing a surge in balance sheet liquidity.

Credit unions have grown deposits faster than loans for the last seven quarters, with that gap significantly expanding in the first quarter of 2021. Loans and leases rose 4.3% year over year, the lowest growth rate since the third quarter of 2012. Meanwhile, shares and deposits rocketed up 23.1%, representing the peak rate during that period.

The uneven growth caused the loans and leases-to-shares and deposits ratio to decline to 68.7% at March 31 from 81.1% in the year-ago quarter.

Without strong loan demand, deposit inflows are increasingly matched with liquid assets, consisting of cash on deposit, cash on hand, cash equivalents and investments maturing in one year or less. Liquid assets, the bulk of which are cash on deposit, increased 17.1% quarter over quarter and 61.2% year over year. As a proportion of total assets, liquid assets jumped to more than 20% from 15% a year ago.

One of the symptoms of excess liquidity is margin compression. And like the banking industry, margins at credit unions have suffered. For credit unions, the first-quarter net interest margin was 3.14%, down 26 basis points year over year. Margin compression at banks was more severe, down 63 basis points to 2.53%.

During the last year, credit union loan portfolios have tilted more heavily toward closed-end, first-lien one-to four-family mortgages and away from credit card loans. (S&P Global Market Intelligence, May 13)

Credit Union News

1st Advantage Announces New Chair and Vice-Chair of the Board of Directors

After nine years as Chairman at 1st Advantage Federal Credit Union, Tom O. Cameron, LTC (Ret.), has made the decision to step down from his position and give way to new leadership on the Board of Directors. Succeeding Tom Cameron as the new member elected Chairman of the Board is Sylvester McClellan. McClellan is the institution’s first African American to serve as chairperson in its nearly 70-year history. He has served on the board for 11 years and has been a member of 1st Advantage for over 34 years.

Learn more

Chapter News

Tidewater Chapter Charity Golf Tournament Tees Off June 4

The Tidewater Chapter will hold its 8th Annual Charity Golf Challenge on June 4 at Sewells Point Golf Course in Norfolk. ALL credit unions – regardless of location - are invited!

Format will be four-man captain’s choice. The cost will be $100 per player. Proceeds will benefit Children’s Hospital of the King’s Daughters, our local Children’s Miracle Network Hospital! Please join us for this exciting event, which has raised more than $100,000 for CHKD during the past seven years.

Learn more / Register

« Return to "CURRENT Newsletter" Go to main navigation