CURRENT Newsletter | 15 January 2021 - Virginia Credit Union League

The COVID-19 pandemic brought employers unique and difficult challenges last year and the end is still not in sight. What can you do when an employee refuses to be vaccinated? Is it even legal to ask for their “vaccination status?” How did the new Coronavirus Relief Bill change leave under the FFCRA? Should you offer paid leave voluntarily?

This Jan. 26 webinar on COVID-19 Legal Updates with attorneys from the Labor & Employment practice at Woods Rogers will answer these questions so you can protect the health and safety of your employees and protect yourself from legal risk.

Webinar begins at 10 a.m. Have a question for Dan and Leah? Send it in an email to mamyx@vacul.org.

IGNITE 2021: Please Note Date Change!

We’re excited to announce the return of IGNITE, the League Annual Meeting! Now slated for Nov. 10-12, 2021 in Virginia Beach, we’ve secured the new Marriott Virginia Beach Oceanfront as our host hotel.

Registration and hotel information for the event will be distributed in the coming weeks, so stay tuned!

Virginia-Based CUs Added 1 Million Memberships in First Nine Months of 2020

Virginia’s 115 member-owned added a million new memberships during the first nine months of 2020, according to information from the National Credit Union Administration, credit unions’ federal regulator.

While the rate of membership growth slowed during the pandemic when compared to growth in previous years, growth was strong enough to push total memberships at Virginia-based credit unions to 14.7 million as of Sept. 30, 2020, up from 13.7 million at year-end 2019.

“2020 has been an incredibly trying year for many of Virginia’s families with the pandemic pushing unemployment to levels we haven’t seen since the height of the financial crisis and recession more than a decade ago,” noted Virginia Credit Union League President Rick Pillow. “But credit unions are stepping up to the challenge and members are finding they have a partner focused on their needs, not on profits.”

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NOTE: View the 3rd Quarter 2020 Credit Union Profile, with credit union stats, milestones and trends

Three-Part Fundamentals of the Mortgage Process Webinar Series Offered in February

A three-part webinar series, presented by CUNA Mutual Group partner MGIC, will provide credit union staff a better understanding of the mortgage cycle and process. Participants will learn how mortgage insurance works, the importance of a well-taken loan application, how to use the "Four Cs" in lending decisions, and the "whys" behind the "how-tos" of the mortgage process. A thorough understanding of the mortgage process will enhance your value to your members and help ensure an efficient, effective member service experience.

Fundamentals of the Mortgage Process Webinar Series schedule & content:

Wednesday, Feb. 3, 2 p.m.- 3 p.m.: Understanding the Mortgage Cycle and How Mortgage Insurance Works - In the first of our 3-part Fundamentals series, learn about the mortgage cycle, key players, regulatory compliance, mortgage insurance and MI premium plan options.
Wednesday, Feb. 10, 2 p.m.- 3 p.m.: Taking the Loan Application and Processing the Loan - In the second of our 3-part Fundamentals series, learn about loan types and programs, questions to ask while completing the loan application, the importance of processing and complete documentation.
Wednesday, Feb. 17, 2 p.m.- 3 p.m.: Evaluating Credit, Capacity, Capital & Collateral - In the third of our 3-part Fundamentals series, learn about evaluating the Four Cs—credit, capacity, capital and collateral —along with risk layering.

Your educational investment is $150 per person for all three sessions. MGIC clients may attend at no charge. The webinar and registration is hosted by our TRGroup partner, the Mississippi Credit Union Association.

Get additional program details or register here!

NCUA Proposes Raising Threshold for ‘Complex’ CUs

The NCUA Board issued a proposal raising the asset threshold for credit unions defined as “complex” for risk-based capital purposes at its Thursday meeting. A complete summary of the meeting can be found on CUNA’s Removing Barriers Blog.

Specifically, the RBC proposal would amend the NCUA’s regulations to provide that any risk-based net worth requirement will be applicable to only a federally insured natural-person credit union (credit union) with quarter-end assets that exceed $500 million and a risk-based net worth requirement that exceeds 6%.

This change would remain in place until the RBC rule goes into effect.

The board also issued an advance notice of proposed rulemaking (ANPR) to solicit comments on two approaches to simplify its RBC requirements:

The first approach would replace the RBC rule with a Risk-based Leverage Ratio (RBLR) requirement, which uses relevant risk attribute thresholds to determine which complex credit unions would be required to hold additional capital (buffers).
The second approach would retain the 2015 RBC rule but enable eligible complex credit unions to opt-in to a “complex credit union leverage ratio” (CCULR) framework to meet all regulatory capital requirements. The CCULR approach would be modeled on the Community Bank Leverage Ratio framework, which is available to certain banks.

CAMELS rating system proposal

NCUA issued a proposal to add the “S” (Sensitivity to Market Risk) component to the existing CAMEL rating system and redefine the “L” (Liquidity Risk) component. The existing CAMEL rating process addresses both sensitivity to market risk and liquidity risk within the “L” component.

The proposed addition of the “S” component is intended to enhance transparency and allow the NCUA, state supervisory authorities, and credit unions to better distinguish between liquidity risk and sensitivity to market risk.

CUSO proposal

The board issued a proposal to amend NCUA’s credit union service organization (CUSO) regulations. The proposal would:

Expand the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union may originate; and
Grant NCUA additional flexibility to approve permissible activities and services.

CUSOs are generally limited to business lending, consumer mortgage lending, student lending, and credit cards.

Corporate credit union final rule

The final corporate credit union rule would amend NCUA’s corporate credit union regulation to make clear that corporate credit unions may purchase subordinated debt instruments issued by natural person credit unions.

It also specifies the capital treatment of these instruments for corporate credit unions that purchase them.

The board also heard briefings on:

The ACCESS Initiative;
Statutory inflation adjustment of civil money penalties;
NCUA’s 2021 Annual Performance Plan; and
The Consolidated Appropriations Act, 2021.

Biden's COVID-19 Proposal Includes Billions for Cybersecurity

As part of his sweeping $1.9 trillion COVID-19 rescue package proposal, President-elect Joe Biden would like to set aside billions of dollars to bolster U.S. cybersecurity.

Biden's American Rescue Plan calls for a $9 billion investment to help the U.S. launch major new IT and cybersecurity shared services at the Cyber Security and Information Security Agency and the General Services Administration. The investment would also go toward helping complete modernization projects at federal agencies.

Biden would also like to put $200 million toward increased cybersecurity technology and engineering expert hiring. He would like $300 million invested in no-year funding for Technology Transformation Services in the General Services Administration to drive secure IT projects forward without the need for reimbursement from agencies.

An additional $690 million for the Cyber Security and Information Security Agency would go toward improving cybersecurity across federal civilian networks and supporting the piloting of new shared security and cloud computing services.

Biden's focus on cybersecurity comes after a massive breach of network software firm SolarWinds Corp.'s system. As many as 18,000 of SolarWinds' customers were exposed to a software vulnerability in its Orion products that allowed hackers to breach the systems of U.S. agencies such as the Justice Department and companies including Microsoft Corp.

Microsoft President Brad Smith recently called the breach "a massive indiscriminate global assault on the technology supply chain" and "a danger that the world cannot afford."

Biden's plan describes the proposed cybersecurity funding as "the most ambitious effort ever to modernize and secure federal IT and networks," adding that the money would help "remediate the SolarWinds breach and boost U.S. defenses, including of the COVID-19 vaccine process." (S&P Global Market Intelligence, Jan. 15)

State Opens COVID-19 Vaccinations to New Groups

As part of a federal push to speed up the pace of vaccinations, Gov. Ralph Northam said Thursday that the state will immediately expand COVID-19 vaccination availability to Virginians ages 65 and older, as well as others ages 16-64 with health issues.

With regard to the expansion of vaccinations, “this means about half of Virginia is eligible for the vaccine,” Northam said. He added that the Virginia Medical Reserve Corps is training volunteers to administer shots and called for anyone with medical training — including retired doctors and other providers — to volunteer.

State Vaccine Coordinator Dr. Danny Avula said that vaccination expansion is moving quickly but is not yet at the 50,000 doses a day that is needed to establish “herd immunity.”

Only 25.7% of all COVID-19 vaccine doses sent to Virginia had been administered as of Thursday, Jan. 14, according to the Virginia Department of Health. The average number of shots over the past seven days was at 11,835 — far below the governor’s short-term goal of 25,000 shots per day. Currently, 215,101 people in Virginia have received at least one dose, and 27,429 are fully vaccinated.

Learn more

PPP Re-Opens to Small Lenders Jan. 15, All Lenders Jan. 19

The Small Business Administration, in consultation with the Treasury, will re-open the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders with $1 billion or less in assets for First and Second Draw applications January 15 at 9 a.m. (ET).

The portal will fully open January 19 to all participating PPP lenders to submit First and Second Draw loan applications to SBA.

Earlier in the week, SBA granted dedicated PPP access to Community Financial Institutions (CFIs) which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries as part of the agency’s ongoing efforts to reach underserved and minority small businesses.

On Friday, SBA will continue its emphasis on reaching smaller lenders and businesses by opening to approximately 5,000 more lenders, including community banks, credit unions, and farm credit institutions.

The agency also plans to have dedicated service hours for these smaller lenders after the portal fully re-opens next week.

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Compliance / Regulatory Affairs

NCUA Streamlined Certification Process for CDFI Certifications Opens Jan. 24

NCUA said federally insured, low-income credit unions seeking Community Development Financial Institution certification can apply to use the National Credit Union Administration’s streamlined qualification process beginning Jan. 24.

NCUA noted CDFI certification makes credit unions eligible for CDFI Fund training and competitive award programs that “enhance their capacity to provide underserved communities with access to insured, affordable financial services.”

The agency further noted the Consolidated Appropriations Act, 2021 authorizes additional COVID-19 relief funding for community development financial institutions that predominantly serve minority communities. Approximately a third of this additional funding includes a set aside for smaller financial institutions with less than $2 billion in assets.

NCUA’s program guide has instructions explaining the streamlined qualification process, the agency noted.

The deadline for streamlined certification applications is April 3. Credit unions that do not qualify to use the streamlined process may still use the standard CDFI certification application.

Education & Training

Webinar: Reinventing Internal Controls in the Digital Age

Internal controls have always been used as a way to ensure proper framework and oversight. But, with digital technology transforming the way we do business, credit unions need to consider how to adapt these controls in a digital era.

Balancing innovation with safety and security is key. While technology may make internal controls more effective and efficient, digitization doesn’t come without risk. Data governance will become even more important as controls continue to become embedded in automated systems.

During CUNA Mutual Group’s Jan. 20 webinar, you’ll learn about key emerging technologies, commonly overlooked internal controls, tips for addressing the internal audit talent gap, and more!

Registration Now Open for Spring 2021 DE Trainings

Registration is now open for two DE Training classes this spring hosted by the National Credit Union Foundation. One will take place March 15 to April 9, the other April 26 to May 21.

Participants will engage in a mix of on-demand and live learning sessions over the four weeks on Mondays and Tuesdays between the hours of 11 a.m. to 5 p.m. (ET).

Since 1982, the DE Program has inspired credit union professionals and advocates to leverage the unique business model of credit unions and serve our members and communities in new and better ways. While many trainings focus on the “what” and “how” of credit union service and operations, the DE Program focuses on exploring the “why.”

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Financial Services / Economic News

Full Employment Not Expected Until 2024

While the U.S. economic recovery is expected to pick up steam this year as the coronavirus vaccine is rolled out, a full recovery in the labor market isn’t expected for another three years, according to the American Bankers Association’s economic advisory committee.

Unemployment rose to 14.8% in April 2020 as businesses shuttered to prevent the spread of the disease and remained elevated, at 13.1%, at the end of the second quarter. The rate is now under 7% and is expected to continue shrinking through 2021 and 2022, but likely won’t return to pre-pandemic levels of under 4% until 2024, the ABA panel said in a presentation Thursday.

Panel members briefed Federal Reserve officials on their forecasts earlier this week. The pace of recovery is said to inform when the Fed will begin to raise interest rates and what risks remain that could prolong the damage caused by the virus. (American Banker, Jan. 14)

In the Workplace

CUNA, AACUC Announce Strategic Alliance to Further DEI

CUNA and the African-American Credit Union Coalition (AACUC) announced a strategic alliance to further diversity, equity and inclusion (DEI) within the credit union movement. The collaboration agreement focuses on a scholarship program and an online community for black credit union professionals.

“The AACUC is a leading agent of change in the credit union industry. This alliance is an important avenue to bring diverse perspectives and voices to our organizations,” said CUNA President/CEO Jim Nussle. “We look forward to working alongside the AACUC to strengthen diversity in the credit union industry.”

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Storming the U.S. Capitol! Can You Fire an Employee for Rioting?

If one of your employees stormed the Capitol, or voices support for this conduct, you may be in a position to make some tough personnel decisions. Can private conduct on an employee’s personal time result in termination from your business? The answer is unequivocally YES!

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News About Credit Unions

2021 National Credit Union Youth Month Theme Announced

The theme of 2021 National Credit Union Youth Month, which occurs in April, is “Be a credit union saver and your savings will never go extinct.”

“National Credit Union Youth Month is a vehicle for credit unions to attract the attention of younger members so they become more engaged in the credit union as they grow into adulthood,” said Michelle Kamke, marketing projects manager at Credit Union National Association. “CUNA provides free resources such as downloadable posters and coloring pages.”

Credit unions can purchase related products beginning in January to help create awareness of National Credit Union Youth Month through the member celebrations store.

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News From Credit Unions

Chartway Federal Credit Union’s We Promise Foundation Awards $600,000 in Charitable Grants

Chartway Federal Credit Union’s We Promise Foundation is proud to announce that the We Promise Foundation board of trustees has awarded $600,000 in grant funding to deliver joy, hope, and smiles to children facing medical hardship or illness.

As Chartway’s charity, the We Promise Foundation provides financial support to companion charities to make dreams and wishes come to life. This year’s grants will benefit nine charities.

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