CURRENT Newsletter | 15 June 2021 - Virginia Credit Union League

Virginia Credit Union was approved by the Bureau of Financial Institutions (BFI) to add the Medical Society of Virginia to its field-of-membership in July 2019, prompting the Virginia Bankers Association and seven of its member banks to file a petition asking the SCC judges to consider whether or not BFI’s decision was appropriate.

The SCC judges have final say in matters overseen by the SCC’s various divisions, including decisions made by BFI, though it’s been extremely rare for credit union field-of-membership cases to be heard by the judges.

As background, the Medical Society of Virginia is a 10,000-member association offering support and services to medical professionals across the Commonwealth. Virginia Credit Union’s original application to add the Medical Society of Virginia to its field-of-membership was filed in 2018.

This same case was argued before an SCC hearing examiner last July, with Virginia Credit Union and your League offering extensive testimony in the case which stretched more than 10 hours over the course of two days. In October 2020, the hearing examiner presiding over the case issued her findings, siding strongly with Virginia Credit Union, the League and BFI Commissioner Joe Face.

Senior Hearing Examiner Ann Berkebile’s recommendation to the SCC judges was that they adopt her report, uphold the Bureau of Financial Institutions’ decision to allow Virginia Credit Union to add the Medical Society of Virginia to its field-of-membership, and dismiss the case brought by the Virginia Bankers Association and its member banks.

In January 2021, the State Corporation Commission remanded the case to a new hearing examiner for new proceedings, with the added requirement that Virginia Credit Union must prove its compliance with the applicable laws governing field-of-membership expansions.

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CULAC Fundraiser ‘$30 By the 30th’ Underway; Support CUs’ Advocacy Work

Contribute here

It’s June, which means it’s time for our annual $30 by the 30th campaign supporting CULAC. This is one of the best ways to support one of our movement’s strongest advocacy tools – by donating $30 or more to CULAC by June 30.

As the 117th Congress continues their work, the credit union movement is facing threats on multiple fronts, including attempts to apply new CRA-like rules to credit unions, expand regulations and even place new limits on interchange and our ability to fight fraud and data breaches impacting our members.

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CUNA Hosting Young Professionals Advocacy Workshop

Advocating for your credit union as a young professional is vital. Your voice matters in promoting the advancement of pro-credit union policies and bettering the credit union movement. Join us for CUNA Young Professional Advocacy Workshop: the perfect opportunity for future leaders like yourself to learn all things credit union advocacy.

This three-day virtual workshop August 4-6 will help you prepare to champion the credit union cause in Washington and Richmond!

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Fiserv Webinar: Exceptional Member Service as a Differentiator for Your Card Program

Providing exceptional service is a differentiating factor in the crowded and hyper-competitive card market. Join our free June 24 webinar and learn how serving your members’ needs is key to “customer satisfaction” and loyalty and why it matters for an optimal credit union member experience.

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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.

Overdraft, NSF Fee Lawsuits Continue

Several law firms continue to send demand letters threatening a lawsuit and/or file a lawsuit against credit unions alleging members were improperly assessed overdraft and/or NSF fees. These cases surged in 2019 and show no signs of slowing down as plaintiff attorneys continue to aggressively seek potential clients. It is believed plaintiff attorneys continue to troll credit union websites searching for account agreements that do not adequately disclose how and when overdraft and/or NSF fees are assessed.

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Advance Child Tax Credit Payments to Begin on July 15

As a response to the continuing COVID-19 outbreak and economic impact, Congress passed H.R. 1319, the American Rescue Plan Act (ARPA) of 2021, which President Biden signed into law on March 11, 2021. The $1.9 trillion COVID-19 stimulus bill expands the (CTC) for tax year 2021.

The American Rescue Plan Act (ARPA) of 2021 provides advance payments of the 2021 Child Tax Credit in the form of regular payments from July through December. These direct cash payments are intended to provide a boost to the current struggling economy by giving money to families in the most need of additional support.

Credit unions may experience additional deposit balances due to this program, similar to what has been experienced with the three rounds of recovery rebate payments.

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Know Whether Excise Tax Final Regs Will Affect Your Credit Union

The IRS’s final regulations for the 21% excise tax levied against credit unions based on the income of certain highly compensated employees have been in place since January 2021.

The IRS actually began to levy this tax in 2018, after it was included in the Tax Cuts and Jobs Act of 2017. Even if your credit union hasn’t been affected by the tax so far, it’s a good idea to know how it works, including some key changes and clarifications contained in the final regulations.

CUNA Mutual Group’s John Pesh, director of executive benefits, overviews key modifications within these final regulations for IRS Section 4960 that could affect your credit union in a new, downloadable regulatory update.

CUNA Mutual Group to Host Webinar on Employee/Workplace Safety

CUNA Mutual Group (CMG) will host a live webinar on June 16, at 2 p.m. for credit unions with questions for a risk consultant on employee and workplace safety. Join CMG for this live question-and-answer session where industry experts will address your top-of-mind concerns.

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Pandemic Response

Virginia's COVID-19 State of Emergency to End June 30, Affecting Mask Rules

Virginia’s 15-month-long state of emergency brought on by COVID-19 will come to an end June 30, Gov. Ralph Northam’s office announced last week, citing a decline in coronavirus infections.

The end of the state of emergency comes after Northam lifted nearly all public restrictions related to the COVID-19 pandemic. For most Virginians, the end of the emergency declaration will be largely symbolic, though it will have implications on mask rules.

When the emergency order ends, a Virginia law that bans people from wearing face coverings in public will go back to being in effect, even as many Virginians are still choosing to wear masks, and many businesses require them.

Northam chief of staff Clark Mercer said the governor will ask the legislature to amend the state’s ban on face coverings when lawmakers convene in a special session this summer. The date for the session is still up in the air, but the main task for lawmakers will be to decide how to spend $4.3 billion in federal aid from the American Rescue Plan. (Richmond Times-Dispatch, June 10)

Compliance / Regulatory Affairs

Trade Groups Flag Concerns Over New Tax Reporting Requirements

Ahead of a House Ways and Means subcommittee hearing to examine the 'tax gap,' NAFCU and CUNA joined with several other financial services industry trades to flag their concerns with a possible new tax reporting requirement included under President Joe Biden's budget proposal.

Under the new reporting requirements, financial institutions would be required to file an annual information return for all business and personal accounts with more than $600 in their account. The annual reporting requirement would include information related to gross inflows and outflows, including the amount of cash, transfers to and from accounts held by the same owner, and transactions with foreign accounts.

In the letter, NAFCU, CUNA and the trades said proposals "to create new reporting requirements for financial institutions appear to impose cost and complexity that are not justified by the potential, and highly uncertain, benefits."

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Education & Training

CFPB Webinar: Measuring the Financial Well-being of Hispanics

The CFPB is holding a free webinar June 23 highlighting the findings of its recent report Measuring the financial well-being of Hispanics. The webinar will include a discussion on the implications of the findings for initiatives aimed at helping to improve and maintain the financial well-being of Hispanics in the United States.

Webinar Details:
Date: Wednesday, June 23, 2021
Time: 2 p.m. to 3 p.m.
Click this link to join

News About Credit Unions

Small Credit Unions’ ROA Was Half of Big Credit Unions

While credit unions overall showed a spectacular leap in earnings in the first quarter, the gains were modest among smaller ones.

NCUA data released June 4 showed the nation’s 5,175 credit unions generated $5 billion in net income in the three months ending March 31, more than double the $2.1 billion earned in 2020’s first quarter, which was marked by heavy loan loss provisions after COVID-19 was declared a pandemic on March 11.

The recent quarter’s earnings represented an annualized 1.04% return on average assets, up from 0.53% ROA in 2020’s first quarter.

As in the past, the results improved with size. A CU Times analysis showed credit unions with less than $1 billion in assets earned at half the rate of credit unions with $4 billion or more in assets.

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Auto Loan Delinquencies Plunge at CUs in 1Q2021

Auto loan delinquencies at U.S. credit unions continued to decline in the first quarter both on a linked-quarter basis and year over year.

At the end of March, U.S. credit unions reported $1.02 billion in delinquent new vehicle loans, a decline of 33.2% quarter over quarter and 41.8% year over year. Meanwhile, $2.50 billion in used car loans were delinquent as of March 31, down 40.5% year over year.

Approximately 0.92% of aggregate new and used car loans were delinquent at U.S. credit unions as of March 31, down from 1.40% and 1.57% at the end of 2020 and the first quarter of 2020, respectively.

Meanwhile, total auto loans at credit unions rose 1.7% year over year to $384.57 billion as of March 31, as used vehicle loans drove the growth with a 4.9% jump from the year-ago quarter. However, new auto loans continued to decline, reaching their lowest levels since the second quarter of 2018, as they dropped 3.4% from the first quarter of 2020. (S&P Global Market Intelligence, June 9)

Economic Update Video Addresses Women in CU Leadership

CUNA Chief Economist and Deputy Chief Advocacy Officer for Policy Analysis Mike Schenk interviews Vice President of Diversity, Equity, & Inclusion at CUNA Samira Salem in this month’s Economic Update video.

Salem discusses the latest trend of women holding a significantly higher percentage of executive leadership positions in credit unions than in the banking industry.

The subject of women leadership in credit unions was the topic of an industry report released by CUNA in May that found 51% of U.S. credit union CEOs – and 33% of board members – are women.

The complete video, as well as the full issue brief, can be found on CUNA’s Economic Update homepage.

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Financial Services / Economy

Americans Adopting New Financial Behaviors Faster Than Ever: Study

Americans are making significant shifts in their work and retirement plans, in their payment and purchasing behaviors, and in their saving and investing, according to a new study released Wednesday by Logica Research.

Some of the biggest changes have to do with increased use of payment apps, peer-to-peer payments and buy now, pay later options, the study found.

“We’ve conducted many waves of this study over the past few years, and never before have we seen this level of acceleration when it comes to changing financial behaviors,” Logica Research’s founder and chief executive, Lilah Raynor, said in a statement.

“During the height of COVID-19, we found distinct and critical shifts in how people are working, spending, saving and investing, and this latest wave shows that many of those shifts are here to stay.”

The message to financial brands and fintech companies, Raynor said: Adapt to meet customers where they are now.

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Report Says Big Banking Fees are Hurting Low-Income Households

Hefty banking fees are hurting low-income households, especially families of color, according to one new report.

Hispanic and Black households paid a total of $3.1 billion and $1.4 billion, respectively, in overdraft fees alone last year, according to a recent report from the Financial Health Network, reported CBS News.

The report also found Black Americans forked over $800 million last year on fees for checking account maintenance, money orders, and check cashing, while Hispanic families spent $1.1 billion on those services.

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Prices Jumped 5 Percent in May, Continuing Inflationary Climb. Policymakers Say It’s Temporary.

Prices rose by 5 percent in May compared with a year ago, the largest increase since the Great Recession, continuing a steady climb in inflation even as policymakers insist on staying the course.

Price spikes often coincide with downturns, and officials from the White House and Federal Reserve have predicted that prices will climb over the coming months, especially compared to a year ago, when the economy was reeling from coronavirus pandemic shutdown. However, the move adds new fuel to the Republican criticism that the Biden administration is spending too much, which could lead to an overheated economy.

The most recent inflation figures, released Thursday by the Bureau of Labor Statistics, are not rattling the Biden administration nor the Fed. Both predict that prices will continue to rise until supply chains and consumer demand recalibrate and the economy has time to heal.

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News From Credit Unions

Member Options SVP George Ballew Honored with Lifetime Achievement Award

Member Options LLC Senior Vice President George Ballew has been honored with a Lifetime Achievement Award and as a Professional of the Year for 2021 by Strathmore’s Who’s Who Worldwide Edition for his outstanding achievements and contributions in the field of finance.

Member Options LLC, is a wholly owned subsidiary of UVA Community Credit Union, offering members a variety of mortgages and related services.

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