CURRENT Newsletter | 16 December 2020 - Virginia Credit Union League

After more than 40 years with the Virginia Credit Union League and its managed companies, Terry Childress has announced his plan to retire in March 2021.

Childress began his career with the Virginia League in 1977, and currently serves as Executive Vice President/Chief Operating Officer for the League, its service corporation and the Credit Union Service Company of Virginia, the shared branching organization owned by Virginia-based credit unions.

“On behalf of our Board, staff and credit unions, I want to thank Terry for his exemplary service these past four decades to the Virginia credit union system,” said Rick Pillow, president of the Virginia Credit Union League. “It can’t be overstated how critical a role Terry’s leadership has played in the success of the League and the organizations we’ve managed...”

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VACUPAC Accounting Year Closing Soon; Please Send Funds By Dec. 21

We’re in the homestretch for collecting Virginia Credit Union Political Action Committee (VACUPAC) contributions for 2020. We ask that you submit your contributions by Dec. 21, as a mid-December deadline aids our accounting and PAC management efforts.

If you have questions about the process, please contact Cathy Baldwin at cbaldwin@vacul.org or 434.237.9615.

CUNA Mutual Group: Valued Partner Provides Essential Services, Information Resources in Helping Credit Unions Weather Pandemic

We approach the end of a challenging year for our nation and for the credit union system. Nine months into the pandemic, we can look back at 2020 and appreciate, through the benefit of hindsight, how remarkably well credit unions handled an operational environment turned upside down.

In times of crisis, it’s also important to know you’ve got partners ready, willing and able to lend a hand. CUNA Mutual Group stood with us as we adapted and adjusted to an evolving consumer landscape, where demand for digital offerings exploded.

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Share Your Story of How You've Helped Members During Pandemic

During one of the recent CUNA-League Small Credit Union webinars, we worked on how to tell your credit union’s story in simple but powerful ways. We’d like you to put that story to important practice this week. We’re asking credit unions to submit simple stories about how they’re helping members during these challenging times via our Advancing Communities advocacy initiative.

Advocacy is what we do as an organization; same for CUNA and our fellow Leagues. And we know that if we can help credit unions share stories with lawmakers, especially as new members of Congress and state legislatures are sworn in, we can preserve the tax status and strengthen the operating environment for the movement.

So, we're asking you to share your story, because people connect with real stories about real people. Simply click on the "share your story link" on the top-right corner of our Advancing Communities homepage and record a brief message that spotlights your credit union's good work on behalf of your members!

Overdraft Services Webinar: 10 High-Risk Issues You Need to Address

Plaintiff attorneys continue to send demand letters and/or file lawsuits against credit unions alleging improper assessment of overdraft and/or NSF fees.

The Credit Union Times reports that Navy Federal Credit Union will settle a class-action suit for $16 million that will reimburse an estimated 700,000 current and former members charged fees for overdrafts.

TD Bank recently agreed to pay $97 million in restitution to approximately 1.42 million customers, as well as a $25 million civil penalty to settle allegations brought by the Consumer Financial Protection Bureau that it engaged in illegal overdraft fee practices.

These legal actions spotlight a few of the issues you have to worry about with your overdraft services deposit programs. Join us a for a Jan. 13 webinar through TRGroup for a discussion of overdraft-related risks, including:

Per item per time issues
Debit Card Pending Issues—what are good funds?
Timing of disclosures when you open accounts off-premise
Opt-In and Opt-Out Procedures for one-time debits and ATM transactions
The Regulations, the guidance, the exam

League System Steps Up in Huge Way to Support Credit Unions During Pandemic

A recent American Association of Credit Union Leagues (AACUL) survey reveals the breadth and depth of support Leagues have provided to credit unions to help them effectively navigate the pandemic.

A recent American Association of Credit Union Leagues (AACUL) survey reveals the breadth and depth of support Leagues have provided to credit unions to help them effectively navigate the pandemic. All 35 AACUL members participated in the survey representing all 50 states and the District of Columbia.

Leagues have held over 2,700 meetings with legislators, regulatory agencies, governors’ offices and leadership since mid-March. In addition, leagues have hosted 1,475 different lawmakers and regulators - at both the state and federal level - to engage in dialogue with credit unions virtually.

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Advocacy / Governmental Affairs

Congress Closes in on a $900 Billion Covid Relief Deal as Americans Await Aid

Congressional leaders closed in on a $900 billion coronavirus relief deal Wednesday as millions of struggling Americans wait for help.

The developing aid agreement would not include liability protections for businesses or aid to state and local government, CNBC confirmed. Disagreements over those two issues have blocked lawmakers from crafting a year-end rescue package.

“We made major headway toward hammering out a targeted pandemic relief package that would be able to pass both chambers with bipartisan majorities,” Senate Majority Leader Mitch McConnell, R-Ky., said on the Senate floor Wednesday after a night of talks among the top four congressional leaders.

Speaking after McConnell, Senate Minority Leader Chuck Schumer, D-N.Y., said “we are close to an agreement” but noted “it’s not a done deal yet.”

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Compliance / Regulatory Affairs

Trades Ask to Exempt Credit Unions From CFPB Small Business Reporting Rule

Credit unions are unique financial institutions and should be exempt from forthcoming CFPB rules requiring the collection of data regarding applications for credit from women-owned and minority-owned small businesses, CUNA and NAFCU told the agency Monday.

“As entities bound to serve a specific field of membership, the data collected from credit unions would likely be incomparable to other lenders that are legally permitted serve anyone walking through its doors or accessing its websites,” Alexander Monterrubio, CUNA’s senior director of advocacy and counsel, said in a letter to the CFPB.

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Banks Would Have 36 Hours to Report Cyberattacks Under Proposed Rules

New federal rules proposed Tuesday would require U.S. banks to notify their regulators about major computer security incidents within 36 hours.

If the rules are enacted, they would cover sophisticated criminal attacks and failed system upgrades, and would provide a hard near-term deadline where none currently exists. Still, government officials said that the proposal is tailored narrowly. They estimated that it would apply to only approximately 150 cyber incidents per year.

The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency issued the proposal on Tuesday, and the Federal Reserve Board is expected to do so soon.

FDIC Chairman Jelena McWilliams pointed to a rise in both the frequency and severity of cyberattacks, and noted that prompt notification to regulators could help contain the damage.

“The rule proposed by the agencies today provides appropriate balance — avoiding unnecessarily difficult or time-consuming reporting obligations while ensuring that regulatory agencies are in a position to provide assistance to a bank or the broader financial system when significant computer-security incidents occur,” McWilliams said in a written statement.

Under the proposal, banks would be required to notify their primary federal regulator within 36 hours of making a good-faith determination that an incident could materially disrupt, impair or degrade their operations, or threaten U.S. financial stability. Such a notification could be as simple as making a phone call or sending an email to an agency official.

The proposed rules would also impose new obligations on banks’ technology vendors. Once vendors determined that a computer security incident met certain thresholds, they would have to notify their bank customers immediately. (American Banker, Dec. 15)

Financial Services / Marketplace News

Trends Report Notes Rising Savings, Slower Loan Growth

The November 2020 Credit Union Trends Report is now available from CUNA Mutual Group

Credit union loan balances rose 0.5% in September, slower than the 0.6% pace reported in September 2019.
Credit union savings balances rose a strong 18.3% during the last 12 months due to $1,200 stimulus checks, COVID-19 induced uncertainty, falling gasoline purchases, aging demographics and fears of recession.
The credit union system’s capital-to-asset ratio fell to 10.5% in September, down from 11.3% in September 2019 due to a surge in deposits and assets and a slowdown in earnings.

U.S. Economy Can Hit Pre-Virus Level in Q3'21 with $1 Trillion Stimulus – S&P

The U.S. economy could regain its pre-pandemic level by the third quarter of 2021 if a new coronavirus relief package worth $1 trillion — slightly larger than a bipartisan compromise proposal being considered — is in place at the start of the year, S&P Global Ratings said.

Ratings expects U.S. real GDP to rebound 4.2% in 2021 following an estimated 3.9% contraction in 2020 if Congress passes and the president signs a $1 trillion in economic stimulus that is divided equally across tax rebates, extended unemployment insurance, support to small businesses, and aid to state and local governments.

"First-quarter 2021 would show the biggest bang for the buck, as we assume households would receive their tax rebate checks in this quarter, and literature suggests they tend to spend nearly 40% of the money received in this quarter," the rating agency wrote in a Dec. 15 report.

The weighted average impact of the stimulus would be $770 billion through 2023, boosting economic growth over the three-year period by 2.5 percentage points, the rating agency added.

Ratings published its report as top Republicans and Democrats in Congress remain in stalemate in their stimulus talks. On Dec. 14, a bipartisan group of lawmakers revealed more details about a proposed two-part, $908 billion relief package, which includes a $300 billion boost to the Paycheck Protection Program, $160 billion in aid to state and local governments, and a $300-per-week unemployment benefit for Americans.

It remains unclear whether the White House and Democratic and Republic congressional leaders would back the bipartisan proposal in its current size and scope. Ratings said a no-stimulus scenario would shrink the economy by 1.5 percentage points and delay its recovery to pre-pandemic level to the first quarter of 2022.

"Moreover, indecision among policymakers will influence private-sector expectations and spending plans. Households, for example, may delay spending on worries that the modest recovery may collapse," the rating agency said.

If Congress passes a larger stimulus worth $1.5 trillion, the economy could hit its pre-pandemic level sooner, in the second quarter of 2021, and lead to a stronger full-year GDP growth of about 5% in 2021, the rating agency added. (S&P Global Market Intelligence, Dec. 15)

Pandemic’s Projected Hit to Bank Revenues: $3.7 Trillion

As central banks around the world hold borrowing rates at record- low levels to ward off further economic damage from the coronavirus pandemic, the cost to the global banking industry could prove to be steep.

A recent report from the consulting firm McKinsey estimates banks around the world could lose out on $3.7 trillion between the start of this year and the end of 2023, when compared with earlier projections.

That’s assuming the economy recovers modestly from the pandemic. If the recovery takes longer, global banks could miss out on as much as $4.7 trillion in revenue, McKinsey predicts.

Meanwhile, reserve builds meant to cushion against loan losses could pass levels last seen during the 2008-09 financial crisis, according to the report. (American Banker, Dec. 16)

Millennials, Gen Z Almost Universally Use Mobile Banking Apps, But Adoption Rates For Older Consumers Rising

Mobile banking is a convenient way to manage your money on the go and continues to grow in popularity. In fact, 54% of consumers agreed that they use digital banking tools more now, due to the pandemic, than they did last year, according to the Digital Banking Attitudes Study by Chase.

“The pandemic has demonstrated that digital banking is essential for consumers of all ages to confidently manage their finances,” Allison Beer, Head of Digital at Chase, said in the press release.

It comes as no surprise that millennials and Gen Z are the two groups who are using mobile banking apps the most. The study found that 99% of Gen Z and 98% of millennials use a mobile banking app for a wide range of tasks, including viewing account balances, checking their credit score and depositing a check. Gen X and Boomers use mobile banking apps less (86.5% and 69.5%, respectively), but the ones who do are still in the majority.

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Pandemic’s Silver Lining: Americans Gain $1 Trillion in Home Equity

The pandemic has had more than just a silver lining for American homeowners: it’s gold, as they are approximately $1 trillion richer as a result.

As prices rise over the past year, homeowners with mortgages, representing about 63% of all properties, have seen their equity increase by 10.8%, according to CoreLogic. That equates to a collective $1 trillion in gained equity, or an average $17,000 per homeowner, the largest equity gain in more than six years,

In Washington state, homeowners banked an average of $35,800. In California they gained $33,800 and in Massachusetts an average of $31,200, according to CoreLogic. Homeowners in North Dakota, however, have seen the lowest annual equity gain of just $5,400.

"Over the past year, strong home price growth has created a record level of home equity for homeowners," said Frank Nothaft, chief economist for CoreLogic. "The average family with a home mortgage loan had $194,000 in home equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties."

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Education & Training

Discovery 2020 Now Available On-Demand

Discovery 2020 is now available On-Demand with videos of all keynotes, breakout sessions and panel discussions at no cost no matter how many of your staff access these materials.

Risk Management / Security

Why the US Government Hack is Literally Keeping Security Experts Awake at Night

The US government is reeling from multiple data breaches at top federal agencies, the result of a worldwide hacking campaign with possible ties to Russia. Investigators are still trying to figure out how much of the government may have been affected and how badly it may have been compromised.

But what little we know has cybersecurity experts extremely worried — with some describing the attack as a literal wakeup call.

"I woke up in the middle of the night last night just sick to my stomach," said Theresa Payton, who served as White House Chief Information Officer under President George W. Bush. "On a scale of 1 to 10, I'm at a 9 — and it's not because of what I know; it's because of what we still don't know."

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News From Credit Unions

Freedom First Partners with City of Roanoke to Bring CDBG-CV Grants to Local Microbusinesses

ln response to the economic hardships experienced by microbusinesses resulting from the COVlD-19 pandemic, the City of Roanoke, in partnership with Freedom First, is launching a small business relief grant program utilizing Community Development Block Grant - Coronavirus (CDBG-CV) federal funding.

This is a grant program created in response to businesses that are at-risk of closing or laying off employees due to COVID-19, and its goal is to keep businesses open and retain or create jobs in the City of Roanoke.

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