CURRENT Newsletter | 19 August 2021 - Virginia Credit Union League

Join leadership consultant and award-winning entrepreneur Dr. Samuel Jones he helps us shift the moments of anxiety and stress we experience during crisis into a "movement of excellence."

His "Simplify the Shift: How to Transition From Recovery to Resilience" keynote will offer insights on how to move past the stresses of the past 18 months and achieve the resilience we need to move forward for our families, our colleagues and our members.

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Note: Your League’s Health-Related In-Person Event Guidelines

Governance Committee Seeks Candidates for League Board

Member credit unions will elect individuals to three seats on the League Board this Fall. The League Governance Committee seeks your recommendations for candidates for 2 At-Large seats and the Region III seat (Northern Virginia and Central Virginia).

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CONNECT Conference Features Session on Understanding CU Financials

NOTE: Discounted room rate at our host hotel ends Aug. 26, so act now!
Join your peers at CONNECT on Sept. 28-29 in downtown Richmond for two days of learning, professional development, peer networking and a lot of fun! Not everyone has an accounting background or works in a position focused on the CU’s financials, but as an aspiring next-gen leader at your credit union, it’s important you have a working knowledge of the key elements of the balance sheet and income statement.

In a special session at CONNECT, you’ll learn about key financial statement ratios, how to read financial statements and how to interpret your CU’s current and historical performance.

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Note: Your League’s Health-Related In-Person Event Guidelines

Marketing Workshop Features Sessions on Advertising Compliance, Digital Marketing

Join us Oct. 13 and 14 for the Marketing Workshop, now a virtual event, for sessions on advertising compliance, strategic planning, digital marketing and more! Registration is only $99 for both days.

Day 1 features Elizabeth Rider of On The Mark Strategies covering the "Top Five Things You Should Have on Your Priority List in 2022:"

The five things you must incorporate into your 2022 marketing plan and budget
Key strategies for growing loans in 2022 (including across different generations)
How to utilize data to your advantage in an increasingly personalized world
How to communicate your value to consumers in 2022 and get them to act
Strategies for executing these priorities when everything feels like a priority

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How to Launch a Credit Card Program at Your CU: Aug. 26 Webinar

Think you can't jump into the credit card space … think again! With FISERV's new Credit Choice solution, you can offer a competitive card for your members without having to be a card expert. Learn how you can partner with FISERV during our Aug. 26 webinar on a top-of-wallet product for your members.

Credit Unions, Small Banks Push Back Against Fed Debit-Routing Proposal

Credit unions and small banks are fighting the Federal Reserve’s proposed changes to debit card routing rules, which are designed to make it easier for online merchants to choose a low-cost debit network but would make financial institutions largely responsible for implementation.

“Your League is firmly opposed to the proposal,” notes League President/CEO Carrie Hunt. “We have grave concerns about the proposed rule’s impact on credit unions, including an increase in compliance costs, operating expenses and fraud risk. Add the significant loss of fee income that will result from adoption of this proposal and every small issuer is justifiably concerned. Consumers, merchants and small issuers all benefit from the current system and we remain hopeful the Federal Reserve will abandon this proposal.”

Merchants claim that because an increasing proportion of consumer debit card transactions are flowing through online and mobile channels, since last year they’ve paid $2 billion to $3 billion in excess fees that are not covered by existing card rules, which are focused on the point of sale.

But card issuers say the Fed's proposal — making banks and credit unions implement new debit-routing options for online transactions — will add costs and erode interchange revenue.

The Fed in May unveiled proposed clarifications to Regulation II under the Durbin amendment that would ensure merchants get the same debit network routing choices for online transactions as they do for in-store purchases.

Hundreds of financial institutions and their constituents have filed comments, and many claim that the proposed changes would punish smaller card issuers like credit unions and community banks, potentially costing them billions in lost transaction fee revenue while increasing expenses and fraud risk. (American Banker, Aug. 18)

Online Training for Supervisory Committees

Popular credit union consultant Ancin Cooley has created a web-based course for supervisory committee members, offering the most comprehensive overview of the role, duties, responsibilities and resources available to committee members. The five modules offer you a fun, interactive learning experience with bonus content and even quizzes to test your content retention.

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Register Now (Your League is offering volume discounts for multiple registrations from the same credit union. Use our registration to ensure you receive the discount.)

Virginia Lawmakers Already Discussing Speeding Up Retail Marijuana Sales

Virginia lawmakers are already discussing speeding up the three-year delay between marijuana legalization last month and the beginning of retail sales.

“We have legalized the use of marijuana, but we have not legalized the actual purchase of marijuana,” said Del. Paul Krizek, D-Alexandria, during the inaugural meeting Tuesday of the legislature’s Joint Commission on Cannabis Oversight.

“What we need to do is get the safe sales of marijuana out there as soon as possible.”

Members of the commission outlined a proposal from the state’s four licensed medical marijuana producers to begin selling to recreational customers while the broader marketplace ramps up.

Note: Your League remains engaged with state lawmakers on this issue in hopes they’ll soon provide clarity for credit unions and banks interested in serving legal cannabis-related businesses. We also maintain that the legal uncertainty between state and federal law must be resolved to bring cannabis-related businesses into mainstream financial services and we remain hopeful Cannabis banking legislation will advance at the federal level.

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Advocacy / Governmental Affairs

CFPB Leadership Commission is ‘Balanced’ Approach

CUNA joined several organizations to support bill H.R. 4773 from Representative Blaine Luetkemeyer (R-Mo.), which would replace the director of the Consumer Financial Protection Bureau (CFPB) with a bipartisan five-member commission. CUNA is a longtime supporter of a multi-member commission to lead the CFPB, especially in light of the U.S. Supreme Court decision that found the director is removable at will by the president.

“A Senate-confirmed, bipartisan commission will provide a balanced and deliberative approach to supervision, regulation, and enforcement by encouraging input from all stakeholders. The current single-director structure leads to uncertainty as administrations transition,” the organizations wrote.

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Compliance / Regulatory Affairs

Letter to Credit Unions Says NCUA Exam Modernization Now Underway

NCUA has sent a Letter to Credit Unions (21-CU-08) detailing the agency's transition to modernized systems. The agency said it will begin this transition in August.

NCUA’s efforts will include the implementation of emerging and secure technology that supports the NCUA’s examination, data collection, field-of-membership, and reporting efforts.

“These new applications will streamline processes and procedures and provide significant benefits to credit union users,” NCUA said.

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Treasury to Clarify That Only Cryptocurrency Cos. Must Comply With Proposed IRS Reporting

The Treasury Department is set to clarify that only cryptocurrency companies it considers brokers will need to comply with proposed IRS reporting requirements, aiming to quell concerns over a provision in the bipartisan infrastructure bill passed by the Senate.

Among those that have expressed concerns over the proposed reporting have been credit unions, with both national trade groups issuing statements opposing the plan.

In addition, firms key to the nearly $2-trillion crypto market – from developers and miners to hardware and software providers – won’t have any new requirements, so long as they don’t also act as brokers, according to a Treasury official, Bloomberg reported.

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Regulatory Review: Proposed Changes Put to NCUA

As part of the NCUA’s annual regulatory review process, which covers one-third of its regulations, trade organizations NAFCU and CUNA submitted their ideas of ways certain regulations could be improved by the agency.

In the past week, CUNA and NAFCU filed letters with the NCUA for the 2021 Regulatory Review. In the letters, the groups agreed on three items to bring to the NCUA’s attention, while NAFCU added two more to its list.

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Will CFPB Take Cues from Canada in Writing Data-Sharing Rules?

As the Consumer Financial Protection Bureau mulls standards on the portability of consumer financial data, a concurrent effort by Canada to craft an open banking system could help determine the shape of U.S. rules.

An advisory report issued earlier this month by the Canadian government calls on Ottawa to launch a new framework by January 2023, with rules for banks and an accreditation process for third-party providers to govern data sharing.

The CFPB plans to have a data-sharing rule in place sooner, by April 2022. But observers note the Canadian report has shed much more light on what an open banking regime would look like than the U.S. agency's request for public comment issued last fall, and could influence the rulemaking process in both countries.

The Canadian report comes on the heels of President Biden’s executive order last month urging the CFPB to act quickly on a rule that would make customer data portable. The CFPB’s rulemaking was mandated by Section 1033 of the Dodd-Frank Act, a law enacted 11 years ago.

The rule could be one of the most consequential policies implemented by Rohit Chopra, Biden’s nominee to lead the bureau. But Chopra is still waiting for confirmation by the Senate, which is expected in September. The CFPB asked for industry feedback in an advance notice of proposed rulemaking issued in October. (American Banker, Aug. 17)

News About Credit Unions

League Notes Benefits of CUs Acquiring Banks

Credit unions are acquiring more and larger banks, setting the stage for a potentially record-breaking year in the number and volume of credit union-bank deals. The rush of credit union-bank deals has spurred banking industry groups to redouble their efforts to scuttle credit union M&A.

Financials deal activity has been robust this year as lenders face pressure to add scale to both invest in fintech and navigate a tough earnings environment. Some credit unions are responding by targeting larger banks: the average total assets of banks acquired by credit unions is $580 million year-to-date, compared to $140.7 million last year and $280.9 million in 2019. And there are more deals, too, with eight credit union-bank deals this year, already surpassing the total of six in 2020.

“Credit unions buying banks is a win for the community,” said League President/CEO Carrie Hunt. “Credit unions are not-for-profit member-owned cooperatives who exist to provide provident credit. Studies have shown that credit unions provide great benefits to consumers directly and indirectly by keeping bank rates in check. If banks are saying that the bank assets are better off in the hands of wealthy stockholders than being deployed into the community, I would take great issue with that.”

"The [credit union] buyers are pragmatic," Michael Bell, partner and co-leader of the financial institutions practice group at Honigman LLP, said in an interview. "They know that you can't stop and there's no magic point of wonderfulness. ... You've got to scale, you've got to grow, you've got to diversify, and that's what they're all doing." (Market Intelligence, Aug. 17)

NASCUS Intro's Dual Charter Resources Initiative Aimed at Boosting State Charters

The National Association of State Credit Union Supervisors (NASCUS) has announced what it is calling the Dual Charter Resources Initiative, which it said is designed to help boost oversight balance, state-charter competitiveness, and resource distributions.

The new effort debuted during the first day of the NASCUS’ 2021 Annual Membership Meeting, at which it also said a group of “committed supporters” that includes American Share Insurance, CUNA Mutual Group and PSCU have collectively pledged $260,000 to the program over the next two-to-three years.

According to NASCUS, the DCRI will begin development during the coming months and will move into the market in early 2022. DCRI sponsors will engage with the initiative through a series of financial contributions and program participation, the organization added.

“State charter advances benefit the entire credit union system, from state and federal regulators to state and federally chartered credit unions and their members,” said President/CEO Lucy Ito, who is scheduled to retire later this year. “It is essential to the system’s vibrancy that we work hand in hand to address the challenges ahead.”

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News From Credit Unions

ABNB FCU's Mary Ann Melchers Inducted Into DCUC Hall of Honor

ABNB is proud to share that Mary Ann Melchers, Member of our Board of Directors and former Chairperson, has been inducted into the Defense Credit Union Council’s (DCUC) Hall of Honor. The Hall of Honor was established in 2000 as a means of recognizing individuals whose exceptional contributions have made a significant difference to the defense credit union community.

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Justice Federal Credit Union Congratulates Scholarship Award Recipients

Justice Federal Credit Union is proud to congratulate the recipients of the 2021 Building Futures across the Nation Annual Scholarship Competition who exemplified a commitment to furthering their education ? Lark Davidson Cammanday, Caisha Wilkes, Matthew Kwok-Fu Wong, Tyler J. Richards, Marissa Lee Scott, London Amana Jenkins and Alexa Smith.

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Financial Services / Marketplace

Mortgage Refinance Loans Drove an Increase in Closed-End Originations in 2020, New CFPB Report Finds

A new Home Mortgage Disclosure Act (HMDA) data report on residential mortgage lending trends released today by the Consumer Financial Protection Bureau finds that the total number of closed-end originations -- as well as applications -- increased substantially between 2019 and 2020. Closed-end originations (excluding reverse mortgages) increased in 2020 by 65.2 percent, from 8.3 million in 2019 to 13.6 million in 2020. Most of the increase was driven by the refinance boom observed in 2020. The data point also notes that, while the number of financial institutions reporting 2020 HMDA data declined compared to 2019, the number of closed-end records in 2020 increased compared to the previous year.

Of note: U.S. credit unions funded $275.96 billion in home mortgages in 2020, up more than 55% from the $177.31 billion in originations reported in the prior year, based on recently released Home Mortgage Disclosure Act data compiled by S&P Global Market Intelligence.

“Initial observations about the nation’s mortgage market in 2020 are welcome news, with improvements in the overall volume of home-purchase and refinance loans compared to 2019,” said CFPB Acting Director Dave Uejio. “Unfortunately, Black and Hispanic borrowers continued to have fewer loans, be more likely to be denied than non-Hispanic White and Asian borrowers, and pay higher median interest rates and total loan costs. It is clear from that data that our economic recovery from the COVID-19 pandemic won’t be robust if it remains uneven for mortgage borrowers of color.”

Operations

Labor Shortage Leads To Currency Shipment Delays

Similar to other supply disruptions that became widespread in 2020, some armored car companies are now struggling with a labor shortage. Many credit unions have reported currency shipment delays and fear running short on currency at some branch and/or ATM locations. Credit unions should be proactive and develop a contingency plan.

Data of More Than 40 Million Exposed in T-Mobile Breach

The names, Social Security numbers and information from driver's licenses or other identification of just over 40 million former and prospective customers that applied for T-Mobile credit were exposed in a recent data breach, the company said Wednesday.

The same data for about 7.8 million current T-Mobile postpaid customers appears to be compromised. No phone numbers, account numbers, PINs, passwords, or financial information from the nearly 50 million records and accounts were compromised, it said.

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