CURRENT Newsletter | 2 July 2020 - Virginia Credit Union League

Credit unions and banks are back before a State Corporation Commission hearing examiner July 9, arguing a field-of-membership case with far-reaching ramifications should credit unions lose. Your League is a party to the case, which involves the decision last year by the state Bureau of Financial Institutions to approve a field-of-membership expansion for Virginia Credit Union to serve the Medical Society of Virginia, a 10,000-member association offering support and services to medical professionals across the Commonwealth.

The Virginia Bankers Association and several of its member banks objected, petitioning the State Corporation Commission to rehear and reconsider the decision of the Bureau of Financial Institutions to allow Virginia Credit Union to serve the group. The Commission granted the bankers' request to stay the expansion decision.

In January 2020, parties to the case offered oral arguments on standing, scope of discovery and a host of other issues. Since then, thousands of pages of written testimony and motions have been filed in the case.

“Bankers are attempting to meddle in BFI’s process as it relates to field-of-membership expansions for multiple common-bond credit unions. They were unsuccessful in a similar attempt almost two decades ago to derail community charters here in Virginia. Across the nation, we’ve seen cases of bankers pursuing these state-level attacks – whether field-of-membership or taxation -- in hopes of building the necessary momentum to carry these issues to the federal level. We’re doing all we can to ensure they don’t win here, and this case bears every credit union’s close attention.”

League Hosting Virtual Workshops on IRAs

Your League is providing a two-day Essentials and Advanced Virtual IRA Workshop on Sept. 22 and 23 from 9 a.m. – 3:45 p.m. each day. This interactive workshop will be led by instructors presenting live with opportunities to pose questions and have discussion.

Staying informed about IRA policies is imperative for staff who work with members to secure and maintain IRAs in any capacity. Whether you are new to working with IRAs or an experienced finance professional, staying up to date on IRAs is exceptionally beneficial for your credit union and its members.

Day 1 offers IRA Essentials, giving attendees a solid foundation of IRA knowledge. Attendees will leave this session able to work with IRA owners and process basic IRA transactions with confidence.

Day 2 features Advanced IRAs, which builds on the attendees’ basic IRA knowledge to address some of the more complex IRA issues that their financial organizations may handle. The instructor uses real-world exercises to help participants apply information to job-related situations.

NOTE: If you cannot attend this event, we’ve partnered with the Mississippi League to offer a similar event Oct. 20 and 21. Ascensus will conduct the training.

Learn more and register

Virtual Mixer for Marketers, BizDev Pros July 9

The Virginia Credit Union League and the Marketing and Business Development Committee would like to invite you to attend our first “Marketing Mixer.” This is a virtual networking event to discuss current issues credit union marketing and business/community development professionals are facing. We have a few topics in mind and encourage you to bring more!

Topics requested to date include:

Member engagement and business development strategies during a pandemic
Hosting virtual annual meetings
How your credit union is addressing social issues

Join us Thursday, July 9 at 4 p.m.

Marketing Mixer Registration

Once you register, you will receive information to access the GoToMeeting. We look forward to seeing you!

Young Professionals’ Lunch & Learn Series Continues July 9 with Emotional Intelligence Session

In this short session, Laurie Maddalena will share the components of emotional intelligence and facilitate a short exercise to build awareness so you can increase your emotional intelligence.

You will learn:

What is emotional intelligence
How to build awareness around your emotional triggers
The impact of emotional intelligence on leadership
Important skills for high emotional intelligence

Net Income at FICUs Fell by 40 Percent Compared to a Year Ago

Net income at federally insured credit unions (FICUs) fell by 40 percent at the end of the first quarter of 2020 compared to a year ago, according to the National Credit Union Administration.

Net income was $2.1 billion as of March 31, 2020. In comparison, net income was $3.5 billion as of March 2019.

The decline in net income was partially due to an increase in provisions for loan and lease losses. Provisions for loan and lease losses were $2.13 billion at the end of the first quarter of 2020, up from $1.6 billion at the end of the first quarter of 2019.

Assets at FICUs increased by 4.6 percent during the first quarter of 2020 to $1.64 trillion.

Total shares and deposits were up 4.3 percent during the first quarter, while loans grew by just 0.8 percent over the same time period.

Net worth at FICUs grew by 1.2 percent during the first quarter of 2020 to $180.4 billion. However, the net worth ratio fell by 36 basis points during the first quarter of 2020 to 11.01 percent.

Read the quarterly data summary.

Advocacy / Governmental Affairs

House NDAA Passes Committee Without Expansion of Military Lease Exemption

The House Armed Services Committee passed its version of the fiscal year 2021 National Defense Authorization Act (NDAA) early Thursday without a provision expanding a military base lease exemption. Credit unions are currently eligible for the exemption, which allows for the waiving of certain fees and costs, and CUNA pushed back against efforts to expand the exemption from banks.

Learn more

Compliance / Regulatory Affairs

What’s Next for CU Membership Rule?

More than three years after the American Bankers Association began its legal challenge of the National Credit Union Administration’s updated field-of-membership rule, credit unions can finally ask, “What’s next?”

It’s unclear how many credit unions have applied to take advantage of the expanded FOM rule. NCUA couldn’t provide data on the number of these applications.

A number of credit unions that submitted expansion applications to NCUA since late 2016 subsequently merged with others, which affects the data. Overall, the number of active institutions has shrunk by just over 10% since the legal challenge began, while credit union membership is up nearly 13% since then, according to figures from CUNA Mutual Group.

Those that are still active, however, are likely to see their applications approved quickly. An agency spokesperson said the regulator’s “primary focus is to move expeditiously to process and approve field-of-membership expansions affected by this decision.”

The most recent revisions to the rule have not yet been approved by the board, but the agency is expected to move quickly to put those provisions in place. Some sources indicated that could happen as soon as NCUA’s next open board meeting in July. (Credit Union Journal, June 30)

Pandemic Response

CFPB Issues IFR on Pandemic-Related Loss Mitigation Options for Homeowners

The Consumer Financial Protection Bureau (CFPB) issued recently an interim final rule (IFR) that will make it easier for consumers to transition out of financial hardship caused by the COVID-19 pandemic and easier for mortgage servicers to assist those consumers.

Learn more

CDC Posts Information for CUs, Banks for Keeping Employees Safe from COVID-19

The Centers for Disease Control and Prevention (CDC) has posted webpages for banks and credit unions and their employees with tips for protecting staff and slowing the spread of COVID-19.

The tips for FI employers include creating a COVID-19 workplace health and safety plan, conducting a hazard assessment and developing hazard controls.

Among these controls are engineering controls (isolating workers from hazards through workspace distancing and transparent shields, as well as adjusting HVAC ventilation and adding filtration) and administrative controls (including changing workflows and practices, cleaning facilities and encouraging cloth face coverings as appropriate).

Recovery Could Take 4 Years if Virus Contained, Fed’s Daly Says

The U.S. economy can escape another decade-long slog back to health if strong public measures or a vaccine curb virus surges, Federal Reserve Bank of San Francisco President Mary Daly said.

“If we can get the public health issues under control either through a really robust mitigation strategy or a vaccine, then we can reengage in economic activity really quickly,” Daly said Wednesday in a virtual Washington Post Live event. “Then it could take just four years or five years. But if we end up with a pervasive, long lasting hit to the economy, then it could take longer.”

The U.S. economy officially entered a recession in February, according to the National Bureau of Economic Research, ending a decade-long recovery from the 2008 financial crisis. Although some of the early heavy-hit areas of the country are now seeing lower rates of the coronavirus, states like Texas and California are witnessing a resurgence after starting to reopen their economies. (American Banker, July 1)

Congress Passes Bill to Extend PPP Deadline to Aug. 8

The House and Senate passed a bill that would extend the deadline for applying for Paycheck Protection Program (PPP) loans. The president is expected to sign it.

The bill, introduced by Senate Small Business Committee Ranking Member Sen. Ben Cardin (D-Md.), would extend the deadline for applying for PPP loans to Aug. 8. Though the PPP still has approximately $130 billion in unspent funds, the program technically expired June 30 at midnight.

US Would Dodge 5% GDP Hit with National Face Mask Mandate, Says Goldman Sachs

A U.S. national mandate on face masks would help contain the coronavirus pandemic and bring "sizeable" benefits to the economy as it could replace new disruptive lockdown measures, according to analysts at Goldman Sachs.

The analysts probed the link between face masks and coronavirus outcomes and found that the protective coverings "are associated with significantly better" results.

In their baseline estimates, a national mandate would increase the percentage of people who wear masks by 15 percentage points and lower the daily growth rate of confirmed COVID-19 cases by 1 percentage point, to 0.6%.

"These calculations imply that a face mask mandate could potentially substitute for lockdowns that would otherwise subtract nearly 5% from GDP," Goldman Chief Economist Jan Hatzius said in a note to clients.

In the absence of a national face mask mandate, state and local governments could expand orders that may lead to similar economic effects, the Goldman analysts suggested. "Either way, our analysis suggests that the economy could benefit significantly from such moves, especially when compared with the alternative of a return to broader lockdowns," they said. (S&P Global Market Intelligence, June 30)

Economy / Financial Services

Nearly All CU Loan Categories Declined for First Four Months of 2020

Credit union loan balances were expected to grow well below long-run average rates through 2021, one of the many adverse impacts of the financial crisis that have resulted from the COVID-19 pandemic, according to a new report from CUNA Mutual Group.

The “Credit Union Trends Report” found that the loan balances rose just 0.1% in April, the first full month of the pandemic. They were expected to increase by only 3.5% through the end of the year and 5% in 2021, compared to the average rate of more than 7%, driven largely by low consumer confidence and high unemployment rates, the report showed.

“With loan balances growing slower than savings, credit union liquidity is loosening up,” according to this month’s report.

Learn more

HR, Education & Training

League Co-Hosting Webinar Series for Small CUs

Start adapting industry best practices to the unique challenges of your small credit union. CUNA-League System Small CU Webinar Series is a new live and recorded webinar series that’s free for CUNA and League members. It kicks off on Tuesday, August 4, 2020, and runs through Spring 2021. Get impactful best practices relevant to small credit unions on hot topics, including member experience, digital marketing, lending and more.

The first sessions include:

August 4, 2020: New member growth: Learn from the best in the industry
August 11, 2020: Revising your budget following COVID-19 Pandemic
August 18, 2020: Getting to know your members A LOT better and why DEI matters

See a full list of free webinars and register here.

Registration Open for CUNA Mutual Group’s Discovery Conference

Join thousands of credit union leaders across the country online, Thursday, Aug.13, for a day of Discovery. This free conference is designed to help boost your strategic planning with innovative ideas and key insights.

Learn more

NCUA OMWI Asks CUs to Save-the-Date for 2nd Annual DEI Summit

The NCUA Office of Minority and Women Inclusion (OMWI) reminds credit unions to save the date for its second annual Diversity, Equity and Inclusion Summit. It will be a virtual event tentatively scheduled for Oct. 7 and 8. Details to follow.

African-American CU Coalition’s Racial Justice Initiative Secures Financial Commitments

Amid protests for racial justice, the African-American Credit Union Coalition (AACUC) has called on credit unions around the U.S. to join an effort to address racism head on.

The AACUC announced that several credit unions in North Carolina and Florida pledged financial support for the initiative, which is named “Commitment to Change: Credit Unions Unite Against Racism.”

Learn more

Fraud Prevention / Security

Identity Fraud is Soaring

The use of stolen and synthetic identities to perpetrate fraud skyrocketed last year, and the pandemic may be making the problem worse.

Losses stemming from identity fraud rose 15% in 2019 to $16.9 billion after hitting a five-year low in 2018, according to the latest Identity Fraud Report from Javelin Strategy & Research.

The firm doesn't yet have numbers for 2020, but the coronavirus-related shutdown of the economy is said to have become a breeding ground for a wide range of financial fraud. For instance, credit and debit card fraud rose 35% in April from a year earlier, according to FIS, which assists about 3,200 banks with fraud monitoring.

One of the main culprits for the soaring ID fraud numbers last year was a spike in account takeovers, a high-impact kind of crime that takes fewer victims to add up to big money, said Krista Tedder, head of fraud at Javelin. (American Banker, July 2)

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