CURRENT Newsletter | 23 December 2021 - Virginia Credit Union League

Happy holidays from all of us at your League! Thank you for all you do for your members and for joining with us to promote, protect and unify Virginia’s credit union system. We appreciate your support this past year and we look forward to an eventful and productive 2022!

Your League’s offices in Richmond and Lynchburg will be closed Dec. 24, Dec. 27 and Dec. 31 for the holidays! We’ll resume regular operations and communications the first week in January.

Reminder: Our holiday closing signs are available here.

League Readies for 2022 General Assembly

We’re looking forward to a busy Virginia General Assembly session, which is set to begin Jan. 12. The legislature runs 60 days in even years.

This session, we’ll be working with a Republican-controlled House and a Democrat-held Senate, with Republican Glenn Youngkin occupying the Executive Mansion. There are also plenty of new members following an eventful 2021 election season.

See the steadily growing list of legislation here.

Collections and Bankruptcy Virtual Conference Coming Jan. 11, 12

Join credit union attorney and collections consultant, David Reed, for an exciting virtual training event as he highlights the latest techniques, tips and trends to maximize your collections function in the “new world order.” The event includes sample checklists and procedures and ample time to answer your questions.

Among the topics covered: maximizing the virtual workflow, working with troubled borrowers, workout options, rescue resources, bankruptcy rules, COVID and the bankruptcy process and maximizing your recovery opportunities.

You can’t afford to miss this training Jan. 11 and 12 … Register here through the Kentucky Credit Union League.

CUNA Mutual Group’s ULEND Academy Set for Feb. 8-10

Your League is proud to offer CUNA Mutual Group’s popular ULEND Academy Feb. 8-10 as a virtual learning experience for credit union lenders looking for real-world solutions to today’s toughest lending challenges.

The curriculum guides lenders from foundational to advanced skill levels in all lending communication channels and across all stages of the loan process - origination, underwriting, and closing - with cross-selling, consultation, and compliance woven throughout. ULEND Academy is set up as a virtual learning workshop within three-hour daily sessions over the course of three days, providing participants skills and concepts they can use immediately in interactions with members.

Learn more | Register

Your Safe Deposit Service: Top 50 Most-Important Operating Procedures

The safe deposit operation is a unique, fast-changing service in the financial industry. It is the only product or service in which your staff members do not know the value of a consumer's assets. As a result, every vault transaction can lead to considerable liability. Effective procedures and daily sound practices can counteract and minimize this risk. Our Feb. 16 virtual seminar covers the "nuts and bolts" and the recommended day-to-day operating procedures for your institution.

Learn more | Register

In addition, you will receive information about many current safe deposit lawsuits and other nationwide horror stories.

Regulators See ‘Real Progress’ on LIBOR Shift as Deadline Nears

Though the transition was moving slow just a few months ago, the financial services industry is now making rapid progress on halting its use of the scandal-plagued London interbank offered rate, regulators said Friday.

“The transition away from Libor is advanced and accelerating, and our financial system will be more stable as a result,” Michael Gibson, who leads the Fed’s supervision and regulation division, said at a Financial Stability Oversight Council meeting. (American Banker, Dec. 17)

NCUA Board Meeting: Good News for CUs with Changes to NOL, Budget; Agency OKs CCULR

The National Credit Union Administration Board tackled a full agenda last Thursday, including a number of high-profile items closely watched by the industry.

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Credit Unions Seek NCUA Approval to Hold Crypto Assets

Credit unions are looking for approval to hold digital assets like Bitcoin directly, after a federal regulator clarified they can provide cryptocurrency services to customers by partnering with third parties.

The National Credit Union Administration said in a letter published last week that credit unions with federally insured deposits can team up with third-party crypto service providers to allow their members to buy, sell and hold digital assets — as long as certain conditions are met. The guidance is indicative of a broader trend toward the traditional financial services industry increasingly embracing digital assets as the space grows and matures.

The federal regulator’s recent letter confirms what many credit unions thought should be possible under existing rules, giving them the assurances they may need to move forward with partnerships, said Lance Noggle, senior director of advocacy for payments and cybersecurity at the Credit Union National Association.

Ultimately credit unions would like to be able to offer those products and services directly in the same way that banks can, Noggle said. The Office of the Comptroller of the Currency, which regulates national banks, in July 2020 gave banks the green light to offer custody services for cryptocurrency — though more recently it said they must first get written permission from their supervisory office.

Without similar guidance, credit unions risk losing members to banks and seeing their industry “start to shrivel” because they can’t offer financial products and services that people want, Noggle said. (American Banker, Dec. 21)

Woods Rogers: COVID-19 Legal Round Up and Looming 2022 Deadlines

Breaking News: The Supreme Court said on Wednesday evening that it would hold a special hearing next month to assess the legality of two initiatives at the heart of the Biden administration’s efforts to address the coronavirus in the workplace.

The court said it would move with exceptional speed on the two measures, a vaccine-or-testing mandate aimed at large employers and a vaccination requirement for certain health care workers, setting the cases for argument on Friday, Jan. 7. The justices had not been scheduled to return to the bench until the following Monday.

President Biden’s vaccine mandates have faced a roller-coaster ride in the federal court system over the last few weeks, leaving covered employers in the difficult position of trying to comply with on-again, off-again federal regulations and enforcement deadlines on the horizon.

Our partner attorneys at Woods Rogers have compiled information on each of the three vaccine mandates and where they stand as of Dec. 21, 2021.

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Voluntary Credit Union Diversity Self-Assessment Due Jan. 15

We encourage federally insured credit unions to complete the Voluntary Credit Union Diversity Self-Assessment before Jan. 15, 2022. The self-assessment is a valuable tool for credit unions that want to commit to the principles of diversity, equity, inclusion, and belonging.

Learn more at https://cudiversity.ncua.gov/

Compliance / Regulatory Affairs

NCUA Extends COVID-19 Regulatory Relief

The NCUA board has unanimously approved, by notation vote, an extension of the effective date of its temporary final rule, which modified certain regulatory requirements to help ensure that federally insured credit unions remain operational and can address economic conditions caused by the COVID–19 pandemic.

The temporary final rule issued by the board in April 2020 raised the maximum aggregate amount of loan participations that a federally insured credit union may purchase from a single originating lender to the greater of $5,000,000 or 200% of the credit union’s net worth. The rule also temporarily suspended certain limitations on the eligible obligations that a federal credit union may purchase and hold.

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CFPB Opens Inquiry Into ‘Buy Now, Pay Later’ Credit

It's been one of the hottest trends of 2021, but 'Buy Now, Pay Later' credit plans have drawn the attention of the Consumer Financial Protection Bureau.

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News About Credit Unions

Half of FICUs Had Fewer Members at End of Q3 Than 1 Year Earlier

More than half of all federally insured credit unions had fewer members at the end of the third quarter of 2021 than they had one year earlier, most of which were smaller CUs.

In 23 states and Washington, D.C., the median membership growth rate for federally insured credit unions was negative.

Meanwhile, according to the latest NCUA Quarterly U.S. Map Review, federally insured credit unions continued to see elevated asset and share-and-deposit growth over the year ending in the third quarter of 2021, the agency reported.

Idaho (20.3%) and Nevada (16.1%) led the country in asset growth, the agency analysis showed, with Idaho again leading in loan growth, followed by Wyoming. In seven states, the median loan growth rate for federally insured credit unions was negative, NCUA reported.

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Join CDFI Program, NACA Program Pre-Application Webinar on Jan. 10

Interested in applying to the upcoming fiscal year (FY) 2022 funding round for the Community Development Financial Institutions Program (CDFI Program) and Native American CDFI Assistance Program (NACA Program)? To help your organization prepare for the upcoming round, join CDFI Fund staff for an informational pre-application webinar on Jan. 10, 2022.

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News From Credit Unions

Peoples Advantage Federal Credit Union Announces CEO Patsy Smith’s Retirement; Habansky to Succeed

Peoples Advantage Federal Credit Union and its Board of Directors announced that CEO Patsy Smith plans to retire effective Dec. 31, 2021. Amanda Habansky, the credit union’s Chief Operating Officer, will assume the CEO role with Smith’s retirement.

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DCCU Wins National Award for 2020 Credit Card Campaign

DuPont Community Credit Union (DCCU) received second place in the nation for the 2021 Louise Herring Philosophy In Action Award, according to the Credit Union National Association (CUNA). DCCU was recognized for its unique community campaign – Dine Out and Make a Difference.

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Erin Krause Promoted to Chief Member Experience Officer for Northwest Federal Credit Union

Northwest Federal Credit Union recently promoted Erin Krause to Chief Member Experience Officer (CXO). Krause has been the Senior Vice President of Lending since 2017 and has been employed with the credit union for over 40 years.

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Park View FCU's Debra Mowery Obtains CFP Certification

Park View Federal Credit Union is excited to announce that Debra (Debbi) Mowery has completed the CERTIFIED FINANCIAL PLANNER™ exam and obtained her CFP® certification.

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Financial Services / Economy

Economic Momentum from 2021 Unlikely to Continue in 2022; Two Interest Rate Increases Coming Next Year, Fannie Mae is Forecasting

The outlook for full-year 2021 economic growth has been revised upward to 5.5%, an improvement of 0.7% points compared to last month’s projection, due primarily to stronger-than-anticipated consumer spending and inventory investment data, according to the December 2021 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group.

The ESR Group also adjusted downward its forecast for 2022 real gross domestic product (GDP) growth to 3.2%, noting that strong recent data likely reflects a pull-forward of activity from the first half of 2022 and is unlikely to be sustained.

The principal macroeconomic concern for 2022 remains accelerating inflation and how the market and policymakers respond to it. While there’s significant room for uncertainty regarding the near-term path of inflation, the ESR Group projects it to peak at approximately 7.0% annualized in the first quarter of 2022 before gradually decelerating to 3.8% by year-end.

The ESR Group said it expects the Federal Reserve to begin a more aggressive pace of monetary tightening in the new year as part of its effort to combat rising price pressures without tipping the economy into recession. The forecast is now calling for interest rate increases in the second and fourth quarters of 2022, and then quarterly through 2023. The market forwards showed a high probability of a third increase in 2022 at the time of writing, Fannie Mae is predicting.

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Risk Management

Risk Alert: Account Takeovers Stemming From Credit Card Management Systems

Credit unions utilizing credit card management systems offered by card processors have reported fraud due to account takeovers. These systems allow members to view balances and recent transactions, sign-up for and access e-statements, and make payments 24/7. Fraudsters are enrolling compromised cards for this service by exploiting weak authentication measures.

Fraudsters are using social engineering tactics such as phishing, vishing and smishing to gain access to members’ personal account information. Credit unions that offer members access to credit card management systems from their card processors for payments and account management of their credit union-issued credit cards have reported fraud due to account takeovers. By enrolling compromised credit cards in the card management system, fraudsters are exploiting weak authentication measures.

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Ransomware Risks Drive the Need for Critical Cyber Loss Controls

The ransomware business is booming and could be bringing in billions for some of its top players according to a Financial Crimes Enforcement Network (FinCEN) report. The report found suspicious ransomware-related payment transactions totaled around $590 million from January 2021 to June 2021.

In addition to extortion demand increases, ransomware has grown in both frequency and severity. A ransomware incident is one of the most disruptive and costly attacks your credit union can suffer. As a result, the cyber insurance marketplace is changing at a rapid pace with increased scrutiny for loss controls being in place during the underwriting process.

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