CURRENT Newsletter | 25 August 2020 - Virginia Credit Union League

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 runs through Spring 2021. Get impactful best practices relevant to small credit unions on hot topics, including member experience, digital marketing, lending and more.

Upcoming sessions include:

September 1, 2020: Succession planning
September 8, 2020: History & Philosophy of the Credit Union Movement
September 15, 2020: Financial Counseling Tips Anyone Can Use to Help Members
September 22, 2020: Performance management
September 29, 2020: Lending

See a full list of free webinars and register here.

Young Professionals Webinar Set for Tomorrow

The August Young Professionals Network “BYO Lunch and Learn” is set for tomorrow (Aug. 26) with popular speaker Ancin Cooley facilitating the session.

Ancin was our keynote speaker at last year's CONNECT Conference. His dynamic style, quick humor, and deep insights electrified the CONNECT audience and gave us plenty to think about and work on once we got back to the office/branch. Ancin will share the keys to building a career in an uncertain environment. In the Age-of-COVID, it is very easy to be worried about not only our physical and mental health, but also our careers and continued professional growth. Ancin will help to relieve our concerns by giving us tools and tips to continue building our careers in even the most difficult circumstances.

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Powell Set to Deliver ‘Profoundly Consequential’ Speech, Changing How the Fed Views Inflation

History will remember Paul Volcker and Jerome Powell as standing on the opposite ends of the inflation canyon, with the former taking desperate actions to try to tamp it down and the latter expected this week to announce an unprecedented effort to crank it back up.

Volcker, the Federal Reserve chairman from 1979-87, ushered through a series of inflation-busting interest rate hikes that dragged the country into recession but won the fight against pricing pressures and spurred a powerful economic recovery.

Powell, the central bank chief since 2018, is likely to detail a set of measures aimed at pushing inflation higher amid a coronavirus pandemic that has dragged the U.S. economy into one of its darkest hours.

While the average consumer might find it absurd to want to raise the cost of living, central bankers and economists see too little inflation also as a problem. It often reflects a slow-moving economy with a low standard of living. On top of that, the accompanying low interest rates give policymakers little wiggle room when crises happen and there’s a need to loosen policy.

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Bipartisan Group of Senators Calls for Refinance Fee Withdrawal

A bipartisan group of Senators wrote to Federal Housing Finance Agency (FHFA) Director Mark Calabria last week to echo CUNA’s position that the Fannie Mae/Freddie Mac refinance fee set to go into effect Sept. 1 be withdrawn. Leagues have engaged several of the letter’s signers on the issue, and CUNA has contacted FHFA leadership on several occasions to express opposition to the fee. CUNA and the Leagues also signed and sent a letter today urging Calabria to rescind the fee, noting the impact on credit unions and small banks.

The fee would consist of 50 basis points on all loans refinanced through Fannie or Freddie. CUNA has said the fee threatens to undercut the refinance market and will raise costs for credit union borrowers and could price vulnerable potential homeowners out of the market.

Sens. Mike Rounds (R-S.D.), Kevin Cramer (R-N.D.), Steve Daines (R-Mont.), Jerry Moran (R-Kan.), Tina Smith (D-Minn.), Jon Tester (D-Mont.) and Thom Tillis (R-N.C.) signed the letter, requesting immediate withdrawal of the fee.

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CUNA Mutual Group’s Latest CU Trends Report

CUNA Mutual Group’s July 2020 Credit Union Trends Report is now available.

Credit union loan balances rose a 1% in May, faster than the 0.6% pace reported in May 2019 due to record-setting first mortgage loan originations.
Credit union fixed rate first mortgage loan balances rose 33.6% at a seasonally adjusted annual rate in May, the fastest in credit union history.
Credit union savings balances grew at a 21% seasonally adjusted, annualized growth rate in May, the fastest pace since August 1986 which was during the height of the Savings-and-Loan Crisis.

In addition to reading the Credit Union Trends Report, please watch video commentary about the current economic conditions facing credit unions and what leaders need to know as they work to serve member needs.

Advocacy News

Navy Federal Court Win Could Have Trickle-Down Impact for All FCUs

A panel of federal judges has ruled in favor of the world’s largest credit union in a suit that could have long-ranging impacts for federally chartered institutions.

The U.S. Court of Appeals for the Fourth Circuit this week overturned a lower court’s decision and determined FCUs have diversity jurisdiction to file federal lawsuits. Diversity jurisdiction allows companies and private citizens to access federal courts in order to avoid litigants from differing states having a possible advantage in their home states’ courts. Ordinarily to sue in federal court, both parties must have a federal case or be citizens of different states.

Navy Federal Credit Union had challenged a district court’s ruling that, although the credit union is headquartered in Virginia, it is not a citizen there or in any other state, based on statutory language classifying FCUs as corporations.

Mary McDuffie, president and CEO of Navy Federal, called the ruling a “huge victory” in a statement, adding it “ensures that federal credit unions will have the same access to federal courts that all state-incorporated companies have enjoyed for decades.” (Credit Union Journal, Aug. 21)

Compliance / Regulatory Affairs

Agencies Issue Joint Statement on BSA/AML Enforcement

NCUA and other federal banking agencies have issued a joint statement updating their existing enforcement guidance to enhance transparency regarding how they evaluate enforcement actions that are required by statute when financial institutions fail to meet Bank Secrecy Act/anti-money laundering (BSA/AML) obligations.

The Financial Crimes Enforcement Network simultaneously issued a “Statement on Enforcement of the Bank Secrecy Act” that sets forth its approach to enforcement in circumstances of non-compliance with the BSA.

The statement:

clarifies that isolated or technical violations or deficiencies are generally not considered the kinds of problems that would result in an enforcement action.
Addresses how the agencies evaluate violations of individual components (known as pillars) of the BSA/AML compliance program.
Describes how the agencies incorporate the customer due diligence regulations and recordkeeping requirements issued by the U.S. Department of the Treasury as part of the internal controls pillar of the financial institution’s BSA/AML compliance program.

The statement, issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, updates and supersedes the Interagency Statement on Enforcement of BSA/AML Requirements issued on July 19, 2007.

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‘Ask the Regulators’ Webinar on PPP Forgiveness

NCUA, along with the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and the Conference of State Bank Supervisors will host an interagency webinar on Thursday, Aug. 27 at 11 a.m. (ET) on the Small Business Administration’s Paycheck Protection Program (PPP) Loan Forgiveness Platform.

Registration is now open for the webinar, which will include a brief Q&A session. Participants are encouraged to submit questions in advance by email at asktheregulators@stls.frb.org.

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NCUA Issues Risk Alert on COVID-19 Related Fraud

NCUA issued a risk alert (20-RISK-02) highlighting the risk of fraud associated with the COVID-19 pandemic. Scammers are attempting to take advantage of opportunities made possible through new or expanded large government programs arising from emergency situations, such as the CARES Act.

According to NCUA, the alert is intended to describe increased risks associated with routine operations, outlines red flags associated with common fraud schemes in major CARES Act programs, provides references and avenues to report fraud or misconduct to the most appropriate authorities, and also provides member education resources.

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NCUA, CFPB Issue Payday Rule Guidance, Resources

NCUA issued a regulatory alert (20-RA-07) detailing the Consumer Financial Protection Bureau’s final payday lending rule, including highlights of key provisions that affect credit unions.

The CFPB issued the final rule in July, which rescinds several ability-to-repay, underwriting, recordkeeping and recording requirements.

Why ADA Compliance Is Important at Your Credit Union

It may appear that credit unions are in the clear based on recent litigation when it comes ADA “compliance” for websites. However, plaintiffs and their attorneys have recently adjusted their defense by claiming that the plaintiffs could technically be tied to the credit union’s services via shared branching. Once a benefit by linking networked credit unions’ ATMs and financial services, shared branching is now an avenue being used to sue credit unions with an insufficient level of “compliance” with the ADA online.

With Virginia-based credit unions among those involved in recent, high-profile litigation over “ADA-compliant” websites and e-services, this issue is one with which we’re very familiar.

Until the federal government provides clear guidelines on website accessibility for credit unions, lawsuits will continue to rise in murky waters. While the investment of ADA compliance may be a cost you were not prepared to handle, you must now weigh website accessibility versus possible litigation.

What’s more, making a personal commitment to website accessibility provides valuable options for people with disabilities who often get overlooked. Committing to ADA compliance is just the right thing to do.

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News About Credit Unions

Warning to Execs: Credit Union Members’ Children Aren’t Joining, Survey Shows

To remain viable, credit unions must encourage retention of family members across generations, according to a digital banking platform provider that has released a study of customer loyalty to financial institutions.

According to Chris Doner, founder and CEO of the Berkeley, Calif.-based Access Softek, the top line finding of the poll was that the vast majority - up to 90% - of credit union members are not encouraging their children to bank at their institutions.

If the issue is not addressed, a statement announcing the survey results said, generational wealth transfers could prove “devastating” for credit unions.

The survey, whose findings were announced on Wednesday, should spur new strategies for family retention among credit union executives and marketing officers, the statement said.

“Credit unions must begin treating the family as one financial unit and looking at family wallet share. Currently, there are little-to-no programs or incentives for families that bank together,” Doner said. “This is a huge opportunity that many institutions are missing out on.”

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Economic / Marketplace News

Consumer Confidence Unexpectedly Slides Further

Consumer confidence in the U.S. dropped for the second consecutive month in August, threatening the rebound in consumer spending in the coming months as households become more worried about the economy and their personal finances amid the coronavirus pandemic, according to new survey data from the Conference Board.

The Conference Board's Consumer Confidence Index declined to 84.8 from a revised reading of 91.7 in July. The consensus estimate of economists polled by Econoday was for an improved index reading of 93.0.

The index now stands at its weakest level at any point during the coronavirus pandemic, signaling that the surge in consumer spending following the economic reopening could soon lose momentum, said James Knightley, chief international economist at ING. (S&P Global Marketplace, Aug. 25)

JPMorgan May Offer Services at Post Offices

JPMorgan Chase is reportedly in discussions with the U.S. Postal Service to test ATMs and other banking services at post offices in several states, according to a report Wednesday from Capitol Forum.

According to one of Capitol Forum's sources, the deal involves JPMorgan Chase — the largest bank in the United States, with $3.2 trillion of assets — leasing space from the postal service. Capitol Forum also reported that the proposal could give JPMorgan the “exclusive right” to solicit postal customers. It is unclear how the deal would impact postal credit unions, some of which have branches and ATMs inside postal facilities. (Credit Union Journal, Aug. 20)

The credit union industry has long been against postal banking and Wednesday's news prompted quick condemnation.

Some analysts have also suggested the plan could be one of the rare instances that puts community banks and credit unions on the same side of an issue.

Community banks have long opposed efforts by lawmakers to offer banking services at every post office in the country. (Credit Union Journal, Aug. 20)

Why Sluggish Mail Delivery Matters to FIs

The controversy surrounding the U.S. Postal Service could create headaches for financial institutions who otherwise have been trying to steer well clear of the political fight over potential election tampering.

While Postmaster General Louis DeJoy faces mounting criticism over how his operational changes have threatened mail-in voting and held up delivery of critical medicines in the middle of a pandemic, there is a growing concern that the recent postal service slowdown could lead to more late fees accrued on debt payments.

If these charges begin to escalate while the economy remains shuttered to prevent new surges of the coronavirus, banks and credit card companies could face new pressure to waive fees while fixes are considered for the postal service.

Several industry representatives reached about the issue said they have not received reports of problems from the mail delay so far. But the issue is top of mind as forbearance plans granted at the start of the pandemic may need to be renewed after applications for further relief are sent in by consumers and business owners. The process of applying for forgiveness through the Small Business Administration’s Paycheck Protection Program is about to begin but could be jeopardized as well, according to some bankers. (American Banker, Aug. 24)

News From Credit Unions

Longtime UVA Community CU Board Member Tim Gillet Has Died

Tim Gillet, a longtime member of UVA Community Credit Union’s Board of Directors, died Aug. 11, at age 72. He served on the Board of Directors of the UVA Community Credit Union for 38 years. He retired from service on the board earlier this year. He also served as Treasurer on the Board of The Arc of the Piedmont for many years.

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Roanoke-Area CUs, Credit Unions Care Foundation Donate $5,000 to Red Cross

The Credit Unions Care Foundation of Virginia, representing credit unions in the greater Roanoke area, presented a check to the American Red Cross in the amount of $5,000 to aid in the American Red Cross mission to "prevent and alleviate human suffering."

The Foundation asked that the monies be used where the biggest need is, whether a blood services vehicle or another area of our local Red Cross chapter.

1st Advantage Provides Digital Financial Education to Local Schools

At 1st Advantage Federal Credit Union supporting our communities also means supporting our students. Together with EVERFI, a leading education technology company, we were able to bring a digital-based financial education program to 2,659 students for a total of 12,904 hours of learning across 12 local schools. The program enabled students to practice and develop healthy financial habits through real-world scenarios and engaging educational interactions.

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NSWC Federal Credit Union is Now Topside

NSWC Federal Credit Union has changed its name to Topside Federal Credit Union to better reflect its membership.

The member-owned financial cooperative was founded in 1961 by the employees of the Naval Weapons Laboratory in Dahlgren.

“We’ll never abandon our roots with the Navy and the amazing work that is done in Dahlgren,” said CEO Bruce Six. “Our new name reflects our openness to the community outside Dahlgren and desire to see the entire area do better.”

The new name includes a nautical term that refers to the area above the water line on a ship.

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Chartway FCU Announces Promotion of Fernando Perez to Comptroller

Chartway Federal Credit Union is proud to announce Fernando Perez (pictured left) as its new comptroller.

Prior to his new role, Perez served as the director of accounting at Chartway FCU, leading all facets of accounting operations

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Education & Training

Woods Rogers Launches ‘HR Lifeline’ Webinar Series

2020 has been a year like none other. With consideration for the health and safety of our clients and employees, Woods Rogers' annual seminar series will move to a virtual platform for 2020. We hope you can join us online this fall every Thursday from Oct. 1 to Oct. 29 from 1:30 p.m. - 3:00 p.m.

Since March, the role of the human resources department is front and center in daily operations as issues of racism, inclusion, and equality appear next to COVID-19 in the headlines. While life may have paused for a few months for some businesses, understanding HR laws and issues is now more crucial than ever.

We’ll cover topics that have come out of the COVID-19 pandemic, as well as other top issues that require the guidance of a human resources leader. Beginning with a discussion of how to create an inclusive workplace and closing with our annual overview of actions from the “Big Three,” we’ll bring the same experience to you, just in a different format.

Email seminars@woodsrogers.com or call 540.983.7791 with questions. Session info can be found online at www.woodsrogers.com/hrlifeline2020.

PRICING: $250 for 5 courses. Credit unions can use the code “LOYAL50” to save $50!

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