CURRENT Newsletter | 29 September 2020 - Virginia Credit Union League

Amendments to the NCUA’s chartering and field-of-membership rules go into effect Oct. 14, NCUA Chairman Rodney Hood wrote in a letter to federal credit unions (20-FCU-03). These changes will allow a credit union applying for NCUA approval of a community charter, expansion, or conversion to designate a Combined Statistical Area (CSA) or an individual, contiguous portion of a CSA as a well-defined local community (WDLC) if the area has a population of 2.5 million or less.

Beginning Oct. 14, 2020, prospective and existing federal credit unions seeking a community charter may use a CSA or portions of a CSA (within certain limitations, as defined in the rule) as a basis for defining their proposed service area without documenting how a CSA’s residents interact or share common interests.

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Last Chance to Showcase Your Pandemic-Related Efforts to Help Members

The CUNA/League pandemic assistance survey closes Oct. 1! This short survey captures information on loan modifications, forbearance, emergency loans, fees waived and other assistance you’ve provided to members during the pandemic.

Please complete the survey here: https://www.research.net/r/CULCOVID630

We’ve also posted a PDF copy of the survey for your review.

If you need assistance in completing the survey, please contact your League’s Lewis Wood (800.768.3344, ext. 629 / lwood@vacul.org) or Nicole Widell (ext. 604 / nwidell@vacul.org).

GWLN Virginia Sister Society Offering Virtual Programs on Leadership Oct. 15, 22

The Global Women’s Leadership Network Virginia Sister Society Committee is excited to offer a new virtual program in October. We are working with Lynda McNutt Foster, CEO of Cortex Leadership Consulting, to provide two virtual leadership events on “AGILITY - Today’s Leadership Super Power.”

If you’re ready to build your AGILE SUPERPOWER, then this two-hour virtual program is for you! If you’re interested in participating in these events, please be prepared to:

Do pre-work and a pre-quiz prior to the virtual event.
Participate in both large and small group discussions on camera.
Share your challenges and learn from others.
Find real solutions to build your leadership superpower!

Seating is limited. Please only register for one event.
View the event flyer here.

Upcoming Training & Education

Your League has several upcoming events you’ll want to mark on your calendars!

Credit Union Employee and Volunteer Orientation (Oct. 14) (Registration now open!)
Human Resource Peer-to-Peer Dialogue (Oct. 21) (Registration coming soon!)
Compliance Hot Topics Discussion (Oct. 28) (Registration now open!)
Fraud Trends During COVID-19 (Oct. 29) (Registration coming soon!)

CUNA Mutual Group’s ULEND Academy Set for Nov. 2-6

Your League is proud to offer CUNA Mutual Group’s popular ULEND Academy Nov. 2-6 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 six, 60-to-90-minute daily sessions where participants will discuss, learn, and then apply.

Learn more | Register

Advocacy News

PPP Forgiveness, Extension of CARES Act Relief Needed

Changes to regulations and the creation of new lending programs have and will continue to help individuals affected by the pandemic, CUNA wrote Thursday to the Senate Banking Committee. The committee conducted the hearing on the quarterly report of the CARES Act pandemic relief legislation which, among other things, created the Paycheck Protection Program (PPP).

Credit unions facilitated more than 170,000 PPP loans that averaged $49,000 each.

“While PPP lending has concluded, there are a number of steps that SBA should take if additional funds become available. SBA should improve their national and regional operation in order to provide more timely feedback to lenders and borrowers, including lender prioritization guidance, official guidance formalizing the use of PPP forms and guidance on the loan purchasing process,” the letter reads. “Furthermore, the SBA should issue guidance and forms to reflect that privately insured state-chartered credit unions are eligible to lend through the program.”

CUNA also expressed support for the House and Senate bills that would provide simple forgiveness for PPP loans under $150,000 and called on Congress to enact “commonsense” liability protections for PPP lenders.

Other priorities for credit unions, CUNA noted include:

Including legislation that would lift the credit union member business lending cap for loans made during the pandemic in the next phase of COVID-19 legislation;
Expand the borrowing authority for NCUA’s Central Liquidity Facility to 25 times the paid-in capital, extend its expanded borrowing capacity until Dec. 31, 2020 and make permanent the ability of corporate credit unions to act as agents for credit unions; and
Extend the CARES Act’s temporary Troubled Debt Restructuring relief until the end of 2021.

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Compliance / Regulatory Affairs

CFPB Missed Opportunity to Call Out Lending Discrimination, Critics Say

Amid a national focus on redlining and other forms of racial inequality, the Consumer Financial Protection Bureau has identified persistent gaps in home-loan denial rates by race and ethnicity, but is stopping short of pointing to a pattern of discrimination.

The CFPB's recent analysis of 2019 Home Mortgage Disclosure Act said denial rates are improving slightly across demographic groups, but historical racial disparities have not abated. Black homebuyers were denied loans last year at nearly three times the rate of non-Hispanic white homebuyers, roughly the same gap as 2018. The CFPB also found gaps by race and ethnicity in interest rates and refinance volumes.

But the CFPB, which released the preliminary results in June followed by further analysis in August, said the disparities require further study and left out any suggestion of discrimination. Against the backdrop of national protests over racial equity issues, some observers say the agency is being too timid.

The CFPB found that Black and Hispanic borrowers had notably higher denial rates last year than non-Hispanic white and Asian borrowers. Denial rates for conventional home purchase loans in 2019 were 16% for Blacks, 10.8% for Hispanics, 8.6% for Asians and 6.1% for whites, according to the 69-page report the CFPB released in June. (American Banker, Sept. 24)

News About Credit Unions

Proposed Solutions for the NCUSIF Equity Ratio Are Unnecessary

In the September NCUA board meeting, it was reported that the National Credit Union Share Insurance Fund (NCUSIF) equity ratio has dropped to 1.22% at mid-year from where it was in December at 1.35%. This is understandable given the historically unprecedented deposit growth, which was driven by members depositing COVID-19 economic impact payments.

Some believe this will trigger an NCUSIF premium assessment. Others are suggesting solutions to a problem that doesn’t exist. Until the NCUSIF equity ratio falls below 1.20%, there is no need for a premium, restoration plan or any other off-the-wall fix, writes CUNA’s Mike Schenk in Credit Union Times.

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Diversity Training Gaining Ground at CUs

While workplace diversity has long been an important issue for some companies, many organizations moved quickly to reexamine their internal policies this summer following George Floyd’s death in police custody and the nationwide protests that followed.

Some of the institutions included in this year’s Best Credit Unions to Work For rankings were ahead of the curve, offering formalized diversity training as part of their workplace culture prior to Floyd’s death and the launch of a broader conversation on social justice issues.

John Wilkening, chief retail officer at Notre Dame Federal Credit Union, explained that his institution’s goal is to raise awareness and educate employees, but stay away from the politicization that has developed around the issue.

“Leadership is about action,” said Wilkening. He added, “At Notre Dame FCU, we want to change a life a day, and we are doing so by starting in-house with the intention of inclusion for all, which will flow into how we serve our membership base and community.” (American Banker, Sept. 24)

Financial Services News

Credit Agencies Worry as Fresh Delinquencies Rise

The widespread use of loan forbearance programs has obscured loan quality, but some analysts have been seeing troubling signs among fresh delinquencies.

As the number of loans in forbearance dwindles, jobless claims and unemployment have remained at a record high. Another factor making trends difficult to read was the help millions of Americans received from the $600-a-week in federal unemployment benefits that expired at the end of July.

A report released by TransUnion Thursday found serious delinquency rates continued to fall in August, while 30-day delinquency rates started rising slightly for the two largest payments in the consumer wallet – auto and mortgage.

New delinquencies are watched closely as an early indicator of declining credit quality that might lead to defaults and charge-offs. Experian, another credit reporting company, raised flags on similar trends in a Sept. 15 report, and the Mortgage Bankers Association released a study Sept. 17 showing 11% of renters and 8% of homeowners missed, delayed or deferred at least one payment from April through June.

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New Car Sales Showing a Pulse in the Third Quarter

Consumers returned to dealers in the third quarter of 2020 to buy 30.6% more vehicles than in the second quarter in the immediate wake of the COVID-19 pandemic’s emergence, Edmunds forecast on Thursday.

Edmunds, a car-buying analytics company based in Santa Monica, Calif., forecast that U.S. dealers will sell more than 3.8 million new cars and trucks in the three months that end Sept. 30, 11% fewer than the 4.3 million sold in 2019’s third quarter but up from the 2.9 million sold in this year’s second quarter – the first full three months after COVID-19 was declared a pandemic March 11.

Jessica Caldwell, Edmunds’ executive director of insights, said the results show a positive turning point for the automotive industry despite challenges presented by the pandemic.

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Economic News

Economic Update Forecasts ‘Swoosh-Shaped’ Recovery

CUNA’s latest Economic Update video features Senior Economist Jordan van Rijn examining the latest on the economy, what to expect from the recovery, how long the recovery might take, updated credit union operations forecast, and more. The video and presentation are available here.

“The COVID-19 pandemic is unprecedented. It caused an increase in the unemployment rate to 14.7%, the highest in decades, and after some adjustment, the BLS actually found the unemployment went up to 20%, the highest since the Great Depression,” van Rijn said. “The good news is that this unemployment rate has fallen considerably since then.”

CUNA economists estimated unemployment would be at 7.5% by the end of this year and 6.5% by the end of 2021.

“A lot of people thought we’d have more of a V-shaped recovery, go into temporary lockdown, get the pandemic under control and then basically open everything up again and maybe a year later get the jobs back,” van Rijn said. “Now I think we’re looking at a sort of ‘Nike swoosh’ shaped recovery, with a big downturn and then a steady increase over the next couple of years.

“The bad news is we’re going to be in this for a while with elevated unemployment rates, business closures and people out of work,” he added. “The good news is that if this holds true, it would be faster than the recovery from the Great Recession.”

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Risk Management

Investigators Bust Nationwide Synthetic ID Fraud Operation Involving Several CUs

Federal and New York police investigators charged 13 persons and three businesses in connection to a nationwide scheme that created synthetic identities to fraudulently obtain more than $1 million in loans and credit cards from 10 credit unions and nine banks.

Investigators publicly released a 108-count indictment last week after a two-year investigation that involved law enforcement from New York, California, the Secret Service and other agencies such as the U.S. Postal Inspection Service, the Social Security Administration and all three credit bureaus.

Persons involved in the scheme allegedly created synthetic identities by associating a stolen Social Security number with a different name, address and date of birth. The stolen Social Security numbers belonged to individuals with no existing credit history or those who were unlikely to be monitoring their credit history, such as children, recent immigrants, deceased individuals, elderly persons and incarcerated individuals.

The fraud ring allegedly took steps to then make the synthetic identities appear legitimate, including applying for phone accounts, email accounts, rewards card accounts, library cards and other accounts with minimal verification requirements. One of the perpetrators of this scheme would also allegedly insert the synthetic identities into public databases that are used by financial institutions to verify identity information to further legitimize the synthetic identities, according to police investigators.

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News From Credit Unions

1st Advantage Earns Virginia Values Veterans (V3) Certification for Commitment to Hiring Military Veterans

The Commonwealth of Virginia’s Department of Veterans Services (DVS) has awarded 1st Advantage Federal Credit Union the Virginia Values Veterans (V3) certification for its commitment to hiring military veterans.

Virginia Values Veterans (V3) is a groundbreaking program administered by DVS that works with companies as well as state and local governmental agencies across the Commonwealth to promote the recruitment, hiring and retention of military veterans in the Virginia workforce.

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Apple FCU Makes ‘Best Credit Unions to Work For’ List

Eighteen credit unions with assets of $1 billion or more made Credit Union Journal’s Best Credit Unions to Work For list, with Virginia’s own Apple Federal Credit Union ranking 15th.

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Chartway FCU, Saint Matthew’s FCU Announce Merger Proposal

Chartway Federal Credit Union is pleased to announce that the National Credit Union Administration has given its approval for Saint Matthew’s Federal Credit Union to merge into Chartway.

The proposed merger will now go before the Saint Matthew’s membership for a vote to accept the merger proposal, as agreed on by both credit unions.

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TruEnergy’s Amber Mooney Named 2020 Credit Union Rock Star

Thirty-nine credit union professionals and volunteers have been named as 2020 Credit Union Rock Stars by Credit Union Magazine, including TruEnergy Federal Credit Union’s Amber Mooney.

The Credit Union Rock Stars program, sponsored by Fiserv, recognizes outstanding credit union professionals and volunteers from a wide range of disciplines who use their unique strengths to advance the mission of their credit unions. This year's winners, representing 27 states, were selected for their exceptional creativity, innovation, and passion.

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