CURRENT Newsletter | 30 March 2021 - Virginia Credit Union League

Childress began his career with the Virginia League in 1977, and currently serves as Executive Vice President/Chief Operating Officer for the League, its service corporation and the Credit Union Service Company of Virginia, the shared branching organization owned by Virginia-based credit unions.

“On behalf of our Board, staff and credit unions, I want to thank Terry for his exemplary service these past four decades to the Virginia credit union system,” said Rick Pillow, president of the Virginia Credit Union League. “It can’t be overstated how critical a role Terry’s leadership has played in the success of the League and the organizations we’ve managed…”

League Service Corporation Vice President David Deacon will run the League Service Corporation after Childress’s retirement. If you have any questions regarding LSC services, please direct them to David at 800.768.3344, ext. 634 or ddeacon@vacul.org.

Terry, best wishes for a happy and healthy retirement!

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Savings Boom, Lending Slows and Total Memberships at Virginia-Based Credit Unions Reach 15 Million

Savings growth rose significantly, lending growth slowed, and Virginia’s 113 not-for-profit credit unions added more than 1.3 million new memberships during 2020, according to information from the National Credit Union Administration, credit unions’ federal regulator.

For the year ended Dec. 31, 2020, stimulus checks and increased precautionary savings in the face of the pandemic pushed the savings growth rate to 23.9 percent at Virginia’s credit unions. American households’ disposable income received additional boosts with $600 stimulus checks mailed out in January and $1,400 checks in March.

While the rate of membership growth slowed during the pandemic when compared to growth in previous years, growth was strong enough to push total memberships at Virginia-based credit unions to 15 million as of Dec. 31, up from 13.7 million at year-end 2019.

“While ‘challenging’ doesn’t begin to describe 2020, Virginia’s credit unions again proved to be a reliable, caring and resilient partner in serving their members,” noted Virginia Credit Union League President Rick Pillow. “From programs to help struggling households dealing with job loss to loans designed to keep small businesses afloat, credit unions proudly showcased our ‘People Helping People’ philosophy in 2020.”

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[VIEW OUR 4Q2020 CREDIT UNION PROFILE] Learn more about Virginia credit unions’ performance in 2020. Website password required. Register here if you need one.

Webinar: Why Text Messaging is Essential for Your Credit Union

Secure, TCPA-compliant Text Messaging with your members is easy with Eltropy's award-winning platform! Eltropy's CEO and co-founder Ashish Garg will share how Eltropy’s secure and compliant platform can help your credit union communicate effectively during the pandemic and beyond. Learn more by joining us for an April 1 webinar (2 p.m.).

Credit Unions: Help Us Thank Teachers, Schools for Efforts During Pandemic; Deadline is April 2

It’s been an especially tough year for our teachers, educators and school staff. The League’s Financial Education Committee has launched a new initiative called “Message of Hope” to thank those educators for their work in continuing to educate and mentor young people during the pandemic.

They are also reminding educators that credit unions stand ready as a financial education resource, by providing classroom materials and presentations, including virtual or in-person participation.

If you want to thank your local educators for their tremendous work during the pandemic, contact your League’s Mary Amyx for details on recording a short video message via Tribute.

Learn more about the “Message of Hope” initiative!

Let’s Have an Uncomfortable Conversation: Diversity, Inclusion & Bias

Where are you in your diversity journey? Find out by joining us for The No Nonsense Experience, starting Thursday, May 6.

Offered as a one-hour, weekly course May 6-27, The No Nonsense Experience will be guided by a team of expert facilitators from JP Enterprises, and will focus on building conversation skills around your thoughts, intentions, actions and behaviors regarding Diversity, Inclusion and Bias.

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Registration Now Open for April 14 Webinar on BSA/AML Compliance

Federally insured credit unions can get valuable information on Bank Secrecy Act and anti-money laundering compliance during a National Credit Union Administration webinar scheduled for April 14.

Online registration for the webinar, “Bank Secrecy Act Update,” is now open, and it is scheduled to begin at 2 p.m. (ET) and run for approximately 60 minutes.

Staff from the NCUA’s Office of Examination and Insurance will be joined by credit union compliance staff to cover topics that include:

Updates on recently issued BSA statements,
Actions for managing high-risk accounts, and
Highlights of the Anti-Money Laundering Act of 2020.

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Compliance: Implementation of BSA Changes

CUNA’s CompBlog addresses the new provisions of the Anti-Money Laundering Act of 2020, as there will likely be much activity around the law’s implementation. National examination and supervisory priorities are expected to be established by July 1, with regulations implementing these new priorities to follow before the end of the year.

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Advocacy / Governmental Affairs News

Virginia’s New Big Tech-Backed Data Privacy Law Nation’s Second; Critics Say It Doesn’t Go Far Enough

Supporters of Virginia’s Consumer Data Protection Act, approved by the General Assembly this year and already signed by Gov. Ralph Northam, say the fact that Virginia was able to pass such significant legislation without a major fight is a testament to the quality of the bill, which lays out new consumer protections while largely shielding companies from a flood of data-related lawsuits.

“In the absence of a comprehensive federal privacy law, we are encouraged to see Virginia lawmakers and other states continue to establish and improve legal protections for personal information,” Future of Privacy Forum CEO CEO Jules Polonetsky said in a news release after Northam approved the legislation earlier this month.

Though the bill passed with broad, bipartisan support, some critics say the momentum was the result of an industry-friendly proposal that avoided hot-button issues that have derailed similar efforts elsewhere, most notably the question of whether ordinary Virginians should have the right to sue companies profiting from the sale and use of their data.

The Virginia law won’t take effect until the beginning of 2023, and the bill includes the establishment of a work group that will continue studying the issue and potentially recommend future changes.

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NOTE: The Virginia law exempts financial institutions that are subject to the privacy-protection provisions of the federal Gramm-Leach-Bliley Act of 1999. But FIs could still be on the hook. The Virginia law may not apply to credit unions directly, but it could apply to some of the vendors and third parties with whom you do business.

Calls Intensify for Congress to Intervene on Libor

Consensus is building among banks and regulators that federal legislation will be required to avoid uncertainty and liability issues related to the years-long transition away from the scandal-plagued London interbank offered rate.

Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen recently told lawmakers that Congress should pass a bill to provide automatic fallback language for trillions of dollars worth of legacy contracts that would automatically swap in a new rate when most Libor settings end in 2023.

Without congressional action, regulators and industry groups fear that courts could be quickly swamped with litigation between contract issuers and buyers. (American Banker, March 26)

Compliance / Regulatory Affairs

Prepare for a Lot of Activity Around New AML Provisions, Cautions CUNA

CUNA expects there will be much upcoming activity around the implementation of new provisions of the Anti-Money Laundering Act of 2020. National examination and supervisory priorities are expected to be established by July 1, with regulations implementing these new priorities to follow before the end of the year, the trade group stated.

New beneficial ownership regulations are expected before the end of the year but are expected to only describe the new beneficial ownership form that legal entities will file when incorporating with the state, CUNA said.

CUNA also said, that in 2021, there will be at least 16 reviews, studies, assessments, and analysis covering a wide range of BSA-related challenges, such as:

Currency Transaction Report and SAR reporting, including threshold adjustments and streamlining these reports
Human trafficking
Trade-based money laundering
Financial technology assessment
Annual reporting requirements
FinCEN Exchange analysis
FinCEN Domestic Liaison
Financial services de-risking
Review of BSA/AML regulations and guidance
No-action letters

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Agencies Seek Insight on FIs’ Use of Artificial Intelligence

Five federal financial regulatory agencies, including NCUA and the Consumer Financial Protection Bureau (CFPB), are gathering insight on financial institutions’ use of artificial intelligence (AI). The agencies seek information from the public on how financial institutions use AI in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations.

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News From Credit Unions

Hampton Roads Educators Credit Union Awards Scholarships to High School Seniors, School Employees

Hampton Roads Educators Credit Union (HRECU) awarded four scholarships to local high school seniors and school employees.

“We had an incredible pool of applicants this year. It’s always difficult to narrow down the winners,” stated HRECU Manager/CEO Karen Orie. “We know this year was challenging for everyone. We wish the class of 2021 success in everything they do!”

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League / LSC News

CUNA Mutual Group’s AdvantEdge Digital: New Name, New Data-Driven Solutions

CUNA Mutual Group unveiled a new set of software as a service (SaaS) solutions with the announcement that its AdvantEdge Analytics will now become AdvantEdge Digital.

According to Tuesday’s unveiling by the Madison, Wis.-based organization, AdvantEdge Digital will deliver proprietary and consumer-centric digital lending solutions to credit unions. “The digital lending solution provides a transparent, seamless experience to both members and loan officers, and expands access to the loan application process for more consumers,” the press release stated.

“Members expect real-time, contactless and self-service delivery of financial services, and we are committed to building, buying and partnering to bring additional capabilities to consumers,” said Dan Kaiser, president of AdvantEdge Digital.

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Ken Watts Honored with AACUL’s Farley Award

Ken Watts, president/CEO of the West Virginia Credit Union League (WVCUL), was recognized with the 2021 Eugene H. Farley League Leadership Award by the American Association of Credit Union Leagues (AACUL) during AACUL’s recent System Partners Meeting, a collaboration among AACUL, CUNA, CUNA Strategic Services, and CUNA Mutual Group.

The award honors a league employee who demonstrates visionary leadership at the state and national levels. It is named for the late Gene Farley, who served as president of the Virginia Credit Union League from 1967 until his retirement in 1999.

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Financial Services / Marketplace

Consumer Confidence Surges in March to Highest Point in Year

U.S. consumer confidence surged in March to the highest reading in a year, helped by increased vaccinations and more government economic support.

The Conference Board said Tuesday its consumer confidence index rose to 109.7 in March, the best showing since it stood at 118.8 in March of last year as the pandemic was beginning to hit the United States. The index stood at 90.4 in February.

The present situations index, based on consumers' assessment of current business and labor market conditions, rose to 110.0, up from 89.6 in February. The expectations' index, based on consumers' outlook for income, business and labor market conditions six months into the future, also improved, rising to 109.6 in March, up from a reading of 90.9 in February.

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Refi Slowdown Means No More ‘Lazy Mode’ for Mortgage Lenders

Financial institutions with large mortgage operations will face challenges over the rest of this year, and many will need to be more aggressive and adjust their business models to compete.

The Mortgage Bankers Association is bracing for a slowdown in overall activity, projecting that volume over the second half of 2021 could fall by 47% from a year earlier, to $1.2 trillion. Refinancing volume is expected to plummet by 77%, to $340 billion, as interest rates creep up.

A sharp decline in refis will put more pressure on bankers to fight for mortgages tied to home purchases, where volume should remain relatively steady as rates increase. That will intensify competition among mortgage lenders, forcing many to focus more on marketing, relationships with real estate professionals and customer service to drive volume. (American Banker, March 29)

Pandemic Response

CDC Extends Eviction Moratorium Until June 30

The federal ban on evictions has been extended yet again, bringing relief to tens of millions of renters struggling to catch up.

The Centers for Disease Control and Prevention extended its federal moratorium on eviction for non-payment of rent until June 30.

It marks the third time the deadline for lifting the ban has been pushed back.

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Risk Management

Ransomware Threat is Growing; Response Strategies Are Shared

Two more credit unions have allegedly been hit with ransomware attacks, a sign the crime continues to spread and target CUs, according to one security expert, who is further warning the attacks are becoming more “extreme.” That even includes blackmail attempts against individuals based on the stolen data.

And the size of the institutions attacked does not seem to faze crooks, as one of the CUs alleged to have been hit had less than $10 million in assets.

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