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CURRENT Newsletter | 14 November 2013

Nov 14, 2013 by Lewis Wood

News and Information For and About Virginia's Credit Union System

Headline News

News About Credit Unions

Compliance/Regulatory Affairs News

Financial Services/Marketplace News

Education & Networking Opportunities

News From Credit Unions

Chapter News

Headline News

CBO Lists 'Tax Large CUs Like Thrifts' As Discussion Item

Taxing large credit unions as thrift institutions is one option noted in the Congressional Budget Office's (CBO) list of budget and revenue options presented to the House-Senate Budget Conference Committee on Wednesday. The CBO made it clear that its list of options were discussion items and not recommendations.
"It's no surprise that credit unions are listed," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said. Taxing credit unions was mentioned as an option in 2005, 2007 and 2009 versions of the biennial report, but was not listed in 2011.
Donovan said the addition of credit unions into this year's report shows they should remain focused on the budget process and how it could impact tax reform.

As budget and tax talks continue, CUNA is urging credit unions and their members to use social media sites including Twitter, Facebook, micro-video site Vine and other outlets to tell their legislators, "Don't Tax My Credit Union!"

[read more]
> As of last Thursday, we've generated 18,636 Don't Tax My CU messages to our Congressional delegation.

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CUNA-Supported IOLTA Fix Passes House Committee

The House Financial Services Committee has just approved legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. The bill, known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468), was approved by voice vote.

[read more]

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CU Days at the General Assembly; Chapters Working on Dates for 2014 Session

We're gearing about for our Chapter "Credit Union Days at the General Assembly!" Chapters will be selecting dates convenient for their advocates, and we'll keep you posted as those dates are finalized. Central Virginia and Richmond are out of the gates first – both will be at the General Assembly on Jan. 22. Contact your League’s Karin Sherbin for information: ksherbin@vacul.org or 800-768-3344, ext. 626.

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Sponsorship Opportunities for The Credit Union House of Virginia Announced

Speaking of Richmond...The leadership of all of our credit unions have been informed about sponsorship opportunities for The Credit Union House of Virginia. We're excited about the response to date, as we've raised almost $900,000 in sponsorship funds, but there's still plenty of opportunities for credit unions, chapters and even individuals to get involved.

Earlier this year, your League Board approved a plan to renovate buildings the League purchased in downtown Richmond. An important component of that plan is creation of a meeting and event facility that showcases the strength of the commonwealth's credit unions - The Credit Union House of Virginia. Learn how you can contribute here.

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Save the Date: Free Compliance Webinar Dec. 11

Join us for the FREE Compliance Hot Topics Webinar hosted by your League’s Compliance Team on Dec. 11 from 2:30 p.m.-4 p.m.

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Financial Education: Credit Unions Invited to 'Train the Trainer' Workshop

You are invited to attend and observe the FREE Personal Finance SOL Teacher Training event hosted by the Credit Unions Care Foundation's Financial Education Committee on Nov. 21 from 8 a.m.-3 p.m. at Virginia Credit Union's headquarters in Richmond. For further information, contact your League’s Dawn Lindley at dlindley@vacul.org. Several credit unions have partnered to offer financial education training for teachers focusing on the Personal Finance Standards of Learning. Real Money Experience introduces educators to tools and resources available for teaching the Economics and Personal Finance course.

[learn more]
[related: Financial Literacy Education Has Real-Life Impact]

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USA Today: Patent Trolls Trip Up Every Business

They send letters to businesses, and these letters, often densely worded documents full of legalese, boil down to a simple demand: You are infringing on our patent. We will give you a license for a certain fee. If you don't pay, we'll sue you — implying that it will cost a lot more to defend that lawsuit than the troll is demanding.

[read more]

NOTE: League President Rick Pillow just sent a letter to Rep. Bob Goodlatte (R-6) thanking him for introducing legislation that would take on the patent trolls, who target credit unions, as well as all other types of businesses.

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News About Credit Unions

Credit Unions Beat Banks In Loan Growth, Exec Pay(?) And More

Credit union executives are beating community bankers out for new loans — and getting paid a lot more than many bank executives to do it, according to the latest lending and compensation data. Those realities add to the frustration of the banking industry, which has argued unsuccessfully for years that credit unions — which are tax-exempt — enjoy an unfair subsidy. "Fighting the credit unions' tax-exempt status is like trying to outlaw apple pie," David Hanrahan Sr., the president and chief executive of Capital Bank of New Jersey, said during a recent meeting in Washington hosted by the American Bankers Association. "It isn't going to happen."

They find the pay differentials especially galling. Credit unions with $250 million or more in assets are paying CEOs more than banks of similar size, according to a recent study by enetrix, a Gallup division, prepared for the Credit Union Executives Society. For example, the median base salary of CEOs at banks with assets between $500 million and $1 billion was $221,000 earlier this year, compared with the $325,000 their counterparts at credit unions earned.

(EDITOR'S NOTE: On Page 14 of the referenced enetrix compensation report, a caution is presented about cross industry comparisons. "It is important to note the comparisons made within this section consider only cash compensation. Benefits, long-term incentives (i.e. phantom stock and other compensation vehicles) and perquisites are not included in the analysis which will tend to drive the total compensation picture higher for banking executives."

A user comment on the report also noted that the following should be explored: How many banking executives captured in the study's population are operating independent banking entities? "While not stated, one would hope the banking compensation data is only from independent banking entities (so they are comparable to credit unions), and exclude bank executive positions reporting within a holding company structure.")

Factoring in bank executives' extra incentives, research from the Credit Union National Association shows that on average bank executives' compensation at institutions greater than $100 million is about 42% higher than credit unions of comparable size. Meanwhile, loan growth at banks appears to be lagging. Total credit union assets at Sept. 30 rose nearly 5% from a year earlier, to $1.08 trillion, according to CUNA Mutual Group's latest Trends Report. Loans are on pace to increase 6.2% this year compared to 2012, Dave Colby, CUNA Mutual chief economist, told Credit Union Journal. "On balance, our forecast shows annual gains averaging 6.5% through 2015," Colby said. At June 30, loans at small banks grew at a 4.7% annual rate while they increased less than 1% at big banks, according to data from the Federal Reserve Board. (Credit Union Journal, Nov. 14)

[related: Member Drawdown of Shares Triggers Deposit Outflow]

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CU Journal: Americans Trust Their CUs More Than Their Financial Advisors

Americans trust their credit unions but are less inclined to trust their credit union advisors. That's one of the key findings of a recent study from Kehrer Saltzman & Associates. Credit union members trust their credit union more than any other provider of financial services, according to the study. More than three in five (61.8%) said they view their credit unions with a great deal of trust, while only 27% held that view toward banks and a tiny 4.7% toward full-service stock brokerage firms.

Despite this, only 18% ranked their credit union advisors as their most trusted source of financial advice. "There is a wide gap between how credit union members view their credit union and their perception of the financial advice they can get from the credit union," Tim Kehrer, senior research analyst at Kehrer Saltzman and a co-author of the study, said in a statement. (Credit Union Journal, Nov. 13)

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Government Shutdown Dings CU Small Business Lending

The government shutdown crimped small business lending by credit unions, with a 4% decrease in approval rates in October, according to a new study. The latest Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2Credit.com, released Tuesday, said credit union small business lending had been on the rebound prior to the government shutdown. But lending approval rates at credit unions fell to an all-time low of 43.4% in October, down from 45.4% the previous month. Small business loan approvals at big banks (over $10 billion in assets) dropped to 14.3% in October, a significant drop from the loan approval rate of 17.5% recorded in September, Biz2Credit said.

Approval rates at small banks dropped from 50.1% in September to 44.3%, which marks the lowest figure since August 2011. "SBA loan approvals stalled because the agency was not working for three weeks. Similarly, non-SBA could not be processed during the government shutdown because the IRS was shut down," said Biz2Credit CEO Rohit Arora, who oversaw the research. (Credit Union Journal, Nov. 12)

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Compliance/Regulatory Affairs News

Cordray Vows "Openness" with Auto Lenders

Consumer Financial Protection Bureau Director Richard Cordray acknowledged concerns Tuesday about how the agency is regulating indirect auto lenders, vowing to be more transparent about its oversight. The agency has been under fire since a March bulletin, which was not subject to public comment, that said the agency would hold auto lenders responsible for any discrimination made by partner dealers, whether it was intentional or not. Cordray said the agency was holding a field hearing Thursday on the issue designed to engage directly with auto lenders.

[read more]

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Financial Services/Marketplace News

Most Americans Adding Debt Faster Than Savings

More than half of Americans with 401(k) accounts are accumulating debt faster than they are putting away money for retirement, according to a new report. The study, by HelloWallet.com, found that the average 401(k) user puts around 11 percent of his income away for retirement every year, through savings and social security taxes. But such savings remains "stubbornly low," according to the personal finance site, which said that the typical worker nearing retirement has roughly only two years of replacement income stashed away. That is about 15 years less than people tend to live after they retire.

[read more]

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Mortgage Credit Availability Loosened Slightly in October

Credit availability improved in October following two months in which the Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index (MCAI) declined. The MCAI increased 0.7 percent to 111.5 in October after declining by 0.7 percent in both August and September. A decline in the index indicates that lending standards are tightening while increases means credit is loosening. The index was benchmarked to 100 in March 2012 and MBA says that had it been available in 2007 it would have measured credit availability at roughly 800. MBA said the loosened credit in October relative to September can be partially explained because some investors reduced the minimum credit score of certain products. 

[read more]

[related: Mortgage Applications Fall as Rates Rise]
[related: Tight Credit Squeezing First-Time Homebuyers Out of Market]
[related: Home Foreclosures, Mortgage Loan Delinquencies at Multiyear Lows in Q3]
[related: Late-Payment Rate on Mortgages at 5-Year Low]

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Auto Loans Set to End Year on High Note

Nearly half of all credit union loan growth this year can be traced back to auto loans, setting the stage for record expansion across the industry for 2013. “We are running out of superlatives, but don’t need any,” wrote Dave Colby, chief economist for CUNA Mutual Group in the company’s November Credit Union Trends Report, which tracked data through September. Indeed, during the past year, auto loan portfolio expansion of $19.7 billion accounted for 48% of all credit union loan growth, the data showed. Vehicle loans now represent 30.7% of all credit union loans, up from a low of 28.7% at the end of 2011, but below the pre-recession level of 33.3%.

New vehicle loans accounted for 18% of all loan growth year-to-date and year-over-year, according to the trends report.

[read more]

[related: More Auto Loans Written as Delinquency Rates Fall]

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More than a Third of Small Banks Offer Mobile Payments: Study

Community banks are stepping up their mobile payments offerings — and a growing number say they're doing it more to please customers rather than for the direct profits. Thirty-seven percent of community banks now offer mobile payments, compared with 14% in 2011, according to a biennial survey released Tuesday by the Independent Community Bankers of America. Another 43% plan to have mobile payments by 2015. Fifty-two percent of banks identified the desire to improve customer service as the primary motivation of their mobile payments strategy, compared with 47% in the last payments survey in 2011. (American Banker Online, Nov. 12)

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Education & Networking Opportunities

Learn How the Credit Union Member Discount from GM Can Help Your CU

Join the Virginia Credit Union League and Curt Belaney, National Business Consultant with CU Solutions Group/Invest in America for a FREE informational Webinar on Invest in America’s valuable Credit Union Member Discount from GM. Webinar Date/Time: Nov. 20, 2:30 p.m. To register please email a request to your League's Dorshey Coleman at  dcoleman@vacul.org and login instructions will be sent to you. This webinar will benefit CEOs, managers, marketing staff, lending staff and any other credit union staff who are interested in hearing about this valuable Auto Discount Program. Please contact Dorshey at 800.768.3344, ext. 618 or dcoleman@vacul.org with any questions.

[read more]

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News From Credit Unions

Park View FCU Employees Serve Community on Veteran’s Day

Employees of Park View Federal Credit Union will be spending Veterans Day serving at several local non-profit partner organizations. Employees will be helping with tasks such as fall yard work, sorting donations, maintenance projects, reading and financial education in classrooms, administrative filing, assisting with exercise and craft activities, food preparation, and wood splitting.

[read more]

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Langley Federal Credit Union Announces Assistant Vice President of Facilities

Langley Federal Credit Union is pleased to announce the addition of Rick Shook as Assistant Vice President of Facilities. Shook will oversee company vehicles; facility maintenance, renovation and construction for LFCU.

[read more]

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Chapter News

Richmond Chapter Hosting Nov. 19 Workshop

Geezeo Interactive's Jim Craig will present "Keeping Cross-Selling Effective in a Solution-Focused World" at the Richmond Chapter's Nov. 19 workshop. Note: This is a breakfast meeting, with registration beginning at 7:30 a.m.

[learn more]

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Piedmont Chapter Sets Nov. 21 Meeting

CEOs from area credit unions will participate in a roundtable discussion of credit union issues at the Piedmont Chapter's Nov. 21 meeting.

[learn more]

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Central Virginia Chapter Hosting Holiday Socials

The Central Virginia Chapter's officers will be hosting coffee socials for the Holidays. Enjoy free coffee and a Danish at these locations:
Dec. 6 (Waynesboro Panera Bread)
Dec. 11 (Charlottesville Starbucks)
Dec. 12 (Harrisonburg Panera Bread)
[learn more]

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