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CURRENT Newsletter | 5 September 2013

Sep 5, 2013 by Lewis Wood

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

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September 5, 2013

Headline News

News About Credit Unions

Compliance/Regulatory Affairs News

Governmental Affairs News

Financial Services/Marketplace News

Education & Networking Opportunities

News From Credit Unions

Chapter News

Technology News

Headline News

CUNA Quickly Refutes New Report Full Of Tired Old Banker Claims

While credit unions score with their grassroots "Don't Tax My Credit Union" campaign as federal policymakers debate tax code reform, the banks are re-circulating their dank and tired arguments to promote a new tax on credit unions and their 97 million members, Paul Gentile, Credit Union National Association executive vice president of strategic communications and engagement, pointed out Wednesday.

"A 'new' bank study on the issue just re-hashes tired arguments that credit unions have already refuted," Gentile said, and noted that report authors are "advocates of the big banks--and paid by bankers--which are at odds with credit unions." Gentile suggested that any reader of the report should be aware of the following areas of misinformation...

[read more]
[related: Leagues Keep Up 'Don't Tax My CU' Energy]
[related: Innovative 'Don't Tax' Efforts To Build Support In Congress]
[related: ICBA: 'Credit Unions, Farm Credit System Should Be Weaned from Taxpayer Subsidies']

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#DontTaxTuesday Returns

With Congress returning to Washington early next week, the Credit Union National Association and state credit union leagues have refocused their national grassroots efforts on tax reform. Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways & Means Committee Chairman Dave Camp (R-Mich.) remain committed to comprehensive tax reform, having spent the August recess touring the country in support of tax reform, and hoping to have legislation drafted by late September. 

In response CUNA has planned a number of initiatives in September to keep the "Don't Tax My Credit Union" message before Congress. Building on the success of the first #DontTaxTuesday campaign, CUNA members will welcome back Congress on Sept. 10 with another #DontTaxTuesday promotion. 

The campaign will include a large social media push, in which credit union members and advocates nationwide will Tweet their lawmakers or post on their Facebook page a "Don't Tax My Credit Union" message. Advocates wishing to participate should visit www.DontTaxMyCreditUnion.org starting on Sept. 10, where they will be able to post directly to their lawmaker's Twitter and Facebook accounts.

[read more]

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Federally Insured Credit Unions Report Brisk Loan Growth, Earn $2.2 Billion

The National Credit Union Administration reported that federally insured credit unions saw brisk loan growth and their highest net worth ratio since 2008 in the second quarter. Loans were up 2.3 percent or $13.8 billion in the second quarter to $613.7 billion with lending growing in nearly every category.

• First mortgage real estate loans rose to $253.8 billion, up 2.1 percent for the quarter and 5.6 percent year-over-year.
• New auto loans expanded to $66.4 billion, up 2.8 percent for the quarter and 10.7 percent for the last four quarters.
• Used auto loans rose to $121.3 billion, up 3.7 percent for the quarter and 9.3 percent for the year ending June 30.
• Net member business loan balances grew to $43.5 billion, up 2.3 percent for the quarter and 8.3 percent for the prior 12 months.

[read more]
[related: Loan growth, Net Worth, Membership Are 2Q Story]

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CUNA Seeks CU Comment Call On Revised QRM Rule

The Credit Union National Association is encouraging interested credit unions to comment on a joint revised proposal on credit risk retention  issued this week by federal banking agencies. One aspect of the proposal is key for credit unions -- a proposed definition of the term "qualified residential mortgage (QRM)" for purposes of creating an exemption from the risk retention requirements under the Dodd-Frank Act.

While few credit unions likely would be covered as securitizers of asset-backed securities, the proposal is important to credit unions because the secondary market will likely conform to qualified mortgage (QM) and QRM standards, CUNA noted in its request for comment. CUNA is also concerned that examiners may insist credit unions confine their mortgage loans to QMs and QRMs.

Under the proposed rule, the definition of QRM would be revised to be the same as the Consumer Financial Protection Bureau's definition of a QM. This is a development that CUNA had urged.

[read more]
[related: Reg Advocacy Report Digs Deeper On QRM Proposal]

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League Compliance Webinar Sept. 18

Due to changes in scheduling we are moving the League's Quarterly “Compliance Hot Topics” Conference Call from Wednesday, Sept. 11 to Wednesday Sept. 18 at 2:30 p.m.

This webinar covers current compliance hot topics with your Virginia Credit Union League Compliance Team. Space is limited. Please send an email to compliance@vacul.org to reserve your place for this important webinar.

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Deadline Nears for VACUPAC Golf, Legislative Forum

The deadline for registering to play golf Sept. 24 in Glen Allen to raise money for our  political action committee is Sept. 10. Register here: The deadline for registering for the Sept. 25 free legislative forum in Richmond is also Sept. 10 also. Register here.

If you want to overnight between events, contact the Omni Hotel in Richmond and ask for the government rate. If the Omni is full, the Crowne Plaza also offers a government rate. See you in Richmond Sept. 24 and 25!

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Virginia Among Membership Growth Leaders

The newest analysis of state-level data for federally insured credit unions was been released this morning by the National Credit Union Administration and among its revelations: Idaho and Virginia were the top states for membership growth in the year ending in the second quarter.

Overall, the analysis shows, membership in federally insured credit unions rose 2.2% to 95.2 million. While that pace was slightly slower than the year ending second quarter 2012, membership increased in 41 of the states and territories, with Idaho (8.8%) and Virginia (7.9 %) leading the way with the greatest growth. Membership advance were not universal, however. Virginia's credit union member rolls tally 8.09 million, a new milestone. Virginia's credit unions have added 1 million new members since year-end 2010.

[read more]
[related: CU July Membership Growth 3X Population Growth]
[related: CU Growth Outpaces Population Growth, CUNA Reports]

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CUNA Monthly Estimates Show July Loan Growth, Savings Decline

Credit union loans outstanding grew in July and credit union savings balances declined, according to the Credit Union National Association's monthly sample of credit unions. Loans grew 1% to $634 billion in July, compared with a 0.5% increase during the same period last year. Unsecured personal loans rose 2.1%, followed by new-auto loans (1.8%), used-auto loans (1.6%), fixed-rate mortgages (1.3%), credit card loans (1.2%), and adjustable-rate mortgages (0.9%).

Other mortgages and home-equity loans declined 1.1% and 0.1%, respectively. Savings balances dropped 0.6% in July to $925.1 billion, compared with a 0.8% decline in July 2012. Money-market accounts and one-year certificates grew 0.6% and 0.1%, respectively. Share drafts (3%), regular shares (0.9%) and individual retirement accounts (0.9%) all decreased in July.

[read more]

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NCUA Warns of Potential Violations of Common Bond Advertising Requirements

The National Credit Union Administration is warning federal credit unions to be cautious in advertising membership eligibility. "If your credit union is advertising that anyone, without limitation, is able to become a member of your credit union, then you may be in violation of federal law and regulation," NCUA said.

"Some overly aggressive marketing campaigns by federal credit unions to facilitate membership through associational groups are providing consumers with misleading information about single and multiple common bond membership requirements. NCUA is particularly concerned about advertising by federal credit unions stating their fields of membership are 'open to anyone.'" 

[read more]

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CFPB Puts Consumer Data Suppliers in Crosshairs

The Consumer Financial Protection Bureau issued a stark warning Wednesday to financial institutions and other firms that exchange information with consumer reporting agencies, saying such companies will be heavily scrutinized for how they resolve customer disputes.

The agency said that so-called information "furnishers" — a category that includes financial institutions, credit card companies, retailers and collection agencies — need to take responsibility when a consumer disputes something on their credit score. (American Banker Online, Sept. 5)

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Forbes Cites CUNA Figures: CUs Have Become the Auto Lenders Of Choice

A Sunday Forbes.com article cited Credit Union National Association figures to show credit unions have become the auto lender of choice for an increasing number of U.S. consumers looking to purchase cars, Forbes.com said.

"That's partly because credit union membership is growing; partly because credit unions can often beat the interest rates banks charge, due in part to tax breaks; and according to credit union officials at least, because the Great Recession eroded public trust in big banks," wrote Forbes contributor Jim Henry in an article, "Credit Unions Gain Share In Autos, Trading On Local Image."

The article cited comments by Richard Cordray, director of the Consumer Financial Protection Bureau, in which he said the CFPB recognizes that credit unions were not one of the causes of the recent financial crisis.

[read more]
[related: Report: Americans Continue to Curb Driving]

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Auto Leasing Volume Projected To Increase

Leasing has been picking up over the last year, and the momentum only will accelerate as loan rates rise, analysts agree. Melinda Zabritski, senior director of automotive credit for Experian, told Credit Union Journal that leasing now represents 27% of all new car sales, up from historical averages of 23% to 24%.

“Leasing is certainly taking off, with payments on average of about $50 less than what we see on a loan.” That lower payment, noted David Jacobson, president of GrooveCar, Hauppauge, N.Y., will be more attractive as rates rise. (Credit Union Journal, Sept. 3)

Auto, Student Lending Each Rise More than 10%: Equifax

Student and auto lending surged in the 12-month period ended in July, according to an Equifax report released Thursday. The total balance on federal and private student loans increased to $884.2 billion in July 2013, up 11.3% from a year earlier, according to the Atlanta credit bureau's National Consumer Credit Trends Report.

Auto loans rose 10.9%, to $826.8 billion in July from a year earlier. (American Banker Online, Sept. 3)

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News About Credit Unions

Credit Union CEOs Optimistic on Loan Demand: Survey

Expectations for increased loan demand are high among some credit unions CEOs. According to Catalyst Corporate Federal Credit Union’s most recent CU CEO Confidence Survey, second-quarter 2013 measurement represented a jump of 4.2 points over the first quarter report and a year-over-year confidence surge regarding lending of almost 13 points.

During the first half of 2013, consumer sentiment improved just enough to see overall annualized loan growth increase to about 4%, aided by a sizeable increase in auto sales during the first quarter, said Brian Turner, director and chief strategist for Catalyst Strategic Solutions, a subsidiary of the Plano, Texas-based Catalyst Corporate.

[read more]
[related: Credit Union 'Health' Declines, Glatt Reports]

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Credit Unions Urged To Move More Quickly on Collections

Credit unions would see a smaller percentage of loans fall into significant delinquency if they reached out to borrowers earlier, according to a firm which offers credit unions collection assistance.

CU Recovery and the Loan Service Center says it has research which indicates that something as small as a friendly reminder to a borrower in the first few days after a payment is late can be enough to prevent the loan from becoming seriously delinquent. 

[read more]

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Compliance/Regulatory Affairs News

IRS Provides Update on Employee Benefits of Same-Sex Couples

In June, the Supreme Court invalidated a portion of the Defense of Marriage Act and provided favorable tax treatment for the estate of a same-sex spouse. Like most litigation, the Court's decision raised as many questions as it answered. The IRS has now answered for taxpayers and employers some of the questions raised by the decision.

In Revenue Ruling 2013-17, the Service has taken a common-sense approach to determining who is married and has simplified the administration of employee benefit plans for employers. The new rules reference everything from marital status and amended returns to effective dates and new health insurance.

[download the report]

Governmental Affairs News

September Edition of The Advocate Available

The September edition of The Advocate – the League Governmental Affairs newsletter - is now available online here.

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Financial Services/Marketplace News

1-in-5 Mortgages in Richmond Region is Deeply Underwater

Nearly one in every five homeowners with mortgages in the Richmond area is deeply underwater, according to a report released this morning by an online researcher of foreclosures. In all, 35,924 households, or 19 percent of residential homeowners with mortgages in the Richmond area, owe 25 percent or more on their mortgages than their houses are worth, according to RealtyTrac's U.S. Home Equity & Underwater Report for September.

An estimated 43,800 households, or 23 percent of homeowners with mortgages, are on track to resurface with enough equity to be able sell their houses in the next 15 months -- if home prices continue to rise, RealtyTrac said in its first report on home equity. [read more]

[related: Rising Home Prices Lift Underwater Homeowners]
[related: Mortgage Rates Bounce Back on Signs of a Stronger Economic Recovery]
[related: Mortgage Applications Rise as Rates Dip]

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Home Prices Still Surging ... For Now

Home prices are still surging, but the pace of the gains has steadied as interest rates continue to rise. Prices for homes in the nation's 20 largest cities in June rose 12.1% over the last year, according to a report Tuesday from S&P/Case-Shiller home price index. While that gain is still robust, it didn't quite match the gain of 12.2% reported for May.

Rising mortgage rates may be to blame. "With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened," David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a press release.

[read more]

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U.S. Economic Growth Stronger Than Thought

The U.S. economy grew significantly faster than thought in the second quarter, which may help convince the Federal Reserve to start unwinding its stimulus program sooner rather than later. The nation's gross domestic product -- the broadest measure of economic activity -- rose at a 2.5% annual rate from April through June, according to a revised estimate from the Bureau of Economic Analysis Thursday.

That's higher than the 1.7% rate originally reported, and better than the 2.1% rate that economists surveyed by Briefing.com were expecting.

[read more]

[related: U.S. Third-Quarter-Growth Forecasts Get a Haircut]

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August 2013 Looks to Be the Biggest Month Ever for New-Car Sales

J.D. Power has estimated that based on the pace set in early August, new car sales will hit 1.27 million units by the end of the month—a 12% increase over August 2012, and the highest tally since the onset of the Great Recession.

What’s more, because the average price paid for new cars has risen over the years, and “consumers are spending more on new vehicles than in any month on record,” J.D. Power “anticipates that consumer spending on new vehicles in August will be close to $36 billion, which would be the highest level on record.”

The average price for a new car was $30,500 in 2012, which was then an all-time high. The average jumped to over $31,000 for March 2013, and has remained at over $31,000 through the summer months.

[read more]
[related: Americans Still Spending On Cars: August Sales Up At Ford, GM And Chrysler]
[related: Americans Drive Less Even as Economy Rebounds]

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Consumer Sentiment Retreats from 6-Year High

U.S. consumer sentiment retreated in August from last month's six-year high, though Americans were slightly more upbeat in their outlook than earlier in the month, a survey released on Friday showed. The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment slipped to 82.1 in August from 85.1 in July.

The final result did manage to top an initial mid-month reading of 80.0 and beat economists' expectations for a final read of 80.5. "Most of the late August gain was due to more favorable income expectations, with consumers expecting the largest income gains in nearly five years.

[read more]

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Bank Fees Rankle Otherwise Satisfied Customers: Survey

Checking account fees may help banks pad revenue, but a new survey suggests that ATM and overdraft charges can send customers running. Over a third of Americans said they would be very or extremely likely to switch banks to avoid paying fees on their checking accounts, according to TD Bank's inaugural survey of more than 3,000 consumers.

In fact, 14% of respondents have already moved their business for those reasons. Some types of charges aggravate customers more than others; 38% of respondents said that nonbank ATM fees were the most frustrating type of charge. Another 27% awarded that dubious honor to overdraft charges. Just 13% picked minimum balance fees as the most annoying type of charge. (American Banker Online, Sept. 4)

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Education & Networking Opportunities

Strong Demand Prompts Third CUDE Program

The National Credit Union Foundation has upped the ante for those wanting to participate in the Credit Union Development Educators Program by adding a third school for the 2013-14 season. Officials for the NCUF, located in Madison, Wis., said strong demand prompted the first-ever addition of the seven-day immersion program dedicated to the credit union philosophy.

The new program, scheduled for Jan. 22-29 at the University of North Carolina in Chapel Hill, is in response to growing demand that often prompts sell-out conditions, said Lois Kitsch, NCUF’s national program director. DE training is open to everyone from new employees who need a credit union orientation to seasoned executives who need to recharge.

[read more]

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News From Credit Unions

Belvoir Federal Welcomes Thousands to the 8th Annual 'Celebrate Fort Belvoir' Event

Belvoir Federal Credit Union hosted the 8th Annual Celebrate Fort Belvoir at the New Exchange located on Fort Belvoir, Va. The event welcomed thousands of military families, Fort Belvoir residents, and community members to a day of family fun, entertainment, free food, and showcased more than 40 local vendors.

The Annual Celebrate Fort Belvoir was designed as a way for Belvoir Federal to give back to the military, their families, and the surrounding community.

[read more]

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Belvoir Federal Wins Two Awards in the 2013 GMA Competition

Belvoir Federal Credit Union was recently awarded with two honors from the Credit Union Executive Society (CUES) Golden Mirror Awards (GMA), a national competition between hundreds of credit unions based on campaigns implemented in the previous year.

CUES, who presented the awards to Belvoir Federal’s Marketing Department, represents an international association of credit union executives who have provided professional development over the past 50 years.

[read more]

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Cars Line Up Across Nation For CUs' Free Gas

Northern Star Credit Union picked up the gas tab last week for 200 consumers, with employees personally pumping $20 of free gas for the first 200 drivers in line as part of the national "Take Back Your Banking" campaign. It was a scene repeated over and over across the country Wednesday and Thursday as credit unions and community banks in 38 cities did the same, pumping more than $150,000 in free gas to 7,600 people.

The institutions used the event to urge consumers to go local in their banking and many credit unions garnered some media attention about the good credit unions do for their communities.

[read more]
[related: Get Pumped! Free Gas for Lucky 200 in Chesapeake]

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Filene Welcomes Mark Hamid to Prestigious i3 Innovation Program

Filene Research Institute welcomes Mark Hamid to its i3 innovation program, which fosters the development of new ideas and innovations for credit unions. Hamid joins 14 other executives from credit unions and credit union service organizations across the United States and Canada in the program.

Hamid is Vice President and Chief of Retail Operations at Fort Lee Federal Credit Union. He brings 24 years of combined experience in the credit union and banking industry, holding positions from Teller to VP/SVP of Retail and Business Banking.

[read more]

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Chapter News

Roanoke Valley Chapter Plans Sept. 17 Meeting

League General Counsel Nathan Bowden will offer a program on regulatory updates and compliance hot topics at the Roanoke Valley Chapter's Sept. 17 meeting. Location: Salem Civic Center. Time: Social at 6 p.m.; dinner at 6:30 p.m.; and program at 7 p.m.

[learn more]

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Richmond Chapter Offers White House Ornaments as VACUPAC Fundraiser

It is that time of year again! The Richmond Chapter of Credit Unions will be selling the 2013 White House Ornament to benefit the Virginia Credit Union Political Action Committee. The cost will be $20 for each ornament. To place an order, please send your information to Chris Miller by Sept. 30.

The Chapter will be ordering several shipments, so the sooner you place your order, the sooner you can get your ornaments delivered! Ornaments are not returnable or refundable, so only order what you plan to purchase or sell at your credit union. Payment is due by Oct. 29 (checks payable to Chesterfield FCU). Each credit union will receive credit for the amount it raises through ornament sales. Help us reach our 2013 VACUPAC goal.

[learn more]

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NoVA Chapter Meets Sept. 12

World Council of Credit Unions Vice President Victor Corro will be the featured speaker at the NoVA Chapter's Sept. 12 meeting. Since 2004, Corro has worked to develop, coordinate and oversee WOCCU's International Partnership program, which currently includes 20 partnerships spanning 21 countries.

Among those partnerships is the 5-year-old relationship between the Virginia Credit Union League and credit cooperatives in the Baltic nation of Estonia. Location: Marriott Fair Oaks. Time: 5:30 p.m. networking; 6 p.m. meeting.

[learn more]

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Tidewater Chapter to Hold Sept. 12 Meeting

Dr. Larry Filer, of Old Dominion University, will be the featured speaker at the Tidewater Chapter's Sept. 12 meeting. Location: Greenbrier Country Club (1301 Volvo Parkway, Chesapeake). Time: 6 p.m. social; 6:30 p.m. dinner and meeting.

[learn more

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Tidewater Chapter to Host Sept. 19 Charity Golf Tournament

Join the Tidewater Chapter Sept. 19 for its Inaugural Golf Challenge at Sewells Point Golf Course in Norfolk! Format will be four-man captain’s choice, with an entry fee of $125 per player. Cost includes a hot dog lunch, cart, range balls, green fees and cookout dinner. Shotgun start at 1 p.m.

Proceeds will benefit Children's Hospital of the King's Daughters, the area's local Children’s Miracle Network Hospital. Sponsorships are also available, ranging from $250 to $1,000.

[learn more]

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Technology News

CUNA Mutual Group's Smartphone Loan Technology Reaches Major Milestone

Credit union members have embraced CUNA Mutual Group’s Smartphone Loan technology, boosting total loan requests submitted via mobile devices to more than $1 billion since it launched two years ago.

“Reaching this milestone demonstrates how loanliner.com®, Smartphone Loans, and the new AskAutoTM Smartphone application work together to provide credit unions with a convenient way for their members to apply for loans when and where they desire,” said Steve Hoke, director of loan growth products at CUNA Mutual Group and product leader for loanliner.com, Smartphone Loans, and the AskAuto app.

Launched in July 2011, the Smartphone Loan technology allows loan applicants who are credit union members to begin the loan application process from wherever they are – an auto dealership, their kitchen table, or sitting in their car – on their Smartphones. The technology is a mobile version of CUNA Mutual Group’s loanliner.com product, which is used by more than 550 credit unions nationwide.

[read more]

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