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CURRENT Newsletter | 9 May 2013

May 15, 2013 by Lewis Wood

News and Notes for Virginia's Credit Unions

May 9, 2013
  • Your comments and submissions are always welcomed. E-mail pr@vacul.org
Headline News News About Credit Unions Compliance/Regulatory Affairs News Financial Services/Marketplace News News From Credit Unions Chapter News Financial Education News Marketing News News About The Competition Technology News Human Resource Management

Headline News

ABNB FCU's Bob Morgan Recognized for 45 Years of Service to Credit Union Movement

Robert E. "Bob" Morgan, the retired President/CEO and current Board member of Chesapeake-basedABNB Federal Credit Union has been awarded the Virginia credit union system's highest individual honor, the James P. Kirsch Lifetime Achievement Award.

"Virginia's credit unions have been blessed with leaders fiercely committed to the success of the system, and Bob Morgan long ago cemented his place among our greatest leaders," said Rick Pillow, president of the Virginia Credit Union League.

[read more]

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Possible Tax Reform-Debt Ceiling Link Heightens Need For CU Vigilance

Reports that a key lawmaker cleared a path this week for tax code reform debate--by publicly backing the idea of linking an overhaul of the tax code to an increase in the debt limit--truly highlights the need for credit unions to be vigilant in defense of their tax status right now, said CUNA Executive Vice President of Government Affairs John Magill.

"Credit unions must be educating their members--now--about the public policy value of the credit union federal tax exemption. Our research shows that informed members are ready to stand with us in this battle," Magill said.

House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) have said they are ready to push ahead with efforts to revise the tax code. It was Camp who backed tying tax talks with debt-ceiling talks, which would create a package harder to derail during the legislative process (Bloomberg Government May 8). [read more]
[related: Sen. Finance Chair Backs CU Tax Status In MCUN Remarks]

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Ways And Means Working Group Tax Reform Report Delivered

The credit union tax status is one of many issues discussed in the just-released report on tax policy reform created by 11 House Ways and Mean working groups and delivered to the Joint Committee on Taxation.

The 550-plus page report does not contain any policy recommendations, but lists the pluses and minuses of around 400 different tax expenditures.

"Our tax preference is not alone, we have plenty of company," Credit Union National Association President/CEO Bill Cheney said Monday.

"But credit unions need to be alert to the fact that our tax status is being discussed." Cheney added, "It is vital that credit unions move to educate more of their members on the value of the credit union tax status, as their advocacy efforts could play a key role in deciding what goes into a final tax reform bill."

The U.S. House could consider comprehensive tax reform legislation before the end of July.

[read more]

[related: CUNA Tax Status Advocacy Toolkit (members only)]
[related: Fed Report Finds Credit Union Tax Advantage Inconclusive]
[related: CUNA In CU Insight: 96 Million Voices Can Back CUs In Tax Battle]
[related: Cheney Report: CUs Must Be Heard As Tax Talk Intensifies]

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League Endorses Six State Lawmakers; Seeks CUs' Aid for Campaigns

Your League has endorsed a slate of lawmakers in upcoming primaries and the general election. All have proven to be good friends to Virginia's credit unions, and most are veteran lawmakers.

Our hope is that you'll get involved and help these lawmakers any way you can. If you can help, please contact your League's Karin Sherbin at 800.768.3344, ext. 626 or ksherbin@vacul.org.

Your League is endorsing the following candidates:

  • Del. Rosalyn Dance (Petersburg) in her re-election bid for the Virginia House of Delegates' 63rd District.
    [read more]
  • Del. Todd Gilbert (Woodstock) in his re-election bid for the Virginia House of Delegates' 15th District.
    [read more]
  • Del. Robert Orrock (Carolina/Spotsylviania counties) in his re-election bid for the Virginia House of Delegates' 54th District.
  • Del. Joe May (Leesburg) in his re-election bid for the Virginia House of Delegates' 33rd District.
    [read more]
  • Del. Beverly Sherwood (Winchester area) in her re-election bid for the Virginia House of Delegates' 29th District.
    [read more]
  • Del. John Cosgrove (Chesapeake) in his election bid for the Virginia Senate's 14th District. Squared off in a Republican primary today (May 9)! We'll keep you posted.
    [read more]

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New White Paper Assesses DDoS Risk To CUs

Over the past eight months, a buzz has grown around news of Islamic hacktivist groups targeting U.S. banks with powerful distributed denial of service (DDoS) attacks. Against this backdrop, writes Chief Technology Officer Kevin Prince of CompuShare in a just-released white paper, credit unions and community banks have to ask themselves: How concerned should we be? Compushare, a technology management provider for the financial services industry, is CUNA Strategic Services' newest alliance provider. Its new white paper, "DDoS Attacks: How Real Are The Risks For Community Financial Institutions," is available to Credit Union National Association members via the trade group's website. A DDoS attack involves using an army of hijacked computers to overwhelm a site with so many requests for attention that it's unable to respond to legitimate requests and thus becomes unavailable. It has become a popular method to make a political or ideological point in which the target is some kind of symbol. [read more]

[related: Tuesday's DDoS Fears Allayed, FBI Extends Alert]
[related: Small Banks and Credit Union Attack Set for Tuesday]
[related: Websites Defaced, But No Action So Far Vs. U.S. CUs]

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News About Credit Unions

Consumers--And Members--Borrowed Slightly More In March

Borrowing by consumers and credit union members increased in March, but the increase is smaller than projected, and revolving credit--credit card use--actually decreased, said the Federal Reserve's Consumer Credit report, released Tuesday afternoon. Overall borrowing rose $7.97 billion or 5.75%  to reach $2.81 trillion--the smallest increase since July. [read more]

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Compliance/Regulatory Affairs News

CFPB Proposes CUNA-Sought Credit Rule Delay

The Consumer Financial Protection Bureau has favorably responded to the Credit Union National Association's recent request that the agency delay a June 1 effective date relating to the prohibition on financing certain credit insurance charges. The provision is contained within the bureau's mortgage loan originator compensation rule. The CFPB told CUNA it will seek comment for 15 days on a proposed delay. CUNA had expressed concern that certain language within the new rule needed clarification. [read more]

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NCUA Supports CU Capital Bill

The National Credit Union Administration backs a bill that would allow well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--which currently is the only type of capital that counts toward capital ratio. Under current law, the more deposits a credit union accepts, the more its capital ratio declines. When capital ratios decline, credit unions could face prompt statute regulated corrective action by their regulator. NCUA Chair Debbie Matz pledged in a May 2 letter to Rep. Peter King (R-N.Y.), the bill's chief sponsor along with Rep. Brad Sherman (D-Calif.), that if the U.S. Congress enacts King's Capital Access for Small Business and Jobs Act (H.R. 719), her agency will "promptly propose the necessary rule changes required for implementation." [read more]

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Governmental Affairs News

See The Advocate Blog for our latest news!

Financial Services/Marketplace News

Home Loan Delinquencies Rise in 1Q, Foreclosures Drop: MBA

The share of all loans that were at least one payment past due or in foreclosure fell to 10.3% in the first quarter, the lowest level in four years, the Mortgage Bankers Association said Thursday. But the mortgage delinquency rate, which excludes loans in the process of foreclosure, rose slightly in the first quarter to 7.25%, a 15-basis-point rise from a year earlier. The MBA attributed the rise in first-quarter delinquencies to normal seasonal patterns and economic weakness. (American Banker Online, May 9)

Zillow Survey: 5% Home Value Growth Expected in 2013

With more than 100 forecasters predicting Zillow’s Home Value Index could end the year up an average of 5.4% from last year, fears of a market bubble resurfaced. According to the latest Zillow Home Price Expectations Survey, the median U.S. home value is expected to rise to $165,280, on average by the end of 2013. At the end of 2012, the U.S. Zillow Home Value Index stood at $156,800. [read more]

CFPB Calls for Payment Reductions on Student Loans

The Consumer Financial Protection Bureau is pushing for private student lenders and the government to help lower payments for borrowers after receiving thousands of complaints from consumers. In a report released Wednesday, the CFPB called private student loans a potential "roadblock" to a borrower's entire financial life which creates a domino effect on the economy. The agency said student lenders should consider lowering payments for performing and struggling borrowers in addition to clearing credit reports for defaulted customers now on the rebound. (American Banker Online, May 9)

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Education & Networking Opportunities

View our upcoming webinars!

News From Credit Unions

14-Year-Old from Ashburn Runs Ice Cream Business with Help of Northwest FCU

For 14-year-old Grayson Albers, it started with the idea to sell lemon sorbet at his sister Gretchen’s lemonade stand. A year and a half later, GG’s Frozen Treats had grown into a neighborhood hit, with a website, a menu of flavors and shelf space at Ashburn Wine Shop, Carolina Brothers BBQ, and The Wine'ing Butcher. When the gelato and sorbet company needed a financial partner, CEO Grayson turned to Northwest Federal Credit Union.

His family has been members of Northwest Federal for a long time, according to Grayson’s mom, Marty Albers.” We’ve had a good experience with them over the years, and knew they would be the right fit,” she said. After studying Northwest Federal’s website thoroughly, Grayson was prepared when he came to the Leesburg branch, with all of his completed paperwork and the required documents from the IRS and the State of Virginia. [read more]

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Northwest FCU Foundation Hosts Financial Scavenger Hunt, Awards iPad® Prize

In honor of National Credit Union Youth Week (Youth Week), Northwest Federal Credit Union Foundation (NWFCU Foundation) held a Financial Amazing Race scavenger hunt for youth featuring financial education topics at Northwest Federal Credit Union’s (NWFCU) 9th Annual Member Appreciation Day. More than 125 NWFCU kids entered the scavenger hunt, which featured valuable financial education tips geared toward teaching kids to save, spend and share money wisely. After completing the scavenger hunt, the kids could enter to win an iPad® generously donated to the NWFCU Foundation. [read more]

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Lila M. Carnevale Steps Down from Fairfax County FCU Board of Directors

Fairfax County Federal Credit Union announces the retirement of Board of Directors Vice Chair Lila M. Carnevale, after 34 years on the Board and a total of 46 years of distinguished volunteer service to the credit union. “Lila has played a key role in the credit union’s success,” said Joe Thomas, president and CEO. “She has been instrumental in the growth of Fairfax County Federal Credit Union from $407,000 in assets in 1966 to over $280 million today. We thank her for her dedication and service, and we all wish Lila the best.” [read more]

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Member One FCU Wins National HR, Training Award

Member One Federal Credit Union was recently honored with an "Excellence Award" from the CUNA HR/TD Council during the council’s 19th annual conference, which took place April 21-24 in Anaheim, Calif.

The award recognizes and honors credit unions that exemplify excellence in the human resources and training. Member One was recognized for their “Using the Humanities to Give Business Training a Soul” Program, which is a diverse offering of courses related to sales, soft skills, economics and leadership that are business related, but humanities based.  Each program involves music, poetry, literature, the fine arts, history or dance.

For more information on the 2013 Excellence Awards, go to www.cunahrtdcouncil.org, and click on the “Award & Recognition Program” link, located on the “Events” pull-down menu.

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Belvoir Federal Supports 'Month of the Military Child'

April began the Month of the Military Child, a 30-day celebration of the courage and sacrifice of military youth. On Fort Belvoir, the celebration originated with a dinner where servicemen, family members, and children filled the Fort Belvoir Community Center’s ballroom.

The event, hosted by the Directorate of Family and Morale, Welfare, and Recreation (DFMWR), featured remarks from Fort Belvoir’s U.S. Army Garrison Commander, Col. Gregory D. Gadson, and Trevor Romain, Co-Founder of the Comfort Crew for Military Kids, along with raffle prizes for the families. [read more]

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Richmond Postal Staff Participate in MDA Fundraiser, Teach Money Management Basics to Local Girl Scouts

Richmond Postal Credit Union has been very busy recently! Elizabeth Smiarowski, collection manager, participated in the MDA Lockup and raised $725 for the charity. Staffer Ellen Bruton, meanwhile, provided personal finance education to Girl Scout Troop #105, South of the James. The topic was Money Matters and girls from kindergarten through fifth grade were presented with lessons to identify money, count change, learn about wants versus needs, ways to earn money, ways to save, and more! [read more]

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Chapter News

Tidewater Chapter to Award $10,000 in Scholarships on May 16

The Tidewater Chapter will award $10,000 in scholarships to deserving local high school students at its May 16 Scholarship Night. Please make plans to attend, as we honor deserving students in their pursuit of their educational dreams! Location: Greenbrier Country Club (1301 Volvo Parkway, Chesapeake, 23320). Time: 6 p.m. social; 6:30 p.m. dinner. Make your reservations by May 10! [learn more]

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Tidewater Chapter to Host July 26 Charity Golf Tournament

Join the Tidewater Chapter July 26 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. Fee includes a hot dog lunch, cart, range balls, green fees and cookout dinner. Shotgun start at 1 p.m. Proceeds will benefit Children’s Miracle Network Hospitals. Sponsorships are also available, ranging from $250 to $1,000, and your support is greatly appreciated! [learn more] (Word document, 930kb)

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Richmond Chapter Meeting Slated for May 21

The Richmond Chapter will host its annual Scholarship Night on May 21. Join us as we support young credit union members pursuing their education dreams. Also on the agenda is a program by Michael Zieg, of MasterCard Worldwide, who will speak on "Inspiring Member Loyalty." Location: Hilton Garden Inn Airport. Time: 5:30 p.m. registration, 6 p.m. welcome; 6:45 p.m. scholarship awards and program. RSVP by May 10 for the early bird rate of $30; $35 thereafter. Contact Dianna Clouse at dianna.clouse@vacu.org. [learn more] (pdf, 435kb)

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Richmond Chapter News

> The Richmond Chapter will host Credit Union Night at the Diamond on May 18. Join us as we catch Double-A baseball action between the Richmond Flying Squirrels and the Altoona Curve. Game time is 6:05 p.m. [learn more

> Richmond Chapter to Host 19th Annual Susan J. Adams Memorial Golf Tournament to Benefit CMN Hospitals

The 19th Annual Susan J. Adams Memorial Golf Tournament tees off July 29 to benefit Children’s Miracle Network Hospitals. The Chapter has renamed this event to honor the hard work and dedication of the late Susan Adams, who coordinated this event for 18 years. She made this tournament a great success, raising more than $200,000 during those 18 years! [learn more]

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Roanoke Valley Chapter Meets May 21

Scott Vail, of Vail Appraisals LLC, will present a program on current real estate market conditions and recent trends at the Roanoke Valley Chapter's May 21 meeting. Location: Salem Civic Center. Time: Cash bar at 6 p.m.; dinner 6:30 p.m.; and program 7 p.m. Cost: $19. Please respond by noon, May 17, with names of attendees to Jim Scott by email to jscott@memberonefcu.com. [learn more]

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Financial Education News

Cordray Calls for Financial Education in Schools

The Consumer Financial Protection Bureau is recommending that policymakers implement a nationwide financial education program into grade school as well as standardized tests. Upon issuing a white paper Tuesday, CFPB Director Richard Cordray called the current process "utterly unacceptable" in which consumers mostly learn how to manage their finances by trial-and-error.

"We must be deliberate about pursuing financial education in our schools," said Cordray said in prepared remarks at a conference on Investing in Our Future. "Failing to do so is to condemn boys and girls to make the same mistakes others have made before them by enrolling them in the 'school of hard knocks,' which we all know is no school at all."

The CFPB is asking for "integrated curricula" on finance in schools, starting with kindergarten and leading up to more personal finance training in high school, including a state requirement for a stand-alone financial education course to graduate. (American Banker Online, April 30)

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Marketing News

Want Satisfied Members? Make Your Loyalty Program Easy to Use

Offering better rewards may not be the best way to foster member/customer loyalty. A new study from Maritz Loyalty Marketing in Toronto found that a main driver of consumer satisfaction with financial-services firms' loyalty programs is how easy they are to use, rather than the financial incentives they offer.

The survey also showed that financial institutions need to balance consumers' need for communication with privacy concerns. The five top factors determining the level of satisfaction were whether the program meets the consumer's needs, the ease of redeeming rewards, the quality of rewards available, total earning potential and the number of ways to earn points. (American Banker Online, May 9)

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News About The Competition 

More Banks Plan to Add, Not Subtract, Branches

Many banks plan to add to their branch networks over the next few years even though all the evidence suggests that foot traffic is declining and that most banking transactions are now conducted online.

More than six in 10 banks say they expect to have more branches in five years than they do now, while less than 20% say they will have fewer, according to a new report from the consulting firm Celent. That's despite the fact that branch traffic has been declining by 5% a year and accelerating to the point that between 30% and 60% of all branch traffic could disappear within five years, according to banks surveyed by Celent.

"There's a widespread belief that branches are going to die but everyone still wants more branches," says Bob Meara, a senior analyst at Celent and co-author of the report. "Rather than resisting branch closures or considering closure a move of last resort …banks [should] adopt a proactive, strategic view of this opportunity," Celent said in the report. "Then, resources can be applied to leveraging competitive advantage gained through [multichannel] banking rather than a persistent overreliance on the branch channel." (American Banker Online, May 9)

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Technology News

Consumers Increasingly Comfortable with Mobile Banking

Americans are increasingly taking to the mobile channel to take care of tasks, including their banking needs. In new research, 75% of people polled said they are equally comfortable accessing their financial accounts from their mobile devices as they are accessing them from laptops and/or desktops. These are findings of a report published Tuesday by Mojiva, a mobile ad network.

The research, conducted in March, pulled from 1,000 completed consumer responses. Mojiva said it drew from consumers who owned at least one smartphone and one tablet and who self-identified as having interest in financial news, services or products. The firm's report also showed that 72% of all respondents use a retail banking app/site weekly, while 56% of respondents said they use a credit card app/site weekly.

Three other interesting nuggets from the study include: 79% of those surveyed said they read financial news on their tablets or smartphones; 58% of respondents use their smartphones or tablets to pay bills and invoices 25% or more of the time; and consumers are most likely to respond to mobile ads for financial products or services during working hours or in the early evening (22% for each). (American Banker Online, May 9)

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Payment Systems' Future Is Topic Of CUNA Committee Paper

Mobile technology is here to stay and all evidence points to it having an increasing role in the payments ecosystem. Being at the center of members' payments is essential to the credit union's sustainability, relevance and competitiveness, reports a white paper commissioned by the Credit Union National Association's Community Credit Union Committee.

"The Future of Payment Systems for Credit Unions" was prepared by George A. Hofheimer, chief research and innovation officer at Filene Research Institute. (To access the full report use this link.) It outlines 12 trends in payments systems and offers tips for credit unions related to payments.

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Human Resource Management

2014 A 'Watershed' Year For Health Care Reform Compliance

2014 will be a “watershed” year for employers to meet mandates and deadlines related to the Affordable Care Act, and credit unions still have plenty of work to do to ensure they are in compliance with the law, two speakers told a CUNA Human Resources and Training and Development Council Conference audience recently.

Citing CUNA’s 2012-2013 Credit Union Staff Survey for Human Resources Planning study, CUNA Mutual Group’s Brad Pricer said just 31 percent of credit unions surveyed indicated they were ready for ACA requirements in 2013 and 2014. [read more]

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