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July 23, 2014

85% of members feel 100% safe with a CU: Filene

CU System
MADISON, Wis. (7/23/14)--Because they hold credit unions in such high regard, credit union members are more likely than bank customers to keep a greater portion of their holdings with their financial institution--an encouraging development as credit unions continue to seek ways to expand member outreach, according to a new Filene Research Institute white paper.
 
"The Consumer Experience: Financial Institution Preference and Usage Factors," which analyzed McKinsey and Co. survey data from 2013, found that 85% feel their assets are completely safe at their credit union, while only 68% of bank customers feel the same about their institution.

"Credit unions can't prevent every member from shifting their funds or closing their account, but the current outlook for growth is extremely promising," the report noted. "Research is showing how effective credit unions are at creating trust with their members.
 
"As long as this trust is sustained, there is no reason to think credit unions can't grab more market share," the report continued. "We have learned that consumers choose financial institutions based on income, age and attitudes toward service offerings. These preferences are always subject to change. The onus will be on credit union leaders to ensure they don't."

"Lessons learned" in the report included:
  • Credit union members keep a greater portion of their holdings with their primary financial institution than bank customers;
  • Wealthy consumers with more than $150,000 in annual income tend to keep a smaller proportion of their personal assets at their primary financial institution;
  • Consumers with less than $20,000 in household income keep 80% to 100% of their total assets with their primary financial institution;
  • Consumers who use a credit union as their primary financial institution are much more likely than bank customers to agree strongly with positive statements about their primary financial institution;
  • Forty-eight percent of credit union members feel their credit union rewards them for remaining loyal to their brand, compared with 34% of bank customers;
  • Between 75% and 90% of consumers use websites to check balances;
  • Those who use a credit union as their primary financial institution consistently report the highest level of satisfaction with various attributes of their primary financial institution;
  • Only 14% of respondents with incomes of less than $20,000 switched financial institutions for better products, rates, fees or returns; and
  • Forty percent of respondents with more than $150,000 in annual income switched to find better products, rates, fees or returns.
To download the white paper, use the link. ReadMore

NCUA outlines late-filer civil money penalty process

Washington
ALEXANDRIA, VA. (7/23/14)--The civil money penalty process and how it applies to late call-report filers are detailed in the July issue of The NCUA Report , which was published Tuesday. More than 100 credit unions filed their quarterly call reports late in the first quarter of this year, which could result in penalties of varying amounts.

According to the NCUA, 104 credit unions filed late in the first quarter of 2014. The represents and 80% decrease in late filers from the previous quarter.

After the filing deadline for each quarter's call reports, the NCUA generates a report identifying credit unions that missed the deadline, how many days late each institution is, and whether the credit union has been late previously.

Agency staff then manaully verifies the list of late filers, consulting with NCUA regions and state supervisory authorities for state-chartered credit unions. This helps to identify whether any extenuating circumstances contributed to missing the filing deadline.

Once an institution is confirmed, the civil money penalty matrix is applied. The agency's Office of Examination and Insurance sends letters to each credit union with the proposed civil money penalties. The letters are accompanied with legal documents allowing a late-filing credit union to consent to paying a reduced fine to avoid litigation, as well as contact information for an NCUA program officer who will listen to appeal from institutions that believe there are valid reasons for missing a deadline.

Examples of circumstances that may warrant a waiver of penalties include failure of a credit union's core processing system, natural disaster or incapacitation of a key employee.

A penalty is not final until a credit union has signed a consent order agreeing to pay a reduced penalty or an administrative judge has ruled in the NCUA's favor. The names of credit unions paying civil money penalties, along with the amount paid, will be made public, as mandated by federal law. These will be published approximately 11 weeks after the quarterly filing deadline.

All civil money penalties go to the U.S. Treasury, per federal law. No funds are retained by the NCUA for its own use.

According to the NCUA, the hope is that the process will allow examiners to spend time on safety and soundness, as opposed to chasing down late filers.

The deadline for second quarter call reports is Friday. Use the resource link below to access the June NCUA Report . ReadMore

CU programs are tailor-made for Hispanic members' success

CU System
FARMERS BRANCH, Texas (7/23/14)--Hispanics are likely to have clear financial goals but are unsure about how to achieve them, according to a recent survey by Prudentia, thus giving credit unions an opportunity to start conversations about how they can support these goals.
 
Prudential's "Hispanic American Financial Experience" report found that personal debt is culturally taboo--62% indicated there is no such thing as "good debt"--and the desire by almost half of respondents to pay for items with cash.
 
However, nearly 70% recognize that living debt free is not possible, which may create educational opportunities for credit unions and other financial institutions, the report noted.
 
The Prudential study was conducted Oct. 28-Nov. 18 and polled 1,023 Americans age 25-70 who self-identified as Hispanic, had a household income of more than $25,000 and had some involvement in household financial decisions.
 
Through increased community involvement and financial literacy opportunities, credit unions can engage the Hispanic community in setting goals. This is a tactic taken by some credit unions in the Cornerstone Credit Union League's Juntos Avanzamos program.
 
"There is a great financial opportunity for credit unions in the Hispanic market," said Bob Peterson, chair of Cornerstone's International Relationship Committee ( Leaguer July 17). "However, if we want to earn their business, we have to be at the forefront of educating them on how we can help them meet their financial goals."
 
Peterson is also president/CEO of $90 million-asset OneSource FCU, El Paso, Texas--one of 28 credit unions that have received the Juntos Avanzamos (Together We Advance) designation.
 
The Prudential survey also asked what financial institutions could do to better meet Hispanics' needs. The leading answer was to be more involved in the community, followed by having the ability to communicate in Spanish; offer financial education for the community; tailor products/services to the community; provide jobs for Hispanic workers; and use easy-to-understand language.
 
Southwest 66 CU, Odessa, Texas, has tailored products and services to its local Hispanic community. President/CEO Sean Cahill said the $85 million-asset credit union--also a member of the Juntos Avanzamos program--has created a number of specialty loans including a "borrow and save" loan to combat payday lending and establish savings behaviors and a quinceanera loan to cover the cost of celebrations held for girls' fifteenth birthdays ( Perspectives June 26).
 
"The thing we are most proud of is our citizenship loan, as it combines funding with community partnerships," Cahill said. "There are five unique stages to this loan, and each stage requires a commitment from the member before the next portion is funded. We use a local attorney to ensure the member is protected, and make local (English as a Second Language) partnerships to bring the greatest value to the member. We even offer a loan for a suit or dress for the member to wear while attending their citizenship ceremony." ReadMore

Plaintiffs push to continue Target data breach class action

CU System
MINNEAPOLIS (7/23/14)--In response to Target Corp.'s attempt to delay discovery in multidistrict litigation regarding last year's data security breach, plaintiffs filed a joint memorandum opposing Target's request.
 
Earlier this month, the retail giant requested a stay of discovery for the multidistrict litigation, citing a desire to wait until rulings are made on motions to dismiss the class-action lawsuits brought by consumers and financial institutions. This could push discovery until as late as November.
 
"Given the burden that discovery regarding potentially moot questions would impose on the parties and this court, good cause exists for continuing the discovery stay for a few months until the motions to dismiss can be resolved," the retailer said ( Law360 July 3).
 
However, last week, plaintiffs fought the attempted delay of discovery with a joint memorandum filed in the U.S. District Court in Minnesota. "Fact discovery should begin and should not be delayed," the memorandum says, adding that "federal courts disfavor staying discovery while a motion to dismiss is pending, and here, Target has not met its burden of demonstrating that its anticipated motion to dismiss will resolve all claims in its favor."
 
The memo adds, "Target's arguments that Financial Institution Plaintiffs' claims will be dismissed and that Consumer Plaintiffs lack standing are premature and incorrect. Neither argument warrants a stay of discovery. Accordingly, this Court should deny Target's Motion."
 
Financial institution plaintiffs' consolidated complaint will be filed Aug. 1, and Aug. 25 is the due date to file the consumer plaintiffs' consolidated complaint.
 
In May, U.S. District Judge Paul Magnuson said "big, long, indefinite stays" for the class-action lawsuits would not be appropriate ( News Now May 19).
 
Target revealed Dec. 19 that about 40 million debit and credit card numbers were compromised as was the personal information of as many as 70 million customers.
 
A survey by the Credit Union National Association found that credit unions incurred $30.6 million in costs directly related to the breach--not including fraud costs. CUNA is pressing federal lawmakers to address data security relative to merchants, who are not held to the same standards of security as credit unions and other financial institutions. ReadMore

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CUNA: Affordable mortgages bill brings reg relief, mortgage access

Washington
WASHINGTON (7/23/14)--Rep. Blaine Luetkemeyer's (R-Mo.) bill known as the Access to Affordable Mortgages Act would provide regulatory relief for heavily burdened credit unions and increase access to mortgage credit for middle- and low-income borrowers, the Credit Union National Association said in a letter of support for H.R. 5148.

"By providing an exemption from the Truth in Lending Act appraisal requirements for properties with transaction values of $250,000 or less for loans held on portfolio for at least three years, the bill would provide both regulatory relief to mortgage lenders as well as increase access to mortgage credit availability for borrowers purchasing lower cost dwellings," the letter reads. "The bill would also amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to exempt this same category of higher-risk mortgages from the standards prescribed by the federal interagency appraisal requirements, as long as such mortgage loans are held on a lender's portfolio for at least three years."

CUNA supports this bill because it would allow credit unions that offer mortgage loans secured by covered properties to better serve middle to lower income members.

The letter reiterates points made by CUNA witness Doug Fecher, president/CEO of $2.8 billion-asset Wright-Patt CU, Beavercreek, Ohio, at a hearing held by the House Financial Services subcommittee on financial institutions and consumer credit last week. CUNA has testified more than a dozen times in the past three years to fight for regulatory relief for credit unions.

Use the resource link below for more information. ReadMore

NWCUA launches relief effort for central Wash. wildfires

CU System
PORTLAND, Ore. (7/23/14)--The credit union community is offering assistance to victims of the Carlton Complex fire in central Washington, with an initial $5,000 donated by the Northwest Credit Union Foundation (NWCUF).

NWCUF also is encouraging online donations--a similar effort earlier this year resulted in $108,000 in contributions from credit unions and leagues across the nation for victims of the Oso mudslide.
 
The fire burned another 7,000 acres overnight Monday, the Northwest Credit Union Association reported Tuesday ( Anthem July 22). An estimated 150 homes have been destroyed. The Carlton Complex fire is the largest of several wildfires burning in Washington and Oregon this week.
 
"Credit unions in our region have shown time and time again that they understand how important it is to provide immediate support and they always step up when there is a disaster," said Kim Vu, NWCUF executive director. "We always realize that these are not just members of our credit unions, but they also part of the local communities we serve who could be losing their homes and this is when they most need us."
 
Credit unions are raising funds and offering financial assistance to members who may be directly affected by the wildfires. Spokane Teachers CU, with $1.9 billion in assets, Liberty Lake, Wash., is leveraging a longtime relationship with the American Red Cross and a local television station to raise emergency funds for fire victims.
 
Numerica CU, with $1.3 billion in assets, Spokane Valley, Wash., reached out to members through its popular Facebook site to offer both financial assistance and personal support. A spokesperson for Numerica CU reports that as many as 30 members in the Patero location live in one of the active fire zones and could be at risk.
 
Numerica CU also encouraged employees to support the fundraising. For a donation to help victims of the wildfires, employees will receive "Casual for a Cause" coupons valued at $25.
 
In addition, the credit union is sponsoring the Rain Down Hope Benefit Concert today to benefit the Chelan Valley Hope Fire Relief Fund.
 
Credit unions and employees interested in making a donation can donate directly through the NWCUF to benefit the Community Foundation of North Central Washington's Fire Relief Fund. ReadMore

CDFIs can sign up for health center financing webinars

Washington
WASHINGTON (7/23/14)--The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund has announced five free webinars starting in August on the topic of financing community health centers (CHCs) in underserved communities.

According to the most recent CDFI Fund report, credit unions represent 177 of 811 CDFIs active at the end of 2013.

The webinars are scheduled as follows:
  • "Trends in Health Care," 2 p.m. (ET) Aug. 6. An overview of the American health care delivery system and the role CHCs play within it. The session highlights the major shifts occurring in the health care industry, including affordability and cost, and the importance of CHCs providing access to affordable health care;

  • "Defining the CHC Landscape," 2 p.m. (ET) Sept. 9. A historical perspective of the CHC movement and the essential elements to be a federally qualified health center. This webinar will help CDFIs understand the types of patients that health centers serve, the services provided, and the types of revenue and funds generated by community health centers;

  • "Primary Credit Needs of CHCs and Sources of Credit," 2 p.m. (ET) Sept. 24. Highlights the primary types and uses of loan products that CHCs request and summarizes the major sources of capital for community health centers, including those provided by public, private and philanthropic entities;

  • "CHC Financial and Operational Metrics and Trends," 2 p.m. (ET) Oct. 7. Provides an overview of community health centers' operating structures, composition of revenue streams and typical expenses (including staffing structures and how they impact revenues and productivity); and

  • "Underwriting CHCs," 2 p.m. (ET) Oct. 22: Highlights common risks and mitigations in lending to community health centers and how CDFIs should incorporate the financial ratios discussed in the "CHC Financial and Operational Metrics and Trends" webinar in the credit analysis process.
The free webinars are open to the general public. Advanced registration is required to access the presentation. Registration may be completed up until the start time listed for each individual session.

Future webinar opportunities will be posted as they are finalized to the "Financing Community Health Centers" webpage.

Use the resource link below to register and for more information. ReadMore

Decades-high number of VA loans boost housing market

Market
NEW YORK (7/23/14)--National housing market numbers may have underwhelmed lately, but one bright spot has been mortgages approved by the U.S. Department of Veterans Affairs (VA), which offer attractive home loans to current and former military servicemembers.

Accounting for 8.1%, or $19.5 billion, of all mortgages issued in the first quarter, according to Inside Mortgage Finance , after jumping more than 25% in the last two years, VA mortgage loans' share of the market has reached a 20-year high ( Bloomberg.com July 22).

"On Facebook, my friends have started posting: 'I got my VA loan, I got my house," Staff Sgt. Claude Hunter, told Bloomberg.com . "Everybody is just ready. A lot of them have done their jobs overseas and are coming home."

VA mortgage benefits can be accessed by veterans, their surviving spouses, active military members and reservists who have served at least six years or who have been called up for 90 days.

The loans pose less risk to lenders, as the government promises to cover a portion of any losses, normally up to 25% of the loan amount.

Unlike the Federal Housing Administration, which will allow down payments of as little as 3.5%, the VA also doesn't levy monthly insurance premiums, and upfront cost can be combined with loan balances.

Hunter, for example, paid $219,000 for a four-bedroom home in May with VA mortgage financing, and he didn't have to make a down payment, according to Bloomberg.com .

About 90% of VA mortgages don't require down payments.

Michael Litzner, real estate broker for Century 21 Homes, told Bloomberg.com: "It's really the only avenue out there for people who are completely cash-strapped to be able to get into a home." ReadMore

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