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News Now

March 3, 2015

CUNA-backed MBL bill reintroduced to raise cap to 27.5%

WASHINGTON (3/3/15)--CUNA welcomed the reintroduction Monday of a bill that would raise the cap on credit union member business lending (MBL) to 27.5% of assets. Introduced by Reps. Ed Royce (R-Calif.) and Gregory Meeks (D-N.Y.), the Credit Union Small Business Jobs Creation Act (H.R. 1188) is identical to a bill introduced by Royce in the last Congress.

"I thank Reps. Royce and Meeks for their strong leadership and support of credit unions and small businesses," said CUNA President/CEO Jim Nussle. "This common sense legislation would allow credit unions to do so much more to help small businesses grow, creating jobs for hard-working Americans and boosting our economy." (See related story: CU's loan makes small biz feel 'important,' owner says.)

To qualify for the higher MBL threshold, credit unions must be well capitalized, have a history of MBL experience, be operating at no less than 80% of the cap for the previous year and receive approval from the National Credit Union Administration.

CUNA estimates that raising the cap from the current 12.25% of assets would create 140,000 new jobs and allow credit unions to lend an additional $13 billion to small businesses, with no cost to taxpayers.

"Current regulations arbitrarily cap the ability of our nation's credit unions to lend to small businesses. Main Street businesses looking to expand and hire more workers have suffered as a result," said Royce in a statement. "The Credit Union Small Business Jobs Creation Act removes this obstacle to lending and ensures that qualified credit unions are better able to support Americans who need loans to start, sustain, or grow their businesses."

Raising the MBL cap is a major legislative priority for CUNA, due to the regulatory relief it would achieve. CUNA will send a letter of support for the legislation.

Bill to codify CU Advisory Council, create small biz panel is introduced

WASHINGTON (3/3/15)--A House bill was reintroduced Monday that would both establish a Small Business Advisory Board to the Consumer Financial Protection Bureau, as well as codify the bureau's existing credit union and community bank advisory councils.

The bill was introduced by Reps. Robert Pittenger (R-N.C.) and Denny Heck (D-Wash.).

CUNA Chief Advocacy Officer Ryan Donovan welcomed the bill's introduction, saying, "The engagement that the credit union system has had with the CFPB through the credit union advisory council has been positive and this legislation is important because it would ensure the council continues as a matter of law."

Just last Friday, CUNA President/CEO Jim Nussle sent a letter to recommend credit union candidates for the CFPB's  Credit Union Advisory Council and Consumer Advisory Board. He noted that membership on CFPB's advisory boards is key to ensuring the unique perspective of credit unions is not only heard, but also taken into consideration as a part of any and all rulemakings affecting credit unions.

The new Small Business Advisory Board, if the bill is enacted, would be charged with providing information on emerging  practices of small business concerns that provide eligible financial products or services, including regional trends, concerns, and other relevant information. ​

2014 CU loan growth reached a 9-year high: NCUA 4Q numbers

ALEXANDRIA, Va. (3/3/15)--Loan growth at federally insured credit unions climbed last year to the highest level since 2005, according to fourth quarter data released by the National Credit Union Administration Monday.

Memberships, assets, deposits and net worth saw positive growth in the fourth quarter of 2014, and net interest margins held steady from the first quarters and were slightly higher than the end of 2013.

Mike Schenk, CUNA vice president of economics and statistics, said the NCUA's information reflects results reported in CUNA's monthly survey of credit union released last month.

"Strong and broad-based loan growth was clearly one of the defining characteristics of credit union operating results in 2014," Schenk said. "Perhaps more impressive is the fact that credit union memberships grew by an astounding 3.1% in the year. That's the biggest one-year percentage increase in memberships in 20 years and represents growth that is more than three times faster than the rate of U.S. population growth.

"Clearly, an increasing number of Americans recognize credit unions as their best financial partner," he said.

Outstanding loan balances grew 10.4% between the end of 2013 and the end of 2014, and total loans reached $712.3 billion.

This includes:
  • Total first mortgage loans outstanding were up 2% to $292.2 billion from the previous quarter and up 8.8% from the fourth quarter of 2013;
  • Second mortgage loans were up 0.7% to $72 billion from the previous quarter and up 2.3% from the end of 2013;
  • New auto loans were up 4.8% to $86.3 billion from the previous quarter and up nearly 21% from the fourth quarter of 2013;
  • Net member business loan balances were up 2.8% to $51.7 billion from the previous quarter and up 12.4% from the fourth quarter of 2013; and
  • Payday alternative loans outstanding were up 16% to $37 million from the previous quarter and up 36.2% from the fourth quarter of 2013.
NCUA Chair Debbie Matz said the loan growth helped credit unions reduce reliance on long-term investments to generate income. Investments declined in all categories except those with maturities of one to three years, which rose by 11.8%  from 2013, for a total of $99.7 billion.

Investments with maturities greater than 10 years dropped 21.6% from the end of 2013, to $5.6 billion.

The NCUA has posted details of fourth-quarter call reports, as well as a summary of fourth-quarter performance and financial trends data for federally insured credit unions.

On CUNA's radar: CFPB report to Congress, cybersecurity

WASHINGTON (3/3/15)--Consumer Financial Protection Bureau (CFPB) Director Richard Cordray will deliver the sixth semiannual report to the U.S. House Financial Services Committee today. Cordray's appearance is one of several Congressional hearings CUNA will be paying close attention to this week.

The CFPB director is required by the Dodd-Frank Act to testify on the bureau's activities twice per year. Today's hearing will cover CFPB activities from April 1 to Sept. 30, 2014.

The hearing is scheduled to begin at 2:30 p.m. (ET) and will be streamed on the committee's website .

Other hearings of interest scheduled for this week include:
  • Today: House Energy and Commerce oversight and investigations subcommittee, "Understanding the Cyber Threat and Implications for 21st Century Economy," 2:30 p.m. (ET). Cybersecurity expert witnesses will focus on the history, evolution and future of cybersecurity and its effect on the economy;
  • Today: Senate Banking Committee, "Federal Reserve Accountability and Reform," 2:30 p.m. (ET). Business and economics experts will testify; and
  • Wednesday: House Committee on Homeland Security subcommittee on cybersecurity, infrastructure protection and security technologies, "Industry Perspectives on the President's Cybersecurity Information Sharing Proposal," 2 p.m. (ET). Various industry stakeholders will share their perspectives on the recently announced information-sharing initiative.
Last week in Congress, Small Business Administration (SBA) Administrator Maria Contreras-Sweet testified before the House Small Business Committee on the agency's fiscal year 2016 budget. The SBA is requesting $860 million, a 3% reduction from the current budget.

The budget includes the highest-ever authorization request to Congress for the SBA's 7(a) lending program, $21 billion, up from $19.2 billion last year. It also seeks full funding for resource partners, including Small Business Development Centers, SCORE partners, Women's Business Centers and Veterans Business Outreach Centers.

The SBA recently entered into a memorandum of agreement with the National Credit Union Administration, and reached out to CUNA about connecting with more credit unions. The SBA-guaranteed portions of its loans do not count against a credit union's member business lending cap.

FASB credit-losses proposal most-read Feb. News Now article

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MADISON, Wis. (3/3/15)--An article reporting that the Financial Accounting Standards Board (FASB) proposal regarding credit losses would likely "have a significant, detrimental impact on a number of credit unions and their members" was the most-read News Now article in February.
In response to the report, CUNA President/CEO Jim Nussle wrote to all seven FASB board members to reiterate the message sent last year to FASB: that the board should refrain from imposing the proposed changes on credit unions.
The Top 10 articles for the month included:
10. CFPB may temporarily suspend credit card agreement submissions

WASHINGTON (2/26/15)--Credit card issuers could see a reduced burden for one year under a Consumer Financial Protection Bureau proposal issued this week.
9. Curtain rises in less than a month for CUNA GAC

WASHINGTON (2/9/15)--In less than a month, nearly 5,000 credit union leaders will be coming together in Washington, D.C., for CUNA's 2015 Governmental Affairs Conference--the credit union movement's premier conference.
8. 16 indicted in fraud thwarted by Widget Financial

PITTSBURGH (2/5/15)--On Monday, federal prosecutors indicted 16 people allegedly associated with an identity theft and wire fraud scam that was uncovered by Widget Financial FCU, Erie, Pa., in 2012.
7. CUNA to launch unique survey examining CUs' post-Dodd-Frank compliance costs

WASHINGTON (2/12/15)--CUNA has commissioned a comprehensive study and fact-based analysis of the compliance costs credit unions face due to the heavy burden of regulation. Wally Murray, president/CEO, Greater Nevada CU, Carson City, Nev., announced the CUNA initiative in his testimony on regulatory relief at a Senate Banking Committee hearing this morning.
6. Nussle on Bloomberg: CUs best suited to meet consumers' financial needs

NEW YORK (2/23/15)--CUNA President/CEO Jim Nussle refuted point-by-point longstanding misunderstandings about credit unions in an appearance on "Bloomberg Surveillance" Friday.
5. 'Significant' concerns with same-day ACH plan, CUNA says
WASHINGTON (2/9/15)--While same-day automated clearinghouse (ACH) payments would create a faster payments option, CUNA has significant concerns about the same-day ACH proposal issued by NACHA--The Electronic Payments Association. The proposal would enable the option for same-day processing of virtually any ACH payment.
4. CUNA welcomes NCUA's review of 'small entity' threshold
ALEXANDRIA, Va. (2/20/15)--CUNA welcomes the National Credit Union Administration's (NCUA) review of the definition of "small entity." The NCUA issued a proposal Thursday that would expand the definition of the term "small entity" to include credit unions with assets of less than $100 million; however, CUNA maintains a much higher threshold of $500 million would be appropriate for purposes of reduced regulatory burden.
3. CUNA provides memorandum on UBIT refunds

WASHINGTON (2/18/15)--CUNA has asked outside counsel, Foley & Lardner LLP, to prepare a memo with general information on how credit unions can claim tax refunds on income exempt from Unrelated Business Income Tax (UBIT) and what a credit union might expect if it files for a refund.
2. Bill to allow CUs to raise supplemental capital met with CUNA support
WASHINGTON (2/13/15)--A reintroduced bill that would allow credit unions to raise other forms of capital has been met with strong support from CUNA. Reps. Peter King (R-N.Y.) and Brad Sherman (D-Calif.) introduced the Capital Access for Small Businesses Act earlier today.
1. FASB credit losses plan likely to be detrimental to CUs, warns CUNA

WASHINGTON (2/20/15)--A FASB proposal regarding credit losses is "likely to have a significant, detrimental impact on a number of credit unions and their members." CUNA President/CEO Jim Nussle wrote to all seven FASB board members this week to reiterate the message sent last year to FASB: that the board should refrain from imposing the proposed changes on credit unions.

League-backed PLS, ATM bills become law with stroke of Va. gov.'s pen

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RICHMOND, Va. (3/3/15)--Virginia Gov. Terry McAuliffe last week signed into law two pieces of legislation backed by the Virginia Credit Union League, including one that would allow credit unions to offer prize-linked savings (PLS) accounts.

PLS accounts encourage savings by offering members entries into cash raffles each time they put away a set amount of money into savings. Members don't risk anything because, even if they don't win, they keep all the money they have saved.

"It's been a good General Assembly session for credit unions and we're pleased that our bill to allow credit unions and banks to offer prize-linked savings programs has been signed by the governor," league President Rick Pillow told News Now . "Credit unions still embrace our mission to promote thrift and savings and the authority to offer prize-linked savings programs is simply another opportunity to help our members develop and maintain a savings habit."

Ryan Donovan, CUNA chief advocacy officer, highlighted the passage of the two bills in his weekly " Legislative Update ." (See related story: On CUNA's radar: CFPB report to Congress, cybersecurity hearings.)

PLS accounts so far have been approved in 11 states. The other 10 states include Connecticut, Indiana, Maine, Maryland, Michigan, Nebraska, New York, North Carolina, Rhode Island and Washington.
In Minnesota last week, two bills sponsored by the Minnesota Credit Union Network allowing credit unions to offer prize-linked savings were introduced in both the Minnesota House and Senate.

Since 2009, credit unions offering PLS accounts have helped more than 50,000 members save $94 million.

The second law in Virginia will ease regulatory burden for credit unions related to ATM services, the league said. Previous Virginia law required state-chartered financial institutions to notify state regulators any time they want to place or remove an ATM, something federally chartered institutions and ATM providers were not required to do. The new law eliminates that notification requirement, creating parity for state-chartered institutions.

"We appreciate the good work of our credit unions in lobbying for these two bills during our Credit Union Days at the General Assembly," Pillow said. "When lawmakers hear their constituents care about specific legislation, they pay attention. It makes our job at the Capitol that much easier."

Cornerstone in 2014: $9K in savings per member

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FARMERS BRANCH, Texas (3/3/15)--Consumers from Texas, Oklahoma and Arkansas who picked credit unions over banks to manage their finances last year appear to have made the right choice, according to recent numbers from the Cornerstone Credit Union League.

Click to view larger image (Cornerstone Credit Union League Graphic)
Based on the league's research, credit unions in the three states managed an average of $9,000 in savings per member in 2014 (Leaguer March 2).

Further, credit unions provided an average of nearly $7,000 in loans to each member--increasing total portfolio assets by more than 10%, or $6.2 billion--and granted more than 3.1 million new loans.

"That's nearly 12,000 loans issued every business day, or 25 loans every minute," the league said.

More than one-quarter of all residents in the states' combined populations used a credit union last year.

The report also found that credit unions:
  • Issued nearly $36 billion in new loans, or roughly $98 million per day;
  • Spent more than $1.6 billion on compensation for nearly 24,500 employees;
  • Spent nearly $129,000 per day to train and educate employees;
  • Purchased more than $133 million in advertising and promotional materials;
  • Paid more than $1.1 million per day for professional and outside services; and
  • Paid more than $1.7 billion for goods and services in their local communities.

Ihrig named new chief compliance officer at CUNA, Thompson retires after 35 years

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WASHINGTON (3/3/15)--Jonathan "Jared" Ihrig has been promoted to chief compliance officer for CUNA. Effective immediately, Ihrig will manage staff to provide compliance information to leagues and credit unions, as well as provide assistance to CUNA's advocacy department in assessing the impact of federal legislation on credit union operations.
"Jared will bring a wealth of legal knowledge and knowhow to his new role, which will contribute greatly to the success of credit unions and CUNA," said CUNA President/CEO Jim Nussle. "Jared will make a great addition to CUNA's leadership team, and I look forward to continuing to work with him."
Ihrig will replace Kathleen "Kathy" Thompson as chief compliance officer. Thompson, who has plans to retire from CUNA this summer after more than 35 years, will stay on board during the transition.
"Kathy has been a leader in the financial industry for decades," said Nussle. "Her work has raised the bar for the credit union system, and she will be missed. Kathy will always be a friend to CUNA, and I wish her well in retirement."
Ihrig has been with CUNA since 2011, most recently serving as senior director of advocacy and counsel for regulatory affairs. He also worked in the regulatory and compliance field at law firms in Texas. Ihrig also was senior compliance officer at Security Service FCU, San Antonio, and director of compliance/assistant general counsel at American Airlines FCU, Fort Worth.
Ihrig also is a certified public accountant. He earned his law degree from Oklahoma City University and his bachelor's degree from Oklahoma State University.

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