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September 2, 2014

NEW: Loan balances up 9.8% according to NCUA 2Q data

ALEXANDRIA, Va. (9/2/14 11:20 a.m. ET)--Second quarter data from the National Credit Union Administration indicates the highest year-over-year loan growth since 2006, the agency announced today. Data also showed federally insured credit unions saw membership grow by 909,452 over the last quarter.

Lending increased in all categories, with outstanding loan balances up 9.8%, to $673.9 billion from the same time last year.

The data released from the NCUA shows federally insured credit unions saw:
  • New auto loans grow 17% to $77.7 billion;
  • Used auto loans increase 11.6% to $135.3 billion;
  • Net member business loan balances rise 12% to $48.8 billion; and
  • Non-federally guaranteed student loans increase 26% to $2.9 billion.
First mortgage real estate loans reached $279.2 billion, up 9.9% from the second quarter of 2013. Of those loans 61% had fixed rates.

The growth in total loans over the year contributed to a 4.2 percentage-point increase in the overall loan-to-share ratio, which reached 71.7%, the highest ratio since the fourth quarter of 2010.

Total membership in federally insured credit unions now stands at 98 million, according to the NCUA.

The Credit Union National Association announced that total credit union membership passed the 100 million mark in June. According to CUNA's monthly survey, that number grew by 0.4% in July, bringing total credit union membership to 100.5 million.

See tomorrow's News Now for more on the NCUA's second quarter data. ReadMore

Other Resources

Engaged members fuel CU loan growth: MCUE survey

CU System
MADISON, Wis. (9/2/14)--Credit union lending numbers continue to come in strong, with July's monthly and year-over-year increases notching levels not seen in years, according to the monthly survey of credit unions from the Credit Union National Association.
 
Click to view larger image (Source: CUNA Economics and Statistics)
"The monthly credit union estimates report first and foremost makes it clear that members remain engaged--reflected in a continuation of strong results in the lending arena," said Mike Schenk, CUNA interim chief economist.
 
"Overall, the 1.4% monthly increase in loans (16.7% annualized) is the fastest monthly advance since August 2005, and the 10.2% year-over-year increase is the highest seen in nearly a decade," he told News Now .
 
Year-to-date loan growth has increased 6.2% compared with 3.4% for the same period last year.
 
"Importantly the increases are broad-based with four of the key portfolios we track reflecting double-digit increases: new autos are up 19.7% over the past 12 months, followed by adjustable-rate mortgages (14.1%), used autos (13.4%) and personal unsecured loans (11.7%)," Schenk noted.
 
"Beyond this, we see solid increases in credit cards, which increased 7% in the past year and a decent 12-month jump in fixed-rate first mortgages (6.7%). Even home equity loans reflect a healthy increase--with a 5% increase compared with July 2013 levels," he said.
 
Only second-mortgage portfolios showed some weakness, with a 2% decline over the past year.
 
Schenk said, "Look for strong loan growth to continue, fueled by improving labor markets, higher incomes and an abundance of pent-up demand.
 
"Of course, those conditions will help to buoy credit union bottom-line results and are certain to push both delinquency and net charge-off rates lower in the coming months."
 
Click to view larger image (Source: CUNA Economics and Statistics)
Savings balances declined less in July (0.1%) compared with June's drop of 0.6%. One-year certificates experienced gains of 0.8%, while declines were seen in individual retirement accounts, share drafts, regular shares and money market accounts.
 
In June, the milestone of 100 million credit union memberships was reached. July's numbers show continued growth--0.4%--bringing the number to 100.5 million.
 
Credit unions' overall capital-to-asset ratio remained at 10.7%. The loan-to-savings ratio ticked up to 73% in July from 71.9% in June, and the liquidity ratio fell to 16.2% from 16.4% in June. ReadMore

Even 1 step makes a difference in preparing for disasters

CU System
MADISON, Wis. (9/2/14)--This year's theme for National Preparedness Month is "Take Action to Prepare," and taking just one step can make a difference in getting your credit union ready.
 
Click to view larger image These eight steps are only part of an infographic that can help credit unions kick start their disaster preparedness plans. (Agility Recovery Graphic)
"Take a single step forward," said Scott Teel, marketing director at Agility Recovery Services, a CUNA Strategic Services alliance provider. "When it comes to disasters, any step a credit union takes will benefit its employees, members, community and business." And many of those steps don't take a lot of time, effort or money.
 
One action is creating a crisis communication plan. No matter how large or small the crisis, you must be able to communicate your status to your employees and your members, Teel told News Now .
 
"If it's a power outage that's affecting one branch, or only certain transactions can be completed on mobile banking, if you have the ability to remotely update a website with an alert, it will make it so much easier for members," he said.
 
Don't make assumptions that the cell-phone or Internet service provider will be dependable during an emergency. Think about texting people instead of calling them when cell service is down.
 
"Depending on one certain device is a gap in a preparedness plan," Teel said.
 
In order to contact them, though, you must have collected that contact information. Teel suggests updating the company's contact list. "Include personal contacts--a parent, a spouse, a friend. Have a means to communicate with them," he said.
 
Credit unions can provide something as simple as a contact card for their members. "As kids go back to school, have the parents fill out one of your cards and give it to the kids to keep in their backpacks or lockers," Teel advised. "It shows that you care for your members beyond transactions, and it keeps preparedness at the top of their mind, too."
 
National Preparedness Month is a one-month focused campaign of the Federal Emergency Management Agency's (FEMA) Ready.gov awareness program.
 
As part of its goal to "spread the gospel of preparedness," Agility provides resources year-round for individual and businesses of all types.
 
Agility, in conjunction with the U.S. Small Business Administration and FEMA, will hold four free, half-hour webinars, starting Wednesday, for National Preparedness Month:
  • "Crisis Communications for any Organization," 2-2:30 p.m. (ET) Wednesday;
  • "How to Plan for a Power Interruption ... and Recover Fast," 2-2:30 p.m. (ET) Sept. 10;
  • "The Top 5 Steps for Preparedness This Year," 2-2:30 p.m. (ET) Sept. 17; and
  • "If You Do Nothing Else This Year ...," 2-2:30 p.m. (ET) Sept. 24.
ReadMore

MyCreditUnion.gov: Making fin. ed. resources available: Part I

Washington
ALEXANDRIA, Va. (9/2/14)--While most of the National Credit Union Administration's day-to-day functions involve its mandate of regulating, chartering and supervising federal credit unions, as well as operating the National Credit Union Share Insurance fund, the agency also exists as a resource to credit unions and their members.

MyCreditUnion.gov is the NCUA's official consumer protection website, launched in 2011. Morgan Rogers, director of the NCUA's Division of Consumer Affairs, in an interview with News Now , said the site is intended to be a resource for anyone interested in financial literacy, especially credit unions members, staff and board members.

"Our goal is to make financial education resources available to all who need them. Credit unions, by their nature, tend to be community-based organizations, which puts us in a unique position," she said. "As member-owned institutions, the more financial literacy members are exposed to, the better it is for the entire system."

The site also contains the basics on credit unions, everything from the history of the credit union movement, to fraud prevention tools, to information on how share deposits are insured.

"Some of our top-viewed web pages are the ones with the explanations of what a credit union is, the differences between credit unions and banks and how deposits are insured," added Kenneth Worthey, financial literacy and outreach analyst with the NCUA's Office of Consumer Protection. "Hopefully the site is becoming a go-to resource for people who might be interested in becoming a credit union member."
 
In addition to information about credit unions, the site contains the latest information on consumer protection issues, credit reports and scores and tips to prevent identity theft and other scams.

The NCUA takes more than one route to support consumer financial education. Agency staff also take a proactive approach by participating in such things as the U.S. Department of Defense's annual Financial Readiness events and Financial Literacy Day on Capitol Hill. The agency also hosts webinars for credit unions--like the one in April, also known as Financial Literacy Month, which was attended by more than 400 people--with an additional 130 watching online.

"When we see representatives from 400 different credit unions attending something like this, we see 400 credit unions that are ready to reach out to their members, to inform their members about the resources that are available to them," Rogers said. "We see the members of those credit unions benefitting from this because their credit union is actively looking at ways to spread financial literacy strategies."

The NCUA is active on the social media front as well. It has hosted several Twitter chats this year using its @TheNCUA account, and the @MyCUGov Twitter accounts to tweet out daily tips. Some examples include: "Credit cards must tell you at least 45 days before your rate/account terms change," "Consider keeping emergency savings in a seprate, federally insured savings account" and "Paying bills late can affect your credit score just as much as missing a payment."

Watch for part 2 of this article in the Thursday issue of News Now . ReadMore

Other Resources

S.F. paper notes Bay Area CUs' growth, 100M milestone

CU System
SAN FRANCISCO (9/2/14)--The San Francisco Business Times last week heralded the strength of California's Bay Area credit unions in an article that highlighted the national 100 million membership milestone.
 
"In the banking world, 100 million isn't a big number," the article's lead paragraph read. "After all, $100 million will pay a year's compensation for a handful of big-name CEOs. But 100 million is plenty big for credit unions. Membership nationally crossed the 100 million-member mark in June for the first time ever, according to the Credit Union National Association. Bay Area credit unions are tapping into this surge, adding loan products and services as well as expanding their branch networks."
 
The article included CUNA statistics that indicate credit union membership rose 2.9% over the past year as 1.7 million additional members were added, marking the fastest growth since 2000.
 
"There is clearly growing recognition about credit unions among consumers," Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, told the Times . "They understand credit unions place their interests above all else, particularly in returning financial benefits to consumer members in the form of lower rates on loans, higher returns on savings, and lower and fewer fees."

The article described how credit union growth has occurred in step with publicity surrounding bank fee hikes and account balance requirements. Those actions aren't the case at most credit unions.

Patelco CU, Pleasanton, with $4 billion in assets, recently reduced 39 different fees, a strategic decision that is expected to save members $800,000 annually. Patelco also saw loan growth of almost 18% over the first seven months of 2014, compared with less than 18% gain in 2013. The credit union's product-per-member rate is 4.04, CEO Erin Mendez told the Times .

Credit unions built their reputation on auto loans, and San Francisco FCU, with $884 million in assets, continues to build relationships with that product, President/CEO Steven Stapp told the paper. When they finance their vehicles, members often switch other accounts to the credit union, and banks have created more opportunities for the credit union to market its free checking, Stapp said.

Bay Area credit unions also offer business loans. Santa Rosa-based Redwood CU expanded into member business lending in 2005 to meet member needs because members couldn't find credit elsewhere. Now member business loans account for $221 million in the credit union's lending portfolio. ReadMore

CUNA seeks comments on FinCEN customer due diligence proposal

Washington
WASHINGTON (9/2/14)--The Credit Union National Association has issued a comment call for a proposed rule that would clarify and strengthen member/customer due diligence obligations of financial institutions.

The proposal, issued by the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN), aims to amend regulations in the Bank Secrecy Act (BSA) to prevent anonymous companies from conducting illegal activity in the American financial sector ( News Now Aug. 4).

The rule would clarify that customer due diligence includes: identifying and verifying identities of members; identifying and verifying beneficial owners of legal entity members; understanding the nature and purpose of member relationships; conducting ongoing monitoring to maintain and update customer information and to identify and report suspicious transactions.

There would also be a new explicit regulatory requirement for a financial institution to establish and maintain written customer due diligence procedures that are "reasonably designed to identify and verify beneficial owners of legal entity customers." Existing supervisory guidance would also be incorporated.

The proposed effective date would be one year after the final rule is issued.

CUNA's comment call asks credit unions to answer several questions, including:
  • Does your credit union generally support this proposed customer due diligence rule?

  • Do you have an estimate of the additional compliance costs that would arise from the new requirements for beneficial owners? FinCEN believes that a financial institution would have to spend an additional 20 minutes to receive and verify the information on the new certification form for each new account opening; and

  • Does your credit union have any comments regarding the scope of the proposed exemptions? Are there any additional accounts that should be exempt?
Comments to CUNA are due by Sept. 22, and the deadline for comments to FinCEN are due by Oct. 3.

Use the resource link to access the full comment call. ReadMore

Carpenter to be nominated Treasury asst secretary for financial markets

Washington
WASHINGTON (9/2/14)--President Barack Obama announced he will nominate Seth Carpenter to be the U.S. Treasury's assistant secretary for financial markets.

The position reports to the undersecretary of the Treasury for domestic finance, who oversees policy relating to domestic finance issues, fiscal policy,  fiscal operations, government assets, government liabilities, and other related economic and fiscal matters.

Carpenter is currently a senior advisor in the Office of Financial Markets. From 2013 to 2014, he served as the deputy assistant secretary for economic policy at the Treasury, and was at the Board of Governors of the Federal Reserve from 1999 to 2014. 

He also taught undergraduate and graduate courses at Duke University, the College of William and Mary, George Washington University and The Johns Hopkins University. 

Carpenter would replace Matthew Rutherford, who has taken over as undersecretary for domestic finance on an interim basis. ReadMore

Other Resources

NCUA prohibits 3 from participating in CU activity

Washington
ALEXANDRIA, Va. (9/2/14)--Three individuals have been prohibited from participating in the affairs of any federally insured credit union, the National Credit Union Administration announced.

The individuals are:
  • Donna Harabin, former president/manager of Telco FCU in Elmira, N.Y., with $22 million in assets, pleaded guilty to the charge of making false entries. Harabin was sentenced to time served and ordered to pay a fine of $500;

  • Cindy Moser, former employee of Logan Medical FCU in Logan, Utah, with $18 million in assets, pleaded guilty to the charges of theft and forgery. Moser was sentenced to 90 days in prison, three years of probation and ordered to pay a fine of $583; and

  • Marnett Pich, formerly known as Marnett Parket, a former employee of St. Jean's CU in Lynn, Mass., with $154 million in assets, pleaded guilty to the charge of embezzlement. Pich received six years of probation and was ordered to pay restitution in the amount of $31,019.96.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link below to access the NCUA's administrative orders. ReadMore
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News Now LiveWire
Consumer spending, income slip in July #Market #NewsNow http://t.co/GHFviIePLS
1 hours ago
Breaking on #NewsNow: Loan balances up 9.8% in 2nd Q, per @TheNCUA http://t.co/sqoJTfHQ8q
1 hours ago
#NewsNow S.F. paper notes Bay Area CUs' growth, 100M milestone http://t.co/rxl2TrwRIt
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Take 1 step to prepare See #NewsNow http://t.co/iAmMGHY9V3 HT @AgilityRecovery graphic #NPM @Readygov http://t.co/KDvJl9K9hJ
2 hours ago
#NewsNow: Seth Carpenter nominated to be @USTreasury assistant sec. for financial markets. http://t.co/SfLjscjrEE
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