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News Now: April 15, 2014

Tax day: Cheney reminds, CU exemption staunchly serves original purpose

Washington
WASHINGTON (4/15/14)--It's tax day and what better day is there, asks Credit Union National Association President/CEO Bill Cheney, to remind credit unions and their members that the tax treatment of credit unions continues to serve the purpose for which it was created--namely, to create substantial financial benefits to members and to the public, far in excess of the cost.
 
"Every April 15, we should all be mindful of our tax exemption, and remind our members and our communities that Congress should not tax credit unions because doing so would represent a tax increase on 99 million Americans. It would likely lead to the elimination of many, if not most, credit unions," Cheney says.
 
According to the latest numbers and estimates gathered by CUNA:
  • The benefits that credit unions provide to both members and others--amounting to an estimated $8.5 billion in 2013 alone--far exceed the total annual tax that could be raised by taxing credit unions (less than one-tenth of that amount, on average, annually).
  • Those benefits are realized by credit union members in the forms of higher returns on savings, lower rates on loans, and lower or fewer fees than members would have paid or received had they been customers at other financial institutions. Those totaled $6.1 billion in 2013.
  • In addition, several independent researchers have found that credit unions have a moderating influence on bank pricing: raising bank deposit interest rates and lowering bank loan rates. Based on this research, CUNA estimates that bank customers saved about $2.4 billion in 2013 from more favorable pricing due to the presence of credit unions in their local markets.
  • Over the past eight years credit union benefits have totaled an estimated $87.3 billion.
The CUNA leader noted the recent decision by the House Ways and Means Committee to leave intact the credit union tax exemption in the committee's proposed tax reform plan, and thanked committee members for doing so.
 
"Thanks to Chairman Dave Camp (R-Mich.) and ranking member Sander Levin (D-Mich.) and rest of the committee for maintaining our tax status," Cheney said. "Repealing the credit union tax exemption would result in negative consequences for savers and borrowers, the most severe of which would be the erosion of a credit union option for millions of Americans. Credit unions must continue to remind their lawmakers, and the public, of the importance and value of the tax exemption."

CUs' strong deposit rates keep beating banks': GOBanking

CU System
LOS ANGELES (4/15/14)--Credit unions continue to offer strong interest rates on deposit products, shutting out banks once again and staying high above the national averages, according to a recent survey by GOBankingRates .
 
Across the board, credit unions were ahead of banks with numbers such as:
  • Savings: Credit unions, 0.14% annual percentage yield (APY) vs. banks, 0.11%;
  • Checking: Credit unions, 0.31% vs. banks, 0.20%; and
  • Money market: Credit unions, 0.19% vs banks, 0.15%.
Certificate of deposit rates at credit unions ranged from 0.08% higher than banks for a six-month CD all the way to 0.29% higher for a 60-month CD. 
 
GOBankingRates surveyed interest rates for more than 26,700 deposit accounts offered by banks and credit unions in the U.S. as of April 1, with an assumed deposit of $10,000. It did not include rates for online-only financial institutions.
 
"Our goal is to encourage our members to use GLCU as their primary financial institution," John Skul, assistant vice president of marketing, Great Lakes CU, North Chicago, Ill., told GOBankingRates (April 9). "Offering them a fantastic rate is a win-win for both GLCU and our members--they receive a great interest rate on their checking account and we benefit when they meet the criteria to receive the great rate," he added.
 
The top 10 credit unions and their products are:
  • Alabama Telco CU, Birmingham, Ala. The $595 million-asset credit union's Centsible Savings account works like a "keep the change" savings program and has 3% APY.
     
  • Great Lakes CU. The Ultimate Checking account from the $643 million-asset credit union is a rewards account with 3% APY and up to a $5 ATM rebate per month.
     
  • Gulf Coast Community FCU, Gulfport, Miss. The $80 million-asset credit union offers the Kasasa cash checking account, which earns 3% APY on balances up to $25,000.
     
  • Lake Michigan CU, Grand Rapids, Mich. The Max checking account from the $3 billion-asset credit union pays 3% APY on balances up to $15,000, with no fees and no minimum balance requirements.
     
  • Meridian Trust FCU, Cheyenne, Wyo. The $283 million-asset credit union's MaxRewards checking account pays up to 3% APY and charges no maintenance fees.
     
  • Partner Colorado CU, Arvada, Colo. The high-interest checking account from the $260 million-asset credit union is a straightforward high-yield account that pays 3% APY as long as account holders complete 20 signature-based debit card transactions, receive e-statements and use online or mobile banking.
     
  • UniWyo FCU, Laramie, Wyo. The maximum interest rate--currently 2.99% APY--is paid on balances up to $15,000 at the $247 million-asset credit union.
     
  • DuPont Community CU, Waynesboro, Va. The $890 million-asset credit union offers 2.78% APY on its Grow Green checking account when 15 debit transactions are performed each month with an amount of at least $250.
     
  • IC FCU, Fitchburg, Mass. Intelligent Checking from the $523 million-asset credit union is a high-yield checking account with no monthly fees. Balances up to $15,000 earn 2.59% APY.
     
  • University of Iowa Community CU, North Liberty, Iowa. The $2.1 billion-asset credit union's Rewards checking account offers 2.5% APY on balances of $0 to $19,999.
 

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New FHFA director meets with CUNA on housing, mortgage issues

Washington
WASHINGTON (4/15/14)--The Credit Union National Association met with new Federal Housing Finance Agency Director Mel Watt Monday, raising a number of issues of concern to credit unions. At the FHFA meeting, the sale in the secondary market of non-Qualified Mortgage (QM) loans, containing guarantee fees, and increasing loan limits for eligible loans were among the issues CUNA addressed with Watt and members of his senior staff. Other issues that CUNA discussed during the session included the director's priorities, the role of credit unions in the mortgage market and CUNA's efforts on housing finance reform to ensure credit unions' interests are fully protected. CUNA President/CEO Bill Cheney stated after the meeting, "This was an important inaugural meeting with Director Watt as he has only been at the agency for about 100 days. "Credit union mortgage lenders, which have about 7% of the single family home loan market, are very concerned about these issues. This discussion provided an important opportunity to ensure credit union concerns, including fair and equitable access to the secondary mortgage market, are given due consideration by the agency." Cheney was accompanied by General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Senior Vice President for Legislative Affairs Ryan Donovan and Chief Economist Bill Hampel. CUNA will be following up with FHFA staff in the coming weeks to continue to advocate for credit union issues. Also on Monday, CUNA staff attended another in a series of White House housing finance reform policy discussions. (See related story: CUNA warns of reg burden at White House housing finance policy discussions.)

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CUs tally up Money Smart Week events

CU System
MADISON, Wis. (4/15/14)--Money Smart Week ended Saturday, and credit unions are tallying up the experiences they provided to their members and communities.
 
Gov. Rick Snyder reads "The Berenstain Bears' Trouble with Money" at the Detroit Public Library Campbell branch. (Michigan Credit Union League photo)
In Detroit, Michigan Gov. Rick Snyder was a guest reader at the Campbell branch of the Detroit Public Library ( Michigan Monitor April 14). In addition to reading "The Berenstain Bears' Trouble with Money," Snyder shared his financial advice with the young audience.
 
"Do you have a budget today? Do you know how to manage your money?" Snyder asked.
 
The Michigan Credit Union League donated 3,300 copies of the children's book. Village Community CU, Dearborn, with $18 million in assets, helped out at the governor's reading, while Vibe CU, Novi, with $416 million in assets, participated at the Berkley (Mich.) Public Library.
 
League Executive Vice President/Chief Operating Officer Ken Ross said, "Money Smart Week is a great time to take a step back from the day to day and to really focus on developing those skills that are necessary to use your money wisely in order to be a successful consumer."
 
In Missouri, Nikhil Krishmam of Fenton, Kyle Reading of O'Fallon and Chloe Momphard of Troy each earned a 2014 Money Smart Kid Essay scholarship April 4. The contest was sponsored in part by Vantage CU, a $705 million-asset credit union in Bridgeton, Mo. Scholarship amounts ranged from $500 to $2,000.
 
"This contest allows area students to demonstrate the skills they are learning and offers encouragement us that this generation will be wiser consumers throughout their lives," said Rachel Parrent, Vantage community engagement manager and Money Smart Kid Essay committee chair.
 
More than a dozen areas are participating in this year's essay contest, according to the Money Smart Week website.
 
The "10 Steps to Financial Success" seminar, sponsored by Land of Lincoln CU, Decatur, with $188 million in assets, helped Jennifer Coventry set her savings goals ( Herald-Review April 12). She liked the idea of an emergency fund in case she needed repairs in her home. "I also want to continue learning about how to save for different things like vacation since I haven't taken a vacation in 13 years," she told the Herald-Review .
 
Land of Lincoln CU's Karalee Misner, business development manager, and Melissa Hesse, loan officer, coordinated the seminar. Misner said people have negative connotations with the terms "budget" and "financial management." She noted, "Instead of being apprehensive about a lifestyle change, they should be in the mindset of 'How can I make my money work for me?'"

Mazuma CU wants its members to 'bank happy'

CU System
KANSAS CITY, MO. (4/15/14)--Kansas City, Mo.-based Mazuma CU last week unveiled its new brand, built around the theme, "Bank Happy."
 
In addition to a new logo, color scheme, website and social media strategy/campaign, the brand launch features TV and radio commercials.
 
In promoting the new brand, the $470 million-asset credit union said it isn't changing the way it serves its members, but it is promising to lighten up its approach to serving members compared with other financial institutions.
 
"Credit unions are different from banks; they are not for profit, not for charity, but for service," Brandon Michaels, Mazuma CU president/CEO, said. "And part of that service means that members leave us a little happier than when they came."
 
In a video promoting the new brand, Mazuma promises it will provide financial services with a sense of fun that goes beyond a polite thank you.
 
The credit union insists that it will still have the same great service and dedication to keeping its Member's money safe and secure. The difference will be in how they do it: Mazuma t-shirts instead of ties, fist bumps instead of handshakes, jokes instead of forced pleasantries
 
"We believe we can still be awesome caretakers of our members' money and not be a total bore about it," Mazuma Brand Manager Andy Dickhut said. "We believe we owe our members a smile. That's going to be our goal every day."
 
The new website offers locally shot photography and a scrolling format. The credit union also launched its new blog, mazumafy.com, which takes a fun, light-hearted approach to community service, pop culture and financial advice.
 
Mazuma's first-ever TV commercial began airing on local television stations April 9. The spot is centered on a semi-spokesperson, Mazuma Mike, a lovable idiot who has good intentions but unfortunate luck. In the commercial, Mike spoofs credit union values with hilarious results.
 
Mazuma partnered with Lenexa, Kan.-based Beyond Marketing LLC to help develop many aspects of the new brand, including the website, Mazuma Mike campaign, promotional materials and blog.

White House housing finance policy discussions: CUNA warns of reg burden

Washington
WASHINGTON (4/15/14)--Policymakers must be mindful of the existing regulatory obligations of credit unions and other mortgage servicers as discussions on housing finance reform proceed. That was one of the messages delivered by the Credit Union National Association at a Monday meeting with White House and U.S. Treasury staff. At the White House meeting, CUNA noted that a pending Senate bill to revamp the housing finance system proposes creation of a new regulatory authority over mortgage servicing operations. CUNA stressed that policymakers must proceed judiciously and not layer additional regulatory authority on top of existing regulatory regimes that address mortgage servicing. CUNA also underscored on credit unions' behalf that a new system must ensure that the housing finance market remains accessible to credit unions and other smaller institutions and that structure must be in place to prohibit domination by the country's biggest banks. The meeting was part of a series of stakeholders' sessions that have been being held as the Senate Banking Committee prepares to consider the Johnson-Crapo housing finance reform bill on April 29. (See related story: New FHFA director meets with CUNA on housing, mortgage issues.)

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CUNA reminds CUs of tax Form 990 deadline

Washington
WASHINGTON (4/15/14)--With taxes on everyone's mind today, the Credit Union National Association reminds credit unions of another looming deadline: Many credit union leagues and state-chartered credit unions must file their Internal Revenue Service Form 990 for 2013 by May 15.

Those that fail to file by May 15 risk losing their tax-exempt status. Organizations will see their federal tax exemptions automatically revoked if they have not filed reports for three consecutive years, according to the IRS.
 
State-chartered credit unions are required to file Form 990 with the IRS annually, although a few states still permit group 990 filings. Federal credit unions are not required to file, since they are not subject to unrelated business income taxes.

Small tax-exempt organizations with annual receipts of $50,000 or less can file an electronic notice Form 990-N (e-Postcard). Tax-exempts with annual receipts above $50,000 must file a Form 990 or 990-EZ, depending on their annual receipts. Filing extensions are available.

The IRS, not surprisingly, has been on a roll, putting out information that might help tax filers get the job done before the deadline falls. This one might help a lot of people today: Advice to help last-minute filers avoid common filing mistakes (see resource link).
 
The tax agency also offered these recently:
  • Social media tools to help filers check their refund status and get the latest tax information (see resource link); and,
  • Details on more than 200 new IRS investigations into identity theft and refund fraud schemes (see resource link).
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