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NCUA: CU Loans, Members, Net Worth All Up in 2013 3Q

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ALEXANDRIA, Va. (12/3/13)--Federally insured credit unions are on the right course with loans, membership and net worth all increasing during the third quarter of 2013, National Credit Union Administration Chairman Debbie Matz said Monday, as the agency released its most recent trend data.

The total number of loans held by credit unions increased by 2.9% in the third quarter, continuing a trend that began in 2011. In total, credit unions held $631.5 billion in loans at the end of the quarter.

The Credit Union National Association's monthly numbers, released on Monday, showed similarly positive results. (See News Now story: CUNA Monthly Estimates Show Loan, Savings Increases.)

"The strong loan growth, at a 11.6% annual rate in the third quarter, is really good news for credit unions, and for the economy. Loans are credit unions' best asset, and the return to consumer loan growth over the past year will strengthen credit union balance sheets, CUNA Chief Economist Bill Hampel said.

The agency reported:
  • New auto loans grew by 4%, to total $69 billion;
  • Used auto loans grew by 3.1%, to total $125 billion;
  • First mortgage loans grew by 3.3%, to total $262.3 billion;
  • Net member business loan balances grew by 2.5%, to total $44.6 billion; and
  • Non-federally guaranteed student loans grew by 10.2%, to total $2.5 billion.
Credit union membership also increased by 726,911 during the quarter, bringing the national total to 95.9 million, a new record.

The credit union system's net worth ratio was 10.65% at the end of the third quarter, a 15 basis point increase from the 2nd quarter total. This is the highest net worth ratio reported since late 2008.

"The good news is we continue to see strong, positive trends in the industry. Credit unions are serving their members and investing in their communities by making the loans needed to purchase homes, buy cars and go to college. That said, smaller credit unions still face challenges in growing loan volume, generating earnings and attracting members, so NCUA must continue to provide them with needed assistance, training and support," Matz said.

Matz also warned that credit unions should take interest rate risk seriously, particularly in rate-sensitive deposits, fixed-rate mortgages and certain investments.

"As interest rates go up, credit unions could be caught between a rock and a hard place," Matz said. "They have been paring expenses and reducing loan loss reserves to maintain earnings. However, as they make new loans at lower interest rates than older loans coming off their books, they have been making longer-term investments to increase yield. If credit unions haven't planned carefully, the value of those investments could decline when rates rise."

The NCUA quarterly statistics are based on call report data submitted to and compiled by the agency for the quarter ending Sept. 30.

CUs Can Watch for Patent Bill, Reg Burden Hearing This Week

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WASHINGTON (12/3/13)--While the Senate remains out of session this week, the U.S. House and Credit Union National Association will be hard at work as a CUNA-supported patent bill is considered and a credit union witness testifies on regulatory burden.

The House is scheduled to consider the Innovation Act (H.R. 3309) and the Small Business Capital Access and Job Preservation Act (H.R.1105) this week.

H.R. 3309, which was introduced by Rep. Bob Goodlatte (R-Va.) in late October, would crack down on the so-called "trolls" who abuse the patent system by using low-quality patents to try to extract settlements from credit unions and other parties. CUNA supports the bill.

H.R. 1105 would provide a registration exemption for private equity fund advisors.

Rose Bartolomucci, president/CEO of Towpath CU, a state-chartered, privately insured credit union in Akron, Ohio, will discuss duplicative and inconsistent federal rules, and other credit union issues, before a Wednesday House Financial Services subcommittee on financial institutions and consumer credit hearing. The hearing is scheduled to begin at 10 a.m. (ET).

The hearing, entitled "Examining Regulatory Relief Proposals for Community Financial Institutions," will focus on three bills: A bill to require the National Credit Union Administration and other federal financial regulators to assess and address regulatory duplication or inconsistency; legislation that would allow privately insured credit unions to join a Federal Home Loan Bank; and a bill that would adjust the Consumer Financial Protection Bureau's rural designation to align with the definition used by the U.S. Department of Agriculture.

A Tuesday House Judiciary regulatory reform, commercial and antitrust law subcommittee hearing entitled "The Bankruptcy Code and Financial Institution Insolvencies" has also been scheduled this week.

The Senate is scheduled to return to Washington on Dec. 9.

These and other valuable insights are provided each week in the CUNA Legislative Update.

Senators Urge CFPB Mortgage Rule Delay

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WASHINGTON (12/3/13)--In a letter cosigned by 25 Senate colleagues, Sen. Roger Wicker (R-Miss.) called on the Consumer Financial Protection Bureau to hear the concerns of credit unions and other small institutions and "consider providing appropriate relief" from pending mortgage regulations, "including deferring implementation."

The letter, which was sent to CFPB Director Richard Cordray before the Thanksgiving congressional break, addresses the Consumer Financial Protection Bureau's six rules for mortgage products and services. The rules, which are required by the Dodd-Frank Act, are set to go into effect in January 2014 and include the bureau's Ability-to-Repay and Qualified Mortgage standards.

Credit Union National Association concerns are reflected in the letter, although the senators did not specify a time period for an implementation delay. CUNA has suggested that Congress grant a one-year extension of compliance deadlines for the pending CFPB mortgage rules. If such a delay cannot be created, Congress should provide credit unions with a buffer of at least six months as they work to come into compliance with qualified mortgage standards, CUNA has said. CUNA has also recommended that a similar six-month delay should also be applied to legal liability provisions of mortgage regulations.

The senators in the letter noted their constituents "are concerned that they will be hard pressed to come into compliance with the significant changes called for under these rules by the current deadline."

Compliance with these changes "will prove daunting" for small financial institutions with few compliance officers, and many institutions will not have appropriate software in place as of January 2014, the senators added.

Failure to comply with the pending regulations "could lead to market distortions" which could "adversely affect the availability of mortgage credit for consumers" in several states, particularly in rural or remote areas of the country, the legislators added.

For the full letter, use the resource link.

CUNA Launches New Survey Seeking CU Exam Challenges

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WASHINGTON (12/3/13)--Credit union experiences and impressions of the examination process are again being requested by the Credit Union National Association: CUNA has just released a new edition of its survey that gives credit unions the chance to provide feedback to CUNA and state leagues on their most recent examinations by the National Credit Union Administration and/or state regulators.

CUNA and the state credit union associations used the 2012 survey results to advocate this year on behalf of credit unions and improve NCUA and state regulator examinations. As it did last year, this latest survey covers such topics as length of on-site exam, how satisfied the credit union was with the exam and results, and which problem areas if any were noted by the examiner. It also includes a series of questions to gauge how the credit union felt about the examiner's performance and the exam process, and asks what are the biggest issues credit unions would like CUNA and their leagues to focus on to reduce regulatory compliance burdens.

And, for this year, CUNA has provided an optional section through which credit unions can identify and rate individual examiners.

"The 2012 survey produced much valuable information, and which we and several leagues used to good effect in discussions with regulators. Conducting such a survey positions the leagues and CUNA at the forefront of working to improve a very important aspect of our credit unions' lives, and provides credit unions with an anonymous, and therefore safe, way to be heard," CUNA Chief Economist Bill Hampel said.

Survey replies are confidential, and identifying information from individual credit union respondents will not be seen by individuals outside of CUNA's Market Research Department. Only summary results will be reported.