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CU milestone: 100M memberships reached nationwide

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WASHINGTON (8/6/14)--Credit unions have reached and surpassed 100 million memberships nationwide--equating to one in every three Americans, the Credit Union National Association announced Tuesday.
 
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The count is based on data collected from credit unions and compiled by CUNA in its June 2014 monthly credit union estimates. CUNA estimates that credit union memberships expanded by 2.9% in the past 12 months, from June 2013 to June 2014, and the 100 million mark was eclipsed in June.

This represents a continuation, and acceleration,  of trends previously reported: In 2013 memberships expanded by 2.5% and in 2012 memberships grew 2.1%. CUNA expects the membership growth to continue in the second half of 2014 and exceed the full-year growth of the previous year.
 
Credit unions added a total of 2.85 million additional memberships over the past year--the largest reported increase in more than a quarter century. And, in percentage terms, the 2.9% increase was the fastest since 2000, according to the CUNA analysis.
 
"Clearly, there is growing recognition for credit unions among consumers," said CUNA interim President/CEO Bill Hampel. "They increasingly understand that a credit union places their interests above all else, particularly in returning financial benefits to consumer members in the forms of lower rates on loans, higher returns on savings, and lower and fewer fees." He added that, in 2013, those financial benefits totaled more than $6 billion.
 
Hampel pointed out that, as cooperatives, credit unions are owned by their members and exist to provide financial services to those members. Banks, he noted, which are owned by shareholders, exist to return profits to those shareholders.
 
"It's the structure of credit unions--as not-for-profit, democratically led and cooperatively owned financial institutions--that allows credit unions to maintain this focus on returning financial benefits to members," CUNA leader Hampel said. "In fact, by doing so, credit unions have earned the satisfaction and trust of their existing members--and are attracting even more."
 
At least two key measurements of consumer attitudes have recently underscored the reputation that credit unions have built among their members. At year-end 2013, the American Customer Satisfaction Index found, for the fifth straight year, that credit unions lead banks in customer satisfaction--scoring 85 out of 100, compared to 78 for all banks. Credit unions have topped banks in each of the five years that they have appeared on the index.
 
In 2013, the Chicago Booth Kellogg School Financial Trust Index showed that consumers trust credit unions more than banks. The index, sponsored jointly by the Kellogg School of Management at Northwestern University and the University of Chicago Booth School of Business,  showed trust in credit unions is 62% while trust in big banks is 28%.
 
CUNA interim Chief Economist Mike Schenk said other factors within the financial services marketplace have played key roles in the credit union growth. He noted that a growing number of consumers continue to express dissatisfaction with big Wall Street banks due to economic downturn and consumer movements such as Bank Transfer Day in 2011, when consumers were urged through a grassroots movement--and primarily on social media--to leave big banks and move their money to a credit union or small bank because the organizations tend to offer better rates and incur fewer fees.
 
"In 2010, credit union membership barely grew, expanding by just about 0.65%, or about 600,000 memberships," Schenk said. "But, with the spotlight turned in 2011 to the increasing fees banks were charging--particularly for debit cards and other products--and the additional publicity for the lower and fewer fees at credit unions by contrast, membership growth that year more than doubled over the previous year, by 1.4 million--and the rate of growth has increased in each subsequent year."
 
Schenk noted that not everyone can join the same credit union, but there is a credit union for everyone. He noted that consumers wishing to find a credit union they are eligible to join should visit aSmarterChoice.org , a website that includes a comprehensive credit union finder with every credit union in the country, and helps consumers learn more about credit unions.
 
Additionally: Hundreds of credit union members have shared their credit union stories with their photo on americascreditunions.org and social media to show they are part of an organization that focuses on their best financial interests. Learn more about the 100 million credit union memberships nationwide milestone by visiting www.americascreditunions.org .

CFPB offers 2nd TILA-RESPA integrated disclosure webinar

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WASHINGTON (8/6/14)--With the new mortgage disclosure rule to take effect in less than a year, the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve will host a webinar Aug. 26 to address implementation and other questions.

The rule consolidates existing mortgage disclosures required under the Truth in Lending Act-Real Estate Settlement Act (TILA-RESPA) into two integrated forms.

The session is meant to address specific questions related to rule interpretation and implementation challenges that have been raised by creditors, mortgage brokers, settlement agents, software developers and other stakeholders.

According to the CFPB, it will host several similar webinars to answer questions and respond to feedback throughout the new rule's implementation process.

The webinar is scheduled to begin at 2 p.m. (ET) Aug. 26.

Use the resource links below for more information.

62 CUs pay total $57,750 for late call reports

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ALEXANDRIA, Va. (8/6/14)--Sixty-two credit unions were identified by the National Credit Union Administration as being subject to civil money penalties for the late filing of their first-quarter call reports, and all 62 have consented to those penalties, the NCUA announced Tuesday.
 
Those late filers will pay a total of $57,750 in penalties, with individual penalties ranging from $150 to $20,000, the NCUA said. Under federal law any funds from civil money penalties must be sent to the U.S. Treasury.
 
The NCUA broke down the 62 late filers this way:
  • Thirty-eight have assets of less than $10 million;
  • Eighteen have assets between $10 million and $50 million; and
  • Six have assets between $50 million and $250 million.
Use the resource link to see the a list of the credit unions that have agreed to pay the penalties.
 
Although NCUA Chair Debbie Matz has made it clear that the agency is shooting for zero tolerance of call report late filing, she has made it equally clear that the regulator makes exceptions for credit unions able to document certain filing hardships. They could include a breakdown in the credit union's core operating system, a natural disaster taking place in the credit union's community or the incapacitation of a key employee who would be responsible for filing the report.
 
After identifying 104 credit unions as late for the first quarter of 2014, the NCUA--consulting with regional offices and, when appropriate, state supervisory authorities--determined mitigating circumstances in 20 cases allowed credit unions to avoid a penalty. News Now reported the agency had identified possible financial penalties against 84 credit unions in its July 1 issue.

A number of credit unions subsequently provided the agency with information about extenuating circumstances that caused them to miss the deadline and NCUA determined 22 of those credit unions would not be penalized.

"Our intention is that credit unions fully comply with the deadline for filing call reports," Matz said Tuesday in announcing the fines. "We've seen an improvement from the days when more than 1,000 credit unions filed late, but we haven't yet reached the goal of timely filing by all credit unions every quarter."

Use the resource links to access a January NCUA Letter to Credit Unions about late-filing penalties and to view the agency's how-to video describing the call report-filing process.

Study shows big banks mislead on overdraft programs

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CHICAGO (8/6/14)--Big-bank branches' explanations of overdraft programs can be inconsistent and unclear according to a report published by the Woodstock Institute, a nonprofit research and policy organization. The report cites 64 mystery shopping visits at 39 bank branches in Chicago; Durham, N.C.; New York City and Oakland, Calif.

Through the visits to branches, the study found:
  • Explanations of overdraft programs in the four cities were "highly inconsistent and often unclear and incorrect;"

  • Bank employees did not clearly or correctly explain how overdraft fees are triggered, making it "difficult or impossible" for consumers to understand the costs; and

  • Bank employees "frequently" did not explain the opt-in requirement for ATM and debit courtesy overdraft, leading some to believe it was an automatic feature.
The four organizations that participated--Woodstock, the California Reinvestment Coalition, the New Economy Project and Reinvestment Partners--made several recommendations to federal banking regulators and the Consumer Financial Protection Bureau (CFPB). These include limiting overdraft fees, prohibiting financial incentives to employees for sale of overdraft products and creating a uniform standard for verbally describing overdraft products and fees.

The organizations visited branches of the four largest banks by deposit size in their respective states, which included Bank of America, BB&T, Capital One, Citibank, JPMorganChase and Wells Fargo, among others.

A July CFPB report on overdraft data found that overdraft and non-sufficient funds fees make up the majority of checking account fees incurred by consumers, approximately 75% of total fees paid by opted-in consumers, averaging more than $250 per year.

Sen. Brown: RBC proposal raises CU parity concerns

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WASHINGTON (8/6/14)--The National Credit Union Administration's risk-based capital (RBC) proposal raises concerns about credit unions' ability to compete with community banks, said Sen. Sherrod Brown (D-Ohio). Brown, chair of the Senate Banking subcommittee on financial institutions and consumer credit, wrote to the agency to share concerns from Ohio's credit unions.

"Numerous entities have noted that the proposal applies risk weights to mortgages and member business loans that are substantially higher than those applicable to community banks under their risk-based capital rules," the letter reads. "While the NCUA has been urged to address credit union lending concentration, it seems appropriate to consider credit unions' concern about parity."

Brown said he supports heightened capital requirements to "lower both the frequency and the cost of financial institution failures," but he echoed concerns from Ohio credit unions, especially when it comes to raising capital from limited sources.

To date, more than 30 legislators have written to the NCUA with concerns about its RBC proposal, in addition to 324 representatives that signed a letter in May with similar concerns.

NCUA Chair Debbie Matz has said the proposal will undergo changes, notably to the proposed 18-month implementation period, as well as risk weights.

White paper examines employee perception of cyberattacks

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WASHINGTON (8/6/14)--Of nearly 500 data breaches analyzed from the first half of 2013, 89% could have been avoided with controls and security best practices, according to a report from Online Trust Alliance.

SilverSky, a CUNA Strategic Services alliance provider, has released a white paper about perception of cyberattacks on businesses and organizations.

SilverSky surveyed approximately 200 employees about their perception of cyberattacks, and 78% said their company had been victims of such attacks one to five times over the past year. The majority of these attacks (71%) are phishing scams, in which an e-mail is made to look like an official communication from a trustworthy entity and contains links to website that look real, but are infected with malware or will steal personal information.

The following percentage of surveyed employees said there is perceived inadequacy:
  • Socially engineered Trojans, 31%. Where a victim is tricked into doing the scammer's bidding, which includes accessing a fraudulent website and entering confidential information, phony breaking news or sale alerts or false lottery winnings. Phishing is an example;

  • Botnets, 25%. A botnet is a network of computers that have been infected by a bot, a type of malware that allows the attacker to take over an affected computer;

  • Unpatched exploits, 19%. Vulnerabilities in software that has not been secured through an update from the provider;

  • Distributed denial-of-service (DDoS) attacks, 12%. A situation when compromised computers, usually infected by a Trojan, attack a single system, often crashing it; and

  • Zero-day attacks, 12%.  An attack that exploits a previously unknown vulnerability in existing software.
When asked what is preventing companies from doing a better job monitoring, protecting and analyzing cyberattacks, 64% said the cost, 44% said time constraints and 42% said a lack of skill sets or in-house knowledge.

Use the resource link below to access the paper, titled "Navigating the Pitfalls of Attack Prevention: A Look at Employee Perception."