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News Now: October 23, 2014

CUs emphasize co-op principles during National Co-op Month

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INVER GROVE HEIGHTS, Minn. (10/23/14)--The nation is taking time to appreciate cooperatives this October for National Co-op Month, and financial cooperatives, commonly known as credit unions, have joined in on the celebration.

The festivities are in full gear in Minnesota, as the Minnesota Credit Union Network (MnCUN) kicked off the month by hosting a "Community Connected" press event at Heartland CU, Inver Grove Heights, Minn., with $102 million in assets, to recognize the impact cooperatives of all kinds have on their communities.

Speakers at the press event, which included credit union and cooperative leaders from throughout the state, including Mark D. Cummins, MnCUN president/CEO, spoke about the community-oriented work performed by cooperatives in Minnesota.

Minnesota was one of the first states to enact a law authorizing credit unions and the first state to celebrate an official co-op month in 1948.

The state is also home to the most cooperatives and cooperative memberships in the United States.

"The credit union mission goes beyond serving the financial needs of members," Cummins said. "By providing thousands of volunteer hours and leading community initiatives, member-owned credit unions and cooperatives in Minnesota build better communities for all of us to live in."

Also in attendance was Casey Carlson, vice president of marketing and strategic planning for SPIRE CU, Falcon Heights, Minn., who spoke about the $626 million-asset credit union's program that offers members the opportunity to win money for their favorite co-op when they shop with a co-branded Visa card program.

"This program is a triple win," Carlson said. "Our members win, our local co-ops win and our communities win overall as well."

On Wednesday, the celebration reached the nation's capital, as the National Cooperative Business Association (NCBA) CLUSA International hosted representatives from the U.S. Department of Agriculture, the Small Business Administration and the cooperative community at large at the National Press Club for a panel discussion about how cooperatives and the government intersect.

Thanks to the NCBA, credit unions nationwide can participate in the month-long celebration using the association's 2014 Co-op Month communication toolkit , which includes posters, social media graphics, sample social media posts and email invites.

44 CUs to pay total $17,111 for late filings

ALEXANDRIA, Va. (10/23/14)--Forty-four of the 75 credit unions cited for failing to file their second quarter 2014 call reports on time were determined to be out of compliance and have consented to civil money penalties totaling $17,111.

Click to view larger image Individual penalties ranged from $52 to $1,824, primarily depending upon the credit union's asset size, according to the NCUA.  This chart shows the asset makeup of those fined.
The National Credit Union Administration noted in its announcement Wednesday that four of the credit unions assessed penalties had been late in the previous quarter, but also acknowledged "the situation is improving."

NCUA Chair Debbie Matz said, "As most of the credit unions that file late are small credit unions, NCUA's Office of Small Credit Union Initiatives has been working with smaller institutions, and we think that has helped several credit unions file on time."

In fact, the OSCUI has dedicated an economic development specialist to assist small credit unions in filing their reports on time. The NCUA also has produced a video describing how to file call reports.

"Our efforts on compliance and assistance will continue until we get to the point where no credit union files a late call report," Matz declared. 

Individual penalties ranged from $52 to $1,824, primarily depending upon the credit union's asset size, its recent call report filing history and the length of its delay.

After a call report deadline, the NCUA determines what credit unions missed the cutoff.  It then explores if there are any mitigating circumstances that absolves the credit union of culpability and excludes from penalties those for which circumstances out of their control were to blame.

It was in January that the agency officially put credit unions on notice with a Letter to Credit Unions alerting them to the civil money penalties for noncompliance with deadlines. The NCUA says that late-filed call reports impact the federal regulator's ability to conduct effective off-site supervision and are a drain on agency resources. They also delay the release of quarterly industry data to the general public.

Sixty-two credit unions were fined a total of $57,000 for missing the first quarter filing deadline.

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Johnson, Crapo want regulators' accounting of cybersecurity actions

WASHINGTON (10/23/14)--The leadership of the Senate Banking Committee is seeking information from the National Credit Union Administration, the other federal financial regulators and the U.S. Treasury Department on what actions are being taken to protect the financial system from threats posed by cyberattacks.
In an Oct. 21 letter , Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) write, "The economic impact of cyberattacks is staggering. A recent Center for Strategic and International Studies report projected global economic losses of up to $575 million annually in the U.S. alone."
They add, "Financial institutions are a particularly lucrative target. Many find themselves under constant attack, with some spending up to $250 million per year on cybersecurity."
The lawmakers ask the agencies and Treasury to provide information such as:
  • What is its process for acquiring information on potential or occurring cyberattacks and passing information to the financial services sector in a timely manner? What obstacles and/or legal restrictions hinder information sharing?
  • Describe interagency coordination and interaction, as well that with as law enforcement, the Department of Homeland Security and the intelligence community. How would legislative proposals improve or impede your coordination and relationships with other government agencies? 
  •   What is the role the Financial Stability Oversight in monitoring cybersecurity risks?
The Johnson-Crapo letter also notes that the Federal Financial Institutions Examination Council--comprised of the heads of the federal financial regulatory agencies--announced earlier this year that it is planning cybersecurity and risk-mitigation assessments to help smaller institutions address cybersecurity gaps. The regulators were asked to describe the effort and what particular considerations or risks may exist at institutions of varying sizes.

McWatters visits CUNA D.C. office

WASHINGTON (10/23/14)--National Credit Union Administration board member J. Mark McWatters visited the Credit Union National Association offices here and met with CUNA President/CEO Jim Nussle.
Click to view larger image New NCUA board member J. Mark McWatters (front left) talks to CUNA President/CEO Jim Nussle (front right) in a get-to-know-you meeting in Nussle's office this week.  Also at the meeting were NCUA Senior Policy Advisor Sarah Vega (center right) and CUNA Chief Economist Bill Hampel (center). (CUNA Photo)

McWatters was sworn to his post on Aug. 26.  He joined NCUA Chair Debbie Matz and Vice Chair Rick Metsger on the three-person board, and filled the post of exiting board member Michael Fryzel. Fryzel performed the swearing-in.
McWatters' trip to the CUNA office Tuesday was a get-to-know-you session with CUNA's CEO Nussle--himself a newcomer to his current position having joined CUNA on Sept. 20. Sara Vega, NCUA senior policy advisor, and CUNA Chief Economist Bill Hampel also attended the meeting.
One of the biggest issues facing McWatters as he joined the NCUA board was--and is--the pending risk-based capital (RBC) rule, first proposed in January and the subject of thousands of comment letters.
In some of his first public statements as a federal credit union regulator, including in a meeting with senior CUNA staff, McWatters said that he would not vote on a final RBC rule without a second comment period. CUNA strongly advocated for a second comment period due to the extensive revision the agency is considering to the original proposal and commended the NCUA decision to allow a second round of comments. CUNA said in recent letters to the agency that period should be at least 60 days long.
CUNA leader Nussle also recently met with Matz and plans to meet soon with Metsger.

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Heck to NWCUA: CUs are a solution, not part of problem

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SPOKANE, Wash. (10/23/14)--Credit unions were not part of the systemic problem that caused the recent recession, U.S. Rep. Denny Heck (D-Wash.) told a general session audience at the Northwest Credit Union Association's recent Amplify Convention. "More often than not they are part of the solution," Heck said.
Click to view larger image U.S. Rep. Denny Heck (D-Wash.) told a general session audience at the Northwest Credit Union Association's recent Amplify Convention that "more often than not they are part of the solution" within the financial services industry. (Northwest Credit Union Association Photo)
The U.S. financial system may need some adjustments to avoid another recession, but current banking regulations are often superfluous to credit unions, Heck said. "Banking regulators have [risk-based capital] rules," he said ( Anthem Oct. 21). "But just because it's right for banks doesn't mean it's right for credit unions. I don't think it is."
If regulators insist that credit unions raise capital in order to satisfy RBC regulations, then those regulations should not go into effect until H.R.719, the Capital Access for Small Businesses and Jobs Act,  is passed, because the bill would allow credit unions to raise supplemental capital, Heck said.
Heck challenged Amplify attendees to lead by example, and to continue distinguishing themselves in the financial services marketplace with their "people-helping-people" philosophy.

"I have this sacred obligation to represent the people of Washington's 10th District," he said. "A lot of them are facing the black hole of credit card debt, auto debt and student loan debt. Many other financial institutions aren't willing to do the work of financial education, because they profit from those problems.
"Credit unions are a movement predicated upon the financial well-being of your members," Heck continued. "As the credit union movement gets bigger, we should not lose sight of that. It's getting bigger because it's different."

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Top lobbyists list: Nussle steady on tax fight with banks

WASHINGTON (10/23/14)--In its annual list of Washington's top lobbyists, The Hill newspaper named Credit Union National Association President/CEO Jim Nussle to its recognition roster after just a month in CUNA's top job.
"Nussle, a former House Budget Committee chairman and Office of Management and Budget director, has now taken the reins at CUNA, where he'll continue to fight against banks to save credit unions' tax exemption," the publication states.
CUNA achieved a successful result--and widespread accolades--for its efforts to preserve the credit union tax status as federal policymakers stripped the U.S. tax code down to zero and required industries to provide validation for their tax treatment.
CUNA's viral #DontTaxMyCreditUnion grassroots social media campaign reached millions and even had lawmakers joining in to tweet the credit union message. When House Ways and Means Committee Chairman Dave Camp (R-Mich.) submitted a draft tax reform package in February of this year, he left the credit union tax status untouched.
The Hill's list of top lobbyists is created based on conversations with aides, other lobbyists and members of Congress. The newspaper covers lobbying and Capitol Hill activities. It is read largely by congressional members, their staff and lobbying organizations.

Webinar explores impact of CDFI CUs

WASHINGTON (10/32/14)--David Meyer, acting program manager for the U.S. Treasury Department's  Community Development Financial Institutions (CDFI) Fund certification, compliance monitoring and evaluation department, said Wednesday that credit unions are often natural fits for the CDFI program, since many credit unions are already involved in the types of activities the CDFI program is intended to promote.

Those activities include offering financial services to low-income and economically distressed communities. As of Sept. 30, credit unions represented 241 of the 917 CDFIs around the country.

The webinar, hosted by the National Federation of Community Development Credit Unions, included a look at the past and present of credit union CDFIs. CDFI is a certification provided by the U.S. Treasury's CDFI Fund that allows them to expand financial services in economically distressed communities.

The CDFI certification program began in 1994, but credit unions were originally slow to seek certification. That began to change in 2010, due to the launching of the Community Development Capital Initiative, which provided long-term secondary capital loans at low rates.

The program required a low-income designation from the National Credit Union Administration and CDFI certification, and since 2010 there has been a 46% net increase in CDFI-certified credit unions.

Missouri has the most CDFI credit unions, with 27, and those credit unions make up 84% of that state's CDFIs. Other states with the most CDFI credit unions, and their market share, include Louisiana (44%), New York (25%), California (20%), Texas (42%), Hawaii (69%), Michigan (45%), Washington (35%), Florida (32%) and Alabama (44%)

"One of the most notable states missing from that list, in my opinion, is Pennsylvania, which has the highest concentration of low-income designated credit unions, but has not risen in the ranks in terms of CDFI certified credit unions," said Mark Kudlowitz, acting program manager of the CDFI program and native initiatives.

Kudlowitz also examined several of the common misconceptions about CDFI credit unions, including that they don't provide the same services as regular credit unions, or that they are not as financially viable as other financial institutions.

"While that might have been the case at one time, it does not appear to be the case now ... they are active lenders, they are a well-capitalized institutions as a group, and their return on assets compares favorably to low-income designated credit unions as a whole and mainstream credit unions," he said.

The webinar also contained the following statistics about services offered by CDFIs:
  • Specialized loans: Almost 60% offer credit builder loans, almost 50% offer share secured credit cards, more than 33% offer micro business and micro consumer loans, 25% offer payday alternative loans and nearly 10% offer refund anticipation loans;

  • High-tech member services: More than 80% provide ATM and debit card programs, account balance inquiries and access to online account histories; more than 70% provide e-statements, phone and audio response systems and online bill payments; and more than 50% provide online loan applications and mobile banking; and

  • Financial services: More than 80% offer no-cost share drafts, wire transfers and share certificates with low minimum balances; 70% offer money orders, check cashing and business share accounts; almost 60% offer surcharge-free ATMs; 30% offer international remittances and 17% offer individual development accounts.
A recording of the webinar will be posted to the federation's website next week.

The webinar included data from a federation white paper commissioned by the Credit Union National Association's Community Credit Union Committee about CDFI credit unions and a Federal Reserve Bank of Cleveland report on CDFI lending.

Don't be afraid to reach out, NBA legend Johnson advises CUs

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LOS ANGELES (10/23/14)--Keynote speaker Earvin "Magic" Johnson challenged leaders attending the California and Nevada Credit Union Leagues' annual meeting and convention Tuesday to elevate their credit unions to the next level by using some of the same team-building skills that the NBA legend employed during his career.
Click to view larger image California and Nevada Credit Union Leagues President/CEO Diana Dykstra presents keynote speaker Earvin "Magic" Johnson with a pair of shoes (size 15), celebrating the conference's REACH theme. (California and Nevada Credit Union Leagues Photo)
Johnson urged attendees to sublimate their egos and rely on the support of their teammates to foster a true team environment.
"Don't be afraid to reach out to those around you, and to reach for new heights," Johnson said. The NBA basketball legend and successful entrepreneur expounded on the challenges and opportunities to invest in urban communities across the nation.
He showered the audience with hugs and impromptu photo opportunities as he made his way around the room, discussing how credit unions can use similar strategies to those he's implemented to connect with consumers and communities.
Joseph Pine, co-founder of Strategic Horizons LLP and author of the book "The Experience Economy," opened the afternoon general session on Monday. Staging an engaging, memorable experience for consumers rather than just delivering products and services can carry credit unions forward by leaps and bounds in today's economy, Pine said.
"If credit unions say they change people's lives, then you need to realize you're in the transformation business," Pine said. "When you stop advertising and start creating 'places,' people can start experiencing who you are. When your business stages experiences, your work is theater."
The leagues also announced they are seeking 16 credit union leaders to join the 2015 REACH Innovation Group. Launching in coordination with the Filene Research Institute, the REACH Innovation Group will foster the development of new ideas and innovations for credit unions, similar to Filene's i3 group. Applications are due Dec. 31. Applications will be available on the leagues' website.

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Conn. CUs aiming to solidify status as members' primary FIs

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HARTFORD, Conn. (10/23/14)--An Oct. 13 article on noted that Connecticut credit union are striving to become the financial institution of choice for state consumers.

Connecticut credit unions have grown their overall asset base to $9.4 billion, compared with $9.2 billion two years ago.

Jill Nowacki, president of the Connecticut Credit Union League, said she believes credit union membership in the state will increase, particularly as cooperative financial institutions attract consumers who seek out local financial services providers.

"When you look at society's trends, especially among younger people, and the commitment that they have to buying local, to working in collaboration, I think credit unions offer those values," Nowacki told

Ed Danek Jr., CEO of Hartford (Conn.) FCU, with $86 million in assets, said credit unions typically offer better rates on loans and savings than banks because of their cooperative ownership structure.

To become their members' primary financial institution (PFI), credit unions must demonstrate value and stick to their core mission, Danek said.

"Statistics show that when a member has their checking, direct deposit, debit card, mobile banking and online bill pay with an institution, their retention rate is over 90% higher," he told .

"They are also many times more likely to borrow from that institution as well. PFI--make it sticky, and then deliver on your mission statement."

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Today's NCUA agenda: Corporate CUs, flood area loans

ALEXANDRIA, Va. (10/23/14)--It's another light agenda for the National Credit Union Administration's monthly board meeting, which is scheduled for 10 a.m. (ET) today.

The meeting will feature a discussion of two proposed rules and an update on the National Credit Union Share Insurance Fund.

The first proposed rule is one listed on the agency's regulatory review list for this year, part 760 of the NCUA's rules and regulation. That is the section relating to loans in areas having special flood hazards. The second proposal concerns corporate credit unions, section 704 of the agency's rules and regulations.

The meeting will take place at the NCUA's Alexandria, Va., headquarters. A recording of the meeting will be made available several weeks later.
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