News Now Archive
Published on January 2, 2013.
- Interchange issues impacting small issuers, Wash. Post reports
- CFPB mortgage rules among early 2013 actions: CUNA
- 2013 HMDA threshold set by CFPB
- Convicted embezzler banned from FI work by NCUA
- Inside Washington
- 2012: CUs' year in review
- The new year starts with 101 insights from Filene
- Michigan CU Foundation made a difference in 2012
- Strategic plans: Focus on your goals for 2013
- New era in expense management: CFO Council paper
- CU System briefs
- FOMC sets 2013 meeting schedule
- Market News
- News of the Competition
- Claim saver's tax credit for 2012
- DocuTech participates in CFPB initiative
Interchange issues impacting small issuers, Wash. Post reports
WASHINGTON (1/2/13)--In an article that extensively quotes Credit Union National Association (CUNA) Chief Economist Bill Hampel, the Washington Post reported that credit unions and other small issuers are reporting reduced debit card processing revenues as a result of recent interchange regulation changes.
The Federal Reserve Board's final rule implementing interchange changes caps debit interchange fees for issuers with more than $10 billion in assets at 21 cents. An additional five basis points per transaction may be charged to cover fraud losses, and an extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards. Most credit unions are exempt from the fee cap, but CUNA has repeatedly warned that the exemption will not insulate credit unions and other small issues and they will be adversely impacted by the big-issuers' interchange cap.
The Washington Post item directly questions the recent claims of a December Federal Trade Commission (FTC) report (News Now, Dec. 31) that small issuers have been unharmed by the interchange regulations. The Post story noted that credit unions and community banks have called the FTC report premature, and have said the results of the FTC survey do not reflect the true impact that interchange regulations have had on smaller institutions. The story also noted that small financial institutions have had to consider, in some cases, charging new fees to cardholders to offset revenue losses created by the interchange changes.
CUNA's Hampel in the Post story pointed out that the interchange provision "that could really start to lower interchange revenues for smaller institutions took effect in April, and in the only full quarter since then, the third quarter of 2012, we saw the first-ever decline in interchange revenue for credit unions.
"We are concerned about whether that was a one-time downward shift or the first of several quarters of decline," he added.
CUNA Deputy General Counsel Mary Dunn last week took issue with the FTC's interchange claims, and CUNA is planning to outline concerns regarding the FTC's report in an upcoming letter to the agency.
Dunn said all aspects of the interchange cap law must continue to be monitored and assured credit unions that CUNA's work on these issues will continue. (See Dec. 31 News Now story: Small issuer concerns remain despite FTC interchange report: CUNA)
CFPB mortgage rules among early 2013 actions: CUNA
WASHINGTON (1/2/13)--Many mortgage regulations that the Federal Reserve and the Consumer Financial Protection Bureau (CFPB) have proposed over the last two years are scheduled to be finalized in early 2013, setting up a busy year for both regulators and the regulated, the Credit Union National Association (CUNA) notes.
Among the biggest items on the CFPB's docket are ability-to-repay/qualified mortgage regulations, which will need to be finalized by Jan. 21. Under the Dodd-Frank Wall Street Reform Act, no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan. If the loan is a qualified mortgage, the creditor may presume that the ability to repay test has been met.
This rule has the ability to reshape the mortgage industry in the years to come, and many have argued that this is the most important rule under consideration by the CFPB at present, CUNA has noted.
Other items that are scheduled to be finalized by Jan. 21 include:
CUNA continues to meet with the CFPB and urge improvements in all of these proposals and will keep credit unions posted as the new rules are issued, CUNA Deputy General Counsel Mary Dunn said.
For more on these CFPB changes, use the resource link. A more comprehensive look at what regulatory changes credit unions can look out for in 2013 will be released in the coming days.
2013 HMDA threshold set by CFPB
WASHINGTON (1/2/13)--Credit unions and other financial institutions with total assets of less than $42 million as of Dec. 31, 2012 will not need to collect and report Home Mortgage Disclosure Act (HMDA) data in 2013, the Consumer Financial Protection Bureau (CFPB) said last week.
Under HMDA in 2013, financial institutions with total assets of more than $42 million that have home or branch offices in defined metropolitan statistical areas must collect certain mortgage loan data and report it to federal regulators. The HMDA reporting threshold stood at $41 million in 2012.
Credit Union National Association (CUNA) staff have emphasized that a credit union's exemption from collecting HMDA data in 2013 does not affect its responsibility to report the data it is required to collect during 2012.
The Federal Financial Institutions Examination Council (FFIEC) has also posted information on its 2013 HMDA and Community Reinvestment Act data entry software. For that information, use the resource link.
Convicted embezzler banned from FI work by NCUA
ALEXANDRIA, Va. (1/2/13)--Giovanna Liranzo, a former employee of McCoy FCU in Orlando, Fla., has been banned by the National Credit Union Administration (NCUA) from any future work at a federally insured financial institution.
The NCUA said Liranzo was convicted of embezzlement and misapplication of credit union funds and was sentenced to 15 months in prison, three years supervised release and ordered to pay restitution in the amount of $161,125.03.
To view this and earlier NCUA enforcement orders, readers can use the resource link below or visit NCUA's Office of General Counsel between 9 a.m. and 4 p.m. (ET) Monday through Friday. Paper copies may be ordered by mail from NCUA, 1775 Duke St., Alexandria, VA 22314-3428.
The agency also makes available links to the enforcement actions of other federal regulators against other institutions or their affiliated parties, which can be accessed via the second link below.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.
- WASHINGTON (1/2/13)--The Senate Sunday voted to confirm Carol Galante as assistant secretary of Housing and Urban Development. In her new position, Galante will head the Federal Housing Administration. The vote was 69-24. Galante previously held the assistant secretary position in an acting capacity. Prior to that, she served as the deputy assistant secretary for multifamily housing programs, a post to which she was appointed by President Barack Obama in March 2009 …
2012: CUs' year in review
MADISON, Wis. (1/2/13)--History will note 2012 as the International Year of the Cooperatives. Credit unions took advantage of that by reminding anyone they could about their cooperative structure, collaborative nature, member orientation and people-helping-people philosophy.
As a result, 2012 was a milestone year in terms of new members, assets, and more. As 2013 opens, more people than ever know what a credit union is and have chosen credit unions as their financial service provider.
Credit unions benefited from a range of efforts that shone spotlights on the good work they do. Their continued growth, their low or no fees and better rates, their assistance to people struggling to get businesses started in a tough economy, their push to get Congress to raise member business lending rates, and advocacy on behalf of the consumer on the interchange fees all led to a year of positive press that re-emphasized the credit union difference.
Here are a few milestones and other highlights of the year.
- Record membership joined credit unions. The phenomenal growth in membership credit unions experienced in 2011 did not end with Bank Transfer Day that year. It continued through 2012. In November, the Credit Union National Association (CUNA) counted a nearly 2.1 million growth in membership from June 2011 to June 2012--double the average growth for similar periods in the past decade. Members opened nearly 2.9 million new checking accounts (News Now Nov. 2).
- Credit union assets surpassed the $1 trillion mark. Credit unions in the U.S. reached the $1.02 trillion assets milestone in March--one of the most significant developments CUNA's surveys have reported. Assets grew 4.1% during the past year, CUNA reported in May (News Now May 4). CUNA economists reported the asset growth was a direct reflection of the fact that consumers increasing recognize and embrace the credit union difference.
- Mortgage business took off at credit unions. For the first time in history, credit unions were on track to surpass $100 billion in mortgage loan originations, said the American Credit Union Mortgage Association (News Now Dec. 17). As housing construction began to slowly improve, and mortgage rates remained low, more members originated or refinanced their mortgages at a credit union.
- Credit unions continued to top big banks on consumer satisfaction. As consumers became discontented with bank fees and lousy service, credit unions stood out in survey after survey. They were found to have the most loyal members and most satisfied member/customers, were noted as providing the most trustworthy services and the most safe and sound financial services and more. They topped big banks in surveys that received wide national press and were conducted by these independent research organizations: 2012 ath Power Ideal Banking Study, American Customer Satisfaction Index, Chicago Booth/Kellogg School Financial Trust Index, Prime Performance survey, a second Prime Performance survey on call center representatives, Tempkin Customer Service Ratings, and National Cooperative Business Association/Consumer Federation of America. CUNA surveys also noted that credit unions outshone banks in consumers' perceptions of safety and soundness, and that credit unions were perceived by consumers as the best place to keep their savings and checking accounts.
- Credit unions worked together to provide aid in disaster recovery efforts. In true collaborative efforts, credit unions helped each other out whenever nature had the upper hand, be it wildfires in Colorado, floods in Vermont, tornados, hurricanes or superstorms. In October credit unions along the eastern U.S. seacoast were hit with a once-in-a-century superstorm. Hurricane Sandy--responsible for 125 deaths in the U.S. and 70 in the Caribbean--affected hundreds of credit unions with closures due to power outages, wind and water damage and more. Its high winds, high waters and storm surges created havoc in an 800-mile swath along the eastern U.S. seacoast, hitting credit unions in New York and New Jersey hard. Shared branches--something that banks don't have--kept credit unions working for their members. The superstorm became the second costliest storm in U.S. history, after Hurricane Katrina in 2005. The movement collected more than $140,000 to assist credit unions, their employees, volunteer directors and members.
- Credit unions and credit union organizations consolidated more. While new corporate credit unions were getting their footing after restructuring and combining services across states or regions, credit union leagues and foundations found new ways to collaborate. They, like many credit unions who merged in 2012, had learned they can offer better services by collaborating and working together, than each might offer individually. The latest announcements came from several leagues last month. The Arkansas Credit Union League, Credit Union Association of Oklahoma and the Texas Credit Union League announced they would pursue consolidation into a single regional league, the Cornerstone Credit Union League. The North Carolina Credit Union League and South Carolina League boards announced they would move to a formal process to consider consolidating. Some collaborations were unusual, with credit unions moving to acquire banks, or credit unions deciding to share back office operations to take advantage of economies of scales.
- Mobile banking took hold in credit unions. Nothing has changed credit union's interactions with members more than online banking, and just when credit unions were getting used to that, along came the smartphone. During 2012, many credit unions introduced mobile banking channels to help attract new, younger members. Those who did so are ahead of the pack. Aite research group projects that the number of U.S. consumers who will use a mobile device to access their bank account will increase to 96 million by 2016 from today's 33 million (American Banker Dec. 20). That's a compound annual growth rate of 30%.
The new year starts with 101 insights from Filene
MADISON, Wis. (1/2/13)--A new report, "101 Things: Credit Union Insights from the Filene Research Institute," offers "easy-to-digest" highlights from 12 months of Filene reports--an easy way for credit unions to begin the new year armed with strategic insight.
Among the highlights from each of the nine areas covered in the report:
- Strategy and policy: Credit unions could improve organizational performance by diversifying their noninterest revenue streams, decreasing the variety of deposit products offered, and questioning the effectiveness of a diversified loan product strategy.
- Credit unions as cooperatives: Patronage refunds are the necessary tool that demonstrates to members that the cooperative is socially and fiscally responsible with the member's money.
- Lending: The average American household lives in the same home for only seven years. That implies that most Americans, or a very large swath of Americans, could do better with a shorter-term fixed interest rate, which would result in lower monthly interest payments
- People: High-performing middle managers want to be given the vision and the mission, participate in goal development, and then be allowed to do their thing.
- Consumer behavior: Consumers, especially low-income consumers, are much more likely to cycle in and out of debit and credit cards and the institutions that issue them than to give up on cash.
- Marketing: Credit unions that dedicate eight or more hours per week to social media report the highest success rates.
- Credit union profitability: Research shows that the top 30% of members contribute 110% to the bottom line, while the bottom 10% don't merely fail to contribute, they actually destroy profits. On average, members who connect with the credit union through online channels are 35% more profitable than those who have only an offline relationship.
- Innovation: Only 27% of executives responding to a McKinsey Global Survey said that their companies are effective at holding leaders accountable for executing tactics that support innovation.
- Governance: Good governance in both corporations and credit unions is, in essence, the leadership structure and the complex system of incentives, checks and balances that makes sure that the organization creates long-term, sustainable value.
Michigan CU Foundation made a difference in 2012
LANSING, Mich. (1/2/13)--The Michigan Credit Union Foundation (MCUF) last year provided $90,000 in support to Michigan credit unions through scholarships for employee educational development and grants for community outreach projects.
Donors to the foundation in 2012 included 73 credit unions, 10 chapters, 10 credit union business partners and the Michigan Credit Union League (MCUL) (Michigan Monitor Dec. 17).
MCUF assisted 100 credit unions and 249 credit union employees with grants and scholarships in 2012.
A new option will allow 2013 donations to be made along with payment of MCUL membership dues, the league said.
Strategic plans: Focus on your goals for 2013
MADISON, Wis. (1/2/13)--The calendar has flipped to a new year. Credit unions have spent hours and dollars preparing their strategic plans, but daily tasks and to-do lists are likely distracting credit unions from their plan. In 2013, credit unions will need to stay focused on those plans to make sure their plan works.
Mark Arnold of the Louisiana-based On the Mark Strategies offered four tips to assist credit unions in meeting their strategic planning goals for the new year. At least two leagues--Texas and Delaware--have noted his tips in their newsletters (Lone Star Leaguer Dec. 21 and Together Dec. 31).
- Stay focused. "Don't start the new year chasing wild geese," Arnold said. Although strategic plans have flexibility built into them so the credit union can pursue worthy projects, credit unions must stay true to their plan. "The question shouldn't be 'Can you do this project?' but 'Should you do this project?'" Does the new project fit into your plans and goals? Arnold also cautioned against managing by crisis; putting out little fires diminishes accomplishing the goals.
- Commit budget dollars. Allocate sufficient resources--both dollars and manpower--to the goals. Don't expect great results without realistic funding.
- Follow up and measure. Review the strategic plan and goals at least monthly, if not more often. Review important data like timetables and who is responsible for what action items. Update the status of each goal to determine overall progress. "One cardinal rule of strategic planning is 'What is not measured is not accomplished,'" said Arnold. "Follow up on your strategic plan, or it will die," much like a neglected houseplant in the office.
- Motivate staff. Strategic plans are not just for the executive management or board level. They will be driven by the credit union's staff, especially the front-line staff. Staff not only have to buy into the plan; they have to live it. Some credit unions provide all staff with a laminated index card "cheat sheet" with the top three to five strategic goals so staff can refer back to it often. Use staff meetings to remind employees of the importance of the strategic plan, and provide updates on the goals' progress. "Your front-line staff will help make or break the strategic plan, so keep them accountable by keeping them updated and involved," said Arnold.
New era in expense management: CFO Council paper
MADISON, Wis. (1/2/13)--The role of the chief financial officer (CFO) has evolved from bean counter to communicator and collaborator, according to a new CUNA CFO Council white paper.
"A New Era in Expense Management" is based on information gathered from credit union CFOs, other financial executives and consultants. The white paper delves into expense management practices, which go beyond budgeting to encompass strategic planning, process improvement and revenue generation. In the paper, credit union leaders stress that expense management should focus on adding value to operations.
While traditional accounting is still essential, the CFO's greatest contributions typically result from monitoring and measuring financial performance, the paper said. Rather than focusing solely on cost, the CFO and other senior members of the finance team examine whether the credit union is using effective, efficient operations to serve members and generate revenue. This effort requires the CFO to become a strong communicator who collaborates with all departments to share ideas and streamline operations.
CFOs rely on data and analysis to monitor expenses, identify trends and compare their credit unions' spending to peers' spending. Expense ratios, efficiency ratios and benchmarking can provide perspective and give the CFO an objective measurement of appropriate expense levels, said the council paper. CFOs are also an integral part of credit unions' ongoing efforts to manage risk and improve operations.
Throughout the white paper, CFOs and consultants share their strategies for managing expenses, creating a culture of continuous improvement and pursuing new opportunities to attract members and enhance revenue. As economic conditions improve, these experts say credit unions will be tempted to relax their focus on expense management. Instead, they recommend that credit unions create a "new normal" marked by the use of analysis to determine whether expenses are justified based on their ability to generate revenue or enhance operations.
CU System briefs
- WACO, Texas (1/2/13)--A Texas man has pleaded guilty to the Aug. 8 robbery of the Lacy Lakeview branch of Waco, Texas-based Genco FCU (kwtx.com Dec. 20). Bradley Kilmer, 33, of Fort Worth is scheduled for sentencing in the U.S. District Court in Waco in February. In addition to the Genco FCU case, Kilmer is also a suspect in the Aug. 30 robbery of Fort Worth Community CU in Weatherford, Texas, and a bank robbery in Alvarado. In the Genco robbery, a man entered the credit union and handed a note to a teller that said he would shoot her if she didn't give him money. The robber fled with an undisclosed amount of cash. In the other credit union robbery, the robber also handed a note threatening harm to a teller if she did not give him money …
FOMC sets 2013 meeting schedule
WASHINGTON (1/2/13)--The Federal Open Market Committee (FOMC)--the monetary policymaking body of the Federal Reserve--has set its 2013 calendar.
The FOMC will meet on these dates:
- Jan. 29-30;
- March 19-20;
- April/May 30-1;
- June 18-19;
- July 30-31;
- Sept. 17-18;
- Oct. 29-30; and
- Dec. 17-18.
The FOMC is the body responsible for setting the fed funds targeted interest rates and for taking measures, such as its recent string of quantitative easing measures involving buying back bonds, to adjust to the nation's economic conditions.
MADISON, Wis. (1/2/13)
- The U.S. is on pace for the slowest decade of population growth since the 1930s, as the country emerges slowly from the worst economic downturn since the Great Depression, according to the Census Bureau (Bloomberg.com Dec. 30). Roughly 315.1 million people were estimated to live in the U.S. on New Year's Day, a 7.3% increase from last year's estimate and 2.05% more than the most recent census report in April 2010. If the current pace of growth continues, that means the nation's population will grow by 7.3% during the decade. That would be the lowest level recorded since the 7.25% growth between 1930 and 1940, said Bloomberg. In the aftermath of the 2007-2009 recession, the nation's birth rate and immigration dropped. Between 2000 and 2010, the nation's population grew by 9.7%. Five Mountain states in the West--Wyoming, Utah, Nevada, Colorado and Arizona--were among the top 10 growth states. Two states--Vermont and Rhode Island--lost population during 2012 …
- Holiday shoppers were more likely to use smartphones for mobile assistance this year, said GfK Roper, which asked smartphone owners how they used their devices for holiday shopping (eMarketer Dec. 31). Every activity surveyed increased in percentages: 82% said they used smartphones for research and browsing of products (up from 67%); 74% bought something (up from 55%); 62% used an e-mail offer from a retailer (up from 45%); 56% used a consumer rating site to help decide to buy a product (up from 40%); 35% used a global positioning system/location feature on their phone to help with shopping (up from 31%); 27% used a QR code to find more information about a product (up from 19%); 33% used a mobile coupon (up from 18%). In addition, 9% said they used a Black Friday or Cyber Monday mobile app, and 7% said they purchased something on their tablet …
News of the Competition
News of the Competition
MADISON, Wis. (1/2/13)
- Bank of America (BofA) has sold 21 branches in Iowa and Maine since March, and the Charlotte-based megabank has made deals to sell an additional 38 branches in the central U.S. Community banks are set to purchase all of the branches, which total about $1.5 billion in assets (American Banker Dec. 31). Northwest Bank has sought to acquire BofA branches for several years, according to Greg Post, Northwest president/CEO. Northwest wanted the branches for what they offer in customer relationships, employees and real estate, Post said. Locations that are irrelevant for BofA are meaningful for community banks, said Chris Marinac, an analyst with FIG Partners …
- Banks paid a record $1.2 billion in fines to U.S. and state authorities this year. About half of that amount was related to improper mortgage practices. A $1.5 billion mortgage settlement with major home lenders was announced in February to create a fund to pay borrowers whose homes were improperly sold or taken into foreclosure (CNNMoney Dec. 31). Another $3.5 billion was awarded to state and federal governments to fund counseling and legal aid. Wells Fargo paid $175 million in July to help minority homeowners who were sold subprime loans when they qualified for traditional mortgages. Also, UBS agreed in December to pay $1.2 billion for manipulating the London interbank offered rate …
- Canadian Imperial Bank of Commerce (CIBC) has agreed to pay $149.5 million to settle a claim with the estate of Lehman Brothers related to collateralized mortgage obligations that led to the failure of the Wall Street bank (Reuters Dec. 31). The estate claimed had Lehman Brothers contracts that gave it senior payment priority on derivatives and collateralized debt obligations, but that the bankruptcy improperly placed the priority of the payments. The claims were filed against CIBC and numerous other financial institutions in September 2010, two years after Lehman Brothers went bankrupt. CIBC previously recognized a $841 million gain and reduced its financial commitment to zero after Lehman filed for bankruptcy in September 2008 …
Claim saver's tax credit for 2012
WASHINGTON (1/2/13)--If you're a low- or moderate-income worker saving for retirement in a 401(k), an individual retirement account (IRA) , or similar workplace retirement program, you could be eligible to claim a special tax credit of as much as $1,000 for individuals and $2,000 for married couples (U.S. News & World Report Dec. 20).
You can claim this credit in addition to any other tax savings you get for your retirement account contributions.
Here are the rules to claim this credit on your 2012 tax return:
- You must be age 18 or older.
- Your adjusted gross income must be within the Internal Revenue Service (IRS) guidelines: up to $28,750 for singles, $43,125 for heads of households, and $57,500 for couples.
- You can't count rollovers to your retirement account towards the credit.
- You're eligibility might be reduced if you recently took a distribution from your retirement account.
The saver's credit is highest for retirement savers with the lowest incomes. The credit ranges between 10% and 50% of retirement contributions, with the highest percentage going to savers with the lowest incomes.
If you were unaware of this credit, first introduced as a temporary provision in 2002 and made permanent in 2006, you're not alone: Only one of four workers has heard about it.
You have until April 15 to make qualifying contributions to a new or existing IRA and get the saver's credit on your 2012 tax return. Follow the instructions on IRS form 8880 to figure the saver's credit correctly and claim it.
DocuTech participates in CFPB initiative
IDAHO FALLS, Idaho (1/2/13)--DocuTech Corp., an Idaho Falls, Idaho-based mortgage document compliance services provider, is leading a response from lenders to the Consumer Financial Protection Bureau's (CFPB) recently announced Project Catalyst, which seeks to involve mortgage executives in testing new disclosure forms.
The CFPB has been working on new mortgage disclosure forms, which outline the expected closing costs and terms of the mortgage for consumers, for the past 18 months. As part of this initiative, the bureau's goal is to encourage credit unions, banks and other financial services companies to propose and conduct trial disclosure programs.
DocuTech is leading a group of lenders in testing different formats to provide feedback to the CFPB.
"The CFPB recognizes that what seems like a good idea in theory often hits unexpected obstacles when put into full production," said Scott K. Stucky, DocuTech chief operating officer. "We are in a unique position to help lenders not only evaluate the disclosures from a content perspective, but to also test ease of implementation and the impact to operations."