FASB Delays CECL Compliance for CUs Until 2023

NORWALK, Conn.–The Financial Accounting Standards Board has announced a delay in the implementation date for its new current expected credit loss (CECL) standard for an additional year for credit unions, pushing back the compliance date until 2023. 

Both credit union trade associations have been pushing for the delay.  

“We appreciate FASB considering credit unions’ concerns and moving forward with a delay of the CECL standard and committing itself to conducting a cost-benefit analysis to better understand this new standard’s impact on consumers, credit unions and the economy as a whole,” said NAFCU Chief Economist and Vice President of Research Curt Long. “NAFCU will continue to advocate for credit unions to be exempt from this onerous and costly accounting standard as it could adversely affect credit unions’ capital levels immediately upon implementation. More so, credit unions did not cause or contribute to the financial crisis or the poor lending conditions that led the FASB to consider a new standard.” 

Added Elizabeth Eurgubian, deputy chief advocacy officer and senior counsel with CUNA, "While the proposed one-year delay will help small credit unions come into compliance with this rule, the fact remains that CECL is a solution in search of a problem. We maintain that CECL will only hinder credit unions’ ability to uplift low-income borrowers and maintain that a quantitative impact study is critical to understand the far-reaching effects of CECL, including its impact on credit availability.”

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CD rates have reversed course!

SAN FRANCISCO—For the first time in five years, rates of certificates of deposits have reversed course and are declining, a new report reveals. Separately, mortgage rates have also declined to a two-year low.

The report from Analyticom signals a reversal of a rising-rate trend that started in June of 2014 and lasted until now. The last time deposit rates started declining, as they are now, was 12 years ago on the eve of the Great Recession in July of 2007.

“The main driver behind the decline in CD rates is the growing probability of a Fed rate cut in the second half of this year,” stated Analyticom’s Dan Geller. “Banks and credit unions are lowering interest rates on CDs in order to reduce their risk and exposure to shrinking net interest margins once the Fed cuts the Funds rate and loan rates start to decline.

“The decrease in interest rates on CDs is going to impact fixed-income savers, such as retirees, who like the safety and predictability of certificate of deposits despite their relative low interest rates, compare to investments that carry some risk,” continued Geller. “Risk-averse people, such as retirees, prefer the five-year CD, which offers the highest interest rate of all deposit types.”

In June of 2014, the national average of the five-year CD was only 0.75% and it increased to 1.28% after five years. However, in some markets the rate of the five-year CD is twice as high as the national average. As of June of this year, the national average rate for the five-year CD has declined to 1.21% according to data from the FDIC, Geller said.

Mortgage Rates Decline

Separately, mortgage rates hit their lowest levels since November 2016. Freddie Mac reported the 30-year fixed-rate average fell to 3.73% with an average 0.5 point. The rate is down from 4.55% one year ago. The 30-year fixed rate has fallen in seven of the last nine weeks.

The 15-year fixed-rate average dropped to 3.16%, down from 4.04% a year ago, while the five-year adjustable rate average fell to 3.39%, down from 3.87% a year ago.

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Does Credit Union Content Marketing Work?

 

Does Credit Union Content Marketing Work?

Content marketing is a kind of marketing strategy designed to attract and nurture inbound leads. It relies on maintaining a consistent and prominent online presence to show up in peoples’ internet searches. Can credit union content marketing work?

Few credit union marketing strategies are exactly alike. Each credit union fills a unique niche and appeals to particular local community. Each credit union offers something that other financial institutions near them don’t.

With quickly evolving technology and the popularity of online and mobile banking, traditional marketing avenues are changing as well. Content marketing can help credit unions reach prospective members who turn to the internet first to gather information about companies, products, and services that interest them.

Quick Content Marketing Statistics

According to Hubspot, generating traffic and leads is by far the largest marketing challenge for most businesses. That speaks volumes about how most companies feel    Continue Reading

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NCUA Chairman Rodney E Hood to Speak at the National Council of Firefighter Credit Unions Inc Conference

NCUA Chairman Rodney E. Hood will join our excellent list of speakers in Clearwater Beach, Florida this year. 

National Council of Firefighter Credit Unions Inc.

For a complete list of speakers and events,  Click Here

 

President Donald J. Trump nominated Rodney E. Hood for the NCUA Board on January 19, 2019. The U.S. Senate confirmed him on March 14, 2019, and he took the oath of office on April 8, 2019, and was designated as the eleventh NCUA Chairman by President Trump.

As NCUA Board Chairman, Mr. Hood also serves as a voting member of the Financial Stability Oversight Council. He also represents the NCUA on the Federal Financial Institutions Examination Council and the Financial, Banking Information Infrastructure Committee.

Mr. Hood was previously nominated to the NCUA Board by former President George W. Bush and served from November 2005 until August 2009. He was appointed Vice Chairman by former NCUA Board Chairman JoAnn Johnson, and he served as the NCUA’s representative on the board of directors of NeighborWorks America.

Immediately prior to rejoining the NCUA Board, Mr. Hood served as a corporate responsibility manager for JPMorgan Chase, managing national partnerships with non-profit organizations, financial regulators, and community stakeholders to promote financial inclusion and shared prosperity in underserved communities throughout the United States.

His previous experience includes serving as associate administrator of the Rural Housing Service at the U.S. Department of Agriculture. In this role, he helped to address the housing needs in rural communities and administered the agency’s $43 billion mortgage portfolio.

Prior to his public service, Mr. Hood served as marketing director and group sales manager for the North Carolina Mutual Life Insurance Company in Durham, North Carolina. He also served as national director of the Emerging Markets Group for Wells Fargo Home Mortgage and served on the board of the Wells Fargo Housing Foundation. Earlier in his career, he worked for Bank of America as a Community Reinvestment Act officer and completed the management development program at G.E. Capital.

In addition to his public and private sector service, Mr. Hood served as a member of the University of North Carolina at Chapel Hill Board of Visitors and as member of the UNC School of Arts Board of Trustees. He also served as a member of the Board of Trustees for the North Carolina Museum of Art and as a member of the Board of Governors for the University of North Carolina College System.
Mr. Hood’s professional awards include being named one of the “40 Young Leaders Under the Age of 40” by the Triangle Business Journal in Raleigh, North Carolina. He is also the first recipient of the “Dream Award,” an award given by the Wells Fargo Housing Foundation to honor individuals who have exhibited an outstanding commitment to affordable housing.

A native of Charlotte, North Carolina, Mr. Hood holds a bachelor’s degree in business, communications, and political science from the University of North Carolina at Chapel Hill.

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The Federal Reserve has opted to make no changes in interest rates

WASHINGTON–The Federal Reserve has opted to make no changes in interest rates following the conclusion of its meeting here, but it has indicated it could move as soon as next month to cut rates if the United States and China isn’t able to find ways to resolve their trade dispute. As a result,  For now, the Fed left its short-term rate at a range of 2.25% to 2.5%. Eight of the 17 votings, Fed policymakers did predict there could be as a half percentage point decline in rates in 2019.

In a statement following its meeting, the Fed did dial down a bit its forecast for the economy. 

 “In light of these uncertainties and muted inflation pressures, the FOMC will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market” and inflation near the Fed’s 2% goal,” the Fed said. 

Fed Chairman Jerome Powell in recent interviews has expressed concerns over what he called “cross-currents” in the economy. Inflation remains below the Fed’s goal of 2% annually, and the most recent jobs numbers were relatively small.

President Trump has recently announced plans to assess a 25% tariff on the remaining $300 billion in Chinese imports not already hit with such a tariff.

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Ireland - Banks are charging credit unions as much as 65 basis points to keep their money on deposit meaning, for example, a credit union would pay €6,500 for every €1 million it has on deposit.

DUBLIN, Ireland–At least three-dozen credit unions in Ireland have imposed a limit on the deposits members can have, in some cases as low as €15,000, as a result of negative interest rates now in place at the country’s two largest banks.

Ireland

The Irish Times reported it has identified 36 credit unions that have imposed the caps in order to limit any surplus funds they keep on deposit with the banks.

One of the banks, AIB, is charging corporate customers as much as 65 basis points to keep their money on deposit, the Irish Times reported, meaning, for example, a credit union would pay €6,500 for every €1 million it has on deposit.

A spokesman for the bank told the Irish Times it has tried to insulate “the vast majority of our customers from the impact of a sustained period of negative interest rates” but that there were “a relatively small number of larger depositors with whom AIB seeks to reflect the commercial realities of the negative interest rate environment.”

Bank of Ireland is reportedly charging depositors as much as 40 basis points (or a negative rate of 0.4 percent) on short-term deposits, the publication reported.

Credit unions are also blaming the Central Bank–which regulates credit unions in Ireland–for rules they say cut the amount of savings they can accept from members, arguing that for every €100 saved in the credit union, they have to set aside €10 as part of the regulator’s capital requirements.

Savings hit € 13.2 billion in March of this year, up 20% on 2008, while at the same time demand for lending has shrunk, the Irish Times reported. The Irish League of Credit Unions said loan dollars outstanding had declined from €6.4 billion in 2008 to €4.3 billion as of March this year.

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NAFCU's Curt Long noted that strong gains in consumer spending may diminish the chances of a recession in 2019.

ARLINGTON, Va.—Total retail sales increased by 0.5% in May, and April's sales growth was revised upward from -0.2% to +0.3%. NAFCU's Curt Long noted that strong gains in consumer spending may diminish the chances of a recession in 2019.

Retail Sales

"Household saving rates are at normal levels, so any growth in real wages would represent an upside risk," said Long, NAFCU's chief economist and vice president of research, in a NAFCU Macro Data Flash report. "There are plenty of downside risks to fret over, from the trade war to energy prices to a weak May jobs report, but NAFCU believes a recession is not in the cards this year."

Year-over-year growth in retail sales was 3.2% in May, down from 3.7% in April. Core retail sales increased by 3.2% from a year ago, and auto and gas sales grew by 3.1%.

Core retail sales (excluding light vehicles and gasoline) increased 0.5% in May. Auto and gas sales increased by 0.6% during the month.

In the report, Long also examined current consumer trends and how they impact overall economic growth. 

"After a steep decline over the winter, shopping patterns seem to have stabilized. And although year-over-year growth of just over 3% is nothing to get too excited about, it is solidly positive in real terms. It also highlights the strength of the American consumer, who represents two-thirds of GDP," Long concluded.

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