The Pulse (02-12-2014)
Feb. 12, 2014 ● Volume 03, Issue 6
The Pulse Archive
Credit Union News
Network holds informational meeting on Target data breach
On Feb. 5, MnCUN held a conference call with credit unions throughout Minnesota to share information related to the recent Target data breach. President & CEO Mark D. Cummins began the call with a review of findings from CUNA’s data breach survey. Through mid-January, nearly 1,000 credit unions across the country had responded, and it is estimated that the breach has cost them between $25 million to $30 million. A conservative estimate of the impact on Minnesota credit unions is 120,000 cards with a $600,000 cost.
Mara Humphrey, MnCUN Vice President-Governmental Affairs, talked about recent legislative activities that have been prompted by the breach. Four Congressional hearings were held during the week of Feb. 3-7, including one in the Senate Judiciary Committee on which both Sens. Franken and Klobuchar serve. They have also both signed on as co-sponsors of the Personal Data Privacy & Security Act of 2014 (S. 1897), which defines what types of information are considered "sensitive personally identifiable information," such as names, social security numbers, passwords and more.
On a national level, legislative remedies backed by MnCUN and the Credit Union National Association (CUNA) include enacting legislation that holds merchants to the same data security standards as credit unions, requiring merchants to reimburse credit unions for data breach costs and allowing credit unions to disclose where a data breach has occurred when notifying members. These points will be part of the legislative agenda at the upcoming Governmental Affairs Conference (GAC) in Washington, D.C., Feb. 23-27.
Humphrey also discussed the 2007 Minnesota law that became the first of its kind in the nation to potentially allow financial institutions to recoup costs related to events like the data breach. At that time, MnCUN passed the Plastic Card Security Act because of concerns raised by credit unions on the cost and impact of data breaches. The law requires merchants to follow payment card industry (PCI) standards for the storage of information. Businesses not in compliance with PCI standards can be held liable to the card-issuing financial institutions for the costs resulting from a breach of security. Recoverable costs include the costs of reissuing cards, reimbursement for fraud losses, the costs of notification and the costs of opening and closing accounts. At this point, the Target data breach has not been linked to a violation of PCI standards.
Representing CUNA, Associate General Counsel Robin Cook provided an overview of credit unions across the country that have engaged in legal actions against Target. A number of suits have already been filed, including class action suits in Alabama, Arkansas, Pennsylvania and Minnesota.
Also providing a national perspective on this breach, John Christenson, CUNA Mutual Group Associate General Counsel, mentioned that a Target memo identified 72 total suits that have been filed against the company, with seven of those being financial institution-related class actions. Christenson also reminded credit unions of CMG’s Plastic Card coverage, which protects credit unions’ payment card programs from fraud-related losses.
MnCUN’s compliance team rounded out the call, with General Counsel John Wendland and Associate General Counsel Lyndsay Miller discussing potential legal options and answering questions from call participants. While MnCUN cannot provide legal advice or recommend a specific course of action, Wendland and Miller shared information with credit unions that are weighing their legal options.
Wendland reported that MnCUN has also been in contact with Target’s legal department regarding the breach.
In case you missed the call, or would like to listen to parts of it again, a recording is available on the Target Data Breach page on the MnCUN website. If you have questions about the Target data breach, please feel free to contact the following MnCUN staff:
Communications, media relations and breach activity updates
MnCUN unveils new venue, new format for 2014 Annual Meeting – registration now open!
With the 2014 Annual Meeting change in location also comes a change in schedule and format, including an exhibit hall grand opening, an awards breakfast, and a continuous general session to kick off the conference. Join us at the new Radisson Blu Mall of America for two days of business meetings, engaging speakers, educational sessions and networking. Whether you are a credit union professional or volunteer, from a large or small credit union, you will find programs specifically geared toward your needs.
This is an event not to be missed. Complete event details are available online in the Annual Meeting & Convention section of the Network website. This section contains a schedule of events, lodging information, prices and online registration. For additional information or with specific questions about MnCUN's 2014 Annual Meeting, please contact Director of Education Sue Groskreutz by email or at (651) 288-5521
Minnesota credit unions continued growth trend in 2013
Minnesota’s credit unions experienced continued growth in most leading indicators throughout 2013, according to preliminary statistics compiled by the Minnesota Credit Union Network. This growth is a trend that has continued in the years since the financial crisis began.
Total Minnesota credit union lending showed significant growth in the fourth quarter, increasing by $202 million over the third quarter. For 2013, credit unions nationwide have experienced growth in lending that has outpaced savings for the first time since 2007, according to the Credit Union National Association's Credit Union Monthly Estimates for 2013, released on Feb. 5.
Also, Minnesota credit union loan growth in 2013 outpaced deposit and asset growth – by $720 million compared to $613 million for deposits and $700 million for assets – illustrating how credit unions continue to support and strengthen communities while creating a positive impact on their own income statements. Loan growth was well-balanced between real estate and non-real estate loans.
"It’s very encouraging to see the continuing demand for loans,” said Mark D. Cummins, Minnesota Credit Union Network President & CEO. "More lending is a good sign that consumer and business confidence continue to improve after the economic downturn, and credit unions are helping to contribute to the state economy’s overall growth.”
Overall, credit union membership has grown since 2011 and assets have grown steadily each year since 2007, as outlined below:
Minnesota Credit Union Membership and Assets
Members (in millions)
Assets (in billions)
"The underlying fact behind this continued growth is simple – consumers trust their credit unions,” Cummins said Tuesday in a press release. "Members like to know that their preferred financial institution is locally-owned and operated, and that their credit union works for people, not for profit."
Below is a summary of additional key indicators from the 2013 preliminary statistics:
- The latest available membership results show that Minnesota credit union membership grew by 16,000 in the third quarter of 2013 to reach 1,607,000 – a 1.0 percent growth rate. This pace is slower than the 2.0 percent growth rate reported in the third quarter of 2012, but indicates that consumers continue to choose credit unions as their financial partner.
- Minnesota credit union assets grew by 3.91 percent between 2012 and 2013, with a 0.38 percent growth between Q3 and Q4 2013.
- Deposits at Minnesota credit unions increased 3.91 percent year-over-year from 2012 to 2013. Between Q3 and Q4 2013, deposits increased by 0.34 percent.
- Year-over-year loan growth was 6.95 percent between 2012 and 2013. Loan balances increased 1.86 percent in Q4 2013, reflecting what is typically a seasonal slowdown for loans in the fourth quarter but building on the 2.69 percent increase seen in the third quarter.
- Minnesota credit unions are rated as "well-capitalized” by the National Credit Union Administration (NCUA), with a reported net worth of 10.06 percent at the end of 2013. The NCUA considers a credit union as well-capitalized if its net worth is above 7 percent.
Risk-based capital rule proposed; CUNA provides impact simulator
NCUA has proposed a rule that would replace the current risk-based net worth requirement with a new risk-based capital ratio. The rule would apply specifically to those federally-insured natural person credit unions with assets of over $50 million. The rule would revise the risk weights for many of NCUA’s current asset classifications, which would weigh more heavily assets in real estate loans, member business loans, delinquent loans and investments in CUSOs.
Under the proposed rule, a credit union must maintain:
- a net worth ratio of 7 percent or greater and a risk-based capital ratio of 10.5 percent or greater to be well capitalized,
- a net worth ratio of at least 6 percent and a risk-based capital ratio of 8 percent or greater to be adequately capitalized, and
- a net worth ratio of 4 to 6 percent or with a risk-based capital ratio less than 8 percent if the net worth ratio exceeds 6 percent to be undercapitalized.
The significantly and critically undercapitalized classifications are essentially unchanged from the current rule.
In addition, the proposed rule sets forth the process for NCUA to require an individual credit union to hold higher levels of risk-based capital to address unique supervisory concerns raised by NCUA. In the proposed rule NCUA provides examples where higher levels may be appropriate. The rule would go into effect 18 months after publication of the final rule.
The Credit Union National Association (CUNA) has created a risk-based capital impact simulator to assist credit unions in assessing the overall potential impact of the rule. Simulator information, as well as the simulator spreadsheet, can be found on CUNA’s website. See the below links for additional information.
The MnCUN Regulatory Review Committee is meeting later this month to discuss the proposed rule. MnCUN will be submitting a comment letter to NCUA and will provide that letter to member credit unions to use as a sample for their own comment letters. Please forward any comments you have regarding the proposed rule to MnCUN General Counsel John Wendland.
Comments are due 90 days after Publication in the Federal Register, which is expected soon.
Make the smarter choice – promote your CU online
In 2013, nearly 300,000 visits nationwide were made to aSmarterChoice.org and nearly 250,000 searches for credit unions were conducted on this site. Consumers are looking for financial institutions that they can trust, and aSmarterChoice.org provides consumers the tools they need to find a credit union in their area that they can join.
However, this tool cannot be effectively used and promoted without credit unions' help.
The aSmarterChoice.org website uses news stories and member testimonials to educate consumers about credit unions. The national credit union locator on the site enables users to quickly and successfully find a credit union in their area. In addition, this website offers marketing materials that credit unions can use to promote this valuable tool. The free marketing resources available to credit unions include:
- Credit Union Difference Banner: Through a rotating banner, you can educate members and potential members about the difference between credit unions and banks. Each image of the banner completes the sentence "credit unions are better than banks because…” and shares powerful facts about how credit unions stack up against banks.
- Credit Union Locator Tool: Post this tool on your website as a way to help members to share the credit union difference with those they know. Encourage members to share this locator with their friends and family.
To access these powerful marketing tools, visit aSmarterChoice.org. In addition, credit unions should review their membership information posted on the website. To edit your credit union's profile, visit a SmarterChoice.org's update your records page.
Foundation reminds credit unions to log financial education presentations
Credit unions across the country partner with schools and community groups to teach personal finance to America’s youth. As part of the nationwide effort to promote and quantify financial education efforts, credit unions are encouraged to notify the National Youth Involvement Board (NYIB) of their classroom presentations made throughout the year.
The Minnesota Credit Union Foundation -- with a focus on financial education -- reminds credit unions that reporting these presentations is beneficial to the Foundation, the Minnesota Credit Union Network, Credit Union National Association, and NYIB in providing information to state and federalelected officials. This quantitative data helps illustrate to lawmakers the credit union difference. Plus, in this day and age of bank attacks, credit unions need to showcase the activities that they do to improve their communities.
It is vital for credit unions to document and reportsuch efforts! The submitted information is used to demonstrate how credit unions make a difference in the lives of young people and, at the same time, helps protect the unique status of credit unions as not-for-profit financial cooperatives. Visit NYIB online to report your financial education presentations. With questions, contact NYIB North Central Regional Coordinator Ashley Buchholz.
Biz Kid$ financial education grants available to credit unions
Credit union organizations can now apply for Biz Kid$ Financial Education Grants from the National Credit Union Foundation (NCUF) through March 31.
Biz Kid$ is a financial literacy initiative launched nationally in January 2008 that teaches kids about money and business. The initiative includes an award-winning TV series, free classroom curriculum, outreach activities, and a website targeting children 9 – 16 years old.
The number one goal of the Biz Kid$ financial literacy initiative is to teach kids from upper elementary through high school to understand and incorporate the skills they need to successfully manage their financial lives. The goal of NCUF’s Biz Kid$ Financial Education Grants is to extend the reach of the series beyond broadcast into the community.
Biz Kid$ Financial Education Grants may be used to fund innovative programs that improve the financial education of youth through the use of the Biz Kid$ program. Projects may engage teachers, students, education leaders, local PBS stations, or community stakeholders through events, activities, and/or curriculum distribution. Each project should create innovative and engaging activities incorporating Biz Kid$ materials. The overall grant objective is to engage the credit union movement in using Biz Kid$ and its curriculum to build students financial literacy and economic education skills while increasing awareness and usage of Biz Kid$. Funds may not be used as a cash donation to a third party.
For more information about Biz Kid$, click here.
2014 Women in Business nominations now open
Minneapolis/St. Paul Business Journalwill be accepting nominations for its annual Women in Business Awards Feb. 7-28.In May, the Twin Cities top women business leaders will be honored in the Business Journal’s annual Women in Business publication.
Each year, the Business Journal recognizes 50 women for their professional achievements, leadership qualities, and contributions to the broader Twin Cities community. The Business Journal also honors one female executive with a Career Achievement Award.
Complete submissions online in the nominations section of the Minneapolis/St. Paul Business Journal website. Please contact Staff Writer Kathy Grayson at (612) 288-2106 for more information.
Credit Unions in the News
Follow the links on the stories below to read more about the outstanding programs, new initiatives and well-deserved recognition received by your peers recently. Got news of your own? Send stories, pitches, press releases and published articles to MnCUN Director of Communications Connie Kuhn.
PCU Student Credit Union Celebrates 1st Anniversary
(PR Web, © 02/11/2014)
Royal Credit Union Raises Money for Children’s Miracle Network Hospitals
(press release, © 02/10/2014)
Hermantown Chamber of Commerce announced its 2014 board of directors
(Duluth News Tribune © 02/10/2014)
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CUNA Strategic Services
The Network and CUNA form strategic endorsement relationships with various vendors to help your credit union compete in today’s financial environment. Through the Network Service Corporation (NSC), your credit union has access to a variety of products and services that help your organization meet the financial needs of its members.
CUNA Strategic Services (CSS) develops strategic alliance relationships to offer products and services to credit unions that contribute to the bottom line, add to your peace of mind, and enhance your credit union's relationships. The company is jointly owned by Credit Union National Association (CUNA) and the state leagues.
To learn more about CUNA Strategic Services and the products and services it has to offer your credit union and its members, contact MnCUN Director of Business Development Vickie Ganrude by email or at (651) 288-5515.
Click here for a printable list of CUNA Strategic Service providers