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|The Pulse (11-05-14)|
The Pulse (11-05-2014)
November 5, 2014 ● Volume 03, Issue 44
Credit Union News
Preliminary data recently released by the National Credit Union Administration (NCUA) shows that Minnesota credit unions experienced strong year-over-year asset, deposit and loan growth between the third quarters of 2013 to 2014. Growth includes $768 million in assets, $576 million in deposits, and $722 million in loans over the one-year period.
“The continuing growth in these areas – particularly in lending – is very encouraging and is a strong indicator of Minnesota consumers’ confidence,” said Minnesota Credit Union Network President & CEO Mark Cummins. “Minnesotans trust credit unions and are choosing them to help grow their businesses and create a strong financial future for their families.”
This summary and analysis was compiled by the Minnesota Credit Union Network.
The data security breach at Home Depot stores in September cost credit unions nearly $60 million to reissue cards, deal with fraud and cover other costs, according to the results of a new survey of credit unions, released last week by the Credit Union National Association (CUNA).
The CUNA survey, which asked credit unions to report the effects of the Home Depot breach (first announced Sept. 18), found that 7.2 million credit union debit and credit cards were affected by the breach. The results further show that the cost of the violation per card issued by credit unions was $8.02 (which included costs for reissuing new cards, fraud and all other costs – such as additional staffing, member notification, account monitoring and others).
Conducted from Oct. 1 to Oct. 24, the CUNA survey is the second this year by the nation’s largest trade group for credit unions to gauge the impact of data breaches on credit unions. In January, CUNA conducted a similar survey in the wake of a data breach at Target stores in December. That survey found that the Target breach cost credit unions nearly $30 million. The Home Depot breach costs – at $57.4 million nearly twice as much as the Target breach – affected more credit union debit and credit cards and the cost per affected card was considerably higher in the case of the Home Depot breach.
Further, the most recent CUNA survey found that – to date — credit unions have not been reimbursed for the costs they incurred as a result of the Target breach.
“The cost to credit unions of data breaches – which seem to be occurring with increasing regularity – is rising, as the CUNA surveys clearly demonstrate,” said CUNA President and CEO Jim Nussle. “The bottom line is that credit union members end up paying the costs – despite the fact that the credit unions they own had nothing to do with causing the breach in the first place.”
Nussle added that all participants in the payment process have a shared responsibility to protect consumer data. “However, the law and the incentive structure today allow merchants to abdicate that responsibility, making consumers vulnerable,” Nussle said. “Congress has a role to play in addressing the issue of merchant data breaches by making sure all of the participants are playing by the same set of data security rules, and that merchants who hold consumer data and allow that data to be breached, are responsible for the costs incurred by others.
“Congress must act to protect consumers by taking steps to enhance data security standards for merchants,” the credit union leader said.
CUNA Chief Economist Bill Hampel, who conducted the survey, said the results show that more than four in every five (80.1%) of credit unions affected by the breach have reissued or will reissue all affected cards. Nearly one in five (18.5%) will reissue or have selectively reissued cards in response to member requests or other factors. The remainder – 1.4% — do not plan to reissue any cards.
“Card reissuance is an expensive proposition, representing about a quarter of the total costs to credit unions of these breaches,” Hampel said. “But our latest survey found that fraud is the most expensive component of costs, amounting to $4.89 for each card, or 60% of the total costs.”
Credit unions responding to the survey (835 total) have issued a total of 20.1 million cards outstanding (14.9 million debit cards and 5.2 million credit cards). The total represents 28.2% of the 53.0 million debit cards issued by credit unions, 32.5% of the 16 million credit cards outstanding, and 29.2% of the total of 69 million cards outstanding.
As the end of the year approaches, the Minnesota Credit Union Network looks ahead to 2015 with energy and optimism. MnCUN staff work as tireless advocates for your credit union and for the entire industry as they provide compliance support, educational seminars, legislative advocacy, networking opportunities and much more.
But don't take our word for it! Find out what your peers are saying about the value of being a member of the Minnesota Credit Union Network….
I’m continually amazed by the breadth of services and value that the Minnesota Credit Union Network offers its members. We have benefited greatly from both your in house services, like your strategic planning and legal services, and from the many industry related partnerships you have formed, such as your partnership with DAYTA Marketing. Thanks for helping Financial One Credit Union succeed and remain relevant in this highly competitive industry.
– Ross Bloomquist, President/CEO, Financial One Credit Union
MnCUN provides so many services to small and large credit unions with such professionalism. They are so valuable on keeping us updated on compliance, regulatory advocacy and what’s happening on the state and federal levels. I appreciate their hard work and helping our credit union succeed in an ever changing environment.
– Karen Fleming, President/CEO, HBI Employees Credit Union
The Minnesota Credit Union Network provides an invaluable service to all Minnesota credit unions by leading and coordinating political and regulatory advocacy efforts. In this era of over-reaching rules and regulations, the Network staff members do an outstanding job of identifying and research all current and emerging issues, working with state and federal agencies and elected officials, informing credit union representatives, and coordinating needed lobbying activities with all appropriate parties.
MnCUN also functions as a primary public relations agent for Minnesota’s credit unions, working to distribute news and information across the state to enhance credit union awareness, foster membership growth, and build overall credit union market share in a highly-competitive financial environment. In addition, the Network serves as the central coordinator of numerous credit union activities and events, and operates as a central organizing body for education, collaboration, and networking among all credit unions.
In a nutshell, the Network is really the heart of the credit union movement in Minnesota, with a fantastic staff of dedicated professionals working for all of us.
– Dave Boden, President/CEO, Hiway Federal Credit Union
In September, the National Credit Union Administration (NCUA) announced its intent to issue a revised risk-based capital rule proposal before the end of the year. This second proposal comes with an additional comment period and provides further opportunity for MnCUN, credit unions and others to carefully review the proposal and provide commentary.
In the spring of 2014, the Minnesota Credit Union Network filed a comment letter on the original proposal requesting numerous changes, along with 36 comment letters filed by Minnesota credit unions.
In addition to the second proposal and comment period, NCUA has stated that the revised proposed rule will include several changes, such as a longer implementation period, revised risk weights for mortgages, investments and member business loans. NCUA has also indicated that it intends to separate interest rate risk from credit risk in the original proposal’s risk-weighting computation.
The Minnesota Credit Union Network is carefully tracking this and will keep credit unions apprised of any developments. With immediate questions, please contact MnCUN General Counsel John Wendland or Associate General Counsel Lyndsay Miller.
Trainers from credit unions throughout Minnesota participated in the inaugural “Your Money, Your Goals” training session on Nov. 3. “Your Money, Your Goals” is a toolkit developed by the Consumer Financial Protection Bureau (CFPB) that credit unions can use to help their members set goals, choose financial products and build skills in managing money, credit, and debt.
Minnesota was chosen by the CFPB to be the first state in the nation in the rollout for the “Your Money, Your Goals” initiative. The training session was sponsored by the Minnesota Department of Commerce and the Minnesota Department of Employment and Economic Development (DEED) and is in partnership with the University of Minnesota Extension.
Participants in this train-the-trainer session included non-profit groups, state and federal agency staff, educators and organizations that serve veterans and low-income consumers. Credit unions were the only financial institutions invited to participate in this introductory training.
“When the CFPB began talking about this program and the national rollout, the fact that it’s being held first in Minnesota is a testament to all the work you’ve done in financial literacy,” Commissioner Rothman said, specifically thanking credit unions for their efforts in financial education. Rothman recognized Cook Area Credit Union for its efforts in establishing a student-run credit union in a K-12 school and for their student advisory board that leverages peer relationships to encourage savings. Commissioner Rothman also referenced Ideal Credit Union’s student branch at Tartan High School.
”The partnership between public and private organizations in Minnesota is unprecedented. Your strong history of collaboration and extensive networks – federal, state, local, private sector, non-profits and credit unions – working together help consumers experience financial empowerment,” said CFPB Office of Financial Empowerment Director Daniel Dodd-Ramirez. “We’re excited to learn from this experience and take the training to more states.”
The “Your Money, Your Goals” toolkit is meant to supplement the materials trainers at credit unions currently use to educate their staff and the public.
“Financial education is not new to credit unions – and in fact, is part of the credit union mission to improve the financial lives of the members and communities that they serve,” said Minnesota Credit Union Network President & CEO Mark Cummins. “Working with Commerce and the CFPB, we are proud to have credit unions on the front-lines of this training and appreciate the opportunity to equip credit unions with yet another tool supplement the good work they already do.”
Credit unions can use the “Your Money, Your Goals” toolkit to help members make decisions that can help them reach their goals, such as choosing financial products, making decisions about repaying current debts and taking on new debt and keeping track of their income and bills.
“We teach our staff, our members, students and the public about the importance of identifying needs versus wants,” said Mid-Minnesota Federal Credit Union’ Director of Learning & Development Jill Carlson. “The “Your Money, Your Goals” toolkit will be a great resource in helping us continue to reframe our thinking about the ways that we can make these lessons the most relevant to each of those groups.”
The National Credit Union Administration (NCUA)’s Office of Small Credit Union Initiatives (OSCUI) is offering free consulting services for a six-month semester starting in January 2015. Applications are currently being accepted through Nov. 30. During this time frame, economic development specialists will offer assistance in budgeting, marketing, policy development, strategic planning, operations and regulatory areas. The nomination form can be found on NCUA’s website.
"OSCUI's consulting program is a valuable part of our efforts to help credit unions succeed in a changing economic environment and provide needed services to their members," NCUA board Chair Debbie Matz said. "Consultants help credit unions think strategically, develop plans and position themselves for future success."
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.