2012 AND BEYOND
A CAPITOL PERSPECTIVE
ASSOCIATION of CREDIT UNION
INTERNAL AUDITORS
22nd ANNUAL CONFERENCE
Denver, Colorado
June 20, 2012
Presented by:
Fred R. Becker, Jr.
President and CEO
National Association of Federal Credit Unions
OVERVIEW
• Legislative Issues
• Regulatory Issues
• The Future
LEGISLATIVE ISSUES
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Taxation
Member Business Lending
Housing Finance Reform
Data Security
Regulatory Reform
Capital/PCA Reform
Interchange
Patent Reform
Postal Reform
CFPB Privileged Information Bill
ATMs
Flood Insurance
Taxation
Concern Over the Deficit Increasing
• The President’s “Economic Recovery Advisory Board” raised the idea of
removing the credit union tax exemption
• President’s Debt Reduction Commission called for elimination of all tax
expenditures
- Commission report fell short of the 14 votes needed to formally recommend
to Congress triggering, on January 1, 2013:
$1.2 trillion in automatic cuts over two year (9% of DoD and 9% of nondefense budget (Social Security, Medicare, Food Stamps, and Federal
Retirement Programs exempt)).
• Senate bipartisan “Gang of Six” tried to reach deal based off of Commission
report but efforts lost steam
Taxation
Bush Tax Cuts
• Expire at the end of 2012
• Top federal income tax rate will increase from 35% to 39.6% and the 33% bracket will
increase to 36%
• Dividends will be taxed according to one’s income tax bracket – top rate of 39.6% as
opposed to current 15% rate.
• Capital gains will be taxed at 20% as opposed to 15%.
Obama Affordable Health Care Act
• Effective January 1, 2013
• An additional 3.8% tax (on the lesser of the couples modified adjusted gross income
above $250,000 and their unearned income) on couples with adjusted gross incomes
above $250,000
• An additional .9% tax on couples with wages above $250,000.
Taxation
Source: The Washington Post
Member Business Lending
S. 2231, “The Small Business Lending Enhancement Act of 2011”
• First introduced 3/8/11 by Senators Udall (D-CO) and Snowe (R-ME)
as S. 509
• Reintroduced as S. 2231 on 3/22/12 to set up potential floor vote
• Senate Majority Leader Reid: “We will have a vote on this”
• 21 bipartisan co-sponsors
• Senate floor vote possible in late April – early May; 60 votes needed
• Endorsed by Treasury and NCUA
Member Business Lending
S. 509/S. 2231/H.R. 1418 would:
• Raise the cap to 27.5% for credit unions that meet certain key criteria
(with no more than 30% growth allowed per year)
• Key criteria:
- Near the current limit for four consecutive quarters
- Well-capitalized
- Have at least five consecutive years of experience in underwriting
and servicing member business loans
- Have strong policies and experience in managing member
business lending loans
- Satisfy other standards established by NCUA to maintain the
safety and soundness
• NCUA to report to Congress semi-annually
• GAO study after three years
Member Business Lending
H.R. 1418, “The Small Business Lending Enhancement Act of 2011”
• Introduced 4/7/11 by Representatives Royce (R-CA) and McCarthy
(D-NY)
• House companion to the Senate bill
• 136 additional bipartisan co-sponsors as of 5/30/12
H.R. 4293, “The Restore Main Street’s Credit Act of 2012”
• Introduced 3/28/12 by Representative Kurt Schrader (D-OR)
• Exempts MBLs made to companies with under 20 FTE’s from MBL
cap
Housing Finance/GSE Reform
Key Item in the 113th Congress
• Both the HFSC and the Senate Banking Committee have held
hearings; action unlikely this Congress
• Administration released white paper with three options for reform of
Housing Finance and GSE’s in February
- All 3 approaches could put the secondary market in the hands of big
banks
Housing Finance/GSE Reform
NAFCU Principles on Reform
Secondary Mortgage Market
• At least two Government Sponsored Enterprises (GSEs).
• Uninterrupted access during any transition
• Against full privatization
GSE Structure
• Model consistent with a cooperative or mutual entities model.
• Regulated by the Federal Housing Finance Agency
• Required to meet strong capital standards
• Elected Board of Directors.
• Meet appropriate regulatory standards to limit their ability to take on risk while ensuring
safety and soundness.
• Rigorous oversight
Housing Finance/GSE Reform
NAFCU Principles on Reform (Continued)
Funding
• Self-funded, without any dedicated government appropriations.
Government’s Role
• Explicit guarantee on the payment of principal and interest
• Access to FHLBs
Guidance
• Credit Union representation on a board of mortgage industry
Data Security
S. 1151, “Personal Data Privacy and Security Act of 2011”
S. 1207, “Data Security and Breach Notification Act of 2011”
S. 1408, “Data Breach Notification Act”
S. 1434, “The Data Security Act of 2011”
S. 1535, “Personal Data Protection and Breach Accountability Act
of 2011”
S. 2105, “Cybersecurity Act of 2012”
S. 2111, “Cyber Crime Protection Security Act”
H.R. 2577, “The SAFE Data Act”
H.R. 1707, “Data Accountability and Trust Act”
H.R. 1841, “Data Accountability and Trust Act (DATA) of 2011”
Data Security
Provisions NAFCU Seeks
• Payment of Breach Costs by Breached Entities
- Require merchants to be accountable for costs of data breaches
that result on their end, especially when their own negligence is to
blame
• National Standards for Safekeeping Information
- Require any business entity responsible for the storage of consumer
data to meet standards similar to those imposed on financial
institutions under the Gramm-Leach-Bliley Act
• Data Security Policy Disclosure
- Require merchants to post their data security policies at the point of
sale if they take sensitive financial data
Data Security
Provisions NAFCU Seeks (Continued)
• Timely Disclosure of Breached Entity
- Mandated disclosure of identities of companies and merchants
whose data systems have been violated, so consumers are aware
of those that place their personal information at risk.
• Enforcement of Prohibition on Data Retention
- Violation of existing agreements and law by merchants and retailers
who retain payment card information electronically must be
addressed.
• Burden of Proof in Data Breach Cases
- Evidentiary burden of proving a lack of fault should rest with the
merchant or retailer who incurred the breach.
Dodd-Frank/Regulatory Reform
Consumer Financial Protection Bureau
• Recess appointment of Richard Cordray as Director
- Legal challenges to Cordray’s appointment have no impact on credit
unions
• Congressional Initiatives
- House & Senate Republicans continue to push for structural
changes to the CFPB.
-- Replace the CFPB Director with a 5-person board
-- Make it easier for FSOC to “veto” CFPB rules
-- Bring the CFPB under the annual Congressional appropriations
process.
Dodd-Frank/Regulatory Reform
Privileged Information
• Identical bipartisan legislation in both chambers (H.R. 4014/S.2099)
• Ensures privileged information provided by financial institutions to the
CFPB will be kept confidential
• Privacy protection from third parties critical and consistent with
current statute regarding credit union information sharing and the
NCUA
• Passed House on 3/26/12, delayed in the Senate.
Capital Issues
H.R. 3993, “The Capital Access for Small Businesses and Jobs
Act”
• Derived from principles adopted at NAFCU-CUNA meeting
during NAFCU’s 2010 Congressional Caucus
• Would allow the NCUA to authorize accounts that:
- Do not alter the cooperative nature of the credit union;
- Are uninsured;
- Are subordinate to all other claims against the credit union including
the claims of creditors, shareholders, and the Fund;
- Are available to be applied to cover operating losses of the credit
union in excess of its retained earnings and to the extent so applied,
will not be replenished;
- Are subject to maturity limits as determined by the Board; and
- Are offered by a credit union that is determined by the Board to be
sufficiently capitalized and well-managed.
Debit Interchange
H.R. 3156, “The Consumer Debit Card Protection Act”
• Repeals the Durbin Amendment
Debit Interchange –The Vote
Senators Supporting Credit Unions & Voting for Tester-Corker
Alexander
Ayotte
Blunt
Boozman
Coats
Coburn
Cochran
Corker
Cornyn
Crapp
DeMint
Hatch
Heller
Hoeven
Hutchison
Inhofe
Johanns
Johnson
(R-TN)
(R-NH)
(R-MO)
(R-AR)
(R-IN)
(R-OK)
(R-MS)
(R-TN)
(R-TX)
(R-ID)
(R-SC)
(R-UT)
(R-NV)
(R-ND)
(R-TX)
(R-OK)
(R-NE)
(R-WI)
Kirk
Kyl
Lee
McCain
McConnell
Moran
Murkowski
Paul
Portman
Risch
Roberts
Rubio
Sessions
Shelby
Thune
Toomey
Wicker
Webb
(R-IL)
(R-AZ)
(R-UT)
(R-AZ)
(R-KY)
(R-KS)
(R-AK)
(R-KY)
(R-OH)
(R-ID)
(R-KS)
(R-FL)
(R-AL)
(R-AL)
(R-SD)
(R-PA)
(R-MS)
(D-VA)
Akaka
Baucus
Begich
Bennet
Carper
Coons
Gillibrand
Hagan
Johnson
Manchin
McCaskill
Mikulski
Nelson
Nelson
Schumer
Stabenow
Tester
Warner
(D-HI)
(D-MT)
(D-AK)
(D-CO)
(D-DE)
(D-DE)
(D-NY)
(D-NC)
(D-SD)
(D-WV)
(D-MO)
(D-MD)
(D-FL)
(D-NE)
(D-NY)
(D-MI)
(D-MT)
(D-VA)
Patent Reform
H.R. 1249, “The Leahy-Smith America Invents Act”
• Both House and Senate passed comprehensive patent
reform bill
• Significantly reduces patent infringement suits against
financial services providers
• Signed into law on 9/16/11
REGULATORY ISSUES
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CFPB
NCUA
Housing
Litigation
Regulatory Compliance
Consumer Financial Protection Bureau (CFPB)
Consumer Financial Protection Bureau (CFPB)
“State attorneys general will be an important partner for the
Bureau because they understand as well as anyone the kinds of
problems that consumers – their constituents – face. There’s
another reason, too: Congress has emphasized that we are to
enforce Federal consumer financial law consistently …. That … will
require the sustained collaboration of State and Federal regulators,
including both the consumer bureau and State attorneys general.”
Richard Cordray
Director, CFPB
A Level Playing Field for Consumer
Financial Products and Services
March 8, 2012
Consumer Financial Protection Bureau (CFPB)
“My vision for the Consumer Bureau is that it will work to make
consumer financial markets operate fairly … to protect consumers,
support honest businesses, and play a crucial role in helping to
safeguard the economy.
First, the Consumer Bureau will benefit consumers by clarifying
the prices and risks of consumer products and services.
Second, the Consumer Bureau will benefit honest business by
leveling the playing field and ensuring that financial institutions play
by the same set of rules.
Finally, the Bureau's efforts can help strengthen our nation’s
economy.”
Richard Cordray
Director, CFPB
Subcommittee on TARP, Financial
Services and Bailouts of Public and
Private Programs,
U.S. House of Representatives
January 24, 2012
Consumer Financial Protection Bureau (CFPB)
“By requiring the CFPB to examine nonbanks, the DoddFrank Act – the law that established the CFPB – sought to ensure
that consumers get the benefit of federal consumer financial laws
on a consistent basis. This consistent supervisory coverage will
help level the playing field for all industry participants to create a
fairer marketplace for consumers and the responsible businesses
that serve them.”
Richard Cordray
Director, CFPB
The Brookings Institution
January 5, 2012
Consumer Financial Protection Bureau (CFPB)
So is the ultimate goal to level the playing field between small and large
institutions? There is obviously tension between the big banks and the
small banks on that question.
“Well, in most of the consumer markets, you take the
largest institutions, and you're talking about 80, 85, 90% market
(Continued)
share. I just think that it makes
sense for us to consider carefully
what burdens we're imposing on different types of institutions and
be a little bit nuanced about that.”
Richard Cordray
Director, CFPB
Trying to Stay Above the Politics: A
Conversation with Richard Cordray
American Banker
March 23, 2012
Consumer Financial Protection Bureau (CFPB)
CFPB Authority To Regulate Prices
In response to a question following his prepared remarks at the
(Continued)
Community Bankers Association
Annual Meeting on March 21, 2012
CFPB Director Richard Cordray responded that the CFPB lacked both
usury authority and the ability to regulate fees. Instead, he noted that
the bureau’s focus will be on ensuring consumers understand the fees
that they will incur.
Consumer Financial Protection Bureau (CFPB)
Consumer Laws Implemented by the Agency
• Regulation B – Equal Credit Opportunity Act
• Regulation C – Home Mortgage Disclosure Act
• Regulation D – Alternative Mortgage Transaction Parity
• Regulation E – Electronic Funds Transfers
• Regulation F – Fair Debt Collection Practices Act
• Regulation G – S.A.F.E. Mortgage Licensing Act (Federal)
• Regulation M – Consumer Leasing
• Regulation N – Mortgage Acts and Practices Advertising
• Regulation P – Privacy of Consumer Financial Information
• Regulation V – Fair Credit Reporting
• Regulation X – Real Estate Settlement Procedures Act
• Regulation Z – Truth in Lending
• Regulation DD – Truth in Savings
Regulations Not Transferred to the Agency
• Regulation D − Reserve Requirements
• Regulation CC
• Regulation GG − Unlawful Internet Gambling Enforcement Act
Consumer Financial Protection Bureau (CFPB)
Ability to prohibit “unfair, deceptive or abusive acts or practices
• Unfair
- Causes or is likely to cause substantial injury to consumers;
- Injury is not reasonably avoidable by consumers; and,
- Injury is not outweighed by countervailing benefits to consumers or to
competition.
• Deceptive
- Representation, omission, act of practice misleads or is likely to
mislead consumers;
- Consumers’ interpretation of the representation, omission, act or
practice is reasonable under the circumstances; and
- The misleading representation, omission, act or practice is material
Consumer Financial Protection Bureau (CFPB)
Ability to prohibit “unfair, deceptive or abusive acts or practices”
(Continued)
• Abusive
- Materially interferes with the ability of consumers to understand
a term or condition of(Continued)
a financial product or service; or
- Takes unreasonable advantage of:
• A lack of understanding on the part of a consumer of the
material risks, cost, or conditions of the product or service
• The inability of consumers to protect this interests in
selecting or using a consumer financial product or service; or
• The reasonable reliance by the consumer on a covered
person to act in the interest of the consumer.
Consumer Financial Protection Bureau (CFPB)
Will the CFPB give any guidance specifically on what UDAAP means?
“We have given some exam guidance around these
concepts, and I think maybe we'll have more to say over time. I
don't anticipate us writing a rule around UDAAP.”
So people will mostly have to look at your actions as the model for how
this new term is defined? (Continued)
“I
think that's probably right. The law is, I think, pretty welldefined out there, and it was pretty significantly defined by
Congress as well.”
Richard Cordray
Director, CFPB
Trying to Stay Above the Politics: A
Conversation with Richard Cordray
American Banker
March 23, 2012
Consumer Financial Protection Bureau (CFPB)
Current Initiatives:
• Confidential
Treatment of Privileged Information
• Remittances
- Insured
depository financial institutions temporarily exempt until 7/21/15
• TILA-RESPA
Disclosure/Settlement Disclosure Forms
- Model Disclosure Form
- Cost of funds disclosure
• QM
(Ability to ability-to-repay) a mortgage loan
• Overdraft
Protection Programs
- Model disclosure form
Consumer Financial Protection Bureau (CFPB)
Current Initiatives (Continued):
• Mortgage
Servicers
• Student Loans
• Streamlining Inherited Regulations
• Collection of Credit Card, Mortgage, Student Loan, Bank
Account/Service, Vehicle, and Consumer Loan Data
• Arbitration Clauses
• Vendor Compliance
• Disparate Impact
• Prepaid Cards
Consumer Financial Protection Bureau (CFPB)
Consumer Advisory Council
• The CFPB is setting up a consumer advisory council (CAC), that will
consist of approximately 20 individuals with a background in
consumer protection, financial services, consumer products and
services, fair lending, civil rights, and community development. The
Council will offer advice and consult with agency officials regarding
consumer protection issues.
Credit Union Advisory Panel
• The bureau has also indicated it plans to set up a credit union
advisory panel consisting of up credit union professionals. There are
no guidelines for the panel yet, however, the bureau intends to use
the panel to help inform its rulemaking process and other functions.
• The bureau has not yet begun formally setting up the panel.
Consumer Financial Protection Bureau (CFPB)
Consumer Complaints
• The CFPB and the NCUA have entered into a Memorandum of
Understanding relating to the treatment of consumer complaints.
• NCUA’s Office of Consumer Protection (OCP) is processing credit
union complaints, but is about 3 to 4 months behind in handling the
cases.
NCUA
Final Rules
• Concentration Risk/Interest Rate Risk
• TDR/Loan Workout Policy
Proposed Dodd-Frank Related Rules
• $1/$10 billion incentive disclosure rule
• Appraisal management rule
• Credit rating agencies rule
Other proposed Rules
• Loan Participations
• Central Liquidity Facility (CLF)
• Credit Union Service Organizations (CUSOs)
• Derivatives
The NCUA’s National Supervisory Exam Manual
• Examiner’s Guide
NCUA
Advice Given During Level 4 New Examiner Training
• Begin in a friendly way
• Let others do a great deal of the talking
• See things from their point of view
• Be sympathetic with other’s ideas and desires
• Slow down, give Reviewing identified specific risks and discussing how
those identified will be resolved.
Steps To Contribute To A Conducive Exam Environment
• Discussing expectations
• Setting Ground rules and the exam approach upfront
• Agreeing to a regular update schedule during the examination to eliminate
surprises
• Coordinating how examiners and credit union staff will interact
• Reviewing identified specific risks and discussing how those identified will be
resolved.
Larry Fazio
A Dialogue on the Exam Process
The NCUA Report, April 2012
Director, Office of Examination and Insurance
National Credit Union Administration
NCUA
Stabilization Assessment
• The NCUA Board’s estimate of 7-12 basis points (depending on
share growth) in 2012 for the corporate stabilization and NCUSIF
assessments still holds.
• A revised projection for the remaining assessments over the life of
the Stabilization Fund ranges from $1.9 billion to $6.2 billion.
NCUA
Corporate Credit Unions Capital Requirements
• Includes three minimum capital ratio benchmarks and a retained earnings
(RE) component that will start gradually increasing in 2013.
• Benchmarks
(1) 4% minimum leverage ratio (5% to be well-capitalized) by 10/20/11
After 10/20/2011, the minimum leverage ratio plus number
(2) & (3) below;
(2) 4% tier one risk-based capital ratio (6% to be well-capitalized)
(3) 8% total risk-based capital ratio (10% to be well-capitalized)
• Temporary Corporate Credit Union Share Guarantee Expires December 31,
2012
Housing
FHFA Foreclosure Mitigation
FHA Forgiveness Period
Mortgage Servicing Compensation
Escrows for “higher priced loans”
Mortgage interest deduction
Settlement with major servicers
Mortgage Electronic Registration System (MERS)
Qualified Residential Mortgages (QRM)
Litigation
National Retail Federation v. Federal Reserve on Interchange fees
Hudson Valley FCU
NCUA
• Five pending lawsuits against the securities firms of Wachovia, JP Morgan
Securities, RBS Securities, and Goldman Sachs.
• Settled to date: Deutsche Bank Securities ($145M), Citigroup ($20.5M), and
HSBC ($5.25M)
ATMs
• Fee Notices
• ADA Compliance
Overdraft Fees
Regulatory Compliance
Regulatory Compliance
“Nine Dangerous Words:
‘Show Me Where It Says We Can’t Do That’”
Jo Ann S. Barefoot
BankThink
September 13, 2011
Former Comptroller of the Currency
Co-Chair, Treliant Risk Advisors
Regulatory Compliance
“Today, when a customer has a positive or negative
experience, they take to the Internet. They post it on Facebook
and Twitter …. ”
Sam Boonin
Vice President of Product Engagement
Zendesk
Important Compliance Dates
March 15, 2012 – Americans with Disabilities Act & ATMs
• Speech Output requirement applies to all existing ATMs
• Physical Access requirements only apply to ATMs that are altered after
March 15, 2012
• Given that the ATMs currently comply with the 1991 ADA Standards
• Physical Access requirements apply to any new ATMs added after March 15,
2012
April 1, 2012 – Unaffiliated Network Requirement
• Stems from Durbin Amendment (Regulation II)
• Requires two unaffiliated networks
• Example: One PIN network, One Signature network
Important Compliance Dates
April 30, 2012 – National Labor Relations Board Notice
• All private employers need to post an employee rights poster
• Notice informs employees of right to unionize
• No exclusion for credit unions
• FAQs at www.nlrb.gov/faq/poster. Poster to download and print at www.nlrb.gov/poster.
July 1, 2012 – Mandatory E-Filing of BSA Reports
• E-Filing required for all Currency Transaction Reports and Suspicious Activity Reports
September 30, 2012 – Interest Rate Policy
• NCUA final rule requires written interest rate risk policy and management program
• Policy must be approved by CU’s Board
January 1, 2013 – Tracking of Interest Payments to Nonresident Aliens
• IRS Forms 1042-S must be submitted for 2013 in 2014
February 7, 2013 – Remittance Transfers
• New disclosure requirements from the CFPB
CULookup.com
110% growth in visitors over 2010
Since Bank Transfer Day, traffic has been 30% higher
CULookup.com Unique Visitors
30000
25000
20000
Bank Transfer Day Movement
15000
10000
5000
0
CULookup.com Only
Linear (CULookup.com Only)
CULookup Calculators
2011 results: 1.6 million calculations on the platform
> 200,000 people have performed > 550,000 calculations so far in 2012
Monthly Usage of NAFCU Services CULookup Credit Union Calculators
200000
180000
140000
120000
100000
80000
60000
40000
20000
Mar-12
Feb-12
Jan-12
Dec-11
Nov-11
Oct-11
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
0
Jan-10
# Visits/Calculations
160000
Month
Total Calculations (Credit Unions Only)
Total Unique Visits (Credit Unions Only)
Linear (Total Calculations (Credit Unions Only))
Linear (Total Unique Visits (Credit Unions Only))
49
Free Video Ads
Free Video Ads
• Free to all credit unions
• Flat fee of $150 payable to
designers to customize for
your credit union
• www.nafcu.org/video-ads
The Future
Failed Financial Institutions
BANKS AND CREDIT UNIONS
200
157
140
150
92
100
50
3
12
25
28
28
18
16
0
2007
2008
Failed Banks
Source: FDIC, NCUA
2009
2010
Failed Credit Unions
2011
Problem Financial Institution
Financial Institution Supervisory Actions
2010
* Letters of Understanding and Agreement
Source: NCUA 2010 Annual Report, FDIC Enforcement Decisions & Orders
Financial Institution Delinquency Ratio*
All FICUs
6%
Delinquent Loans / Total Loans
5.21%
5.12%
5%
4.87%
FDIC-Insured
4.71%
4.37%
4.22%
4.09%
4.11%
4%
3%
2% 1.73%
1.75%
1.74%
1.62%
1.58%
1.59%
1.60%
1.44%
1%
0%
Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012
*Note: Credit union delinquencies are reported as 2 months or more past due,
while FDIC delinquencies are reported 90 days or more past due.
Source: NCUA Call Report & FDIC Quarterly Banking Profile
Delinquency Ratios*
As of March 31, 2012
All FICUs
FDIC-Insured
11%
9.57%
Delinquent Loans / Total Loans
10%
9%
8%
7%
6.56%
6%
5%
4.11%
4%
3%
2%
1.87%
2.40%
2.05%
1.34%
1.63%
1.01%
1%
1.44%
0%
All Real Estate
Loans
Home Equity
Loans
First Mortgages
Credit Cards
Total Loans &
Leases
*Note: Credit union delinquencies are reported as 2 months or more past due,
while FDIC delinquencies are reported 90 days or more past due.
Source: NCUA Call Report & FDIC Quarterly Banking Profile
Net Charge-Off Ratios
(Annualized)
All FICUs
Net Charge-Offs / Total Loans
3.0%
2.8%
2.6%
FDIC-Insured
2.74%
2.59%
2.54%
2.4%
2.2%
2.0%
1.8%
1.82%
1.58%
1.6%
1.4%
1.16%
1.2%
1.0%
1.14%
1.47%
1.37%
1.17%
1.14%
1.00%
0.95%
0.91%
0.91%
0.78%
0.8%
0.6%
0.4%
Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012
Source: NCUA Call Report & FDIC Quarterly Banking Profile
Net Charge-Off Ratios
As of March 31, 2012 (Annualized)
All FICUs
FDIC-Insured
Net Charge-Offs / Total Loans
5%
4.25%
4%
3%
2.55%
1.97%
2%
1.08%
1%
0.54%
1.17%
0.78%
1.11%
1.08%
0.35%
0%
All Real Estate
Loans
Home Equity
Loans
First
Mortgages
Source: NCUA Call Report & FDIC Quarterly Banking Profile
Credit Cards
Total Loans &
Leases
The Future
”Small Banks Shift Charters to Avoid U.S. Regulator”
“An increasing number of the nation’s more than 600 savings and
loan associations are fleeing the comptroller’s office as they navigate a
shifting regulatory landscape. “
“Frustrated, Mr. Pierce agreed to sell his institution, which has $82
million in assets and a charter as a savings and loan association, to the
GFA Federal Credit Union in Gardner, Mass., a credit union overseen by
the National Credit Union Association — not the comptroller’s office.”
“Gary Easterling, the chief executive of the United Federal Credit
Union, which bought Griffith Savings Bank in Indiana in January, said
that community banks considered credit unions to be more of a
peer than the nation’s largest banks.”
The New York Times
April 2, 2012
The Future
“Virtually every member of Congress has heard the concerns
of small business owners and community banks about
overzealous regulators. No one wants regulators to allow unsafe
practices, but no one wants regulators to stifle a potential
economic recovery by applying regulatory standards in ways that
needlessly inhibit bank lending.”
Spencer Bachus (R-Ala)
Chairman
House Financial Services Committee
The Future
“You can whine and moan endlessly about all the new
enforcement and all the new rules. Or as a leader you can be
inspired and say, Look, it is what it is. I’m going to do my
fighting and battles behind the scenes with the people that can
affect things, but as it related to me, my company and
employees we’re going to figure out the rules and do those
rules.”
Richard Davis
CEO
U.S. Bancorp
Best Practices in Retail Services Symposium
March 11, 2012
The Future
“In a city where special-interest pleading and fingerpointing has been developed to a high art form, there are no
bigger whiners than community banks. When they’re not
complaining about excessive regulation, misguided monetary
policy and inflated deposit insurance premiums, they’re railing
against unfair competition from big banks, savings and loans,
credit unions, credit card companies, finance companies and
other unregulated lenders.
Considering this mountain of injustice that has been
heaped upon them, it’s a wonder these bankers are able to get
out of bed in the morning, let alone show up smiling at the
weekly Rotary luncheon.”
Steven Pearlstein
Think True Value – but for Banks
The Washington Post
April 14, 2012
The Future
“We need to meet these regulatory demands properly while
ensuring that our clients are not adversely affected …. We are
totally focused on what is in front of us. It is a new world, and we
are going to adjust to it very quickly – whether or not we like it or
think it is all needed.”
Jamie Dimon
Chairman and CEO
JPMorgan Chase
The Future
“Consumer dissatisfaction and overall frustration with the
economy are more intense than at any time in modern history, but
it presents our industry with a chance to reinvent itself.”
Pierre Habis
Senior Executive Vice President and Head
of Branch Banking
Union Bank of California
The Future
“The well-managed, well-capitalized institutions have
significant opportunities to grow their franchises in the country
today.”
Dan Schatt
General Manager of Financial Innovations
PayPal
The Future
“… the credit unions that will survive and thrive in the years
ahead will be those that take the time to think about how they will
respond … those who sit back and wait, then react, will find their
part more difficult to navigate and their choices more limited.”
Dr. Michael Hudson
Credit Union Strategist
The Future
“Luck is what happens when preparation meets opportunity.”
Roman Philosopher Seneca
Interchange Revenues
The Future
“I actually reached out to
500 friends and assumed
maybe 200 would respond
and shift their business
to a credit union”
Kristen Christiansan
on Bank Transfer Day
Movement
New Credit Union Checking Accounts
CULookup.com
110% growth in visitors over 2010
Since Bank Transfer Day, traffic has been 30% higher
CULookup.com Unique Visitors
30000
25000
20000
Bank Transfer Day Movement
15000
10000
5000
0
CULookup.com Only
Linear (CULookup.com Only)
The Future
“Bank Fees Pay Off For Credit Unions”
to
"We're going to be playing bank fee
Whack-a-Mole for the foreseeable
future," Fred R. Becker, chief executive
of the National Association of Federal
Credit Unions said Thursday.
Ultimately, he added, "people are going
switch" to credit unions.
The Los Angles Times
(Story picked up by Politico’s Morning Money,
Charlotte News & Observer, and Bellingham
Herald)
March 2, 2012
The Future
“... what we’re really seeing is customers migrating towards
true value”
Kent Liechty
President and CEO
First Bank of Berne
Berne, Indiana
2012 AND BEYOND
A CAPITOL PERSPECTIVE
ASSOCIATION of CREDIT UNION
INTERNAL AUDITORS
22nd ANNUAL CONFERENCE
Denver, Colorado
June 20, 2012
Presented by:
Fred R. Becker, Jr.
President and CEO
National Association of Federal Credit Unions