April 16, 2015

2015 Credit Union Cherry Blossom: A Team CUNA Mutual Runner's Report

by Holly Fearing, Digital Media Strategist

Hains Point with Cherry Blossom trees
This is a report of my experience running the 2015 Credit Union Cherry Blossom Ten Mile Run. The CUNA Mutual Running Team took 6th place this year with team members Karnail Kooner, Retirement Sales Specialist and Alastair Shore, Chief Financial Officer rounding out our official corporate team. 

This year's Credit Union Cherry Blossom Run was truly different than all other years.

I have run this race since 2009--so it was the 7th year in a row for me--and maybe 7th is the charm. This was the first time in 8 years that the official 'peak bloom' day of the cherry blossom trees coincided with race day. That meant all of us standing on the start line at 7:30 am on Sunday, April 12--all 15,000+ of us--were about to get the VIP treatment: front row views of the canopy of fully-bloomed trees lining many parts of the 10-mile course, especially in the cherry-blossom-tree-dense area of Hains Point.

Runners await the race start
Which leads me to another reason this year's race was different than any other I have run, and what I was told by countless local runners over the years--Hains Point is a dreaded stretch of land, a thing of legends for local runners, because it is always excessively windy here. Even on calm days, the wind picks up off the Potomac and the long stretch in one direction for over a mile can make even the steeliest runners question their strength into the face of stronger winds. But not this day—this day the wind wasn't even strong enough to knock the petals off the delicate flowers above. So in addition to the endless blue sky filled with beautiful pink blossoms, we had little more than a gentle breeze which merely carried the flower's delicious scent down to the runners. It was a Hains Point anomaly that was much welcomed by runners young and old, novice and pro.

Cherry Blossom runners
Yet another curiosity of this year's race...the 10 miles wasn't quite 10 miles this year. Unfortunately, about an hour before the start of the women's elite race, there was an accident along a stretch of the designated race course, which forced organizers to re-route miles 4-6, which go around the Tidal Basin, in another direction before reconnecting with the established route at mile 6. This 2-mile route replacement, as best as organizers could match, was only about 1.4 miles. So in the end, we all ran an approximately 9.4 mile “Ten Mile Run.” Needless to say, it was a personal record for everyone that day!

I can't say I minded the bit of a break, and psychologically I think it gave me more energy to push harder knowing it would be a little different route and a little shy of the full distance. I'm sure some runners were upset, as neurotic as we are, since when we say we will run 10 miles we HAVE to run 10 miles, even if it means circling the parking lot until our watches beep the completion of that last mile. But this day for me was a day to simply enjoy the sites, the blossoms and the race. So I had no complaints. Also a big kudos to race organizers who swiftly and seamlessly redesigned the flow of 15,000+ people on an hour's notice! It could have been a catastrophe but instead most runners didn't even notice the reroute.

Washington Monument
I've run this race in faster times (even with the .6 mile shortage my full 10-mile times have been faster); I've started with the elite women; I've finished 22nd place overall female and 5th in my age group. The CUNA Mutual team has taken first place in the corporate challenge. I've raced in rain, under raining petals, into tough winds and in years where the blossoms were not yet out or long since gone. But never before on the peak bloom day with beautiful weather and among runners who, for better or worse, had to let go of their serious attitudes a little bit, and just enjoy the 9.4 mile race we were embarking on.

In the end, more than $525,000 was raised by this race and its sister race held on the same day in Sacramento--the SacTown Ten-Mile Run. Close to $100,000 of that amount was raised by us runners. This money directly benefits more than 170 Children's Miracle Network Hospitals across the county, serving millions of children, despite the family's ability to pay. 

FR Left:  Bob Hess (CB Race Committee), Theresa Mann 
(The Partnership FCU), Charlie Mallon (Congressional FCU), 
Susan Streifel (CUNA Chair), Juri Valdov (CUMD Ex-Officio), 
Brian Caldarelli (PSCU). BR Left: Bill Brooks (CB Race 
Committee), John Slusher (CUNA Mutual Group), Dan 
Berger (NAFCU), Casey Duplantier (CB Race Committee), 
Jim Nussle (CUNA), Vincent G. Logan (Department 
of the Interior), Jan Roche (State Department FCU), 
Elliott Pitts (Children’s Miracle Network Hospitals).
One of those children benefiting directly from the existence of these facilities is my 9-year-old nephew who was diagnosed with type 1 diabetes 6 years ago and treated at the Children's National Medical Center in Washington, D.C. Nothing makes me more proud, happy and sure I picked the right industry to work in, than participating in this race, put on by the nation's credit unions and sponsored by CUNA Mutual, as the biggest single fundraiser for Credit Union Miracle Day to benefit Children's Miracle Network Hospitals and millions of children across the county.

Here are a few more photos from this beautiful day and extraordinary event:

Elite Men's Start Line

Christopher Roe, SVP, Corp & Legislative Affairs,
Susan Streifel, CUNA Board Chair, Alastair Shore, Chief
Financial Officer, Jan Roche, State Department FCU

Runners lining up to start

Cherry Blossoms

$525,852 Donation to Children's Miracle Network Hospitals

Bag Check Volunteers from Georgetown University
Student Alumni FCU. This is one of only 2 student-run
credit unions in the nation.

Team Runner Karnail Kooner and Vivian Slusher

Read our team's pre-race report here to learn more about Children's Miracle Network Hospitals, Credit Union Miracle Day, and why this is event is so important to us!

April 9, 2015

Ready to run among the cherry blossoms; raise funds for our nation's children

The 43nd running of the Credit Union Cherry Blossom Ten Mile Run will take place Sunday, April 12, starting at 7:30 a.m. on the Washington Monument Grounds, Washington, D.C. The event serves as a fundraiser for the Children's Miracle Network Hospitals, a consortium of 170 premier children's hospitals across North America. Children’s Miracle Network Hospitals is an alliance of premier children’s hospitals which treat 10 million critically ill children annually, regardless of their ability to pay.

Founded in 1973 originally as a precursor training run for local runners planning to compete in the Boston Marathon, the race has evolved over the years into the annual “Runners’ Rite of Spring” for over 15,000 runners of all abilities from all 50 states. More than half of those 15,000 runners are already credit union members, and for the rest, this race is a wonderful introduction to the power of the credit union movement. 

Since credit unions became the title sponsors in 2002, over $7 million has been donated to Children's Miracle Network Hospitals nationwide. Every dollar raised by credit unions across the nation goes directly to their local Children's Miracle Network Hospital. 

This year's efforts raised $525,852 and of that amount, nearly $100,000 was raised from runners, their families and friends. Credit Union Miracle Day is the charitable organization comprised of credit unions and affiliates dedicated to raising funds for Children’s Miracle Network Hospitals and to raising awareness of the credit union difference. They will be presenting a check for this amount on race morning. 

CUNA Mutual gets personal: provides sponsorship funds, runners, volunteers and race committee support

To show our support for and commitment to this industry tradition, CUNA Mutual Group sponsors the race and provides $55,000 to this race and its sister race, the Sac Town 10, held the same day in Sacramento. We also send a team of volunteers and runners to the event and one of our employees, John Slusher, Vice President of Sales, serves on the race committee. 

"I am honored to be a part of the CU Miracle Day/Cherry Blossom 10 Mile event as a committee member on the Race Committee. The Race Committee is charged with coordinating all of the local credit union involvement, promoting the event within those credit unions and securing sponsorships as well as coordinating all of the many events related to the CU Miracle Day weekend and overseeing the fundraising that has raised over $7 million dollars since the beginning of CU Miracle Day," said Slusher. 

"Before serving as a Race Committee member, I have always been active in locally supporting the event serving as a race day volunteer with other CUNA Mutual field/sales staff since the beginning and I am very proud that CUNA Mutual has been a major sponsor during that entire period."

The race is personal for many of our other employees as well. Holly Fearing, Digital Media Strategist, is a long-time runner and has served as the CUNA Mutual running team captain for the past 5 years. "A few years back, our corporate team took first place in the team competition. That was a pretty special year! However when I learned that about one-third of the funds raised support Washington, DC's own Children's National Medical Center, the race took on all new meaning for me. About six years ago, my 3 year-old nephew was diagnosed with type 1 diabetes and treated at that hospital. He is a very happy, active and hilarious 9 year-old now and I am honored that my company helps support the very hospital that helped my nephew get through a very tough time."

Follow along with the runners and credit unions via the race link at the top of the page. There will be a web cam of the finish line the whole time! And consider running, volunteering or donating to this event in the years to come!

April 2, 2015

A skilled advisor shares her wisdom with classmates during CBSI’s New Advisor Academy

Ric Pearson, Senior Consultant - Advisor Development for CUNA Brokerage Services, Inc. gives his insight into the value of CBSI's New Advisor Academy and how one advisor was able to share her wisdom with classmates:

Cindy Sforza Buss, financial advisor from SchoolsFirst Federal Credit Union in Fountain Valley, CA, served as the class mentor at CBSI’s New Advisor Academy, March 16-20.  

Throughout the week, Cindy led the 15 participants in the class by sharing some of her successful best practices.

Cindy has been a 3 time President’s Council winner, Woman of Distinction (5 years), Senior Advisor Leadership Team (2 years), and a graduate of the very first class of CBSI’s Honors Academy.  She credits her 6 ½  years of success with CBSI to the unwavering support and effective training opportunities of CBSI. Obviously the class was inspired and grateful for sharing her wisdom with them the entire week.  

Thank you Cindy, and thank you SchoolsFirst FCU!

March 26, 2015

What Matters Now™ research shows 62 percent of middle-income Americans worry about financial stability every day

This consumer insight, and much more, is revealed today, in our What Matters Now™ research program, at the CUNA Marketing and Business Development Council Conference.

We have more than 2 million conversations with credit union members each year and a database of more than 65 million credit union members.

What Matters Now is part of an annual insights program to learn from middle-income Americans and credit union members alike.

TruStage, our consumer brand, gathered insights from more than 25,000 individuals using a combination of quantitative, qualitative and social media research methods. It draws similarities and differences between credit union members and broader middle-income Americans in terms of core demographics and lifestyle preferences to show how this population defines success across generations.

“We use consumer insights to continuously improve our member experience including how we develop media plans, design products and optimize each consumer touch point,” said Susan Sachatello, senior vice president, TruStage. “Our goal was to add dimension to what we have learned from middle-income credit union members and non-members alike to become more relevant in their everyday lives.”

Research Insights: What Matters Most to Middle-income Americans 

  • There’s a huge opportunity to serve the unbanked. Thirty-four percent of the individuals included in the research self-identify as having no banking relationship. Understanding this population and engaging them in the credit union value proposition could be a significant source of membership growth.
  • Financial stability far outweighs simply attaining wealth. Sixty-two percent of middle-income Americans worry daily about financial stability, while only 6 percent defined success as having a lot of money.
  • Middle-income Americans define success based on family, relationships and financial stability first. Middle-income Americans rank raising good/happy kids first (38 percent) and having a great partner relationship second (36 percent) as measures of success in life. Being financially stable ties with staying in good health (33 percent). 

Credit unions can learn more about this research at cunamutual.com/whatmattersnow.

TruStage is sharing what we learned with credit unions to understand the implications then work together to shape our next topic. According to Kim York, senior vice president/chief marketing officer, Ascend Federal Credit Union, among the most compelling insights is how consumers define success:
“People define success more personally; it’s about relationships and work-life balance.” She said. “I like that. I walked away feeling hopeful. It also made me realize that when we’re choosing art for marketing pieces, we really need to focus on kids and families. We need to position Ascend as the go-to source for members seeking stability.” 
Sachatello said, “We know that what matters most to members evolves over time as people go through different life stages or as our economy fluctuates. In fact, 77 percent of the members we talked with said their definition of success has changed over time. We plan to continue learning from members and will share our findings with credit unions to better serve them, their members and non-members alike.”

What Matters Now underscores the company’s continued focus on middle-income Americans as a primary opportunity for credit union growth and member retention.

About TruStage
Protecting more than 15 million members, TruStage insurance products and programs include, auto, home, life, accidental death and dismemberment and health insurance. They’re available to credit union members across the U.S. and offer compelling and successful ways to build financial security for their families. Credit union members seeking more information can contact TruStage at 888.888.0375.

March 10, 2015

The value of data security and information sharing: CUNA Mutual Group and FS-ISAC collaborate to support credit unions

The escalating frequency and severity of cyber-attacks continue to make data security and response a top priority for the financial services and insurance industry. We are excited to collaborate with the Financial Services Information Sharing and Analysis Center (FS-ISAC), the gold standard in risk and threat information sharing, to offer discounted FS-ISAC membership so policyholders can mitigate cyber security threats, improve incident identification and reduce response times.

According to a Ponemon Institute study from September 2014, the risk of experiencing a data breach is higher than ever with almost half of organizations suffering at least one security incident in the last 12 months.

Cyber insurance policies are also becoming more important to an organization’s preparedness plan, with the adoption rate more than doubling over the last year from 10 percent in 2013 to 26 percent in 2014.

Click to view animated infographic
“As with any organization today, credit unions face similar severity of risk. Our collaboration with FS-ISAC brings expertise to our credit unions to understand the complexity, pace and current threat environment related to cyber breaches,” said Jay Isaacson, CUNA Mutual Group vice president of business protection.

“We are proud to partner with CUNA Mutual Group to ensure that credit unions have access to the actionable threat intelligence. As a leading resource in the financial sector, FS-ISAC can support the credit union industry to build a stronger, more secure financial future for their members,” said Bill Nelson, President and CEO, FS-ISAC.

“FS-ISAC’s ability to facilitate the exchange of information, the breadth of membership in their network, and their commitment to facilitate threat intelligence provides credit unions with important resources to enhance their cyber security risk management efforts,” adds Isaacson.

FS-ISAC is a member-owned, non-profit organization serving as the global financial industry's go-to resource for cyber and physical threat intelligence analysis and sharing. Launched in 1999 and serving more than 5,500 financial firms, FS-ISAC is a well-respected platform for information and threat-sharing intelligence across the financial services industry.

The U.S. Department of the Treasury, the U.S. Office of the Comptroller of Currency, U.S. Department of Homeland Security, U.S. Secret Service and the Financial Services Sector Coordinating Council have encouraged FS-ISAC membership. The Treasury and DHS rely on FS-ISAC to disseminate critical information to the financial services sector in times of crisis.

In the alliance, FS-ISAC offers a discounted annual fee on a basic membership for credit unions that have a cyber insurance policy through CUNA Mutual Group. Twenty percent savings on new memberships and 10 percent on renewals are available. 

“There is tremendous value in the sharing of information, best practices and real-time threat warnings,” said Isaacson, “Credit unions must remain vigilant in protecting member data entrusted by them.”

GAC Community Building: Giving Back, Lending a Hand, Caring

The National Credit Union Foundation (NCUF) embodies the spirit of credit unions through its efforts to strengthen and develop the credit union movement. As the movement's charitable arm, the NCUF funds industry-wide development initiatives, including:

  • Financial education to consumers of all ages;
  •  Disaster assistance;
  • Greater access to affordable financial services; and
  •  Helping empower consumers to save, build assets, and own homes.

Donations to the Foundation enable credit unions to help their members reach life-changing goals and achieve financial freedom.

“The NCUF is a catalyst to improve people’s financial lives through credit unions,” said Bob Trunzo, President and CEO for CUNA Mutual Group. “The NCUF exemplifies the credit union philosophy and builds upon the mission of the credit union system.”

As a proud supporter of the NCUF, CUNA Mutual Group is dedicated to giving back, lending a hand, and building communities through credit unions. In 2015, the company contributed more than $158,000 to the NCUF to support the organization's general fund.

“We’re proud of the programs the NCUF puts together, and we want to support them for many, many years to come,” said Trunzo.

To learn more about the NCUF visit: https://www.ncuf.coop/

March 9, 2015

New Consumer Research Helps Credit Unions Engage Baby Boomers with Vital Financial Services

CUNA Mutual Group and the Filene Research Institute have released new research examining how credit unions can best serve and connect with baby boomers. Topline results of the study show that while today’s boomers need diverse investment portfolios, wealth protection and financial security, only 10.5 percent say they are actively looking for a financial advisor to discuss retirement planning.

Credit unions can help to fill this gap, and they can use the new research to enhance their marketing efforts targeting baby boomers – a generation numbering more than 75 million people across the U.S., according to AARP.

Commissioned by CUNA Mutual Group, the new study is especially timely because boomers face significant challenges with retirement and finances. More than 60 percent plan to work past age 65 or not retire at all to preserve their income and health benefits. More than half aren’t confident their income and assets will last through retirement. More than half report the same level of debt as they did six years ago. And one-third are financially supporting both an aging parent and a dependent at the same time.

How Credit Unions Can Connect with Boomers

In an effort to help credit unions reach beyond these and other perceived barriers, CUNA Mutual Group and Filene offer the following reflections and research highlights from the study:

    The physical branch is critical with pre-retirees. So is your Web presence. Boomers prefer to be served in person, regardless of the product. This is consistent across loan products (58 percent), investments (55 percent), savings (52 percent) and insurance (51 percent). Following in-person service, they prefer Internet support, then mail and then phone.

    To acquire and retain boomers as customers, understand why they shift their holdings. Boomers will shift their holdings to alternate financial institutions for more convenience (27 percent), better products/rates/fees/returns (20 percent), more confidence/security in your institution (14 percent) and better service (12 percent).

    Timely service is vital to boomers’ satisfaction. So is creating an emotional connection. Boomers view timely service as the most important action a financial institution can take to satisfy their needs, and providing an emotional connection is another satisfaction driver.

    Member referral programs may be the key to connecting with boomers for investments. More than a third of consumers surveyed said a referral from a friend or family member was the most important factor in choosing a financial advisor, more than any other factor. The research suggests credit unions can leverage the personal relationships they have with members and others in their communities to gain investment clients for their businesses.

    Offer products -- and professionals -- that fit boomers’ retirement planning needs. When asked what products they want credit unions to provide, boomers most often cited IRA or Roth IRA (38 percent) and stocks, bonds and mutual funds (34 percent). Credit unions can strengthen their member relationships by offering these investment products. They can also leverage advisors by having them guide members through various financial services, including stable, fixed investments like bonds, and help members build diverse portfolios with the appropriate level of risk.

    The full report, “Baby Boomers & Retirement Planning: Recent Trends and Future Implications for Credit Unions,” is available for download from Filene.

    100 Million Members! Now what?

    Q&A with Dan Kaiser, Senior Vice President, Lending & Payment Security, 
    CUNA Mutual Group

    Q: Why are credit unions so good at signing up new members, but then not capturing wallet share from those new members? Is there a flaw in the process? Training? Culture?

    A: As credit unions look to grow, indirect lending continues to be a valuable product to build new membership. While increased use of indirect lending as a strategic lever to grow loans can bring positive business results, it tends to produce softer relationships between member and credit union.

    A member who has an indirect loan may not have the same affinity as a traditional member, increasing the marketing costs to expand this relationship beyond the indirect loan. As a credit union looks at its strategic portfolio of member wallet share, the challenge or opportunity will be how to expand the indirect lending relationship over the next several years.

    In addition, the digital and mobile revolution in the financial industry has weakened an institution’s ability to be recognized as a consumer’s primary financial institution.  Historically, consumers would choose where to keep their checking and savings account, and then rely on that same institution for other financial/insurance products and services.

    In the digital age, more competition and options provide consumers with the ability to spread their financial services and investments, letting rates and the best experience win their business over pre-established relationships and familiarity. Credit unions are not immune to this trend, and must continue to compete not only on service but also on product and technology innovation to attract the younger demographic.

    Q: In your experience, is the 80/20 rule still a rule (80% of members not profitable)?  Do you have any insights into what the “80” is costing the average credit union?

    A: While the 80/20 rule can provide a general understanding and perspective with customer sales and profitability, it may not ring true with specific member segmentation on profitability. Most credit unions do not have the detailed data at the member level; however, they can assess the aggregate in order to develop an overall understanding of membership profitability.

    An example of this is fee and non-interest income, specifically debit card interchange fees, NSF courtesy pay and mortgage fees. This income provides a substantial part of a credit union’s profit stream. While these fees can increase overall profitability, it is challenging for credit unions to allocate their costs down to the individual member level, making it difficult to assess individual member profitability.  It also largely depends on the credit union’s operation model and member demographics. The credit union needs to understand the makeup of the membership and how these fees contribute to the credit union’s bottom line. In some cases that contribution may be 20%, while in other demographic markets, it might be higher.

    Q: Are credit unions capturing the data they need to have a full understanding of individual member profitability? Or do they have the data they need and it’s not either A) understood, or B) utilized?

    A: While some larger credit unions have the ability to leverage their member data with advanced data analytics and segmentation, many credit unions measure member value by product count versus profitability or wallet share. For many credit unions, a sufficient level of data is being captured – but it’s how that data is being analyzed and used that needs improving.
    In addition, there are extensive compliance and privacy requirements for how member data is collected, used, and protected.  Data mining and analytics can take significant investments, resources, and expertise to ensure the data provides the right information for decision-making. This can be difficult for many credit unions to fund.

    Q: What can be done to improve wallet share capture among new members? Existing members?

    A; Data analytics and member segmentation are very powerful strategies to improve cross-sell opportunities and increase wallet share amongst members. The industry must shift from understanding the member beyond demographics and leverage data to tailor product offerings that align with their personal financial situation, life moments and milestones, and future financial goals. This next-level data segmentation positions credit unions to create significantly more opportunities to expand the relationship. Better segmentation creates a more consultative sales culture that asks the right questions and tailors the right message that ultimately drives additional sales opportunities for existing members.

    In an environment of such heightened competition, better segmentation becomes more about putting the right product in front of a member, at the right time and in the right way.

    Q: What can be done to better align marketing, IT and management to address this issue?

    A: Alignment largely depends on the size, culture, and leadership of the credit union. While cross-functional teams can drive customer service priorities, connecting sales and customer service goals with investment and budgets can also support better alignment across the credit union.

    Helping people find financial security: How will you seize the opportunities?

    From Bob Trunzo, President and Chief Executive Officer, CUNA Mutual Group

    We have served credit unions and their members for 80 years. We know that supporting credit unions means a commitment to empowering the financial security of the millions of Americans they serve.

    So, in 2014, we announced a $200 million investment in consumer-focused initiatives, products, and services to help credit unions reach middle-American consumers.

    At the core, this requires a clear focus on the latest consumer insights in areas like broad research, wealth management, and customer experience.

    Research provides priceless perspective

    While there are marketplace challenges for credit unions, consumer research shows clear opportunity. We want to do our part to help you navigate the future.

    A new study we commissioned from the Filene Research Institute reflects on how consumers prefer to interact with financial institutions, how they approach retirement planning, the investment idiosyncrasies of baby boomers, and how credit unions can help.

    Shedding light on the economic dynamics affecting our industry, our monthly trends report provides credit unions with a glimpse at the big picture.

    Wealth management services provide vital opportunities for growth

    Credit unions are uniquely positioned to leverage wealth management and retirement planning services to support the financial stability of their members.

    We are investing $25 million in CUNA Brokerage Services, Inc. (CBSI) to expand our network of more than 400 financial advisors who provide in-house services to members through 250 credit unions nationwide.

    We also seized the opportunity to provide financial services tailored for the preferences of women, who will control two-thirds of private wealth over the next five years, offering some of the most impactful female advisors in the industry.

    Meanwhile, we remind you that the National Credit Union Foundation offers retirement planning counseling and services to members and staff through retirement fairs it hosts with credit unions across the nation.

    We support this program through corporate giving, and we encourage you to leverage it as a resource.

    An intuitive, engaging online customer experience is critical

    Today’s consumers expect an immediate, engaging user experience online – one that fits the way they live and the devices and technologies they already use today. Credit unions that bring this to life have the best chance to connect with new members.

    You can see this at work through our TruStage Connect solution. It provides live video and text chat support with a licensed insurance representative to help simplify the purchase of personal insurance products for credit union members.

    Our alliance with financial technology provider D+H is another example. It will bring a new online mortgage payment protection solution to members in a seamless, online user experience for application and enrollment.

    The products and services we provide through credit unions have been empowering Americans with financial security for generations. As we reflect on years past and the years ahead, one thing is clear: Credit unions who align with the needs, preferences and financial interests of the American consumer will remain relevant to their members, now and in the future.

    How will you seize the opportunities?

    Get more information on how CUNA Mutual is dedicated to helping people find financial security, download the Filene research report and more on CUNAMutual.com. 

    March 4, 2015

    Consumers demand it! It’s time to set your sights higher on the mobile channel...

    This article by CUNA Mutual Group's Steve Hoke, director of loan growth products, originally appeared in Credit Union Magazine

    If your basic online banking functions such as checking balances and transferring funds work smoothly for members who login on their smartphones, you’ve accomplished goal No. 1 for mobile banking: You’re meeting their basic needs and expectations.

    But it’s time to set your sights higher.

    Use your mobile services to encourage deeper relationships, especially with younger members who will need loans, credit/debit cards, and other services that—unlike most mobile services—directly add to your bottom line.

    According to a Federal Reserve survey of mobile phone users [pdf] who had used mobile banking within the last 12 months, 39.1% were 18 to 29 years old, and 33.7% were 30 to 44.

    The survey also measured the percentage of mobile phone users who said they’d used specific mobile banking services. Ninety-three percent said they’d checked account balances or conducted a recent transaction.

    The next two most popular actions were downloading the financial institution’s mobile banking app (72%) and transferring money between accounts (57%).

    These three services probably drive the most mobile traffic to your site. Look further down in the survey results, however, and you’ll see mobile services that not only drive traffic but have the potential to enhance loyalty.

    For example:

    • 53% of mobile phone users surveyed received an email alert and 43% received a text message alert from their banking institution within the previous 12 months. That’s the financial institution reaching out to the mobile user, providing a valuable service and creating another touch point.
    • 41% located the closest in-network ATM. This uses mobile devices’ GPS capability.
    • 38% deposited a check using their mobile phone camera.

    The lesson? Design your mobile experience to take advantage of this technology’s features to create more meaningful touch points with mobile banking users.

    Loans are a stronger bond to your credit union than account maintenance. Require the bare minimum data your credit union needs on an application to begin the decision process.

    Later, you can get the other information you need to complete the transaction in person, on the phone, or via email.

    Payment protection products are a good way to protect members while establishing an additional relationship. Your mobile lending platform should be able to cross-promote these products.

    This gives your lending staff a head-start in bringing these options to members’ attention at the loan closing.

    For your mobile strategy to build loyalty that lasts, you must continually test your site’s mobile capabilities. This technology changes quickly, and users’ expectations change
    with it.

    Loyalty, in this arena, doesn’t mean finding members who will stay with you no matter what—it means adapting to their needs as they change.

    Mobile Banking: Consumers Set the Bar Higher

    Google’s 2013 Our Mobile Planet survey showed that mobile device users increasingly expect mobile-optimized websites.

    Respondents who completely agreed with the statement, “I expect the websites I visit on my smartphone to be easy to navigate and access as they are when I visit them on the desktop PC or tablet,” increased from 61% in 2011 to 65% in 2012, and to 70% in 2013.

    Visit CUNAMutual.com for more information.

    February 20, 2015

    Summit on Cybersecurity and Consumer Protection: Reflections and Key Take-Aways from CUNA Mutual

    Last Friday, President Barack Obama and the White House held a Summit on Cybersecurity and Consumer Protection with the nation's top tech companies and cybersecurity experts. CUNA Mutual Group's Jay Isaacson Vice President, Business Protection was in attendance. What follows is Jay's account of the event and his key take-aways with a particular focus on the impacts to the credit union industry. 

    From the moment I walked on the Stanford campus there was a feeling of interest, enthusiasm, and excitement for a day focused on a critical issue that faces all businesses (large or small) domestically and globally.

    A line of attendees were already gathered at the entrance by the
    6:45 a.m. opening which gave me the impression the people
     here today understand that cyber threats are a vexing issue
    that no one is immune to and see the immense value in
    learning more about how this risk can be better managed.
    Mix in a dose of healthy skepticism about the government's
    true intentions behind wanting more data and information,
    and I think this captures the environment.
    Over half the attendees were Stanford students and the remainder was a mix of public sector, university faculty (Stanford and other schools), and private sector (no shortage of journalists). I was told there were 1,500 invitees.

    John Hennessy, President of Stanford University, kicked off the day speaking about the importance of the cybersecurity issue and how thrilled he was to be host of this historic event.

    Lisa Monaco (National Security Council) and Jeff Zients (National Economic Council) provided introductory remarks. Lisa made a point of comparison between cybersecurity and terrorism (which was echoed many times later in the day), and said that both of these risks require communication, threat intelligence, and collaboration across industry verticals, sectors, private and public channels, and international support. Jeff highlighted that cybersecurity is also an economic issue and by building better cybersecurity practices (hygiene), it better positions U.S. companies to compete on the global stage (over time this strong practice will engender trust).

    Kenneth Chenault, CEO American Express spoke on the first panel about the core values of American Express and the one core value that he kept coming back to as it related to this topic was ‘trust’ (a perspective that was shared by all of the CEO’s on the panel). The value of trust is something that had strong resonance to me and it is a perspective that I think would be widely shared by credit union leaders.

    The first panel was moderated by Secretary Jeh Johnson,
    US Department of Homeland Security. Panelists included:
    Kenneth Chenault, Chairman and CEO, American Express;
    Anthony Early, Jr, Chairman and CEO of Pacific Gas & Electric;
     Mark McLaughlin, President and CEO of Palo Alto Networks;
    Bernard Tyson, President and CEO of Kaiser Permanente,
    and Elizabeth Sherwood-Randall, Deputy Secretary,
    US Department of Energy. 
    Chenault also noted that customers hate passwords (a sentiment that was also rehashed throughout the day), and he made a very interesting point in that current regulation only allows AMEX to send text messages to 10% of their current cardholder base (consumers must opt in to this feature). Of the customer group to whom they have sent text messages to in order to confirm the legitimacy of their transactions, 36% of cardholders responded back in less than 60 seconds--an impressive response rate to an enhanced security feature! He used this point as an opportunity to highlight a need to reevaluate existing regulations for data security purposes.

    Speaking specifically of financial institutions, he highlighted the importance of data sharing and noted that FIs have one of the most mature information sharing tools out there which has enhanced sharing and improved data security efforts (the tool highlighted was FS-ISAC). He noted that AMEX was hit over 100,000 times last year with some type of attack. He closed his comments asking what we as a country want our values to be with respects to the cybersecurity issue, which I thought was an interesting question and one that set the day up well.

    The remaining panelists reiterated the key points of trust and the value of information sharing with their industry peers ("we are competitors, but on cyber/data security issues we stand together," was a common perspective reiterated). Mark McLaughlin, President and CEO of Palo Alto Networks, had a question from the moderator that asked him to assess the importance of information sharing for varying sized organizations. He noted it was important for all companies, but thought it was particularly important for smaller organizations since they simply don’t have the same level of people, IT tools, and financial resources that a larger firm can bring to this issue.

    The second panel was moderated by Secretary Penny Pritzker,
    US Department of Commerce. Panelists included: Ajay Banja,
    President and CEO MasterCard; Peter Hancock, President and
    CEO of AIG; Renee James, President of Intel; Brian Moynihan,
    Chairman and CEO of Bank of America, and Nuala O’Connor,
    President and CEO, Center for Democracy & Technology.
    The second panel was conducted completely via Q&A from the moderator and highlights included:
    • Discussion of the NIST framework and how NIST creates a high level framework that helps define cybersecurity best practices--however NIST is a starting point and will need to evolve over time given the sophistication of cyber-attacks (I agree that NIST creates a high level framework and starts to build a common language around cyber risk management). The companies on this panel have adopted NIST and supported the framework. They see this as NIST 1.0 and that it will need to evolve to 2.0, 3.0, etc.
    • Renee James, President of Intel, highlighted that her firm and the technology industry is building in greater levels of security capabilities on hardware, but the industry has work to do on this front.
    • Ajay Banja, President and CEO MasterCard, talked about the distaste that consumers have for remembering passwords and in some ways that may be an antiquated model. Innovation is coming along with EMV and more advanced security (he specifically highlighted a partnership between MasterCard and First Technology Federal Credit Union to make this point. First Technology is rolling out retinal scanning and biometrics to confirm identity and verify transactions.

    Tim Cook, CEO of Apple, then took the stage. Overall, Mr. Cook's comments focused on Apple’s enduring commitment to protecting the privacy of their customers and while not directly saying so, it appeared his commentary was focused on concerns about the type of information the government is truly after. His was a short but impassioned speech and I think it captured a view that Mr. Cook shares with other tech focused companies out in Silicon Valley. He also briefly mentioned Apple Pay and the efforts they have made to make payments more secure and easier for consumers.

    “If those of us in positions of responsibility fail to do everything in our power to protect the right of privacy, we risk something far more valuable than money--we risk our way of life. Fortunately, technology gives us the tools to avoid these risks, and it's my sincere hope that by using them and by working together, we will,” said Cook.

    President Obama’s remarks closed out the session. Ultimately, he again made the point that the government can play a valuable role in the “wild west” of cyber space and that is a role connecting government threat intelligence with private sector threat data to help everyone improve their understanding of real time cyber risks. It was clear from Cook's commentary that some skepticism remains in private industry.

    Key themes and take-aways: 

    • Cybersecurity threats are growing in number and complexity, which makes this risk a critical topic for any organization. It also validates the need for the summit and puts more importance on continued dialogue and action after the summit.
    • Cybersecurity is a unifying mission for companies that doggedly compete against one another in our economy.
    • Information sharing is a critically important component to an organization's defense against cyber-attacks. An information sharing network should be robust with connection points across the industry, and the public sector can play a role in terms of disseminating real time threats.
    • Privacy continues to be of utmost importance and organizations have a duty to protect their customers Personally Identifiable Information (PII). Some have argued that information sharing could be in conflict with this. Generally, my view is that a great deal of information that can help credit unions can be shared without releasing any PII. Emphasis of sharing should focus on types of attacks and vectors utilized.
    • We are at a time period of rapid innovation for technology (particularly payment technology), which is exciting but also emphasizes the importance of finding talented employees to bring this innovation to life.
    • We are still very early in the Internet age and we are still shaping what it will become. There is a clear opportunity to make the Internet better.

    How this impacts credit unions:

    • NIST framework is gaining traction with government and regulators and is something that credit unions should begin to familiarize themselves with to assess their cyber risk management and preparedness.
    • Information sharing is a key piece to the NIST framework and was a big focus of this session. Credit unions should look for opportunities to do this while protecting member PII.
    • Payment innovation is forthcoming and it is important for credit unions to understand and assess these new options becoming available (EMV, tokenization, biometrics) to remain relevant with their members (particularly younger members).
    It was an honor for me to be a part of this event and share my experience with you here. My team and I will continue to stay connected to what’s happening in the cyber landscape and share our learnings with credit unions.

    February 18, 2015

    Credit Union Trends Report: February 2015 (December 2014 data)


    The economy grew 2.6% in the fourth quarter of 2014, above its underlying potential growth rate of 2.0-2.5%. This will use up some of the economy’s excess capacity and close the gap between actual output and potential output. Inflation, however, plunged in December falling 0.4% due to falling energy prices and the strengthening dollar. Low inflation won’t stop the Federal Reserve from beginning the process of normalizing interest rate in the second half of 2015.

    The unemployment rate fell to 5.6% in December as the economy added a remarkable 329,000 jobs. Wage growth will begin to accelerate over the next few months as the labor market approaches full employment. Lenders loosened their lending standards for consumer and mortgage loans in the fourth quarter, according to the Federal Reserve’s Loan Officer Survey.

    Credit Union Trends Report Highlight Video:

    Report Highlights:

    • During December, credit union members slowed their pace of debt accumulation and saved most of their gasoline price dividend, credit unions reduced their excess liquidity by making loans and repaying borrowings, and the economic recovery became a self-sustaining economic expansion.
    • At the end of December, CUNA’s monthly estimates reported 6,535 CUs in operation, down 11 CUs from one month earlier. The number of credit unions declined by 260 in 2014, fewer than the 275 reported in 2013.
    • Credit union savings balances rose 0.2% in December, above the 0.3% decline reported in December 2013, as members pocketed some of the savings at the gas pump. Credit union savings balances rose 4.8% in 2014, faster than the 3.6% pace reported in 2013. Asset growth of 5.2% in 2014 outpaced savings growth as credit unions turned to borrowings to fund some of their assets.
    • The nation’s CUs increased their loan portfolios 0.7% in December, a slight deceleration relative to the 0.8% pace reported in December 2013. Loan balances rose 10.2% during 2014, the fastest pace since 2005.
    • Credit union memberships rose a remarkable 464,000 in December to reach 101.9 million, a 0.5% increase from November. Memberships rose 3.6% during 2014, the fastest pace since 1988.
    • Credit union loan delinquency rates fell to 0.82% in December, down from 1.00% set in December 2013, and less than half the 1.88% reported in February 2010 in the aftermath of the Great Recession. Credit union loan-to share ratios reached a new cyclical high in December, breaching 74.7% above the 71% reported in 2013.

    February 17, 2015

    Keeping CU members in their homes: Innovative alliance with D+H drives enhanced protections

    We are excited to offer a new mortgage payment protection insurance product to credit unions and their members, through an alliance with D+H via an integration with MortgagebotPOS™ , D+H’s consumer direct mortgage solution.
    “Just as today’s potential homeowners are concerned with their ability to secure a mortgage, they’re also concerned with their ability to keep their home,” said Alan Bahr, director of product management for CUNA Mutual Group. “It is important that we help credit unions ensure members can maintain the security of their families’ long-term financial health, including their home.”  

    The alliance will bring to life the credit union industry’s first, all-in-one, residential mortgage protection product to cover members in the event of unexpected job losses, death or disability – all within one, seamless user experience for application and enrollment.

    Through the alliance, we are able to integrate our new mortgage payment protection insurance product directly into MortgagebotPOS. This will allow credit unions to seamlessly provide quotes and enroll members in the new insurance offering. The product will launch later this year and will include complimentary loan officer training for the credit unions.
    “We’re excited to be working with D+H, a market leader in lending technology solutions,” said Chuck Cashman, vice president of business development and strategic alliances for CUNA Mutual Group. “This alliance means that credit unions will have a new critical service to offer their members. It also provides a strong competitive advantage for the credit union industry.”

    Mortgage payment protection is a unique and voluntary insurance offering designed to cover mortgage payments during a critical period following the occurrence of a borrower’s death, disability, or involuntary unemployment.

    Currently, there are more than 6,500 credit unions and 100 million credit union members in the United States. In 2015, CUNA Mutual Group’s mortgage payment protection product will be available to many of the nation’s credit unions that currently use the MortgagebotPOS market leading consumer direct solution for taking mortgage applications.
    “This collaboration between D+H and CUNA Mutual Group clearly illustrates the unwavering and strong commitment of both companies to continue to invest in new and innovative ways to support credit unions for the future,” said Cashman.

    February 9, 2015

    Welcome to TruStage Connect: My name is Michelle, what can I assist you with today?

    We want to make the experience of evaluating and choosing an insurance plan that best fits each individual's needs easier and more streamlined. This is the driving motivation behind our most recent project: TruStage Connect.

    We are excited to announce we have launched a new, real-time service to help simplify the purchase of personal insurance products for credit union members. 

    TruStage Connect is a live video and text chat for the life and accidental death and dismemberment insurance offered through trustage.com. It also leverages the expertise of licensed insurance agents who can share their screen with the consumer to help them navigate the website to shop for insurance.

    “Expanding the TruStage customer experience to include live chat is a direct reflection of our continued focus on today’s consumer,” said Susan Sachatello, senior vice president, TruStage. “We care about making it easier for them to evaluate and choose insurance that best fits their needs. Through live chat, our licensed experts simplify the task of choosing and buying life insurance.”

    The new live video chat service is one of the first of its kind in the insurance industry, connecting consumers with a licensed agent as they browse the website to shop for insurance products. It’s also the latest example of CUNA Mutual Group's ongoing commitment to consumer-focused initiatives and innovation.  

    “Today’s consumer has high expectations based on their experiences with retail consumer brands,” said Sachatello. “TruStage Connect is one more way we're delivering on those expectations and making it even simpler for credit union members to protect their families.”

    About TruStage

    Protecting more than 15 million members, TruStage insurance products and programs include, auto, home, life, accidental death and dismemberment and health insurance. They’re available to credit union members across the U.S. and offer them compelling and successful ways to build financial security for their families. Credit union members seeking more information can contact TruStage at 888.888.0375.

    February 4, 2015

    Celebrating $1 Billion: Making A Difference for CUs

    By: Jane Chesbro, CUNA Mutual Group's Vice President of Specialty Distribution

    We're very excited to announce that CUNA Mutual Group’s Total Benefits Pre-Funding (TBPF) program reached a major milestone in January - $1 billion in assets under management!

    This is exciting because it's a positive sign credit unions are taking advantage of previously impermissible investments to help fund the rising costs of employee benefits programs.

    TBPF defrays the rising cost of benefits because it allows credit unions to offset employee benefits obligations by using potentially higher-yielding investments that would otherwise be considered “impermissible” by the NCUA.

    This matters to credit unions because they are often challenged with flat or even shrinking margins due to returns on assets not keeping pace with rising operating expenses, especially those related to employee benefits. On top of that, family health care premiums have increased nearly 70 percent over the last 10 years*.

    CUNA Mutual Group launched its TBPF program in 2008 because it was becoming increasingly difficult for credit unions to maintain a competitive benefits package and remain an employer of choice. TBPF offers credit unions an array of investment options that can help close the employee benefits gap.

    Since launching the program 226 credit unions joined, and assets under management have more than doubled in the last two years. Participating credit unions shared $40 million of incremental investment returns in 2014 alone**. That extra income helps the bottom line and can be used to continue offering, or potentially add, high-quality employee benefits, which helps ensure the credit union's long-term success and competitiveness.

    To learn more about our TBPF programs, call our Executive Benefits Service Center (1.800.356.2644, Ext. 6651035) or visit www.cunamutual.com/tbpf.

    *Kaiser Family Foundation/Health Research & Educational Trust 2014 Employer Health Benefits Survey
    **CUNA Mutual Group data

    February 3, 2015

    A Look Beyond the Bottom Line

    Soon, corporate earnings reports and other year-end statistics for 2014 will begin flowing into the media, where they will be parsed by journalists and industry analysts. CUNA Mutual Group’s numbers will be among them, and the company expects excellent 2014 results.

    That’s a good sign for the credit union industry as a whole, but it’s more than that. It means CUNA Mutual Group will continue to invest more effort, expertise, and resources on behalf of all credit unions and members, as the company does year after year.

    Here’s a look beyond the bottom line—beyond products and services—at some of what CUNA Mutual Group does to support the credit union industry:

    Advocacy: Lending a Strong Voice to Credit Unions That Need to be Heard 

    Working alongside credit unions and other industry partners, CUNA Mutual advocates for our industry with legislators and regulators at the federal and state levels. Whenever the credit union industry needs to be heard in Washington or in state capitals, CUNA Mutual Group is there.

    In March 2014, the IRS reversed its ruling about Unrelated Business Income Tax (UBIT), resulting in millions of dollars in refunds to more than 200 state credit unions. CUNA Mutual Group’s Larry Blanchard, who chaired the UBIT Steering Committee, has been involved in this fight since 1995, and hundreds of the company’s employees joined in the UBIT effort by contacting their legislators.

    The UBIT campaign isn’t unique. In December, CUNA Mutual Group partnered with the National Cooperative Bank to form a national Co-op Coalition to stand together in mutual support as Congress embarks on tax reform. The group is holding monthly meetings, and its early members include trade groups and similar apex organizations of mutual insurance companies, credit unions, cooperative housing, co-op utilities, and worker and agricultural-related co-ops. Blanchard and Charles Snyder, president and CEO of the National Cooperative Bank are co-chairing the coalition.

    Research: Fueling Innovation and Growth

    CUNA Mutual Group is a founding member of the Filene Research Institute—our industry’s “think and do tank,” and supports The Cooperative Trust, a community of young credit union professionals. The company also sponsors its own research, including the monthly Credit Union Trends Report.

    Infrastructure: Investing in the Industry’s Critical Support System

    CUNA Mutual Group provides financial and other support for a network of organizations—state leagues, CUNA, CUES, the National Credit Union Foundation, the World Council of Credit Unions, and dozens more—that credit unions use for critical services: training, leadership development, compliance resources, community-building initiatives, and much more.

    Community Building: Giving Back, Lending a Hand, Caring

    Local, national, and global community groups receive millions each year from CUNA Mutual Group, often in cooperation with credit unions and industry partners.

    In addition to schools, neighborhoods, community centers, and food pantries in communities that are home to CUNA Mutual Group offices, the company also supports the United Way, Children’s Miracle Network hospitals, Susan G. Komen, Juvenile Diabetes Research Foundation, Boys & Girls Club, WOCCU Relief Fund, the Credit Union Cherry Blossom Run, and on and on.

    Money isn’t everything, however. CUNA Mutual Group also takes enormous pride in how many hours, how much sweat, and how much care individual employees devote to helping people. It’s a reflection of the credit union ethic of people helping people.

    In the end, that’s really what CUNA Mutual Group is: A reflection of the credit unions it serves. It’s hard to quantify that, and it’s unlikely to get much media attention. But it bears repeating every so often.

    CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates.

    January 15, 2015

    Credit Union Trends Report: January 2015 (November 2014 data)


    Economic activity surprised on the upside in the third quarter with the government reporting the economy grew 5.0%, at a seasonally adjusted annual rate, and rose 2.7% year over year. Inflation moved in the opposite direction, plunging 0.3% in November as energy prices dropped 3.8%. Consumer prices rose only 1.3% during the last year, below the Federal Reserves’ 2.0% inflation target. The unemployment rate was unchanged in November at 5.8%, despite the economy adding 353,000 jobs.

    The stage is set for economic growth to exceed 3% in 2015 and the economy to generate over 250,000 new jobs each month. This will put upward pressure on wages later in the year. The Federal Reserve will therefore seriously consider raising short-term interest rates sometime in the second half, albeit at a significantly slower pace than previous rate-tightening cycles in 1994 and 2004.

    Report Highlights
    • During November credit union members borrowed and spent, credit unions recapitalized, inflation dropped, the labor market strengthened and economic growth accelerated.
    • At the end of November, CUNA’s monthly estimates reported 6,543 CUs in operation, down 42 CUs from one month earlier. Year to date the number of credit unions declined by 252, above the 242 lost in the first 11 months of 2013.
    • Credit union savings balances fell 0.1% in November, but rose 4.2% from one year ago. Year-over-year asset growth of 5.2% is outpacing savings growth due to borrowings rising 16% and capital rising 10%.
    • The nation’s CUs increased their loan portfolios 0.6% in November, a slight acceleration relative to the 0.5% pace set in November of 2013. Loan balances rose 10.5 during the last 12 months, the fastest pace since January 2006. 
    • Credit union memberships rose 303,000 in November to reach 101.9 million, a 0.3% increase from October, and 3.6% year to date. Year-over-year, memberships are up 3.9%, the fastest pace since June 2003 when the economy was recovering from the 2001 recession. 
    • Credit union capital grew 0.7% in November to help push the movement’s overall capital-to-asset ratio over 10.8%. Credit union loan delinquency rates fell to 0.77% in November, down from 1.03% set in November 2013. Credit union loan-to-share ratios reached a new cyclical high in November, breaching 74.5%, the highest since November 2010. This improved credit union bottom lines in 2014 and will continue to do so into the new year.

    Total Lending

    Credit union loan balances rose 0.6% in November, slightly better than the 0.5% pace reported in November 2013, and rose a strong 10.5% during the last year. With loan growth exceeding savings growth since March 2013, the credit union movement’s loan-to-share ratio reached 74.5%, up from a 66.3% cyclical low set in March 2013. This shift toward loans pushed CU yield-on-asset ratios to 3.4% in the third quarter from 3.33% in the second.

    U.S. Households’ debt burden, measured by total-debt-to-disposable-income, fell to 97% in the third quarter of 2014, the lowest level since the third quarter of 2002, and down from the 124% record high set in the fourth quarter of 2007. The deleveraging phase of the business cycle appears to be coming to an end. So if households can keep their total debt growth rate less than or equal to the growth rate in disposable income, debt burdens will remain manageable.

    Credit Union Consumer Installment Credit (CUCIC)

    Credit unions’ consumer installment credit balances rose a robust 1.0% in November, or $3.1 billion, significantly above the 0.3% gain, ($0.6 billion) reported in November 2013. The surge in debt corresponded with a strong 0.7% growth in total retail sales in November. Retail sales were 5.1% above their year-ago level, the strongest growth since July 2013. Rising confidence, jobs, wages, wealth and real purchasing power drove the spending spree. During the last 12 months, credit union consumer installment credit balances rose a remarkable 14.2%, the fastest pace since July 1995. Excluding credit unions and guaranteed student loans from the aggregate consumer loan data reveals the consumer loan performance in the banking arena. We see bank balances are increasing at a modest 3.9% pace. 

    Vehicle Loans

    Credit union auto lending remains a bright spot with balances rising 0.8% in November, greater than the 0.7% reported in November 2013. Vehicle sales (cars and light trucks) rose to 17.2 million units on a seasonally adjusted annual rate in November, the second strongest month of the year, and up 5.6% year over year. Improving consumer fundamentals drove the strong sales number: strong job growth, improving household wealth, subprime borrowers with greater access to credit, falling gasoline prices, attractive discounting offers and favorable lending terms. During the last 12 months, credit union auto loan balances rose 15.4%, the fastest pace since May 2000.

    Credit union new auto loan rates continue to beat bank loan rates by over one percentage point. Currently, credit union 5-year new-auto loan rates average 2.62%, 117 basis points below the bank average of 3.79%, according to data gathered by Informa Research Services. Expect auto lending to remain strong in 2015 as vehicle sales are expected to approach 17 million units due to the economy and labor market picking up momentum.

    Real Estate-Secured Lending – 1st Mortgages and Other Real Estate

    Credit union first mortgage loan balances rose 0.5% in November, faster than the 0.3% reported in November 2013, as credit unions continue to pick up a greater share of the mortgage market and fewer originations were sold into the secondary market. Credit unions now make up 7.9% of all U.S. first mortgage originations, up from a 2.5% average prior to the Great Recession. During the last 12 months, first mortgage balances rose 8.8% due to a 15.6% rise in adjustable-rate mortgages and a 6.1% gain in fixed-rate mortgages.

    Notwithstanding the rising loan balances, first mortgage loan originations were down 30% during the first 9-months of 2014 compared to 2013. Credit unions originated only $68.7 billion from January through September and sold $22.4 billion to buyers in the secondary market. And of the $68.7 billion originated 62% were fixed-rate loans, 16% were adjustable-rate loans and the remaining 22% were balloon or hybrid loans. During the similar period in 2013, credit unions originated $98.1 billion and sold $47.2 billion. Of those loans originated 78% were fixed-rate due to the record low interest-rate environment at the time.

    First mortgage credit quality improved significantly over the last year as measured by delinquency rates falling from 1.28% in the third quarter of last year to 0.96% today. Moreover, first mortgage charge offs fell from 0.20% to 0.11%, although this is still greater than the 0.02% reported in 2006. Improving credit quality will encourage credit unions to loosen their underwriting standards as well as hold more of the loans originated on the balance sheet.

    Home equity loan balances rose 0.5% in November, a significant turnaround compared to the 0.5% decline reported in November 2013. Home equity loan balances are up 9% during the past 12 months due to a 5% rise in home prices, the improving job market, rising consumer confidence, consumers releasing pent up demand for durable goods, and lower interest rates. Second mortgage loan balances, however, declined 2.9% during the last year as repayments, prepayments and chargeoffs exceeded new loan originations. Members continue to roll their second mortgage balances into their refinanced first mortgage as they take advantage of these low mortgage interest rates.

    Surplus Funds (Cash + Investments)

    Credit union surplus funds fell 1.4% in November, or $5.4 billion, in order to fund a 0.6% increase in loan balances, $4.3 billion and to meet member deposit withdrawals of $1.3 billion. Surplus funds as a percent of assets now stand at 32.6%, down from 36.1% in November 2013. This shift in the mix of credit union assets from low-yield investments to higher-yielding loans contributed to the increase in credit union asset yields over the last year.

    The composition of surplus funds for the average credit union is 24% cash (cash on hand, deposits at corporate credit union or deposits in other financial institutions) 51% in investments of federal agency securities (obligations of Fannie Mae and Freddie Mac) 12% in CDs at commercial banks and S&Ls, 3% in obligations of U.S. government securities and the remaining 10% in other investments. The Great Recession and the associated corporate credit union goings-on caused a tectonic shift in the composition of surplus funds. In 2007, credit unions held approximately 33% of their surplus funds in shares/deposits at corporate credit unions. Today, only 5.6% of cash and investments are held at corporate CUs.

    Savings and Assets

    Credit union savings balances fell 0.1% in November, as the excess funds that were deposited in October, due to the month ending on a payroll Friday, were used for monthly expense payments in November. U.S. personal income rose 0.4% in November and is up 4.2% during the last 12 months. With personal spending up a strong 0.6% in November, the national savings rate fell to 4.4%, the lowest rate this year. During the last 12 months, credit union savings balances rose only 4.2%, below the 10-year average growth rate of 5.5%. Year-over-year asset growth of 5.2% is outpacing savings growth due to borrowings rising 16.2% and capital rising 10.2%.

    Capital and Other Key Measures

    Credit union capital grew 0.7% in November, pushing the credit union average capital-to-asset ratio over 10.8%, creating fortress like balance sheets for many credit unions. During the last 12 months, credit union capital grew 10.2%, the fastest pace since April 2003. The growth rate of capital is also known as the return-on-capital ratio, a key indicator of financial performance. Expect earnings performance to improve in 2015, pushing the capital ratio over 11.3%.

    Credit union loan quality indicators are now back to pre-recession levels. The CU loan delinquency rate (loans two or more months delinquent as a percent of total loans outstanding) fell to 0.77% in November, from 1.03% in November 2013 and approximately equal to the 2007 average delinquency rate of 0.76%. Better credit quality numbers are encouraging credit unions and banks alike to loosen their loan underwriting standards and increase their loan volumes. 

    Credit Unions and Members

    As of November 2014, CUNA estimates 6,543 credit unions were in operation, 42 fewer than October. Using a 3-month moving average to smooth out large month-to-month volatility shows an average loss of 37 credit unions per month. Credit unions cease to exist for a number of reasons – merger, purchase and assumption, or liquidation. The vast majority cease to exist as the result of a merger with another credit union. NCUA data shows 182 credit unions merged during the first 9 months of 2014, down slightly from 195 mergers during the similar time period in 2013. Year-to-date, the number of credit unions fell 252, slightly above the 242 credit union decline reported in 2013.

    Credit unions added another 303,000 memberships in November, bringing the year-to-date increase up to 3.6 million members. Credit unions were attracting members at a record pace during the first 11 months of 2014, averaging over 325,000 new memberships per month. In percentage terms, credit union memberships rose 0.3% in November, 3.6% year-to-date and 3.9% during the last year, the fastest annual pace since June 2003.

    There is a confluence of factors bringing about this membership surge: robust job growth, strong new auto sales, aggressive credit union auto pricing relative to banks, an increase in credit demand by the general public and relatively tight bank loan underwriting standards. Credit union membership growth is positively correlated with U.S. job growth and in November, the U.S. economy added 353,000 jobs, exceeding most economists’ expectations. With job gains expected to remain robust in 2015, credit unions can expect another year of strong membership growth.

    If you would like a PDF copy of the full report, please email Jess.Noelck@cunamutual.com