By The Way
The By The Way newsletter is a great way to keep Kentucky credit unions informed of the latest updates in governmental affairs, compliance and regulations, education and training. In addition, By the Way highlights the difference credit unions are making on a daily basis.
League Updates
CUNA Announcements
Educational Opportunities
Credit Union News
Compliance Updates
Career Opportunities
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A Message from the President 
Homeownership – a dying concept in Kentucky?
New data from the 2020 Census Track was recently released. The data revealed two areas of concern for Kentucky. First, home ownership is declining and second, our state is getting older. Thinking about credit unions’ loan portfolios and how mortgage lending fits, this data is a bit concerning. Cities like Louisville and Lexington remain relatively “young” but the rural areas are going to take the brunt of an aging population. The stats revealed that the age group of 65 and older represented about 13% of Kentucky’s population in 2010 but as of the 2020 Census, that percentage has raised to 17%. In addition, there appears to be a lessening of homeownership in the middle-class. This is bound to have a negative effect on intergenerational wealth. Healthcare and renting become more of high priority than homeownership. Also, as the state gets older, so does the workforce.
How does this information impact your strategic plan? Your ability to grow? Your desire to plant a new branch? There never seems to be an end to the everchanging dynamics a credit union faces today. However, as I have said many times before, credit unions are resilient and I am confident you will find paths to assist your members, no matter what part of the state they reside in or what age group they fit in to.
Thank you again for all you do!
Sincerely,
Debbie Painter
League President
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Governmental Affairs Update
This month was a busy one, with work going on in DC as Congress and the President work to raise the debt ceiling and prevent America from defaulting on our national debt for the first time in our history and legislators in Frankfort scheduling their first few rounds of interim meetings for June as they begin to gear up for the 2024 legislative session.
While all this was going on, Kentucky conducted the primary election contest for our Statewide Constitutional Officers. The most notable, and hotly contested, of those being the race to see which Republican would win the right to take on the incumbent Governor Andy Beshear in November, with Attorney General Daniel Cameron coming away as the winner of that contest.
In addition to all that action, final preparations are underway for our exciting Advocacy On Track event with NCUA Board Member Rodney Hood, presented by the Cincinnati FHLB. This event is presented free of charge and a few spots remain, please reach out to me directly if you have any questions or would like to secure your spot for an educational and exciting day.
As always, please reach out with any questions or if there is anything I can do to be of service to you or your Credit Union.
Sincerely,
Kyle Hagerty, CUCE
VP, Governmental Affairs & Compliance
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National Credit Union Foundation announces Workshop 2023 to help credit unions serve Hispanic consumers
The immersive learning event will take place in El Paso, Texas, October 10 – 13, 2023. GECU, headquartered in El Paso, is partnering with the Foundation as a host credit union. Coopera Consulting, Inclusiv and National Association of Latino Credit Unions & Professionals (NLCUP) are also event partners, adding value to the event with strategic and on-site support.
Workshop 2023 will leverage the framework of the Foundation’s signature Development Education (DE) program—collaborative learning with excursions and volunteer activities—to help credit union system employees explore opportunities to better reach, engage and serve Hispanic communities.
“Over 62 million Hispanics live in the USA, and this diverse group is the largest contributor to U.S. population growth in every single state. Collectively, Latinos and Hispanics control trillions of dollars in purchasing power, but they are systematically underserved by financial services,” said Chad Helminak, the Foundation’s chief impact officer.
“Our cooperative mission encourages us to challenge our perspectives and business models in order to achieve financial well-being for all, and in turn, secure the credit union system’s long-term success. Workshop 2023 will provide plenty of insights and resources no matter where your credit union is on your journey.”
Leaders from all credit union or system partner organizations are encouraged to attend.
Early bird pricing of $650 per person runs through July 15 and is inclusive of all excursions, activities and most meals. Discounted hotel rates are also available on a first-come, first-served basis.
Learning sessions will cover developing and implementing multicultural strategies, data gathering and analysis, building culturally relevant products and services, and much more. These will be complemented by collaborative work, networking opportunities and immersive off-site excursions.
For more information, visit the Foundation’s website.
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Limited Seats Remain for the 2023 Session of the Southeast CUNA Management School
Registration is STILL OPEN for the 2023 session of Southeast CUNA Management School!
Meeting Dates: Sunday, June 18, 2023 through Friday, June 23, 2023
Location: UGA Georgia Center for Continuing Education, 1197 South Lumpkin Street, Athens, GA.
Southeast CUNA Management School is the premier learning opportunity for credit union professionals in the southeast, providing students with the skills and knowledge to meet today’s leadership challenges. The three-year program features advanced academic instruction on a variety of topics including management, leadership, and financial analysis. Students apply what they learn from the on-site sessions to projects that require strategic analysis of their credit unions and research of relevant issues facing the industry.
Start or continue your SRCUS journey!
Tuition: $2,395 per person
Need financial assistance? Contact Janet Garrett to learn more about available scholarships and how to apply.
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2023 Southeast Regional Directors' Conference
July 23 – 26, 2023
Peabody Hotel • Memphis, TN
Welcome to the Southeast Regional Directors Conference, which features a full range of informative educational sessions on critical, timely issues related to the economy, lending environment, and more.
Located in the historic area of Memphis, conference attendees will experience a unique opportunity for professional development while enjoying the sights, sounds, and flavors of the home of blues, soul, and rock and roll.
The Southeast Regional Directors’ Conference is designed for credit union directors and committee members. The conference location rotates among the ten Southeastern states, giving each state an opportunity to host their fellow credit union volunteers and showcase the best of what their state has to offer.
The conference will be hosted by the Tennessee Credit Union League and the other nine supporting states of the Southeast Region - Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, Kentucky, South Carolina and Virginia.
If you’re ready to turn your credit union job into your credit union career, the Southeast CUNA Management School (SRCUS) is the program to help you achieve it.
Join like-minded peers on the campus of UGA in Athens, Georgia from June 18-23 to develop the skills and knowledge to meet today’s credit union management challenges. This 3-year program provides the financial analysis, strategic thinking, management insights and business communication skills you need to take your career to the next level!
Register Today!
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VISION 2023 – Annual Meeting & Convention
REGISTRATION NOW OPEN!
August 14-16, 2023 | Omni Louisville Hotel | Louisville, KY
The Kentucky Credit Union League is proud to provide our credit unions with this distinguished opportunity for improvement, growth, and knowledge.
Vision 2023 – the League’s Annual Meeting and Convention features a comprehensive agenda on top-of-mind issues, the Members’ Business Meeting, TopGolf Contest, an awards banquet, entertainment and an extensive showcase of business partners and exhibitors.
Whether you are a credit union professional or volunteer, from a small or large credit union, you will find useful information geared towards your needs.
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Service One Credit Union Awarded CDFI Grant Approval to Support Underserved Communities
The U.S. Department of Treasury has approved Service One Credit Union (SOCU) as a Community Development Financial Institution (CDFI). The CDFI designation better positions SOCU to offer loans, financial education, and other services to individuals and businesses that have been traditionally underserved by the financial industry.
“We are very pleased to be the second credit union/bank in the state of Kentucky to be approved as a CDFI,” said Rebecca Stone, SOCU President and CEO. “It is a testament to our ongoing initiatives to serve the financial needs of all members of our community, particularly those who have been underserved or overlooked by traditional financial institutions.”
As a CDFI, SOCU will have access to additional resources and funding opportunities to support its mission of creating opportunities and fostering economic growth in the communities it serves. The credit union serves 19 counties in South Central and Western Kentucky.
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UK Federal Credit Union Partners with Frederick Douglass High School to Launch New Student Program
The University of Kentucky Federal Credit Union’s Program to Professional Careers at Frederick Douglass High School will begin in the fall of 2023. The program boasts a paid internship and in-school, student-led branch. Housed under the Academy of Professional Services at Frederick Douglass High School (FDHS) this program will bridge the gap between education and application, providing career-readiness through exposure and experience in multiple fields.
“At Frederick Douglass High School we make learning relevant,” said Principal Lester Diaz. “The partnership with the University of Kentucky Federal Credit Union is a great example of the learning linked to life. We are all excited about the opportunities this program will provide for our students.”
Through application and interviews, selected Student Interns will have the opportunity to manage and operate the UK Federal Credit Union (UKFCU) branch located in the school. Student Interns will learn the values of personal finance, customer service, and timely management skills as they offer banking services to FDHS students, faculty, and staff. In addition to banking basics, students will gain experience in communication, time management, public speaking, and member experience.
“Educating members of this community, both students and adults, about financial wellness is at the core of UK Federal Credit Union,” said David Kennedy, President & CEO of UKFCU. “Investing in students and providing real-life experiences they can use throughout their lifetime is a great privilege.”
The partnership between FDHS and UKFCU began in 2020 through a desire for a more sustainable form of financial education and making financial literacy equitable and accessible for high school students. The collaboration followed with planning for the Program, including curriculum, student expectations, and the physical construction of an in-school credit union branch. Student applications for the internship will be accepted through April 2023 and those selected will begin their training with UK Federal Credit Union in June of 2023. Student Interns will participate in required classroom and on-the-job shadow training over the course of several weeks. Upon completion, they will be fully trained as a teller and prepared to manage their new branch at Frederick Douglass in the Fall.
Bradley Scroggin, Business Teacher at FDHS, will lead the Program to Professional Careers. Mr. Scroggin has an extensive background in business and will provide great insight to students in transitioning classroom education into real-world application. He will work closely with the UKFCU Branch Coordinator to ensure students have all the tools necessary to succeed.
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Service One Credit Union Donates $20,000 to the WKU College Heights Foundation
Service One Credit Union is donating $20,000 to the College Heights Foundation at Western Kentucky University (WKU) to provide student scholarships.
“The donation reflects our long-standing commitment to education and to empowering the next generation,” said Rebecca Stone, President and CEO of Service One Credit Union. “We view it as an investment in the future of this area.”
The College Heights Foundation, established in 1923, has a rich history of supporting students at WKU. Through its scholarship programs and financial assistance initiatives, the foundation has helped countless individuals achieve their academic aspirations and unlock their full potential.
Service One Credit Union is known for its philanthropic efforts and dedication to improving lives in the communities they serve.
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The next couple years will be rough
Economists foresee earnings struggles, liquidity pressures, and high inflation ahead.
A recession is coming. The only question is when.
Fortunately, it won’t be as severe as the Great Recession of 2008-2009.
That’s the consensus of three economists who addressed the 2023 CUNA Finance Council Conference Tuesday in Anaheim, Calif. Amy McGraw, vice president of marketing and chief experience officer at $988 million asset Tropical Financial Credit Union in Miramar, Fla., and Christine Messer, chief financial officer/senior vice president of finance at $729 million asset Heritage Family Credit Union in Rutland, Vt., moderated the session.
Marisa DiNatale, senior director at Moody’s Analytics, offered a more optimistic forecast than her fellow panelists. “Our forecast is no recession this year, with higher chances as we go into 2024. We’re calling it a ‘slow session,’ with gross domestic product growth of around 1%,” she says. “The labor market has been incredibly resilient, although we expect job growth to slow significantly in the next couple quarters.”
While inflation remains high, DiNatale believes the Federal Reserve won’t raise interest rates again this year and will lower them next year. “This will allow the Fed to thread the needle between managing inflation and hurting the economy. The economy is very fragile, and any major force could throw it off, particularly the debate over the debt limit. A lack of action on the debt limit causes a loss of confidence on the part of businesses and consumers.”
Other areas of risk include fragility in housing and manufacturing, says Lindsey Piegza, chief economist at Stifel. While she agrees the labor market remains strong, wage pressures are creating a vicious cycle of sorts: A tight labor market results in higher wages, leading companies to raise prices, which requires people to earn more to buy products and services.
Plus, inflation remains a concern. “There’s still no sustainable level of disinflation, and I’m not convinced we’re heading to the 2% inflation target,” Piegza says. “This is the Fed’s primary focus. If the Fed moves to the sidelines with rate hikes, it will be a temporary pause with one or two rate hikes this year.
“The biggest risk,” she adds, “isn’t if the Fed raises rates too much. The bigger risk is that the Fed doesn't raise rates high enough and allows inflation to become entrenched in the economy, forcing us into a deeper recession. The Fed was late to the inflation-taming party. They won’t make that mistake again. It’s better to act now.”
Bill Hampel, consultant at MDB Hampel LLC, agrees inflation won’t subside soon. He says decades of low inflation left most people surprised by the striking rise in inflation.
“The Fed feels bad that they let the inflation genie out of the bottle,” he says, adding that it wasn’t the Fed’s fault. The key factors: COVID caused supply shocks that drove up prices and led to government stimulus, and the war in Ukraine pushed up energy prices.
“Getting that genie back in the bottle is the Fed’s No. 1 policy goal,” Hampel says, placing odds of a recession this year at 50% and next year at 80%. “The headwinds are so strong.”
What does this mean for credit unions? High rates mean high cost of funds and disintermediation of member funds, according to Hampel.
“Liquidity pressures will continue next year and your margins will be lousy,” he says. “Fortunately, credit unions have plenty of capital and they won’t dilute it with asset growth.
“The next couple of years will be rough. There will be rainy days for credit union earnings, and liquidity pressures will persist. Don’t do any crazy things to boost the bottom line in the short term. Draw down your capital a bit to live another day.”
Source: cuna.org
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CUs have ‘considerable interest’ in ensuring FHFA meets core mission
Credit unions provide a vital partnership in helping the Federal Housing Finance Agency (FHFA) achieve its housing mission and goals, CUNA wrote to House Financial Services Committee leaders Tuesday for its hearing on FHFA oversight.
“During 2022, credit unions originated $237 billion in first-lien mortgages, and they sold more than 16% of those mortgage loans into the secondary market,” CUNA wrote. “Therefore, credit unions have a considerable interest in ensuring that the FHFA-regulated entities, which include [Government-sponsored Enterprises Fannie Mae and Freddie Mac] and the Federal Home Loan Bank System (FHLBanks), operate effectively and efficiently and satisfy their core missions to benefit low- and moderate-income borrowers and communities.
“CUNA has continuously championed that the housing finance system must ensure that lenders of all sizes have equal access to the secondary mortgage market,” it adds. “Moreover, the Enterprises “must be subject to appropriate regulatory and supervisory oversight to ensure safety and soundness.”
Other highlights include:
- CUNA applauds the FHFA’s recent decision to rescind that DTI ratio-based upfront fee because many credit unions and other industry stakeholders voiced serious operational concerns about the fee.
- Potential limitations conditioning access to the FHLBanks to the quantity of mortgage loans or limiting use of the funds for mortgage lending and community investment would reduce credit unions’ ability to help their members achieve their affordable housing goals.
- Permitting credit union service organizations (CUSOs) to access the FHLBanks would not create additional risks to the safety and soundness of the FHLBanks because the credit unions that own CUSOs are supervised by state and/or federal regulators.
- Any newly allocated funding or created programs should first require a careful assessment of the potential collateral impact on the balance sheets of the FHLBanks and the bank system as a whole.
Source: cuna.org
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Proposed CFPB ‘junk fee’ study fails to meet PRA obligations
The Consumer Financial Protection Bureau’s (CFPB) timing study on “junk fees” has not met the public comment obligations under the Paperwork Reduction Act (PRA) and should not receive a general clearance, CUNA and other organizations wrote to the White House Office of Information and Regulatory Affairs (OIRA) Thursday.
A federal agency seeking to conduct a survey or collect information must obtain approval by OIRA under the PRA, which PRA requires agencies to provide two opportunities to comment on a collection request.
“The Timing Study does not fall within the limited uses that OIRA has defined for a generic clearance,” the letter reads. “The Timing Study is not a customer satisfaction survey, focus group test, or website usability survey, and the specifics of this collection can be determined before the data are to be collected. Instead, the Bureau appears intent on using the Timing Study to conduct research to inform the Bureau’s rulemakings or other policy actions.
The organizations also call for the OIRA to explicitly prohibit the CFPB from using the results of they study—if approved—to inform a rulemaking or policy action
“Putting aside questions about the legitimacy of the generic clearance process,13 we urge OIRA to enforce the limitations on use of the streamlined process and disapprove requests for collections that relate to substantive or policy issues,” the letter reads. “The failure to enforce these limitations invites agencies to ‘push the envelope’ and seek to use a generic clearance for a survey that is neither low burden nor non-substantive.”
The organizations also note it the CFPB not provided the survey instrument or any other substantive information related to the proposed collection—other than a one-sentence abstract—meaning the public cannot meaningfully provide comment on the study.
Source: cuna.org
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