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Weekly Recap - Despite costs, CUs continue to grow branch networks

The weekly recap features news on regulatory actions, mergers and other issues facing the credit union space. Send tips, ideas and chatter to ken.mccarthy@spglobal.com.

News

* While banks across the U.S. continue shedding brick-and-mortar locations, credit unions are slowly adding to their total branch count. U.S. credit unions opened 10 more branches than were closed during the fourth quarter of 2016, according to SNL Financial data. A total of 91 branches were opened during the period, while 81 closed. As of Dec. 31, 2016, there were 21,209 branches in the U.S., up 53 from a year earlier. Credit unions added a net four branches in the third quarter and 39 during the second quarter of 2016.

* More financial institutions are servicing the marijuana industry, but depositories have terminated 5,650 accounts at an increasingly rapid clip. Between June 2016 and September 2016, U.S. financial institutions terminated roughly 8.8 accounts per day, up from a rate of 7.5 terminations per day from November 2015 to May 2016. "Some banks have opted to keep a client because they've been a long-term customer," said Sundie Seefried, CEO of Partner Colorado Credit Union, a credit union that openly services marijuana businesses. "So while they're not openly doing it for the industry, they have one or two people for whom they do it."

* Donald Trump officially took office as the 45th President of the United States of America in an inauguration ceremony Jan. 20, kicking off a new administration that he touted as prioritizing "America first." In his inauguration speech, Trump promised the country he would re-shift the government's focus to America, embracing protectionism on various fronts. Credit union industry observers expect Trump to quickly appoint National Credit Union Administration board member J. Mark McWatters as board chairman.

* Santa Rosa, Calif.-based Sonoma County Grange Credit Union changed its name to North Bay Credit Union, according to the credit union's winter newsletter. The credit union plans to update its signage, forms and contact information over the next few months.

Regulation/legislation

* The NCUA is moving forward with exploring the pros and cons of allowing credit unions to seek alternative means of capital. During its Jan. 19 meeting, the board approved an advance notice of proposed rulemaking to solicit comments on a possible rule governing the issue. NCUA board member J. Mark McWatters called the action the first "full-bore" attempt at addressing an issue that has been floating around the credit union space for years.

* Also at the Jan. 19 meeting, the NCUA board said that it is amending its regulations to adjust the maximum amount of civil monetary penalties under its jurisdiction to account for inflation. The maximum penalty levels for 2017 are 1.6% higher than the maximum levels in 2016.

* The Consumer Financial Protection Bureau has accused Navient Corp. of failing student loan borrowers at every stage of repayment in a federal lawsuit asking for restitution for borrowers and civil penalties against the loan servicer. Navient used shortcuts and deception that resulted in preventing borrowers from accessing loan options that could have saved them money, the CFPB said in a Jan. 18 release.

* In a press conference Jan. 17, Senate Minority Leader Chuck Schumer, D-N.Y., warned President-elect Donald Trump not to tamper with the CFPB, Reuters reported. "If Trump intends to keep any of his promises and un-rig the system, he would keep Rich Cordray," Schumer said, according to Reuters.

* The Credit Union National Association wrote a letter to CFPB Director Richard Cordray urging the bureau to impose an immediate moratorium on all of its pending and future rulemakings. The group believes that a directive issued by President Donald Trump is consistent with CUNA's request. "A moratorium will give credit unions time to catch up with all of the recently imposed requirements and it will give the bureau time to figure out how to focus its rules on Wall Street and get out of the way of Main Street," CUNA President and CEO Jim Nussle wrote.

M&A

* Battle Creek Area Community FCU members approved the merger of the Battle Creek, Mich.-based institution into Honor Credit Union, according to an announcement posted on the former's website. The partnership is expected to become official by the end of the first quarter, pending regulatory approval. No branches will be closed, and employees will keep their jobs.

* In Henrico, Va., Nabisco Employees Credit Union merged into Henrico Federal Credit Union on Jan. 1, Richmond BizSense reported Jan. 18. Nabisco Employees CU had 984 members, according to the report. Henrico FCU now has about 28,000 members.