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Weekly Recap — NCUA economist says CUs should prepare for continuing rate hikes

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Weekly Recap — NCUA economist says CUs should prepare for continuing rate hikes

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

* The Credit Union National Association filed an amicus brief with the U.S. Supreme Court in a case that challenges a New York law prohibiting merchants from imposing a surcharge for using a payment card but does not prohibit cash discounts. CUNA's move follows actions on a state level in California, Texas and Florida and by the New York Credit Union Association in that state. "CUNA is resolute in our work to inform the judicial system about this issue," said CUNA President and CEO Jim Nussle. "It is a push for a fee by merchants in an attempt to shift their costs of using electronic payments to consumers and financial institutions, while continuing to allow merchants to receive the benefits of participating in the system."

* Former Corry Area Schools Federal Credit Union CEO Karen Schenck pleaded guilty to a charge of embezzling from the Corry, Pa.-based credit union, CUToday reported Dec. 21. Schenck admitted to stealing more than $741,000 through false loans and deposits and making unauthorized withdrawals from members' accounts. She is scheduled to be sentenced in April next year and may face as much as a 30-year jail sentence and a fine of $1 million.

* Hartford Municipal Employees Federal Credit Union will change its name to Cencap Federal Credit Union, according to an announcement posted on its website. The Hartford, Conn.-based credit union will begin using the new name and logo Jan. 5, 2017.

* Anchorage, Alaska-based Credit Union 1 appointed Paul Yang president and CEO, effective Dec. 1, according to an announcement posted on its website. Yang previously served as CEO of Los Angeles-based University Credit Union.

* Los Angeles-based First City Credit Union named Jim Miller successor to retiring President and CEO Terry O'Steen. Miller has worked as executive vice president and CFO at the credit union for the last eight years, a press release posted on CUInsight.com said.

* Middlebury, Conn.-based Waterbury Connecticut Teacher FCU named Susan Enis president and CEO, succeeding George MacDonald, according to its winter-spring 2017 newsletter. Enis previously served as president and CEO of United States Senate Federal Credit Union.

Regulation/legislation

* Twenty-four federally insured credit unions consented to penalties totaling $9,364 for filing late call reports in the second quarter of 2016, the National Credit Union Administration announced. In the second quarter of 2015, 14 credit unions consented to penalties. In the most recent quarter, individual penalties ranged from $150 to $1,057. The median penalty was $303. No credit unions with assets of more than $250 million were subject to civil monetary penalties for filing late call reports in the second quarter, the NCUA said. Eight of the late-filing credit unions had been late in a previous quarter. The Federal Credit Union Act requires NCUA to send any funds received through civil monetary penalties to the U.S. Treasury.

* Falling unemployment rates during the past half decade combined with improving labor markets have been good for credit union loan growth, NCUA Chief Economist Ralph Monaco said. "A solid labor market is very important for credit unions because it means growing loan demand, good loan quality, increased deposits and, potentially, rising membership," Monaco said. "For credit unions, the outlook for fundamentals like employment and consumer demand should help to support credit union financial performance in 2017." However, credit unions should prepare for a continued rise in interest rates, according to Monaco. "The consensus of most analysts is that interest rates, both on the short end of the yield curve and the longer-term rates, are expected to increase," Monaco said.

M&A

* The NCUA approved 18 credit union mergers in November, according to the agency's latest Insurance Report of Activity. The NCUA listed "expanded services" as the reason behind 12 of the mergers. Three mergers were attributed to "poor financial condition," two were chalked up to "loss/declining field of membership," and one was due to "lack of sponsor support." The merging credit unions had a total of approximately $426.5 million in assets, according to the report.

* Health Care Credit Union members on Dec. 20 approved the proposed merger of the Salt Lake City-based institution into Ogden, Utah-based Goldenwest Federal Credit Union. Federal and state regulators had already approved the merger in November. The two credit unions will officially merge and combine financial statements Jan. 1, 2017, but they will maintain two separate computer systems for a few months as they prepare for the integration of core operating systems. Accounts, products and services are expected to be fully integrated May 1, 2017.