(please click ad for more information)

What's New?

At the Leagues

The Leagues

California & Nevada

Current News

Relevant Information—For You, By You
L-R: Rick Schmidt, CEO of WestStar CU; Richard Holloway, CEO of Alta Vista CU; and Ray Shams, Chief Lending Officer for Xceed Financial FCU

LENDING'S NEW AGE: BEYOND THE SCORE
updated 01/28/14 09:05 AM
A 'Huge Potential' for CUs
“It’s a vastly different world out there,” said Rick Schmidt, CEO of WestStar CU. “We have to look beyond our members’ past and focus on where they’re going in the future.”

Hailing from Las Vegas, where the bulk of his members are gaming employees, Schmidt’s perspective illustrates a phenomenon gaining speed across Nevada, California, and the nation. Tarnished by the Great Recession, many borrowers are still too risky to lend money to, or too young to show established credit.

That’s on paper. The reality is, several of these individuals are just as creditworthy as their peers with higher or established credit scores, for various reasons. Credit unions have an opportunity to fill this gap, a fact that many CEOs and lending executives are starting to realize.

“About 70 percent of people who apply for loans at our credit union have a credit score under 650,” Schmidt said. “Does this mean they’re not worthy of borrowing from us, or they’re bad people? We can’t completely use the past to judge their future because the past is so, so skewed.”

Research points to the same conclusion. A migration toward “holistic underwriting” by some credit unions and banks is stirring in the ranks, according to a white paper released in August by the Credit Union National Association’s (CUNA) Lending Council. Folks who had good credit are now seemingly subpar due to financial setbacks during or after the recession—usually the loss of a job, home foreclosure, or sometimes both. They are “still willing to pay their debts,” the council’s research states. “There is room for loosening some underwriting standards while still being prudent lenders.”

A commentary published by the Federal Reserve Bank of Cleveland in November 2010 reminds lenders that consumers’ credit scores aren’t “totally within the individual’s control.” The odds of someone repaying a loan aren’t completely dependent on his or her score, but rather “their translation into the level of riskiness they represent at the current time.”

Further research issued by the Applied Research Institute—a consortium of credit unions in California, Nevada, and other western states—validated this point in a September 2010 analysis, entitled New Consumer. “Standards need to be adjusted,” it states. “If not, credit unions are likely to unnecessarily over-tighten and damage the service they provide their members, and lose out on potential loan opportunities.”

This forward-looking approach of seeing consumers in a new light goes even deeper. Technological improvements to underwriting and so-called “behavior profiling” and “big data mining” are vetting the right opportunities for lending at some financial institutions, said Karan Bhalla, managing director of IQR Consulting, a firm serving both credit unions and banks.

“Behaviors tell a lot,” Bhalla said. “They tend to be very strong indicators of loan performance.”

Studying payment behaviors and decision habits isn’t new. But in this day and age, larger amounts of information and analysis on credit union members and bank customers is helping anticipate the exact moment they’ll need a loan or credit, along with their chances of default. Banks, especially the large ones, are ahead of the curve on this trend.

However, even the smallest of credit unions have enough data to start crunching numbers and charting possibilities.

“In many cases, you can still lend to someone even if they don’t have a good FICO score,” Bhalla said. “There is huge potential for credit unions of all sizes, a few of which are at the beginning stages of this. For many, it will be a leap of faith.”

Click here to read the full perspectives of WestStar CU CEO Rick Schmidt, Alta Vista CU CEO Richard Holloway, and Xceed Financial FCU Chief Lending Officer Ray Shams within the latest News and Views column on Pages 6-7 in the February/March edition of Credit Union Digest!

 
print   email   share   share   share

HARRY REID TO RETIRE IN 2016 updated 03/27/15 01:11 PM
Served Senate Since 2005
Senate Minority Leader Harry Reid (D-NV) will not seek re-election in 2016, he said in an interview with the New York Times. He has led the Senate democrats since 2005 and has had a three-decade congressional career.

FIRST CU REG. RELIEF BILL PASSED updated 03/26/15 09:21 AM
H.R. 299 Approved by Committee
The House Committee on Financial Services passed H.R. 299—the Capital Access for Small Community Financial Institutions Act—granting privately-insured credit unions access to the Federal Home Loan Bank. The bill now moves to House floor for consideration hopefully before June.

FIs TRUSTED OVER RETAILERS updated 03/25/15 03:00 PM
Better Data Protection
According to a recent Gallup poll, 91 percent of consumers trust credit unions and banks to better safeguard their personal information and keep data secure, compared to less than 70 percent of consumers who trust merchants. More than 11,000 U.S. adults age 18 and older were surveyed for the poll.

OVERDRAFT PROPOSAL OPPOSED updated 03/24/15 08:56 AM
Treatment of Prepaid Cards
The California and Nevada Credit Union Leagues have submitted a comment letter to the Consumer Financial Protection Bureau (CFPB) that strongly opposes the bureau’s proposed treatment of overdrafts on prepaid cards as credit and subject to Regulation Z requirements.

GRR IS LESS THAN THREE WEEKS AWAY updated 03/23/15 10:54 AM
Crucial Event for CA State Advocacy
The 2015 Government Relations Rally (GRR) is the most important state legislative event for credit unions in California— and it’s less than three weeks away. Will you be there to advocate for your credit union?

CEOs TALK RISK, OPPORTUNITY, FUTURE updated 03/19/15 05:04 PM
Cheney, Gunderson, and Hernandez
Threats to cybersecurity, defending against card fraud, and remaining relevant to consumers are top concerns for three credit union CEOs who recently participated on a special panel during a California Credit Union League Orange County Chapter meeting.

CA CEO TESTIFIES BEFORE CONGRESS updated 03/18/15 10:18 AM
Also, Rep. Royce Reintroduces Bill
Patrick Miller, CEO of CBC FCU testified before today’s House Committee on Financial Services hearing titled “Preserving Consumer Choice and Financial Independence.” Miller was the witness on behalf of the California and Nevada Credit Union Leagues and the Credit Union National Association (CUNA). The bulk of his testimony centered on duplicative compliance burdens, as well as the modifications needed to strengthen the credit union charter.

NCUA WARNS ABOUT PHISHING SCAM updated 03/18/15 03:00 PM
‘National Credit Union’ Con
The National Credit Union Administration (NCUA) has issued a warning to consumers that the agency has received reports of an online phishing scam which uses a website with a logo and a design similar to the agency’s own site in an attempt to convince customers/members to provide information or send money. Click here to read the warning.

SMALL, LARGE CUs MEET AT 'GAC' updated 03/16/15 11:31 AM
Also, Pete Aguilar Fundraiser
Nearly 50 CEOs and professionals from small credit unions and their large-sponsor counterparts attended the Partners in Advocacy reception last week at the California and Nevada Credit Union Leagues’ suite during the 2015 Credit Union National Association Governmental Affairs Conference (GAC).

MCWATTERS MEETS WITH CA, NV LEADERS updated 03/16/15 10:27 AM
CFPB Officials Address Rules
The room was packed last week when National Credit Union Administration (NCUA) Board Member Mark McWatters made time to address attendees from California and Nevada during the 2015 Credit Union National Association Governmental Affairs Conference (GAC) in Washington, D.C.

CU HILL VISITS: 'TREMENDOUS SUCCESS' updated 03/16/15 01:25 PM
Keeps Advocacy Top of Mind
More than 225 colleagues from California and Nevada credit unions joined thousands of their peers at the 2015 Credit Union National Association Governmental Affairs Conference (GAC) last week, making visits to lawmakers’ offices and meeting with regulatory officials.

ADVOCATES GATHER IN WASHINGTON, D.C. updated 03/10/15 10:51 AM
2015 Governmental Affairs Conference
California and Nevada credit union leaders attending the Credit Union National Association’s 2015 Governmental Affairs Conference (GAC) in Washington D.C. focused on pressing legislative and regulatory issues as they were briefed in the California and Nevada Credit Union Leagues’ suite on Monday afternoon and met intermittently on Tuesday.

COMMITMENT TO SUPP. CAPITAL AND RBC updated 03/10/15 09:57 AM
Plus, Modernizing FOM Limits
Credit union leaders from California and Nevada were surprised and pleased with National Credit Union Administration (NCUA) Chairman Debbie Matz’s comments from this week regarding the use of supplemental capital for risk-based capital purposes.

PURCELL SCHOLARSHIP AWARDED AT 'GAC' updated 03/10/15 07:50 AM
Honor ‘Means a Great Deal to Me’
This year’s Kelly J. Purcell Credit Union Memorial Fund Scholarship was awarded to Rebecca Herrigel, a student at the George Washington University Graduate School of Political Management who will graduate this year with a master’s degree in political management.

REG. RELIEF HEARING ANNOUNCED updated 03/09/15 10:06 AM
Signals Many Discussions Ahead
With the opening of the Credit Union National Association (CUNA) 2015 Governmental Affairs Conference (GAC) on March 8, the California and Nevada Credit Union Leagues had its first of many announcements.

CEOs JOIN CU HOUSE HALL OF LEADERS updated 03/09/15 09:30 AM
Eric Bruen and Joe Schroeder
Desert Valleys FCU CEO Eric Bruen and Ventura County CU President Joe Schroeder were inducted into the Credit Union House Hall of Leaders during the Credit Union House meeting, prior to the Credit Union National Association’s (CUNA) Governmental Affairs Conference (GAC), which began on March 8. Both received this honor for their significant impact on the credit union movement, and are the third and fourth inductees from California since the program’s inception in 2008.

NCUA, CFPB TO MEET CA AND NV LEADERS updated 03/03/15 09:12 AM
RBC, Overdraft, and Other Topics
On board for California and Nevada attendees of the Credit Union National Association’s 2015 Governmental Affairs Conference (GAC) is a special visit from officials with the National Credit Union Administration (NCUA) and Consumer Financial Protection Bureau (CFPB) at the California and Nevada Credit Union Leagues' hospitality suite.

THREE TOPICS SHAPING ‘GAC’ THIS YEAR updated 03/02/15 05:08 PM
Data Security Will Top GRR
Next week the Credit Union National Association’s 2015 Governmental Affairs Conference (GAC) will kick off in Washington D.C.—a conference that, unlike others, is focused on bringing the credit union message to Congress and the administration.

EVANGELICAL CHRISTIAN CU CEO RETIRIN updated 03/02/15 04:20 PM
Holbrook Served For 36 Years
Evangelical Christian CU's Mark Holbrook will retire in May after 36 years as CEO. He is widely acknowledged for growing the 50-year-old institution to an alliance of more than 11,000 members and ministries in 130 countries.

ROYCE REINTRODUCES MBL CAP BILL updated 03/02/15 03:31 PM
Raises Limit to 27.5 Percent of Assets
Today, Congressman Ed Royce (R-CA) reintroduced legislation raising the member business lending (MBL) from 12.25 percent to 27.5 percent of assets.

CUs LEND UNIQUE VOICE TO NEWS MEDIA updated 03/02/15 02:55 PM
Stories Garner Spotlight in CA, NV
Only two months into 2015, local news media across California and Nevada are highlighting credit unions’ positive impact on their communities as the economy continues strengthening and the industry seeks how it can uniquely serve members.

VETERANS MBL BILL INTRODUCED updated 02/27/15 01:27 PM
Service Member Loans Exempt From Cap
This morning, Reps. Julia Brownley (D-CA) and Jeff Miller (R-FL) introduced H.R. 1133, legislation that will help the nation’s veterans establish themselves as small business entrepreneurs. With many service members already credit union members, this new bill would exempt small business loans issued to veterans from the member business lending (MBL) cap.

CUs TESTIFY ON FIN. LITERACY updated 02/25/15 10:50 AM
Nat'l. CU Foundation Speaks at FLEC
Gigi Hyland, executive director of the National Credit Union Foundation toured the movement's dedication to youth financial literacy today in a presentation to the U.S. Treasury's Financial Literacy Education Commission (FLEC).

WINE AUCTION RAISES RECORD AMOUNT updated 02/24/15 10:27 AM
More Than $1 Million for Children’s Hospitals
More than $1 million was raised for 11 Children’s Miracle Network Hospitals in California and Nevada during the annual Credit Unions for Kids Wine Auction last Friday night—a record amount in the event’s 10-year history.