CUANM Newsletter
August 31, 2021
Inside this issue
  N.M. Credit Unions Rank High in 2021 Top Work Places  
 

In the Albuquerque Journal's Top Work Places 2021 survey, three New Mexico credit unions made the list, and Nusenda Credit Union took the top spot in the large employer category. 

Nusenda, which has 608 employees, has been named to the list every year the survey has been done. This year, however, the credit union took the top spot in the survey which is conducted annually by Energage of Philadelphia, Pa., for the paper. Nusenda also won the Meaningfulness Award for standout scores in that category. 

"We come to work every day with the thought of, how we can make our members' lives better? What do our members need? And, what is the right thing to do for membership?" CEO Joe Christian told the paper. 

First Financial Credit Union was ranked 8th in the midsized employer category. First Financial has been on the list four times before. 

Guadalupe Credit Union was ranked 18th in the small employer category. With 72 employees, Guadalupe has been on the list seven times. 

 

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  National Credit Union Call Center Conference will ROCK 2021!  
 
  
 

Are you ready to rock at the 2021 National Credit Union Call Center Conference? Last year proved credit unions are stronger together, so let's take that hit song on tour.  Show off how your rock star talents make every day a jam session for your members.  Join us this year as we go on tour in Las Vegas to hear the latest hits on contact center needs.  Capture the lyrics and notes of new sounds from this year's line up of subject matter experts. Share with your peers how you deliver rockin' service to your members every day.  Lets Rock! Join us October 11-13, 2021 at the Park MGM in Las Vegas.  This is a concert of very talented people coming together. 

"Every year we look forward to the call center conference because it's a rare opportunity to learn from the best in the call center business, whether that's about the newest techniques and technology, or to talk about best practices. Call centers have become even more critical now as members need to know about their finances quickly. Join us for the fun, informative, and jam-packed 2021 Credit Union Call Center Conference this October in fabulous Las Vegas," said Amy Vigil, executive director of NCUCCR. 

This year's conference will be MC'd by new CUANM CEO Juan Fernandez Ceballos. 

Register for the 2021 conference HERE.

Note:  The NCUCCC team is following guidance from local health departments and the Centers for Disease Control and Prevention (CDC) regarding large gatherings, including CDC recommendations on preventing the spread of COVID-19. In addition, we are specifically focused on monitoring COVID-19 in the State of Las Vegas in conjunction with our partner hotel, Park MGM.
Click here to see MGMs's Seven-Point Safety-Plan.

 

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  Banking Cannabis: What You Need to Know at CU CannaBiz Conference  
 

 


 


Experts will explain how to bank cannabis funds at the CUCC, the first national conference dedicated to helping credit unions understand this expanding industry. Registration is now open. 

The Credit Union Association of New Mexico is presenting the Credit Union Cannabiz Conference that will demystify how credit unions can offer banking services for marijuana-related businesses this October 13, 14 and 15 in Las Vegas, Nev. Registration is now open. 

Speakers such as Sundie Seefried, CEO of Safe Harbor Financial,  and chairman of Safe Harbor Private Banking, will explain what it takes to get into the business of banking cannabis funds, and experts such as attorney Lynn Ciani and entrepreneur Dierdra O'Gorman of EMPYREAL Logistics will give insight into the struggles of banking cannabis, including the BSA requirements.

The CUCC will be America's first national comprehensive discussion concerning cannabis banking services and the role of credit unions in serving this expanding industry, its employees and the community. Negotiating the rigorous compliance requirements is a big first step, but dealing with the needs of cannabis business accounts, creating an aligned strategy, and understanding the marketplace are key to a successful program. Learn the strategies for success and drawbacks of failed planning from leading business and industry experts.

"There is tremendous opportunity, and tremendous risk, involved in banking cannabis funds. We realize that this is a new frontier that requires in-depth knowledge of cannabis-related businesses, of compliance and federal regulations," said Amy Vigil, Executive Director of the CUCC. "We aim to demystify how credit unions can serve this growing industry."

At the CUCC, credit unions will learn: 

  • The needs of cannabis business owners. 
  • What regulators look for in a model compliance program. 
  • Insight to obtaining board buy-in. 
  • About important money logistics.
  • Network and share with peers.

So far, cannabis is legal in 37 states for adults for medical use or adult recreational use. However, it remains a Schedule 1 drug federally, making it difficult for credit unions and payment processors to accept the funds. Cannabis dispensaries are forced to handle thousands of dollars in cash, often paying their vendors and suppliers in cash. By helping these legal businesses learn to bank CRB funds, we hope to create a safer working environment for those in the CRB world. 

What: The National Credit Union Cannabiz Conference

When: October 13 -15, 2021

Where: Park MGM in Las Vegas, Nevada

Cost: $785

Information: CUCannabiz.org

 

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  Six Trends, Challenges and Projections Impacting Your Auto Lending Business  
 

 

By Chris Harper, Senior Director, Membership | Filene Research Institute

Across the credit union system, auto loan growth has flattened in recent years. Consumer preferences, economic conditions, competition, and technology has been shifting since long before the start of the COVID-19 pandemic. Even under normal conditions, these changes are nothing to ignore, especially when vehicle financing through auto loans makes up a significant fraction of credit unions' loan portfolios. But what does a flattened market and a shifting environment added on top of a life-changing pandemic mean for credit unions when it comes to their auto lending business? 

While I can't predict the future, as much as I wish I could (hello, lottery tickets!), I can tell you from my years of experience working in credit union, auto lending and technology fields, what the trends I'm seeing are pointing toward, what Filene's research on auto loan trends and challenges are projecting for the impact to the industry, and what you should be planning to do about it.

First, this goes without saying, but I want to be very clear: a solid understanding of current auto trends has never been more important. In addition to auto loans making up a significant portion of credit unions' loan portfolios, a robust auto loan portfolio offers an asset that allows your credit union to be responsive to the interest rate market without the long-term risk inherent in the mortgage space.  

 

The strange case of 2020

The average auto loan stays on the books for just under 39 months ensuring the ability to constantly refresh these assets with new ones at current market rates. We are coming off two of the strongest auto sales months in recent history (April & May 2021), and new car sales are trending close to 2019-or pre-pandemic-levels (16.7M vs 17.0M).1 

A major indicator of overall economic health as you may know, is new car sales. In 2020, this dropped to 14.7 million sales vs 17.0 million in 2019. Overall auto sales were down 14.6% in 2020 because of COVID. This compares to only a 9.9% drop in retail sales.2 

Due to factory closings during the pandemic, inventory levels are extremely low. New cars are down 59% from 2019 levels while used inventories are down a more modest 14%.3 These tight inventories are driving up retail prices in both segments. Credit unions need to be responsive to loan requests that may exceed existing loan policy guidelines in the near term. 

 

A new competitive landscape in 2021

To date in 2021, we are seeing a drop off in zero percent offerings from the manufacturers (down to 6.7% of new financed vehicles from a high of 21% at the end of 2020).4 

This makes for a more competitive landscape in which credit unions have the chance to thrive in the auto lending game once again. Expect to see this trend continue until manufacturers rebuild new inventory levels.

This supports one of the key trends and patterns surfaced in Filene's recent report Auto Loans and Credit Unions: Trends, Challenges, and Projections (filene.org/531), indicating that credit union auto loan growth will slowly return to the long-term average of 6% (4% adjusted for inflation).5 

  • Credit Union Implication #1: If your auto loan portfolio needs to grow, consider how your credit union can better compete with captives and banks for auto loans. Common options include offering your members longer terms and competitive rates, better advertising of your loan offerings, and deepening relationships with auto dealers. Reach out to members of underserved communities who may be overlooked by competitors and who may often offer safer credit profiles than is usually assumed by standard credit scoring models. Pay close attention to members hit particularly hard by the pandemic. In addition, develop analytics capabilities to provide targeted loan offerings to members likely to be preparing for a car purchase.

Another reality to call out is this-electric vehicles are here to stay. In the first quarter of 2021, electric vehicle sales grew 44.8% year over year and accounted for 7.8% of all new vehicle sales.6 

  • Credit Union Implication #2: Begin preparing for the growing adoption of electric vehicles and the eventual adoption of autonomous vehicles. Offer home equity loans to help members install home electric vehicle charging systems. Refer to Filene's research on Consumer Insights on Autonomous Vehicles as an Impending Market Disruption (filene.org/449) for more on how your credit union can prepare for the  autonomous vehicle market.

As of Q4 2020, leasing made up over a quarter of all new vehicle sales.7 Exploring a lease program offers advantages to your membership while also ensuring a consistent rate of return.

  • Credit Union Implication #3: Offer Lease Alternative Loans, also known as vehicle alternative loans or lease-like loans, which provide the flexibility of a leased vehicle experience with better terms for members. Members keep the vehicle title, enjoy shorter payment terms, and lower payments.

After a slight drop in sales in 2020 (2.6%) motorcycle sales have seen a resurgence, up 33% in Q1 20218, which leads me to...

  • Credit Union Implication #4: Increase alternative lending offerings for RVs, motorcycles, boats, and ATVs. 

You don't need me to tell you this-credit unions have lived and breathed the very real need to instantly adapt into providing a digital-first experience through the past 15+ months and that is here to stay if you want your organization to be resilient enough to outlast this pandemic and whatever comes next.

  • Credit Union Implication #5: Speed up your digital transition to online auto loans. Develop loan origination systems that are streamlined and online from start to finish. If your credit union does not have internal capacity, move your transition along with support from trusted system providers. 

Putting your members first and centering their needs at the heart of your strategy will always send you down a successful path when creating new strategies. Find ways to make it a win-win for your business and the member.

  • Credit Union Implication #6: Adopt member-friendly non-interest income that builds upon traditional auto loan offerings such as auto insurance, Guaranteed Asset Protection (GAP), and Mechanical Repair Coverage (MRC). Other offerings include auto insurance for leased cars and drivers working for ride-hailing firms. Partner with trusted system providers to offer these services if your credit union does not have the internal capacity. 

Despite the short-term disruption of COVID-19, we expect auto loans to remain a significant component of credit union loan portfolios over the medium term and for the foreseeable future. Credit unions should use these implications and trends to prepare for a future where auto loans and related services truly advance member well-being, improve members' transportation options, attract new members, and form lasting, meaningful member relationships-all while diversifying loan portfolios.

 

1J.D Power and LMC Automotive U.S. Automotive Forecast May 2021. 2NADA, "NADA Issues Analysis of 2020 Auto Sales, 2021 Sales Forecast", January 12, 2021. 3, 4Cox Automotive, "Cox Automotive Auto Market Report: June 8", June 8, 2021. 5Filene Research Institute, "Auto Loans and Credit Unions: Trends, Challenges, and Projections", January 26, 2021. 6Cox Automotive, "Sales of Electrified Vehicles Jump 81% in the First Quarter of 2021", April 19, 2021. 7Experian, "U.S. Auto Debt Grows to Record High Despite Pandemic", April 12, 2021. 8McD MotorCycles Data, "United States 2021. Motorcycles market posted a spectacular Q1 (+33%)", May 11, 2021

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries, and affiliates. Corporate headquarters are located at 5910 Mineral Point Road, Madison WI 53705.

 

 

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  Pandemic Forces Seismic Shift in Financial Protection Mindset  
 

By Micheal Herman, AdvantEdge Digital President

While the economic impact of COVID-19 on individuals and families has been about as divergent as possible, most people experienced a financial awakening of one form or another. Whether it was the financial devastation of a job loss or the influx of savings from going nowhere and doing nothing, unprecedented times forced most Americans to confront entirely new household economics. 

Anyone who's had to adjust a family budget knows the exercise conjures up the need to choose. Most often, decisions around budgeting come in the form of trade-offs: Do we drive a new car and cook meals at home or drive used and enjoy the occasional meal out? Obviously, there are Americans facing much more difficult, even unfathomable, trade-offs, like the choice between food or shelter, medicine or clothing. Those are circumstances no one should have to face. For the financially well, however, trade-offs are a manageable way of living within an individual's or family's means. 

Other budgeting decisions come in the form of risk assessment. Insurance is a prime example. How likely is it that our home will sustain storm damage? How much life insurance makes sense based on our ages and the family's income needs?

These are the basic budgeting choices families have been making for decades. But during the pandemic, even the basic became complex. As the day-to-day grind came to a grinding halt, we were faced with a whole new set of choices, risks and worries. Seemingly overnight, trade-off and risk-mitigation decisions we'd grown accustomed to making were upended. This left many, including credit union members, understandably anxious about their financial situations. 

One way we saw that anxiety live out was a significant uptick in consumer interest in taking a protective stance against sudden income changes. Research conducted by CUNA Mutual Group found that, as different economic stressors came on the scene, more people looked closer at financial protection products, such as guaranteed asset protection (GAP), mechanical repair coverage (MRC) and credit and debt protection. 

Research CUNA Mutual Group conducted before the global COVID-19 outbreak, indicated credit union member awareness of and interest in financial protection products was low. Among members with a recent loan, less than half (48 percent) were very or somewhat familiar with financial protection options. Just about one quarter (27 percent) said they weren't familiar at all. 

The three main drivers of low interest levels pre-pandemic were: 1) a perception the cost was too high, 2) a lack of perceived need for financial protection; and 3) the member hadn't been offered a financial protection product. 

All that changed in 2020. 

As members dealt with entirely new financial realities, their interest in taking protective action grew, and it grew fast. Research conducted in May, August and November 2020 showed member interest in loan protection growing from 69 percent to 76 percent in less than seven months. What's more, CUNA Mutual Group observed a shift in mindset as credit union member perception of financial protection turned much more positive than in prior years. More than half (53 percent) of members said they considered buying financial protection insurance to be good financial planning, a sentiment that increased steadily from May to November 2020.

If your credit union is thinking through a new or enhanced product strategy in light of COVID's impact on members, financial protection products may fit the bill. Three engagement strategies you might consider are below.

Make protection products available to members. The best options help to offer critical peace of mind to vulnerable members and can help improve member/credit union relationships. As a side benefit, protection products can help generate non-interest income. 

Use a multi-channel approach that prioritizes digital. Most protection products are tied to a loan; the average member probably doesn't know they exist. Embed protection product options into your digital banking experience. 121 Financial Credit Union did. Since integrating the AdvantEdge Digital Lending solution into the credit union's website, more members are opting to add GAP to their car loans. The lending team attributes much of this to the transparency and ease of navigation offered by the revamped digital lending experience. 

Train staff how to introduce members to protection products. Credit union staff are exceptional member advocates and understandably leery of products that don't offer clear benefits. Ensure that everyone is well-versed in protection product benefits and trained to have consultative conversations with the right members at the right time.

Living out the people-helping-people promise of credit unions has never been more important. Regardless which end of the financial-impact spectrum members find themselves on, most everyone will continue to navigate unrecognizable terrain for the foreseeable future. This is when credit unions shine. Leaders within the movement recognize, better than most, how even small tweaks to a credit union's approach can help to set thousands of people on a path to financial wellness. As your credit union thinks through the strategic tweaks that make the most sense for your members, consider giving financial protection products a second look.

 

 

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  CUANM Updates  
 

 

Over the last 60 days, I have traveled throughout the state and been able to meet credit union leaders one-on-one. A concern I heard expressed repeatedly by credit union leaders is how difficult it has been to plan for and manage health care costs - a concern that has been amplified by the unexpected challenges of the last 18 months.

You spoke and we listened. I am delighted to announce the creation of a Healthcare Taskforce. This group will work hand in hand with your Association as we vet and explore potential programs to stabilize healthcare costs and enhance the benefits you are able to provide your employees. We would like to invite you and/or someone from your credit union to join this task force.

Our first meeting was in August over Zoom, and I will keep you informed of more meetings as they are scheduled if you, and/or someone from your credit union would like to join this taskforce. 

We are also holding new CEO roundtable discussions to get more information about how your Association can serve you better. 

Thank you,

Juan E. Fernández Ceballos

President & CEO, CUANM

 

 

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