CUs issue $846 million through PAL program
A new article from Pew Charitable Trusts examined trends in credit union lending trends and found that credit unions issued $846 million in loans through the NCUA’s Payday Alternative Loan (PAL) program in 2022, exceeding the 2019 figure by 32 percent.
The PAL program, which was created in 2010, was expanded in 2019 to increase access to affordable small loans. In 2022, the amount of PAL loans originated under each quarter represented the highest volume ever originated, ranging from $195 million in the first quarter to $227 million in the fourth quarter.
“The rapidly changing rate environment has not slowed the rising demand for small-dollar, short-term loans at federal credit unions,” said NCUA Chairman Todd Harper. “With the help of technology, credit unions are being increasingly responsive to this need while operating within current interest rate caps, adhering to the NCUA’s updated supervisory guidance for interest rate risk, and remaining committed to meeting the financial needs of their members—especially those of modest means.”
This increase in lending reflects credit unions’ continued commitment to helping consumers with limited or no credit history obtain loans to quickly cover emergency expenses and avoid costly alternatives such as payday loans and buy now pay, later (BNPL) loans. The article also points out the advantage of automation in helping both credit unions and banks deliver loans to consumers faster than BNPL programs.
NAFCU has long warned against the use of underregulated BNPL programs. A recent CFPB report found that borrowers who use BNPLs often exhibit higher measures of financial distress compared to non-borrowers. The association has urged the bureau to ensure companies that offer them have adequate oversight and consumer protection practices. NAFCU has also urged the NCUA to continue work on a PALs III rule and engage with the CFPB to exempt all PALs loans from the Payday Lending rule.
NAFCU will continue to engage regulators and lawmakers to ensure credit unions have ample resources to provide safe, affordable, and accessible financial products and services to their members.
Growth & Retention
Add to Calendar 2023-09-22 14:00:00 2023-09-22 14:00:00 Understanding Credit Card Portfolio Sales & Agent Programs Both credit union and bank credit card issuers are under intense pressure from various sources, including competitor innovation, significant internal resource commitments, increasing operating expenses, uncertain regulatory and economic environments and a variety of capital and liquidity constraints. This has led to about 80% of all banks offering credit cards under an ‘agent issuing’ model, where a third-party issues credit cards under the financial institution’s name. While hundreds of credit unions do the same, and interest in this option has increased in the last two years, the majority of credit unions still own and manage this product themselves. Deciding whether this option can meet strategic, financial and member needs can be difficult to untangle. In this webinar, Understanding Credit Card Portfolio Sales & Agent Programs, you’ll delve into the structure of such programs, the financial and risk-profile impacts of such a decision, the contractual commitments required of both parties and discover evaluation tips and processes for any credit union that would like to evaluate this path. Key Takeaways Discover the structure of the agent issuing concept and obligations of both parties Understand the financial impact of entering such a program to the balance sheet, income statement, and critical performance ratios Ascertain the impacts to members, including both positive and negative possibilities Review the accompanying contractual structures and key considerations Develop an evaluation process that best protects the credit union’s financial and other outcomes Register Now $295 Members | $395 Nonmembers(Additional $50 for USB)One registration gives your entire team access to the live webinar and on-demand recording until September 22, 2024.Go to the Online Training Center to access the webinar after purchase » Who Should Attend COOs CFOs NCCOs and compliance titles NCRMs and risk titles General counsel staff Education Credits NCCOs will receive 1.0 CEUs for participating in this webinar NCRMs will recieve 1.0 CEUs for participating in this webinar CPA credit information is below; recommended 1.0 CPE credits. CPA Certification Credit Information Reviewer: Josie Collins, Senior Associate Director of Education, NAFCU Learning Objectives: See key takeaways Program Level: Basic Prerequisites Needed: None Advance Preparation Needed: None Delivery Method: Group Internet-Based Recommended CPE Credits: 1.0 credits Recommended Field of Study: Regulatory Ethics – Technical About Our Webinars Our webinars are streamed live from NAFCU headquarters near Washington, DC. Your audio/video feed of the presenters includes presentation slides and downloadable handouts. You can easily submit your questions to the presenters at any time during the live broadcast, with no dialing over the phone! The audio and video stream directly through your computer. Web NAFCU firstname.lastname@example.org America/New_York public
Credits: NCCO, NCRM, CPE
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