Login | Help

Rebecca McClay

Rebecca L. McClay is managing editor of www.creditunions.com and a contributor to Trefis, a financial analysis website. She recently interned for MarketWatch in San Francisco and Bloomberg in New York and was previously a business writer at The Gazette of Business & Politics in Maryland. She has been published in The Arizona Republic, The Wall Street Journal, The Baltimore Sun and more. Rebecca has been contributing articles to businessjournalism.org since 2009.


A guide to reporting on credit union trends and financials

credit union

Photo by Flickr user Thomas and Juliette Aiko

Business journalists have a wealth of new data on financial institutions to sift through as the nation’s 7,105 credit unions recently reported second-quarter financials. Reporters who review their local credit unions’ 5300 call reports will find a range of story topics in different regions of the U.S. – including stronger business lending, increased first mortgage market share and perhaps standouts in new and used auto lending.

Last year amid a grassroots furor over big bank fees, credit unions relished an opportunity to draw more new members to their smaller institutions. They promoted their lower fees and not-for-profit business structures in a variety of marketing campaigns, and it seems to have worked.

Credit unions reported nearly 3 million new members this past year as of the 2012 second quarter, according to the National Credit Union Association’s most recent credit union filings, finalized August 30.

The latest credit union industry data

Credit unions have a long way to go before they are as widespread as banks. But credit unions are financial institutions to watch as they’re claiming 7.6 percent of first mortgages, a portion of the loan portfolio that grew 5.8 percent year-over-year. They are also making significant gains in new and used auto loans and credit card lending, which in year-over-year both increased to 4.8 percent . In total, credit unions reported $156.7 billion in loan originations in the first six months of 2012.

Find the second-quarter credit union reports, called 5300 call reports, in your area on the NCUA’s website. Compare the performance of local credit unions to nationwide averages and to credit unions that have similar asset sizes.

Industry wide, business lending was the fastest growing component of credit unions’ loan portfolios in the second quarter. Banks have been focusing more on lending to larger commercial businesses and many credit unions have found a niche in making $50,000 to $100,000 to smaller – though more risky – startups. Credit unions increased total business loans 8.7 percent in the second quarter from a year prior.

Political issues to watch

As election season heats up, the credit union industry is getting more involved in their local elections. On some issues, like increased regulations, it sides with banks. On other issues, such as whether to raise the member business lending cap, it takes an opposite stance. Here are a few political issues credit unions in your area may be absorbed with:

Disclosures issues. Credit unions, like banks, will likely have to abide by new disclosure rules proposed by the Consumer Financial Protection Bureau. The new disclosures aim to be easier for the consumer to understand, but many smaller credit unions are worried about the resources it will take to comply with new regulations. Find out what credit union executives in your area are expecting. Learn how they are already explaining credit card and mortgage terms to their members and whether they will soon change.

Member business lending. In a nutshell, some credit unions are pushing Congress to raise the 12.25 percent cap on member business lending (12.25 percent of a credit union’s total assets) so that they can lend to more entrepreneurs. Bankers, however, are arguing that the cap should remain intact because credit unions enjoy a tax-exempt status. Bank executives say the higher cap would cost tax payers more and would only benefit a small number of larger credit unions that already have an edge with tax exemption. What is the sentiment among credit unions in your area?

Consumer Financial Protection Bureau regulation. Aside from the disclosures issue, credit unions are anticipating the CFPB will affect them in many ways. The bureau only has authority to review and enforce rules for institutions over $10 billion, which excludes all but four credit unions. Still, any CFPB rules can affect banks and credit unions of all sizes. The CFPB has yet to officially pass new regulation, but credit unions are on guard for what may come. What are your local credit unions expecting from the CFPB?

credit union ad

Photo by Flickr user Michael Cote

Key ratios in credit union reports

Lydia Cole, an analyst with Callahan & Associates, has outlined “12 Key Ratios” for credit union board members to know to ensure a working familiarity with their balance sheets. These ratios are also exactly what journalists covering credit unions should know when reviewing the quarterly reports, called 5300 call reports. Understanding the health of the credit unions in your region in the same way executives and regulators understand it is crucial to reporting accurately and thoroughly on the credit union industry.

These key ratios are similar to what reporters covering banks need to know, but the terminology differs a bit. Here are some examples of key ratios you could apply to your local credit unions:

Loans-to-shares ratio: Shares are simply credit unions’ checking accounts. They are called shares because the members, or customers, of a credit union are also the owners. The loans-to-shares ratio measures a credit union’s liquidity. The more shares a credit union has, more it has to lend and the lower its loan-to-share ratio. Credit unions reported an average of 67.0 percent loan-to-share ratio in the second quarter, up 0.9 percent from the first quarter.

Coverage ratio: This metric tells executives how much money they have to cover loans  the credit union can’t recover. To get it, divide the allowance balance on the 5300 call report by the total reportable delinquent loans.

Net interest margin: Like banks, credit unions make money by lending, so the profit credit unions are making on their loans is important. The net interest margin is calculated by subtracting the interest paid to members from loans and investments and dividing that by the average assets.

Operating expense ratio: Reporters can use this ratio to gauge whether a credit union is operating efficiently. It’s calculated by dividing the operating expense by average assets. To calculate operating expense to income ratio, divide the operating expense by the total income. Both of these reveal how productive a credit union is. Compare these ratios from different credit unions in your area both against each other and against other similarly sized credit unions.

Average member relationship: This ratio is an important gauge to tell how involved members are as it shows how much of the credit union’s retail a credit union’s members are using. It includes shares and loans but not business loans. So, to calculate it, add total shares to total loans and subtract member business loans. Then divide by the total members.


Financial copy editing: Choose words and descriptions carefully

Christine Steele

Christine Steele leads a session on financial copy editing during the American Copy Editors Society’s 2012 Conference. 

Copy editors who attended The American Copy Editors Society’s 2012 Conference’s “Financial Editing” session learned how to ensure text is clear and readable for investors and that verbiage is accurate and does not reflect poorly on a company. Unlike journalists, financial editors must be aware that careless language can harm a company by giving investors the wrong impression.

Copy editing print for financial organizations requires going beyond catering just to the reader’s perspective to ensure the company’s message is coherent, said Christine Steele, a financial copyeditor for more than 20 years.

Steele said editors should ask themselves about the copy: “Does it suggest something you don’t want to convey?” 

Steele is a senior copy editor for The Capital Group Companies, a mutual-fund outfit, where she  edits brochures for financial advisers, white papers, annual shareholder reports ,and quarterly information packets for investors.

In proofreading, copy editors should pay special attention to vocabulary that could send the wrong message. For example, investors could associate the words “bet” or “betting” with gambling. Instead, Steele suggests substituting words like “opportunities” or “prospects” or “speculating.”

Instead of the phrase “book of business,” which Steele said dehumanizes the adviser-client relationship, try a phrase like “build your business.” Or substitute “expert” with “someone with experience” for more accuracy. For a more personal touch, refer to shareholders as “investors,” a term shareholders in the mutual fund’s focus group said they prefer.

Financial jargon can be confusing. Editors who do not understand what they’re reading can turn to resources like Investopedia or Onelook. If you’re confused about what a phrase like “base level coupon” means, talk to the author.

“Don’t be afraid to ask if you don’t understand,” Steele said. “If you don’t understand, your readers won’t understand.”

Ensure all your terminology is clear. Don’t use phrases like “digging down,” which isn’t polished or mature for a corporation. Avoid simply saying it’s a “challenging period” without giving details for context. And edit out clichés like “stay the course.”

Finally, make sure the company’s investor materials have a consistent voice and a professional tone that’s appropriate for a shareholder audience.


Business and the environment: An inside look at corporations and air quality

By Flickr user Matt Anderson

This is the third in a three-part series by Rebecca McClay that explores how journalists can better investigate the relationship between business and environment.

In the first two articles, we looked at ways to reporters can investigate how companies impact water quality and affect land quality. Now, we’ll explore here how business journalists can monitor how their local businesses’ relationship with air quality.

Energy companies, recycling companies, food production companies and metals companies are among the many industries that can contribute air toxins like formaldehyde, benzene, mercury, carbon and other chemicals. For more than two decades, the Environmental Protection Agency has tried to monitor and regulate air pollution tens of thousands of plants across the country. This year, more than 1,600 plants were deemed to warrant urgent action, a recent NPR article says.

With so much data to sift through, reporters may find it daunting to get started on covering air pollution. For inspiration, check out joint coverage by The Center for Public Integrity and National Public Radio on extensive air pollution coverage this week, “Secret ‘Watch List’ Reveals Failure To Curb Toxic Air.”  You’ll see that, just as in covering water and land stories, starting with the Environmental Protection Agency and its “watch list” of air polluters can yield a wealth of stories. Some of the companies are serious polluters while other may have only permit delinquencies.

NPR and the CPI posted a spreadsheet of 464 facilities that compares the plants’ September status with their July status. Reporters easily determine which companies remained on the list of emissions violators, and which improved their pollution performance, distinctions which are color-coded on the document. For example, Aker Plant in Streetman, Texas, was just added to the list while General Engines Companies in Lake Wales, Fla., dropped off. You even can sort the spreadsheet by zip code for local data.

For a few more tools, check out The World Health Organization’s website, which has a fact sheet on the impact of air pollution on health, or National Geographic’s overview on how air pollution causes climate change, which includes official reports from the Intergovernmental Panel on Climate Change. And CBS News has crafted an interactive graphic of cities are the most affected by air pollution, that allows you to sort by an air quality index, the sources of smog and other factors.

There are countless stories in analyzing how companies contribute to air pollution, but there are many more in following the companies benefiting from helping companies remedy the problem. For example, Fuel Tech, a public company in Warrensville, Ill., that offers nitrogen oxide-reduction technology, recently reported an 18.8 percent surge in its revenue, with earnings beating estimates. What factors are driving that increase? Are companies investing more to cut back on their emissions?

Finally, don’t neglect court documents.  Turn to your court system to find out whether companies are fighting cases of emissions violations and whether and how they are held accountable. For example, The Milwaukee Journal-Sentinel recently followed case on United Ethanol, which converts corn into ethanol, as it received a $700,000 fine for air pollution violations. If the EPA’s “watch list” of 1,600 plants is any indicator, there is likely no shortage of similar stories in your state.


Business and the environment: Dig into land-related stories


By Flickr user D’Arcy Norman

This is the second in a three-part series by Rebecca McClay that explores how journalists can better investigate the relationship between business and environment.

In the first article examining the intersection of business and the environment, we explored numerous ways journalists can find stories in how companies may impact water quality, but there are also a wide variety of ways reporters can investigate businesses’ impact on land.

Chemical and nuclear plants, industrial factories and oil refineries are among the most notorious land polluters, but land contamination can come from countless sources. Mining and deforestation are other top polluters, along with the housing and agriculture industries. Which industries are more prevalent in your coverage area? Are they required to report their environmental impacts?

Researching a meaningful story on land pollution starts with finding the local issues in your area and analyzing the right data. The best starting point for snooping around topics in your area is the Environmental Protection Agency. While it’s a federal agency, the EPA’s website allows you to enter your zip code or city and search for topics at a very local level. For example, I entered “Annapolis” and found that the area’s land highlights include the fact that there are parcels there on the national priorities list.

As of April 2011, there were about 1,290 polluted land pieces on the list that were previously used as metal foundries, landfills, dry cleaning sites, industrial manufacturing. Where are those companies now? Are they still operating locally? What changes have they made to their practices? If they were responsible for the pollution, were they held accountable?

In addition, several communities have packaged reports on their environmental conditions with the EPA, such as Bowie, Md., which has its 2010 State of the Environment Report posted there.  Business reporters covering Bowie would find several stories in that report. For example, BGE electric utility company had to trim a large number of trees for its business and is planning to subsidize a large-scale tree canopy program to replace the lost canopy.

Turn to your state’s department of the environment for story leads. New York’s Department of Environmental Conservation posted several brief releases about companies penalized for environmental violations. Business reporters can follow up with whether they abide by new requirements and look to see how the company, if it has other locations, is behaving elsewhere.

When you find an interesting or suspicious topic, verify your findings.  Check with your local environmental engineers, who are on the frontlines of investigating and measuring land conditions. Also, if you have negative findings, confirm them with the company. Many larger companies like Coca-Cola post an environmental report on their website that details their standards, goals and environmental programs. Compare the most recent reports to those from years prior to see how the company’s environmental priorities have evolved.

Businesses can have a harmful effect on land pollution, but increasingly tighter regulations to protect the environment can have a harmful effect on businesses. Whenever your state or local municipality passes a law to improve environmental quality, be sure to explore how the businesses will fare.

For example, Berkeley, Calif., led the charge in banning polystyrene packaging, followed by more than 20 U.S. cities, such as Portland.  The ban is likely to spread to other cities that want to better manage landfill issues, and journalists there should ask how their retailers and restaurants will fare without the product. What will the impact be on the distributors and manufacturers of Styrofoam containers? How will jobs there be impacted? Many U.S. towns and cities are considering measures against plastic bags, as Portland passed recently, and reporters there can follow the impact in a similar way.


A guide to covering the remodeling industry’s rebound

As the housing industry continues to weigh the economic recovery, experts anticipate its remodeling sector will buck the trend and takeoff this year as homeowners start spending on upgrades and renovations.

Business reporters can gauge how their local remodeling market is recovering by turning to three key industry indices, finding the right industry experts, and checking in with both local remodeling retail shop owners and homeowners on local trends.

The best way to delve into the research is to look at your localized information from one of the indices. The National Association of Home Builders provides a quarterly Remodeling Market Index (RMI) that measures the remodeling market by gauging demand based on surveys of thousands remodelers in the U.S. The RMI is broken down into two indices – one that measures current activity and one that predicts future trends. Its survey questions focus mainly on the demand for major and minor additions and repairs and the amount of work remodelers have committed to them.

The NAHB’s index offers region-specific data that could be helpful in identifying unique trends in your area. For example, reporters in the Midwest will see that their region was the only region that experienced a decline in remodeling so far this year, according to 2011 first quarter RMI. The NAHB’s first-quarter survey also includes special questions on what would be keeping homeowners from remodeling – don’t miss that data.

Another telling remodeling industry index is Buildfax’s monthly Buildfax Residential Remodeling Index (BFRRI), once-private research that was launched for public use in January. It also provides regional information, but unlike NAHB’s RMI, the Buildfax index measures remodeling by tallying building permits for remodeling projects. It should give reporters a good sense of trends in larger additions and bigger-ticket remodeling spending.

Finally, a third remodeling index is the Leading Indicator of Remodeling Activity (LIRA), a quarterly measurement from Harvard’s Joint Center for Housing Studies’ Remodeling Futures Program, which factors in a wide variety of data. The index, which will next be released July 21, accounts for consumer intentions and housing market activity. LIRA’s most recent data anticipates a significant boom in the remodeling industry during the spring season this year, traditionally the most busy time for the industry.

If remodeling is indeed rebounding in your area, find out what’s driving it. Is it an aging population retrofitting their homes for old age? Is it a demand for eco-friendly projects like energy efficienct upgrades? Are more people having trouble selling their homes so choosing to renovate instead? Those are good questions to pose remodelers or homeowners in your area.

In an economy where housing prices and home sales have slumped so severely, many homeowners trying to sell their homes may be investing in remodeling. One often-overlooked question by business journalists covering the housing and remodeling markets: Is investing in remodeling to sell your home still worth it?

At least one source –  Remodeling magazine - says remodeling has not been paying off this year as well as it did last year for homeowners investing in projects. Ask your state or regions chapter of the National Association of the Remodeling Industry, local Realtors, homeowners and home buyers what’s true in your area. Exploring the impact of remodeling’ return on investment could lead to a whole new angle on the topic.

Fast Facts

  • Spending on remodeling is typically two-fifths of the total spending in the housing market.
  • The remodeling industry is a roughly $280 billion-per-year industry, which accounts for about 2 percent of the U.S. economy.
  • About 40 percent of all spending on housing construction is spent on remodeling.
  • The remodeling industry peaked in 2007, after the housing bubble burst but before the broader economic recession. The remodeling market fell by about 12 percent from 2007 to 2009.

Sources: the National Association of Home Builders, Joint Center for Housing Studies

A few expert sources


Tough, but not impossible, to find fresh foreclosure stories

The foreclosure crisis has been trucking along for a few years now. And experts say it’s not going away anytime soon. But reporters surely are getting a little real estate story fatigue.

Photo by Flickr user Alex E. Proimos

Finding new sources and new angles for covering the foreclosure crisis is key to keeping readers interested and informed as the wave of foreclosures continues.

Most business journalists who cover the housing market have likely already learned where to find the most pertinent information. Aside from the actual courthouse, RealtyTrac seems to be the best source for foreclosure numbers, breaking the trends down to zip code level. And local real estate  associations can offer numbers on housing sales and comment on the foreclosure market.

For my capstone final project at Arizona State University’s Walter Cronkite School of Journalism and Mass Communication, I’m looking at how foreclosures affect smaller communities. Arizona is among the states hit the hardest by foreclosures and the majority of those foreclosures are of course in the Phoenix metropolitan area.

But foreclosure rates in rural areas are just as high, they just don’t get as much attention as metropolitan markets because they don’t have the staggering volume of foreclosures. In fact, I’m learning that the foreclosures in smaller communities are having a severe impact on small, established communities.

To find an exhaustive list of foreclosures, I turned to ReconTrust, which is owned by Bank of America. I can see, for example, that in the rural Mohave County, more than 600 foreclosures were in the pipeline for auction. Note: the database does not cover all states yet.

You can compare those numbers to current foreclosure rates, from, say RealtyTrac, to get a sense of where the foreclosure trends are heading in your area.

Housing counselors, particularly HUD-approved housing counselors, will likely be your strongest starting point for getting a sense of how foreclosures are affecting residents and the community. They should know how homeowners facing foreclosure are planning to cope: will they leave the area, double up with family members, or seek help from nonprofits or homeless shelters?

Contacting your local USDA office could yield some surprising foreclosure information – inquire about the USDA properties up for auction in rural areas.

Finally, nonprofits such as your local chapter of the St. Vincent De Paul Society and business groups such as a chamber of commerce can comment on how foreclosures are affecting residents and businesses respectively.

But regardless of your angle on the foreclosure crisis, it’s definitely not a story to be neglected.


IPOs may be coming into their own as market loosens up

As the market for public companies starts to pick up, now may be a wise time to identify the trends for initial public offerings in your coverage area.

Are investors putting their dollars into new public companies yet, or is a volatile stock market keeping them at bay? How many companies in your state have gone public this year, compared to previous years? How does your state’s initial public offering, or IPO, figures compare to the national trends?

Toys ‘R’ Us and Liberty Mutual have both delayed announced IPOs. Linda Killian, who manages Renaissance Capital’s IPO Plus Aftermarket Fund, told Forbes’ Steve Schaefer last week that recent hiccups on the IPO markets should not cause any alarm.

Swift Holdings, the largest truckload carrier in North America, filed in July to raise up to $700 million in an IPO. Photo by Rebecca L. McClay

In researching story on the market for public companies in Arizona for Cronkite News Service, I turned to several places for answers including Killian’s website.

My starting point was Renaissance Capital, a non-profit research firm that follows IPO trends. The site has a both a searchable index and regular research reports.

Renaissance Capital, founded in 1991 and headquartered in Greenwich, Conn., compiles research on IPO investments and manages an IPO index and IPO investments.

Renaissance Capital’s site includes the number of IPO filings in the United States this year  and you can find how many were in your state. You can search by name or ticker symbol.  | Renaissance Capital IPO Home.

Data on the site is updated daily. In fact, the site has a news feed which will show you what company has filed for an IPO today.  The free site is aimed at investors considering IPOs, but there’s nothing saying journalists can’t dig around there too.

I took a look at the number of companies that applied for IPOs, how many completed the search for funding and how many withdrew their application.

From there you can check how close the actual offering price was to what the company originally expected. That will provide a clue as to whether there is a high demand for IPOs now. And there may be other patterns in that information: geographical, sector, etc.

Double-check the information you find on Renaissance Capital with company Securities and Exchange Commission filings.

By taking these steps, I found that Arizona has had a few companies recently indicate that they hope to go public, but so far none have been successful. One company opted to shore up the funding they sought by selling bonds instead of stock. Others have yet to complete the process.

Be sure to call a few IPO experts in your area – investors, university professors or underwriters – and ask about the health of the IPO market. Is it a good time for investors to put their money in IPOs? Is there a large pipeline of companies that want to go pubic but can’t attract the investors they need?

Finally, call the companies themselves. Ask why they want to go public or why opted to withdraw. If they’re moving toward an offering, how hopeful are they that they’ll be successful?


Retail recovery has its winners and its losers

Like a game of musical chairs, retailers have been vying for shoppers’ dollars through the recession in an effort to stay inRetail Sales recovering play, and the business media have been keeping close tabs on who gets the seats.

Now, as many retailers are releasing better-than-expected earnings reports this quarter, it’s more clear who the winners and losers of the economic shake up will be.

Business journalists, well aware that the recession has been a turning point for retailers, are noting which companies have strengthened business, which have been forced into bankruptcy or closure and which are struggling to keep their seat.

As shopping revives, business journalists should help readers understand what it means for the retailers in their areas. What is the aftermath of the recession? What business practices are different and which have held true? Are shoppers habits different now compared to spending before the recession?

The New York Times (Wall Street Rallies Late on Retail Sales), The Washington Post (Department store sales comparisons for February)and The L.A. Times (Retail sales show strongest gain since before the recession) are giving the broad picture of the rebounding industry plenty of coverage. But local papers are can tune into the picture for their coverage areas.

While many smaller and mid-size papers have been pulling retail news from the wires, others have been delving into their own regional stories. For example The Birmingham Business Journal has a nice piece today on how retailers are expecting to “see more green this St. Patrick’s Day.”


Biz journalists keep pace with mortgage report

from Creative COmmons

(Creative Commons)

Mortgage delinquencies. Foreclosure rates. Housing starts. Home sales. Price trends.

With so many factors to analyze and keep up with in the housing market, business journalists have found today’s news cycle has again put the issue in the foreground with a new report from the Mortgage Bankers Association.

Washington Post’s Renae Merle reports on the 14 percent of homebuyers who were delinquent on paying their mortgage at the end of September, according to the the Mortgage Bankers Association. That’s a full 14 percent of homeowners not paying their mortgage on time. It’s a shocking percentage, and one that should be at the top of any story covering the report, as it is in the Washington Post.

The Associated Press story, run by The Seattle Post Intelligencer among others, addressed how unemployment and housing prices factor into the housing market equation. But readers never get sense of just how many homeowners are behind — again, a full 14 percent. Instead, the article mentions the Mortgage Bankers report as one that “suggests the housing market is under pressure from the surge in home loan defaults.” Ya think? While the article has several stats related to the market, it’s only in the cutline that we see the real newsy number —  the 14 percent behind in payments.

The New York Times’ David Streitfeld cut right to the chase. In an article headlined “U.S. Mortgage Delinquencies Reach a Record High,” the lead can’t be better at getting to the point saying, “Nearly one in 10 homeowners with mortgages were at least one payment behind in September.”  It’s a great example of how to take a report pivotal to the housing crisis and present the key information to readers.