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CU System briefs (01/10/2011)

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* TRENTON, N.J. (1/11/11)--New Jersey Assemblyman Craig Coughlin (D-19) has become the 12th co-sponsor to an Assembly measure that would amend the state's 40-year-old Governmental Unit Depository Protection Act (GUDPA). The bill would enable counties, school boards, municipalities and other local government entities to include credit unions when considering potential depositories. The state Senate passed a companion bill, S-1807, in June with a 29-6 vote. The Assembly measure is pending consideration in the Assembly Financial Institutions and Insurance Committee, said the New Jersey Credit Union League (The Daily Exchange Jan. 7) … * TUCSON, Ariz. (1/11/11)--A 71-year-old woman and her 47-year-old daughter have been charged in two robberies, including one at Tucson FCU, and one in Pima County at a Bank of the West branch. Evelyn L. Ward and her daughter Bonnie Jane Jasmer were arrested by Tucson Police after a tip from a citizen. Police said a handgun was used in the bank robbery but not the credit union heist. Ward allegedly entered the financial institutions and Jasmer allegedly was the getaway car driver. They have been charged with one count of robbery, one count of armed robbery and two counts of aggravated robberies, all felonies (abc15.com Jan. 8) … * CHULA VISTA, Calif. (1/11/11)--Tellers at a Chula Vista, Calif., branch apparently foiled a robbery attempt Friday when they refused to open a locked door for a masked man. The man wore a blue bandana over his face and tried to enter the branch at about 10 a.m., said police. The small credit union, which has a practice of keeping its doors locked and letting members in one at a time, activated a silent alarm and would not let him enter. The man shouted and rattled the door briefly before leaving in a Volkswagen Jetta (Sandiego6.com Jan. 7) … * JANESVILLE, Wis. (1/11/11)--Sherri Stumpf has been named president/CEO of Janesville-based Blackhawk Community CU. She succeeds Robert Carmichael. Stumpf most recently was chief operating officer of TruStone Financial FCU, Minneapolis. She also has held management positions at the Bank of Elk River, Minn., and Home Depot. Blackhawk has $322 million in assets and more than 32,000 members with locations in Janesville, Edgerton, Delavan and Stoughton, Wis. (Wisconsin State Journal Jan 6) … * MEXICO, Mo. (1/11/11)--United CU President/CEO Betty Clark is retiring after spending more than 20 years in the credit union movement, according to the Missouri Credit Union Association (MCUA). Clark started as vice president of Mexico, Mo.-based United in 1989, moving up to senior vice president in 1994 and president in 2001. She held positions in the Northeast Chapter of Credit Unions, serving as vice chair and chairman of the MCUA Board, chairman of the Missouri Credit Union Charitable Foundation Board and a member of Credit Union National Association's Examination and Supervision subcommittee. During her tenure, the credit union grew to $115 million in assets from $61 million. She will be succeeded by Brent Sadler, who was chief operating officer of Mid Missouri CU, Fort Leonard Wood, and previously served in the U.S. Army. At Mid Missouri, Sadler provided volunteer personal finance and credit score counseling to more than 12,500 soldiers and civilians and partnered with MCUA for the Homes for Our Troops project (The Missouri difference Jan. 7) …

Fitch affirms corporate rating after merger announced

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CHICAGO (1/11/11)--Mid-Atlantic Corporate FCU's rating has been affirmed by Fitch Ratings. The affirmation followed announcement of the corporate's plans to pursue a merger with VACORP FCU. Fitch said it affirmed the "A+" long-term Issuer Default Rating (IDR) and the "F1+" short-term IDR. The rating outlook is stable. Mid-Atlantic and VACORP entered into an agreement in principal to pursue a merger. Mid-Atlantic, which will be the surviving charter, has begun its due diligence process, said Fitch's press release. The merger is subject to approval by the National Credit Union Administration and VACORP's members. If approved, the merger is expected to be completed in fourth quarter. "The transaction should provide the combined company with some cost-saving opportunities, but more importantly, by the time the merger is completed, Mid-Atlantic will likely have completed its current capital-raising initiatives and capital ratios for the combined company are expected to be in compliance with the new regulatory standards," Fitch said. Fitch said its affirmation reflects that Mid-Atlantic's IDR is currently at its Support rating floor. The Individual rating, which reflects the corporate's stand-alone financial position absent external support, remains an "E." An "E" rating denotes a company that requires or will require external support. Although Mid-Atlantic has never fallen below its mandatory regulatory capital requirements, Fitch said, it "still faces significant capital challenges and continues to benefit from the government support provided to the industry to stabilize the corporate credit union system." However, as Mid-Atlantic executes on its current capital-raising initiatives while maintaining its otherwise sound fundamentals, the companies Individual rating would likely be upgraded, Fitch said. The $3.1 billion asset Mid-Atlantic is based in Middletown, Pa., and the $1.2 billion corporate credit union is based in Lynchburg, Va. On a pro-forma basis the total assets of the combined company will be more than $4.3 billion, with a membership base of about 860 member institutions. For the full ratings report, use the link.

Injured congresswoman a CU supporter

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TUCSON, Ariz. (1/11/11)--Rep. Gabrielle Giffords (D-Ariz.), who was critically injured in Saturday's shootings in Tucson, has worked closely with credit unions on several key issues, said the Arizona Credit Union League. Six people were killed--including a federal judge, a congressional aide, and a nine-year-old girl--and 14 others injured--including two other aides--during the rampage, which occurred as Giffords greeted constituents in her first "Congress on Your Corner" event of her third term in Congress. Monday she remained in critical condition after being shot in the head, but doctors say they are optimistic she will recover. The alleged assailant, Jared L. Loughner, 22, has been charged with five federal counts, including the attempted assassination of a member of Congress. "The tragedy over the weekend has left all of us in Arizona with very heavy hearts," said league President/CEO Scott Earl. "The league mourns the six Arizonans we lost, as we extend our deepest sympathy to the family and friends of the victims. We continue to pray for the full recovery of Congresswoman Giffords, as well as those that were injured on Saturday." Earl noted that the league and member credit unions have worked with Giffords for over a decade. "Our relationship began when she was first elected as a state representative in 2001, and later elected to the State Senate in 2003. At the time, she was the youngest female elected to the Arizona State Senate," he said. In 2005, she resigned from the Senate to seek election to the open congressional seat in the state's eighth district. "During her initial campaign, the league endorsed Giffords and even held a credit union Meet and Greet for her in Tucson," Earl told News Now. "The league again supported her candidacy during the 2008 and 2010 elections. Our federal political action committee, CULAC, contributed a total of $11,500 spanning across all three elections." "Since her time in Congress, credit unions have worked closely with Congresswoman Giffords on several key issues. She has been one of the most accessible representatives in the state and has always been willing to meet and listen to credit union concerns," he said. Last spring, credit union constituents from Congressional District 8 visited Washington, D.C. to meet with her. "Instead of holding a meeting in her office, she invited her credit union constituents to join her for breakfast at a D.C. coffee shop to have a more personal conversation with us. After meeting with our group, the congresswoman joined us by signing a letter of opposition to an interchange fee amendment." The league said that several credit unions have asked how they might show support in the wake of the tragedy. Arizona State CU shared this statement from Giffords' husband, Captain Mark Kelly: "Many of you have offered help. There is little that we can do but pray for those who are struggling. If you are inspired to make a positive gesture, consider two organizations that Gabby has long valued and supported: Tucson's Community Food Bank and the American Red Cross." Arizona State CU and the league will make a contribution to the Community Food Bank.

Community Food Bank

3003 S Country Club Road #221

Tucson, AZ 85713-4084

520-622-0525

American Red Cross, Southern Arizona Chapter

2916 E. Broadway Blvd.

Tucson, AZ 85716

520-318-6740

Mass. Court Must record mortgage before foreclosure

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BOSTON (1/11/11)--The Massachusetts Supreme Judicial Court Friday upheld a lower court's ruling that US Bancorp and Wells Fargo foreclosures were invalid because the mortgages contested weren't legally recorded first as being owned by the foreclosing banks. The ruling could have implications for all mortgage lenders, including credit unions, in the state. The court unanimously upheld the March 2009 decision by Land Court Judge Keith C. Long, which rejected claims made by the two banks that, as securitization trustees, they did not have to prove their authority to foreclose on two separate homes. However, the court found their assignment of mortgage notes invalid because they left blank the part of the notes designating who the properties were transferred to and therefore failed to meet the state's requirement for the assignment notes as negotiable instruments. Also, the mortgage transfers were not recorded with the state's recording agency as required by state law. If the lender has no valid assignment note, it is not the mortgage holder; if not the mortgage holder, it can't foreclose on the mortgage, the court said. The ruling repudiates the industry’s fallback defense on botched securitization procedures. The American Securitization Forum and several securitization attorneys working for the banking industry have argued that evidence of intended transfers of a mortgage are enough to demonstrate legal standing. The Massachusetts high court rejected that argument. In Massachusetts, the ownership of a mortgage can be divided and transferred multiple times by the lenders into mortgage-backed securities existing along with the mortgaged property. The transfer document often lags in months or even years of the property's sale. That, coupled with the trend of passing along assignment paper without the mortgagor's name, makes it difficult to determine who owns what in the "chain of title" from lender to lender of the trusts. Many states have adopted nonjudicial foreclosures to alleviate unnecessary paperwork and speed up time in court. But the court maintained that "there must be proof that the assignment was made by a party that itself held the mortgage. "The key in either case is that the foreclosing entity must hold the mortgage at the time of the notice (of foreclosure) and sale in order accurately to identify itself as the present holder in the notice and in order to have the authority to foreclose under the power of sale…," the court wrote. "The theoretical purpose of mortgage recording is to put other lenders and third parties on notice that the property is encumbered with a mortgage on the property, but recordation is an important part of states' mortgage regulatory schemes and is typically a prerequisite for foreclosure," said Michael Edwards, counsel for special projects at the Credit Union National Association (CUNA). He told News Now the case could have implications for credit unions and other lenders in Massachusetts. Credit unions "should check with their lawyer to make sure that they are in full compliance with all state and federal laws, including making sure that mortgages are assigned in compliance with the state's Uniform Commercial Code and are recorded with the state." He noted the case could be an issue for title insurers and people who have purchased foreclosed homes in Massachusetts. "If there is a cloud on a title, it would involve a separate court case to settle the title. Hopefully credit unions have kept better records than the banks in this case."

IKansas City Business JournalI CUs help small biz

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KANSAS CITY (1/11/11)--Credit unions are increasingly finding ways to provide loans to small businesses as they diversify their service portfolios for members, according to an article this week in the Kansas City Business Journal. “It’s a market we want to develop,” Dennis Pierce, CEO of $1.75 billion-asset Community America CU in Lenexa, Kan., told the Journal. “We go at it as an extension of our members’ personal business, and we tend to continue to focus that way.” Although the credit union doesn’t aggressively try to market products to local businesses, commercial loans are becoming more important because members are struggling to keep their small businesses thriving in a troubled economy, Pierce told the Journal. “If you look at national statistics, most of the job growth is going to happen with small businesses, so we want to be a part of that and support it,” Pierce added. Credit unions often provide loans that banks don’t because credit unions look at the character and individual circumstances of the applicants, Rob Givens, CEO of $410.6 million-asset Mazuma CU in Kansas City, told the Journal. “It varies case by case, but in general, I think the difference is the relationship we establish and the commitment we make to really understand their business,” Givens added. “We dig into it and try to find what is going on that inhibits them from getting a loan from a bank. Having a deeper level of understanding for what they are trying to do often gives us confidence to make a loan that a bank might not do.” From March 2009 to March 2010, credit union business lending rose 9%, while it decreased 9% at banks, according to Credit Union National Association (CUNA) data, the Journal said. CUNA and credit unions have advocated to Congress that their member business lending cap should be lifted to 27.5% of total assets from 12.25% to boost the economy with 100,000 jobs and $10 billion in loans to small businesses, at no expense to the taxpayer. To read the article, use the link.

Schenk to IBankrate.comI Savers face prolonged yield drought

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MADISON, Wis. (1/11/11)--People looking to bolster their savings during the next few years will have to deal with a paucity of interest rate yields, a Credit Union National Association (CUNA) economist told Bankrate.com Monday. Although no one knows for certain when the Fed will adjust interest rates, one sure thing is that it won’t happen until inflation becomes a concern, Bankrate.com said. As a result, savers may face a prolonged yield drought for the next several years, Mike Schenk, CUNA vice president of economics and statistics, told the publication. "Without those substantial increases in economic activity, without improvements in labor markets, you won’t have inflation pressures,” Schenk added. To read the article, use the link.

WalletPop recommends CUs to young adults

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MADISON, Wis. (1/11/11)--AOL consumer finance website WalletPop.com advised young adults to check out their local credit unions in a recent article on what financial products they should choose and which ones they should leave behind. The article advised young consumers of financial services to opt for a bank or credit union checking account over a prepaid debit card. The article specifically pointed cost-conscious readers to credit unions. “Our experts recommend checking out local credit unions, since these often have lower fees than banks,” the article said. Prepaid cards don’t offer the same protections as checking accounts, the article said. With monthly fees and activities charges, prepaid cards also tend to be more expensive than checking accounts.

31 from 13 states earn CCUE designations

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MADISON, Wis (1/11/11)--Credit Union National Association Certified Credit Union Executive (CCUE) designations have been awarded to 31 individuals from 13 different states, bringing the total nationwide to 2,714. Designed for managers and those aspiring to credit union leadership, the CCUE program teaches advanced credit union management and operations techniques. High honors were awarded to Allison Anderson, Clinchfield FCU, Erwin, Tenn., and Mark Young, Maine State CU, Augusta, Maine. Honors were awarded to Carol E. Rich, State Employees CU, Raleigh, N.C., and Peter VanGraafeiland, CCUE, Coastal FCU, Raleigh, N.C. Also, three individuals earned the Certified Financial Services Professional (CFSP) designation. This program began in 1999 as a designation targeted specifically at educating credit union professionals specializing in financial services. Julie L. Cunningham, Cherokee Strip CU, Ponca City, Okla., earned honors in the Certified Financial Services Program. The Certified Executive Program (CEP) awarded specialty certifications to 16 credit union professionals. The certifications require in-depth courses in a specialty area, including: compliance, lending, financial management, marketing and human resources. The CEP is the overall name for the self-study program allowing for the above designations. Recommended for college credit by the American Council on Education (ACE), the classes and materials are tailored to those working within the credit union system. VanGraafeiland also graduated with honors as a Certified Lending Specialist

Bill Gates Kudos to WOCCU mobile phone effort

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MADISON, Wis. (1/11/11)--Billionaire philanthropist Bill Gates gave kudos in his personal blog to World Council of Credit Unions (WOCCU) for its efforts in helping to bring financial services via mobile phones to poor African countries. “When I visited Kenya last December I had a chance to observe M-PESA, which is a mobile money service that is being used by more than 13 million people for storing and transferring money,” Gates wrote. “Services like M-PESA are exciting because financial services of any kind have been available to only 10% of the 2.5 billion people who live on less than $2 per day.” Gates said he took part in a panel discussion, which included WOCCU, about the kinds of partnerships that can deliver financial services to every household in developing countries. “I was … struck by how Brian Branch, [chief operating officer of WOCCU], recognized that scale is a problem for the smaller community-based banks he represents, but also an opportunity,” Gates wrote. “They are seeking ways to band together to find common technology solutions and partner with bigger players with national payment platforms such as Safaricom. This way they can remain true to the interests of the local communities they serve, offering more services at a lower cost. “Technology can be a major force to advance financial inclusion, which can help improve the lives of the poor in the developing world,” Gates added. “This is an important focus of the foundation’s efforts. At the Global Savings Forum, we pledged $500 million over five years to help create access to savings accounts that will help increase the financial security of the world’s poorest. “I’m personally very excited about these efforts, which have the potential to replicate in other key markets,” he concluded. To read Gates’ blog, use the link.

NCUF grantee helps Kansas City Hispanics with fin lit

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KANSAS CITY, Mo. (1/11/11)--Holy Rosary CU is making headway in helping its local Hispanic community become financially literate through a collaborative financial education program made possible by a grant from the National Credit Union Foundation.
“Your Finances Today” is part of an outreach initiative to bring financial services and skills to the largely unbanked Latino community in Kansas City. Here, instructor Ximena Pacheco and her assistant, Leonel Prato, discuss the basics of credit during a “Your Finances Today” session. (Photo provided by National Credit Union Foundation)
The program, “Your Finances Today: Building Your Brighter Financial Future” is one part of an outreach initiative to bring financial services and skills to the largely unbanked Latino community in Kansas City. Through NCUF’s grant to the Missouri Credit Union Association, St. Louis, Nancy Pierce, field coach for the NCUF’s REAL Solutions program in Missouri, is working with Holy Rosary to develop community partnerships to better serve the market and to document efforts and results for a case analysis. The $10 million-asset Kansas City-based credit union is working with St. Anthony’s Parish Catholic Church to reach Latino parishioners and to gain their trust. The Reverend Joseph Cisetti of the parish approached Carole Wight, CEO of the credit union, in 2009 and requested financial and educational help for his Latino parishioners. The result is a growing and strengthening relationship between the church and credit union to perform outreach to meet the financial needs of the Hispanic community. The program’s two-hour modules were taught over a seven-week period. Ximena Pacheco, a native of Chile with a background in personal financial education, constructed the curriculum and taught the classes. The modules covered the U.S. financial system, credit and budgeting and identity theft. The final two sessions, which addressed buying a house, funding a college education, and starting a micro-business, were taught by Spanish-speaking experts in those areas. As a community development credit union, Holy Rosary also was provided a grant by the National Credit Union Administration (NCUA) to cover the costs of the instruction and development of a curriculum designed for the immigrant market. The participants were identified by Brother Jim Krause of St. Anthony’s as leaders among the Latino parishioners and were encouraged to attend the program, so they could recommend future courses to other families.