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CU System briefs (01/12/2011)

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* MARLBOROUGH, Mass. (1/13/11)--The Massachusetts Credit Union League and 27 credit unions are participating in a blanket drive for the homeless during January. Their participation is in keeping the Credit Union Community Hope Initiative's ongoing efforts to support the Massachusetts Coalition for the Homeless. It is the Social Responsibility Committee's first annual blanket drive, said the league (e-Weekly Jan. 12). STCU CU, Springfield, is participating with two branches collecting new, unused blankets, said the credit union. "People helping people is what this is all about and certainly aligns with our credit union mission," said STCU President/CEO William Brothers … * PEORIA, Ill. (1/13/11)--Valerie D. Mason, 51, a former Visa credit manager at Citizens Equity First CU (CEFCU), pleaded guilty Monday to stealing more than $228,000 over a two-year period at the Peoria-based credit union (Peoria Journal Star (Jan. 12). She will be sentenced May 6 and faces up to 30 years in prison. Part of her position involved training people on the credit union's computer system. Using her access, she allegedly opened Visa accounts, raised credit limits on some cards including her own, and changed mailing addresses to avoid alerting the card holders. She then used cash advances for personal use. Mason also obtained loans in other people's names without their knowledge or consent … * NEW ORLEANS (1/13/11)--Paul T. Bertuccini Jr., former board member of the Louisiana Central CU and Louisiana Corporate CU, died Sunday in New Orleans at the age of 88. He was retired from the Bureau of Alcohol, Tobacco and Firearms and was manager of the former Federal Officers and Employees CU. He is survived by three children, seven grandchildren and two great-grandchildren (The Times-Picayune Jan. 12) …

Ill. league obtains 1.4M reg. fee holiday for CUs

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NAPERVILLE, Ill. (1/13/11)--All 290 Illinois state-chartered credit unions are seeing a boost to their bottom lines in 2011. That is because they received a holiday on their 2010 fourth-quarter regulatory fee, which would otherwise be due in January to the Illinois Division of Financial Institutions (DFI). They will also receive a partial holiday on their 2011 first quarter fees to be paid to the regulatory agency in April. In total, an aggregate credit of $1,452,256 will be received by Illinois state-chartered credit unions. The fee holiday was a result of legislation initiated by the Illinois Credit Union League (ICUL) to implement the court-approved settlement of a regulatory fee case filed against the state in 2004. Under the terms of the settlement, state-chartered credit unions, banks, savings banks and savings and loan associations received a cash payment from the state in June 2009. The represents a credit for the overpayment in regulatory fees made under former Gov. Rod Blagojevich’s fee escalation and transfer (“sweep”) budgetary arrangement adopted by the state in its fiscal years 2004 through 2006. The settlement was signed into law by Governor Patrick Quinn, effective April 6, 2009. The 2009 legislation implementing the settlement accomplished two other goals. It codified a rate reduction in regulatory fees on a permanent basis commencing Jan. 1, 2009. It also reduced the credit union fund margin that triggers a credit back to credit unions. The credit union fund is the dedicated fund into which regulatory fees are deposited to offset the ordinary administrative and operational expenses of the DFI Credit Union Section in supervising state-chartered credit unions. It is structured as an operating account, not a savings account. To ensure adherence to that objective, the league’s legislation reduced the margin level from 50% to 25%. When the balance in the credit union fund at the end of a state fiscal year exceeds 25% of the expenses incurred by the state in administering the Illinois Credit Union Act and related laws, the excess must be credited back to the credit unions that paid the fees. “We are happy to report that the margin threshold has been surpassed for the state’s fiscal year ending June 30, 2010, which means that state-chartered credit unions are entitled to a credit,” said Stephen Olson, ICUL executive vice president, general counsel and chief operating officer. Olson added that the amount of the credit is determined on a proportionate basis, by taking into account the regulatory fee paid by a particular credit union versus the aggregate amount of all fees collected by DFI from state-chartered credit unions.

Supreme Courts bankruptcy ruling a positive for CUs

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WASHINGTON (1/13/11)--Tuesday's 8-to1 ruling by the Supreme Court of the U.S. in favor of a creditor who contested a bankruptcy filer's disposable income deduction is a "positive for credit unions" or any creditor of unsecured debt in a Chapter 13 bankruptcy, according to Michael Edwards, Credit Union National Association (CUNA) counsel for special projects. The ruling in Ransom v. FIA Card Services centered on a standard car-ownership deduction in a Chapter 13 bankruptcy repayment plan. Since the bankruptcy reform act of 2005, bankruptcy courts in Chapter 13 bankruptcies have used a statutory formula known as the "means test" to help ensure that the debtors who can pay creditors do pay them. The test instructs the debtor to determine his disposable income--the amount that would be available for reimbursing creditors--by deducting from his monthly income "amounts reasonably necessary to be expended." The debtor took deductions for both "car ownership," although he owned the car free and clear and made no lease or loan payments on it, and for "car operation," which cover the costs of operating the vehicle. FIA Card Services contested the "car ownership" deduction amount of $471 but not the car operating deduction of $388. The court held that a debtor who does not make loan or lease payments may not take the car-ownership deduction. The ruling means that the debtor has $471 more in the pool for repaying creditors. "This is a positive for credit unions," said Edwards. "With unsecured debt such as credit card debt, the creditor [including credit unions as creditors] will get a greater recovery than if the court had ruled in favor of the debtor, albeit it is often pennies on the dollar." The decision was the first majority opinion delivered by Justice Elena Kagan. The lone dissenter, Justice Antonin Scalia, said that the "occasional overallowance (or, for that matter, underallowance) "is the inevitable result of a standardized formula like the means test Congress chose to tolerate the occasional peculiarity that a brighter-line test produces. Our job is not to eliminate or reduce those oddit[ies] but to give the formula Congress adopted its fairest meaning"

Reality Fair to be at Capitol during GAC

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WASHINGTON (1/13/11)--A Financial Reality Fair--an experiential leaning opportunity for high school students in which they identify career choices, learn salaries of those choices and try to “live” within their budget--will be held after the Credit Union National Association (CUNA) Government Affairs Conference General Session March 2 in Washington, D.C. The fair will be at Rayburn House Office Building, so leagues and lawmakers can stop by the fair, said the Credit Union League of Connecticut. “I have had the opportunity to be involved with Reality Fairs for more than 10 years,” said Tony Emerson, president/CEO of the league. “When you get to see the recognition in students’ faces that financial decisions are important and do affect their daily lives, it is instant gratification that the fairs are worthwhile and effective.” The Washington fair will “highlight the benefits of reality fairs to a larger, influential audience that will be able to take what they see back to their states.” In the experience, students are encouraged to save and spend wisely. Financial counselors explore with students the importance of planning for future needs and preparing themselves for future economic empowerment through savings and wise spending. The fair will tempt students to spend their incomes on “fun,” but the financial counselors will bring their focus back to saving and thrift practices.

Bail denied in defunct CU fraud

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CLEVELAND (1/13/11)--U.S. Magistrate Judge Kenneth McHargh for the Northern District of Ohio, denied bail for Koljo Nikolovski--an Eastlake, Ohio, man who has been indicted and charged with bank fraud and money laundering stemming from the collapse last April of St. Paul Croatian FCU, based in Eastlake. “Yes, the judge ordered him held,” Mike Tobin, spokesman for U.S. Attorney Steven M. Dettelbach’s office in Cleveland, confirmed to News Now. Nikolovski, 48, who has residences in Eastlake and in Skopje, Macedonia, was indicted by a federal grand jury Jan. 5 for fraudulently obtaining $2.5 million in loans and placing the money in a personal bank account before wiring about $2.3 million of the proceeds to a bank in Skopje (Cleveland Plain Dealer via Cleveland.com Jan. 5). The newspaper reported that the indictment said Nikolovski was not eligible for the loan because he previously defaulted on more than $1 million in loans. It alleged he paid cash bribes and kickbacks to the credit union’s CEO Anthony Raquez to influence him to issue the fraudulent loans. It also said that the CEO--who has not been charged with any crime--reset the loans when they defaulted. The National Credit Union Administration (NCUA) Office of the Inspector General (IG) revealed in October that the fraudulent loans put the credit union into liquidation, with losses to the National Credit Union Share Insurance Fund totaling $170 million (News Now Oct. 14). The IG report also noted that the CEO “manipulated loan records and masked the suspected loan fraud by constantly refinancing certain loans or making advance payment on those loans.” St. Paul Croatian FCU was placed into conservatorship April 23 and closed May 1. At the time of its closing, it held $238.8 million in funds from 5,400 members (News Now May 4).

Pa. CUs outperform national growth for 3Q 2010

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HARRISBURG, Pa. (1/13/11)--Pennsylvania credit unions outperformed credit union national growth rates in assets, members, savings and loans during the third quarter of 2010, according to the Pennsylvania Credit Union Association (PCUA). As of Sept. 30, there were 545 credit unions in Pennsylvania, with $33.4 billion in assets, and 3.58 million members. Credit union membership grew 1.1% in the third quarter, and 1.9% in the 12-month period ending Sept. 30, compared to 0.7% national growth for the period, (Life is a Highway Jan 12). . PCUA President/CEO Jim McCormack cited the state’s iBelong credit union awareness campaign as a key factor in the third quarter performance. “The iBelong campaign has steadily raised awareness and the perception of credit unions over the past few years, resulting in consistent membership growth that is stronger than the national average,” said McCormack. Pennsylvania’s total loan balances grew 3.5% for a 12-month period ending Sept. 30. Loans rose 1.5% in the third quarter, faster than the national average of 0.3%. Member business loans were the fastest growing loan category, up 4.9% for the third quarter, compared with 1.8% national growth. First mortgages and other unsecured loans each grew 2.7%. Credit cards increased 2.2%. Nearly 96% of all Pennsylvania credit unions were well capitalized with net worth ratios of 7% or greater. Nationally, 94.5% of credit unions met the standard for being well capitalized. “Pennsylvania credit unions have positioned themselves well during the tough economic times, earning confidence of members in helping them make important financial decisions, as well as improving their visibility within their communities. These are important factors in strengthening the foundation for future credit union growth,” said McCormack.

CU surprises pastor with 25K prize

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DALLAS (1/13/11)--A surprised Dallas minister started his new year with a special delivery: an oversized $25,000 “check” presented to him by leaders of Neighborhood CU, Dallas, Texas.
Click to view larger image Neighborhood CU, Dallas, surprised The Rev. Mark Walz with a $25,000 check to start the new year. Walz was the winner of the credit union’s Prize Savings Account annual drawing. Pictured from left, Neighborhood CU CEO Chet Kimmell, Walz, and Neighborhood Senior Vice President Carolyn Jordan. (Photo provided by Neighborhood CU)
The Rev. Mark Walz was speechless as $250 million-asset Neighborhood CU CEO Chet Kimmell, accompanied by credit union team members, arrived at Walz’ house early Jan. 4. “This is amazing. Truly amazing,” said Walz, as the news sank in. “When I got the call that you wanted to deliver some kind of prize, I figured it was either a $5 bill or a chance to learn about life insurance. This is an amazing surprise and a wonderful way to start the new year.” The pastor of Unitarian Universalist Church of Oak Cliff, Texas, Walz has been a member of Neighborhood CU since 2004. He and his wife have checking and savings accounts and an auto loan. The credit union drew the name of the 62-year-old winner from among its Prize Savings Account holders. Neighborhood CU’s Prize Savings Account was created to promote and incent good savings habits. The credit union offers prize drawings throughout the year, culminating with the annual $25,000 grand prize.

CUNA MarketingBiz Development Council taps Gill for keynoter

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MADISON, Wis. (1/13/11)--CUNA Marketing and Business Development Council (CMBDC) has tapped Libby Gill, executive coach, brand strategist and author as the keynote speaker at the 2011 CMBDC Conference, March 16-19, in Las Vegas. Gill, whose clients include Dr. Phil and Accenture, will kick off the two-and a-half day conference with her audience participation game “Name That Brand.” She will share five key strategies for creating a powerful brand that creates mindshare, promoting trust and loyalty. Other sessions for the 18th annual conference include:
* Creative strategies in challenging times: * Strategies for penetrating a crowded market; * Building member relationships online; * Effective social media; * Industry update; and * Two pre-conference workshops (additional fee required)--a full day on marketing plans and a half-day session on the process of turning innovation into action.
A recognition dinner and award presentations for the Marketing Professional of the Year, Business Development Professional of the Year, and Diamond/Merit award winners will take place March 18. Best Practice Award winners also will be announced during the conference.

Australias floods affect CUs

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BRISBANE, Australia (1/13/11)--Continued flash flooding, including what has been described as an “an inland tsunami” bearing down on Brisbane, has saturated the province of Queensland, Australia. After three weeks of rain, communities are underwater, homes have been destroyed, credit unions affected and the personal toll stands at 78 missing and 30 presumed dead.
Click to view larger image A lone wallaby is stranded on a hay bale outside the town of Danby, Queensland, a victim of the worst flooding in Australia’s history. (Photo provided by World Council of Credit Unions)
Massive service disruptions have hit Queensland’s mutuals, including credit unions and building societies, which are dealing with operational challenges and attempting to help members cope with what authorities have described as the worst floods in Australia’s history. Heritage Building Society, based in Toowomba, has closed multiple branches and enacted hardship provisions for its members, including postponing loan payments and adjusting credit contract terms, according to Bill Armagnacq, the assistant CEO. Credit Union Australia was forced to shut down its online banking services in Brisbane (finextra.com Jan. 12). Also, credit unions and building societies in the cities of Warwick, Maleny and Gympie have struggled with flooding, protecting branches with sandbags and in some cases closing them in the face of the rising waters. No credit union staff have been injured or killed during the disaster; however, conditions are expected to worsen now that Brisbane is in the path of the massive wave. World Council of Credit Unions (WOCCU) member Abacus Australian Mutuals, which serves the country’s 104 credit unions and nine building societies, has taken steps to help its member institutions. The Worldwide Foundation for Credit Unions, part of WOCCU, has also stepped in and will work with Credit Union Foundation Australia (CUFA) to channel funds to mutuals under siege. WOCCU will make a donation from its own disaster relief funds and invites interested individuals and credit unions to contribute to Australian credit union rebuilding and relief. “Credit unions comprise a global movement and, as such, stand together in the face of disaster,” said Brian Branch, WOCCU executive vice president and chief operating officer “We know that the strong leadership of Abacus and the support of CUFA will make a significant difference in the recovery of Australia’s credit unions and building societies.” WOCCU will send its donation directly to CUFA. Those interested in making a contribution to Australia's relief effort can send their donation by check, credit card or wire to:

Worldwide Foundation for Credit Unions

5710 Mineral Point Rd.

Madison, WI 53705, USA

Donations may be made online with a credit card. Use the link. For wire transfer information, contact: Valerie Breunig, Worldwide Foundation for Credit Unions, 608-395-2055, or vbreunig@woccu.org. Please indicate that the donation is for Australia Disaster Relief.