Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

CU System briefs (01/16/2008)

 Permanent link
* HARAHAN, La. (1/17/08)--Louisiana Gov.-elect Bobby Jindal announced that John Ducrest will continue as Louisiana Commissioner of Financial Institutions. Ducrest has served in the position since 2004, overseeing the regulation and supervision of all state-chartered institutions, including credit unions (e-News Jan. 16) … * NEW YORK (1/17/08)--Fitch Ratings has withdrawn the "insurer financial strength (IFS) AA- ratings for CUNA Mutual Life Insurance Co. (CMLIC) due to its Dec. 31 merger with CUNA Mutual Insurance Society (CMIS). CMLIC's ratings, now obligations of CMIS, continue outstanding and are affirmed. All other ratings are unaffected and the rating outlook remains "stable," said Fitch. Previously, Fitch rated three companies--CMIS, CMLIC and CUMIS Insurance Society Inc.--on a combined basis … * GRAND RAPIDS, Mich. (1/17/08)--West Michigan CU was robbed twice in less than a week, with the latest incident occurring at 10 a.m. Tuesday. Police were looking for a man wearing a puffy coat, blue jeans and a black dress hat. On Jan. 9, a man carrying a briefcase robbed the credit union, then drove away in a minivan with the license plates removed (Grand Rapids Press Jan. 15) … * BUCKSPORT, Maine (1/17/08)--Seaboard FCU has teamed up with Bucksport officials to lure shoppers to town by offering discount gas prices. In the program, funded by the credit union and the town, merchants will offer coupons for discounted gasoline at two stations on Main Street. The discounts will be based on the amount of merchandise purchased at each store. The funds contributed by the town and the $82.2 million asset credit union will be used for printing the coupons and for marketing the program. A recent survey of local residents indicated that more people leave town to shop than come into town. Gas prices were cited as a factor (Bangor Daily News Jan. 16) …

Indiana foundation elects officers

 Permanent link
INDIANAPOLIS (1/17/08)--The Indiana Credit Union Foundation elected four table officers for 2007-2008. Those elected at a December board meeting are:
* Chairman: Barbara Berghoff, PROFED CU, Fort Wayne; * Vice Chairman: Karla Salisbury, KEMBA CU, Indianapolis; * Secretary: Sandy Heller, Northern Indiana FCU, Merrillville; and * Treasurer: Emily Everett, Community Spirit CU, Lawrenceburg.
Others on the foundation board are:
* Ron Budzinski, First Trust FCU, Michigan City; * Jenny Budreau, FORUM CU, Fishers; and * Lamoura Munse, Indiana Members CU, Indianapolis.
Heller also is chairman of the Indiana Credit Union League Board. Munse serves as league board secretary, and Budreau is immediate past league chairman. Berghoff and Budzinski were re-elected to the board in October, each to a three-year term. “Our board looks forward to continuing to put credit unions’ best interests first,” Berghoff said. “The ongoing financial support the foundation has received from individuals, credit unions and vendors has allowed us to fund a number of initiatives that are important to the Credit Union System. These include assisting with disaster relief efforts, focusing on financial literacy initiatives and providing scholarships to representatives of Indiana credit unions.”

Banking trends study Proceed with caution

 Permanent link
NEEDHAM, Mass. (1/17/08)--The subprime mortgage crisis has forced the retail banking industry to enter 2008 in a reactive mode, according to new research from Needham, Mass.-based TowerGroup. Credit unions may want to monitor several trends. Retail financial institutions are anxious about two fronts--the unseen threats that may not yet have surfaced in their credit portfolios and how their institutions can compete in the volatile days ahead, said Towergroup. They will return to proactively approaching their markets only after the extent and expected duration of the credit crisis is understood, said the report. Although many institutions have reallocated some management and technical resources, they continue to focus on longer-term business drivers and technology investments, such as the re-engineering of payments processing. "The key issue for retail banks will be managing growth and profitability while adapting to an ever-changing economic climate," said Kathleen Khirallah, TowerGroup managing director and practice leader of Retail Banking. In 2008, financial institutions will focus information technology (IT) spending on initiatives to reduce risks as concerns over consumer data disclosure and attempted fraud force them to pay more attention to information security and fraud prevention. "Many banks have embarked on multi-year strategic technology initiatives that are already well under way," said Robert Hunt, research director of TowerGroup's Retail Banking practice and co-author of the report. "In many cases, it would simply not be economical or strategically sound to put these large-scale projects on hiatus." Other findings of the research:
* Sustaining organic growth (not related to mergers or acquisitions) will continue as a top challenge for most retail financial institutions. * Concerns over disclosure of consumers' information will lead management to focus on creating enterprise centers of excellence for information security. * As electronic payments volume increases and institutions introduce new delivery channels, they won't be able to afford operational silos for each type of payment. This pressure will help drive a continued focus on streamlining payments processing. * Heightened consumer awareness of Internet fraud and ID theft will motivate institutions to develop new offerings that combine conventional products with ID theft and fraud protection services.

CUAO board officers named

 Permanent link
BEAVERTON, Ore. (1/17/08)--Gene Pelham, president/CEO of Rogue FCU in Medford, Ore was re-elected to a three-year term on the Credit Union Association of Oregon (CUAO) board of directors and elected as vice chair. Pelham has served on the CUAO board of directors since 2001. He also served on the Governmental Affairs Committee since 2001 and serves as chair of the Oregon Credit Union Foundation. The search committee will select a new CUAO president to succeed Gene Poitras who retired Nov. 30. “Gene will continue to play a vital role in the leadership search over the next six months and will be involved in the transition phase when the new leadership is chosen,” said Shirley Cate, chair of the CUAO board. Other CUAO board members are:
* Chair: Cate, Providence Health Systems FCU, Milwaukie; * Treasurer: Bill Anderson, Mid Oregon FCU, Bend; * Secretary: Cameron Dickey, Advantis CU, Milwaukie; * Director: Kevin Cole, Oregon Employees FCU, Salem; * Director: Bob Corwin, First Tech CU, Beaverton; * Director: Doug Mountain, Legacy FCU, Portland; * Director: Bob Newcomb, SELCO Community CU, Eugene; * Director: Debra Riggle, OSU FCU, Corvalis; and * Director: Mark Zook, Marion & Polk Schools CU, Salem.

PCUA names Go Green task force

 Permanent link
HARRISBURG, Pa. (1/17/08)--The Pennsylvania Credit Union Association (PCUA) has announced the formation of a “Go Green” task force to discuss ways that credit unions can be eco-friendly. The task force, which will meet via teleconference, also will discuss ways to offer services to members interested in protecting the environment (Life is a Highway Jan. 16). The task force is co-chaired by Joe Wambach, executive director of the Pennsylvania Credit Union Foundation; and Bret Davis, PCUA vice president, information systems and technology. Task force members include:
* Flora Caranci, American Heritage FCU, Philadelphia; * Carla Fastrich-Aranos, AmeriChoice FCU, Mechanicsburg; * Janelle Battle, Belco Community CU, Harrisburg; * Joshua Mountz, Bellco FCU, Wyomissing; * Bruce Wappman, Blue Chip FCU, Harrisburg; * Tara McQuillen, Discovery FCU, Wyomissing; * Liz Butler, Erie General Electric FCU, Erie; * Barbara Fortney, LANCO FCU, Lancaster; * Tina Hartman, Mennonite Financial FCU, Lancaster; * Sheryl Snider, Patriot FCU, Chambersburg; * Dan Moon, Pittsburgh Central FCU, Sewickley; * Trenton Mason, Riverset CU, Pittsburgh; and * Myra Fick, Tri County Area FCU, Pottstown.
PCUA staff who are working on the initiative are: Lori Plasic, card services operations/training supervisor, and Monika Scott, account executive. “As this project moves forward, you will certainly see and hear more about individual credit union ‘go green’ initiatives in this and other PCUA publications,” said Jim McCormack, PCUA president/CEO.

Hundreds of FI websites hit by admin error

 Permanent link
CALABASAS, Calif. (1/17/08)--A number of credit unions were among the 200 to 250 financial institutions impacted Tuesday by an administrative error that left their online banking sites inaccessible. The shutdown resulted from an administrative error between Digital Insight and its Web hosting server, Network Solutions. The server was interrupted for a few hours, Tobin Lee, spokesman for Digital Insight, told News Now. The error has since been resolved, and all sites were up and running within a few hours, he said. Some financial institutions’ sites may have been affected longer, depending on their internet service providers (ISPs). Some ISPs rapidly reset their servers, while others may have taken longer, Lee added. Lee emphasized that there is nothing wrong with the sites, and their security and integrity are intact. “There is no risk for customers,” he said. “We apologize for the inconvenience.” The outage was spread across the nation. The number of credit unions affected is not available, although Digital Insights’ overall client base is 50% credit unions, Lee said. University of Virginia Community CU in Charlottesville was affected by the error, spokesman Janine Williams told News Now. A significant portion of the credit union’s membership is able to access the website, according to a press release on the credit union’s website. Some members were not affected by the issue, while others’ ISPs have been slower to refresh, Williams said. The credit union has more than 50,000 members.

Mennonite CUs growth focus of article

 Permanent link
LANCASTER, Pa. (1/17/08)--The growth of Mennonite Financial FCU in recent years was the focus of a Jan. 11 article in the Central Penn Business Journal. The $80.2 million asset, Lancaster, Pa.-based credit union has entered into a partnership with Mennonite Mutual Aid--a Goshen, Ind.-based insurance and investment provider with connections to Mennonite Church USA--to offer investment and insurance services and to continue growing, according to the article. The partnership makes sense because members were telling the credit union they wanted access to additional services, and Mennonite Mutual was considering how to offer banking services, Kent Hartzler, Mennonite Financial president/CEO, told the journal. In the past six years, the credit union has more than doubled its assets to about $80 million, and Hartzler said he expects to see--at a minimum--that same rate of growth continue. Mennonite Financial also grew its membership for that same period to 10,000 members from 6,700. In the next five to 10 years, the credit union intends to open 10 to 20 branches while sharing employment expenses with Mennonite Mutual, Hartzler told the journal. Mennonite Mutual would subsidize the cost of branch space, he added, noting that this arrangement would free up capital for Mennonite Financial to grow its loan business. Although the details have not been ironed out, the two organizations intend to offer each other’s products and services to members, the article said. Mennonite Financial’s efforts in this partnership are similar to what other midsize credit unions are attempting, Mike Wishnow, executive vice president of communications and public relations for the Pennsylvania Credit Union Association, said in the article. Some credit unions go through their cooperative networks, while others form a partnership with nonprofit or for-profit organizations to deliver these services, he added. However, there is one difference that separates Mennonite Financial’s efforts from others, Wishnow told the journal. “They’ve found an interesting way to weave Mennonite principles into a business model that works for that community,” he concluded.

Minnesota opens 20th shared-branch location

 Permanent link
ST. PAUL, Minn. (1/17/08)--Minnesota added two City-County FCU branches to its list of shared-branch service centers last week, bringing the total service centers in Minnesota to 20, with 18 in the Twin Cities area. During the past year, a merger of shared-branching networks Credit Union Service Corp. and CO-OP Financial Services resulted in 3,000 locations nationwide. "This is an exciting time for the shared-branching business," said Pete Skaalen, executive vice president of the Minnesota Credit Union Network. In addition to City-County Federal's new service centers, four other sites will open soon, he said. By mid-2008, Minnesota will have 24 service centers, with 22 in the Twin Cities. "The shared branching network exemplifies the credit union difference," Skaalen added. "It puts into action the cooperative philosophy of credit unions and demonstrates how they are constantly working to find ways to better serve their members."

California DFI OKs CU Visa stock investments

 Permanent link
RANCHO CUCAMONGA, Calif. (1/17/08)--The California Department of Financial Institutions (DFI) has given approval for state-chartered credit unions to hold investments in the restricted stock of Visa Inc. The California Credit Union League worked with state DFI officials for several months to encourage the blanket approval instead of having each credit union solicit a separate opinion. “This issue has been a top priority for us, and our lobbying team worked tirelessly with DFI [staffers] to give them the information they needed to provide guidance and approval, said league President/CEO Bill Cheney. When Visa USA becomes a public company later this year, it will change its name to Visa Inc. Then it will convert member ownership positions into restricted stock on a pro rata basis. State-chartered credit unions receiving such stock will be allowed to hold the stock under the terms of the ownership restrictions. Several other states have provided similar guidance to their state-chartered credit unions in recent weeks. The National Credit Union Administration (NCUA) has also provided similar guidance to federally chartered credit unions. Use the resource link to access Visa stock accounting tips provided by the Credit Union National Association's (CUNA's) Accounting Task Force. In October of 2006, Visa Inc. announced plans to restructure its non-European operations into a global corporation and offer a majority of its stock to the public. As a part of the restructuring, Visa U.S.A. will become a subsidiary of Visa Inc., and its members will receive stock in Visa Inc. calculated on the basis of fees a member has generated in the past. Visa member financial institutions, including credit unions, will not compensate Visa Inc. for the stock, nor will they receive the stock without taking any further action. No cash or other rewards to members are available in lieu of the stock. As part of the transaction, financial institutions will be prohibited from selling their shares for three years. Generally, the Federal Credit Union Act does not authorize federal credit unions to invest in the stock of companies other than credit union service organizations, said the league. However, on Nov. 1, 2007, the NCUA issued a legal opinion stating that federal credit unions may accept and hold Visa stock. The agency views the transaction not as an investment (since no tangible consideration will be paid, and federal credit unions are receiving it as the result of the business decisions of a third party), but as a by-product of lending, which is permissible. NCUA also cautioned that a federal credit union may not receive and retain the stock if its examiner determines holding the stock is a safety and soundness problem for that credit union. Unlike the NCUA, California's DFI views the receipt of Visa stock by credit unions as an investment requiring approval of the Commissioner (California Financial Code §14653.5). On Jan. 11, DFI issued a legal opinion letter granting blanket approval for state-licensed credit unions to hold the stock. According to the league, the DFI advises credit unions that this approval is only for the ownership of restricted stock resulting from the conversion of Visa, U.S.A., and for any other investment, including (but not limited to) common stock that will be issued in the Visa initial public offering.