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Why Thrivent decided to apply for CU charter

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MINNEAPOLIS and APPLETON, Wis. (1/19/12)--What are the major reasons prompting Thrivent Financial Bank--a profit-making subsidiary of Thrivent Financial for Lutherans, the fourth largest privately held company in Minnesota--to announce it will become the second bank in U.S. history to convert to a credit union charter?

New regulations and regulators for bank holding companies were the driving factor, as well as benefits of the not-for-profit member-ownership structure and cost, according to CEO Todd Sipe, in an interview with The Nonprofit Quarterly ( Jan. 18).

Thrivent announced last week it would convert its bank subsidiary to a credit union, pending approval of its charter from the National Credit Union Administration and other regulators (News Now Jan. 17).

The driving factor for the charter switch is the Dodd-Frank Act, which introduced new regulators to organizations like Thrivent, Sipe told the publication. In the past the bank was regulated by the Office of Thrift Services (OTS), which was absorbed into the Office of the Comptroller of the Currency (OCC).  At the holding company level, its regulators changed from OTS to the Federal Reserve. "There are additional costs and a burden associated with dealing with two regulators," he told the publication. The cost burden of having multiple regulators was a key driver, he said.

Thrivent Financial also looked at ownership structure to balance an "appropriate level of regulatory oversight but not have undue increase in cost or burden."  It researched the needs and preferences of its members and decided the credit union model was "the best model to serve members of Thrivent Financial Lutheran going forward," he said.

Credit unions are not strangers to Thrivent Financial for Lutherans, which was the result of a merger in 2001-2002 of the Aid Association for Lutherans and Lutheran Brotherhood. The two organizations had a trust bank, three credit unions and a community bank in the Twin Cities. At that time it picked the thrift charter, which provided flexibility to continue to offer all the products and services of all the banks and credit unions.

This time, members preferred to become a member-owned not-for-profit organization where profits are returned in the form of better rates and fees, he said.  As of Jan. 17, Sipe said he had not received one concern or complaint about moving to a credit union, a fact he called "remarkable."

Taxation was not a key consideration or a driving concern in the decision, he said.  The total tax liability would be well below a million dollars a year, while the regulatory burden was going to be significantly higher than any tax break.

Consumers are looking for an entity they can trust and moving from banks to credit unions. Thrivent already has members' trust because it's a faith-based organization, so the charter move is not an attempt of a bank to regain trust, he said.  "The credit union model is a great model in today's environment…clearly credit unions do enjoy a trusted relationship, so it reinforces the relationship we already have with our clients."

If approved, the new credit union will serve about 40,000 members, with a potential 2.3 million to 2.5 million people eligible for membership. It will have about $530 million in assets, which would mean it would be in the top 10% of the credit union industry by assets, said Sipe.

To read the full article, use the link.

CU System briefs (01/18/2012)

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  • GRAND RAPIDS, Mich. (1/19/12)--WESCO Net, a network solutions integrator and division of CU*Answers, has changed its name to  CU*Answers Network Services, to better reflect clients' needs and the changing competitive landscape, as well as distance itself from the old Wesco brand that CU*Answers previously operated under, said the company. WESCO Net was formed in 2002 to help credit unions transition from terminals to PCs and offer ancillary services such as firewalls. At that time, it rebranded as CU*Answers Inc.  but chose to keep the WESCO Net name to help with marketplace name recognition and ease the transition.  "The WESCO Net brand at times had the unintended consequence of putting us in a 'capabilities box' and did not recognize that we are part of an organization nearly 200 strong," said David Wordhouse, vice president of network technologies.  The company now offers a full suite of network services …  

CUNA Mutual sues RBS Securities over failed RMBS

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MADISON, Wis. (1/19/12)--CUNA Mutual Group has filed a $72 million-plus  lawsuit against RBS Securities Inc.  seeking  a rescission of 15 certificates in 10 separate residential mortgage-backed securities (RMBS) offerings CUNA Mutual bought from RBS before the financial crisis hit.

The suit was filed by CUNA Mutual Insurance Society, CUMIS Insurance Society Inc. and Members Life Insurance Co. in Dane County Circuit Court,  but on Tuesday CUNA Mutual filed a notice to remove the case to the U.S. District Court for the Western District of Wisconsin.

The suit alleges that when CUNA Mutual bought the certificates between 2004 and 2007, RBS had made "representations about the credit quality of the pools of mortgage loans collateralizing those RMBS." The supporting documents for the investments contained "untrue or misleading statements concerning the loans underlying each separate RMBS offering," according to the court documents filed. The RMBS performed poorly and the certificates lost much of their value, CUNA Mutual maintained in its complaint.

"This action is about righting a wrong and is being taken in the best interests of CUNA Mutual Group and its policyholders," said Jim Buchheim, vice president of corporate communications at CUNA Mutal Group. "The complaint we filed fully explains why we took this action. However, because this issue is in litigation, we will not comment further on the lawsuit," he told News Now.

Before filing the suit, CUNA Mutual commissioned a forensic investigation of the loan pools collateralizing the 10 RMBS to test the accuracy of RBS's quantitative representations. CUNA Mutual analyzed 17,947 loans from the RMBS transactions or about 40% of all the loans in the pools, said the court documents. "The results of CUNA Mutual's forensic investigation revealed that RBS's quantitative representations in the offering documents of all 10 RMBS were false at the time they were made," alleged the court document.

The document also alleged that RBS made representations about the mortgage underwriting standards of the originators that issued the mortgage loans serving as collateral for the 10 RMBS. The representations "were also false at the time they were made. In truth, the originators had systematically abandoned their underwriting standards," said the document filed. RBS was also accused of inflating credit ratings to induce CUNA Mutual's purchase of the certificates.

The document named five originating lenders that are in bankruptcy or that are subsidiaries of bankrupt entities: Washington Mutual, First Magnus Financial Corp., Delta Funding Corp., New Century Mortgage Corp., and Fremont Investment & Loan.

In its summary citing its "justifiable reliance" on the representations by RBS, CUNA Mutual noted that "but for the misrepresentations and omissions in the offering documents, CUNA Mutual would not have purchased or acquired the certificates, and those representations and omissions were material to its decision to acquire the certificates."

The suit does not say that RBS intentionally or knowingly made the misrepresentations. CUNA Mutual seeks to exercise the rescission clause in the sale of the securities.

RBS also is being sued by the National Credit Union Administration  (NCUA)  related to $1.1 billion of mortgage-backed securities RBS allegedly sold to the now defunct Western Corporate FCU.  NCUA has filed similar suits against Goldman Sachs, JP Morgan Chase and Wachovia Securities (now a unit of Wells Fargo and Co.).

CUs create prosthetic hands for Afghanistan

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A poster promoting the Credit Union Helping Hands program will appear in Afghanistan's Islamic investment and finance cooperatives once the program to provide prosthetic hands for disabled conflict victims begins operations there. (Photo provided by the World Council of Credit Unions)
KABUL, Afghanistan (1/19/12)--A group of U.S. credit unions and supporting organizations have teamed up to create prosthetic hands to help some Afghanistan conflict victims begin the recovery process. Years of armed conflict have left many Afghan civilians disabled and finding it difficult to support themselves and their families.

With World Council of Credit Unions' (WOCCU) assistance, the group will soon distribute the prosthetics through Afghanistan's Islamic investment and finance cooperatives (IIFCs), or credit unions.

The Credit Union Helping Hands program, launched by the CU Philanthropy Group (CUPG), has been assembling and distributing prosthetic hands for those in need through Rotary International for three years. The group works with the Islamic Investment and Finance Cooperative Group, the Afghan trade association established by World Council to support IIFC growth and development, to plan the delivery of prosthetic hands in northern Afghanistan. Victims who register with IIFCs will receive the hands free and do not need to be IIFC members.

"The goal of credit unions is to foster economic empowerment and growth for their members, thereby helping strengthen the communities in which they live," said Brian Branch, WOCCU president/CEO. He noted that IIFCs "have found yet another way to help meet what for some members is their most critical need."

CUPG's consulting services' past credit union clients have assembled the prosthetic hands as part of teambuilding and process-improvement exercises with the firm, said Frank Hackney, founder of the Washington, D.C.-based philanthropy and consulting group. Participants from about 25 credit unions already have assembled as many as 100 hands.

"The credit unions get a great learning experience with a powerful philanthropic component that the employees love," Hackney said.

Last year, Rotary International arranged for several IIFC volunteers, members of social organizations from across Afghanistan, to travel to Ahmedabad, India, for prosthetic-fitting training sessions. Credit union consulting firm DDJ Myers financed the trip. Those volunteers will train others throughout Afghanistan to fit the prosthetic hands on their recipients.

"The primary value of the hands is that they enable the user to grasp," Hackney said. "The ability to grasp allows recipients to hold tools or utensils, steer a bike or an automobile and, in many cases, increases their ability to work."

The first shipment of 50 hands will be sent during first quarter, once the initial demand has been determined, Hackney said.

For more information about the Credit Union Helping Hands program, contact Frank Hackney at or 866-918-8969.

Southeast Corporate Corporate One sign merger pact

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COLUMBUS, Ohio and TALLAHASSEE, Fla. (1/19/12)--The boards of directors of Corporate One FCU, Columbus, Ohio, and Southeast Corporate FCU, Tallahassee, Fla., have signed a definitive merger agreement.

The two corporates announced their intent to merge on Sept. 13 and are in the process of submitting their formal application to the National Credit Union Administration (NCUA) for approval.

The agreement governs the terms and conditions that binds the organizations together, and it formalizes many of the merger details, the two corporates said.

"As we drafted the definitive merger agreement, our No. 1 goal continues to be the preservation of the collective $63 million in member capital shares (MCS) held by members at Southeast," said Brad Miller, Southeast Corporate president/CEO.

"With the definitive merger agreement now completed and signed, it is increasingly clear that choosing Corporate One was the best choice for Southeast members. Once the merger is approved by the NCUA and voted on by members, we can look forward to a smooth merger with Corporate One," Miller said.

The next step in the merger process is to submit the application to the NCUA sometime this month. Once the application is reviewed by the NCUA, the memberships of the credit unions will vote on merger. If approved, the official capital subscription process will begin soon thereafter.

Keynoters set for CUNAs 2012 Americas CU Conference

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MADISON, Wis. (1/19/12)--The Credit Union National Association's (CUNA) 2012 America's Credit Union Conference (ACUC) will be held June 17- 20 in San Diego, and the keynote speakers have been set. Conference registration can be found at

ACUC is designed to connect progressive credit union leaders with like-minded business experts and action-inspiring ideas. Each year, ACUC features the industry's top line-up of business speakers, CUNA said.

CUNA Mutual Group's Discovery breakout sessions are led by credit union experts and designed to help credit union leaders solve problems, capture opportunities and address current market challenges. The small-session sizes foster networking opportunities and strong connections among attendees.

"Collaboration is a unique trait that differentiates credit unions from other financial institutions and helps make our movement stronger," said Jeff Post, CUNA Mutual president/CEO. "ACUC's energetic atmosphere and focus on a successful future for credit unions is a natural fit for our Discovery sessions."

The 2012 ACUC also offers Thought Leader sessions, an exclusive Executive Series for CEOs, one of the largest exhibit halls in the industry, networking and guest programs to enjoy San Diego.

Additional speakers, session topics and programs will be announced in the weeks to come.

For more information, use the link.

CUNA WOCCU video IYC an opportunity to educate

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MADISON, Wis. (1/ 19/12)--Bill Cheney, president/CEO of the Credit Union National Association (CUNA), and Brian Branch, president/CEO of the World Council of Credit Unions (WOCCU), offered a special, joint message on the meaning, importance and value of credit unions getting involved in the International Year of the Cooperative (IYC).

Kentucky Corporate chooses LT for correspondent services

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WICHITA, Kan. (1/19/12)--LT, a third-party service provider to correspondent financial institutions, has entered into an agreement with Kentucky Corporate FCU, Louisville, Ky., to deploy LT's Private Correspondent Gateway for transaction and reporting services for the corporate's member credit unions.

The transition to LT's system will include a full replacement and enhancement to all APEX automated clearinghouse functionality with the addition of international wire transfer services through a real-time interface to Travelex Global Business Payments.

Kentucky Corporate also will use LT's direct connection to the Federal Reserve, allowing automated ACH file delivery of inbound and outbound files.

The entire solution will be secured by LT's biometric multi-factor authentication.

Kentucky Corporate will also provide member credit unions with their own branded LT cash management systems to business members (select-employee groups) through the partnership with LT. Credit unions will be able to provide their business members with cost-effective ACH services that will integrate into Kentucky Corporate's Private Correspondent Gateway for processing, said LT.

Montana First CU members defeat merger proposal

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MISSOULA, Mont. (1/19/12)--Members of $63 million Montana First CU of Missoula, Mont. have voted down a proposed interstate merger with $432 million Horizon CU of Spokane Valley, Wash.

The results of a special member voted were released Tuesday ( Jan. 18).

About 18% of the membership voted, with 249 more "no" votes than "yes" votes, said Montana First CEO Chris Cisco in the article.

Boards from both credit unions approved the proposal in October, but some directors and members from Montana First expressed concern about whether merging with an out-of-state credit union is the best way to help grow and serve the membership of Montana's oldest credit union (News Now Jan 4.)

Members also said they lacked information about the merger. An informational meeting about the merger was held Jan. 5, the same day ballots were due.

For now, the merger is off the table, said Mark Londine, Montana First CU board chair.

Montana First serves its 9,700 members through two branches. Horizon has 38,000 members and 18 branches.

CUNA launches Youth Week online store with discount

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MADISON, Wis. (1/19/12)--The Credit Union National Association (CUNA) has launched its National Credit Union Youth Week online store and is providing early bird prices for credit unions. Youth Week will be celebrated April 22-28.


Through March 9, credit unions can save 10% on print materials to promote the "Be a Credit Union Super Saver" theme and events, financial education materials to introduce money concepts to youth, items to reward young savers and apparel to dress the part in April. Discounts of up to 10% apply to standard items in inventory and bulk or customized orders.

Credit unions also can choose to participate in the nationwide Saving Challenge, where hundreds of credit unions track youth savings deposits during April. CUNA will award $100 cash prizes to youth at 10 of the participating credit unions.

"Participating in the Saving Challenge is a great way for individual credit unions to raise awareness about the importance of financial responsibility and the benefits of credit union membership on a national scale," said Joanne Sepich, CUNA's Youth Week coordinator. "Last year, participating credit unions reported more than 9,000 new accounts and savings deposits of $28.5 million. This is a prime opportunity to increase member involvement," she added.

For Youth Week and throughout April, credit unions can outfit staff in Super Saver two-color imprint T-shirts in adult and youth sizes.  The credit union can choose from five colors and customize by adding its name. The shirt features the Credit Union Super Saver dollar sign logo highlighted by a yellow lightning bolt across the front.

Also new for this year's Youth Week, the online store builds upon the International Credit Union Day store design. Improved product categories support enhanced item browsing and easier site navigation. For updates on Youth Week, credit union staff can sign up for a free e-newsletter and visit the Youth Week site. For more information, use the links.