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CU bonuses sign of strength in troubled times

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MADISON, Wis. (1/23/09)--Credit unions are consistently providing members with year-end patronage dividends, with some even offering bonuses to members struggling through the economy. The dividends indicate that credit unions are operating in today's economic turmoil from a position of strength. Dallas-based American Airlines FCU announced a record bonus dividend was paid on Dec. 31 to its membership. "While other financial institutions are tightening their belts, American Airlines FCU is able to offer a bonus because we made sound lending decisions, operated efficiently and remain financially secure, strong and solid," said Angie Owens, president/CEO of the $4.8 billion asset credit union in Lonestar Globe (January). "As a result we can give back this unprecedented bonus dividend to our members based on their active participation in the credit union," Owens said. The credit union based the bonus dividend upon dividends earned on qualifying share accounts and/or interest paid on applicable loans in 2008. The savings portion was paid at an annual rate of 3%. Applicable loan interest was also calculated at a 3% annual rate. This year, the most loyal and active members received an additional $80 bonus if they maintained three or more products among these categories: savings, checking account, certificate, auto loan, credit card, other loan, mortgage/home equity loan and financial services, said the credit union. In Hunt Valley, Md., the $68.3 million asset Atlantic Financial FCU paid a bonus dividend for 2008, based on how much the member has used the credit union, according to the Maryland and District of Columbia Credit Union Association's FOCUS Newsletter (Jan. 20). The bonus is calculated as a one-time additional dividend equal to 5% of all dividends earned during 2008 on all savings products, and a one-time 5% return on all interest on loan products during 2008. "During these difficult times in the financial markets this bonus is representative of the hard work and dedication of our management and associate team " at the credit union, said Chairman Joseph Droney in the article. CU Community CU, Springfield, Mo., gave its 5,600 members a bonus dividend totaling as much as an additional 50 basis points (0.50%) on their fourth-quarter 2008 savings account earnings. The dividends were directly deposited into each member's account on Dec. 31. "Contrary to so many businesses in the current economy, we were fortunate to have a good year financially," said Judy Hadsall, president (The Missouri difference Jan. 9). "We are very proud of our financial results and want to share that success with each of our members because they are our owners. This is a tough time for everyone; we want to do everything we can to help." Bay Winds FCU, a $96.9 million asset credit union in Charlevoix, Mich., announced it paid a bonus dividend in excess of $212,00 Dec. 31 to its members--the second bonus dividend offered in three years (Charlevoix Courier Jan. 13). "Members are more than just customers, they are our lifeblood," said Bay Winds President/CEO David Leusink. Response from members to the bonus dividend has been "very positive, given the state of our economy. There is financial strength in numbers; this dividend underscores that principal," he added. Green Bay, Wis.-based PCM Employees CU returned $395,707 to its members in year-end bonuses and rebates--roughly 5% of all loan interest paid in 2008 and a 50% bonus on the interest earned on various programs (Green Bay Press-Gazette Jan. 18). PCM has 7,400 members and $119 million in assets. Dean Wollin, PCM president, noted that after establishing a 13% capital reserve, the credit union had money left over. "We feel when we maintain that reserve level, we have long-term sustainability. When we go over 13%, we are going to give it back," Wollin told the newspaper. He said the profitable year was aided by a greater-than-expected net interest margin and fewer loan losses than expected. Other recent announcements of dividends included DFCU CU, Dearborn, Mich., which paid $17 million in yearly dividends for 2008 ( Jan. 7); and GPO FCU, New Hartford, N.Y., which paid members a 3% dividend bonus on dividends earned on their accounts in 2008 (The Oneida Daily Dispatch Jan. 19).

Members among Heartland breach victims

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MADISON, Wis. (1/23/09)--Some credit unions reported that their members have been affected by the Heartland Payment Systems breach. Heartland of Princeton, N.J., reported Tuesday that its processing system was compromised sometime last year. Heartland is a third-party processor used by 250,000 merchants nationwide (News Now Jan. 22). Visa and MasterCard told several Maine credit unions that members’ cards were affected between mid-May and mid-August 2008, said Jon Paradise, governmental and public affairs manager for the Maine Credit Union League (Associated Press Jan. 22). AP noted that this is the third time in two years that Maine financial institutions have had to deal with a data breach incident. TJX Cos. and Hannaford breaches cost Maine credit unions $2.1 million, according to the Maine league (Portland Press Herald Jan. 7). PeoplesChoice CU, Saco, Maine, said that 500 members’ Visa credit and debit cards may have been compromised, Luke Labbe, president/CEO, told AP. About 50 to 60 members experienced fraudulent charges on their cards, including small charges at gas stations. The credit union had noticed losses since October, and “couldn’t figure out where they were coming from,” Labbe said. Piedmont CU, Danville, Va., said its members have been affected by the breach. More than two dozen members reported fraudulent purchases on their cards Wednesday afternoon, Piedmont CU President Tom Shields told the Register-Bee (Jan. 21). Piedmont is disabling cards for members who report fraudulent purchases, and is reimbursing members who report fraudulent transactions instead of waiting for Visa to refund the credit union, Shields told the newspaper. GFA FCU, Gardner, Mass., issued new cards to thousands of its members who were compromised, though no member losses were reported. The credit union wanted to be proactive, said Kelli Mason, GFA FCU’s vice president of sales and service. GFA also put a daily limit on accounts of members who were compromised, she told the Worcester Telegram (Jan. 22).

FSCC awards honor CUs for halting 1.5 million in frauds

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SAN DIMAS, Calif. (1/23/09)--Financial Service Centers Cooperative Inc. (FSCC), a credit union shared branching network, announced Thursday that it has made 60 awards to credit unions for stopping more than $1.5 million in fraud activity for 2008. Fraud Buster Award recipients included credit unions who participate in the FSCC Shared Branching Network. They were recognized for protecting their credit unions, their members, and members of other credit unions from fraud. “Credit unions have hit another milestone as the amount of money they are preventing from loss is impressive,” said Bonnie Kramer, FSCC executive vice president and chief operating officer. “They are truly demonstrating their commitment to helping members and the credit union from theft and damages. Credit union safety and security is always a top priority for FSCC staff and the network. FSCC has a suite of fraud tools to help credit unions fight fraud. Fraud training, online fraud detection, and alerts also are available for FSCC credit unions. An Operation Advisory Committee comprised of stockholder credit unions reviews activity and looks at ways to prevent and detect fraud through rule changes, products and services. The committee organized the awards program in 2000. The first Fraud Buster Awards were handed out in 2001. In eight years, credit unions have stopped more than $6.5 million in fraudulent activities. Financial institutions and businesses lose more than $48 billion annually from fraudulent activities, according to the Federal Trade Commission.

Iowa league names political key contacts

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DES MOINES, Iowa (1/23/09)--Seven Iowa credit union representatives were recently selected to serve as the Political Key Contacts (PKC) of the Iowa Credit Union League (ICUL) for 2009-10. The PKC system is a grassroots initiative that matches seven credit union members, who have a relationship with one of Iowa’s U.S. senators or state representatives. PKCs keep Iowa federal officials informed on credit union issues. The contacts also may be called upon, as needed, to travel to Washington, D.C., to lobby the Iowa congressional delegation. The PKC terms are two years for U.S. representatives, and six years for senators. In congratulating the appointees, Patrick Jury, league president/CEO, said, “We sincerely appreciate their willingness to lead the league, and connect with congressmen on important issues affecting our industry.” Those appointed are:
* Gregg Liddle, Dupaco Community CU, Dubuque, key contact for U.S. Rep. Bruce Braley (D-1); * Jim Hagerman, Linn Area Community CU, Cedar Rapids, for U.S. Rep. Dave Loebsack (D-2); * Mike Harvey, Veridian CU, Waterloo, for U.S Rep. Leonard Boswell (D-3); * Paul Becker, Citizens Community CU, Fort Dodge, for U.S. Rep. Tom Latham (R-4); * Janine Keim, Consumers CU, Denison, for U.S. Rep. Steve King (R-5); and * Denise Dolan, Dupaco Community CU, for U.S. Sen. Tom Harkin (D);
Mark Heth, Iowa Community CU, Waterloo, was not up for appointment this year and will continue to serve as the contact for U.S. Sen. Chuck Grassley (R).

CU to the rescue when bank reneges on biz loan

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WAYNE, N.J. (1/23/09)--A New Jersey credit union came to the rescue of a local fire department after the department received an 11th-hour decision by a local bank to rescind its loan.
First Jersey CU Vice President of Operations Debbie Gordon presents Ringwood Fire Co. #1 Treasurer and Commissioner Lou Piccininno with a check so the Stonetown Fire Department in Ringwood, N.J. can begin repair work after a bank rescinded the department's loan. (Photo provided by First Jersey CU)
First Jersey CU, a $101.9 million asset credit union based in Wayne, N.J., stepped in to help the Ringwood, N.J. Fire Co. #1, which was in desperate need of upgrading and repair. The Stonetown Fire Department had done what seemed natural and contacted an unnamed local bank to apply for a loan. The department turned in the required paperwork, and the bank reviewed the application and approved the loan. However, the bank changed its mind and rescinded the loan, leaving the fire department scrambling to find a way to make the upgrade so the department could continue its life-saving work, said the credit union in a press release. First Jersey heard about the problem and approved the loan, just like it would have done for many others in these difficult financial times, said the credit union. The credit union, which said it has been a "safe harbor for consumer savings and loans" for more than 79 years, noted that consumers saved $10.9 billion by using credit unions rather than banks in the form of lower fees, higher savings rates and lower loan rates.

Ohio foundation awards 207000 in grants for 08

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COLUMBUS, Ohio (1/23/09)--The Ohio Credit Union Foundation (OCUF) awarded more than $207,000 in grants in 2008 to assist credit unions, communities and individuals statewide. Last year, the foundation received a record $249,000 in contributions. It also received grant applications for programs and initiatives with wider scopes and larger scales (eLumination Newsletter Jan. 21). Fifteen grants totaling $92,000 were awarded for financial education, and five grants worth $44,000 were given for modest-means outreach initiatives. Noteworthy projects included:
* Funds for Ohio’s first Credit Union Community Center; * A “reality day” for 300 students; * A credit union CEO simulation program; and * About 740 bus passes to help individuals attend medical appointments, employment opportunities, and social-service agency visits.
Last year, 39 professional development grants totaling $48,000 helped train credit union employees, members and volunteers. Also, $10,000 in disaster relief helped credit union employees, members and volunteers impacted by Midwest floods and Hurricane Ike. For 2009, the foundation’s board of trustees established a $260,000 fundraising goal and a $250,000 grant-making goal.

FIs turn to relationship products to raise wallet share

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SAN ANSELMO, Calif. (1/23/09)--Research indicates that financial institutions--including credit unions--are bundling relationship products to raise their wallet shares. With relationship products, members are rewarded for purchasing multiple products from a credit union. Financial institutions are offering rate premiums for depositors who have a multi-product relationship with them (BusinessWire Jan. 21). For example, the average annual percentage yield (APY) for a regular share certificate is 1.85%, while the average APY for a relationship share certificate is 2.15%, according to Market Rates Insight (MRI). “This measure was designed to encourage existing and new [members] to increase their deposit surface with the institution by having multiple deposit products such as checking, savings, [share certificates] and others,” said Dan Geller, MRI executive vice president. Institutions also are using statistical modeling to optimize product pricing by breaking demographic and geographic markets into sub-groups, and pricing products accordingly, MRI said. MRI is a research firm that tracks rates for deposits, loans and fees for financial institutions.

Federation has record year with CDCUs

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NEW YORK (1/23/09)--Despite troubled economic times, the National Federation of Community Development Credit Unions broke records in 2008 for raising and renewing capital, increasing investment in community development credit unions (CDCUs), and purchasing affordable mortgages to free up loan capital in distressed markets.
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As a federally certified Community Development Financial Institution (CDFI) Intermediary, the federation raised millions in funds to support the growth and expansion of CDCUs--credit unions with a primary mission of providing sustainable and affordable financial services to low-income and underserved communities. The Community Development Investment Program closed 2008 with more than $46.2 million in assets under management--including commitments--and 24% growth in its investment portfolios. The portfolios now total more than $36.2 million in investments outstanding and committed to CDCUs. In spite of the rapid growth and the current economic climate, the federation’s investments have been sustainable, and all investments in the federation's portfolio continue to perform, the federation said. The Community Development Investment Program in 2007 launched a capital campaign to raise $25 million within three years. The additional capital allows the federation to increase its investments in CDCUs. Since announcing its goal, the program has raised more than $19 million in additional capital. Other 2008 federation campaign highlights:
* Total assets under management--including commitments--rose 27.2% to $46.2 million from $36.3 million; * Additional capital of $9.6 million was raised from eight investors, four of them new to the federation--Annie E. Casey Foundation, Deutsche Bank, Unitarian Universalist Congregation of Shelter Rock, and United Nations FCU, New York. * A record $17.8 million was invested in CDCUs in 2008, including $7.8 million in new investments, $5.3 million in renewed investments, and 43 mortgages totaling $4.7 million purchased, increasing the mortgage portfolio to $6.1 million; and * The federation's Community Development Relief and Rebuilding Fund (Hurricanes Katrina and Rita), totaling $926,000, was fully disbursed and provided supplemental grants to CDCUs in the Gulf regions, including ASI FCU, Harahan, La.; Coastal Waters FCU, Mobile, Ala.; Hope Community CU, Jackson, Miss.; Total Community Action FCU, New Orleans; and University of New Orleans FCU. * As of the third quarter of 2008, CDCUs increased loans to their members by more than 7%.
With a recent commitment from HSBC Bank to invest an additional $700,000 in CDCUs through the Community Development Investment Program, the federation will continue its partnerships with its current investors and establish new relationships to increase investments in CDCUs.

Sponsor companys cutbacks affect CU

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HARRISBURG, Pa. (1/23/09)--Chemical-maker Rohm & Haas, Philadelphia, announced this week that it plans to cut 900 jobs and freeze salaries. The changes have affected Rohm & Haas Employees FCU, said the Pennsylvania Credit Union Association (PCUA). The credit union’s sponsor company also cut 925 jobs in June and is being bought by Dow Chemical Corp. (Life is a Highway Jan. 22). “A series of cutbacks have been going on for the last five years and has affected [the credit union’s] chargeoffs,” said Jack DeWaele, the credit union’s CEO. “If you don’t have a job, you can’t pay your loan. Some people don’t pay us because they are angry at Rohm & Haas, and don’t understand that we’re not them,” he told PCUA. The credit union is most affected by the impending sale of the company. “It’s created so much uncertainty that it’s next to impossible to make loans,” he said. The credit union will offer a 4.25% rate on second mortgage loans for a 48-month term in February to help members. Rohm & Haas Employees FCU has $33 million in assets.

SW Corporate Remote deposit trend continues

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FARMERS BRANCH, Texas (1/23/09)--Southwest Corporate FCU’s remote deposit services are growing. Last year, the number of participating credit unions jumped 57%, the corporate told the Texas Credit Union League. About 160 new credit unions joined the program, bringing the year-end total for 2008 to 442. Also, 698 credit union branches signed up for the program, raising the total number of branches using remote deposit to 1,773 (LoneStar Leaguer Jan. 22). “Southwest Corporate experienced rapid adoption of our branch and teller applications this year,” said Jody Beck, Southwest Corporate senior vice president of operations. “We expect interest in those products to continue,” she told the league. The transition from paper to imaged item processing is moving at a quick pace, evidenced by the ahead-of-schedule closure of 24 Federal Reserve Bank check processing facilities in just five years, the Texas league said. Southwest Corporate offers remote deposit in 31 states.

CO-OP joins Filene Chairmans Roundtable

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MADISON, Wis. (1/23/09)--CO-OP Financial Services joined the Filene Research Institute’s Chairman’s Roundtable. Membership in the roundtable is open to organizations providing grants of $250,000 to the institute over a period of three years. The contribution will be used to fund Filene research focusing on growth opportunities and future business challenges affecting credit unions. “Our organization’s investment in the Chairman’s Roundtable demonstrates our strong tradition of supporting the growth of credit unions,” said Stan Hollen, CO-OP Financial Services president/CEO. “We are eager to work with the Filene board and staff in the spirit of research in the area of collaborative effort. This contribution will help give credit union leaders the tools they need to help their institutions grow and prosper.” Credit unions will succeed to the extent that they anticipate market demands of the future and arm themselves to win the battle for the hearts and minds of financial services consumers, Hollen added. Evolving challenges make support of the Filene Research Institute’s efforts critical to industry growth, he said. “CO-OP Network and CO-OP Shared Branching form the core of the network that serves as an extension of a member’s credit union,” Hollen said. “We’re grateful and delighted to accept this generous support of our research and innovation program,” said Mark Meyer, Filene executive director and CEO. “While the financial contribution is substantial, equally important is the formation of a partnership with a leading provider of products and services to our industry.” CO-OP Financial Services is the nation’s largest credit union-owned electronic funds transfer network and processor.

CU System briefs (01/22/2009)

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* NAPERVILLE, Ill. (1/23/09)--The Illinois Credit Union League's
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79th Annual Convention, with a "Shake, Rattle and Roll" theme, will be held April 16-18 at the Hilton Chicago. The delegates' meeting will be April 16 from 2 p.m. to 3:30 p.m. National Credit Union Administration Chairman Michael Fryzel and a pre-recorded presentation by Credit Union National Association President/CEO Dan Mica will be featured, as will motivational speaker Al Masocco, who will incorporate the history of rock and roll into his presentation. Chaz Allen of "Little Know Facts" radio program will speak at the Credit Union Executives Society Illinois Council luncheon on April 18. The convention will close April 18 with artist Sam Glenn presenting a "Kick in the Attitude." Details can be found on the league's website … * CHANDLER, Ariz. (1/23/09)--First CU had donated more $27,000 to the 2008 Children's Miracle Network's "Credit Unions for Kids"
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fundraising campaign, which benefits children's hospitals. The Chandler, Ariz.-based credit union raised $17,258.27 in various fundraisers. It participated in CO-OP Financial Services Miracle Match Program, which matches $10,000 for credit unions raising at least $10,000. The match meant the total contributed was $27,258.17. Locally, the network provides funds for Tucson Medical Center's Pediatric Unit and Phoenix Children's Hospital. Among those pictured are, from far left: Megan Wall, director of the 1 Darn Cool School at the Phoenix hospital; Lee Bultiman, director of patient and family services; and Desiree Hoogerjuis, community outreach coordinator for First CU. (Photo provided by First CU) … * KANSAS CITY, Mo. (1/23/09)--KC Police CU, located in Kansas City, has promoted Aaron Goff to CEO, announced the board of directors. Goff served as vice president and assumed the position of CEO on Jan. 5, according to the Missouri Credit Union Association (The Missouri difference Jan. 21). Goff has worked in the credit union industry since 1992. KC Police CU has $95.1 million in assets … * DECATUR, Ala. (1/23/09)--Two people, including a former manager of Lauderdale County Teachers CU in Florence, Ala., have been charged with defrauding the credit union of more than $6 million during a three-year period. The trial of Timothy David Shelton, 53, and Melissa Killeen, 39, both of Shoals, began Wednesday. According to prosecutors at the hearing, Shelton allegedly falsified loan applications and Killen approved 21 loans knowing the information was inaccurate. Shelton used the loans--against credit union policy--for his business, which failed. When his loans hit a ceiling, he recruited relatives and friends to join the credit union and apply for loans, and received a share of some of the loan money. Killeen resigned in 2005. ( Jan. 22) …