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Boat broker pleads not guilty to swindling CUs

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GRAND RAPIDS, Mich. (1/29/09)--A former boat broker accused of defrauding banks and credit unions in Michigan of $27 million pleaded not guilty Tuesday in a U.S. District Court in Grand Rapids, Mich. Michael Vorce, former owner of Michigan West Yachts, is charged with a 15-count indictment related to convincing two credit unions and eight banks to loan him millions for boats that didn't exist in a "Ponzi" scheme (Grand Rapids Press Jan. 28). Among the 10 institutions defrauded are Lake Michigan CU, which lost $4.7 million, and Michigan State University FCU, which lost $4.7 million. Other institutions lost from $200,135 to $9.2 million. The bank fraud charges each carries a maximum sentence of 30 years in prison and $1 million in fines. Vorce also is charged with three counts of money laundering, one count of wire fraud, and one count of aggravated identity theft. About $9 million of the stolen funds has been recovered.

Bay FCU closes Salinas branch reorganizes

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CAPITOLA, Calif. (1/28/09)--Bay FCU is closing its Salinas, Calif., branch and scaling back its plans for growth because of current economic conditions. The branch had opened two and a half years ago. Six of the eight employees at the branch have found employment at other branches. Two others could be offered other positions later, the Capitola-based credit union told KSBW.com (Jan. 27). Bay Federal said it has laid off about 30 employees or 13% of its staff--leaving the credit union with 189 employees--because of the spiraling economy (The Mercury News and Californian.com Jan. 27). The $654 million asset credit union had grown steadily until the recession. President Carrie Birkhofer told the Mercury News that the credit union provided staff with "exceptional packages."

U.S. Central to release 08 financials next week

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LENEXA, Kan. (1/29/09)--U.S. Central FCU announced Wednesday that it expects to report its 2008 financial results next week. The Lenexa, Kan.-based wholesale corporate credit union also said the results will include an unaudited net loss of roughly $1.1 billion due to charges for other-than-temporary impairments (OTTI) of $1.2 billion. Excluding the OTTI charge, U.S. Central said it would have recorded net income of about $119 million for the year ended Dec. 31, 2008. "U.S. Central's estimated 2008 loss is based upon mark-to-market adjustments to our portfolio of residential mortgage-backed securities, resulting from the adverse economic environment, the severe illiquidity of such assets in today's market and the current accounting treatment of such assets," said Francis Lee, CEO. "Despite the reported loss, these securities continue to perform as expected, providing U.S. Central with monthly cash flow in the form of regularly scheduled principal and interest payments," Lee added. "We continue to maintain a strong conservative portfolio, but like other financial institutions with substantial mortgage-backed portfolio holdings, we have not been immune to drastic and deteriorating financial conditions of last year, particularly during the fourth quarter," he said. Lee noted that "U.S. Central remains committed to its long history of providing essential services to its members and the credit union system. We will remain an important source of liquidity and support to the Corporate Credit Union Network."

Missouris HFOT efforts will continue says MCUA

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ST. LOUIS (1/29/09)--Missouri credit unions will get the opportunity to help build a home for a severely injured veteran in the state, said the Missouri Credit Union Association (MCUA). Homes for Our Troops (HFOT) is searching for a deserving veteran to receive the specially adapted home. (The Missouri difference Jan. 28). MCUA said it would notify credit unions with project information and updates as they become available. Credit unions in the state are continuing fundraising for the program. Electro Savings CU, St. Louis, has a number of activities, including:
* Allowing members to cash-out reward points for donations to HFOT, with 1,000 points equaling $10; * Hosting a trivia contest in the spring; * Launching Centiments, a campaign where members donate the cents on a check they're cashing or depositing to HFOT; * Selling in each branch paper "bricks" that will be assembled on a cut-out house; * Selling T-shirts and polo shirts to staff and members; and * Asking each office to find a unique way to contribute.
"Like most credit unions, we are proud that our staff is always willing to support various charities throughout the year," said Eric Hardman, vice president of finance. HOFT, however, "has touched many of us through one of our employees, Josh Eckhoff. Josh was a teller for our main office when he was called by the National Guard to serve in Iraq," Hardman said. "During his tour, Josh suffered severe head injuries when he was struck by an IED (improvised explosive device). It is Josh and the efforts of all the other U.S. soldiers that makes our credit union willing to support such a charity."

Economy begins to hit CU loan quality

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MADISON, Wis. (1/29/09)--The economic, credit and housing crisis is beginning to affect credit union loan quality, said Steve Rick, Credit Union National Association (CUNA) senior economist. The credit union overall loan delinquency rate rose to 1.42% by December from 0.96% in July. With the national unemployment rate expected to rise from its current level of 7.2% to 9% by year-end, the credit union delinquency rate could hit 2% this year--the highest since 1986, Rick said. December statistics show that credit union loans outstanding increased 0.48% for the month, ending the year with a 7.6% increase, compared to increases of 0.5% and 6.5% during the same periods last year, according to the CUNA monthly sample of credit unions.
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Fixed-rate first mortgages led loan growth, increasing 3.3%, followed by increases in credit card loans (3%), home equity loans (1.3%), unsecured personal loans (0.7%), and used auto loans (0.5%). Adjustable-rate mortgages decreased 3.1%. “According to CUNA's monthly survey of credit unions, credit union balance sheets increased 7.5% in 2008 despite the ongoing recession, up from 6% the year earlier,” Rick said. “Fast-growing mortgage portfolios pushed up credit union loan balances by 7.6% in 2008, up from 6.5% in 2007. “The fog of uncertainty floating over banks’ asset values and capital levels is restraining their willingness to extend credit for both residential and consumer loans,” he added. “Credit unions are filling this void since many do not face similar capital constraints.”
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Credit union savings balances increased 0.4% to $700 billion in December from $697 billion in November. Overall year-to-date growth increased to 7.3% during 2008 from 5.1% in 2007. Individual retirement accounts led savings growth, rising 2.4%, followed by increases in one-year certificates (1.1%) and money market accounts (1%). Regular shares and share drafts decreased 0.5% and 2.3%, respectively. The loans-to-savings ratio remained relatively constant, inching up to 83.7% from 83.6% in November. The liquidity ratio rose slightly, to 16% from 15.8% in November. Regarding asset quality, credit unions’ 60-plus day delinquencies edged up to 1.4% from 1.3% in November. The movement’s overall capital-to-asset ratio remains at 11%, with the total dollar amount of capital at $90 billion. “Credit unions also stretched their balance sheets in 2008 by increasing their borrowings by $14 billion, a 49% increase from December 2007,” Rick said. “This dollar increase was exactly matched by a $14 billion increase in their investment portfolios, which rose 6.7% over the year. Credit unions bought more longer-term investments last year. The percent of the investment portfolio with less than a one-year maturity fell to 55% from 61%.”

Tampa op-ed to Obama Use charities CUs

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TAMPA, Fla. (1/29/09)--An opinion editorial urges the Obama administration to consider charities and credit unions in providing assistance in its economic stimulus package. It mentions specifically credit unions and the National Federation of Community Development Credit Unions. The article, in Sunday's TampaBay.com was written by Lester Salamon, director of the Center for Civil Society Studies at Johns Hopkins University and former deputy associate director of the U.S. Office of Management and Budget. Salamon notes that more than one million nonprofit organizations exist, with 11 million paid employees and countless volunteers. "Those organizations have a critical role to play in sustaining families and communities during the hard climb to recovery…," he said. He detailed three ways the government could help nonprofits step in to help the economy, including earmarking funds from the Troubled Assets Relief Program to nonprofit housing and community development organizations to help low-income homeowners avoid foreclosures. He cited the availability of a "powerful and effective alternative mechanism"--the network of nonprofit community development credit unions, finance institutions and housing organizations. "They already manage billions of dollars of mortgage loans in low-income areas with delinquency rates that their high-flying for-profit competitors would now die for," he wrote. For the 230 members of the federation, delinquency rates on mortgages loans are at only 3.1% of assets, compared with the 18.7% national average on subprime loans, he said. His other two proposals involved creating a $3 billion to $5 billion matching grant program for nonprofit soup kitchens, homeless shelters and other service organizations; and adopting emergency incentives for private giving and volunteering. For the entire article, use the link.

CU System briefs (01/28/2009)

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* NAPERVILLE, Ill. (1/29/09)--About 70 Illinois Credit Union League (ICUL) and ICUL Service Corp. employees participated in recent wellness screenings the league offered its employees. The screenings measured blood pressure, body mass, cholesterol levels, and other concerns. The league plans to offer flu shots to staff in the fall and host two blood drives. Each event usually draws about 20 individuals, the league said ... * ATLANTA (1/29/09)--CDC FCU, Atlanta, donated more than $14,000 to the Children’s Miracle Network, beating its goal to raise $10,000. About 75% of the donation came from internal contributions from employees. The credit union also held monthly fundraisers. The money will fund medical services at children’s hospitals such as Children’s Healthcare of Atlanta. CDC FCU has $162 million in assets ...

CUNA Mutual Group joins Invest in America

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MADISON, Wis. (1/29/09)--CUNA Mutual Group joined credit unions nationwide Wednesday with supporting initiatives for purchases made from automakers General Motors and Chrysler Corp. through the “Invest in America” program. The credit union loan program includes nearly 8,000 credit unions nationwide and makes available $80 billion in credit union auto loans for new-vehicle purchases. The national program with Chrysler runs through June 30, and layers on top of recently announced Employee Pricing. GM’s national program runs through March 31, but it has extended the program in Michigan, Illinois, Indiana and Ohio to June. The states were part of the pilot program. CUNA Mutual is offering added incentives, including:
* Free online auto loan applications (for credit unions) through CUNA Mutual’s loanliner.com; * Discounts on quick, automated decisions on loan applications; * A discount of up to a 25% for participation in CUNA Mutual’s target marketing program, which identifies creditworthy members who may be in the market for a new vehicle, based on the life of their existing auto loan.
“Participating in the Invest in America program is a natural extension of our continued commitment to credit unions,” said Kevin Lentz, CUNA Mutual senior vice president of Service Product Lines. “It’s also a great way for CUNA Mutual to do its part to stimulate the economy.” The “Invest in America” program offers supplier pricing on new GM vehicles and rebates of $500 or $1,000 on eligible Chrysler, Jeep and Dodge vehicles. The discounts are offered in addition to most cash incentives both manufacturers are offering. CUcorp, a wholly owned subsidiary of the Michigan Credit Union League (MCUL), created and coordinated the program with GM and Chrysler. “As one of the largest and most influential companies servicing the credit union market in the U.S., CUNA Mutual Group’s support will give another major component to this important campaign to boost domestic auto sales,” said David Adams, president/CEO of CUcorp and MCUL. “This is another example of broad credit union industry support for U.S. automakers and our national economy.”

CUNA Brokerage names women of distinction

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MADISON, Wis. (1/29/09)--CUNA Brokerage Services Inc. is honoring 22 credit union financial advisors as “Women of Distinction” to recognize their performance, value to their program, client service and overall contribution to the financial services industry and CUNA Brokerage Services. Qualifying financial advisors not only exemplified the characteristics of the award, but earned $250,000 or more in gross dealer concessions in 2008. Recipients will participate in a mentoring program offered through CUNA Brokerage Services to foster the growth of women who are new to the financial services industry. Jim Metz, senior vice president of Asset Management at CUNA Mutual Group, said of the recipients, “Their contributions to CUNA Brokerage Services, the financial services industry and to the women they mentor are key to our overall success.” Developed by women for women, the award debuted in 2008 to recognize top female financial advisors and introduce the mentoring program. This year’s Women of Distinction are:
* Catherine Barnes, VyStar CU, Jacksonville, Fla.; * Emmor Boslet, Belco Community CU, Harrisburg, Pa.; * Jane Brockway, University of Illinois CU, Champaign, Ill.; * Kathy Chesney, Pacific Marine CU, Camp Pendleton, Calif.; * Diane Clark, Fibre FCU, Longview, Wash.; * Linda Cohen, Coast Central CU, Eureka, Calif.; * Wendy Cundari, California Coast CU, San Diego; * Terry D’Amico, Teachers FCU, Farmingville, N.Y.; * Carol Diest, First Community FCU, Parchment, Mich.; * Judith Ebert, Ascentra CU, Bettendorf, Iowa; * Marcella Evans, T&C FCU, Pontiac, Mich.; * Ruby Evans, Chartway Investments & Insurance; * Judy Evers, Baxter CU, Vernon Hills, Ill.; * Leigh Glover, Southeast Financial FCU, Franklin, Tenn.; * Kelly Goreham, Veridian CU, Waterloo, Iowa; * Breta Grumbois, Fibre FCU, Longview, Wash.; * Paula McCauley, East Texas Professional CU, Longview, Texas; * Wendy Miletich, Wings Financial FCU, Apple Valley, Minn.; * Stephanie Morales, Arizona Central CU, Phoenix; * Sophia Spencer, Red Canoe CU, Longview, Wash.; * Suzi Williams, Yakima (Wash.) Valley CU; and * Emily Windolph, WEOKIE CU, Oklahoma City, Okla.
CUNA Brokerage Services uses face-to-face financial advisors to help credit unions meet member retirement, investment and insurance needs.

IHuffingtonPostI blog Transform banks to CUs

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MADISON, Wis. (1/29/09)--The time has come for the U.S. to nationalize large banks and model them after credit unions, according to a HuffingtonPost blog posted Tuesday. Middle-class taxpayers are not benefiting from ongoing financial industry bailout deals, Mike Garibaldi-Frick, founder of EvolveArts.com, wrote on the blog. By nationalizing banks and having them follow the credit union model, the government would be able to better “regulate bank lending practices so that interest rates on mortgages, credit cards and other loans will more closely match bank borrowing levels,” he added. “Banks are no longer the community-based institutions they were decades ago,” Garibaldi-Frick wrote. “Credit unions have taken over as the cooperative financial institutions that invest in their own members’ lives and businesses. Most credit unions offer a variety of services--including financial/bankruptcy counselors--to help members experiencing difficult financial circumstances to stay in their homes and remain solvent.” If enough people discover the benefits of credit unions, banks would be out of business--and banks fear credit unions for this reason, he added. “If you would like to take a stand against the greed of the banking industry and these current bailouts, consider putting your money in a credit union instead. Even The Wall Street Journal recognizes that credit unions are better places to borrow money and store your savings. Plus credit unions are largely untouched by the subprime debacle. It’s time to take control of your financial destiny, America,” Garibaldi-Frick concluded.