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CU System briefs (01/03/2012)

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  • SUPERIOR, Wis. (1/4/12)--A former employee who pleaded guilty Thursday to stealing more than $14,030 from two member accounts at Superior (Wis.) Choice CU will spend 100 days in jail and two years under probation in a plea agreement (Duluth News Tribune Dec. 30). Shawn Wayne Johnstad, 21, pleaded guilty in Douglas County Circuit Court to felony theft and misdemeanor theft for allegedly taking the funds. Restitution of the $14,030 has been paid. If he successfully completes probation, the misdemeanor counts could be expunged from his record. Judge Kelly Thimm warned that if Johnstad's probation  and deferred judgment of conviction were revoked, he could face 11 years and eight months in prison …

IConsumer ReportsI Largest CUs rates beat largest banks rates

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YONKERS, N.Y. (1/4/12)--The largest credit unions' rates have beat the largest banks' rates in a side-by-side comparison cover story in the prestigious comparative-shopping venue:  Consumer Reports. And they did so in all areas compared.

"Take on your bank" is the lead four- page spread in an 11-page section on financial services in Consumer Reports' February issue, which is just hitting newsstands and subscribers' mailboxes.

The article leads off with consumers' anger, noting that consumers are "furious at behemoth banks, for myriad reasons: lending practices that helped sink the economy, government bailouts, foreclosures, huge bonuses for CEOs, and now higher fees and tougher account requirements."

It notes escalating fees and predicts that banks will continue to experiment with fee increases, tougher account requirements, cost cutting and new sources of revenue such as sharing customers' marketing data.

It also describes options-- credit unions. The Credit Union National Association  (CUNA) provides information about members with checking accounts and the history of credit unions' progression to full-service financial institutions that "have expanded services to match what you'll find at a bank."  The publication reports that credit unions exist solely for their members, and fees tend to be lower and offers CUNA's website locator to find a credit union.

"Credit unions and smaller banks charge consumers less, our data show," reads a pullout quote.

"The largest credit unions tend to have lower fees on average than the biggest banks," said a chart, "Banks vs. credit unions," in which credit unions were better than banks on all areas compared: noninterest checking monthly fees; minimum balance to waive fees; online bill payment monthly fees; use of another bank's ATM; ATM surcharge fees; insufficient funds; stop payment; and overdraft fees.

The article also compared fees for five service features  at the 10 largest banks by assets and the five largest credit unions. Seven banks had fees in every category; one had fees in four categories, one in three categories and one in two categories.  The fees for the most part were larger than credit union fees.

Only one credit union had fees in all five categories, and its fees were lower than banks'.  The rest of the credit unions had fees in only two categories--most of them charge overdraft fees and stop payment frees, which were lower than their bank counterparts.

To review the fees, use the resource link for the full article.

Seven agree to plead guilty in St. Paul Croatian fraud case

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CLEVELAND (1/4/12)--More defendants have changed their pleas to guilty against bank fraud and money laundering charges related to St. Paul Croatian FCU, the East Lake, Ohio, credit union that collapsed in April 2010 in the largest credit union failure in history.

That brings the total to seven defendants of the nine indicted in March who have made plea bargains in the case. Their sentences are being delayed until after the trial of a central figure in the case, Koljo Nikolovski, 49,  an Eastlake, Ohio,  resident who also maintains a residence in Skopje, Macedonia.

Nikolovski was indicted on Jan. 5, 2011, for allegedly obtaining $2.5 million in fraudulent loans and placing the money in a personal bank account before wiring about $2.3 million to a bank in Skopje (Cleveland Plain Dealer Jan. 5, 2011, and News Now Jan. 13, 2011).

The Plain Dealer reported that Nikolovski was not eligible for the loan because he had previously defaulted on loans totaling more than $1 million.  He is charged with numerous counts of bank fraud, money laundering, financial institution fraud, and giving commissions or gifts for procuring loans.

Changing their pleas to guilty  were:

  • Rose Ann Nikolovski, ex-wife of Koljo's Nikolovski, who is charged with financial institution fraud and money laundering. Her sentencing hearing was set for March 6.
  • Anthony Raguz, former CEO of the defunct credit union, who is charged with bank fraud, bank bribery, and money laundering.  He pleaded guilty to issuing more than 1,000 fraudulent loans to more than 300 account holders from 2000 to April 2010, according to the Justice Department documents ( Sept. 28). His sentencing was reset for Feb. 24, according to the court docket records. It was originally scheduled for tomorrow.
  • Jon Cendol Jr., brother of Rose Ann Nikolovski, charged with financial institutions fraud and scheduled for sentencing Feb. 22.
  • Ruth Cendol, charged with financial institutions fraud and scheduled for sentencing Feb. 22.
  • Daniel Kocher, charged with financial institutions fraud and to be sentenced March 6.
  • Edward Watral, charged with financial institutions fraud and to be sentenced Feb. 24.
  • Jennifer Cerjan, charged with financial institutions fraud and to be sentenced March 5.
Nikolovski's trial is set to begin Feb. 13 before U.S. District Judge Christopher A. Boyko in the U.S. District Court in Cleveland, according to court documents.

St. Paul Croatian FCU was placed into conservatorship on April 23, 2010 and closed the following  May 1. It held $238.8 million in funds from 5,400 members when it collapsed  (News Now May 4, 2010) and caused the National Credit Union Share Insurance Fund about $170 million in losses.

Deputy hurt robbery suspect shot in CU heist

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FORT WORTH, Texas (1/4/12)--An off-duty sheriff's deputy working security at Fort Worth (Texas) Community CU and a robbery suspect were both injured in a confrontation in the credit union's parking lot after the credit union was robbed Saturday morning.

The deputy, Fredrick Bauer, 58, an eight-year veteran of the Tarrant County Sheriff's Department, received serious but non-life threatening injuries when his throat was cut by the suspect after he confronted the suspect in the parking lot (Star-Telegram Dec. 31 and Jan.1).

Bauer reached his handgun and shot the suspect in the head, said  Fort Worth police. He was treated at a local hospital and released in good condition.  The suspect was in critical condition at another local hospital.

The robbery occurred at 9:30 a.m. when a man entered the credit union and presented a note demanding money to a teller. The man then fled with the money.  A second suspected robber fled the scene in a car. Bauer shot at the car, possibly breaking windows, said police.

MnCUN kicks off international co-op year with video

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ST. PAUL, Minn. (1/4/12)--The Minnesota Credit Union Network (MnCUN) is joining cooperatives worldwide in celebrating the International Year of Cooperatives (IYC) in 2012, with a video message featuring MnCUN President /CEO Mark D. Cummins.

MnCUN used the video to kick-off its year-long initiative to tout the characteristics and benefits of cooperatives.

Designated by the United Nations, IYC highlights the contributions cooperatives have made to help reduce poverty, create jobs and promote socio-economic development worldwide. In particular, IYC celebrates a different way of doing business--one focused on human need and a model where the members, who own and govern the business, collectively enjoy the benefits, said MnCUN.

As one of the largest cooperative sectors, credit unions understand the value of the cooperative structure and the positive influence they have on local and global economies, said MnCUN. Consequently, credit unions enthusiastically join this celebration and effort to inform consumers about the cooperative alternative to traditional businesses, MnCUN added.

For more information, use the link.

CU membership rises loan delinquencies up in November

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MADISON, Wis. (1/4/12)--Credit union membership rose significantly in November, while credit union loan delinquency rates inched up, according to a Credit Union National Association (CUNA) economist's analysis of November's monthly sample of credit unions.

"Credit union memberships continued to increase at a fast pace as more households appear to have transferred from banks to low-fee, membership-focused credit unions," Steve Rick, CUNA senior economist, told News Now.

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"Overall, the sample of credit unions participating in our monthly survey report memberships increased a strong 0.5% in November," he added. "It is important to note that while we are confident that final data from the National Credit Union Administration (NCUA) will confirm relatively fast overall growth in memberships, the numbers reported Tuesday will be revised once the NCUA data is obtained late in February."

Credit union loans outstanding increased less than 0.1% during November, compared with a 0.3% increase in October. Unsecured personal loans led loan growth with a 1.0% gain, followed by credit card loans (0.8%), adjustable-rate mortgages (0.7%), and used-auto loans (0.3%). New-auto loans, home equity loans, and fixed-rate mortgages each decreased 0.3%, 0.4% and 0.5%, respectively. Credit union loans totaled $584 billion, compared with $580.7 billion in November 2010, said the monthly estimates.

Credit union savings balances rose 0.2% in November, compared with a 0.1% decrease in October. Money market accounts led savings growth with a 1.0% increase, followed by regular shares, which went up 0.4%, and individual retirement accounts, which increased 0.1%. One-year certificates and share drafts decreased 0.1% and 0.6%, respectively. Credit union savings in November totaled $838.1 billion--or $38.7 billion more than the $799.4 billion in November 2010.

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Regarding asset quality, credit unions' 60-plus-day delinquency rate inched up. "On a less positive note, credit union loan delinquency rates edged up slightly to 1.61% in November from 1.59% in October," Rick said.

"The credit union loan delinquency rate plateaued in the 1.58% to 1.61% range over the past seven months after a precipitous fall in the first quarter," he added. "No loan growth in November was one factor not helping to reduce the delinquency rate. We expect loan balances to rise 3% in 2012, hopefully increasing the denominator of the delinquency ratio faster than the numerator.  Faster loan growth and a strengthening economic recovery should bring credit union loan delinquency rates down to 1.35% by the end of 2012."

Credit unions' loan-to-savings ratio remained at 70%. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained constant at 18%.

The movement's overall capital-to-asset ratio remained at 10%. The total dollar amount of capital is $100 billion.

Mich. governor signs leagues foreclosure reform law

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LANSING, Mich. (1/4/12)--Michigan Gov. Rick Snyder has signed bills that reform the 90-day foreclosure-delay law championed by the Michigan Credit Union League (MCUL) & Affiliates.

The laws revise Michigan's "foreclosure by advertisement" process to develop a 90-day foreclosure-prevention workout program to provide borrowers more time to discuss with their lenders possible alternatives to home foreclosure (Michigan Monitor Jan. 3).

Under the program, the lender holding the mortgage is required to send a written notice to borrowers before foreclosing on a principal residence. The two parties have 90 days to participate in "pre-foreclosure" meetings to discuss possible alternative solutions. The goal is to encourage greater communication between borrowers and members of the mortgage industry, MCUL said.

MCUL supported the original act because of the rise in state foreclosures and because it had a two-year expiration date, set for July 5, 2011. However, with the law in effect for more than two years, MCUL worked with lawmakers to seek reforms to the process.

The reforms include:

  • Having clearer timelines concerning which actions must occur at certain points during the process for both lenders and borrowers, thereby allowing a lender to proceed immediately to foreclosure if a borrower is unresponsive to requests for certain documents. Borrowers will now have 30 days--instead of 14 days--to contact their lender or housing counselor if they want to try to make a modification. Under the law, within 60 days of sending the notice, if the lender has not received the requested modification documents from the borrower, the lender can proceed to foreclosure. Previously, there was no deadline established for borrowers to send the documents.
  • Holding borrowers responsible for damaging the property during the redemption period. Every notice of foreclosure by advertisement must now include language stating that if the property is sold at a foreclosure sale, the borrower will be held responsible to the person who buys the property or to the mortgage holder for damaging the property.
  • Reducing the redemption period for properties larger than three acres to six months from one year, if the property is not deemed to be for agricultural use. To qualify for the agricultural-use exemption, borrowers must provide an Internal Revenue Service Schedule F from their prior-year tax return. This will align the redemption periods for any residential property, regardless of size, to the six-month period.
  • Extending the sunset to Dec. 31. The bill originally proposed a July 2015 sunset, but the sunset was shortened to December 2012 because the legislature wanted to continue discussions on how to recognize the burdens placed on community lenders by the 90-day law. Credit unions and community banks lobbied hard for legislation that would have shortened the redemption period for portfolio loans by 90 days, which would have helped offset the additional burden of adding 90 days to the front end of the process provided by the 90-day law. A shorter sunset will ensure the discussions continue in the coming months, MCUL said.

Montana members debating merger with out-of-state CUs

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MISSOULA, Mont. (1/4/12)--Montana First CU, Missoula, Mont., will conduct a members meeting Thursday to vote on its proposed merger with Horizon CU, Spokane Valley, Wash.

Boards from both credit unions approved the proposal in October, but some directors and members from Montana First have 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 (Missoulian Jan 3).

Montana First, with $60 million assets, serves its  9,700 members through two branches. Horizon, with $420 million in assets, has 38,000 members and 18 branches.

The merger would allow Horizon to better serve Missoula First's younger, technology-oriented membership, said Montana First CEO Chris Sisco.

Also, between 15% and 20% of Montana First members live outside of Montana, with 36% of those living in Idaho and Washington, Sisco said. Horizon CU has branches in both Idaho and Washington, according to its website.

All Montana First employees will be retained with similar pay and benefits, and branches in Missoula will keep the First Montana name.

Board members expressed concern about moving the Montana First's assets outside the state.

If the merger is approved, the Horizon board with be temporarily expanded to include an eighth Montana First member. Montana First members will be eligible to run for one of seven spots during the next board elections.

iBankrate.comi CUs boosted safe and sound ratings 3Q

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NORTH PALM BEACH, Fla. (1/4/12)--More credit unions received the highest possible five-star ratings in Bankrate's latest Safe & Sound Star Ratings for third quarter.

The improvement is likely the result of the the influx of new members to credit unions as a result of Bank Transfer Day, according to (Jan. 3).

Banks and thrifts also showed improvement overall, but fewer received the five-star rating, according to Greg McBride, Bankrate senior financial analyst.

In the third-quarter Safe & Sound ratings, credit unions showed their net improvement by gravitating within the four- and five-star bands--the two highest on the rating scale, McBride said.

Commercial bank and thrifts consolidated in the middle of the scoring band, with fewer institutions rating five stars.

The ratings take into account the performance of a financial institution's assets, its profitability, liquidity and other factors.

Top 10 iNews Nowi stories for December (01/03/2012)

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MADISON, Wis. (1/4/11)--An article about how credit unions set a customer satisfaction record was the most read News Now article in December.

The 10 most-visited stories for the month:

10. Former FCU employee convicted of ID theft

ALEXANDRIA, Va. (12/12/11)--The National Credit Union Administration on Friday blocked former University of South Alabama FCU employee Jennifer Stringer from working for a federally insured financial institution after she was convicted of identity theft.

9. Troops get special treatment for holidays

MADISON, Wis. (12/28/11)--Many men and women serving the country were not able to return home for the holidays. However, credit unions did their best to send them a little bit of home, be it words of encouragement on a video from loved ones, holiday gift packages donated by credit unions and their communities or even Christmas cards.

8. FinCEN delays use of new SAR, CTR reporting forms

WASHINGTON (12/21/11)--The Financial Crimes Enforcement Network  has pushed back the deadline for credit unions and others to use its new Currency Transaction Report and Suspicious Activity Report forms until March 31, 2013.

7. FIs move beyond basics in mobile banking, says study

BROOKFIELD, Wis. (12/15/11)--Financial institutions, including credit unions, are poised to ramp up their mobile banking capabilities, according a survey of the mobile banking and payment plans of 10 top-tier financial institutions, including credit unions.

6. BofA cuts off issuing CU credit cards

CHARLOTTE, N.C. (12/7/11)--Credit unions will no longer be able to sell credit card portfolios to FIA Card Services, the Bank of America unit that issues bank cards for other banks and credit unions under their names.

5. CUs' mortgage loans noted by media

MADISON, Wis. (12/21/11)--Consumers know now--thanks to Bank Transfer Day--that credit unions are good deals on checking and savings accounts. Two recent media reports also touted the benefits of getting a mortgage at a credit union.

4. U.S. News & World Report, Yahoo Finance cite benefits of CUs

NEW YORK (12/9/11)--An article outlining "Why You Should Consider a Credit Union" in Thursday's issue of  U.S. News & World Report, which also featured comments from the Credit Union National Association and the  National Credit Union Administration, was among several positive press items about credit unions in national media this week.

3. CUNA economist: Top five predictions for CUs in 2012

MADISON, Wis. (12/27/11)--This past year was a whirlwind for the U.S. economy and credit unions trying to rebound from a lingering recession, persistent unemployment, a depressed housing market, and worldwide economic trouble, especially in Europe.

So what does 2012 have in store for credit unions?

2. NWCUA: Joining a CU a good start for New Year

FEDERAL WAY, Wash. and BEAVERTON, Ore. (12/30/11)--Thousands of consumers got an early start to a financial healthy 2012 by joining credit unions in the weeks leading up to Bank Transfer Day Nov. 5.

1. Survey: CU satisfaction breaks all records

WASHINGTON (12/14/11)--Credit unions have set an all-time American Customer Satisfaction Index record, with 87% of credit union members surveyed saying they are "more satisfied than ever before" with their credit unions.