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CU System briefs (01/31/2012)

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  • TRENTON, N.J. (2/1/12)--New Jersey Gov. Chris  Christie has nominated Ken Kobylowski  as director of the state's Department of Banking and Insurance (DOBI), succeeding Tom Considine, who will step down effective Feb. 10, according to the New Jersey Credit Union League (The Daily Exchange Jan. 31). Kobylowski joined DOBI as chief of staff in February 2010 and took on the additional role of acting director of banking in October 2011. He was responsible for all legislative, regulatory, operational and administrative matters.  Kobylowski was in private law practice for 20 years and began his career as a bank analyst at the Federal Reserve Bank of New York. His nomination is subject to confirmation by the state Senate …
  • HARRISBURG, Pa.  (2/1/12)--Karen Janoski has been appointed CEO of the Greater Pittsburgh (Pa.) Police FCU, effective today. She succeeds Sandy Lazzara, who is finishing a 35-year career in the credit union movement. Lazzara will stay on through the month to consult and train.  She was honored in 2004 with the Pennsylvania Credit Union Association's Lifetime Achievement Award as recipient of the William W. Pratt Professional of the Year. Janoski most recently served as CEO of Consumer Healthcare FCU in Moon Township, Pa.  (Life is a Highway Jan. 31) …
  • SALT LAKE CITY (2/1/12)--Mountain America CU, based in West Jordan, Utah,  was recognized as one of Utah's Best Places to Work by the state's Department of Workforce Services Office of Work and Family Life. This is the seventh time the more than $2.9 million asset credit union has received the award, which recognizes companies that have created outstanding work environments and business growth by providing well for the work/life needs of their employees. Twenty companies received the awards, based on confidential state surveys completed by employees. The award scores in these areas: flexibility and benefits; whole life; workplace excellence; and business and people success.  The credit union will hold a celebration tomorrow for employees to thank them for helping make the credit union a thriving corporate community, said Sterling Nielsen, president/CEO of the credit union …
  • MANSFIELD, Texas (2/1/12)--Texas Trust CU has been named best financial institution in the Mansfield, Texas, market by the Mansfield News Mirror, a community publication of the Star-Telegram. This is the sixth consecutive year the $680 million asset credit union has received the award. Texas Trust received more nominations than any of the other 21 financial institutions located in Mansfield. "It is an acknowledgement of the hard work and dedication our employees put forth every day to make Texas Trust stand apart from other financial institutions," said Jim Minge, president of the credit union …

Guilty plea for role in St. Paul Croatian collapse

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CLEVELAND  (2/1/12)--A central figure in a loan scam that caused the collapse of St. Paul Croatian FCU, East Lake, Ohio--in one of the largest  credit union failures in U.S. history--pleaded guilty Monday to 18 counts of bribery, bank fraud and money laundering.

Koljo Nikolovski, 49, a resident of both East Lake and Skopje, Macedonia,  entered the plea in the U.S. District Court in Cleveland. The charges stemmed from his alleged role in a $2.5 million fraudulent loan scam in which he allegedly obtained several loans worth about $2.9 million from 2003 through 2005 from the credit union ( and Jan. 31).

He allegedly placed the money in a personal bank account before wiring about $2.3 million to a bank in Skopje. Local media reported that he was not eligible for the loans because he had previously defaulted on loans totaling more than $1 million (Cleveland Plain Dealer Jan. 5).

Nikolovski was one of nine people charged in the case. He has been linked by Macedonian authorities to organized crime there. He is scheduled for sentencing on April 23.

Anthony Ragus, 51, of Mentor, former CEO of the defunct credit union, pleaded guilty earlier this month 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 (News Now Jan. 4). He allegedly accepted more than $500,000 in bribes, kickbacks and gifts from people obtaining the fraudulent loans. His sentencing will be Feb. 24.

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, costing the National Credit Union Share Insurance Fund $170 million. The collapse has prompted lawsuits by the National Credit Union Administration seeking to recoup some of the losses (News Now Jan. 4).

NCUA disappointed at tentative dismissal in RBS suit

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WASHINGTON and LOS ANGELES, Calif. (2/1/12)--The National Credit Union Administration (NCUA) Tuesday expressed disappointment at another tentative ruling Monday by a federal judge in California who said he plans to dismiss NCUA's $629 million lawsuit against RBS Securities Inc. over the mortgage-backed securities (MBS) it sold to the now defunct Western Corporate FCU.

The suit was filed by NCUA in July in the U.S. District Court for the Central District of California Western Division, Los Angeles. It claimed that RBS violated federal and state securities laws when it sold securities to San Dimas, Calif.-based WesCorp. The complaint alleged that RBS sellers and underwriters caused the corporate to believe the risk of loss associated with the investments was minimal. 

On Monday, U.S. District Judge George H. Wu told NCUA's attorneys that an additional briefing submitted by NCUA after his Dec. 19 tentative ruling to dismiss had not convinced him that he'd erred in the earlier ruling. He noted the briefing was "insufficient." Wu said he would decide by the end of this week whether to dismiss NCUA's case or grant another leave to amend. The question, he said, was whether the insufficiency is in a manner that cannot be remedied in good faith.

"We are disappointed with Judge Wu's tentative ruling," said an NCUA spokesman. "As we indicated during yesterday's hearing, we believe he is imposing a heightened pleading standard not required by the law. Our allegations are quite specific and the vast majority of District Courts have upheld far less specific allegations in cases like this one," he told News Now.

The information NCUA submitted addressed specific allegations of reduced documentation underwriting guidelines, loan-to-value ratios, and loan originators, among other things. It noted the same information has resulted in the denial of motions to dismiss in other securities-related cases in separate courts.

NCUA attorneys noted in Monday's hearing that it has originator-specific allegations indicating the originators did not follow underwriting guidelines.

In the December tentative ruling, Wu had said NCUA relied mostly on "conclusionary" allegations tied to statistics that showed how the investments were affected by the housing market collapse. Without additional information, he had said, the complaint would fail the pleading standards outlined in Bell Atlantic Corp. v. Twombly and Ashcroft vs. Iqbal.

In that tentative ruling, he also said NCUA failed to show that RBS, Indymac MBS Inc., Wachovia Mortgage Loan Trust LLC, Nomural Home Equity Loan Inc. and other entities had disregarded underwriting standards when offering MBSs to WesCorp and that NCUA's federal claims were barred by the passage of statute of repose deadlines.

NCUA did not say whether it will appeal the final decision when asked by News Now.

The suit is one of several filed by NCUA, seeking about $2 billion total from companies that sold MBSs to corporate credit unions. It has sued J. P. Morgan Securities LLC, Goldman Sachs and Wells Fargo, which succeeded Wachovia Bank.  In November, NCUA settled its suits with two other banks: Citigroup in a $20.5 million settlement and Deutsche Bank Securities for $145 million. Neither bank admitted any fault in the settlements (News Now Dec. 20). Also, on Dec. 7, Judge Wu  ordered NCUA and RBS to start negotiations for a settlement.

RBS is also being sued by CUNA Mutual Group in a $72 million lawsuit seeking a rescission of 15 certificates in 10 separate residential MBS offerings it bought from RBS before the financial crisis hit (News Now Jan. 19).

Irish league study Consumers fear harder year

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BELFAST, Northern Ireland (2/1/12)--Consumers in Northern Ireland are worried that 2012 will bring further economic decline in a country already beset by problems, according to research by the Irish League of Credit Unions.

Large numbers of Northern Ireland residents are borrowing cash from moneylenders to pay their bills and are rationing their fuel, the league survey--its first Household Income Tracker for Northern Ireland--found (Belfast Telegraph Jan. 30).

The report is based on representative survey of 500 people.

The survey's findings indicate:

  • 65% of consumers surveyed fear 2012 will be more difficult than 2011;
  • 87% ration fuel in cold weather;
  • 44% have less disposable income than 12 months ago; and
  • 150,000 people turn to payday loans and moneylenders.
The Irish League of Credit Unions has 103 member credit unions in Northern Ireland and 494 member credit unions on the entire island of Ireland.

Kansas CU Association launches more councils

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WICHITA, Kan. (2/1/12)--The Kansas Credit Union Association (KCUA) just launched its Marketing and Lending Council, joining its CUnext Young Professionals Council, which was started in early 2011.

Members of the Kansas Credit Union Association CUnext Young Professionals Council-- an initiative to give young credit union leaders the opportunity to help shape the future of the industry--talk during a recent meetup. About 25 young professionals attended the event.

Click to view larger image The CUnext Young Professionals Council gives young credit union leaders in the state the opportunity to help shape the future of the industry (News Now May 4).

Horizon CU's Josh Allison addresses credit union marketers during the Kansas Credit Union Association Marketing and Lending Councils kickoff event.  (Photos provided by the Kansas Credit Union Association)

Click to view larger image The association promoted the councils with direct mail, videos, articles in its e-newsletter and webinars. The council kick-off event introduced the Lending and Marketing Councils and featured national speakers.

Council-only seminars also are planned for KCUA's 2012 Annual Meeting & Convention in April.

Councils are open to employees or volunteers of affiliated credit unions or their credit union service organizations. They are governed by three directors, and are supported by annual membership dues.

Additional councils are being considered, to be launched at a later date. The councils were formed to promote synergy among all Kansas credit unions as the local, primary source for uniting and energizing individuals and credit unions by sharing best practices, education and resources, said KCUA.


Filene announces board transition

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MADISON, Wis. (2/1/12)--Paul Kundert, CEO of the University of Wisconsin CU, Madison, Wis., has been named to the Filene Research Institute's board of directors.

Kundert replaces Stephan Winninger, who retired as the CEO of Lake Trust CU, Lansing, Mich.

"Steve has been a passionate believer in the work of Filene, and we will miss him," said Patricia Smith, Filene chair and CEO of Unitus CU in Portland, Ore.

Kundert has served as CEO of $1.4 billion University of Wisconsin CU since 2003. Prior to that, he worked for fourteen years at Think CU (formerly IBM Employees CU) in Rochester, Minn.

Paper mills closures effect on CU minimal

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EVERETT, Wash. (2/1/12)--Mill Town CU will survive the shutdown of the Kimberly-Clark paper mill in Everett, Wash., this spring, but it will lose a large part of its legacy. The credit union was chartered in 1939 to serve mill employees.

Fortunately, the credit union is in good shape financially and has diversified its membership. Mill workers currently make up about a fifth of the credit union's membership, the credit union's CEO, Laura Leuze, told News Now.

The state regulator told local media that Mill Town CU had a high capital ratio to protect itself against potential losses (The Daily Herald Jan. 31)

Leuze said the $44 million credit union will have to move out of its 2,400 square-foot stand-alone facility, which is located adjacent to the mill, but she's not sure exactly when. "We seem to be least of their worries right now," she said.

About 150 workers are winding down operations in the mill. At full capacity, the mill employed 800 workers. March 31 is the targeted date for the mill's closing, Leuze said.

Leuze said a lot of members are using their severance checks from Kimberly-Clark to pay off loans. "That's good," Leuze said, "It's a lot better than charging them off later. But at the same time we're trying to grow loans like any other credit union."

The credit union has worked with other mill employees on loan modifications. Of course former mill workers can longer pay via payroll deduction and must set up payment via coupon books, which requires extra paperwork.

Leuze said she worries that some members will fall behind on loans. "When someone comes in, we try to be as proactive as we can. We ask them what we can do to set up a loan payment schedule," she said.

The credit union has budgeted more for loan losses, she said.

Everett also is home to a Boeing plant, where many ex-mill workers hope to find employment, Leuze said.

Leuze said the credit union's business plan called for further growth before the plant closing was announced. "In that sense our strategy hasn't changed," Leuze said. "We knew we needed to continue to diversify our membership. We just didn't anticipate it happening in quite this way."

Houston chapter receives TCULs first 12 of 2012

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FARMERS BRANCH, Texas (2/1/12)--The Houston Chapter of Credit Unions' "Experience a Houston Credit Union" initiative is the first recipient of the Texas Credit Union League's (TCUL) 12 of 2012 recognition program. 

Click to view larger image The Houston Chapter of Credit Unions was named as the first recipient of the Texas Credit Union League's 12 of 2012 recognition program for its Experience a Houston Credit Union" co-op advertising program. The 12 of 2012 is a year-long recognition program to recognize the state's brightest credit union stars. The 12 of 2012 is a year-long recognition program to recognize the state's brightest credit union stars.

Click to view larger image Pictured is the promotions group of the Houston Chapter's Experience a Houston Credit Union initiative. Front row, from left, Diana Fisher, vice president, marketing, Member Source CU; Stephanie Olszewski, marketing manager at Members Choice CU; Patsy Jalomo, marketing and business development manager, People's Trust FCU; Michelle Oshinski, senior vice president, government affairs and marketing, Primeway FCU. Back row, Malcolm Rene, chief financial officer/executive vice president, United Community CU, Galena Park, Texas; Frank Bucci, marketing manager, Primeway FCU; and Brian Ellis, vice president of marketing and business management at InvesTex CU. (Photos provided by Texas Credit Union League) The initiative got off to a slow start, said Tuggle. When the group's first website failed to attract many visitors, Malcolm Rene, executive vice president at United Community CU, Galena Park, Texas, led the formation of three committees: one to redesign the website, another to raise money for advertising, and a third to develop an advertising plan.

The renewed efforts generated $63,000 in funding. "We had to recognize that we weren't after a certain demographic: We were after web traffic," said Brian Ellis, vice president  of marketing and business management for InvestTex CU. Within two months the redesigned site had attracted three million visitors. By the end of the year, seven million had visited the site.

The team also added a local spokesman to the mix. Michael Garfield now promotes credit unions regularly in his role as the "High Tech Texan" on talk radio.

The success of this new, hybrid model of an ad co-op has heightened interest in credit union collaboration in the region, Tuggle said. During the last legislative session, the chapter recruited area credit union leaders who hadn't take part in past advocacy efforts. The group held a luncheon in Austin under the banner of "Experience Houston Credit Unions."

The success has inspired the group to reach out to TCUL, which is working to roll out the idea across the state.