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Members United Corporate announces 08 financials

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WARRENVILLE, Ill. (1/6/10)--Members United Corporate FCU Thursday announced its final audited financials for 2008, noting it had posted a $1.2 billion loss for the year after auditors required a 100% write-off of U.S. Central capital as of Dec. 31, 2008. The statement from Minneapolis-based auditors McGaldrey & Pullen set to rest the number of losses incurred by the corporate, like others, during the nation's credit crisis, and set the stage for the $8.3 billion asset,Warrenville, Ill.-based corporate's November 2009 financials, which reported no additional losses. The write-off of U.S. Central capital means that roughly $155.5 million in losses that previously were recorded in July and October 2009 have instead been recorded as a loss in December 2008. The restatement entries recorded in November 2009 had "no net impact on retained earnings--it is simply a timing issue for financial report," said the November financial report. The restated year-to-date loss for 2009 is $138 million. Members United reported a net income of $1.6 million for November. Its capital ratio at the end of November was 1.68%. Should more losses be incurred that result in a new deficit, Members United will be required to deplete more membership capital. It was performing an OTTI review as of Dec. 31 and said results should be ready by mid-February.

Bankruptcies up CUs in maintenance phase CUNA

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MADISON, Wis. (1/6/10)--Personal bankruptcy filings hit 1.41 million last year--an increase of 32% over 2008. And credit unions can expect more chargeoffs during the post-recession, say Credit Union National Association (CUNA) economists.
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CUNA economist Steve Rick pointed out that the numbers will continue to go up because bankruptcies and chargeoffs lag behind a recession. "During a recession, people are existing for a while on their savings, and when that's used up they begin charging more, getting into debt." They make it through most of the recession. Then, it catches up and chargeoffs occur, he noted. According to the National Bankruptcy Research Center, which compiles and analyzes bankruptcy data, 2009's bankruptcy filings are at their highest level since 2005 (The Wall Street Journal Jan. 5). More people filed for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of other debts. Chapter 7 filings were up more than 42% as of November 2009, compared with November 2008. Chapter 13 filings increased by 12% and accounted for less than one-third of the 2009 filings as of November, the latest month statistics were available. "You could see the increase coming with the last quarter's data," Mike Schenk, CUNA senior economist and vice president of economics and statistics, told News Now. "There naturally would be more bankruptcies after the recession than before."
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He noted that consumers rushed to file bankruptcies in 2005 before new bankruptcy laws took effect that October. The laws make it more difficult to file for a Chapter 7 bankruptcy. Filers are required to under go a means test to determine if the filer can pay back at least a portion of the debt after it is restructured. Rick agreed that credit unions could anticipate the losses and be prepared for them. "Credit unions for years have been in the building phase, building their allowances for loan losses (ALL) provisions in anticipation for an increase in chargeoffs. Now they're in the maintenance phase, where they will see a drop in provisions for ALL." For credit unions, chargeoffs are still a small number, said Schenk. Both delinquencies and net chargeoffs remain substantially lower than bank norms, according to the U.S. Credit Union Profile's Third Quarter 2009 results. In 2005, before the new law, credit unions experienced four bankruptcies per 1,000 members. That number tapered off to 1.4 bankruptcies per 1,000 members in 2006, followed by 1.8 in 2007, then 2.6 in 2008 and 3.7 as of September 2009. The average number of bankruptcies per credit union has increased slightly from 39.3 in 2005 to 43 as of in September 2009, according to the profile report. Half of credit unions' chargeoffs are due to bankruptcies.

Maine study CU members twice as loyal

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WESTBROOK, Maine (1/6/10)--Maine consumers rated credit unions higher than other financial institutions in rates, services and products, and are twice as likely to recommend a credit union over another financial institution, according to a report. “Perceptions of Banks and Credit Unions” by Market Decision--a Portland, Maine research firm--indicated that Maine credit union members are significantly more satisfied than customers of other financial institutions, said the Maine Credit Union League. The firm interviewed and surveyed 400 Maine consumers statewide for the report. "The study’s findings that Maine credit unions are the only segment in the financial services industry in the state that reaches the threshold considered a benchmark for a high-performing organization in the financial services industry further emphasizes [how well-positioned credit unions are]," said John Murphy, Maine league president. The study also indicated:
* Consumers said credit unions paid better interest rates (49%) than banks (25%); * Credit unions (36%) were viewed as better at giving back to the community than banks (28%); and * Consumers said credit unions (35%) offered friendlier service than banks (18%).
"The findings and results validate the important and positive role that credit unions have in providing financial services to Maine consumers,” Murphy said. “Despite the economic uncertainty and events of the past year throughout the financial services industry, credit unions in Maine are performing well and, as this study found, offer value and benefits consumers clearly recognize and appreciate."

CUNA Mutual exec outlines prefunding benefits

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NEPTUNE, N.J. (1/6/10)--CUNA Mutual Group Executive Benefits Specialist Mike Downey covered an emerging concept--credit unions prefunding benefits--at Monday’s Monmouth/Ocean County credit union chapter meeting in Neptune, N.J. With credit union health care costs increasing by 20% on average, some credit unions are using prefunding benefits to help mitigate costs, Downey said, according to the New Jersey Credit Union League (The Daily Exchange Jan 5). “It’s not a program to reduce benefit costs, but rather get higher investment yields to offset rising costs,” Downey added. Prefunding benefits is covered under National Credit Union Administration (NCUA) Reg. 701.19 with clarification letters in February 2004 and December 2006. CUNA Mutual had an ongoing dialogue with NCUA on what investments are permissible for prefunding of benefits, Downey noted. Credit unions can fund benefit obligations using normally non-permissible investment vehicles, Downey said. Prefunding is a long-term investment strategy. The earnings from the investments can offset costs of underlying benefits. One New Jersey credit union prefunds benefits, as do about 12 on the East Coast. The concept is still new to most credit unions, Downey said.

Tax issue irrelevant to MBLs--N.Y. league

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ALBANY, N.Y. (1/6/10)--The fact that credit unions are exempt from income taxes should have no influence on federal lawmakers as they consider a bill to lift credit union member business lending to 25% of assets from 12.25%, the Credit Union Association of New York said. Whenever credit unions seek new powers, the tax issue gets raised and it is “irrelevant,” William Mellin, association CEO, told The Business Review of Albany, N.Y. (Jan. 1). “We are cooperatives,” he told the publication. “We are set up so that the profits go back to the members. And the members pay taxes.” As a whole, the credit union industry is not close to its collective cap, and for many credit unions the existence of a low cap is the problem, Mellin added. “Most credit unions in the country are small, and don’t want to gear up to get involved in commercial lending if they have to make 20 loans and then stop,” he said. Albany-based State Employees FCU (SEFCU) makes business loans ranging from $1,000 to as much as $10 million, the Review said. “What this [lifting of the cap to 25%] would do is support our future,” SEFCU CEO Michael Castellano told the publication. “We’re in sight of the limit, and demand for our business loans is stronger than ever.” Other credit union executives in the article included Bruce Beaudette, CEO, Summit FCU, Latham, and Paula Stopera, CEO, Capital Communications FCU, Colonie.

CU System briefs (01/05/2010)

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* MANHATTAN BEACH, Calif. (1/6/10)--Kinecta FCU board of directors announced that credit union industry veteran Steve Lumm has joined the Manhattan Beach, Calif.-based credit union as interim president/CEO, effective immediately. He previously was president/CEO of the $1.8 billion asset Addison Avenue FCU (formerly HP Employees FCU) for 12 years and was instrumental in establishing its credit union service organization, Addison Avenue Financial Partners, which managed $1.7 billion in assets when he retired in early 2007. Since retiring, he has acted as a credit union consultant with Nice Enterprises Inc. Lumm also has served in leadership positions at Hewlett-Packard and was chair of the HP Employees FCU board and of the Supervisory Committee. Lumm will work with Kinecta's leadership team to continue the credit union's fourth-quarter performance momentum and deliver on its financial and operational plans while the search for a CEO is underway ... * MANCHESTER, N. H. (1/6/10)--Northeast CU has donated $10,000 to the New Hampshire Food Bank. In the photo, Northeast CU
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President/CEO Peter Kavalauskas presents the check to Melanie Gosselin, executive director of the food bank, on behalf of the credit union's employees, volunteers and board members. The food bank has seen a 30% to 40% increase in demand for meals from people struggling with the economy. "We recognize the extreme need to support our local communities, particularly during the holiday season when so many families are working hard to make ends meet and struggling to place food on their tables," said Kavalauskas. The Portsmouth, N. H.-based credit union has $656 million in assets. (Photo provided by Northeast CU) ...

CUs have great reputation Kanjorski tells Pa. CUs

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HARRISBURG, Pa. (1/6/10)--Credit unions have a great reputation in the financial services industry, U.S. Rep. Paul Kanjorski (D-Pa.) told credit union leaders Monday at a town hall meeting for Pennsylvania’s 11th Congressional District. “You offer a great service, and credit unions have a great reputation,” Kanjorski said. “Stick to your mission of providing financial services at a great value,” he added (Life is a Highway Jan. 5). The meeting also focused on Kanjorski’s bill that would lift the member business lending cap from 12.25% to 25% of assets and exclude loans less than $250,000 from being defined as a “business loan.” All credit unions present at the meeting stressed how small businesses are looking for new sources of credit while banks tighten loans, the association said. Regarding the 2010 election cycle, credit unions urged Kanjorski to seek another term. Pennsylvania Credit Union Association President/CEO Jim McCormack pledged support for Kanjorski’s campaign.

Pa. CUs see strong loan growth in 3Q

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HARRISBURG, Pa. (1/6/10)--New- and used-auto loans grew in third quarter 2009 for Pennsylvania credit unions, with new auto loans increasing 2.5%--double the growth reported in third quarter 2008, said the Pennsylvania Credit Union Association (PCUA). New-auto loans fell 0.1% nationally, according to PCUA’s Pennsylvania Profile, Third Quarter 2009. The report said state member business loan balances rose 5.2% in the third quarter and 23% over the last 12 months. Loan delinquency rates stabilized slightly above 1%, compared with the national average of 1.69% (Life is a Highway Jan. 4). Loans grew faster than savings during the third quarter, pushing the loan-to-savings ratio for Pennsylvania credit unions up to 69.4%, from its lowest point of 67.4% in the second quarter. Credit union membership also grew 2.3% over 12 months ending Sept. 30, compared to a national growth rate of 1.6%, PCUA said.

Top 10 INews NowI stories for December

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MADISON, Wis. and WASHINGTON (1/6/10)--Credit unions’ media advocacy efforts continue to bring results, and News Now’s Top 10 story list for December reflects that. Two stories on media efforts were among the top five stories in News Now’s Top 10 stories for December. December’s top stories include: 10. Consumers write CUNA: Nearing point of bank revolt MADISON, Wis. (12/16/09)--Consumers are writing the Credit Union National Association to vent against banks’ actions and policies, and some are mentioning the word “revolt.” In a meeting Monday, several large banks were taken to task by President Barack Obama about their reluctance to make loans and help the economy and their opposition to regulatory reforms. That prompted several letters Tuesday to News Now. 9. NCUA seeks to intervene in WesCorp lawsuit ALEXANDRIA, Va. (12/31/09)--The National Credit Union Administration (NCUA), which serves as conservator of Western Corporate FCU (WesCorp), announced Wednesday it has filed papers in a superior court in Los Angeles to intervene as plaintiff in a lawsuit against several current and former employees and officials of WesCorp. 8. Compliance: Statements must comply with new overdraft rules Jan. 1 WASHINGTON (12/16/09)--On Jan. 1, 2010, all credit unions that offer overdraft services will have to comply with new Truth-in-Savings requirements for disclosing aggregate overdraft fees on periodic statements. 7. Kohl’s payday loan bill means better access to CUs WASHINGTON (12/3/09)--Sen. Herb Kohl (D-Wis.) on Wednesday introduced legislation aimed at increasing access to mainstream financial institutions by encouraging credit unions and community banks to provide low-level loans to low- and moderate-income Americans. 6. Fed sets overdraft protection audio conference WASHINGTON (12/2/09)--The Federal Reserve Board will discuss its recently enacted final rules on overdraft protections during its “Outlook Live” Audio Conference, which is scheduled for Dec. 10 from 1 until 2 p.m. ET. 5. HUD issues new settlement-cost booklet WASHINGTON (12/29/09)--Starting Friday, Jan. 1, 2010, credit unions and other mortgage lenders must comply with the changes to the Real Estate Settlement Procedures Act implementing rules. These rules, finalized in November 2008 by the Department of Housing and Urban Development, require the use of revised Good Faith Estimate forms and HUD-1 Settlement Statement forms. 4. CNN tells why CUs are better WASHINGTON (12/30/09)--CNN Tuesday explained some of the reasons why consumers feel as though they're “getting a better shake” by choosing credit unions over banks. 3. NCUA denies lump-sum payment to employee of defunct CU WASHINGTON (12/15/09)--The National Credit Union Administration (NCUA) has denied a lump sum payment of more than $265,000 to a person who had a deferred compensation agreement with the failed New London (Conn.) Security FCU. 2. “Guys, I gotta go...we’re being robbed” STOCKTON, Calif. (12/21/09)--On Dec. 15, Allied CU CEO Frank Michael participated in a conference call with the Credit Union National Association's Small Credit Union Committee. During the call, Michael suddenly needed to sign off. “Guys, I gotta go ... we're being robbed,” he told the group. 1. Suze Orman to Larry King: CUs have great rates WASHINGTON (12/14/09)--Credit unions offer better rates on credit cards, personal finance guru Suze Orman told Larry King on Larry King Live Thursday.