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Home Equity Loans on Rise According to CUNA Monthly Estimate

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MADISON, Wis. (1/6/14)--Optimistic consumers and rising home prices equaled higher home equity loan growth in November according to the Credit Union National Association's monthly sample of credit unions.

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"We're seeing a nice turnaround in home equity loans," said Steve Rick, CUNA senior economist. After years of deleveraging and paying down debt, consumers are starting to borrow, he said.

S&P/Case-Shiller home price indexes, released Dec. 31, collectively rose 13.6% in October (See Jan. 2 News Now, Monthly Increase in Home Prices Highest Since '06.)

With home prices rising, there is equity available for homeowners to tap into. The monthly credit union estimate report said home equity loans grew 0.4% in November. "It means good things for the economy," he said.

Rising mortgage rates are prompting the upward movement in adjustable-rate mortgages, which led November loan growth at 1.1%. Fixed-rate mortgages declined 0.04%.

Overall, loans continue to do well, with 0.3% growth in November. Right now, CUNA is forecasting about 6.5% in loan growth for the year ending 2013 and more than 7% in 2014, Rick added. "We could see one of the best years in loan growth with a stronger economy and consumer confidence going up," he said.

Credit unions also are picking up market share in new auto loans, which increased 0.4%.

"Earnings aren't coming in as strong as we'd like to see," Rick said, which resulted in a slowdown in capital growth. November's year-over-year number was 4.3% compared with 7.9% for November 2012's year-over-year.

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The November loan-to-savings ratio of 69.8% decreased 0.4% from October because of the extra payday in November, said Rick. "Everybody got paid on that Friday, and the savings went up," he said.

Credit union savings balances grew 0.8% in November compared to a 0.3% increase in October. Share drafts had the greatest increase of 4.5%, while one-year certificates, regular shares and money market accounts ticked upward. Individual retirement accounts declined 0.1%.

Asset quality remains strong as shown by the 60-day-plus delinquency rate that has been at 1% for the past nine months.

Credit union membership grew to 98.3 million--a 2.5% increase from November 2012 and year-to-date growth of 2.4%.

4 CUs Join Fledging Police CU Association

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ORANGE, Calif. (1/6/13)--In its first month of existence, the Police Officers' Credit Union Association has enlisted four new members.

New member credit unions include:
  • Chicago Patrolmen's FCU;
  • Greater Hartford (Conn.) Police FCU;
  • Police & Fire FCU, Philadelphia; and
  • Police FCU, Upper Marlboro, Md.
State Highway Patrol FCU, Columbus, Ohio, is the charter member of the association.

"Given the direction and growth we were seeing with the conference, starting the POCUA was the natural next step," said Norman Mann II, executive vice president and chief operating officer of Police FCU. "Regardless of size, it's going to be more difficult for credit unions to compete in the future. The association provides the structure for police credit unions to collaborate and thrive."

Police FCU has been a supporter and attendee of the Police Officers' Credit Union Conference since its inception in 2004.

5th CU Approved To Accept N.J. Municipal Deposits

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TINTON FALLS, N.J. (1/6/14)--United Teletech Financial FCU, Tinton Falls, N.J., is the fifth credit union in New Jersey to secure eligibility to receive municipal deposits.

After filing its Governmental Unit Depository Protection Act (GUDPA) application, the credit union received its official notification of eligibility Nov. 25.

"This is a big deal and allows UTF to bid for the deposits of various public entities as they receive funding at the beginning of the year," Leo R. Ardine, president/CEO of $322 million-asset UTF FCU, told the New Jersey Credit Union League (Daily Exchange Jan. 3).

UTF FCU will be included on the list of eligible depositories for local government entities, municipalities and school districts in New Jersey's Monmouth, Middlesex and Ocean counties.

The league helped pass legislation in 2011 to allow credit unions to enter the $15 billion municipal depository market.

In Ohio, the Ohio Credit Union League and credit unions are urging state lawmakers to pass legislation that would allow credit unions to accept municipal deposits (News Now Dec. 30).

Other states that have laws on the books or are considering legislation to allow credit unions to accept public deposits include California, Illinois, Missouri,  New York, Oregon and Washington.

South Dakota CUs Score Another Win in Tax Battle

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BROOKINGS, S.D. (1/6/14)--South Dakota credit unions achieved another victory in their battle against state banks Thursday when a resolution proposal to change the tax status of state credit unions and farm credit services failed to get support from the Brookings Chamber of Commerce  Government Affairs Committee and died on the table. 
A motion was made to approve the resolution; however, it failed to receive a second motion and was not called into question, the Credit Union Association of the Dakotas (CUAD) reported. If approved, the resolution proposal would have been recommended for adoption by the Brookings Chamber of Commerce and Visitors Bureau Board of Directors. 
While the South Dakota Bankers Association is seeking a resolution sponsor for the upcoming state legislative session, its proposal has failed to win approval from several local city, county and school boards across the state, including the Brookings County and City commissions, Yankton City Commission and School Board, the Vermillion City and Clay County commissions, and Campbell County Commission.  
"Over the course of the last several months I have come to the conclusion that the reason that banks are devoting so much time and energy to shouting at the rain about 'tax equality' on the local level is because they can't sell it anywhere else," Jeff Olson, CUAD vice president of advocacy, told News Now
CUAD will advocate for credit unions at the Yankton Area Progressive Growth Committee and at the Vermillion and Brookings School Board meetings Jan. 14. The South Dakota Legislative Session is set to open in Pierre Jan. 14.

Frankenmuth CU Forms Community Foundation with Dividend

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FRANKENMUTH, Mich. (1/6/14)--Frankenmuth (Mich.) CU invested its annual patronage dividend of $1 million back into its community by creating a new nonprofit called Foundation for Our Communities.
"This was something we have never done before, but when the board saw that the patronage dividend gave a big benefit to some and a small benefit to most, everyone around the table had a desire to make a much bigger impact for our membership," said Vickie Schmitzer, CEO of the $285 million-asset credit union (Frankenmuth News Jan. 3). "That's where the idea of the foundation came from."
The credit union determined at year-end that it had an additional patronage dividend that went beyond the normal dividends it calculates quarterly.

Foundation for Our Communities will support projects that are concentrated on improving the quality of life and will continue to support the credit union's mission to support community causes that its members care about.
Board Chairman Pete Bender said, "Frankenmuth CU has always been very active in the communities it serves by donating time, talents and treasures, but we feel the establishment and funding of a foundation will further enhance our support of those communities we serve."

CU System Briefs (01/06/2014)

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  • HARRISBURG, Pa. (1/6/14)--Pennsylvania State Employees CU announced recently that it is bestowing a $10 million dividend upon its members this year. The minimum reward is $10, with the maximum determined by the usage of certain products and services combined with a percentage of total dividends earned and interest paid by the entire membership.  This is the second year in a row that the $4.1 billion-asset credit union distributed dividends. "Thanks to our members, we're as strong as ever and as a member-owned financial cooperative, it's only right that we give back to them," said Gregory Smith, president of the Harrisburg, Pa., credit union ...

  • BEAVERTON, Ore. (1/6/14)--Doug Page became Great Northwest FCU's new president/CEO Jan. 1 (Anthem Jan. 2). Page, who has been with the $113 million-asset credit union since 1994, replaced outgoing head Karen Burkhalter. He was previously an executive vice president--a position he had held since 2002. Before joining the Aberdeen, Wash.-based credit union, he worked for a finance company in Spokane, Wash. Page predicted that the credit union's biggest challenges will be "much like those at many other credit unions: shrinking margins, an excessive compliance burden and slow loan demand," but said he expected Great Northwest to manage them ...

  • ARLINGTON HEIGHTS, Ill. (1/6/14)--Community Trust CU, Gurnee, Ill., named Lana Krieps as its new CEO (The Daily Herald Jan. 2). Krieps, who has 29 years of experience working in the financial sector, had previously worked at Pioneer West Virginia FCU, Charleston, W.Va., where she oversaw nine branches as a vice president. She has also been a CEO and a chief financial officer at other credit unions. Community Trust CU has $185 million in assets and membership based in Lake and McHenry counties ...

  • WASHINGTON (1/6/14)--Sandra Braunstein, the Federal Reserve's director of the Division of Consumer and Community Affairs, announced Friday that she will retire April 1. She has led the department since April 2004. Under her administration, the division developed a new regulatory framework for credit cards and used the Truth in Lending Act and Home Ownership and Equity Protection Act to establish consumer protections for residential mortgage borrowers. Braunstein also oversaw the establishment of mortgage foreclosure mitigation and neighborhood stabilization programs after the 2008 financial collapse. From 2010 to 2011, she also helped transition staff and resources to the Consumer Financial Protection Bureau. Braunstein has worked for the Federal Reserve Board for almost 27 years ...

  • NEW YORK (1/6/14)--The deadline for Community Development Investment Program applications has been extended to Jan. 10 from Jan. 6 due to inclement weather. The grants are given out by the National Federation of Community Development Credit Unions to low-income designated credit unions seeking to increase liquidity, boost net worth, mitigate risk, and launch innovative products. (News Now Dec. 20, 2013). CDIP is also accepting applications for predatory relief and intervention deposits and microenterprise deposits ...