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Members United meets on franchise value service plans

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WARRENVILLE, Ill. (10/4/10)--Members United Corporate FCU hosted a webinar Friday morning to update members on the state of the corporate since it was placed into conservatorship. In the webinar, the leadership noted that all shares are insured through Dec. 31, 2012, all products and services are in place with no interruptions, and the corporate will deliver a new plan for its survival to members later this month, according to the New Jersey Credit Union League (The Daily Exchange Oct. 1). The corporate was one of three placed into conservatorship on Sept. 24 by the National Credit Union Administration (NCUA). Scott Hunt of NCUA's Office of Corporate Credit Unions and now a board member of the corporate told members there is value in the Members United "franchise" and he hoped members would be open to listening to Members United's plan for the future. "The benefit of Members United and the other corporates is a franchise value," he told those attending the webinar. Members United serves 2,400 members out of the 7,600 credit unions in the system, a "significant" number, he said. NCUA encouraged members to consider a long-term, viable partner as a group. The corporate will have time to consider a plan. If a viable plan isn't found, members would then have about 24 months to find a future provider. However, Hunt said NCUA would be flexible on the timing. "It will be much more difficult for members if we piece out services to other providers. The first goal is to remain intact all the solutions provided to members by Members United," he said. Interim CEO Chuck Furbee emphasized that a bridge corporate "means we look different from an accounting perspective, but we look very much the same from an operations standpoint." For the next six months it is better for the entire corporate credit union system if credit unions keep their funds in the corporate while NCUA works on implementing the legacy asset strategy, Hunt said. Credit unions asked if those who lost member capital shares will have an opportunity to recoup the funds if the "legacy assets" perform better than expected. However, Hunt noted that the funds' priority will be to settle the corporate's liability and the returns likely would not be cleared for up to 20 years. "The amount and timing are very much unknown. I don't want to give any false perception that will happen, but we are preserving that opportunity." A recording of the one-hour webinar is available at Members United Corporate's website. To access it, use the link.

First Carolina Corp. Reg is in line with biz plan

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GREENSBORO, N.C. (10/4/10)--First Carolina Corporate CU says the National Credit Union Administration's (NCUA) final rule concerning the corporate credit union system is in line with First Carolina's business plan. In an update sent Wednesday to the Greensboro, N.C.-based corporate's member credit unions, President/CEO David W. Brehmer said the "new regulatory framework that ended up in the final regulation is very much in line with where we were heading in our business plan." "We believe that from an operational perspective, First Carolina can succeed and continue to serve its members in a value-added manner. First Carolina is a profitable operation today and that should continue well into the future," he said. "Our challenge in the near term will be executing our recapitalization effort as we have no choice but to raise new capital and convert existing capital to meet the minimum capital requirements outlined in the new regulation," he added. Brehmer noted the corporate is in the process of reworking its capital restoration plan with a goal of discussing it at its board meeting this week. After the meeting, the corporate will set dates and locations for town meetings. NCUA announced the final rule on Sept. 24, along with its plan for treatment of "legacy assets" and its conservatorship of three corporate credit unions: Southwest Corporate FCU, Members United Corporate FCU and Constitution Corporate FCU.

Texas league warns of phishing scam

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FARMERS BRANCH, Texas (10/4/10)--The Texas Credit Union League is warning credit unions about an e-mail in circulation claiming the Texas league was notified by Visa that a national retailer may have experienced a card security breach. The perpetrator is phishing for personal information to be used fraudulently, the league said. The league encourages credit unions to continue educating members about phishing and other scams. The phishing e-mail reads: “The Texas Credit Union League (TCUL), representing all of Texas credit unions, was notified by VISA that a national retailer may have experienced a security breach. As a result, some Texas credit unions VISA/Master/ATM/Debit card accounts may be affected. If you have received this notification means that your card account was identified as being at risk.” The e-mail signature uses the name of Guy M. Hood, the well-known, retired CEO of the Florida Credit Union League. He has never been affiliated with the Texas league. The league is taking steps to protect the privacy of its members and sent copies of the e-mail to the Texas attorney general’s office Internet Crime Complaint Center.

Federation briefs press about CDCI funds

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NEW YORK CITY (10/4/10)--The National Federation of Community Development Credit Unions Friday held a press briefing regarding the Treasury Department’s Community Development Capital Initiative, through which 48 community development credit unions received funds. During the conference, federation President/CEO Cliff Rosenthal noted that the infusion--roughly $70 million for credit unions--was the largest he’s seen in 30 years. Total funding through the program is $570 million. The infusion is “not bailout money,” Rosenthal emphasized. The funds will help credit unions to better serve their members and communities by allowing them to expand their services. Some credit unions have turned people away because of their capital shortcomings, he added. Responding to the application process for funds, credit unions must undergo a rigorous review process to ensure they are well-suited candidates, Rosenthal said. “It’s not a walk in the park,” he added. The funds were distributed to recipient credit unions at the end of September.

N.C. governor launches small biz lending initiative

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GREENSBORO, N.C. (10/4/10)--North Carolina Gov. Beverly Perdue has launched the Capital Access Network initiative to increase government guaranteed lending to small businesses statewide. The state’s commissioner for small business and the commissioner of banks are working together on the initiative and have introduced a statewide network of 65 business advisers who are available to assist credit union and bank clients with financing issues (North Carolina Credit Union League’s Weekly Update Sept. 28). Credit union employees may refer any small or mid-sized business owner to a local business adviser through the Department of Commerce’s Business Link North Carolina (BLNC). The BLNC staff will conduct an initial interview, provide some guidance on the documentation the business owner will need to support a loan application, and refer them to a local business adviser. The adviser will then work face-to-face with the business owner to improve the loan application and understanding of eligibility requirements for all types of debt financing, including debt guaranteed by the Small Business Administration and U.S. Department of Agriculture. If a credit union refers a member business owner to one of the business advisers for assistance in preparing a loan package, the advisers have agreed to return that client to the credit union for loan submission. The counseling services are confidential and free. The business advisers are members of the Small Business and Technology Development Center, the Small Business Center Network and SCORE, a nonprofit association dedicated to educating entrepreneurs and helping small business.

INews NowsI Top 10 stories for September (10/01/2010)

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MADISON, Wis. (10/4/10)--Stories about the corporate credit union system dominated September’s list of top 10 stories in News Now. Other stories that made the list include a study indicating that credit unions beat banks on trust, and the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act. September’s top stories are: 10. Official insurance signs have March 2011 deadline WASHINGTON (9/3/10)--Starting March 2, 2011, federally insured credit unions must abandon any jury-rigged public displays that disclose a 2006 change in law that increased share insurance levels to $250,000, up from $100,000. 9. Study: CUs beat banks on trust--again MADISON, Wis. (9/8/10)--Banks could take a lesson from credit unions on building relationships, according to a recent Mintel Comperemedia report. 8. More on SAFE Compliance: Sample policy WASHINGTON (9/14/10)--The Credit Union National Association, in response to inquiries, has written a sample policy that credit unions may find useful to review in developing their own Safe and Fair Enforcement for Mortgage Licensing Act (SAFE) policy that must be adopted by Oct. 1. 7. NCUA: Assessment at 12.4 bp, corp. CU rule Sept. 24 ALEXANDRIA, Va. (9/17/10)--The National Credit Union Administration (NCUA) approved a 12.42 basis point National Credit Union Share Insurance Fund (NCUSIF) assessment at its Thursday open board meeting. 6. NCUA reveals new corporate CU rule ALEXANDRIA, Va. (9/27/10)--The National Credit Union Administration on Friday revealed the final corporate credit union rule. 5. NCUA to CUNA: Expect merger registry in Oct. WASHINGTON (9/9/10)--The National Credit Union Administration (NCUA) said credit unions can expect a national merger registry "to be live by October." The registry, an idea initally recommended by the Credit Union National Association would provide the names of potential credit union merger partners. 4. NCUA denies community charter for CU BRIDGETON, Mo. (9/20/10)--The National Credit Union Administration (NCUA) has denied an application by Bridgeton, Mo.-based Vantage CU to convert to a federal community charter. 3. Compliance: A SAFE registration update WASHINGTON (9/13/10)--The Conference of State Bank Supervisors (CSBS) briefed the Credit Union National Association (CUNA) and other trade associations last week about its progress on developing the registration process that banks, credit unions, and their employees will have to follow in order to comply with the Safe and Fair Enforcement for Mortgage Licensing Act (SAFE Act). 2. CU movement reacts to NCUA’s actions on corporates MADISON, Wis. (9/28/10)--The credit union movement responded over the weekend to the National Credit Union Administration's (NCUA's) announcements about its final corporate rule, the conservatorship of three corporate credit unions, and its plan to isolate and securitize the corporates' "legacy assets." 1. Cheney battles notion of CU ‘bailout’ on Fox News WASHINGTON (9/29/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney took to the airwaves to correct the misperception that credit unions are being "bailed out" by the National Credit Union Administration's (NCUA) recently released corporate credit union and legacy asset plans.

AVCU advises Peru CUs on startup ATM network

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SOUTH BURLINGTON, Vt. (10/4/10)--Joe Bergeron, president of the Association of Vermont Credit Unions (AVCU), and Michelle Fullerton, AVCU program services administrator, traveled to Peru last week to advise South America credit unions as they work to grow a startup ATM network.
Joe Bergeron (right), president of the Association of Vermont Credit Unions (AVCU), and Michelle Fullerton, AVCU program services administrator, traveled to Peru last week to advise credit unions as they work to grow a startup ATM network. (Photo provided by the Association of Vermont Credit Unions)
Bergeron and Fullerton made the trip at the request of the World Council of Credit Unions (WOCCU) (Newslines Express Oct. 1). WOCCU called upon AVCU because it has operated its own ATM and debit card program and developed Electronic Funds Transfer (EFT) knowledge for more than 15 years. Kuskanet is one of five similar WOCCU projects ongoing in Latin American countries. Bergeron and Fullerton consulted with managers and operations personnel from the Kuskanet ATM network at the Federacion Nacional de Cooperativas de Ahorro y Credito del Peru (FENACREP) offices and at select Kuskanet credit union locations in Lima and Ayacucho. Peru’s credit unions are politically locked out of regional and national EFT networks. As a result, prior to the creation of Kuskanet, credit unions could issue plastic cards, but members had no place to use them. The startup ATM network, so named because “kuska” means “together,” is owned by WOCCU, FENACREP and a handful of member credit unions. “It’s amazing what they’re doing with the resources they have available to them, especially considering how they’re politically blocked from accessing networks by big banks,” Bergeron said. “Kuskanet hopes to change that dynamic and create competition with banks that will provide members with the same services that bank clients receive and will ultimately benefit all Peruvian consumers.” He noted that Kuskanet completely bypasses checking accounts. “Peru credit unions don’t have checking accounts, so they’re going direct to plastic cards for access to cash.” Because of the inability to access EFT networks, making the ATM cards debit-capable isn’t an option right now, but Bergeron and Kuskanet said they hope to change that in the future. The long-term goal is to research possible alternatives to gain access to already existing remote access infrastructures. Leading the trip and assisting the consulting efforts was Steve Schaefer, WOCCU manager of technical services. Schaefer oversees WOCCU’s EFT projects in Peru and in other Latin American countries. AVCU is in its third year of a WOCCU international partnership with FENACREP and Peru’s credit unions. Prior to the ATM network project, AVCU researched the possibility of developing a deposit insurance system for Peru’s credit unions, with Bergeron providing testimony to a committee of Peru’s national congress. Representatives from AELUCOOP credit union will visit Vermont next week to sign a partnership agreement with Vermont FCU, Burlington. AELUCOOP, the second largest credit union in Peru, has a membership that is predominantly Japanese. The same is true of ABACO, the largest Peruvian credit union, which is in a WOCCU partnership with Heritage Family FCU, Rutland. Early in 2011, representatives from Pacifico CU will travel to Vermont to establish a partnership with NorthCountry FCU, South Burlington.

What do census figures mean for CUs

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MADISON, Wis. (10/4/10)--The U.S. Census Bureau’s recently released 2009 American Community Survey (ACS), which provides information on the nation's population, has some ramifications for U.S. credit unions, according to a Credit Union National Association (CUNA) economist. Wednesday’s release is based on survey responses collected during 2009 and provides data on the U.S.’ socioeconomic, housing and demographic characteristics. For median household income, the ACS shows:
* Real median household income in the U.S. fell between 2008 and 2009-- decreasing by 2.9% to $50,221 from $51,726; and * Between 2008 and 2009, real median household income decreased in 34 states and increased in one: North Dakota.
Regarding poverty, ACS data show that:
* Thirty-one states saw increases in both the number and percentage of people in poverty between 2008 and 2009; and * No state had a statistically significant decline in either the number in poverty or the poverty rate.
“The thing that causes poverty is job loss and the inability to find jobs,” Mike Schenk, CUNA senior economist, told News Now. “The immediate effect of job losses is rising delinquencies and charge-offs. We already lived through that. “Increases in unemployment mean incomes go down,” he added. “That effect is softened by the [government] social safety net. Nevertheless, when incomes go down, we see higher delinquencies and charge-offs. Since 2010, the deterioration in labor markets has stopped. Labor markets are beginning to heal themselves, so incomes should go up. “We’ve seen declines in delinquency rates at credit unions, but they’re just marginal improvements,” he continued. “The longer-term effects of higher poverty rates don’t express themselves in delinquencies and defaults; they mean people don’t get loans and credit is not as readily available. Less credit available means less spending and less economic growth.” For home values:
* In 2009, the median property value for owner-occupied homes in the U.S. was $185,200; * After adjusting for inflation, the median property value decreased in the U.S. by 5.8% between 2008 and 2009.
Regarding rental housing costs:
* Nationwide, roughly two in five renter households (42.5%) experienced housing costs that consumed 35% or more of their incomes; and * Housing cost burdens ranged from a low of 23.2% of renting households in the Casper, Wyo., metro area to a high of 62.8% of renting households in the College Station-Bryan, Texas, metro area.
“Declines in home values in the short-run mean higher delinquencies and defaults, but we’ve lived through most of that already, so most of the nasty consequences of that are behind us,” Schenk said. “However, declines in home values mean that people are less willing and able to borrow money and to spend. “People can’t tap into home equity because there’s less of it or it doesn’t exist,” he continued. “The labor force is a lot less mobile. If a house is worth less than you pay for it, you’ll be less able to sell it and move to where the jobs are. “So it prolongs the difficulties in the labor market and tends to be a self-reinforcing cycle,” Schenk concluded. The first set of 2010 Census data, including the nation’s population and congressional apportionment figures for the states, will be released by the end of 2010. To see the ACS release, use the link.

Post CUs can seize opportunity from slow economic growth

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SAN ANTONIO (10/4/10)--Four areas of risk will affect the economic recovery, and credit unions and regulators should expect continued difficult economic times that may not return to the "normal" as they know it, attendees of the National Association of State Credit Union Supervisors (NASCUS) Annual Summit were told Thursday. CUNA Mutual Group President/CEO Jeff Post, speaking at the summit, said he believes the slight improvement in 2010's economic conditions may only be a break, rather than a real economic recovery. “We’re clearly not in a recovery and we face the potential risk of the economy declining before it fully stabilizes,” Post said. “I believe we’re entering a new economy--one that will not have the type of growth or accumulation of wealth we’ve seen in previous decades. I also believe it’s very important to have our eyes wide open for the future. In times of great challenge, there are also opportunities to improve, differentiate and gain market share.” Post focused his concern on four areas of risk that will affect an economic recovery: housing, employment, credit losses and debt.
* Housing: “Total delinquencies were at 13.97% at the end of second quarter. With foreclosures continuing and inventories still high, there’s a real concern that values will continue to decline. Credit union members are affected in another way--many were counting on their home equity to contribute to their retirement. In the future, that may not be an option.” * Employment: “Only when there’s a consistent increase in employment will we see improved home sales and starts. Until companies have more confidence in the future, employment will continue to be a challenge.” * Credit losses: “Remember, the economic crisis started as a credit crisis, and we continue to see credit losses continuing today. An astonishing $1.3 trillion of consumer debt is delinquent ... Adding to the weight of this debt is the fact that consumers’ income statements aren’t flush now due to high unemployment and rock-bottom interest rates.” * Debt: “I worry about the next decade and beyond because of the growing U.S. debt and debt around the world.”
Despite the gloomy economic picture, Post said he feels better about the economy today compared to 2008 and early 2009. “However, I’m clearly not bullish,” he added. He reminded attendees that challenging times also present opportunities and suggested credit unions employ some of the same strategies CUNA Mutual has in the down economy. “This is a great opportunity to clarify your strategy and what sets you apart," Post said. "Now is the time to improve by leveraging your strengths and reducing costs in areas where you don’t differentiate, and it’s also an opportunity to return to your roots, or your original purpose. These actions can help improve your operations and the balance sheet, and give you the flexibility to adjust based on the things you don’t control,” he added.