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CU System Briefs (10/11/2013)

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  • SALT LAKE CITY, Utah (10/11/13)--A credit union foundation awarded schools in Utah with over $10,000 at the start of the school year. Six schools in five districts received the money from the 100% For Kids Utah Credit Union Education Foundation, a charitable arm of the Utah Credit Union Association. The donation is geared toward financing supplies for the schools' core curriculum. "Reading, writing and math are so important in our modern society and our economy, we make those projects a priority," said Liz White, director of the foundation. "In the true spirit of the original credit union philosophy, Utah's credit unions are giving back to the people in their communities through 100% for Kids," said Scott Simpson, the association's president/CEO. The foundation has given over $5 million since it was created in 2002 ...

No Monday Edition Of News Now

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WASHINGTON and MADISON, Wis. (10/14/13)--Today is Columbus Day, a federal holiday. News Now will not publish its regular issue today, but will resume regular publication on Tuesday. 

The Credit Union National Association's offices in Washington, D.C., and Madison, Wis., are open.

Donovan: 'Table Is Set' For Tax Reform

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UNCASVILLE, Conn. (10/11/13)--Credit unions' membership numbers give them a tremendous advantage over their political opponents, aka the banks, said Credit Union National Association Senior Vice President Ryan Donovan Thursday, but only if federal lawmakers believe credit unions can bring their members to speak up on their behalf.

"Lawmakers take notice when they hear credit union
Click to view larger image Credit Union National Association's Ryan Donovan says now is the time for credit unions to ask their members to contact federal lawmakers in support of the credit union tax status. (CUNA Photo)
 numbers--but they take ACTION when they hear from them," he said.  Donovan was addressing the CUNA Community Credit Union & Growth Conference here.  The conference ends today.

Donovan told the assemblage of community credit union leaders that there are advocacy lessons for credit unions woven through the success of Prohibition Era politics.

First, as Donovan has advised credit unions many times, political advocacy is a "long game."  Like prohibition workers, advocates have to be disciplined, have to work methodically to generate "support on the ground," and have to be in it for the long haul--though hopefully, Donovan added, not the 60 years it took Prohibition to be established.

Another thing to remember, Donovan said, is that a group asking for change--like the banks  asking to revoke the credit union tax status or the prohibitionists seeking to revoke alcohol--is always more passionate and more motivated than the one defending the status quo.

"Credit unions are the status quo" in the credit union tax status fight, he said. "If we don't react when there is a threat, they may demonstrate the resolve to wear us down.  And that would be bad for credit union members."

The CUNA senior vice president, noting the meltdown in Congress that has caused the ongoing government shut down, said he could anticipate that credit unions might wonder, given lawmakers' seeming inability to get anything done, why bother fighting so hard on tax reform?

He informed the audience that Congress' current 95% disapproval rating is "unsustainable."

"When we are out of this crisis, there will be immense pressure on lawmakers to show that they can get something done," and tax reform could be that something, he said. The tax reform process has been a bi-partisan effort, he reminded, and added that "table is being set for Congress to do something."

"The problems that led us to the fiscal cliff and to this debt ceiling problem have not gone away. We have a debt in excess of $14 trillion and the government has been running annual budget deficits since 2001," Donovan said.  It is quite possible that the resolution for the debt ceiling will include instructions for the tax-writing committees to produce comprehensive reform and perhaps expedited consideration, he added.

Donovan said the tax reform process could still take some time, but how the credit union tax status is accommodated in the early drafts of legislation will be critically important.

Regarding bank attacks, Donovan reminded that the banks have pushed tax legislation in Oregon and Illinois and run campaigns of anti-credit union radio ads in Missouri, Illinois, and Washington, D.C., among other things.

In an on-the-spot poll, Donovan canvassed his audience asking how many thought the tax threat to credit unions was real.  Ninety-one percent indicated they understood it is real.

He urged the credit union representatives to engage their members in the advocacy efforts and noted the advocacy tools CUNA provides through its "Don't tax My Credit Union" campaign at donttaxmycreditunion.org, including mobile advocacy apps that allow instant access to lawmakers and regular updates on the tax issue.

Texas Trust CU's Youth Council Designs ICU Day Campaign

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MANSFIELD, Texas (10/11/13)--A panel of high school students that works with a Mansfield, Texas credit union developed a website to promote International Credit Union Day.
 
The Texas Trust CU Youth Advisory Council, made up of 16 high school students, meets twice a month to discuss student leadership and personal finance. (Photo provided by Texas Trust CU)
The 16-member Youth Advisory Council--established by Texas Trust CU in 2011--developed the website as part of a youth-focused International Credit Union Day campaign.

The website was designed by Jacob Brunson, Angel Murphy, and Alessandra Wheeler--three members of the group, which is made up of students at five north Texas public school districts and two private schools.

The council, which was founded to promote student leadership and personal finance, meets twice a month. Fifty-six students applied for the council's positions, which the incumbents will retain until December.
 
International Credit Union Day has been held on the third Thursday of October since 1948 to celebrate the difference between credit unions and banks.

Use the link to take a look at the website designed by the Texas Trust CU's Youth Advisory Council.

Kansas CUs Give Away 23K In Make a Difference Campaign

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WICHITA, Kan. (10/11/13)--Seventeen Kansas credit unions gave away cash, gift cards and free gas totaling 23,000 to 900 Kansans at 10 locations Wednesday as part of a statewide Make Difference event.
 
Click to view larger image Adrianne Basham, Central Star CU, Wichita, receives a hug after giving away a gift card at the Kansas credit unions' 2013 Make a Difference Event.
"We don't do any advance promotion for these events," said Susan Dyer, Kansas Credit Union Association communications director. "We feel our efforts have the greatest impact when it's unexpected. We just want to brighten someone's day, and hope that those on the receiving end pass it on, so it has a ripple effect in the community."
 
This is the third event in the Kansas Credit Union Association's Make a Difference campaign. The first event was a gas giveaway.  The second event was a giveaway that included gift cards, cash, free coffee or free lunches.
 
Representatives from the participating credit unions throughout the state volunteer and coordinate their respective locations for the event. Initial consumer reactions have been positive with lots of smiles, "thank yous," and even a few hugs.
 
"These events are a great way for credit unions to put the 'people helping people' philosophy in action," said Dyer. "Credit unions exist to serve their members and support their local communities, and these events illustrate the credit union difference."
 
The giveaway did indeed make a difference to beneficiaries. Dyer reported "countless thumbs up, handshakes and high fives," and at least three hugs at one location. Some recipients cried, she said.
 
Click to view larger image A consumer in Wichita, Kan., can't believe his luck after Christy Bales of Cessna Employees CU gives him $25. (Photos provided by Kansas Credit Union Association)
At one location, a man initially took the money but returned it and asked that it be given to some more in need.
 
One credit union received a call from nonmember to thank the credit union for helping her daughter, who was down to her last $5 until payday, said Dyer.
 
The Make a Difference campaign prompted on giveaway recipient to visit the credit union and open a share account.
 
The 17 participating credit unions in the Make a Difference giveaway included:
  • Ark Valley CU, Arkansas City;
  • Central Star CU, Wichita;
  • Cessna Employees CU, Wichita
  • Educational CU, Topeka;
  • Emporia (Kan.) State FCU;
  • EquiShare CU, Wichita;
  • Kansas State University FCU, Manhattan;
  • Mainstreet CU, Lenexa;
  • Medical Community CU, Wichita;
  • Meritrust CU, Wichita;
  • Mid American CU, Wichita;
  • New Century CU, Topeka;
  • Quest CU, Topeka;
  • Reliance CU, Kansas City;
  • TECU CU, Wichita;
  • United Northwest FCU, Norton; and
  • United CU, Ness City.

Community CUs Offer Peers 'Best Practices' Tips

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UNCASVILLE, Conn. (10/11/13)--Three 2012 Community Credit Union of the Year award winners walked their peers through a presentation Thursday to illustrate the "best practices" that led their credit unions to the winners' circle.

The three speakers agreed that the best practice for any credit union is to stay true to the credit union philosophy. But each also dug down into the particulars that have helped their credit unions succeed. The presentation was a Thursday morning breakout session at the Credit Union National Association's annual Community Credit Union & Growth Conference.

Dan Cumbee, president/CEO of $235 million asset Dakotaland FCU, Huron, S.D., said his credit union's success is written in its history. It became a designated low-income credit union (LICU) in 1997, gained a community charter in 1998, and, because of its LICU status, has had access to secondary capital since 1999 and a waiver from the 12.25% member business lending (MBL) cap since 2005.

Cumbee said that access to secondary capital is a "great tool to manage growth." Federal law restricts most credit unions' capital formation to retained earnings. CUNA actively advocates for supplemental sources of capital for credit unions as a tool to manage growth. Among the steps to success recommended by Cumbee were:
  • Remove limitations on your credit union as much as possible. For instance, expand your field of membership. "Otherwise," he said, "you are just limiting your own future."
  • Become LICU-designated, if you can. He said there is no "downside" to the designation, and it is a route to escape capital restrictions and the MBL ceiling. 
  • Consider Federal Home Loan Banks for term borrowing. Dakotaland has been an FHLB borrower for at least 10 years, and Cumbee recommended it as a tool for mortgage lenders to lengthen their liabilities to match their assets."
Cumbee said most of all a credit union should remember its mission: service to members.

Also during the Best Practices session, Amber Scott said that in 2007 her credit union took a look at its mission statement--something she said no one really understood--and honed it. The mission the credit union accepted was to "exceed member expectations." Scott is vice president of marketing at 1st MidAmerica CU, in Bethalto, Ill.,, which won honorable mention in the $250 million-$500 million asset category in the Community Credit Union awards.

She said that 1st MidAmerica then employed member and employee feedback to determine what are the strengths contained within the credit union brand. It found:
  • Long-term relationships;
  • Service and trust; and
  • Community.
"Next we identified gaps in our brand," Scott said. They were:
  • New youth products;
  • A mortgage program for those approaching retirement years; and
  • E-service development.
Scott said her credit union met these challenges and more. MidAmerica also offers popular educational seminars to members and nonmembers in its community, among many other community outreach efforts.

MBLs were among the topics of the session's final speaker, CEO Steve Schmitz of First Community CU, Jamestown, N.D., the largest credit union in the state with $450 million in assets.

Schmitz said from 60% to 65% of his credit union's loan portfolio is in MBLs--possible because of flexibility in its 1939 charter that was grandfathered in.

"MBLs are very profitable, but expensive if you have losses. So invest wisely in expertise," he said. He also said a credit union entering or expanding an MBL program must prepare and execute a plan ("NCUA will demand it," he reminded) and be proactive in loan management.

Schmitz said his credit union's sales culture is built on a "needs-based model."

"We ask our employees to see what members need and then to ask them for their business," he said. He also counseled his credit union peers to "hire the right people" for sales, manage them well, and track results.

"Also," he admonished credit unions, "embrace change. It is the only sustainable model."

Missouri CUs Were Front And Center On Virtual Rally

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ST. LOUIS, Mo. (10/11/13)--
Click to view larger image Members at Arsenal CU, Arnold, Mo.--who were among thousands who participated in delivering the Don't Tax My Credit Union message to Congress during the national online rally Oct. 2-- hold up signs that say "I am a credit union member. Don't Tax My Credit Union. #DontTaxMyCU." To view an entire album members delivering that message, use the resource link.
Credit unions in Missouri did their part to share the "Don't Tax My Credit Union" message with lawmakers during Credit Union National Association's first  national virtual rally on Oct. 2, according the Missouri Credit Union Association.

The online event featured participation from leagues, credit unions and members across the U.S. drew 9,000 unique visitors to CUNA's www.DontTaxMyCreditUnion.org site, with 70% coming from first-time visitors. The online rally saw more than 2,300 e-mails from credit union advocates and nearly 2,200 tweets using the #DontTaxMyCU hashtag sent to members of Congress. The campaign overall has sent more than one million Don't Tax messages to Congress.

MCUA's website, like those of other leagues, outlined how it and Missouri credit unions participated in the rally.
Click to view larger image While credit unions and members delivered the Don't Tax My Credit Union message via Twitter, Facebook and other social media, some credit unions delivered it in person to members of Congress at the U.S. Capitol in Washington. Here is a group of Missouri credit unions and Missouri Credit Union Association staff who participated in the Missouri-Kansas Hike the Hill Oct. 2. (Photos provided by the Missouri Credit Union Association)
The site features a video of the physical rally held at Credit Union House in Washington D.C., and the online activities of a number of credit unions in its state, including:
  • Arsenal CU, Arnold;
  • Community America CU, Kansas City;
  • Holy Rosary CU, Kansas City;
  • United CU, Mexico;
  • Electro Savings CU, St. Louis;
  • Mazuma CU, Kansas City;
  • St. Louis Community CU;
  • Vantage CU, Bridgeton;
  • BluCurrent CU, Springfield; and
  • United Consumers CU, Independence.
MCUA also provided links to Twitter and Facebook pages the credit unions and members used as well as examples of messages tweeted. Use the links to review the activities of each credit union.

Oregon CU: Don't Write Off the Underserved

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UNCASVILLE, Conn. (10/11/13)--For those credit unions that have been led to believe the path to prosperity lies in focusing only on members with spotless credit, Teri Robinson has a message for you: Don't believe the hype.

In engineering a stunning turnaround of Pacific Ironworkers FCU, the CEO of the $10.6 million asset institution in Portland, Ore., placed her faith in a variety of tools designed to serve underserved consumers and those with marginal credit histories.

She said she was rewarded mightily.

Robinson told a Community Credit Union & Growth Conference breakout session about strengthening credit unions' ability to serve the underserved.

Hit hard by the recession, Pacific Ironworkers Federal fell into the net worth restoration program, bottoming out at 4.8% in January 2010. Examiners focused on four areas, according to Robinson: risky borrowers, higher-than-peer loan yield, higher-than-peer income, and higher-than-peer operating expenses.

Her curiosity piqued, Robinson analyzed her books and made a surprising discovery: Pacific Ironworkers Federal attributed 80% of charge-offs in 2011--and 60% the following year--to members with A+ to B ratings.

"I wasn't losing it on the riskier members-- I was losing it on the members who could chase rates," she said.

Pacific Ironworkers Federal's most loyal members constituted that at-risk segment, Robinson said. She decided to earn back their business from predatory lenders, who were charging members an average annual percentage rate (APR) of 29% compared to 16% for the credit union's average D-rated borrower; some even qualified for a C rating and an 8.75% APR loan.

By mining credit reports, Pacific Ironworkers Federal identified loan conversion candidates. Again, she said the results might be surprising: Robinson cited a school teacher who makes $70,000 annually as a regular payday loan user.

"I figured, if they've been making that payment at 36% for 12 months, why not get that loan over here by me?" Robinson said.

In April 2011, Pacific Ironworkers Federal obtained a Community Development Financial Institution designation, creating regulatory flexibility. An infusion of secondary capital boosted the credit union's net worth from 6.61% in January 2012 to 8.2% as of August 2013. Pacific Ironworkers Federal's loan growth increased 35% in 2013, hitting $10.5 million.

This year, Pacific Ironworkers Federal granted 47% of its loans to C-, D-, and E-rated borrowers, had a loan yield of 8% and increased its portfolio by $5.7 million. It boasts a 1% delinquency rate, and a 101% loan-to-share ratio.

"Some of the theories we think about at the National Federation of Community Development Credit Unions,  it's the people like her on the ground that prove it can happen," says Blake Myers, a federation consultant. "She's created a fair product that also works out very well for the credit union."

CU Award Winners Provide Shining Examples

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UNCASVILLE, Conn. (10/11/13)--Four credit unions received Credit Union National Association Community Credit Union of the Year Awards Thursday, recognizing community credit unions that best exemplify the principles of the credit union movement while serving as a positive influence in the field of service.

The credit unions received their honors during a ceremony at CUNA's Community Credit Union & Growth Conference in Uncasville, Conn. The three-day conference ends today.

Winners among credit unions with more than $250 million in assets were:
  • First place: Freedom First CU, Salem, Va.; and
  • Honorable mention: BayPort CU, Newport News, Va.
Winners among credit unions with less than $250 million in assets were:
  • First place: St. Louis (Mo.) Community CU; and
  • Honorable mention: Dakotaland CU, Huron, S.D.
The awards program is open to community chartered credit unions and those with multiple select employee groups. This includes credit unions that, in all aspects, consistently excell in the advancement of the ideals of the credit union movement, are proactive in their communities, and provide a wide array of services that meet the needs of their diverse communities.

Judges praised this year's entries for their:
  • Long-range commitment to developing sustainable initiatives benefiting low- and medium-income members, urban and rural;
  • Innovative campaigns that publicize the credit union difference to the masses;
  • Use of available tools such as Community Development Financial Institution (CDFI) and Low-Income Credit Union (LICU) designations; and
  • Commitment to being community action organizations.

CUANY Economic Forum Focused On Outlook, Trends

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ALBANY, N.Y. (10/11/13)--The Credit Union Association of New York's 2013 Economic Forum, held Oct. Tuesday and Wednesday explored current trends and offered a perspective on future economic trends.
 
The Credit Union Association of New York's 2013 Economic Forum this week in Albany provided an overview of current and future economic trends. From left, speaker Dr. Barry Asmus; James Mathews, Balance Sheet Solutions senior analyst; Victor Vrigian, Alloya Corporate FCU vice president of marketing; and William Mellin, CUANY president/CEO. (Photo provided by Credit Union Association of New York)
Following a brief welcome from CUANY President/CEO William J. Mellin, the forum kicked off with a presentation from John Lass, CUNA Mutual Group's senior vice president of strategy and business development.
 
Lass highlighted emerging threats posed by non-traditional financial institutions and new payment technologies expected to make an impact in the coming years. He also encouraged credit unions to look for growth opportunities by focusing on member needs, instead of on specific products or services.
 
Following Lass' presentation, attendees chose among concurrent breakout sessions led by industry experts on economic outlooks, asset/liability management trends and loan portfolio risk management strategies.
 
The second morning began with a presentation by Dr. Barry Asmus, a senior economist with the National Center for Policy Analysis. Asmus offered a positive outlook on the U.S. economy and focused on the resurgence of American manufacturing and production, said CUANY.
 
The forum concluded with a lighthearted presentation from keynote speaker Steve Gilliland. A credit union board member, bestselling author and Speaker Hall of Fame inductee, Gilliland encouraged the group to rediscover their passion and "enjoy the ride." Lead sponsors of the forum included CUNA Mutual Group, CO-OP Financial Services and CU Direct.

Two Leagues Report Results From Hill Hikes

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MADISON, Wis. (10/11/13)--
Click to view larger image Missouri credit unions met with U.S. Rep. Jason Smith (R-Mo.) during their Hill hikes. From left are: Dave Osborn, Anheuser-Busch Employees CU, St. Louis; Johnny O'Hare, Mid Missouri CU, Fort Leonard Wood; Don Cohenour, Missouri Credit Union Association president; Charlie Hicks, Poplar Bluff (Mo.) FCU; Rep. Smith; Sharron Payne and Kirk Mondy of Poplar Bluff FCU; Charlie Waalkes, Anheuser-Busch Employees CU; and Amy McLard, MCUA. (Photo provided by the Missouri Credit Union Association)
On the home front, several leagues this week were busy debriefing their membership on how the latest round of Hike the Hill visits went.

Ten leagues visited the Capitol last week during the Don't Tax My Credit Union campaign's online rally to deliver that message to Congress. Two of the leagues--Missouri and Michigan-- provided updates for members on their progress.

The Missouri Credit Union Association worked with the Kansas Credit Union Association to collaborate on their hikes on Oct. 2-3, said MCUA. Missouri's credit union advocates, in their visits with lawmakers, discussed preserving the credit union tax status as well as lifting the cap on credit unions' member business lending, regulatory reform, and housing finance reform and encouraged legislators to co-sponsor legislation (Missouri Difference Oct. 8).

Click to view larger image U. S. Rep. Bill Huizenga (R-Mich.), second from left, talks about credit union issuers with Hike the Hill participants from Michigan. (Photo provided by the Michigan Credit Union League)
"We focused attention on our key issues and could immediately counter information provided to lawmakers by bankers from Missouri who were also in town for legislative visits," said Amy McLard, senior vice president of advocacy for MCUA. "The timing of the Hike the Hill was extremely effective."

The delegation met with these lawmakers and staff:  U.S. Sen. Roy Blunt (R); U.S. Reps. Lacy Clay (D); Emanuel Cleaver (D), Sam Graves (R), Blaine Luetkemeyer (R), Jason Smith (R); and legislative staff Alexis Alber with Rep. Vicky Hartzler's (R) office; Brian O'Shea, with Rep. Ann Wagner's (R) office; and Curtis Trendt of Rep. Billy Long's (R) office.

More than two dozen credit union leaders from Michigan visited their state's congressional delegation.  The visitors included a few who had either never attended one of the Michigan Credit Union League's advocacy trips or had not attended in several years (Michigan Monitor Oct. 7).
 
"All the congressional staff and lawmakers we talked to understood our issues and were engaged in the conversation," said Michigan Credit Union League CEO David Adams. " It's obvious they have heard the credit union message loud and clear."   He noted the government shutdown didn't have much impact on the visit.