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CU System briefs (10/13/2009)

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* HARRISBURG, Pa. (10/14/09)--Pennsylvania Gov. Ed Rendell signed the state budget Friday night. The $27.8 billion plan ends a 101-day state budget stalemate that prompted credit unions to offer special assistance programs to their members affected by the impasse. The plan is more than $500 million less than last year's $28.3 billion budget. A key provision involving table games legislation is expected to pass this week, said the Pennsylvania Credit Union Association (Life is a Highway Oct. 13) … * WESTBORO, Mass. (10/14/09)--Tina M. Sbrega has been appointed to the Massachusetts Credit Union Share Insurance Corp. board of directors (Telegram.com Oct. 11). Sbrega is president/ CEO of GFA FCU, a $298 million asset credit union based in Gardner. It has eight branch offices. Sbrega also is a trustee for Mount Wachusett Community College and Heywood Hospital, both based in Gardner … * PHOENIX (10/14/09)--Desert Schools FCU and Phoenix police are seeking the public's help in identifying a man who is running scams against financial institutions and businesses in the area. The $3.346 billion asset credit union said Monday a man has entered three of its branches asking to exchange $20 bills for larger denominations in multiple transactions. He then claims he was short-changed and tries to get that money from the tellers. He has hit two branches in Mesa and one in west Phoenix. (Phoenix Business Journal and abc15.com Oct. 12) … * SYRACUSE, N.Y. and ROCHESTER, N.Y. (10/14/09)--Syracuse (N.Y.) FCU said its members voted Oct. 7 to merge with Summit FCU, Rochester, N.Y. On April 1, the credit unions will do business under the name of The Summit--which will have 80,000 members, 18 locations and $625 million in assets (The Post-Standard Oct. 10) … * TAMPA, Fla. (10/14/09)--Invest Financial Corp.--a full-service broker-dealer based in Tampa--appointed former CUNA Mutual Group executive Steve Dowden to be Invest’s new president/CEO. Dowden succeeds Lynn Niedermeier who retired in July. Dowden was senior vice president of distribution and president/CEO of CUNA Brokerage Services, quarterbacking a sales force of 550 advisers and responsible for all sales in CUNA Brokerage’s asset accumulation division (Tampa Bay Business Journal Oct. 12) …

Belarus plans CU expansion

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MINSK, Belarus (10/14/09)--Elena Koleda has turned to the World Council of Credit Unions (WOCCU) and the National Association of Cooperative Savings and Credit Unions (NACSCU), WOCCU's member organization in Poland, for assistance in developing more credit unions in her native Belarus.
Elena Koleda (left), head of Belarus' credit union trade group, stresses the importance of credit union growth to Pawe³ Grzesik of the National Association of Cooperative Savings and Credit Unions. (Photo provided by the World Council of Credit Unions)
"Our top priorities are staff training, credit union accounting software and credit union legislation," said Koleda, manager of the Republican Association of Consumer Cooperative Societies for Mutual Financial Assistance, the trade association representing credit unions in Belarus. The efforts would help the Eastern European country's existing eight credit unions grow as a movement to a size necessary to become a more formidable influence in serving Belarus' population. "By forming an association, Belarus' credit unions were able to brand their institutions and pool their resources to reach the greater levels of efficiency necessary to grow a credit union movement," said Brian Branch, WOCCU executive vice president and chief operating officers. Branch was in Belarus last week to work with the country's credit unions and speak to lawmakers about drafting legislation supporting financial cooperatives. At the urging of the United Nations, WOCCU first looked into developing credit unions in Belarus in 1997. During subsequent years, NACSCU's foundation provided support necessary to develop the country's first financial cooperatives. Belarus' trade association was formed in 2007. Currently, the country's credit unions serve professionals and small business owners in the capital city of Minsk, as well as rural communities across the country. Many of the movement's leaders are self-employed small business owners who felt neglected by the country's banking system. By turning to a cooperative model, they can be assured they will have a voice in the financial activities that affect their enterprises, said Pawe³ Grzesik, plenipotentiary head of NACSCU's Warsaw office. Grzesik joined Branch during his visit. The Belarus movement "is one of the best examples of genuine bottom-up efforts to build a civil society in Europe today," Grzesik said. During their visit, Branch and Grzesik participated in an international financial conference designed to raise the profile of credit unions among the public, lawmakers and the press. They stressed credit unions' role in helping consumers and small business owners gain access to financial services at more affordable rates. Also, Grzesik is helping Belarus National Bank officials develop credit union-specific regulations that will enable the movement to grow. "[National Bank] Deputy Chairman Vasily Matyushevsky believes that the assistance of WOCCU and NACSCU is critical to developing the credit union sector in Belarus," Grzesik said. "He encouraged our further involvement in building the capacities of both the credit unions and their association through training and study tours to neighboring countries, including Lithuania and Poland." Because of geographic proximity, NACSCU will lead the development in Belarus, said Branch. "We have offered NACSCU our support due to its success in assisting other emerging movements throughout the region," he added. "Belarus is one more example of our two organizations' abilities to work together to foster credit union development on a global scale."

Economys impact topic at Mich. leagueregulators talk

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LANSING, Mich. (10/14/09)--The Michigan Credit Union League (MCUL) met with senior officials of the Credit Union Division of Michigan's Office of Financial and Insurance Regulation (OFIR) last week to discuss concerns and trends in the state's credit union industry during a tough economic period.
Michigan Credit Union League Vice President of Information Services Mike DeFors discusses the economy's impact on Michigan credit unions with Office of Financial and Insurance Regulation Deputy Commissioner Roger Little at an Oct. 5 meeting. (Photo provided by the Michigan Credit Union League)
League officials met with OFIR Deputy Commissioner Roger Little and Assistant Director John Kolhoff Oct. 5 (Michigan Monitor Oct. 12). They discussed several topics, including proper underwriting expectations, recordkeeping and reporting of modified residential loans using generally accepted accounting principles (GAAP). OFIR reported that credit unions' capital levels appear fairly stable for Michigan credit unions. However, the agency has seen an uptick in the "watch list" and expects that trend to continue when September call report numbers are released. OFIR also expressed concern about the growth of commercial loans taken on by credit unions after the borrower had been previously turned down by commercial banks. The meetings "continue to prove effective in keeping abreast of where Michigan credit unions stand with our state regulator," said MCUL Vice President of Information Services Mike DeFors. He termed the conversation with Little and Kolhoff as constructive and "about the positives and areas of concern for credit unions as economic times remain hard. This kind of dialogue is important in keeping lines of communication open between the regulator, the MCUL and all Michigan credit unions." The meetings help raise awareness of issues useful to league representatives visiting credit unions and planning educational sessions and articles. During the meeting, Little reiterated that CEOs should contact his office to discuss any unresolved differences regarding exam issues or unprofessional examiner conduct. The league also scheduled a similar meeting for this week with Andrew Healey, supervisory examiner of the National Credit Union Administration, and said similar meetings with credit union regulators will take place next spring.

CUs good alternative to payday loan trap IWash. PostI

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WASHINGTON (10/14/09)--The Washington Post cited a Chicago credit union’s payday loan alternative product as an example of innovation by the private sector in serving the unbanked in an article published Tuesday. North Side Community FCU offers members a six-month, $500 loan with a 16.5% interest rate. The credit union has made 5,000 loans since it introduced the loan several years ago, the Post said. The credit union doesn’t profit from its payday lending alternatives, but it hopes to help place members into good financial standing so they can then apply for profitable products--such as auto loans, credit union manager Ed Jacob told the Post. The article noted Congress is debating over the creation of a Consumer Financial Protection Agency, which is slated to provide federal oversight of the financial industry. Some industry representatives are opposed to the agency, saying that innovation is the key to reform, instead of legislation, the Post said. Many credit unions offer payday lending alternatives for their members. Several states, including Michigan, Arizona, Ohio and others have passed or are working on pieces of legislation that would restrict payday lenders, which routinely charge borrowers high interest rates. A payday lending group issued a release Tuesday indicating that the premise of the Post's article--that individuals who borrow from payday lenders are not banked--is inaccurate. Borrowers who receive loans from payday lenders are considered "banked," the group said. To read the full Post article, use the link.

Transactions to exceed 100 billion for first time

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LAKE BLUFF, Ill. (10/14/09)--Credit unions will have to plan for members’ greater electronic payment use because the number of checks and electronic transactions for debit cards, credit cards and automatic payments is expected to exceed 100 billion by the end of the year--the first time in U.S. history, according to an Illinois financial industry research firm. “[Based on the data], we believe there will be implications to the bottom line of financial institutions in pricing, fee structure and service delivery,” said Mike Moebs, CEO of Moebs Services, a research firm in Lake Bluff, Ill. The volume represents all transactions from consumers and businesses. It is based on research and projections conducted by Moebs Services, which used Federal Reserve data ranging from 1979 to 2006. Transactions in 2009 are expected to break down as follows:
* Debit card transactions, 33%; * Paper checks, 24%; * Credit card transactions, 23%; and * Automatic payments, 20%.
One interesting item about the projected 100 billion transactions is that “they do not represent an increase in U.S. consumer spending, which began declining in 2008 and is still not back on track as we approach year-end,” Moebs said. “This research indicates that consumers are doing significantly more transactions for significantly fewer dollars than in the past. This may be due to easy electronic payment methods replacing cash,” he added. The changes in payment trends mean that credit unions and other financial institutions will see reduced overdraft revenue from consumers using fewer paper checks. Paper check volume has dropped to 25% of transactions from 85%, Moebs said. Financial institutions also will have to secure their online electronic payment systems to prevent fraud, and ensure that their electronic communications can manage the increasing volume of transactions without errors, Moebs added.

N.J. league honors CUs for philosophy action more

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ATLANTIC CITY, N.J. (10/14/09)--More than 700 credit union leaders attended the New Jersey Credit Union League’s (NJCUL) annual meeting and convention Sept. 22 in Atlantic City to discuss credit union issues and to honor several credit union leaders.
Click to view larger image A panel discussion with, from left, Jim Blaine, president/CEO, State Employees’ CU, Raleigh, N.C.; Paul Gentile, president /CEO, New Jersey Credit Union League; and Dennis Dollar, former chairman, National Credit Union Administration, discussed overdraft protection, the future of the corporate credit union system, and the Community Reinvestment Act at the New Jersey league’s 75th annual meeting and convention, Sept. 20-22 in Atlantic City. (Photo provided by the New Jersey Credit Union League)
The conference was attended by 85 credit unions and featured 69 vendors (The Weekly Exchange Oct. 5). The 2009 NJCUL award-winners were announced at the convention. They included:
* Desjardins Youth Financial Literacy Award--First Financial FCU, and Raritan Bay FCU, Sayreville; * Dora Maxwell Social Responsibility Recognition Award--Jersey Shore FCU, Northfield; * Louise Herring Award for Philosophy in Action --Jersey Shore FCU; * CEO of the Year--Ann South, president/CEO, Novartis FCU, East Hanover; * Alexander Kosobucki Promotion Award--First Financial FCU, Toms River; and Hamilton (N.J.) Horizons FCU; * Catherine Miller Newsletter Award--Affinity FCU, Basking Ridge; Campbell Employees FCU, Cherry Hill; and Hamilton Horizons FCU; and * The Website Award--Aspire FCU, Clark; and Hamilton Horizons FCU.