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Southwest Corporate has high credit quality says Fitch

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PLANO, Texas (10/24/08)--Although Fitch Ratings has concerns about specific segments of Southwest Corporate FCU's investments portfolio, the global rating agency says "the vast majority of the company's assets are considered low risk." The corporate "is still considered to be a high credit quality company with strong fundamentals," said Fitch in an Oct. 16 press release. "Besides having an overall low risk profile, Southwest maintains ample asset liquidity, ready access to contingent funding sources, and its current capital base is considered sound and exceeds regulatory requirements," Fitch noted. Fitch downgraded Southwest Corporate's ratings and the short and long ratings remain on negative watch. The ratings are:
* Long-term Issuer Default Rating (IDR) downgraded to A+ from AA-; * Short-term IDR downgraded to F1 from F1+; * Short-term debt to F1 from F1+; * Individual to B from A/B.
According to Southwest Corporate President/CEO John Cassidy, "The primary reason for Fitch's action is to reflect concern about expected losses from Southwest Corporate's $49.5 million holdings of senior unsecured Lehman bonds and potential future losses from Southwest Corporate's mortgage-backed security holdings." "While indicating that Southwest Corporate's loss exposure supports the revised ratings, Fitch also noted that near-term losses will be absorbed by Southwest Corporate's earnings and capital base," said Cassidy in an Oct. 17 statement on the corporate's website. "Even with potential future losses from mortgage-backed securities, Fitch expects Southwest Corporate's capital ratio to exceed regulatory requirements," he added. Cassidy noted the ratings remain at "high investment grade. Fitch also confirmed our message that the unrealized loss of our available-for-sale portfolio overstates the true risk to the company, and that we have the liquidity to hold our securities to recovery which limits the risk of loss from selling securities into distressed market conditions." Cassidy said the corporate's executive team will conduct a webinar Nov. 3 at 3 p.m. CT. Use the webinar link for more information. Cassidy also urged credit unions to read Fitch's statement in full. Use the Fitch Report resource link.

IBusiness WeekI CUs small biz loans way up

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NEW YORK (10/24/08)--Credit unions originated $6.5 billion in business loans during the first six months of 2008, Credit Union National Association Chief Economist Bill Hampel told Business Week online. In its Wednesday article, "Small business loans from credit unions way up," Business Week noted that credit unions' increase in originating business loans is one more indicator of credit conditions for small businesses. Small business owners are turning to credit unions for financing. Business loans at credit unions are up 36% from the $4.8 billion they loaned in the first six months of 2007, Hampel said. In 2007, commercial banks originated about $287 billion in small business loans. "So credit unions, like microlenders are a relatively small source of small business lending, but with many banks in bad shape, it looks like they may be increasingly important," said the publication. The publication advised entrepreneurs to consider a credit union or microlender for financing.

ITimeI Bad times for banks mean boom for CUs

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NEW YORK (10/24/08)--Time magazine's website features a positive article on credit unions weathering the financial system crisis. The article is entitled "Bad Times for Banks Mean Boom Times for Credit Unions." According to the article, business is booming for credit unions, with Texas Dow Employees CU doubling its real estate lending over the past five weeks and tracking a 405 to 605 growth in auto loans ( Oct. 23). The credit union is getting calls from car dealerships who have been jilted by auto companies' financial arms. Filene Research Institute Chief Research Officer George Hofheimer notes in the article that credit unions typically are conservative in good times --to the point of being boring and old-fashioned--but such practices are "just what the doctor ordered" in bad times. Credit unions are making sure people are aware they are lending and are taking pre-emptive action to keep delinquencies down. Unitus Community CU in Portland, Ore., hired a work-out specialist to review loan data and make preemptive calls to members who might need help, "the sort of down-home, we-care solution credit unions sell themselves on," said the article. For the full article, use the link.

CU System briefs (10/23/2008)

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* SALT LAKE CITY (10/24/08)--Mountain America CU (MACU) hosted six Votkinsk, Russia, leaders participating in an Open World Program "Women as Leaders" visit to West Jordan, Utah, Votkinsk's sister city. Attending a luncheon at the credit union Oct. 7 were
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Olga Pyankova, director, Votkinsk Municipal Fund for Small Business Support; Nataliya Nikitina, deputy head, Education Department, Votkinsk City; Yuliya Durova, correspondent with Autoradio Votkinsk; Yekaterina Mikryukova, educational psychologist, Republic Center for Complex Social-Psychological Aid to Youth; Nataliya Sterkhova, leading specialist for Religious Ethic Relations, Culture, Sport and Youth Policy, Votkinsk City; and Viktoria Kabatyuk, English teacher from Karelia and group facilitator. Also attending were West Jordan Chamber President Craig Dearing; West Jordan Mayor David Newton, and Salt Lake County Mayor Peter. Here, the group poses with MACU representatives Brent Lawrence, Annette Zimmerman and Denise Dubcek. (Photo provided by Mountain America CU) … * ALBANY, N.Y. (10/24/08)--Tony Schilling, financial education specialist for the New York Credit Union Foundation received the 2008 Hobart H. Conover Friend of Business Education Award from the Business Teachers Association of New York State for supporting business and marketing education in New York schools. The award recognizes his contributions as a member of the New York State Education Department for 21 years and his promotion this past year of the foundation's financial literacy programs to business teachers in the state … * BATON ROUGE, La. (10/24/08)--Michele Merle Lacour, chief growth officer at LA DOTD FCU, Baton Rouge, died Tuesday at the age of 40, reported the Louisiana Credit Union League (eNews Oct. 23). She was involved in the credit union movement at the local, state and national levels, and was active in many outreach programs benefiting youth, including the opening of in-school branches in Baton Rouge and implementing financial literacy programs. She managed six grants from the National Credit Union Foundation for the credit union the past three years. Through her efforts, LA DOTD FCU received the national Desjardins Youth Financial Literacy Award from the Credit Union National Association. She is survived by her husband, parents, one son, and sister. Visitation is today at 10 a.m. followed by service at 11 a.m. at St. Thomas More Catholic Church, Baton Rouge …

Canada to include CUs in interbank lending guarantees

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TORONTO, Ontario (10/24/08)--Canada expects to include credit unions in a plan to guarantee interbank lending. Canadian Finance Minister Jim Flaherty this week introduced the plan, which is similar to plans introduced by several countries, including the U.S., to cope with the economic crisis (Dow Jones Newswires Oct. 23). The move is ostensibly designed to help Canadian financial institutions remain competitive with institutions worldwide, rather than to mitigate any specific problems in the Canadian financial system, industry sources told the newspaper. The plan has a six-month limit, will be offered to banks on commercial terms, and will not cost taxpayers, the paper said. Finance officials in Canadian provinces have indicated they expect to provide similar assistance to credit unions, Flaherty told the paper. The program is offered as a safety mechanism in the event the ongoing credit crisis disrupts lending to Canadian financial institutions, Flaherty told the paper.

Nevada CUs shares assets loans increasing

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RANCHO CUCAMONGA, Calif. (10/24/08)--Bucking a three-year trend of asset growth deceleration, Nevada credit unions saw their assets exhibit strength with a 4.02 % increase through the first half of 2008, according to the California and Nevada Credit Union Leagues. Credit union share (deposits) growth increased by more than $231 million, a 5.45% rise through the second quarter. Nevada credit unions have seen their investment portfolio grow 13.11% for the first six months of 2008, drastically reversing the prior year’s losses in total investments of 10.54%. Net worth realized a total dollar gain of $52,758 for the first six months of the year. As regular reserves and net income grew ($5.5 million and $3.4 million, respectively), undivided earnings and other reserves dropped ($7.4 million and $1.5 million, respectively), virtually cancelling out each other. “Maintaining net worth, especially given the economic climate, is actually a show of strength for Nevada’s credit unions,” said Terrin Griffiths, league economist and industry analyst. In lending, fixed-rate first mortgages grew $144.3 million while other loans grew $10.7 million. In a surprising turn against the national averages, auto lending was rather strong with used autos growing 2.87% ($9 million) and new autos keeping pace at 2.43% ($8.6 million), the league said. The statistics are from the league’s 2008 mid-year WestScan economic activity report for credit unions. WestScan is a financial report that examines economic, financial, demographic, and other trends affecting credit unions in the state.

Ohio league announces board election results

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DUBLIN, Ohio (10/24/08)--The Ohio Credit Union League announced the results of its board of directors elections. Elected to the board were:
* Mike Kurish, Associated School ECU, Youngstown, District IV; * Judy Andrews, State Transportation ECU, Columbus, District I; * Ernie Jackson, Community Star CU, Elyria, District III; and * Sandy McCormick, Total Assurance FCU, Worthington, Membership Category A.
Kurish, Andrews, Jackson and McCormick were the only candidates in their respective categories and were elected by acclamation. Kurish filled a seat vacated by Gary Soukenik of Seven Seventeen CU, who was term-limited (eLumination Newsletter Oct. 22). Beginning in February, there will be a vacancy in Membership Category B. The three-year terms begin in February and expire in 2012.

Wright-Patt CU staff to assist trailing BRAC spouses

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DAYTON, Ohio (10/24/08)--Cindy Swigert, vice president of human resources at Wright-Patt CU, Dayton, Ohio, is helping civilian military spouses find employment in the Dayton area. Swigert teamed up with human resource specialists in the Miami Valley Human Resource Association to create a website that provides information on employment. The website aims to attract civilian employees from out-of-state Air Force bases to Wright-Patterson Air Force base by September 2011 (Dayton Daily News Oct. 18). Users can submit their information to the website,, and Swigert connects them with area employers. The website has received about a dozen inquiries so far. Helping spouses find jobs is crucial in helping individuals decide whether they will relocate with the federal base realignment and closure (BRAC) program, supporters told the newspaper. Wright-Patterson could gain 1,100 jobs from bases in Massachusetts, New York, Texas, Arizona and Florida. About 15% of civilian employees who could choose to relocate did so during BRAC shifts, the Daily News said. For more information, use the link.

CU guard fires on armed men thwarts robbery

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COLORADO SPRINGS, Colo. (10/24/08)--A credit union security guard thwarted an armed robbery attempt Wednesday morning at One Thirteen CU in Colorado Springs. The guard opened fire on four men--at least two of whom were armed--as they stood at the entrance to the credit union. Some of the suspects wore masks, the guard said ( Oct. 22). The guard fired several shots through the glass entrance doors and through a window at the armed suspects as they stood near the credit union’s entrance, according to police. The suspects fled in a car. It is not known if any suspects were hit by gunfire, but the getaway car may have been hit, police said. Four employees and one member were in the credit union at the time of the incident, Bruce Aldridge, president/CEO of One Thirteen, told News Now. “Four guys pulled up and one had a sawed-off shotgun,” Aldridge said. “We have an armed guard here and when he saw them, he locked a magnetic lock we have at the entrance, so they couldn’t get into the credit union. “The guard fired a total of six shots at them and they fled,” he added. “The guard isn’t sure, but he thinks he may have hit of one the suspects because the guy fell back and his mask fell off.” No new information regarding the incident has become known yet, Aldridge said.

WOCCU Peru CUs launch shared-branching network

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LIMA, Peru (10/24/08)--The World Council of Credit Unions and FENACREP, Peru’s national credit union federation, last week launched Kuskanet, Peru’s first national shared branching network. WOCCU’s program in Peru is funded by the U.S. Sgency for International Development and implemented in partnership with FENACREP.
Presenting Kuskanet to consultants at the launch event are, from left: Steve Schaefer, World Council of Credit Unions program manager; Manuel Rabines, FENACREP CEP; and Carlos Nolazco, WOCCU-Peru financial adviser. (Photo provided by the World Council of Credit Unions)
Three credit unions are part of Kuskanet: Finatel in Lima, San Francisco in Huanuco and San Martin de Porres in Tarapoto. The credit unions have 13 points of service across four departments--Peru’s equivalent of states. The network expects to add four more credit unions by the end of the year and plans to launch ATM and debit card services. “Kuskanet will enable credit unions to offer services that other Peruvian financial institutions offer the market, which would be very difficult for each credit union to do individually,” said Luis Jimenez, WOCCU’s Peru program director. “On the basis of scale economies, the credit unions will now be able to offer financial services through the network that they couldn’t in the past. We expect that affiliating with Kuskanet will favor an increase in membership, and therefore strengthen credit union growth in Peru.” “From the Peruvian Andes to the most remote Amazon villages and from Lima to other coastal cities in the country, credit union members will now be able to make deposits or withdrawals of money at credit union branches outside their communities, where members will be served as if they were at their own credit union,” added Manual Rabines, FENCREP CEO and a member of the WOCCU board of directors. “Kuskanet will bring to more people, especially those in impoverished situations, better access to appropriate, dignified and convenient financial services,” he added. Credit unions represent less than 5% of the country’s financial system. There are no credit unions that offer ATM or debit card services, and few credit unions offer members the possibility to perform inter-branch transactions, which are possible only through credit union-to-credit union agreements, according to WOCCU. Kuskanet comes from the word “kuska,” which means “together.”

Philly CUs show support for World Series team

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PHILADELPHIA and WARMINSTER, Pa. (10/24/08)--Two Pennsylvania credit unions are showing their support for the Philadelphia Phillies baseball team as it competes in this year’s World Series.
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Philadelphia FCU (PFCU) with branches located throughout the city is showing its support of the Philadelphia Phillies with a special savings certificate promotion. The credit union is so confident that the Phillies will win the World Series that they created a special promotion called the “Red October CD Blast.” For anyone who purchases a PFCU Regular One-Year Savings Certificate from now until Oct. 25, PFCU will lock in a special annual percentage yield (APY) of 3.25%. Participants also get a chance to score in the credit union’s Red October CD Blast. For each game that Philadelphia wins, PFCU will add 50 basis points to the certificate. If Philadelphia wins the series, the certificate will automatically increase to 6 % APY as a special bonus. The minimum purchase is $250 and there is no maximum. The offer is available to new and existing account holders. Philadelphia FCU has $580.9 million in assets.
Click to view larger image Freedom CU employees celebrated the Phillies entrance into the World Series by having a “Phillies Day” Wednesday. All employees wore Phillies jerseys and T-shirts to show their support and enthusiasm for their hometown team. (Photo provided by Freedom CU)
Freedom CU employees celebrated the Phillies entrance into the World Series by having a “Phillies Day” Wednesday. All employees wore Phillies jerseys and T-shirts to show their support and enthusiasm for their hometown team. Freedom Employees were encouraged to wear their Phillies gear in hopes of rallying team spirit and good luck for the team’s first World Series game against the Tampa Bay Rays Wednesday night. The Warminster, Pa.-based Freedom CU has $350 million in assets.

Grant helps small businesses in underserved areas

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WINSTON SALEM, N.C. (10/24/08)--To help small businesses revitalize underserved communities, the National Credit Union Foundation (NCUF) has approved an Innovation Grant of $22,840 to Truliant FCU, based in Winston-Salem, N.C. The grant will help Truliant provide entrepreneuer education, credit counseling, and strategic planning for small business owners in five underserved areas of North Carolina and Virginia.
A staffer from Truliant FCU, based in Winston-Salem, N.C., teach entrepreneurs how to improve their credit scores under an Innovation Grant from the National Credit Union Foundation. (Photo provided by the National Credit Union Foundation)
“Rural entrepreneurs in particular need greater access to equity capital,” observed Truliant Director of Community Services Marjorie Rorie. “Our program aligns with the mission of NCUF to ‘improve consumer financial independence through credit unions,’ by increasing access to loans for low-wealth and rural-based entrepreneurs in underserved communities. "We want to broaden financial options for start-ups and growing businesses," Rorie said, adding, "We will make a concerted effort to provide financial literacy among adults and youths to prepare them better for entrepreneurship.” Rorie learned two important lessons from conducting financial literacy classes that will help refocus the next series for entrepreneurs:
* “We have to make the foundation of every class about ‘how to improve credit scores.’ In one class we conducted, 40 out of 48 potential and current small business owners had credit scores under 600. This is a critical issue. Without good credit, it becomes a struggle to run a business,” Rorie noted. * “We also saw that many small business people have no formal plan on how they should run their business. Often this has led to their seeking unrealistic loan amounts to borrow for their business,” Rorie said.
In a pilot funded by NCUF during the first six months of 2008, Truliant has offered new and existing members a “holistic approach to building financial strength through saving, credit building, account management, and financial education.” Rorie reported that “We have seen success with this pilot, with credit scores rising significantly.” Classes will be delivered in Spanish and English. This is the fourth of 14 Innovation Grants to be approved by NCUF in 2008 (News Now, Oct. 20). The grants are made possible through credit unions' investments in the Community Investment Fund.