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Members United Corporate reserves 281.5M for more losses

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WARRENVILLE, Ill. (10/27/09)--The September financial statements for Members United Corporate FCU, based in Warrenville, Ill., are much as expected, with the corporate indicated it is recording $281.5 million in capital shares to be available for weathering more potential losses. Members United Corporate released its financial statements for Sept. 30 on Friday. The $7.5 billion asset corporate eliminated its retained deficit that existed in the previous financial statement at the end of August. In accordance with guidance from the National Credit Union Administration (NCUA), the corporate depleted 100% of paid-in-capital and recorded a 40.1% depletion in membership shares. The corporate noted that "both U.S. Central and Members United have not completed their respective investment OTTI (other than temporary impairment) reviews." The report added that results from reviews in process are not incorporated into the financial performance report. "Both reviews are expected to generate additional investment losses which will be recorded and reported in the October financial statements," the report said. "Assuming that these reviews result in a new retained deficit, it is likely that additional depletion will be charged against the remaining membership capital share balances in the month of November 2009," it added. "While the results of the investment OTTI review that is in process are not final and ready for release, management does not anticipate that losses from this review will exceed the remaining $281.5 million of membership capital shares," the report said. Members United, like other corporates, is following NCUA guidance as outlined in Rules and Regulations 704.2 and Letters ot Credit Unions No. 09-CU-10 regarding depletion of capital from the impact of U.S. Central FCU and corporates' own investment OTTI. To access the financial statement, use the resource link.

CU System briefs (10/26/2009)

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* PUEBLO, Colo., and COLORADO SPRINGS, Colo. (10/27/09)--Members of Pueblo, Colo.-based Pueblo City Employees FCU (PCE) voted Friday night to merge with Colorado Springs-based Aventa CU (Gazette Oct. 24). The merger will take place March 1 and result in a combined credit union with nearly $150 million in assets and 18,000 members. PCE will retain its name. It handles accounts, payroll checks and loans for city employees and community members. Aventa CU said the vote was for better financial stability, products and services. Aventa was established in 1957 as Colorado Springs Employees CU … * SARASOTA, Fla. (10/27/09)--Sarasota (Fla.) Coastal CU members were to vote last night on whether to merge with Achieva CU, based in Clearwater, Fla. Sarasota Coastal has $215 million assets while Achieva has $666.8 million in assets.(HeraldTribune.com Oct. 23). Sarasota Coastal has struggled with bad loans and to stay the course would require cuts in service levels and member offerings, while merging with a larger credit union will provide members with what they deserve. Sarasota Coastal board Chair Janet C. Cantees told the Herald Tribune. Achieva said longtime Sarasota Coast CEO Thomas J. Randle would retire and that it will select two Sarasota Coastal directors to join its board. It does not plan to close any of the Sarasota Coastal's five offices but there may be layoffs in duplicated jobs … * WINSTON-SALEM, N.C. (10/27/09)--Winston-Salem (N.C.) City ECU Chief Financial Officer Don Wolford, will take to the skies Wednesday to accompany three World War II veterans--ages 87, 89 and 90 years old--to Washington, D.C., to the World War II Memorial on the Mall, which honors the sacrifices of the "Greatest Generation." Wolford was selected as part of the Triad Flight of Honor, a series of three trips. "I'll be responsible for making sure that the veterans assigned to me have a good trip and have all their needs met," he told the North Carolina Credit Union League, adding that the trio the trip "is an emotional experience for everyone, both at the memorial and then coming back to the airport." More than 1,000 people in Greensboro, N.C. welcomed home a flight earlier this month. The event is part of the Honor Flight Network, conceived by Capt. Earl Morse (USAF-Ret.) in 2005 and has received widespread publicity. Check out the video about the flight

Cumorah CU shuttered by state regulator

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LAS VEGAS (10/27/09)--Nevada state regulators closed Las Vegas-based Cumorah CU Friday night and announced that Rantoul, Ill.-based Credit Union 1 will assume Cumorah's deposits and assets. Cumorah is the third credit union in Las Vegas to fail this year and the first privately insured Nevada credit union to be closed since the nation's financial crisis began (Las Vegas Review Journal Oct. 24). American Share Insurance, a private share insurance company based in Ohio, is the liquidating agent. Credit Union 1 CEO Paul Simons was appointed interim CEO before the announcement was made that the $574 million asset Credit Union 1 would take over the deposits and assets. He said Cumorah's problems began with delinquencies in its commercial real estate loans. Cumorah, with $147 million in assets and $129 million in deposits, has 60 employees, two offices in Las Vegas and two in Henderson (Las Vegas Sun Oct. 23). According to the Nevada Financial Institutions Division, the credit union had inadequate capital and mounting loan losses. In the past 18 months, former CEO Tony Mook said the credit union had laid off 42 of its 101 employees to cut expenses. He resigned Oct. 5 after 19 years as CEO. Members can conduct transactions as usual, with their deposits insured up to $250,000, said the regulator. Other Nevada credit unions to fail this year include Community One FCU, Las Vegas, which was assumed by America First CU, Ogden, Utah, on Aug. 12, and Clearstar Financial CU, Reno, which went to United CU, Mexico, Mo. Three banks also have failed since the year began. In all, nine financial institutions in Nevada have failed since July 2008. Cumorah served 15,000 members of The Church of Jesus Christ of Latter-day Saints. It was established in 1965.

Film director Take your money out of a bank put it into a CU

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DETROIT (10/27/09)--A Michigan filmmaker is encouraging consumers to take their money out of banks and put it into credit unions. Michael Moore, film director, has released a list of 15 things every American can do to fix what Moore considers “a broken system” (The Examiner Oct. 25). Moore just released, “Capitalism: A Love Story.” Since the release of his film, Moore told the newspaper he has been asked by viewers what they can do to help. At the top of Moore’s list of five things Americans can do to protect themselves and their loved ones was to deposit money at a credit union. “Take your money out of a bank if it took bailout money and place it into a locally owned bank or credit union,” Moore said. The controversial film maker has directed movies such as “Roger and Me,” “Fahrenheit 9/11,” “Bowling for Columbine,” and “Sicko.”

INew YorkerI Move to CUs to deal with megabanks

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NEW YORK (10/27/09)--Consumers will have to rise up “en masse” and move their money to credit unions before the market will deal with megabanks’ problems, according to a recent article in the New Yorker. The author, James Surowiecki, noted that big banks--like Wells Fargo, Citigroup, Bank of America and JPMorgan Chase--have even gotten larger, controlling nearly 40% of the country’s total banking deposits and two-thirds of credit cards (The New Yorker Oct. 26). Banks’ growth isn’t because of their customer-friendly philosophy. Instead, they’ve done the opposite by charging higher fees than other institutions. But many customers and clients haven’t moved on because switching from one financial institution to a credit union is often considered a hassle. “A 2001 study showed that the cost of switching a loan came to about a third of the loan’s annual interest rate,” Surowiecki wrote. “Even if people are dissatisfied with their bank, it’s usually cheaper not to fight than switch.” Still, he encouraged consumers to move their money to credit unions. Only then will the market have to deal with the problem of megabanks, which means Washington will then have to deal with them, he wrote.

Robbery stops ICU Day event at CU

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HARRISBURG, Pa. (10/27/09)--An armed man robbed the Lebanon (Pa.) FCU (LFCU) on International Credit Union (ICU) Day, Oct. 15, stopping its ICU Day events. However, the credit union donated hundreds of spray hand sanitizers--originally purchased for members as part of the ICU Day celebration--to local elementary schools, according to the Pennsylvania Credit Union Association (Life is a Highway Oct. 26). The robbery occurred at 9:21 a.m., when a man entered the $136.6 million asset credit union, displayed what appeared to be a handgun and demanded cash from the tellers (Pennlive.com Oct. 16). He placed the cash in a duffle bag and fled on foot. Several members were in the credit union at the time, but no one was injured, according to police (Lebanon Daily News Oct. 15). The robbery closed the credit union, ending all its ICU Day events, which included a live radio broadcast, Italian Ice cart, autographed footballs from Bill Bergey and "lots of food." The credit union board decided area schools could use the hand sanitizers to help fight cold and flu germs. "This is taking an unfortunate event that happened to our credit union and using it to benefit our community," Pat Hain, CEO, said. "Keeping kids and families safe and making our community a stronger and better place is LFCU's goal."

New insurance stems from rising employment liability risks

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MADISON, Wis. (10/27/09)--A 30% spike in employment liability claims paid in 2008 is the catalyst for CUNA Mutual Group’s new Employment Practices Liability (EPL) coverage and risk management offering. Employment Practices Liability insurance is a key part of CUNA Mutual’s new Management and Professional Liability (MPL) policy, which covers credit unions and their staff against alleged violations of federal, state, local and common law related to past, present or prospective employment. These allegations may include discrimination, wrongful termination or workplace harassment, said John Wallace, CUNA Mutual bond and MPL product executive. “Typical compensatory awards range from $100,000 to $500,000, which is conservative because it does not include punitive damages or other awards,” Wallace added. “The recent spike in frequency and severity of employment-related lawsuits is driven primarily by higher unemployment rates.” A prevention-oriented approach combined with modern insurance coverages can help safeguard credit unions from potentially severe financial losses resulting from employment practices litigation, Wallace said. “Our new online risk management resources are prepared by employment litigation specialists and can help credit unions avoid such losses,” he added. CUNA Mutual’s Employment Practices Risk Management program features Web-based resources, including:
* Articles and news briefs; * Employment-practices training modules for credit union staff; * A reference library with papers, checklists, self-assessment tools and links to government websites; and * Model forms and policies.
These online resources will be available after Jan. 1 at no additional cost for credit unions purchasing EPL coverage with their MPL policy. “These specialized risk management tools provide protection beyond the policy for credit unions in response to a very significant and growing loss category for our industry,” Wallace said. MPL is part of CUNA Mutual’s Credit Union Protection insurance and risk management portfolio designed exclusively for credit unions to manage their financial, operational and personal risk exposures. The Credit Union Protection program includes:
* Bond; * Plastic card; * Management and professional liability; * Property and business liability; * Business auto; * Workers’ compensation; and * Plus, additional policies.

Minn. biz mag notes CUs willingness to lend

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MINNEAPOLIS (10/27/09)--A Twin Cities Business article recently explored Minnesota credit unions’ willingness to lend and serve their members despite a tight economy. The article, “Extra Credit,” also included comments from Minnesota credit unions CEOs; Mark Cummins, president/CEO of the Minnesota Credit Union Network; and Mike Schenk, Credit Union National Association senior economist. The overall tone of the article focused on credit unions’ willingness to lend to small businesses and consumers who have been turned away by other financial institutions. “We get a lot of members who say they’re being shut out for business loans,” Jeff Schwalen, Hiway FCU president/CEO, told the magazine. “They may be too small for many banks, or maybe they don’t qualify. We’ll take a look, and for the most part, we’re able to do the loan, assuming they can meet our requirements.” Cummins told the magazine that the state’s credit unions are experiencing deposit growth and continuing loan activity. Credit unions also remain at near-record levels for capital ratios, added Schenk. Credit unions in Minnesota have experienced a drop in net income--to $16.4 million last year from $80.2 million in 2007--because of the housing collapse. However, credit unions’ lending increased by 1.65% in 2008, and total shares and deposits surged 6.85% to $12.2 billion, the magazine said. “We’re not immune to what’s happening in the economy, but in a relative sense, we’re doing very well,” Cummins added. The “really surprising thing to me is, given the heightened correction in housing in the Twin Cities, is that both banks and credit unions seem to be doing pretty well there,” Schenk said. Other statistics the article noted include:
* Real estate loans--mortgage and equity lending--made up 57% of Minnesota credit unions’ total lending of $9.96 billion in 2008; * Credit unions showed an annualized write-off rate on all loans of 0.94%, compared with rates of 1.11% for all U.S. credit unions and 1.94% for banks; * Credit unions had a write-off rate of 1.63% compared with 4.88% of U.S. banks; and * Credit unions’ capital ratio was 10.2% as of March. Seven percent is considered “well-capitalized” by the state.

CU shout out on IToday ShowI

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NEW YORK (10/27/09)--Consumers were encouraged by a finance expert to find credit cards at credit unions on The Today Show Monday during a segment on credit card fees. During the show, Today Show host Matt Lauer interviewed a financial expert--Carmen Wong Ulrich--about credit card fees. Some major credit card companies--such as Bank of America and Citibank, plan to begin charging cardholders fees for inactivity. Lauer asked Ulrich how consumers can avoid paying the fees. Ulrich responded: “About 80% of companies aren’t charging these new fees--especially credit unions. Go to NCUA.gov and you can search Find a Credit Union. No fees and great rates.” To see the video, use the link.

Kenyans flock to rural CU branch

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NZAIKONI, Kenya (10/27/09)--The Universal Traders savings and credit cooperatives (SACCO)--UTS--credit union branch in the mountaintop community of Nzaikoni, Kenya, has experienced a groundswell of interest from members in a community that never had access to financial services. However, the steady member growth over the past 90 days was nothing like the rush during the branch’s official grand opening Wednesday, when a member of Kenya’s parliament pledged her support of the branch by joining UTS and offering to sponsor the initial fees to enroll 20 new members.
Click to view larger image Wavinya Ndeti, a member of Kenya’s parliament, encourages citizens of Nzaikoni, Kenya, to join the new Universal Traders savings and credit cooperatives (SACCO) branch, which is supported by the World Council of Credit Unions.
Click to view larger image A staff member from the Nzaikoni branch of UTS lines up men interested in enrolling in the SACCO. (Photos provided by World Council of Credit Unions)
UTS opened the Nzaikoni branch after several years of support from World Council of Credit Unions’ (WOCCU) SACCO Growth Program in Kenya, funded by the Bill & Melinda Gates Foundation. With WOCCU’s assistance, the small credit union was turned into a regional powerhouse that has attracted involvement from the Kenyan government to administer its agricultural lending program, and establish additional branches, WOCCU said. The rapid rise of membership in the Machakos-based UTS’s fifth branch proved to be a surprise. Residents of the poor community appeared at the small branch during the past few months with jars of money that had been buried in the ground so long that the contents smelled musty. Members hid their funds at home because they lacked the means to take public transportation down the mountain to other SACCOs. “People say it is a miracle that a financial institution has opened here,” said Isaiah Mutungi, chairman of the UTS board. During the grand opening, several officials spoke, including Jesus Chavez, who manages the Kenya SACCO Growth Program. Wavinya Ndeti, an assistant minister in Kenya’s parliament who represents the Kathiani Constituency in which Nzaikoni is located, officially opened the SACCO. She congratulated both the credit union and the community on coming together to provide affordable financial alternatives to people who need them the most. “Thank you for bringing UTS here,” Ndeti said. “These people are the lowest of the low and don't have much. We will judge you by the changes you bring to our people. If I see good results, I promise I will give you 101% support in your efforts.” As a show of faith, Ndeti became a UTS member. She also agreed to sponsor 10 female members and 10 youth members, paying the 100 Kenyan shillings (about $1.20) each to enable them to join. “You can see that the people really need this office,” said Stephen Kisili, UTS general manager. “It has come out very clearly how critical that need is.”