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CU System briefs (10/31/2011)

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CU System Briefs

  • WILMINGTON, Del. (11/1/11)--Sun East FCU, Aston Pa., will open its first branch in Delaware at a shopping center in Wilmington, Del., with a ribbon-cutting ceremony Friday. The credit union will offer deposit and loan rate specials exclusively at the Wilmington branch during the two-day grand opening event Friday and Saturday and running through Nov. 10. The new facility is a full-service branch with a 24-hour ATM. The celebration will include a Video Game Challenge open to everyone, and the winner will be awarded an HDTV and an Xbox video game system …
 

  • MANSFIELD,  Texas (11/1/11)--Derrotis Kerioth Holmes, 35, of Grand Prairie, Texas, was sentenced to 55 months in federal prison on charges related to the robbery of a branch of Mansfield, Texas-based Texas Trust CU,  the U.S. Attorney of the Northern District of Texas announced Oct. 17 (Targeted News Service Oct. 17). Holmes allegedly entered the Texas Trust CU branch in Arlington, Texas, carrying a plastic grocery bag and a large knife on May 5, according to documents filed in the case. He approached the credit union's greeter then proceeded to the teller station, where he allegedly threatened the teller with the knife and demanded that she give him all her money, indicating that he would "come over the counter" if she did not comply. During his confrontation with the teller, Holmes switched from an underhand to an overhand grip on the knife and continued to threaten the teller with it. After the teller gave Holmes the cash, he left the credit union, and was later arrested as a result of an anonymous tip …

Were ready CUs tell nations media of switch movement

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MADISON, Wis. (11/1/11)--The likes of NBC Nightly News, Los Angeles Times, the Washington Post, Detroit Free Press and Minneapolis Star-Tribune were among the dozen or so well-known outlets reporting this weekend that credit unions are ready to step in and serve consumers fed up with fees charged by big banks.

In addition, more than two dozen reported on the latest news related to the nationwide Bank Transfer Day, set for Saturday. The Associated Press, Reuters, ABC Action News  were among them. Bank Transfer Day is the movement that began on the Facebook page of a California art dealer who announced said she was moving her account  because of bank fees. Many began suggesting that consumers switch to credit unions. The media barrage on the topic has gone on more than a month.

The Credit Union National Association (CUNA)  helped arrange an interview on Friday NBC Nightly News anchored by Brian Williams with BECU, Tukwila, Wash., about why consumers are switching to credit unions.

The segment hit bank fees hard and noted that while some big banks are pulling back from their debit card fee announcements, consumers should be on the lookout for "stealth fees" such as increased minimum balances to maintain "free" checking, a fee for using a teller, a fee for receiving a paper statement, and other manipulations.  If consumers want to avoid the extra fees, they can often do so at a credit union or community bank, the segment said. BECU, during an average month, attracts about 7,000 new accounts per month. Todd Pietzsch of BECU told NBC.  In October alone, it opened 16,000 new accounts. The program also noted that members joining credit unions have 28,000 ATMs accessible.

A number of major national media are reporting that big banks are rethinking their debit card fees in light of the outcry from consumers and the movement to transfer accounts to credit unions. The banks, however, are mum about their other fees.

The Los Angeles Times, in "Saying goodbye to your bank" (Oct. 30), noted the "torrent of ill will" unleashed by Bank of America's $5 monthly debit card fee. The article said that "breaking up is easy. Finding a financial partnership that's more satisfying could prove trickier."  It urged consumers that switch to do their homework.

"Credit unions…are set up for such hands-on service at a low cost. Owned by members who are linked by jobs or geography, their core focus is on consumer accounts, although some these days are doing more small-business lending," said the Times, which added the criteria for membership have broadened.

It mentioned several credit unions, the fact that they have 28,000 ATMs, and that readers can find a credit union to join at CUNA's consumer site, http://www.asmarterchoice.org.

Asbury Park Press, in New Jersey, highlighted New Jersey's credit unions as positioning themselves as the go-to alternative for big banks and their fees.  It reported United Teletech Financial FCU's campaign to attract new members at its "Bank Transfer Headquarters. Leo Ardine, president/CEO, told the newspaper that people are reacting to lack of control in the marketplace and are "tired of being a profit opportunity for others." The article also recognized First Financial FCU, which said it is seeing an uptick in new accounts.

NuMark CU in Joliet, Ill., was the focal point of a feature in the Morris Daily Herald (Oct. 27) about credit unions "as alternatives to fee-raising banks." The credit union noted consumers will find significant advantages to being a credit union member in addition to saving money.  It also reported that CUNA estimates the average credit union member saved $69 (or $132 per household) in the 12 months preceding June 2011--just by doing business at credit unions.

Meanwhile, credit unions are gearing up their campaigns to woo more members . Among them:

  • US FCU, Burnsville, Minn., which is "looking forward and prepared for the additional traffic" that Bank Transfer Day might bring as individuals make the switch. According to Bob Stowell, vice president of operations, each new checking account opened Saturday will receive a $50 deposit as a welcome to U.S. Federal. All its branches will be open Saturday from 9 a.m. to 1 p.m.
  • Golden 1 CU, Sacramento, Calif., will extend its hours on Saturday to welcome new members. All branches, except those in limited-access locations, will be open from 9 a.m. to 4 p.m. It noted that it continues to offer free checking accounts and debit cards with no monthly fees as well as other free and low-cost services. "Consumers are awakening to the idea that there are better choices than big banks," said Donna A. Bland, Golden 1's president/CEO.
  • Hopewell FCU of Heath/Newark, Ohio, said not to wait until Saturday to join. "Every day is a good day to join a credit union," said James G. Johnson, president/CEO. He noted that consumers who make the switch will find that on just about any given day, on average, credit unions offer higher return on most savings, lower rates on most loans, and lower (or no) fees than other financial institutions charge.
  • NEFCU, in Westbury, N.Y., said it wants Long Islanders to get the most affordable banking services, along with a host of other free benefits, and wants to help make the general public aware of how easy it is to join. "With the rising frees banks are adding to their customers' accounts, Bank Transfer Day is an opportunity to educate consumers about the value of joining a credit union like NEFCU," said Edward P. Paternostro, president/CEO. NEFCU offers one of the highest interest rates on Long Island, with a free checking account that pays a 3.5% annual percentage yield, which is almost unheard of today, said Paternostro.
  • At Belco Community CU in Harrisburg, Pa., "Now is the time to become one of more than 92 million Americans nationwide who are already enjoying the benefits of credit union membership,"said Lonny J. Maurer, president/CEO.  It already has seen an upsurge in new members, partly due to its Refer-a-Friend Dream Vacation Sweepstakes, which began in April and runs through December. Every 500th new Belco member receives a choice of an Apple iPad 2 or $500 cash and is registered to win a Dream Vacation for Two.
  • Members 1st CU, Redding, Calif., will open its doors for special hours Saturday to coincide with Bank Transfer Day. It will be open 9 a.m. to 2 p.m. "Our Basic Checking account has no monthly fees, no debit card fees, and no minimum balances to maintain," said Nicki Crandall, assistant vice president/area manager. She noted an increase in new members the past couple of weeks "as people are bringing their business to us because of our fee-free account."

Catalytic force of co-ops highlighted at IYC launch

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NEW YORK (11/1/11)--Calling cooperatives a "catalytic force," United Nations General Assembly President Nassir Adbdulaziz Al-Nasser officially launched the 2012 International Year of Cooperatives at special ceremonies in New York Monday.

More than 150 CEOs and presidents of cooperatives the attended the events, which continue through today.

At the United Nations' launch of 2012 International Year of Cooperatives Monday are, from left, Cliff Rosenthal, CEO of the National Federation of Community Development Credit Unions, and CUNA President CEO Bill Cheney. (CUNA PHOTO)
Noting the theme, "Cooperatives Building a Better World," Al-Nasser emphasized that people  must be at the center of social and economic development.  No country can develop unless the people are developed.  International Year of Cooperatives marks the first time the UN has awarded a business model an "International Year" designation.

Cooperatives' principles contribute immensely to this, he said, to reduce poverty, create jobs, promote social and economic integration.  And they do so with honesty, social responsibility and caring for others.

"We'll focus on the achievements of cooperatives and support for the objectives to bring people together to resolve societal issues at a grassroots level," he said at Monday's launch.

Cooperatives are a "catalytic force" because they aggregate economic power, create opportunity and enable communities to compete successfully in a global economy, he said, adding they deserve more support and encouragement in order to thrive in their respective countries.

Dr. Asha-Rose Migiro, on behalf of the UN Secretary General, noted that the emphasis of the International Year of Cooperatives is an opportunity to raise public awareness and encourage governments to establish policies conducive to their growth. Co-ops help to reduce poverty, create jobs, empower youth, the elderly, those with disabilities, women, she said.

Dame Pauline Green , president of the International Cooperative Alliance (ICA), highlighted the outcome of a morning panel. Cooperatives reflect the combined power of economic opportunity and social responsibility, and have taken millions out of poverty with dignity, she said. After the year is over, it is her hope that efforts pivot from IYC to a decade of cooperative growth.

Also speaking was Gordon Brown, former British Prime Minister,  who also addressed the World Council of Credit Unions' annual conference in Edinburgh this year. "Literally a billion of us are part of a movement of men and women who believe in something," he said, adding, "It's monumental. When the strong help the weak it makes us all stronger."

He noted that, "We must do more than talk about our interdependence and our moral sense that cooperatives are good.  We must listen to the voices of discontent, the unemployed, the impoverished--listen to these voices and set out a cooperative vision of the future."

Credit Union National Association President/CEO Bill Cheney attended the events. "Today's remarks by these very distinguished speakers on the floor of the UN General Assembly were truly inspiring. They highlighted the value and accomplishments of cooperatives and the great potential cooperatives have to accomplish still more."

Also attending the UN sessions, World Council of Credit Unions President/CEO Brian Branch remarked, "It was striking how many countries--nineteen, including the United States--had their representatives speak to the benefits of cooperatives, including a number of references to the work that credit unions do around the world."

Monday morning CUNA's Cheney attended a round table discussion that focused on the theme of cooperative enterprises--how to help create sustainable development. He will also participate in today's events.

Today's agenda includes:

  • Cooperative business;
  •  Cooperative finance; and
  •  How businesses use communications to meet objectives.
 

Today's events include an ICA Leadership Forum and the National Federation of Community Development Credit Unions' "New York: Building a Cooperative City" at the Ford Foundation today. Co-sponsors include the Council of New York Housing Cooperatives and the National Cooperative Bank.

Man who shot teller sentenced to 25 years

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GREENSBURG, Pa. (11/1/11)--A man who shot a teller during a robbery in January 2010 at Westmoreland Community FCU in Greensburg, Pa., was sentenced to 25 years in prison.

David Mathis, 47, apologized for his actions Wednesday--saying tough times caused him to commit the robbery--before he was sentenced in Westmoreland County Court by U.S. District Judge Donetta Ambrose (Associated Press Oct. 26).

Mathis allegedly pistol-whipped one teller and shot another during the robbery, authorities said.

Mathis, who in July pleaded guilty to the robbery, said he didn't know how to operate the weapon and it went off by accident. Judge Ambrose said that was no excuse.

In February 2009, Mathis was released from prison after serving nearly 15 years for five robberies committed in 1994 in the Pittsburgh area.

CU wins reduced verdict on performance bond claim

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MIAMI (11/1/11)--Dade County FCU, Doral, Fla., won a reduced verdict in the amount of  $406,200 against its insurance company to fulfill a performance bond claim it made after an employee altered more than 500 delinquent credit card accounts to make them appear current.

The judgment was made Oct. 18 in U.S.  District Court for the Southern District of Florida in Miami against defendant CUMIS Insurance Society, part of CUNA Mutual Group.

The credit union filed a claim for $2.4 million, which CUMIS said was inflated. The jury agreed, reducing the amount awarded to $348,183 plus $58,017 in pre-judgment interest from the date of loss--April 2, 2009--resulting in the total $406,200, according to the ruling.

"In this case, the credit union and its lawyers filed a claim for $2.4 million," John Christenson, associate general counsel for CUNA Mutual Group, told News Now. "CUMIS maintained all along that the amount claimed was significantly inflated. In the end, the jury agreed with CUMIS' position, finding that the credit union's covered loss was $348,183, which is less than 15% of what was claimed.  

"Paying inflated claims impacts all of our policyholders," he continued. "As a mutual company owned by our policyholders, we are duty-bound to those policyholders to avoid paying inflated claims and to defend against efforts to get us to do so. CUNA Mutual's claims philosophy is to handle all claims fairly, paying what we owe, nothing more and nothing less. That is what we've done in this matter.

"Unfortunately, in situations such as these the only real winners are the lawyers who often generate fees far in excess of any recovery.This seems particularly inappropriate here, where the credit union's lawyer engaged in such misconduct during the trial that the judge felt compelled to instruct the jury to disregard much of her argument," he concluded. 

At issue in the case was the credit union bond, which in part sets terms of coverage for loss incurred by the credit union in exchange for a premium paid by the credit union to CUMIS. The credit union alleged the contract agreed to pay the credit union for loss directly resulting from "a named employee's failure to faithfully perform his/her trust."

In April 2009, the credit union discovered that Jorge Garcia was manually manipulating credit card accounts to make it appear as if the accounts were current, the complaint said.  Because his actions led credit union staff into believing the card accounts were current, they took no actions on several accounts that actually were delinquent, the complaint said.

The continued manipulation of the credit card accounts meant the credit union could not recover funds on past due accounts, according to the compliant.

In April 2009, Dade County FCU submitted proof of loss to CUMIS, which investigated the credit union's claim and denied it on July 8, 2010.

Mich. State Senate committee takes interchange testimony

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LANSING, Mich. (11/1/11)--The Michigan State Senate Banking and Financial Institutions Committee hosted a hearing Thursday on the debit interchange fee provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Representatives from the Michigan credit union and banking industries testified on the new regulation.

Michigan State Sen. Darwin Booher (R-Evart) listens to testimony Thursday at a hearing on the debit interchange provision of the Dodd-Frank Act. Michigan credit unions and the Michigan  Credit Union League testified at the hearing. (Photo provided by the Michigan Credit Union League)
They discussed recent actions by many "capped" institutions to raise fees to cover the costs of their debit card programs and the ongoing concerns by small issuers that market pressures could drive down the interchange rates charged by exempt institutions, said the Michigan Credit Union League (MCUL)  (Michigan Monitor Oct. 31).

Marcia Hune, league vice president of government affairs, and Tony Carnarvon, CEO of Co-Op Services CU, Livonia, represented the credit union industry.

Hune provided a brief summary of the interchange fee provision and outlined ongoing concerns that merchants may influence consumers to use certain debit cards at the point of sale.

Hune also said that the full effect on smaller issuers such as credit unions is still unknown since they are unsure of what the future will hold for two-tiered network structures and their sustainability.

Carnarvon noted small issuers have an opportunity as larger, capped institutions implement new fees on basic debit cards and checking accounts. Carnarvon's credit union launched a "Shred My Card" campaign, which gives consumers the opportunity to take their bank debit card to any Co-Op Services location, open a new free checking account with direct deposit, shred their old bank debit card and receive $105--pending an approved membership.

"There's a major difference here," Carnarvon said. "Unlike other financial institutions, we're focused on giving our members better rates, added conveniences and more value. Co-Op Services has never charged a debit card transaction fee to our members and offers a free checking account with no monthly fees."

While opportunities have presented themselves in the short term, market forces will almost certainly put downward pressure on interchange rates for small issuers, potentially proving the small issuer exemption meaningless in the future, MCUL and Co-Op CU said at the hearing.

The Credit Union National Association is urging the Federal Reserve to increase the amount of per transaction fees that debit card issuers receive to cover their costs associated with fraud prevention.

NCUF grant helps Mich. CUs attain FiCep certification

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MADISON, Wis. (11/1/11)--With assistance from a National Credit Union Foundation, the Michigan Credit Union League (MCUL) offered a training program that produced 72 Certified Credit Union Financial Counselors last year.

With a National Credit Union Foundation grant, the Michigan Credit Union League trained 72 Certified Credit Union Financial Counselors last year. Here, Kathryn Greiner from University of Michigan CU presents on the "Budget Counseling Process" during training. (Photo provided by National Credit Union Foundation)
Since then, MCUL has reached an estimated 170 credit union staff and more than1,850 consumers through the program.

The training combines the Credit Union National Association's self-study Credit Union Financial Counseling Certification Program (FiCEP) with webinars and local in-person training and networking, to help credit union staff to become more confident in assisting members with their financial futures. 

An additional 101 credit union staff from 26 credit unions have enrolled in the program in 2011.  The guided self-study portion provides bi-weekly interactive webinars on each of the eight FiCEP modules and two live training and testing sessions during a six-month period. Upon completion of the modules, training and testing, participants receive their Certified Credit Union Financial Counselor designation. 

A major component of the enhanced training is working with counselors to develop a strategic for their credit unions to obtain maximum impact for the credit union and the community.

MCUL's goal is to increase the number of credit unions providing financial counseling to assist Michigan residents to manage their money and avoid problems such as bankruptcy, foreclosure and loan defaults. Michigan's credit unions are attracting the interest of partners such as Habitat for Humanity and United Way's 2-1-1 system as a source of trustworthy financial guidance for the families they serve. 

With 24 credit unions reporting in the first half of 2011, counselors logged in about 1,200 hours of counseling activity, helping more than 1,850 consumers. Expanding those results to the full group of 170 credit union financial counselors in 56 credit unions would translate an annual reach of more than 8,800 consumers, said NCUF.

Second-quarter National Credit Union Association Call Report data has illustrated the program's impact shows Michigan credit unions experiencing fewer delinquencies and charge-offs and a reduction in the rate of bankruptcy among members.     

"Members are always thanking us because we helped them and no one else would," said Lisa Blevins, a FiCEP participant from Education Plus CU in Monroe, Mich. "Our charge offs and delinquencies are way below our peers, and we take pride in keeping it this way because that tells us we are helping more members than charging them off as a loss."

New music video highlights how to switch to a CU

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MADISON, Wis. (11/1/11)--The Disclosures, a credit union music duo, released a new music video to help credit unions encourage consumers to switch accounts in anticipation of Bank Transfer Day on Saturday.

A rework of Gloria Gaynor's "I Will Survive" '70s anthem, "Tired of Your Big Bank? Take These Steps to Switch to a Credit Union (& Sing-along)!" provides an overview members of how they can move funds from a big bank to a credit union.

"Sometimes it helps to get an important message across if you take something people know and turn it on its head," said Disclosure band member Christopher Morris, who is also director of communications at the National Credit Union Foundation. "And like everything we do, we don't take ourselves too seriously to help make it entertaining."

The viral Bank Transfer Day continues to grow amidst widespread dissatisfaction with high bank fees. Bank customers who have become disillusioned with banks are looking to local cooperative credit unions, who typically charge fewer and lower fees and provide other services that represent their structurally driven commitment to people rather than profit, said the duo.

"The idea of moving your money to a credit union is a hot topic now because of Bank Transfer Day, but we hope credit unions will find value in sharing our video long after Nov. 5," said Disclosures band member Chad Helminak, who is web producer/member development strategist at the Wisconsin Credit Union League.

SECU recommends ice cream for Bank Transfer Day

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RALEIGH, N.C.  (11/1/11)--Emphasizing the credit union difference, with a twist, State Employees' Credit Union (SECU), Raleigh, N.C., is recommending that potential members don't come in to switch their accounts on Bank Transfer Day, Saturday. Rather, SECU is advising consumers to spend the day with their families--and go get ice cream.

SECU isn't spurning new members. It's emphasizing that making the switch to a new financial institution can't be accomplished in a single day. The process can take from 30 to 60 days, according to the credit union.

The credit union has fined-tuned the switch process during the past nine months. The 23 billion asset SECU initiated its own transfer program in January, well before Bank Transfer Day became a national phenomenon. A simplified switch kit, available online on the credit union's website, provides a checklist of steps to help guide members through the process. 

Staffers are assigned to help new members establish a plan and to initiate phone calls to employers on payroll direct deposits, or to draft letters to insurance agents, utility companies and other businesses for automated clearinghouse items. Creating an individualized switch plan and timeline helps ease member anxiety about the switch process, and helps assure a smooth, "no-miss" transition, said SECU. 

The "ice cream" approach is the best use of a member's time, said Jim Blaine, SECU president/CEO. "The last thing SECU wants is for members to start off on the wrong foot with their credit union experience," Blaine said. "I'm quite certain most SECU members' first choice for the weekend is not sitting in a branch office on a Saturday morning for an hour or so--especially when the switch process cannot be completed in one day."

Blaine estimates the credit union already is working with 25,000 consumers on switching their accounts.

On Saturday, SECU's contact center will be prepared to answer initial basic questions and advise members about the terms of SECU's products and services. Contact center staff also will mail switch kit information packets to interested potential members. "Branch staff will follow-up by meeting individually with members to formulate a well-reasoned plan and timeline for the switch," said Amy Waller, SECU vice president of support services and head of the credit union's Checking Switch initiative. "We're ready."