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CU System Archive

CU System

Most check fraud not single scammer--FinCENs Freis

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LAS VEGAS (10/6/10)--Although check use is declining, credit unions shouldn't think that check fraud also is decreasing. In fact, check fraud has grown into the second most common crime reported in suspicious activity reports (SARs), behind money laundering, according to an official at the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). Money laundering accounts for about half the SARs, said FinCEN Director James H. Freis Jr., in a speech before the Financial Service Centers of America Inc.'s (FiSCA) annual conference meeting in Las Vegas. Suspected check fraud incidents have accounted for more than 600,000 SAR filings since 1996. If check kiting and counterfeit checks are figured in, the number of SAR filings climbs past one million, he said. "Most check fraud activity is unlikely to involve a single instance of criminal behavior," but "often occurs as a serial or repeated activity," Freis told the group. "Criminals who commit check fraud may not stop there. Many may be involved in other illegal activities as well." Those activities include counterfeit checks, credit card fraud, identity theft, check kiting and "other." "This 'other' category really drives home how interconnected check fraud is to other crimes," Freis said. "Some of the related activities reported on a check fraud SAR include: tax evasion; account takeover; ACH fraud, internet and lottery scams; stolen/forged checks; and ATM fraud." He also noted activity can include organized criminal activity--such as narcotics trafficking, trade-based money laundering and terrorist financing. Of the nearly 49,000 SARs filed so far this year by depository institutions reflecting "check fraud," the average suspicious activity amount was for $766,270 and the average loss amount was for $18,836. "The amount is reflective not of an individual fraudulent check, but rather the total related activity," he said. "The point is while several institutions see relatively small amounts lost to fraud, when they share information, a different picture emerges. What may look like a small-time scammer could be in actuality a criminal enterprise that has pulled down millions because the activity is spread across a number of financial institutions, each of whom can't see enough to connect the dots," he told the group. FinCEN, working to analyze suspicious activity reports (SARs) with law enforcement, can paint a more complete picture, he said. Freis noted that FinCEN posed the question, "Should cash checkers be required to file SARs," for public comment in May 2009. FiSCA said it supports encouraging voluntary filings by check casher but did not support a mandatory check casher SAR requirement. "FiSCA's concerns were that a mandatory check casher SAR requirement might result in a large number of reports to FinCEN with little or no benefit to the Bank Secrecy Act goals of curbing money laundering or terrorist financing," he said. He noted that SARs filed by check cashers would provide "lead information you would wish law enforcement to follow up on--individuals trying to take advantage of your business and customers you serve." He cited a 2009 American Bankers Association Deposit Account Fraud Survey, which estimated industry check-related losses totaled $1.024 billion in 2008, up from $969 million in 2006. It was the first time the survey had passed the $1 billion amount. About 80% of banks continued to report check fraud losses in 2008, the same percentage as in 2006, he said. Technology also has created new opportunities for fraud, Freis said. For example, digital scanners and mobile devices fail to capture many of the protections--such as magnetic ink character recognition (MICR) encoding, indelible inks, microprinting and watermarks--developed to mitigate check fraud and counterfeiting. He urged financial institutions to "anticipate such risks as they develop new products."

Loan-to-savings ratio drop hurts CU performance

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MADISON, Wis. (10/6/10)--The loan-to-savings ratio in August is pulling down credit unions’ financial performance, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly review of credit unions. “An increase in loans and a decrease in savings pushed the loan-to-savings ratio back above 73% in August, but down from 78% in August 2009,” Steve Rick, CUNA senior economist, told News Now. “This drop in the loan-to-savings ratio is placing downward pressure on credit unions’ asset yields and net interest margins.”
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Credit union loans outstanding increased 0.3% during August, compared with a decrease of 0.1% during July. Used-auto loans led loan growth, rising 1%, followed by unsecured personal loans and credit card loans, which went up 0.8% and 0.7%, respectively. Fixed-rate mortgages went up 0.5%, and adjustable-rate mortgages grew 0.4%. Home equity loans increased 0.3% while new-auto loans decreased 1.3%. Credit union loans in August totaled $582.6 billion, compared with $590 billion in August 2009. “Credit union loan balances rose 0.3% in August, the fastest pace since August 2009 when balances rose 0.6%,” Rick said. “Loan balances declined 0.8% during the first eight months of 2010, a complete turnaround from the 1.6% rise during the similar time period in 2009. Credit unions charging off and members paying off loan balances are the two main factors driving this result. Credit card, unsecured-personal and new-auto loan balances are down 0.2%, 1.1%, and 12% so far this year. “Credit union loan balances are expected to rise 4% in 2011 due to a strengthening economy, pent up demand for consumer durables, lower loan charge-offs and a rise in new-auto sales,” he added.
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Credit union savings balances decreased 0.7% in August, compared with a 0.7% increase during July. Individual retirement accounts led savings growth, rising 0.2%. One-year certificates and money market accounts each dropped 0.2%. Regular shares and share drafts fell 0.5% and 4.5%, respectively. Credit union savings in August totaled $795.1 billion--or $39.7 billion more than the $755.4 billion saved in August 2009. “Credit union savings balances fell in August by 0.7%--mainly because the month ended on a Thursday--a day before the Friday payday and a surge of payroll funds,” Rick said. “During the past year, credit union savings balances are up 5.3%, below the 9.4% recorded in the year ending August 2009. Members appear to be using any excess funds to pay down high-rate consumer debt, rather than placing funds in low-rate savings products.” Regarding asset quality, credit unions’ 60-plus-day delinquencies decreased slightly to 1.7% during August. The loan-to-savings ratio remained at 73% in August. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased slightly to 18%. The movement’s overall capital-to-asset ratio remained at 10% in August. The total dollar amount of capital for credit unions is $92 billion.

MidWest Financial members OK merger with DFCU Financial

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ANN ARBOR, Mich. (10/6/10)--MidWest Financial CU members have officially approved a merger of their Ann Arbor, Mich.-based credit union with Dearborn, Mich.-based DFCU Financial--the state’s biggest credit union by total assets. First announced in June, the merger was approved by 92% of MidWest Financial members who voted (annarbor.com Oct. 4). DFCU has $3 billion in assets, more than 219,000 members and 530 employees. MidWest Financial had roughly $177 million in assets, nearly 18,000 members, four branches and 70 employees. DFCU is expected to keep MidWest’s employees as DFCU enters the Ann Arbor market, the website said.

Southwest Corporate forming advisory council

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FARMERS BRANCH, Texas (10/6/10)--Texas-based Southwest Corporate FCU said Tuesday it will form an advisory council made up of credit union leaders to advise it on its future. More than 100 credit union representatives have already volunteered to serve on it, and members can still sign up, the corporate said. Nearly 450 credit union representatives attended the corporate's webinar, held Thursday, which introduced new CEO Dianne Addington and the corporate's new direction (eFacts Oct. 5). Recently retired as CEO at Michigan-based Genisys CU, Addington was appointed CEO of Southwest Corporate when it was placed into conservatorship--along with two other corporates--by the National Credit Union Administration (NCUA) on Sept. 24. Operationally, it's business as usual for Southwest Corporate. The same staff will continue to serve members, Addington told webinar participants. She also assured members that new capital will not be required during the bridge corporate status. She presented options for future business models that include:
* Purchase of corporate operations by an existing corporate; * A new corporate charter; and * Purchase of corporate operations by a credit union service organization (CUSO) or start of a new CUSO.
Addington noted it is wise to evaluate service alternatives, but she encouraged credit unions to stay with Southwest Corporate long enough to see the new plan emerge. She expressed confidence in the corporate's "efficient operations" and optimism for a viable, member-directed solution that would prevent interruption of services. "We are developing a process to receive input from everyone who wants to contribute," said Kathy Garner, executive vice president, member relations and business development, about the new council. "Much of the work already done on business models can be used by credit unions to help set the course for Southwest Corporate's future operations," she said. "We hope to provide members answers by year end." NCUA's Keith Morton urged the group to avoid fragmentation, but said that while credit unions need to start making plans for a transition, the best option is to work in a unified way, according to a report by the Texas Credit Union League (LoneStar Leaguer Oct. 4). The message was similar to that delivered by NCUA's Scott Hunt to members of Members United Corporate FCU, in another webinar last week (News Now Oct. 4). Members United was placed into conservatorship, along with Constitution Corporate FCU, on the same date as Southwest Corporate. Individuals can sign up for Southwest Corporate's advisory council until Thursday. To do so, contact Garner at garnerk@swcorp.org.

Illinois chapter leaders survive annual conference

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NAPERVILLE, Ill. (10/6/10)--More than 80 leaders from 21 of the Illinois Credit Union League’s 24 chapters “survived” this year’s annual Chapter Leaders Conference, hosted by the league and the
Click to view larger image The Illinois Credit Union League recently hosted its annual Chapter Leaders Conference, with the theme, “Strive, Survive, Thrive.” Twenty-four chapters attended the conference, which included outdoor teamwork activities. (Photo provided by the Illinois Credit Union League)
Aurora Chapter. The conference was themed, “Strive, Survive, Thrive.” During the conference, winners of the state-level Credit Union Political Action Council’s (CUPAC) annual chapter fundraising competition were recognized. Winners included:
* First place--Southern Illinois Chapter, $18,083; * Second place--George G. Burnett Chapter, $10,976; * Third place--Kankakee Valley Chapter, $10, 885; and * Honorable Mention--Thomas W. Doig Chapter, $9,256.
A silent auction also raised $1,665 at the conference. The money was donated to CUPAC and the Illinois Credit Union Foundation.

CU System briefs (10/05/2010)

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* PORTLAND, Maine (10/6/10)--Maine credit unions and Good Shepherd Food Bank Friday celebrated the beginning of National Co-op Month by
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marking the fifth anniversary of Maine's first "Food Mobile" with a $10,500 contribution. The Maine Credit Unions' Campaign for Ending Hunger has contributed more than $3.5 million to help end hunger since 1990. Also announced: the Food Mobile program has distributed more than 1.6 million pounds of food to food pantries throughout the state. From left are Rick Small, executive director, Good Shepherd Food Bank, and Jon Paradise, governmental and public affairs manager at the Maine Credit Union League. (Photo provided by the Maine Credit Union League) ... * ALBANY, N.Y. (10/6/10)-- Amy Kramer, vice president, governmental affairs at the Credit Union Association of New York, has left to work for AT&T in the company's top state legislative slot in New York State (PR Newswire Oct. 1). She will be responsible for developing strategies and plans for achieving AT&T's legislative objectives and lobbying elected officials and policymakers on a range of issues for AT&T. She also was a former Senate Fellow/Legislative Coordinator for the New York State Senate and assistant curator for the Shaker Museum & Library in Old Chatham ... * FORT WORTH, Texas (10/6/10)--The credit card program at American Airlines FCU has surpassed balances of $100 million, the Fort Worth, Texas-based credit union announced. In the past five years, the program has experienced double-digit growth annually. Nancy Crouch, director of card services for AA CU, noted that in the tough economic climate, the program "acts as a safe harbor for members, protecting them from the predatory practices common in this industry. That's one of the many reasons credit unions are thriving despite the challenges." The more than $5 billion asset credit union offers several Visa Platinum card progams and includes a points-based reward card, which is also available as a starter card. Two years ago, the credit union launched a low-rate Platinum card. The program has generated $30 million in outstanding balances ...

WOCCU redefines rules of engagement

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MADISON, Wis. (10/6/10)--Engaging credit unions and volunteers from developed countries in World Council of Credit Union (WOCCU) programs and activities is the best way to gain organizational support and reignite the credit union philosophy worldwide,
Click to view larger image At the World Council of Credit Unions’ (WOCCU) Corporate Strategic Conference in Madison, Wis., last week are (left) Barry Jolette, WOCCU chairman; Anne Cochran, WOCCU treasurer; and Greg Moser, vice president of WOCCU Services Group.
Click to view larger image Brian Branch, left, World Council of Credit Unions (WOCCU) executive vice president and chief operating officer and Pete Crear, WOCCU president/CEO, attended the WOCCU Corporate Strategic Conference in Madison, Wis. The goal of the conference is to enhance WOCCU’s capabilities. (Photos provided by the World Council of Credit Unions)
according to WOCCU’s Corporate Strategic Conference, which took place in Madison last week. “I’d like to believe that we can make a difference in peoples’ lives,” said Barry Jolette, WOCCU chair and president/CEO of San Mateo CU in Redwood City, Calif. He provided opening comments to the second-annual conference and was on hand with other representatives from U.S. credit union leagues and credit union organizations in Canada and Ireland. The purpose of the conference was to enhance WOCCU’s capabilities by including representatives from partner organizations in defining its future directions. “The purpose of this meeting is about looking analytically at ourselves, determining what we have learned and deciding where we need to go,” said Brian Branch, WOCCU executive vice president and chief operating officer. “If we focus only on what staff can do, we limit our range. But if we extend that range by reaching out to our partners, we may be able to tap unlimited possibilities.” Partner organization representatives attending included Anne Cochran, WOCCU treasurer and CEO of the Louisiana Credit Union League; Mike Lanotte, senior vice president and general counsel, Credit Union Association of New York; Murray Williams, chief operating officer, Iowa Credit Union League; Alan Moore, international development officer, Irish Credit Union League Foundation; and Derek Cameron, program officer for the Canadian Cooperative Association. Field officers from WOCCU development program in Afghanistan, Ethiopia, Haiti, Kenya, Mexico and Sri Lanka also joined staff from WOCCU’s Madison and Washington, D.C., offices. More than 40 presenters and evaluators participated. “The ability to gather staff from around the globe for an annual planning session has always been an asset for World Council,” said Pete Crear, WOCCU president/CEO. “But the opportunity to engage the expertise of partners in our global development efforts significantly extends our reach and enhances our ability to improve the lives of people worldwide through the power of credit unions.”