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CU System briefs (10/05/2011)

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* MOUNTLAKE TERRACE, Wash. (10/6/11)--A former Washington State credit union-turned-bank plans to raise up to 432 million in an initial public offering, reported American Banker (Oct. 3). 1st Security Bank, the former Washington CU, based in Mountlake Terrace, Wash., converted charters in 2004. Its new holding company will be known as FS Bancorp. The bank has been under supervisory agreements until recently, said the Banker, and had reduced its branches to six. It had 14 branches as a credit union. In 2009 it streamlined its operations to restore profitability, said the publication … * DUBUQUE, Iowa (10/6/11)--After 47 years of service, Dupaco Community CU President/CEO Bob Hoefer will retire, effective Feb. 12. He will be succeeded by Joe Hearn, Dupaco's chief operating officer. Hoefer joined the then-$3.4 million asset Dupaco Employees CU in 1964. At that time it served employees of Dubuque Packing Co., had one branch and served 4,600 members. Today, the $955 million asset credit union serves 63,000 members from 12 offices. Hoefer is an honorary director and past board chair of the Iowa Credit Union League. He served on the Credit Union National Association's (CUNA) Renaissance Commission and was a member of its Governmental Affairs Committee for more than 20 years. He also was active in the Credit Union Executives Society, National Association of State Credit Union Supervisors, Filene Research Institute. Hearn joined the credit union as director of marketing in 1986. He became chief operating officer in 2008 and then executive vice president. He is serving his second term as league chairman and is a member of CUNA's state credit union subcommittee. Hearn was inducted into the CUNA Marketing and Business Development Council Hall of Fame in 2010 … * OTTUMWA, Iowa (10/6/11)--Community 1st CU's Board of Directors has appointed Philip Van Mersbergen as president/CEO, effective immediately, the board announced Wednesday. Van Mersbergen joined the $356 million asset, Ottumwa, Iowa-based credit union's team in 2008 as chief financial officer. His duties included being instrumental in a credit union merger, the opening of two new branches and generating asset growth of more than $90 million. His career in financial services began in 1996 at MidWest One Bank, where he held several positions …

ITodayI blog CUs provide ATM convenience via CO-OP Network

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NEW YORK (10/6/11)--A blog by NBC Today financial editor and author Jean Chatzky clarifies a point about credit unions and ATM convenience she made on a bank fee segment aired Tuesday morning when she noted that credit unions provide an alternative to a large national bank for financial services. In the segment aired, Chatzky said credit unions offer lower fees but lacked an extensive ATM network so consumers might end up paying surcharges. However, readers pointed out to her that credit unions do indeed have an extensive ATM network: the CO-OP Network, she said in her blog later. "There exists something called the CO-OP Network, which includes over 3,000 participating credit unions," Chatzky wrote. "Through this network, there are 28,000 ATMs that offer surcharge-free access to accounts for all participating credit union members." She also noted that credit unions often have shared branching arrangements. At CO-OP Network "members of participating credit unions can go to any of the 4,400 participating branches across the U.S. and use that branch as if it was their own." The blog also included CO-OP's ATM locator link and a link to shared branches. Chatzky is author of "Not Your Parents' Money Book: Making, Saving, and Spending Your Own Money" and has been a guest on the Credit Union National Association's weekly Home and Family Finance Radio show.

Cheney to IWash. PostI aSmarterChoice traffic up as banks hike fees

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WASHINGTON (10/6/11)--As if someone woke up a sleeping giant, the media, members of Congress and consumers have caught on to the value of credit unions during the debit card fee debate. Credit Union National Association (CUNA) President/CEO Bill Cheney told the Washington Post Tuesday that traffic on its consumer website, aSmarterchoice.org, has jumped eightfold since the news broke that Bank of America would charge a $5 a month debit card fee. "Our point is, if you're upset, you should do something about it," Cheney told the Post. Earlier this week Cheney invited upset bank customers to join a credit union where fees are lower and service is better (News Now Oct. 5). Banks such as BoA, Wells Fargo and Chase plan to charge or are testing new fees to recoup losses they say they will encounter from lost interchange income regulated by the Dodd Frank Act. The public outcry against the fees has prompted response from congressional delegates and the Obama administration, said the Post. U.S. Rep. Brad Miller (D-N.C.) introduced a bill to make it easier to switch accounts and to prohibit banks from assessing fees for the process, and Sen. Richard J. Durbin (D-Ill.), the author of the Dodd Frank amendment that mandates a cap on interchange fees, called for credit unions and community banks to "seize this competitive opportunity" to woo consumers. President Barack Obama also criticized the fee hikes as a way for banks to pad their profits at the expense of consumers, said the Post. Credit unions, the leagues and CUNA are taking full advantage of the opportunity to educate consumers on membership's benefits through mass media, and credit unions are promoting their no-fee and low-fee services. (See related story "CUs, leagues reach out with no-fee promos" in today's System section of News Now.) The news has prompted media reports across the nation about consumers, angry with the escalating bank fees, seeking alternative financial services solutions. Many of them mention switching to credit unions as a key option. Case in point: Tuesday's nationwide newspaper, USA Today, featured an article, "Debit card fees are coming: How to avoid them," with a subhead, "Banks ding shoppers for purchases after law limits transaction fees." In the article, Sandra Block' outlined three ways to avoid debit card fees (pay with cash, pay with credit and switch banks), and wrote: "Small banks and credit unions have historically offered lower fees than the big banks, and that's likely to continue. The law mandating the reduction in debit card fees exempted banks and credit unions with assets of less than $10 billion. Many credit unions allow consumers to open an account for as little as $5." Other media outlets, such as The Oregonian, have "localized" the story, canvassing local credit unions and banks on whether they plan to adopt fees. Credit unions have no plans do adopt fees, according to most of the articles.

CEOs letter on tax status outlines benefits of CUs

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ROCHESTER, Minn. (10/6/11)--A letter to the editor of Minnesota's PostBulletin.com on Wednesday from a credit union CEO outlines the benefits of credit unions while disputing bankers' attacks against credit unions' tax status. Kelly McDonough, president/CEO of $115 million asset First Alliance CU, Rochester, Minn., wrote the letter in response to another letter published on Sept. 28. "I want to clarify that credit unions are member-owned, not-for-profit financial cooperatives," McDonough wrote, adding that although credit unions are tax exempt, they pay payroll and unemployment taxes and property taxes. "Any benefits credit unions receive from their tax-exempt status are passed onto those they serve in the form of dividends. Our member-owners pay income tax on those earnings,"the letter said. "The substantial savings Minnesota credit unions provide to consumers far outweigh any revenue that would be raised by taxing credit unions," McDonough wrote. "It is estimated that each year Minnesota credit unions provide $125 million in direct financial benefits to the state's 1.5 million credit union members. These benefits are given in the form of fewer fees, lower rates on loans and higher savings rates, which translate into saving the average member $86 a year and the average member household $163 a year. "Credit unions look out for the best interests of people like nurses, teachers, firefighters and even your next-door neighbor. Furthermore, when hard times hit, we stand with our members and extend credit when others won't," McDonough concluded. Use the link to access the full letter.

Massachusetts Maxwell Herring award winners announced

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MARLBOROUGH, Mass. (10/6/11)--The Massachusetts Credit Union League announced state-level winning entries for the Dora Maxwell Social Responsibility Community Service Award and the Louise Herring Award for Philosophy-in-Action Service Award (The Massachusetts league’s Values & Visions Sept. 20). Two credit unions were presented first-place Maxwell awards:
* Crescent CU, Brockton, $200 million to $500 million in assets, for strengthening its partnership with the Old Colony YMCA in Brockton; and * Workers’ CU, Fitchburg, $500 million to $1 billion, for expanding financial support and increasing participation in its support of the American Cancer Society’s Greater Gardner Relay for Life event.
Hanscom FCU, Hanscom AFB, Mass., $500 million to $1 billion in assets, received a first-place Herring award for its commitment to green lending, creating a benefit to members while contributing to global environmental conservation efforts. The award winners will move to the national level competition presented by the Credit Union National Association.

Song video celebrate ICU Day CUs cooperative nature

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MADISON, Wis. (10/6/11)--The credit union music duo, The Disclosures, have released a free song and music video for International Credit Union (ICU) Day on Oct. 20. The song, “Building a Better World,” pays homage to this year’s ICU Day celebration theme. Credit unions can use the song and video to raise awareness of the positive impact credit unions continue to make worldwide. “Our music has always focused on finding new ways to package the credit union message,” said Disclosures band member Chad Helminak. “With ‘Building a Better World,’ we decided to take it one step further and invite credit union folks to have some fun and help demonstrate our cooperative nature.” The Disclosures put out a casting call to credit unions to provide video clips, which would eventually become the entirety of the music video. The band also filmed credit union people singing song segments. More than 40 credit unions and supporting organizations make cameos in the video. The cameos include credit union staff lip-synching lyrics, performing air-guitar with hockey sticks and even dancing with mascots. “Credit unions’ personability usually shines through their member and community service, but now you can see it also holds true for music videos,” said Disclosure member Christopher Morris. The song, free to download, and lyrics can found on The Disclosures website. Use the link to view the YouTube video. Credit unions can distribute and share the video on their websites and in other online communications. As part of the video collection process, the Disclosures also randomly selected a video submission to receive a signed copy of their compact disc “(Hey, We’re) The Dislcosures.” The winner was Doug MacMillan from State Employees’ CU, Raleigh, N.C.

Speaker Growth opportunities closer than most CUs believe

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MADISON, Wis. (10/6/11)--Credit union leaders don’t need to look any further than their current business when exploring growth opportunities, a CUNA Mutual representative told an Online Discovery audience Tuesday.
CUNA Mutual Group employees were kept busy Tuesday in their virtual booths within the Discovery Expo Center during the company's second annual Online Discovery Conference. The daylong virtual conference attracted more than 1,800 credit union professionals. The event featured 13 speakers, the Expo Center exhibit hall and a variety of chat rooms. (Photo provided by CUNA Mutual Group)
Online Discovery is CUNA Mutual Group’s free Web-based conference. The event attracted a national and international audience of more than 1,800 credit union and league staff. Eric Hansing, director, product marketing and MemberCONNECT for CUNA Mutual, said working on the little things that optimize its results is a factor that often determines success for a credit union. “We all are engaged in things we can do significantly better,” Hansing said. “Too often, we chase new initiatives that we think will offer us growth. We shouldn’t lose sight of making the most of what we’re already doing by optimizing those opportunities.” Whether it’s loan growth, cross sales or productivity, Hansing said, credit unions should look at new ways to make the most of something they’re already doing. He suggested they start by “clarifying the win.” “What’s your specific goal? In the case of member relationships, it’s important to know your customers and know where you currently stand,” he said. “Also, make sure your people see how it matters so they can be better focused--and become motivated.” A credit union must identify critical components of success and be very clear about the end game, or target, Hansing said. That requires knowing the business and the levers that must be pulled to capture opportunities. “It’s about targeting customers and knowing what they want from you. Here’s where you might consider research,” he added. A critical component of a business achieving its target goal is to continuously improve by being very good at the fundamentals, Hansing said. He urged conference attendees not to underestimate the power of sound fundamentals. “Whether it’s sports or a business, the good teams excel at the fundamentals,” he said. “They are a critical success factor that dramatically improves performance.” Continuous improvement also requires measuring internal capabilities and diagnosing limitations. Sustaining momentum in reaching a goal takes work, he added. Developing action plans. “You need to look for bright spots and things you are doing well and clone them,” Hansing said. “Brainstorming is another important step in maintaining your improvement level.” He recommended credit unions brainstorm with outsiders--their peers, business partners and non-members--and find out what competitors are doing that they aren’t. “As you start to apply this framework, you’ll notice there is a surprising amount of growth potential right under your noses. And these principles do work,” he said.

CU offers credit line for bankrupt Philly orchestra

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MAUMEE, Ohio (10/6/11)--Sun FCU in Maumee, Ohio, has agreed to finance a business line of credit for the Philadelphia Orchestra, one of its sponsor groups. The orchestra will use the $3.1 million debtor-in-possession loan for operating expenses as it works to reorganize and emerge from Chapter 11 bankruptcy filed in April. Sun FCU has offices in Toledo, Ohio, and Philadelphia. Unlike other bankruptcies, the orchestra has no creditors, said the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Oct. 5). The orchestra said it intends to use Chapter 11 to gain relief from pension obligations, secure a new lease with the Kimmel Center where it performs, and structure a new union contract with musicians. Collateral for the loan will include fine instruments owned by the orchestra, contents of the orchestra’s musical library, real property and other business assets. “Understanding the unique needs of the Philadelphia Orchestra as an employer to many of our members is essential in carrying out our mission of caring service at Sun Federal,” Dale Frankhouse, Sun Federal director of business services, told PCUA. “It is our privilege to partner with the orchestra to help ensure its long-term sustainability as a valued part of the Philadelphia community and culture, and its enduring prominence in the world of music.” The $401.9 million asset Sun FCU has been serving members of the Philadelphia Orchestra since 2003 when the Philadelphia Orchestra FCU merged with Sun FCU. Sun FCU served the needs of orchestra musicians and employees long before it entered discussions with the orchestra’s management about a possible business line of credit, PCUA said. The credit union’s product offering includes a business loan tailored to the needs of professional musicians. The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions’ MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity for credit unions to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

Economic woes affect retirements--Online Discovery

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MADISON, Wis. (10/6/11)--While still less than 50/50, the chances of a return to recession have grown substantially in 2011, affecting how people plan for their retirement, a CUNA Mutual Group retirement expert told Online Discovery Conference attendees Tuesday.
Scott Knapp (left), director, investment strategy for CUNA Mutual Group, told Online Discovery Conference attendees the economy is still struggling because of the type of recession we are recovering from: a debt deflation spiral similar to the Great Depression. (Photo provided by CUNA Mutual Group).
The economy is still struggling because of the type of recession the nation is recovering from: a debt deflation spiral similar to the Great Depression, Scott Knapp, director, investment strategy for CUNA Mutual Group, told conference attendees. “This happens when public and private debt reaches a bubble level,” Knapp said. “Then credit gets choked off in the financial system and that leads to a credit crisis and a rapidly slowing economy … this is by far the worst category of recession and it is the hardest to exit.” The only remedy for a debt deflation spiral is time, so the country’s patience will be tested for an extended period as excess debt gets paid down. The Federal Reserve believes recovery will be slow as indicated by its warning that interest rates will be kept low until 2013. “Translation: Don’t expect any meaningful growth for the next two years,” Knapp said. As price inflation outstrips wages, consumers are falling backward. Corporate profits, however, are excellent. Balance sheets and profitability in the corporate sector are strong, which is good for everyone because it supports the overall economy, Knapp added. In addition to the current state of the economy, demographics, a possible extended period of below-average investment returns, and structural changes in the economy are leading many to re-evaluate retirement planning. Nearly four in 10 workers said they will retire after age 70 or just keep working, and in 2008, at the height of the tension, only 20% of current retirees felt very confident about their retirement security, according to a 2008 Employee Benefit Research Institute survey. “The U.S. doesn’t lack a willingness to provide for baby boomers in retirement, but it doesn’t have capacity to live up to all the promises that have already been made,” Knapp said. “As a result, benefits are currently funded through issuance of debt, and that’s not sustainable. Having modest expectations about the government’s role in providing retirement security is prudent. Those preparing for retirement must take full control of their future circumstances.” Total lifecycle planning and outcome-based strategies are taking the lead in preparing for retirement. “Having enough assets accumulated at retirement is not enough,” Knapp said. “Pension-like benefits must be also available during the post-retirement income phase, even from 401(k) plans. The industry needs to innovate in the post-crisis era, and achievement of retirement security must become less dependent on investment returns.”

FirstCorp CEO resigns Harden named interim CEO

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PHOENIX (10/6/11)--Pete Pritts, president/CEO of First Corporate CU, has submitted his resignation, effective immediately. He has worked with credit unions for 24 years. Greg Harden, FirstCorp executive vice president/chief investment officer, has been named interim president/CEO, the corporate credit union said in a release. Harden has been with FirstCorp for 22 years. His responsibilities include investment, lending, credit risk and balance sheet management. “I am taking this action, after lengthy consideration, so both the credit unions and I can move forward,” Pritts wrote in his resignation letter. “I am leaving a well-capitalized FirstCorp in compliance with Part 704 of the Corporate Regulation and a sound 6% leverage ratio,” he added. “It is my belief that FirstCorp is the most solid corporate credit union in the West and is well positioned to thrive as part of a solution for credit unions.” "Pete’s leadership has navigated us through these critical times of revised regulation and new capitalization standards,” said David Doss, FirstCorp’s board chairman. “His efforts have resulted in strong financial and operational performance for FirstCorp. Doss said the board will explore a range of options as it searches for Pitts’ replacement. “We have strong and experienced leaders in Greg Harden and Stacy Glidden, our chief operating officer, who continue to drive our funds management and payment systems businesses respectively,” Doss said.