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CUs help borrowers buy cars in tight credit market

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MADISON, Wis. (11/17/08)--The volume of car loans is dropping, captive finance companies are tightening credit, and interest rates have nearly doubled in third quarter. But consumers still can get a car loan at an affordable price through a credit union, according to several media sources. During third quarter, the volume of car loans declined 6%, compared with third-quarter 2007. Average interest rates on car loans almost doubled from July to September with financing now as high as 39%, and borrowers are required to make larger down payments--averaging $2,000 down on a $20,000 car (Washington Post Nov. 13). The 39% financing--offered by Nationwide Acceptance Corp. in Chicago to people with "perfectly awful credit"--is almost four times what local banks and credit unions charge, even for consumers with poor credit histories, reported The Seattle Times (Nov. 13). Credit unions and banks still are lending to qualified buyers, the article said. It offered suggestions on how to get the best car deal. One suggestion: Shop for financing. "Talk to a credit union or bank, and compare those rates with what dealerships offer," the article advised. In Jacksonville, Ark., Gwatney Cheverolet is one of several auto dealers turning to different sources--including credit unions--to finance cars after its captive finance company, GMAC, tightened its lending standards (Arkansas Democrat Gazette Nov. 13). The dealer is increasing its work with local credit unions and banks rather than GMAC. In fact, Arkansas FCU is now its largest lender. Terry Vick, the credit union's chief lending officer, noted in the article that Arkansas FCU has lent 13% more in auto loans this year, compared with all of 2007. She attributes the business to the volatile stock market. Members have pulled their funds from the market and deposited them in the credit union. As a result, there's plenty of money to lend out. Edmunds.com, an online resource for consumer automotive information, agrees it is possible to get a car loan in times of economic stress. It called media reports that consumers are unable to get auto loan financing as "often overstated" (BusinessWire via MarketWatch Nov. 14). Edmunds.com pointed out several trends, which credit unions can help educate members about:
* Consumers with average credit scores will be required to make a down payment as high as 20%; * Lenders are restricting the length of loans; six-year loans may no longer be an option for many consumers; * The minimum credit score required for an auto loan has risen to around 500; * The credit score required for the best loan rates has risen to at least 720, up from 700 a few months ago; and * Consumers with the best credit can expect an interest rate as low as 5.95%, while those with average credit may see rates as high as 12.5%.
Among the strategies Edmunds.com outlines: "Look to credit unions, local banks and online lenders as alternative sources for auto loans."

U.S. Central to convert accounts to stabilize ratings

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LENEXA, Kan. (11/17/08)--U.S. Central FCU will convert roughly $450 million of member capital share accounts (MCS) to permanent capital known as paid-in-capital (PIC) in efforts to stabilize its ratings and build long-term capital. About $3.8 billion of unrealized losses on U.S. Central’s securities as of Sept. 30, have caused Wall Street ratings agencies to downgrade the corporate in early 2008. “Ratings agencies look at the current capital we have,” David Dickens, U.S. Central vice president of asset liability management, told News Now. “No credit is given for MCS because it is not considered to be equity under GAAP [generally accepted accounting principles] since it is not perpetual. “The ratings agencies will only recognize capital that is a GAAP-qualifying equity,” he continued. What U.S. Central is in essence doing is asking its “members to make a change in the type of capital instrument,” Dickens said. “We’re attempting to make this move to solidify our current AA+ rating, which is the second-highest rating,” he added. U.S. Central still will have $2.6 billion in total capital, Dickens said. By converting $450 million from MCS to PIC, the corporate will increase its GAAP equity to $1.385 billion from $935 million. Since U.S. Central has a long-standing use of MCS as a capital component, the change could cause some consternation among members because the move might basically be saying to some that “this type of capital is not good enough,” Dickens acknowledged.

Missouri has most participants in CU Locate

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ST. LOUIS (11/17/08)--Missouri credit unions are leading the nation in CU Locate. No other state has as many credit unions participating in the natural disaster response program offered by Credit Union National Association, according to the Missouri Credit Union Association (MCUA). The program is free and helps members stay in contact with their credit union during a natural or man-made disaster (The Missouri difference Nov. 12). Members can call 1-877-CULOCATE (1-877-285-6228) to check the status of their credit union, access funds and receive other information. “It’s important for credit unions to take advantage of CU Locate,” said Don Cohenour, MCUA senior vice president of credit union development. “In a natural disaster, businesses can literally be swept away. CU Locate provides members and credit unions with an emergency contact.”

Massachusetts Missouri league CEOs in the media

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MARLBOROUGH, Mass. and ST. LOUIS (11/17/08)--Presidents of two state credit union leagues recently weighed in, through various media, on the condition of the economy and its effect on credit unions. Dan Egan, president/CEO of the Massachusetts Credit Union League, commented Friday to the Boston Herald on the $700 billion federal bailout package. “The whole thing is strange,” Egan told the newspaper. “The [bailout] is morphing into something different than what was originally intended.” The result could be confusion and loss of confidence for consumers--many of whom may decide not to seek new loans, even though the Massachusetts financial system is in relatively good shape, Egan added. Rosie Holub, president/CEO of the Missouri Credit Union Association, wrote a letter to the editor published last week in the St. Louis Business Journal. In it she said: “There has been much discussion about the economic crisis and remake of the financial services industry. A bright spot in our current economic woes are credit unions. As not-for-profit financial cooperatives, credit unions continue to put the financial security of our families first. “Although we are experiencing an unprecedented period of economic stress and uncertainty, this sector of the financial services industry continues to maintain public trust," she continued. "As a matter of fact, year after year independent national surveys confirm that credit unions are trusted to consistently act in the consumers’ best financial interests. Perhaps it isn’t so bad to be a little conservative; and perhaps it is time to take a look at credit unions--a segment of the financial services industry you can trust.”

Members United Corporate establishes new foundation

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WARRENVILLE, Ill. (11/17/08)--Members United Corporate FCU has established The Central Credit Union Fund Foundation to fund initiatives that support the theme of “people helping people” and to help credit unions improve consumers’ financial well-being. Members United is providing the foundation with $50,000 in its first year for operating costs/grant awards and $200,000 to establish an endowment. “Creating the foundation is a natural extension of our core mission,” said Kevin Brauer, president of Members United’s northeast region. “When we merged with Central Credit Union Fund in 2007, we wanted to recognize its position as the nation’s first corporate credit union and its continued commitment to serving credit unions. The foundation will benefit former Central Fund members and other Massachusetts credit unions.” The foundation will fund programs that encourage consumer education, financial literacy, financial services to those of modest means, credit union development, service to under-served consumers and management development. The foundation’s board of trustees approved its grant-making policy Thursday. Members United Corporate FCU is a national $10.3 billion asset financial institution headquartered in Warrenville, Ill.

Laptops stolen from auditors may have members info

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PORTLAND, Ore. (11/17/08)--Two Oregon credit unions have notified members that laptops stolen from outside auditors may have contained their names, account numbers and balances for certain types of deposit accounts but not critically sensitive information. OnPoint Community CU, based in Portland, said a laptop that belonged to a Michigan-based auditing firm was stolen after the auditors left the office of OnPoint Community CU on Oct. 29. OnPoint Community President/CEO Robert A. Stuart told members about the theft in a letter to members posted Nov. 4 on its website. And local media in Eugene, Ore., reported that Oregon Community CU, based in Eugene, sent out similar letters last week to members informing them that laptops had been stolen from auditors after they left the credit union for a required audit, also on Oct. 29 (KMTR.com Nov. 14). The auditors could not confirm they deleted all OnPoint information from the laptop before leaving the offices, as required by OnPoint policy, Stuart said. "Because of this uncertainty, we are taking a number of precautions, including proactively notifying our members," he said. He noted the information did not include any credit card information, debit card information or passwords. It also did not include any Social Security numbers, taxpayer ID numbers, birthdates or other information typically used in identity theft. "This appears to have been a random theft. There is no indication the thief has accessed any data, or is even aware of it," he told members. The credit union recommended members monitor their accounts and said employees will continue to carefully check member identification during business transactions. Oregon Community CU spokesperson Cheri Kistner told KMTR that the credit union believes the risk to members in minimal. The information taken did not include critically sensitive information, she said. Like the other credit union, Oregon Community CU encouraged members to monitor their accounts.

CUs on the Tube Tinker FCU bucks the norm

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OKLAHOMA CITY, Okla. (11/17/08)--Tinker FCU has launched a website, BucktheNorm.com, to reach young adults. The “norm,” according to Tinker FCU, is spending beyond a consumer’s needs, getting into debt, and not knowing how to get out. The site aims to provide information to young adults so that they can “buck the norm” and achieve financial empowerment. The website provides articles about spending and finances, a link for a free credit report, and an application for a scholarship contest. It explains financial products, such as checking accounts, savings accounts and retirement accounts. BucktheNorm.com also uses Twitter to provide links to financial empowerment stories. For more information about “bucking the norm,” watch the video or use the link. Tinker FCU has $1.7 billion in assets and is based in Oklahoma City, Okla. For more information, use the link.

City planners reject CUs proposed branch

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GRAND RAPIDS, Mich. (11/17/08)--A proposal to build a new branch of Consumers CU in Grand Rapids, Mich., has been rejected by city planners. More than 150 residents signed a petition opposing the plan, arguing that the drive-through branch would create noise and cause traffic congestion in a residential area (MLive.com Nov. 14). Kalamazoo-based Consumers CU will not pursue the proposal, CEO Kit Snyder told News Now. He cited economic factors in the credit union’s decision to hold off on the proposal.

Even robber cant get satisfaction from bank

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YORK, Pa. (11/17/08)--Even a bank robber can't get satisfaction from a bank. A miffed robber was so disgruntled that a bank had no cash that he threatened to file a complaint with the bank's management. The branch of Susquehanna Bank in Springettsbury Township, Pa., had just opened at about 9 a.m. Thursday morning. Three tellers were waiting for their cash drawers to be filled, when the man entered and demanded money (Associated Press and Publicopiniononline.com and York Daily Record Nov. 13). The first teller screamed and fainted. The second said she didn't have any cash and showed him the empty drawer. The third teller also showed him an empty cash drawer. As he ran from the scene empty-handed, the robber vowed he would let bank managers know of his dissatisfaction. A drive-thru customer followed the robber and contacted police, who arrested Joseph Goetz, 48, less than a mile from the bank.

CU System briefs (11/14/2008)

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* GREENSBORO, N.C. (11/17/08)--The Carolinas Credit Union Foundation announced that Judy Tharp, president/CEO of Piedmont Aviation CU, has been named to its board of directors. Tharp has been with the credit union industry since 1979, when she helped start Cape Fear Employees' CU and served as its first president/CEO until 1994. Since then she has worked in senior leadership positions at Founders FCU and South Carolina FCU and served as an officer of CUNA Mutual Group, overseeing lending strategy and solution development. She also has served as a board member of the North Carolina Credit Union League and First Carolina Corporate CU. Tharp succeeds Steve Harkins, president/CEO of SC Telco FCU, who vacated his seat (The Weekly Update Nov. 12) … * WINSTON-SALEM, N.C. (11/17/08)--Two Winston-Salem, N.C.-based credit unions have joined forces with the national Credit Union Service Centers to bring the shared branching concept to the city. Piedmont Aviation CU (PACU) and Winston-Salem City Employees' CU (WSCECU) are spearheading the collaboration. WSCECU's new branch is now located in leased space at Piedmont Aviation CU and operates as a finance service center. Pictured are, from left: PACU's Chief Financial Officer John Jameson, Chief Operating Officer Allen Upchurch, and Vice President of Administration Patty Mauro; WSCECU President/CEO Tony Ebron; and PACU's President/CEO Judy Tharp and Vice President of Finance Jim Venesky. (Photo provided by the North Carolina Credit Union League) … * YOUNGSTOWN, Ohio (11/17/08)--Michael Kurish, president/CEO of Associated School Employees CU, headquartered in Youngstown, Ohio, has been elected to the Ohio Credit Union League's Board of Directors for a three-year term, the credit union announced. The election filled the District IV seat, which covers the Mahoning Valley, Northeast, Ohio Valley, Stark County and Summit County chapters. Associated School Employees CU has assets totaling more than $71 million …