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CU System briefs (11/17/2011)

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  • BERLIN, N.H. (11/18/11)--A Berlin, N.H., couple has been charged with the Monday robbery of Guardian Angel CU, a $42 million asset credit union based in Berlin. Daniel Ray Hufstetler, 32, and Sheena Craig, 29, were arrested on Route 16 in Gorham after the credit union's surveillance video tapes were publicized and generated a number of tips.  Hufstetler is charged with armed robbery and Craig is charged with conspiracy to commit armed robbery, said police (UnionLeader.com Nov. 16) …
  •  CHELSEA, Mass. (11/18/11)--Chelsea, Mass.-based Metro CU completed its merger Friday with Secure CU in Melrose, Mass., resulting in a combined institutions with more than $900 million assets, announced Robert M. Cashman, president/CEO of Metro CU. The merger enables Metro to provide better services to residents and businesses of Melrose and surrounding communities.  Secure CU's staff will continue to serve members at the Main Street branch in Melrose, which became Metro's 13th branch. Metro also opened new branches in Boston and Salem this year.  Peter Cucinotta, chairman of Secure CU, said its members "will significantly benefit from the merger through greater convenience and access to a broader selection of banking products and services." …
  • PHOENIX (11/18/11)--Arizona State CU, a $1.3 billion asset credit union in Phoenix, announced it will pay an Arizona Sundogs fan's mortgage for a month--up to $1,000--at the team's hockey game Saturday night. The credit union is partnering with the Sundogs to sponsor a "Mortgage Match" contest to give back to the Prescott community.  "This is a prime example of a business that does things right, understands the local economic climate and is willing to do something to help," said Sundogs General Manager Chris Presson.  "The credit union's commitment to partnering with locally owned businesses  supports the local economy while promoting community pride," said David E. Doss, Arizona State CU president/CEO.  Throughout the season, people can register to be a contestant for the "Mortgage Match" at the games by completing an entry form at the Sundogs information table in front of the team store (The Daily Courier Nov. 16)…

Are branches endangered iUSA TODAYi says no

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NEW YORK (11/18/11)--With more consumers choosing online banking and using ATMs and mobile channels, are brick and mortar branches an endangered species? Not necessarily, said USA TODAY's Thursday edition, but branches are changing.

Bank customers are embracing online banking: 62% of those surveyed indicated they prefer to bank online, up from 36% from last year, according to newspaper's personal finance columnist, Sandra Block, citing an American Bankers Association survey conducted in August. Meanwhile 20% of respondents said they preferred a branch, compared with 25%  last year. About 57% of customers age 55 and older  preferred online banking, compared with 20% last year.

Many customers still value the human touch, bute too many branches exist  to serve the shrinking number of customers who use them, Celent senior banking analyst Bob Meara told the newspaper. The total number of branches declined since 2009,  but today there's still nearly four times as many branches as there were in 1970--when there were no ATMs or online banking.

Meara also noted that the decline in bank revenue sources (such as fees) is making it more difficult to justify the cost of maintaining branch buildings.  Downsizing  branch networks would save money for banks looking to recoup revenue, but so far few have closed branches and some are opening new ones to meet their customers' demand.

The article noted banks are updating their branch networks by targeting specific markets in areas they don't have a big presence in and using the branch to get a foothold in the community;  offering "specialty stores" that dispense advice on more complex financial services such as mortgages; focusing on time-intensive small-business consumers; buying the competition's and its branches to extend their reach; opening virtual branches or using technology to extend their reach; and outsourcing branch functions to other entities such as the United Postal Service.

The article noted that credit unions offer use shared branches to widen their reach; use virtual branches and technology to help them provide full financial services, and use outsourcing.

For the full article, use the link.

New CUSO CURoots Cooperative elects board

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ONTARIO, Calif. (11/18/11)--CURoots Cooperative--a credit union service organization (CUSO) launched last year by several credit unions and the California and Nevada Credit Union Leagues to help credit unions reduce back-office costs--recently held its first annual meeting and elected its new board of directors.

Re-elected board members include:

  • Chairman--Gary Perez, CEO, USC CU, Los Angeles;
  • First vice chairman--Linda White, CEO, United Health CU, Burlingame, Calif.;
  • Second vice chairman--Bill Birnie, CEO, Eagle Community CU, Lake Forest, Calif.;
  • Diana Dykstra, California League Services Corporation; Ontario, Calif.;
  • Jon Hernandez, CEO, CalCom FCU in Torrance, Calif.; and
  • Joe Schroeder, CEO, Ventura County CU, Ventura, Calif.
New to the board is Kimberly Hester, executive vice president, network services for CO-OP Financial Services, Rancho Cucamonga, Calif.

CURoots' initial service offering features onsite and remote compliance services, specialized compliance audits, and policy reviews. The CUSO has 16 participating member-owner credit unions and service organizations and employs three full-time compliance officers.

For 2012, CURoots Cooperative will launch its second service--CU Vitality--in collaboration leagues. The new service will offer a collective benefits solution, including medical, dental and vision plans for member-owners.

Also, CURoots plans to launch an enterprise risk management division, which will provide internal audits and loan portfolio analysis.

"We're also reviewing other ancillary services to offer as part of CU Vitality next year, such as group and individual life insurance, short-term and long-term disability insurance, long-term care insurance, Consolidated Omnibus Budget Reconciliation Act, workers compensation, and employee wellness programs," said CURoots CEO Lucy Ito.

Cardinal Community CEO appointed to Ohio CU Council

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MENTOR, Ohio (11/18/11)--Ohio Gov. John Kasich appointed Christine Blake, CEO of Cardinal Community CU in Mentor, Ohio, to the state's Credit Union Council to serve a three-year term.

The council is part of the Ohio Division of Financial Institutions and comprises seven members who provide advice and recommendations on issues for credit unions to the regulatory agency and governor (eLumination Newsletter Nov. 16).

The council meets quarterly and is chaired by the Ohio Deputy Superintendent for Credit Unions, Michael Wettrich. Also serving on the council are: Vidya Iyengar, Marion (Ohio) Community CU; Greg Kidwell, Members First CU, Columbus; Gary Soukenik, Seven Seventeen CU, Warren; and Matthew Studer, Toledo (Ohio) Postal Employees CU.

Kasich is expected to fill a vacant seat on the council soon, said the Ohio Credit Union League.

CU helps Mich. woman turn idea into biz in tough times

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SAGINAW, Mich. (11/18/11)--Many entrepreneurs have a personal story behind their small businesses. Alice Brown's story is a painful one.

Brown, of Saginaw, Mich., suffered a knee injury in a head-on car crash. Not one to take things sitting down, Brown designed a knee brace that eased her pain, helped her rehabilitate, and restored her normal movements.

She held such a belief in her homemade knee brace, she set her sights on creating a product line. But she faced one more hurdle: access to capital.

Brown turned to her local credit union, $643 million asset Wildfire CU, Saginaw, Mich., to provide her with the small-business loan she needed to market her  knee brace.

"I wanted to share my product with others in the hope that it could help make their lives a little better," Brown told the Michigan Credit Union League. "Thanks to Wildfire's support, I've been given the opportunity to bring my knee brace to people who need it while creating jobs and contributing to the local economy. Without the help and support from my credit union, I never would have been able to see my idea through."

Today, Brown markets her knee brace through her online company, In The Groove. In addition to helping her customers relieve pain and maximize their mobility, she has been able to hire four full-time and one part-time employee.

"Our credit union is proud to have the opportunity to finance small business owners with big ideas like Alice Brown," said Linda P. McGee, Wildfire vice president of membership development. "Local innovators provide the new ideas that drive economic growth and create new jobs. The more we can lend to small businesses, the more positive the impact on our local economy."

It's part of a Michigan and nationwide trend: Credit unions are ramping up small business lending at a time when other financial institutions are stepping back. Michigan credit unions' small-business loans surpassed $1 billion for the first time in early 2011 with member business loan growth of 29% for the 12-month period ending June 30, according to the National Credit Union Administration. During the same 12-month period, Michigan banks' small business lending dropped 10.1%.

Lending has grown from $345 million in 2005 to more than $1 billion today. Last year, 33 Michigan credit unions pledged $43 million in loans to the Credit Union Small Business Financing Alliance, partnering with the Michigan Economic Development Corp. and the Michigan Small Business & Technology Development Council to help train entrepreneurs and fund new businesses in the state.

"Credit unions are stepping up to lend as other institutions are stepping back," said David Adams, CEO of the Michigan league. "Small businesses continue to struggle with access to low-cost capital and credit unions are providing a good alternative for certain types of small business loans."

The U.S. Senate Banking Committee is considering a plan to let credit unions lend up to 27.5% of its assets for small-business projects, up from the current cap of 12.25% of total assets. Increasing the small-business lending cap could potentially pump $13 billion into the nation's economy and create 140,000 new jobs in small businesses without any taxpayer costs, according to the Credit Union National Association, which along with credit unions nationwide, is urging Congress to pass the measure.

CUNA Mutual reports strong financials through 3Q

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MADISON, Wis. (11/18/11)--CUNA Mutual Group reported it posted a strong performance in key financial measures through the third quarter, despite continuing economic pressures.

The company's credit union business played a significant role in its positive operating gain and revenue performance, the company said. With growth in its consumer business areas, operating revenue on continuing operations grew 5.8% year-to-date. Net income rose in the quarter to $97 million year-to-date, despite paying out more in catastrophe claims and weather-related crop insurance claims in the third quarter, compared with third quarter 2010.

"Overall, our results through the third quarter reflect the hard work of the organization and the strength of a diversified portfolio of products," said Jerry Pavelich, chief financial officer. "We will continue to do all we can to help credit unions and their members as the economic environment remains difficult, with high unemployment, volatile markets and low interest rates."

CUs well above banks in California performance survey

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SACRAMENTO, Calif. (11/18/11)--California credit unions rated well above the state's banks in the 2011 California Bank & Credit Union Survey by Prime Performance (worldbookandnews.com Nov. 16).

The Golden 1 CU, a $7.46 billion asset credit union based in Sacramento, had the top overall score in the survey (79%) and ranked first in all four questions that constitute the company's Prime Experience Index (PXI). Other scores for major banks were:

  • Bank of the West, 68%;
  • Union Bank, 66%;
  • U.S. Bank, 57%;
  • Wells Fargo, 51%;
  • Citibank, 48%;
  • Chase, 43%; and
  • Bank of America, 39%.
PXI indicates how credit unions and banks perform when attempting to deliver a superior member/customer experience.

In the survey, the Overall Customer Experience Score for all financial institutions in the state was 55%. The PXI for all credit unions other than The Golden 1 was 79%; and for all banks other than the seven major ones listed earlier the score was 65%.

The Golden 1's top scores in the four areas that constitute the overall index were:

  • Satisfaction with service: 86%; other credit unions, 87%; other banks, 76%; state average, 68%;
  • Likely to recommend: 86%; other credit unions, 82%; other banks, 65%; state average, 56%;
  • Likely to come to the [financial institution] first for additional products or services: 66%; other credit unions, 71%; other banks, 53%; state average, 43%;
  • Effective at meeting financial needs: 77%; other credit unions, 76%; other banks, 66%; state average, 55%.    
"Credit unions are the clear customer-experience winners in our survey," said Jim S. Miller, Prime Performance president, adding that "overall, banks have work to do to catch up with their credit union competitors."

Pa.s Reality Fair attracts state officials at Capitol

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HARRISBURG, Pa. (11/18/11)--The Pennsylvania Credit Union Association and the Pennsylvania Credit Union Foundation, through the National Credit Union Foundation's REAL Solutions Project Initiative, sponsored their first Financial Reality Fair at the state Capitol in Harrisburg, Pa.

Students visited the state capitol, in Harrisburg, Pa., for the state's first Financial Reality Fair, sponsored by The Pennsylvania Credit Union Association and the Pennsylvania Credit Union and Pennsylvania Credit Union Foundation, through the National Credit Union Foundation's REAL Solutions Project Initiative. Here, Secretary of Banking Glenn Moyer talks with students participating in the fair.
 

During the fair, more than 180 Pennsylvania high school students learned about the day-to-day realities of earning and spending and saving, including budgeting for a car, furniture, food and fun.

Students could spin a Reality Wheel to arrive at unforeseen gains or losses of money, such as flat tires, computer crashes, speeding tickets, tax returns, garage sale profits and overtime wages.

Volunteering at the event were 50 representatives from PCUA, the foundation and these credit unions:

  • AmeriChoice FCU, Mechanicsburg;
  • Belco Community CU, Harrisburg;
  • Cornerstone FCU, Carlisle;
  • Members 1st FCU, Mechanicsburg;
  • New Cumberland (Pa.) FCU,
  • P&G Mehoopany Employees FCU, Tunkhannock; and
  • Pennsylvania State Employees CU, Harrisburg.
State Rep. Ron Buxton met with students from Harrisburg High School and Tricia Heisey, right, of Belco Community CU, Harrisburg. (Photos provided by the Pennsylvania Credit Union Association)
Volunteers worked at booths throughout the fair to help student with their budgeting decisions.

The fair also gave students an opportunity to visit the Capitol building for the first time. Joe Wambach, executive director of the Pennsylvania Credit Union Foundation, led several of the school groups on a tour of the Capitol Rotunda, the Pennsylvania House of Representatives, and the Pennsylvania Senate.

Secretary of Banking Glenn Moyer stopped by to see the event and to meet some of the students, faculty, and volunteers. State Rep. Ron Buxton (D), and Cara Laudenslager, legislative assistant to state Sen. Pat Vance (R), also spent time visiting with students.

Survey 0 card rates attract but dont retain customers

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NEW YORK (11/18/11)--Although credit card issuers--including credit unions--are wooing new accountholders aggressively by offering teaser rates and sign-up bonuses, holding on to these new member/customers will be a challenge, according to a new study.

Credit unions especially should take note in light of all the new members they attracted (and are still attracting) surrounding the events of Bank Transfer Day, the day that was earmarked to switch accounts from big banks to credit unions and local community banks. Although most of credit unions' new business is tied to new checking accounts, they will be cross selling other products, including credit cards, to those new members and will need to know the trends aimed at retaining the new members.

Common methods to attract new credit card account holders include offering 0% rates on balance transfers, or supercharged air miles and hotel points as bonuses for signing up for a new credit card, said a survey conducted by Cardbeat, a syndicated research publication of New York and London-based Auriemma Consulting Group (ACG).

Zero percent offers for balance transfers were a hallmark of the pre-recession economy, but this time the offers are different, said Auriemma in a press release (Business Wire Nov. 15). For example, the offers are mainly for the most creditworthy consumers. And issuers are trying new tactics to combat "rate surfing," said Dr. Patricia Sahm, managing director at ACG.

"Consumers told us that their primary reason for acquiring a card was the APR [annual percentage rate], and it was also the primary reason for cancelling the same card once the teaser rate expired," Sahm said. "Now we see issuers offering zero interest with very long time frames, such as over a year on new purchases as well as promo checks."

Card issuers must get the member/customer to actually use the new card--a big step, Sahm said.  In a recent Cardbeat survey, 40% of respondents who had cancelled a card during the previous six months said they never or rarely used the card. 

Teaser rates appeal mostly to people who usually carry balances. However, consumers who pay their monthly balance in full like the airline and hotel bonus offers.

In the past, sign-up bonuses were usually 10,000 to 25,000 miles or points. Now many travel companies are offering 50,000 or more points and waiving the first year's annual fee. The travel/entertainment segment of consumers aren't interested in rate surfing. Instead, they engage in "travel hacking," collecting as many different cards they can. Some boast 20 different cards in their dresser drawer, and they aren't spending time managing those accounts, said Sahm.

"Because most travel-oriented cards have an annual fee, the issuer has less of an issue with inactive accounts," Sahm said. "Annual fees have the dual benefit of adding a revenue stream and of forcing the usage issue: if you pay an annual fee, you need to use the card to justify it."

The Web-based survey polled 400 credit card users in the U.S.