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Research sheds light on Hispanic market

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NEW YORK (11/20/08)--A study from Experian Consumer Research is shedding more light on Hispanics' attitudes and behaviors about finances. Credit unions with outreach programs to that market might need to ensure they're on top of the trends. The Hispanic market is increasing in importance to credit unions and others because a growing population can influence the success of products and services. Total adult Hispanic population has grown by 20% the past four years, with younger and older segments growing even faster, according to the study. Much has been made of Hispanics' traditional distrust of financial institutions. However, Hispanic consumers surveyed said they feel more financially secure than in the past. Among the findings:
* Hispanics are using credit cards more. More than 25% of the Hispanic population reports using a credit card one to five times in the past 30 days, an increase from the last survey in 2004, says Experian. All levels of credit card use are up slightly from 2004. This suggests the population is either more comfortable carrying debt than in the past, or Hispanics see the importance of establishing credit, Experian said. * Their self-reported lack of knowledge about financial matters has increased. It could be that financial literacy education and other outreach efforts by institutions such as credit unions may make them more aware of what they don't know. * Compared with the average U.S. adult, Hispanic adults are more likely to shop frequently and buy in the spur of the moment. Hispanic consumers are more likely than the average U.S. shopper to pay higher prices for environmentally responsible products and are less likely to plan ahead for large purchases. Name brands are more important to Hispanics than they were four years ago. * The percent of Hispanics who say they don't like being in debt has decreased slightly the past four years. At the same time, Hispanics are now less likely to pay cash for their purchases. Experian says these decrease may help explain the increase in credit card usage.
The study is part of research that tracks Hispanic consumers' spending and buying behaviors, compared with the overall U.S. population.

Conserve capital compete for deposits

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NEEDHAM, Mass. (11/20/08)--The continuing uncertainty in the global economy and financial markets will force consumer financial institutions to sharpen their focus on conserving capital and competing for deposits in the coming year, says TowerGroup. Credit liquidity will be a pervasive issue for financial institutions across all geographies, and economic growth in every region will be severely impacted, said new research from the Needham, Mass.-based firm. TowerGroup predicts that developed markets in North America and Europe will suffer more than the emerging markets in Latin America, Africa and Asia. In 2009, capital conservation will become critically important for financial institutions, said the firm. With credit likely to be tight throughout the year, financial institutions must determine how to lend funds to consumers profitably and allocate capital adequately given the global curtailment of securitization. To improve risk management protocols and address lending operations' efficiency issues, financial institutions likely will implement improved analytics, business intelligence and performance-management solutions, said TowerGroup. "The interdependencies among financial institutions will impact consumer banks in every region of the world as capital adequacy and liquidity concerns continue to permeate the global financial system," said Kathleen Khirallah, managing director and practice leader of banking research and advisory service at TowerGroup. "With the strongest of banks under pressure to maintain earnings, growth will stagnate, banking consolidation will increase and discretionary information technology (IT) spending will decline," she said adding that institutions "will be forced to do more with less." The research's key points include:
* The pace of banking consolidation will accelerate throughout the first half of 2009, as distressed banks seek to be acquired and regulators close banks they consider too weak to survive. * For most retail banks, the most pressing outcome of the reduction in economic growth will be the necessity to reduce discretionary spending. Aside from pressure to cut personnel costs, consumer bankers will face significant reduction of their discretionary IT budgets in 2009. * The current environment will cause banks to divert IT resources from other projects to support loss mitigation. To curtail losses, consumer banks will upgrade collection and foreclosure software and use analytical software to detect potential problems in loans before they enter delinquency status.

Federation CDFI coalition request 1 billion from TARP

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WASHINGTON (11/20/08)--The National Federation of Community Development Credit Unions and the Community Development Financial Institutions (CDFI) Coalition have urged the federal government to set aside $1 billion of its $750 billion rescue plan for capital infusions to CDFIs, including community development credit unions (CDCUs). They said the $1 billion from the Emergency Economic Recovery Act would support increased lending and investment in low- and moderate-income communities. The request came in the form of a letter from the coalition's board of directors to Neel Kashkari, assistant secretary for financial stability at the Treasury Department's Office of Financial Stability, and Donna Gambrell, director of the department's CDFI Fund. They are two key officials responsible for administering the Troubled Assets Relief Program (TARP). The CDFI Coalition represents financial institutions whose mission is serving underserved communities and people of modest means. "Congress has expressed its concern that little of the first wave of TARP investments in banks seems to be finding its way to the communities and families most in need," said Cliff Rosenthal, federation president/CEO. "We in the CDFI movement believe that our institutions are uniquely positioned to aid some of the hardest-hit communities around America, and that moreover, we can leverage any federal funding many times over," he said. Rosenthal said the coalition is "pleased that a number of community development banks have now gained access to the TARP program" and added that the coalition's directors "want to ensure that CDCUs and other CDFIs also gain access to this important source of capital."

Connecticut governor CUs launch student loan program

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MERIDEN, Conn. (11/20/08)--Connecticut’s governor and the state’s credit unions will work together to provide new and current students with access to higher education through a new student loan program. The Credit Union League of Connecticut and officials from Connecticut’s credit unions met with Gov. M. Jodi Rell Tuesday to discuss the state’s economic situation and to propose the new partnership between the state and the credit unions. Credit union officials pledged support of the governor’s concept and estimated that up to $17.5 million could be committed to the program. The program would offer interest rates at no higher than 6% or 5.75%. Institutions offering 6% loans could defer interest payments for one year; credit unions offering 5.75% loans would not defer interest payments. The loans would be offered to students who may not qualify for traditional loans or who already have used all of their resources and are having a hard time funding tuition. In light of taking on this risk, Rell said the Connecticut Health and Education Facilities Authority (CHEFA) would provide 20% loan guarantees on the loans. “I view the new credit union student loan program as another tool, a bridge loan if you will, to help families and students through the next few years of a weakened economy and very difficult strains on household budgets,” said Tony Emerson, league president/CEO. “All of us know we will come out of this current fiscal downturn, but there will be some hard times before we do,” he added. “The best way our state can position itself for this economic future is to continue to invest in an educated and diverse work force. Our credit unions understand this and have stepped forward, in partnership with the state, to help us accomplish this goal. “Credit unions remain healthy in the current economy due to key differences in our structure,” and have money to lend, Emerson said. The league will administer the student loan program with CHEFA. The program will be open to all students that live or go to school in Connecticut. The funds will not be pooled, and individual credit unions will allocate their own funds. Credit unions must allocate a minimum of $100,000 of their funds to participate in the loan program, which will run for one year with the possibility of extending that period, based on demand and available resources. The program is expected to officially begin Dec 8. For a list of participating credit unions, use the league link.

Consolidation is reshaping online banking market

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SAN FRANCISCO (11/20/08)--Consolidation is rapidly reshaping the online banking market, according to an annual Online Banking and Bill Payment Report by Javelin Strategy & Research (BusinessWire Nov. 18). As a result of recent acquisitions, three large banks--Bank of America, Wells Fargo and JPMorgan Chase--will control 39% of the online-banking market, up from 25%. Javelin, a provider of research on financial services, forecasts that the growth rate for online banking adoption will increase 4.6% annually through 2013, and when 83 million households will be banking online. However, the survey indicates that bank bill-payment services--which are at 49% penetration--are the pivotal opportunity for credit unions and other financial institutions to expand their online services. The survey predicts online services will grow 5.6% annually through 2013 and reach 45 million households. In addition to the finding about consolidation, key findings and recommendations of the Javelin report are:
* Market winners will design and promote online banking based on member-driven architecture. Benefits include a return-on-investment in terms of increased loyalty, reduced costs, fee income, cross-selling opportunities and fraud-prevention savings; * To gain share from third-party billers, financial institutions should upgrade bill-viewing and bill-payment platforms to make the online experience seamless for consumers. Online banking user experiences are key to preparing for a mobile future; and * Promoting electronic statements and making it easy to eliminate paper statements will save money and reduce fraud.

Redwood CU CEO named California league chairman

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RANCHO CUCAMONGA, Calif. (11/20/08)--Brett Martinez, president/CEO of Redwood CU, Santa Rosa, Calif., was named California Credit Union League board chairman during the league’s annual meeting in San Francisco. Jeff York, president/CEO, CoastHills FCU, Lompoc, was elected first vice chairman. Eileen Rivera, president/CEO, FAA First Federal CU, Hawthorne, was named second vice chairman. Members of the executive committee include: Darren Williams, president/CEO, Wescom CU, Pasadena, and Teresa Halleck, president/CEO, The Golden 1 CU, Sacramento. Immediate Past Chairman Lynn Athens, president/CEO, Spectrum FCU, San Francisco, will serve as an ex officio member of the committee. Martinez served as a senior executive for the California league and Arrowhead CU in San Bernardino, Calif.

Municipal deposits measure introduced in N.J.

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TRENTON, N.J. (11/20/08)--A measure to allow New Jersey credit unions to accept municipal deposits was introduced in the state Senate last week. It would allow credit unions in the state to become eligible depositories for public entities such as county and municipal governments and school boards. The bill was introduced by Majority Leader Steve Sweeney (D-3) and in the Assembly by Housing and Local Government Affairs Committee member Fred Scalera (D-36) and Assemblyman Doug Fisher (D-3). The legislation repeals a provision of New Jersey's Government Unit Depository Protection Act, which, since its enactment in 1970, specifically precluded local government entities from using credit unions for their banking needs. The legislation also amends the state credit union act to enable state-chartered credit unions to accept municipal deposits, affording them parity with federally chartered credit unions in the area. “We believe allowing credit unions to get involved in municipal deposits will create more competition and ultimately be good for the taxpayers of New Jersey,” Paul Gentile, president/CEO of the New Jersey Credit Union League, told News Now. “Approximately a third of states allow credit unions to accept municipal deposits. With more than 500 municipalities in New Jersey, we believe it's key that credit unions here are allowed to compete.” Having the Senate majority leader sponsor the bill is a positive development, Gentile said. “Many states allow credit unions to compete for public deposits and afford taxpayers the numerous benefits of doing business with democratically controlled, not-for-profit, financial cooperatives,” Gentile said. “Including New Jersey among those is the league's No. 1 state legislative priority.” The cash infusion from public deposits will allow credit unions to make more loans available to their members and needy small businesses, Sweeney told The Gloucester County Times Wednesday. Because credit unions tend to be locally focused and lend to their members, they don’t send money out of state or abroad, Sweeney told the newspaper. The majority of credit unions’ loans are made locally because that’s where their members live, Sweeney added.

Greater Nevada CU CEO is new Nevada league chairman

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RANCHO CUCAMONGA, Calif. (11/20/08)--Wally Murray, president/CEO of Greater Nevada CU, Carson City, was elected the Nevada Credit Union
The 2009 Nevada Credit Union League board of directors are, from left: Cumorah CU CEO Tony Mook; Moapa Valley FCU CEO Doug Schwartz, league treasurer; Silver State Schools Executive Vice President Carol Gibson, league secretary; Greater Nevada CU CEO Wallace Murray, league chairman; Great Basin FCU CEO Dennis Flannigan, league vice chairman; Frontier Financial CU CEO Bruce A. Rodela; and WestStar CU CEO Dan Paulson, immediate past chairman. (Photo provided by the Nevada Credit Union League)
League board chairman during the league's recent Annual Meeting and Convention in San Francisco. Other officers of the board are:
* Vice Chairman Dennis Flannigan, president/CEO of Great Basin FCU, Reno; * Treasurer Doug Schwartz, president/CEO of Moapa Valley FCU, Overton; and * Secretary Carol Gibson, executive vice president of Silver State Schools CU; Las Vegas.
Also on the board are: Tony Mook, president/CEO of Cumorah CU, Las Vegas; Dan Paulson, president/CEO of WestStar CU, Las Vegas, and immediate past league board chairman; and Bruce Rodela, president/CEO of Frontier Financial CU, Reno.

Illinois CUs collection agencies having busy year

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NAPERVILLE, Ill. (11/20/08)--Business at Illinois collection agencies is up, and so is attendance at the Illinois Credit Union League (ICUL) Service Corp. (LSC) collectors roundtable events.
Attendance at this year’s Illinois Credit Union League Service Corp. collection roundtables such as this one has spiked as business at Illinois collection agencies has increased. (Photo provided by the Illinois Credit Union League)
Creditors Resource Service, an agency that works for 200 Illinois credit unions, reported a 15% increase in business compared with last year. The firm is “very busy,” Sheila O’Leary, head of collections, told Crain’s Chicago Business (Nov. 17). Tough economic times positively impact collection agencies because institutions are seeking “every uncollected penny” to benefit their returns, Karolyn Rubin, vice president, Bonded Collection Corp., told the newspaper. The ICUL Service Corp. has provided help to collection agencies for nine years. This year, LSC has seen more than 60 attendees at upstate and downstate roundtable events. The number of topics addressed at the meetings also has increased. “It’s the sign of the times,” said O’Leary. “With issues from short sales, to identity theft, to foreclosure, to red flag--you name it, they’re being discussed.” The LSC also maintains an active listserv for collectors to network and seek advice on issues. About 150 individuals representing 100 credit unions are on the listserv. “It’s been great to share information, learn that we all are facing some of the same challenges and put our heads together to see how credit unions can handle [challenges],” said Claudia Stiltner, collections manager, Meadows CU, Arlington Heights, Ill.

Illinois CDCU granted 232000 from CDFI Fund

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NAPERVILLE, Ill. (11/20/08)--North Side Community FCU (NSCFCU) was recently presented with a $232,000 grant from the Community Development Financial Institutions Fund (CDFI) during a visit to the credit union by CDFI Fund Director Donna Gambrell.
Click to view larger imageDonna Gambrell (seated in center holding check), director of the Community Development Financial Institution Fund (CDFI), is joined by Jim Masini, board chair (seated left), and Ed Jacob, CEO (seated right), both of North Side Community FCU, and credit union members, staff and supporters as Gambrell presents the credit union with a CDFI Fund grant of $232,000. (Photo provided by the Illinois Credit Union League)
The grant will be used to support the expansion of the credit union’s New Americans Loan Program and mortgage lending programs. A portion of the funds will upgrade its technology and add online banking for its members. “With her new position as head of the Office of Homeownership Preservation, Gambrell was able to hear firsthand how North Side's Housing and Urban Development-certified housing counseling program has been able to help keep people in their homes,” said Ed Jacob, CEO, NSCFCU. “With the contraction in the credit markets, CDFIs such as North Side Community FCU will be in greater demand by low-income individuals and businesses as a source of capital for borrowers to finance investments in distressed communities,” Gambrell said. “The CDFI Fund’s award to North Side will increase its resources to carry out this important lending responsibility.” The CDFI Fund was created to promote economic revitalization and community development through investment in and assistance to CDFIs. The CDFI Fund is a part of the U.S. Department of the Treasury. NSCFCU is a $7 million CDFI.

CU System briefs (11/19/2008)

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* SAN DIEGO (11/20/08)--Point Loma CU (PLCU), based in San Diego, hosted Jose Eduardo Alvarado Campos, CEO of COOPENAE CU, Costa Rica's largest credit union. Campos' visit, to learn about American credit unions and discuss issues affecting credit unions around the world, was sponsored by the World Council of Credit Unions. Ted Dennis, president/CEO at PLCU, said COOPENAE has products and services similar to those offered PLCU, including insurance. Alvarado, in a demonstration of international cooperation and access, used his COOPENAE debit card at a PLCU ATM without a transaction fee. Campos, left, watches as PLCU staff members demonstrate PLCU procedures. (Photo provided by Point Loma CU) * WICHITA FALLS, Texas (11/20/08)--A former manager of a defunct credit union has been charged with embezzlement from the $1.9 million asset Texdot Wichita Falls CU. Joanna Lynn McGee, 39, is charged with embezzling between $850,000 and $1.9 million from the credit union between 1999 and May 2008 by creating 129 fictitious loans and using them to generate money that was later embezzled or to cover up the embezzlements. The credit union was placed into conservatorship on Sept. 30 and is being operated by Postel Family CU (Times Record News Nov. 18) … * SACRAMENTO (11/20/08)--Michael Edward Osgood, dubbed the 'Straw hat bandit,' was sentenced to three years and 10 months in prison and three years of supervised release for a series of bank robberies in the Sacramento area, according to the Federal Bureau of Investigation's Sacramento field office. Osgood, 47, wore a large brim straw hat during the heists, which included a robbery at Sterlent CU on May 12. He pleaded guilty to that robbery and four additional robberies of banks in the area. He has paid full restitution to seven institutions for the robberies (US Fed News Nov. 17) … * DUBUQUE, Iowa (11/20/08)--Several DuTrac Community CU staff members took a plunge into the Mississippi River and raised $2,000 for the Iowa Special Olympics Saturday. This year's Polar Plunge--the coldest in recent memory--raised more than $15,000, a record. Temperatures for the day, which had snow flurries, were: Water temperature, 42 degrees; air, 34 degrees; and wind child, 22 degrees. Employees participating were Michelle Ariss, Laura Johnson, Jennifer Henson, Patti Butler, Andrea Jaeger, Tye Miller and Kathy Klostermann. (Photo provided by DuTrac Community CU) … * ABERDEEN, Md. 11/20/08)--Aberdeen Proving Ground FCU has partnered with Halls Cross Road Elementary School in Aberdeen, Md., with an official launch scheduled for Friday as part of American Education Week. APGFCU will make financial education presentations in classrooms for every grade level, host free money management seminars on weekends for parents and community members, and provide recognition and reward incentives for student and school achievement. APGFCU already has partnered with five other elementary schools in Harford County … * DALLAS (11/20/08)--Tim Johnson, senior vice president of strategic planning at TwinStar CU in Olympia, Wash., has been appointed to the board of directors of Southwest Corporate FCU, the corporate announced. He will serve the unexpired term of Arno Easterly, who retired earlier this year as CEO of Barksdale FCU, Bossier City, La. Johnson, who has more than three decades of credit union industry experience, is a former CEO of Pacific Crest FCU, Klamath Falls, Ore., and Denali Alaska FCU, Anchorage. He has been a member of Southwest Corporate's Supervisory Committee since December 2007. Prior to the merger between Northwest Corporate and Southwest Corporate, Johnson served on Northwest's Supervisory Committee …