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Bank fined in TJX breach also was fined in BJs case

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BOSTON (11/27/07)--Fifth Third Bancorp, the bank that recently was fined $880,000 by Visa for its role in the historic TJX Cos. data breach, also paid more than $1.4 million in fines and compensation after the BJ's Wholesale Club Inc. data breach several years ago (Boston Globe Nov. 24). The earlier fines in the BJ's Wholesale case came to light in court filings against TJX in a U.S. District Court in Boston by banks who argue TJX didn't do enough to protect its data against hackers. The Globe said details of the BJ's fine came from litigation filed in Pennsylvania against the bank, BJ's and IBM Corp. by a Pennsylvania credit union seeking to recover costs of replacing the compromised cards. Both data breach cases cost credit unions and other financial institutions millions of dollars to replace compromised credit and debit cards and in losses from fraudulent purchases. TJX's breach, discovered in December of 2006, compromised nearly 100 million customers' data. Visa levied $880,000 in penalties against Fifth Third including an "egregious fine" of $500,000 for the TJX data breach. TJX plans to appeal the fine, which indicates the bank presented the bill to TJX, said the Globe. Visa had threatened to levy fines when merchants didn't meet a Sept. 30 deadline to upgrade their systems to meet security standards. The standards require data to be kept behind firewalls and wireless networks to be encrypted. More than one-third of merchants had not met the requirements as of October, Visa said. Visa and MasterCard can't fine merchants directly. Instead, they levy penalties against banks the merchants use to process the transactions. That Fifth Third was fined for the BJ's case suggests it should have known better than to tolerate the security issues at TJX, said Michael Gavin, strategist with Security Innovation, Wilmington. In 2006, Fifth Third, the fifth-largest processor of bank card transactions for merchants, processed 2.5 billion bank credit and debit card transactions worth $137 billion--a 19% increase from 2005 transactions, according to a Nilson Report study. Fifth Third operates more than 1,150 bank branches in the Midwest and Florida.

League officially launches Ohio fin lit program

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KENT, Ohio (11/27/07)--The Ohio Credit Union League (OCUL) launched its financial education initiative, MoneyAndStuff, in Kent and Cleveland last week.
Area credit unions officials and school administrators joined Ohio State Sen. Lance Mason (D-25), back center, for the launch of the Ohio Credit Union League’s financial education initiative, MoneyAndStuff, at Woodland Hills Elementary School in Cleveland, Ohio. (Photo provided by the Ohio Credit Union League)
MoneyAndStuff will promote financial literacy among youth, emphasizing credit concepts and teaching youth how to manage borrowing. The MoneyAndStuff website will serve as a financial resource for parents, educators, public officials, credit unions and the media. The website includes a “Credit Union Section” with promotional materials, logos and newsletter statements (eLumination Nov. 20). MoneyandStuff also will help teachers meet a new state mandate that requires all Ohio public high schools to teach personal financial education starting in 2010. The Ohio General Assembly passed the legislation in 2006. A survey of Ohio adults by the league indicated that 23% of Ohioans made any effort to encourage financial literacy in their families. Only 5% reported that they were taught about personal finances when they were young. “We are stepping up our efforts as leaders and collaborators in financial education because the financial health of Ohio’s youngest citizens is at risk,” said OCUL President Paul Mercer. “Teaching personal financial responsibility has always been part of the mission of not-for-profit credit unions.” MoneyandStuff was launched at Theodore Roosevelt High School with Joe Crawfis, CEO of Kent CU; State Sen. Tom Sawyer (D-Akron); and Kent City Schools career Technical Adviser Kathy Thomas attending. The MoneyAndStuff media tour continued throughout Ohio, with stops planned in Cincinnati, Columbus, Dayton, Lima, Toledo and Youngstown.

Media look to CUNA experts for holiday spending advice

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MADISON, Wis. (11/27/07)--Financial experts from the Credit Union National Association (CUNA) are at the forefront in helping consumers at least think twice about their holiday spending this year. A number of articles have appeared this week in which CUNA experts are quoted. For example, an article on "10 ways to save on gift-giving" in a Clark County, Wash., newspaper features advice from Jim Hanson, vice president of CUNA's center for personal finance, and Susan Tiffany, CUNA's director of personal finance information for adults (The Columbian, Nov. 25). "You'll temporarily feel good about yourself if you buy expensive gifts for people, but in the long term, you don't feel great about yourself or the situation you put your family in if you can't manage your debt," Hanson said. Tiffany tells consumers to: "Think quality, not quantity" and recommends scaling back. Some families implement a three-gift rule at Christmas in homage to the three wise men's gifts, she said. Or implement a secret Santa tradition; instead of buying for the entire family, the consumer buys for one name drawn. She also says clipping newspaper coupons and checking for direct-mail ads with coupons to cut costs. Hanson and Tiffany also advise consumers to protect their identity by not using debit cards for online purchases and read the fine print on refund an exchange policies. CUNA economists have also been featured in mass media coverage about a holiday spending survey sponsored by CUNA and the Consumer Federation of America. In the survey, consumers said they would be spending a little less this year, because of higher gasoline costs and heating bills(News Now Nov. 20). In addition to 30 media outlets that covered the CUNA/CFA press conference last week, the survey has been the basis for a tongue-in-cheek article in that says nothing will stop the American holiday shopper. A version of the article also appears in the Dec. 3 issue of Newsweek. Other articles on the economy and holiday spending featuring Bill Hampel, CUNA chief economist, appeared in South Florida Sun Sentinel (Nov. 26) and The Kansas City Star (Nov. 19). The average American will spend $923.36 on food, gifts, greeting cards and decorations for the holiday, although spending will increase by a smaller margin than in past holidays, according to the National Retail Federation.

CU System briefs (11/26/2007)

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* BATON ROUGE, La. (11/27/07)--Pelican State CU distributed $300,000 in special member dividends to more than 10,000 qualified members on Nov. 1, reports the Louisiana Credit Union League (eNews Nov. 21). The dividend was the result of a surplus in the credit union's operating budget due to under budget expenses, increased efficiencies, and a superior team effort by the Baton Rouge-based credit union's 120 employees, said Jeff Conrad, CEO … * LATHAM, N.Y. (11/27/07)--Freshman state Assemblyman George Amedore, left, (R-Adirondack) toured Sunmark FCU's General Electric branch Nov. 21 to learn about the credit union difference and Sunmark's philanthropic initiatives. Amedore, left, met with the credit union's senior management, including President/CEO Bruce Beaudette, center, and branch Sales and Service Manager Tricia Lavoy, right. The group also discussed taxation issues related to credit unions. The event was coordinated by the New York State Credit Union League. Representing the league during the visit were Amy Kramer, vice president of governmental affairs, and Allison Doney, advocacy specialist. (Photo provided by the New York State Credit Union League and Sunmark FCU) … * NORFOLK, Va. (11/27/07)--A former vice president of the former $1.9 million asset Portsmouth (Va.) Post Office CU was charged with defrauding the credit union of more than $170,000 and causing the demise of its business (The Virginian-Pilot Nov. 24). Minerva Marrero-Smith, who was also treasurer and a board member at the credit union, is scheduled to appear in federal court Dec. 11 on charges she defrauded the credit union through a series of seven loans obtained under false pretenses. She allegedly defaulted on $171,000 of the loans and also is accused of defaulting on a fraudulently obtained $42,000 loan from the Hampton Roads Postal CU. The Northern Star CU took over the Portsmouth credit union in 2003 … * MADISON, Wis. (11/27/07)--Madison police are looking for a man who robbed a branch of the University of Wisconsin CU last week. The thief entered the credit union at 7:15 a.m. Nov. 19 and said he had a gun. He then fled on a mountain bike with the money, police said (The Capital Times and Wisconsin State Journal Nov. 22) …

Website spoofs predatory lending mentions CUs as option

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MADISON, Wis. (11/27/07)--A website that spoofs predatory lenders and mentions credit unions as an alternative to predatory lending is sending out its message in cyberspace. The bogus Predatory Lending Association states on its home page that it “is dedicated to extracting maximum profits from the working poor by increasing payday loan fees and debt traps” The site continues: “The working poor are an exciting, fast-growing demographic that includes: military personnel, minorities, and most of the middle class.” Credit unions are mentioned once, in a section of the website titled “Myth vs. Reality.” It states a myth: “The working poor have other options beside payday loans.” Then the site states the reality: “The Payday Lending Associations is actively fighting credit unions that provide alternative lending options to the working poor.” The website also features a discussion site, a blog, a mailing list for people to join and keep abreast of developments in the payday lending area, a section in which users can write to their legislative representatives, and other features.

CU opened at 5 a.m. on Black Friday

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PHOENIX, Ariz. (11/27/07)--To serve its members in midst of the holiday shopping rush, Desert Schools FCU in Phoenix opened its Wal-Mart in-store branches at 5 a.m. on Black Friday. “Many members were surprised that we were open,” said Jason Meyers, Desert Schools FCU public relations manager. “It’s not something that a traditional financial institution really does,” he told News Now. All 25 of Desert School’s Wal-Mart locations were open and staffed by about 100 employees. During the early opening, the credit union processed a number of loan applications, opened new member accounts and served existing members’ needs. There also was a “party atmosphere” with raffles and activities for young children. “It was a lot of fun,” Meyers said. Though final numbers are not yet available, the credit union brought in “many, many new members,” Meyers said. The credit union plans to have early openings on Black Friday next year. “We continue to reinforce good relationships with Wal-Mart,” Meyers said. “We work with their local managers, and they’re really open to ideas such as this.”

Kansas City CUs report healthy third quarter

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KANSAS CITY (11/27/07)--Despite declining revenues and an uptick in delinquent loans, Kansas City area credit unions reported a healthy third quarter. The National Credit Union Administration released financial reports that reveal the financial health of the Kansas City area’s 60 credit unions ( Nov. 24). Collectively, the area credit unions earned 23% less in July August and September than they did in the previous three months. During the third quarter, delinquent loans for the credit unions went up 10.6%, but as a percentage of all loans remained relatively low at 1.03%. A Nov. 1 merger of CommunityAmerica CU with Midwest United CU resulted in CommunityAmerica garnering more than half the assets and almost 60% of the loans of all area credit unions. The $1.518 billion asset, Lenexa, Kan.-based CommunityAmerica is growing. It has three new branches and plans to build more next year. On the other end of the asset spectrum, KC Terminal Employees/Guadalupe Center FCU--despite being hit by several delinquent loans--still has a net worth equal to almost 29% of its assets, higher than any other credit union in the area. However, it is one of four area credit unions with less than $1 million in assets.

Delaware CUs carve out a niche counter bank rhetoric

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WILMINGTON, Del. (11/27/07)--Delaware’s credit unions, by offering lower service fees and better interest rates than banks, have carved out a niche for themselves in the financial services industry, according to a Monday article in the Delaware Business Journal. While some credit unions may not have as expansive branch networks as banks, credit unions have an advantage in offering smaller, more consumer friendly options, the article said. “It’s a different atmosphere,” said Patrick Mahaney, president/CEO of the Delaware Credit Union League, referring to the facts that unlike banks, credit unions are non-profits, have no shareholders, and have boards of directors composed of unpaid volunteers from the credit unions’ membership. The article describes examples of what attracted member Oneil Williams to the $152 million asset, Wilmington, Del.-based Dexsta FCU: personal, friendly service and being recognized by all the credit union employees. The Credit Union Membership Access Act, which allowed credit unions to apply for a charter to permit membership to anyone who lives, works, worships or attends schools in a designated community, is recounted in the article. Also mentioned is how the Credit Union Regulatory Improvement Act (CURIA) would free up more credit union assets for business lending. The article notes the battle lines drawn between credit unions and banks over CURIA, which is pending in Congress.

Former CU Viewpoint Bank to repurchase 580247 shares

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PLANO, Texas (11/27/07)--The holding company for former Community CU--now called ViewPoint Bank--announced last month it will repurchase up to 580,247 shares of common stock in the open market over 12 months, depending on market conditions. The holding company, ViewPoint Financial Group, represents the bank, which is based in Plano, Texas. Community CU converted to a mutual savings bank in 2006 with $1.4 billion assets, becoming the largest credit union to convert. According to Gary Base, president/CEO, the bank's board approved the latest repurchase program. "We believe that the repurchase of our shares represents an attractive investment opportunity which will benefit the company and our shareholders," he said in a press release (PRNewswire Oct. 26). In August, the holding company repurchased 420,208 shares of its outstanding common stock in the open market. That served to fund the restricted stock portion of the company's Equity Incentive Plan, which shareholders approved in May. At that time, the bank had total assets of $1.60 billion and shareholders' equity of $210.1 million (News Now Aug. 15). ViewPoint Bank began trading shares publicly on the Nasdaq Global Select Market Exchange on Oct. 2, 2006, just 10 months after Community CU converted to a bank (News Now Oct. 3, 2006). The bank is the largest bank in Collin County, with 33 branches, 14 of them in-store branches and three of them loan production offices. Also in October, the bank declared a quarterly cash dividend of five cents per share, payable on Nov. 21 to shareholders as of Nov. 8 ( via COMTEX Oct. 29).