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IAutomotive NewsI Why dealer stepped up work with CUs

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VANCOUVER, Wash. (11/27/12)--Auto trade industry publication Automotive News has published a Q & A with a Vancouver, Wash.-based auto dealer who says credit unions account for more than half of its loan volume.

In the article, "Can't beat credit unions? Join 'em," (Oct. 17) , Ralph Larson, finance and insurance director with Dick Hannah Dealerships, noted that if auto buyers financed their last vehicle at a credit union, the dealership's group policy is to send the credit application for their new vehicle to that credit union first. 

Why?  Because the dealer had a high rate of cancellations on its financing and insurance products just days after people bought vehicles at the dealer. The dealership thought it might be a problem with disclosures, but when it took a closer look, it found out that the buyers were simply refinancing the car at their credit union.

The dealership also found out that working with a single credit union to offer a lower payment didn't work if the consumers were members of another credit union. "The problem is the customer's loyalty is deeper than the quarter percent," Larson told Automotive News. Some people, he said, would pay more to stick with their credit union--and often the credit union might match the offer anyway.

Now the credit union gets a first right of refusal on financing the loan, and 53% of the dealer's loans are financed through credit unions. For more information, check out the full article at the link.

FBI seeks suspects in eight CUbank heists in Wis

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MILWAUKEE, Wis. (11/27/12)--The Federal Bureau of Investigation (FBI)  is asking the public's help in identifying  serial robbery suspects in at least eight credit union and bank robberies in southeastern Wisconsin between Oct. 18 and Nov. 20.

The FBI Milwaukee Division said the suspects have hit seven credit unions and a bank--some of them twice. The dates and locations of the heists were:

  • Oct. 18:  Educators CU, Port Washington Road, Glendale;
  • Oct. 22: Landmark CU, Washington Avenue, Mount Pleasant;
  • Oct. 23: Landmark CU, Grove Avenue, Racine;
  • Nov. 5: TruStone Financial, 30th Avenue, Kenosha;
  • Nov. 6: Landmark CU, Grove Avenue, Racine;
  • Nov. 13: North Shore Bank, Green Bay Road, Kenosha;
  • Nov. 16: Landmark CU, 124th Avenue, Wauwatosa; and
  • Nov. 20: Southern Lakes CU, 60th Street, Kenosha.
In the Nov. 16 robbery in Wauwatosa, two masked men waving guns entered the credit union just before its 7 p.m. closing time, robbed several tellers at gunpoint of the contents of their teller drawers and disrupted a loan officer's meeting with members. On the way out, one robber pointed his gun at a door handle and pulled the trigger, but the gun did not go off.  They left in a stolen car that was later found abandoned and burned. Police believe the suspects are white and between 20 and 27 years old.

Another robbery involved three men wearing masks and a third robbery involved a single suspect.

CUs MBL created 100 jobs saved monument to small biz

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PORTLAND, Ore. (11/27/12)--Just how much difference can a single member business loan (MBL) make? Ask DA Hilderbrand of Portland, Ore.  The small business loan he received years ago from Portland-based Unitus Community CU has made a significant impact on the community--and created 100 jobs to boot, according to the Northwest Credit Union Association (NWCUA).

Hilderbrand saw opportunity when he purchased a dilapidated building scheduled for demolishing by the city.  "First we had to clean it out," he told NWCUA (Anthem Recap Nov. 23).  It took more than a year to haul away 120,000 cubic feet of junk and save 29 feral cats.

What attracted Hilderbrand was the building's architectural history and the opportunity to bring "Pearl District quality" to Northeast Portland, at much lower business rental rates.  What is now the Gotham Building opened in 2002 and quickly filled up with successful businesses.

However, the building next door, an abandoned "Historic Yellow Building," posed a fire hazard to the renovated Gotham Building. So Hildebrand decided to buy the property, clean it up, expand the Gotham, and create more jobs. That was in 2007. When he went looking for a loan, banks refused to provide the loan needed. But Unitus Community CU did. 

"Unitus took a lot more interest in the community aspect of what I was doing instead of just going by the numbers," Hilderbrand told the league. "Other banks never even asked why I wanted to do this."  He credited Unitus' former board chairman, the late Barbara Leonard, for championing the project and its financing. "She liked the idea of bringing more jobs back to that area. That's what they were all about."

Today, says NWCUA, the Gotham Building is a "monument to small business success." It houses design firms that land national contracts, computer software businesses, accounting businesses, a new wellness clinic and a popular restaurant. Roughly 100 people work at the businesses.

Hilderbrand told NWCUA he may ask the credit union for another MBL, this time to save an industrial warehouse to create more space for small business. He noted his adviser at Unitus visits and brings colleagues along to show off the example Gotham has set. "It speaks to more than just a financial commitment. They really are interested in what we are doing. Those are the kinds of people I want to do business with," he said.

Hilderbrand is urging Congress to pass S. 2231, the bill to raise the MBL cap for credit unions to 27.5% of assets from 12.25%, said NWCUA. Increasing the cap would generate 140,000 new jobs the first year, without cost to taxpayers, said the Credit Union National Association. What's more, it would generate $13 billion for new small business loans.

For profit bank was never an option for Lakota reservation

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KYLE, S.D. (11/27/12)--When newly chartered Lakota FCU opens here in December, it will be the first time the Pine Ridge Indian Reservation has had a federally insured financial institution in place. In a newsletter article welcoming Lakota FCU into the credit union family, the Credit Union Association of the Dakotas (CUAD) said that a "for-profit" bank was never really an option for the reservation.

"(A)  not-for-profit credit union with a philosophy of 'people helping people' is a good fit for the more than two million acre reservation, one of the largest and poorest Native American reservations in the U.S. and home to approximately 40,000 persons, of which 35% are under the age of 18," the article said.

Whitney O'Rourke is the new credit union's manager, and she has been working on the credit union's development since 2010 with Lakota Funds, a community development financial institution (CDFI) that is helping to lead an economic resurgence of the Oglala Lakota Oyate on the Pine Ridge Reservation. Lakota Funds owns the Lakota Trade Center building where the new credit union is located here.

The credit union has received three start-up grants from the U.S. Treasury Department's Native American CDFI Assistance (NACA) Program. The grants enabled Lakota to hire one additional employee: Shayna Richards will be member service representative. 

Lakota FCU's field of membership (FOM) will be comprised of those who live, work, worship, volunteer, attend school, or conduct business on the Pine Ridge Indian Reservation.  Members are not required to be Native American.

The National Credit Union Administration (NCUA) has already designated LFCU as a low-income credit union (LICU), which means that it can accept deposits from anyone--whether or not they qualify under the FOM rule.

The CUAD article noted that the new credit union may face challenges attracting deposits because the area has an unemployment rate of greater than 80% and a history of dealing in "cash-only" transactions.  But the credit union has addressed this by doing early advertising to get the word out that there will be a financial alternative for the community.  The credit union representatives will be going to schools and businesses, encouraging people to open savings accounts rather than dealing with cash. Members will be able to access their funds through "CU Money" reloadable debit cards. Share draft accounts will not be offered initially.

CU System briefs (11/26/2012)

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  • MADISON, Wis. (11/27/12)--The Filene Research Institute announced Tansley Stearns has joined the institute as its new director of innovation applied research. She will be responsible for transforming research and innovation into action, the announcement said. Stearns is a 14-year veteran of the credit union movement and most recently served as an assistant vice president of corporate strategy and government relations at Bethpage FCU in New York. Filene noted that Stearns is one of the original credit union professionals chosen to be a participant in Filene's i3 program,described by Filene as a work group of innovative, insightful and energetic credit union professionals who have not yet reached the CEO level, but are in a position with substantial responsibility. In her three years with i3, Stearns worked with other credit union executives to create two innovative projects, including Debt in Focus and SmartScore. She also has been a member of the Guiding Coalition at two credit unions, working to build and develop sales and service cultures. She is credited with helping her credit union win first place in both the Dora Maxwell and Louise Herring awards, Filene noted …
  • JACKSONVILLE, Fla. (11/27/12)--Michael Yatros has been selected by Florida Credit Union Shared Services (FCUSS) to serve as its new CEO. "Mike's extensive knowledge of the payment systems industry and his proven track record of success will propel this organization to new and exciting heights which will, in turn, bring even more value to our member credit unions," said Allan Prindle, chairman of the FCUSS Board and president/CEO of Power Financial CU. Prior to accepting his new position, Yatros served as the executive vice president of PSCU Financial Services Inc. in St. Petersburg. He led strategic planning for the client services division responsible for sales, portfolio development, relationship management, and consulting for 1,200 clients and their 18 million cardholders. …
  • SAN ANTONIO, Texas (11/27/12)--Randy M. Smith will step down from his position as CEO of Randolph-Brooks FCU (RBFCU), effective Dec. 31, and will  be succeeded as CEO by the credit union's current president, Christopher W. O'Connor.  Smith will assume the position of senior adviser to the board of directors (LoneStar Leaguer Nov. 26). After a career in public accounting and 27 years of service with the U.S. Air Force (active duty and reserve), Smith began with RBFCU in 1982 as the vice president of finance in 1982. When he became president/CEO in 1987, the credit union assets totaled about $290 million and RBFCU offered a service network of five branches, all located in the greater San Antonio area. Today, the credit union serves more than 410,000 members with more than $5 billion in assets. RBFCU's branch network includes more than 40 locations throughout South Central Texas, including multiple branches in the San Antonio and Austin metropolitan areas. "His leadership has been a determining factor in the success of our credit union," said Dr. Harry M. Edwards, board chairman of the credit union. "He is a visionary who is focused on success and results, and the credit union's growth under his guidance is based on the fact that he can see and act upon the big picture, while still remembering that people are the credit union's most valuable resource." …

St Paul Croatian FCU CEO sentenced to 14 years to repay 72M

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CLEVELAND (11/27/12)--The former CEO of the defunct St. Paul Croatian FCU has been sentenced to 14 years in prison and ordered to pay $72 million in restitution for pocketing bribes, kickbacks and cash gifts as a part of a multimillion-dollar loan scam that caused one of the biggest credit union failures in U.S. history.

Anthony Raguz, 52, the former CEO of the Eastlake, Ohio-based credit union, was sentenced Monday morning in the U.S. District Court in Cleveland (The Plain Dealer and Nov. 26).  He had pleaded guilty in September to six counts of bank fraud, money laundering and bank bribery (News Now Nov. 26).

Raguz allegedly issued more than 1,000 fraudulent loans totaling more than $70 million to about 300 accountholders at the credit union and accepted more than $1 million in bribes, kickbacks and gifts from the borrowers. He has already forfeited that $1 million, said the newspaper.  Earlier accounts had said his take was more than $500,000.

The sentence was part of a plea bargain Raguz made last year. He cooperated with federal prosecutors, and more than 20 people were convicted in the collapse. However,  U.S. District Judge Christopher Boyko rejected prosecutors' request that Raguz receive punishment in the mid-range of federal sentencing guidelines. Boyko said that the damage Raguz caused outweighed his contribution to the prosecution of other defendants.

Raguz apologized  to the victims, to members of the credit union  and to the 10 employees who lost their jobs because of the crime, said the Plain Dealer.

The loan scam ring was allegedly led by Kiljo Nikolovski of Eastlake and Skopje, Macedonia, who is serving 18 years in prison for the fraud.

The National Credit Union Administration placed the credit union into conservatorship in April 2010 and liquidated it a week later in early May, saying it was insolvent. The credit union's collapse caused $170 million in losses to the National Credit Union Share Insurance Fund. NCUA has filed lawsuits against several individuals involved in the scam to try to recoup some of the losses.

IFox BusinessI report on Black Friday features Hampel CUNAs survey

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WASHINGTON (11/27/12)--Credit Union National Association (CUNA) Chief Economist Bill Hampel provided the holiday spending analysis for Fox Business Network's "Special Report" on Black Friday and also discussed how the fiscal cliff may affect spending in the future.

In the 5:19-minute interview Friday, Hampel discussed the Consumer Federation of America and CUNA holiday spending survey, taken three weeks ago, and pointed out that based on the survey's results, he expects about a year-over-year 4% increase in holiday spending this year, up from a 3.5% rise last year.

When asked if consumers were aware of the looming fiscal cliff, he noted that "consumers are paying more attention to their own financial condition and own circumstances and less to what's going on here in Washington."

However, he suspects that will change. "The fiscal news has been restricted to the financial and business news sectors, and the consumers and the general public are just beginning to latch on to" the implications of the fiscal cliff, Hampel told the network.

In the CFA/CUNA survey this year, "more people said they were better off than the previous year than those who said it last year. Last year by a 2 to 1 margin, they told us they were worse off than the year before. That margin has really narrowed and people are feeling a little better." While it won't be a fantastic holiday spending season, it is "another nudge up in the right direction from last year," Hampel said.

"Our survey is a nationwide survey and it showed on balance that people are planning to spend a little bit more this year than last," he noted.

The survey found that the number of people worried about their monthly debt fell. "One of the reasons for that is the household sector is in better condition this year than it has been for four years. The Great Recession was really destructive to the household sector," Hampel said, adding that household debt is coming down and several economic factors are moving in the right direction toward stronger shopping.

Will consumers' improved view of their finances last into the new year? "That does depend entirely on what happens with the fiscal cliff," Hampel said.  As the end of the year gets closer, "if Congress has not come to a reasonable solution, the financial market will signal to the household sector that things are bad and stock markets are tanking because Congress hasn't done anything," Hampel said.

Although consumers aren't directly connected to the stock market through mutual funds investments,  most households are indeed connected to it through their 401 (k) and defined contributions pensions plans. "That will be the mechanism that signals to consumers that  whoops--something's wrong here" if Congress doesn't present a solution, he concluded.