Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

CU System briefs (11/29/2011)

 Permanent link
  • ARLINGTON, Wash. (11/30/11)--Mark Morrison has been named to succeed retiring MountainCrest CU President/CEO Bob Schumacher. Morrison served as executive vice president/chief operations officer and has been in the position of CEO since Sept. 1. He will formally assume the position president/CEO title when Schumacher retires Dec. 14. Morrison began his career in 1980 at Safeway CU (Qualstar CU). He was president/CEO of Educational Community CU, which merged into MountainCrest. He also held executive positions at King County CU (Prevail CU), and Seattle Telco CU (Watermark CU). Schumacher served in the Arlington, Wash.-based credit union's senior management for 15 years, the past nine years as CEO. His 34-year credit union career began with the CUNA & Affiliates (now the Credit Union National Association) in 1977. He also worked for the Washington and Florida Credit Union Leagues, their service corporations, and a five credit union mortgage credit union service organization. Schumacher also served on two projects in the Philippines for the World Council of Credit Unions …
  • SEATTLE (11/30/11)--John Annaloro, CEO of the Northwest Credit Union Association, presented the first check to honor retiring Arlington, Wash.-based MountainCrest CU President/CEO Bob Schumacher, to National Credit Union Foundation Chair Gary Oakland. Schumacher is retiring Dec. 14 after a career that includes work at two leagues and the Credit Union National Association (see previous brief for details). Gifts made to the foundation in Schumacher's honor will benefit the Development Education program and BizKid$, the Emmy Award-winning television show that teaches money management and entrepreneurship to kids. For more information about making donations in honor of someone, use the link 

  • HONOLULU (11/30/11)--The Hawaii Credit Union League announced the promotion of Elizabeth "Liz" Ott to education and meeting coordination officer, effective Sept. 1, and the hiring of Yolanda Rucker as its administrative assistant, effective Sept. 6.  Ott, who joined the league two years ago as administrative assistant, is responsible for coordinating education and training opportunities including the annual convention. Rucker, who moved from California to Hawaii in August, is responsible for maintaining the league's database and assisting different league divisions in clerical assignments …
  • FRANKFORT, Ky. (11/30/11)--Gary Wallace, president of Frankfort, Ky.-based Commonwealth CU, announced he will retire after 35 years with the credit union on Dec. 31, according to the Kentucky Credit Union League (By The Way Nov. 29). He was hired as the credit union's manager in 1976, when it had $2.8 million in assets, 5,900 members, and six employees. Today it has more than $909 million in assets, more than 82,800 members, and 250 employees. Before his credit union career, Wallace managed the Frankfort Credit Bureau for 10 years, a small loan company for five years and was credit manager at Goodyear Tire and Rubber Co. for five years. He served 10 years on the state's Department of Financial Institutions Board. Karen Harbin, who has been with the credit union since 1986, will succeed Wallace as president/CEO on Jan.  …

CUNA analyzes consumer debt for ICNNI

 Permanent link
NEW YORK (11/30/11)--Declines in credit card debt and in the number of open credit accounts could mean banks are closing delinquent accounts, Bill Hampel, chief economist at the Credit Union National Association, told CNNMoney Tuesday in his analysis of consumer debt.

The article discussed how third-quarter consumer borrowing declined slightly because consumers continue to whittle away at their debt burden as they confront a troubled economy.

Third-quarter credit card debt dropped to $693 billion--a marginal change from second quarter--while the number of open credit card accounts declined 23%, falling by 6 million from its peak in 2008, CNN said.

Those figures indicate that banks may be shutting down delinquent accounts, Hampel told CNN.

"I suspect that accounts are mostly the behavior of lenders as opposed to the borrowers, because they could not collect anymore," Hampel added.

The article noted that the number of credit inquiries increased, indicating a "strong demand for credit."

To read the article, use the link.

Two Abilene CUs to merge

 Permanent link
ABILENE, Texas (11/30/11)--Two Abilene, Texas, credit unions are merging--with Abilene Teachers FCU absorbing the smaller People's CU of Abilene. Both credit unions have been serving members locally since the 1950s.

The $6.2 million asset People's CU of Abilene initiated the merger with the $322.5 million asset Abilene Teachers FCU, said the latter's President/CEO James Boyd ( Nov. 28).

The board of the 1,500-member People's approached the board of the 35,000-member Abilene Teachers FCU, seeking a merger because a weak economy and increased government regulations made it difficult for the small credit union to survive, Boyd told the paper.

The merger, which began in September, will be finalized today--at which time People's CU of Abilene will close its one branch, Boyd said.

Hannaford ruling centered on steps to mitigate fraud

 Permanent link
PORTLAND, Maine (11/30/11)--An Oct. 20 federal appeals court ruling in the Hannaford Bros. supermarket credit and debit card breach in 2008 centered on whether steps to mitigate fraud from the breach were reasonable.

The U.S. Court of Appeals for the First Circuit in Maine reversed a lower court ruling and allowed consumers to sue the company for out-of-pocket expenses incurred to lessen the impact of the breach.

The unanimous decision includes costs to get new cards from financial institutions and the purchase of identity-theft insurance.

The Maine Supreme Judicial Court had ruled in September 2010 that the victims of the massive data breach could not sue for damages if they didn't suffer financial losses, physical harm or identity theft. It had said that time and effort alone do not constitute an injury for which damages may be recovered under Maine law (News Now Sept. 23).

In its reversal of that decision, the appellate court said: "The question then becomes whether plaintiffs' mitigation steps were reasonable. This is a contextual question, depending on the facts."

The appellate ruling went on to state: "Hannaford did not notify its customers of exactly what data, or whose date was stolen. It reasonably appeared that all Hannaford customers to have used credit or debit cards during the class period were at risk of unauthorized charges. That many banks or issuers immediately issued new cards is evidence of the reasonableness of replacement cards as mitigation."  Among those issuing new cards were credit unions.

Therefore, it was foreseeable that customers--knowing their debit or credit cards "had been compromised and that thousands of dollars of fraudulent charges had resulted from the security breach--would replace their cards to mitigate against misuse of card data," the court added.

The appellate court said it partly affirmed the lower court's decision and partly reversed it. "We affirm the district court's dismissal of all claims other than the plaintiffs' negligence and implied contract claims. We reverse the district court's dismissal of the plaintiffs' negligence and implied contact claims as to certain categories of alleged damages because plaintiffs' reasonably foreseeable mitigation costs constitute a cognizable harm under Maine law."

It is estimated that the card numbers of more than four million people were stolen in the security breach, which occurred between Dec. 7, 2007 and March 10, 2008, when cyber criminals hacked into Hannaford's system and accessed card numbers used at 165 Hannaford supermarkets in the Northeast and 106 Sweetbay stories in Florida (News Now Nov. 21).

At least 1,800 numbers were used for unauthorized fraud. Hannaford discovered the breach in February 2008 and made it public March 17, 2008. Many credit unions were among the financial institutions that reissued new cards to consumers.

Calif. league Fed up consumers are joining CUs

 Permanent link
ONTARIO, Calif. (11/30/11)--Credit unions are reaping the benefits of consumer dissatisfaction with big banks and the positive media coverage generated by Bank Transfer Day, according to a recent survey conducted by the California Credit Union League. 

The poll indicates sustained increases in membership and deposits since the Sept. 29 announcement that Bank of America would begin charging a $5 monthly fee for use of its debit card. Although that decision was later rescinded, and Bank Transfer Day--created by a California businesswoman to encourage consumers to move their money on Nov. 5--has passed, consumers are still moving their money to credit unions in record numbers.

The results of the poll were reported in the Tuesday Sacramento Bee on Nov. 29.

The league's survey indicated an estimated 160,408 new members have joined California credit unions between Oct. 1 and mid-November. That averages to 26,735 per week--a 72% increase over the weekly average of about 15,500 for the first nine months of 2011.

Deposits at California credit unions also have increased an estimated $317,122,662 during the same period. That averages $52.8 million in new deposits per week, as compared with the weekly average of about $30.7 million for the first nine months of the year.

"Consumers continue to make a statement about their frustration with big banks by taking their financial business to a credit union, where fees are lower and service is better,"  said  said Diana Dykstra, president/CEO of the league. "We are encouraged to see that the peak levels of increases in membership and deposits we saw in October, a result of heightened awareness about credit unions, have continued throughout November.

"Word continues to spread about the benefits credit unions provide for consumers and small businesses," added Dykstra. "We'll know over the coming months whether the momentum from frustration with big banks will translate into continued increases in membership and deposits."

NEFE survey Six in 10 wont use holiday budget

 Permanent link
FARMERS BRANCH, Texas (11/30/11)--Most Americans don't have a budget for their holiday shopping, according to a new poll from the National Endowment for Financial Education (NEFE).

NEFE found 63% of Americans surveyed will not set or have a budget for their holiday shopping.

"It's concerning that the majority of shoppers this holiday season will not have a spending plan along with their shopping list," said Ted Beck, president/CEO of NEFE. "Having a gift budget really helps keep spending on track and prevents a situation where emotion takes over."

The NEFE survey also finds many Americans are concerned about how they will pay for their holiday expenses this year.

About 49% of Americans are much/somewhat more concerned about being able to afford holiday expenses this season, compared with their level of confidence five years ago. As a result, 54% of those who have holiday expenses plan to spend less this year than they did five years ago.

"Americans are facing a lot of challenges because of the duration of the current economic climate, so it's no surprise there is heightened concern over how much money people can spend on their loved ones," Beck said.

Sixty-four percent of Americans surveyed anticipate gifts to be their largest expenditure this year, with 60% planning to spend the most on family members. Other expenses include food/groceries for holiday meals (12%), travel (8%), entertainment/entertaining or holiday greeting cards (both 2%), gift wrap/decorating and other (both 1%). Ten percent anticipate not having any holiday-related expenses this year.

Of those anticipating holiday expenses this year, 67% plan to use cash. Forty-five percent will pay with credit, with 32% paying the full balance in the first statement cycle and 13% not paying off the full balance in that period. Seventeen percent expect to pay from savings, 7% will use layaway, 5% will rely on a holiday or year-end bonus, 3% plan on help from relatives or friends, 2% a short-term loan and 5% plan to pay by other means.

Earlier this month, the 2011 Consumer Federation of America (CFA)/Credit Union National Association (CUNA) holiday spending survey found that spending continues to improve following the great recession, but "spending plans are still considerably below where they were before the recession," according to CUNA Chief Economist Bill Hampel (News Now Nov. 22).

This year's CFA/CUNA survey has found that 8% of respondents plan to spend more on gifts and holiday items, with 41% of respondents saying they would spend less this holiday season.

A survey from the Irish League of Credit Unions indicates that 38% of respondents in the nation will borrow to finance gifts (News Now Nov. 28)

Report Online payments see surge to credit cards

 Permanent link
SAN FRANCISCO (11/30/11)--Changing market conditions and new regulations have led to credit cards regaining an increased share of consumers' wallets for online purchases, according to a new study from Javelin Strategy and Research.

In the five-year period from 2011 to 2016, assuming the Dodd-Frank Act's provision regulating debit card interchange stands, Javelin projects total payments volume for the online use of credit cards by U.S. consumers will climb 63%, while the total payments volume for debit cards is expected to rise 2% during that period.

The study indicates a 16% increase in the U.S. online market as retail e-commerce sales continue to rise to $309 billion in 2011 and are forecast to climb further to an estimated $444 billion by 2016.

The Federal Reserve's final interchange rule caps large issuer debit interchange fees at 21 cents, and allows an additional five basis points per transaction may be charged to cover fraud losses (News Now Sept. 14). An extra penny may be charged by financial institutions that are in compliance with Fed-established fraud prevention standards. Card issuers with less than $10 billion in assets--like most credit unions--are exempt from the fee cap. However, the routing and exclusivity rules apply to all debit card issuers regardless of asset size.

Online merchants have plenty to gain from this shift in payments share, according to "Javelin's Fourth Annual Online Retail Payments Forecast 2011-2016: New Regulations Leave Credit Poised for a Comeback." Credit cards typically generate higher consumer spending and greater revenue for merchants. Javelin's study shows that consumers spend more money on a single online transaction using credit cards than when using other payment options. They spend an average $82.10 with a major credit card versus $58.29 using a major debit card.

Javelin's study tracks the growth of online alternative payments methods, prepaid and gift cards for online purchases. The report identifies key drivers creating shifts in online payments' mix and explores the impact of these changes on consumers, payments providers and merchants.

Non-traditional payment methods also will grow in the next five years, according to James Van Dyke, founder and President of Javelin. With a projected $30 billion growth through 2016, online alternative payments will hold a 19% share of online retail payments or a share that is two percentage points below debit's projected share.

"While online alternative payments represent less than one-fifth of e-commerce transactions, these options are well-positioned to benefit from the introduction and adoption of emerging payment environments, such as the mobile channel and social networking," Van Dyke said.

The Credit Union National Association (CUNA) is monitoring merchants for any signs that they are steering consumers away from using debit cards issued by institutions that are not subject to the debit interchange cap, and has developed a website to help consumers and credit unions report any instances of steering. CUNA is also working with regulators to ensure the two-tiered interchange system is followed so the law doesn't produce unintended consequences for consumers and credit unions.