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650000 new members ahead of Bank Transfer Day

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WASHINGTON (11/4/11)--At least 650,000 consumers across the nation have joined credit unions in the past four weeks, reflecting consumers' reactions to rising fees at banks, according to a survey by the Credit Union National Association (CUNA).

They have joined credit unions since Sept. 29, when Bank of America (BofA)  unveiled its plans to charge $5 a month for debit cards. The public outcry the past month has forced BofA and other big banks to reconsider their debit fees.

CUNA estimates that credit unions have added $4.5 billion in new savings accounts. More than four in every five credit unions experiencing growth since Sept. 29 attributed the growth to consumer reaction to new fees imposed by banks, or a combination of consumer reactions to the new bank fees plus the social media-inspired Bank Transfer Day. Bank Transfer Day, which is tomorrow, urges consumers to switch from big banks to smaller credit unions and community banks.

"The results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings," said CUNA President/CEO Bill Cheney.

Cheney added that studies have shown people living paycheck to paycheck save even more at a credit union than the average financial institution customer, as they use more credit union services.

The growth is particularly noticeable at larger credit unions--those with $100 million or more in assets, Cheney said.  They account for about 20% of all credit unions, but serve about 80% of credit union members. The CUNA survey indicated that more than 70% of these credit unions reported they have seen growth in memberships and deposits since Sept. 29.

"Many credit unions across the nation--whether they are realizing new members or not--are making special efforts to tap the surging interest in credit unions," said Cheney.

"They are conducting advertising campaigns both individually and cooperatively with others, sending 'switch kits' to existing members to share with family members or other prospective members, beefing up websites, extending hours and staffing for Bank Transfer Day, performing e-mail blasts to members, maximizing social media campaigns, putting up banners in lobbies or on their buildings, offering bonuses to members who bring in new members, and giving bonuses to members as well," Cheney said.

"They are doing whatever their resources will allow them to do to help serve this consumer surge in interest in credit unions."

Cheney noted searches for credit unions continue to surge on the website aSmarterChoice.org, with more than 56,000 visitors in October.

The phenomenal increases in membership this month have caught the eye of the nationwide media, many of whom bumped up their coverage of the issue Thursday, with heavy coverage of Cheney's comments and CUNA's statistics and positive press.

Among them: Bloomberg Radio, MSNBC's "Rachel Maddow Show," Businessweek's "Bank fees are a gift to credit unions," credit.com's "Not Your Grandmother's Credit Union," and Reuters' "Credit union business grows as consumers sour on banks." That doesn't count dozens of regional and local coverage.

Reuters (Nov. 3) reported Cheney's comments and noted the growth statistics provided by CUNA and said, "The big banks may have dropped the debit card fees, but the credit unions are the ones picking up the business."

MSNBC's (Nov. 3) Rachel Maddow, in covering Bank Transfer Day, referenced new member growth at several credit unions and pointed to Cheney's comments on credit union growth that appeared in the Reuters story.

In the credit.com article, CUNA Vice President of Economics and Statistics Mike Schenk described the features of today's credit unions, including the conveniences, such as free ATM access, shared branches, and electronic banking. He noted that 71% of credit unions belong to a surcharge-free ATM network. Some 97% of credit unions offer Web-based home banking, allowing members to check balances, view their account histories or transfer funds online. And 94% offer online billing while 47% offer mobile banking.

Meanwhile, credit unions continued to announce their readiness to help consumers switch to credit unions tomorrow, on Bank Transfer Day.

However, they also emphasized, like CUNA's Cheney, that: "Any day is a good day for a consumer to become a credit union member. Saturday, Nov. 5, is one good day to join, and we certainly encourage consumers to make the change. Because when a consumer joins a credit union, he or she takes the first step for themselves, and their families, in moving toward financial freedom."

Use the links to access the full reports in the media.

Judge approves U.S. Mortgage Corp. settlement with underwriters

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NEWARK, N.J. (11/4/11)--A U.S. District Court in Newark, N.J., approved a consent judgment against CU National Mortgage LLC and U.S. Mortgage Corp., and in favor of the companies' insurance underwriters, settling a case stemming from nearly $140 million in fraudulent mortgage loans that caused losses to 28 credit unions.

U.S. District Judge Jose L. Linares signed the consent judgment Thursday, according to court documents. It voids U.S. Mortgage's and CU National's insurance policies with Certain Underwriters at Lloyd's, London, which sued Michael J. McGrath Jr., John Kuskin, and the two former mortgage corporations. Default judgments had been entered previously against the two men.

McGrath, who was president of the former mortgage companies, pleaded guilty in 2009 to stealing $139.6 million from credit unions, and is currently serving a 14 year sentence (News Now Aug. 31).

The case prompted a string of lawsuits led by Fannie Mae, and credit unions including Dover, N.J.-based Picatinny FCU, Medford, N.Y.-based Suffolk FCU and Garden City Park, N.Y.-based Sperry Associates FCU and Nutley, N.J.-based Proponent FCU. They and the other credit unions incurred a combined $160 million in losses after Pine Brook, N.J.-based CU National Mortgage fraudulently sold 189 mortgage loans without authorization to Fannie Mae and pocketed the funds between 2004 and 2009.

The mortgage companies listed more than $200 million in debts to Fannie Mae and 19 credit unions when they filed for Chapter 11 bankruptcy in early 2009. McGrath fraudulently conveyed the mortgages to Fannie Mae by forging allonges that he endorsed in his own name.  An allonge is an attachment to a note that a party can add on for endorsements, such as signatures for transferring the note. His endorsement also included the initials "AVP," which may have been taken to mean associate vice president.

One can make endorsements on the note itself, but McGrath allegedly used allonges instead to help hide his fraud. While CU National Mortgage's non-fraudulent transfers to Fannie Mae were made using Fannie Mae's electronic mortgage note transfer system, the fraudulent transfers were made using paper copies, with the attached allonges, according to court documents from the Fannie Mae lawsuit, which was settled in August.

Call for nominations in CUNA Director elections announced

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WASHINGTON and MADISON, Wis. (11/4/11)--The Credit Union National Association (CUNA) is seeking nominations for eight positions on the CUNA Board of Directors.

Positions up for election are:

  • District 1, Class B
  • District 2, Class C;
  • District 3, Class A;
  • District 3, Class D;
  • District 4, Class B;
  • District 4, Class D;
  • District 5, Class A; and
  • District 6, Class C.
 

An individual must be an employee or voting board member of the nominating credit union to be an eligible candidate elected by credit unions.  

To become an eligible candidate to be elected by leagues, an individual must be a league president and must be nominated in writing by his or her league, and the nomination must be seconded in writing by at least one other league from the district.

Important dates to know:

  • Nominations are being accepted Nov. 4 through Dec. 16;
  • For contested elections, ballots will be sent Dec. 20, with voting continuing through Jan. 27; and
  • Directors will take office upon the adjournment of CUNA's Annual General Meeting on March 18.
Nomination packets are available by calling 800-356-9655, ext. 4013; using the resource link; or e-mailing thanson@cuna.coop.

For more information use the resource link.

CUNA HRTD Council accepting award entries

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MADISON, Wis. (11/4/11)--Entries are being accepted for the 2012 HR/TD Excellence Awards, sponsored by the CUNA HR, Training & Development (HR/TD) Council.

Recognition will be given in three major categories:

  • Employee engagement--includes human resources/training department programs related to internal communications, staff development, rewards and recognition, employee satisfaction and community involvement.
  • HR/TD management practices--covers programs that include compensation and benefits, recruitment and retention, training design and implementation, workforce diversity; and
  • HR/TD strategic leadership--recognizes a senior HR/TD professional who has made significant contributions or taken an innovative approach in these areas: business solutions, change management, succession planning, culture building, learning development strategy or leadership development.
Winners will be based upon innovation, business outcomes/impact, sustainability, quality and integration.

"The CUNA HR/TD Council leaders want to honor credit unions that exemplify excellence in the human resources and training disciplines," said awards committee chair Jennifer Godel, vice president of HR/training and quality at Desert Schools FCU in Phoenix. 

Entries must be received by 5 p.m. (CT) Jan. 13.

Winners will receive a complimentary registration to the 2012 CUNA HR/TD National Conference, April 18-21 in San Antonio. Awards will be presented at the conference.

Harris Poll on BTD CUs far exceed banks in loyalty

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MADISON, Wis. (11/4/11)--When Bank Transfer Day (BTD) arrives tomorrow, large banks could be susceptible to losing more of their customers to credit unions, according to The Harris Poll.

Already, hundreds of thousands of bank customers have signed up to drop their big banks and switch to credit unions, said the Credit Union National Association.

Credit unions have a best-in-class customer retention rate with 87% saying they are extremely/ very likely to continue as members.  However, the biggest U.S. banks have garnered significantly less loyalty from their customers, said the poll (PR Newswire Nov. 3).

For example, 40% of Bank of America (BofA) customers surveyed said they are extremely or very likely to continue with BofA, along with 46% of JPMorgan Chase customers, and 54% of Wells Fargo/Wachovia customers.

Credit union members (74%) are nearly three times as likely as BofA customers (25%) to have a trustworthy relationship, and to feel valued (72% versus 24%). Trustworthiness and being valued are the major factors in a strong emotional commitment to a relationship, the poll said.

Nearly 50% of those who "like" the BTD page on Facebook are forwarding it,  discussing BTD and chatting on Facebook about the cause, compared with a 32% chat percentage for the Occupy Wall Street movement, said Harris.

The Harris Poll concludes that credit unions, community and regional banks are providing consumers with more information, help and tools to make informed financial decisions. Therefore, big banks will have to make significant changes to win back customers' trust.

Also, big banks will have to make the changes soon, before credit unions, community and regional banks make it easier for customers to switch over to them, The Harris Poll concluded.

CUNA Mutual expands services for those new deposits

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MADISON, Wis. (11/4/11)--With Bank Transfer Day arriving tomorrow, credit unions are searching for ways to invest their increased level of deposits from adding new members. To meet that need, CUNA Mutual Group, through its registered investment advisor affiliate, MEMBERS Capital Advisors (MCA), is expanding its Credit Union Investment Advisory Services (CUIAS) program.

The program aims to help credit unions improve their financial performance through investment portfolio management and strategy.

"CUIAS takes the securities selection, execution and monitoring of an investment strategy off the plate of the credit union and places it on the same portfolio managers who invest for CUNA Mutual Group's nearly $10 billion general account," said Ed Meier, director, Fixed Income Investments, MEMBERS Capital Advisors.

The Credit Union National Association (CUNA) estimates that 650,000 consumers nationwide have joined credit unions since Sept. 29--the day Bank of America announced its now-rescinded $5 monthly debit card fee. That estimate is based on a response to a CUNA nationwide survey of 5,000 credit unions. Credit unions have added $4.5 billion in saving accounts--likely attributable to new members and existing members shifting their funds from other financial institutions--since that date, CUNA said.

The company has more than 25 broker relationships to assure a selection of securities, Meier said. CUIAS also adheres to regulatory-compliant accounting and reporting practices. "We provide a monthly report that prices and 'shock-tests' all positions in the portfolio--quality, duration and mix," he said. "This can be given to regulators when they arrive if needed."

Meier noted the credit union's management can remain in control of the process by reviewing, analyzing and approving transactions as the portfolios are advised by MCA on a non-discretionary basis.

CUIAS is best-suited for credit unions with more than $20 million in investable assets, with the minimum investment being $10 million, he said. It focuses on longer-term investments of one year or longer in duration.

To strengthen the program, CUNA Mutual Group has hired Jeff Weber, an industry veteran, to help establish CUIAS. Before taking on the role of investment sales specialist for MEMBERS Capital Advisors, Weber served as managing director of equity trading for Allianz of America, where he was responsible for managing a Standard and Poor's 500 Index Fund with more than $600 million in assets.

Banks look to other fees such as limiting debit transactions

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MADISON, Wis. (11/4/11)--While Bank of America (BofA) and other big banks have dropped plans to charge monthly debit fees, consumers must be more vigilant for less transparent fees. Banks will be seeking to regain revenue lost from the new interchange rule and a stagnant economy, according to industry observers.

BofA will lose as much as $1.2 billion to $1.4 billion in revenues a year by dropping its debit fee, Jefferson Harralson, analyst at Keefe Bruyette & Woods, told the New York Post (Nov. 2). To make up for that lost income, it may impose more fees such as increased requirements for minimum balances, increased monthly fees, maintenance fees and fees for using ATMs for non-customers, Harralson told the Post.

TD Bank, Cherry Hill, N.J., is implementing a new fee and increasing others, a CNNWire report said (Nov 2).

The bank will begin charging its customers a $9 fee each time they withdraw or transfer money from their savings account once they have exceeded six transactions in a billing cycle.

In setting the fee, TD Bank cites Regulation D, which sets the six-transaction limit per billing cycle. BofA and Wells Fargo already have similar fees in place.

In the CNN report, one reader remarked that credit unions look more attractive as big banks continue to search for ways to make money.

Bank fees aren't going away, and credit unions will continue having the opportunity to show consumers the benefits of membership.

Banks also could begin charging customers for more costly services such as processing paper checks and mailing statements, banking analyst Bart Narter said in a Boston Globe (Nov. 3) article.

Rewards programs may also be eliminated at some banks, the Boston Globe said. Citizens Bank, the second-largest retail bank in Massachusetts, will stop offering its GreenSense rewards program at the end of the month. The program gives customers 10 cents each time they make a debit card purchase or electronic payment.

One-third of U.S. banks have cut their debit reward programs during the past year, according to Bankrate.

New curriculum for teens tackles gambling charity bankruptcy

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ST. PAUL, Minn. (11/4/11)--A financial literacy provider has released 10 new online offerings for teens, including "a tough take" on topics such as gambling, charitable giving and bankruptcy.

The curriculum is provided by Foolproof, a consumer advocacy initiative sponsored by 15 state trade associations used by 147 credit unions.

FoolProof is addressing topics such as gambling and bankruptcy in response to inquiries from the credit unions and teachers who use the financial literacy service.

"These modules are different," said Will de Hoo, Foolproof found. "Each module is designed to be used by itself, rather than as part of our curriculum series. But all of the modules---used alone or with our other modules--are tough as nails--and teachers love them.  We have tested these modules in Oklahoma during the past six weeks, and already over 125 high schools have started using them."

Foolproof's entire curriculum includes more than 18 topics in 22 hours of online, interactive instruction.

CU System briefs (11/03/2011)

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  • GRAND RAPIDS, Mich. (11/4/11)--The board of Michigan-based credit union service organization (CUSO) Xtend Inc. announced it will increase the price of new stock ownership, effective Jan. 1, to $23,000. The current asking price of $19,000 will remain until then, said Xtend Board Chairman Steve Searfoss of AAA FCU, South Bend, Ind. He noted the board "felt it was important for our buy-in price to reflect not only our stellar 2011 performance, but also our vision of a bright future for our CUSO and the credit unions we serve." The stock offering for the CUSO has grown steadily since its initial $5,000 price in 2003 …
  • KENILWORTH, N.J. (11/4/11)--Atlantic FCU has named Mike Fanelli as its new president/CEO. He will succeed longtime CEO Fred Beckman, who is retiring in early December, said the New Jersey Credit Union League (The Daily Exchange Nov. 3). Fanelli, who has been with the $275 million asset, Kenilworth, N.J.-based credit union for 12 years, is currently chief financial officer/chief operating officer. Beckman, who has been CEO since 1994, will stay through a transition period and will move onto the credit union's board of directors ...
  • SAGINAW,  Mich. (11/4/11)--The state of Michigan paid special tribute to Saginaw-based Catholic FCU (CFCU), which recently reached the  $1.1million benchmark in its Msgr. Forbes Scholarship Fund. Since 1982, the $300.5 million asset credit union's Scholarship Committee has awarded more than $1.1 million and presented more than 2,300 scholarships to students for their education. Sen. Roger Kahn attended a special ceremony and recognized that the awards have had a valuable impact on the ability of local students to continue their education.  From left are All Saints students Brittany Burns and Megan Marvin; Bishop Joseph Cistone; Kahn, CFCU Board Chairman Robert Looby; CFCU CEO Alan Watson; and Jose Salinas, Msgr. Forbes Scholarship Trustee.  (Photo provided by Catholic FCU) …
  • FARMERS BRANCH, Texas (11/4/11)--The Texas Credit Union League has tapped Tom Haider as its executive vice president for advocacy. Haider, who has more than 25 years of advocacy experience in the financial services industry, will be responsible for directing the league's government relations program. He formerly served for seven years as the first in-house attorney for the Minnesota Credit Union League (now Minnesota Credit Union Network), where he provided legal and regulatory compliance advice to credit unions and ran the league's government relations program.  He also was senior vice president of government affairs and chief compliance officer of MoneyGram International Inc.  According to Texas league President/CEO Dick Ensweiler, Haider has "lobbied successfully for the passage of legislation in multiple states, including Texas, as well as the U.S. Congress and the European Union's Parliament" and has "in-depth knowledge involving many issues affecting credit unions today" …

GCUA holiday shopping poll Cash is king

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DULUTH, Ga. (11/4/11)--Fifty-one percent of Georgians surveyed plan on spending the same amount this holiday season as last year, and 46.5% say they plan on spending less, according to a poll from Georgia Credit Union Affiliates. And more will be paying cash.

Of those polled, 45.1% reported their holiday shopping budget will be between $100 and $500, making bargain hunting a vital part of holiday shopping, said GCUA (Consider This Nov. 2). Another holiday survey from Accenture found 40% of consumers indicated that having a sale on an item is the most important factor in their buying decision, said GCUA.

In the GCUA poll, more than three out of four respondents said they plan to use cash for their holiday purchases, which may lead consumers to begin shopping later than usual. GCUA noted that some major retailers are reintroducing layaway service for the holidays.

Fewer members are saving in advance for the holidays, according to Sherry Hutchison, executive vice president of HALLCO Community CU, Gainesville, Ga.  This year the credit union has 519 Christmas Club accounts, compared with last year's 536. In dollars, members have saved $469,000 so far and there are still a few weeks before they funds transfer from the club accounts to their savings. That compares with last year's $490,000 total transferred.

Hutchinson said Christmas Club accounts have declined steadily since 2007, and members are withdrawing funds from the accounts before the transfer date to pay for emergency expenses.

Another Georgia credit union, Robins FCU in Warner Robins, noted some reluctance among members to borrow or use credit cards for holiday expenses the past few years.  Robert Dyal, vice president of business services and lending at Robins, noted that many members won't spend as freely this year, but he expects loan demand to be similar to the past two years.

He advised consumers to look ahead to the 2012 holiday season and save early in the year  or save a specific amount from each pay period to deposit into a savings account.  He also suggested opening a 12-month share certificate for holiday purchases. Members can't take their savings out of it until just in time for the holiday spending, he said.