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CUs offering ways to save through economy

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MADISON, Wis. (11/5/08)--With consumers reviewing household budgets and hunkering down to weather a possibly long recession, credit unions are trying to make it as easy as possible for their members to save. At least two are providing special promotions taking the economy into account. Georgia's largest credit union, Delta Community CU, Atlanta, introduced a 12-month StandingStrong CD with what it says is one of the market's highest annual percentage yields (APY)--4.50%. That compares with the nation's one-year CD average of 3.59%. The certificate has a minimum deposit of $1,000 and there's no cap on the amount. All deposits are insured by the National Credit Union Administration's (NCUA) NationalCredit Union Share Insurance Fund. "Our strong financial position allows us to offer a safe, secure short-term growth product at an attractive rate," said Rick Foley, president/CEO, in a press release (MarketWire Oct. 31). "It is exactly what consumers are looking for in light of their loss of confidence in the stock market and retirement funds." He noted the deal has the best of both worlds: maturity that can generate noticeable interest and the assurance that the money is safe. In Walnut Creek, Calif., $1.109 billion asset Pacific Service CU is offering a higher-yielding insured investment to let members escape from Wall Street bailouts and the volatile stock market. The "Great 8scape" certificate is an eight-month certificate featuring a tiered-rate structure with higher rates for larger balances. It can be purchased as an Individual Retirement Account (IRA) and is insured for up to $250,000 by the NCUA. "In this current environment of low-rates and unpredictable stock returns, we are pleased to offer a safe, sound and insured savings product with a guaranteed rate of return," said Steve Punch, president of Pacific Service CU. Rates on "Great 8scape" certificates vary depending on the amount deposited. As of Oct. 23, APYs offered were 3.25% for balances under $50,000; 3.40% for balances between $50,000 and $99,999; and 3.60% for balances over $100,000. The certificates can be opened for $1,000 minimum balance and $500 when opened as an IRA certificate. Members age 23 and under can open the certificate with as little as $100, the credit union said.

Maryland fin lit task force in first meeting today

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COLUMBIA, Md. (11/5/08)--The Maryland Financial Literacy Task Force--created earlier this year by a state law advocated by the Maryland and District of Columbia Credit Union Association (MDDCCUA)--will conduct its first meeting today. Credit unions have two representatives on the task force, Bert Hash, president/CEO of MECU, Baltimore, and Thom Beck, MDDCCUA Board member and president/CEO of Montgomery County Teachers FCU. They will advocate for measures to make financial literacy education part of the school curriculum in Maryland, said MDDCCUA (FOCUS Newsletter Nov. 3). In April, Maryland Gov. Martin O’Malley signed legislation creating the task force, which received overwhelming support in the legislature, said MDDCCUA. The task force’s mission is to recommend ways to increase Marylanders’ level of financial knowledge and promote financial literacy education in Maryland’s schools. The bills were sponsored by State Sen. C. Anthony Muse of Prince George’s County and State Delegate Dana M. Stein of Baltimore County. The task force is comprised of representatives from the General Assembly, credit unions, banks, teachers’ unions, financial regulators, consumer groups and educators.

Celebs head All-Star Golf for the Gulf lineup

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FARMERS BRANCH, Texas (11/5/08)--A Golf for the Gulf tournament Nov. 18, featuring celebrity golfers, will benefit the Texas Credit Union Foundation’s (TCUF) Hurricane Ike Phase II disaster relief efforts. Baseball Hall of Famers Harmon Killebrew and Ozzie Smith, Babe Ruth Award-winner Bert Campaneris, former Dallas Cowboy Billy Joe Dupree, and country and western recording star Charley Pride--who played in the 1950s Sox Negro league, will headline the celebrity roster. Major leaguers Rob Nen, Tim Worrell, Frank Quilici, Frank Kostro, and Eddie Bonine will round out the current-player list. CUNA Mutual Group announced its sponsorship last week, joining Southwest Corporate FCU, CO-OP Financial Services, Bluepoint Solutions, ASI/ESI, U.S. Central FCU and Pulse. “This is a great opportunity to support a very important cause,” said Dick Ensweiler, president/CEO of the Texas Credit Union League. “The credit union community has been quick to respond to the initial disaster needs, and we know the response will be there for the longer-term needs as well.” The foundation’s Phase II grants will be used to assist the longer-term needs of credit unions employees with the most severe damage and losses. TCUF already has provided more than 950 grants, totaling about $495,000, to individuals who work for credit unions in the affected areas. However, the number of people who lost their homes is significant, the foundation said.

Speaker Biz services strategy needs five steps

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PORTLAND, Ore. (11/5/08)--About 20 million U.S. small businesses are clearly underserved by banks, and that spells opportunity for credit unions, according to a financial services consultant who spoke at a seminar for the credit union industry. Larry Middleman, president/CEO of CU Business Group, spoke to a crowd of about 70 at Southwest Corporate FCU’s first Member Business Services seminar last week in Dallas. “One single business relationship offers tremendous opportunities,” Middleman said. “Typically, a business uses double the number of financial products a consumer does. In addition, credit unions have the ability to market to the business owners as well as their employees.” Middleman emphasized the importance of developing a business services strategy that encompasses:
* Understanding what businesses members want; * Finding the credit union’s niche; * Demonstrating the credit union’s commitment to business services; * Hiring and developing the right expertise; and * Diversifying the business loan portfolio.
Finding a niche is an area in which credit unions can improve, Middleman said. “Credit unions can define their unique qualities by developing a ‘30-second spiel’ that highlights their competitive advantages,” he added. “Then, employees can more effectively respond to business owners when asked why they should do business with their credit union instead of a bank.” CU Business Group LLC provides business lending, deposit and consulting services to credit unions nationwide. Partnering with 11 corporate credit unions, eight of which are owners, CU Business Group provides strategic and technical expertise to a business lending to credit unions.

Op-ed CUs are model of what went right in economy

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CHAMBERSBURG, Pa. (11/5/08)--Credit unions' conservative approach to business has credit unions standing in good stead during the nation's financial crisis, according to a Pennsylvania credit union CEO in an opinion editorial in a local newspaper. "We can expect that credit unions will serve as one of the few models of what went right in the financial services industry when so much else went wrong," said Peggy J. Bosma-Lamascus, president/CEO of Patriot FCU in Chambersburg, Pa. The comments appeared in Public Opinion Online (Nov. 4). Bosma-Lamascus noted that the Chambersburg area has numerous local financial institutions to choose from, and that local leadership and investment means quicker, sounder decisions on services that specifically address the financial needs of local individuals and businesses. She outlined credit unions' difference in structure. "Because the cooperative structure of credit unions does not encourage excessive risk taking, credit unions have a history of conservative lending practices. This conservative approach has positioned credit unions to experience a very low average net loss rate. Nationally 99% of credit unions loans are current and paying," she wrote. Credit unions assisted consumers during the Great Depression, and as the current economy recovers, "will continue to be there for our members," Bosma-Lamascus said. Meanwhile, "credit unions continue to be safe, consumer-friendly financial service providers that offer consumers with alternatives to for-profit financial institutions," she wrote. For the full article, use the link.

CUNA Lending Council names exec committee

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MADISON, Wis. (11/5/08)--The CUNA Lending Council announced its new executive committee and officers during the council’s 14th annual conference Sunday through Wednesday in Orlando, Fla. Lloyd Gill, executive vice president and chief lending officer for City County CU, Ft. Lauderdale, in Margate, Fla., was named the new chair. He replaces Philip Greer, senior vice president of loan administration for State Employees’ CU, Raleigh, N.C., who stepped down from the committee after reaching his term limit. Aaron Bresko, vice president of lending, BECU in Tukwila, Wash., is the new vice chair. Bill Vogeney, senior vice president and chief lending officer, Ent FCU, Colorado Springs, Colo., is the new secretary/treasurer. Incumbent Vicki Lovett, vice president of loan operations, Suncoast Schools FCU, Tampa, Fla., and newcomer Chuck Anderson, executive vice president of business lending for Arizona State CU, Phoenix, were voted into the two open seats on the committee. Rounding out the board are:
* Claire Ippoliti, vice president of lending, Philadelphia FCU; * Dana Rawlings, senior vice president and chief operations officer, Smart Financial CU in Houston; * Michael Long, vice president of lending, UW CU in Madison, Wis.; * Keith Reynolds, vice president of lending and business services, CEFCU in Peoria, Ill.; and * Bonnie Doolin, senior vice president of business development and lending strategies for the Massachusetts, New Hampshire, and Rhode Island Credit Union Leagues.

WOCCU 2 leagues to serve post-Katrina work force

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NEW ORLEANS (11/5/08)--Thousands of Hispanic construction workers, many of them new immigrants, along with the World Council of Credit Unions (WOCCU) and two state credit union leagues, are helping New Orleans rebuild in the aftermath of Hurricane Katrina’s devastation in 2005. Meeting the financial needs of those workers, many of whom send money home to families in Latin America, has created a new challenge for some New Orleans credit unions, said WOCCU.
From left, the Iowa Credit Union League’s Patrick Jury, the Louisiana Credit Union League's Anne Cochran, and World Council of Credit Union's Brian Branch find a sunny French Quarter street corner to discuss Hispanic outreach efforts in New Orleans. (Photo provided by World Council of Credit Unions)
This week, the credit unions are learning how to better reach this rapidly growing demographic through a united effort by WOCCU; the Louisiana Credit Union League (LCUL); the Iowa Credit Union League (ICUL) and its subsidiary Coopera, designed to serve immigrant and emerging populations; and Caja Morelia Valladolid, one of Mexico's largest credit unions. “Membership levels have been stagnant for Louisiana's credit unions," said Anne Cochran, a WOCCU director and president/CEO of LCUL, which is spearheading the state's Hispanic outreach efforts. “I'd like to see our credit unions take advantage of this opportunity to grow." The need for workers following Katrina's destruction raised the level of New Orleans' Hispanic population from an estimated 15,000 to more than 50,000, and perhaps to as many as 100,000, according to data collected by Coopera, whose staff works with Iowa credit unions to serve that state's growing Hispanic population. The transience and number of unregistered citizens in Hispanic communities make precise numbers difficult to measure. Nearly 50% of New Orleans’ Hispanics work in the city's construction industry. “There is some parallel to the way you reach out to underserved populations of all types," said Patrick Jury, president/CEO of ICUL. “In Iowa, we try to be part of the thought leadership when Hispanic and immigrant issues come up across the state." LCUL's efforts to reach Hispanic members preceded Hurricane Katrina's arrival, according to Brian Branch, WOCCU executive vice president and chief operating officer. The new initiative broadens the scope of those efforts, in terms of reaching larger numbers of Hispanics and involving more Louisiana credit unions, he added. Also, the collaborating organizations bring new insights, WOCCU said. In Iowa, Coopera and ICUL defined a business methodology to reach this market profitably and it will likely have applications in Louisiana. Caja Morelia Valladolid’s input will help Louisiana's credit unions seem approachable and user friendly to immigrants. “With the need for credit union growth becoming more crucial, especially in the face of the ongoing economic crisis, now is the time for the Louisiana league and its credit unions to step forward and reach out to this group,” Branch said. In addition to LCUL, WOCCU, and ICUL staff, leaders in this week's educational sessions for New Orleans credit unions include Coopera staff members Warren Morrow and Miriam de Dios, and Jesus Ortiz and Ismael Medina from Caja Morelia Valladolid. Initial progress could appear slow, warned Jury. “When you undertake an initiative like this, it takes some time to see the needle move on progress,” said Jury. “There have to be financial--as well as philosophical--reasons for credit unions to undertake this effort. It’s important to keep in mind what will constitute success, then strive to attain those goals.”

CU System briefs (11/04/2008)

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* DES MOINES, Iowa(11/5/08)--Seventeen New York credit unions completed a six-month interactive, Hispanic outreach training program to provide a framework for growing by outreaching to the Hispanic market. Coopera Consulting, an Iowa-based consulting firm focused on Hispanic market strategies, partnered with the Credit Union Association of New York to prepare and educate credit unions on how to grow in the Hispanic market through Coopera's 4Ps educational framework: Personnel, Products, Processes and Promotion/Marketing. Through webinars and workshops, the credit unions developed an outreach plan for growth through the Hispanic market. Coopera will work with those that are ready to implement their plans … * WARRENVILLE, Ill. (11/5/08)--Members United Corporate FCU has appointed Jeannine Smith of Albany, N.Y., as vice president of public relations, a newly created position out of the corporate's Albany office. Smith will direct and oversee the corporate's public relations office, including publications and written materials, and will implement the corporate's national media relations plan. She was previously a self-employed public relations consultant. Smith also served as director of communications for Samaritan Counseling Center of the Capital Region and at The Albany Academy … * FRISCO, Texas (11/5/08)--Texans CU and Frisco (Texas) Independent School District are celebrating the opening of a new student-run credit union branch at the district's Career and Technology Center. Four students will earn credit by working at the credit union with a Texans' operations manager throughout the year. The center branch and ATM will be open during school hours for students, teachers, administrators and the public. The new branch is part of Texans' three-part plan to assist with teaching money management to students. From left, Jill Blevins, Jessica McDonald and Michele Canatela, greet parents, students and other school officials at the CTE Center Open House.(Photo provided by Texans CU) …

Reg Z alternative addressed at CUNA Lending Council

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ORLANDO, Fla. (11/5/08)--Credit union advocates have submitted an alternative to the Federal Reserve Board’s proposed changes to Regulation Z. It would address the Fed’s concerns over disclosure, yet ensure the benefits of multi-featured, open-end lending are maintained, according to CUNA Mutual Group.
Bill Klewin, associate general counsel, CUNA Mutual Group, addressed CUNA Lending Council conference attendees Monday about the Federal Reserve Board’s proposed changes to Regulation Z and its impact on credit unions. (Photo provided by CUNA Mutual Group)
Bill Klewin, associate general counsel, CUNA Mutual Group, told attendees of CUNA’s Lending Council that Credit Union National Association (CUNA) and CUNA Mutual representatives have met with Fed staff to discuss the Fed’s belief that more disclosure for consumers is needed in the lending transaction. Fed staff believe loan transactions for autos and boats--and in general, bigger consumer loans--need more disclosure at the time the transaction is consummated. The Fed believes increased disclosure benefits consumers’ ability to make a choice in selecting a lender, Klewin said. The alternative proposed by CUNA Mutual and CUNA, and supported by the Consumer Federation of America, would provide members with more information on payments, finance charges and borrowing amounts. Credit unions have used multi-featured, open-end lending as their preferred method to make non-real estate, secured loans for more than 25 years. About half of all credit unions use this lending approach and about 60% of credit unions with assets of more than $100 million in assets use this approach as their primary method of consumer lending, Klewin said. The Fed proposal would put credit unions’ multi-featured, open-end lending in jeopardy. Open-end lending allows credit unions to establish long-term borrowing relationships by providing loans how and where the member wants from their credit union. The proposal would eliminate the convenience members desire and differs from closed-ending lending, which is characterized by disclosures and processes that require the lender and borrower to close loans at the branch, thus stemming the convenience. “We estimate if multi-featured, open-end lending went away and credit unions had to switch to closed-end lending it would cost the industry $350 million for compliance costs alone to make the switch,” Klewin said. “And that doesn’t include ongoing expenses associated with costs related to the greater length of times for closing. Under the alternative, we believe the disclosure issue concern will be addressed and the associated cost would be lowered to $5 million to 10 million,” he added. When the final rules may be issued is unknown, Klewin said. CUNA Mutual is working on compliance and lending adjustments that credit unions may need to make as a result of any changes in the lending transaction. “Why are we pushing this issue with the Fed? Without any changes to the Fed’s proposal, credit unions will be forced to switch to closed-end lending for many of their consumer loans,” Klewin said. “It would have tremendous expense ramifications to credit unions and adversely affect their service and competitive capabilities.”

Used-auto loan drive accelerated by grant

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CHICAGO (11/5/08)--The National Credit Union Foundation (NCUF) has
Immigrants Caroline Anugioba and her son stand by their 2002 Hyundai Santa Fe financed in 2008 at North Side Community FCU in Chicago. (Photo provided by the National Credit Union Foundation)
approved a $35,000 Innovation Grant to accelerate North Side Community FCU’s drive to help more low-wealth borrowers afford cars. In an underserved area where many subprime auto lenders charge higher rates than the 18% federal usury limit, North Side Community FCU in Chicago will use the grant to reach members who need to refinance subprime loans. The credit union also will target “upside down” loans, where members’ outstanding balance exceeds their car’s value. The $7 million asset credit union also will:
* Purchase quarterly reports from Trans Union to identify members who have auto loans with other lenders; * Partner with Payment Reporting Builds Credit (PRBC) to acquire a list of all “thin-file” credit reports that show a recent credit inquiry from auto dealerships on Chicago’s north side; * Consider offering credit enhancements that would protect each borrower and the credit union: such as guaranteed asset protection (GAP) insurance, mechanical breakdown insurance, disability and job loss insurance; * For “upside-down” borrowers with strong job histories and adequate credit histories, consider financing over 100% of their car’s value with GAP insurance added to the loan pricing.
Successful models will be incorporated into NCUF’s signature program, REAL Solutions. North Side Community FCU is one of hundreds of credit unions offering affordable products and services through REAL Solutions, NCUF said.