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Ill. Governors Advisory Board provides CU dialogue

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NAPERVILLE, Ill. (11/5/10)--The Illinois Governor's Board of Credit Union Advisors (GAB), the state's only statutory committee focused directly on the credit union movement, met Oct. 28 in Chicago to discuss foreclosure environment, loan modifications and state-chartered credit union trends, among other topics. The seven-member GAB is appointed by the governor to consult with, advise and make recommendations to the governor and the director of the Division of Financial Institutions (DFI) on credit union matters. It also advises upon appointments and employment of personnel related to supervision and regulation of credit unions. The GAB is an opportunity for the Illinois Credit Union League (ICUL), state regulators and credit unions to enter a dialogue about critical current issues, said the league. At the meeting, Illinois Department of Financial and Professional Regulation (IDFPR) summarized its activities, including its focus on the state's foreclosure environment. DFI Acting Assistant Supervisor Brad Losch and David Anderson, acting problem case officer, presented a statistical summary of state-chartered credit union operating ratios and trends, with insight and guidance provided by DFI Director Robert Meza and Lindsay Hanson-Anderson, the governors's legislative director. Stephen Olson, ICUL executive vice president, general counsel and chief operating officer, provided a federal and state legislative and regulatory update to the group. After the formal presentations, the group focused on loan modifications and how state regulators evaluate credit unions during the examination process on the standards used in extending loans and altering payment terms. Meza asked the league to host educational sessions so credit unions can share information and best practices on this topic. The league said it plans to offer these in the next couple of months. The group also discussed funding for the IDFPR. The Credit Union Section of the DFI is supported by credit union regulatory fees, not the state's general revenue fund. The discussion indicated that potential restructuring of the super agency will be addressed during the 2011 spring legislative session of the Illinois General Assembly. Consensus was expressed that the GAB should submit a letter to the governor identifying the preservation of the independent credit union regulatory function as an important goal. Board member Bohdan Watral, CEO, Selfreliance Ukrainian American FCU, Chicago, expressed concern about the financial impact of these issues in light of corporate stabilization. He emphasized that "credit unions need to maintain their viability." "This was a very important and informative dialogue session," said GAB Chairman Peggy Cummins, CEO of Three Rivers Community CU, Mount Carmel. "I would really like to encourage credit unions to take more interest in these meetings." ICUL said the meetings are particularly beneficial since Illinois is home to the largest number of state-chartered credit unions in the nation--297--and is a leader in advancing the interests of state-chartered institutions. The meetings also provide ICUL an opportunity to highlight its legislative and regulatory agency on behalf of those credit unions. It works closely with IDFPR, through DFI, the league said, to help provide a favorable operating environment for its affiliates. "The open dialogue and positive working relationship we have experienced with the GAB and the DFI have been extremely productive, especially during this current, very challenging economic and regulatory environment for credit unions," said ICUL's Olson. "The GAB meetings provide a great venue to not only share critical information but also to have a dynamic, open dialogue among credit unions, the agency and ICUL to better understand mutual concerns." In addition to Cummins and Watral, GAB members include:
* Alice Clements, director, Consumers Cooperative CU, Waukegan; * Brian McDaniel, director, Argonne CU, Romeoville; * Helen Young, board member, CEFCU, Peoria; * Karen Woods, marketing manager, Decatur Earthmover CU, Decatur; and * Ray Rogers, internal auditor, DHCU Community CU, Moline.

Leagues assess election results in five states

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MADISON, Wis. (11/5/10)--Leagues across the nation are taking stock of state election results and assessing how the results may impact credit unions and how well candidates who were credit union friends fared. The Maine Credit Union League reported a 91% success rate, with 95 of 106 candidates endorsed by the league and credit unions winning their races. Seven endorsed candidates in the Maine House were still waiting results of their races. All four credit union board members running in the Maine House were victorious--Rep. Herb Clark, vice chair of Katahdin FCU, and Rep. Michael Lajoie, vice-chair at Lewiston Municipal FCU, were both re-elected, while Ken Fredette, board member at Sebasticook Valley FCU, and John Picciotti, chair at KSW FCU, won their House races. "Because of our strong bipartisan support of candidates from both parties, the league and Maine's credit unions are well-positioned when the new legislature convenes in January," said John Murphy, league president. "Despite all of the uncertainty with the elections, [the league and credit unions] had a very strong night at the ballot box," he added. "Having four credit union board members in the Maine House is a significant achievement." The Missouri Credit Union Association (MCUA) noted that the Missouri Senate is now composed of eight Democrats and 26 Republicans while the Missouri House has 106 Republicans and 57 Democrats (The Missouri difference Nov. 3). Two Democratic incumbent credit union supporters in the Missouri Senate--Frank Barnitz and Wes Shoemyer--lost their races to former state representatives ,while five Democratic supporters in the state house--Vicki Lorenz Englund, Sam Komo, Jeff Roorda, Michael Frame and Luke Scavuzzo--lost their races. "We're fortunate to have supporters on both sides of the aisle in the General Assembly," said Peggy Nalls, MCUA senior vice president of public and legislative affairs. "In this election, we saw national issues affect local voting significantly more than we've experienced in the past 15 years. That benefited Republican challengers. Republicans remain in the majority in the Missouri Senate and House … just by a greater margin." The North Carolina Credit Union League noted that Republicans made great gains in the state House and Senate as the state faces another year of budget shortfalls running in the billions of dollars (Decision 2010: What's Next for Credit Unions? Nov. 3). For the first time since 1898, Republicans control the North Carolina Senate, said the league. "Although there is a new political landscape in both Washington and Raleigh, the [league] will continue to work with all lawmakers to ensure the needs of our state's credit unions and their members are met," said the league. As the state General Assembly and U.S. Congress begin their sessions, "league and [Credit Union National Association] staff will be discussing the interests of credit unions with both old friends and new faces alike." In Pennsylvania, the Pennsylvania Credit Union Association (PCUA) noted Republicans were victorious on the state-level elections and will control the governor's office as well as both chambers of the state legislature. Attorney General Tom Corbett won the gubernatorial race by a vote of 54% to 45%, and Bucks County Commissioner Jim Cawley will take the lieutenant governor's spot (Life is a Highway Nov. 3). "The association, along with its outside lobbyist and member credit unions, had frequent communication with the Corbett campaign," said PCUA President/CEO Jim McCormack. "We hope to play a role in the transition, particularly with respect to the Department of Banking and financial services matters." In Ohio, Republicans gained 13 seats in the House of Representatives and will continue to control the Ohio Senate with a 23-10 majority. Long-time credit union champion State Rep. William G. Batchelder, who sponsored the recodification of the Ohio Credit Union Act and co-sponsored a public funds deposits measure in 1986, is expected to become Ohio House Speaker , said the Ohio Credit Union League's 2010 Election Insight Update (Nov. 3). In the Ohio Senate, Sen. Tom Niehaus is expected to be named the new Senate president. Niehaus has visited several credit unions and is always willing to discuss issues, said the league. The next legislative session will see at least 40 new members in the Ohio House . The league plans to host meetings to educate new members about credit unions and their legislative issues and priorities, and regular interactions will be continued with credit union friends still in office. "The 129th General Assembly will be presented with many challenges due to the continued stresses on Ohio's economy, a considerable state budget shortfall, high unemployment, and changes in the statewide offices and the General Assembly," said the league. "In turn, this will also present challenges for credit unions, as well as opportunities to participate in programs and initiatives regarding business lending, consumer lending, and financial education," it added. All the leagues in this story said they are taking measures to meet with the electees and leaders of both parties so they can educate about credit unions and their issues.

Small CU to merge with CBC FCU

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OXNARD, Calif. (11/5/10)--CBC FCU in Oxnard, Calif., announced it will merge with the small Civic Arts Plaza FCU in Thousand Oaks, Calif. The boards of the $349 million-asset CBC FCU and the $11 million asset Civic Arts Plaza FCU agreed to a deal Oct. 27 that will be completed Dec.1 (Ventura County Star Nov. 4). The merger is confirmed on CBC FCU’s website. Civic Arts Plaza FCU will become a branch of CBC FCU in east Ventura County, Kelly Baker, CBC vice president of business development, told the newspaper. CBC sought the merger at a time when small credit unions are struggling with rising loan delinquencies and assessments, Baker said. “It was just a good fit for us to expand our branches,” she told the paper.

CU System briefs (11/04/2010)

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* KANSAS CITY, Mo. (11/5/10)--Joyce Buchanan, 56, former branch manager of Media First CU (now First Financial CU), was sentenced to two years for embezzling nearly $400,000 from the Kansas City-based credit union, which serves employees of the Kansas City Star. U.S. District Judge Scott O. Wright also ordered Buchanan to pay $406,151 in restitution. Buchanan pleaded guilty in May to falsely representing to the credit union that she had made $198,553 in loans to members. Instead, she made the loans payable to herself in the form of cash and checks she wasn't entitled to receive. She also made $426,678 in loans to non-members in violation of the credit union's policy. Of those loans, $268,115 have defaulted. Most of the fraudulent loans were made to her son, who worked for First Financial Lending Group (States News Service (Nov. 3) … * PHILADELPHIA, Pa. (11/5/10)--A U.S. District Court judge in Philadelphia has sentenced Shannon R. Hamilton, 40, formerly of East Stroudsburg, Pa., to 151 months in prison for four bank robberies in Monroe County, Pa., between Dec. 9 and 29, and one credit union robbery--that of a Pinellas FCU branch in St. Petersburg, Fla.--on Jan. 6. Hamilton pleaded guilty to committing the robberies to obtain money to support a drug habit. He also was sentenced to three years' supervision after the prison term ends (States News Service Nov. 2) … * OMAHA, Neb. (11/5/10)--Jason D. McCain was sentenced in U.S. District Court in Omaha, Neb., to 100 months for a series of five robberies in Nebraska and Iowa, including the Dec. 16, 2008, robbery of Telco Triad Community CU in Council Bluffs, Iowa. The robberies occurred between March 1, 2007 and Dec. 24, 2009. McCain also was ordered to pay restitution totaling $71,129 and to serve three years of supervised release after his prison term. He was arrested in April and pleaded guilty on July 8 (States News Service Oct. 18) …

AVCU debuts fin lit concerts today

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SOUTH BURLINGTON, Vt. (11/5/10)--Heritage Family CU in Rutland, Vt., and the Association of Vermont Credit Unions (AVCU) will present Vermont’s first Concert for Financial Literacy today at the Stafford Technical Center in Rutland. Part of AVCU’s EconomyOfMe project, the Concert for Financial Literacy will feature musicians Scott McKenna and Nyke Van Wyk performing on the guitar and violin, while promoting financial literacy (Newslines Express Oct. 29). The concert will also kick off Heritage Family’s next step in the promotion of financial education at the Stafford Technical Center & Rutland High School. The credit union has worked with the center for more than a decade through Heritage Family’s student-run branch. It will enter the classroom to provide a starting point in financial education for every student. Earlier this year, Heritage Family launched, a website featuring articles, videos and more, with the purpose of educating teens. “A solid financial education as early as possible is so important for students being successful with their finances later on,” said Mark Grossarth, Heritage Family’s assistant vice president of marketing. “Now, we are looking forward to working with Stafford to help prepare every student, not just the ones involved with the student credit union, for the real world with an introduction to financial education and continued opportunities to increase their literacy.”

Diversify non-interest income sources--online speaker

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MADISON, Wis. (11/5/10)--Diversifying the revenue sources for non-interest income can help credit unions boost overall earnings, CUNA Mutual Group’s Bob Larson told participants of the Web-based Online Discovery Conference. Larson, a financial support consultant, said current market conditions and new regulations are hitting return on average assets. In addition, credit unions face shrinking auto loan portfolios and rising delinquencies and charge-offs, Larson said. Overcoming these challenges to profitability requires developing new and different sources of revenue, he said. Larson recommended creating an internal work group to scrutinize the credit union’s income statement and assess income-generating sources based on where they are in the product lifecycle and whether revenue can be enhanced. One option for creating higher revenue is increasing plastic card use to boost transaction income. Larson said cash-back and reward programs can work, but the cost must be justified by increased use. Another option is increasing “conversation fees,” a term used to describe the revenue generated by employee cross sales to members. Credit unions can generate revenue by selling credit insurance, guaranteed asset protection (GAP) policies, debt protection, mortgage-related products and other insurance products, he said. Selling these conversation-based products requires creating a consultative sales culture. Larson said that means sitting down with members, listening to their needs and then finding solutions. Strong communications must be backed by accountability and a tracking system. Finally, credit unions must recognize that building a consistent revenue stream from marketing insurance takes time. Currently, debit and credit card interchange fees and non-sufficient funds/courtesy pay fees together generate 58 cents of every $1 of interest income, he said.

Southwest Bridge Corporate offers shopping tool

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PLANO, Texas (11/5/10)--A new online tool, called the Resource Analyzer, will help credit unions determine the value of Southwest Bridge Corporate’s products and services, the corporate said. Southwest Corporate was placed into conservatorship by the National Credit Union Administration in September and was re-established as a bridge corporate. A Southwest Bridge Corporate task force was established and will make recommendations on the corporate’s future structure. The Resource Analyzer provides a detailed review of the features and benefits of seven key services: Settlement, Automatic Clearing House (ACH), Funds (Wire) Transfer, Line of Credit, Share Draft Processing, Remote Deposit, and Image Deposit Returns. One important function of the Resource Analyzer is to spotlight benefits that may be hard to find elsewhere, said the corporate (e-FACTS Nov. 2). Each service module categorizes questions and answers in a hide-and-reveal format under broad headings: General Considerations, Features, Implementation, Training, Service and Pricing. The Resource Analyzer is designed to give credit unions the ability to cut and paste the questions directly into a request-for-proposal (RFP) document. The corporate’s Resource Analyzer addresses several topics:
* The corporate’s providing an automatic advance from member credit union lines of credit to cover daylight overdrafts on settlement accounts; and * Its maintaining a Fedline Advantage connection on behalf of its members, saving individual credit unions the time and expense of dealing directly with the Federal Reserve.
For more information, use the link.

New MCUA president kicks off statewide meetings

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ST. LOUIS (11/5/10)--New Missouri Credit Union Association (MCUA) President/CEO Mike Beall this week kicked off a series of meetings with credit union presidents and managers across the state. Beall began his tenure as president/CEO on Monday. "Despite a tough environment, there is a lot that Missouri credit unions can do for hard-hit working families," he said (The Missouri difference Nov. 3). "I hope to meet with as many leaders as possible in the coming weeks. His first meeting with credit unions was Wednesday in Springfield. He will meet today with the Southeast Chapter Presidents/Managers in Sikeston. Other meetings will include:
* Monday: St. Louis Chapter Presidents/ Managers Continental Breakfast Meeting in St. Louis; * Tuesday: Northeast Chapter Presidents/Managers Lunch Meeting in Mexico and a Central Chapter Meeting in Jefferson City; * Wednesday: Northeast Chapter Meeting, Bevier; and * Nov. 16: St. Joseph Chapter Presidents/Managers Lunch Meeting, St. Joseph, and Kansas City Chapter Meeting, Kansas City.
Beall previously served as president/CEO of the Maryland and District of Columbia Credit Union Association. He replaces Rosie Holub, who retires in December.

CUs can sustain growth if they adapt to new normal

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MADISON, Wis. (11/5/10)--Credit unions can develop sustainable business models that adapt to the “new normal” of both current and future economic shifts, according to John Lass, CUNA Mutual Group’s senior vice president of strategy and business development. Speaking to participants in the Web-based Online Discovery Conference, Lass said it is vital for credit unions to develop long-term business models that adapt to the changing environment produced by the recession. Examining the macro-economic trends related to savings rates, household debt and interest rates is essential to see the big picture, Lass said. As spreads and return on assets (ROA) are challenged, credit unions must reconsider their dependence on interchange and overdraft fees, he said. Lass recommended that credit unions use the DuPont Sustainable Growth Model to help plan their future. The model provides a framework for measuring and breaking down return on equity. Lass said credit unions can pull six “levers” to manage their business. Revenue levers include spread and fee income, while expense levers include loan loss and operating income. There are also asset turnover and leverage levers. Credit unions must weigh which levers offer the greatest control as they seek to develop a harmonious approach to managing all six levers at once, Lass said.