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CU System briefs (12/11/2012)

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  • PORTLAND, Maine (12/12/12)--A woman who pleaded guilty to driving the getaway car in five bank and credit union robberies in Portland, Maine, earlier this year has been sentenced to more than four years in prison (Associated Press Newswires Dec. 11).  Maria Mattson, 31, of Westbrook, Maine, also was sentenced to three years of probation.  She was charged with aiding and abetting bank robbery, conspiracy to commit bank robbery and aiding and abetting interference with commerce by robbery.  Her co-defendant, Paul  Sans, 30, Westbrook, pleaded guilty in October to several counts of bank robbery and will be sentenced in January.  The robberies occurred in January and February and included robberies of Orono-based University CU's Portland branch; Portland-based TruChoice CU, and Portland-based Evergreen CU's Windham branch (News Now Aug. 3) …
  • ATLANTA, Ga. (12/12/12)--A former postal workers union official pleaded not guilty in a federal court in Macon, Ga.,  to embezzling more than $13,000 from the union's Athens local and submitting false statements to get a loan from a credit union in the union's name.  Joseph Allen was charged with fraud that allegedly occurred between October 2005 and May 2008 while he was treasurer of Local 588 of the National Association of Letter Carriers in Athens.  According to court documents, Allen allegedly used the union's name to obtain a $10,000 loan from Atlanta Postal CU and allegedly submitted fabricated minutes of a meeting in which union members allegedly approved applying for a loan. No meeting was held. He is charged with one count each of bank fraud, making a false statement to a credit union and filing a false report, and six counts of embezzlement  (Athens Banner-Herald Dec. 5) …

CEFCU Wright-Patt announce 15M in dividends

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PEORIA, Ill., and FAIRBORN, Ohio (12/12/12)--Two credit unions--one in Illinois, one in Ohio--announced they have paid their members patronage dividends totaling a combined $15 million.

CEFCU in Peoria, Ill., distributed a record extraordinary dividend of $9 million to its members, based on their savings and loan activities during 2012. About $4.5 million went to borrowers and $4.5 million to savers.  The amount received by each member is determined by dividends earned and interest paid during during the first 11 months of the year, as of Nov. 30.

The dividends were distributed Tuesday. For the past 13 years, CEFCU has returned $63 million in extraordinary dividends to its members. CEFCU has nearly $4.8 billion in assets and serves more than 290,000 members.

Wright-Patt CU, based in Fairborn, Ohio, also announced it will pay more than $6 million in the form of a special patronage dividend to 230,000 members on Jan. 3.

This year's dividend represents an increase of more than $1 million over last year's dividend, said the $2.4 billion asset credit union. Since it began distributing dividends in 2008, the credit union has returned more than $22 million to members.

To be eligible, Wright-Patt members must be in good standing both currently and at the payment date. The amount depends on the number of service relationships the member has with the credit union.

Expect new wave of cyberattacks vs FIs

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MADISON, Wis. (12/12/12)--Banks are bracing for a new set of prolonged Denial of Service (DOS) cyberattacks. A group that claimed responsibility for global DOS attacks against about a dozen banks in September warned Monday it has targeted five big banks for electronic attacks soon.

The group, called al Qassam Cyber Fighters Group, said Monday it will target JP Morgan Chase, Bank of America, U.S. Bank, PNC Financial and SunTrust in phase two of an operation it began in September against banks in retaliation for a trailer shown on YouTube of an anti-Muslim film made in America (American Banker Dec. 11).

The attacks will increase in breadth and in the number, with repeated attacks, said a message posted on a computer programmers' website.

Already customers of BofA were reporting sporadic issues getting access to their online accounts Monday, with some reports trickling in Tuesday (Charlotte Observer Dec. 11). However, it wasn't known whether the al Qassam Cyber Fighters Group was responsible.  BofA was the first bank hit in the September epidemic.

The attacks in September were termed "unprecedented" because of their speed and scale. They flooded lines that connect banks to the Internet and prevented customers from gaining access to their accounts, said the Banker.  The U.S. government had said at the time the earlier attacks may have come from Iran.

PNC CEO James Rohr, in an interview on CNBC in October, said the bank had 38 hours of attacks on its systems--the longest attack amongst the banks targeted--and that the attacks "pummeled us"  (Pittsburgh Tribune-Review Dec. 11).

Other banks hit with that type of attack in September and October included BofA, Wells Fargo, U.S. Bank, JP Morgan Chase, Capital One and BB&T, said the Pittsburgh  newspaper.  The American Banker also named two other banks hit: HSBC and Regions Financial.

The attacks are not part of Team GhostShell, a group of hacktivists claiming responsibility for hacking into the websites of 30 companies, organizations, U.S. government agencies and trade associations, including the Credit Union National Association (CUNA), earlier this week. CUNA advised its website users that no sensitive information was accessed or otherwise compromised and it advised taking precautionary steps, such as changing their passwords for

Belvoir FCU prepares for fiscal cliff

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WOODBRIDGE, Va. (12/12/12)--Belvoir FCU, Woodbridge, Va., said Tuesday it will offer its members assistance loans in the event of a fiscal cliff.

Members can borrow up to $5,000 at an annual percentage rate of 4.99% for one year with a 60-day deferment, according to the credit union's website. Also, Belvoir FCU will facilitate loan workouts and skip-a-pay options for members so they do not default on their loans.

The credit union will provide financial coaching services to members in need of guidance.

The 2013 fiscal cliff refers to the U.S. economy succumbing to an estimated $600 billion in tax increases and spending cuts, which will automatically go into effect Jan. 1 unless Congress can come to an agreed-upon budget.

"We hope a fiscal cliff is averted and Congress comes to an agreement," said Patricia Kimmel, Belvoir FCU president/CEO. "However, if a compromise is not reached, Belvoir Federal stands ready to serve our members who are impacted by providing financial options and services to assist them during this challenging time."

New satisfaction index CUs top banks

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ANN ARBOR, Mich. (12/12/12)--Credit unions in the U.S. again topped banks in member/customer satisfaction levels, according to the most recent nationwide survey released Tuesday by the American Customer Satisfaction Index (ACSI).

Credit unions remain best-in-class for financial services and set the bar for customer satisfaction among all service industries covered by the ACSI. The survey has garnered coverage by national media, including CBS News, The Los Angeles Times and The Boston Globe.

However, as credit unions continue to welcome members who are leaving banks behind, the industry has not been able to sustain the same level of service as before: member satisfaction dipped 5.7% to 82, the survey said. That score is still five points higher than the banks' average of 79.

"The large influx of new customers for credit unions, many of whom left banks because of rising fees, poses new challenges for customer service," says Claes Fornell, ACSI founder and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. "The question becomes, How to best serve a fast-growing customer franchise? The more customers you have, the more difficult it gets."

Customer satisfaction with banks regarding checking, savings and loan services grew by 2.7% to 77, mostly due to client satisfaction for smaller banks. The nation's largest bank, JPMorgan Chase, was the only big bank to increase customer-satisfaction levels. Small banks--stable at an ACSI score of 79--continue to outclass large banks and capture market share because of it.

"As more customers move from large banks to smaller banks and credit unions, the overall customer satisfaction level for banks goes up as a matter of mathematics," says Fornell. "As the smaller banks do a better job with customers and therefore attract more of them, customer satisfaction for banks on the whole gets a boost."

JPMorgan Chase leads among big banks. With a 6% rise to an ACSI score of 74, the bank matches its prerecession result from 2007. Other big banks have to deal with deteriorating customer satisfaction. Wells Fargo slid 3% to 71, and Citigroup retreated 4% to 70. Bank of America (BofA) declined 3% to 66, reaching its lowest level of customer satisfaction in over a decade.

"The total fees from overdraft charges alone in 2011, most of them from big banks, amounted to more than $30 billion," says Fornell. "[Consumers] increasingly are rejecting the ever-mounting fees charged by large banks and taking their business to credit unions instead. BofA, in particular, stands out as the only bank that is still below its prerecession customer satisfaction level. It is clear that this is mostly because of fees. Customer satisfaction was probably set to deteriorate further as additional fees were in the making until a few weeks ago, when BofA backed away from the idea."

To read the ACSI survey release, use the link.

In a separate matter, credit unions in Seattle have passed BofA to become the No. 1 financial institution choice in the Seattle area (The Seattle Times Dec. 11).

Currently, 28% of Seattle-area households primarily conduct financial services with credit unions--up from 21.5% in 2008, according to research done by The Seattle Times news librarian Gene Balk. BofA fell to 23.9% from 29.7% in 2008. To read the blog post and financial institution statistics, use the link.

N J league MBLs important to Sandy recovery

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HIGHTSTOWN, N.J. (12/12/12)--In the wake of Hurricane Sandy, credit unions' push to raise their member business lending (MBL) cap and their opposition against banks' efforts to extend the Transaction Account Guarantee (TAG) unless married with MBL provisions have taken on new meaning for credit unions in New Jersey.

So wrote New Jersey Credit Union League President/CEO Paul Gentile in a column entitled "Many Small Businesses Left Crippled in Sandy's Wake; MBL Cap Increase Could Spur Recovery"  in CUinsight (Dec. 11).

Gentile noted that banks have no problem lobbying against raising credit unions MBL cap to 27.5% of assets from the current 12.25% while at the same time many avoid low-dollar business loans that credit unions thrive on.

"Here in New Jersey, we often see banks refer small dollar loans to credit unions. And vice versa, credit unions refer big dollar business loans to local banks. There's nothing wrong with that. That's good for the community." He said the banks' message on Capitol Hill "doesn't reflect what's happening on the ground."

"For us here in the great state of New Jersey, the hypocrisy of the banks' arguments against raising the MBL cap is particularly galling," he wrote.

"We will be dealing with the aftermath of Hurricane Sandy for many years, and there are thousands of small businesses on the New Jersey Shore and inland that have been devastated," Gentile wrote. "They need credit to get their businesses back up and running. Insurance policies have limits. FEMA caps out. These businesses need capital to get back in shape. In many cases the dollar amounts will be $200,000 and below. New Jersey credit unions are ready, willing and able to meet this need, but the cap looms and acts as a governor to small business growth," he continued.

To strongly oppose the new bank bailout while supporting MBL reform, Gentile said, credit unions must focus on their strong point: their structure and what it means to the member (value).

Gentile suggested continuing to tell the credit union story to lawmakers and change the arguments from what the agenda means for banks and credit unions, to what it means for consumers and businesses.

"Credit unions are good for consumers, small business and the overall economy," he said. "Anyone who argues against that is more worried about the bottom-line than spurring the economic growth the country so sorely needs."

The Credit Union National Association and the nation's credit unions are urging Congress to raise the MBL cap so they can inject $13 billion in new small business loans into the economy. Raising the cap would help create 140,000 new jobs in the first year, at no expense to taxpayers.

See related News Now story, "CUNA urgest CUs: Continue to oppose stand-alone TAG bill."

To read the full column, use the link.

Operations during mergers discussed in OpSS Council paper

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MADISON, Wis. (12/12/12)--A new white paper from the CUNA Operations Sales and Service Council outlines the tricky process of meshing operations during the credit union merger process.

"There are always going to be differences in your members, in your locations and in some products and services you offer," said Steve Miller, director of operations/senior analyst for Twenty-Twenty Analytics, Coral Gables, Fla., a CUNA Strategic Services provider. Miller is one of the experts interviewed in the paper, titled "Mergers from an OpSS Perspective." "You need to understand what the differences are and how both credit unions coming together can be better," he added.

The white paper shares merger leaders' perspectives on creating a combined culture; making key operations decisions; addressing human resources issues; communicating with employees, members and other audiences; and understanding the timeline for blending operations.

As merging credit unions make choices that affect culture, delivery channels and related issues, operations executives and managers are likely to be assigned the role of reconciling differences and creating a seamless experience for members. Shaping the member experience is a key part of the continuing credit union strategy and can be achieved only by resolving operational issues, the paper said.

"Every move you make is strategic," said Mina Worthington, president/CEO of $484 million Solarity CU, Yakima, Wash., which was created by a "merger of equals" between Catholic CU and Yakima Valley CU in 2011. "Every move must be thought through for all of the alternatives and everything that could happen."

Pre-merger due diligence typically delves deeply into the strength of the loan portfolio. But it also reveals critical information about cultural differences, operating differences, communication strengths and weaknesses, human resources and other issues. The operations teams can get a head start on addressing key issues through the information gathered by the due diligence process.

When a credit union is forced to merge, observers often assume it's due to bad loans. But several operations leaders noted that inefficient operations can also pull down financial performance and create an underachieving organization. Merging with a credit union with substandard operations can create multiple issues.

In situations where operations are troubled, all parts of the business must be analyzed and acted upon quickly to correct underperforming areas. At the same time, experienced merger leaders recommend a policy of being open and honest with the board, executives, and employees of the merging credit union about the challenges and changes implemented.

To download the white paper, use the link.

In-house vs as a service topic of Tech Council paper

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MADISON, Wis. (12/12/12)--A new white paper from the CUNA Technology Council, "In-House or 'As a Service'" examines how the roles of information technology (IT) professionals are shifting, along with ever-changing technology at credit unions.

There's no doubt that the cloud and virtualization are playing increasingly greater roles in credit union technology plans. Whether they use these options today or plan to within the next decade, credit unions agree the trend is toward off-site hosting, the paper said.

Credit unions today have to be even more technology-savvy, to ask service providers and partners the right questions and to stay on top of tech challenges and potential off-site problems, the council paper added.

It appears the key is to determine the right time to make the shift--considering each operational need as it arises, and balancing costs with control and security with flexibility. The ultimate goals are to serve members' needs and demands, while maintaining privacy and protection of members' personal financial information.

While this new landscape holds promise, it can also be risky, said Jay Liebe, executive vice president, development, for Switch Communications Group. Switch is a CUNA Strategic

Services alliance provider. Many vendors that provide cloud computing services

are new to serving financial institutions and providing infrastructures that deliver 100%

uptime, Liebe said.

Before outsourcing any IT functionality, Liebe says credit unions should ask vendors:

  •  Where is the data housed?
  •  What type of equipment is offered?
  •  How is the data center protected from security threats?
  •  Does the vendor's location protect the credit union's data?
  •  Who owns the data center and what is their area of expertise?
  •  How is the vendor preparing for growth?
  •  Is the company financially stable?
Due diligence is key, and inexperience can be risky, Liebe said.

To see the paper, use the link.

Minn CUs find ally in new congressman

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ST. PAUL, Minn. (12/12/12)--
Click to view larger image U.S. Rep.-elect Rick Nolan (D-Minn.), right, Friday discussed member business lending and supplemental capital with Minnesota credit union representatives, including, from left: Pat Pierce, president/CEO of City & County CU, St. Paul, and Tim Smith, president/CEO, Lake State FCU, Moose Lake, during a meeting coordinated by the Minnesota Credit Union Network. (Photo provided by the Minnesota Credit Union Network)
Newly elected U.S. Rep Rick Nolan (D-Minn.) has declared himself  "a big believer of credit unions," according to the Minnesota Credit Union Network (MnCUN).

"I have always been a big believer of credit unions--of your mission and of your work on behalf of consumers," Nolan said during an introductory meeting Friday with Minnesota credit unions. MnCUN coordinated the event to help form the foundation for a positive working relationship with Nolan.

Focusing on the issues facing the state's credit unions, the group highlighted the movement's advocacy efforts urging Congress to raise credit unions' member business lending (MBL) cap and to pass supplemental capital legislation.

Credit union representatives shared stories about small businesses they helped during the recession and highlighted how they could help more Minnesotans if the MBL cap were raised to 27.5% of assets from 12.25%. They told Nolan that raising the cap would create nearly 2,000 jobs in the state and enable credit unions to inject an additional $150 million available for small business loans in the state.

(The Credit Union National Association says that raising the MBL cap would generate $13 billion in new small business loans and generate 140,000 jobs in the nation.)

Nolan praised credit unions for their ideas and the role they play in their communities. He acknowledged how credit union operations differ from other financial institutions and applauded the state's credit unions for their work with small businesses.

"The congressman's values closely align with the credit union mission," said Mara Humphrey, MnCUN vice president--governmental affairs, noting that credit unions "look forward to working with him during the next congressional session."