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CU System briefs (12/12/2011)

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  • RYE, N.Y. (12/13/11)--USAlliance FCU, based in Rye, N.Y., announced the retirement of current President/CEO Michael F. Ambrose and the appointment of Kris P. VanBeek as his successor.  Ambrose served as CEO since May 2001. VanBeek was formerly senior vice president of information systems and risk management at Digital FCU, Marlborough, Mass. He has experience in several fields including e-commerce, real estate, commodity markets and financial services, and has founded and led two companies. He is a frequent contributor to industry magazines and serves on several advisory boards …

  • MADISON, Wis. (12/13/11)--Membership and staff growth has prompted UW CU to open a new retail branch near its corporate headquarters in Madison, Wis. The new location features branch and Investment Services offices that were relocated from its headquarters building. "Since 1995, our membership has grown from 69,000 to over 161,000, averaging about 13,000 new members per year," said Brad McClain, executive vice president and chief financial officer of the more than $1 billion in assets credit union. UW CU also has increased its work force to keep up with member needs.  "By relocating our retail branch services to the new building, we will accommodate space needs created by growth and make it possible for our corporate office to serve our needs for many more years," said Paul Kundert, president/CEO …

MidFlorida CU to acquire Space Coasts Tampa branches

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LAKELAND, Fla.  (12/13/11)--MidFlorida CU, based in Lakeland, Fla., announced it will assume the Tampa Bay-area branches, assets and membership of SpaceCoast CU (SCCU), Melbourne, Fla., pending approval from regulators and members.

The move represents a small portion of SCCU's branch network and is viewed as a spinoff rather than a merger, said (Dec. 12) and (Dec.9).

MidFlorida will take over six SCCU branches, three in Pinellas County and three in Hillsborough County. It already had expanded into the Tampa area last year with a merger withTampa-based Gulf CU, said The Ledger.

SCCU President/CEO Doug Samuels said the action is the result of the credit union's evaluation of how to serve its Tampa-area members. The options were to invest heavily in an expansion of the existing branch network or to seek a partner who would commit to developing this area, he told local media.

MidFlorida CU plans to retain existing staff. The membership vote is expected to be finalized March 31.  If approved, the spinoff would be completed on July 1.

Irish regulators change deposit insurance limit

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BELFAST, Northern Ireland (12/13/11)--Northern Ireland's credit union members will have their deposits protected up to 85,000 euros (roughly $112,000), said the country's Financial Services Authority (FSA) and Her Majesty's Treasury.

The change will go into effect March 31 when regulation of Northern Ireland's 177 credit unions is passed to FSA from the Northern Ireland Department of Enterprise and Investment ( Dec. 11 and Dec. 9).

With the move, credit union members will have the same protections as customers using banks, and will have access to the Financial Ombudsmen Service, Martin Stewart, FSA head of building societies and credit unions, told Banking Times.

FSA will help credit unions prepare for the transfer by hosting road shows in several Northern Ireland cities, Stewart added.

Pa. foundation ups number of CUs eligible for grants

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HARRISBURG, Pa. (12/13/11)--The Pennsylvania Credit Union Foundation (PCUF) Board of Directors has increased the number of small credit unions eligible for grants from the foundation.

The minimum assets for small credit union grantees will be $30 million in assets instead of $20 million, the board decided in a recent meeting.  That means 52 credit unions are now eligible for PCUF grants. 

The change was approved to bring small credit unions into line with the Pennsylvania Credit Union Association (PCUA) board governance changes recently approved by PCUA's board (Life is a Highway Dec. 12).

The PCUF board also approved its 2012 budget calling for $236,100 in revenues and $299,100 in expenses. Of total expenses, $130,000 is earmarked for grants and $99,100 for operations, leaving a net gain of $7,000 against revenues.

In other action, the board:

  • Approved 10 grants for a total of $130,050;
  • Decided to explore outside fundraising firms;
  • Heard presentations on a recent Reality Fair at the State Capitol, Pennsylvania Flood Relief Activities, new Community Investment Fund options available, and Haitian Task Force activities; and
  • Welcomed new board members Todd Cover, USSCO Johnstown FCU, Johnstown, and Carol Fastrich, AmeriChoice FCU, Mechanicsburg.

Mich. House OKs bill on 90-day foreclosure delay

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LANSING, Mich. (12/13/11)--Michigan's House of Representatives Thursday passed three bills that would reform the state's current 90-day foreclosure delay. Many of the reforms were sought by the Michigan Credit Union League (Michigan Monitor Dec. 12)

House Bills 4542, 4543 and 4544 included these provisions:

  • Establishes clearer timelines as to which actions must occur at points in the process for both lenders and borrowers to allow lenders to proceed immediately to foreclosure if a borrower is unresponsive to requests for certain documents. Borrowers would have 30 days, instead of the current 14, to contact their lender or housing counselor for a possible modification. Lenders with unresponsive borrowers have 60 days between sending a notice and proceeding to foreclosure. Previously there was no timeframe for lenders to send in the documents.
  • Holds borrowers responsible for damaging the property during the redemption period.  Every notice of foreclosure by advertisement must include language stating that if the property is sold at a foreclosure sale, the borrower will be held responsible to the buyer of the property or to the mortgage holder, for the damage.
  • Reduces the redemption period for properties larger than three acres from one year to six months, if the property is not deemed for agricultural use. This aligns the redemption periods for any residential property, regardless of size, to the six-month period.
  • Extends the sunset of the bill to Dec. 31, 2012. Originally the bill proposed a July 2015 sunset.
The league noted that the sunset date was shortened after opposition related to shortening the redemption period for portfolio loans by 90 days to make up for 90 days added onto the front end.  Although the bill, HB. 5176, was passed last week out of the House Banking Committee, groups such as the Michigan Association of Realtors argued that it would cut  the number of short sales completed.  The average short sale is about 179 days,  and realtors often need the entire redemption period to complete the sales, the league said.

The Michigan Foreclosure Taskforce, representing housing counselors and consumers in the foreclosure process, also opposed HB 5176, saying it was unfair to homeowners because it would create two different redemption periods based on whether they have a portfolio loan or a nonportfolio loan.

Lawmakers decided to continue looking into helping credit unions and community banks in the process and shortened the sunset date to ensure dialogue on the measure. The state Senate is expected to take up the bills next week  before it adjourns  Dec. 22, said the league.

What CUs should do with deposit influx from BTD

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MADISON, Wis. (12/13/11)--New members garnered from Bank Transfer Day (BTD) activities present a golden opportunity for credit unions to capture the attention of young people, according to a Credit Union National Association (CUNA) economist.

"What matters is what we do with them and to make them feel like they made a good decision," Mike Schenk, CUNA vice president of economics and statistics, told News Now.

Click to view larger image Click for larger view
BTD activities likely garnered 450,000 net new members (new members minus attrition--those who move or closed accounts) in September and October, according to CUNA estimates.  Despite the original CUNA estimate being revised, the bottom line is there were unusually high numbers of people joining credit unions, Schenk said.

"The numbers are large, but not overwhelming," he added. "For most credit unions, they are unlikely to cause significant bottom-line challenges. There are some credit unions, however, which will have to spend a lot more time thinking about the financial impacts."

That's because people are joining credit unions and bringing their deposits, which is causing relatively fast growth in the asset base. "Because these new members have brought over deposits and not loans, yet, and because overall loan demand is quite low, the money is going into low-earning, short-term investments and not loans," Schenk said.

That means earnings growth is not keeping up with asset growth and that places downward pressure on net-worth ratios for some credit unions. "Therefore, credit unions have to really focus on delivering high-quality service, to put their best foot forward and make it obvious to these members that they made the right decision," Schenk explained.

"When that becomes more obvious to new members, they will bring their entire book of business--including new loans--to credit unions," he added.

The overarching idea for credit unions is to provide good service, Schenk said. "And it would obviously be useful and important for credit unions to market to new members the idea of refinancing their existing loans at the credit union," he added. "Credit unions should make the credit union difference--the financial and nonfinancial benefits--obvious and cross-sell the products that the members haven't brought over."

Because social media were a driving force behind the BTD movement, it seems reasonable to conclude that a disproportionate number of the new members are young, Schenk said.

"This is good because our research shows young people generally don't know a lot about credit unions, and this [BTD] could help change that," he explained. According to a 2011 CUNA Survey of Potential Members, 67% of general consumers and 97% of those aged 18-24 are not familiar with credit unions, and that compares with 60% of the general public in 2006. See the chart.

"[The migration of new, young members to credit unions] also is a good situation because young people tend to want to borrow, and credit unions need to issue more loans," Schenk said.

"In the long run, a demographic shift toward young people as members would help credit unions financially because loans are the financial life-blood of depository institutions," Schenk concluded.

TrinidadTobago bill places CUs under central banks control

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PORT OF SPAIN, Trinidad (12/13/11)--The Central Bank of Trinidad and Tobago has posted on its website a draft of a bill that places all of the country's credit unions under its control.

The bill is based on a proposal approved by the Trinidad Cabinet  in 2009, Carl Hiralal, Trinidad and Tobago inspector of financial institutions, said in a statement to credit unions (The Trinidad Guardian Dec. 10).  

Credit unions have until March 28 to submit their comments on the draft to the Central Bank. Under the proposed legislation, the central bank will assume responsibility for determining the financial soundness of credit unions, supervising credit unions to ensure their compliance with the act, protecting members' deposits and shares from undue loss and ensuring compliance of credit unions with legislation to combat money laundering and terrorist financing.

The proposed legislation allows the central bank or the inspector of financial institutions to have "access to all books, records, accounts, vouchers, minutes of meetings, securities and any other documents, including documents stored in electronic form, of any credit union and the right to call upon any member of the board of a credit union, officer, external auditor or employee of the credit union for any information or explanation the bank considers necessary for the due performance of its duties."

ATM lets consumers choose Surcharge Or Ad

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NEW YORK (12/13/11)--A New York entrepreneur has introduced an ATM that offers users the option of viewing a third-party advertisement to opt out of surcharge fees.

Free ATMs NYC, founded by 25-year-old Brooklyn, N.Y., resident Clinton Townsend, uses targeted advertisements to cover the costs of an ATM surcharge outside of its network (ABC News Dec. 12).

The transactions do not take any longer because the commercials play during the time the transaction is processing, Townsend said.

The ATMs also give consumers the option of donating the surcharge to charity.

ATM receipts may include a coupon redeemable at a local business.  

There is one catch to Free ATMs NYC's strategy: The company can't remove fees that consumers' financial institutions charge them for using out-of-network ATMs (Digital Journal Dec. 12).

Free ATMs NYC placed its first ATM in a Brooklyn music venue and bar. Townsend plans to expand the concept throughout New York City.

Diebold, a CUNA Strategic Services provider, offers Campaign Office, a marketing tool that uses demographic and account information to present specific advertising relevant to the ATM user's interests and needs. For more information use the link.

Alabama shared-branch network to pay second dividend

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BIRMINGHAM, Ala.(12/13/11)--Credit Union Service Centers (CUSC) of Alabama, a shared-branching network, will pay a shareholder dividend for the second consecutive year.

The service centers board of directors also approved a patronage rebate program for participating credit unions. The program will rebate 40% of 2011 net income before taxes to participants based on the participating credit union's percentage of total transactions within the network during the year.

"The ability to institute this dividend and patronage rebate program validates the business model that CUSC of Alabama has put in place," said Patrick La Pine, CUSC chairman. "Credit unions see the value of shared branching and they have been a cornerstone of the success of the company. The board felt it was important to reward those credit unions that have contributed to the success of the organization. We also hope it spurs more credit unions to consider offering shared branching."

CUSC has 124 shared-service centers. In 2011, CUSC opened 10 new shared branching locations statewide.

MnCUN welcomes Paraguayan CU reps in exchange visit

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ST. PAUL, Minn. (12/13/11)--The Minnesota Credit Union Network (MnCUN) kicked off its celebration of the 2012 International Year of Cooperatives by welcoming six Paraguayan credit union representatives to Minnesota last week.

Click to view larger image During their visit to Minnesota last week, Paraguayan credit union representatives visited the State Capitol and met with Speaker of the House Kurt Zellers  (R-Maple Grove), left. (Photo provided by the Minnesota Credit Union Network)
The visit was part of an ongoing international exchange between the Paraguayan credit union association Central de Cooperativas del Area Nacional Ltda. (CENCOPAN) and MnCUN established in 2004 through the World Council of Credit Unions' (WOCCU) International Partnerships Program.  This year's exchange highlighted Minnesota credit unions' advocacy activities and focused on industry issues such as use of social media, branch design, policies and procedures, and uses of technology.

In a meeting with MnCUN, the Paraguayan visitors learned about the association's structure, activities and service to credit unions and received overviews in governmental affairs, education, compliance and communications. They also discussed  in depth MnCUN's for-profit activities and the role they play fulfilling credit unions' products and services needs.

On Dec. 7, they met with Speaker of the House Kurt Zellers (R-Maple Grove), who discussed the relationship between lobbyists and legislators and the importance of meeting with constituents and representatives from various industries.  Gov. Mark Dayton provided a written greeting, thanking the visitors for their "dedication to the credit unions of Paraguay and commitment to the credit union philosophy of 'people helping people.'"

The delegation also met with Minnesota Department of Commerce Deputy Commissioner of Administration Steve Carlson and Credit Union Program Director Carl Schwartz, who discussed the coordination and cooperation between the credit union regulatory and oversight organizations and provided insight into the proactive nature of U.S. regulators and the standard monitoring mechanisms used.

Credit unions the group visited included Hiway FCU and St. Paul FCU in St. Paul; SouthPoint FCU, New Ulm; and SPIRE FCU, Falcon Heights. These credit unions highlighted their approach to meeting members' needs and presented information about information technology infrastructure and security, internet banking, branch management, collections processes and business continuity.

While in the state, the delegation also explored Minnesota's culture, spent time in several credit unions' presidents' homes, visited the Mall of America, and experienced snow for the first time.