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Chinese officials visit U.S. CU movement

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MADISON, Wis. (12/17/07)--Seven officials from Chinese cooperatives, regulatory agencies and the People's Bank of China (PBC) spent a week observing the U.S. credit union operations and visiting regulators and trade association officials to learn how U.S. credit unions operate.
Click to view larger imageYu Li, center, research bureau director for the People's Bank of China, is welcomed by Dan Mica, president/CEO of the Credit Union National Association, on her left, and Ralph Swoboda, World Council of Credit Unions' (WOCCU) China consultant, on her right, during the Chinese delegation's visit. Other delegation participants are from left: Amy Yin Jin, Lei Zhijian, Zhang Ruibin, Liu Naiyun, Sun Yong, Zhang Li, Zhang Mingquan and WOCCU staffer Dave Grace. (Photo provided by the World Council of Credit Unions)
They hope to transfer the knowledge gained to China's growing cooperative movement. The delegation arrived in Washington, D.C. on Dec. 8 and met with government and trade association officials before flying cross-country to visit credit unions in southern California. "The Chinese delegation came to learn from the most developed credit union movement in the world," said Pete Crear, president/CEO of the World Council of Credit Unions (WOCCU), which hosted the delegation. He noted the visit provides "tangible examples of the roles credit unions play and how effective credit unions can be in serving their members," Crear said. Delegates from PBC and the Guizhou (China) Provincial Rural Credit Cooperative Union (RCCU) visited the National Credit Union Administration, and the Washington offices of the Credit Union National Association (CUNA) and WOCCU. Discussion topics included insurance and examination procedures, credit union operations and public and congressional affairs. "We were impressed by the extensive network of rural cooperative financial institutions that have been established in China and the people's dedication to helping those of modest means in rural areas develop some degree of financial security," said Dan Mica, president/CEO of CUNA. "We hope they learned from their visit with us not only how credit unions are regulated in this country, but how credit unions go about making their voices heard by government officials through unfettered advocacy efforts," Mica said. The trip follows earlier visits WOCCU officials made to China to assess the country's cooperative movement and the likelihood of developing credit unions there. They plan to continue those efforts in additional meetings during WOCCU's World Credit Union Conference July 13-16 in Hong Kong. In California, the delegation met with officials at Arrowhead Central CU, WesCorp FCU and the California Credit Union League. The group visited multiple branches of San Bernardino-based Arrowhead to examine different ways it serves its members, said Arrowhead President/CEO Larry Sharp. The last of the delegation will depart Los Angeles today for Beijing.

Vermont CEO Subprime rate freeze a good start

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BURLINGTON, Vt. (12/17/07)--A Vermont community development credit union (CDCU) CEO gives the Bush administration's plan to freeze interest rates for certain subprime mortgages good marks for facing the problem but adds the plan would help only a limited number of people. Caryl Stewart, CEO of the Burlington-based Opportunities CU, told the Burlington Free Press the program is "a good start." The administration's plan would freeze rates for certain subprime mortgage holders for five years. The program is an interesting concept that shows the government is attempting to face up to the mortgage crisis, Stewart said, adding that the White House knew it had to do something about the market. Stewart had this advice for the government: Develop regulations to guide the mortgage industry so the free market doesn't go wild. About 2,400 of the 62,000 mortgages in Vermont--or 3.9%--are subprime, adjustable-rate mortgages. Foreclosures in the state increased 25.9% through September from the same period a year ago. However, Vermont has the lowest percentage of homes in foreclosure in the nation, said a report by the Office of Federal Housing Enterprise Oversight.

CU System briefs (12/14/2007)

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* NAPERVILLE, Ill. (12/17/07)--The Illinois Credit Union System has become a founding sponsor of the Martin Luther King Jr. National Memorial Project with a $5,000 gift to the project's foundation. Once the foundation reaches its $100 million goal, the memorial will be built in Washington, D.C. Dan Plauda, Illinois Credit Union League president/CEO, said the project will "help remind future generations of the tireless efforts of Dr. King." … * ST. PAUL, Minn. (12/17/07)--The Minnesota Credit Union Network hosted a luncheon for Rep. Joe Atkins (DFL-Inver Grove Heights) Thursday. Atkins has been chairman of the state House Commerce Committee since 2002. Atkins told the 25 people attending that he does not see any issues in the 2008 legislative session that would negatively affect credit unions. "Credit unions are in a very vibrant, healthy and competitive industry where people are working together to offer products to their members," he said. From left are MnCUN board members Pat Pierce and Harry Carter, and Atkins. (Photo provided by the Minnesota Credit Union Network) … * ST. LOUIS, Mo. (12/17/07)--Missouri Corporate CU CEO Dennis DeGroot (shown at podium) accepts the 2007 Missouri Governor's Quality Leadership Award during the recent Excellence in Missouri Conference (Courier Net Dec. 12). The award recognizes the individual who best exemplifies outstanding leadership of an organization in the pursuit of performance excellence. Several of DeGroodt's peers nominated him for the award, which is modeled after the Malcolm Baldridge National Quality Award. (Photo provided by the Missouri Credit Union Association) … * GLENDALE, Calif.(12/17/07)--Scott Svonkin, vice chairman of the California CU board of directors, won a seat on the San Gabriel Unified School District Board of Education and was sworn in on Dec. 11. "As a life long member of the California CU, I could not have won my election without the support of the California Credit Union League and so many credit union leaders," he said. "Credit unions have played an important role in my financial life and now with their help and support I have fulfilled a dream of public service." He is shown here with National Credit Union Administration Board member Gigi Hyland. (Photo provided by California CU) … * EUGENE, Ore. (12/17/07)--SELCO Community CU has announced winners of its 2007 Teachers' Mini-Grants Program. It awarded $30,200 in 130 small grants for supplemental funding to K-12 schools in the credit union's service areas. Mini-grants were awarded for up to $250 to educators who submitted lesson plans or projects to the SELCO website from September through Oct. 10. Projects chosen focused on cooking, community gardens, mathematics, physics, arts, life skills, history, aquatic field studies, technology, and more. For a list of winners, check out the website … * GREENSBORO, N.C. (12/17/07)--First Carolina Corporate CU decided to skip sending Christmas cards this year, but not because of a bah! humbug attitude. Instead, employees, working on behalf of credit unions in North and South Carolina, are collecting donations for people in need, including winter coats, stacks of canned goods, and bags of toiletry items. They also donated $1,000 to a local domestic violence shelter, Next Step Ministries. Sorting the collected items are, from left, staffers Michele Rooks, Doretta Battle, Rose Sims and Heather Graham. (Photo provided by First Carolina Corporate CU) … * WASHINGTON, D.C. (12/17/07)--Charles A. Mallon Jr. has been selected as president/CEO of Wright Patman Congressional FCU, succeeding CEO Robert A. Hess, who will retire on Dec. 31. Mallon has been with the credit union for 17 years and is a director on the Maryland and District of Columbia Credit Union Association. During Hess's tenure, the credit union grew to 42,000 members and less than $500 million in assets from 3,500 members and $1.6 million in assets. Hess served as a member of the Federal Reserve's Consumer Advisory Council, chairman of the DC Credit Union League, chairman and board member of the National Association of Federal Credit Unions, and chairman of USERS … * VIRGINIA BEACH, Va. (12/17/07)--A former vice president of the former Portsmouth Post Office CU pleaded guilty in U.S. District Court Tuesday to defrauding the credit union of more than $170,000 through seven loans in which she provided false information. Minerva Marrero-Smith, 51, of Virginia Beach admitted she supplied false statements about her employment, income and assets on the loans. Court records said she failed to use the loans as specified in the applications for buying cars or paying for medical expenses. A $48,000 loan in 2001 was supposed to be used to buy a 1999 Mercedes-Benz, but she never bought the car. The seven loans were in her name and the names of other individuals. According to the Virginia State Corporation Commission, the actions led to the demise of the credit union, which merged later with the Northern Star CU, based in Portsmouth (The Virginia-Pilot and The Ledger Star Dec. 12) …

African-American coalition seeks internships

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SHREVEPORT, La. (12/17/07)--The African-American Credit Union Coalition (AACUC) is accepting applications from college students for the AACUC Internship program for fall 2008. The deadline for applications is Feb. 29 (LoneStar Leaguer Dec. 14). Through the program, African-American and African students enrolled in colleges and universities can experience the operations and benefits associated with credit unions and the credit union industry. The purposes and goals of the program include:
* Expanding the interest and increasing the number of minorities in the credit union movement; * Increasing outreach of credit unions in African countries and in the U.S. through credit union mentoring; * Providing scholarship programs and educational opportunities, as well as advancement, for credit union professionals and volunteers; * Enhancing internships and scholarships for African-American and African-descent college students pursuing financial-service careers; and introducing them to, and encouraging them to seek, employment within the credit union movement; and * Providing students enough practical experience to apply for management and other staff positions at credit unions after they graduate.
College juniors and seniors with majors in business, accounting, marketing or computer science are eligible for the program. For more information, use the link.

Person-to-person loans attract two groups

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SAN FRANCISCO (12/17/07)--Credit unions are likely to see more competition in the loan area, based a new report released Dec. 6 that examines recent growth in person-to-person (P2P) lending. The report by Javelin Strategy & Research reveals the primary users of P2P, their motivations and the potential impact on financial institutions. Demand for P2P lending services to help consumers to pay off credit card debt could grow to $159 billion from $38 billion during the next five years, Javelin predicted (Business Wire Dec. 6). Young adults--age 25-34--and high-income consumers--with incomes over $150,000 per year--are the two main groups turning to P2P lending, Javelin found. Potential savings on an interest rate or profit on a loan are the primary reasons consumers take out person-to-person loans, the study said. However, different consumer groups displayed different reasons for participating in person-to-person lending, the study indicated. For all of the 2,200 consumers surveyed, key factors were: to avoid the use of credit cards and to help someone obtain a loan who otherwise couldn’t get a loan. For higher-income consumers, the primary reason was to participate in an online lending community.

CEO of converted CU to retire

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ROCHESTER, Minn. (12/17/07)--Paul Horgen, CEO of Think Mutual Bank, formerly Think CU, will retire in 2008--no later than the fourth quarter, he announced Wednesday. Succession plans are yet to be announced (Post-Bulletin Dec. 14). Horgen has been in charge of the Rochester-based Think for more than 20 years. In 2003, Horgen was the driving force behind the name change from IBM Mid-America Employees FCU to Think CU. Previously, he was CEO of Moose Lake CU in Minnesota. Think FCU's application to convert to a mutual savings bank was approved by the Office of Thrift Supervision (OTS), effective July 1 (News Now June 13). Members voted 51% to 49% in favor of the change, with 24,807 members out of more than 80,000 eligible voters casting ballots. The results were announced at a special meeting March 14 attended by about 200 people (Post-Bulletin March 14). Think CU was founded as IBM Mid-America CU, 46 years ago by employees of International Business Machines. It has nearly $1.3 billion in assets.

CDCUs meet on mortgage meltdown

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NEW YORK (12/17/07)--More than 40 credit union leaders joined the National Federation of Community Development Credit Unions Dec. 10 to discuss ways to overcome the mortgage crisis. The leaders attended a conference call titled, “Mortgage Meltdown: The Effects of Community Development Credit Unions (CDCUs) and Local Communities.” Brenda Weaver, director of the federation’s CDCU Mortgage Center LLC, and Greg Gemerer, federation director of policy research, began the call by discussing nationwide trends in the subprime crisis and comparing how those trends have affected CDCUs and conventional credit unions. The crisis that is hitting the U.S. is “the culmination of a perfect storm in the mortgage markets: the implosion of the subprime market, rising interest rates, a re-evaluation of real estate prices, economic downturns and predatory mortgages,” Weaver said. Gemerer shared some statistics:
* Year-to-date real estate delinquency ratios for the third quarter of 2007 are up 41 basis points (1.90% from 1.49%) for CDCUS; 28 basis points for all CUs (0.57% from 0.29%) and 57 basis points for banks (1.27% from 0.70%); and * CDCU net charge-offs increased by a small margin of 1.62% year-on-year in the third quarter, compared with 144% and 165% increases in net charge-offs for credit unions and banks.
“CDCUs continue to deal with their delinquencies effectively and manage to collect on the majority of their loans,” Gemerer said. A number of CDCUs also spoke about their experiences with the crisis. Gloria McLendon, loan officer at Faith Community United CU, Cleveland, Ohio, said she helped a member by refinancing a car loan, which allowed the member to refinance her mortgage with another lender. It’s also important to educate members and provide homeownership counseling, said Lynn Meyer, director of lending at O.U.R. FCU in Eugene, Ore. “We need to start refinancing people as soon as possible, before their rates reset and they become delinquent,” added Randy Chambers, federation vice-chairman and chief financial officer at Self-Help CU in Durham, N.C. Key recommendations that emerged from the call include: taking advantage of partnerships that leverage resources to help members; reaching out to borrowers before they are in trouble; and engaging in policy reform by sharing experiences with legislators and policymakers. “CDCUs often make loans that would be considered subprime,” said federation President/CEO Cliff Rosenthal. “The big difference is that unlike many realtors and banks that put people into loans they can’t really afford, CDCUs work with their members to ensure that they can meet their credit obligations. “The numbers show that while some low-income members may miss a payment from time to time, CDCUs tend to lend at much more favorable rates, provide financial education and homeownership counseling, and generally have more personal contact with their members, which leads to much lower instances of charge-offs. This is what it means to be a CDCU,” he concluded. The federation plans to offer a two-day seminar on affordable mortgage lending in Durham during the first quarter of 2008. For more information, use the link.

Several CUs announce dividends

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MADISON, Wis. (12/17/07)--A number of credit unions announced the distribution of dividends to their members, including a dividend of $6 million by CEFCU in Peoria, Ill. CEFCU’s dividend was based on members’ savings and loan activity during 2007, with $3 million going to borrowers and $3 million to savers. The amount each member received was determined by dividends earned and interest paid as of Nov. 30. On Dec. 10, CEFCU dividends were deposited into members’ accounts. “Members have been extremely responsible in handling their loans, and staff continue to be diligent in their efforts to control expenses, which allows CEFCU to return more to members,” said Helen J. Young, CEFCU board chairman. CEFCU has $3.3 billion in assets. Eastman CU in Kingsport, Tenn., recently approved a $4 million dividend, which will be deposited into members’ savings accounts in 2008. The dividend was so large because of the institution’s capital position, cost-effective management, and members’ extensive use of products and services, said Eastman CU CEO Olan O Jones Jr. ( Dec. 13). SB1 FCU of Philadelphia gave its members a dividend worth more than $1 million last week (Life is a Highway Dec. 14), and Hawaii State FCU in Honolulu distributed $2 million to members in bonus dividends and loan interest rebates. The bonuses and rebates were based on dividends earned and interest paid from Jan. 1 through Sept. 30. This year is the 12th consecutive year that Hawaii State FCU has returned money to its members, according to President Deborah Kim (Honolulu Advertiser Dec. 12).

Texas city considers charge for in-school branches

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GALVESTON, Texas (12/17/07)--In a matter that could have repercussions for other credit unions, two credit unions that operate on school property in Galveston may have to pay rent in the future. The Galveston public school district met Wednesday night to begin considering the matter. Galveston School Employees FCU is in a portable building behind Alamo Elementary School, and Island Teachers FCU is on the second floor of Ball High School (The Daily News Dec. 12). While the credit unions have used school property for several decades, they don’t pay to lease the spaces, and the school district pays the credit unions’ maintenance and utility fees. The district administration did not make a recommendation for action on the matter at the Wednesday meeting. District Superintendent Lynn Cleveland said the trustees could either continue to allow the credit unions to operate for free or charge them a minimal fee for use of school property and services. Cleveland added that the credit unions’ no-fee arrangement could be construed as gift of public funds, which the school district is not supposed to allow, according to it policy. Nationwide, self-reported credit union statistics compiled by the Credit Union National Association indicate that 165 credit unions in 30 states and the District of Columbia have branches in 567 schools.

SECU to assist states teachers with housing

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RALEIGH, N.C. (12/17/07)--The State Employees’ CU Foundation has agreed to provide a $2.25 million interest-free loan to help build a new affordable housing complex to benefit Dare County, N.C.- area teachers. The deal was finalized this week (Virginian-Pilot (Dec. 14). The Dare Education Foundation applied for a loan from the credit union in hopes of bringing more quality teachers to the area by providing housing. High living costs had made recruiting difficult, the newspaper stated. The complex could be ready with 24 two-bedroom apartments for the 2008-2009 school year. The Dare County project mirrors the building of an apartment complex in Hertford County with a loan from the credit union’s foundation. That complex opened in August and was filled with teachers after one month. The foundation agreed to provide the Dare County loan because the Hertford County project was successful.

CUs Biz Kid to air on 105 stations in 26 states

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FEDERAL WAY, Wash. (12/17/07)--Starting in January, 105 PBS television stations will broadcast the Biz Kid$ TV series to teach youth about finances. The 26-episode series is underwritten by America’s Credit Unions. It will air in the nation’s top three markets: Los Angeles, New York City and Chicago. Alabama, Indiana, Kentucky, Montana, New York, North Carolina, New Jersey, Rhode Island and Vermont have committed to broadcasting the series as well. Additional cities planning to broadcast BizKid$ include: Austin, Texas; Dayton, Ohio; Detroit; Jacksonville, Fla.; Las Vegas; Milwaukee; Oklahoma City; Salt Lake City; San Antonio; Tempe, Ariz.; Washington, D.C., and Wichita, Kan. Biz Kid$ also will air on high-definition (HD) channels on Sundays at 5 p.m., beginning Jan. 27. The program already airs in the United Kingdom and Ireland. The National Credit Union Foundation (NCUF) is the largest funder of the underwriting group. NCUF committed $2 million over three years from a sub-fund of its Community Investment fund. “This TV series, together with the teaching curriculum being produced in part with Junior Achievement, will fulfill a key part of our mission: to bring financial education and literacy to our nation’s youth,” said NCUF Executive Director Steve Delfin. Each episode of Biz Kid$ will come with teaching materials developed by Junior Achievement. Companion materials and other resources for teachers and parents are available at The site also features clips from the series and invites youth to appear on the show. Website visitors also can sign up for the Biz Kid$ monthly newsletter, The Vault. “We profile real kids running real businesses, from big companies with product lines to small businesses like dog-walking,” said Biz Kid$ Executive Producer Jamie Hammond. “The series also shows kids running businesses to advance social causes and give back to their communities. This humanizes the financial literacy aspect of the production and shows kids the range of possibilities available to anyone who wants to become a Biz Kid.” The first 13 episodes have been produced and paid for, but underwriting funds are needed for the remaining 13 episodes. Supporters can contact their state credit union league for information on donating. Biz Kid$ is produced in association with Junior Achievement Worldwide and WXXI Public Broadcasting in Rochester, N.Y. Funding is provided by America’s Credit Unions, led by the NCUF and the Washington Credit Union Foundation. The Biz Kid$ team created and produced Bill Nye the Science Guy, which received 26 national Emmys and the National Science Board Public Service Award.