Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

CU System briefs (12/14/2010)

 Permanent link
* BISMARCK, N.D. (12/15/10)--Doug Wolf, the former president/CEO of Midwest Corporate FCU, has been hired as vice president of ProDraft Services Inc., effective Dec. 1. "We are excited to have Doug join our staff, and to help us bring a complete correspondent and payment processing services to credit unions that are looking for alternatives," said the credit union service organization's (CUSO) press release. Wolf was president/CEO of Midwest Corporate for 14 years and served nine years in executive management positions, including CEO and chief financial officer, in natural person credit unions. Wolf noted he has been "involved in the development of ProDraft and its services over the past few years…" He will be responsible for credit union client relations and service conversions. The CUSO is owned by 38 credit unions … * KINGSPORT, Tenn. (12/15/10)--Eastman CU announced it will pay a $4 million dividend to eligible members in February. Dividend payments will be deposited into members' savings accounts about Feb. 10, with deposit notifications included with its January statement mailed to members (timesnews.net Dec. 11) … * PORT EWEN, N.Y. (12/15/10)--Ulster County (N.Y.) Industrial Development Agency (IDA) has given its blessing so Mid-Hudson Valley FCU can receive tax incentives while building its Port Ewen branch--a $2.48 million, 2,800-square-foot building. Officials agreed to set a payment-in-lieu-of-taxes schedule and waived sales taxes on construction costs. The credit union is not bonding and will be self-financing the building, said IDA CEO Lance Matteson. The $698 million asset credit union, which is based in Kingston, N.Y., will add three jobs when the branch opens. It will be the first financial institution in Port Ewen since Bank of America closed in July 2009 (Daily Freeman Dec. 14) … * WHEELING, W. Va. (12/15/10)--A sentencing date has been set for Jan. 3 for Bernie Metz, 57, the former CEO of Center Valley CU in Wheeling, W.Va. on an embezzling charge. Metz pleaded guilty to embezzling more than $9 million from the credit union and forging a check to a construction company that built her restaurant and cabins in West Liberty. In exchange for her guilty plea, officials agreed they would not prosecute her family members. Metz faces up to seven years in prison (WTRF.com Dec. 13) … * EDMONTON, Alberta (12/15/10)--Servus CU, a Canadian credit union based in Edmonton, Alberta, announced its member-owners will receive $43 million through its annual Profit Share program. The amount is an increase from 2009's $42.2 million distribution and will be the largest amount shared to date. Members will receive the distribution this month. The 2010 program pays cash as well as a dividend on common shares and investment shares. Commercial and agricultural members will receive cash as a service charge rebate. Servus members, in a survey, said profit sharing and member ownership wither the most important benefits of being members of Servus CU (Marketwire Dec. 13) …

TransUnion predicts sharp decline in card delinquencies

 Permanent link
CHICAGO (12/15/10)--Credit card delinquencies are continuing to drop in a decline that began in first quarter 2009 when 1.21% of all cards were at least 90 days delinquent, according to TransUnion, which predicted the decline will continue well into 2011. The Chicago-based credit bureau predicted a sharp drop in delinquencies to 0.75% by the end of 2010, with the rate falling even more and ending next year at about 0.67% of all balances (Payments Source Dec. 9). More than eight million consumers stopped using general purpose, bank-issued credit cards during the past year, joining more than 70 million consumers who had no active cards in 2009, said TransUnion's quarterly analysis of trends. It attributed the deleveraging in part to charge-offs in the higher-risk segments of the population, more conservative spending in the low-risk segments, and significant efforts by consumers across the board to maintain the health of their credit card relationships as a financial cushion. The analysis revealed that the national credit card delinquency rate (ratioof bankcard borrowers 90 days or more delinquent on one or more of their credit cards) decreased to 0.83% during third quarter 2010, down nearly 9.8% from second quarter. Year over year, credit card delinquencies fell by 24.6%. Consumers with higher incomes were just as likely as those with lower incomes to suspend their use of this payment option. "The vast majority of the consumers who do not possess or have stopped using credit cards continue to have and use other forms of revolving and installment credit, and of course still need to pay for necessities," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "Consumers who do not have or use bank-issued, general purpose credit cards still have a need for other payment vehicles, a fact which is beginning to attract significant attention from credit and debit providers alike," Becker added. Among the statistics for third quarter:
* Incidence of credit card delinquency was highest in Nevada (1.28%), Florida (1.09%) and Mississippi (1.06%). The lowest credit card delinquency rates were found in North Dakota (0.48%), South Dakota (0.53%) and Nebraska (0.56%). * Two areas showed an increase in credit card delinquency--the District of Columbia (19.67% increase) and Mississippi (1.92% increase). The two areas of the country with the largest quarter-over-quarter drop in delinquency were Alaska (-19.2%) and Nebraska (-17.6%). * National average credit card borrower debt (the aggregate balance on all bank-issued credit cards for an individual card borrower) edged up for the first time in six quarters by 0.28% to $4,964 from the previous quarter's $4,951, but down 11.54% compared to the third quarter of 2009 ($5,612). * The highest state average credit card debt remained in Alaska at $7,159, followed by Hawaii at $5,716 and North Carolina at $5,640. The lowest average credit card debt was found in Iowa ($3,807), North Dakota ($4,103) and South Dakota ($4,196). * All but 15 states showed an increase in average credit card debt from the prior quarter. The largest increases in average credit card debt over the previous quarter occurred in West Virginia (2.81%), Wyoming (2.2%) and Hawaii (2.19%). * On a year-over-year basis, national credit card originations increased for the first time since the recession began in late 2007. Nine states showed decreases in originations since third quarter of 2009. The states with the greatest year-over-year increases were Delaware (21.3%), Oklahoma (16%), and Pennsylvania (15.8%). * The areas with the steepest declines in year-over-year credit card originations were the District of Columbia (-10.3%), Minnesota (-9.6%) and Michigan (-4.2%). * About 77 % of metropolitan statistical areas (MSAs) showed a decrease in their 90-day credit card delinquency rates since last quarter, which is generally consistent with national trends. The area with the largest drop in delinquency was the Dubuque, Iowa MSA (-48.4%). The area with the largest increase in delinquency was the Lewiston, Idaho-Washington Metropolitan Statistical Area (92.7%).
"The third quarter marks the first time since the recession officially ended in the summer of 2009 that average consumer credit card balances have not declined, although aggregate balances have dropped. The reason for this apparent contradiction is that the net number of active credit card accounts is continuing to drop, and it is falling faster than the dollar deleveraging rate," said Becker. "On the delinquency side, the news remains good as consumers continue to show fiscal responsibility in paying down their credit card obligations and delinquency rates remain within expected annual variance and seasonal norms," he said. "Moreover, the drop in the savings rate quarter over quarter, coupled with the drop in the number of active cardholders, might lead one to infer that consumers are shifting their focus away from a pure savings mindset to one that may include increased non-credit spending, such as through debit or checking transactions."

CU CEO sentenced to year in jail in securities case

 Permanent link
DENVER (12/15/10)--The CEO of a credit union chartered in the U.S. Virgin Islands with a back office operating from Denver, Colo., has been sentenced to one year in jail for contempt of court and failing to produce documents for a securities investigation. Stanley B. Roberson, of Aurora, Colo., CEO of Her Majesty's CU (HMCU), failed to produce documents related to a subpoena issued to him as part of the state's investigation of the credit union, Securities Commissioner Fred Joseph of the Colorado Department of Regulatory Agencies (DORA) told the denverchannel.com (Dec. 14). The sentence came from a state judge during a third hearing on the matter Tuesday. Regulators for months have been trying to determine whether Her Majesty's CU is legitimate or a fraud (News Now May 13). Commissioner Chris Myklebust of the Colorado Division of Financial Services told News Now in May that his office was in contact with both the U.S. Virgin Islands and the state securities office about the credit union. Under law, the credit union cannot solicit Coloradoans for business because it is "not a legitimate Colorado credit union," Myklebust said. The credit union is not chartered by the Colorado Division of Financial Services, which is part of DORA, nor the National Credit Union Administration (NCUA). The credit union offers certificates of deposit (CD) to consumers over the Internet at interest rates above prevailing CD rates. One ad on Google promoted 6% to 7% CDs. Its accounts are not federally insured, and the state is trying to determine whether it is offering only uninsured deposits or is engaging in the offer and sale of unregistered securities. Roberson received six months in jail for the contempt charge plus six months for failure to produce the documents subpoenaed. The latter charge can be reduced if he produces the documents. In May, News Now learned that Roberson was CEO of Jilapuhn Inc., a former East Point, Ga., company that was a founding sponsor of another credit union--Jilapuhn Employees FCU, also of East Point. That credit union was formed in January 2005 but liquidated by NCUA eight months later. Roberson claimed in an e-mail that it was insured by Lloyds of London. The Credit Union Association of Colorado met with Roberson in May and determined there were inconsistencies in claims made about the background of HMCU (News Now May 14). Roberson told them that HMCU was the only credit union in the Virgin Islands (there are five other credit unions there); that a federal charter and National Credit Union Share Insurance Fund (NCUSIF) were not available to credit unions chartered in the Virgin Islands (five other credit unions there have the federal charter and NCUSIF insurance); that it was a member of the Credit Union Association of New York (it never has been a member of the association there) and HMCU was a member of the Credit Union National Association (CUNA) (it is not a member, says CUNA). HMCU's website says it was established for the residents of the Virgin Islands, military personnel, employees of the Department of Defense, all affiliated companies and family members of members. It offers bank accounts, ATM cards, insurance, money orders and wire transfers.

CUs continue at top of newest satisfaction index

 Permanent link
ANN ARBOR, Mich. (12/15/10)--Less than one week after credit unions came out on top of a customer satisfaction survey, another index--this time the American Customer Satisfaction Index (ACSI)--has announced that credit unions continued in the top spot of its survey. Credit unions scored 80 this year, a 4.8% drop from their score of 84 the past two years, said the Ann Arbor, Mich.-based ACSI. Banks scored an overall 76 this year, up 2.7% from their 2008 and 2009 showings. Individual banks had lower tallies--Wells Fargo at 73, Citigroup at 69, Bank of America at 68 and JPMorgan Chase at 67. The ACSI report covered satisfaction ratings of credit unions, banks, health insurance, life insurance and property and casualty insurance. It noted that although credit unions remain on top, they face increasing pressure and attributed the slight decline to services not keeping up with demands brought by growth and cost-cutting measures in the tight economy. The index also reported significant decreases in satisfaction among insurance customers, largely due to higher health insurance premiums and deductibles. Last week News Now reported that the Prime Performance 2010 Bank and Credit Union Satisfaction Survey announced that credit unions and small banks led their larger rivals in meeting the needs of their member/customers. That study also indicated credit unions and small banks have the friendliest personnel; their member/customers are more likely to recommend others use their financial institution, they are more likely to believe employees want to help them; and they are more apt to believe credit union and small bank employees enjoy their jobs (News Now Dec. 8). Last week's study and Credit Union National Association (CUNA) President/CEO Bill Cheney's comments about the results were reported widely in national media. Cheney noted that CUNA was not surprised at the findings and it was fine to be included with small banks, but also noted the "very real and fundamental difference between banks and credit unions, regardless of size: Credit unions' not-for-profit, cooperative structure."

CU finds BubbaLuv SupaFan a GenY magnet

 Permanent link
ERIE, Pa. (12/15/10)--Erie General Electric FCU has partnered with a local celebrity---“supafan” is actually the more accurate term--and created a lot of fun for its entire community in the process. The match was made when Trent Mason, chief marketing officer at the credit union, sat courtside at a National Basketball Development League game next to Donnell Jordan, aka BubbaLuv, the Erie area’s self-described “supafan,” who supports local teams adorned in oversized sunglasses, a sequined cape and a huge afro. Mason was impressed when a mob of teenagers and young adults asked BubbaLuv for high-fives. “He had kids asking if him if he received their text messages, asking him if he would come to their schools,” Mason said. Knowing that BubbaLuv had so much local appeal, Mason recruited him to appear with CEO Gail Cooks in a television commercial. Mason said at first the credit union didn’t intend to recruit BubbaLuv as a long-term spokesperson, but considering his popularity “moving on would have been the foolish thing to do.” So Erie General Electric has an agreement to request BubbaLuv for appearances through 2012. But for all Bubba’s flamboyance, he’s no gimmick. Mason calls Bubba “a blue-collar guy in a blue-collar town,” and a long-time credit union member. “When they find out his background, and they know that he works for us, they really respect that,” Mason says. “Besides, he’s so much more approachable than any of us. Why would they want to talk to a banker when they can talk to him?”

Add California to the anti-fraud program list

 Permanent link
LOS ANGELES (12/15/10)--The California and Nevada Credit Union Leagues, along with the Los Angeles Department of Consumer Affairs, the California Bankers Association, and Consumer Federation of America (CFA), launched a new program Monday to protect consumers and financial institutions from fake-check scams. The anti-fraud program is being rolled out in 12 other states. Under the program, participating banks and credit unions in the greater Los Angeles area will hand out a brochure created by CFA, “Don't Become a Target,” to every consumer who comes in to deposit checks or money orders of $1,000 or more or to withdraw $1,000 or more, CFA said in a release. Seventeen banks and credit unions have signed up to participate so far. “The key is to prevent consumers from being victimized by educating them about these scams at the very point where they may be at risk,” said Susan Grant, CFA’s director of consumer protection, who is coordinating the program. In fake-check scams, the consumer receives a genuine-looking check or money order for something and is asked to wire money somewhere in return, CFA said. For instance, the check may be described as an “advance” on millions that the consumer has won in a sweepstakes or lottery. The consumer is instructed to send money to pay the taxes and claim the rest of the prize. In another popular scenario, the consumer is recruited to work at home as a mystery shopper or payments processor and is instructed to send money somewhere. The check or money order is phony, and when it bounces, the victim owes the money back to the financial institution where it was deposited or cashed. The average loss is $3,000 to $4,000, CFA said. “Fake check scams are a serious problem for consumers,” said Diana Dykstra, president/CEO of the leagues. “Credit unions want to do all they can to educate their members. That’s why we're excited to be a partner in this consumer education program.” CFA is providing the brochure to participating banks and credit unions at no cost. CFA is asking them to cover the shipping expense if they are able to do so.

TMG Black Friday transactions dominated by debit

 Permanent link
DES MOINES, Iowa (12/15/10)--The Members Group (TMG) has released its Black Friday data, and the numbers confirm what the Federal Reserve has already declared: Debit is king of the transaction world. Of the card transactions processed by TMG the three days following Thanksgiving, nearly 80% were debit. The total number of debit transactions, as well as the total dollar amount of all debit transactions, each increased by 10% from 2009. TMG clients’ cardholders collectively spent more than $31.9 million during this year’s Black Friday weekend on their credit and debit cards, an increase of nearly 8% from 2009. While the total amount spent on credit cards increased less than 1%, over 2009, the amount spent on debit cards rose by more than 10%. “TMG clients’ cardholders are mirroring the American consumers’ inclination to use their debit cards,” said Sara Petty, TMG’s senior vice president of client development. “Debit interchange regulation is bound to have an impact on our clients, interchange revenue. It will become important to continue increasing the number of debit transactions overall in order to minimize and overcome the gap created by a decrease in interchange.” As with 2009’s Black Friday weekend, TMG clients’ cardholders made larger purchases with their credit cards this year. The average credit card transaction among TMG clients’ cardholders this Black Friday weekend was $76, while the average debit transaction was nearly half that at $43. TMG is a credit union service organization owned by Iowa credit unions and their members.

NCUF to conduct financial reality fair at GAC

 Permanent link
MADISON, Wis. (12/15/10)--The National Credit Union Foundation (NCUF) will conduct a financial reality fair for the first time on March 2 in conjunction with the Credit Union National Association (CUNA) Governmental Affairs Conference (GAC) in Washington, D.C. A reality fair is an interactive financial literacy tool for high school students.
Students face financial reality when they participate in a reality fair, such as this one designed by America’s Credit Union Museum (Photo provided by the National Credit Union Foundation)
The fair will be held at the Rayburn House Office Building from 10 a.m. until 11:30 a.m. About 40 to 50 area high school students are expected to attend. GAC attendees can attend the fair, which will remain open until 2 p.m. for anyone who wants to see the booths and fair materials. Also, NCUF will ask Credit Union Development Educators attending the GAC to volunteer for the event. “Holding a reality fair at GAC is a great way to expose legislators and their staff to the innovative financial education programs that are offered by America’s credit unions,” said Lois Kitsch, NCUF national REAL Solutions program manager. The GAC event is sponsored by NCUF with support and expertise from:
* CUNA’s Mad City Money, a hands-on simulation kit for youth, which provides a taste of the real world--complete with occupation, salary, spouse, student loan debt, credit card debt, and medical insurance payments; * America’s Credit Union Museum’s CU 4 Reality, a hands-on comprehensive training package centered on the interaction among students, educators, parents, credit unions and business volunteers; * HarborOne CU’s Credit for Life Fair, which has visited high schools since 2001. The Brockton, Mass.-based credit union has won awards for its fair, which is attended by thousands of students every year; and * Credit Union League of Connecticut, which held reality fairs statewide last year.
The Connecticut league recently received a Desjardins Youth Financial Education Award, in large part due to the league’s educational work supporting the financial reality fair throughout the state. The fair was created as part of the state’s REAL Solutions efforts. “We believe the first step needed to improve the economic environment within a family is access to information--and the earlier the better,” Kitsch said. “Mixing fun with learning creates a memorable experience that will remain with the students in the months and years to come.” “I have had the opportunity to be involved with reality fairs for more than 10 years,” said Tony Emerson, president/CEO of the Credit Union League of Connecticut. “When you get to see the recognition in a student’s face that financial decisions are important and do affect their daily lives, it is instant gratification that the fairs are worthwhile and effective.”