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Plant closure affects CU but were here for the long haul

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FRANKLIN, Va. (12/22/09)--The closure next year of a paper mill will impact a Franklin, Va.-based credit union, but the impact is "manageable," according to its CEO. When International Paper announced it would close its Franklin paper mill, the $208 million asset Bronco FCU went into action, reassuring members it was prepared to assist them with financial problems they might experience from the closures (The Virginian-Pilot Dec. 21). Nearly 14% of Bronco's 18,990 members work at the facility. The closure's impact of "isn't insignificant, but we think it's manageable," CEO Bob Petty told the newspaper. He posted a letter on Bronco's Web site assuring members that the credit union is "here for the long haul." Three years ago the credit union became a community chartered credit union to diversify its membership instead of relying on a single employer-sponsor. To respond to members' concerns, the credit union created a team that addresses financial education needs such as inquiries from International Paper employees with questions about severance payments and rolling over their 401(k) retirement plans, Pam Vaughan, marketing and human resources manager at the credit union, told the paper. A second team works with members who encounter financial difficulties, she said. In addition to losing 828 jobs at International Paper, the area's communities may lose twice that number in jobs from the effects of the mill's shutdown on other businesses, according to the Virginia Economic Development Partnership. Those losses could trigger financial difficulties for borrowers and depress demand for home loans, car loans and other credit, the article said.

California CUs 3Q Assets shares up but loans down

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SACRAMENTO, Calif. (12/22/09)--Assets and shares at California credit unions were up in the third quarter, according to the California Department of Financial Institutions’ Quarterly Report. The report commented on California’s state-chartered credit unions. Assets were up 1.8% at $74 billion, while shares increased 2.5% to $62.1 billion compared with September 2008. Loans decreased 7.2% from September 30 one year ago to $48.5 billion, the report said. “In a state which has been hit with a real estate crisis, high unemployment and a large fiscal deficit, members have turned to bolstering their savings and tightening their belts when it comes to expenses,” said Daniel Penrod, California and Nevada Credit Union League senior industry analyst. “This has led to a significant increase in assets, particularly savings, and a decrease in the demand for loans. Despite California credit unions’ ability and--unlike other financial institutions in the state--willingness to lend, members are hesitant to borrow,” he added. Other statistics the report noted:
* Net worth decreased 13.3% to $6.6 billion from $7.6 billion, causing the net worth to asset ratio to decrease to 8.90% from 10.45% one year ago; * The loan loss allowance was up 108.5%, to $1.3 billion from $602.8 million; * Net margin to average assets increased to 4.35% from 4.20% one year ago; * Provision for loan losses was up 75.9% to $1.1 billion; * Net income moved to a net loss of $365.4 million from revenues of $32.7 million during third quarter 2008; * Delinquent loans increased 68.3% to $1.1 billion; and * The number of credit unions decreased 7.4% to 175.
California has 476 credit unions.

Loans members assets delinquencies in Kansas CUs

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WICHITA, Kan. (12/22/09)--Kansas credit unions have experienced an uptick in assets, loans, members and delinquencies in the third quarter, according to a report from the Kansas Department of Credit Unions released last week. Credit union assets were up 14% to $3.75 billion compared with the third quarter of 2008, the report said (The Wichita Eagle Dec. 18). Other highlights of the report were:
* Credit union membership rose nearly 6% to 539,000; * Loans increased nearly $76 million to roughly $2.5 billion in the third quarter; * Delinquencies jumped 42% to $35.6 million, compared with the same period last year: and * Return on average assets was 0.80% before accounting for fees credit unions had to pay to replenish the National Credit Union Share Insurance Fund. Once the fees were factored in, ROAA was 0.69%.
“We’re pleased with the overall performance of the credit unions,” Jerel Wright, assistant vice president of consulting and compliance with the Kansas Credit Union Association, told News Now. “Credit unions still are looking at writing down further losses from the National Credit Union Administration (NCUA) assessment. So that will be the biggest drag. “The credit unions all are saying it would be a really good year, except for the NCUA assessments,” he concluded.

CU System brief (12/21/2009)

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* MADISON, Wis. (12/22/09)--Madison, Wis., police were lauding the teamwork of a group of citizens who helped catch a suspect in a robbery Monday of Badger Campus CU in Madison. A jogger in yellow shorts, a credit union member, a bicyclist and a woman driving her car past the scene all helped track down the alleged robber, who was arrested within minutes of the 12:08 p.m. robbery of the credit union's Spring Street branch. Police recovered the stolen money and the robbery note, and the suspect, Michael Gober, 45, Madison, was tentatively charged with robbery. The group of citizens came together to provide police with "great detail on his direction of travel" and "all assisted police in setting up a very quick and successful dragnet," said Madison police spokesman Joel DeSpain. As he ran, the suspect tried to get into cars without success and was chased down by officers in a parking lot (The Capital Times Dec. 21) …

CU small biz efforts in N.J. papers spotlight

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MONTVALE, N.J. (12/22/09)--The efforts of New Jersey credit unions to provide needed services to small businesses were featured in a Monday story in The Bergen Record. The article highlighted Cabin Crafters, a small South Hackensack, N.J., company that refurbishes corporate jet cabins, said the New Jersey Credit Union League (The Daily Exchange Dec. 21). The difficulties that Cabin Crafters’ founder and President Mario Diaz, 43, had in obtaining funds to expand and relocate with several banks were detailed in the article. Diaz finally used his personal funds to finance the project, and when the company looked for a $250,000 line of credit--as a safety net should a cash flow problem arise--he turned to a credit union. “In the current real estate market, banks are very reluctant to give out loans,” Gabriella Arrigo, Cabin Crafters’ bookkeeper, told the newspaper. Businesses like Cabin Crafters have helped New Jersey’s largest credit union, Affinity FCU, more than double the size of its business-loan portfolio this year to $100 million from $47 million, the paper said. Affinity FCU, based in Basking Ridge, N.J., has $1.98 billion in assets. “Credit unions are stepping up to make the small-business loans a lot of banks are not making now,” Paul Gentile, president/CEO of the league, told the newspaper. The article also listed issues facing credit unions--including the member business lending cap--when lending to small businesses. With legislation pending on increasing the cap to 25% of assets, the article mentioned that credit union lending to small business would provide 108,000 jobs nationwide. To read the article, use the link.

Rhamy tenders resignation from Silver State Schools CU

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LAS VEGAS, Nev. (12/21/09)--David Rhamy, president/CEO of Las Vegas-based Silver State Schools CU, last week resigned the position as well as his seat on the Credit Union National Association board, effective immediately. Rhamy resigned "to pursue opportunities in the legal profession," said a statement from Carol Gibson, interim CEO and executive vice president/chief operating officer, on the credit union's website. Rhamy had been president/CEO of the $899.2 million asset credit union since 1999. "Not only has he worked diligently to provide leadership to our credit union for the past 10 years, he has also been a tireless advocate for the credit union movement during his more than 30 years in the industry. We will miss him and wish him the best," said Gibson. Rhamey was a member of CUNA's Corporate Credit Union Task Force, established in January. He is past chairman of Western Federal Corporate CU (Wescorp) and served on its board since 1995. He also has been active in the California and Nevada Credit Union League and the Richard Myles Johnson Foundation. Silver State Schools CU is the largest in the Las Vegas area. It, like other financial institutions in the state hard-hit by the recession as members defaulted on loans, reported losses at nearly $36 million during the first nine months of 2009 (Las Vegas Sun Dec. 20). The credit union's private insurer, American Share Insurance of Ohio, told the Las Vegas Sun Nov. 27 that despite a high number of problem loans, the credit union has a good depositor base and strong management.