Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

Bank tries CUs tactic Pays people to use debit cards

 Permanent link
MADISON, Wis. (12/27/11)--During the consumer backlash against debit card fees prior to Bank Transfer Day on Nov. 5, many credit unions promoted their fee-free services by taking one step more: paying members to use their debit cards.  Some banks took a lesson, and in their scramble to find new sources of revenue, some are promoting the use of debit cards and online channels.

For example, because it is in a highly competitive area and taking more desperate measures to attract consumers, North Shore Bank in Peabody, Mass., announced it would try something it has never done before: pay customers to increase their use of debit cards and automated channels.  The move is a way to increase fee income, attract younger consumers and comply with new interchange regulations, said  Bank Technology News (Dec. 20). 

Unlike many credit unions' anti-fee campaigns, the bank's rebate comes with restrictions. It will pay $3 per month to consumers who hit a certain account balance, who use a digital channel and who meet transaction targets.

It also would reimburse customers up to $25 per month in ATM fees from other banks. The cash back checking program, however, requires an average daily balance of $1,000 to avoid the $12 service fee. To get the rebate, customers must receive direct deposits into their account, sign up for electronic ATM statements and conduct at least 10 debit card point-of-sale transactions and a minimum of three bill payments through the bank's web portal.

Credit unions used rebates in their no-fee campaigns while the Bank Transfer Day events were heating up. They are still gaining attention for their anti-bank fee stance.

For example, in September, just as Bank Transfer Day was becoming a household word,  Pioneer West Virginia FCU, Charleston, W.Va.,  started running an advertisement, "Fee'd up with banks? Let's make change." It paid members five cents every time they used the credit union's debit card. The ad declared, "Finally, checking that makes cents!"

Pioneer CEO C. Dana Rawlings told the Charleston Daily Mail that the credit union has some members who swipe their cards 50 to 60 times a month. The campaign attracted about 75 new members who opened checking accounts and asked for debit cards during October and November. That's about twice what the credit unions would open in a normal two-month period and isn't bad in a state where there are no offices of Bank of America--the bank whose planned debit card fee prompted Bank Transfer Day and the wave of consumer backlash. Pioneer has budgeted $3,500 a month in payouts for 2012.

West Virginia Central CU, Parkersburg, ran a similar campaign in November and December that was well-received. Members like getting rewards instead of paying fees, Michael Tucker, president/CEO, told the Daily Mail.  The credit union had 180,000 debit card transactions in November and paid members about $9,000 in nickel rebates. The uptick in volume was "substantial," he said.

Wis. Fin. Literacy awards go to CU league CUNA projects

 Permanent link
MADISON, Wis. (12/27/11)--The Wisconsin Governor's Council on Financial Literacy announced recipients of its 2011 Wisconsin Financial Literacy Award Thursday. Credit unions and their programs were well-represented among the winners.

Three organizational winners involving credit unions are:

  • Investor Education in Your Workplace, a Wisconsin Credit Union League program;
  • Money Mission, a money management simulation game originated by the league and offered to credit unions across the country in a program administered by the Credit Union National Association; and
  • UW CU, Madison, Wis., which hosts free financial education seminars.
News Now reported last week on Money Mission's award.

The Investor Education in Your Workplace program is the first of its kind using credit unions as the springboard to engage thousands of citizens in voluntary, workplace-based investor education said the Wisconsin league. It encourages credit unions and ultimately other employers in their communities to offer 10 hours of voluntary online investment education to employees on basic investment concepts.

According to the council's announcement the program  has led to positive measureable changes in investment knowledge, attitudes and behavior.  In Wisconsin, 24 companies with 3,600 employees--in addition to more than 3,476 employees from 80 credit unions in the state and league staff--registered to complete at least 10 hours each of investor education. The participating credit union employees received a total educational value of $450,000.

In its initial phase, the league's program used pre- and post-tests to measure how well participants' knowledge improved. When calculated as a whole, participants averaged 62.15% on course pre-tests and 87.93% on post-tests--an improvement in knowledge of 25.79% across both sessions.

The program's second phase took graduates of the program and trained them to train others to expand the efforts, according to Chris Henzig, director of communications at the league.

Also, from fall of 2010 to spring of 2011, Pennsylvania and North Carolina credit unions joined the program, which expects to add another 10 states, an additional 100,000 hours of training for roughly 10,000 employees from credit unions and the employers they serve, Henzig told News Now. She also noted that changing investment behaviors through the program can stimulate a potential $1 billion in new investing.

The Investor Education in Your Workplace program was funded by the Investor Protection Trust, which granted $500,000 to pilot the program in Wisconsin and train the Certified Financial Educators (CFEs) to expand the program, and by the National Credit Union Foundation, which provided $30,000 in assistance to train the CFEs to exist in expanding the program to other states.

UW CU will receive its award for providing financial literacy seminars. In 2010, it provided 295 seminars, reaching more than 8,000 people. More than 90% of them were underserved individuals or college students, said the council's announcement. Through October of 2011, another 6,000 were educated in the program. UW CU has more than 40 financial mentors who have been certified and undergo ongoing training.

Credit unions were also mentioned in two other awards as working to improve financial literacy of the state's citizens. Recognized were CoVantage CU of Antigo and its student credit union, Bulldog CU, cited in the award to Laurel Scherer of Antigo Middle School; and Community First CU, Appleton, a partner with organizational winner Appleton Area School District.

In all, eight organizations and 14 individuals will receive the awards.

Ill. league wraps up community service giving for year

 Permanent link
NAPERVILLE, Ill. (12/27/11)--Illinois Credit Union League (ICUL) staff wrapped up their community service and giving for the year by providing toys for patients at Children's Memorial Hospital in Chicago.

ICUL helped to fulfill Children's Memorial's need for small gifts and toys, which are used in several ways, year round. For example, children often can pick a prize after a particularly hard day or on a special occasion, such as finishing a round of treatment. Also, the hospital's closed-circuit, interactive television station, Skylight TV, hosts several in-house television game shows each week, following the philosophy that "everybody's a winner," creating a daily demand for small prizes.

Children's Memorial, the region's top provider of pediatric specialty care, and Illinois' only freestanding hospital exclusively for kids, is celebrating nearly 130 years of serving children and their families.

The toy drive was one of several charitable actions by the league in 2011. Other activities included its annual food drive, where more than 620 pounds of food and $300 were donated to help the Northern Illinois Food Bank (NIFB) find people in need.  This was the third annual food drive held by ICUL employees.

Over the past year, the food bank has seen a 35% to 50% surge in demand throughout the 13 counties it serves in northeastern Illinois. It provides food for about 502,400 people annually, including 61,600 in a given week via more than 520 sites. About 48% of those helped are children under 18.

ICUL staff also has raised funds through monthly "Jeans Days," and raised more than $1,400 for local and national social service organizations, including the American Cancer Society (for breast cancer research), the American Diabetes Association and DuPage Public Action to Deliver Shelter, in addition to Children's Memorial Hospital.

The Illinois Credit Union System also provided 14 food pantries with $200 each, for a total  $2,800 donation.

"This continued to be a year of great need for many people," said Dan Plauda, ICUL president/ CEO. "Rather than sending out its traditional holiday greetings, the Illinois Credit Union System chose on behalf of its member credit unions to coordinate, organize and participate in these activities. We feel blessed to have been able to give back to our communities."

Corporate Central CU names exec committee

 Permanent link
MUSKEGO, Wis. (12/27/11)--At the Corporate Central CU Board meeting held

Dec.13, Greg Hilbert, president/CEO of Fox Communities CU, Appleton, Wis., was elected chairman of the board. Hilbert has served on the board since 2002.

Three other board members for the Muskego, Wis.-based corporate also were elected to the Executive Committee:

  • Kim Sponem, president/CEO of Summit CU, Madison, Wis., was elected vice chairman, and has served on the board since 2004.
  • Ronald Vogel, president/CEO of Fort Community CU, Fort Atkinson, Wis., was elected secretary, and has served on the board since 2007.
  • James Schrimpf, president/CEO of Brewery CU, Milwaukee, was elected treasurer, and has served on the board since 2009.

Quirky humor highlights Security Services new ad

 Permanent link
SAN ANTONIO (12/27/11)--Security Service FCU, San Antonio, has launched a new ad campaign that uses humor to emphasize the credit union's focus on member service.

The ad features two quirky "employees" named Jimmy and George who are determined to shorten the credit union's name to "Service." The duo yuks it up by breaking signage, painting a billboard and rearranging lobby furniture--all in the name of "service."

The multi-media ad campaign--designed by Austin-based Proof Advertising--includes TV, radio, outdoor, and the web complete with a Facebook page, an interactive online game and a landing page that features the two characters changing the credit union name.

The goal of the campaign is to build brand awareness and to attract the attention of a target audience ages 25 to 44, said Greg Stroud, Security Service vice president of sales and marketing of the $6.5 billion asset Security Service.

"Our target audience is inundated with more than 5,000 marketing messages a day so we decided to break from the traditional and move toward engaging them with humor that both surprises and entertains," Stroud said. "The overall campaign encompasses a variety of media using the same two misguided, but well-intentioned characters, to deliver our message about great service."

Radio and TV commercials are airing in San Antonio and will eventually expand into the credit union's other market areas in Texas, Colorado and Utah.

CUNA economist Top five predictions for CUs in 2012

 Permanent link
MADISON, Wis. (12/27/11)--This past year was a whirlwind for the U.S. economy and credit unions trying to rebound from a lingering recession, persistent unemployment, a depressed housing market, and worldwide economic trouble, especially in Europe.

So what does 2012 have in store for credit unions?

News Now asked Steve Rick, senior economist for the Credit Union National Association, for his top five economic predictions for what credit unions will experience next year.

They are:

Return of loan growth. After three years of basically no growth, credit unions in 2012 will see the return of loan growth. "Loan balances will grow 3% next year, which is good, because we are, after all, credit unions," Rick said. "Although 3% is not great, it's better than zero."

Why will there be loan growth? Essentially, low consumer spending during the past three years has created substantial pent-up demand for durable goods--by definition anything that lasts three years or longer, such as cars, appliances and furniture. "These are the types of items for which credit unions usually make loans," Rick said.

Click to view larger image Click for larger view
A big improvement in loan quality. Loan quality will strengthen and improve as reflected by a drop in the loan delinquency rate. For 2011, the loan delinquency rate for credit unions was 1.6%--which means for every $100 in loans, $1.60 is not performing (paying interest), Rick explained. For 2012, the forecast is 1.35%.

Why the improvement? "Two reasons," Rick explained. "Strength of the economy and job growth. They will help people stay current on their loans, and those who are delinquent to get caught up on their payments."

A nice drop in credit unions' provision for loan losses. This is a ramification of significant improvement in loan quality. "We expect the provision to be down to 40 basis points of average assets in 2012 from 51 basis points in 2011," Rick said. "In 2007, it was 43 basis points. So in 2012, we predict it will be lower than--at 40 basis points--pre-recession levels."

The recession started in December 2007, Rick said.

Click to view larger image Click for larger view
Credit unions' bottom lines should improve. In 2012, credit unions' return on assets (ROA)--which is net income divided by average assets--should be 85 basis points, or 0.85%, up from 70 basis points, or 0.70%, in 2011, Rick said. The 15-basis-point jump is forecast because of better provisions for loan losses engendered by better loan quality mentioned earlier. Also, the corporate stabilization assessment will be nine basis points of insured shares in 2012, according to National Credit Union Administration estimates. That compares with 25 basis points in 2011, Rick said.

"That drop will help boost credit unions' bottom lines," Rick said.

Credit unions will have turned the corner when it comes to allowance for loan losses. The allowance for loan-loss ratio is the allowance for loan losses account relative to total loans. In other words, out of all the loans that credit unions have on their balance sheet sheets, what percentage of them are bad loans?

"The allowance ratio was a little over 1.6% in 2011," Rick said (see Credit Union Credit Quality chart--bottom one). "It was 0.7% before the recession. For 2012, it will continue to trend downward. Because of the better credit-quality outlook for 2012, credit unions may have overfunded their allowance account and will let it run down next year.

"For the first time in five years, credit unions in 2012 will keep loan-loss provisions--because that allowance has been built up over the past few years--less than net loan charge-offs," he explained (See bathtub flow chart--top one). "That will bring down the allowance for loan-loss accounts in absolute (dollar amounts) and relative terms (percentage of total loans)."

Louisiana league offers Member Business Services Council

 Permanent link
HARAHAN, La. (12/27/11)--The Louisiana Credit Union League (LCUL) has introduced the Louisiana Member Business Services Council (MBSC) for credit union professionals who are engaged or interested in offering member business services.

The council will provide opportunities for members to network with peers, share best practices, address issues concerning credit unions, and learn from experts in their professional field, said the league.

The direction for the MBSC is provided by an advisory committee whose members will plan the curriculum for council meetings, develop website content and promote council activities at local chapter events.

The advisory committee held its first meeting earlier this month to discuss the goals of the council and plans for the first council-sponsored educational event, which will be held in Baton Rouge, La., on Feb. 16 and 17.

Committee members include:

  • Committee chairperson--Deanna Geisler, Barksdale FCU, Bossier City;
  • Cami Crochet, The New Orleans Firemen's FCU, Metairie;
  • Dawn Harris, Campus FCU, Baton Rouge; and
  • Eddie Vollenweider, Neighbors FCU, Baton Rouge.          
Council benefits include access to the members-only listserv and a password-protected website, which will include sample policies, job descriptions, articles, research and links. Members will also receive discounts to education and training programs.

"The league has been working with credit unions around the state to identify areas where we would benefit from collaboration," said Anne Cochran, LCUL president/CEO. "Member business services were among the top areas of interest. It is our hope that the council will help promote professional development and support the overall maturation of these services provided to credit union members."

The council will begin accepting applications on Jan. 2. Additional information will soon be posted on the league's website.

The Credit Union National Association estimates that increasing the current 12.25% of assets members business lending cap to 27.5% of a credit union's total assets would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer.

NCUA to wind down U.S. Central Bridge Corporates payment services

 Permanent link
ALEXANDRIA, Va. (12/27/11)--The National Credit Union Administration (NCUA) will move forward with plans to wind down various lines of payment services offered by U.S. Central Bridge Corporate FCU, the agency announced Thursday. The wind-down excludes the services of  Corporate Network eCom LLC that were purchased by CO-OP Financial Services and announced Dec. 15.

NCUA said the bidding process for the other services did not result in the selection of any additional acquirers. The agency initiated an open competitive bidding process in October to solicit acquirers for lines of business including international wires, automated settlement, and its automated clearinghouse product (APEX).

"Unfortunately, the solicitation did not result in a satisfactory proposal," NCUA said in a press release. As a result, NCUA determined that the "most effective course of action is to pursue an orderly wind-down of those services" from U.S. Central Bridge.

"Since members of U.S. Central Bridge made the business decision not to pursue a new charter to maintain payment services, we anticipated this outcome," said NCUA Board Chairman Debbie Matz. "The proposals we received from other bidders did not meet NCUA's responsibility to minimize service disruptions and impose the lowest possible cost."

Each corporate credit union, if it has not already done so, now needs to begin the process of transferring to a vendor that will replace the APEX system to continue uninterrupted payment services to member credit unions, said NCUA.

NCUA noted that another critical function of U.S. Central Bridge is serving as the agent group representative to facilitate credit union access to the Central Liquidity Facility (CLF). Due to U.S. Central Bridge's ownership of $1.9 billion of CLF stock, all credit union members of corporates can access the CLF for liquidity purposes.

As the Federal Credit Union Act bases the CLF's borrowing authority on its subscribed capital stock and surplus (retained earnings), U.S. Central Bridge's stock subscription plays a large part in the CLF reaching its current borrowing authority of $50 billion.

As a temporary entity, U.S. Central Bridge cannot hold the CLF stock indefinitely. Because credit unions must have long-term access to emergency liquidity--and that CLF stock will need to either be purchased directly by credit unions or by other corporates as agents for their members--the NCUA Board took two actions in December:

  • It approved a change to Part 704 permitting corporates to deduct CLF stock investments from their assets when calculating capital ratios.
  • It approved an advance notice of proposed rulemaking (ANPR) that would require federally insured credit unions to have access to a backup federal liquidity service for use in times of financial emergency and distressed economic circumstances.
The ANPR provides several options for how credit unions could meet this requirement, including membership in the CLF.

"Experience has shown that in times of financial crisis, federal sources of liquidity are often the only reliable sources," said Matz. "The ANPR is a critical step to maintain the safety and soundness of the credit union industry going forward."

Pa. CU flood victims face difficulty for holidays

 Permanent link
HARRISBURG, Pa. (12/27/11)--Flood victims of September's Tropical Storm Lee in West Pittston, Pa., have only just begun to recover, according to the Pennsylvania Credit Union Foundation.

Most victims of September's Tropical Storm Lee in West Pittston, Pa., have not returned to their homes. Road and home repair work continue on Parke Street.
Most of the victims have not returned to their homes and are either living with relatives or have relocated to other areas during the holidays, said foundation Executive Director Joe Wambach and REAL Solutions Manager John Kebles after visiting West Pittston (Life is a Highway Dec. 22).

Of the 32 homes of credit union members and employees who received assistance from the foundation in September and October, one was occupied, and several condemned.

A two-square-mile-area was busy with cleanup, road repair renovation activity.

The only occupied home in a two-square-mile area celebrates the spirit of the season. (Photos provided by Pennsylvania Credit Union Association)
"We had expected to be able to interview victims of the flooding, but unfortunately the area was completely deserted," Wambach told the Pennsylvania Credit Union Association. "The devastation was disheartening, on the one hand, while recovery activities were encouraging on the other. However, we are pleased to report to our donors that the aid received by the victims from the foundation and other entities is showing positive results but we will need to be as patient as the victims in helping to rebuild their lives."

Association President/CEO Jim McCormack urged credit unions, individuals, vendors and friends of the movement to "contribute generously to the Pennsylvania Credit Union Foundation in 2012, as there are clearly many other victims of this disaster who have not yet received aid."

McCormack also promised members that association and foundation staff will continue to visit other areas of the flood zone to ensure donor funds are used responsibly to help credit union victims.

NEW U.S. Central Bridge Corporate to unwind payment services

 Permanent link
ALEXANDRIA, Va. (FILED 4:30 p.m. 12/22/11)--The National Credit Union Administration (NCUA) announced today it will move forward with plans to wind down various lines of payment services offered by U.S. Central Bridge Corporate FCU. The wind-down excludes services of  Corporate Network eCom LLC that were purchased by CO-OP Financial Services and announced Dec. 15.

NCUA said the bidding process for the other services did not result in the selection of any additional acquirers.

NCUA initiated an open competitive bidding process in October to solicit acquirers for lines of business including international wires, automated settlement, and its automated clearinghouse product (APEX).  "Unfortunately, the solicitation did not result in a satisfactory proposal," NCUA said in a press release. As a result, NCUA has determined that the most effective course of action is to pursue an orderly wind-down of those services from U.S. Central Bridge.

"Since members of U.S. Central Bridge made the business decision not to pursue a new charter to maintain payment services, we anticipated this outcome," said NCUA Board Chairman Debbie Matz. "The proposals we received from other bidders did not meet NCUA's responsibility to minimize service disruptions and impose the lowest possible cost."

Each corporate credit union, if it has not already done so, now needs to begin the process of transferring to a vendor that will replace the APEX system to continue uninterrupted payment services to member credit unions, said NCUA.

NCUA noted that another critical function of U.S. Central Bridge is serving as the agent group representative to facilitate credit union access to the Central Liquidity Facility (CLF). Due to U.S. Central Bridge's ownership of $1.9 billion of CLF stock, all credit union members of corporates can access the CLF for liquidity purposes.

As the Federal Credit Union Act bases the CLF's borrowing authority on its subscribed capital stock and surplus (retained earnings), U.S. Central Bridge's stock subscription plays a large part in the CLF reaching its current borrowing authority of $50 billion.

As a temporary entity, U.S. Central Bridge cannot hold the CLF stock indefinitely. Because credit unions must have long-term access to emergency liquidity--and that CLF stock will need to either be purchased directly by credit unions or by other corporates as agents for their members--the NCUA Board took two actions in December:

  • It approved a change to Part 704 permitting corporates to deduct CLF stock investments from their assets when calculating capital ratios.
  • It approved an advance notice of proposed rulemaking (ANPR) that would require federally insured credit unions to have access to a backup federal liquidity service for use in times of financial emergency and distressed economic circumstances.
The ANPR provides several options for how credit unions could meet this requirement, including membership in the CLF.

"Experience has shown that in times of financial crisis, federal sources of liquidity are often the only reliable sources," said Matz. "The ANPR is a critical step to maintain the safety and soundness of the credit union industry going forward."