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CU System briefs (12/03/2012)

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  • MANASSAS, Va.(12/4/12)--Three people in Manassas, Va., have reported fraudulent charges to their credit/debit cards and Prince William County Police said the crimes may be linked to a card skimmer placed on an ATM at a credit union in the area. The victims used the ATM between 11:45 a.m. and 2:45 p.m. on Nov. 25, and began noticing fraudulent charges. Police urged consumers to check any ATM they use for anything looking suspicious, especially around the card reader area (Manassas.Patch.com Nov. 30) …
  • GENEVA, Ill. (12/4/12)--The former president of $1.8 million asset Aurora (Ill.) Firefighters CU has been charged with felony theft and unlawful use of a credit card stemming from $35,000 in misappropriated credit union funds. Anne Schaal, who was president from 1996 to 2011, allegedly posted phantom payments to a general and personal credit accounts, used the credit union's credit card for personal expenses, failed to make required tax filings on the credit union's behalf, and made an error on member credit cards that resulted in losses to the credit union. Schaal allegedly also spent $580,000 in family assets on a gambling addiction hidden from her former husband. Both the criminal case and a civil lawsuit filed by the credit union are set to continue in January (BeaconNews.com Nov. 29) …
  • GRAND RAPIDS, Mich. (12/4/12)--Deanna Waskelis of Kentwood, Mich., a member of Lake Michigan CU, has won $20,000 in the Michigan Credit Union League & Affiliates Grand Raffle, which benefits the league's federal PAC, MCULLAF. When the credit union's CEO, Sandy Jelinski, notified Waskelis, who works in a Grand Rapids dental lab, Waskelis thought the call was a joke. "I'm not sure if there are enough words to describe how much I can use this right now," she said (Michigan Monitor Dec. 3). Waskelis, center, is shown with, from left: Lake Michigan CU's Bill Clancy, vice president of retail strategy; Don Bratt, vice president of marketing; Leo Vicari, vice president of facilities; and Jelinski. This year's raffle took in a record $200,460. (Photo provided by the Michigan Credit Union League) …
  • BAYTOWN, Texas (12/4/12)--Baytown, Texas-based Community Resource CU has been named a "Juntos Avanzamos" credit union, a designation reserved for credit unions that have demonstrated exceptional commitment and service to the Hispanic community, announced the Texas Credit Union League (LoneStar Leaguer, Dec. 3). The league presented the $298 million asset credit union with the Juntos Avanzamos flag Thursday. Juntos Avanzamos translates as "Together We Advance." The initiative is part of the league's goal to identify Texas credit unions that effectively serve the emerging Hispanic market, so Hispanic families know that the location has affordable and friendly financial services.  To see the ceremony, use the link to the YouTube video
  • BATTLE CREEK, Mich. (12/4/12)--Dale Seward Chidester, former manager, and treasurer-manager of Kellogg Community FCU, Battle Creek, Mich., died Oct. 23 in Salt Lake City, Utah (Battle Creek Enquirer Dec. 2). He was 100 years old. Chidester was a founding member of the credit union and served as treasurer-manager from 1941 to 1958. From 1958 to 1973, he served as full-time management.  He also was vice president of the Michigan Credit Union League for nine years in the 1940s, served on a number of key committees, and was a national director of the Credit Union National Association at the time of his retirement …

NCUA in JP Morgan MBS case A stay would risk documents

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WICHITA, Kan. (12/4/12)--The National Credit Union Administration (NCUA) has asked a federal court in Kansas to reject JP Morgan Chase's request for a stay of NCUA's lawsuit against the Wall Street Bank over mortgage backed securities (MBS) sold to four corporates, including U.S. Central FCU and Western Corporate FCU.

JP Morgan Securities, JP Morgan Acceptance Corp. I, and Bond Securitization LLC--all units of JP Morgan--had filed the motion to stay the case until an appeals court in the 10th Circuit had decided issues in a similar case NCUA had filed against RBS Securities.

The issues under appeal involve an extender statute, which sets statutes of limitations and statutes of repose--deadlines that affect when lawsuits may or may not be filed. Several banks have claimed NCUA did not file its MBS cases early enough.

NCUA filed its opposition to JP Morgan's motion on Friday in the U.S. District Court for the District of Kansas, saying that delaying the case would prevent NCUA from expeditiously vindicating its claims, would likely result in prejudice impacting its ability to obtain critical materials from third parties such as loan originators, and would potentially delay any potential payment of damages to credit unions.

"JP Morgan has failed to meet its burden to justify a wholesale stay of this litigation," said NCUA's opposition motion.  "The bulk of this case is outside the scope of the RBS appeal, and regardless of the outcome of that appeal, this court will be required to move forward on most of the claims in the complaint," said NCUA. It's motion also noted that "no defendant in any other NCUA case has made a similar motion."

NCUA pointed out that courts consider five factors in assessing a motion to stay: the plaintiff's interest in proceeding expeditiously and without potential prejudice; the burden on defendants; the convenience of the court; the interests of persons who are not parties in the litigation, and the public interest.

JP Morgan issued and underwrote securities to the corporates from 2006 to 2007.  The corporates collapsed in 2009, and NCUA, as their liquidating agent, sued a number of Wall Street banks who issued or underwrote the securities that contributed to the corporates' collapse.

NCUA's lawsuits, including the one against JP Morgan, allege the banks made numerous misrepresentations and omissions of material facts in the documents offered the failed corporates. The agency alleges systemic disregard of underwriting guidelines stated in the offering documents and says the alleged misrepresentations caused U.S. Central and WesCorp to believe the risk of loss on the investments was minimal, when in fact, the risk was substantial.

In addition to  JP Morgan and RBS Securities, NCUA has filed lawsuits against Wachovia Capital Markets and Wells Fargo, Barclay's Capital Inc., Goldman Sachs, and UBS Securities. The agency has already settled claims of more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.

CASE Option 1 CUs to share branch facility

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GRAND RAPIDS, Mich. (12/4/12)--CASE CU in Lansing, Mich., and Option 1 CU in Grand Rapids, Mich., said they will share a branch facility in East Lansing starting early next year.

The branch sharing will create a "unique opportunity" for both credit unions, they said in a joint press release issued Friday (mlive.com Nov. 30).

The move will allow the $219.5 million asset CASE CU to maintain its presence in the Lake Lansing Road area of East Lansing.  It is leaving its branches in the area because they are too small to accommodate the growth it is experiencing, Jeffrey Benson, CASE president/CEO, said.

The credit union now will focus on procuring bigger branches that have drive-up service lanes for its members, which CASE has been seeking for some time, Benson added.

In the meantime, Option 1 said it has found a business to occupy a space that is too big for its current needs, the release said.

Oct CU balance sheets earnings continued to improve

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MADISON, Wis. (12/4/12)--Credit union balance sheets and earnings improved in October, continuing a trend that has been in place during the past 10 months, according to a Credit Union National Association (CUNA) economist's analysis of October's monthly sample of credit unions. 

"The capital-to-asset ratio reached 10.5% in October, up from 10.2% at the beginning of the year," Steve Rick, CUNA senior economist, told News Now. "The continued rise in the capital-to-asset ratio was due to better earnings. Credit union earnings as a percentage of average assets year-to-date are running at 76 basis points, up from 68 basis points for all of 2011. Earnings rose mainly due to falling loan-loss provisions. Provisions fell, in turn, because of falling loan charge-offs and loan delinquency ratios.

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"Since the beginning of 2012, delinquent loans as a percent of total loans fell--from 1.6% to 1.1% today," Rick added. "This 32% drop in the delinquency ratio was because of the simultaneous drop in the dollar amount of delinquent loans by 28% and the rise in total loans by 4%. CUNA is forecasting credit union earnings to come in at 70 basis points in 2013."

The total dollar amount of capital is $108 billion.

Credit union loans outstanding grew 0.4% in October, up from 0.3% growth in September. They totaled $608 billion in October, compared with $583.9 billion in October 2011. Adjustable-rate mortgages led loan growth with a 2.2% increase, followed by new-auto loans, which grew at 1.1%, and used-auto loans, which grew at 0.8%. Unsecured personal loans increased 0.7%, and credit card loans rose 0.2%, while fixed-rate mortgages fell 0.4%, and home equity loans declined 2.6%.

"Loan growth has accelerated in 2012 relative to 2011," Rick said. "Loan balances should rise 4% in 2012, significantly better than the 1.1% growth last year. In October, loan balances grew 0.4%, better than last year's pace of 0.3%, due to rising consumer confidence levels. CUNA is forecasting slightly better loan growth in 2013 of around 5%.

"The big news on the lending side is the return of new-auto loans," Rick added. "New-auto-loan balances grew 1.1% in October, compared to no growth last October, and grew 7.4% since the beginning of the year. This comes on the heels of falling new-auto loan balances over the last few years due to the great recession and the weak recovery."

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Credit union savings balances fell 0.1% in October, compared with a 0.6% decrease in September.  Credit union savings totaled $884.9 billion in October--or $49.2 billion more than the $835.7 billion in October 2011. Money-market accounts led savings growth with a 0.7% increase, followed by regular shares, which grew 0.4%. One-year certificates fell 0.1%, and individual retirement accounts and share drafts dropped 0.4% and 1.1%, respectively.

Regarding asset quality, credit unions' 60-plus-day day delinquencies improved slightly to 1% in October from 1.1% in September.

In terms of liquidity, the loan-to-savings ratio increased slightly in October to 69% from 68% in September.

Fisoc MoneyDesktop share tech council Best award

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MADISON, Wis. (12/4/12)--The CUNA Technology Council presented its second annual Best of Show Award to fisoc and MoneyDesktop at the 17th Annual CUNA Technology Council Conference.

The council recognized fisoc for its commitment to provide credit unions with a financial services platform that combines social media and its Buzz Points Merchants program, which helps credit unions increase member transactions, account balances and loan demand.

"Our mission at fisoc is to develop 21st century technologies that enable credit unions to offer financial services that will level the playing field with the mega banks," said Jay Valanju, CEO of fisoc. "To be recognized as the winner of the Best of Show Award at the CUNA Technology Council's most important annual event is quite an honor for our company."

For the second year, Money Desktop was also recognized as a Best of Show winner for its personal financial management solution which integrates directly into online banking platforms and helps credit unions increase loan volume, attract new users and stay ahead of the competition while enabling account holders to take control of their finances.

"We take the relationship between credit unions and technologies very seriously because we want to help credit unions successfully navigate the future so they can properly engage and retain their members, said Ryan Caldwell, MoneyDesktop CEO. "This is the whole point of everything we build at MoneyDesktop."

Since 2011, the CUNA Technology Council has presented the Best of Show award to the speed round sponsor that demonstrates a commitment to delivering technology that will further the growth of products and services in the credit union marketplace. Vendors' products are evaluated by attendees during speed round presentations at the conference.

IBloombergI PowerBall advice Use Save to Win instead

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NEW YORK (12/4/12)--States nationwide should consider expanding prize-linked savings (PLS)--such as Save to Win, a PLS program for Michigan credit unions launched by the Michigan Credit Union League--according to a Thursday Bloomberg column by Zara Kessler.

The article was written after two people split the record $587.5 million Powerball jackpot last Wednesday (Michigan Monitor Dec. 3.).

PLS is better than a lottery because those who don't win with PLS can keep the money they deposit in their accounts, Kessler wrote.

"In January 2009, the Doorways to Dreams Fund helped launch 'Save to Win,' (STW) the first scaled PLS program in the U.S., in eight Michigan credit unions," Kessler said. "Members of the credit unions were given the chance to save in a one-year, balance-building share certificate that earned interest; the accounts required only $25 to open, and each $25 added gave the account-holder a raffle entry (up to 10 per month) for monthly prizes and a $100,000 annual grand prize.

"By 2011, STW Michigan had over 25,000 unique accounts, with over $40 million saved at dozens of participating credit unions," Kessler continued. "This year, the prize design was altered to offer more chances to win at lower levels and a STW program was launched in Nebraska credit unions. North Carolina and Washington state will launch STW programs in 2013."

Because many states have legal hoops on lotteries, she suggested a federally sponsored program might be possible.

To read the column, use the link.

Top 10 iNews Nowi stories for November (12/03/2012)

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MADISON, Wis. (12/4/12)--A story about the Credit Union National Association's (CUNA) outrage over the National Credit Union Administration's (NCUA) planned 2013 budget increase was the most read News Now article in November.

The list of Top 10 stories for November includes:

10. CFPB remittance rule to be delayed, tweaked

WASHINGTON (11/27/12)--The Consumer Financial Protection Bureau has announced its intentions to make "certain limited adjustments" to its recent final rule on international money transfers--also known as remittances.

9. Small biz stories highlight a day of MBL advocacy

WASHINGTON (11/29/12)--Dayton, Ohio-area real estate developer Jerry Bush said he might not still be in business today were it not for his credit union.

8. Robbery suspect shot dead by intended victim at ATM

ORLANDO, Fla. (11/20/12)--A suspected robber was shot dead Friday by his intended victim at a drive-through ATM at the Fern Park, Fla., branch of Orlando, Fla.-based Fairwinds CU.

7. CUNA identifies CU tax language is an error in bill

WASHINGTON (11/15/12)--When the full text of H.R.6474 became available Wednesday and CUNA identified language within that threatened the federal income tax exemption for federal and state-chartered credit unions, CUNA and the League of Southeastern Credit Unions immediately arranged meetings with the office of the bill's drafter, Rep. Dennis Ross (R-Fla.), and learned an error had been made.

6. NCUA reduces TCCUSF high estimate by $400M

ALEXANDRIA, Va. (11/2/12)—NCUA on Thursday revised projections for the total cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion, a $400 million reduction from the previous maximum cost of $9.3 billion.

5. Senate vote on MBL bill expected this week

WASHINGTON (11/26/12)--CUNA Monday told its membership to expect a vote this week--probably within the next 48 hours--on a Senate bill that would lift the credit union member business lending cap to 27.5% of assets, up from the current 12.25%.

4. Bank Transfer Day at one year: Love affair continues

WASHINGTON (11/5/12)--CUNA  has distributed a radio news release to stations around the U.S. in anticipation of today's one-year anniversary of Bank Transfer Day, which marked a lovefest for credit unions as consumers fled high-fee banks for sensible financial services.

3. N.Y., N.J. leagues update CUs' status, report 'significant' losses

ALBANY, N.Y., and HIGHTSTOWN, N.J. (11/2/12)--The leagues in New York and New Jersey sent out updates this afternoon on the latest assessments of credit unions in their states impacted by Hurricane/Superstorm Sandy Monday and Tuesday.

2. Fake pop-ups injected into online banking transactions

MADISON, Wis. (11/14/12)--The latest version of the Citadel banking Trojan malware has something malware analysts have never encountered before:  a browser malware that launches fake pop-ups during online banking transactions and tricks online users into re-entering their bank and credit union account logins and passwords.

1. CUNA outraged by NCUA's proposed 2013 budget

WASHINGTON (11/15/12)--CUNA is outraged by the National Credit Union Administration's planned 2013 budget increase, and will be pursuing this with other policymakers to achieve greater accountability and transparency in the agency's budgetary process, CUNA President/CEO Bill Cheney said today.

Landscape firm MBL extends beyond banking biz

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SALEM, Ore. (12/4/12)--Valley CU's relationship with Green Acre Landscaping extends beyond just banking and business needs. But it began with a member business loan.

Green Acres Landscape has been in business 20 years. Valley CU has been the critical factor in enabling the Salem, Ore.-based company to survive the recession, Richard Kansky, president of Green Acres told the Northwest Credit Union Association (NWCUA) (Anthem Recap Nov. 29)

Green Acres was impacted by the downturn in the housing sector, Kansky told the league. The company met its profit goals by relying more on volume and a wider mix of services.

The relationship with Valley CU helped the business weather other changes in the industry that are directly related to today's economic reality, Kansky said. "It is so important to be able to sit across the table from someone who understands your business needs and has the authority to address those needs," Kansky told the NWCUA.

Valley CU demonstrated that understanding by showing flexibility and providing common-sense responses to the company's specific issues, Kansky said.

"Our customers are holding on to their money longer, and often we will not get paid for 60 or 90 days after we complete the work," Kansky said. "That creates a real cash-flow problem, but Valley understands the dynamics of the business and provides us the credit lines needed to address those delays."

Kansky had a previous relationship a major national bank, but Green Acres' credit line was slashed by nearly 70% when the economy turned sour. The bank did not make the change because of a credit issue, Kansky said. "They were just changing their policy, and we really had no recourse," he told the league. "The credit union took the time to understand our business, and it has been a great asset for us."

Today, Green Acres Landscape employs 45 people full-time, with more temporary jobs created on a seasonal basis.

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. CUNA and credit unions say that increasing the cap would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers.