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KansasTreasure State Corporates start year with merger

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BILLINGS, Mont. (1/3/12)--On Sunday, the Helena, Mont.-based Treasurer State Corporate CU started the year out by officially merging into the Wichita, Kan.-based Kansas Corporate CU. Credit unions in Eastern Montana told a local newspaper why they supported the merger.

Most Montana credit unions believe a merger will benefit them and increase their reach, while members will see no difference in the services provided, said Examiner.com (Dec. 28).  Of Treasure State's members, 100% voted for the merger. 

Kevin Mayer, president/CEO of Sidney, Mont.-based Richland FCU and a board member of Treasure State, noted the credit unions believed the Kansas business plan and its well-capitalized position add no real risk to member credit unions. Also, Montana will have representation on the Kansas Corporate board.

Kansas Corporate can provide all the services the Montana corporate offered plus "enhanced services, investment services, sound asset liability, and lines of credit. Our regulator requires us to have supplementary lines of credit and Kansas is able to do that for us," Mayer told the newspaper.  He cited three reasons why Richland chose to go with the Kansas Corporate: line of credit, asset liability assistance, and investment services.

At Glendive-based Glendive BN FCU, CEO Jenifer Knutson told the newspaper her credit union will gain three times the borrowing power and the merger transition will be seamless. Also in Glendive, Cindy Scheetz, CEO/manager of the $17 million asset Badlands FCU, noted her credit union has seen a surge in members, and although her members won't see a difference in services, the Kansas Corporate will provide an engine for the needs generated by the increasing capacity.

In eastern Montana, all the credit unions except $930,000 asset Froid (Mont.) FCU elected to go with the Kansas Corporate, said the article.  Instead of joining another large corporate credit union,  said Froid's manager, Elaine Clark,  its board chose to feed into a smaller Montana credit union. She told the newspaper that Kansas' mandatory agreements don't allow the credit union to reclaim shares if its status changes.

Audit your bank tops ITIMEsI New Years Resolutions

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NEW YORK (1/3/12)--Bank Transfer Day made a lot of year-end lists for 2011 and has helped insert credit unions into just about any financial conversation. What happened preceding Nov. 5 is also transferring to some New Year's Resolutions for 2012. Case in point: "Audit your bank" is the No. 1 New Year's Resolution touted by TIME's Moneyland column.

The Dec. 30 column, entitled "Banking New Year's Resolutions," notes that 2011 was a tumultuous one for banking, with nods to Americans' anger against the financial industry and widespread outrage against fees that culminated in Bank Transfer Day. 

"But whether your checking account is at a big national bank, small community bank, online bank or credit union, 2012 is a chance to begin afresh," wrote Martha C. White. For better banking, she advised five tips.

The first one:  Audit your bank. "The silver lining of the debit fee debacle is that it made many of us more aware of the fees our banks charge us and of what we're getting in return. Start the new year by tallying up the fees you're being charged for things like monthly account maintenance, overdraft protection transfers and out-of-network ATM use," she advised, noting that "If the math doesn't add up, consider another institution."

Credit unions also figured in tip No. 3: Set up text alerts.  Many credit unions and banks can send an automated text message when the consumer's balance drops below a certain amount or if a transaction seems too high and could be a fraudulent transaction.

Her other tips included: Using cash where possible, finding a better and safer personal identification number (PIN) to thwart criminals, and building an emergency fund or saving for a big purchase by making saving automatic.

For the article, use the link.

CUMIS sues former CU branch manager alleging embezzlement

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SALT LAKE CITY (1/3/12)--CUMIS Insurance Society Inc. has filed a civil lawsuit against a former branch manager of the now defunct Utah Central CU, Salt Lake City, seeking more than $219,630 allegedly embezzled from the credit union, according to court documents.

The suit was filed Dec. 23 in a Utah state Third Judicial District Court against Javier Herrera, who was manager at the credit union's West Valley Branch from May 2008 to May 2010, according to the complaint filed.

Utah Central was liquidated by the National Credit Union Administration in May and is now a division of Virginia Beach, Va.-based Chartway FCU.  Utah Central was insured by Madison, Wis.-based CUMIS with a fidelity bond that covers losses caused by employee dishonesty and failure to faithfully perform his trust, said the complaint.

The suit alleges that beginning in August 2008, Herrera underwrote and approved fraudulent auto loans in members' names without their knowledge or authorization. The credit union found out about the thefts when several members contacted it after they were notified of delinquencies on the fraudulent loans by an auto repossession department, said the complaint filed.

The credit union terminated Herrera's employment and filed an employee dishonesty and lack of faithful performance bond claim with CUMIS, who paid the claim, said the court document.

The insurance company is asking for repayment as well as punitive and exemplary damages and action to prevent Herrara from selling assets. It also asked the court to hold his accounts and property in a trust. Herrera has not been convicted in a criminal court of any crime. CUNA Mutual Group told News Now that it cannot comment on the case, since the litigation is pending.

Loans membership top priority for Pa. CUs in 2012

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HARRISBURG, Pa. (1/3/12)--More than half--52%--of Pennsylvania credit unions surveyed in an informal poll said their top "improvement" priority for 2012 would be lending promotions. The poll was taken by the Pennsylvania Credit Union Association (PCUA).

About 21% said membership growth would be a priority in the new year, said PCUA (Life is a Highway Dec. 22).

Other top priorities include member services, community involvement, staffing, employee education and employee benefits.

Study says switching banks may force choice Fees or convenience

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SAN FRANCISCO (1/3/12)--The movement to switch banks will force consumers to choose between fees and convenience, and it will be up to banking technologists to bridge the gap, according to Javelin Strategy & Research, in its latest report identifying trends for banking, payments, mobile and security in 2012.

"The movement to switch banks will force consumers to choose: fees or convenience?" said Phil Blank, managing director, security, risk and fraud at Javelin in the upcoming Jan. 7 Marketing Weekly News. "Occupy Wall Street protests, anger over banking fees, and the rhetoric of election-year politics will spur many Americans to consider dumping big banks in favor of community banks and credit unions," Blank added.

"Although smaller financial institutions charge lower fees and have higher levels of customer service, they typically cannot match giant banks in terms of convenient 24/7 multichannel banking that features extensive branch and ATM networks, online banking, bill pay and mobile banking," he added.

"The Occupier's Dilemma is that small financial institutions have the love and large banks have the technology, yet neither provide the level of empowerment and control that Javelin expects to see in the future," wrote Javelin President/CEO James Van Dyke in an op-ed piece for Bank Technology News (Jan. 1).

Javelin may be unaware that many credit unions already have made themselves more competitive as smaller institutions--primarily because they were at the forefront of some new technologies in online and mobile banking. Nor does Javelin mention credit unions' cooperative philosophy that allows them to enter shared-branching contracts so they can serve each other's members conveniently, or the extensive CO-OP Network of 28,000 surcharge-free ATMs and 4,400 shared-branch locations.

Meanwhile, certain technology companies are experiencing the backlash for tacking on fees to some of the conveniences consumers already use.  Last week, Verizon Wireless announced that as of Jan. 15, it will charge customers a "convenience fee" of $2 when they pay their bill online or by phone. However, Friday afternoon the company announced it would drop the plan because of complaints from consumers and a statement by the Federal Communications Commission that said it would look into the matter (The Wall Street Journal Dec. 29). The newspaper said the fee created a "protest movement on the Internet."

The company was trying to get customers to pay via autopay, but the fee drew comparisons to Bank of America's infamous $5 a month debit card fee that prompted the Bank Transfer Day movement on Nov. 5 (Forbes.com and SmartMoney.com Dec. 29). BofA pulled its plans to charge the fee after significant consumer backlash that resulted in credit unions gaining 450,000 net new members (new members minus the attrition of those who move or closed accounts) in September and October.

Originally, Verizon had said the fee "will help allow us to continue to support these single bill-payment options in these channels and is designed to address costs incurred by us for only those customers who choose to make single bill payments in alternate channels (online, mobile, telephone)," reported Forbes.com.

In 2012, consumers objecting to fees by banks and others will have to "put a personal price tag on convenience," said Javelin, suggesting that financial institutions upgrade with personal finance management tools to make it easier for consumers to monitor and manage their money. Javelin also suggested upgrading faulty account opening processes, installing and marketing bill pay switch kits and building out a compelling mobile banking solution.

What to expect in 2012 for credit cards arena

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MADISON, Wis. (1/3/12)--CardRatings.com recently offered advice from experts on what consumers can expect in 2012 from credit card issuers.

  1. While lenders and issuers maintain strict underwriting standards, they will not be as strict as in recent years, according to John Ulzheimer, president of consumer education at smartcredit.com. Credit scores have risen for many consumers, and one result is that banks have increased their offers of credit.
  1. Rewards cards will remain the most popular type of card. Banks want deeper, product-driven relationships--especially checking accounts--with customers, according to Dennis Moroney, research director at Tower Group. For that reason, the 0% balance transfer offer is making a comeback, he said.
  1. Card holders will be rewarded with cash. Capital One's Cash MasterCard set the standard with 1% cash back on every purchase for the first year. On the first anniversary of the card activation, the customer gets a 50% bonus on everything earned in the previous 12 months.
  1. Travel and airline perks will remain popular. High-fee cards will offset their costs by covering foreign transaction fees, baggage fees and offering priority boarding according to Curtis Arnold, founder of CardRatings.com. Banks lost many customers to credit unions in 2011, Ulzheimer added. These perks make banks look more attractive.
  1. Debit reward programs are likely a thing of the past. The negative publicity banks received over proposed debit card fees in 2011 have moved more people to credit cards, and debit reward programs are a casualty of that migration, said Arnold. Look for more debit-credit duo cards, Moroney said.
  1. Chip and pin cards are gaining momentum, Moroney said. Chips protect against card-present fraud, he added, and online security is not a concern--as it is with mobile banking. Ulzheimer told CardRatings.com he doesn't think the mobile banking market will take off as some predict, but card issuers still must find a way to market their brands via mobile devices.

CU System briefs (12/30/2011)

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  • SAN JOSE, Calif.  (1/3/12)--Alliance CU got into the spirit of the season by randomly handing out $20 credit union Visa gift cards to 40 people on Dec. 20 and 22 during a Christmas in the Park event in downtown San Jose.  The credit union's Make a Difference  event is part of its mission to surprise people with random acts of kindness and spread generosity in the community. "We've held a $1 bill giveaway and treated people to lunch, but since it's the holidays, we thought it would be nice to make a bigger impact on a few families in  our community," said Emily Condon, senior vice president of marketing and retail delivery. Many recipients were pleasantly surprised to receive the card. One recipient later e-mailed the credit union to say she and her daughters "used the $20 (with some added from their piggy banks) at Toys R Us this morning to buy gifts for kids at the San Jose Family Shelter…Thank you for helping remind me and my girls about the true meaning of Christmas." Watch  a video of the event  on the credit union's Facebook page ...
  • TOTOWA, and PATERSON, N.J. (1/3/12)--A student-run branch in a partnership between North Jersey FCU, Totowa, N.J., and the John F. Kennedy High School Knights, Paterson, will celebrate its first year on Jan. 18.  "The Castle" is run by students from grades 10 to 12 who attend training and are supervised by a teacher and an employee at North Jersey Federal. As participants of JFK High School's Business, Technology and Marketing Academy, the students have developed marketing promotions and initiatives to increase membership. For example: from Nov. 1 through  Dec. 20, anyone opening an account at The Castle was eligible to enter an iPad2 sweepstakes. The winner is Christelle Vanderpool. From left are Sandra Martinez-Preyor, academy vice principal; Bradley Browne, marketing manager at North Jersey FCU; Vanderpool; Pamela Powell, business education and academy teacher; and Amod Fields, principal of operations, John F. Kennedy Educational Complex. (Photo provided by North Jersey FCU) …

Card data security vendors had busy 2011

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MADISON, Wis. (1/3/12)--The payment industry's emphasis on security appears to be paying off. Breached payments worldwide fell to less than four million in 2010--the latest figures available--from 361 million in 2008, according to Verizon Communications and U.S. Secret Service reports.

On the other hand, 760 data breaches, the largest number to date, were reported last year.

The reports found a significant decline in large scale breaches. Cybercriminals are engaging in small, opportunistic attacks rather than large scale, difficult attacks and are using relatively unsophisticated methods to penetrate organizations, according to Verizon.

The payments industry continued to take steps to bolster security in 2011.

In August, Visa started a program that combined fines with incentives to make its merchants compliant with Payment Card Industry Security Standards Council guidelines and requirements.

Also in August, the Payment Card Industry (PCI) Council issued new guidelines on tokenization.  Tokenization is a process that conceals the financial account number from a merchant by replacing it with a surrogate number referred to as a "token."  

In October, the PCI Council announced an update to its personal identification number (PIN) security program under which any card-acceptance device can be tested and approved for eligibility to use advanced encryption---even in those devices that do not accept PIN transactions (American Banker Oct. 17).

The PCI Council in November announced its special interest group initiative would set new security and compliance standards for cloud computing, e-commerce security and risk assessment.