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CU System briefs (12/31/2012)

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  • DUBLIN, Ohio (12/31/12)--Dublin, Ohio-based BMI FCU has expanded its field of membership, the credit union announced on its website. The credit union is now open to everyone who lives, works, worships or attends school in Franklin, Licking, Fairfield, Pickaway, Madison, Union, Delaware or Morrow counties--the Columbus Metropolitan Statistical Area. "With this new change in our charter, we'll be opening up our membership eligibility to 1.8 million people in central Ohio," said William P. Allender, president/CEO, in a message to members in the credit union's December newsletter  …
  • IDAHO FALLS, Ida. (12/31/12)--The Federal Bureau of Investigation's new bank robbery website highlighted a robbery that occurred at East Idaho CU's Rexburg branch on Nov. 7. The suspect is known as the AK-47 Bandit, is a serial robber (Idaho State Journal Dec. 23). The site is a national website that focuses on seeking the help of the public in solving significant open case robberies of banks and credit unions. Its emphasis is on serial robbers or those who are especially violent. It features a gallery of surveillance photos of the suspects and a map of the locations of the robberies …
  • RICHMOND, Va. (12/31/12)--Virginia CU's financial education programs reached a record 12,042 youth and adults during 2012, said the Richmond-based credit union. It provided financial education programs in schools, workplaces, public libraries and its own facilities. The credit union offered weeklong money camps for teens, an introduction to personal finance for college students at Virginia Commonwealth University, adult workshops in budgeting and reducing debt, and programs for first-time homebuyers and on using online banking tools. Young people accounted for two-thirds of the participants. A curriculum developed by VACU Financial Education Director and former public school teacher Cherry Hedges covers the basics of budgeting, saving, borrowing, and what to know before making a major purchase, such as a car …

CUNA in Housing Wire: CUs grew, banks lost consumer confidence

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MADISON, Wis. (12/31/12)--U.S. credit unions have benefitted from some of the failures of larger banks and saw big growth in the past year, a Credit Union National Association (CUNA) economist told HousingWire Wednesday.

During the past year, credit unions nationwide have seen net membership gains of more than two million--up 2%, Mike Schenk, CUNA vice president of economics statistics told the publication.

The gain puts credit union membership at its highest level in 15 years during a time when banks still are contending with a loss in consumer confidence and legacy-mortgage issues, Schenk added.

"The consumer backlash against the banking industry (and especially big banks) had its roots in the housing/financial crisis as it became more obvious that many if not most of the large banks saddled consumers with grossly inappropriate mortgage loans," Schenk explained.

"The backlash intensified in 2011 when several big banks announced plans to impose excessive deposit account fees," he added.

The International London Interbank Offered Rate (LIBOR) scandal consisted of accusations that international banks manipulated rates--negatively impacting the cost of borrowing on specific types of loans, HousingWire said.

"Credit unions are not totally immune from these manipulations operationally because the manipulations can influence product pricing in the marketplace and, by extension, profitability and demand for products and services," Schenk explained. "More broadly, credit unions were not party to any manipulation.

"Subsequent reports of misdeeds (such as the LIBOR scandal) have helped to fuel the fire of anti-bank sentiment and credit unions are undoubtedly benefiting from all of these developments," he concluded.

To read the article, use the link.

Desert Schools FCU's $150K grant aids ed project

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PHOENIX (12/31/12)--Desert Schools FCU in Phoenix Wednesday awarded a $150,000 grant to support a local educational effort.

The $3.1 billion asset credit union will provide the money in a three-year grant to the Balsz Promise Neighborhood (BPN) project--which promotes long-term community education in the Phoenix area for toddlers through college-age students (Phoenix Business Journal Dec. 26).

The BPN project comprises an elementary school district, a local United Way and other community nonprofit and governmental organizations.

The mission of the neighborhood project is to develop a long-term plan to improve family and community involvement around student academic success, the Journal said.

NY's Bridgeway FCU designated as CDFI

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POUGHKEEPSIE, N.Y. (12/31/12)--Bridgeway FCU in Poughkeepsie, N.Y., has received a Community Development Financial Institution (CDFI) Certification from the U.S Treasury.

The designation indicates Bridgeway FCU serves a vital role in its community's development and opens the door for future grant money to create positive changes for its low- to moderate-income "working-class" members, the credit union said.

The certification benefits Bridgeway FCU in three ways. It allows the credit union:

  1. To establish partners in the community, so it can assist with financial services. For example, if non-profits have clients who are struggling to pay their rent, Bridgeway can work with them to provide budget counseling to find ways to reduce their expenses. The credit union also can refer members to local non-profits for services outside the financial scope.
  1. To apply for funding to train all employees to become Community Development Certified Financial Counselors so staff can identify, intervene and coach distressed members.
  1. To apply for funding to develop specific lending products, such as micro-business loans. Bridgeway has already developed a "credit builder" loan and "down payment builder" loan--and has offered personal loans as alternatives to payday loans.
Bridgeway FCU's branch managers and frontline employees will complete financial counseling training, which starts in January. It then will develop additional partnerships with local non-profits to reach underbanked or underserved individuals.

"Since we are the only CDFI-certified financial institution in our area, individuals who need our resources will have greater access that comes along with the capacity building of CDFI certification and U.S. Treasury funding," Bridgeway FCU President/CEO Michelle McCourt said. "As a partner, we can achieve more together than operating individually. By combining our efforts with partners, we will enhance the financial and social well-being of our communities."

CU Strategic Planning assisted the credit union with its application.

Expect 2013 to be the year of the tablet

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MADISON, Wis. (12/31/12)--2012 was the year of the smart phone in mobile banking. 2013 will be the year of the iPad and other tablets. Credit unions and other financial institutions are already employing iPads in the workplace for specific functions, while others are encountering operational, security and legal issues related to employees using Bring Your  Own Devices (BYOD) at the office.

The surrounding use of these devices at work will continue to grow. Consider the latest statistics: More than 17 million Apple iOS and Google Android devices were activated on Christmas Day--up 250% from that day in 2011, says CNN Money (Dec. 28). Apple's App Store saw Christmas Day downloads increase 87% from last year.

Credit unions will be faced with several choices:

  • Embrace the BYOD trend by letting employees bring their devices to and use them at will; the employee controls the use and is responsible for any issues, such as leaked secure information.
  • Head off the trend by offering the credit union's own tablets with secure information in "containers"--called "containerizing," according to Gartner (eweek.com Dec. 27); the credit union owns the devices and controls their use.
  • Forbid use of personal devices at the workplace. In this case, be prepared to enforce the policy and be prepared for unhappy employees who aren't as productive because they can't choose the device that works best for them, said eweek.
Some financial institutions, such as Barclays, own the tablets their employees use. Barclays recently ordered 8,500 iPads for staff to improve customer service and boost sales (American Banker Dec. 27). That averages five iPads in each of its 1,600 branches.

Sovereign Bank wanted a secure, locked down experience, which prevents synching with other devices such as an employee's smartphone or home computer. The bank offered iPads to 140 employees to pilot the devices in the workplace, according to New York-based information technology and electronics firm Tekserve, which set up the devices for the bank.

The key issue is about who has control of the device being used at the office, said Tekserve. Banks and others are buying the devices and setting them up with recommended apps and personalization, so the user's e-mail, Virtual Private Network access and other information are on the device the first time the employee uses it. Others assign each user an app store login and let them install their own apps.

These banks aren't alone. A host of credit unions are involved in smartphone and tablet technology with their mobile banking services.  Others use iPads in specific ways. For example:

  • Element FCU, Charleston, W.Va., which recently went digital, uses iPads to verify members and information, and avoid teller lines;
  • America First CU, Riverdale, Utah, which replaced laptops with iPads as a cost-cutting measure to transform financial data into pictures; and
  • Credit unions around the world use smartphones and iPads for field reps going into rural areas to make transactions with members.
Once credit unions choose which route to pursue with tablets and other BYODs, they should communicate their policies with their employees. There is a significant lack of communication between companies and their employees about BYOD, according to a study by GLOBO (mspmentor.net Dec. 28).  The company surveyed employees and found:

  • 68% of respondents used personal devices for work;
  • 29% said their company had a BYOD policy in place;
  • 42% did not know if their company had a BYOD policy;
  • 42% did not know if their company's policy allowed IT full access to employee personal devices;
  • 69% said they would not consider breaking a BYOD policy even if they knew they wouldn't be caught; and
  • 93% said they would not participate in a BYOD program if IT clearly stated it has access to the employees' personal information such as e-mails and contacts.
Even the Credit Union National Association (CUNA) is taking advantage of the tablet trend. It now offers seven CPDOnline  courses available for iPads in its CUNA Volunteer Achievement Program. For more information, use the link.

Iowa article on tax battle notes CUs' different structure

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WATERLOO, Iowa (12/31/12)--An Iowa newspaper's account of the battle over credit unions' tax status features a credit union and the Iowa Credit Union League pointing out credit unions'  not-for-profit structure and citing Credit Union National Association (CUNA) estimates on how much credit unions benefit consumers in the state.

Veridian CU CEO Jean Trainor and Justin Hupfer, league vice president of government affairs, in an article in the Waterloo-Cedar Falls Courier (Dec. 27), defended credit unions' tax exemption against attacks by the Iowa Bankers Association.

"The reason we have a different tax structure is that we have a different structure, period," Trainor told the newspaper in an editorial board meeting. Trainor noted that credit unions are member-owned and have a volunteer board, while banks are owned by stockholders and have a paid board of directors.  The banks' profits go to their stockholders. Credit unions' lower loan rates translate to an increase in dividends paid to all members or better services if there are excess earnings, she said.

"Nothing has changed since we were created back in 1934. We're still owned by our members," said Trainor in the article. Waterloo-based Veridian is the largest credit union in the state, with $2.02 billion in assets.

The league's Hupfer told the newspaper that members are the main beneficiary of lower tax rates since credit unions are not for profit.  He cited  CUNA's June survey that showed Iowa credit union members in the previous year received $75.9 million in benefit  when compared with the state's banks. The benefit is based on credit unions' lower rates for loans, higher savings rates and lower fees.

Trainor also defended credit unions' push urging Congress to pass legislation that would raise the member business lending cap for credit unions to 27.5% of assets from 12.25%. The bill is important nationally for credit unions because small businesses have been telling them that it is more difficult to get a business loan from a bank since the recession.  She noted credit unions want to raise the cap so they can meet the needs of their members.

CUNA estimates that raising the cap would generate $13 billion for new small business loans and 140,000 new jobs the first year, without cost to the taxpayer.

For the full article, use the link.

Ireland's government enacts CU reforms

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DUBLIN, Ire. (12/31/12)--Ireland's credit unions will start off the New Year facing significant changes, a result of new reforms in the Credit Union and Cooperation with Overseas Regulators Act 2012, enacted earlier this month.

The new law encompasses more than 60 recommendations made by the Commission on Credit Unions last March and clears the way for the government to earmark US$331 million to the Credit Union Fund mandated by the law to help shore up the credit union sector and support restructuring (Tax-News.com Dec. 28 and The Irish Times Dec. 27).

The reforms involve four broad areas: prudential regulation (including reserves, liquidity, lending and investments); governance (including limiting directors' terms to 12 years in aggregate for any 15 year period); restructuring and stabilization overseen by a new Restructuring Board; and support of viable but undercapitalized credit unions.

It is Ireland's first major overhaul of credit union legislation in 15 years, said Finance Minister Michael Noonan, who added the government is making a key investment in the future of the credit union movement there.

Canadian Bobby McVeigh is heading the Credit Union Restructuring Board, which will have a lifespan of about three years. Its function will be to oversee mergers or closures.  Some have said that mergers could cut the number of credit unions from 400 to 200, said the Times. The mergers are meant to be voluntary and incentivized, said Tax-News.com.

The Irish Credit Union League has been supported of the restructuring (News Now April 19).

CUNA closed Tuesday, no News Now

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WASHINGTON  and MADISON, Wis. (12/31/12)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association will be closed Tuesday in observance of New Year's Day, a federal holiday.

News Now will not publish a regular edition Tuesday but will resume regular issues on Wednesday.

UK considering raising rate cap on CU loans

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LONDON (12/31/12)--The government of the United Kingdom (U.K.) this month started a formal consultation on increasing the maximum interest rate cap for credit union loans to 3% per month from the current 2% per month.

The consultation on the proposals will continue through March 15, and any changes are anticipated to take effect in April 2014 (Mortgage Strategy and Press Association National Newswire Dec. 18).

Under current rules, the 2% limit means credit unions often sustain a loss on smaller shorter-term loans they make because of the high administrative costs, compared with the relative value of the loan, the publications said.

By raising the interest rate credit unions can charge on monthly loans to 3%, credit unions will be able to operate more efficiently, become more stable and make more money available to members, the Economic Secretary to the Treasury, Sajid Javid said.

Credit union loans will remain significantly cheaper--even with the 1% increase--than the alternatives for consumers who often find it hard to procure mainstream sources of finance, Mortgage Strategy said.