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CU System briefs (12/07/2010)

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* HARRISBURG, Pa. (12/8/10)--Pennsylvania Credit Union Association (PCUA) President/CEO Jim McCormack was recognized for his years of service on the PASAE board of directors (Life is a Highway Dec. 7). PASAE, headquartered in Harrisburg, was founded as the Pennsylvania Society of Association Executives and serves more than 500 association and business professionals to advance the association management community in the state. PASAE Chair Daniel Tunnell presented McCormack with an engraved silver clock. McCormack has been a member of PASAE since 1981. He was elected to the board in 2005 and served as board chair in 2009 and as immediate past chair in 2010 … * ASBURY PARK, N.J. (12/8/10)--Steve L. Baker, 40, of Camden County, N.J., was sentenced to more than 64 years in prison for three financial institution robberies in Ocean and Monmount counties. Baker had been convicted in August of six counts in the armed robberies of the Investor Savings Bank, Lakewood, on Sept. 24, 2009; the PNC Bank in Brick on Nov. 9, 2009; and the First Atlantic FCU in Neptune on Jan. 13. He was also convicted of using a firearm during each robbery. Baker was ordered to pay $145,111 in restitution to the financial institutions. A co-defendant, Deshawn Clayton, 33, of Ocean Grove, pleaded guilty to the credit union armed robbery and was to be sentenced Tuesday. During the robberies, Clayton would vault the teller counters and loot money from drawers while Baker stayed in the lobbies and threatened the employees by saying, "It's not your money, it ain't worth dying for" (Asbury Park Press Dec. 6) … * CLACKAMAS, Ore. (12/8/10)--Two women were arrested 20 minutes after a robbery at Rivermark Community CU Monday in Clackamas, Ore., near Portland. Brittney Ann Sykes, 23, and Emma Westhusing, 19, were taken into custody after investigators surrounded a home. The robbery occurred when a woman entered the credit union branch at about 5 p.m. and demanded cash, then left with an undisclosed amount (Associated Press Newswires Dec. &7) …

Canadian CUs first FIs to launch mobile P2P payments

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VANCOUVER, B.C. (12/8/10)--Two credit unions are the first Canadian financial institutions to launch a payment system allowing users to securely send or receive money directly between financial institution accounts on their smartphones or computer. Central 1, which provides the e-mail and mobile platforms--has partnered with British Columbia's Prospera CU and Teachers CU of Ontario to launch Interac e-Transfer. The partnership is the first step in making person-to-person payments widely available across financial institutions. "Canadians have traditionally been eager to adopt new technology and there are already 22 million wireless subscribers in Canada," said Oscar van der Meer, chief technology officer for Central 1, the central financial facility and trade association for British Columbia and Ontario credit union systems. "This is the logical evolution of mobile banking, and as more retailers and financial institutions adopt mobile payments, the potential impact for consumers is virtually limitless," he added. Seventeen percent of Canada's credit union members have access to mobile Web banking, said Central 1. In addition, 18% of members have access to e-mail money transfers and 45% to mobile SMS text banking. Roughly 70% of Canadians nationwide use a mobile phone and 34% of those are smartphones such as a BlackBerry or iPhone. Interac e-Transfer simplifies the direct transfer of funds. The feature was previously known as Interac E-mail Money Transfer and was limited to sending funds between bank accounts using e-mail. Transfer notifications can now be sent either from computer to smartphone or from smartphone to smartphone in real-time. Other transfer solutions may take several days to complete a transfer and involve a stored value account.

WesCorp directors file response to NCUA claims

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LOS ANGELES (12/8/10)--Former Western Corporate FCU directors filed briefs in support of their motion to dismiss a lawsuit brought by the National Credit Union Administration (NCUA) related to decisions made prior to WesCorp's conservatorship. The briefs were filed Monday in the U.S. District Court, Central District of California, Los Angeles, in reply to NCUA's opposition filed Nov. 22 to the dismissal motions, which the former directors originally filed on Nov. 1. NCUA's suit, which seeks $6.8 billion in damages, alleges that WesCorp officers and volunteer directors breached fiduciary duties and engaged in "gross negligence" in their investment decisions before the recession. The case hinges on the way the court will treat the "Business Judgment Rule," which immunizes directors from personal liability if they follow the rule's requirements and insulates from court intervention management decisions made in good faith in what is believed to be the organization's best interest. According to the former WesCorp directors' brief, the business judgment rule "means that before a plaintiff can seek billions of dollars of damages from unpaid volunteer directors unsullied by any conflicts of interest or ulterior motives, the plaintiff must make cogent factual allegations strongly suggesting that the directors blinded themselves to reality, acted in bad faith or lacked any rational business purpose." NCUA's complaint "does not do that here," noted the brief. According to the opposition briefs filed by NCUA on Nov. 22, however, it is the agency's view that--at least with respect to WesCorp--the business judgment rule "does not eliminate directors' liability for breach of the duty of care." NCUA's complaint also alleges fraud as well as breach of fiduciary duty against Robert A. Siravo, WesCorp president/CEO from May 22, 2009, to March 20, 2009, and another officer related to executive compensation. The complaint alleged that Siravo and the other officer manipulated the board into approving more executive compensation than the board thought it was approving. NCUA is pursuing a third former officer for alleged unjust enrichment also related to executive compensation. WesCorp was placed into conservatorship on March 19, 2009, after it was required to recognize losses of $6.8 billion.

Michigan CU 3Q results show continued growth

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LANSING, Mich. (12/8/10)--Michigan’s credit unions continued to strengthen their financial positions in the third quarter, with strong earnings and growth in membership--54,000 new members since year-end 2009, according to the Michigan Credit Union League & Affiliates. Third-quarter statistics from the National Credit Union Administration and the Credit Union National Association highlight the continued deposit growth (7.3% for the 12 months ending Sept. 30), business loan growth (22.9%), and strong return on assets (ROA)--up to 34 basis points from 28 at mid-year, the league said. “As Michigan’s economy begins to recover, credit unions continue to grow and lend to small businesses and consumers,” said David Adams, league CEO. “The third quarter saw improvement for credit unions’ already strong financial indicators, allowing our industry to continue to support the state’s economy through lending.” Michigan continues to have the highest percentage of credit union membership among the 10 most populous states, at 44%, the league said. In the third quarter, nearly 40,000 residents moved their money to a local credit union, bringing total credit union membership in the state to 4,488,110. Other key statistics:
* Michigan’s credit unions showed stronger than expected ROA of 0.34%, despite high loan losses from a challenging economy, and continuing loan and deposit growth. * The net worth to assets ratio, a key measure of financial strength, shows Michigan credit unions held steady in the third quarter at 10.8%, higher than the national credit union average (10%). * As Federal Deposit Insurance Corp.-insured institutions pulled back on lending (down 8%), Michigan credit unions still showed positive loan growth (0.7%) for the 12-month period ending Sept. 30. Specific areas of growth included used auto loans (up 9.9%), first mortgages (up 2.9 %) and credit cards (up 4.2%). * For the 12 months ending Sept. 30, business loans by credit unions showed strong growth, up 22.9%, while the national growth rate for credit unions was 6.9%. For Michigan banks, commercial lending declined by 3.1% through September. Nationally, commercial lending by banks declined by 7.8% during the period. * Credit union deposits grew by 7.3% through the 12 months ending Sept. 30, including 17.6% growth in money market account balances, as consumers seek the safety and higher rates offered by credit unions. * Michigan credit unions also continued making real estate loans (up 0.2%), while banks cut back (down 8.6% in Michigan, down 5% nationally) for the 12 months ending Sept. 30.

CU local biz to provide jobs throughout Northwest

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ST. HELENS, Ore. (12/8/10)--St. Helens Community FCU, recently partnered with Northwest Structural Moving, Scappoose, Ore., to finance business loans for the purchase of specialized moving and rigging equipment. Loans such as these make possible the projects that Northwest Structural Moving is involved in, such as moving the 75-ton navigational lock to The Lower Monumental Dam on the Snake River, said the credit union in a press release. “Projects like this one help keep our Columbia County-based employees working all over the Northwest,” said Christy Settle, co-owner of Northwest Structural Moving. St. Helens Community FCU has $160 million in assets. The Credit Union National Association (CUNA) and credit unions have proposed lifting member business lending (MBL) limits for credit unions from the current 12.5% of assets to 27.5%. CUNA has estimated that lifting the MBL cap could create over 100,000 new jobs and inject over $10 billion in funds into the economy at no cost to taxpayers (News Now June 30).

New survey CUs on top in customer satisfaction

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MADISON, Wis. (12/8/10)--Credit unions and small banks lead their larger rivals in customer satisfaction and loyalty, according to the Prime Performance 2010 Bank and Credit Union Satisfaction Survey released Tuesday. The results from the survey of more than 6,000 U.S. bank and credit union customers indicate customer satisfaction is highest at credit unions and small banks. The report, issued today, analyzes results for credit unions, small banks, large banks and megabanks, including Chase, Bank of America and Wells Fargo (PRWeb Dec. 7). “The Credit Union National Association (CUNA) is not surprised at the finding, because this confirms what study after study have found,” Bill Cheney, CUNA president/CEO, told News Now. “It’s fine to be included with ‘small banks’ in a survey such as this. However, it’s also important to note the very real and fundamental difference between banks and credit unions, regardless of size: Credit unions’ not-for-profit, cooperative structure. “Ultimately, that’s what separates all credit unions from the rest, and drives their passion to provide the best service to their members, rather than amass profits,” he added. For big banks, the study revealed that customers question where bank’s loyalties really lie. When responding to the statement “My bank does what’s best for me, not the bank’s bottom line,” 16% of big bank customers responded that the bank’s interest came first. The percentages of negative answers were even higher for three of the best-known names in American banking. Twenty-three percent of Chase and Bank America customers believe their interests came second to the banks. At Wells Fargo, the number was 18%. Only 9% of small-bank customers believe that their bankers place the bank’s interests ahead of those of their customers. Survey findings included:
* Credit unions and small banks rate highest in meeting their customers’ needs; * Customers believe smaller institutions have the friendliest personnel and Chase the least friendly; *Customers at credit unions and small banks are far more likely to recommend others use their bank than customers at big banks and mega-banks; * Customers at credit unions and small banks are far more apt to believe employees want to help them than customers at big banks and mega-banks; and * Customers at credit unions and small banks are more apt to believe employees enjoy their jobs than customers at big banks and megabanks.
“In short, the study suggests that small banks and credit unions have a huge competitive advantage when it comes to giving customers an experience that meets their financial and emotional needs. Given the current vulnerability of larger institutions, we’d advise small banks and credit unions to hone their service skills a bit more and to go after depositors who want the environment and experience they offer,” said Jim S. Miller, president of Prime Performance. Survey data also shows that failure to say “thank you” significantly degrades the client experience. When employees thank customers, satisfaction rises at all financial institutions. The survey indicates:
* Roughly 18% of large banks customers rate their experience “unsatisfactory.” Only 2% do so when “thank you” is said. * About 11% of small bank customers rate their experience “unsatisfactory.” Only 1% does so when “thank you” is said. * Only 5% of credit union members rate their experience “unsatisfactory.” Only 1% does so when “thank you” is said.
Based in Denver, Prime Performance specializes in helping financial institutions enhance the banking experience they deliver to customers.

Members with second jobs increase says league.

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DULUTH, Ga. (12/8/10)--For consumers, taking a second job is a sometimes way to make ends meet. For someone working in collections, it’s a warning sign. The Bureau of Labor Statistics reports that 27 million Americans are working second jobs. And according to ABCNew/Money, the number of Americans looking for second jobs is expected to grow. “Usually, these are people who have been laid off from their primary job and are taking on two or even three part-time jobs to make ends meet,” said Ted Walden, president of Community Federal Credit Union, Waycross, Ga., in a Georgia Credit Union Affiliates press release. However, Walden doesn’t typically uncover these details until a member becomes delinquent on a loan. And with an economy sputtering like an engine that just won’t quite start, he’s seen an increase in “second-job syndrome.” “When we learn about these situations, we work with the individuals to help them prevent repossession or foreclosure,” Walden said, noting that he urges people who are struggling to make payments to contact their financial institutions first. “When we are apprised of the situation, we do everything we can to help people find a way out of the problem.” Working two jobs is never ideal, and Walden suggests credit unions can help members who want to cut an extra job by helping them make a plan. For example, consolidating high-interest debt may allow people to pay the debt down more quickly. “The goal is to reduce the debt and get to a point where you could live without the extra cash,” Walden said. Credit unions looking to help members who are facing the possibility of taking on a second job might ask these questions:
* What types of sacrifices is the family making when a second job is added? * How much additional income will a second job generate for the family? * How many hours per week will the member devote to a second job? * What factors should the member weigh to decide whether it’s worth getting a second job? * Are there alternatives to making ends meet without resorting to a second job? * Does having a second job alleviate stress or add to stress? Why or why not?