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CU System

CU System briefs (12/08/2011)

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  • FORT WORTH, Texas (12/9/11)--American Airlines announced Thursday its restructuring plans and that it has named a board member of American Airlines FCU to an executive position on the struggling airline's management team. Credit union board member Denise Lynn will succeed the retiring Mark Burdette as the company's vice president of employee relations, which serves as liaison between the airline and the Allied Pilots Association. Burdette will retire Dec. 31. Lynn will move from her current position as vice president, flight service. American Airlines FCU is based in Dallas and has $5.4 billion in assets …

CU member rebates dividends another sign of holiday season

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MADISON, Wis. (12/9/11)--This holiday season, many members will get something extra from the credit union--in the form of a year-end rebate on loans or dividends on their deposits, one of the benefits of being a member/owner of a credit union.

Announcements by several credit unions recently have underscored that credit unions return excess proceeds to their member owners--something that for-profit financial institutions don't do.  With the economy still struggling, and consumers feeling pinched, credit unions know that this year, giving something back will mean even more.  Even credit unions that have tighter margins than usual this year make an effort to give back.

A good example is MECU of Baltimore (Md.) Inc. The more than $1.1 billion asset credit union, which has more than 99,000 members, paid its members a loan interest rebate of nearly $1.14 million--about 6% of the interest they paid on their loans between June 25 and Nov. 30.  It also will pay  members an extraordinary dividend on deposit accounts at the end of December. The rebate is in addition to more than $2 million cash bonus paid its members in June. By the end of year, the MECU will have paid members more than $4 million in cash bonuses.

MECU has a long tradition of the cash bonus, which began in 1981.  In 2008, at the high of the nation's financial crisis, MECU's board decided to pay half the cash bonus at the end of June and the remainder at the end of December to help members dealing with financial issues from the recession.  It expects to give the second half of the cash bonus in December.

Other recent examples include.

  • Guardian CU, a $208 million asset credit union in Montgomery, Ala., announced it will give members more than $750,000 in interest rebates and dividend bonuses. About 23,000 members received money back this week, with one individual receiving as much as $3,100. Guardian said the move is a way to say thank you for members' relationships and business over the past year; to give back to members who helped it have a prosperous year; and to help improve members' financial well-being throughout the year. "This 'give back' should also have a significant effect on the community and local businesses," said the credit union's press release, because people "have more than $100 extra to spend right here in the River Region this Christmas."
  • Wright-Patt CU, based in Fairborn, Ohio, will pay $5 million in special patronage dividends to more than 210,000 of its 215,000 members. The amount, which is $1 million more than last year, will be distributed Jan. 4, the $2 billion credit union said.  Since 2008, it has distributed $16 million in excess earnings to members.  "Paying a patronage dividend is great for our members, but our top priority has always been and will continue to be keeping our members' money safe," said Doug Fecher, CEO (Dayton Business Journal Dec. 1).
  • GCS FCU, a $298 million asset credit union based in Granite City, Ill., paid out a bonus dividend last month of 0.25% added to the current share rate to its members share savings accounts, according to its website. Dividends paid so far this year total more than $2.5 million.
  • Omni Community CU, a $270 million asset credit union based in Battle Creek, Mich., announced its Cashback Rebate program as a way to say "Thank you for making us your financial institution," according to its website.  It has paid $3.2 million to members since 2008.  This year members will receive 0.05% to 0.40% on all 2011 average yearly loan and account balances for 2011.  Members must be a member as of Nov. 15 and maintain an active account through Jan. 13, 2012. Members will receive their rebate in their savings account on Jan. 13.

Three nominations added to CUNA Board election

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MADISON, Wis. (12/9/11)--The Credit Union National Association (CUNA) has received three additional nominations for the CUNA Board election.

Nominations received include:

  • Patrick Jury, Iowa Credit Union League, Des Moines, Iowa, District 4, Class D;
  • Mike Mercer, Georgia Credit Union Affiliates, Duluth, Ga., District 3, Class D; and
  • Rod Staatz, SECU, Linthicum, Md.; for District 2, Class C.
 

Nominations were previously received from:

  • Pete Dzuris, Northland Area FCU, Oscoda, Mich., District 4, Class B;
  • Brett Martinez, Redwood CU, Santa Rosa, Calif., District 6, Class C; and
  • Winona Nava, Guadalupe CU, Santa Fe, N.M., District 5, Class A.


Other seats with openings in 2012 are:

  • District 1, Class B; and
  • District 3, Class A.
Deadline for nominations is Dec. 16.

An individual must be an employee or voting board member of the nominating credit union to be an eligible candidate elected by credit unions. 

To become an eligible candidate to be elected by leagues, an individual must be a league president and must be nominated in writing by the league, and the nomination must be seconded in writing by at least one other league from the district.

For contested elections, ballots will be sent Dec. 20, with voting continuing through Jan. 27.

Directors will take office upon the adjournment of CUNA's Annual General Meeting on March 18.

Nomination packets are available by calling 800-356-9655, ext. 4013; using the resource link; or e-mailing thanson@cuna.coop.

For more information, use the resource link.

Pa. N.Y. CUs announce merger plans

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CORNING, N.Y. (12/9/11)--American Community FCU, with $6 million assets, Chambersburg, Pa. and $896 million asset Corning CU (CCU), headquartered in Corning, N.Y., will be merge on Jan. 1.

Corning CU will be the continuing credit union, the credit unions announced. They have collaborated the past several months, during which time American Community has also been without a CEO.

American Community members will gain increased product and service offerings through the merger, while Corning will take over American's branch in Chambersburg.

"While CCU has always been strongly committed to the Greencastle area, this merger will solidify us as a credit union leader in the area and will reinforce our commitment to growing our business in Franklin County," said Gary Grinnell, Corning CU president/CEO. "Our goal now is to make the transition smooth and successful for all American Community FCU members."

Grinnell said service to American FCU members will continue uninterrupted until Corning CU is ready to begin transitioning accounts.

IU.S. News and World ReportI IYahoo FinanceI cite benefits of CUs

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NEW YORK (12/9/11)--An article outlining "Why You Should Consider a Credit Union" in Thursday's issue of  U.S. News & World Report, which also featured comments from the Credit Union National Association (CUNA)  and the  National Credit Union Administration (NCUA), was among several positive press items about credit unions in national media this week.

The article joined others carried in Yahoo! Finance, MarketWatch, NASDAQ, and credit.com via  military.com. Even a press release from a solar energy products company touted credit unions as one of "Top 4 Ways to Save Hundreds of Dollars in 20 Minutes or Less."

The U.S. News & World Report article noted the banks are having a tough year with new interchange rules and consumers are paying the price. "Credit unions, meanwhile, are offering some attractive deals," it said.  Bill Hampel, CUNA's chief economist, told the publication that credit unions have volunteer boards, have no stockholders to please, and  never took the risks that larger banks did by investing in derivatives markets. So the financial crisis was not nearly as hard on them, he said

It also pointed out CUNA's estimates that in the year ending March 2011, members saved $6.78 billion in interest and fees when compared with bank customers.

NCUA Chairman Debbie Matz told the publication that credit unions offer better rates than other financial providers and that she encourages consumers to comparison shop before opening accounts or signing for loans. She said the average interest rate of banks' five-year new-car loans is 5.1% while credit unions average 3.73%.  For the full article, use the link.

Other articles included:

  • "6 Benefits of Using a Credit Union," published by Investopedia and carried in Yahoo!Finance. In the article, Jenn Cloud, Young and Free spokesperson for Bridgeton, Mo.-based Vantage CU, and Seattle (Wash.) Metropolitan CU discuss misconceptions about and the benefits of credit unions. Use the link to access the article.
  • NASDAQ.com published an article, "Should You Switch to a Credit Union?" written by the Financial Planning Association (Dec. 7), which discussed Bank Transfer Day and cited CUNA information about traffic on its website. It noted that "credit unions offer some attractive features over a traditional commercial bank."  Use the link to access the article.
  • MarketWatch, in an article Thursday about the Occupy Wall Street movement, also wrote that "If you're a consumer who's had enough, it's only a matter of moving your accounts. The biggest bank-free option is the credit union."
  • military.com picked up credit.com's article, "3 Ways to Avoid New Hidden Bank Fees," in which one of the three suggestions is to "switch banks." It recognized credit unions as an alternative for credit card fees and said that "many small, local banks and credit unions are in a position to offer you a better deal than goliaths like Bank of America or Citi."

WOCCU program helps Ethiopian agriculture CUs

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GANTA AFESHUM, Ethiopia (12/9/11)--Some Ethiopian farmers are members of Sasun RUSACCO--literally "rural savings and credit cooperative" or credit union--and are required to attend farming and financial training as part of their RUSACCO membership. Sasun is one of a growing number of RUSACCOs taking advantage of a World Council of Credit Unions (WOCCU) program funded by the U.S. Department of Agriculture (USDA) to improve the lives of its farmer-members.

Development agent Redai Halefom leads a class on fattening cattle for a group of Ethiopian farmers who are members of an Ethiopian "rural savings and credit cooperative," or credit union.
For example, Redai Halefom, a development agent assigned by Ethiopia's government to educate farmers in the northern region of Tigray, concluded an open-air presentation one day on ways to fatten the native cattle so they would sell at higher prices. Smiles and nods from his class of 20--both men and women--let Halefom know that another group of Ethiopia's subsistence farmers had taken a few more steps to ensure their food and financial security, said WOCCU.

"The Ethiopian model focuses on 'back to the basics' educational development," said Stanley Kuehn, WOCCU's program director in Ethiopia. "We're not introducing new crops, but instead providing greater access to credit so farmers have the resources they need to increase their yields, improve their finances and feed their communities."

WOCCU's program, funded by the monetization of 23,000 metric tons of wheat provided by USDA's Food for Progress program, already has taken root in the northern Tigray region where 89 RUSACCOs are participating. WOCCU is expanding to RUSACCOs in the Amhara and Oromia regions.

The program's goals are to provide technical training that will help turn subsistence farmers into commercial producers, expand agricultural finance products to meet growing farmer-member demand and improve community infrastructure to support agricultural production and marketing, according to Brian Branch, WOCCU president/CEO.

"Ethiopia has an extensive credit union system already in place that is able to serve members in remote rural areas," Branch said. "By strengthening that system through member education and increased resource availability, we hope to help raise the levels of credit union service to improve food security for communities and financial well-being for members."

Farmer Berihun Gebreyohannes (right) benefits from working with Redai Halefom, an Ethiopian development agent (left), to improve the health and marketability of his small herd of cattle. (Photos provided by the World Council of Credit Unions).
About 85% of Ethiopians rely on agriculture as their primary income source, which accounts for 46% of the country's gross national product and 80% of its exports, according to the U.S State Department. Frequent drought, unsustainable agricultural practices and poor infrastructure have hampered farmers' abilities to meet a growing demand, causing nearly 60% to fall below their own subsistence needs.

Ethiopia's nearly 8,000 credit unions, many of which serve fewer than 100 members, comprise a movement that is now more than 50 years old. The government mandates that each kebele, or community of roughly 2,000 households, has its own RUSACCO. However, since the credit unions' capital strength is based on member deposits, institutional growth has failed to keep up with loan demand among their farmer-members. Funding from WOCCU's program helps them provide greater loan access to members, while additional financial education and mandatory member participation in a RUSACCO savings program has strengthened the financial stability of the RUSACCOs.

Kuehn said the program conducted diagnostic studies on the RUSACCOs to determine areas where greater financial education and agricultural training are needed. "Our hope is to create an effective model that further involves the Ethiopian government in practical training and education of its people," he said.

Early results from the WOCCU program, aimed at providing finance and agricultural training to some 16,500 farmers, have been positive, said WOCCU. Berihun Gebreyohannes, a member of Sasun RUSACCO in Tigray, is one farmer who benefitted from the program.

Gebreyohannes works closely with Halefom, who advises him on his small herd of four livestock. The farmer recently borrowed 9,000 Ethiopian birr (about $525) to purchase a second ox, enabling him to plow and plant cabbage and potatoes. Proceeds from the sale of his vegetables and dairy products produced by his two cows will help support his family of five.

"I want my children to go to school and have a better life than I did," Gebreyohannes said. "I couldn't do that without a loan from my credit union."

N.J. CUs sponsor state coalitions fin lit symposium

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MERCERVILLE, N.J. (12/9/11)--New Jersey credit unions, through their partnership with the New Jersey Coalition for Financial Education (NJCFE) created earlier this year, sponsored NJCFE's fifth Annual Financial Literacy Symposium Wednesday in Mercerville.

The Financial Literacy Symposium is the main event of NJCFE's year. With the theme "Community Financial Survival Kit," the symposium provided information from financial and education experts (The Daily Exchange Dec. 8).

Maryanne Evanko, NJCFE chairwoman, and Michael Drulis, NJCFE executive staff, welcomed the group. And Drulis explained that N.J. credit unions became involved with the NJCFE "just in the nick of time," helping the organization expand its reach into New Jersey communities.

Keynote speaker Paul Gentile, president/CEO of the New Jersey Credit Union League, stressed the importance of financial literacy in the state and affirmed New Jersey credit unions' commitment to the cause. Financial literacy is a key component to helping consumers make better financial decisions, and through their offerings--including webinars, seminars, and Reality Fairs program--New Jersey credit unions are dedicated to spreading financial literacy, Gentile said.

"New Jersey credit unions want to partner with organizations to bring financial literacy to New Jersey consumers," Gentile said.

Credit unions' sponsorship of NJCFE is made possible by contributions from the New Jersey Credit Union Foundation and New Jersey credit unions that support the sponsorship, Gentile noted.

The New Jersey credit unions' work with NJCFE is just one example of how credit unions nationwide are supporting financial literacy programs by partnering with state and local community group and agencies to provide fundamental financial educations to help consumers wisely manage their money, credit, and accounts at financial institutions.

The Credit Union National Association has a financial literacy site that includes several programs, such as a Mad City Money hands-on simulation that appeals to youth and gives them a taste of the real world. The site also has a National Endowment for Financial Education High School Financial Planning program. For more information, use the links.

CUANY takes compliance conference to Puerto Rico

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Michael Lanotte, senior vice president/general counsel for the Credit Union Association of New York, talks to a group of 30 representatives from Puerto Rico and the U.S. Virgin Islands credit union movement about proposed regulation. (Photos provided by Credit Union Association of New York)
ALBANY, N.Y. (12/9/11)--The Credit Union Association of New York offered its second Compliance & Legal Conference Nov. 29 for Puerto Rico and U.S. Virgin Island credit unions in San Juan, Puerto Rico. The event attracted more than 30 attendees.

Michael Lanotte, association general counsel/senior vice president, and Michael Carter association director of compliance, led the conference.

"When credit unions gather together as they did for this conference, everyone wins--especially the credit union movement," Lanotte said. "It's representative of credit unions' 'people helping people' philosophy that is shared throughout the world."

Lanotte provided an update on debit interchange and the Consumer Financial Protection Bureau and discussed proposed regulations. Carter offered an update on recently passed regulations.

Participants of the Credit Union Association of New York's second annual Compliance/Legal conference for Puerto Rico and U.S. Virgin Island credit unions in San Juan, Puerto Rico, peruse handouts as they wait for the conference to begin. 
They engaged attendees in a compliance workshop, in which they posed several scenarios, worked through potential issues and came up with solutions as a group.

The conference was part of the association's ongoing partnership with credit unions in Puerto Rico and the Virgin Islands through the World Council of Credit Unions (WOCCU) international partnerships program.

The groups have been partners since 2005. The conference marked their fifth collaborative event.

"I admire the efforts of CUANY to ensure that credit unions in Puerto Rico and the U.S. Virgin Islands have relevant and accurate information on the ever-changing topic of compliance," said Victor Miguel Corro, vice president, foundation and international partnerships, WOCCU. "It's the top priority for those who participate in the partnership."