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Constitution Corporate reports 2009 losses

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WALLINGFORD, Conn. (2/11/10)--Connecticut-based Constitution Corporate FCU announced Wednesday its losses for 2009, subject to audit, at $100.2 million. That compares with $84.3 million net loss in 2008, according to its December financials posted on the corporate's website. Other than temporary impairment (OTTI) of investments totaled $104.3 million, which depletes members' capital shares of $66.8 million to cover the losses above retained earnings as required by the National Credit Union Administration. The OTTI charge includes roughly $24.4 million charged for the fourth quarter, based on an initial analysis by Clayton IPS of the corporate's residential mortgage backed securities. Changes in accounting required under the FAS 115-2, effective Jan. 1, resulted in a $40.6 million increase to the corporate's undivided loss. That provided a retained earnings balance totaling $8.1 million as of Jan. 1, said the corporate's financial statement. Constitution's core earnings--earned before charges for other than temporary impairment and the writedowns of the corporate's capital in U.S.Central during 2008--totaled $4.1 million in 2009, down from $5.1 million in 2008. The decrease is core earnings is due primarily to a $1.6 million decline in net interest income--the result of a narrowing of the LIBOR to Fed Funds spread, which occurred from 2008 to 2009 as the credit market began stabilizing. A wide spread between the two indices benefits Constitution's earnings because many of its assets are indexed to one-month LIBOR, the corporate said. Fees and other income declined by $48,000 while total operating expenses were reduced by $683,000. Constitution ended the year with a prior undivided earnings deficit totaling $25.2 million, which is guaranteed by the National Credit Union Share Insurance Fund.

Mich. league CEO touts Save to Win on IHuff. PostI

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LANSING, Mich. (2/11/10)--Michigan Credit Union League President/CEO Dave Adams is the latest credit union leader to be featured in the Huffington Post's "Move Your Money" campaign, which advocates consumers taking their deposits out of big banks and moving them to local credit unions and community banks. Adams' column in the Post Wednesday suggests consumers move their money, make the switch and invest in America. There is "a rising tide of anger from the American public," but also "a growing tide of sentiment that resonates the theme of self-empowerment. 'I can vote with my feet.' 'I can switch to a local credit union.' And millions are doing just that," Adams writes. "In addition to the great rates, low fees and high service levels provided by neighborhood credit unions, they are also showing the power of cooperative innovation," he says. He cites three Michigan credit union programs as examples of cooperative innovation:
* The Save to Win program, where members receive an entry into a raffle for prizes for each $25 they deposit into their Save to Win certificate. Last year, credit unions awarded more than $39,000 in monthly prizes to more than 500 winners, plus a grand prize of $100,000 at year-end. More than 11,000 consumers saved nearly $9 million in less than one year. * The Invest in America program, incentives for credit union members to buy American cars and help create jobs in the domestic auto industry. More than 230,000 vehicle sales for General Motors and Chrysler were made during 2009 because 2,100 credit unions promoted the discounts. * A new Small Business Financing Alliance, where Michigan credit unions will provide $43 million in capital for small business loans in cooperation with the state.
Adams also mentioned a column in Huffington Post by Credit Union National Association President/CEO Dan Mica, which applauded the Post's "Move Your Money" initiative and advocated moving funds to credit unions.

CUNACFA card survey generates press coverage

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WASHINGTON (2/11/10)--New credit card survey results announced Tuesday by the Consumer Federation of America (CFA) and the Credit Union National Association (CUNA) on consumer awareness of credit card changes and consumer protections coming down the pike this month resulted in widespread press coverage. Tuesday's teleconference with CFA Executive Director Stephen Brobeck and CUNA Chief Economist Bill Hampel noted that 61% of consumers surveyed are aware that there are new credit card protections but 65% don't know they take effect Feb. 22 and don't understand the specific protections Congress approved last year when it passed the Credit Card Accountability, Responsibility and Disclosures (CARD) Act. Hampel noted that 85% of consumers surveyed reporting planning or taking action when aware of a new rate hike, new fee, lower credit limit, fewer rewards or other disadvantageous terms. For a full report of the findings, use the link. In addition to trade press coverage, the information was featured in the Congress Daily, St. Louis Post-Dispatch, the Cleveland Plain Dealer, CreditCards.com, Mainstreet.com, and on New York's "The Nightly News with Chuck Scarborough" aired on NBC's New York Nonstop. The information was also picked up by Financial Market Regulatory Wire, Targeted News Service and States News Service. The information raised concerns about consumers basing their future credit card use on protections that don't exist, said Brobeck. Thirty-six percent of card users surveyed think that the new law caps late fees at $35 while 31% believes it caps interest rates at 20%. The new law does neither.

N.J. league CEO on TV Were the good guys

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NEW YORK and HIGHTSTOWN, N.J. (2/11/10)--New Jersey Credit Union League President Paul Gentile appeared Tuesday night on New York's "The Nightly News with Chuck Scarborough" to discuss new credit card rules going into effect Feb. 22 as a result of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. The segment highlighted several new provisions related to disclosures, limits on interest rate increases, charges on new purchases and existing balances, and individuals under age 21, who must show ability to pay or a present a co-signer in order to receive a credit card (The Daily Exchange Feb. 10). Asked if credit unions were raising rates like many banks in advance of the Feb. 22 deadline, Gentile said most credit unions are not and were already complying with much of what the new law seeks to protect consumers from. "We're the good guys in this situation," he said. The segment also highlighted the results of the Consumer Federation of America (CFA)/ Credit Union National Association (CUNA) survey announced Tuesday on consumer awareness of the new credit card protections. The survey found that 61% of consumers are aware there are new credit card protections, but 65% don't know they take effect later this month and don't understand the specific protections Congress approved last year. The show aired on NBC's New York Nonstop.

Blizzards shut down leagues CUs

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MADISON, Wis. (2/11/10)--Several credit union leagues and even more credit unions in Mid-Atlantic and Northeast states were closed Wednesday because of a historic snowstorm with blizzard conditions that brought the federal government to a standstill. The Credit Union National Association’s (CUNA) Washington, D.C., headquarters has been closed all week for far, as has the federal government and the National Credit Union Administration. The closings were due to a series of storms that dumped two to three feet of snow last week. About 12 to 18 inches of more snow were predicted to hit states in that area Wednesday, according to USA Today (Feb. 10). The storm, described by the National Weather Services as a “northeaster,” delivered snow to Washington, D.C., Baltimore and Philadelphia--areas that saw snowplows come to a halt because of safety issues. More snow could be on the way Monday (The New York Times Feb. 10). Leagues closed on Wednesday include: The New Jersey Credit Union League, the Pennsylvania Credit Union Association (PCUA), The Credit Union League of Connecticut, The Delware Credit Union League and the Maryland and District of Columbia Credit Union Association. PCUA notified members via a special edition of its daily e-mail newsletter. It noted state offices in the Capitol, as well as Philadelphia, Pittsburgh, Reading and Scranton were closed. “Snow is falling across Pennsylvania ... most business in the mid-state are closed today, and several credit unions already posted closings early (Wednesday),” PCUA said. The Connecticut league let its member credit unions know Tuesday of its intention to close its office in Meriden on Wednesday. League staff worked from home and were available by phone, and in some cases, e-mail, Ed Zagorski, league director of communications, told News Now. The league was scheduled to open its offices today. The league also was able to produce its full edition of Daily Update, an e-newsletter that is sent every business morning to member credit unions and nearly 500 subscribers, Zagorski added. “One unfortunate consequence of the storm and closing of league offices is that we had to postpone the second-day session of the inaugural week of our 2010 Compliance School, which opened on Tuesday with a full day’s session on Truth in Lending,” he said. Wednesday’s session was supposed to cover the Real Estate Settlement Procedures Act (RESPA). The RESPA session will be re-scheduled, he added. The compliance school is a six-month program to inform, instruct and provide workshops in full-day sessions for affiliated credit unions in the Northeast to satisfy regulatory compliance requirements. The Credit Union Association of New York, Albany, was open Wednesday. Albany was expecting three to four inches of snow, Bonnie Sklar, league public relations coordinator, told News Now. The Virginia Credit Union League, based in Lynchburg, also was open. The office is located about three hours from the District of Columbia, and wasn’t experiencing snowy conditions when News Now called. “We dodged a bullet,” said Lewis Wood, league director of public relations and communications. “We haven’t been hammered [by snow] the way D.C. and Northern Virginia have.” The league has heard from several credit unions in Northern Virginia that have closed due to snow, Wood added. He was not sure when they would reopen. “It depends on road conditions,” he said. Washington Gas Light FCU, Springfield, Va., posted information about closings on its website. The credit union closed at 3 p.m. Tuesday and all day Wednesday because of snow. “If the snowfall isn’t as much as predicted, we will make every effort to open for business,” the credit union said. It also reminded members that they still have access to their accounts by phone, online or through ATMs. Belvoir FCU, Woodbridge, Va., also was closed Wednesday. The credit union was scheduled to reopen today at noon except for its two branches on Fort Belvoir, which remain closed, said Jacqueline Connor, vice president of marketing and business development. Many credit unions in Delaware also have been closed as a result of the snow, according to Alice Smith, Delaware league communications director.

IBoston GlobeI notes CUs seeking higher loan limits

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BOSTON (2/11/10)--Credit unions are eager to fill the lending gap for small business owners, a gap created because banks are still reeling from the credit crisis and are under pressure from regulators to be cautious, The Boston Globe said Wednesday. “Credit unions are lobbying Congress to increase their lending limits, arguing that they could help create jobs without the $30 billion President Obama has proposed giving community banks for small business loans,” the newspaper noted. Credit unions such as St. Mary’s Bank in Manchester, N.H, are looking to increase their small-business lending cap to 25% of total assets from the current 12.25% cap level for commercial loans, the paper said. “As we can lend more to the small businesses, it creates more jobs, helps the consumer, and hopefully pulls that sector back up,’’ Ronald H. Covey Jr., chief executive of St. Mary’s, the nation’s oldest credit union, told the paper. Tom Parello, president of Lynnfield, Mass.-based New England Bride Inc., a magazine publisher and bridal show organizer with 10 employees, said his line of credit was called in at a bank last spring. He had been with the bank for several years, so its request to immediately repay a five-figure loan was a surprise, the paper said. His accountant suggested he talk to Metro CU, based in Chelsea, Mass. The credit union provided him with two loans--one to pay off the bank loan and an additional line of credit. Robert M. Cashman, Metro CEO, said Parello is one of many new members the credit union has gained the past year. “We’ve received so many inquiries from small businesses around our branches, this is going to be a vast and growing area,” Cashman told the paper. “If credit unions could lend more, you could stimulate the economy and create more jobs.’’ To read the article, use the link.

New Mexico House passes state funds bill

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ALBUQUERQUE, N.M. (2/11/10)--The New Mexico House of Representatives passed a bill that allows the state to move $2 billion to $5 billion of state funds to credit unions and small banks. The municipal funds bill, House Bill 66, passed 65-0, but still must be passed by the New Mexico Senate. Gov. Bill Richardson said he would sign the bill if it gets to his desk (Capitol Hill Blue and chattahbox.com Feb. 10). State Reps. Brian Egolf (D-Santa Fe) and Timothy Keller (D-Bernalillo) sponsored the bill. Egolf told the Huffington Post in January that the legislation would “direct the New Mexico Department of Finance and Administration to ‘give a preference to a community bank to act as the fiscal agent of the general fund operating cash depository account’” (Huffington Post Feb. 10). The Credit Union Association of New Mexico (CUANM) has been supporting the bill, Sylvia Lyon, CUANM CEO/president, told News Now. Credit unions in the state won’t be able to handle all of the money made available if the bill becomes law, but the legislation still will create some great opportunities for them, Juan Fernandez, CUANM vice president of governmental affairs, told News Now. “The bigger incentive for credit unions is that they’ll be able to get certificates of deposit and investments from the state--not the entire chunk of the $2 billion to $5 billion that’s available from the state--but I imagine it will open up million of dollars of capital to credit unions,” Fernandez said.

Filene Just-in-time fin ed helps 79 of students improve

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MADISON, Wis. (2/11/10)--One of the biggest challenges in financial education is providing the right information at the right time. A new Filene Research Institute report shows how credit unions can deliver just-in-time financial education to young college graduates. The new report, “Delivering Financial Education to Graduating College Students,” details work by Filene Research Fellow Bob Hoel and University of Wisconsin-Madison lecturer Ronald Smith. The report says financial education is effective when:
* It targets a narrowly defined audience. College students about to graduate share interest in an identifiable set of financial decisions that they have not faced before. * It delivers education when the targeted audience needs it. People are more likely to pay attention and change behavior when the information relates to an imminent financial decision. * It offers concrete advice. There are small group forums where students can receive topical advice, and where students can receive one-on-one advice from a financial expert.
“People want to be told what to do,” Hoel said. “Knowing that you need to make good decisions isn’t enough. But getting real numbers, specific advice, and one-on-one time with an expert--that’s what makes a difference.” Filene researchers examined a “Financial Independence Seminar” that can be replicated at colleges and universities nationwide with the help of college alumni associations and credit unions. The basic program was developed and tested at the University of Wisconsin-Madison over the past five years. It is surprisingly simple, Filene said. Graduating students from all majors are invited to participate in a one-day program with two lectures and several breakout sessions. Most participants also sign up for a half-hour of one-on-one counseling during the four weeks after the main session. Students participating reported the seminar helped them take actions that will improve their financial well-being. When surveyed three months after the seminar, 98% said the seminar helped them make real-world financial decisions; 79% took at least one major step to improve their financial well-being; and 55% took more than one step. Some took as many as six steps. Ninety-four percent of graduates who took the seminar three years earlier said the seminar helped them make real-world financial decisions. College alumni associations are the best on-campus sponsors of these programs, according to Hoel and Smith. Credit union professionals can lead some of the breakout sessions and serve as counselors for one-on-one sessions. Credit unions also can be co-sponsors of the seminar. The seminar can be offered for less than $1,000. For more information, use the link.

Survey ID theft at all-time high

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SAN FRANCISCO (2/11/10)--The number of identity fraud victims in the U.S. increased 12% to 11.1 million adults in 2009--the highest increase since 2003, according to a new ID theft study. The total annual fraud amount increased by 12.5% to $54 billion. The high is probably due to the economic downturn, Javelin Strategy and Research said in its study, “The 2010 Identity Fraud Survey Report,” which was co-sponsored by Intersections, a CUNA Strategic Services provider, which specializes in I.D. theft prevention services. “The good news is consumers are getting more aggressive in monitoring, detecting and preventing fraud with the help of technology and partnerships with financial institutions, government agencies and resolution services,” said James Van Dyke, Javelin president. Average fraud resolution time dropped 30% to 21 hours. Nearly half of new victims file police reports, resulting in double the reported arrests, triple the prosecutions and double the percentage of convictions in 2009. Thirty-nine percent of identity fraud victims reported fraudulent new credit card accounts, up from 33% in 2008. New online accounts opened fraudulently more than doubled over 2008, and the number of new e-mail payment accounts increased 12%. Financial services companies continue to excel in detecting fraud and alerting their customers. More than one-third of victims first learned about the fraud from their financial institution, the report said. Other findings:
* Identification most likely to be compromised in a data breach continues to be full name (63%) and physical address (37%). Compromised health insurance information increased 4% over the last year. * About 75% of existing card fraud incidents came from credit cards, an increase of 12% over 2008. Existing debit cards fraud incidents represented 33% of total existing card fraud in 2009 and decreased by 2%. * Eighteen to 24-year-olds are the slowest to detect fraud--they take nearly twice as many days to detect it as other age groups. They were found to be less likely to monitor accounts regularly and the least likely group to take advantage of monitoring programs offered by financial institutions. However, they are the most likely group to take action such as switching primary institutions or switching forms of payment if fraud occurs. * Identity fraud victims in the U.S. grew to 4.8% of the population, with a projected total of $54 billion in crime. * Small business owners suffer fraud at one-and-a-half times the rate of other adults, because small office and home office business owners use personal accounts when making business transactions and make more transactions than typical adults.
“Identity fraud continues on the upswing, and we believe it will continue to rise if consumers fail to take proactive steps to prevent fraudsters from taking advantage of their offline and online transactions and their increasingly exposed personal information on social networks,” said Michael Stanfield, Intersections chairman/CEO. “In addition, consumers need to protect themselves and their computers from sophisticated malware, and well-conceived and executed spam and phishing attacks.” Intersections offered several tips to reduce identity fraud, including the use of direct deposit, installing software to protect against viruses and spyware, turning off Bluetooth or Wi-Fi when not in use, monitoring accounts weekly, and acting quickly when fraud is suspected. For more information, use the links.

Va. Senate committee passes conversion bill

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LYNCHBURG, Va. (2/11/10)--The Virginia Senate's Commerce and Labor Committee Monday evening approved, by 15-0, a bill that would allow state chartered credit unions to convert to mutual savings banks using the same pathway as federally chartered credit unions. The voice vote was on Senate Bill 440, a twin bill to House Bill 482, which was approved last week by the House Commerce and Labor Committee, according to the Virginia Credit Union League. The measure is scheduled to go through three readings on the House floor this week, with a possible vote taking place as early as Friday, said Lewis Wood, director of public relations and communications. Sen. Dick Saslaw (D-35), chairman of the Senate Commerce and Labor Committee and Senate Majority Leader, was the bill's patron in the Senate. Saslaw told the panel that the bill before it was a substitute bill that would give credit union members "ample opportunity" to comment on a conversion plan and to receive notice of the proposal to change their credit union to a mutual savings bank. He noted that after a credit union's board approves conversion, the credit union needs two-thirds of voting members to support conversion. The State Corporation Commission also has to approve the conversion and retains the right to deny the change if safety and soundness issues are present. Unlike the House panel consideration, the Senate proposal sparked questions, mostly centered around the impact of a credit union-to-mutual savings bank conversion. Saslaw noted that conversion to a mutual savings bank charter would allow the former credit union to bid on public deposits, "greatly enhance business lending opportunities," and turn credit unions into "taxpayers that contribute to the state's General Fund." The league provided the language for the substitute bill in both the Senate and House committees. Originally, the Virginia Bankers Association had proposed a bill that would make it easier for stock-owned banks to take over credit unions, a proposal rejected in January by the league's board because it didn't protect members' rights (News Now Feb. 8).

MatriMoney gift registry will help valentines save

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LOS ANGELES (2/11/10)--Valentine’s Day is Sunday--a day that many couples become engaged--and Water and Power Community CU (WPCCU) in Los Angeles is offering couples a MatriMoney wedding registry savings account. Couples can open the interest-bearing savings account to help save cash wedding gifts for honeymoon expenses, furniture or a down payment on a home. WPCCU gives MatriMoney instruction cards for engaged couples to include on their wedding invitations, and gift givers receive cash gift acknowledgement cards to announce their gift to the couple. A minimum of $50 is needed to open the MatriMoney accounts. The couple also must open and maintain a joint savings account in good standing with $25. The credit union also offers free online financial workshops for couples to discuss money and budgeting. WPCCU has $468 million in assets.

Rates help increase Oregon CUs membership

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BEAVERTON, Ore. (2/11/10)--Oregon credit unions are growing, confirms the most recent data released from the National Credit Union Administration (NCUA), according to the Credit Union Association of Oregon (CUAO). One of the attractions of credit unions, in addition to their member-owned, not-for-profit business model, is that more favorable rates for savings and loan products can often be found at credit unions, CUAO said. In late January, NCUA confirmed that credit unions continue to hold the rate advantage. At year-end 2009, credit unions, on average, posted more favorable rates for consumers than banks did in 21 of the 23 loan and savings categories, according to data released by DATATRAC Inc. Also, credit unions provided significantly lower rates on all consumer loan types and provided higher yields on all savings products. Sample average rates are included in the accompanying chart.
Product All CUs Oregon CUs All Banks Oregon Banks
Interest Checking 0.30 .23 0.22 .16
Regular Savings 0.41 .24 0.28 22
Classic Credit Card 11.65 10.98 12.71 17.16
5 year CD 2.76 2.77 2.38 2.25
The data for Oregon were pulled for Feb. 1, from DATATRAC. For the 12-month period ending in September, Oregon credit unions increased in these categories: assets (7%), savings and deposits (11%), and membership (2%). In comparison, deposit growth at Oregon-chartered banks was 8.9%. Nationally, credit unions grew almost twice as fast as banks, 8.25% vs. 4.3%, CUAO said. To access rate comparisons, use the link. DATATRAC Inc. tracks rates charged and paid by credit unions, banks, and credit unions that converted to or merged with banks.

CU System briefs (02/10/2010)

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* AUSTIN, Texas (2/11/10)--Austin, Texas-based Velocity CU sent members a letter this week announcing it will not switch to private share insurance as originally planned. The credit union had proposed switching to coverage by American Share Insurance Corp.(ASI), a private share insurer based in Ohio, because the National Credit Union Administration (NCUA) began charging fees that equaled 0.15% of insured deposits to shore up the National Credit Union Share Insurance Fund during the corporate credit union crisis. However, the $499.3 million asset credit union learned that ASI will begin charging the same fees. That eliminated the main reason for switching insurance, said the credit union. Members voted in December in favor of the switch before the credit union learned of the ASI fee increase (American-Statesman via statesman.com Feb. 10) ... * MERIDEN, Conn. (2/11/10)--The Credit Union League of Connecticut
Click to view larger image Click for larger view
kicked off its 2010 Compliance School on Truth in Lending with nearly 100 credit union representatives attending. Here, league President/CEO Tony Emerson introduces Martha Howell of M&M Consulting and leader of the first section of the compliance school. "Hang on," she told the audience during her 60-page presentation. "These slides were done a week ago, but in today's wild regulatory environment, who knows what will be here tomorrow." More compliance information will follow in two-day sessions during the next five months. (Photo provided by the Credit Union League of Connecticut) ... * RYE, N.Y. (2/11/10)--The chief financial officer of Affina Brokerage Services, which is owned by USAlliance FCU, Rye, N.Y., was sentenced to three to nine years in state prison for embezzling more than $2.2 million in stocks. John P. Walsh of Yonkers swindled the firm from June 17, 1999 to Jan. 27, 2008 by illegally transferring shares of stock from the $772.9 million asset credit union into accounts he controlled and then sold for cash. He also created phony stocks and used them as collateral for loans, according to police. He was ordered to pay $2.265 million in restitution to the insurance company that covered the loss, but Walsh's attorney said that Walsh is indigent with his house in foreclosure (The Journal News Feb. 10) ... * AMARILLO, Texas (2/11/10)--Shannon Leigh Layton, a former employee of Texas Plains FCU, Amarillo, Texas, was sentenced Tuesday to 30 months in prison and ordered to pay $221,000 in restitution after pleading guilty to stealing $221,000 from the credit union by making false entries. According to court documents, the thefts occurred between 2002 and August 2009. In 2009, she went to the Amarillo Police Department and confessed she had been stealing from the credit union (Targeted News Service Feb. 9) ... * MEMPHIS, Tenn. (2/11/10)--A Shelby County jailer was arrested as the 'stumbling bandit' who mumbled and couldn't make herself understood during attempted robberies at two credit unions in Raleigh Feb. 2. Phtosa Dennis, 42, was charged with bank robbery and using a gun during one of the crimes. The first attempted robbery occurred at before 10 a.m. at Southern Security FCU. When the robber walked up to the teller and verbally demanded money, the teller couldn't understand what she was saying. The robber then produced a holdup note, but fled the building before receiving any money. Later, a robber entered First South CU, stood in line, then brandished a gun and handed over a demand note. However, the teller ran from the counter when she saw the gun. The robber fled but stumbled and dropped her weapon. Dennis was relieved of duty with pay while the investigation continues, said the Shelby County Sheriff's Department (The Commercial Appeal Feb. 9) ...