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CU System briefs (02/13/2009)

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* BILLINGS, Mont. (2/16/09)--A North Dakota man was convicted Thursday of bank fraud, wire fraud, bankruptcy fraud, money laundering and aggravated identity theft. The money laundering involved money transferred from a bank in North Dakota to Wolf Point (Mont.) FCU. Todd Horob, 40, of Williston, N.D., lied about his assets in the cattle business to get loans, said prosecutors during a three-day trial in Billings, Mont. (Associated Press Newswires Feb. 12) … * HARRISBURG, Pa. (2/16/09)--A CO-OP Shared Branch mystery shopping program has given a perfect score--100% --to lst Choice Community FCU, Erie, Pa. (Life is a Highway Feb. 13). The credit union was rated on branch appearance, shared-branching signage, and office hours. Tellers were rated on ability to follow procedures-- such as requesting proper identification, Social Security number, and credit union--as well as on service quality--reviewing the member's receipt, making eye contact, and being professional and courteous throughout the transaction. The program ensures that tellers do not solicit the member to join their credit union or sell services. The credit union is the state's third to get a perfect score. Parkview Community FCU and Erie FCU received perfect scores in 2008 … * PHOENIX (2/16/09)--Arizona State CU has been named the No. 1 credit union in the state for the third year in a row by Ranking Arizona: The Best of Arizona Business, published annually by Arizona Business Magazines. The rankings are based on the largest opinion poll in the state and include more than 250 business and leisure categories. Voters are residents and business leaders throughout the state. Arizona State CU is a $1.3 billion asset credit union based in Phoenix (Business Wire Feb. 12) … * HARRISBURG, Pa. (2/16/09)--John Curdie III, CEO of Homestead, Pa.-based Financial Advantage FCU, has announced his retirement, according to the Pennsylvania Credit Union Association (Life is a Highway Feb. 13). He is working through a transition period with the new CEO, Helenann Kozminski. Kozminski was appointed Jan. 1. She has more than 17 years experience with the Keystone Valley FCU, which merged later with TriState Rail FCU …

Next wave in data security Protecting stored info

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TUKWILA, Wash. (2/16/09)--Protecting stored information is the next trend in data security, according to several industry analysts. Boeing Employees CU (BECU) in Tukwila, Wash., is at the front of that trend. The $8.474 billion asset credit union used to keep its stored data locked down, using an appliance to encrypt data before it was stored to tape (Computerworld Feb. 9). When BECU upgraded its system, it chose a simpler, more secure option--an application that encrypts tapes in the tape library while the data is "at rest." Now encryption is offered at every layer, Kathryn Antonetti, BECU's information technology systems and security manager, told the publication. The upgrade was less expensive--it eliminated maintenance and training costs for the appliance and other headaches, she said. Many companies, focusing on securing data at rest, are considering advances such as tape drive encryption, tape library encryption and enhancements in the way encryption keys are managed, said the article. Data security breaches cost companies roughly $202 per compromised record, according to the Ponemon Institute, which means more companies will look at protecting data at rest. Three techniques exist for protecting stored data, the article said: Encryption of the storage tapes, desktop-level encryption for data sitting in a desktop computer, and management of data encryption keys held on other vendors' key management systems.

Vermont CUs discuss impact of stabilization plan

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SOUTH BURLINGTON, Vt. (2/16/09)--Nearly 75% of Vermont's credit unions connected to a conference call hosted Wednesday by the Association of Vermont CUs (AVCU) on the National Credit Union Administration's (NCUA) Corporate Stabilization Program. Speakers from NCUA, the state regulator's office, and the league's accounting firm joined AVCU President Joe Bergeron in the session (Newslines Express Feb. 13). NCUA Region I Director Mark Treichel gave a brief background of the agency’s rationale for the plan, reiterating that, as mentioned in the Credit Union National Association's nationwide conference call last week, the NCUA board continues to be flexible to alternatives. “As long as they can get over three hurdles, and those hurdles are that they’re realistic, they’re responsible, and that they’re legal,” Treichel said, the NCUA board is “open to whatever scenarios that the credit union industry can come up with." Tricorp FCU CEO Steve Roy, said, “Right now, liquidity is the key." In addition to discussing the current situation, Roy explained that late summer of 2008 was one of the most challenging times for liquidity the corporate had experienced in a very long time. Tricorp performed well through those difficult times and that liquidity in February 2009 is still very good, he said. “We are very appreciative of the support of the membership of Tricorp,” Roy said. “We have all done very well collectively with our liquidity and I hope that continues because that will be the key to us moving through this market.” Tom Candon deputy commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration, which oversees state-chartered credit unions, discussed the effect that the NCUA program would have on Vermont credit unions. Under the current assessment plan, Candon said, two Vermont credit unions would likely drop below 7% capitalization and another 13 would suffer negative returns on assets, resulting in 68% of all state-chartered credit unions being severely adversely affected. “We know that this is a really challenging time here,” Candon said. “We see it on the bank side, our licensed lender side and I was honestly hoping that the credit unions would fair better. They have faired better to date. We need the credit unions there to help make loans to people who are so desperate right now, so this is just one more challenge for you.” Glen Bolster, CPA from the association's accounting firm, A.M. Peisch & Co., said he was in agreement with NCUA’s accounting instructions with respect to 2008 year-end financial statements, but said his opinions may change once the American Institute of Certified Public Accountants issues further guidance.

Loveless departs U.S. Central

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LENEXA, Kan. (2/16/09)--U.S. Central FCU confirmed Friday that its chief investment officer, Connie Loveless, departed earlier this month. Loveless left U.S. Central on Feb. 6, the second in senior management to leave the corporate wholesaler since U.S. Central announced a $1.1 billion loss on its 2008 portfolio. David Dickens, former executive vice president of asset/liability management, also left, it was announced Feb. 6 (News Now Feb. 6). U.S. Central told News Now that it does not comment on the circumstances of an employee's departure.

California towns CUs weathering economy

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BAKERSFIELD, Calif. (2/16/09)--Several Bakersfield, Calif.-area credit unions experienced losses last year--as did many U.S. financial institutions--as they weathered a down economy. While eight of nine Bakersfield credit unions lost money in 2008, the institutions are well-capitalized, their deposits are insured, and they will get through the downturn just fine, credit union executives said (bakersfield.com Feb. 11). All Bakersfield credit unions placed more cash into their rainy-day funds in 2008 than they lost on bad loans, the newspaper said. Bakersfield is trending along the same path as the rest of California, Daniel Penrod, industry analyst with the California Credit Union League, told the paper. Although the league hasn’t processed the state’s year-end financial data yet, areas that experienced the most wide-ranging real estate price swings are the one most impacted by the economic downturn, Penrod added. Financial results for Bakersfield’s nine credit unions in 2008:
* Kern Schools FCU, $1.7 billion in total assets, net loss: $24.3 million; * Safe 1 CU, $322 million assets, net income: $1.3 million; * Kern FCU, $265 million assets, net loss: $2.5 million; * Chevron Valley CU, $123 million assets, net loss: $240,000; * Kern Central CU, $39.1 million assets, net loss: $348,000; * Bakersfield City Employees FCU, $23.9 million assets, net loss: $124,000; * Espeeco FCU, $9.6 million assets, net loss $41,600; * Star Energy CU, $7.1 million assets, net loss $48,000; and * Bakersfield Community FCU, $3.3 million assets, net loss: $75,000.

Maine league featured on Portland TV

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WESTBROOK, Maine (2/16/09)--Jon Paradise, governmental and public affairs manager for the Maine Credit Union League, was featured in a primetime, five-minute segment during the “6 O’Clock News” on Portland-based TV station, WGME News 13. Over the past few months, the league has responded to a record number of media inquiries and requests for information and comment on a variety of topics, including safety and soundness, security, data breaches, credit union difference, youth financial education and--most recently--availability of credit, auto lending and the economy. During the segment, Paradise highlighted the availability of credit at Maine credit unions, noting some of the creative lending programs that credit unions offer. He detailed the participation of Maine credit unions in the Invest in America auto loan program and the opportunities it offers members for saving on new General Motors and Chrysler vehicles. “This program offers our members real savings, and credit unions are about value and savings for members,” Paradise told WGME Anchor Gregg Laguerquist. “It has also enabled a number of our credit unions to establish and strengthen relationships and partnerships with local auto dealers, as a number of dealers have reached out to credit unions regarding this program.” Laguerquist also asked for an update on lending at Maine credit unions. “Lending remains strong and has been particularly solid the past couple of months with members refinancing, and also mortgage lending,” Paradise replied. “The message is that Maine credit unions are extending credit to consumers and are ready, willing and able to provide any reasonable loan to members. “Maine credit unions remain focused on serving our members and that means working individually with each member to determine the needs and situation, and how the credit union can help,” he added. WGME replayed parts of the interview in later newscasts, including a prime position on its “News at 10” broadcast, a partnership the station has with the local FOX affiliate, airing the segment right after the conclusion of the top-rated “American Idol.” John Murphy, league president, added: “Our role is to provide information and serve as a resource for the media and consumers, especially in today’s uncertain and ever-changing economic environment. We have positioned Maine credit unions as very strong, solid and safe, and that is an important message for members and other consumers to hear.”

Heartland losses multiply for CU

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WATERVILLE, Maine (2/16/09)--Losses due to the Heartland Payments Systems data breach have tripled for one Waterville, Maine-area credit union. Healthfirst CU was first notified Jan. 12 that 261 of its members’ cards were compromised. Now, the credit union has learned that 550 more cards were affected--putting the total at more than 800, Lynda Quirion of Healthfirst CU, told BankInfoSecurity.com (Feb. 12). The total amount taken from member’s cards is between $60,000 to $70,000. Replacing the cards will cost the credit union $2,500, Quirion said. Healthfirst’s staff also is feeling strained by the breach. The credit union already has spent 300 hours contacting members and re-issuing cards, Quirion told the news outlet. Many of the fraudulent purchases were made at convenience stores, gas stations, and fast food restaurants, the credit union said. Healthfirst has $13 million in assets.

Kansas CUs meet with state legislators

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TOPEKA, Kan. (2/16/09)--More than 160 Kansas credit union employees and volunteers attended the Kansas Credit Union Association’s (KCUA) annual Day at the Capital Wednesday. The event gave credit union supporters statewide a chance to meet with state legislators and share information about credit union efforts to serve Kansas consumers. Credit union attendees heard from a panel of legislative leaders about the opportunities and challenges that face the 2009 Kansas legislature. The panel was composed of State Senate President Steve Morris (R-Hugoton), House Speaker Pro Tem Arlen Siegfried (R-Olathe), and House Minority Leader Paul Davis (D-Lawrence). Newly appointed State Treasurer Dennis McKinney (D-Greensburg) also addressed attendees and said his office is enthusiastic about working with credit unions on financial literacy efforts. “Financial literacy must be a national priority,” McKinney said. “Children who know the power of compound interest will be strong builders for the economy of the future. I look forward to continuing this partnership with the Kansas Credit Union Association to increase the financial literacy of Kansans.” KCUA has partnered with the Kansas state treasurer’s office for more than five years, bringing financial literacy programs to more than 2,500 students statewide. “In these trying economic times, it is more important then ever that legislators are aware of the extraordinary things that credit unions are doing to serve their members,” said Marla Marsh, KCUA president/CEO. “Meeting with their state legislators throughout the day, Kansas credit unions were able to spotlight the credit union difference. It was a great day for Kansas credit unions.”

Bank pulls plug CUs save winter festival

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BURLINGTON, Vt. (2/16/09)--Three credit unions stepped in after a bank pulled its support at the 11th hour on the 2009 Winter Festival in Burlington, Vt.
(Photos provided by the Association of Vermont Credit Unions)
Chittenden Bank had been a long-time major sponsor of the event. Festival organizers had been told the bank would fund the event again this year. However, the former Vermont bank was purchased last year by Connecticut-based People's United Bank, which pulled the funding for the sponsorship (Newslines Express Feb. 13). Three credit unions--Caswell CU, New England FCU (NEFCU), and NorthCountry FCU--all signed on to fill the void when panicked organizers contacted them a few weeks ago. Caswell CU, an $11.3 million asset credit union based in South Burlington, was already signed up to sponsor the festival for a third year in a row. The credit union, assisted by Association of Vermont Credit Unions (AVCU) Vice President Bryan Kent, connected the event's organizers at the University of Vermont (UVM) with the other two credit unions. NorthCountry FCU, a $218.3 million asset credit union based in South Burlington, and the Williston-based, $654.2 million asset NEFCU quickly added their sponsorship support, providing organizers with the funds needed to ensure the event took place as scheduled, said AVCU. This was the 17th year of the festival, which is organized by the event planning class of UVM's Community Development and Applied Economics Department. The event includes the Penguin Plunge to support Vermont Special Olympics, the Ice Walk on Burlington’s Church Street Marketplace, and other area events. The snow sculptors competed to represent Vermont in the National Snow Sculpting Competition in Lake Geneva, Wis. As a major sponsor, NorthCountry’s carving was located adjacent to the Church Street Marketplace piece which traditionally marks the start of the Ice Walk. A dozen sponsored carvings, including those done for Caswell and NEFCU, were located along a three block length of Church Street, with the Marketplace’s fourth and final block reserved for competitive snow sculptures.