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CU System Archive

CU System

Redwood CU Cal State Central CU intend to merge

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SANTA ROSA, Calif. (2/23/11)--Redwood CU (RCU) and Cal State Central CU (CSCCU), both located in Santa Rosa, Calif., announced Friday they intend to merge, with RCU becoming the surviving organization. The boards of both credit unions have approved the merger, the credit unions said in a joint press release. Approval from the National Credit Union Administration and the California Department of Financial Institutions is pending. If approved by regulators, the merger would legally take effect April 1, with actual transfer of accounts on June 1. With the combined credit union, RCU would serve nearly 200,000 members in the North Bay and San Francisco, with assets exceeding $1.8 billion. "CSCCU has served the financial needs of state employees and our community for nearly 75 years," said Jim Larson, CSCCU's CEO. "In this environment, it's been challenge to achieve the financial position and growth needed to provide the products, services and locations our members want and need. Our partnership with RCU will allow us to fulfill our mission and provided the added benefits our members deserve," he added. Brett Martinez, RCU's president/CEO, noted that "Our industry's philosophy is people helping people, and this joining exemplifies that concept." Cal State Central had $13.5 million in loan losses during the past five years, and its net worth ratio dropped to 3.65% in December 2010, down from 8.01% in 2006 (Press Democrat Feb. 19). A well-capitalized credit union has a 7% net worth ration, according to regulatory standards. CSCCU has nearly 16,500 members served by four North Bay branches and locations in Sonoma, Glen Ellen and Rohnert Park. RCU has about $1.7 billion in assets and 151,000 members in 2010, served by 15 branches. It said most CSCCU employees will be offered employment with RCU.

CU employee saves woman from fire

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HARRISBURG, Pa. (2/23/11)--An assistant branch manager at American Heritage FCU's Horsham, Pa., branch came to the aid of a handicapped woman who was trapped as her house went up in flames Feb. 16, according to the Pennsylvania Credit Union Association (PCUA). Lynnette Heary put the People Helping People philosophy of credit unions to work while she was taking a walk during her lunch break in the neighborhood near the Horsham branch of the Philadelphia-based, nearly $940 million asset credit union. While walking, Heary spotted an older woman trapped upside-down under a wheelchair at the bottom of the cement stairs in front of the woman's home. Rushing to the woman's aid, Heary found the woman's home quickly going up in flames, said PCUA. The woman said her family lived across the street, but she was too disoriented to locate the correct house (Life is a Highway Feb. 22). Heary called 911 and began knocking on doors to locate the woman's family. She then stayed with the woman until police and the fire department arrived. Horsham police later called the credit union's branch to thank Heary for her bravery.

CUs reviewing Southeast Corporates capital plan

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TALLAHASSEE, Fla. (2/23/11)--Southeast Corporate FCU has wrapped up its seventh town hall meeting last week, where it outlined its recapitalization plan for member credit unions. About 200 executives and their board members attended the meetings throughout Florida and Mississippi. "Members were fully engaged and asked good questions," said Brad Miller, president/CEO of the $2.9 billion corporate. "It's clear they are doing their due diligence, and weighing all their options inside and outside the corporate system. Our goal is to provide our members with the information they need to make a sound business decision for their credit union." Over the next few weeks, staff will continue to share details of the corporate's new business model and recapitalization plans through credit union meetings, including board presentations, chapter meetings and other opportunities. "It's really important to us that we talk with as many members as possible," Miller said. Southeast Corporate's recapitalization plan calls for member credit unions to invest a combined $80 million in new Perpetual Contributed Capital (PPC). For each credit union, that equates to 45 basis points of average assets, capping at $2 million. Concurrent with the capital raise, Southeast also will return existing member capital shares (MCS) to members after the three-year notice period on MCS expires--less any additional impairments not covered by retained earnings during that period. Based on loss projections from two outside analytic firms, Southeast Corporate expects members will receive back most of their existing $60 million in MCS after the three-year notice period. At the town hall meetings, Miller outlined key components of the corporate's new business plan. They include: increasing efficiencies, ensuring continuity of services for members, protecting and preserving member capital and developing a business model that provides members with sustainable value. "As part of the plan for moving forward and rebuilding a strong and viable corporate, we are asking members to contribute new capital as we feel having an ownership stake in your corporate is fundamental to our cooperative system and makes sure all members are treated fairly," Miller said. Southeast Corporate will submit its business and recapitalization plans to the National Credit Union Administration in March. The corporate expects to launch its capital subscription campaign sometime in April.

Oregon bill proposes tax on CUs holding public funds MBLs

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SALEM, Ore. (2/23/11)--Some Oregon credit unions will be taxed if the state’s banker association gets its way with legislation it initiated this year. The Oregon Bankers Association (OBA) late last week introduced House Bill 3263. The bill will impose a corporate excise tax on state-chartered credit unions and interstate credit unions holding one or more deposits of public funds that exceed $250,000 or holding commercial loans that in aggregate exceed an amount equal to 10% of credit union assets. The proposed legislation would apply to tax years beginning on or after Jan. 1, 2011. As the bill moves through the legislative process, and the Northwest Credit Union Association (NWCUA) learns who the key legislative players will be, the NWCUA said it will inform its credit union advocates of the next steps. The committee assignment for HB 3263 has not been made public. However, it is likely that the bill will go the House Revenue Committee, NWCUA said. Oregon credit unions won a key victory in the 2010 legislature by passing a bill to lift a cap of $250,000 on deposits of public funds. This bill was actively opposed by the bankers. House Bill 3263 is a response to that victory, NWCUA said. “Credit unions earn their tax status every day for their cooperative, not-for-profit structure that brings value to the members and the communities they serve. It has nothing to do with the products or services they provide,” Troy Stang, NWCUA president, told News Now. NWCUA staff have been meeting with key legislative leaders and committee chairs to remind them of some key points:
* Credit unions pay the same share of federal, state, and local taxes as any business, including real and personal property tax and employment taxes. Credit unions’ tax exemption only applies to corporate income tax because of their not-for-profit structure. * Congress reaffirmed its support for the credit union income tax exemption in a 1998 statement reiterating that the exemption is due to the fact that credit unions are member-owned, democratically operated, not-for-profit organizations. * Credit unions do not stop behaving like cooperatives once they reach a certain size. Whether big or small, every credit union shares the same not-for-profit structure and orientation toward member service. * Size and services are completely beside the point. The original reason for granting credit unions their income tax exemption--their not-for-profit cooperative structure--is just as valid today as when the exemption was first granted. * Cooperatives like credit unions typically do not pay income tax because they must pay all their income to their members. Credit unions, after transferring a portion of their income to reserves and loss accounts, must return all surplus earnings to the members as dividends, lower rates, and higher savings returns. * Credit unions continue to be cooperative financial institutions, dedicated to meeting their members’ financial service needs, with a volunteer board and democratic control. * Credit unions pass their savings on to members in the form of competitive interest and dividend rates, fewer or no fees, and convenience. Therefore, a tax on credit unions is another tax on consumers. * Congress’ decision to exempt federal credit unions from income taxation was based on credit unions’ structure as not-for-profit financial cooperatives, which can build net worth only through retained earnings. * Taxing credit unions’ retained earnings would result in reductions in net worth of credit unions. Federal law requires a credit union insured by the National Credit Union Share Insurance Fund to have a minimum net worth ratio of 7% to be considered well-capitalized. * A tax on credit unions is a tax directly on the people the legislators most want to help--average working men and women trying for make ends meet in a difficult economy.

Conn. congressmen urge Fed to consider CUs on interchange

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MERIDEN, Conn. (2/23/11)--The Credit Union League of Connecticut has received copies of letters written by U.S. Reps. John B. Larson (D-Conn.) and Chris Murphy (D-Conn.) to the Federal Reserve, requesting that the Fed make sure that Congress's legislative intent is upheld when it considers its debit card interchange fees and routing proposed rule. The letters to Fed Chairman Ben Bernanke were written as a result of meetings and discussions with the league, said the league. In them, the congressmen asked that the Fed make sure it upholds their intent, when the bill was passed last year, to exempt small issuers like credit unions and community banks so they can remain competitive with larger issuers, according to a press release from the league. Larson's letter said that in drafting the Dodd-Frank Wall Street Reform and Consumer Protection Act, "Congress was committed to leveling the playing field for our nation's small merchants, while also establishing a meaningful exemption for small issuers, particularly community banks and credit unions. I strongly urge you to adhere to this intent in drafting the final rule." Murphy's letter noted that in considering the legislation, "Congress was sensitive to small issuers, particularly community banks and credit unions, and worked to address their concerns with a small issuer exemption." Both letters indicated concern from credit union and community banks about the Fed's implementation of the proposed rule. In discussing the two-tiered fee system, Murphy wrote that some debit networks may eventually stop servicing cards issued by small depository institutions. "The restrictive not-for-profit capital structure of credit unions makes this particularly vexing and could force credit unions into discontinuing their debit programs," he said. According to league President/CEO Tony Emerson, members of Congress in Connecticut are "receptive to the needs of credit unions to stay competitive in the marketplace. They understand that credit unions, as not-for-profits, would not be able to sustain debit card programs unless a two-tiered system is in place." The Credit Union National Association (CUNA) also has urged the Fed to take the time to study the new interchange law, rather than forging ahead with new rules, so everyone including consumers, merchants and financial institutions, wins. The Fed should be given time to consider all interchange related costs and set a reasonable interchange rate to avoid unintended consequences such as elimination of debit card programs by credit unions, said CUNA President/CEO Bill Cheney. (See related story, "CUNA, Two-year rule delay needed for interchange study" in News Now's Washington section)

CUs delivered 203M in 2010 to Wisconsin consumers

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PEWAUKEE, Wis. (2/23/11)--Credit unions saved 2.2 million Wisconsin consumers $203 million with their competitive rates on savings and loans and lower and fewer fees for financial services, according to the REAL Solutions 2010 Scorecard for Wisconsin Credit Unions, a report by the Wisconsin Credit Union League. Members of credit unions saved more than $112 million on loans, saved more than $56 million on savings products, and paid $33 million less in fees for financial services. The report also cited millions of dollars of “intangible” value through services such as free financial counseling that has prevented home foreclosures and improved borrowers’ creditworthiness, and free-tax preparation for low-income consumers. During 2010, credit unions increased their lending to small businesses 8.3% to compensate for an almost equal decrease in available business credit from banks. About $44 million of the savings on financial product usage accrued to lower-income consumers; credit unions, in fact, operated 40% of all the financial institution branches in low-income areas. Nearly all credit unions in the state offered loans of $500 or less at modest interest rates--an alternative to costly payday loans. And credit unions also outperformed non-credit union lenders by approving 71.3% of home loans for low-income borrowers and 77% of home loans for minority borrowers, compared to a 66.2% and 56.7% approval rate by other financial institutions, respectively. Credit unions also supervised 109 branches inside schools to teach young people the regular habit of saving; students statewide have stashed $2.1 million in their in-school accounts. Credit unions also delivered:
* 1,221 presentations to 31,027 consumers to improve their financial savvy; * paid for 47 Wisconsin teachers to attend summer workshops that help them improve financial lessons offered in classrooms * purchased 75,000 copies of a personal finance magazine to help every public high school achieve state teaching standards related to money management; * supported 2,943 charities and civic activities; * granted $162,150 in student scholarships; and * trained 3,520 of their employees to encourage greater investing activity among members.

Bethpage website lets consumers vent outrage over fees

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BETHPAGE, N.Y. (2/23/11)--As part of a multi-faceted, interactive marketing campaign, Bethpage FCU has launched an interactive website inviting Long Islanders to voice their frustrations about big banks adding new fees on their existing checking accounts. The site includes links to relevant news stories, encourages consumers to fight back and offers them an alternative: Bethpage FCU’s free checking account. Bethpage Bonus Checking features no monthly service or maintenance fees, no minimum balance requirement, no per check charges, free Visa Check card, free online and mobile banking, and free online bill pay. It pays 1% interest for each month the member meets basic transactional requirements. When members sign up for online banking with e-statements, set up a monthly direct deposit, and conduct 15 point-of-sale debit card transactions per month, they earn interest each month. If transactional requirements are not met to earn interest for a particular month, there is no penalty, and the account is still free. Bethpage (N.Y.) FCU, with 3.868 billion in assets, has opened more than 33,000 free checking accounts since last summer (M2 Presswire Feb. 18).

CUNA board member to receive national Latino award

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WASHINGTON (2/23/11)--Credit Union National Association (CUNA) board member Winona Nava, president/CEO of Guadalupe CU, Sante Fe, N.M., has been named the recipient of the 2011 Leadership and Support Award by the Network of Latino Credit Unions and Professionals (NLCUP). Nava will be presented with the award at a reception March 1 during CUNA’s Governmental Affairs Conference in Washington D.C. In notifying Nava of the honor, NCLUP Chairman Maria J. Martinez cited Nava’s “indisputable commitment to financial inclusion for the Latino community and your leadership in educating credit unions about the imperative opportunity Latinos represent for the future and relevance of our movement.”

Boston Fed appoints three CUs to CDIAC

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BOSTON (2/23/11)--Three credit union representatives are among the 12 new members appointed to the newly formed Community Depository Institutions Advisory Council (CDIAC) for the First Federal Reserve District, announced the Federal Reserve Bank of Boston. The credit union representatives are:
* James W. Blake, president/CEO of HarborOne FCU, Brockton, Mass.; * John Dwyer, president/CEO of New England FCU, Williston, Vt.; and * Michael L’Ecuyer, president/CEO of Bellwether Community CU, Manchester, N.H.
The board of governors of the Federal Reserve System has created a national CDIAC to broaden the scope of input on economic credit conditions. To complement the national effort with regional perspectives, each Federal Reserve Bank is establishing a district council comprising representatives from that district’s community banks, thrifts and credit unions. The First District council is drawn from communities within Connecticut (excluding Fairfield County), Massachusetts, Maine, New Hampshire, Rhode Island and Vermont. It will provide input to the Boston Federal Reserve Bank’s senior management on topics such as economic and banking conditions, regulatory policies and payments issues. Members of the Boston Fed’s CDIAC will serve three-year terms.

IN.Y. TimesI To heal credit score talk to a CU

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NEW YORK (2/23/11)--Consumers looking to restore a poor credit score should talk to a credit union to help them gain more sound financial footing, according to a Friday article in The New York Times. Among a half-dozen suggestions, in an article titled, “Healing a Wounded Credit Score,” by Tara Siegel Bernard, is the suggestion, “Talk to a credit union.” “These institutions may be more willing to work with members who have checkered histories,” she wrote. “Their offerings vary, but they may be more likely to consider alternative credit scores, offer free credit counseling or have products tailored for people with poor credit histories.” “Certainly, many credit unions have credit builder or rebuilder loans, often structured as a loan with a built-in savings component so that a person gradually builds up funds that can act as partial collateral,” Clifford Rosenthal, president of the National Federation of Community Development Credit Unions, told Bernard. To read the article, use the link.

Malawi parliament passes financial co-ops bill

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LILONGWE, Malawi (2/23/11)--The Malawi parliament last week passed a long-awaited Financial Cooperatives Bill designed to strengthen the position of the country’s savings and credit cooperatives (SACCOs), or credit unions, and bring basic financial services to one of the poorest countries in world.
Click to view larger image Members line up for services at FINCOOP savings and credit cooperative (SACCO), Malawi’s largest financial cooperative.
Malawi President Bingu wa Mutharika is expected to sign the bill into law within the next three weeks. “The passing of the Financial Cooperatives Bill heralds a new dawn in the development and growth of safe and sound SACCOs in Malawi,” said World Council of Credit Unions (WOCCU) Director Sylvester Kadzola, CEO of Malawi Union of Savings & Credit Co-operatives (MUSCCO), a WOCCU member organization. “It’s an endorsement by the government that SACCOs are part of Malawi’s overall financial system and therefore require an enabling regulatory regime.” New laws resulting from the bill’s passage will help accelerate financial inclusion among Malawi’s poor by strengthening the institutions, which enables them to offer more services, Kadzola said. “MUSCCO believes passage of the bill will facilitate the modernization of SACCOs as fully fledged financial intermediaries offering modern and technology-driven financial services,” he added.
Click to view larger image The passage of Malawi’s Financial Cooperatives Bill heralds a new age for the country’s savings and credit cooperatives, according to World Council of Credit Unions Director Sylvester Kadzola. (Photo provided by World Council of Credit Unions)
WOCCU said its officials were instrumental in helping draft the bill on behalf of Malawi’s credit unions, working as part of a multi-national team to counsel both credit unions and governmental officials on the advantages of a strong cooperative sector. WOCCU also met numerous times with parliamentarians and officials from the Reserve Bank of Malawi to lobby on behalf of the country’s credit unions, and the association’s endorsement helped convince officials of the strength and merit of Malawi’s credit unions as part of a global network. “This is the successful culmination of many years of effort and will give Malawi credit unions their first-ever stand-alone piece of legislation,” said Dave Grace, WOCCU senior vice president of association services and primary author of the act. “Strong and sustained development requires both institutional capacity building and an enabling environment with strong prudential supervision. The passage of the bill was an important step forward in this second area.” Parliamentarians who spoke in favor of the bill’s passage last week said the measures contained within it to increase SACCO services and reach were long overdue. The bill also would establish a deposit guarantee fund designed to strengthen the movement and build confidence among members. “This means SACCOs will diversify their products, have ATMs and reduce operational costs,” Minister of Industry and Trade Eunice Kazembe told The Daily Times newspaper. “This means more members, and more savings for investments and industrialization.”