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U.S. Central depletes capital

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LENEXA, Kan. (3/2/10)--U.S. Central FCU's fourth quarter 2009 financials indicate the corporate's other-than-temporary impairment (OTTI) charges totaled $479.9 million for the quarter, bringing OTTI charges for the year to $1.8 billion--and depleting U.S. Central's capital. In addition to depleting U.S. Central's capital, the losses have a $331 million impact on the $1 billion infusion from the National Credit Union Share Insurance Fund (NCUSIF). That means U.S. Central has $669 million left from the capital fusion. "As a result of OTTI charges recorded in 2008 and 2009, U.S. Central's retained earnings have been fully exhausted, and all the PIC (Paid in Capital) and MCS (Membership Capital Shares) have been fully depleted," said U.S. Central's financial statement. "In addition, the NCUSIF capital note has been depleted by $331 million." The loss compares with a net loss of $4.9 billion in OTTI charges for fourth quarter 2008. However the 2008 charges reflect the full difference between amortized cost and fair value. The $497.9 million fourth quarter losses "were caused by further deterioration in many of U.S. Central's consumer-based investment securities, particularly non-agency residential mortgage-backed securities. Included in this amount are OTTI charges of $142.1 million on securities insured by Ambac--one of several insurers of securities in U.S. Central's portfolio." Management, after a review of Ambac, estimates that 80% of projected payments required of the insurer will be received and said it believes that U.S. Central will incur a credit loss on securities where, absent the effects of insurance, a loss of principal or interest is projected. Excluding the OTTI charges, U.S. Central recorded net gains on financial instruments of $16.2 million during the quarter, compared with losses of $27.1 million for fourth quarter 2008. Net interest income totaled $12.7 million for fourth quarter 2009, compared with $95 million for the same period in 2008, a decrease of $82.3 million or 86.7%. Fee income totaled $5.4 million, compared with $4.7 million for fourth quarter 2008. Operating expenses were $13.1 million, a decrease of $4.3 million or 24.5% from the same period in 2008. Assets as of Dec. 31, 2009, increased $8 billion or 29.3% to $35.1 billion. The increase primarily reflects an increase of $12.4 billion in cash held at the Federal Reserve Bank of Kansas City offset by a $1.7 billion decline in investment securities (carried at fair value) and a $2.7 billion decrease in loans.

CU limits withdrawals after 3M goes missing

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NEW CASTLE, Pa. (3/2/10)--The board of $6.5 million asset credit union in Pennsylvania that lost $3.4 million during fourth quarter 2009 has decided to limit the amount of money its members can withdraw from their accounts. New Castle, Pa.-based Lawrence County School Employees' CU's board resolution allows members to remove up to $5,000 in a week. Withdrawals that exceed the amount will require members to provide notice 10 business days in advance (New Castle News Feb. 2). The newspaper reported in another story the same day that federal auditors uncovered irregularities with the credit union's finances in late September. The credit union is working with the National Credit Union Administration and with First Choice FCU, Union Township, Pa., who is assisting with operations, said the report. The credit union's CEO, Holly Cowan, left the job about five months ago for undisclosed reasons. The National Credit Union Share Insurance Fund insures member accounts up to $250,000.

Younger crowd gets the GAC experience

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WASHINGTON (3/2/10)--Ken Worthey Jr., marketing specialist at Belvoir FCU, Woodbridge, Va., summed up his experience with Crash the GAC in Washington, D.C., last week like this: GAC was an eye-opening experience. Worthey was one of 20 young professionals who attended the Credit Union National Association’s (CUNA) Governmental Affairs Conference (GAC) with “Crash the GAC.” Crash was organized by Brent Dixon, young adult adviser at the Filene Research Institute and consultant with REAL Solutions. Crashers received scholarships to attend the conference from the CUNA Center for Professional Development, paid for their own travel costs and stayed at a hostel courtesy of Palmetto Cooperative Services. Worthey, who started with Belvoir five years ago as a teller, said of the GAC: “It helped me to put in perspective how wide the scope of the industry is and the changes we make in the world. The Crash enabled us to collaborate with professionals our age and share ideas about the industry.” GAC recharged Matt Vance’s credit union batteries and gave him a sense of belonging. “We were able to have an impact on credit union leadership and show them that we do care about the future of our movement, we know more [about the industry] than just flashy Gen Y checking accounts and we’re willing to proactively learn what is needed to be in their position in the future,” said Vance, marketing coordinator at Industrial CU, Bellingham, Wash. Aside from learning that “[CUNA President/CEO] Dan Mica is listening to Norah Jones and Ray Charles on his iPod,” and “if you want a hot shower at a hostel, you need to wake up before 6:30 a.m.,” Vance said he learned about the heart and soul of the credit union industry--people helping people. Organizer Dixon said he learned there is a huge need for intergenerational collaboration. “Spending a week with pioneers of the movement really highlighted that our generation needs mentors. I think both age groups have a lot to learn from each other,” he said. Chad Helminak, crasher, Web producer and media relations manager for the Wisconsin CU League, said GAC was energizing. “The scope of credit unions across the nation--and globe--is very impressive and it brings a sense of pride to be a part of that. “As we networked and shared ideas with our fellow crashers and leaders of our movement, it was reaffirming to realize that there are so many people working towards the same goals as we are everyday: to improve the lives of our members and communities,” he said. Robbie Wright, founder of CU Innovators, Salem, Ore., is a GAC veteran. As a crasher, Wright said he felt more involved with industry people. “Between attending the general sessions and our crashers’ breakout sessions, we were very busy,” Wright said. “It introduced our group to a lot of people they may have never met had they not crashed the GAC. For example, I’d seen Gigi Hyland speak, but never got to speak with her one-on-one.” Dixon agreed. “One of the greatest things about attending an industry-wide conference is that it brings perspective,” he said. “Crashing the GAC got us out from behind our desks and showed us the scope of the movement. We spent time with Pete Crear [president/CEO of the World Council of Credit Unions] on the first day, and the work credit unions are doing in developing countries is unbelievable.” During GAC, crashers said they especially liked networking, discussion sessions and Capitol Hill visits to meet lawmakers. They also loved seeing the passion for credit unions from others at the conference, and meeting some of the movement’s pioneers. For some crashers, GAC was their first visit to Washington, D.C. But they’d also like to see the credit union movement be more active. Credit unions make up 6% of the financial marketplace--and crashers said they want to see the industry step up and increase that share. Crashers also want to move beyond their “Gen Y” stereotype. Instead of just being counted on by their credit unions to help sell products and services to youth, crashers said they are interested in bigger issues--like savings and lending. Credit union representatives who spent time with crashers noted their enthusiasm about the industry. “In my interactions with them, they struck me as incredibly passionate, intelligent and engaged young credit union professionals,” said Christopher Morris, Web manager for the CUNA Councils. “This group saw their Crash opportunity as great for their own professional development, but more than that--they really wanted the opportunity to network and grow their ability to help their members and credit unions,” said Meghann Dawson, CUNA instructional design manager. Dawson represented CUNA at the event and helped coordinate Crash. "They see their jobs as part of a movement and really want to be part of moving credit unions on to bigger and better things. If the Crash experience continues--they hope to also be seen as resources to the other GAC attendees.” “Part of CPD’s goal is to provide professional development assistance for our young members--so this was a great fit for us,” Dawson said. Some also plan to “crash” the 1 Credit Union Conference, sponsored by CUNA and WOCCU, in Las Vegas, July 11-14. Vance is one of them. “These crashes provide so much value for young credit union professionals,” he said. “By fostering the credit union passion in them at a young age, we have a better chance of keeping them in the industry and pushing us higher and higher into the future.” “It was such a great week,” Dixon added. “I wouldn't trade the new relationships and conversations we had for anything. By the end of the week we were talking about how to keep this momentum going among the group and across the industry. As we all went home, we agreed it was the beginning of something rather than the end. “The GAC is all about using the passion of our industry to make change,” he said. “Our group just wants to be there with the rest of you. We want to make change with you. We love the work credit unions are doing, and the sooner we can be deeply involved the better.” Dan Emery, marketing specialist at Maine State CU in Augusta, summed up his experience with Crash the GAC in Washington, D.C., last week with a well-known Confucius quote: “I hear and I forget. I see and I remember. I do and I understand.”

WOCCU trying to determine status of Chilean CUs

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MADISON, Wis. (3/2/10)--The World Council of Credit Unions (WOCCU) is attempting to find out the status of credit unions in Chile where a magnitude 8.8 earthquake ripped apart the country early Saturday. Chile has five credit unions, with 826,593 members out of a population of 16.6 million people--a 7.3% penetration rate, according to WOCCU's statistical information for 2008--the latest available. Chilean credit unions' trade association is not a member of WOCCU. Credit unions in Chile have combined assets of more than $1.5 billion. They make nearly $1.4 billion in loans. According to news reports, the death toll has reached more than 723, most of them in the Maule region, a wine growing country along the coast, where at least 541 deaths were reported. As much as 80% of some towns in the region was destroyed (The Wall Street Journal March 1). In Bio-Bio, at least 64 people died (CNN March 1). Chile's earthquake has had more than 100 aftershocks, ranging from 4.9 to 6.9 in magnitude, as well as a tsunami that killed at least eight people, with eight others missing, on the Chilean islands of Juan Fernandez and slammed into the country's coast areas. The city of Concepcion, the nation's second largest city and 70 miles from the epicenter, was hard hit, with a 15-story building collapsing. In the capital city, Santiago, which is farther north, more than 1.5 million people were without power, said CNN. The country's National Office of Emergency said Sunday more than two million people were displaced (The New York Times March 1). CNN said 500,000 homes were destroyed. Although Saturday's earthquake was much stronger and across a broader region than the recent earthquake in Haiti. Haiti's death toll--200,000--much higher. Chile has much stricter building codes for its buildings, which are built to withstand earthquakes.

WOCCU distinguished service nominations due soon

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MADISON, Wis. (3/2/10)--The nomination deadline for World Council of Credit Unions’ (WOCCU) Distinguished Service Award (DSA), the highest honor bestowed by the international credit union system, is April 5. Each year, the award honors the outstanding contributions of individuals or organizations to the global credit union movement. WOCCU’s vision is “Improving people’s lives through credit unions,” and the DSA recognizes the most distinguished achievements in support of that pursuit. WOCCU does not present the DSA honor every year; its presentation is governed by the viability and worthiness of candidates in the eyes of the judges. WOCCU presents no more than three individual awards and one institutional award in a single year. Award presentations this year will be made at The 1 Credit Union Conference, a joint enterprise of both WOCCU and the Credit Union National Association. The one-time conference, July 11-14 in Las Vegas, is expected to attract attendees from more than 60 countries. In the case of individuals, DSA nominees may be WOCCU and member organization officers, directors or representatives; international credit union pioneers; field technicians with a long and outstanding service record; or persons whose actions have benefited global credit union development. Institutional recipients may be organizations or agencies that have provided financial and technical assistance to develop international credit union movements and their service infrastructures over an extended period of time. In 2009, WOCCU bestowed the DSA to David Chatfield, former president/CEO of the California and Nevada Credit Union Leagues, and Wayne Nygren, former president/CEO of Credit Union Central of British Columbia, now Central 1 CU, Canada. In 2008, honors went to Chris Baker and Karen Schwartz, both economic development pioneers, from the U.S. and Credit Union Foundation Australia, respectively. DSA nominations must be made by a WOCCU member organization. For more information, use the link or contact Liliana Tangwall at ltangwall@woccu.org or 608-395-2043.

Shuttered Washington bank was former CU

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TACOMA, Wash. (3/2/10)--A bank shuttered Friday by Washington state and federal regulators was a former credit union. Rainier Pacific Bank, Tacoma, Wash.--formerly Rainier Pacific CU--was closed Friday afternoon by the Washington Department of Financial Institutions (DFI), which appointed the Federal Deposit Insurance Corp. (FDIC) as receiver, reported the FDIC. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Umpqua Bank, based in Roseburg, Ore., to assume Rainier Pacific Bank's deposits. "For consumers wanting to change institutions given the closure, it is reassuring to recognize that community is served by a number of alternative institutions, including some exceptionally strong credit unions that have stayed true to their chartering roots and traditional mission," John Annaloro, president of the Washington Credit Union League, told News Now. "Rainier Pacific pursued a banking charter, for better or worse, and times were bad for them. The outcome is unfortunate," Annaloro added. The 14 branches of Rainier Pacific Bank will reopen as branches of Umpqua Bank, with depositors automatically becoming depositors at Umpqua. As of Dec. 31, Rainier Pacific Bank has roughly $717.8 million in total assets and $446.2 million in total deposits. Founded as Tacoma Teachers CU in 1932, the former credit union received its community charter in 1995. In late November, 2000, more than 70% of its 5,700 voting members voted in favor of converting to a savings bank charter. The credit union became Rainier Pacific Bank on Jan. 1, 2001. At the time of the conversion, the credit union's executives told News Now that Prompt Corrective Action regulations limited the credit union's ability to make mortgage loans. Roughly 55% of its loan portfolio were real estate-based loans (News Now Nov. 29, 2000).

N.C. league to move to Raleigh

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RALEIGH, N.C. (3/2/10)--The North Carolina Credit Union League announced Monday it will relocate its headquarters to Raleigh from Greensboro by April 2011. The move is designed to further enhance the trade association’s ability to serve its members in the areas of legislative and regulatory advocacy. The league also announced that staff would be offered relocation packages and that no positions would be cut in the move. “The board and management looked carefully at this decision over several months,” said President/CEO John Radebaugh. “With our Greensboro lease expiring next year, the board decided that now was the right time to act. Relocating positions the league for continued success and enhances our ability to meet the top priority of our members-- advocacy.” The league will combine Raleigh office personnel in place since 1997 with the entire staff under one roof. It is evaluating office space in downtown Raleigh, and expects to open the new space later this year. “Headquartering downtown puts the entire organization in the heart of our state’s political system,” Radebaugh said. “Opening the site later this year will offer Greensboro staff the transition time and flexibility they need. It also ensures that our credit unions will continue to receive the high level of service they’ve come to expect.” The league has operated in Greensboro since it was chartered in 1934. The league board noted that relocation offers key benefits to credit unions, including:
* A stronger voice with key decision-makers; * Higher visibility among legislators; * Greater ability to influence legislative and regulatory outcomes; and * Faster response times to legislative issues that arise.
“As the board and management team evaluated the options available to the league, the case for moving to Raleigh was very clear,” said league Chairman Ben Hill. “Over time, the league’s focus has shifted, and this commitment to Raleigh is really a commitment to being a more potent force for credit unions across North Carolina in the years to come.”

CUs all over ICBS NewsI this weekend

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NEW YORK (3/2/10)--Credit unions were featured in two stories on CBS News Sunday Morning last weekend, plus one on CBS Evening News with Katie Couric. One story highlighted the Move Your Money initiative, and another featured financial guru Suze Orman, who encouraged consumers to move their credit card accounts to credit unions. “Move Your Money” encourages consumers to move their accounts from large banks to smaller financial institutions such as credit unions. “Move Your Money,” launched by the Huffington Post, has received significant media attention and has noted credit unions as good alternatives to traditional banks. Orman encouraged viewers to find a good credit union near them. “Do you know by law federally chartered credit unions cannot charge you more than 18% interest rate?” Orman asked. “Get yourself a credit card at a credit union.” Credit unions offer an alternative to traditional banks and typically offer better rates than banks, CBS Evening News said. It mentioned First Community CU, Kalamazoo, Mich., which offers rates as low as 8% on credit cards. News Now reported last week that Ondine Irving, a bank adviser, told CBS that credit unions can offer cards without the high fees that banks charge, and still make a profit. “If credit unions can do it, banks should be able to as well. They are just choosing not to,” she said. The Costco Connection, a magazine for customers of wholesale retailer Costco, also featured Orman in its March 2010 issue. “Forget banks,” she told the magazine. “I prefer credit unions; their interest rates and fees tend to be a lot lower than what banks charge.” For more information, use the links.

IBoston GlobeI features CUs push on MBL cap

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BOSTON (3/2/10)--Credit unions are pushing to raise the member business lending cap for small businesses in the U.S. to help fulfill a pressing need in the economy, The Boston Globe reported Sunday. The newspaper conducted a wide-ranging question-and-answer session with Dan Egan, president of the Massachusetts, New Hampshire, and Rhode Island Credit Union Leagues, who was asked about the restrictions on the types of loans credit unions can offer members. “They can do just about any type of lending for consumers that is available anywhere else,” Egan replied to the Globe. “The big problem now is on the business side. We’re seeing a big increase in the number of people who are approaching credit unions for small business loans, and there’s an arbitrary cap on business lending for credit unions.” He was then asked if many credit unions have reached the limit. “Right now, in Massachusetts, one of the larger ones is close to the cap, and the others are staying away from the cap by cutting back on the loans they are offering,” Egan told the paper. “So, they are doing either Small Business Association guaranteed loans, which don’t count toward the cap, or they are doing only a limited number of loans. It’s presenting a barrier to credit unions. He noted that small business people “tell you if they are looking for a loan of less than $500,000, most banks don’t want to talk to them,” he added. “So you wind up with a lot of people coming to credit unions for loans. The average business loan for credit unions in this state is $254,000.” To read the article, use the link.

CUNA MBL push in prominent spot in IUSA TODAYI

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WASHINGTON (3/2/10)--Credit unions' push to lift the cap on member business lending (MBL) took front-page position in USA TODAY's "Money" section Monday.
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In "Credit Unions: Lift Cap on Small Business Loans," Credit Union National Association (CUNA) President/CEO Dan Mica said banks "have huge losses in their portfolio and our business loans are rock solid." The economic downturn presents credit unions' "best opportunity" to persuade lawmakers to lift the MBL cap to 25% from 12.25%, the national publication reported. It noted credit unions have picked up the slack as banks have pulled back on lending, It cited CUNA statistics in comparing loans of banks and credit unions. Banks' outstanding loans to small businesses fell 3.9% in the year ended June 30, while credit union loans rose 11% to $36 billion the first nine months of 2009. CUNA Chief Economist Bill Hampel told the publication that lifting the MBL cap to 25% from 12.25% would free an extra $25 billion or so in loans over three years and add nearly 100,000 jobs the first year. CUNA's witness from Friday's House Financial Services Committee hearing, Ron Covey, CEO of St. Mary's Bank CU, Manchester, N.H., told USA Today that the cap means he can't fund $4.8 million in loans. The article also told about Corvallis, Ore., restaurant owners who were rejected by three banks before OSU FCU approved a loan. The story was paired with a feature on how finances always are on the minds of small business owners. One business owner commented in that article that "in this climate, it is astoundingly hard to secure financing for anything."

Top 10 INews NowI stories for February

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MADISON, Wis. (3/2/10)--The Credit Card Accountability, Responsibility and Disclosures Act, member business lending, fraud and the “Move Your Money” campaign topped News Now's Top 10 Stories for February. Here are last month’s top stories: 10. CUNA ire on administration’s plan noted in American Banker WASHINGTON (2/9/10)--The Credit Union National Association's ire on behalf of credit unions when a recent Obama administration plan proposed to funnel $30 billion into community banks for business lending--but do nothing for credit unions--was highlighted in Monday's "People" section of American Banker. 9. Compliance: CUNA answers CARD Act credit concerns WASHINGTON (2/16/10)--In this month's Compliance Challenge, the Credit Union National Association addresses whether the Federal Reserve's recent Regulation Z final rule, which covers provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 that become effective on Feb. 22, contain any exceptions for share-secured credit card accounts with regard to determining an underage consumer's "ability to pay." 8. Fed to clarify rules under Regs E, DD WASHINGTON (2/22/10)--The Federal Reserve on Friday released a series of proposals that would clarify the portions of Regulation E, Electronic Fund Transfers, and Regulation DD, Truth in Savings, that address overdraft services. 7. Regulators reveal hot exam topics for 2010 WASHINGTON (2/24/10)--Staff from the National Credit Union Administration and two state-level financial regulators revealed some of the hottest exam topics that they will focus on this year—including indirect lending and risk concentration, which NCUA will soon provide guidance on in Letters to Credit Unions. 6. CUNA analyzes CARD Act rule for CUs WASHINGTON (2/2/10)--A comprehensive breakdown of the Federal Reserve Board's recently published final rules that restrict a number of credit card practices has been posted to the Credit Union National Association's website. 5. CNNMoney.com says to ‘Take this bank and shove it’ NEW YORK (2/12/10)--Angry consumers' big-bank bashing over bailouts, bonuses, and nickel-and-diming continues in the media, with credit unions singled out as a haven from fees. In "Take this bank and shove it," CNNMoney.com discusses consumers’ disenchantment with banks and highlights several people who switched from banks to credit unions. 4. Tax refund fraud is among latest scams WASHINGTON (2/18/10)--Credit unions should warn members that tax-filing season brings out tax-preparation frauds. The latest scheme involves tax refunds transmitted as a direct deposit or automated clearing house credit. 3. Problem CUs continue to be an NCUA focus ALEXANDRIA, Va. (2/1/10)--National Credit Union Administration Chairman Debbie Matz Friday expressed concern at the agency's open board meeting about the high number of CAMEL 3, 4, and 5 credit unions and the percentage of insured shares that they represent. 2. CUs outraged over biz lending snub by administration WASHINGTON (2/3/10)--Credit unions are outraged, baffled and feeling "snubbed" by the Obama administration's proposal to funnel $30 billion into smaller banks for business lending--but do nothing for credit unions, Credit Union National Association President/CEO Dan Mica said Tuesday. 1. CUNA compiles FAQ on CARD Act queries WASHINGTON (2/22/10)--As promised, the Credit Union National Association on Friday posted a list of frequently asked questions related to the Credit Card Accountability, Responsibility and Disclosure Act of 2009, which becomes fully effective today.