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SECU adjusts several programs for members

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RALEIGH, N.C. (3/2/11)--State Employees' CU (SECU) of North Carolina announced adjustments to three programs that will benefit its members. The programs include a revamp of its mortgage assistance program, lower interest rates on its payday lending alternative, and absorbing appraisal costs for home equity lines of credit and closed-end second mortgage loans. With North Carolina facing a $2.7 billion budget deficit, SECU, based in Raleigh, is finetuning its Mortgage Assistance Program (MAP) to assist state government employees facing potential job cuts. The program, in effect since January 2009, was developed to help members state in their homes during the recession. The program has helped 7,000 families. In MAP II, members who experience job losses can meet in person with a senior credit union office and develop an individual financial plan to meet primary needs and obligations on a limited budget, said SECU. To avoid possible foreclosure situations, members with a SECU mortgage loan have several options, including partial payment alternatives, mortgage loan modifications, refinances or possible extensions. Budgeting, financial counseling and overall debt restructuring are elements of the revised program. As a prelude to MAP II, SECU is identifying members whose current loan situations warrant a refinance and has implemented a number of lending changes to accommodate possible refinance situations. SECU also is enhancing its payday lending alternative potential for nearly 100,000 monthly Salary Advance Loan (SALO) participants. The maximum $500 loan product will lower the standard 12% interest rate for many of the program's regular users to a share-secured rate of 5.5%, reducing members' interest costs by more than 50% and saving members more than $400,000 in interest costs. The credit union is also enhancing SALO's savings feature, to increase participants' savings balances and earnings by more than $1.5 million. Members saving at least $500 will see their interest on the SALO drop to 5.5% from 12%. The reduced rate remains in place as long as the savings balance is $500 or more. SECU's required savings percentage will rise to 7% from 5% to increase members' chance of graduating from the program into other long-term savings programs. A typical $500 loan advance will now result in a savings deposit of $35 instead of $25. SECU is exploring the possibility of offering a low $100 minimum balance certificate as part of the program. In the third program enhancement, SECU will absorb the cost of an appraisal for home equity lines of credit and closed-end second mortgage loans. Earlier SECU waived first mortgage loan appraisal fees for members after finding that the cost of an appraisal often deters members who are contemplating a refinance. The change is expected to save members $1.2 million annually, said SECU, which hopes the enhancement will open the door for more refinances. The credit union also has:
* Reduced the lifetime cap from 8% to 6% for a two-year adjustable rate mortgage loans; * Increased the maximum loan term for used-vehicle loans to 72 months; and * Waived Department of Motor Vehicle lien recording fees for vehicle loans.

CU System briefs (03/01/2011)

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* EUGENE, Ore. (3/2/11)--Oregon Community CU in Eugene, Ore., has donated $100,000 to Sacred Heart Medical Center Foundation to help medical school students get hands-on experience. The gift funds the Gordon and Joy Lee Hoerauf Endowment for Student Clerkships at the Center for Medical Education and Research at Sacred Heart Medical Center. More than 150 third- and fourth-year medical students receive part of their medical education in PeaceHealth’s hospitals and clinics statewide. The donation is the fourth installment toward a total gift of $1 million over 10 years by the $925 million asset credit union ... * SPRINGFIELD, Mo. (3/2/11)--Postal Federal Community CU (PFCCU) in Springfield, Mo., announced it plans to change its name by the summer, citing the desire to eliminate confusion about who can open an account at the credit union. The $129 million-asset PFCCU was started in 1929 by Springfield postal workers and then expanded membership to include federal employees. In 1994 it expanded its field of membership to serve a much larger group, including everyone who lives or works in a 10-county area in Southwest Missouri. “Now that our membership has been expanded, our current name creates confusion about who can open an account with us,” said Steve Pierson, PFCCU president/CEO. “Based on research we’ve conducted over the last few years, we learned our current name presents a barrier to people who believe they can’t use our credit union. By changing our name, we want to continue to honor our heritage while also letting members of our community know they can use our services" … * BEAUMONT, Texas (3/2/11)--Sandra H. Cooper, 56, president and treasurer of the now defunct Orange County Employees FCU, Beaumont, Texas, pleaded guilty Monday in a U.S. District Court to money laundering and embezzling more than $1.16 million of credit union funds over four and a half years. She faces up to 10 years in federal prison. A sentencing date has not been set, said U.S. Attorney John M. Bales (Targeted News Service Feb. 28). The credit union, with two employees, was housed in the administration building next to the Orange County Courthouse. The National Credit Union Administration declared the credit union insolvent in June 2010 and arranged for members' accounts to be transferred to Sabine, FCU, Orange, Texas … * SAN DIEGO (3/2/11)--Erin Diane Lovellette, 31, a former supervisor at Pacific Marine CU on the Camp Pendleton base in Oceanside, Calif., was sentenced Monday in a U.S. District Court to 18 months in federal prison for stealing $100,000 from the credit union. She also was ordered to pay the full amount in restitution. The theft occurred in May 2002 and was in the form of a tightly wrapped "brick" of $100 bills, which Lovellette later deposited in amounts of less than $10,000 into multiple bank accounts or other financial institutions to avoid currency transaction report filing requirements, said the U.S. Attorney's office (The Valley News Feb. 28) … * WINDSOR, Conn. (3/2/11)--Three branches of Windsor (Conn.) FCU received bomb threats within minutes of each other Monday afternoon, forcing the evacuation of the branches and nearby businesses. Authorities later determined the calls were false alarms. The calls arrived at branches in Windsor, Bloomfield and Granby at about 3:45 p.m. The caller said a bomb was going to detonate in the buildings, according to Granby police. The branches reopened Tuesday ( and The Granby News Feb. 28) …

Study Why bank customers switch--its not fees

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WESTLAKE VILLAGE, Calif. (3/2/11)--Credit unions are seeing more members switching their business from banks, but they may be interested in why bank customers take the plunge to another institution. According to a new study of customers' shopping and selection process for banks, the most common reason isn't high fees--it's a change in life circumstances. Roughly 8.7% of bank customers surveyed in 2011 said they switched their primary banking institution during the past year to a new provider, according to the J.D. Power and Associates 2011 U.S. Retail Bank New Account Study, which was released Tuesday. That's up from the 7.7% who said they did so in 2010. This year, customers indicated they checked out 1.9 financial institutions while shopping around for another one--up from the average of 1.6 average banks in 2010, said the report. The most common reason for switching banks is a change in life circumstances, said Rockwell Clancy, vice president of the financial services practice at J.D. Power and Associates. Other popular reasons for switching included fees and rates, unmet expectations and poor service. Consumers who evaluated and ultimately selected a new financial institution indicated that the most important factors in their decision are advertising, branch convenience, products and services, promotional offers, and direct and indirect customer experience, including past personal interactions, recommendations and the institution's reputation. However, said Clancy, pricing--fees and interest rates--carries relatively little weight in influencing customer purchase decisions, despite media coverage of changes to fees for bank accounts and credit cards. Banks that performed well in acquiring new customers were more aggressive in their advertising and promotions, said the report. "It's undeniable that the 'blunt instruments' of ad spend, branch density and promotional offers such as gift cards have been effective during the past year in capturing market share," said Clancy. "The question is whether these provide sustainable competitive advantage, particularly when compared with customer acquisition gains resulting from positive past experiences with a brand and Other findings:
* Less than half (43%) of customers who purchased an additional banking product made that purchase at their primary financial institution. For those who turned to another institution for an additional product, promotional offers such as gift cards carried the most weight in influencing the purchasing decision. * Those who stay with their primary financial institution are most driven by positive past experience and perceptions that their institution is more focused on customers than on profits.
"Clearly, banks that are not providing a noticeably better experience are more likely to lose he business of indifferent customers who are more easily lured by the next attractive promotional offer to come along," said Clancy. The survey is based on multiple evaluations from 4,791 customers who shopped for a new banking account or new primary financial institution during the past 12 months. No credit unions were among the institutions in the study.

Watermark Sound CUs to merge

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TACOMA, Wash. (3/2/11)--The boards of Watermark CU, Seattle, and Sound CU, Tacoma, Wash., unanimously approved a merger agreement between the two organizations. The agreement is the first formal step in the merger process. Approval from state and national regulators and Watermark CU members are the next steps. The continuing credit union would use Sound CU’s charter and would operate as Sound CU with its corporate office in Tacoma. “We explored all strategic alternatives. A partnership with Sound CU presented a great opportunity,” said Bob Valentine, chair of the Watermark Board of Directors. “Both Watermark and Sound employees share the goal of providing high-quality financial services, with professionalism and enthusiasm. Combining the credit unions would allow the ongoing organization to better serve member/owners with 21 full-service branches from Lynnwood to Olympia.” The $557.3 million-asset Watermark and $536.5 million-asset Sound share a similar history. Chartered in neighboring cities to serve telephone company employees, each has expanded membership to serve anyone who lives or works in Washington. “Watermark wants to expand to serve its members in the South Puget Sound region. Sound has been working to expand north,” said Richard Brandsma, Sound CU president/CEO. “Combining the strengths from both credit unions would expand service for both membership groups through improved product lines, expanded technology offerings, and financial stability. Members would benefit from this merger of two strong credit unions.” Brandsma will lead the combined organization with assets of $1.1 billion and 21 branches in Western Washington, which would make it the fourth largest credit union in Washington. The board for the ongoing credit union would consist of 12 members with equal representation from Watermark and Sound. Sharon Sanford, Watermark CU President/CEO is scheduled to retire in late 2011.

ICBS MoneyWatchI Best way to get free checking--CUs

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MADISON, Wis. (3/2/11)--The best way for a consumer to obtain a free checking account is to join a credit union, according to a Monday article titled “Best Way to Get Free Checking,” by Farnoosh Torabi posted on CBS MoneyWatch. About 96% of 50 major credit unions offered free checking, found the 2011 Credit Union Checking Study, CBS said. About 81.5% of U.S. banking customers had free checking in 2009, and that number dropped to 72.5% in 2010, according to Moebs Services. Although credit unions haven’t been completely unaffected by the financial crisis, and have raised some fees, many of those increases are less than what large banks have recently levied on customers, the Bankrate study found. “I think parking some savings at a credit union, as either your sole banking destination or part of your overall banking ‘portfolio,’ is a fine way to bank smart,” Torabi wrote. “The Credit Union National Association boasts that practically everyone is eligible to be a member at [a] credit union based on where you live, the company your work for, the school you attend or organizations you’re a part of.” Torabi added that she’s been a member of Digital FCU in Shrewsbury, Mass., since she was a teenager and even though she no longer lives there, she still keeps an active account at Digital. To read the article, use the link.

INews NowI Top 10 stories for February

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MADISON, Wis. (3/2/11)--National Credit Union Administration plans, financial literacy requirements for credit union directors and interchange dominated the News Now top 10 stories list for February. The stories are: 10. Social media gets new focus at NCUA ALEXANDRIA, Va. (2/7/11)--The National Credit Union Administration (NCUA), known already to "tweet" on Twitter, is enhancing its outreach through social media and has brought on a new employee to lead the charge. 9. Fed announces start of NMLS WASHINGTON (1/31/11)--The Conference of State Bank Supervisors' (CSBS) Nationwide Mortgage Licensing System & Registry (NMLS) has been upgraded to allow banks and credit unions to register their mortgage loan originators (MLOs), and became fully active earlier today. 8. NCUA compensation plan must address CU concerns: CUNA WASHINGTON (2/14/11)--As the National Credit Union Administration (NCUA) prepares to look at executive compensation rules later this week, the Credit Union National Association (CUNA) is urging the agency to consider credit unions' significant concerns before issuing any proposal. 7. Directors' fin. lit. requirements may be extensive WASHINGTON (2/24/11)--Larger, more complex federal credit unions may need to demonstrate a higher level understanding of financial risk to be in compliance with the National Credit Union Administration's (NCUA) newly adopted director fiduciary duties rule, Credit Union National Association (CUNA) Senior Vice President of Compliance Kathy Thompson has said. 6. CUNA: Two-year delay needed for interchange study WASHINGTON (2/23/11)--The U.S. Congress intended that small debit card issuers be protected from the rate regulations in the interchange law yet the Federal Reserve Board's implementation proposal fails to accomplish that goal, the Credit Union National Association (CUNA) said in its comment letter to the Fed filed yesterday. CUNA was commenting on the board's proposal to implement the interchange provisions of the Dodd-Frank Act. 5. House hearing hints of interchange rule delay WASHINGTON (2/18/11)--Several legislators called for a delay of implementation of the Federal Reserve's interchange fee proposal during a Thursday House financial institutions and consumer credit subcommittee hearing. Also prompting legislator concern about the impact on small issuers were comments from a Fed governor and earlier remarks by the Fed's chairman, as well as testimony from the Credit Union National Association's (CUNA) witness. 4. Oakland Municipal is first CU closing of 2011 ALEXANDRIA, Va. (2/7/11)--On Friday, the National Credit Union Administration (NCUA) was appointed liquidating agent of Oakland Municipal CU, of Oakland, Calif., by the state's Department of Financial Institutions (DFI). It was the first liquidation of a federally insured credit union in 2011. 3. NCUA details fin lit requirements for FCU directors ALEXANDRIA, Va. (2/8/11)--The National Credit Union Administration (NCUA) in its letter to federal credit unions No. 11-FCU-02 sought to remind federal credit union directors of specific financial literacy requirements that will become effective later this year as well as their general responsibilities as credit union leaders. 2. Fed ends development of three Reg Z mortgage rule changes WASHINGTON (2/2/11)--The Federal Reserve Tuesday announced that it would halt work toward finalizing three pending mortgage rulemakings under Regulation Z. Credit Union National Association (CUNA) President/CEO Bill Cheney had asked the Fed to drop these proposals and impose a moratorium on any further rulemakings on issues that will be under the authority of the Consumer Financial Protection Bureau as of July 21, 2011. 1. 2011 NCUSIF premium not a definite ALEXANDRIA, Va. (2/22/11)--The National Credit Union Administration said it may not need to assess a National Credit Union Share Insurance Fund (NCUSIF) premium on credit unions in 2011.

NCUA moves conservatorship loan suit to federal court

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MIAMI (3/2/11)--The National Credit Union Administration (NCUA) has filed a notice to remove a $15 million breach of contract lawsuit filed by a Florida credit union to the U.S. District Court for the Southern District of Florida in Miami. The suit concerns an agreement to buy mortgage loans from a credit union now in conservatorship. Power Financial CU, Pembroke Pines, Fla., filed its complaint Feb. 14 in the 11th Circuit Court against Keys FCU, Key West, Fla. NCUA filed its notice of removal with the U.S. District Court on Thursday, saying that the agency, as conservator of Keys FCU, is the real party to the case. Keys was placed into conservatorship on Sept. 24, 2009, according to court documents. The case relates to a loan sale agreement that Power Financial and Keys Federal entered into on July 12, 2010, according to the original complaint filed in the 11th Circuit Court. The complaint said Power Financial agreed to purchase certain mortgage loans of Keys Federal and that the borrowers whose mortgage loans were to be purchased would automatically become members of Power Financial. On Aug. 27, 2010, Power Financial received a letter from Keys Federal that "expressly repudiated" the contract, explaining that the transaction was "no longer in the best interest" of Keys Federal. It is "extremely difficult," said Power Financial's complaint, for it to purchase replacement mortgage loans because it "is limited by state regulation to specific preapproved geographic areas" related to its field of membership. "Mortgage loans available for purchase in the communities in which Power Financial has members are often not suitable for purchase because of the current real estate conditions in those communities," the document said. The complaint noted that on Oct. 12, Power Financial received consent for the sale from the Florida Office of Financial Regulation, and on Oct. 19, Power notified Keys' attorneys of the approval, but never heard back on the matter.

NCUF honors Hanley Mica and NYIB

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WASHINGTON (3/2/11)--The National Credit Union Foundation (NCUF) presented three Herb Wegner Memorial Awards at its annual dinner Monday night in Washington.
Click to view larger image National Credit Union Foundation Chairman Gary Oakland, right, and Vice Chairman Laida Garcia present Rudy Hanley, center, president/CEO of SchoolsFirst FCU, with the Wegner Award for Lifetime Achievement.
Click to view larger image Dan Mica, former president/CEO of the Credit Union National Association, speaks after accepting his Wegner Award for Individual Achievement. National Credit Union Foundation Chairman Gary Oakland is in the background.
Click to view larger image Rebecca Isaacs, National Youth Involvement Board (NYIB) chairman, and Brandon Pugh, NYIB chairman emeritus, speak after accepting the Wegner Award for Outstanding Organization. (Photos provided by the National Credit Union Foundation)
The awards ceremony celebrated three of the highest national honors in the credit union movement:
* Lifetime Achievement: Rudy Hanley, president/CEO, SchoolsFirst FCU, Santa Ana, Calif. Hanley has been described as a visionary, consensus builder, and a respected voice for all in the credit union industry. * Individual Achievement: Daniel A. "Dan" Mica, former president/CEO of the Credit Union National Association (CUNA). Mica helped preserve credit union access for millions of consumers, protect credit unions' federal tax exemption, raised credit union political involvement to the highest levels, and a host of additional achievements. * Outstanding organization: National Youth Involvement Board (NYIB). For 38 years, the NYIB and its volunteer network of credit union youth advocates have consistently led the charge to bring financial education and understanding of credit unions to America's young people.
"There is no honor greater than the one that comes from your peers," said Hanley. "It is especially humbling when it comes from those you admire and are far more deserving." More than 800 credit union leaders and supporters attended the event held during CUNA's Governmental Affairs Conference (GAC) this week. "This year's winners will join an elite group of 45 individuals and 21 organizations whose extraordinary efforts over the past 23 years have earned the credit union movement's highest national honors," said emcee Bob Schumacher, CEO, MountainCrest CU, Arlington, Wash., and chair of NCUF's Awards and Recognition Committee. The awards are named for the late CUNA CEO Herb Wegner, whose innovative ideas and deeds revolutionized the ways that credit unions serve their communities. They carry on his spirit of "innovative, creative, risk-taking" leadership. To learn more about this year's award recipients, use the link.