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Survey CU small bank CEOs more positive than in 10

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AUSTIN, Texas (3/17/11)--New regulatory compliance requirements and fee income issues related to Regulation E are the top two concerns voiced by credit union and community bank CEOs, in a nationwide survey that indicates CEOs have a more positive outlook this year. Credit union CEOs were found to be more positive than the bank CEOs. The survey was conducted by Abound Resources, an Austin, Texas-based, growth and technology consulting service for credit unions and banks. Among the respondents were 204 president/CEOs and 225 executives in the chief operating officer (COO), chief information officer (CIO), and chief financial officer (CFO) positions. CEOs in the survey were more positive this year. About 20% reported they were either somewhat or very pessimistic about 2011. That compared with 32% the year before. More credit union CEOs (44%) said they were "somewhat" or "very" optimistic about the year ahead, compared with 40% of community bank CEOs. Overall priorities changed, according to the survey. Last year's top priority was cleaning up the balance sheet; this year's focus is efficiency and growth, said the company. Of those surveyed, 66% of bank CEOs are focusing on growing commercial loans, and 85% of credit union CEOs are focusing on consumer loans. Using technology to increase efficiencies was a No. 2 priority of 74% of the credit union CEOs surveyed and 64% of bank CEOs. Credit union CEOs (62%) also indicated that they would "expand online presence" as an additional priority for 2011. COOs, CIOs and CFOs surveyed named as a top concern getting more value from existing technology and vendor relationships, and shared concerns about information security and compliance. These executives in credit unions added they worry about not having enough resources to complete projects and budget constraints on important projects. "One of the reasons community institutions are so concerned about the regulatory environment is that they don't have internal resources to keep up with all the changes and the documentation required," said Brad Smith, president/CEO of Abound Resources. "For most, external assistance will be required to fully prepare for the coming regulatory requirements." Other key technology findings:
* Credit unions and small bank are focusing their new or replacement technology purchases heavily on mobile banking. However, 70% of credit unions are making consumer remote deposit capture (RDC) their priority purchase, while this is a priority for 27% of banks surveyed. * Asset liability management systems and network equipment/storage/server/virtualization rank as the highest priorities for banks' utilization improvements. Credit unions are focusing on improving the use of their core processing, fraud management and new account and teller systems. * While high on bank executives' lists for contract renegotiation, core processing was surprisingly missing from the credit union executives' top five priorities.
To download the survey results report, use the link.

Prize-linked savings bill moves to Iowa house

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DES MOINES, Iowa (3/17/11)--A bill that would allow Iowa's credit unions to offer prize-linked savings account as an incentive for Iowans to save more money recently passed the Iowa Senate (SF 490) and now moves to the House for consideration, according to the Iowa Credit Union League. “Financial illiteracy is one of the root causes of our current financial crisis and the prize-linked savings program can serve as a tool to help Iowans improve their financial lives,” said Patrick S. Jury, league CEO/president of the league. “The need for innovative ways to save could not be more apparent. If we want to change behavior, we need to change our traditional ways of thinking.” Prize-linked savings programs provide incentives to consumers to save more money regularly by offering various prizes tied to a savings account. The promotions keep the saver motivated to save throughout the year. The result is a learned behavior of savings and more money in Iowans’ pockets. “This project has led to an experiment that has been successfully implemented. This approach targets the low-income population for saving, which may help [low incomers] form better savings habits,” said Dr. Tahira Hira, professor and assistant to the Iowa State University president. For example, for every $25 deposited into such an account at a credit union or bank, the saver would receive a chance to win raffle prizes. Members’ money remains in their account and accrues interest. "It’s important to stress that consumers would not lose a penny of their hard-earned savings,” said Jury. “Whether or not savers win additional prizes, they still have the money they saved plus the interest accrued. These accounts are a no-lose proposition.” This approach has proven successful in other states and has been championed by Harvard Business School professor Peter Tufano and the non-profit he founded, Doorways to Dreams Fund. Eight Michigan credit unions introduced prize-linked savings in 2009. Last year, more than 16,500 Michigan residents opened accounts through the contest, saving $28.1 million. Roughly 56% of participants hadn't saved regularly before, and 59% spent money on a lottery in the previous six months. Michigan credit unions also found that even minor rewards could spur interest: people who won a smaller monthly prize were more likely to deposit more money into their savings the next month. “The time is right for our state to increase its focus on savings habits to shore up household finances and strengthen Iowa’s economy as a whole,” said Jury. “A prize-linked savings program, which requires no public subsidies or taxpayer expense, could help more Iowans build a stronger fiscal foundation. We look forward to working with the Iowa House to advance this legislation.”

20 innovations for CUs released by Filene i3

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MADISON, Wis. (3/17/11)--The Filene Research Institute has released Key Findings: Blueprints for Innovation, a report on the latest findings from its i³--Ideas, Innovation and Implementation--group. The report, by Chief Innovation Officer Denise Gabel, features 15 new idea blueprints designed to fuel credit union growth and five updates on innovations gaining national attention. Blueprints for Innovation includes a detailed examination of Lift, a project that received a grant from the Center for Financial Services Innovation’s Financial Capability Innovation Fund. Blueprints for Innovation includes Filene i³ team projects developed to help credit union members build wealth, navigate financial waters, meet life’s milestones, make community connections, and borrow responsibly. They include:
* Savings Exchange: Empowers low-income individuals with financial literacy and ongoing support while providing small businesses with a low-cost financial service alternative; * R-Bond: Removes roadblocks to retirement savings for small businesses; * 2 Grand Plan: Creates a $2,000 emergency savings fund; * The Signal: Helps members navigate the financial road of disability benefits; * The Big Payoff Loan: Eliminates credit card debt with segmented loans from credit unions; * goalmine: Simplified way to save and invest for college and other life goals; * UMatter: A referral-based exclusive membership for Gen X; * Black Star: Fosters a cooperative environment in the food and drink industries; * VolunTIER: Rewards community volunteers for their commitment and connections through credit unions; * CU Launch: Provides professional services to small businesses through credit union volunteers; * Co-Opera: Makes co-op to co-op lending and borrowing more accessible for all cooperatives; * MI-COOP: Helps Americans achieve the dream of owning their own manufactured home; * 60-Day Loan Guarantee: Builds trust in credit unions by allowing members to return a loan in 60 days; * Be N’ Biz: Connects Gen Y entrepreneurs with credit unions for business creation; and * Lift: Lowers interest and improves credit for members who make payments on time.
Blueprints for Innovation also updates five ideas that are ready to implement and gaining national traction:
* Debt in Focus--An anonymous, debt management tool for credit union members that delivers an actionable plan to help improve their credit profiles and reduce debt; * Prize-linked Savings--An approach to saving for participants to enter prize drawings every time they deposit money into their savings account; * Savings Revolution--A program that allows people to overhaul their financial lifestyles to save money and reduce debt with strategies supported by social media with credit union collaboration; * The Leap--An interactive website that helps members jump into the green revolution by highlighting how to save money and the environment with E-products that are already in place at most credit unions; and * Virtual Finance--A program that allows participants to select and customize an avatar and interact with others in a world that beckons them to experience financial decisions, and introduces critical financial and life concepts over a simulated lifetime.
“We encourage credit union innovators to keep this catalog of ideas at hand as they develop their organization’s goals and tactics for today’s challenging times and consider how these solutions may meet member needs,” Gabel said. Credit unions should review the ideas and evaluate the fit for their organizations, then consider how the ideas might be improved and customized in the spirit of open source innovation, Gabel said. For more information, use the link or e-mail innovation@filene.org.

Former Brit prime minister to headline WOCCU Conference

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MADISON, Wis. (3/17/11)--Former Prime Minister of Great Britain Gordon Brown, MP, will open the World Council of Credit Unions' (WOCCU) 2011 World Credit Union Conference. The annual event and only global credit union conference will be held July 24-27 in Glasgow, Scotland. B
Former British Prime Minister Gordon Brown will keynote the 2011 World Credit Union Conference in Glasgow, Scotland, in July. (Photo provided by the World Council of Credit Unions)
rown's keynote address at the conference's opening general session on July 25 will discuss lessons from his new book, Beyond the Crash: Overcoming the First Crisis of Globalization, and the role that credit unions can play in strengthening the financial system and communities. Brown has been a member of the British parliament (MP) since 1983 when he was 32 years old. He succeeded Tony Blair as Britain's prime minister and leader of the country's Labor Party, serving in the position from 2007 to 2010. Brown previously served as the Labor Government's Chancellor of the Exchequer, running the country's Treasury department from 1997 to 2007. As head of the Treasury, he established the winter fuel allowance for poor pensioners, lifted a half million children out of poverty, introduced a minimum wage, created the trust fund and tax credit for children, and more. He also negotiated the government's debt cancellation for the world's poorest countries and helped stay true to his commitment to spend 0.7% on aid to the poor. He may be most recognized for devising a plan to help European and U.S. governments stabilize the global financial sector in 2008. "The challenge for our generation is to create global institutions that reflect our ideas of fairness and responsibility, not the ideas that were the basis of the last stage of financial development," Brown has said. "Combine the power of our moral sense with the power of communications and our ability to organize internationally. That, in my view, gives us the best opportunity as a community to fundamentally change the world." For more information about the conference, use the link.

Last call for WOCCU DSA nominations

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MADISON, Wis. (3/17/11)--The deadline for nominations for World Council of Credit Unions' (WOCCU) Distinguished Service Award (DSA) is March 25. Nominees for the global credit union movement's most distinguished honor must be submitted to WOCCU headquarters. Recipients will be honored at WOCCU’s World Credit Union Conference, July 24-27 in Glasgow, Scotland.
Credit Union National Association Chair Harriet May accepted her 2010 Distinguished Service Award from World Council of Credit Unions Chair Barry Jolette. (Photo provided by World Council of Credit Unions)
DSA honors are presented to individuals and organizations that have provided exemplary service to the global credit union movement in support of the concept of improving people’s lives through credit unions. WOCCU does not award the DSA every year, choosing instead to bestow the honor based on the viability and worthiness of candidates in the eyes of the awards committee. “The Distinguished Service Award recognizes the best of the best within the credit union movement,” said WOCCU Director Ron Hance, president/CEO of Heritage Family CU in Rutland, Vt., and chair of the WOCCU Awards Committee. “Our hope is that DSA will continue to foster excellence in service among credit union individuals and organizations worldwide.” In 2010, DSA honors were awarded to Lech Kaczyñski, the deceased president of Poland who was central in helping establish the country’s credit union movement; Credit Union National Association Chair Harriet May, president/CEO of GECU of El Paso, Texas; and Credit Union Executives Society, the Madison, Wis.-based professional development organization for credit union executives. “We’re not an island unto ourselves, something I realized as I reached out to our neighbor to the south, working in ways that impacted my government, my community and my country,” said May upon receiving the award at the 1 Credit Union Conference in Las Vegas last July. “If I have been one drop in the sea that lifts the life of one individual, then I have been successful.” In the case of individuals, DSA recipients may be WOCCU member organization officers, directors or representatives; international credit union pioneers; field technicians with a long and outstanding service record; or persons whose actions have benefitted global credit union development. WOCCU may present up to three individual awards in a single year. Institutional recipients may be organizations or agencies that have provided financial or technical assistance to develop international credit union movements and their service infrastructures over an extended period of time. WOCCU presents no more than one institutional award each year. Nominations must be made by a WOCCU member organization. For more information, use the link.

Shift in deposits a factor in lending says study

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CHICAGO (3/17/11)--Investor aversion to risk and low interest rates on long-term investments are shifting where clients are putting their funds, according to an analysis of the Federal Reserve's Flow of Funds report. Dramatic shifts in deposits for 2010 are contributing to lenders lending less and to only high quality borrowers, according to the analysis by Moebs Services Inc., a Chicago-based consulting firm. When banks and credit unions know their deposits will be around for months, they lend, CEO Michael Moebs said in a press release (Professional Services Close-Up March 16). He said banks have restricted their lending because of a significant consumer shift toward short-term deposits and banks' efforts to increase capital to asset ratios. The deposits have shifted to checking and money market deposit accounts at financial institutions from traditional sources such as retail certificates of deposit (CDs) and jumbo CDs. Last year, retail and jumbo CDs dropped to 22.4% of total deposits from 31.7% in 2007. Money market mutual funds declined to 23% from 26.2% for that period. CDs with longer terms have low rates driven in part by bank efforts to reduce long-term deposits to increase capital-to-asset ratios, said the Moebs analysis (Investment News March 15). Credit Union National Association Chief Economist Bill Hampel said that there's more to the shift than an institution's desire to curtail growth. "In addition to banks and credit unions moderating growth to maintain capital ratios, households are also using the money they might otherwise have placed in deposits or money market mutual funds to pay down debt, because deposit interest rates are much closer to zero right now than existing loans are," Hampel told News Now. The Fed's Flow of Funds report indicated that checking account deposits rose for both interest and non-interest types to 7.7% of total deposits in 2010 from 5.2% in 2007. Money market mutual funds deposits fell to 23% last year, compared to 26.2% in 2007. It also noted that total of insured and uninsured deposits dropped $800 million--to $12.3 trillion at the end of 2010. In 2007, those deposits weighted in at $13.1 trillion. Moebs attributed the drop to the recession and reduced earnings by workers, said Investment News.

CU System briefs (03/16/2011)

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* ST. PAUL. Minn. (3/17/11)--Following the introduction of the Small Business Lending Enhancement Act on March 9, Minnesota Credit Union Network President/CEO Mark D. Cummins used the press to advocate for the bill’s passage. A regular columnist in the Twin Cities publication Finance & Commerce, Cummins said that the lack of available credit for small businesses could be remedied by Minnesota credit unions--if the arbitrary cap on credit union business lending activities were lifted. Working to meet the demand of their business-owning members, Cummins pointed out in the March 15 column that credit unions' member business lending has grown 15% during the last year, while bank business lending has decreased 11%. “And credit unions could do even more if given the capacity, allowing for greater capital expenditures, greater economic activity and, ultimately, the creation of more jobs,” he said. “America’s small businesses are the engine of growth of our nation’s economy. At a time when small businesses need more options--not fewer--credit unions are in a position to help.” The Credit Union National Association has backed bills introduced this week in Congress to lift the cap to 27.5% of assets, from the current 12.25%. … * RALEIGH, N.C. (3/17/11)--Coastal FCU announced Wednesday it will begin offering teller services from 7 a.m. to 7 p.m. seven days a week. The increased hours are possible though its implementation of a Personal Teller System, a video interface that allows tellers to provide traditional services to multiple branches from a single remote location at Coastal's Raleigh, N.C., headquarters. The $1.9 billion asset Coastal has upgraded its branches to the system for the past two years and extended weekday service and added Saturday hours, said Larry Wilson, Coastal's president/CEO. "Now that we've fully realized the capabilities and efficiencies offered by the system, we're able to further expand our Saturday hours and add Sundays, without making a significant impact on resources or staffing needs." This weekend, the credit union wills start a staggered rollout, beginning at three locations … * Vancouver, Wash. (3/17/11)--Vancouver police have arrested Nicholas Reynold Duncan, 18, of Vancouver for allegedly placing a skimmer and pinhole camera on an ATM earlier this month at Lacamas Community CU. He was arrested Friday after a resident saw the ATM's surveillance image of a man setting up the devices and called police. Police said it does not appear any financial information was compromised at the ATM but reminded citizens to report any suspicious devices near the credit card slot at ATMs or gas pumps (KATU.com March 10 and Columbian.com March 15) … * WASHINGTON (3/17/11)--Rudy Hanley, CEO of SchoolsFirst FCU, Santa Ana, Calif., has been re-elected chairman of the board of trustees at the Trust for Credit Unions. The trust, a mutual fund family solely for credit unions, was created in 1987 by industry leaders seeking more investment options as liquidity in the movement swelled. The board of trustees, which meets quarterly, is composed of eight members from credit unions and outside professionals. The fund's administrator, CUFSLP, is a partnership of 39 credit unions with Callahan Financial Services, the fund's distributor, serving as general partner … * SALT LAKE CITY(3/17/11)--Mountain America CU President/CEO Sterling Nielsen has been recognized as one of Utah's Most Influential People for 2011 by Utah Business magazine for outstanding business leadership. Every three years the magazine forms a panel to determine business executives, entrepreneurs, nonprofit leaders, artists, politicians, university presidents and others who work to create a robust economy and better quality of life in Utah. The honor is awarded to key individuals who help shape the state's economic climate. Nielsen shared his philosophy: "Be yourself and live true to your beliefs. Never compromise who you are and what you stand for. I have faced many situations where that advice wasn't always the easy path to follow. At the same time, I have never regretted any action where I followed that simple advice." The $2.8 billion asset credit union has more than 60 branches in four states serving more than 350,000 members. It has been honored four times as one of "Utah's Best Companies to Work For" by Utah Business magazine …