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CU System

Federations Rosenthal to leave for federal post

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NEW YORK, N.Y. (3/5/12)--Longtime CEO of the National Federation of Community Development Credit Unions Cliff Rosenthal announced late Friday that after 32 years with the federation he will leave May 4 to take a job with the federal government May 7.

Although not naming his new post, Rosenthal said the government position will allow him to "pursue the mission that has guided me throughout my career: providing financial access and a route to economic self-sufficiency for low-income people."

Upon hearing the announcement, Credit Union National Association President/CEO Bill Cheney called Rosenthal the "the colossus of community development credit unions."

"For more than 30 years, he has devoted his professional life to the growth of these institutions, and has earned accolades for both the National Federation and the credit unions themselves," Cheney said, adding, "Although we will miss his dedication, enthusiasm, and intellect, we wish him success in this next chapter of his career, and look forward to working with him."

Rosenthal said the federation has come a long way since the 1980s, when its very future was in question. Now, he said, the federation is proud to count more than 200 credit unions in its membership, with total assets of some $13 billion and membership of 1.7 million.

"I can tell you that reaching these heights was beyond our wildest dreams back in the 1980s," he added.

Rosenthal said leaving the federation is personally difficult, but added the organization is "strong, stable, and sustainable."

"If I may borrow a phrase from the Peace Corps, this is the toughest job I've ever loved," he said.

CU System briefs (03/02/2012)

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  • AUSTIN, Texas and CARSON CITY, Nev. (3/5/12)--A member service representative at an Austin, Texas-based call center used by Carson City, Nev.-based Greater Nevada CU saved the life of a member who had called and apparently wasn't feeling well. Annette Gutierrez, an agent for Gila Group, took the routine member service call and realized the member was ill.  She alerted management, and an ambulance was dispatched to the member's home. The member later called back to say her action had saved his life.  "Credit unions have a special relationship with their members. At Gila, we work to build the same strong relationship with their members and service them with the same high standard and level of care," said Bruce Cummings, CEO of Gila Group. Gutierrez has worked there since 2009 and has specifically served GNCU's accounts for almost two years.  "Everyone was impressed with the extra effort made by the Gila representatives," said Patty Chang, GNVU risk manager ...
  • HONOLULU (3/5/12)--A Kauai, Hawaii, woman was indicted by a federal grand jury and charged with embezzling $24,721 from Kauai Teachers FCU, based in Lihue, Hawaii.  Kerry K. Higashi, 31, was an employee of the credit union and is accused of embezzling funds from two member accounts from Oct. 7, 2009, through May 30, 2011, said a press release from the Federal Bureau of Investigation. Maximum penalty for the crime is 30 years in prison and a $1 million fine …
  • ST. LOUIS (3/5/12)--During March, St. Louis-based Vantage CU is challenging 18- to 25-year-olds to design a new debit card for its Young & Free account. It is accepting applications through March 30. Public voting on the designs submitted will be April 5-12.  More than 5,000 Young & Free members use the Not Your Mama's Account (NYMA). The winning debit card designer will receive $500 in cash and have the opportunity for the concept to be produced and used by the credit union.  For details, visit YoungFreeSt.Louis.com …
  • ALBANY, N.Y. (3/5/12)--The Credit Union Association of New York has named Dirck Van Deusen as director of political and foundation development, effective today.  He will work with New York credit unions to encourage their financial support for CUANY's political action initiatives and its foundation. He most recently was vice president of mortgage business development for CUMAnet. Prior to that he spent more than20 years as senior vice president of corporate relations for Members United Corporate FCU, where he was responsible for developing and leading the corporate's legislative and advocacy initiatives.  He also represented the organization on both state and national boards, including the association's New York Credit Union Foundation …

CUNA analyzes BTD impact on 4Q membership growth

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WASHINGTON (3/5/12)--The impact of Bank Transfer Day (BTD) and all of its related activities on credit union memberships in late 2011 has been much publicized. With the release of Call Report Data for all U.S. credit unions as of December, BTD's effects now are clearly seen, said Credit Union National Association's (CUNA) chief economist.

The net increase in the number of credit union memberships in the fourth quarter of 2011 was 399,721--to 93,052,509 from 92,652,788--Bill Hampel, CUNA chief economist, told News Now. The fourth quarter's increase of 400,000 memberships represents 31% of the full year increase of 1.3 million. The increase in memberships in the first three quarters of the year was 892,000--or an average of 298,000 per quarter.

"Perhaps a better indication of the transfer of activity to credit unions during the fourth quarter is the change in the number of credit union checking accounts during the period, because Bank Transfer Day was spurred in part by debit fee increases by a number of large banks," Hampel said.

"During the fourth quarter there was a net increase in the number of credit union checking accounts of 737,000," he added. "Again, that is a net increase. The number of new accounts opened was of course more than that, by the number of accounts that were closed during the period. We should also note that the net increase of 737,000 checking accounts was the result of account openings by both new and existing members."

In summary, Hampel emphasizes:

  • The 400,000 net increase in credit union memberships in the fourth quarter of 2011 was 530,000 greater than the average change in members recorded in the same period during the preceding seven years.
  • The 737,000 net increase in the number of checking accounts at credit unions in the fourth quarter was almost three times the average of such growth (259,000) in the fourth quarter of the previous seven years.
  • This much stronger-than-usual growth in the number of memberships and checking accounts at credit unions in the fourth quarter of 2011 is strong evidence that BTD did indeed have a significant impact.   

Study Certain services help retain membercustomers

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SAN DIEGO (3/5/12)--A new study says that financial institutions' members/customers who buy investments and insurance services where they bank are more likely to stay with the institution--and be more profitable to the institution--than member/customers with multiple banking relationships.

The study, "The Value of an Investment and Insurance Customer to a Bank," was conducted by investment broker dealer LPL Financial LLC, a wholly owned subsidiary of LPL Investment Holdings Inc. in San Diego. It examined  the role of investment services and insurance customers at retail financial institutions.

The findings:

  • Households that buy investment and insurance products where they bank are among the retail financial institution's most profitable and desirable customers because they are more likely to stay than those in multiple relationships.
  • By underinvesting in these services, the financial institutions are missing an opportunity to increase the "stickiness" of highly desirable member/customers.
  • Member/customers who purchased these products from their primary bank or credit union have checking account balances that are 16% greater than households without a brokerage or insurance relationship.
  • These member/customers have savings account balances that are on average 85% more than non-brokerage account member/customers; and
  • Brokerage and insurance customers have more than twice as many credit products and 11% more remote banking products than customers who have not purchased an investment or insurance product from their primary bank or credit union.
The study was designed to help institutions see the opportunity that exists from a successful and growing investment and insurance program, said Andy Kalbaugh, managing director and president of LPL Financial's Institution Services division.

"Until now there has not been a source of industry data to test this belief [that investment and insurance services are strategically important], and this appears to have led to under-investment by banks and credit unions in their investment and insurance services capabilities," said Kenneth Kehrer, founder of Kehrer-LIMRA and co-author of the study.

The study drew on data from MacroMonitor, a retail financial services and marketing database.

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Massachusetts CU to buy New Hampshire bank

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GARDNER, Mass. (3/5/12)--GFA FCU, based in Gardner, Mass., will acquire a New Hampshire bank in a $6.4 million cash deal, the first such acquisition nationally by a credit union of a stock savings bank, according to announcements in local media.

The purchase price covers substantially all of Monadnock Community Bank's assets and liabilities and is 119% of book value, said the two institutions. It includes $5.50 for each of Monadnock's nearly 1.2 million outstanding shares. (Banker & Tradesman.com March 1 and Telegram.com March 2).  The price also represents 13.1% price-to-deposits and a 2.73% premium on core deposits as of Dec. 31.

The acquisition is pending approval of regulators and shareholders of Monadnock and on satisfaction of customary closing conditions, including the repayment of Troubled Asset Relief Program funds by Monadnock.  Monadnock reported a $1.8 million loss for 2011, said Banker & Tradesman.com.

The bank was initially chartered as AWANE CU in 1971, serving the Automotive Wholesalers Association of New England Inc., a nonprofit organization aimed at improving relations among wholesalers, manufacturers and dealers in the automotive parts industry, said the bank's website. It converted to a federally chartered savings bank in May 1996 and opened its retail banking office in November 1997 in Peterborough, N.H. It changed its name to the current name in October 2000.

GFA FCU has about $429 million in assets while Monadnock's assets total $82 million as of Dec. 31. They said they expect the deal will close during fourth quarter of 2012.

CU earnings ROA start year on positive note

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MADISON, Wis. (3/5/12)--Credit unions began 2012 on positive note, propelled by strong earnings and a good return on assets (ROA), according to a Credit Union National Association (CUNA) economist's  analysis of January's monthly sample of credit unions.

"Credit unions started the new year with a bang," Steve Rick, CUNA senior economist, told News Now. "Return on assets--net income divided by average assets--rose to 1.10% in January, on an annualized basis, up from 0.88% in January of 2011. Strong earnings, along with slightly falling assets, pushed the movement's capital-to-asset ratio up to 10.33% in January from 10.22% in December 2011." The total dollar amount of capital is $101 billion, according to the monthly estimates.

Credit union loans outstanding decreased 0.2% during January 2012, compared with a 0.4% increase in December 2011. Adjustable-rate mortgages led loan growth with a 1.2% increase, followed by home equity loans and unsecured personal loans, which each rose 0.1%. Used-auto loans decreased 0.2%, while fixed-rate mortgages and credit card loans declined 0.3% and 1.8%, respectively. Credit union loans totaled $585.7 billion, compared with $576.8 billion in January  2011.

"Credit union members appear to be loosening their purse strings and spending as evidenced by faster seasonally adjusted loan growth in January 2012 versus January 2011 and slower savings growth," Rick said.

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Credit union savings balances fell 0.5% in January compared to a 1.2% increase in December. Money market accounts led savings growth with a 1.1% gain, followed by regular shares, which rose 0.2%. One-year certificates decreased 0.4%, while individual retirement accounts and share drafts each declined 0.5% and 4.1%, respectively. Credit union savings in January totaled $843.1 billion--or $40 billion more than the $803.1 billion in January 2011.

Regarding asset quality, credit unions' 60-plus-day delinquency rate remained at 1.6%. "Credit union loan delinquency rates--delinquent loans divided by total loans--rose to 1.63% in January from 1.62% in December, but below the 1.77% reported in January 2011," Rick said. "The January rise in delinquency is a function of seasonal effects and falling loan balances.  We expect the delinquency rate to resume its decline next month."

Credit unions' loan-to-savings ratio remained at 69%. Their liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 18%.

N.C.s first gentleman at SECUs StudentsWork Week

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RALEIGH, N.C. (3/5/12)--Bob Eaves, husband of North Carolina Gov. Bev Perdue, visited the State Employees' Credit Union's (SECU) Raleigh Stonehenge branch Tuesday in support of North Carolina Business Committee for Education Students@Work Week. 

Click to view larger image Bob Eaves (second row left), husband of North Carolina Gov. Bev Perdue, is shown with West Millbrook Middle School students; teacher Diane Walters, first row, right; and Karyn Roth,  State Employees' CU branch senior vice president, far right, during a visit to SECU's Raleigh Stonehenge branch as part of the North Carolina Business Committee for Education Students@Work Week. (Photo provided by State Employees' Credit Union)
During his visit, Eaves spoke with students from West Millbrook Middle School, who visited the credit union to learn about the importance of education to create future career opportunities. SECU personnel gave a branch tour to the group of  seventh-grade students, allowing them to see various SECU career options first-hand.

Started by Eaves in 2010, the Students@Work program focuses on raising North Carolina's graduation rate by collaborating with educators and local business communities to provide job shadowing or mentoring opportunities to students in real workplace settings. 

During Students@Work Week last year, SECU personnel provided workplace tours and presentations to 11,650 students and the credit union anticipated exceeding that number this year.

SECU branches statewide took-part in the week-long program, which ran from Feb. 27 through March 2. This year, 62 companies, covering all 100 North Carolina counties, participated in the program, nearly doubling last year's number of participants.

More than 25% of North Carolina students do not complete high school, according to the North Carolina Department of Public Instruction.  The Students@Work initiative focuses on middle school students because that grade level is a crucial time for dropout prevention. 

"It's important that the business community understand that they are vital stakeholders in education," said Eaves. "Job shadowing opportunities can help students develop goals with the knowledge that their education will be relevant in the workplace."

Carilion FCU completes merger with Freedom First

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ROANOKE, Va. (3/5/12)--A merger between $8 million asset Carilion FCU and Freedom First FCU, both of Roanoke, Va., is complete.

Carilion FCU accounts were transferred to Freedom First CU on Thursday.

Freedom First now has assets of more than $250 million.

Based upon Freedom First's financial strength, commitment to service, product line, and expanded branch and ATM locations, the board of Carilion FCU unanimously voted to adopt a resolution to merge with Freedom First, the credit unions announced in a press release.

On Dec. 1, the membership of Carilion FCU approved a plan to merge with Freedom First by an overwhelming majority--94% of those voting approved the merger.

Regulatory approval was also obtained from the National Credit Union Administration.

Carilion FCU was founded in 1970 to serve the Carilion Clinic community. The former Carilion FCU branch location in Roanoke will remain open as a branch of Freedom First.

Grassroots helps Maine CUs prevail on foreclosure bill

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WESTPORT, Maine (3/5/12)--The Maine House of Representatives voted 90-54 Ought To Pass on a foreclosure bill that included an amendment presented by the Maine Credit Union League.

The bill would require the entity foreclosing on a home to show proof that it owns the mortgage note, preventing potential fraud against homeowners.

The league provided talking points for credit unions to communicate to legislators and said it received a strong support from state credit unions (Weekly Update March 2)

The amendment provides consumer protection if original documentation cannot be produced, but does not harm credit unions, the league said. Also, the foreclosure process will not be delayed and credit unions will not be prevented from foreclosing if they are the legitimate owner of the note.

"Once again, credit unions demonstrated that credit unions are owned by the people that use their services," said Maine league President John Murphy. "It was a great opportunity to highlight credit unions in a positive way with legislators."

CU CEO confidence on the rebound Catalyst

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PLANO, Texas (3/5/12)--Credit union CEOs are significantly more optimistic about the economic environment today than they were one year ago, according to results of Catalyst Corporate FCU's CU CEO Confidence Survey.

The fourth quarter 2011 confidence index of 26.81 is nearly 16 points higher than the fourth quarter 2010 index. Historically, the index has ranged from a high of 47.40 (2004 fourth quarter) to a low of 7.90 (2009 first quarter) during the survey's eight-year history.

The survey registers credit union CEO confidence on a scale from -100 to 100 in six areas. Questions are designed to capture a snapshot of CEO state of mind and future expectations.

CEOs are asked to evaluate:

  • Current financial condition of members;
  • Current financial condition of the credit union;
  • Anticipated financial condition of members in six months;
  • Anticipated financial condition of the credit union in six months;
  • Anticipated loan demand at the credit union in six months; and
  • Anticipated share deposit growth at the credit union in six months.
CEOs were more optimistic about their own institutions' financial positions in this year's survey. In the 2010 fourth quarter survey, CEOs registered the lowest reading in the survey's history (15.53) for that category. One year later, CEOs' optimism was 25 points higher (40.20). Executives also see more improvement on the horizon, with responses driving an even more positive mark (43.75) in the 2011 fourth quarter survey for credit union financial condition in six months.

Other survey measurements reveal optimism across the board, said Catalyst. Although still a relatively low score, CEO assessment of their members' current financial condition jumped 13 points from -0.42 a year ago to 12.85 in 2011 fourth quarter. Likewise, CEO marks for members' anticipated financial condition in six months increased from 9.11 to 23.54 year over year.

CEO expectations for loan demand are up by 14 points from fourth quarter 2010. Expectations for share-deposit growth also increased seven points over the same time last year.

The employment sector--with reports from the Labor Department indicating improvement in the unemployment rate from 9.1% to 8.3% since June--is buoying the optimism, according to Brian Turner, director and chief strategist of Catalyst Strategic Solutions.

"Given the depth of despair felt over the past year, it is not surprising to see overall improvement in the CEO index--both from the institutions' and the members' perspectives," said Turner. "In addition to the declining unemployment rate, the rate of decline in home prices is slowing, stock prices appear to be improving, and members are considering replacement of their aging vehicles." He cited statistics from Polk Research, noting the average age of U.S. cars on the road reached a record high of 10.8 years in January, helping auto sales rebound to an annualized unit pace of nearly 13 million.

Credit card use also increased, particularly during the past two quarters, Turner said. "Rising usage suggests that consumers are again willing to open their wallets and spend a few dollars, he added. "Unfortunately, over the past few years, credit union market share of consumer loans has drifted downward from 9.6% to 9%. So, either credit union members are not the current spenders, or the industry is missing the boat when it comes to marketing consumer loans."

If credit unions want to see continued improvement, they should consider expanding efforts to attract and retain members in the appropriate demographics for these loans, Turner said.

Loans haven't been an issue in Hobbs, N.M., where loan growth increased 40% in 2010. "With gas prices going up, I expect that trend to continue," said Jeff Bruce, Lea Community CU president/CEO. "This is pick-up (truck) country, and members have come in and asked me to calculate how much they can save by buying a vehicle that gets better gas mileage."

Lea Community CU, with $34 million in assets and a charter that serves a county with a population of 100,000, is located in an area that has a strong local economy. "There are a number of energy-related businesses, and the unemployment rate is only 4%," Bruce said. "Anyone who wants a job can pretty much get one."

The improved confidence index may have another explanation. Bruce noted that "people are ready for a mental switch from the doom and gloom of the past several years, and many credit union CEOs have said, 'Let's lead the way.'"

Surveys were sent in January to 1,736 CEOs of Catalyst Corporate and Western Bridge Corporate FCU member credit unions. The response rate was 18.7%.

CU offers 5K to staff who adopt a child

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GLENDORA, Calif. (3/5/12)--Employees of America's Christian CU, Glendora, Calif., welcomed an additional employment benefit last week: Any employee adopting a child will receive a $5,000 grant under a new program initiated by the credit union.

The funds are for staff to use towards fees and other expenses in adopting.

"With this new grant, we want to demonstrate our solid support for our team members that want to extend their love to the orphan," said Mendell L. Thompson, America's Christian CU president/CEO.