Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

Citadel expands into Greater Philadelphia

 Permanent link
THORNDALE, Pa. (3/27/09)--Citadel FCU is "extremely pleased" that the National Credit Union Administration (NCUA) last week approved the expansion of the Thorndale, Pa.-based credit union's charter into the five-county Greater Philadelphia region. "It has been a long process of continuous dialogue with the NCUA to assure that Citadel has met the very high standards expected for a charter expansion," said Citadel President/CEO Jeff March. Previously, the $1 billion asset Citadel served Chester County. Now it will serve Philadelphia, Montgomery, Delaware, Bucks and Chester counties. "In the past, we have had to turn away countless people from all corners of the Greater Philadelphia region who were unable to meet Citadel's eligibility requirements," said March. At a time when other financial institutions are struggling, Citadel continued to prosper with rates, products and services and member service, he said, adding, "Today, we are eager and excited to open our doors to those people who are no eligible and are searching for a trusted, locally owned financial institution." Citadel is evaluating opening additional offices that are more accessible to the expanded range of members. Meanwhile, members can use online banking, bank by phone and shared branches.

IE-Commerce JournalI explains the CU difference

 Permanent link
BOSTON (3/27/09)--Credit unions have become excellent alternative to banks, says the E-Commerce Journal in an article entitled, "Credit unions vs. banks. Your choice!" The March 26 article says that credit unions offer similar products and services as banks, offer better terms and conditions for loans, and have several fundamental differences. It urges readers to learn more about them to make a more educated choice. The article then outlines the differences in structure, membership and membership eligibility, and how the structure benefits members with lower fees and better rates. It also explains credit unions have their own federal deposit insurance that is "as safe as deposits in FDIC insured banks." And it makes the points that credit unions' conservative lending policies have helped them avoid much of the subprime and credit crises. For the entire article, use the resource link.

NCBA board member objects to Coastway conversion plan

 Permanent link
PROVIDENCE, R.I. (3/27/09)--A letter to the editor of the Providence Journal (March 25) objects to Coastway CU's plans to convert to a mutual savings bank. The letter writer, Erbin Crowell of Glocester, R.I., is a member of the Cranston, R.I.-based credit union and a member of the board of the National Cooperative Business Association. Coastway's members will vote on April 29 on whether to change charters (News Now March 13). "With our financial system in disarray, I was surprised to learn that my credit union, Coastway CU, has proposed converting from a member-owned nonprofit into a bank," Crowell wrote. "After all, credit unions have been a bright spot in these difficult times, providing loans in a responsible manner and avoiding the kinds of risky, greed-driven lending that fed the crisis," he added. He noted "serious questions" about the conversion attempt regarding motivation of the credit union's leadership, whether it would raise rates and fees after losing its credit union tax-exempt status and what will happen to the $25 million owned by members. "These are the sorts of concerns that have led national organizations such as the Consumer Federation of America and the NCBA to oppose proposed credit union conversions such as Coastway's," he added. He doubted that becoming a bank would better serve members. "First, credit unions that have converted to banks now charge higher rates on loans and offer lower-paying deposits," he said, citing BankRateData. Second, members' ownership of the $25 million of member-equity "is at risk" if the credit union becomes a bank, he wrote, adding that Coastway's leadership tries to assure members it has no plans to sell stock while converting, but the credit union's literature "leaves plenty of wiggle room." He noted 75% of credit unions that have converted have eventually sold stock and questioned why the credit union is using Georgeson, Inc., which specializes in "strategic shareholder consulting" if it doesn't intend to become stock-owned. He urged members to reject the conversion in their vote and urged legislators to reform the U.S. conversion law. For his complete letter, use the resource link.

UW CU introduces Rapid Refinance for home loans

 Permanent link
MADISON, Wis. (3/27/09)--UW CU is introducing Rapid Refinance, a program for members looking to refinance their home loans without paying traditional closing costs. Rapid Refinance will allow members who are planning on paying off their loans within 15 years to lock into a low, fixed rate for $79, saving them hundreds of dollars of closing costs over traditional home loans. A new, streamlined loan process will speed up the closing process and reduce the documentation required to get the loan closed, the credit union said. “These members will now be able to refinance their homes when it otherwise may not have made sense financially due to high closing costs,” said Mike Long, UW CU vice president of lending. Rapid Refinance is available for loans up to $125,000 and will offer a 12-year term with a low, fixed rate and no prepayment penalties. An online calculator also is available so members can compare their Rapid Refinance payments to traditional home loan payments. UW CU, based in Madison, Wis., has $1.08 billion assets.

G-20 gets WOCCU input on financial co-ops

 Permanent link
MADISON, Wis. (3/27/09)--Members of the Group of 20 (G-20) nations attending The London Summit 2009 April will know that credit unions and financial cooperatives worldwide have contributed to the solution for, not the cause of, the struggling global economy. The World Council of Credit Unions (WOCUU) alerted attendees to the role credit unions play in their countries in serving members and contributing to economic stability. WOCCU originally submitted a letter last fall to G-20 countries attending the Nov. 15 summit in Washington, D.C. The letter, addressed to participating finance ministers, asked the group to acknowledge the strength and safety of credit unions and financial cooperatives, and to not make cooperatives part of inappropriate legislation or regulations that may restrict the practices that give member-owned institutions their capability to serve. After its November meeting, the G-20 established four working groups. One focuses on supervision, enhancing sound regulation, and increasing and strengthening transparency. WOCCU wrote to committee co-chairs Rakesh Mohan, deputy governor of the Reserve Bank of India, and Tiff Macklem, associate deputy minister of the Canadian Ministry of Finance, outlining the role of credit unions and their supervisory structures. “We also have been in communication with the World Bank representative who sits on the committee,“ said Dave Grace, WOCCU vice president of association services. "He assured us that credit unions are not within the scope of the regulatory review." The other three working groups are not expected to consider issues involving credit unions and financial cooperatives, Grace added. Before the November meeting, WOCCU President/CEO Pete Crear wrote a letter requesting the group take three steps during the fall summit:
* That any future financial rescue packages implemented at global or national levels be unbiased against cooperative financial institutions relative to the commercial banking sector; * That in any pronouncements emanating from the summit, cooperative financial institutions be recognized as secure, locally owned financial institutions that have presented safe and sound financial alternatives during the current crisis; and * That future regulations or legislation that may result from this crisis clearly recognize that cooperative financial institutions have not been the source of these problems, have been significantly less affected by the economic fallout and should not be punished by inclusion in a series of new rules designed to correct a problem they have not caused.
"We believe strongly that cooperative financial institutions must be consulted prior to any regulatory actions that may affect them," wrote Crear, "and we urge you to make this step a permanent part of your protocols." WOCCU's current efforts support the initiatives outlined in Crear's letter. Based on discussions with committee members, WOCCU expects the London Summit to produce a principle-based approach to regulatory reform that includes several outcomes:
* All systemically important financial entities will require supervision; * The perimeter of regulation will expand to include hedge funds and private equity funds; * Regulator "colleges" will coordinate cross-border supervision for systemically important financial entities; and * There will be reductions in pro-cyclicality of capital ratios that require institutions to build stronger capital bases in periods of strength.
"Throughout all our efforts we stressed our support for independent credit union regulators who are knowledgeable about financial cooperative activities and the credit union difference," Grace said. "As seen from past financial crises at national levels, during this global crisis credit unions have performed better than many other financial institutions. We are unaware of any credit union in any market that has received capital infusions from government as a result of the current crisis," Grace added. Established after the emerging markets financial crisis of the late 1990s, the G-20 is an informal forum that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability. The G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, Great Britain, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S. and the European Union. In G-20 countries, financial cooperatives serve 621 million people and have over US$7.6 trillion in assets.

Kansas legislature passes three measures supported by CUs

 Permanent link
TOPEKA, Kan. (3/27/09)--The Kansas legislature passed three pieces of legislation supported by the Kansas Credit Union Association (KCUA) on membership requirements, disclosures of mortgage trigger leads and financial literacy. The first is a credit union membership eligibility bill, introduced by KCUA, which clarifies that membership eligibility components, such as family members and volunteers, are protected going forward. It passed 123-0. The question had been raised that, because these components were referenced only in the grandfathered portion of the statute, versus the prospective portion, they may not be allowable. KCUA sought changes to eliminate confusion. “KCUA wanted to make sure there are no misinterpretations of the law and how it should be applied,” said Haley DaVee, director of state legislative and public affairs. The second bill requires greater disclosure of mortgage trigger leads. The bill requires that in oral and written solicitations for products or services based on a mortgage trigger lead, the solicitation must state clearly that the solicitor is not affiliated with the initial lender, and that the solicitation is based on personal information about the consumer that was purchased from a consumer reporting agency without the knowledge or permission. Other states have taken steps to require full disclosure of unsolicited offers of mortgage credit. In its testimony to the House Financial Institutions Committee, KCUA said, “Requiring full disclosure from users of mortgage trigger leads is ultimately a consumer protection measure. Kansas credit unions recognize consumers’ interest in preserving the privacy of their personal information.” The legislature passed financial literacy legislation for grades K-12 that requires the State Board of Education to develop state curriculum standards for personal financial literacy for all grade levels. The legislation also requires the board to encourage school districts to select textbooks containing provisions on personal finance when appropriate. “Personal financial literacy is critical as consumers today have more options for credit in an increasingly complex and overwhelming marketplace,” KCUA said in its testimony.

Navy Army FCU grows by being lender of choice

 Permanent link
CORPUS CHRISTI, Texas (3/27/09)--Navy Army FCU has built its growth model based on being able to lend money and becoming the “lender of choice” in the area it serves. The $780 million asset, Corpus Christi-based credit union experienced 11% membership growth in 2008. It usually grows more than 10% each year, Wayne Vann, Navy Army CEO, told News Now. Navy Army has been a community credit union since 2003 and serves a six-county area with a population of about 400,000. In January 2003, the credit union had about 40,000 members. Today, it has more than 68,000. The population of Corpus Christi and the surrounding area is nearly 70% Hispanic--not first generation, but an established Hispanic population, Vann said. “Corpus Christi is one of the weakest credit areas in the nation with an average FICO (financing corporation) score of 578,” Vann said. “To serve those people we have decentralized loan approval, versus the usual centralized approval process at most credit unions. We have more than 40 lenders at our 10 branches. We decentralized it, because with a centralized process most of our members wouldn’t make the cut. “All our growth revolves around our ability to lend money,” he added. “Our loan to-share percentage is 92% to 97% generally. We try to stay north of 90%.” About 50% of Navy Army's loans consist of C-paper (600 to 639 FICO scores) and D- paper (below 600 FICO scores). The credit union’s A-paper consists of FICO scores of 680 and above, and its B-paper is in a FICO score range of 640 to 679. “We have to build a model that will fit our audience,” Vann said. “Our growth philosophy is based on building relationships.” Navy Army uses five rungs to establish a lending ladder with members: capacity, stability, relationship, credit score and collateral. “We look at a member’s capacity to make loan payments; are they stable in terms of having a job; our relationship with the member--consisting of how many deposits and services they have with us--how well we know them; and their FICO score,” Vann explained. “So based on the first four rungs, we decide whether to give out a loan. We look at the collateral piece last.” About 55% of all the credit union’s loans are automobile loans. Of that, 60% are for used cars and 40% are for new ones. “Because our members have mostly low- to moderate- incomes and marginal credit, they mostly buy used cars,” Vann explained. About 35% of the credit union’s loan portfolio is real estate, he added. Although Navy Army does a lot of print and media advertising, its biggest source of business is referrals. “Once referrals start, then there is some pressure on the referring persons to make their loan payments and maintain good credit,” Vann said. Many Hispanics refer family members and “throw out a wide net” with referrals because often times they cannot obtain loans at other financial institutions, Vann said. As for the future, “there is plenty of business out there and it all revolves around relationships,” Vann said. “Most of our employees start as tellers and learn their knowledge base internally,” he added. “We’re service-oriented and listen to our members to see if we can make the service fit somehow in term of their needs. “We’ve built this whole [growth] model off of being able to loan money. We’re known in this area as the lender of choice. You need a stomach for risk and need to know your audience. Then you train your staff appropriately,” he concluded.

CU System briefs (03/26/2009)

 Permanent link
* HARRISBURG, Pa. (3/27/09)--John Kebles, retired president/CEO of Choice One Community FCU, Wilkes-Barre, has been named REAL Solutions program manager in Pennsylvania, announced the Pennsylvania Credit Union Association and the Pennsylvania Credit Union Foundation (Life is a Highway March 26). REAL Solutions is a national project of the National Credit Union Foundation. Kebles will work with credit unions to provide financial services to people struggling to save and build assets. (Photo provided by the Pennsylvania Credit Union Association) … * WARMINSTER, Pa. (3/27/09)--Freedom CU received 1,085 nominations for its 2009 Annual Voices of Inspiration Awards for Teaching Excellence. Nominations were submitted on behalf of exceptional educators in Montgomery County. Twenty-three finalists--one teacher from each Montgomery County public school districts, Montgomery County Intermediate Unit, and Montgomery County non-public school--will receive $500 and be recognized at a banquet on May 7. From those, three winners--one high school, one middle school, and one elementary school teacher--will be awarded the awards and given an additional $1,500. Also, the three schools--one in each grade level category--with the most nominations will receive cash prizes--$1,000 for the most nominations and $500 each for the runners up … * DEXTER, Maine (3/27/09)--Two men were sentenced Wednesday for forging $14,725 in stolen checks owned by a soldier serving in Iraq who had a credit union account. Duane Hyde, 37, and Robert Brammer, 29, were sentenced to two years in prison. Both men are accused of forging checks in the name of Shawn Burke, 23, who lost his life savings when his checks were stolen. Burke was serving in Iraq when the theft occurred. Burke’s account was at Maine Highlands FCU, Dexter, Maine. The credit union has refunded him $3,995 so far. Two other individuals allegedly involved in the case have not been charged (Bangor Daily News March 26) ... * LIVE OAK, Texas (3/27/09)-- Randolph-Brooks FCU just completed its 13th Annual Credit Unions for Kids Bowl-A-Thon, raising more than $34,000 to benefit the children of South Central Texas who use the Christus Santa Rosa Children’s Hospital in San Antonio and Dell Children’s Medical Center in Austin. The Randolph-Brooks Bowl-A-Thon requires a bowling center to host the event for an entire day. This year, Fiesta Lanes in New Braunfels, Texas, hosted 69 teams of five to bowl in two shifts--morning and afternoon. A group of 14 committee members worked six months to coordinate the event, including teaming up with a long list of companies willing to offer money or in-kind goods to make the event successful and ultimately benefit the children ...

Americas CU ConferenceExpo announces keynoters

 Permanent link
MADISON, Wis. (3/27/09)--America's Credit Union Conference and Expo will offer five keynoters, according to the Credit Union National Association (CUNA). The conference will take place June 21-24 in Boston.
Bert Jacobs, co-founder of Life is good, will speak about how he and his brother John turned three simple words on a T-shirt into a major brand with more than $100 million in annual sales. In 1989 they designed their first T-shirt. They spent five years traveling the East Coast, selling their shirts on the streets and door-to-door in college dormitories, sleeping in a beat up van. When they introduced "Jake," a smiling stick-figure-turned-mascot into the "Life is good" mix, sales soared. Jacobs will discuss making a difference while making a profit by selling feel-good products and embracing optimism as a force for powerful change. He also will discuss the company's business model, which includes almost no advertising. Instead, the company harnessed good public relations by organizing Life is good Festivals, which raise money for children. The conference marks the centennial celebration of credit unions with presentations honoring the first 100 years of credit unions in the U.S. Attendees at Sunday's reception and keynote session will be treated to a humorous, thought-provoking look at the life of Sen. George Norris, a key figure in the signing of the Federal Credit Union Act of 1934. Other keynoters include:
* Bill Hampel, CUNA's senior vice president of research and chief economist, and Mike Schenk, CUNA's vice president of economics and statistics. They will address the best ways to respond to current economic challenges and help attendees gain insight into the outlook for the economy and credit unions, the economic slowdown and more. Hampel and Schenk's expertise has been featured throughout the year in venues such as Bloomberg TV, MarketWatch, The New York Times, USA Today, The Associated Press, The Wall Street Journal, and CNN, among others. * Dan Roam, author of "The Back of the Napkin: Solving Problems and Selling Ideas With Pictures." Roam will show how to use pictures to describe complex concepts and solve problems and demonstrate how anyone can use visual thinking, regardless of artistic talent, to approach and resolve business challenges. * Guy Kawasaki, best-selling author of "Rules for Revolutionaries: The Capitalist Manifesto for Creating and Marketing New Products and Services." Kawasaki will discuss his experience with world-class companies to explain how to innovate, improve, and create new credit union products and services. His presentation will be modeled after his book.
For more information or to register, use the resource link.