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The Union CU opens branch in Kennewick Wash.

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KENNEWICK, Wash. (3/4/09)--A Spokane, Wash.-based credit union serving union employees, their families and businesses that hire union workers has opened a branch Monday in Kennewick, Wash. The Union CU, with $12.8 million in assets, decided to open the branch to better serve members in the Tri-Cities. Many already use the credit union's online banking facilities, CEO Demaris Krummel told the Tri-City Herald (March 3). In a financial environment of tightening credit, the credit union has become more important to members. The bulk of its growth occurred last year, Krummel said. Established in 1968 by members of the Bricklayers Local 3 in Spokane, the credit union has about 4,500 members. The new branch employs three employees, including manager Jeff Burckhard. All employees--including the CEO and board members--are union members. Krummel told the paper that members earn 3% interest on their checking accounts, and it is helping its members through tough times. Out-of-work members are allowed to skip loan payments. The credit union is also planning a branch in Seattle next year.

Desjardins fourth-quarter losses total 476 million

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MONTREAL (3/4/09)--Desjardins Financial Group, Quebec's largest credit union, saw member dividends sink 64% to $215 million in 2008, down from 2007's total of $592 million as a result of investments in asset-backed commercial paper (ABCP) and the global financial crisis. The financial cooperative experienced a $476 million loss during fourth quarter 2008, before member dividends. A year earlier, Desjardins had reported a $273 million surplus (The Canadian Press March 2). The cooperative attributed the losses to the divestment of its hedge fund holdings, which supported Desjardins' guaranteed capital investments. Desjardins President Monique Leroux said that the credit unions are encouraged to pour their surpluses into their reserves, which would result in reduced member dividends. Its guaranteed capital investments included $785 million in ABCP, a short term investment vehicle that was hit by the subprime mortgage crisis in the U.S., said the article. Desjardins' surplus earnings for 2008 fell 93%--to $78 million from $1.1 billion in 2007. Fourth quarter 2008 revenues totaled $1.73 billion, a 36% decline from a year earlier. Revenues for the entire year totaled $8.37 billion, which was 13% less than in 2007.

U.S. Central January net income at 9.2 million

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LENEXA, Kan. (3/4/09)--U.S. Central recorded net income of $9.2 million during the month of January, according to the January 2009 financials posted Monday on its website. Some of U.S. Central's available-for-sale investment securities improved. Accumulated other comprehensive income (AOCI) on the balance sheet reflected an unrealized loss of $5.9 billion--down from $6 billion in December. The $100 million improvement resulted from tightened spreads during the month for asset-backed securities supported by credit card and student loan receivables. Member balances, consisting of share and certificate accounts and Fed Funds purchased, as applicable, averaged $23.1 billion, compared with $35.3 billion during January 2008. Net interest income totaled $12.8 million in January, compared with $18.9 million in December. In January, the National Credit Union Administration announced its $1 billion capital infusion into U.S. Central to assist with the announced 2008 other-than-temporary impairment charge. That brought U.S. Central's total regulatory capital to 6.326% for January, up from 3.756% in December. The new paid-in-capital was funded by the National Credit Union Share Insurance Fund in late January and qualified as core capital. For more detail use the link.

California bill prohibits FIs from spending

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SACRAMENTO, Calif. (3/4/09)--A California bill that would prohibit financial institutions--including credit unions--from using federal or state emergency economic assistance for certain purposes was introduced in the state Assembly Friday. State Rep. Pedro Nava (D-35), chairman of the state Assembly Banking Committee, introduced Assembly Bill 1075. The bill states: A credit union, or any subsidiary, that is a recipient of federal or state emergency economic assistance shall not use any funds derived from that assistance for:
* Lobbying expenditures or political contributions; * The hosting or sponsorship of, or payments for, conferences and events; * Corporate aircraft, travel accommodations, and travel expenditures; * Mergers or acquisitions; * Office or facility renovations or relocations; and * Entertainment, holiday parties, employee recognition events, or similar ancillary corporate expenses.”
Any credit union that violates the provision will be subject to a civil fine of at least $100,000 per violation and shall be ineligible to receive any future emergency economic assistance until the credit union completes measures to comply with, and to prevent future violations of, the provisions. Fines collected will be deposited in the state Credit Union Fund. Similar provisions in the bill apply to banks. The California Credit Union League will have a committee meeting in two weeks to review A.B. 1075, and currently has taken no position on the legislation since it is so new, Melissa Ameluxen, league director of state government affairs, told News Now. “If the bill prevents credit union people from exercising their freedom, we might be against it,” she said. “However, a lot of items in the bill sound reasonable. “No California credit unions have received federal government TARP [Troubled Asset Relief Program] money,” she added. “Credit unions in California and Nevada have spent money wisely--keeping the best interests of their members in mind. And the credit unions will continue to do so--even if they do receive TARP money.”

IWall St. JournalI Small businesses turning to CUs

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NEW YORK (3/4/09)--Unable to get loans at banks, more small-business owners are turning to credit unions, reports the The Wall Street Journal. And credit unions could do more if an arbitrary cap on business loans were lifted, the Credit Union National Association told the nationwide newspaper. "Credit unions are more able--and willing--than most of their banking counterparts to dole out money to small businesses," the newspaper noted (March 3). It cited CUNA statistics, noting that 27% of credit unions in the U.S. offer business loans, and the amount of the loans was up 18%--to almost $33 billion--last year. "In this really bad environment, we're doing more and more loans," said Mike Schenk, CUNA senior economist, told the Journal. The Journal reported that "Many credit unions say they would lend out even more money if they could. But a 1008 federal law caps the amount of business loans credit unions can have at 12.25% of assets." Credit unions hope to convince Congress to introduce legislation to lift the cap, it added. CUNA's Schenk also noted that the 12.25% cap is "an arbitrary cap that was imposed in 1998 as part of the Credit Union Membership Access Act." Historically, there were no restrictions on credit union business lending. Also interviewed were:
* Larry Wilson, president/CEO of Coastal FCU, Raleigh, N.C., who told the paper credit unions could provide $10 billion in small-business loans within the next 12 months without costing taxpayers; * Kenneth Beine, president/CEO, Shoreline CU, Two Rivers, Wis., who said more "Main Street" loans have arrived to the credit union since traditional sources of funding dried up; * John Duggan, president, Chem-Dry of Madison, and Matt Rosenhal, vice president of business services, Summit CU, Madison, Wis., who were in a photograph with the article and told about Chem-Dry receiving two business loans from Summit; * Nick Frescas, member of West Texas CU, El Paso, which gave him a loan after his home day-care business failed to get a bank loan in 2005 because it didn't have enough assets. It is now applying for a $750,000 loan for its second building--with the credit union; * Curtis Anderson, vice president, Mountain America CU, West Jordan, Utah, who said his credit union requires more proof in underwriting but continues lending to people starting businesses.
Use the link to access the entire article.

CU System briefs (03/03/2009)

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* RANCHO CUCAMONGA, Calif. (3/4/09)--Yadira Feliciana-Lacot received the third Kelly J. Purcell Credit Union Memorial Scholarship, named for the California and Nevada Credit Union Leagues' former director of federal government affairs, at a reception at Credit Union National Association's Governmental Affairs Conference in Washington, D.C., last week. She is a graduate student at The George Washington University (GWU) Graduate School for Political Management (GSPM), where Purcell received her master's degree. Originally from San Juan, Puerto Rico, Feliciana-Lacot moved to the U.S. a year ago to attend school and expects to begin the GSPM Master's Program in Advocacy Politics this fall. She is assistant director of communications at the National Minority AIDS Council in Washington, D.C. From left: Lucy Ito, league senior vice president of credit union growth; league President/CEO Bill Cheney; Feliciana-Lacot; GWU Dean Christopher Atherton; Bob Arnould, league senior vice president of government affairs; and Prof. Larry Parnell, GWU director of strategic public relations. (Photo provided by the California and Nevada Credit Union Leagues) … * SAN ANTONIO (3/4/09)--Security Service FCU has reached the $5 billion asset milestone, officials announced Monday. That makes the credit union the largest credit union in San Antonio, the second largest in Texas, and the 10th largest in the U.S. It reached its first $1 billion in 1995, and its second billion in 2001. The credit union achieved $3 billion in 2003 and more than $4 billion in 2007. "We are grateful for the trust and loyalty of our members and our dedicated employees who have made our success possible in these tough economic times," said President/CEO David Reynolds … * SAN FRANCISCO, Calif. (3/4/09)--Two men have pleaded guilty to robbing a San Francisco branch of San Jose, Calif.-based Pacific Postal CU on Aug. 6, with assistance from one suspect's niece, a former credit union employee. Sefo Sagote, 27, and former employee Angelica Sagote, 20, pleaded guilty Thursday. Elisara Taito, 26, pleaded guilty in December. On Aug. 4, two men attempted to rob the credit union but were caught in a "bandit barrier" that protects tellers. They fled with the purses of two members. On Aug. 6, two men robbed the credit union of more than $76,000. Police believe the two incidents are linked. Sefo Sagote faces more than 11 years in prison; Angelica Sagote faces between 46 and 57 months in prison. Taito is to be sentenced on March 23 (San Francisco Chronicle via sfgate.com March 3) … * WINSTON-SALEM, N.C. (3/4/09)--Piedmont Aviation CU has announced it has changed its name to Piedmont Advantage CU. The Winston-Salem, N.C.,-based credit union said the name change is to emphasize its expansion into serving other employee groups. President/CEO Judy Tharp told the Winston-Salem Journal (March 3) the change helps overcome confusion with potential new members who may believe they can't join because they're not employees in the aviation industry. The credit union was established in 1949 to serve employees of Piedmont Aviation and Piedmont Airlines but expanding its field of membership to serve residents in six counties …

Suncoast Schools GTE FCUs plan merger

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TAMPA, Fla. (3/4/09)--The boards of two Tampa-based credit unions--Suncoast Schools FCU and GTE FCU--have signed a letter of intent to merge the two large credit unions, subject to satisfactory due diligence reviews and regulatory approval. In a joint press release, the credit unions said they will conduct due diligence to review a number of points including but not limited to financial statements, reports of operation, contracts, loan quality and underwriting standards, computer and telecommunication systems, human resource practices, regulatory examinations and others. "We believe this merger would help both credit unions achieve their ultimate goal to provide better value to our member-owners," Tom Dorety, president of SSFCU, said. "The due diligence process will be thorough and deliberate, with both parties agreeing along the way." The credit unions expect the process to take about four to six months before the merger application will be turned over to regulators to determine compliance. After that, the time frame is unknown, they said. "Benefits such as an expanded branch and ATM network and greater efficiency in several areas are just part of the merger potential," said Bucky Sebastian, CEO/president of GTE FCU. "While we have an agreement to consider the merger, we realize it will take time to complete, but we look forward to the process unfolding." Both credit unions will continue operating in a manner consistent with current operations, they said, adding that business will not be interrupted in any way during the due diligence process. Suncoast Schools FCU, chartered in 1934, serves more than 473,000 members and operates 50 full-service branches in 15 Florida counties. With $6 billion in assets, it is the largest credit union in Florida and the seventh largest in the U.S. GTE FCU, chartered in 1935, serves 205,000 members and operates 38 branches in 14 counties in Florida. It has $1.8 billion in assets.

Ireland regulator says some CUs hit by economy

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DUBLIN, Ireland (3/4/09)--Ireland’s financial regulator said Tuesday it is trying to help a few credit unions with financial difficulties as the country’s economy drops deeper into a recession and more borrowers fall behind on loan payments. However, the reserves and liquidity of the Ireland’s credit unions overall are “quite adequate,” Brendan Logue, the regulator’s registrar of credit unions, told Ireland’s state broadcaster, RTE (Reuters March 3). Of the 419 credit unions nationwide, fewer than 10 are in a risky position, Logue said, adding that the problems of the few credit unions resulted from “looser lending” during the economy’s boom years. Because some credit unions have gradually moved away from the “very prudent lending rules” they deployed in the past, they now are facing difficulties, Logue told the news service. The country’s credit union members should not worry about the safety or security of their savings because the credit union movement has $1.76 billion in reserves, said Ciaran Brennan, CEO of the Irish League of Credit Unions (RTE March 3). The regulator has asked Mitchelstown CU in the southern county of Cork to stop business lending and limit its personal lending because loan delinquencies are rising.

Deustsche Bank to invest 1 million in CDCUs

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NEW YORK (3/4/09)--Deutsche Bank invested in the National Federation of Community Development Credit Unions with a $1 million commitment to the Community Development Investment Program (CDIP). With the funds, the federation will place below-market rate deposits in community development credit unions (CDCUs) in New York and California. The deposits likely will support CDCUs serving Manhattan’s Lower East Side, Washington Heights and East Harlem neighborhoods. Other target areas include Syracuse and Lakewood in upstate New York, and Oakland, Calif., the federation said. “This investment could not have come at a more opportune time,” said Alice Greenwald, director of the Community Development Investment Program. “The liquidity needs of CDCUs have grown tremendously throughout the last year as increasing numbers of people in underserved communities turn to their local credit unions for personal, vehicle and home loans. “Deutsche Bank's generous support will help us sustain our member CDCUs’ vital community lending at a time when most low-income individuals are finding it harder and harder to access affordable credit and financing,” she added. The federation launched its 25th anniversary capital campaign two years ago, with a goal of bringing assets under management to $50 million by the end of 2009. In addition to significant support from the banking and philanthropic sectors, the CDIP also has received direct investments from some of its Community Development Partner credit unions. “Access to credit for individuals and small businesses is a key feature of current economic recovery plans, and the community lending that the federation supports is more important than ever,” said Gary Hattem, president of the Deutsche Bank Americas Foundation. The federation makes secondary capital loans and risk-sharing Predatory Relief and Intervention Deposits, and administers special grant programs for CDCUs. Deutsche Bank’s new investment brings the CDIP portfolio to a record $48.8 million in funds under management.