Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

CU System briefs (03/07/2012)

 Permanent link
  • MADISON, Wis. (3/8/12)--The World Council of Credit Unions (WOCCU)  is reminding credit unions that there's not much time left for nominating individuals and organizations for its Distinguished Service Award. Nominations are due no later than March 30. The award will be presented by WOCCU during its World Credit Union Conference July 15-18 in Gdansk, Poland. The award honors exceptional achievements that have furthered WOCCU's vision of "improving people's lives through credit unions." Nominations must be made by a WOCCU member organization …
  • MAUI, Hawaii (3/8/12)--Amy P. Waikiki, 36, formerly a teller at Kulia Ohana FCU, Wailuku, Hawaii, , was sentenced Monday in a U.S. District Court to 44 months in prison for allegedly embezzling  $163,744 from the credit union.  She pleaded guilty to two counts of embezzlement and a related offense. According to court documents, Waikiki allegedly stole funds from 34 member accounts through 224 unauthorized transactions  while employed as a teller from Aug. 8, 2008 until June 25, 2009.  She was terminated from the credit union position after being convicted in a state court on 10 theft charges of insurance premiums  at a previous employer, an  insurance company. The embezzlement was discovered after she left the credit union  (Hawaii Reporter March 6) …

Two more sentenced for fraud at St.Paul Croatian FCU

 Permanent link
CLEVELAND, Ohio (3/8/12)--Two more people were sentenced Tuesday in a federal court in Cleveland for their roles in a $2.5 million loan fraud ring that led to the collapse of Eastlake, Ohio-based. St. Paul Croatian FCU in 2010.

Rose Ann Nikolovski, 48, of Eastlake was sentenced to one day in prison and ordered to pay $3,281,250 in restitution after pleading guilty to two counts of bank fraud.  A fine was waived and she paid a special assessment of $100 at the hearing.  Originally, Nikolovski, who is the ex-wife of the alleged ringleader, Koljo Nikolovski, was charged with seven counts of bank fraud and three counts of money laundering (The News Herald March 7).

Daniel Kocher, 72, of Euclid, was sentenced to one day in prison, ordered to pay $260,000 in restitution jointly and separately, and ordered to pay the $100 special assessment. His fine was also waived. He had pleaded guilty to one count of bank fraud.

They were among several defendants charged with allowing illegal transfers to their loan accounts at the credit union. Indictments indicate that more than 1,000 fraudulent loans totaling more than $70 million were made to 300 account holders between 2000 and 2010 (News Now Feb. 28 and May 17).

Twelve people have been charged in the case, including the former CEO of the defunct credit union, Anthony Raguz. He pleaded guilty to issuing the loans and accepting more than $500,000 in bribes, kickbacks and gifts from those who obtained the fraudulent loans.

St. Paul Croatian was the one of the largest credit union failures in history, costing the National Credit Union Share Insurance Fund $170 million.  It was placed into conservatorship on April 23, 2010 and closed on the following May 1. At the time of the collapse, the credit union held $238.8 million in funds from 5,400 members. The collapse prompted lawsuits by the National Credit Union Administration to recoup some of the fund's losses.

Illinois modified FiCEP program begins second year

 Permanent link
NAPERVILLE, Ill. (3/8/12)--Forty individuals from Illinois credit unions are participating in the second year of the REAL Solutions Enhanced Financial Counseling Certification Program (FiCEP), funded by the Illinois Credit Union Foundation.

Two significant modifications were made in the second year of the program--which began yesterday--to allow more Illinois credit unions to participate, said the Illinois Credit Union League.

The enhancements include a reduction in cost and an increase in number and locations of proctored test sites. The Illinois foundation board of directors is covering the cost of enhancement. The only cost to Illinois credit unions is the purchase of the FiCEP books and exams from the Credit Union National Association (CUNA).

In the first year of the Illinois program, 23 individuals from 11 credit unions graduated as Certified Credit Union Financial Counselors (CCUFC).

As CUNA's financial counseling certification self-study program, FiCEP enables all credit union staff to become more confident in helping members build a stronger financial future. FiCEP is designed for credit union staff members who work in the financial counseling, collection and loan departments, or any others committed to helping members gain control of their financial futures.

Modeled after the CUNA Certified Financial Counselor Schools, FiCEP includes two parts of four learning modules each. When participants successfully complete the proctored exams for both parts, they become CCUFCs--ready to assist credit union members.

The Illinois league and foundation teamed up with the National Credit Union Foundation in 2009 to offer "REAL Solutions for Low Wealth Households." Currently, 87 credit unions in the state are participating. REAL stands for Relevant, Effective, Asset-building, Loyalty-producing, and is operated by 35 leagues representing 37 states. More than 1,000 credit unions are part of the program.

Kansas CUs grew in nearly all areas in 4Q

 Permanent link
WICHITA, Kan. (3/8/12)--State-chartered credit unions in Kansas grew in nearly every performance category during the fourth quarter, except for one that reflects past-due accounts, according to the Kansas Department of Credit Unions' (KDCU) quarterly report.

Total loans at the state's 80 credit unions rose 6.4% year-over-year to $2.88 billion. Assets increased 8% to $4.43 billion. Credit union membership also climbed by 1,434 members--to 574,471 (The Wichita Eagle March 7).

The largest change was in delinquencies, which during the 12-month period fell 23% to $28 million. The steepest year-over-year drop in delinquencies occurred between the December 2010 and March 2011 period, Michael Baugh, KDCU financial examiner administrator, told the Eagle.

"Kansas credit unions have continued to support our members' loan needs, even as other financial institutions have pulled back in lending," Bob Mayes, vice president of member and strategic services at the Kansas Credit Union Association, told News Now. "The drop in delinquency demonstrates the continued commitment of Kansas credit unions to effective lending and solid underwriting processes."

Kansas credit unions' return on average assets was 0.8%, compared with 0.71% in the fourth quarter of 2010.

Because credit unions set aside fewer funds as provisions for loan losses, that likely boosted revenue growth, Baugh told the paper. Also, the National Credit Union Share Insurance Fund didn't assess credit unions a premium, he added.

For 2012, Kansas regulators said their biggest concern is rising interest rates. Credit unions that have mortgages with fixed-interest rates or government- or mortgage-backed securities with low interest rates could see downward pressure on their net interest margin, John Smith, KDCU's administrator, told the paper.

Mich. CUs MBLs increased 21 .7 in 2011

 Permanent link
LANSING, Mich. (3/8/12)--Michigan's credit unions increased their member business loans (MBLs) by 21.7% in 2011, according to the Michigan Credit Union League (MCUL) and Affiliates in announcing year-end performance results.

The state rate of MBL growth is more than three times the annual increase for all credit unions, said the league.  The increased support of Michigan's small business from credit unions comes at a time when bank lending has remained sluggish, since 2008.   The league cited statistics from the Federal Deposit Insurance Corp. (FDIC) , reporting that U.S. banks' small business lending continued to decline in fourth quarter 2011, with a year-over-year bank decline of 4.3%.

"Credit unions continue to step up and support both small businesses and local families, as other institutions are stepping back," said league CEO David Adams. "Michigan still has a long way to go to recover from the recession, but our credit unions are demonstrating that they can be counted on to support local economic growth and development as we begin to turn the corner."

The Credit Union National Association and credit unions are urging Congress to raise credit unions' MBL cap to 27.5% of assets from 12/25%. Doing so would help inject $13 billion into the economy and translate into 140,000 new jobs without cost to the taxpayer.

Michigan credit unions saw strong growth in several areas, according to new data. Their total assets rose to an all-time high of $41.9 billion on Dec. 31, up $383 million for fourth quarter and $1.9 billion for the year, said the league.  Overall deposits rose 4.8% in 2011, growing faster than lending. The industry's loan-to-share ratio declined to 64.33% from 2010's ratio of 67.26%.

Loans in the state totaled $23.2 billion by year-end, an annual growth rate of 0.2% over 2010 and recouping a decrease in total loans from the first quarter of 2011.  During fourth quarter, consumer lending increased  by $130 million for first home mortgages, $55 million for unsecured gift cards and $100 million for used cars, said the league.

New bankruptcy filings dropped 24.3% during the year, with the state's credit unions reporting 13,613 members filing for bankruptcy. Loan charge-offs due to bankruptcy dropped to 29.19% from 31.22% in 2010--a 6.5% improvement.

"In the wake of significant growth in several key areas last year, Michigan credit unions began 2012 in a very strong position," Adams said. "Credit union savings and lending are growing at healthy rates, and are showing some of the strongest results in several quarters."

Credit union membership rose to 4.47 million as of Dec. 31, with Michigan credit unions adding 24,751 new memberships and 87,209 new checking accounts in fourth quarter. It was the strongest fourth quarter growth in several years, despite the state's declining population, the league said.  For 2011, the state's credit unions added 87,209 new checking accounts.

"Our membership growth shows that more families across our state and all over the nation are embracing what credit unions offer in the way of great rates and lower fees as they continue to look for ways to stretch every dollar," Adams said.

Maine CUs turn out for CU Day at State House

 Permanent link
AUGUSTA, Maine (3/8/12)--Nearly 50 credit union representatives from throughout Maine made a trip Thursday to the state capital in Augusta to participate in Maine Credit Union Day at the State House.

John Murphy, president of the Maine Credit Union League, left, catches up with a familiar face, State Rep. Ray Wallace (R-Dexter), who is a volunteer serving on the Supervisory Committee at Maine Highlands FCU in Dexter, at Maine Credit Union Day at the State House in Augusta.  Wallace is one of six credit union volunteers serving in the Maine Legislature. (Photo provided by the Maine Credit Union League)

The morning-long event attracted nearly 100 legislators, who visited with credit union representatives in the Hall of Flags, according to the Maine Credit Union League. One legislator called the opportunity to meet with his local credit union "a chance to touch base on important issues and get feedback on the economy from their point of view. Credit unions are so connected with their communities and members, which provide a great perspective and insight into how many of my constituents are doing."

Another legislator told the league: "Maine credit unions are a vital part of helping thousands of Maine people succeed financially. I told the credit unions I spoke with how much I appreciated the benefits and the services they provide to members."

Highlights of the day included watching the legislature in session, meeting with legislators and being recognized with a joint resolution by the Maine House and Senate.

The resolution was "for the positive contributions and significant role [credit unions] have made on the lives of Maine citizens and their communities for more than 91 years. Your service and dedication to this state is a tribute to many of those values and principles that we all hold dear."

The resolution also honored Maine's credit unions for their "leadership on ending hunger in Maine, by raising a record-setting $447,000 in 2011, and for the significant contributions credit unions provide to the people of Maine."

"It was great that, even in less than ideal weather conditions, we again demonstrated a strong presence at the State House and reinforced the commitment and involvement that Maine's credit unions have in legislative affairs," said John Murphy, league president, referring to snowy weather.

Visa Consumers OK with CUs thin gift cards

 Permanent link
WASHINGTON (3/8/12)--Consumer focus-groups have reacted favorably to extra-thin prepaid gift cards being pilot-tested at three Arizona credit unions.

The cards are offered through ATMs by Credit Union West, Glendale; MariSol FCU, Phoenix; and Pinal County FCU, Casa Grande (News Now Jan. 12).

Visa was initially concerned that consumers would consider the thinner cards to be worthless and throw them away. But consumers correlated the Visa brand with the card, and understood the value, Visa said (American Banker March 6).

Consumers also found the cards easier to store than traditional cards, Visa said.

Better ATM Services, which initiated the pilot program in partnership with Visa, said it will offer the test at the credit unions through the second quarter, then test the gift cards at banks.

Eventually the cards will be marketed to underbanked consumers, Better ATM Services said.

Cleaning person hurt in attempted robbery at CU

 Permanent link
FORT WAYNE, Ind. (3/8/12)--A cleaning person contracted by Partners First FCU, Fort Wayne, Ind. was injured Wednesday morning after being attacked by two people trying to rob the credit union.

Fort Wayne Police were called at 7:16 a.m. to the $240 million asset credit union, where an employee of a cleaning company claimed to have been attacked and forced inside the credit union at gunpoint.

No cash was stolen, though the investigation continues, Fort Wayne police said in a press release.

The suspects allegedly hit the cleaning worker repeatedly during the robbery attempt and fled in the worker's vehicle, the release said. Officers later recovered the vehicle.

The worker was in fair condition at the scene, police said.

Police had not released surveillance video or descriptions of the suspects as of Wednesday morning.

The incident remains under investigation by the Northeast Indiana Bank Robbery Task Force, which includes members of Fort Wayne Police, the Allen County Sheriff's Department, Indiana State Police and the Federal Bureau of Investigation.

Centra CU assists in wake of South Indiana tornadoes

 Permanent link
COLUMBUS, Ind. (3/8/12)--Centra CU, Columbus, Ind., has put in place several initiatives to help victims of tornadoes that struck Indiana Friday.

Christi Lee, left, and Amber Vogt are among Centra CU employees who took paid time off to volunteer for the Salvation Army to help victims of the tornadoes that struck Indiana last weekend. Centra CU, Columbus, Ind., is offering aid to tornado victims through emergency loans and donations. (Photo provided by Centra CU)
The credit union is offering a tornado-relief loan designed as an emergency fund for members who have sustained tornado damage. The loan is $1,000 unsecured with no payments for six months. It is offered at 6% annual-percentage rate  (APR) for six months; 7% APR for 24 months; and 8% APR  for 36 months. Members also can apply for additional funds.

Centra CU has established accounts for members to make donations to the American Red Cross or Salvation Army, two of the primary organizations providing disaster assistance in southern Indiana.

The credit union is working with the Clark County Rural Electric Membership Corp. to set up an account for rural cooperatives to aid the tornado relief efforts.

Centra is providing employees paid time off to volunteer for the Salvation Army.

At least 42 tornadoes swept across 10 states on Friday, the National Weather Service said.

CU website offers classified ads section

 Permanent link
TOPEKA, Kan. (3/8/12)--Kansas Air Guard CU in Topeka is using a craigslist-type online classified advertising section on its website to connect with members.

With $5 million in assets and three employees, human resources are stretched pretty thin at the credit union, said Manager Becky Razak. Maintaining a Facebook or Twitter account isn't a reasonable option, she added.

But Razak said her nephew helped open her eyes to the power of social media. "The more often our members come in touch with us, the more likely they are to do business with us," Razak said.

An online classified page offered the credit union the opportunity to build stronger relationships without the daily time commitment of Twitter or Facebook, Razak said. A Kansas Air employee scans the classified form filled out by members and e-mails it to the credit union's core processor, who posts the ads on the website.

The concept is also a good fit for the Kansas Air Guard CU membership. The credit union serves members of the Kansas Air National Guard. Members typically work nine-hour days and have a work day off every other week. Many members have jobs on the side offering services ranging from mechanical and auto body work to website design and cake decorating, Razak said.

The classified page, called the CoyoteList, has been live for about three weeks. Feedback has been very positive, with members downloading a steady stream of listing sheets, Razak said.

"It's very compatible for the nature of our membership," Razak said. "There's also an element of trust. Normally, you're going to have anxieties [about whether] someone is going to do a good job at a fair price. If it's someone you work with, I think you're more likely to work out those issues. The credit union also has a relationship of trust."

N.Y. response in mortgage tax appeal due Monday

 Permanent link
ALBANY, N.Y. (3/8/12)--The State of New York has until Monday to respond to amicus briefs filed in December  before the New York Court of Appeals by the Department of Justice, the Credit Union National Association and the Credit Union Association of New York, among others, and to Hudson Valley FCU's challenge of the state's mortgage recording tax (MRT).

Hudson Valley, a $3.2 billion asset credit union based in Poughkeepsie, N.Y.,  is appealing two lower courts' decisions that denied its challenge to the MRT. It had filed suit on May 12, 2009, in the New York Supreme Court, a lower trial court, against the New York State Department of Taxation and Finance.

The lower court, in dismissing the case, said the MRT was a tax on the "privilege" of filing the mortgage under state law.  The case then went to the Appellate Division, which upheld the lower court ruling. The credit union appealed to the New York Court of Appeal, the state's highest court, which agreed Oct. 18, 2011, to hear the appeal.

The credit union maintains that the Federal Credit Union Act exempts federally chartered credit unions from the state tax, which it argues is not considered a "privilege tax" under federal law. Instead, credit unions' federal tax exemption and applicable U.S. Supreme Court rulings should control in the issue, it said.

The Department of Justice, in an amicus brief filed Dec. 19 by Preet Bharara, U.S. Attorney for the Southern District of New York,  New York City, supported the credit union's interpretation. In its brief, the Justice Department argued that the lower courts' interpretation of the Federal Credit Union Act  (FCUA) "is inconsistent with the statute's plain language" exempting federal credit unions from all taxes except real property taxes and tangible personal property taxes.

"The lower courts misinterpreted Section 122 of the FCUA Act," said the Justice Department, adding the act "expressly immunizes federal credit unions from all state taxes, with the limited exception of real property taxes and tangible personal property taxes." It also pointed out, "The United States has an interest in the proper interpretation of the FCUA and in preserving the tax exemptions afforded federal credit unions by Congress."

The appellate division's decision "conflicts with decisions of other courts interpreting the FCUA to exempt federal credit unions from all taxes not expressly authorized under the statute," said the Justice Department. "Under the clear terms of the FCUA, because the MRT is not a real property or tangible personal property tax--the only two taxes permitted under the FCUA--it cannot be levied against federal credit unions such as Hudson Valley," the document said.

"Even if the FCUA exempts federal credit unions from only certain categories of taxes, as the Appellate Division erroneously concluded, federal credit unions are still exempt from paying the MRT because the MRT can be characterized as a tax on a federal credit union and its property, two of the categories prohibited by the FCUA under the Appellate Division's construction of the statute," said the Justice Department.

Because the U.S. Supreme Court "has characterized mortgage recording taxes similar to the MRT as a tax on the mortgage, the MRT can be construed as an exempted tax on intangible personal property. The MRT is also a tax on a federal credit union itself when applied to mortgages issued by the federal credit union, and thus is exempted…," said the document.

New York's MRT requires a tax of 50 cents for each $100 of debt secured by a mortgage.  Most states charge only administrative fees for recording a mortgage.

Others amicus briefs for the credit union were filed by the Federal Housing Finance Agency (see "HFA seeks to back CU in N.Y. mortgage tax appeal" in News Now's Jan. 18 issue);  the Credit Union Association of New York and the Credit Union National Association ("CUANY, CUNA file amicus brief in mortgage recording tax case appeal," News Now Dec. 20), and the National Association of Federal Credit Unions.