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Michigan foundation OKs 5000 grant to BizKid

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LANSING, Mich. (4/14/09)--The Michigan Credit Union Foundation Board of Trustees has approved a $5,000 grant for the PBS Biz Kid$ financial education program as part of the foundation's efforts to support financial literacy programs. "BizKid$ is a quality, worthwhile tool for financial education outreach and something the foundation wanted to support," said Patrick LaPine, executive vice president of the Michigan Credit Union League (Michigan Monitor April 13). The program, underwritten by America's credit unions for the past three years, promotes financial literacy to middle- and high school-age students and is aired in 97% of the U.S. public television market. "In this economy it's imperative to continue to contribute financially to programs that are important in the long-run, and this is an example of something that can be very helpful for credit unions in their financial literacy efforts," LaPine said.

Filene report tracks mortgage risk delinquency rates

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MADISON, Wis. (4/14/09)--The Filene Research Institute has released a research brief, Mortgage Borrower Risk Profiles, Delinquencies, and Interest Rates in 2005-2008, to help assess the three critical issues for both lenders and borrowers. The brief, by Mark C. Meyer, CEO of Filene, and Luis G. Dopico, Macrometrix, provides marketplace analysis of mortgage pricing strategies, a review of delinquency rates across borrower characteristics and demographics from the period's survey data, and concludes with several strategic implications for credit unions. One strategy suggests that credit unions may benefit from studying delinquency rates for mortgages and other loan types using in-house data reflecting their field of membership. For instance, changes in the national unemployment rate may have very different impacts on credit unions servicing federal employees, state employees, private companies, communities or nationwide professional groups affected by each recession in varying degrees. "This type of analysis and data may also be of particular importance when institutions are facing especially large changes in their customer bases--for instance, following a merger, the expansion of a credit union's FOM, or the launch of a new product for a new set of customers," says the report. The report, third in a series of Consumer Finance Research briefs based on information from Ohio State University's Consumer Finance Monthly, explores several research questions:
* What might a simplified mortgage pricing model look like? * How do delinquency rates vary across borrowers' financial characteristics? * How do delinquency rates vary across demographic groups? * Did mortgage pricing based on rising house prices contribute to delinquencies? and * How can both underpriced and overpriced mortgage loans be avoided?
"The ongoing mortgage crisis provides a painful reminder that financial institutions cannot assume that low delinquency rates during economic expansions will continue indefinitely," said Meyer. "As this brief points out, many financial institutions underpriced mortgages in the mid-2000s. The interest rates they charged were not enough to cover eventual loan losses. These mounting losses, and the uncertainty surrounding their eventual size, mean that many financial institutions are now in deep disarray," he said. Meyer noted that the temptation during a housing crisis is to err on the side of extreme safety. Many financial institutions try to avoid underpricing mortgages in the future by charging interest rates that reflect today's delinquency rates, or by rejecting more loan applications altogether. However, credit unions need to approach such measures with caution, and to recognize opportunities to serve members, he said. For more information, use the resource link.

Jamaica CUs studying development banks fee proposal

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KINGSTON, Jamaica (4/14/09)--Jamaican credit unions are studying a proposal offered by the Development Bank of Jamaica (DBJ), which refused their request to increase loan spread and instead proposed credit unions raise their fees on the loans. Jamaica Cooperative Credit Union League General Manager Glenworth Francis said the issue is not settled (Jamaica Gleaner Online April 12). DBJ distributes loan capital through approved financial institutions and stipulates that the interest rate to end users can be no more than 3% higher than its rate to the institutions. Credit unions, however, say they need about an 8% spread; otherwise it is unprofitable to distribute the DBJ funds. Instead of raising the spread, DBJ proposed that credit unions add fees to the loans to cover their costs. Discussions about the spread surfaced last year when credit unions began opting out of a $1 billion program to funnel funds to small- and medium-size enterprises, saying the cost to administer the funds were 5% higher than the allowed spread, according to the article.

Tax credit packs CUs homebuyer seminars

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MADISON, Wis. (4/14/09)--UW CU, Madison, Wis., has experienced an increase in participants at its homebuyer seminars, held in conjunction with the local housing authority, because of the government’s $8,000 tax credit for first-time homebuyers. Those attending the seminars want to know how the credit can be used, how they can get the money and if the credit union does anything with it, according to UW CU Director of Mortgage Lending Julio Rios (Wisconsin State Journal April 13). About 700 UW CU members have applied for and received pre-approval for mortgages during the past three months. This figure is twice of what the credit union processed last year at this time and includes many first-time homebuyers, the newspaper said. Taxpayers who purchase their first home before Dec. 1 can receive the credit on their 2008 or 2009 tax returns. The home must be their primary residence for three years after purchase. UW CU has $1.08 billion in assets.

Youth Week begins Sunday

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MADISON, Wis. (4/14/09)--The Credit Union National Association’s (CUNA) National Credit Union Youth Week kicks off Sunday, with more than 400 credit unions signed up for the savings challenge. About 435 credit unions have signed up as of Monday morning, said Lin Standke, CUNA Youth Week manager. The Savings Challenge takes place during Youth Week. During the challenge, youth deposit money into savings accounts at credit unions. Credit unions also can win $100 from CUNA for one of their youth members. Last year, more than 76,500 young members deposited nearly $12 million into their accounts. About 6,748 were new accounts. This year’s Youth Week theme is “The Magic of Saving.” Several credit unions have planned activities:
* Aberdeen Proving Ground (Md.) FCU is hosting a month-long series of promotions for Youth Week. Magicians will appear at the credit union’s branches Saturday, and a “Magic of Saving” contest will run all month long. Members 18 years and younger can participate to win $100 cash or a $250 savings bond; * Marshall (Mich.) Community CU will host a Kids Day event April 18 with a Bike Safety jamboree, a magician, and a presentation on managing money for kids and adults. Youth also can enter contests to receive $50 savings bonds and tickets to local amusement parks and events; * Prime Financial CU, Cudahy, Wis., will host a coloring and essay writing contest. When youth make deposits to their savings accounts, they also will be enrolled to win $100; and * The Michigan House and Senate declared April to be Financial Literacy Month (Michigan Monitor April 6). The Senate resolution was co-sponsored by State Sen. Randy Richardville (R-Monroe) and State Rep. Andy Coulouris (D-Saginaw).
The Michigan Credit Union League’s Financial Literacy Legislative Challenge also is underway and credit unions can partner with a lawmaker in their district to host an education event. The program builds relationships between credit unions and lawmakers through presentations to students or visits to student-run credit union branches (Michigan Monitor April 6). So far, about 18 lawmakers have expressed interest in partnering with a credit union, the league said.

Countys schools transfer summer pay program to CU

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ROCKVILLE, Md. (4/14/09)--Montgomery County (Md.) Public Schools (MCPS) will move its summer pay program, which allows employees to set money aside throughout the school year for summer expenses, to MCT FCU, Rockville, starting next school year, 2009-2010. "This will help the school system save money in administrative costs and enable MCPS employees to earn interest," said Sue DeGraba, MCPS chief financial officer (FOCUS Newsletter April 13). Funds saved through the program will be disbursed to the county schools' employees during the summer of 2010 in five equal payments on July 2, July 17, July 31, Aug. 14 and Aug. 28. The payment schedule mirrors the credit union's current summer pay program payout schedule, said the Maryland and District of Columbia Credit Union Association. MCT FCU's summer pay program is similar to the county schools' program in that it allows employees to deduct as much as they wish from each paycheck during the school year. However, MCT offers 2% annual percentage yield on all funds saved through its program, while the current MCPS program doesn't pay interest. Although the school district recommends its employees save through the credit union's program, employees have the option of making summer savings arrangement with any financial institution of their choice.

PSCU Financial Services issues 45.4 M dividend

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ST. PETERSBURG, Fla. (4/14/09)--PSCU Financial Services issued $45.4 million to its member credit unions--the largest dividend ever paid by any credit union service organization, PSCU Financial said. Member-owner credit unions received 85% of the dividend in cash. The distribution included cash dividends of $35 million from the sale of Visa and MasterCard stock. Financial savings of $12.6 million also were passed along throughout 2008, PSCU Financial said. PSCU Financial reported 2008 revenue of $633 million--an increase of 12% over 2007. “The difficult economy can be the perfect storm for our industry,” said David J. Serlo, PSCU president/CEO. “It’s time for credit unions to expand programs and offer new services that drive members to make their credit union their primary financial institution.” PSCU Financial Services provides credit, debit, ATM, prepaid, bill payment, home and mobile banking, lending, collections and contact center solutions.

Chattanooga branch serving Hispanics to close

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CHATTANOOGA, Tenn. (4/14/09)--The economy has taken a toll on a credit union branch that served Hispanics in Highland Park, Chattanooga, Tenn., the past two years. Because of the economy, Holston Methodist FCU, based in Knoxville, will close its Highland Park branch, located in St. Andrews Center, on April 30, officials told the Chattanooga Times Free Press. However, CEO Janet Tidwell said she hopes to consider opening another branch in Chattanooga when the economic situation improves. Most of the branch's 223 accounts and 160 members are Hispanic, Stacy Johnson, member development director of the credit union, told the newspaper. She is also director of La Paz, a neighborhood group. She noted there are ways for the branch's current members to keep their accounts with the credit union, but if they choose to close, the credit union is directing them to other institutions that serve the Latino community. Mike Feely, director of the St. Andrews Center, praised the credit union's excellent service and said he is looking for a credit union or other lender interested in a partnership. For many of the members of the branch, the credit union was their first involvement with a financial institution, Feely said in the article.

GM extends Invest in America to end of year

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PLYMOUTH, Mich. (4/14/09)--General Motors (GM) has expanded its participation in Invest in America until Dec. 31. Previously, GM planned for the promotion to run through the end of March. Invest in America is a credit union auto loan discount program offered by GM and Chrysler. Under the extension, consumers will receive discounts on any eligible new vehicle through the end of the year. “As over 1,200 credit unions continue to promote the ‘Invest in America’ credit union member discounts, the automakers are seeing great results with first-time and returning buyers,” said David Adams, CUCorp CEO. “This is causing them to take this program serious. The contract extension reflects GM’s satisfaction with the program and we continue to hope for a long-term, mutually beneficial partnership between GM and credit unions.” Chrysler is offering a Credit Union Member Cash Discount through June 30. Invest in America launched in December. More than 73,000 vehicles have been sold through the Invest in America program, according to the Invest in America website, lovemycreditunion.org.

CU System briefs (04/13/2009)

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* LYNCHBURG, Va. (4/14/09)--Alcoa Richmond FCU, which served employees of Alcoa in Richmond, Va., has merged with Virginia CU, also based in Richmond. The merger was effective April 1. Members of the $2.1 million asset Alcoa Richmond voted March 6 in favor of the merger after its sponsor company announced it was phasing out its Richmond operations. Virginia CU had assets of nearly $1.7 billion before the merger (Richmond Times-Dispatch … * ST. PAUL, Minn. (4/14/09)--Fort Snelling FCU (FSFCU), Minneapolis, has merged resources with Hiway FCU, a $739.5 million asset credit union in St. Paul. The merger became effective March 31. The combined credit union will retain the Hiway name. Fort Snelling had more than $33.6 million in assets and 5,500 members. "During this time of economic challenge, we looked to align ourselves with another credit union to create a stronger, sustainable financial organization," said Diane Menton, FSFCU president/CEO. She noted its members "will now have access to Hiway's expansive array of products, services and benefits." Hiway President Jeff Schwalen said the credit union "will keep all members up to date on the integration of our organizations through our website, newsletters and by mail." … * MERIDEN, Conn. (4/14/09)--Thirteen credit unions from Connecticut and 10 private businesses participated April 1 in a REAL Solutions Financial Reality Fair for area high schools, held at Central Connecticut State University. More than 200 students from eight high schools went through the paces of making real world financial decisions as independent adults. Students such as those pictured here chose an occupation that interests them and researched their salary, then made living choices in areas such as housing, transportation, food and clothing, insurance, entertainment and other budget categories. "We feel strongly that we have a responsibility to provide financial education," said Andrew Klimkoski, president/CEO of Achieve Financial CU, Berlin, and chairman of the organizing committee. (Photo provided by the Credit Union League of Connecticut) … * HIGHTSTOWN, N.J. (4/14/09)--The New Jersey Credit Union Foundation has granted money to Junior Achievement (JA) to host a JA Day program at Abington Avenue School, Newark on May 28. The one-day event provides elementary school students with the five-lesson JA elementary curriculum, which teaches financial literacy to students. The foundation and JA are seeking credit union staff and volunteers to help bring the program to 10 classes of fourth and fifth graders. Volunteers will be assigned a class and will team up with a local JA staffer to teach the lessons, said the foundation …