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CU System Archive

CU System

Economy hitting San Diego CUs

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SAN DIEGO (4/20/09)--Credit unions have sidestepped the nation's economic turmoil by "sticking to their knitting of making mortgage, auto, consumer and some business loans at good rates to members," says a San Diego-based newspaper. But now, local credit unions are bracing for stiff winds. Of the 11 largest credit unions in San Diego, three made money in 2008, said the San Diego Union-Tribune (April 17). They were Mission Federal, Pacific Marine and San Diego County CUs. The stiff winds the credit union faces involve the impact of the conservatorship of U.S. Central FCU and Western Corporate FCU (WesCorp) and the assessments to shore up the National Credit Union Share Insurance Fund (NCUSIF) on credit unions in the area. The article noted that California credit unions in particular will be affected. Chris Collver, regulatory and legislative analyst with the California Credit Union League, told the newspaper that WesCorp has about 1,100 cedit union members, with a little less than 500 in California. He also pointed out that credit unions in California and nationwide have near historic levels of capital. The newspaper interviewed North Island Financial CU co-CEO Geri Dillingham and Kim Reedy, chief financial officer and co-CEO, about the assessments the credit union would face due to the corporate stabilization plan's impact on the National Credit Union Share Insurance Fund. Also interviewed was Mary Cunningham, CEO of USA FCU, who noted that without relief from Congress, the credit union would drop from well-capitalized to adequately capitalized because of the assessments to replenish NCUSIF. Marla Shepard, CEO of California Coast CU, noted in the article that her credit union lost $23.7 million last year--its first-ever loss--but it remains well-capitalized. Joseph Schroeder, CEO of San Diego Metropolitan CU, said he is managing growth to start rebuilding the credit union's capital ratio in "the most extraordinary financial event I've ever seen." For the full article, use the resource link.

Illinois league honors CUs individuals

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NAPERVILLE, Ill. (4/20/09)--A number of individuals and credit unions were honored during the Illinois Credit Union League's 79th Annual Convention Friday at its Keynote and Awards Program. Desjardins Youth Financial Education Award first-place winners include:
* Prairie Trail CU, Joliet, in the $35 million-$75 million asset category; * NuMark CU, Joliet, $75 million to $250 million in assets; and * Great Lakes CU, North Chicago, more than $250 million assets.
Dora Maxwell Social Responsibility Award first-place honorees included:
* Rock Valley FCU, $50 million-$100 million assets; * Financial Plus CU, Ottawa, $100 million-$200 million assets; * Scott CU, Collinsville, $200 million-$500 million; and * Consumers Cooperative CU, Waukegan, more than $500 million.
Louise Herring Philosophy in Action Award first-place winners were GCS FCU, Granite City, in the $50 million-$250 million asset category, and Consumers Cooperative CU, in the more than $250 million asset category. Hall of Fame inductees were: James Bright, inducted posthumously as CEO of Scott CU, and William Reidel, retired CEO of Consumers Cooperative CU. Lifetime Achievement Award recipient was Janet Francoeur, CEO of Riverside Community CU, Kankakee. Employee of the Year was Ann O'Neill, executive vice president of Prairie Trail CU, and Volunteer of the Year was Dave Harris, supervisory committee chairman on the board at NuMark CU. The Illinois Credit Union Foundation recognized tribute scholarships in honor of Robert Nelson, board member of Members Choice CU, Peoria, and Vic McCauley, board member of MembersAlliance CU, Rockford. Also recognized posthumously with a memorial ward was Mary Sue Sours, manager of St. John Employees CU, Springfield. Raymond Schulenberg, director of the board of Motorola Employees CU, Schaumburg, received a Perpetual Tribute Award.

Texas CUs OK league dues schedule restated bylaws

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AUSTIN, Texas (4/20/09)--Delegates at the Texas Credit Union League's (TCUL) 75th Annual Membership Meeting Thursday voted in favor of the 2010 league dues schedule and in favor of adopting the league's restated bylaws. They also gave the league board authority to adopt a balanced or a deficit budget (LoneStar Leaguer April 17). Board Secretary/treasurer Jim Minge reported the consolidated 2008 financials reflect a net gain of about $322,000, which, he said, was significant given the punches the economy has taken the past year. He noted the consolidated TCUL, including Credit Union Resources Inc., met the annual budget for 2008 and continued to provide quality services and products. TCUL President/CEO Dick Ensweiler outlined a three-phase plan to reduce expenses while not compromising the integrity of the organization. "Fiscal responsibility has never been more critical than it is today," he told attendees. "With consistent and cautious navigation, we have and will continue to fill our mission to protect credit unions, and promote your growth, unity and strength."

27 New Mexico CUs waive unemployment fees

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SANTE FE, N.M. (4/20/09)--The CU Anytime Network, which has 27 credit unions in New Mexico, is partnering with the state Department of Workforce Solutions to waive ATM surcharge fees on unemployment insurance debit cards. The fee waiver begins today for so-called “foreign transaction fees,” which normally are charged to members for transactions outside their financial institution’s ATM network (Associated Press April 16). CU Anytime will now waive the $1.75 fee for those transactions. However, Bank of America fees still apply to those transactions.

CEOs expect reversal in consumers savings habits

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PLANO, Texas (4/20/09)--Credit union CEOs are expecting their members to respond to economic uncertainties with a sharp reversal in savings habits, according to results of the April 2009 Credit Union CEO Confidence Survey, conducted by Southwest Corporate FCU, Plano, Texas. Share deposit growth expectations for the next six months climbed 15.38 points from the last report, compared with a drop half that size for the previous three quarters combined (LoneStar Leaguer April 17). The share growth barometer offered some hope in an otherwise unenthusiastic economic outlook, said the corporate. Projections for loan demand in six months declined to -3.75 from zero in November, and the overall CEO Confidence Index landed at its lowest level in five years, falling to 7.9 in the April report from 10.5 in November. “Had we not lowered savings rates, share growth was tracking at a 60% increase this year,” said Steve Rasmussen, president of FAA CU, Oklahoma City, Okla. “I expect loan demand to remain steady throughout the year, and possibly increase slightly as a result of indirect lending. We have, however, projected higher delinquencies and charge-offs.” His region of the country is fortunate, compared to some, he acknowledged that members are feeling the pinch. “The general atmosphere is not overly optimistic for 2009. Most members are just looking to get through this year,” he added. More so than in the past, CEOs registered weakening certainty in their own institutions’ financial condition in the April report, lowering marks for their current position by 13 points and for their projected position six months from now by 10 points. CEOs also recorded a further decline in confidence for their members’ current financial condition, with the index falling 3.33 points to -5.37 this quarter. Members’ financial conditions in six months also dipped further into the negative range, to -10.59 in April from -10.46 in November. “Given the current state of affairs, these results are not surprising,” said Brian Turner, Southwest Corporate’s director of advisory services. “Lower market rates and higher loan delinquencies are contributing to lower asset yields and tighter net interest margins. Add to that recent and pending write-downs associated with the National Credit Union Share Insurance Fund, and you get less-than-stellar optimism. “Share growth is positive, but could be transitional,” Turner added. “Credit unions typically experience the highest concentration of shares during the first quarter, and loans generally half that growth over the next three quarters. Many economists anticipate weak loan demand for 2009, however, so the short-term financial result for some natural person credit unions may be unprecedented. “The good news is that early signs indicate the downward trend in the economy is beginning to slow,” Turner continued. “Many market economists project higher interest rates by the end of this year, which will continue--and possibly accelerate--over the next few years. “Higher interest rates underpin an expectation that the economy will rebound, stronger loan demand will return, and net interest margins will begin to widen. Unfortunately, most credit unions likely will have to wait until 2010 to fully experience that result,” he concluded.

National foundation offers new Innovation Grants

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WASHINGTON (4/20/09)--Credit union organizations now are eligible to apply for new Innovation Grants from the National Credit Union Foundation (NCUF) through June 30. Innovation Grants are aligned with NCUF’s signature program, REAL Solutions. While participation in REAL Solutions is not required to apply for a grant, NCUF is seeking grant applications for innovative projects in any of REAL Solutions’ five service areas:
* Education--Innovation grants assist credit union organizations participating in national financial education programs including Biz Kid$ and the National Endowment for Financial Education. They also support other initiatives consistent with the education components of REAL Solutions: financial counseling, product awareness and staff training. * Transaction Services--The grants support transaction services that help credit unions attract underserved consumers. Examples include check cashing, money orders, prepaid stored value cards, remittances, second chance/fresh start checking, and tax preparation. * Savings--The grants support programs that help credit union members with low wealth establish and maintain savings. Examples include prize-based savings, safe accounts, savings challenges and step-up share certificates. * Credit--The grants support initiatives that help non-prime borrowers build and improve credit through credit unions. Examples include alternative credit reports, citizenship loans, first and last rent loans, flexible loan policies, non-prime used car loans, score builder loans, and thin file loans. * Homeownership--The grants support programs that help credit unions members with lower credit scores qualify as first-time homebuyers. Examples include foreclosure assistance loans, green loans, Home Loan Payment Relief mortgages, Individual Taxpayer ID Number loans, and timely repayment rewards.
Eligible applicants include credit unions, credit union service organizations, state credit union associations, state credit union foundations, and other organizations owned or controlled by credit unions. Applications will not be accepted from organizations outside the credit union movement. “Both our Grants Committee and our Board voted unanimously to narrow the eligibility this year,” explained new NCUF Grants Committee Chairman John Gregoire. “These actions ensure that all Innovation Grant dollars will directly benefit the credit union community.” “Based on what we’re hearing from credit unions that want to apply for grants this year, their needs are greater than ever,” said NCUF Deputy Director Steve Bosack. “We’re fortunate that our foundation is in a strong position to help credit unions reach new members and deliver innovative services.” The grant dollars available will depend on how much credit union organizations invest in the Community Investment Fund.

SECUs VITA tax service sees huge volume hike

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RALEIGH, N.C. (4/20/09)--State Employees’ CU (SECU) of North Carolina reported that its Volunteer Income Tax Assistance (VITA) program staff completed more than 25,000 returns, generating more than $33 million in total refunds during this year’s tax season. Last year, News Now reported that SECU helped 15,000 qualifying individuals claim more than $8 million in tax credits over a three-month span (April 25, 2008). “The dramatic increase in the volume of returns processed through SECU’s VITA program this year is proof of the positive difference SECU is making for North Carolinians,” said Josh Kelly, SECU senior vice president of tax preparation services. About $3.75 million was saved in preparation fees typically charged by for-profit tax preparation services, SECU said. The VITA program also generated $15.7 million in tax credits, including $9.7 million in Earned Income Tax Credits and $5.2 million in Child Tax Credits. SECU offered consumers a tax refund anticipation loan with the VITA program, which saved members $50,000 in interest expense costs, compared with a traditional refund anticipation product. By promoting e-filing and direct deposit, SECU also helped consumers avoid $175,000 in refund anticipation loan costs. All 223 SECU branch locations served as VITA sites, with three credit union staff members trained as VITA preparers at each branch.

CDCUs prepare 3500 tax returns for low-incomers

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NEW YORK (4/20/09)--The National Federation of Community Development Credit Unions worked closely this tax season with 16 credit unions
Members of Santa Cruz (Calif.) Community CU receive free tax preparation services from a credit union volunteer.
to help low-income people across the country file their taxes for free. The coalition--made up of nine credit unions new to the Volunteer Income Tax Assistance (VITA) program and seven with previous experience--prepared more than 3,500 tax returns totaling more than $5 million. The amount includes $2.5 million in Earned Income Tax Credits (EITC). The coalition VITA sites helped residents of low-income communities save nearly $400,000 in tax-preparation fees, said the federation. Coaltion members included: Alternatives FCU, Ithaca, N.Y.; ASI FCU, Harahan, La.; Border FCU, Del Rio, Texas; Communicating Arts CU, Detroit; District Government Employees FCU, Washington, D.C.; El Futuro CU, Porterville, Calif.; Family FCU, Wilmington, Calif.; Halifax County Community FCU, South Boston, Va.; Ka'u FCU, Na'alehu, Hawaii; NRS Community Development FCU, Birmingham, Ala.; OUR FCU, Eugene, Ore.; Santa Cruz (Calif.) Community CU; Tongass FCU, Ketchikan, Alaska; Triumph Baptist FCU, Philadelphia, Pa.; Winthrop (Mass.) FCU; and Women's Southwest FCU, Dallas.
Sharon Saulters, seated, manager of Triumph Baptist FCU, Philadelphia, with her credit union VITA volunteers, from left: Diane Wilson, Hannah Wallace, Deborah Powell and Latasha Foster. (Photos provided by the National Federation of Community Development Credit Unions)
"We commend the Internal Revenue Service (IRS) for recognizing the value of credit union VITA sites and look forward to working closely with them in coming years to help even more low-income people retain their hard-earned cash," said Cliff Rosenthal, federation president/CEO. Many of the credit unions would have been unable to offer the service without support from the IRS, Rosenthal. "These types of programs require significant staff time and many credit unions simply do not have the excess liquidity to support the added expense," he said. The coalition was made possible by a $125,000 grant from the IRS to the federation, the only national tax coalition exclusively representing credit unions. The federation provided technical assistance and financial support to the credit union VITA sites.

CUNA Mutual to Texas CUs Build future with Gen Y

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AUSTIN, Texas (4/20/09)--Credit unions are missing an opportunity to build their future if they aren’t working to attract young members and their business, Kris Wickline, consumer program manager at CUNA Mutual Group, told members of the Texas Credit Union League Thursday. Wickline spoke to a group of credit union leaders during the league’s annual meeting in Austin. Credit unions that ignore this consumer segment do so at their peril, as complacency will result in this generation building relationships with other financial institutions, Wickline said. “You can’t afford to wait until they are the most profitable customer segment or have the most income power,” she said. “By then, they will have established financial relationships, and it will either cost you more to get them or you risk not getting them at all.” Also called Millenials, Generation Next, Generation Net or Gen O, members of Gen Y were born between 1977 and 1995, making them 14 to 32 years old. A close second to Baby Boomers in volume--roughly 76 million in Gen Y to 77 million Boomers--this generation’s income is poised to outpace Boomers’ by roughly $500 million in about eight years. In the meantime, Gen Yers represent the borrowers of the future to credit unions with their peak borrowing years right around the corner. Credit unions have an advantage in seeking to serve Gen Yers financial needs because credit unions are trusted and have experience and a long history of advocacy, which are attractive characteristics to Gen Y, Wickline said. Also, developing a business strategy around this generation isn’t enough; credit unions must turn that strategy into action by appealing to the unique consumer behavior of Gen Y, she added. Wickline said this generation is worth attracting because of three distinct Gen Y characteristics. They are:
* Influential--Since they are early technology adopters, they technologically influence the rest of society, including their Boomer parents; * Active--Gen Y members are active consumers of financial products. They are more likely to experience life events that trigger financial decisions--relocation, marriage, job change; and * Efficient--Because this generation has grown up with technology, they expect immediate action. While some businesses worry about serving this demanding demographic, Gen Y members also are more efficient to serve. They are more likely to transact and serve themselves using the least expensive channels.
“So the question becomes whether you want to spend the money to acquire them now or spend the money trying to woo them away from Bank of America later,” Wickline said. “I can tell you which will cost less.” Serving their basic needs--building or repairing credit, debt management, money management and asset building--will create a more lasting relationship with this generation because it tends to favor one-stop shopping for their financial needs, she added. Wickline outlined five specific identities of this generation to help credit unions develop their plans to attract this demographic, and gave scenarios of how to make plans successful:
* “I expect big things!” Because this generation was raised to believe they were special and could do anything, they come with big expectations. The first big expectation is their education. Wickline cautions not to ignore the significance of student lending in developing a longer-term relationship. * “I connect to transact, communicate and express myself.” This generation doesn’t know life without computers, Internet service or mobile phones. The members spend more time on the Web than watching television and communicate with peers through text messages and social media, including Facebook and MySpace. Because technology pervades every aspect of their lives, developing and maintaining functional websites is critical to attracting and keeping their business. “Make transacting quick and easy while communicating with them simply and where they’re at,” Wickline said. * “I research, seek opinions, buy and leave opinions.” In making buying decisions, they do their own research, but seek reinforcement from family, friends or the institutions selling a product. Wickline suggested credit unions provide user recommendations on their websites to help influence Gen Y decisions regarding financial services. * “I can save the world, for real.” Gen Y was raised with a strong sense of community and taught to think in terms of the greater good. More schools encourage volunteering, supporting the message of social and environmental responsibility and making this generation the most socially conscious consumers to date. Wickline said credit unions should promote their values and community activities, and explore opportunities to either facilitate or engage young adults in community activities. * “I love my helicopter parents.” Wickline reminded the audience of the hovering nature of Boomer parents. Never before has a generation been so nurtured as Gen Y. Given this reality, Wickline said parents can function as both the influencer and the decision-maker with their Gen Y children, depending on the product and consumer’s age. She suggested leveraging marketing, communication and promotional efforts with parents when appropriate.

CU System briefs (04/17/2009)

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* KENNEWICK, Wash. (4/20/09)--A 70-year-old woman has been sentenced to six months in jail and fined $90,000 for stealing $106,000 in 1983 from Tri-City Medical CU and Gesa CU in Kennewick, Wash. Barbara Kurz, who had fled to Arizona under an assumed name and was recently arrested in Mesa, Ariz., pleaded guilty Thursday in Benton County Superior Court. Her jail term was about double the top of the standard range (Seattle Post-Intelligencer and Tri-City Herald April 17). The Medical CU was her own business and she had been a supervisor at Gesa's Kennewick office … * HOUSTON (4/20/09)--Two men pleaded guilty Thursday in a federal court to aggravated robbery of Investex CU, Houston, in November. Dominque Sherrard Ervin and Carl Edward Preston Jr. told the court they worked with credit union employee Dorcell Devon Johnson in planning the holdup, which yielded more than $202,000. They face up to 25 years in prison. During the robbery, Ervin and Preston brandished weapons, pointing them at a security guard, at Johnson, and others, and Ervin fired his weapon. The Federal Bureau of Investigation said that police became suspicious of Johnson when they watched surveillance tapes of the heist because he appeared unafraid during the incident. Johnson is being tried separately (Houston Chronicle via chron.com April 16) … * SANTA ROSA, Calif. (4/20/09)--Redwood CU (RCU) recently sponsored
Click to view larger image Click for larger view
the Cesar Chavez Health Fair in Santa Rosa, an annual event that centers on health education and awareness for families, particularly among the Hispanic community. Volunteers from RCU were on hand to provide information about financial wellness in reducing stress, anxiety and other potential health issues. Rene Meza, branch manager for RCU's Mendocino Avenue branch, noted the $1.8 billion asset credit union has supported the health fair for the past five years. "Our message of financial well-being is particularly relevant in today's challenging economy," Meza said. Here, RCU's mascot, Reddy the Redwood, and staff help entertain children and promote the message that saving is fun. (Photo provided by Redwood CU) … * SOUTHBRIDGE, Mass. (4/20/09)--Southbridge CU has appointed Jeffrey Davenport as president/CEO. Davenport was a director of the Massachusetts Share Insurance Corp. and served as a trustee of the New York Credit Union Foundation. He also is active in community groups. Southbridge is a 71-year-old credit union with more than $166.1 million in assets (Worcester Telegram & Gazette via telegram.com April 12) …