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CUs lead large banks on best debit-fraud measures

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HOUSTON (4/30/08)--Credit unions and community banks are leading large banks in terms of lowering debit card fraud losses, according to a study for ATM/debit network PULSE. Best-in-class debit card issuers achieved more than 55% lower fraud losses per gross dollar value than other debit card issuers in the debit card study, which was conducted by Oliver Wyman for PULSE, the network owned by Discover Financial Services. Best-in-class issuers are not always large financial institutions, said Tony Hayes, partner at Oliver Wyman. "In the area of fraud, for example, credit unions and community banks tend to lead large banks. This is likely due in part to differences in account holder profiles among the institution types," Hayes added. The study indicated that debit card issuers' fraud-loss rates were higher for 2007 than in a previous 2005 study. In the current survey, issuers lost 5.40 basis points (0.054%) per dollar spent through signature debit transactions and 1.09 basis points (0.0109%) through PIN debit transactions. Data breaches, stolen cards and phishing were the most commonly reported points of compromise for debit card fraud involving card information only. When PINs also were obtained, the most common points of compromise were ATM tampering, data breaches and "friendly fraud" (defined as unauthorized transactions made by the cardholder's family or friends). All of the 62 credit unions, community banks, and larger banks surveyed said they had debit cards potentially compromised in data breaches during 2007. More than 80% of survey respondents reported they implemented new fraud tools within the past year. "Although tools such as CVV/CVC checking and neural networks have proven effective, fraud continues to be a significant challenge for financial institutions," said Hayes. He added that "constant vigilance is required to combat increasingly sophisticated techniques." Hayes also noted that most issuers surveyed believe the next step in fraud management is "to improve collaboration among key constituencies in the industry: issuers, networks, processors and merchants."

Iowa bill signed by governor includes CUs IDAs

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DES MOINES, Iowa (4/30/08)--Iowa Gov. Chet Culver Tuesday signed an economic stimulus bill that will enable Iowa's credit unions to continue serving working Iowans through the Credit Union Family Partnership Individual Development Account (IDA) program. The IDA program was recently launched by the Iowa Credit Union Foundation, which is one of many organizations that can apply to use funds for a program. The bill signed into law was Senate File 2430. It was the result of work by the bi-partisan Successful Families Caucus and the Iowa Credit Union League, and will demonstrate to low-income Iowans the importance of saving in an effort to end poverty, said the league. The legislation updates state law on the regulation of IDAs, which are savings accounts where a low-income participant's savings are matched dollar for dollar by grant funds from matching partners. The accounts traditionally are used to purchase a first home, to start or expand a small business, or to cover education or job training costs. The legislation appropriates $150,000 to organizations implementing an IDA program. It also allows IDA accounts for purchasing assistive technology--such as wheel chairs, hearing aids or prosthetic devices--by persons with disabilities. Through the foundation's program, "Iowa credit unions are reaching out to low-income Iowans to help them save, and this legislation will further facilitate and expand our initiative," said Marybeth Foster, executive director of the foundation.

Filene debuts CU Tomorrow business briefs

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MADISON, Wis. (4/30/08)--The Filene Research Institute has initiated CU Tomorrow to help credit unions attract younger members, younger professionals and younger volunteers. One component of CU Tomorrow is the Business Briefs, a series of open-source, young adult business plans for credit unions. Business Briefs are short documents written to share innovative ideas and real-life credit union examples with the credit union community. All briefs are free and applicable to credit unions of all sizes, said Ben Rogers, who leads the CU Tomorrow project. The briefs can be downloaded from the Filene website, www.filene.org. They will be published monthly through the middle of 2009. The first three publications--Young Adult Advisors, Credit Card Consolidation Loans and Campus Recruiting: Finding and Keeping Talented Young Employees--are available in print and electronic format. Young Adult Advisors explores tools credit unions can use to establish an advisory panel of young members and ways to solicit their ideas. Credit Card Consolidation Loans discusses the features to help credit unions make products more attractive to young members. It also offers marketing recommendations. Campus Recruiting examines strategies to attract prospects for full or internahip employment at the credit union. The Wisconsin Credit Union League, and the Maryland and District of Columbia Credit Union Association have partnered with Filene to launch the briefs. For more information, use the link.

CUs saved North Carolinians 529 million in one year

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GREENSBORO, N.C. (4/30/08)--Credit unions in North Carolina saved members $529 million in 2006, according to research released by the North Carolina Credit Union League. The study, “The Benefits of Credit Unions to North Carolina Consumers of Financial Services” indicated that credit union members saved more than $452 million by using a credit union rather than a bank. And because of competition from credit unions, bank customers saved $77 million. Lower loan rates from credit unions saved members $124 million; higher deposit rates saved them $168 million; and lower fees saved them $158 million, according to the research. The average rate differential in 2006 on a used car loan was 2.65%. “That means a 36-month used-car loan for $15,000 saved the member more than $400,” said John Radebaugh, league president/CEO. The average credit union money-market account paid 1.67% more than the average bank money market account in the state. Credit union members saved $123 million on checking account fees, and $34 million on mortgage closing costs, according to the research. The value of credit union competition on bank loans to individuals was $30 million, and ATM network savings for non-credit union members was $46 million. Credit union competition also lowered the commercial bank consumer loan rates by 10 basis points--a savings of more than $30 million. The study was conducted by William Jackson, University of Alabama professor of finance. The report updates a 2005 study.

401ks are a core business service CUSOs told

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LAS VEGAS (4/30/08)--Credit unions that have adopted a formal strategy to enter the business services market should consider offering 401(k) retirement plans to select employee groups (SEGs), business members and other businesses, a panel told attendees at the National Association of Credit Union Service Organizations (NACUSO) annual conference Monday.
Participating in a business services discussion at the National Association of Credit Union Service Organizations' annual conference Monday were (from left): Kevin Thompson, CUNA Mutual vice president, asset accumulation products; Peggy Mostowy, assistant vice president of business development, Clearview FCU, Moon Township, Pa.; and Chuck Purvis, senior vice president, Coastal FCU, Raleigh, N.C. (Photo provided by CUNA Mutual Group)
Steve Dowden, CUNA Mutual Group’s senior vice president of asset accumulation sales distribution, moderated the panel, which included Kevin Thompson, CUNA Mutual vice president, asset accumulation products; Peggy Mostowy, assistant vice president of business development, Clearview FCU, Moon Township, Pa.; and Chuck Purvis, senior vice president, Coastal FCU, Raleigh, N.C. Credit unions are showing more interest in offering retirement programs as part of an overall business services strategy, Thompson said. “That makes sense, because offering 401(k) programs to SEGs and small businesses directly supports a business services growth strategy,” he explained. Thompson said marketing retirement services can help credit unions:
* Attract and retain members, including younger ones; * Generate ongoing fee income from plan sales; * Attract 401(k) rollovers and individual rollovers from participants; * Strengthen current business relationships; * Increase cross-selling opportunities for credit union products such as lending and checking accounts; * Increase retirement expertise awareness within the community; and * Remain relevant to baby boomers, while helping them do a better job of saving for retirement.
“For Coastal FCU, it gives us an opportunity to deepen the relationship with our 1,100 SEGs and provide valuable business services to diversify and grow our revenues,” Purvis said. Retirement services also can help the credit union meet demand from small businesses for reasonably priced services from a local, trusted and tenured institution, he added. “The average community bank in our market is less than seven years old. Our credit union has an established track record here over the last 41 years,” Purvis said. Coastal offers a full menu of business lending and business account services. Adding employee benefit plans seemed a logical extension, Purvis said. “The ability to offer 401(k) plans will better position us to capture rollover funds in our Trust and Investment Services group, and these additional services will enhance our visibility within our SEGs, particularly with human resources decision-makers,” he said. Clearview’s Mostowy echoed those sentiments, and said her credit union’s target market is small businesses--those with annual sales up to $5 million--and the mid-market--annual sales between $5 million and $10 million. “This product will assist small businesses as they grow and their needs become more complex. With mid-market clients, it will deepen the relationship and provide us the opportunity to compete with the larger financial institutions,” Mostowy concluded.

New Jersey prepares for first new CU in 11 years

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HACKENSACK, N.J. (4/30/08)--New Jersey hasn’t seen a new credit union chartered in 11 years--but that soon will change when Bergen County Community Action Partnership (BCCAP) creates a community development credit union.
At a recent meeting, individuals discussed the proposed 1st Bergen FCU, a community development credit union. From left are: Brian Gately, director of technical assistance at the National Federation of Community Development Credit Unions; Allan DeGuilio, board chair of the proposed 1st Bergen FCU; Robert Moore, chief financial officer of Bergen County Community Action Partnership; Jim Merrill, senior vice president of the New Jersey Credit Union League; and Robert Halsch, CEO of 1st Bergen. (Photo provided by the New Jersey Credit Union League)
The new credit union will be called 1st Bergen FCU and will serve low-income residents. During the past year, the New Jersey Credit Union League has helped BCCAP with its charter submission to the National Credit Union Administration. It also has provided in-person board governance training and strategic planning. “Part of the core mission of the credit union movement is to serve the underserved, so we see a great opportunity for Bergen County CAP,” said Paul Gentile, New Jersey league president/CEO. Jim Merrill, league senior vice president, and Brian Gately, director of technical assistance for the National Federation of Community Development Credit Unions, addressed the following topics with BCCAP such as: mentors, physical branch setup, league support, board member training, business planning, marketing assistance and policy development. The league board also voted to waive the credit union’s league dues for the first two years of membership.

NACUSO conference kicks off with CUSO 101

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LAS VEGAS (4/30/08)--The National Association of Credit Union Service Organizations (NACUSO) opened its 2008 Annual Conference Sunday in Las Vegas, marking its 23rd anniversary and offering a credit union service organization (CUSO) 101 tutorial to attendees. The 400-plus attendees also were provided a CUSO legal update and discussion of current regulatory topics presented by NACUSO General Counsel Guy Messick and Brian Lauer--both attorneys with Messick & Weber, P.C., Media, Pa. Messick and Lauer discussed the strategic uses of CUSOs, and when to use CUSOs and incidental powers. The CUSO formation process, normal organizational structure, and the relationship between the credit union-owners and the CUSO also were presented. Examples of CUSO services that are gaining popularity were highlighted. These included youth marketing, disaster recovery, business continuity and investment advisory services. “Regulators are recognizing that CUSOs are the future of credit unions,” Messick said. “In order to properly evaluate CUSOs, we have to create a new model in the credit union industry, in which credit unions not only provide services, but also monitor the services. “Credit unions can’t just hand over the keys of operational services to third parties, including CUSOs, without monitoring them,” he continued. “So NACUSO is helping credit unions and CUSOs develop a means for ensuring proper evaluations are in place and that we as an industry move forward in a new model.”

MnCUN meeting features youth focus group basics

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BLOOMINGTON, Minn. (4/30/08)--The Minnesota Family Involvement Council (FIC) taught the fundamentals of youth focus groups with a live youth focus group during an educational session at the Minnesota Credit Union Network's Annual Meeting and Convention on April 11-12.
Shannon, left, along with three other teens, talked about how she spends and manages her money during the Minnesota Family Involvement Council's session on youth focus groups, held during the Minnesota Credit Union Network's Annual Meeting April 11-12. (Photo provided by the Minnesota Credit Union Foundation)
The event was part of FIC's goal to promote full-family involvement in Minnesota's credit unions. FIC is a committee of the Minnesota Credit Union Foundation. Rick Foy, director of marketing communications at Sight Creative, hosted the session. He outlined steps involved in conducting a successful focus group and provided tips on facilitating and recruiting youth to participate in a group. Focus groups "are a way of member input that validates what members are really about," said Foy. "Marketing cannot be conventional any more. You need to talk the language of your audience." One of the best ways to learn the language of youth is to conduct a focus group at the credit union, he said. Groups are a powerful means to evaluate the credit union's services, and receive feedback from youth on the impressions and feelings those services invoke. The information will provide direction for creating strategic goals and action steps, he said. Foy led a live focus group consisting of one high school sophomore and four high school juniors. The teens answered questions about their spending habits, how they manage money, and the factors they use in determining where they put their money. The teens continually emphasized they wanted to receive more financial education and learn about a variety of topics, including student loans and how to manage their money. "Nobody really talks to teenagers about money and how to deal with it," said Raquel, a sophomore on the panel. Other panelists agreed and expressed concern about how to successfully manage their money and make wise financial decisions. "The live youth focus group allowed the attendees to see first-hand how to facilitate a focus group and how valuable the information gained from the focus group can be," said LeAnn Achtenberg, FIC chair. "While paper surveys can give you a lot of information, they don't give you the chance to ask follow-up questions. With a focus group, you really get to know your teen members and what they want from a financial institution," Achtenberg added.

Debit transactions up 14.4 but penetration slows

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HOUSTON (4/30/08)--Debit card issuers--including credit unions--saw a 14.4% growth in debit transactions last year, but the growth rate dropped four percentage points from the year before. And penetration growth has slowed, according to a study released Tuesday. The 2008 Debit Issuer Study surveyed 62 credit unions, community banks and large banks. It was commissioned by PULSE and conducted by Oliver Wyman. It includes new data and comparisons to the results of the 2007 Debit Issuer Study released in February 2007. The overall 14.4% transaction growth comprises a 15% increase in signature debit transactions and a 14% growth for PIN debit. Although transaction growth remained strong in 2007, it was lower than the 18% growth rate in 2006. "Despite having a strong year in 2007, issuers are implementing a number of programs aimed at improving the performance of their debit card programs in 2008," said Cindy Ballard, PULSE executive vice president, in a press release. "These efforts center on rewards programs, targeted cardholder promotions and expansion into new products and new merchant categories," Ballard added. Institutions surveyed issued more than 74 million debit cards--28% of the debit cards in the U.S. They represent 46,000 ATMs and are balanced across institution size, type, geography and network participation. Eighty-six percent of respondents' debit cards are signature-capable, while 14% are ATM/PIN-only cards. These results are the same as the previous survey. However, roughly 29% said they plan to convert at least a portion of their ATM/PIN-only cards to cards with capability to handle both signatures and PINs during 2008. Of the debit transactions made last year, 65% were authorized by signature and 35% by PINs. Other findings:
* The average debit card penetration rate was 73%--a 1% increase over 2006. Card activation (defined as using the card for one signature debit transaction within the past 30 days) averaged 59%, compared with 56% in 2006. * Active cardholders, on average, performed 16.6 point-of-sale transactions a month during 2007, compared with 16.1 transactions a month the year before. * The average amount transacted was $43 for PIN debit and $38 for signature debit, compared with $42 and $40, respectively, the year before. * Nine percent of PIN debit purchases included cash back. ATM cash withdrawals exceeded PIN debit cash-back withdrawals by a ratio of nine transactions to one. In dollars, ATM withdrawals exceeded PIN debits by a ratio of 30 to one. * Twenty-five percent of the issuers surveyed charged a PIN debit transaction fee at the point of sale to at least some cardholders. That compared with 28% in 2006 and 32% in 2005. Per-transaction fees averaged 53 cents but affected only 0.6% of cardholders, compared to 5% affected in the previous survey.

CU System briefs (04/29/2008)

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ARVADA, Colo. (4/30/08)--The Credit Union Foundation of Colorado and Wyoming announced the addition of Bob Hoel and Jane Prancan to the foundation's board, beginning in May. They will serve a one-year term. Hoel was former executive director of the Filene Research Institute for 15 years until early 2007. He was named the Herb Wegner Memorial Award winner in 2008. Hoel now serves on the board of Public Service CU, based in Denver. Prancan ran the $26 million asset U.S. West/Quest Foundation across a 14-state region, including Colorado. She also led an $11 million fundraising and public relations department for the American Indian College Fund. Prancan is chairman of Bellco CU, Greenwood Village, Colo. Hoel and Prancan fill seats being vacated by Susan J. Brayman and Janet Meyers. Other foundation board members who were reappointed include: John Uchida, president/CEO, Space Age FCU, Aurora; Mike Williams, president/CEO, Colorado CU, Littleton; Walter Marx, president/CEO, College CU, Greeley; Marilyn James Rhoades, NEPCO branch manager, Minnequa Works CU, Pueblo; and John Dill, president/CEO, Credit Union Association of Colorado … * NORTHVILLE TOWNSHIP, Mich. (4/30/08)--Author and consultant Alan Pariss, will be the opening keynoter at the 2008 Michigan Credit Union League Annual Convention and Exposition, to be held in Grand Rapids May 15-17 (Michigan Monitor April 28). He will speak on "Prospering through Cycles and Change." Other keynoters include: Jane Bryant Quinn, contributing editor for Newsweek and ranked by the World Almanac as one of the 25 most influential women in America, who will address "Financial Empowerment in Today's Economy," and Mary Crane of Mary Crane and Associates, speaking on "Millennials and Their Money." This year's conference theme is "Moving Michigan Forward" … * OGDEN, Utah (4/30/08)--Goldenwest CU says it will donate $50,000--raised during the credit union's eighth annual "5K for Schools"--to nine local schools. The event was held March 29. One-hundred percent of the registration fees for the race are going to the schools for needed equipment and materials. The $582.5 million asset Goldenwest kicked in an additional $5 for each entry received. The race attracted its largest crowd in its history, with 2,600 runners and walkers. Goldenwest also donated registration posters and forms, t-shirts, food, water and other items needed for the race, said its announcement on its website … * MONTREAL(4/30/08)--Desjardins Group, a Canadian cooperative financial group representing caisse populaires (credit unions), announced the results of its Desjardins Paper Challenge and the Desjardins Eco-friendly Statement Challenge on Earth Day. The campaign is committed to taking 12 initiatives in waste management, energy efficiency and responsible consumption. Desjardins aimed to reduce printer and photocopier paper by 15% between 2005 and 2008, and to increase use of recycled paper by the same percentage. Its program resulted in a 21% reduction, representing 43 million fewer paper sheets. The reduction also prevents about 227 tons of CO2-equivalent greenhouse gas emissions or 3,435 saved trees. The use of recycled paper went up 22% to 55% during the same period. More than 114,519 members joined its Eco-friendly Statement challenge. It will be planting 22,224 trees throughout Quebec and Ontario this spring (Canada Newswire April 15) …

Southern California CU volunteers help community

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WHITTIER, Calif. (4/30/08)--With the slowing economy leaving more families in need, Credit Union of Southern California (CU SoCal) employees and members together with other area credit unions helped distribute food April 19 to 3,000 local residents in need.
Credit union volunteers from Credit Union of Southern California (CU SoCal) and other area credit unions helped distribute more than 50,000 pounds of free food and clothing to area residents April 19 at the CU SoCal Whittier, Calif., branch.
Southern California’s Helping Hands, working with Heart of Compassion, held its fourth annual Food Distribution Day at CU SoCal’s Whittier branch. The branch was closed for the event, and more than 2,000 people were given lunch while they waited for groceries. For children waiting with their parents, there were games and coloring sheets. More than 50,000 pounds of food--valued at $100,000--was donated to local residents during the daylong event. “This is great help,” said recipient Silvia Avila. “I work two or three days and it’s not sufficient to pay for gas, lights, telephone and all that. It’s very expensive. Life is very hard.” A CU SoCal member of nearly 25 years volunteered her time to help pass out dried foods at the event. “It was wonderful and so nice to be included,” she said. “I delight in helping others and find that when you’re around ‘givers,’ the atmosphere is wonderful. The whole day made for such a good feeling.”
More than 3,000 local residents received free groceries April 19 at the fourth annual Food Distribution Day at Credit Union of Southern California’s Whittier, Calif., branch. The branch was closed for the event, and more than 2,000 people were given lunch while they waited for groceries. (Photos provided by Credit Union of Southern California)
With this week being National Volunteer Week, Dave Gunderson, president/CEO of the $500 million asset Whittier credit union, recognized the generosity of more than 200 volunteers who participated in the food distribution day. “Putting together an event of this magnitude requires the help of many caring individuals,” he said. “It’s heart-warming to see the compassion and care of so many. A simple thank-you cannot describe the gratitude I feel for those who generously gave their time and financial support to this worthwhile cause. The volunteers were fantastic.”