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Ohios Stretch-Pay a result of collaboration with students

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DAYTON, Ohio (5/2/11)--Ohio credit unions' Stretch-Pay short-term loan program is featured as a solution to quick-fix and expensive payday lending schemes in Alive Magazine's Spring issue. The article touts the benefits of the program and tells how it got off the ground. Local credit unions in the Dayton, Ohio area--Day Air CU of Kettering and Wright-Patt CU of Fairborn--piloted the program after a group of persistent students in a management class at the University of Dayton (UD) were asked to develop workable alternatives to the cash stores. The course instructor, Brother Victor Forlani, Marianist-in-residence at the university's School of Business, worked with the Fitz Center for Leadership in Community at UD. Eight years ago a city councilman had requested the center and UD look at the payday lending problem in the area. "We thought credit unions might offer a potential solution because of their nonprofit business model," he said. The credit unions expressed an interest but wanted the students to develop a workable business plan. After several proposals, the students came up with the idea of targeting people who were tempted to take out loans but who were also potential credit union members--thus creating a new line of business, instead of a new business. The article also talks about the impact the loans have made--in 2009, credit unions made more than 86,000 Stretch Pay loans and borrowers developed healthy financial habits.

Cyber crooks hit businesses with CU accounts

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WASHINGTON (5/2/11)--A new trend in international cyber crime is targeting businesses that have accounts at credit unions and small community banks, said the Federal Bureau of Investigation (FBI). The scheme uses compromised online banking credentials of small to medium-sized U.S. businesses to send unauthorized wire transfers to apparently legitimately licensed economic and trade companies in Heilongjiang province, a remote region of China near the Russian border (CNN Wire and Life is a Highway April 29). The crooks have successfully stolen at least $11 million, although the attempted fraud amount is about $20 million, according to the FBI's Internet Crime Complaint Center. The targeted businesses generally have accounts at local community banks and credit unions, some of which use third-party providers for online banking services. The crooks gain access through compromising the computer of an unsuspecting company employee. The FBI identified 20 incidents between March 2010 and April 2011 using the scheme.

CUs pick up the pieces in tornadoes aftermath

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MADISON, Wis. (5/2/11)--Credit unions in several Southern states have either begun to pick up the pieces from last week's swarm of tornados and flooding or are standing ready to help. So far, no significant new damage was reported Friday by credit unions in Alabama, which bore the brunt of the damage and deaths. But employees of a number of credit unions there have experienced damage to their homes. "We have reached all of the credit unions in Alabama," said Mike Bridges, vice president of marketing and communications at the League of Southeastern Credit Unions (LSCU). "While most are not affected, of the new ones we contacted, very few have had any problems. Many are seeing the power come back on in certain areas, but a few are continuing to keep branches closed until the power is restored," he said Friday. A day earlier, the league had reported that two credit unions sustained major damage. "We have been helping Community CU of Gadsden and Druid City Hospital (DCH) CU of Tuscaloosa secure mobile branches so they can continue operations," Bridges told News Now. "Pen Air FCU in Pensacola is lending its mobile branch to Community, since it completely lost its Rainsville branch, while DCH has tree damage to its facility and Alabama CU is loaning its mobile branch. "Right now we are still working to assess the needs of credit unions such as generators and things like that. As you would imagine, there are many stories of those affected. A few employees of various credit unions have sustained personal damage," Bridges said. Shared-branching, which proved itself during Hurricane Katrina, also saved the day in Alabama and other states. Credit Union Service Centers (CUSC) has 118 locations in Alabama, and "nearly all were open following the storm," said a press release. It said its shared branching services saved business. "Many credit unions struggled to keep branches open with power being out to nearly 400,000 residents. Shared branching locations allowed those affected by the storms to continue delivering services to members." "While shared branching is extremely convenient to members for routine access to their credit union, members in hard hit areas of Alabama are realizing the benefit shared branching offers during times of disaster," said CUSC Board Chairman Patrick La Pine. "The network also benefits members that are displaced or needing to travel during this difficult time." Many credit unions alerted their members to shared branching locations. DCH CU--just one of a number of examples--redirected its members in Tuscaloosa, Birmingham, and North Alabama to credit unions within the shared branching network and helped them to use surrounding outlet locations for their access. Websites also provided key communication to both members and employees, and enabled some to share stories and offer assistance or tell who needed help. The website of Alabama CU, Tuscaloosa, informed members it is offering 0% annual percentage rate (APR) disaster loans up to $1,000, with the first payment due in 45 days and repayment up to 120 days. It announced its "rolling branch" outfitted with a branch lobby and an ATM would be at Cullman office Friday to assist members needing cash and service. The Cullman area had been without electricity since Wednesday. And it gave updates on which branches were closed and which were operating with regular business hours. It said several branches would not open "until further notice." Alabama CU also gave information about employers posting payrolls and offered to use payroll data provided on the last payroll and credit them in advance of receiving payment from the employers "in an effort to assist, as much as possible, persons affected by Wednesday afternoon's damaging storms." The site also served as a message center for employees. They shared who is accounted for, who is displaced, who needs help, who is offering to truck in supplies, and how members were grateful for the credit union's help. "Offices that were able to open are reporting busy activity, and grateful members have said, 'Now's when we need you.' One staffer said, "Every member has a story--for some, they've lost everything they had." A poignant example came from a staffer at the Fairhope branch who received a call from a mother who had received her debit card in the mail. She was on her way to pick up her son and his girlfriend, who lost everything in the tornado. The debit card was not yet activated. She had left with no cash. She asked if the credit union could rush the card activation "so that it will work for me now. I have to get gas." The staffer got in touch with member care, got back with the member and told her to "stay on the phone with me while she tried her card and made sure it worked." The member was grateful. It "made me realize once again why I truly love working at Alabama Credit Union," the staffer said. Wider efforts of help will be available soon, said the league. LSCU is initiating its Disaster Relief Fund through its Southeastern Credit Union Foundation. "We are sending out the grant request documents and pledge form if any credit union would like to donate." It will have more information about the fund once it determines what physical needs, such as desks and computers, will be." It also is having discussions with the National Credit Union Foundation, and will provide more information once the league has visited the affected credit unions this week. (See related story, "CU disaster assistance activated for tornado areas" for an update.)

Maine league testifies on state TIL elder-abuse bills

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PORTLAND, Maine (5/2/11)--The Maine Credit Union League was in Augusta, Maine, Tuesday providing testimony at two state legislative public hearings. Of most interest to the league and Maine credit unions was LD 1338--which would incorporate federal Truth in Lending laws into Maine’s Consumer Credit Code. The league also is interested in a bill aimed at preventing elder abuse. LD 1338 would incorporate the TIL changes into Maine law in one step, rather than the piecemeal approach of the past, the league said (Weekly Update April 29). “We support the concept behind LD 1338, which would amend the Maine Truth in Lending Act (TILA) by adopting by reference federal TILA regulations,” said Quincy Hentzel, Maine league director of governmental affairs, testifying in support of LD 1338. “We support and prefer the approach of a wholesale adoption of federal Truth in Lending and implementing regulations which would then become Maine law. This approach would minimize, if not eliminate, our state-chartered institutions’ biggest challenge, which is the delay between federal law being enacted and the adoption of comparable state law and regulations.” Hentzel said the hearing went as anticipated, and the Insurance and Financial Services Committee directed that a stakeholders group, which includes Maine credit union representatives, be formed to try to come to an agreement. The stakeholders group is meeting today. The league also testified in support of LD 1374, which would expand protections--including financial activity--for victims of elder abuse. The league’s testimony highlighted the proactive approach the league and its credit unions have taken through the years to help identify and prevent finance abuse of elder and dependent members.

CU System briefs (04/29/2011)

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* STATE COLLEGE, Pa. (5/2/11)--A former manager at State College (Pa.) FCU has been charged with embezzling more than $67,000 from the credit union over a five-year span. According to court documents, Anne Martin, 42, allegedly approved unauthorized raises and pension contributions totaling $45,127 and engaged in $9,000 worth vacation abuse. A court hearing is scheduled in July ( April 28) … * ST. LOUIS (5/2/11)--Vantage CU hosted Willie Ahli, a credit union
delegate from Ghana, during the week of April 13-21 at the credit union's Bridgeton, Mo., headquarters. Ahli is deputy general manager, finance and administration, at the Ghana Cooperative Credit Union Association. He traveled to Madison, Wis., to attend a Credit Union Development Education (DE) training program, whose 2011 graduating class included two from Ghana participating through the African DE Scholars Program. During his St. Louis visit, he toured several Vantage CU branches, and spent a day at St. Louis Community CU and half a day at the Missouri Credit Union Association. He also shared his experiences with students at East St. Louis High School. From left are Vantage board President Dr. Jerry Eichholz, Ahli, and Vantage President/CEO Hubert Hoosman Jr. (Photo provided by Vantage CU) … * BURLINGTON, Vt. (5/2/11)--Mark Sievewright, who will be a speaker at the Association of Vermont Credit Unions Annual Meeting, has been named president of Fiserv's Credit Union Solutions division, effective at the end of May (Newslines Express April 29). He served for the past six years as Fiserv's senior vice president of the credit union division. Last year Sievewright received the Ambassador Award from the World Council of Credit Unions for his long-term contributions to the industry. He also has held positions as CEO of the Tower Group, president of Payment Systems Inc., and senior positions at HSBC and MasterCard International. Sievewright will succeed Scott Butler ...

Ga. SW Bridge corporates merger app submitted to NCUA

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DULUTH, Ga. (5/2/11)--Georgia Corporate and Southwest Bridge Corporate submitted their merger application to the National Credit Union Administration’s (NCUA) Office of Corporate Credit Unions on Thursday.
Speaking before several hundred delegates at the Texas Credit Union League’s 77th Annual Meeting last week, Southwest Bridge Corporate CEO Diane Addington said Catalyst Corporate FCU will be structured to cover costs with its existing fee structure. (Photo provided by Texas Credit Union League)
The application includes the corporates’ strategic business and capital plan, which describes the business model for Catalyst Corporate FCU--the organization that will be created by the merger--and capitalization documents that were finalized in March. The corporates anticipate that the NCUA Board will vote on the merger at its scheduled July 21 meeting. The planned merger date is Aug. 1. Southwest’s Member Advisory Council’s executive committee recently selected, and the Georgia Corporate board approved, participants for the Governance Advisory Council to assist in identifying members for Catalyst Corporate’s new board, according to Southwest Bridge Corporate President/CEO Dianne Addington. Governance Advisory Council participants are: Randy Smith, CEO of Randolph Brooks FCU, San Antonio; Tim Adams, CEO of SPCO CU, Houston; and Willie Jacobs, CEO of White Sands FCU, Las Cruces, N.M. The council will meet in May to review a list of potential candidates, to be drawn from credit unions in the nine core states served by the corporate. Speaking before at the Texas Credit Union League’s 77th Annual Meeting last week, Addington said Catalyst will be a full-service corporate credit union structured to cover its costs with its existing fee structure. “Catalyst will have a high-coverage ratio,” she said, indicating that it will not need to rely heavily on interest income or higher fees. At the same time, Catalyst will maintain a risk-averse balance sheet with an emphasis on transparency, she said.

First Carolina Corp. tops minimum cap fund goal

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GREENSBORO, N.C. (5/2/11)--First Carolina Corporate CU raised $60.6 million as of Thursday through its Perpetual Contributed Capital (PCC) subscription offering. The amount exceeds the minimum goal set for the Corporate’s Capital Restoration Plan, which was submitted to the National Credit Union Administration (NCUA) in January. Board Chairman Scott Woods credits the progress of the corporate’s recapitalization to the quality of the plan. “The staff at First Carolina has worked tirelessly to present our members a comprehensive, well-thought-out plan on how to move the corporate ahead and succeed under the new regulatory environment,” said Woods, president/CEO of South Carolina FCU, North Charleston. First Carolina had set a target of raising $60 million to $75 million in PCC and has received confirmation from 134 member credit unions to-date that their recapitalizations were approved by their boards. Of the amount committed, $39.1 million represents new capital investments and $21.5 million signifies conversions of existing membership capital share deposits. “Given the PCC raised and our estimated average assets, we expect to be in full compliance with NCUA’s regulatory requirements for capital and net economic value well before the October 2011 deadline,” said David Brehmer, president/CEO of First Carolina. “It’s a strong sign that our members want First Carolina to be their corporate credit union into the future. We deeply appreciate credit unions’ support of our mission and recapitalization effort.” Brehmer says several credit unions will consider First Carolina’s plan in May. “We’re hopeful the PCC total will continue to grow as additional credit unions hold board meetings to discuss our plan,” he said. Based in Greensboro, N.C, First Carolina Corporate CU is a $1.7 billion corporate serving credit unions in four states.

Survey CUs biggest challenge--attracting new members

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TALLAHASSEE, Fla. (5/2/11)--A majority (61%) of credit union industry leaders cited attracting new members as the greatest challenge affecting credit unions, after concerns over the U.S.’s economic climate declined, according to a recent industry survey by Credit Union 24, a deposit-taking ATM and point- of-service (POS) credit union service organization. Credit Union 24 announced the results of the industry survey conducted before and during the Credit Union National Association’s Governmental Affairs Conference this year.
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In 2010, attracting new members took second place to concerns about the economic climate. The second-greatest challenge facing the industry in 2011 is the uncertainty caused by the financial reform legislation at 53% (see Figure No. 1 to the right). Less than half (44%, compared with 70% in 2010) of leaders surveyed see the economy as a threat, rendering it the third-greatest overall challenge facing credit unions in 2011. For the third consecutive year, polled credit union leaders cited consumer misunderstanding of credit union benefits over banks as the greatest challenge in attracting new members. About 66% cited this as the greatest challenge, compared to 77% and 67% in 2010 and 2009, respectively (see Figure No. 2 below).
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The perception that credit unions have limited offerings compared with banks follows as the second greatest challenge in wooing new members for the third year in a row, with 52% of those polled--a seven point increase from 2010. “Results of our survey show that credit union leaders are feeling similarly to how they did in 2009; however, it also illustrates that credit unions are continuing to face the same challenges that have plagued our industry for many years,” said Jim Park, president/CEO of Credit Union 24. “This year’s financial reform legislation has understandably caused tremendous uncertainty among credit union leaders--and electronic funds transfer networks--as no one really knows the full effects of the legislation,” he added. “The challenge lies in analyzing the 'what-if' scenarios and developing contingency plans to address the legislation while continuing to remain focused on our industry’s core mission of delivering superior customer service to credit union members.” Also, 84% of credit union leaders surveyed cited that their credit union’s membership has either increased (45%) or remained steady (39%) year-over-year. This is a slight decline compared to 2010’s findings when 85% of industry leaders cited an increase (56%) or neutral (29%) movement in membership. The number of credit unions noting a decrease in membership grew 2% year-over-year to 17%, compared with 15% in 2010. For the second consecutive year, credit union leaders polled cited better customer service as credit unions’ strongest competitive advantage over banks; however, the percentage decreased by 12%. More lenders polled said that member ownership--a major hallmark of the credit union industry--is an increasingly important advantage over banks. Ownership nearly doubled in ranking to 21% in 2011 from 11% in 2010. Also for the second year, credit unions leaders said lower interest rates on loan products is the second strongest competitive advantage over banks. Lower rates grew in importance by 6% this year to 28%, from 22% in 2010. “For the third year in a row, more than half of industry leaders [surveyed] feel that credit union-owned service providers do a better job of serving credit unions. This sentiment is increasingly permeating our country and our industry,” he added. Member behavior has continued to evolve since 2010. 2011 saw a slower increase in members using point-of-sale (POS) and a more steady use of POS, at 54% compared with 45% in 2010. This is the first year that credit union leaders saw a decline in POS use among their membership. Other trends:
* ATM usage in 2011 has slowed; * The increase in ATM usage has continued to slow down and remain at a steadier pace; * The ongoing decline of ATM use has slowed as well; and * Fewer credit union leaders saw a decrease in ATM usage this year (5%) than last year (7%).
From the slower-than-last-year increase in POS, “we can infer that, given the economic climate and the national financial trends in consumer behavior, consumers have moved more towards cash transactions,” Park said. “While this is not a bad thing, it was a major focus of credit unions last year--as illustrated by survey data--to move members more towards cash-back at the point of sale, as this generates interchange income compared to an ATM transaction cost,” he added. “While the financial reform legislation has caused much uncertainty, the more that credit unions can continue to drive members to increase income-generating behaviors, the more it will benefit credit unions in the long term.”

SECU helps 53000 members get 82M plus in refunds

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RALEIGH, N.C. (5/2/11)--State Employees’ Credit Union (SECU) helped nearly 53,000 members claim more than $82 million in refunds while saving them roughly $7.9 million in fees during the 2011 tax season. This is the fourth year SECU has assisted members with tax preparation. Through its participation in the Internal Revenue Service free Volunteer Income Tax Assistance (VITA) program, the credit union increased the number of members helped by more than 35% to nearly 48,000, from 35,000 in 2010. VITA is an IRS program that helps low- and moderate-income taxpayers complete their annual tax returns at no cost. Credit unions and community organizations receive IRS-provided training in the preparation of basic tax returns and establishment of tax preparation sites. In only its second year of offering a low-cost tax preparation service for members who are above the income threshold for VITA, SECU more than doubled the number assisted, increasing to nearly 5,000 from the 2,100 figure of last season. A main focus of SECU’s tax preparation services is to ensure that participating members benefit from all tax credits for which they qualify--credits that often go unclaimed by those eligible, such as the Earned Income Tax Credit (EITC). This season, SECU helped members claim more than $35 million in tax credits, including $20.8 million in EITCs. SECU, based in Raleigh, N.C., has $22.5 billion in assets.

WOCCU to recognize international DE candidates

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MADISON, Wis. (5/2/11)--World Council of Credit Unions (WOCCU), in partnership with six Credit Union Development Educator (CUDE) programs, will recognize the third class of International DE (I-CUDE) designees at WOCCU’s 2011 World Credit Union Conference, July 24-27 in Glasgow, Scotland. David Marquez, general manager of COPOS Credit Union Co-operative Society, Port of Spain, Trinidad, intends to be one of the first Caribbean candidates to receive the certification. Marquez, who in 2007 earned his CUDE designation from the U.S. program, was one of the first to enroll in the Caribbean’s new CaribeDE program this past year. He’s attended WOCCU conferences in Dublin and Calgary. His work on his country’s WOCCU partnership with the Credit Union League of Connecticut as his independent study project, has completed the basic I-CUDE requirements. International candidates must complete four steps to achieve an international DE designation:
* Build a solid foundation by completing their local DE programs; * Complete an independent studies project approved by the International DE Council; * Participate in a WOCCU Engagement Tour Program, another country’s DE program or an equivalent international program approved by the International DE Council; and * Attend WOCCU’s World Credit Union Conference.
“Philosophy is good business,” said Pete Crear, WOCCU president/ CEO. “Each of these six DE programs has expanded the reach of our business and fostered credit union growth through cooperative philosophy. We hope to multiply that impact by facilitating the programs working together at an international level.” The six national groups represented at Glasgow will establish I-CUDE guidelines and growth strategies, include DE programs in Asia, Australia, the Caribbean, Europe, the Philippines and the U.S. Persons holding local DE certification interested in applying for international certification can contact:
* Asia--Ranjith Hettiarachchi, CEO, Association of Asian Confederation of Credit Unions, Thailand; * Australia--Peter Mason, Credit Union Foundation Australia; * The Caribbean--Melvin Edwards, past WOCCU chair, West Indies; * Europe--WOCCU Director Marlene Shiels, chief executive, Capital CU Ltd., Scotland; * The Philippines--Audie Joseph “Dudz” Samson, CEO, Visayas Cooperative Development Center, Philippines; and * The U.S.--Christopher Morris or Lois Kitsch, National CU Foundation.

Finances of Silver State Schools Arrowhead improve

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LAS VEGAS and SAN BERNARDINO, Calif. (5/2/11)--Arrowhead CU and Silver State Schools CU—two credit unions with recent financial troubles--are reporting improved operating results. Arrowhead CU, San Bernardino, Calif., posted net income of $3.9 million for the first quarter 2011 and increased its net worth to 3.91% of assets from 3.44% as of Dec. 31. Total assets at the end of the quarter were $700 million (Fontana Herald News April 29). Among the reasons for the improvements were reductions in operating expenses and improvement in loan quality, according to Arrowhead. National Credit Union Administration assumed control of Arrowhead June. The $876-million-asset credit union was placed into conservatorship due to declining financial condition News Now Dec. 12) Silver State Schools CU, Las Vegas, reported a $90,000 profit in the first quarter, reversing a string of nine quarterly losses ( April 29). The credit union lost $8.5 million in the first quarter of 2010. In 2008, Silver State Schools reported a record $10 million net income from operations but set aside $10 million in reserves for potential loan losses. During 2009, as property values continued to decline and record numbers of members experienced reduced income, the credit union recorded $8.1 million net income from operations. However, it set aside $59 million to cover current and potential future loan losses (News Now April 30, 2010). In February 2010, the credit union received a capital infusion to bolster its general reserves from its private share insurer, American Share Insurance (ASI). Silver State Schools CU reported $29.7 million in net worth at the end of March, but that figure includes the $22 million subordinated loan ASI made to the credit union in 2010.