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Vermont credit card bill passes Senate

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MONTPELIER, Vt. (4/8/10)--Vermont's credit card bill, S. 138, made it through the state Senate Tuesday, with one change--to its title--but leaving intact several provisions by which merchants can limit the credit cards they accept. The bill is now named "An Act Relating to Unfair Business Practices of Credit Card Companies and Fraudulent Use of Scanning Devices and Re-encoders" and more appropriately reflects what the bill is now currently about, said Joe Bergeron, president of the Association of Vermont Credit Unions (AVCU). "The bill now goes to the House. We await announcement of which committee gets the assignment," Bergeron told News Now. In the meantime, both bankers and credit unions have events in the State House today, "where S. 138 will no doubt be the primary focus of lobbying efforts," he said. "Bankers have a Hike the Hill, and AVCU is hosting an annually highly attended Legislator Appreciation Reception, preceded by a private meeting of credit union leaders with the Governor and a few key legislators (all individual)." The bill, which was amended earlier, would:
* Allow merchants to set minimum and maximum amounts for acceptance of debit and credit cards; * Forbid electronic payments system network processors from imposing penalties or requirements on the way merchants advertise, thus allowing merchants to add a surcharge for customers using a credit or debit card in the state; and * Require a state regulatory study, due Dec. 15, 2011, to determine the economic impact on banks, credit unions and consumers of prohibiting electronic networks from inhibiting merchants as to whose cards they can not accept.
The provisions are detrimental for credit unions, their cardholders and Vermont's economy, Bergeron has said (News Now April 5 and April 2).

CU System briefs (04/07/2010)

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* HERRIMAN, Utah (4/8/10)--A prankster was arrested Tuesday after he sprayed a foul-smelling product into the pneumatic tube with his deposit at the drive-through lane at a branch of Mountain America FCU (Deseret News April 6). The smell made the teller who opened the tube sick. A website about the prank product said the spray isn't harmful. Police tracked down the prankster from the information he submitted on the transaction and booked Preston Barlow, 21, into Salt Lake County Jail for investigation of disorderly conduct, obstructing justice and other citations ... * TREVOSE, Pa. (4/8/10)--The 13th branch opened by TruMark Financial CU is turning into a lucky one. TruMark Financial already has seen a constant flow of activity at its
Click to view larger image Click for larger view
new Parkwood Shopping Center branch in Philadelphia and opened 45 new relationships since it opened on March 1. At its ribbon-cutting ceremony on March 26 are, from left: Joseph J. Ciaranca, chairperson, supervisory committee; Donna M. Carvin, vice chairperson, supervisory committee; Leonard V. Doughty III, board director; Hugh T. Bray, board president; Daniel L. Dillard and William A. Tollok, board directors; Pennsylvania Speaker of the House of Representatives Dennis M. O'Brien (R-169); State Sen. Michael J. Stack (D-5); Michele Kudrick, Parkwood branch manager; Joseph J. Bily, board treasurer; Wayne J. Goodwin and Richard V. Lawn, board directors; Richard F. Stipa, CEO; and David A. Rufibach, board director. (Photo provided by TruMark Financial CU) ... * PRIOR LAKE, Minn. (4/8/10)--The U.S. Green Building Council has granted a LEED Silver certification to the Shakopee Mdewakanton Sioux Community's new South Metro FCU building in Prior Lake, Minn. The 7,934-square-foot building opened in September. Among its features: pavers made from recycled tires, local and regional materials, natural lighting, air-friendly finishes, a rain garden to treat storm water, water-efficient plumbing fixtures and a geothermal heating systems. Construction waste was reduced by 75%. Other features: "preferred parking" for car pools, fuel-efficient vehicles and low-emitting vehicles (Finance & Commerce April 8) ... * PORT HURON, Mich. (4/8/10)--John Frank Herbert Schultz, former president of E&A CU, Port Huron, Mich., died March 26. He was 66. Schultz worked for the credit union for 30 years and retired as CEO in 2001. E&A CU has $238.9 million in assets and is located in Port Huron, Mich. Schultz is survived by his wife, a son, two step-sons, six step-grandchildren, several step-great-grandchildren and a sister (Times Herald March 29) ...

Auto leasing could be great opportunity for CUs

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MADISON, Wis. (4/8/10)--Credit unions could have a great opportunity in consumer auto leasing this year, according to a credit union auto leasing expert. Terry Bowdler, CEO of Credit Union Leasing of America (CULA), said there could be a significant increase in credit union auto leasing, provided a few things happen. First, interest rates will need to rise. When that happens, the payment differential between lease and loan payments will be magnified--and credit unions could have more opportunities to lease if those payments are more attractive than loan payments. Second, auto manufacturers and their finance arms will have to stop “playing with money” and offering leases at low rates--like 0% or 1%. Those tactics are hurting credit unions because they are undermining credit unions’ rates. A good insurer of residual risk also will need to emerge. Residual risk refers to factoring in what the value of a vehicle will be at the end of a lease term. If a consumer wants to purchase a vehicle for $30,000, and pays $15,000 plus interest to lease it--the risk will be whether or not the car is worth the amount left at the end. If those three events happen, “credit unions are in a great position,” Bowdler said. The opportunity will not happen in the short-term--six months--but credit unions will likely have a great consumer leasing opportunity within the next year and a half, he said. Credit unions do, however, have a great opportunity now to offer commercial leasing--which is leasing to their small business owners, he added. Kiplinger.com noted Monday that auto leasing could be making a comeback this year and that credit unions were stepping up leasing. Of the roughly 12 million new cars that will be sold this year, about one-fifth of them will be leased, Kiplinger said (April 6). About 17% of vehicles were leased annually before the auto market bottomed out in 2008 and 2009, the publication said. In general, credit unions lease about $200 million worth of vehicles each year. CULA hasn’t seen an increase in leases, but while the numbers may be down--they are positioned to go up “and then some” in the future, Bowdler said. For credit unions considering getting into--or getting back into--auto leasing, Bowdler suggested that they perform a great deal of due diligence on their insurer for residual risk. Many credit unions outsource their leases to other providers, so they need to research third party vendors, he said. About 3% of credit unions offer auto leasing, according to the Credit Union National Association. Many automakers halted leasing in 2009 when vehicle sales dropped. However, some lenders--like GMAC--are ramping up their efforts, Kiplinger noted. Regarding auto lending in general, credit unions gained auto lending market share in 2009, according to CUDL, an indirect auto lender for credit unions. Credit unions ended the year at 22.2%--a 3.8 percentage point increase in auto lending market share, CUDL said. Credit unions “gained a lot of shares from captives,” which dropped to 21.7% in 2009 from 25.4% in 2008, according to Andrea Salgado, CUDL market research analyst, who presented CUDL’s Auto Lending Trends & Credit Union Analysis webinar. Credit union auto loan penetration has been at 17% for the past several years. Auto loans make up about one-third of credit unions’ portfolios. “That figure hasn’t changed much,” Salgado said. Indirect loans increased 2% by $1.4 billion at credit unions. Indirect delinquencies went up 1.45% and charge-offs 1.74%. “That’s still below the numbers we see at banks,” Salgado said. She also noted that new-vehicle sales dropped 20% to 10.6 million for 2009. Used vehicle sales were at 35.5 million, down 3% from 2008. In January and February 2010, new auto sales were up over 2009 at 5% and 12%, respectively. CUDL credit unions were the fifth largest lender of auto loans in 2009, moving up from being the seventh largest lender in 2008. Top brands financed on the CUDL platform as of Dec. 31 were General Motors, Chrysler, Ford and Toyota. About 1,467 auto dealerships closed by the end of October--the most since the 1950s, CUDL added.

N.J. league broadcasts roundtable sessions live

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HIGHTSTOWN, N.J. (4/8/10)--The New Jersey Credit Union League hosted its first live broadcasts of two roundtable sessions Tuesday in a pilot it deemed successful.
A screen shot from ustream.tv shows the live broadcast of the New Jersey Credit Union League's Lending Roundtable in action.(Photo provided by the New Jersey Credit Union League)
The league used ustream.tv to broadcast from its boardroom two roundtables on lending and collections. The Web cameras were manned by Barbara Agin, the league's director of education and training. Viewers could join the webcast at any time after the start time and could send questions and comments (The Daily Exchange April 7). The Lending Roundtable was led by Alla Kounin, loan manager for Automatic Data Processing FCU, and focused on the question facing credit unions in the economy: Is there a recipe for the right loan decision? The afternoon Collections Roundtable was led by credit union attorney Stephen Edwards and focused on mortgage modifications, said the league.

Washington islanders aim to create a CU

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VASHON-MAURY ISLANDS, Wash. (4/8/10)--A group of consumers has been trying since January to start a credit union on Vashon Island--off the coast of Washington state. Supporters said the move will provide Vashon with increased control over its financial resources and the ability to create meaningful investment in people and projects (Vashon-Maury Island Beachcomber Reporter April 6). The group is rallying around the motto, “Our Community, Our Money,” which speaks to the essence of a credit union and the group’s desire to establish one, the newspaper said. “We could do the right thing for the environment, stimulate the local economy and invest in our community,” Bill Moyer, one of the main organizers of the credit union project, told the paper. “We could be taking control of our money.” The article noted credit unions’ lower interest rates on loans, higher interest rates on savings, and fewer service fees than banks. “Credit unions can also provide innovative financial services banks often don’t offer,” the paper said, adding that credit unions have enjoyed a surge in popularity as people have become less happy with large banks and their practices. To read the article, use the link.

NCUF offers CIF alternative partners with NCB

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WASHINGTON (4/8/10)--To diversify revenues, the National Credit Union Foundation (NCUF) has entered into a partnership with NCB, FSB, the thrift subsidiary of the National Consumer Cooperative Bank, to provide another Community Investment Fund (CIF) program alternative for programs supported by NCUF and state credit union foundations. The funding pathway through corporate credit unions--considered a crucial partnership by NCUF and the state foundations--remains in place. The CIF with the corporate credit unions have been a successful program for more than 10 years, enabling credit unions to support the foundations' philanthropic work. The corporate credit union network is a generous investor in the fund and donates administrative time to CIF, said NCUF. "If it weren't for the partnership with the corporate credit union network," emphasized Tom Candell, NCUF interim executive director, "critical programs such as REAL Solutions, Innovation Grants, Development Education and the CUAid disaster relief program would never have been made possible. We look forward to our corporate credit union relationship continuing to support our programs and services." In January, NCUF's Board of Directors made the decision to diversify. NCUF said that during the past two years, the value of all CIF investments declined to about $250 million from its peak $370 million, and it had seen a significant number of investments withdrawn for various reasons. Several large certificates were withdrawn even though they carried a penalty and a stated rate of more than 5%. Several withdrawals occurred because their investment return dropped significantly. Some credit unions withdrew their CIF investments because they do not want to invest in corporate credit unions. "It was important for us when we went looking outside the corporate credit union network to stay within the cooperative family," said Candell. "As the cooperative's community bank, NCB is a natural fit." NCB is no stranger to credit unions. "Our partnership exemplifies the unique set of values we share as cooperatives, and we are excited to expand the impact of NCUF's philanthropic efforts and its innovative Community Investment Fund," said Charles Snyder, chairman of NCB, FSB. CIF gives credit unions the ability to leverage their investments to support innovative credit union programs. CIF with NCB is designed as an alternative to the traditional CIF with corporate credit unions. It allows half of the dividend to be returned to investing credit unions. The other half is donated to NCUF, which disburses its half of the dividends to the various programs. For more detail on how CIF works, the programs it supports, and the unique features of CIF with NCB and the unique features of the traditional CIF with corporate credit unions, use the resource links.

Consumer loan delinquencies declined in 4Q

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WASHINGTON (4/8/10)--Consumer loan delinquencies declined in eight of 11 loan categories in fourth quarter 2009, marking the second consecutive quarter of broad-based improvement, according to the American Bankers Association’s (ABA) Consumer Credit Delinquency Bulletin. While credit union members’ loan delinquencies went up in the quarter, credit unions still saw fewer delinquencies than banks, said the Credit Union National Association (CUNA). ABA’s composite ratio, which tracks eight closed-end installment loan categories, fell four basis points to 3.19% of all accounts, compared with 3.23% of all accounts in the previous quarter. Bank card delinquencies dropped 38 basis points to 4.39% of all accounts, which is below the five-year average--4.52%. The report defines a delinquency as a late payment that is 30 days or more overdue. ABA Chief Economist James Chessen said the news is a strong indication that the economy is on an upswing. “The fall in consumer delinquencies is a very positive and hopeful sign,” he said. "Clearly, consumers are shoring up their finances, and banks are putting losses behind them. Overall, there is a prudent approach to credit.” Credit union consumer loan delinquency rates rose to 1.67% in the fourth quarter--up 12 basis points from the previous quarter, Steve Rick, CUNA senior economist, told News Now. “This is roughly half the 3.19% consumer loan delinquency rate reported by banks,” Rick said. “Credit union first-mortgage delinquency rates rose to 2.12%, up from 1.93% in the third quarter. We expect delinquency rates to fall in the summer of 2010 as job growth picks up steam. Economic indicators already are signaling a labor market turnaround. “March payroll numbers rose 162,000, according to the establishment survey of larger firms, the third time in the last five months the economy created more jobs than it lost,” he added. “The household survey--which includes small and start-up businesses--is reporting an even stronger labor market recovery. The Bureau of Labor Statistics reported a 264,000-job gain in March, the third consecutive month of job creation.” In the auto-loan categories, direct loan delinquencies fell 10 basis points to 1.94% of all accounts, ABA said. Indirect auto loan delinquencies--arranged through auto dealers--remained even at 3.15% of all accounts. Housing-related loans showed mixed results, ABA said. Home equity loan delinquencies hit another record, rising to 4.32% of all accounts, compared with 4.30% in the previous quarter. Conversely, home equity lines of credit delinquencies at quarter-end fell for the first time in six quarters to 2.04% of all accounts, compared with 2.12% in the previous quarter. “This first sign of improvement has been a long time coming and is finally some positive indication that the housing market is stabilizing,” Chessen said. He agreed with CUNA’s Rick that while most consumers appear to be handling their finances well, the level of consumer credit delinquencies still is heavily tied to job creation. “People are actively reducing their level of debt relative to their income and are rebuilding their savings,” Chessen said. “But it’s still a very stressful time for many families and this won't disappear until more people have jobs. This will keep delinquencies elevated for the next several quarters.”

Paper Tips for one-person finance departments

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MADISON, Wis. (4/8/10)--Leaders in one-person finance departments must balance what must be done with what they wish they could in the time allotted, according to a new CUNA CFO Council white paper. “Finding Time: The One-Person Finance Department Challenge” shares the experiences of six credit union leaders with chief financial officer (CFO) responsibilities, including some who also are CEOs or serve in other roles. The leaders share the technology tools, personal tips and perspectives that help them balance their workloads. The paper notes that depending on the credit union’s size and situation, a CFO’s assignments in an average day may include compiling financial reports, conducting financial analysis, monitoring progress toward strategic goals, updating software and performing building maintenance. Many CFOs want more time to delve into complex financial issues or explore strategic options for their credit unions. Increasing requirements of regulatory compliance and routine daily tasks siphon time, the council said. “Trying to manage time and be as efficient as possible is probably the biggest challenge that you have,” said CFO Donald Windmueller, Affinity First FCU, Minot, N.D. “You have a lot of functions you have to get done in a finite time period.” For more information, use the link.