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Illinois REAL Solutions network has first meeting of 2012

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NAPERVILLE, Ill. (4/10/12)--Illinois REAL Solutions program partner credit unions attended their first in-person meeting of  2012 last week. They discussed attracting new members and eco-friendly loans, and compared popular prepaid cards.

Jonthan Fuhrman, marketing consultant with CU Solutions Group, noted that Generation Y (ages 17-32) is a group most credit unions hope to attract as new members. The evolution of technology and this group's lack of experience in managing money makes reaching Gen Y an interesting challenge, he said. 

He shared information on understanding Gen Yers, then reviewed marketing methods--traditional, online, social responsibility, mobile and referral--and explained how to maximize their effectiveness in reaching out to Gen Yers. Among the suggestions for marketing to this group:

  • Review images portrayed in printed marketing pieces, on websites and in lobby displays to ensure young, single adults are among those represented in the images;
  • Create and maintain a Facebook page, add QR codes (quick response barcodes) to printed materials, and develop mobile websites and ads; and
  • Avoid one-size-fits-all approaches; each credit union has its own goals and demographics to consider when determining the best marketing techniques to employ.
Abby Coroso of the Delta Institute discussed Eco-Friendly Loans and Energy Impact Illinois (EI2), a collaborative effort to help residents, businesses and non-profits reduce energy use. El2 is looking for credit unions to participate as lenders in its Residential Retrofit Loan Program. Homeowners use the loans to make home improvements that improve energy efficiency. Examples include upgrading boilers or furnaces, water heaters, programmable thermostats, central air conditioning and other qualified appliances or equipment. MembersAlliance CU, Rockford, and North Side Community FCU, Chicago, are involved in the program, which launched in November.

Jim Byrnes, executive director, national accounts for the ICUL Service Corp. (LSC) compared the Suzy Orman-endorsed prepaid card for consumers with others in the market, including LSC's CU Money product.

The second of the two in-person meetings for 2012 will be Oct. 16 in Naperville. The meetings are part of the REAL Solutions for Low Wealth Households program. The Illinois Credit Union League and ICU Foundation teamed with the National Credit Union Foundation in 2009 to offer the program. Currently 87 Illinois credit unions are participating. The program is operated by 35 leagues representing 37 states and includes more than 1,000 credit unions nationwide.

Arizona State CU helps underwater homeowners refinance

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PHOENIX (4/10/12)--Arizona State CU, based in Phoenix, has accepted 167 applications for the Home Affordable Refinance Program (HARP) to help underwater homeowners obtain more affordable mortgages in today's low-interest rate environment.

Homeowners who are current on their Fannie Mae mortgage and have not been able to obtain traditional refinances because of the decline in their home's value, may be eligible for HARP.

"If members can benefit from a lower mortgage payment, then we, as a local financial cooperative, need to meet this need," said David Doss, president/CEO of the $1.3 billion asset credit union.  "The opportunity to offer HARP is significant to the credit union as it can help Arizona residents rebound from economically challenging times," he said.

HARP has been extended by the Federal Housing Finance Agency to help eligible homeowners refinance to take advantage of historically low interest rates, even if the outstanding balance of the mortgage is greater than the value of the home.

More media report CUs stand on MBLs

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MADISON, Wis. (4/10/12)--More small businesses are letting media know how credit unions have helped them through a tight credit market.

Their support comes at a time when credit unions, leagues and the Credit Union National Association (CUNA) are pushing for Congress to raise credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25% so credit unions can help more small businesses and the economy.

In a letter to the editor of The Columbus Dispatch (April 7), Ohio Credit Union League President Paul Mercer  wrote that the Credit Union Small Business and Jobs Bill (Senate Bill 2231) would help generate up to $275 million in new credit available to Ohio small businesses and more than 3,000 new jobs.

"Since the beginning of the economic decline, when many banks began limiting access to credit, Ohio credit unions saw demand soar, increasing outstanding business loans by 98.5% from December 2007 to December 2011," Mercer wrote.  During the past 12 months, loans to businesses by Ohio credit unions grew 24% to $430 million. Roughly 57% of small business owners who sought financing from banks were turned down, he wrote, citing statistics from Pepperdine University.

Also during the weekend, small businesses in Iowa and North Carolina were speaking up on behalf of raising the MBL cap.

In the Winston-Salem (N.C.) Journal (April 8),  Jim Dobbins, owner of a 23-year-old construction company, Sharp Interiors Inc., told of his quest for a six-figure loan.  A slowdown in demand and customer payments had left the company struggling in late 2010 and its existence--as well as 32 jobs--were in jeopardy.  The company was sick but knew that it could weather the storm with a loan, he told the Journal.

Dobbins' request was turned down by seven large and community banks. Some banks said their hands were tied because of increased regulations after they had accepted Troubled Asset Relief Program money from the U.S. Treasury. Instead of lending to small businesses, they were bolstering their own capital levels, said the article.

Other banks were unwilling to risk a loan for a small business without stellar credit, said Dobbins. He eventually got a loan from Allegacy FCU in Winston-Salem after three months of due diligence and uncertainty, said the article. "Allegacy stood up when no other financial institution would," Dobbins told the paper. "I had gotten to the point of literally having no other option available to me." 

The loan enabled Sharp Interiors to not only survive but also more than double its work force in the past 18 months to 70 employees. It did $10 million in business last year, and expects a10% increase this year.

Others who spoke up on behalf of credit unions:

  • Robert and Faith Newton, Bloomfield, Iowa, who wrote in a letter to The Ottumwa Courier that three years ago their company, Troy Elevator Inc.," needed long-term financing due to several factors, some of which were beyond our control. We applied for financing at a number of banks but were turned away for various reasons." Community 1st CU "came to our rescue and provided us a guaranteed loan through the RSDA Rural Development Loan Program.  Thanks to our credit union, we were able to keep our business in operation and keep our 40 employees working. Unfortunately, Community 1st--and many other Iowa credit unions--may not be able to make a loan to the next business owner in need due to an arbitrary cap on the amount of business loans they can make."
  • John Stewart of Centerville, Iowa, who got a small business loan to buy his place of employment, Centerville Body Shop, when the owner retired. "I looked at different financing options and found that Community 1st really wanted to help me." The credit union "looked at every option that was available to find the best avenue for me so I could buy my small business,"  he wrote in a letter to the editor of the Daily Iowegian.
  • Shirley Hendrickson, Iowa City, who told the Iowa City Press-Citizen that a credit union helped her purchase a bed and breakfast seven years ago. Today many are constrained by the cap, she noted.
The Iowa Credit Union League also noted it is airing tv ads in support of raising the MBL lending cap.  Use the link to the ad on youtube.

Catalyst Corporate membership tops 1190

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PLANO, Texas (4/10/12)--Catalyst Corporate has reached more than 1,190 capitalizing member credit unions nationwide after launching with 890 members last September.

Although membership rose steadily throughout the final months of 2011, the greatest influence on growth is transition of Western Bridge Corporate members, the corporate said.

Two hundred eighty-five Western Bridge members pledged more than $46.5 million in capital to Catalyst Corporate, bringing total Perpetual Contributed Capital to more than $144 million.

"We have exceeded our business plan target well in advance of the acquisition date and will continue to accept new member capital as long as credit unions want to join," said Kathy Garner, Catalyst Corporate president/CEO. Catalyst's upcoming acquisition of certain Western Bridge assets and is slated to occur on July 1.

Catalyst continues to lay the groundwork for serving its coast-to-coast membership. In addition to its Plano, Texas, headquarters, Catalyst maintains branch offices in Georgia and Hawaii, and is working to secure space in Southern California.

The corporate also has staff in California, Oregon, Washington, Oklahoma, Florida, Utah and Idaho. They also provide coverage for the neighboring states of Nevada, New Mexico, Arkansas and Louisiana.

"Even though the majority of our business can be performed remotely, we believe that a local presence is important, especially in states where we have large concentrations of members," Garner said.

In Georgia and Hawaii, Catalyst's employees share office space with local leagues. Last week, the space-sharing arrangement between Catalyst and the Texas Credit Union League was made public. Catalyst said it will see substantial savings in its operating costs while furthering the cooperative relationship with the league.

"We all have the same stakeholders, and physical proximity can serve as a valuable reminder that collaboration can help us with future endeavors to serve those stakeholders," Garner said.

Also, the board of directors is adding two new seats to accommodate representation from Western Bridge Corporate's membership. These directors will be selected for recommendation to the board by a Governance Advisory Council--also made up of Western Bridge members.

Catalyst's Western Regional Council was established this week, shortly after the kick-off meetings of the Eastern and Central Regional Council meetings in late March.

Filene report urges CU digital branding

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MADISON, Wis. (4/10/12)--Digital branding and social strategies are becoming the necessary norm for all businesses, including credit unions. But there is a danger that managers, while acknowledging this new norm, can get in trouble by not approaching it strategically, according to a recent report from the Filene Research Institute.

Filene convened a panel of expert researchers and practitioners in November to discuss and show how credit unions should think about their own branding and digital presence as marketing moves to an increasingly electronic format. Filene wanted to know what tools are out there--and what's coming down the pike--along with what digital messages and channels resonate with today's consumers.

It is not enough to turn traditional collateral and messaging into digital collateral and messaging, the report noted. Instead, credit unions need to capitalize on the deeper trend of social connections to make sure their marketing reaches the right audience in the first place and has its intended effect when it arrives. Mobile usage, more emphasis on design, and social marketing are trends that every credit union needs to consider, especially as it looks for new members, said Filene.

The colloquium included a cross-section of social media practitioners and researchers and strategists from Google and Facebook. Each brought a different message, but the unspoken message was that digital marketing is becoming ever more important. Adopting it won't be enough; embracing it is the only acceptable route, said the report.

Other credit union implications the colloquium noted:

  • Consumers trust other consumers' opinions more than any form of advertising. Now that consumers can meet each other online, credit unions should facilitate the interaction around their brands, according to Hope Schau, associate professor of marketing at the University of Arizona.
  • Bank Transfer Day proved two things when its founder, Kristin Christian, began the movement. One is that social media have undisputed power in today's communications world. The other is that credit union ethos resonates among a large number of consumers.
  • Measuring impact is much more important and harder to do than measuring output.  Maximizing impact among Gen Yers requires promoting emotionally rewarding concepts; rational advertising is not enough, said Maya Bourdeau, partner, Attune. Work within what the credit union target already believes--social responsibility and collaboration--instead of trying to bring Gen Yers to the credit union message.
  • Good social media correlate with important performance measures but not in every category. Credit unions that perceived their social media efforts as successful were more likely to see loan growth, more website visits and higher deposit volume, according to Beth Austin, principal, Crescendo Consulting.
  • Search functions and social media are essential platforms for every financial institution because online is the preferred banking channel and because of the huge increase in mobile searches during the past three years, said Payton Dobbs, head of industry, banking & lending at Google.
  • The inherent advantage social media bring to marketing is the ability to find members/customers that look a lot like and have a reason to listen to existing members/customers, said Christine Trodella, national sales manager, Facebook. The colloquium presenters agreed that credit unions have an advantage on the social media playing field because--unlike big banks--they need fewer efforts to convince consumers that they are authentic and that they have members' best interests at heart.

CU System briefs (04/09/2012)

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  • 4/10/12)--Vermont CU regulatory agency has new nameMONTPELIER, Vt. (4/10/12)--The state agency that regulates state-chartered credit unions and financial institutions in Vermont has changed its name to the Vermont Department of Financial Regulation ( April 4).  The former name, the Vermont Department of Banking, Insurance, Securities & Health Care Administration , or BISHCA, was dropped in legislation signed last week by Gov. Peter Shumlin. The new name reflects the streamlining of the department after a law enacted last year moved the oversight of health insurance and hospital budgets to the Green Mountain Care Board …
  • BROCKTON, Mass. (4/10/12)--Brockton, Mass.-based Crescent CU has been awarded a $67,676 employee training grant from the Massachusetts Workforce Training Fund, according to the Massachusetts Credit Union League (Values & Visions March 27).  The grant was based on Crescent's application demonstrating its commitment to investing in training to further develop employees and improve service to members.  The comprehensive training proposed includes training in areas such as commercial sales leadership and quality and efficiency processes. Employees from every level  will participate in the program, which will take place over two years.  Pam Walsh, Crescent's assistant vice president, employee development, will coordinate the program, which will be conducted by Tandem Training of Keene, N.H. ...
  • MANHATTAN BEACH, Calif. (4/10/12)--Keith A. Sultemeier  has been named president/CEO of Manhattan Beach, Calif.-based Kinecta FCU,  effective April 23, the credit union announced Monday.  He will oversee all aspects of the credit union and will work closely with Roger Ballard, who previously served as joint CEO of both Kinecta and NuVision FCU, to ensure a smooth transition.  After the transition, Ballard will return to NuVision as CEO.  Sultemeier brings 12 years of credit union experience plus 10 years of strategic planning and financial management experience to Kinecta. Most recently he served as executive vice president at Security Service FCU in San Antonio, Texas, where he led strategic planning and budgeting for the organization and directed operations in both back office and member-facing divisions …
  • SHELTON, Wash. (4/10/12)--Jim Morrell has been selected as president/CEO of Shelton, Wash.-based Peninsula FCU, succeeding Steve Gorseth, who will retire in June, said the Northwest Credit Union Association (Anthem April 3). Morrell has spent the past 14 years at iQ CU in Vancouver, Wash., where he was most recently  served as senior vice president of support services. Morrell has been active in the credit union movement and has served as chair of the CUNA Technology Council in 2002; on the former Washington Credit Union League's (WCUL) Evolution Task Force, the NWCUA Future Leaders Task Force, Washington Model Credit Union Act subcommittee, and the Filene Research Institute's i3 group. He was named WCUL's 2010 Distinguished Credit Union Professional of the Year. Morrell has more than 20 years' experience in the financial services industry, including 17 in the credit union movement …
  • HAMILTON SQUARE, N.J. (4/10/12)--Harold Ley, president/CEO of Mercer County NJ  Teachers' FCU, died Saturday after battling cancer. He was 50 years old.  "Harold was an inspiration for his staff at Mercer County Teachers and a dedicated credit union leader. He will be missed," said Paul Gentile, president/CEO of the New Jersey Credit Union League.  Ley joined the credit union in April 2006 as assistant vice president of operations and was promoted to president/CEO in November 2008. He is survived by his wife, Maureen, and two children, Kaitlyn, 12,  and Aiden, 5. No services will be held, according to the credit union (The Daily Exchange April 9) …

NWCUA CUs should track MBL stories online

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BEAVERTON, Ore. (4/10/12)--Credit unions are working to educate the media and public about their efforts to get Congress to raise the member business lending (MBL) cap. And some credit unions are succeeding. But what happens after their articles are published or aired?

Once the first media hits are registered, credit unions should track those stories online and consistently post on the story's comment section, said David Bennett, Northwest Credit Union Association (NWCUA) director of public relations.

Bennett called this "camping a site" to make sure accurate information and positive comments appear near the top of the comments section.

"Sharing those stories on Facebook, Twitter, on credit union websites--even in branch lobbies--is another important aspect of moving this to social media and spreading the word," Bennett said.

Every social media message on this topic should have an action item, said NWCUA Anthem April 5). In the case of MBL, the action item is asking consumers to call or write their legislators.

Credit unions in the Northwest are among those selling positions on MBL in the local media. Mid-Oregon CU, Bend, Ore., was recently featured in the Central Oregonian touting the benefits of increasing the MBL cap for credit unions.

On March 29, Mid-Oregon placed a story in the Bend Bulletin that said increasing the MBL cap to 27.5% of assets from 12.25% would add 2,700 more jobs in Oregon and 140,000 nationwide, according to the NWCUA.

The Credit Union National Association (CUNA) and credit unions are in the midst of a national effort to get the MBL legislation passed through in Congress. By increasing the MBL cap, credit unions can help the country inject $13 billion available for small business lending.

North Coast CU in Bellingham, Wash., is engaging members directly on its website with a pop-up box that asks members for their help. The box explains why their help is needed, and provides a link to contact their legislators. Developed as a reaction to help alert credit unions to phone scams, the pop-up box has become part of the credit union's repertoire of tactics when engaging members.

Spokane-area credit unions held a conference call recently to unify their message. Working in solidarity, local leaders outlined a strategy that includes petitions and a letter drive.

"It would be counter-productive for every credit union to work individually on this effort, because it will surprise journalists who think of us as competitors," Dan Hanson, Spokane Teachers CU senior writer and public relations expert, told NWCUA. "And because a good idea coming from any credit union should be shared with all the others."

Many Northwest credit unions are also engaging editorial page editors and editorial boards to offer information about elected officials and their constituents.

"Pitching to the editorial page comes with some risks, depending on what is being pitched and the general leanings of the outlet, but the rewards can be tremendous," said Bennett. "Because most (traditional newspapers) are pro-business, editorial board meetings can be effective as long as arguments are well prepared and practiced. Those being interviewed should also be ready to be filmed, as many newspapers use these to fill their social media requirements."

Opinion editorials and letters to the editor come with far less risk, but carry less weight to readers, generally, because they are not third-party endorsements and present one side of an issue, Bennett said.

Its not too late to sign up for Youth Week

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MADISON, Wis. (4/10/12)--There's still time to register for the National Credit Union Youth Week and the National Youth Saving Challenge--two events sponsored by the Credit Union National Association (CUNA) in celebration of National Financial Literacy Month.

Credit Union Youth Week is April 22-28. This year's theme is "Be a Credit Union Super Saver."

Click for slide show For a look at the past 11 years of National Credit Union Youth Week Posters, click on the slide show.
National Youth Saving Challenge is held during the entire month of April. Last year nearly 146,000 young members deposited $28.5 million into their saving accounts during National Youth Saving Week---with 9,058 new accounts.

Events such as youth week and the savings challenge offer credit unions an opportunity to differentiate themselves within their communities, said JoAnne Sepich, CUNA's Youth Week coordinator. For that reason credit unions should spread the news that they are participating, she added.

"Let people within your community know about it," Sepich said. "Tell your sponsor groups. Nothing endears you to people more than doing something for their children."

Even credit unions without a budget can participate in Credit Union Youth Week. Sepich offers these tips:

  • Register for the National Youth Saving Challenge. The free program helps affiliated credit unions build strong relationships with youth and their families. CUNA will tally and report the deposits, plus offer $100 cash prizes to youth at 10 participating credit unions. Register by answering a few simple questions. Use the link for more information
  • Display the free challenge poster. Affiliated credit unions received a free Youth Week poster in January.
  • Play along. Invite the staff to ham it up during Youth Week. Credit unions can feature a theme where employees dress accordingly.
  • Share goals. Set a good example. Invite the staff to put up pictures of their own savings goals. Post them by their stations or make a collage.
  • Hold a book drive. Invite staff and members to donate new and gently used books during the week and then deliver them to a school or a local library.
  • Color. Put out crayons and coloring pages to entertain the youngest members.
  • Hold a petting zoo. Contact your zoo or Humane Society about bringing in some kid-friendly pets Saturday morning.
  • Hold a cook off. Feed young visitors with brownies, cookies, and candy made by staff.
  • Go to school. Send volunteers into local schools to introduce money management principles.
Here's how three credit unions around the country will celebrate Credit Union Youth Week:

  • UT FCU, Knoxville, Tenn., will hold events at two locations, and at each location it has asked community organizations to get involved by adding an item to the backpacks of goodies each child will receive or by setting up a booth at a branch the day of the event to join. One location will feature a rock-climbing wall provided by the National Guard. Invitations have been sent to more than 300 area youth and their families. Registrants will be entered into a drawing for a Wii entertainment console and a sports package to be given away by UT FCU.
  • Eaton Family CU, Euclid, Ohio, is tying the release of "The Avengers" movie with its Super Saver promotion. Parts of "The Avengers" were filmed in Cleveland, so many area residents are aware of the movie's release in May. The credit union will deposit $20 to any new youth account opened during Credit Union Youth Week. New youth members also will receive a T-shirt with a yellow-and-red Eaton Family emblem on the front and "I'm a Super Saver at Eaton Family Credit Union" on the back. Any deposit of $100 or more will enter the youth into a drawing in conjunction with a locally-owned movie theater for four tickets, four snacks, millionaire for a day service ($20 interest from $1 million on deposit for one day), and a Super Saver T-shirt.
  • Ventura (Calif.) County CU is hosting a video contest in which participants are asked to tell other young members how to be credit union super savers. The creator of the winning entry will win $100 plus $2,500 for his/her school's film/video production program. The credit union will also award $25 gift cards to five runners-up.
Amid all the games, events and activities, good financial management and savings, credit unions have one simple message that holds true for both children and adults: Take care of your needs before your wants.

"That is very easy for children to understand, and it can be a life-changing message for entire families," Sepich said.

iPads change America Firsts financial reports

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RIVERDALE, Utah (4/10/12)--America First CU has used Apple iPads to cut costs and offer a more visual depiction of the credit union's financial results.

The $5 billion credit union began to replace laptops in November 2010 as a cost-cutting measure, according to a recent article in American Banker. At $499 to $699 each, iPads cost about 50% to 75% less than the notebooks America First had previously used, according to the article.

At the same time, America First CU was trying to find a more timely and user-friendly way to reproduce the credit union's financial information. National Credit Union Administration was pressuring credit unions to translate numbers faster to prove they had adequate risk controls.

"It was taking executives too long to make sense of the credit union's financial information," said the article, headlined "The Whole Bank on an iPad."

Thayne Shaffer, America First's controller and vice president, was put in charge of organizing a team and maximizing the iPad's potential.

Shaffer and his team sought a business intelligence app that transforms financial data into pictures with descriptive text and also display trends in a manner that could be easily understood by nonfinancial experts.

After efforts to develop an application took too long, Shaffer found Roambi, a data visualization app for iPads, in Apple's app store.

Roambi works with the credit union's main data engines for financial and historical analyses of budgets and forecasts and loan studies. Reports are used to monitor how economic indicators are affecting asset liability; monitor risks in loan distribution, concentration, delinquency and writeoffs; gauge revenue opportunities; and measure branch performance.

Roambi serves 47 users at American First CU. Users access financial information, which is presented graphically, as soon as the data are compiled.

To read the article, use the link.

Kansas appeals court ruling favors CU in state tax case

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WICHITA, Kan. (4/10/12)--A Kansas appeals court has overturned an order by the Kansas Court of Tax Appeals,  with the higher court saying that Wichita-based Cessna Employees CU (CECU) is exempt from a state retailers' tax on travel-related expenses that were passed on to the credit union in a vendor's invoice.

According to the ruling Friday by the Court of Appeals of the State of Kansas, Cessna had made a claim on June 30, 2008, for a $3,333 refund of the state taxes on travel, hotel and meals listed by an invoice from a service provider, Jack Henry & Associates (JHA), with whom the credit union had contracted computer upgrade services that required its employee to travel to Wichita.  JHA invoiced CECU for its services, hardware and software, and presented a separate invoice for the travel purchases (its employee's transportation, meals and lodging).  Cessna paid the invoice but sought a refund of the sales tax amount.

The state tax department denied the claim on June 30, 2008, and CECU appealed the denial on Nov. 11, 2008 to the department secretary, who upheld the department's denial on July 17, 2009. The $209 million asset credit union then appealed to the Court of Tax Appeals on Aug. 17, 2009,

The lower court said in its summary judgment that the travel expenses billed to the credit union were "part of the total amount of consideration given by CECU in the transaction for which the taxable goods and goods and services were sold" and thus subject to Kansas retailers sales tax as part of the 'gross receipts' of JHA in the transaction."

However, the Kansas Court of Appeals concluded there was no "sale" of the reimbursed travel expenses, and it reversed and remanded the case with directions to grant CECU's refund claim.

It said the amount invoiced was the original travel expenses plus sales tax paid, but with sales tax then computed on that total and billed for reimbursement to CECU. "The sales tax at issue here has been levied upon the total amount of consideration given by CECU in the transaction with JHA for providing the upgrades. In this transaction…we find that the travel is properly considered an expense incurred by the seller," the ruling said.

"We found no ambiguity in the statutory language as it applies to this case. Quite simply, there were no retail sales involving the travel expenses, so no retail sales tax may be applied to them--those taxes already having been fully paid by the end consumer of those expenses …," the ruling continued.

The higher court also noted that even if the statutes were ambiguous, "the rule of strict construction of tax imposition statutes must favor the taxpayer."