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Southwest Corporate updates operating insights

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PLANO, Texas (5/20/09)--Southwest Corporate updated its Operating Insights Friday and revised its capital losses at U.S. Central FCU in accordance with the first quarter 2009 financials released May 13 by U.S. Central. Total investment losses Southwest Corporate expects to record in April have been reduced by $68 million--to $314 million from $382 million, said a message on Southwest's website from President/CEO John Cassidy. When U.S. Central revised its March financial statements with roughly $500 million less in investment losses than originally reported, with credit losses revised from $2.3 billion to $1.8 billion, the change meant Southwest Corporate's member's capital account at U.S. Central was replenished by $68 million. That results in a 23% reduction, vs. a 63% reduction originally reported, said Cassidy's report. Southwest Corporate had retained earnings of $323 million as of March 31, which means current losses will be covered by retained earnings. "Unlike reported in the May 6 Operating Insights, we do not expect to reduce members' capital accounts at this time due to the change in recording $314 million in investment losses instead of the $382 million previously reported," Cassidy said. As of March 31, Southwest Corporate's total capital was $717 million, and its capital ratio was 7.07%. Investment losses of $314 million would have reduced those March 31 amounts to $403 million and 3.97%. If conditions in the economy continue to deteriorate, losses on Southwest Corporate's member capital at U.S. Central beyond the 23% are possible, as are additional losses related to Southwest's mortgage-backed securities portfolio. For the full update, use the link.

Three branch closings announced in Calif. Nevada

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CARSON CITY, Nev. and BIGGS, Calif. (5/20/09)--Two credit unions--one in Carson City, Nev., and the other in Biggs, Calif.--have announced branch closures. Greater Nevada CU, a $550 million asset credit union based in Carson City, announced it has shut down two of its older branches in Sparks and Carson City. The credit union said the branches closed because more members are using its new locations and electronic services ( May 18). ATMs at the two branches will remain open. Members can get service at the eight full-service branches remaining open. In California, the Marysville branch of Butte FCU will close May 29. The credit union told Appeal-Democrat (May 18) the decision was difficult but that a reduction in expenses to ensure its operational efficiency was necessary with the economic times and financial stress in the region and nation. The $42 million asset credit union will keep open three other branches in Biggs, Chico and Oroville. The publication interviewed a member, David Rice, who said he liked the credit union because he was recognized as soon as he arrived at the branch.

Michigan Supreme Court to hear OFIR credit-scoring case

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LANSING, Mich. (5/20/09)--The Michigan Supreme Court will hear an appeal by the state's Office of Financial and Insurance Regulation (OFIR) over insurance credit-scoring, which the agency says is discriminatory. According to the Michigan Credit Union League, the issue has been in the courts since Gov. Jennifer Granholm and former OFIR Commissioner Linda Watters proposed banning credit scoring for determining home and auto insurance for 2004. (Michigan Monitor May 19). The rules went into effect in March 2005 but several insurance organizations challenged the rules that April. Judge James Fisher declared the rules invalid and permanently enjoined the commissioner from enforcing them against any plaintiff. Commissioner Watters appealed, and in August 2008, the Michigan Court of Appeals issued a split decision with three separate opinions, resulting in the vacating of Judge Fisher's order. The state Supreme Court will hear the case in October. "This is good news for Michigan consumers," OFIR Commissioner Ken Ross said. "After four years of waiting, we are hopeful that the court resolves this issue in favor of Michigan drivers." Removing insurance credit scoring would lower base rates for all insurance customers. OFIR says using credit scoring is unreliable, unfair discriminatory and not in line with the state's insurance code.

Hannaford ruling doesnt settle card-reissue liability

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PORTLAND, Maine (5/20/09)--A U.S. District Court ruling in Maine to dismiss all but one consumer class action lawsuits against Maine-based grocer Hannaford Bros. over its data breach doesn't address the question of whether the breached merchant is liable to card issuers for the costs of reissuing compromised cards. The Hannaford Bros. data breach compromised four million debit and credit cards and caused many financial institutions, including credit unions, to cancel and reissue the cards. Overall the Maine decision, rendered in a case that consolidated 21 consumer civil claims, is seen as a victory for merchants because it eliminates a large percentage of potential class plaintiffs, said (May 19). However, "this case does not settle the question of potential liability to issuing banks for reissuance costs," said David Navetta in the publication's blog. That question "is a matter likely being settled behind the scenes pursuant to dispute resolution provisions in the operating regulations of key card companies Visa and MasterCard," he said. The Hannaford data breaches occurred between Dec. 7, 2007, and March 10, 2008. It was announced March 17, 2008. About 1,800 incidents of fraud were recorded by the time the breach was announced. Credit unions in New England, New York, and Florida were among the financial institutions that re-issued cards for members whose accounts were compromised (News Now May 14 and April 17, 2008).

Ruling a milestone CUNA tells IBNA Daily Tax ReportsI

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WASHINGTON (5/20/09)--A court ruling in Wisconsin last week that refunded to a credit union the entire unrelated business income tax (UBIT) it paid for credit life and disability life insurance and a guaranteed asset protection (GAP) product is a milestone, according to the Credit Union National Association (CUNA). The ruling follows 12 years of effort to obtain clarity from the Internal Revenue Service on credit union tax liability, CUNA Executive Vice President and General Counsel Eric Richard said. "We hope this will lead the IRS to reconsider its entire position on UBIT for credit unions," he said (BNA Daily Tax Report May 19). A jury in the U.S. District Court for the Eastern District of Wisconsin Thursday awarded Community First CU of Appleton, Wis., the full amount of the tax refund it sought--$54,604--plus trial costs. The jury found that the insurance and GAP products the credit union provided members were "substantially related" to the credit union's purpose. To be exempt from UBIT, products must relate to the purpose of the credit union. "It was a wonderful and decisive victory for state charter credit unions," said Cathie Tierney, CEO of Community First CU, said during a telephone conference call that CUNA conducted with news media Monday. Only state-chartered credit unions pay UBIT taxes. She noted that similar products have been offered by credit unions for more than 70 years and the government couldn't make its case that the products weren't part of credit unions' mission. Brett Thompson, president/CEO of the Wisconsin Credit Union League, said the ruling should send a message to IRS, which he said is stuck in a "time warp" seemingly believing that tax-exempt credit unions should not offer services beyond basic loans and savings accounts. The U.S. has 10 days to submit in writing a motion to overturn the jury's verdict. The credit union would then have 10 days to rebut that motion. "It's rare for those motions to be granted, but not unheard of," Richard said. The government could then appeal. An appeal, however, would have to be approved by the U.S. Solicitor General before it could proceed. Community First filed the lawsuit against the government in January 2008 with the support of the UBIT Steering Committee--CUNA, the American Association of Credit Union Leagues, CUNA Mutual Group and the National Association of State Credit Union Supervisors. Meanwhile, another credit union is preparing its court case against the IRS's interpretation of UBIT for a Denver court. Bellco CU, Greenwood Village, Colo., is seeking a refund of $199,000 it paid in UBIT taxes for similar products during 2000, 2001 and 2003. A court date has not been set.

Truliant FCU pays students to create new products

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WINSTON-SALEM, N.C. (5/20/09)--Truliant FCU, Winston-Salem, N.C., partnered with Forsyth Technical Community College asking students to create credit union-oriented products and services for a cash prize. The innovation contest sought to generate ideas from students on products and services relevant to the financial industry and that would benefit Truliant members, the credit union said. Truliant offered $3,000 to the first-place winner and $1,500 to the second. Students submitted applications to participate in the first annual Truliant Financial Fair, where they presented their ideas for products and services to a panel of judges. Kayla Hall won first place, and Linda Burnette received second place. Hall’s idea was to create a book buy-back program that would allow students to get a loan to pay for tuition and school books. At the end of each semester, when students sell their books back, the proceeds would directly pay off their loan with Truliant. Truliant has $1.1 billion in assets.

CUs in NYC program for small-biz loans

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NEW YORK (5/20/09)--New York City is providing $5 million in city funds to its Capital Access Program, which will guarantee up to 40% of small business loans provided by credit union and other lenders. In total, about $13 million is expected to be distributed through the program, said New York City Mayor Michael Bloomberg in his weekly radio address Sunday. Once the loans are repaid, the program will be able to generate another cycle of new small-business loans, he added (States News Service May 17). “A barbershop in Brooklyn, a family clothing store in Queens, an electrical contractor in the Bronx, a bakery, a fuel delivery company, and a shoe repair shop. Those are the kinds of small businesses that hold our neighborhoods together,” Bloomberg said. “And last week, they were among the first 28 of what we expect will be up to 400 small companies and non-profit organizations throughout the five boroughs to receive New York City Capital Access emergency loans. “Our administration has worked with private sector lenders to develop this program,” he added. “In the months ahead, loans ranging from $1,500 to $250,000 will enable businesses to buy new equipment [to] meet day-to-day expenses and, most important, keep their doors open and make their payrolls.”

Town prefers a CU reports IMarketplaceI

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DANNEBROG, Neb. (5/20/09)--Residents of Dannebrog, Neb., a small town with 350 people, voted Monday for a credit union move into town rather than another bank after one bank there failed and its successor decided to close shop, Marketplace reported. The town has been without a financial institution for more than a week, the public radio show reported. After some farm loans went bad, “Dannebrog’s only bank let the people down,” Marketplace said. Sherman County Bank collapsed a few months ago. Another Nebraska bank, Heritage, took over, but decided it didn’t make financial sense to keep a two-teller branch operating. Several residents said they need a financial institution not only for financial services it provides, but to provide a key element for the health of Dannebrog and its future. “If we don't have a bank, what I would see happening is pretty soon then the grocery store would fail, and the restaurants would have a very difficult time making it,” Carol Schroeder, a resident, told Marketplace. “The gas station. You know, I've seen a lot of small towns die, and I think it starts when you lose a bank.” About 100 people went to the town fire hall recently to hear pitches from a credit union and a regional bank after Dannebrog made it known it is looking for a new financial institution. In the 1980s, some residents formed a credit union after a bank failed, said town resident Bob Peterson. The Federal Deposit Insurance Corporation owns the bank building and will decide if a credit union can move in.

Despite economy more CUs adding shared branching

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ATLANTA (5/20/09)--More credit unions have joined shared branching year-to-date than in the same period in 2008, CO-OP Shared Branching said Monday. Between January and April, 43 credit unions were added to the network. Last year, 40 credit unions joined during the same period. Shared branching is integral for credit unions looking to trim expenses, according to Carroll Beach, CO-OP Shared Branching president and chief operating officer. “It’s a much more affordable way for credit unions to be around every corner than building proprietary branches,” he said. About 80% of this year’s new shared-branching participants employ CO-OP’s Next Generation Network technology, which facilitates shared-branching transactions. Through the network, credit unions can offer services such as fast-branch kiosks, remote deposit and mobile banking. CO-OP Financial Services and Credit Union Service Corp. recently joined to form CO-OP Shared Branching, a shared-branching network that services credit unions.

ACUC hotel rates slashed to aid travel budgets

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MADISON, Wis. (5/20/09)--The Credit Union National Association (CUNA) has reduced the hotel rates for attendees at America’s Credit Union Conference and Expo (ACUC), scheduled for June 21-24 in Boston. All three hotels adjusting the daily rates are:
* Sheraton, whose adjusted rate is $239, from $250; * Marriot is $239, from $259 single/$289 double; and * Westin is $259, from $274.
The conference will feature five keynoters. Bert Jacobs, co-founder of Life is good, will speak about how he and his brother John turned three simple words on a T-shirt into a major brand with more than $100 million in annual sales. Jacobs will discuss making a difference while making a profit by selling feel-good products and embracing optimism as a force for powerful change. The conference marks the centennial celebration of credit unions with presentations honoring the first 100 years of credit unions in the U.S. Attendees at Sunday's reception and keynote session will be treated to a humorous, thought-provoking look at the life of former U.S. Sen. George Norris, a key figure in the signing of the Federal Credit Union Act of 1934. Other keynoters include:
* Bill Hampel, CUNA’s senior vice president of research and chief economist, and Mike Schenk, CUNA's vice president of economics and statistics. They will address the best ways to respond to current economic challenges and provide insight into the outlook for the economy and credit unions, the economic slowdown and more. Hampel and Schenk's expertise has been featured throughout the year in venues such as Bloomberg TV, MarketWatch, The New York Times, USA Today, The Associated Press, The Wall Street Journal, and CNN, among others. * Dan Roam, author of “The Back of the Napkin: Solving Problems and Selling Ideas With Pictures.” Roam will show how to use pictures to describe complex concepts and solve problems, and demonstrate how anyone can use visual thinking, regardless of artistic talent, to approach and resolve business challenges. * Guy Kawasaki, best-selling author of "Rules for Revolutionaries: The Capitalist Manifesto for Creating and Marketing New Products and Services." Kawasaki will discuss his experience with world-class companies to explain how to innovate, improve, and create new credit union products and services. His presentation will be modeled after his book.
For more information or to register for the America's Credit Union Conference and Expo, use the resource link.

CU System briefs (05/19/2009)

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* MADISON, Wis. (5/20/09)--CLARIFICATION: Transactions from 7-Eleven Vcom (virtual commerce) kiosks have increased 43% compared with the same time period one year ago, according to Financial Service Centers Cooperative. News Now Tuesday referred to the units as ATMs instead of kiosks. The kiosks, which allow users to conduct any transaction they normally could at a credit union branch, function differently than an ATM, according to FSCC ... * LANSING, Mich. (5/20/09)--The league representatives for the Michigan Credit Union League’s (MCUL) credit union relations department shifted to CUcorp and report to Lisa Treat, director of credit union relations, effective May 1. The new department combines the efforts of MCUL representatives with the CUcorp in-state sales team. The move is designed to eliminate job redundancies, save money, improve sales efforts and realize tax benefits from shifting expenses, said the league (Michigan Monitor May 18) ... * COLUMBIA, Md. (5/20/09)--The Credit Union Foundation of Maryland and District of Columbia announced the appointment of two new board directors.
Jo Ann Talbot, CEO, National Capital FCU, Landover, Md., and Paul Torbeck, CEO, Point Breeze CU, Hunt Valley, Md., were newly appointed to the nine-member volunteer board. The new directors replace Lisa Jester, CEO, Central CU of Maryland, Towson, Md., and Jerry Dooley, CEO, Ft. Meade (Md.) Community CU, who reached their director term limits of six years (FOCUS Newsletter May 18) … * HARRISBURG, Pa. (5/20/09)--Collaboration was the focus of the Annual Pennsylvania Credit Union Foundation breakfast, according to the Pennsylvania Credit Union Association (Life is a Highway May 19). During the breakfast, retired U.S. Army Colonel Mark Volk recounted his experienced of working in the Pentagon on Sept. 11, 2001. His office was located in the area that was damaged in the terrorists' plane crash. He was awarded a Soldier’s Medal, the highest non-combat award for heroism, for his actions that day. Volk encouraged collaboration and said credit unions can work with schools on financial education programs. “Give back in service to the community,” he said. From left are: Norb Kaczmarek, foundation board chair; Mike Wishnow, association senior vice president of marketing and communications; Volk; Joe Wambach, executive director of the foundation; and Dave Ackerman, vice chairman. (Photo provided by the Pennsylvania Credit Union Association) ... * TAMPA BAY (5/20/09)--GTE FCU, Tampa, Fla., has created a new account, U22, for 12- to 22-year-olds and has named Evan Longoria, Tampa Bay Rays third baseman and Major League baseball’s “Rookie of the Year” as spokesperson for the accounts. He was involved with a U22 photo shoot to promote the U22 debit card and will be featured on radio commercials that will air during Rays’ home games (Tampa Bay Business Journal May 19). Young adults who sign up for a U22 account by Sept. 5 will receive two Tampa Bay Rays tickets and be given a chance to meet Longoria before the game. GTE has $1.8 billion in assets ... * LANSING, Mich. (5/20/09)--Staff and volunteers from Michigan's Oakland County Credit Union Chapter hopped a bus and traveled to Lansing May 13 for a luncheon with state lawmakers, including State. Sen. Gilda Jacobs (D-Huntington Woods), center (Michigan Monitor May 18). They met with nine lawmakers and several staffers, including Jacobs; State Sen. Deb Cherry (D-Burton): State Rep. Gail Haines (R-Waterford); State Sen. Nancy Cassis (R-Novi); State Rep. James Marleau (R-Lake Orion); State Rep. Marty Knollenberg (R-Troy) and staff; State Sen. John Pappageorge (R-Troy) and staff; State Rep. Tim Melton (D-Auburn Hills): Rep Chuck Moss (R-Birmingham); and staff from the office of State Rep. Lisa Brown (D-West Bloomfield). The group was recognized in the House during its session. (Photo provided by the Michigan Credit Union League) … * VIRGINIA BEACH, Va. (5/20/09)--A suspect has been arrested and charged with robbery, conspiracy and possession of burglary tools in two robberies of the same credit union--Virginia Beach (Va.) Schools FCU ( and May 18). Matthew Alexader Lewis Sr., 25, of Virginia Beach, turned himself in, said police. The latest robbery incident occurred May 1. Lewis is also a suspect in a June 23, 2008, robbery at the $63 million asset credit union …