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Arizona CUs feel pain of first quarter says league

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PHOENIX (6/2/09)--Arizona credit unions were hit hard by a housing downturn, the job market and increases in bankruptcies during first quarter 2009, reports the Arizona Credit Union League. The credit unions are feeling the pain their members are feeling, Scott Earl, league president/CEO, told Associated Press. Roughly 95% of Arizona-based credit unions say they lost money during first quarter 2009. That compares with 75% of Arizona-based banks reporting losses for that period. Membership in credit unions, however, has risen to nearly 1.6 million members in the state, because people are seeking low-risk places to put their money, Earl said. More than one-third of the state's credit unions lost as least $1 million for first quarter. Arizona FCU, Phoenix, reported losing $48 million during the period, after a $116 million loss in 2008. Ron Westad, president/CEO of the $1.738 billion asset credit union noted that it's members are "middle America, and they have been drastically impacted by the local economy." The credit union reduced staff, tightened lending standards, closed some branches and reduced advertising. It also improved its loan quality and expects a better second quarter. Desert Schools FCU, a $3.167 billion asset credit union in Phoenix, reported a $12.8 million loss for the quarter. The state's largest credit union also said it still grew through the recession--with a 4% increase in membership, an 8% increase in deposits and 10% growth in loans.

First quarter saw strong growth for Michigan CUs

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LANSING, Mich. (6/2/09)--First quarter 2009 data show Michigan credit unions continued growth and increased lending in a challenging economy, says the Michigan Credit Union League. New-auto loans increased to $2.03 billion from $1.89 billion at an annualized growth rate of 30% for the quarter, said the league (Michigan Monitor June 1). Used-auto loans grew at an annualized rate of 10.8% to $3.53 billion. First mortgage loans experienced 2.8% in annualized growth rate--to $9.73 billion outstanding. "Credit union participation in the 'Invest in America' program continues to show promise as new- and used-auto loan volumes grow at a very strong rate," said Michigan league President/CEO David Adams. "The annualized growth rate of 40% in the fourth quarter of 2008 and the 30% in the first quarter of 2009 are particularly noteworthy, given the shrinking volume of car sales and auto loans affecting the industry as a whole," he added. The trend bucks the national trend. "New-auto loan volumes have been going down nationally in each of the past five quarters," Adams said. "But in Michigan, we're seeing very robust growth." Other data for first quarter:
* Total small business loans grew 16% to $713 million. Small business loans increased by 22% between March 31, 2008, and March 31, 2009. * Credit unions saw unprecedented growth in shares and deposits, which rose at an annualized rate of 26% to $30.9 billion. Total assets grew 23% to $36.4 billion. * Membership growth was a 0.64%, the strongest membership growth in the past five quarters. Total credit union net income was $13.1 million vs. $16 million during fourth quarter of 2008. The aggregate provision for loan losses continued at $72 million, down from the $99 million booked during fourth quarter 2008. * Aggregate net worth/assets ratio is 10.88%, well above the national average. Michigan credit unions held $9.1 billion in investments as of March 31, which is an increase from $8.2 billion at the end of 2008.

AARP Skip the bank look into CUs

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NEW YORK (6/2/09)--An article in AARP Bulletin Today discusses seven ways to beat the bank on fees. Its No. 7 suggestion: "Skip the bank, look into credit unions." "According to some credit union fans, the best way to beat the banks is not to use them," said the article (May 20). "When I hear my friends complaining about bank fees and service charges, I tell them to look into credit unions," Maureen Sherman of West Nyack, N.Y., told the publication. Sherman says she doesn't worry "about what new fees my credit union is tacking on to my account because, as a member-owner, not-for-profit organization, I know they have my best interest at heart." The article notes that readers will find credit unions offering the same products and services as banks but with no or lower fees than other financial institutions. It also discusses the member-owned structure of credit unions. To review the article and its seven tips for avoiding fees, use the resource link.

Michigan OFIR reaccredited by NASCUS

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ARLINGTON, Va. (6/2/09)--The National Association of State Credit Union Supervisors (NASCUS) approved the re-accreditation of the Michigan Office of Financial and Insurance Regulation (OFIR) for the fifth year in a row. The Michigan agency was the first state credit union regulatory agency to earn NASCUS accreditation status in 1989. OFIR supervises 215 credit unions with combined assets of approximately $25 billion. “Earning NASCUS re-accreditation is certainly a feather in our cap,” OFIR Commissioner Ken Ross said. “The intense review of our programs and operations provided our staff with valuable insight into where we were strong and where we had room for improvement.” NASCUS accreditation is valid for five years, subject to annual review. The annual review enables the accredited agency and the NASCUS Performance Standards Committee to measure progress and improvement. NASCUS’ 28 accredited states supervise 85% of state-chartered credit union assets. “NASCUS re-accreditation is a significant achievement and represents the effectiveness and sound supervision of the state credit union regulatory system,” said NASCUS President/CEO Mary Martha Fortney.

Altura CU postpones Coachella branch closure

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RIVERSIDE, Calif. (6/2/09)--The city of Coachella, Calif., has convinced Altura CU not to close its Coachella branch. Coachella Mayor Eduardo Garcia said closing the branch, which is located downtown, would have created a void and hurt commerce ( May 31). The Riverside, Calif.-based credit union had planned to close the branch Wednesday. “The city made a big push to work with us to see how they can help us out,” said Ricki McManuis, senior vice president of corporate communications with Altura, in a press release. “We know for sure we'll stay open until the end of the year,” she said. “We’ll continue to work with city officials, and hope to stay open beyond the end of 2009.” Six employees of the branch, originally slated to be laid off, now will remain Altura employees. The city may also open up some accounts at the credit union to generate business. The $889-million-asset Altura CU announced in April that it would close the San Jacinto and Coachella branches to reduce expenses (News Now April 6). The credit union is one of two financial institutions in Coachella.

GM Chrysler to continue support of CU loan program

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LANSING, Mich. (6/2/09)--With General Motors (GM) filing bankruptcy Monday and Chrysler set to come out of its bankruptcy restructuring this week, how do these events affect credit unions' auto loan program? The bankruptcies won't affect credit unions' incentive program, Invest in America, says David Adams, president/CEO of cuCorp and the Michigan Credit Union League. "We're a preferred supplier with Chrysler," said Adams, who told News Now that the same terms of the Invest in America contract will apply. "Their communications have made it clear that we will receive continued support through the contract and through the bankruptcy process. "Chrysler announced today [Monday] it would extend its terms with us to June 30," he said, terming the extension "a very rich offer for members." The program had been slated to end May 31. At GM, "our members will receive supplier pricing through the end of the year," Adams said. "Credit union discounts will remain in place," and, he noted, "credit union financing remains even more important to both GM and Chrysler." He emphasized "the partners' relationships will get stronger through this." Credit union members in Michigan have been hit hard by the auto manufacturers' problems. In the state, 24 credit unions are focused on the Michigan Big Three and their supplier companies. All have felt the pinch of cutbacks and unemployment, Adams said. The closure of a stamping plant in Grand Rapids this month was previously announced and "people were aware of it already," he said. Of the 14 dealers that will be affected by closures by 2012, seven are in Michigan. Of those seven, two are on standby. "The pain is continuing in temporary and permanent job losses," Adams said. "However, we're hoping that many plants will be redeployed in the automotive industry and many jobs brought back." He noted that not all jobs would return. The current 12.8% unemployment rate in the state is expected to increase. "We could very well see a 15% unemployment rate. "We've had eight years of recession and a steady stream of job losses in manufacturing. People have been slowly preparing for this [the closures]. With GM and Chrysler reinventing themselves, they likely will be smaller companies and employ fewer people." Michigan's credit unions serving the industry have become very diversified. One of the largest credit unions with the auto industry, Genesis CU, served employees in GM's truck and motor segments. It merged with USA CU and diversified. Each credit union had about $500 million in assets. "They are nicely diversified," Adams said. DFCU, a Dearborn-based credit union that serves Ford employees, has become a community credit union with lots of select employee groups (SEGs). It also merged with a state-chartered credit union, CapComm. And Research FCU, which served the GM tech industry in Warren, has merged with Community Choice and is no longer singularly focused on the auto industry, he said. "We've seen across the board, credit unions preparing for this. They are well-positioned and diversified. They will still have high loan losses and chargeoffs but they show strong numbers," he said. (See "First-quarter growth strong for Michigan CUs" in today's News Now.) In addition to planning and diversifying, credit unions have become very good in loan underwriting because they've seen the cycle for years. "But there's a lot more to come," Adams said. "While the rest of the country will be celebrating the national economic recovery next year, Michigan will be working through an extended recession for years to come. "It's a testament to credit unions that they are helping with auto loans and making small business loans. In the midst of the economic turmoil, credit unions show their strength by filling the voids and helping members and their communities," he noted.

CU deposits and capital rise earnings problematic

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MADISON, Wis. (6/2/09)--Credit unions are seeing a swell in deposit growth, but may find it harder to generate earnings over the next couple of years, according to a Credit Union National Association (CUNA) economist. The credit union movement’s overall capital-to-asset ratio for April is at 9.6%, and the total dollar amount of capital is at $83 billion, reported the CUNA monthly sample of credit unions.
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“After falling for three consecutive months, credit union capital levels rose 0.1% in April, reaching $83.34 billion,” Steve Rick, CUNA senior economist, told News Now. “Capital levels are now down 8.3% from the peak of $90.84 billion reached last November. “Credit unions’ return on assets is expected to fall to less than 0.20% in 2009--excluding corporate stabilization costs--as rising loan loss provisions eat up most pre-provision income,” he added. “Over the next couple of years, all financial institutions are going to find it harder to generate earnings.” Credit union asset balances rose 0.5% in April and 4.7% year-to-date, Rick said. With assets growing faster than capital, the capital-to-asset ratio fell to 9.56% in April from 10.8% at the end of 2008. “With this ratio expected to fall over the next two years, credit unions are now operating with a heightened awareness of risk, especially the systemic risks facing an economy going through the worst recession since the Great Depression,” he added. Credit union loans outstanding increased 0.2% in April 2009 and 0.3% during the first four months of 2009, down from a 1.2% increase during the same period of 2008.
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Leading loan growth was other loans, rising 1.8%, while credit card loans and home equity loans grew 1.1% each. Used-auto loans (0.8%) and adjustable-rate mortgages (0.7%) also increased this month. Declining during April were other mortgages (-1.2%) and new-auto loans (-1.1%). “Relative to other financial institutions, credit unions maintain more consistent credit standards throughout business cycles,” Rick said. “This cost credit unions some loans in good times, but is now increasing their credit market share in the current economic downturn. “Specifically, credit unions are making significant gains in the mortgage market,” he continued. “Fixed-rate mortgage loans are up 10.5% from April 2008, while home equity loan balances are up 13%. Credit unions need to guard against a rising adverse selection problem, however, as high-risk borrowers who are denied credit at banks turn to credit unions for loans.” Credit union savings balances rose 0.7% in April, but grew 6.4% during the first four months of 2009. Individual retirement accounts grew the fastest with a 3.6% increase, followed by money market accounts (1.4%), share drafts (1%) and regular shares (1%). One-year certificates declined 0.6% during April. “As U.S. households change their financial behavior by deleveraging their balance sheets, credit unions are seeing a surge in deposit growth,” Rick explained. “Savings balances rose 0.7% in April and 6.4% year-to-date, the fastest pace since the 2001 recession. Credit unions should not minimize the scale of the changes sweeping over the financial services industry and should begin planning for the ‘new normal’ business environment.” The loan-to-savings ratio remains close to 79% during the last three months. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 19%. Credit union 60-plus-day delinquencies grew to 1.6% in April 2009 from 1.5% in March.

CUs raise 222000 for Idaho childrens hospitals

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BOISE, Idaho (6/2/09)--Idaho credit unions raised nearly $222,000 to benefit the Children’s Miracle Network through their Credit Unions for Kids program. One hundred percent of the money will benefit children’s hospitals in the state. Idaho credit unions raised more than $1.8 million for Children’s Miracle Network in the past 14 years, according to the Idaho Credit Union League. Credit unions raised the money through raffles, holiday bazaars and ‘skip-a-payment’ programs, the league said. Credit Unions for Kids is a credit union industry effort to raise money for Children's Miracle Network. Credit unions nationwide contributed $9,322,827 to children's hospitals in 2008, making Credit Unions for Kids the third largest fundraising sponsor for the charity (News Now May 28).

Ohio CUs declare The Summer of Money

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COLUMBUS, Ohio (6/2/09)--Ohio credit unions have declared this summer as “The Summer of Money,” a financial education effort that coincides with the start of summer break for school-aged children. During “The Summer of Money,” the Ohio Credit Union League encourages parents to use information from the league’s website,, to teach their children money concepts. The recently updated curriculum on the site is broken down by age group. “Just because children are home from school does not mean they need to leave education in the classroom,” the league said. About 23% of Ohioans make any effort to encourage financial literacy in their families, according to the league. Five percent of consumers surveyed report being taught personal finance when they were young. The league said it sees a direct connection between financial illiteracy and rising bankruptcy rates, debt and foreclosures.

Top 10 INews NowI stories for May

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MADISON, Wis. (6/2/09)--Here are the Top 10 News Now stories most requested by readers during May. Use the link to review the entire story online. 10. Sixty gang members nabbed in $500,000 scam vs. CU SAN DIEGO (5/15/09)--More than 60 members and associates of the San Diego Lincoln Park Street Gang were arrested Tuesday and charged with stealing $500,000 from a credit union by recruiting young credit union members to give up their account information so the account could receive counterfeit check deposits. 9. House panel to discuss corporate stabilization WASHINGTON (5/13/09)--A House Financial Services subcommittee will discuss the National Credit Union Administration's (NCUA) corporate credit union stabilization plan in a May 20 hearing. 8. Member pops question at annual meeting, CEO says yes PORT HURON, Mich. (5/12/09)--It was all business at E&A CU's annual meeting May 4, but the conclusion brought a surprise and some happy drama to the Port Huron, Mich.-based credit union's meeting. 7. Kanjorski offers corporate CU stabilization bill WASHINGTON (5/14/09)--Rep. Paul Kanjorski (D-Pa.), a longtime supporter of the credit union movement, has introduced legislation that will "recapitalize the credit union deposit insurance system to ensure the long-term stability of the credit union system." 6. CU stabilization, insurance fund mods clear Senate WASHINGTON (5/7/09)--The Senate on Wednesday voted 91-5 to approve S. 896, the Helping Families Save Their Homes Act, which now includes provisions to create a temporary Corporate Credit Union Stabilization Fund and permit credit unions to spread the cost of National Credit Union Share Insurance Fund (NCUSIF) replenishment over a longer period of time. 5. More accounting guidance sent to NCUA examiners WASHINGTON (4/10/09)--National Credit Union Administration (NCUA) examiners received additional clarification today regarding credit unions' flexibility in booking the National Credit Union Share Insurance Fund (NCUSIF) deposit impairment, according to NCUA. 4. Community First CU wins UBIT case GREEN BAY, Wis. (5/15/09)--Community First CU has won its challenge against the federal government over the Internal Revenue Service's (IRS) interpretation of the unrelated-business income tax (UBIT) as it relates to three insurance products. 3. Matz to be nominated as NCUA chair WASHINGTON (5/22/09)--Debbie Matz is President Barack Obama's choice to become the new chair of the National Credit Union Administration (NCUA), the White House announced Thursday. 2. House, Senate pass corporate stabilization bill WASHINGTON (5/20/09)—The House and Senate on May 19 approved S. 896, the Helping Families Save Their Homes Act, which would extend $250,000 share and deposit insurance coverage and help credit unions manage the impact of the financial crisis on the credit union system through a corporate stabilization program. 1. President's pen turns corporate stabilization plan into law WASHINGTON (5/21/09)--In a ceremony held at the White House on May 20, President Barack Obama signed S. 896, the Helping Families Save Their Homes Act, into law.

CU System brief (06/01/2009)

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* COLUMBIA, S.C. (6/2/09)--The National Youth Involvement Board (NYIB) has instituted a referral incentive for the NYIB Conference Aug. 3-6 in Tempe, Ariz. "We are asking that people share information on the conference with peers--credit union pros, cooperative extension agents and the like--while asking that any who decide to register enter at registration the name of the person who referred them," said NYIB Chairman Brandon Pugh. Each referral constitutes a separate entry in a random drawing for a complimentary registration. Also, the person who refers the most people will receive a complimentary registration. "Because we are a volunteer organization of peers without a significant budget for outreach, word-of-mouth is a necessary tool for us to bring more people together, whether at the conference or in sharing through our listserv and the resource pages on our website." The registration page has optional fields for "Referred by name" and "Referred by CU/organization." Any credit union that registers more than one person pays $100 less for each additional participant, Pugh told News Now

MDDCCUA honors marketing outreach award winners

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COLUMBIA, Md. (6/2/09)--The Maryland and District of Columbia Credit Union Association (MDDCCUA) announced the recipients of its marketing and outreach awards Wednesday.
District Government Employees FCU (DGEFCU), Washington, D.C., received the Christine DeWitt Memorial Award for Excellence in Marketing, Best of Show. Accepting the award were (from left): Claudia Saidon, Graphic Ideas; Joann Clark, DGEFCU chairman; Charlie DeWitt; Mallorie David, COMSTAR FCU; Carla Decker, CEO, DGEFCU; and Mike Beall, Maryland and District of Columbia Credit Union Association CEO. (Photo provided by the Maryland and District of Columbia Credit Union Association).
District Government Employees FCU, Washington, D.C., received the Christine DeWitt Memorial Award for Excellence in Marketing, Best of Show. Carla Decker, CEO; Joann Clark, chairman; and Claudia Saidon and Maximo Gastaldi from Graphic Ideas, accepted the award. The award memorializes Christine DeWitt, former vice president of operations of COMSTAR FCU, Clarksburg, Md., who died in 2007. Chessie FCU, Cumberland, Md.; MECU, Baltimore; and Credit Union Miracle Day Inc., received Dora Maxwell Social Responsibility awards. Chessie won in the $100 million to $200 million assets category, and MECU won in the $500 million assets category. Chessie and MECU also won the Louise Herring Award for Philosophy in Action, and MECU received the Desjardins Youth Financial Education Award. For a complete list of winners, use the link.

Idaho league names outstanding pro volunteer

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BOISE, Idaho (6/2/09)--The Idaho Credit Union League named recipients for its Outstanding Professional of the Year and Outstanding Volunteer of the Year awards. The awards were presented during the league’s 73rd annual meeting.
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Val Guenther, CEO of Lewis Clark CU in Lewiston, received the Professional of the Year award. She has worked in the Idaho credit union movement for more than 30 years. Guenther is an advocate for youth financial literacy; serves as vice chair of the board of League Services, Inc., the for-profit arm of the Idaho league; chairs the league’s scholarship committee; and serves on its Credit Unions for Kids Committee. Ron Anderson, chairman of Kamiah (Idaho) Community CU, received the Outstanding Volunteer award. He chairs the credit union’s board of directors and has been involved with the league’s Hike the Hill events in Washington, D.C. He also has been involved with community events, such as volunteering to repair the city’s American Legion building and contributing to Credit Unions for Kids.