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NEW: Plauda To Retire From Illinois League In June 2014

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NAPERVILLE, Ill. (6/10/13, UPDATED 4:55 p.m. ET)--Illinois Credit Union League (ICUL) President/CEO Dan Plauda will be retiring after 37 years of service to the credit union movement, effective June 30, 2014, the ICUL announced today.

Plauda joined the league staff in May 1977, serving at that time as the organization's first general counsel. Before that, he was a partner in a Minneapolis law firm.

In August 1984, Plauda became the fourth president in the 83-year history of the league, and also at that time was named president/CEO of the League Service Corporation (LSC).

The ICUL announcement noted that under Plauda progressive leadership, the Illinois credit union movement has expanded to $35 billion in assets and serves more than 2.84 million members.

During his time at the helm of the league, Plauda also served five years on the board of the Credit Union National Association, and its affiliate, CUNA Service Group.  He also served as chairman of the board of the CU Interchange Group, the national ATM network for credit unions; and on CUNA's governmental affairs and audit committees.  Plauda is also a former member of the executive board of the American Association of Credit Union Leagues (AACUL).

See News Now Tuesday for more.

Myth Of Uneven Playing Field Debunked In Report

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FEDERAL WAY, Wash. (6/10/13)--All major claims made by critics of credit unions about an uneven playing field are unsubstantiated, according to an economic analysis released Friday. The study also found there is "no evidence that state and federal tax policies give credit unions unfair competitive advantages over banks."

"Credit Unions vs. Banks: The Myth of the Uneven Playing Field" is authored by

ECONorthwest's Randall Pozdena, managing director and senior economist, and Michael Wilkerson, senior economist.  The report was commissioned by the Northwest Credit Union Association.

The  independent economic analysis was commissioned after bank trade associations in Oregon and the U.S.  lobbied to eliminate not-for-profit credit unions' tax-exempt status in the state and in Congress.

"In our view," wrote the authors, the difference in organizational forms of credit unions and commercial banks, the asymmetry of powers enjoyed by the respective institutions, and the trends in credit union development are not consistent with the claim that credit unions enjoy unfair competitive advantages."

In the study, they reviewed the theory and historical performance of credit unions then statistically tested where there is a comparative performance difference based on the adoption of the community common bond membership criterion, or credit unions' exemption from corporate income taxation.

"All the major claims made by critics of the credit union industry are unsubstantiated," said the report.  Contrary to the claims of banks, the study concluded:

  • Credit unions' share of consumer deposits have not been growing for more than a decade.
  • There is no evidence that either the community bond designation or corporate tax policy has had any positive statistical effect on deposit or institution share trends.
  • Credit unions' growth and consolidation is mainly a response to the risk and inefficiency of reduced scale revealed by credit union liquidations in the 1970s and 1980s--not a consequence of changes in common bond designation or tax policy.
  • Untaxed credit union net income is not going to higher credit union labor compensation.
  • Consistent with the theory of cooperative banking, credit unions continue to provide superior deposit and loan rates, in addition to greater protection from portfolio risk relative to outside-ownership commercial banks.
  • The channeling of free cash flow to savers and borrowers means that free cash flow does not go untaxed.
  • Credit unions have not abandoned small account holders.
The authors said their "review of the theory, data and formal statistical analysis does not offer support for disturbing the tax policy and provides room for charter enhancements of credit unions. Indeed, to disturb the tax policy and limit the charter evolution of the not-for-profit cooperative may eliminate a small, but important class of institutions that theory says should be able to better manage risk and provide benefits to consumers than investor-owned commercial banks under the right operating conditions."

For the full report, use the link.

Hensler Appointed To Maine League Board

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PORTLAND, Maine (6/10/13)--Ken Hensler, president/CEO of The County FCU, Caribou, Maine, has been appointed to the Maine Credit Union League board.

Hensler's appointment was made by the league's Aroostok Chapter of Credit Unions (Weekly Update June 7). He will fill Dave Rossignol's unexpired term.

Rossignol, who is chairman of the league board, will step down with his retirement as president/CEO of NorState FCU, Madawaska.

Prior to accepting his current position with The County FCU in 2003, Hensler served on the credit union's board for five years.

Illinois, Ecuador CUs Sign As International Partners

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AMBATO, Ecuador (6/10/13)--BCU of Vernon Hills, Ill., and the Cooperativa de Ahorro y Credito OSCUS Ltda. met early this month in Ambato, Ecuador, to establish an official credit union-to-credit union partnership under the World Council of Credit Unions' International Partnership Program.

Click to view larger image BCU, Vernon Hills, Ill., and Ambato, Ecuador's Cooperativa de Ahorro y Credito OSCUS Ltda. signed an international partnership through World Council of Credit Unions' International Partnership Program. Representatives included, from left, Jose Cajigas, BCU regional director; Bob Pondelicek, BCU director of mortgage sales; Federico Cuesta, OSCUS CEO; and Joshua Fetting, Worldwide Foundation for Credit Unions program manager. (Photo provided by the World Council of Credit Unions)
The partnership means the credit unions will directly exchange information, ideas and best practices in credit union operations.

"Forming a partnership with an organization full of dedicated individuals with shared goals and values only strengthens our pride in the World Council International Partnerships' mission and the industry as a whole," said BCU President/CEO Mike Valentine.

During the visit, Bob Pondelicek, BCU director of mortgage sales, and Jose Cajigas, BCU regional director, visited three OSCUS rural branch offices to observe how the credit union helps underserved communities.

They also joined 800 credit union members and international delegates attending OSCUS' 50th anniversary celebration. During the event, local government presented OSCUS with special awards for its community service, and BCU presented a special congratulatory commemoration.

"This partnership breaks boundaries and marks a milestone in the Ecuadorian cooperative movement," said Federico Cuesta, OSCUS CEO. "Cooperative thought and willpower have built a new path of management and international integration."

World Council's International Partnership Program now has 20 alliances in North America, Latin America, the Caribbean, South Pacific and Europe.

"Connecting OSCUS and BCU allows them to leverage their shared commitment to provide the best member experience regardless of whether it's in the suburban communities of Chicago or in rural Ecuador," said Victor Miguel Corro, vice president of Worldwide Foundation of Credit Unions. He oversees the International Partnership Program.

"We will work hard to support this partnership and to continue connecting credit unions around the globe," he said.

Ending Hunger a Cooperative Effort, League Tells Public Radio

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PORTLAND, Maine (6/10/13)--Helping to put an end to hunger involves cooperation among many credit unions and members, the Maine Credit Union League told a public radio station in the state.

"One of the reasons behind the success of the Maine credit unions' Campaign for Ending Hunger is that it is a cooperative effort, and that is the kind of effort that it is going to take to make a difference," said Jon Paradise, league assistant vice president of governmental and public affairs, during a recent Roundtable Discussion on Maine Public Radio (MPR) about hunger in Maine (Weekly Update June 7).

The league organized the roundtable to help build awareness about hunger in the state. During the program, the host and several callers lauded Maine CUs for raising funds for ending hunger.

"Since 1990, Maine's credit unions have raised $4.8 million to help end hunger in Maine, representing more than two decades of commitment to this cause. That is a lot of money," said host Jennifer Rooks on MPR's Maine Calling Show, which airs statewide.

Two hunger advocates also appeared on the program: Kristen Miale, president of the Good Shepherd Food Bank, and Brenda Davis, founding director of Cross Roads Resource Center and one of the state's leaders on this issue. Davis and Miale praised credit unions "for showing leadership and tremendous initiative on the issue of hunger in Maine. What the credit unions do for this cause is amazing," they said.

During the 45-minute program, callers statewide phoned in to discuss the issue and reiterated the importance of a cooperative effort, such as the Maine credit unions' campaign.

"This cannot be done alone; we must work together and what credit unions are doing is a great example of what we can accomplish when we do," one caller said.

Maine CU Friend Named SBA Regional Administrator

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PORTLAND, Maine (6/10/13)--A credit union supporter in the Maine State Senate, who often touted the support he received from his credit union when he started a small business, has been appointed regional administrator of the New England Office of the U.S. Small Business Administration, said the Maine Credit Union League.

State Sen. Seth Goodall was appointed by SBA Administrator Karen Mills and will oversee SBA programs and state offices in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. Now in his third term, Goodall was Senate Majority Leader in the 126th Main Legislature, said the league (Weekly Update June 7).

"Although we lose a great friend in the Maine Senate," said league President John Murphy, "I believe that the an outstanding choice that, long-term, will serve credit unions and small businesses well."

Murphy said he wrote a reference letter on Goodall's behalf.  In it, he cited Goodall's strong support of credit unions.  "Senator Goodall has always been extremely responsive to credit unions and the small businesses we serve across Maine, and he frequently notes the assistance and support he received from his local credit union when his business was just starting out and how appreciative he is of that support. Sen. Goodall has been a good friend of Maine's credit unions."

Goodall will resign when the current legislative session adjourns later this month.

The appointment comes as credit unions are trying to raise their member business lending (MBL) cap in Congress so they can offer more MBLs to help small businesses and the economy. Raising the cap to 27.5% of assets from 12.25% would help generate $13 billion in new loans to small businesses and help create 140,000 new jobs, without costing taxpayers a dime, says the Credit Union National Association.

Eight Charged In Alabama Tax Refund Scheme

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BIRMINGHAM, Ala. (6/10/13)--Eight people in Alabama, including a state prison inmate, have been indicted in a five-year-long federal tax refund fraud scheme in which some of the proceeds were deposited into an account at a credit union.

Shermaine "Shade" German, 56, an inmate at Bibb County Correctional Facility in Brent, is charged with leading the conspiracy, which occurred from January 2008 through last month, according to a press release from the Federal Bureau of Investigation and the U.S. Attorney's Office in Birmingham.

He allegedly orchestrated the scheme from prison, where he obtained names, birth dates and Social Security numbers of other people, including fellow inmates on death row and those serving life without parole. That information was used to create false income tax returns under others' names with fabricated tax withholdings.

German also is accused of creating false power-of-attorney forms mailed with the false income tax returns. Others in the ring notarized the documents and used them to cash or deposit income tax refund checks received as part of the scheme, said the law enforcement agencies.

Others charged are: Ronald Webster, 55; Brenda Joyce McDonald, 55; and Yvette Berry Pinckney, 48, all of Montgomery; Marlo Yvette Miller, 46, and Irene King Douglas, 58, of Huntsville;  Cynthia Dianne Ware, 49, of Eufaula; and Barbara Ann Grimes, 62, of Mobile.

Miller allegedly cashed or deposited fraudulent refund checks into Regions Bank and Redstone FCU, a $3.4 billion asset, Huntsville-based credit union.

Cheney Addresses CUAD On Tax Threat

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GRAND FORKS, N.D. (6/10/13)--Bill Cheney, president/CEO of the Credit Union National Association, and the Credit Union Association of the Dakotas were in Grand Forks, N.D., last week to rally support for protecting the federal tax exemption and to "Unite for Good" during the annual CUAD Summit.

Click to view larger image Bill Cheney, right, president/CEO of the Credit Union National Association, posed with Robbie Thompson, president/CEO of Credit Union Association of the Dakotas, and CUAD's CU on the Road Vehicle, part of its credit union awareness campaign, last week during the annual CUAD Summit.  (Photo provided by the Credit Union Association of the Dakotas)
On Thursday, Cheney addressed the general session, and discussed CUNA's strategy in Washington, D.C., meeting the challenges credit unions face, and looking toward a bright future. Cheney expanded upon the three-tiered coordinated efforts of "Unite for Good," the "Don't Tax My Credit Union" movement and the "Plan To Win," which are vital to the success of the credit union movement.

"There is much to be excited about ... credit unions grew over 800,000 net new members so far this year, in just three months" Cheney said.  "Hats off for all you are doing."

Cheney said that credit unions do not want to wait until the taxing of credit unions is part of legislation and then begin to fight it; they must stop it now. "With a shared message and a common vision, nothing is impossible," he said.

Cheney encouraged the audience to visit the website.

Unite for Good is CUNA's campaign to rally credit unions toward the strategic vision in which "Americans choose credit unions as their best financial partner."  The campaign's goals are: remove barriers, create awareness and foster service excellence.

CUNA's Plan To Win can help credit unions educate their members and prepare for a national call to action to protect the tax status, if needed. The plan includes four steps:

  • Educate;
  • Participate;
  • Communicate; and
  • Hold lawmakers accountable.
Addressing the burdens that community based financial institutions and credit unions are facing, Cheney said that "over-regulation could create the next financial crisis ... and we are starting to have some success in getting that message across."

Cheney met with Consumer Financial Protection Bureau Director Cordray and National Credit Union Administration Chairman Debbie Matz recently and said that the tone is different than it was a year ago. "They acknowledge that credit unions did not cause the financial crisis, and are addressing issues with examinations," Cheney said.

CU Merger Trend Continues

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 MADISON, Wis. (6/10/13)--The merger trend among credit unions nationwide continues, with smaller credit unions seeking to offer their members a wider range of products, services and branches, and larger credit unions looking to increase their memberships.

Among the credit unions merging:

  • Capitol Region FCU, Wethersfield, Conn., with assets of about $30 million, will be consolidated with $200 million asset Dutch Point CU, also of Wethersfield. The ability to gain value for members was the reason cited for the merger by Jeanne Kelly, president/CEO of Capitol Region FCU.
  • First American CU, a part of First Community FCU, will merge with E&A CU, Port Huron, Mich. Once the merger is complete, the combined credit union will have more than 100,000 members and assets of nearly $1 billion (Beloit Daily News June 5). First American CU, based in Beloit, Wis., became a part of Parchment, Mich.-based $704 million First Community CU in 2010.
  • WECU CU, with $27 million in assets in Marysville, Ohio, has merged into the $192 million Pathways Financial CU, Columbus, Ohio. This merger follows a strategic merger model that Pathways used in 2012, in which each merging credit union continues to use the trade name associated with their former credit union. Pathways Financial was formed on Aug. 1, 2012, as the result of an unprecedented three-way merger by Members First, Powerco and Western credit unions. As a result of the latest merger, Pathways Financial has $219 million in assets and serves 27,819 members.
  • SELCO Community CU, based in Eugene, Ore., with $1 billion in assets, is merging with $33 million asset Greater Oregon FCU, Burns, Ore (Argus Observer June 1). Greater Oregon FCU members will benefit from the full range of banking, mortgage, business lending and insurance services that SELCO Community CU offers, said Bob Newcomb, SELCO Community CU president/CEO.
  • Tehachapi (Calif.) FCU has merged with Bakersfield, Calif.-based Kern Schools FCU, with $1.24 billion in assets (SNL Bank and Thrift Daily May 22). Tehachapi FCU, with $1.9 million in assets, is facing financial challenges, SNL Bank and Thrift Daily reported.
  • Centel CU, with $23 million in assets, in Owosso, Mich., has merged into the $549 million asset LAFCU in Lansing, Mich. The merger is expected to be completed in the fall (Argus Press May 18).
  • America's Christian CU, with $255 million in assets, in Glendora, Calif., will merge with $27 million asset Lutheran CU, Brea, Calif. (California Dept. of Financial Institutions DFI Monthly Bulletin April 2013).
  • Huntington Beach Calif.,-based, $1.2 billion asset NuVision FCU will merge with $103 million asset Pacific Resources CU, Los Angeles (California Dept. of Financial Institutions DFI Monthly Bulletin April 2013).
  • Alameda (Calif.) CU, with $33.9 million assets, is seeking regulatory approval to merge with Redwood City, Calif.-based, $1.73 billion asset Provident CU, also of Alameda (SNL Bank M&A Weekly May 6). Alameda CU cited rising overhead costs and more complicated regulations as among reasons the merger.
  • Fairfax, Va.-based Apple FCU, with $1.2 billion in assets, has merged with Vantria FCU, $72 million Springfield, Va. (Business Wire May 14). Apple FCU offered Vantria FCU members a greater range of personal banking options, said Robert Sowell Sr., Apple FCU vice president of community relations.
  • Middletown, N.Y.-based Hudson Heritage FCU, with $265 million in assets, is seeking a merger with $27 million MPO FCU, also based in Middletown (SNL Bank M&A Weekly May 22). MPO CU found it difficult to survive in the current environment in which interest rates are low, President/CEO Kelly Bilello said.
  • U.S. Coast Guard Community CU, with $33 million in assets, in Pasadena, Md., will merge into Tower FCU. The expected merger date is June 30. The Office of the Maryland Commissioner of Financial Regulation and the National Credit Union Administration approved the merger April 29. Laurel, Md.-based Tower FCU has more than $2.6 billion in assets and 126,000 members.