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CUs succeed in local coverage on interchange

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MADISON, Wis. (6/14/10)--From Raleigh, N.C., to Superior, Wis., from Houston, Texas, to Kansas City, Mo., and Des Moines, Iowa, credit unions and others are speaking out in the media with this message: No interchange amendment. The amendment in the Senate version of the regulatory reform bill would allow government to intervene in setting interchange fees. It is strongly opposed by Credit Union National Association and credit unions. Last week, hundreds of credit unions have hiked Capitol Hill to deliver their message to Congress. Credit unions and their members have made about 450,000 individual contacts with their representatives. Others took to the media to explain why they oppose the amendment. Here are some examples. In an op-ed in the Kansas City Star Thursday, Stuart E. Weiner, a former vice president and director of payment system research at the Federal Reserve Bank of Kansas City, said credit unions' concerns that they cannot avoid the harms of interchange price controls even through an exemption "should not be ignored." "It is hard to envision an outcome where the larger institutions which are essential to achieve the economies of scale necessary to operate a national or global network choose to continue to support a system that provides a significant revenue advantage to thousands of their competitors throughout the country," he said. "The result would be a single system at the lower regulated rate, in effect bringing the smaller issuers under the regulation," he said. The amendment would require the Federal Reserve, one of the nation's two automated clearinghouse operators, to set prices for its competitors, and it would be difficult for the Fed to precisely determine a correct interchange fee, Weiner said. (For the full article, use the resource link.) In the Houston Chronicle (June 10), business columnist Loren Steffy said, "Financial reform was designed to address the egregious practices of banks that contributed to the financial crisis. Swipe fees weren't part of the problem." James Tuggle, CEO of Transtar FCU, Houston, told the Chronicle that his credit union would have difficulty keeping members or attracting new ones without offering a debit card for checking accounts. Smaller institutions "would be put at a competitive disadvantage. If I want to keep my debit card program, I can either operate it at a loss or pass that on to consumers," which would prompt them to switch to a larger institution. Use the resource link for the full article. In the Superior (Wis.) Telegram, Gary Elliott, president/CEO of Superior Choice CU, said, "We're all in favor of reforms that protect consumers from the kind of bad practices that caused the financial crisis. But this bill should not be used as a convenient cover by merchants simply looking to shift their costs to consumers. Our members should not have to foot the bill." Credit unions aren't asking their members to stand up for a fight that they won't benefit from personally, he said. "Members are standing up for credit unions because they're the owners whose wallets will feel the impact of this provision," he added. "Nothing in the amendment guarantees that consumers--whose interests should drive public policy in the area--will see any savings at all from the reduced interchange fee," said Tom Liebe, vice president of government affairs at the Wisconsin Credit Union League, citing a similar bill in Australia. In Raleigh, N.C.'s News Observer (June 8), Maurice R. Smith, president of Local Government FCU, Raleigh, N.C., wrote, "Credit unions did not cause the financial crisis, but rather have been instrumental in the solution. So we are alarmed that the effects of financial reform could be misplaced and hurt consumers who are already struggling to pay their bills. "With plastic cards, issuers like the credit union run the risk of not getting paid. Fraud is the highest expense and risk for card issuers. Yet the fraud often takes place at the merchant's point of sale," Smith said, adding, "It would seem merchants would like to go back on an arrangement that has served both parties well. Merchants would like to unload all of the risk and their costs on the card issuers. This is not fair." For the article, use the resource link. On Radio Iowa the Iowa Credit Union League explained that the amendment would lead to bigger fees for credit union members. Justin Hupfer, league vice president of government affairs, said the amendment would not include the cost of protecting against fraud, which is a significant cost for debit card programs. The interchange fee would lead to more fees for consumers. And it would be unlikely that merchants would reduce their prices if the interchange fee was lowered. For the full article, use the resource link.

Minnesota CUs feel recessions lending slump

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MINNEAPOLIS/ST. PAUL, Minn. (6/14/10)--A drop-off in lending caused by the recession is the major reason that 60% of the largest 25 credit unions in Minnesota’s twin cities area--Minneapolis/St. Paul--are reporting lower capital rates. The situation is leading some credit unions to take proactive approaches to the problem. Some credit unions reported double-digit percentage drops in the value of loans generated in the first quarter 2010, compared with the same period last year (Minneapolis/St. Paul Business Journal June 11). “You’re not seeing second-mortgage loans as much,” Mark Cummins, president/CEO of the Minnesota Credit Union Network, told the Journal. “People aren’t buying new cars. If the consumers are not buying, we’re not lending to them. That’s going to hurt our bottom line. It’s going to make it hard for us to raise capital.” Credit unions not only are dealing with defaulted loans, they also are handling loans that are being paid on time, but for some reason are considered troubled and need to be renegotiated, the Journal said. Therefore, money has to be set aside, per accounting rules. As an example, Hiway FCU was advised by its outside auditor to reserve more funds for troubled loans, Jeff Schwalen, president of the $847.7 million-asset, St. Paul-based credit union, told the publication. That resulted in a first-quarter loss of $1.72 million--the largest loss among the Twin Cities’ biggest 25 credit unions. However, Hiway still is well-capitalized and Schwalen told the Journal he thinks the worst is over. “The third and fourth quarter will be positive,” he added. Some credit unions are trying different approaches rather than waiting for economic conditions to improve, the Journal said. In one instance, Financial One FCU, a $68 million-asset credit union based in Columbia Heights, entered partnerships with roughly 40 auto dealerships to provide auto financing. The auto loans bolstered the credit union’s loan levels, allowing it to provide nearly $8 million in first-quarter loans this year--eight times more than the same quarter a year ago, Previn Solberg, Financial One president, told the Journal. Also, some smaller credit unions are looking to merge with larger ones. More difficult financial times and increased regulation are forcing more credit unions to merge, Sherri Stumpf, interim CEO of TruStone Financial FCU, a $642.4 million-asset Plymouth-based credit union, told the Journal. “[Some credit unions are] seeking us out saying, ‘We can see the rates you are able to offer on car loans and home loans and we’d like to be able to give that to our members, and we just can’t anymore because of all these assessments and impairments,’” Stumpf added. Four other Twin Cities credit unions were mentioned in the article.

Four out of five Net households bank online

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BROOKFIELD, Wis. (6/14/10)--Credit unions should note that four out of five households with Internet access use online banking services--primarily to access balance and account history, and transfer money between accounts--according to a Fiserv survey. These figures are expected to keep rising, said Brookfield, Wis.-based Fiserv, a company that provides information management and e-commerce systems for the financial services industry. “We believe that consumers will continue to conduct more and more of their financial activities online,” said Geoff Knapp, Fiserv vice president of online banking and consumer insights. Credit unions may be particularly interested in this survey because 64.8% provide Web-based home banking, according to The National Credit Union Administration Freedom of Information Act file for March 2010. Roughly 96% of credit union members can use Web-based home banking, while 4% cannot because their credit union doesn’t offer it. About 64.4 million households pay at least one bill online, through a financial institution website or directly through a company website. Of those Fiserv surveyed, 41% of current online banking users indicated they planned to pay more bills online at their financial institutions’ website in the coming months. And 35% of those who pay bills directly at company websites said they planned to pay more bills online at those sites. Consumers use online banking because of its speed, ease of use, cost savings and control, Fiserv said. The survey also noted:
* About 49% of consumers who use online bill pay said they are less likely to switch banks due to their experience, up from 43% last year; * Roughly 67% of online bill pay users would recommend their bank to a friend or relative; and * Over a period of three months, 38% of online bill pay users recommended the service to others. Those recommending the service did so an average of two times.
Fiserv’s survey reflects the habits of 88.2 million households in the U.S. The survey has been conducted since 2001.

Greylock appoints Sperling as interim presidentCEO

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PITTSFIELD, Mass. (6/14/10)--Greylock FCU, Pittsfield, Mass., has named Marilyn Sperling as interim president/CEO, according to the credit union's board of directors. "We have accepted the resignation of President/CEO Angelo Stracuzzi," the board said in a statement Friday. The board noted the resignation "concludes a full evaluation that began in late May 2010 when this board of directors first learned of Angelo Stracuzzi's 2005 misdemeanor conviction. "In accordance with our established succession plan, the Greylock directors convened a special board meeting and appointed long-time executive Marilyn Sperling as interim president/CEO." Sperling has 35 years of banking experience, including 25 at Greylock. "Marilyn and the other members of Greylock's senior management team have taken all steps needed to ensure a seamless transition with no disruption of service," the board said. For the past seven years, Sperling has been senior vice president at Greylock overseeing the credit union's branch network. She built the credit union's mortgage practice and is recognized as the foremost real estate lender in the region. Sperling also had established Greylock as the top mortgage lender in Berkshire County, said the board's press release. Board Chairperson Sheila LaBarbera said that Stracuzzi, in tendering his resignation, "stated that he felt this was in the best interest of the credit union. We'll always appreciate the achievements of the credit union under his leadership." Local news media reported that there was a potential conflict of interest probe, and the board had accepted the resignation of Stracuzzi and of board member Cliff Nilan. Nilan was the chief of probation for Berkshire Superior Court (Associated Press and Boston Herald June 5).

Pa. CUs VITA programs tally 2M in refunds

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HARRISBURG, Pa. (6/14/10)--Eight Pennsylvania credit unions participated in the Internal Revenue Service (IRS) Volunteer Income Tax Assistance Program (VITA) during this spring’s tax-filing, resulting in more than $2 million in federal tax refunds for state taxpayers. Nearly 2,000 Pennsylvania taxpayers had their 2009 tax returns processed through the program, said the Pennsylvania Credit Union Association (Keystone Extra June 11). The IRS VITA and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for underserved taxpayers. Trained community volunteers provide tax preparation assistance and may help with special credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly or the Disabled. AmeriChoice FCU, Mechanicsburg, assisted more than 93 families in the Harrisburg area with refunds equaling $151,730, an increase of more than 25% from 2009. The credit union partnered with the United Way and the Community Action Commission to provide free tax preparation each Friday afternoon. Belco Community CU, Harrisburg, recruited 19 volunteers, 14 of whom went through a minimum of 16 hours of training to become certified tax preparers. Five others served as greeters and assisted the program. Overall, the volunteers contributed a combined total of 275 hours to the VITA program and completed 161 returns, resulting in refunds totaling $295,489. Two employees from Choice One Community FCU, Wilkes-Barre, prepared tax returns at its main office on Wednesdays and in its waterfront branch on Thursdays. They prepared 143 federal returns for total refunds of $171,444. Twenty-five taxpayers received the Earned Income Tax Credit of $43,028. At Clearview FCU of Moon Township, 18 volunteers prepared returns at eight branches and seven volunteers were located at three satellite sites. A total of 480 electronic file returns and 53 paper-filed returns provided refunds of $584,990. Seven employees at Erie (Pa.) FCU trained and were certified at the Intermediate Level to prepare tax returns. One additional employee scheduled appointments. The employee volunteers committed 185 hours of time for tax preparation. As a whole, the credit union processed 82 returns for $136,733 in refunds, in addition to 27 EITC returns totaling $45,631. Erie (Pa.) General Electric FCU completed its fifth year of volunteering for the VITA program. Its volunteers prepared 425 tax returns, with total refunds exceeding $625,000. Timberland FCU, DuBois, participated in the VITA program for the first time. The credit union’s three IRS-trained employees filed more than 60 returns at the credit union, with an average return of $1,328. They volunteered more than 100 hours. The sum of the county program was 307 returns totaling $407,812. As part of the York County Financial Stability Partnership, White Rose CU, York, agreed for the second consecutive year to prepare taxes for free at all four branches. During the 2009 tax season, credit union employees and volunteers helped prepare 369 tax returns, compared with 184 in 2008. All individuals who filed tax returns were offered free debit cards, with acceptance guaranteed. Thirty-eight individuals, formally unbanked, joined White Rose. The York County program included 79 certified tax preparers and 49 phone volunteers, with 7,862 volunteer hours. They prepared 2,451 federal tax returns totaling $3.94 million. Although Lehigh Valley FCU, Allentown, did not process tax returns, the credit union donated its conference room for AARP volunteers preparing tax returns for members and nonmembers. The partnership assisted more than 135 individuals, and the credit union has already reserved the room for next tax-filing season, for each Thursday from February through mid-April 2011. The IRS in 2010 awarded 24 TCE grantees $6.1 million and 147 VITA grantees $7.44 million. Through mid-May, the two grant programs filed more than 2.1 million returns at nearly 9,000 sites nationwide.

CU System briefs (06/11/2010)

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* JACKSON, Miss. (6/14/10)--Mississippi Attorney General Jim Hood has issued a warning that new phishing activity has surfaced in Northeast Mississippi. Consumers in the area have called his office and the state Public Service Commission about suspicious phone calls that advise them their credit or debit card has been deactivated, frozen, or transferred to another company. Consumers are then prompted to enter their account number. "This is a common scam that our office sees on a regular basis," said Hood. He noted it is "important to remember that a legitimate financial institution will never call, text or e-mail you to ask for your information." ... * PHOENIX (6/14/10)--The Arizona Credit Union Foundation announced its sponsorship of Kara Kirschner-Brooks, learning and development specialist at Chandler-based First CU, for the Gary L. Plank World Council of Credit Unions' (WOCCU) Young Credit Union Professionals Program (WYCUP) Scholarship. WYCUP is a scholarship program to promote credit union professionals under 35 years old. As Arizona's 2010 representative, Kirschner-Brooks has been automatically nominated for one of five WYCUP scholarships WOCCU will award to attend the 2011 World Credit Union Conference in Glasgow, Scotland ... * MONTPELIER, Vt. (6/14/10)--The National Youth Involvement Board (NYIB) has selected the Association of Vermont Credit Unions' (AVCU) Economy of Me Project Manager Colin Ryan for the Robert L. Curry Scholarship Award to cover conference and education fees for Ryan to attend the NYIB 2010 Annual Conference July 26-29 in St. Louis. The scholarship recognized AVCU's mission of enhancing the financial education of Vermont high school students through the project, which resembles the principles of leadership development exemplified by Curry, a former president/CEO of CUNA Mutual Group ... * CHARLOTTESVILLE, Va. (6/14/10)--UVA Community CU's success in supporting small businesses was recognized by the U.S. Small
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Business Administration (SBA), which named the credit union the Top Credit Union in the Richmond District for fiscal year 2009. The district includes all of Virginia, except for the Washington, D.C., metropolitan area. The award recognizes the highest loan volume by dollar amount. The credit union closed more than $5.5 million in business loans in 2009, providing much-needed capital to local businesses in various industries. At year end, it had more than $20 million in business loans outstanding, a 23% increase from 2008. Business member-owners more than doubled during that period, to 453 from 216. At the award presentation June 3 in Richmond are, from left: Donald "Scott" Dailey, SBA assistant district director of lender relations; Ronald E. Bew, SBA district director, Richmond office; Michael D. Lyster, vice president of business lending, UVA Community CU; Bridget Bean, acting regional administrator of Region 3, SBA; U.S. Rep. Robert C. "Bobby" Scott (D-Va.); and Virginia Lt. Gov. William T. "Bill" Bolling. (Photo provided by UVA Community CU) ...

Royal CU purchases assets of Anchor Bank

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ALEXANDRIA, Va. (6/14/10)--Twenty thousand bank customers were transformed into credit union members last week when Royal CU, of Eau Claire, Wis., purchased assets from Wisconsin-based Anchor Bank. The bank has been seeking solutions to its stability problems all year. As reported in April by the Milwaukee Journal Sentinel online version , the bank lost $158.2 million last year after losing $169.8 million in 2008 and had been looking to shed assets and branches. The National Credit Union Administration (NCUA) announced Friday that it has approved the purchase and assumption of certain assets, including eleven branch offices in Wisconsin, and deposits by the state-chartered Royal CU from Anchor Bank. The Wisconsin Office of Credit Unions, Federal Deposit Insurance Corporation, and Office of Thrift Supervision also have approved the transaction. Royal, which is federally insured, has approximately $1.05 billion in assets. An Anchor Bank spokesman said this transaction reduces its operation from 72 branches to 61. After pending arrangement with Nicolet Bank in the region to purchase four more branches, Anchor will continue operations with 57 branches. Carla Leuck, community relations coordinator at Royal CU, said the credit union was planning to release more information about the purchase today.