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Consumers place priority on making mortgage payment--study

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SILVER SPRING, Md. (6/16/10)--Consumers consider paying their mortgages a higher priority than their other debt obligations, according to a new survey. That could have some implications for credit unions' loan programs. The National Foundation for Credit Counseling's (NFCC) 2010 Financial Literacy Survey, conducted in March by Harris Interactive, revealed data that support consumers' ongoing efforts to stay in their homes, instead of walking away from their mortgages and allowing foreclosure, said NFCC. The overwhelming majority of consumers surveyed--even those in financial distress--still consider their mortgage payment a priority, the survey found. That could be good for credit unions offering mortgages, but also could suggest problems for other types of loans playing second banana in the loan chain, as members lose more income during a tough economy. The survey asked respondents: if they were unable to meet all their financial obligations, would they more likely keep their mortgage current or their credit cards current? Ninety-one percent said they would pay the mortgage first. Respondents also were asked under what circumstances, if any, they would consider it justifiable to default on a mortgage. About 23% answered that foreclosure is justifiable if the property is now worth less than what is owed on it. Another 15% said there is no justifiable circumstance under which a mortgage default would be acceptable. "Taken together, the NFCC survey data bring us some encouraging news: consumers still place a priority on making their mortgage payment," said Gail Cunningham, spokesperson for NFCC. "Americans continue to prioritize their obligation to service their mortgage loan, and this is indeed good news for homeowners, mortgage lenders and the housing market overall." The survey was conducted by telephone between March 4 and March 8, among 2,028 adults eighteen years and older.

DFCU Financial plans to acquire Midwest Financial FCU

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DEARBORN, Mich., and ANN ARBOR, Mich. (6/16/10)--Dearborn, Mich.-based DFCU Financial CU and MidWest Financial CU, based in Ann Arbor, Mich., have applied for permission with the Michigan's Office of Financial and Insurance Regulation (OFIR) to merge the two credit unions. DFCU Financial, based in Dearborn, is the state's largest credit union with more than $2.6 billion in assets. MidWest Financial, based in Ann Arbor, has more than $185 million in assets but had suffered losses the past two years. According to a statement on DFCU Financial's website, the new organization will assume the DFCU Financial name and have more than $2.9 billion in assets. The merged credit union will serve more than 218,000 members with 25 full-service branches and about 530 employees. The merged credit union "will benefit from geographic market diversification through the expanded branch network, expanded products and services, continued commitment to community initiatives, increased membership growth opportunities, and proven financial strength, leadership and operating performance," said Mark Shobe, DFCU Financial president/CEO. Richard Nowakowski, chairperson of Midwest Financial's board of directors, noted that partnering with Michigan's largest credit union will provide members with enhanced benefits and employees with greater opportunities. "Both MidWest Financial and DFCU Financial are dedicated to making the merger transition a positive experience for all involved," he added. The merger approval is expected to be a formality if MidWest members approve, according to Crain's Detroit Business (June 15).

Concern about interchange noted in more newspapers

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MADISON, Wis. (6/16/10)--Credit unions' concerns about the interchange amendment in the Senate version of the regulatory reform bill are still making the rounds in a number of newspapers and their online sites, in letters to the editor, op-ed pieces, and in interviews. The amendment would allow government intervention in setting interchange fees. If the Federal Reserve set fees set too low--to favor the economy of scales of large banks-- debit card programs at smaller financial institutions would suffer, and consumers would end up paying more, say several newspaper sources. The Credit Union National Association and the nation's credit unions oppose the amendment so strongly that hundreds of credit union representatives blanketed Capitol Hill in Washington, D.C., last week to talk to legislators. And, nearly half a million contacts with congressional representatives were made by credit unions grassroots supporters delivering the message: "No interchange amendment." The amendment "really has the potential to damage credit unions, and debit and credit programs," Winter Prosapio, director of public affairs for the Texas Credit Union League, told the Fort Worth Business Press (June 14). If the Federal Reserve set fees too low, banks and credit unions will lose money and some small institutions may not be able to offer credit and debit card program, which hurts competitiveness, she told the newspaper. Pat Brown, CEO of $10 million asset NRCS FCU, Fort Worth, agreed that the amendment would be detrimental. "Our debit card program puts us in the red every month, so we don't make money on the debit card program. If they take the interchange fee away, we'll be that much further into the red, and I don't know that we'll be able to keep offering the program," Brown told the newspaper. In an op-ed article in the Asheville (N.C.) Citizen Times (June 12), Patty Idol, president/CEO of the $98 million asset, Waynesville, N.C.-based Mountain CU, noted that the amendment is a bad deal for consumers and unnecessarily interferes in the free market. "This amendment threatens to drastically change the way credit unions operate their debit card programs, and punish the very consumers the bill is trying to help," she wrote. Wisconsin Credit Union League President/CEO Brett Thompson, in a letter to the editor of the Milwaukee Journal-Sentinel (June 12), agreed with the newspaper's June 8th editorial that the financial reform bill includes many ideas to help consumers get a fairer shake. "However, there is one troubling provision that needs to come out: the Senate interchange amendment," he wrote. "Retailers want the convenience of taking these cards--immediate payment for their goods and no risk of fraud--without having to pay their fair share of the costs," Thompson wrote, noting that "consumers will be the ones who pay for this." "Bottom line: Consumers won't save any money at the store, but they will pay more to use their cards. The Senate interchange amendment must be dropped," Thompson added.

CU System briefs (06/15/2010)

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* PHOENIX (6/16/10)--The Arizona CU Foundation is sponsoring Amy Singpradith of Canyon State CU, Phoenix, for a scholarship to attend The 1 Credit Union Conference, co-sponsored by the World Council of Credit Unions (WOCCU) and the Credit Union National Association (CUNA) in Las Vegas July 11-14. Singpradith, 35, is vice president of human resources at the credit union and chair of its Employee Recognition Committee. The scholarship, which promotes a credit union professional under 35 years old, is separate from the annual WOCCU Young Credit Union Person's (WYCUP) scholarship, said the Arizona Credit Union League. The foundation's scholarship is one-year only and was made available because the event is close to Arizona. For information about The 1 Credit Union Conference, use the link ... * WAUSAU, Wis. (6/16/10)--Connexus CU was the presenting sponsor of this year's Relay for Life of Wausau, Wis. The credit union donated $10,000 plus its employees raised nearly $14,000 to bring a total of $24,000 to the cause. Connexus employees have participated in the relay for 16 years, and employees volunteer as part of the Connexus team on the event committee and during the relay. From left are Joan Crisman, mortgage loan officer, and Nancy Kowalski, senior executive assistant, who gave the relay a thumbs up. (Photo provided by Connexus CU) ... * DOWNEY, Calif. (6/16/10)--Downey FCU mentored the first place winning team--students in the Regional Occupational Program (ROP)-- in the MoneyWise Teen state competition organized by the California Council on Economic Education. Mentoring the students was Kari Johnson, the Downey, Calif.-based, $154 million asset credit union's community education and development representative. She helped them win the competition over four other high school finalist teams. Each of the seven students and their instructor, Coty Alvarez, received $500. From left are: kneeling, Mario Rios and Eduardo Rivera; and back row, Aaron Chavarria, Brando Castro, Nicholas Baxter, Andrea Ovedo and Rodrigo Perez. (Photo provided by Downey FCU) ... * HOUSTON (6/16/10)--William H. "Bill" Strunk, chairman and founder of Strunk & Associates LP, a discretionary overdraft payment service provider for credit unions, died June 10 after a battle with leukemia. In addition to designing and deploying the original Overdraft Privilege Service Program, Strunk was responsible for a number of innovations commonly used by banks and credit unions, said Strunk President/CEO Mike Sobba. Strunk authored articles on topics such as branch profitability and financial services in banking journals and industry trade magazines. Services were held Tuesday (The Daily Exchange June 15) ...

Bay Gulf to merge with MIDFLORIDA CU

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TAMPA, Fla. (6/16/10)--Bay Gulf CU, Tampa, announced its intent to merge with MIDFLORIDA CU of Lakeland, Fla., subject to a due diligence review already underway. Both credit unions’ boards of directors have unanimously approved the merger. The intention to merge is not related to a cease-and-desist order issued in April to Bay Gulf by the Florida Office of Regulation, according to Bill DeMare, Bay Gulf president/CEO. “The cease and desist order was not what triggered it,” he told News Now. “I had been in talks with Kevin Jones [MIDFLORIDA CU president/CEO, regarding a merger] for some time.” Bay Gulf looked into the merger as a means to maintain profitability, and its board wanted to offer members more products and services. “The decision to merge was not an easy one, but our board felt like the products, services and customer service offered by MIDFLORIDA would benefit Bay Gulf’s membership,” DeMare said. He noted that MIDFLORIDA also is open extended hours from 7 a.m. to 7 p.m., which would benefit Bay Gulf members. While some of Bay Gulf’s long-time members may be sad to see the name change to MIDFLORIDA, DeMare said he hopes most members will be amenable to the change. MIDFLORIDA has $14 billion in assets, with a net worth of $130 million and a 9.3% net worth ratio. The combined credit union will have $1.55 billion in assets, with 150,000 members. MIDFLORIDA also has been rated five stars by Bauer Financial Ratings. “[The merger] really puts us in a strong financial position,” he said. “That’s a plus. We’ve had members ask about Bauer Financial Ratings.” Bay Gulf is a two-star institution, which is not “unusual with our capital,” DeMare said. Bay Gulf has submitted a capital restoration plan to regulators to help it reach 7% net worth by September 2012 after the cease-and-desist order. The credit union has been operating normally since. Regulators reviewed the plan and had several suggestions for adjustments, which include making a more conservative estimate of the effects the National Credit Union Share Insurance Fund premiums will have on the credit union. “We took a more optimistic approach,” DeMare said of the estimate.

Illinois league reaches out to faith-based CUs

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NAPERVILLE, Ill. (6/16/10)--The Illinois Credit Union League (ICUL) recently hosted a meeting for faith-based credit unions in the Chicago area--a second such effort to help the group of credit unions explore growth opportunities. With the daily challenges of staffing mostly by volunteers, restricted hours of operation, and limited opportunities to diversify their membership, the credit unions were offered networking opportunities and heard a variety of presenters. In addition to ICUL staff, presenters included:
* Ron Jones, economic development specialist from the National Credit Union Administration; * Representatives from Members United Corporate FCU, Warrenville; * Geri Burek, ICUL vice chairman and league director for the Chicago Metro Chapter of Credit Unions; * Christine Dickover, chapter chairman; and * Gregg Brown, CEO of South Side Community FCU, Chicago.
Presenters discussed the low-income/Community Development Financial Institution designation, chapter activities and opportunities, loan participation assistance, and system resources and programs. “Since they are not always able to attend educational sessions, chapter functions and other activities, we feel it is important to get this select group of credit unions together on an as-needed basis to discuss compliance and other issues,” said Joyce Jackson, ICUL regional director, who serves the credit unions. Nearly 30 individuals from 15 credit unions attended, representing an average asset size of about $500,000. The Illinois Credit Union Foundation also supported the effort with a Small Credit Union Development grant. One of those in attendance was Chris Grant, chairman of St. Gregory Parish CU. The credit union, located on the north side of Chicago, has more than 200 members and $331,000 in assets, and received its low-income designation about a year ago. “Many conferences are geared toward larger credit unions, so bringing our peer group together was excellent in terms of networking and feedback,” Grant said. “We received a ton of resources that were very hands-on and something we can immediately put into practice.”

IMSNBC.comI Check FIs health look up any CU

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NEW YORK (6/16/10)--Consumers can check out the health of any U.S credit union--or other financial institution--through an online MSNBC.com article Monday, which featured a searchable database. The article, “Bank profits rise, but so do bad loans,” by Wendell Cochran, is based on quarterly financial reports compiled by the Federal Deposit Insurance Corp. and analyzed by the Investigative Reporting Workshop at American University in Washington, D.C. The search does not identify branches of credit unions, only parent institutions. The National Credit Union Administration (NCUA) data are not reported for local branches. Users are taken to a page displaying details about the requested financial institution’s financial performance. The first quarter was difficult for credit unions and 2010 will be a difficult year, Debbie Matz, NCUA chairman, told MSNBC, [referring to the broad reach of the country's economic woes and housing crisis]. However, NCUA reported that U.S. credit unions made about $1.1 billion in the first quarter this year, MSNBC said. To read the article, use the link.

Interchange issue kicks off N.C. annual meeting

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RALEIGH, N.C. (6/16/10)--To kick off the North Carolina Credit Union League Annual Meeting Monday, the league’s Governmental Affairs Forum examined the interchange issue, the 2010 elections, and other topics of interest to credit unions.
The North Carolina Credit Union League’s Governmental Affairs Forum featured the entertaining members of the North Carolina SPIN panel, who discussed state politics and the 2010 elections. The forum kicked off the league’s annual meeting Monday. (Photo provided by the North Carolina Credit Union League)
The session began with a focus on the ongoing interchange amendment battle being waged by credit unions. Credit Union National Association Senior Legislative Representative Phil Drager shared the most recent information on the issue, and praised the work of North Carolina credit unions in contacting their elected leaders in Washington, D.C. (Weekly Update June 14). Drager also recapped the visits by credit union advocates to Washington last week to make the case in person on interchange. He noted three specific messages seemed to resonate with members of Congress:
* The amendment placed into the Senate bill came with no committee vetting and debate. Congress should have a thorough debate of the issue before getting involved. [Editor’s note: A conference committee in Congress likely will discuss the interchange issues at a meeting next week]. * If the amendment were to pass, the Federal Reserve would only be empowered to deal with the processing charges when considering an interchange fee structure. Other costs to credit unions--such as fraud--could not be considered. * The amendment does not specifically mandate a two-tiered pricing structure on interchange.
As of Monday, more than a 100 members of the U.S. House had signed a letter sent to the conference committee asking that the Interchange amendment be pulled from the final bill, Drager said. Four members of Congress from North Carolina have signed the letter as of Monday, said the league. Drager also updated credit unions on member business lending and secondary capital. “Issues such as business lending and secondary capital will continue to be part of our overall messages to Congress,” said Dan Schline, league senior vice president of association services. “But with the conferees on the Financial Services Regulatory Reform Bill expected to meet within days, it’s essential that credit unions and their members continue to make interchange priority No. 1.” A pair of panel discussions touched on advocacy and the North Carolina political scene. The advocacy panel included State Rep. Rick Glazier (D-45); Jay Rouse, director of governmental affairs for North Carolina’s Electric Co-operatives; and Southern Select Community CU CEO Huyla Jackson. League Director of Political Affairs Mickey Fanney moderated the panel. “It was a great look at how to be successful in grassroots advocacy from a variety of different perspectives,” Fanney said.

N.C. league state award winners announced

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GREENSBORO, N.C. (6/16/10)--The North Carolina Credit Union League announced its statewide Dora Maxwell, Louise Herring and Alphonse Desjardins Award winners Monday during its 75th annual meeting. The league also honored Mark of Excellence and Credit Union Person of the Year Award winners.
The Mark of Excellence Award recognizes sustained leadership among North Carolina credit union people. Eligibility is limited to past winners of the Ronald J. Hutchins Credit Union Person of the Year Award who have at least 25 years of service in the credit union industry. This year’s winners are Bobby Hall, senior executive vice president, State Employees’ CU, Raleigh, and Curtis Ring, Summit CU, Greensboro. The Ronald J. Hutchins Credit Union Person of the Year Award is presented to a credit union professional and volunteer to recognize outstanding accomplishments, time and effort given in support and promotion of the credit union ideal of people helping people. The league this year honored Joy Watts, president/CEO, Carolina Postal CU, and Leslie Colin "LC" Kelly, Charlotte Fire Department CU, both of Charlotte. The league also presented first- and second-place Dora Maxwell Social Responsibility Awards to:
* Ecusta CU, Pisgah Forest, first place, $20 million to $50 million asset category; * Carolina Mountains CU, a Division of Self-Help, Durham, second place, $20 million to $50 million; * Latino Community CU, Durham, first place, $50 million to $100 million assets; * Carolina Postal CU, second place, $50 million to $100 million; * Charlotte (N.C.) Metro FCU, first place, $200 million to $500 million assets; * Members CU, Winston Salem, second place, $200 million to $500 million; * State Employees’ CU, Raleigh, first place, more than $500 million in assets.
The Louise Herring Award for Philosophy in Action also was given to:
* State Employees’ CU, first place, more than $250 million in assets; * Local Government FCU, Raleigh, second place, more than $250 million.
Latino Community CU also received first place in the $50 million to $150 million asset category for the Desjardins Youth Financial Education Award.