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Kansas CUs prepare for FOM law effective today

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TOPEKA, Kan. (7/1/08)--The first stage of a new Kansas field of membership law goes into effect today, and the Kansas Credit Union Association (KCUA) and Kansas credit unions are preparing themselves for the changes that will follow. “KCUA and Kansas credit unions have been working hard to ensure that all Kansas credit unions understand the many components of the new law,” Haley DaVee, KCUA political and public affairs specialist, told News Now. “We recognize the complex nature of the legislation and, as such, realize the importance of Kansas credit unions understanding what they need to do to comply with this law.” The law places geographic restrictions on the areas credit unions can serve. The law grandfathers existing credit union members and their immediate family members, all existing occupational and associational groups, current geographic fields of membership up to 1 million in population and all current branch counties. It also outlines geographic limitations of up to 500,000 in population, using multiple contiguous political jurisdictions for credit unions not headquartered in a metropolitan statistical area (News Now April 15). KCUA held 12 educational sessions statewide over the past month and half to provide credit unions with an in-depth understanding of what to expect under the new law. The first set of three education sessions provided a step-by-step examination and overview of the four components of the bill--branching, field of membership for the future, field of membership grandfathered and mergers, DaVee said. The second set of nine education sessions covered what credit unions need to do to prepare to get their fields of memberships grandfathered. The grandfathering portion of the law is scheduled to go into effect on Jan. 1, DaVee added. “The association worked very hard to get everyone educated,” Vicki Hurt, CEO, Credit Union 1, Topeka, told News Now. Credit Union 1 will be grandfathered under the law. “We are looking at the current field of membership bill and are determining the best options for us,” Hurt added. KCUA will be holding another set of education sessions in early fall to cover the applications, procedures and timelines for the new portion of the legislation as established by the Kansas Department of Credit Unions, DaVee said.

Firefighters story From darkness to light

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NEW YORK (7/1/08)--“We will never forget. We will never give up.” With those words, Richard Picciotto, retired fire chief of the New York Fire Department, summed up his harrowing survival of the terrorist attacks of Sept. 11, 2001, at America’s Credit Union Conference & Exp, which began Monday in New York City. Picciotto has strong credit union ties. He has been a member of Municipal CU for 30 years, he announced and his cousin is employed by a credit union in Miami, Fla.
Click to view larger image Richard Picciotto, retired fire chief of the New York Fire Department and survivor of the Sept. 11 terrorist attacks, stressed the importance of decision making and risk management at Monday’s General Session. “When you’re in an emergency,” he remarked, “people are looking for leadership. They’ll do what you say.” He has been a member of Municipal CU for 30 years. (Photo provided by CUNA)
Picciotto was on a rescue mission in the World Trade Center’s North Tower when it collapsed. The South Tower disintegrated in 10 seconds; the North Tower, in eight seconds. “That sounds like a short time,” he said, “but it’s an eternity. “We were tossed around like rag dolls, free-falling in the blackness,” he continued. “I knew I was going to die. My life flashed before me, and I said a quick prayer: ‘Please God, make it quick.’” Picciotto and 13 other survivors—11 firefighters, one Port Authority officer, and one civilian—landed on the third floor in a void, or air pocket, buried in talcum-powder-like dust. After hours of spotty radio communication with rescuers, he glimpsed a light gray patch amid the blackness. It was a crevice in the rubble, from which Picciotto emerged--a solitary figure atop the once-proud tower’s remains. Picciotto credits tremendous support—both emotional and financial—for helping him get through the experience. He urged conference attendees to establish priorities in their lives--family and friends. “Stop to smell the roses, and appreciate what you have.” Other observations:
* Following Sept. 11, “the feeling of unity was great.” That’s disappeared, he claims, and he blames politicians for that. “Politicians tend to divide us, to target our minor differences” versus our commonalities. *Youth—often tagged the “me generation”--were affected deeply by Sept. 11. Many enlisted in the armed forces as a result. “Whatever your [political] beliefs, the troops are there to fight for us no matter what, and we need to support them.”
Above all, Picciotto is grateful God didn’t listen to his request for a quick ending. “Sometimes,” he observed, “unanswered prayers are the best kind.” America’s Credit Union Conference & Expo, which is presented by the Credit Union National Association, ends Wednesday. For more on the conference, use the link to to Credit Union Magazine’s ACUC Daily.

Wall St. Journal notes CUs as HELOC option

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NEW YORK (7/1/08)--Credit unions are a good option for consumers seeking home equity lines of credit (HELOCs), as falling home prices and the credit crunch causing lenders to freeze HELOCs on hundreds of thousands of homeowners nationwide, according to a Friday article in The Wall Street Journal. The article, “Renovators in Limbo,” by June Fletcher, lists tips for consumers who have had their HELOCS cancelled or for those worried that cancellations are pending. The home renovation boom of recent years has largely been funded by borrowing against home equity, the article said. One tip is to look locally for funding to financial institutions, such as credit unions, which still may offer financing. Banks that rely on Wall Street backing are the most likely to pull the plug on home equity liens of credit. Some big lenders such as Bank of America, Citibank, Countrywide Financial, Washington Mutual Bank and USAA to-date this year have told hundreds of thousands of consumers that their HELOCs have been frozen, the article said. New credit lines also are being limited, the article added.

CUNA introduces Web-based vendor management solution

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MADISON, Wis. (7/1/08)--Credit unions will soon have the ability to ensure that their third-party vendors comply with regulatory responsibilities and best practices when dealing with sensitive information. The Web-based vendor risk management solution will be available through CUNA Strategic Services (CSS) and TraceSecurity. This first-ever planned solution for credit unions will centralize vendor data, manage relationships, assess vendor risk, and ensure compliance with policies and controls. Credit unions rely on an increasing number of third-party vendors to deliver services to their members, and credit unions have to spend a large amount of time ensuring that they are complying with related regulations. By combining forces and leveraging the CSS thorough due diligence process with TraceSecurity’s software expertise in security and compliance, the joint venture will provide nearly 8,000 credit unions with a vendor risk-management solution. “Credit unions spend tremendous time and budget focusing on identifying and mitigating the risks associated with providing external access to sensitive data,” said Wes Millar, senior vice president, CSS. “The market of more than 8,000 credit unions has been asking for a product that can help centrally manage the risk and compliance issues they deal with, and we will announce a solution that we’ve been working on with TraceSecurity in the near future.” “TraceSecurity, as a strategic alliance provider, has been working successfully with CSS for the past several years,” said Jim Stickley, chief technology officer at TraceSecurity. “We believe this new solution will help finally bring 100% centralized control over the compliance complexities and risk management that credit unions grapple with on a daily basis.”

National CU Foundation premieres first ad campaign

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NEW YORK (7/1/08)--The National Credit Union Foundation (NCUF) is premiering its first-ever advertising campaign today. Attendees at America's Credit Union Conference (ACUC) will see the first ad today in the ACUC Daily News. New ads will appear each month in leading credit union trade publications such as Credit Union Magazine and News Now. Each ad will include photos and quotes featuring credit union leaders who invest in the Community Investment Fund (CIF). The CIF is a family of investments offered by all corporate credit unions to allow investors to donate up to 1% of their dividend to NCUF and up to 1% to their state credit union foundation or league. “We designed this campaign to build awareness of how the CIF supports programs and grants that make a real impact on people’s lives,” explained NCUF Deputy Director Steve Bosack. “To commemorate the CIF’s 10th anniversary year, ads will thank leading supporters whose investments benefit the entire credit union community as well as their own communities.” The first ad features Greater El Paso’s CU (GECU) CEO Harriet May, a board member of the Credit Union National Association and winner of NCUF’s 2008 Herb Wegner Memorial Award for Individual Achievement. The ad shows a wheelchair-bound woman who bought her first home through GECU with help from an NCUF grant program funded in part by the CIF. As May says in the ad: “National Credit Union Foundation initiatives through the Community Investment Fund, including homeownership grants for members of Greater El Paso’s CU, help make the American Dream a reality. That’s why we support NCUF.” NCUF is seeking other credit union leaders to feature in the ad series. Contact Bosack at sbosack@ncuf.coop or 800-356-9655, ext. 6752.

ACUCandE HGTV founder tells how to transform CU

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NEW YORK (7/1/08)--When Susan Packard co-founded HGTV in 1994, established cable TV networks barely took notice.
Susan Packard, co-founder of HGTV, told how an "upstart" evolved into a $7 billion cable enterprise industry during Monday's General Session at America's Credit Union Conference and Expo in New York City. (Photo provided by CUNA)
“We were an upstart, and established networks didn’t take us seriously,” Packard said during Monday’s Opening General Session at America’s Credit Union Conference & Expo in New York City. Big mistake. Since that time, HGTV has become a $7 billion enterprise with magazines, websites, a shopping network,and more in more than 170 countries. ”Always take your competition seriously,” Packard advised. “Once we had 30 million subscribers, [other cable networks] couldn’t knock us off the mountaintop.” She offered these steps credit union leaders can take to transform their credit unions:
* Build a good idea into a big idea. Talk to members constantly to make sure you’re on target, you offer the right products and services, and you’re relevant. “To be successful, you have to matter to members.” * Keep your ideas fresh and focused. Use variety and humor to attract different market segments. But beware: “Using humor is tricky,” Packard said, “and it can fall flat.” So proceed with caution.

To keep your ideas focused, use a "brand lens process." This involves defining the experience you want members to have, and choosing words and brand images that define the desired experience and identify the credit union. Repeat this process periodically to make sure you matter to members.

During the early days of the Food Network, for example, "the most exciting show on it was Mrs. Fields making cookies," she said. That changed quickly. * Recognize the importance of culture. Organizational culture “is a roadmap for employees to do good work,” she said. “There’s no right or wrong culture, but you must stand for something.”
HGTV’s core values include diversity, clarity in communications, integrity, and work/life balance. Every new HGTV employee receives a laminated card bearing the organization’s values. “Create a culture where employees can be successful and fulfilled.” America’s Credit Union Conference & Expo, which is presented by the Credit Union National Association, ends Wednesday. For more on the conference, use the link to to Credit Union Magazine’s ACUC Daily.

Mortgages lead loan growth for CUs in May

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MADISON, Wis. (7/1/08)--Credit union loans outstanding increased 1% in May, and 2.8% so far this year, with fixed-rate first mortgages leading loan growth, rising 2.6%, according to the Credit Union National Association (CUNA) monthly sample of credit unions.
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The 2.8% rise in loans outstanding year-to-date 2008, compares with a 1.6% rise for the comparable five-month period last year. “Credit union real estate lending is the main factor driving the surge in loan balances,” Steve Rick, CUNA senior economist, told News Now. “The exodus of lenders and the tightening of lending standards by other real estate lenders is providing credit unions an excellent opportunity to increase market share.” Credit union fixed-rate first mortgage loan balances rose 10.4% in the first five months of 2008, compared with 6% for the 2007 similar period, he added. “With the mortgage securitization market still froze up, portfolio lenders such as credit unions are increasing their market share in the real estate space,” Rick said. “We can expect this scenario to continue to play out as long as home prices continue to fall across the U.S.” Following the rise in fixed-rate mortgages were home equity (1.8%), credit card (1.2%), and used auto loans (1%). Unsecured personal loans, adjustable rate mortgages, and new auto loans declined 0.7%, 0.5% and 0.3%, respectively. May is the fifth consecutive month in which used-auto loans as a percentage of total loans increased. During the same period, new-auto loans as a percentage of loans have decreased.
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Credit union savings balances increased 1.9% in May, and 6.7% year-to-date. With payday falling on the last Friday of the month, share drafts led savings growth, increasing 7.9% in May. “For the year, we expect credit union savings balances to grow over 10% because of the tax rebates, slowing economy, falling home prices, and further deleveraging of household balance sheets,” Rick said. Money market accounts (2.9%), regular shares (2.5%), and individual retirement accounts increased, while one-year certificates declined 0.47%. With savings growth outpacing loan growth, the loan-to-savings ratio decreased to 80.4% in May from 81.1% in April. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--increased to 19.5% in May from 18.9% in April. Regarding asset quality, credit union 60-plus-day delinquencies remained at 1% in May, a 0.3% increase from May 2007. The movement’s overall capital-to-asset ratio remains at 11.1%. The total dollar amount of capital is $90 billion. The fast deposit growth increased credit union balance sheets and lowered the credit union average capital-to-asset ratio to 10.9% from its recent high of 11.5% last October. “This drop is to be expected during an economic slowdown,” Rick explained. “Capital is meant to be an economic stabilizer, rising during an economic boom and reduced during an economic slowdown, protecting credit union members from the vicissitudes of the economy.”

Pa. CUs helping college students through credit crunch

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HARRISBURG, Pa. (7/1/08)--Pennsylvania credit unions were noted in a recent issue of the Central Penn Business Journal for helping college students with loans despite the credit crunch. Credit unions see an opportunity in student lending because of tightening credit, Mike Wishnow, senior vice president of communications and marketing at the Pennsylvania Credit Union Association, told the Journal. The Pennsylvania Higher Education Assistant Agency (PHEAA) suspended its loan programs in February, encouraging several credit unions in the state to pitch in and help students, the newspaper said. Consumer lending is a credit union’s meat and potatoes, Wishnow said. Students can still apply through PHEAA for loans, but they are referred to a credit union or financial institution of their choice. PHEAA handles the loan paperwork, but does not actually provide the money, Jesus Cruz, Belco vice president of lending, told the newspaper. Belco has seen an increase in student lending over the past few years, and the credit union wants to get the word out to college admissions counselors that the credit union can help students with loans, he said. Pennsylvania State Employees CU (PSECU), Harrisburg, targets the student market because it hopes those individuals will use PSECU for more than just college loans--later, they may need help with buying cars or paying for their children’s needs, said Gregory A. Smith, PSECU president. In the last six years, PSECU has gained 55,000 student members, he added. Members 1st CU, Mechanicsburg, is offering a new student lending program, called Credit Union Student Choice. Members 1st partnered with eight other credit unions to offer students private lending. Students can borrow up to $75,000, with a 6% interest rate, Fred Ryerse, senior vice president of lending at Members 1st, told the Journal. The program also allows students to pay back their loans at a lower amount during the first two years, because most graduates do not make much money right away, Ryerse added. Like PSECU, Members 1st sees student borrowers as future members, Ryerse told the Journal.

Data breach affects 612 Envision CU members

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TALLAHASSEE, Fla. (7/1/08)--A data breach has affected more than one million cardholders and 612 Envision CU members--including Envision’s president. Hackers accessed information on cardholders that goes back six or seven years, Al Hammock, senior vice president of marketing, Envision CU, told News Now. The Tallahassee-based credit union received about 1,600 to 1,700 records from the FBI and the U.S. Secret Service on members whose accounts were exposed to potential fraud. After sorting through the records for cards that had expired, Envision found 612 members whose cards may have been affected. Of the 612, two members had attempted fraud on their accounts. A few weeks ago, Envision CU President Ray Cromer’s account was flagged by the credit union’s Falcon program, which monitors suspicious transactions. Another account belonging to an Envision employee also was flagged by the system. Envision has contacted all members potentially affected by the breach through a letter and ordered new cards for them, Hammock said. The replacements will cost Envision more than $2,000 (Tallahassee.com June 30). Envision has been receiving calls about the breach since Friday. “People just want to make sure they’re not affected,” Hammock said. Coverage of the data breach and its effect on Envision members was triggered when an Envision member took the letter the credit union sent about the breach to a local newspaper. The newspaper called Hammock and interviewed him for more information, Hammock said. Hammock commended the newspaper for working to “get all of the final information,” but noted that some readers wrote comments on the newspaper’s website about the breach “that were not informed on the procedures and what we’re trying to do to help members,” he said.

CU System briefs (06/30/2008)

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* TUCSON, Ariz. (7/1/08)--The Arizona Credit Union League (ACUL) honored Steve Dunham, CEO, Canyon State CU, Phoenix, as this year’s Very Outstanding Credit Union Person. The award recognizes an individual who goes above and beyond in service to the credit union movement, the league said. Dunham also is the new ACUL board chairman, replacing Linda Dhaemers, CEO, Desert Energy CU, Tucson. Three other board members were elected for three-year terms at the conference: Ken Bredemeyer, AEA FCU, Yuma; John Cassise, First Edition Community CU, Phoenix; and Dan Desmond, TruWest CU, Scottsdale ... * LATHAM, N.Y. (7/1/08)--The Credit Union Association of New York donated a Nintendo Wii gaming console, two controllers, a charging station and the WiiPlay Board Game Collection to the Children’s Hospital at Albany (N.Y.) Medical Center. “We couldn’t think of a better game to give the children than a Wii,” said William J. Mellin, president of the association. “Wii is an interactive and socializing experience; one we thought might be able to take a youngster’s mind off his or her health challenges.” From left are: association representatives Lori Mayer, Michele Molenaar, Danielle Mancuso, Joan Butler, Children’s Hospital child-life specialist Brenna Griswold, and representatives Vicki Hirsch, Cynthia White, Joann Miller and Jennifer Chenail. (Photo provided by the Credit Union Association of New York) ...

PCI firewall requirements now effective

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FRAMINGHAM, Mass. (7/1/08)--As of yesterday, retailers accepting payment card transactions are required to install firewalls to protect Web applications from hackers. The new Payment Card Industry Data Security Standard (PCI DSS) 6.6 aims to protect the privacy of consumer information by requiring retailers to place firewalls in front of Web applications or to conduct application code reviews (CIO.com June 30). The standard, created by credit card companies including MasterCard and Visa, was formerly a best practice. Credit unions have been affected by numerous data breaches that have compromised members’ credit or debit card accounts. The breaches have cost credit unions thousands of dollars to replace cards. News Now reported today that a breach at an unknown restaurant chain affected 612 members of Envision CU, Tallahassee, Fla.

Change is the keyword for tough times Mica tells CUs

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NEW YORK (7/1/08)—With the economy presenting tough times for financial institutions, “change is the keyword” and fighting for the status quo won’t be enough, Credit Union National Association (CUNA) President/CEO Dan Mica told the America’s Credit Union Conference & Expo, which opened Monday in New York City. Speaking before 1,600 attendees, Mica cautioned that credit unions “have been a movement for 74 years. It worked then, but if we don’t change, we lose,” Mica said.
Click to view larger image CUNA President/CEO Dan Mica told America’s Credit Union Conference & Expo attendees that although credit unions didn’t cause the economic crisis, they could become a secondary casualty. (Photo provided by CUNA)
“The subprime crisis is taking a bigger toll than we knew a month ago. In January, financial institutions foreclosed 20,000 homes a week. Last month, they foreclosed on 50,000 homes a week. We’re not sure where it’s taking us. “Doing what’s right doesn’t mean circling the wagons and refusing loans,” Mica said. “We are the certified white hats. Everyone else is stained now.” Credit unions can offer training and education, make appropriate loans and, if the loans aren’t appropriate, use compassion. “We didn’t make these (subprime) loans.” However, “credit unions will be hit as a secondary casualty, he said. “We should not cheer for banks’ demise even though they are our archrivals and give credit unions fits. If banks truly implode, it will affect everyone in this room,” he added. Mica noted changes coming in Congress and the White House. “Some of that change is coming today, when Michael Fryzel is sworn in as the new chairman of the National Credit Union Administration (NCUA)” and with NCUA Board member Rodney Hood’s term expiring soon. Credit unions can expect Democrats to gain 20-30 seats in Congress, going from a majority to a “working majority”--which means less negotiation and more power. A tight presidential race means “Your vote will make a difference.” “We can ride this change all the way,” he said. America’s Credit Union Conference & Expo, which is presented by CUNA, ends Wednesday. For more on the conference, use the link to Credit Union Magazine’s ACUC Daily.