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Federation CDFI Fund winners were 30 of CU applicants

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NEW YORK (7/1/09)--Nine community development credit unions (CDCUs) who were awarded more than $17.15 million in capital from the Treasury Department's Community Development Financial Institutions (CDFI) Fund accounted for about 19% of the total $90 million awarded to 59 organizations. The nine CDCUs, all members of the National Federation of CDCUs, represent 30% of the 30 credit unions that applied in the fund's current round, said the federation. The $17.15 million they received amounted to 40% of the total dollars requested by credit unions. The strong showing in the current awards rounds were by "some of our most dynamic, innovative institutions, and we know they will continue to make a huge difference for the low-income communities they serve," said federation President/CEO Cliff Rosenthal. "We would always like to see a large credit union share, of course," Rosenthal said, "but these percentages are a marked improvement over recent CDCU performance in previous award rounds. Given the stress on the credit union industry, the CDFI Fund's investments could not come at a better time." Eight of the credit unions received $2 million each, while the ninth, Brooklyn (N.Y.) Cooperative FCU, received $1.15 million. For a list of the winners, use the link to Tuesday's News Now story.

Columnist notes CU advantages on Wisconsin Public Radio

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MADISON, Wis. (7/1/09)--Wisconsin Public Radio aired a show Tuesday morning in which a financial columnist for Yahoo! Finance expounded on the advantages of credit unions. Laura Rowley, Yahoo's money and happiness columnist and adjunct professor at Seton Hall University, discussed setting financial goals and protecting credit cards. She also told about credit unions and cited a recent survey noting several advantages: credit unions rates are better, their credit card fees are lower and their service is better. She appeared on the Joy Cardin's "On Your Money" show from 8 a.m. to 8:30 a.m. on Wisconsin Public Radio's Ideas Network.

Oregon Wash. CUs raise 879000 for CUs for Kids

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BEAVERTON, Ore. (7/1/09)--Credit unions in Oregon and Southwest Washington raised more than $879,000 during their 2008 campaign year for Credit Unions for Kids. It was the second highest one-year amount raised in the program's 23-year history for the two states. The funds complete the $1 million commitment credit unions made to Doernbecher Pediatric Neurosciences Research Progam at Oregon Health and Science University (OHSU). The funds will be used to recruit another researcher to the team, secure core equipment and activate a robust lab, which will be named for Credit Unions for Kids, in recognition of the donation. The funds also complete the $70,000 goal for two birth suites at the new Women's Birth Center at Sacred Heart Medical Center in Eugene, Ore., as well as a $40,000 goal for a Giraffe NICU Bed for specialized care for the smallest premature babies at Rogue Valley Medical Center in Medford, Ore. New fundraising goals include:
* Doernbecher Children's Hospital: A two-year $1 million goal to fund the professorship of Dr. Robert Steiner, who specializes in inborn errors of metabolism and osteogenesis imperfecta; * Sacred Heart Medical Center: A one-year $75,000 goal for a pediatric patient room and a labor and delivery triage room; and * Rogue Valley Medical Center: A two-year $45,000 goal for a HUGS Security System for the Pediatric Department to alert the nursing station whenever a pediatric patient is within a few feet of an exit door.

CU difference topic of Connecticut radio show

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MERIDEN, Conn. (7/1/09)--An hour-long program on WDRC-AM, Connecticut's leading talk radio station, recently highlighted the credit union difference and updated listeners on the state of the financial services industry. Tony Emerson, president/CEO of the Credit Union League of Connecticut, and Howard Pitkin, Connecticut commissioner of banking, answered questions from callers and provided an overview of key issues. Emerson focused on credit unions’ cooperative origins, the types of charters that provide membership accessibility and the benefits enabled by credit unions’ not-for-profit nature. Pitkin responded to a caller’s question by stating that credit unions can be considered generally healthier than banks. Other callers asked about the availability of student loans, whether joining a credit union carried any costs, whether credit unions offer business loans and mortgage refinancing. Host Phil Mikan ended the broadcast by sharing a caller’s story about how credit union employees redirected members from a branch that was closed after a tornado wiped out electrical power, to a nearby branch so they could make their transactions.

Gov. Doyle comes through for CUs--Wisconsin league

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MADISON, Wis. (7/1/09)--Wisconsin credit unions are celebrating Gov. Jim Doyle’s veto of several provisions contained in the state’s budget bill that would have negatively affected credit unions. “Credit unions saw all potentially damaging provisions that had been part of the $46 billion state budget removed this morning before it was signed into law,” said the Wisconsin Credit Union League Tuesday. Doyle vetoed:
* A provision that would have encouraged credit union to bank conversions. The provision was included at the request of the Wisconsin Bankers Association and would have provided a more direct route to conversion that would have not provided adequate notice and protection for members; * A limitation on credit union service organization (CUSO) lending authority. The provision would have prevented any Wisconsin CUSO from running a car sales or leasing operation; and * A requirement for credit unions to match data on delinquent taxpayers. The budget passed by the legislature had language requiring financial institutions to initiate a data match with the Department of Revenue to identify delinquent taxpayers.
The league attributed credit unions’ success to credit unions’ strong relationships with lawmakers. The budget process shows how tenuous the fate of credit unions can be, underscoring the need to have strong relationships with individuals from both parties in the state legislature, the Wisconsin league said. Many legislators stood up for credit unions during the budget process, either by signing a letter to Doyle urging his vetoes or by making critical contacts to get the job done, the league added. For a story on one of the provisions vetoed, see RELATED: “Wis. governor vetoes bill extending CU’s car sales.”

Hacker pleads guilty to stealing 2M card numbers

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SAN FRANCISCO (7/1/09)--A hacker pleaded guilty Monday in Pittsburgh to charges of hacking into computer systems belonging to other hackers and financial institutions--including a credit union. The hacker, Max Ray Vision, stole two million credit card numbers and ran up charges of more than $86 million. The breach affected Visa, MasterCard, American Express and Discover cardholders, according to the Pittsburgh Tribune-Review (June 29). Vision also hacked Pentagon FCU, Alexandria, Va. Thousands of financial institutions suffered losses due to the breach, Luke Dembosky, assistant U.S. attorney, told the newspaper. Vision pleaded guilty to two counts of wire fraud. He faces up to 60 years in prison and will be sentenced Oct. 20, the newspaper said. Vision and a partner, Christopher Aragon, created CardersMarket.com to sell and use stolen credit card information, the newspaper said. The website had 4,500 members worldwide at its peak. Aragon and Vision participated in hacking activities from 2005 until their arrests in 2007.

The Golden 1 honoring state IOUs

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SACRAMENTO, Calif. (7/1/09)--The Golden 1 CU intends to accept California state-issued IOUs from its members in response to the budget standoff between Gov. Arnold Schwarzenegger and state lawmakers. Lawmakers were meeting earlier this week to develop a budget that deals with a $24 billion funding shortfall (Sacramento Business Journal June 29). The $6.971 billion asset, Sacramento-based credit union has created state budget loans with a 0% annual percentage rate to aid state employees affected by the budget standoff. California could start issuing IOUs or registered warrants for many payments this week, John Chiang, state controller, told the newspaper. The Golden 1 has a tradition of helping communities in need, and the credit union will be there for its members if they need help during the state’s budget crisis, Teresa Halleck, Golden 1 President/CEO, told the paper.

Wis. governor vetoes bill extending CUs car sales

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MADISON, Wis. (7/1/09)--Wisconsin Gov. Jim Doyle Monday vetoed a measure contained in the state’s budget bill that would have allowed Educators CU in Racine to continue its auto sales business, which was under attack by state auto dealers. “Naturally, we’re disappointed with the veto,” Jim Henderson, Educators CU senior vice president told News Now. “We’re going to talk with local legislators to see if there are options for another bill.” The Wisconsin Credit Union League talked with Educators CU and the Wisconsin Department of Financial Institutions about pursuing this option. Doyle also vetoed several provisions that would have been harmful to credit unions. (See RELATED: "Gov. Doyle comes through for CUs, says Wisconsin league.") Educators CU had been ordered to divest its auto business in April 2010 by the Office of Credit Unions (OCU) after the Wisconsin Automobile and Truck Dealer Association complained to regulators. The OCU initially ruled that the State of Wisconsin Credit Union Statutes, Chapter 186, allows credit unions to own only car leasing services, not retail car sales. The credit union appealed the ruling and came to an agreement with the regulator, which allowed 18 months for the credit union to divest its auto sales business (News Now Dec. 3, 2008). The dealers association filed a court petition to overturn the agreement. The Wisconsin Joint Finance Committee included an amendment in the budget bill--which Doyle vetoed this week--that would have allowed the credit union to continue operating its used-car auto lot in Racine County if it passed. Local auto dealers don’t like Educators’ auto sales business because of the competition, Henderson said, but the credit union focuses on service rather than just selling a car. For instance, Educators tries to match its members with cars that are best for their needs, and will refer them to another dealership if the credit union can’t provide them with the right vehicle, Henderson said. “It’s satisfying a need more than selling,” he said. Educators established its auto dealership to provide car-buying resources and used-car sales to members and consumers in 2002. Educators has $1.1 billion in assets.

State regulator California CU assets up 3 for 1Q

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SACRAMENTO, Calif. (7/1/09)--Assets at California credit unions went up more than 3% in the first quarter of 2009, according to the California Department of Financial Institutions Quarterly Report. Credit union assets were at $76.1 billion--up 3.3% from the $73.6 billion reported as of March 31, 2008. Share drafts rose to $63.7 billion from $61.7 billion--a gain of 3.2%. Loans were down 1.4% from March 31, 2008, dropping to $51 billion from $51.7 billion. Members’ equity decreased 15.6%, falling to $6.4 billion from $7.6 billion. This in turn caused the capital-to-asset ratio to decrease to 8.47% from 10.36%. The allowance for loan losses was up 90.36%, rising to $1 billion from $537.9 million. The number of credit unions decreased to 185 from 196--a 5.6% drop. Net margin to average assets increased to 4.12% from 4.02%, while the provision for loan losses was up 71.2%, going to $385.5 million from $225.2 million. Net income went to a net loss of $553 million from a loss of $14.3 million. Delinquent loans were up 78.4%, rising to $946.9 million from $530.9 million.

CEO confidence does an about-face--SW Corporate

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DALLAS (7/1/09)--Southwest Corporate FCU’s most recent CU CEO Confidence Index did an about-face, rebounding 17 points from the all-time low recorded in the previous survey. The second quarter 2009 index registered 24.54 on a scale that ranges from -100 to +100. The jump to 24.54 compares with 7.90 in the first quarter of 2009. In the five-year history of the survey, CEO confidence reached its peak of 46.79 in the second quarter of 2004. The quarterly confidence index measures credit union CEOs’ feelings in six categories:
* Members’ current financial condition; * Members’ financial condition six months from now; * A credit union’s current financial condition; * A credit union’s financial condition six months from now; * Loan demand at a credit union in six months; and * Share deposit growth at a credit union in six months.
All six survey categories showed positive gains this quarter. The biggest was the 41-point vote of confidence that CEOs gave members’ current financial condition over last quarter. Their expectations for members’ financial condition six months from now, while somewhat tempered, still showed a 19-point quarterly increase. Credit unions were less optimistic about their own current financial condition, but did record marks 4.22 points above last quarter. Expectations for six months from now were better, reflecting a 22.78-point increase. “The survey mirrors other national and regional assessments,” said Brian Turner, Southwest Corporate’s director of advisory services. “Pockets of the country have experienced a decline in economic freefall, primarily as a result of stabilized home values, while others have seen slight improvement.” The improved outlook may be a “correction” of the dismal perception CEOs have had over the past few quarters as a result of declining margins, rising National Credit Union Shared Insurance Fund premiums and special assessment charges diluting their capitalization, Turner said. “So, whereas most of the CEOs renewed optimism comes from the hope that their institutions and the markets in general may have the worst behind them, let’s pray that it is not just post-traumatic stress syndrome,” Turner added. However, Turner noted signs that suggest the economy is beginning to improve, or at least not decline at the same rapid rate. “Consumers are paying off credit cards and deferring big ticket acquisitions to alleviate troublesome debt burdens,” he said. “This increases their disposable income, helps to save a few dollars along the way, and in turn, helps to stabilize credit union shares.” CEOs believe loan demand will improve in six months, as indicated by a 12.11-point increase in that metric, according to the survey. Expectations for share deposit growth in six months were up one point over last quarter’s results. “In southeast Texas, we’ve seen tremendous share growth the last 12 months,” said Jimmy Lackey, CEO of Education First FCU in Beaumont, Texas. “Loan demand has been very soft, so we’ve had to work to curb deposits. Delinquencies, while still low, are above our norm. Thankfully, we’re well-capitalized.” Lackey says the credit union will be better off in six months. “We’re not putting mortgages in the portfolio now, because rates below 5% are lower than we want to go,” he said. “Hopefully by the end of the year, the economy will improve, but it will probably be slower coming around this time.” “Regarding the members, I think people are doing what they should have been doing in the ’90s--saving and paying down debt,” Lackey added. “Loan demand will improve when consumers feel more confident about their jobs.” A record number of respondents--342--answered the survey, marking the highest level of participation in the five years the data has been gathered. The CU CEO Confidence Survey was sent to 1,344 credit union CEOs and generated a 25% response rate.

CU System briefs (06/30/2009)

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* ST. PAUL, Minn. (7/1/09)--The Minnesota Credit Union Network hosted a gathering for Minnesota Speaker of the House Margaret Anderson Kelliher as part of a two-day gathering of credit union professionals for legislative meetings. Kelliher, left, talked with Mark D. Cummins, president/CEO of the Minnesota Credit Union Network, at the event. She described the state’s budgeting process as a “budgeting tilt-a-whirl” amid financial instability and a $2.7 billion budget shortfall. After serving in the Minnesota House since 1998 and as speaker for three years, Kelliher recently said she is considering joining the 2010 governor’s race. Credit union representatives spoke with Kelliher about the housing market, mortgage mediation legislation and working with financially troubled members. (Photo provided by the Minnesota Credit Union Network) … * SOUTHFIELD, Mich. (7/1/09)--Three Michigan lawmakers addressed current issues facing credit unions at a recent Downriver Chapter legislative breakfast (Michigan Monitor June 29). State Sen. Ray Basham, standing, answered questions from a group of 30 credit union representatives that included, from left, CEO Phil Matous of Total Community CU and CEO Paul Assenmacher of Monroe County Community CU. State Rep. Deb Kennedy and Sue Trussell of State Sen. Bruce Patterson’s office also attended to answer questions about topics ranging from term limits to budget negotiations. (Photo provided by the Michigan Credit Union League) … * INDIANAPOLIS (7/1/09)--FORUM CU employees are focusing their 2009 fundraising efforts for the Dayspring homeless shelter on buying a 15-passenger van. Activities such as penny wars, $5 jeans days, bake sales and cookouts have already raised $13,000 of the van’s $20,000 cost. One popular fundraising option is a snack cart that is stocked with baked goods contributed by employees. The cart is then pushed around the credit union so employees can make a donation in exchange for a snack. FORUM CU has an ongoing relationship with Dayspring, which provides emergency shelter, clothing and three daily meals for homeless families with children. It serves central Indiana. (Photo provided by FORUM CU) …

Hood addresses Colorado CU Real Estate Network

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ALEXANDRIA, Va. (7/1/09)--Credit unions should seize the opportunity to engage in responsible mortgage lending, said National Credit Union Administration Vice Chairman Rodney Hood while addressing the Colorado Credit Union Real Estate Network (CUREN) in Denver Tuesday. “Although credit unions did not cause the mortgage debacle that has hurt the American economy, they certainly can be part of the solution,” Hood said. “Mortgage lending creates an excellent
National Credit Union Administration Vice Chairman Rodney Hood addressed the Colorado Credit Union Real Estate Network in Denver Tuesday. From left are: Tracy Yeager, Aventa CU mortgage director; Guy Goodenow, Public Service CU mortgage director; Hood; Stacy Campbell, Coors FCU vice president of mortgage lending; Chris Myklebust, Colorado state commissioner of financial services; Lonnie Burkholder, Air Academy FCU vice president of mortgage lending; Joe Dillon, CMG mortgage insurance senior vice president; Shannon Van Sickler, Bellco FCU director of mortgage lending; and Jon Paukovich, Ent FCU mortgage president. (Photo provided by the National Credit Union Administration)
opportunity for credit unions in the Rocky Mountain states to differentiate themselves from financial services providers.” Credit unions should pursue partnerships with results-oriented non-profit organizations that can provide resources for training outreach efforts--such as the Neighborhood Reinvestment Corp., the HOPE NOW Alliance and Operation Hope, he said. Hood also underscored the necessity for proactive risk strategies. From July 1, 2007 to June 30, 2009, financial institutions filed 62,084 Suspicious Activity Reports (SARs) regarding mortgage fraud. Credit unions filed 541 SARs during the same period--a 176% increase over the prior year. “It is also imperative to manage interest-rate risks because credit union shares grew 7.7% last year to $68.1 billion,” he said. The growth is concentrated in short-term certificates and is being used to fund long-term assets. Long-term assets to total assets are 23.2% and first mortgages comprise more than 30% of total loans, Hood said. Credit unions also have seen an uptick in real estate loan delinquencies to 119 basis points in 2008, from 67 basis points in 2007. First mortgage delinquencies jumped to 76 points from 28 points, Hood said. “We must focus efforts on helping refinance mortgages and use other tools to assist homeowners,” Hood added. “To the degree your balance sheets and risk tolerance levels allow, I encourage you to modify expensive mortgage loans and help homeowners keep their homes.”