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CU System Archive

CU System

WesCorp reports 7.6 billion loss for 2008

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SAN DIMAS, Calif. (6/5/09)--Western Corporate FCU (WesCorp) reported its losses for 2008 at nearly $7.6 billion, according to its audited Consolidated Financial Statements for 2008 and 2007. Losses on investments and securities totaled $7.736 billion but fee and operating income reduced the losses to $7.6 billion. Adjustments to reconcile net income loss to net cash indicated that $7.6 million in losses came from other than temporary impairment loss on securities. Impairment on investments in U.S. Central FCU Paid-In-Capital (PIC) totaled $114.7 million. According to the statements, Member Capital Accounts (MCA) and PIC "have been depleted to cover losses that exceeded retained earnings as of Dec. 31, 2008, and March 31, 2009," as mandated by National Credit Union Administration (NCUA) regulations. WesCorp has derecognized MCA amounting to $929.9 million, effective March 31, through retained earnings. That number is unaudited. The corporate also derecognized PIC accounts amounting to $213 million as of March 31 through retained earnings, and its corporate reserve and undivided earnings accounts were depleted and derecognized. Those figures also are unaudited. As of Dec. 31, WesCorp's capital ratio was -20.40%, well below the 5% required. Its retained earnings ratio was -24.41%, below the 2% required, and its core earning ratio was -23.66%, less than the 3% required. WesCorp and U.S. Central were placed into conservatorship on March 30 by NCUA. The financial statements are posted on WesCorp's website. For more detail, use the link.

Chatzky chats about CUs on the Today Show

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NEW YORK (6/5/09)--Consumers looking to minimize bank fees should consider credit unions as an alternative to banks, Jean Chatzky, “Today Show” financial editor, told viewers Thursday.
Matt Lauer and Jean Chatzky discuss minimizing bank fees on the "Today Show" Thursday morning. One tip: Consider a credit union. (Photo provided by CUNA)
Chatzky mentioned that banks used to have 250 different fees that they charged consumers, and that many fees are coming back because banks are looking to boost their revenues. Some banks don’t even allow customers to opt out of overdraft fees, she added. When Matt Lauer, the “Today Show” host, asked how consumers can get around some of these fees, Chatzky mentioned credit unions. “Consider banking with a small community bank or credit unions because fees at these institutions may be a little bit lower,” she said. That tip also was listed on a chart displayed on camera. The Credit Union National Association supplied comparisons of bank and credit union fees to one of Chatzky’s researchers for the segment.

Direct-deposit info sent to wrong people

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AUGUSTA, Maine (6/5/09)--Credit unions in Maine may want to note that about 600 individuals receiving unemployment benefits in the Augusta, Maine, area received direct-deposit information--including Social Security numbers--that did not belong to them. Dick Thompson, head of the state Office of Information Technology, said the office is treating the incident as a security breach. The mix-up resulted from a printing error at the office. The mailings contained information for each recipient plus that of another individual. Of the 5,000 forms the office sent, 597 were incorrect (Kennebec Journal June 4). The office sent a message to recipients about the problem within 48 hours to let them know what happened. It is taking full responsibility for the mistake, Thompson told the newspaper. There have been no reports of the data being misused, the Journal said. The incident is different from a typical credit card breach because the information was given to one other person, and if the data are misused, the office can identify who has the affected person’s information, Thompson said. Credit unions in Maine have dealt with several security breaches in recent years, including a Hannaford Bros. breach in March 2008 and a TJX data breach in January 2007. TJX owns several retail stores, including TJMaxx and Marshalls.

Three more corporates announce financials

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MADISON, Wis. (6/5/09)--Three more corporate credit unions--Southeast Corporate FCU, SunCorp FCU, and Constitution Corporate--have posted their financials and the impact of their exposures for losses. Southeast Corporate FCU noted that charges related to its shares in U.S. Central FCU and its mortgage-backed securities would result in a $79 million loss to its net income for April. That compares with a net income of $3.9 million it recorded as of Dec. 31, 2008. The $3.2 billion asset Southeast Corporate, in its statement of financial condition on its website, recorded retroactive impairment entries on its books for $23.4 million as of Dec. 31 and $60.5 million as of March 31. Analysis of Southeast's portfolio for first quarter 2009 also resulted in an additional impairment of 10 securities, for a $17.7 million loss recorded and adjusted retroactively in March. As of April 30, Southeast Corporate's exposure to securities supported by subprime mortgages represented 3.2% of its portfolio. Of the subprime exposure, $27 million (or 27%) is insured, said the report. SunCorp Corporate CU's financial statement indicates a $134.9 million loss for the year. It attributed the losses to its holdings in U.S. Central FCU and in mortgage-backed securities. Constitution Corporate FCU noted that all of its capital in U.S. Central, totaling $34 million, is fully impaired. Constitution Corporate reported an "unaudited credit loss" totaling $14.5 million for 2008 and a $36.9 million loss for first quarter 2009. These charges, combined with its holdings in U.S. Central, are expected to reduce Constitution Corporate's regulatory capital to about 2.50%, below the 4% capital limit set by the National Credit Union Administration as of March 31. Other corporates that recently made financial statements are WesCorp, Southwest Corporate FCU, Corporate One FCU and EasCorp. The latter three's results appeared in the June 4 issue of News Now, and WesCorp's is the topic of a separate story in today's issue.

UW CU launches payday-loan initiative

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MADISON, Wis. (6/5/09)--UW CU is rolling out Paycheck Advance, an alternative to traditional payday loans, on June 15. The program will give members in good standing access to a short-term loan without the traditional loan application process and will offer an interest rate dramatically lower than the average offered by storefront payday lenders. The $1.080 billion asset, Madison, Wis.-based credit union’s Paycheck Advance program has a fixed interest rate of 21.75%. The national average interest rate for payday loans in 2008 was 391%, according to The American Prospect, The New York Times and Consumer Credit Counseling Services, said the credit union in a press release. “We applaud Wisconsin legislators for recently drafting legislation which would protect consumers by capping the payday loan interest charged by licensed lenders at 36%,” said UW CU CEO Paul Kundert. The Paycheck Advance program will offer loans in amounts from $50 to $500, and require a $50 minimum payment per month. “The problem with storefront payday loans is that when you factor in the fees and the finance charges, it makes paying off the loan very difficult, if not impossible,” said Chief Credit Officer Mike Long. UW CU’s Paycheck Advance has several advantages. It:
* Requires no application fee; * Removes monthly service fee; * Has no prepayment penalty; * Can be used multiple times without reapplying; and * Provides a reasonable period for repayment.
“Paycheck Advance is a better alternative than a traditional payday loan,” Long said. “It provides members access to small, short-term loans with an option that does not subject them to unreasonable rates and fees. In addition, our financial specialists are available to work with members to determine if this product is the right fit for their situation or if they qualify for a product that is even more beneficial.”

Study Expect sustained debit transaction growth

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HOUSTON (6/5/09)--Credit unions can expect a sustained debit transaction growth despite the recession, according to a new study that identifies several positive trends for credit union and other issuers of debit cards. The 2009 Debit Issuer Study, commissioned by PULSE, also found that the use of personal identification number (PIN) debit has increased, while fraud loss rates for debit transactions has declined (BUSINESS WIRE June 4). Debit issuers surveyed saw an 8% debit transaction growth during the second half of 2008. That growth includes 15% growth in PIN debit transactions and 4% growth in signature debit. Those surveyed predicted growth in 2009 at 7% for each of the PIN and signature debit transactions. "Debit card use is expected to continue to grow as the economy bottoms out and begins to recover, because consumers use their debit cards for a large portion of necessary everyday expenses," said Cindy Ballard, PULSE executive vice president. More than one-fourth (27%) of all debit transactions last year were for less than $10. "In most cases, these transactions are replacing cash, highlighting a clear consumer preference for electronic payments," Ballard said. Penetration--the percentage of eligible accountholders who have a debit card--remained flat--at 73%. Using an expanded definition of "active" debit cards, the study found the number of issued cards used actively was 66%. PIN debit accounted for 35% of debit transactions in 2008--up from 34.2% in 2007. The average amount debited was $42 for PIN debits and $37 for signature debits. Both figures declined by roughly $1 from the year before. Active debit cardholders made on average 17.3 point-of-sale transactions per month, compared with 16.6 transactions a month in 2007. Debit card fraud losses at the point of use declined in all categories. PIN losses (in dollars per card) fell to $0.15 from $0.19. ATM losses declined to $0.56 per card, from $0.61. Signature card losses dropped to $1.81 from $1.92. Although losses for all three usage points declined year-over-year, the survey recorded an increase in share for the ATM losses, to 38% of total debit fraud losses last year. That is up from 25% in 2007. Other findings:
* Active debit cardholders averaged three ATM transactions a month, down from 3.4 in the previous survey; * More than half (53%) of issuers participate in a surcharge-free ATM network, down from 56% in 2007. And 43% offer ATM surcharge reimbursements to at least some cardholders. * Bill payments represented 10% of signature debit transactions, compared with 7% in 2007. * The percentage of debit card issuers offering debit rewards rose two percentage points to 53% this year. * Roughly 37% of debit card issuers offer mobile banking, compared with 15% in 2008, and 38% said they plan to introduce it soon, up from 28% last year.

Article notes CUs efforts to learn Spanish

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BATTLE CREEK, Mich. (6/5/09)--The Battle Creek Enquirer recently noted United Educational CU’s efforts to teach its employees Spanish. The Battle Creek, Mich.-based credit union is hoping to break down language barriers for consumers who speak Spanish as their primary language. Many Spanish-speaking residents in Battle Creek are unbanked. Instead, they use predatory lenders for their finances, the credit union told the newspaper (June 4). The credit union wants to reach out to those consumers, so they are offering their employees an eight-week language course. Because the first contact many Spanish-speaking members encounter at the credit union is a teller, United Educational member service representatives have been trained to say, “Wait, I’ll get a translator” in Spanish. They also can say, “How can I help you?” in Spanish. In addition to language training, United Educational is promoting a bilingual employee from part-time to full-time, and will hire another part-time bilingual employee. Staff also have learned that in Hispanic families, the husband usually handles all of the finances.

Summit members videos show charity campaign success

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MADISON, Wis. (6/5/09)--Summit CU, Madison, Wis., has placed nearly $8,000 into the communities it serves through its Pay It Forward initiative, and several videos on the credit union’s website show what kinds of causes members are looking to serve with the money. Earlier this spring, Summit handed out $10 bills to individuals at each of its 20 branch locations, asking, “If we gave you $10, what would you do for someone else?” The answers ranged from giving the money to local charities to giving to charities overseas. One member, Mary, said that she would give the money to a local food bank. The food bank can provide seven meals with $1, so the $10 would provide 70 meals, she said. Other members Summit interviewed said they would donate their $10 to Ronald McDonald House, purchase gas for a stranger, buy flowers for a teacher, sponsor a bicyclist for an AIDS Network race and help a friend with a prescription co-pay. Other members said they would give the money to individuals in Afghanistan, Mexico, Haiti and Darfur. Participants’ intentions were videotaped and posted on the Summit CU website. Until June 15, website visitors can rate their favorite video responses. The winner will receive $500, and Summit will donate $500 to the winner’s charity of choice. Summit has $1.2 billion in assets. To see the videos, use the link.

CUNA CFO Council honors outstanding volunteer

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MADISON, Wis. (6/5/09)--Kevin Durrance of Georgia FCU received the inaugural Outstanding Volunteer Award from the CUNA Chief Financial Officer (CFO) Council at the council's annual conference May 17-20 in Las Vegas. Durrance is executive vice president and CFO of the Duluth, Ga.-based credit union. The council delivers on its education-based mission for members with the aid of many volunteers. "Nothing we do is possible unless we get volunteers to help," said Pam Finch, council chair. She is also vice president of administration and CFO for Mid Minnesota FCU, Baxter, Minn. "They spend countless hours calling members, reading papers and reviewing regulatory updates on behalf of our members." Durrance, a 15-year member of the council, received the first award in honor of his efforts on four active council subcommittees and his willingness to regularly take on extra assignments.