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CU System Archive

CU System

CUs step up motorcycle loans in gas crisis

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RANTOUL, Ill. (6/9/08)--With prices for gasoline in the U.S. skyrocketing, a number of credit unions are looking to step up their loan promotions for fuel-efficient motorcycles and scooters. Mike Daugherty, president, Community Plus FCU, Rantoul, Ill., practices what he preaches by riding his scooter to work every day. “I bought it last year, and it is not often that you do get to do something that is practical, but fun as well,” he told News Now. The $12.1 million asset credit union has been offering loans on motorcycles and scooters “forever,” he said. “Last summer, we had a hot-pink scooter in our lobby for a promotion, but it didn’t result in a lot of loans though,” Daugherty said. So far this year, Community Plus has not seen any substantial increase in motorcycle or scooter loans. Daugherty attributes this to the fact that many people in town drive to a larger metropolitan area--Champaign-Urbana, about 15 miles away--for work, which is more practical for a car than a motorcycle or scooter. However, Community Plus is hoping to increase loans in this area. “We are planning a promotion but we haven’t work out the details yet,” Daugherty explained. “We opened a branch by a motorcycle store that sells mostly Harleys. And although we don’t do indirect [loans], we will work with the store if it sends people over. We’ll offer loans to them and do the paperwork.” Although ultra-high gas prices have negatively impacted the big three U.S. automakers, many small businesses and consumers who drive a car, they have been a plus for scooter sales (LoHud.com May 18). In the first quarter of 2008, brand name scooters, including Honda, Suzuki, Yamaha and Vespa, went up 24%, according to Mike Mount, Motorcycle Industry Council trade group spokesman. Fuel prices definitely seem to be the driving force behind the ongoing upward-spiraling scooter sales, based on anecdotal evidence, Mount added. The Credit Union National Association’s CU360 online research and advice portal for credit union executives has an article on credit unions offering scooter loans, as rising gas prices boost sales of smaller vehicles. Two credit unions are mentioned for their loan promotions in this area. The article also identifies the pros and cons of scooter loans. For more information, use the link.

Membership Growth Series Local Government FCU

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RALEIGH, N.C. (6/9/08)--Local Government FCU (LGFCU) grew its membership 7% from 2006 to 2007, and it attributes its success to a five-fold growth strategy. LGFCU, located in Raleigh, has $736 million in assets and serves the North Carolina local government community, including local government employees, elected officials, appointed persons and volunteers. The credit union self-limits its field of membership to local government. “We believe this contributes to the strength of LGFCU,” Maurice Smith, LGFCU president told News Now. “Our singular focus on local government gives us powerful credentials when making a case to local government officials. We can warrant that our concentration allows us to better understand our membership.” A substantial factor in LGFCU’s growth is its partnership with State Employees CU (SECU) in Raleigh, Smith said. LGFCU outsources its branch operations through SECU, which has 215 branches in North Carolina. Members of LGFCU can visit any SECU branch for service. LGFCU’s computer systems are synchronized with SECU’s so the tellers at each branch can conduct transactions seamlessly, regardless of the member’s credit union, Smith noted. “There’s nothing like having a local facility,” he said. Other parts of LGFCU’s five-fold strategy include:
* Creating close relationships with the leaders of groups in its field of membership. LGFCU has hired member development officers as traveling relationship managers to visit employers at their locations. “The familiarity that our representatives develop helps keep the welcome mat out for the credit union and thwart competitors’ efforts to undermine our connections,” Smith said; * Partnering with corporate entities where members work, which “allows LGFCU to be thought of as more than an employee benefit,” Smith said. The credit union offers payroll deduction, health savings accounts, direct deposit and commercial lending, he added; * Approaching potential members, such as those whose relatives are members of the credit union; and * Being “fanatical” about the LGFCU brand. “We recognize that members are inundated with marketing messages every day. In order for our message to stand out, we must make professional, consistent and relevant points in our communications. We hope members feel comfortable with our approach and suggest that others join,” Smith said.
This is the third installment of News Now's Membership Growth weekly interviews with fast credit union growers. The series is as part of an initiative of the Credit Union National Association (CUNA) Membership Growth Task Force. It focuses on fast "organic" membership growth, not growth by merger or indirect loans. The task force, chaired by Dick Ensweiler, president of the Texas Credit Union League, was convened at the request of CUNA's Immediate Past Board Chair Allan Kemp McMorris. Its purpose is to investigate, report on, and encourage credit unions to embrace opportunities, techniques and processes that will increase credit unions' membership retention and growth. Like many credit unions, LGFCU is shifting its growth strategy to target younger generations. Two months ago, the credit union launched a youth advisory council with volunteer youth who share their perspective on LGFCU’s financial services and product ideas. “The purpose is to reach out and understand the younger generation,” Smith said. The volunteers are located throughout the state and don’t meet face-to-face. They meet electronically, through text messaging, the Internet and over the phone. “I’m so impressed with the young folks,” Smith said. About 12% of the credit union’s membership is under 18 years, he added. LGFCU has 18 regional advisory councils that it uses to gain feedback and promote outreach. The councils have been around since the late 1980s and involve about 250 volunteers. The credit union recently hired an employee to oversee LGFCU’s volunteer force, Smith added. LGFCU regularly tweaks the features of its products and services. “Our mortgage loans do not require private mortgage insurance no matter the loan to value,” Smith said. The credit union does not offer risk-based loan pricing, and it keeps fees to a minimum, he added. The credit union also emphasizes the value of a volunteer board, the transparency of democratic voting, the accountability of a member-led loan review committee and a commitment to being responsive to members’ concerns. “Compared to the for-profit world, we believe these features are unique,” Smith said. LGFCU doesn’t want to grow just to claim market share, Smith said. The credit union grows because of philosophical reasons. “We believe that we offer value to membership. And if we believe we offer value, it’s our duty to expose as many people as we can to the credit union. “If we want to grow 500% a year, so be it,” he said. “But if I have anything that slows growth, such as regulatory requirements, I have to ration resources. . . but we are hopeful that the regulatory climate will improve, and growth will be encouraged and rewarded.” Anyone who wants to contact the CUNA Membership Growth Task Force can e-mail the account established for this purpose at cunamgtf@cuna.coop.

W. Va. league responds to citys intent to tax CUs

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PARKERSBURG and CHARLESTON, W.Va. (6/9/08)--The West Virginia Credit Union League has written a letter to city officials of Charleston, W. Va., warning that the city's intent to tax credit unions would violate both state code and the Federal Credit Union Act. The league learned through a third party that the city of Charleston intended to propose a business and occupation (B&O) tax on earnings of credit unions as part of the state's Municipal Home Rule Pilot Program. State legislation had given five cities permission as part of the project to find new ways to tax locally. Charleston is the first city to apply, Rich Schaffer, senior vice president of the league, told News Now, noting city officials "may think they may have more leeway than the law allows." The Home Rule Commission approved the city's plans, but the matter has not gone before the City Council yet. League President Kenneth R. Watts, in a letter sent May 30 to City Manager David D. Molgaard and other city officials, outlined why taxing credit unions would be a violation of the state and federal code. "As not-for-profit financial cooperatives, credit unions are exempt from taxation at both the federal level (12 USC Sec. 1768) as well as the state level (WV Code Sec 31C-2-8)," Watts wrote. "This exemption applies to any tax on capital, reserves, surpluses, income, or shares. Both citings are very specific statutory exemptions which I hope will sufficiently eliminate credit unions from any future consideration regarding sources of potential tax revenue," Watts wrote. Watts also clarified a statement in city documents about "unrestricted 'full service' credit unions." "It would seem you feel credit unions are not 'restricted' or perhaps not regulated," Watts wrote, adding that credit unions in the state are regulated by the National Credit Union Administration and the state's Division of Banking, and that credit unions must comply with all applicable consumer laws and regulations that apply to other financial institutions except the Community Reinvestment Act. "It appears that you feel credit unions should be subject to B&O taxes due to their ability to offer an array of services and to serve communities rather than a 'particular business or organization.' Watt wrote. "Since their inception in the U.S. in 1907, credit unions have always had multiple ways to serve their member/owners. While a common way was to have an occupational common bond, credit unions could also be organized to serve anyone within a specified community," Watts explained. He cited as examples: the first credit union in the U.S., which served a parish in Manchester, N.H., and the first credit unions formed ever--in Germany in the mid 1800s. "Both the U.S. Congress and the West Virginia Legislature have deemed credit unions worthy of a tax exemption due to their structure, not based upon the services they provide," he emphasized before outlining the not-for-profit financial cooperative, democratically controlled and governed by unpaid volunteers. He noted the restrictions credit unions have in ways they can raise capital. Watts offered to meet with city officials for a further discussion. The league's attorney has also contacted the city's attorney as a professional courtesy. Schaffer told News Now Friday the league had hoped to have a response by then, and added the league would monitor the situation for further action.

Vermont CUs elect directors honor Bergeron

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BURLINGTON, Vt. (6/9/08)--The Association of Vermont Credit Unions (AVCU) elected new officers to its board and honored AVCU President Joe Bergeron during its 61st Annual Meeting May 31. Jim Adorisio, Susan Best and Jeff Morse were re-elected to three-year terms on the board. Officers for this year are:
* Chairman John Benoit, NorthCountry FCU, South Burlington; * Vice-chair Sean Gammon, Members Advantage Community CU, Barre; * Secretary Susan Best, ORLEX Government Employees CU, Newport; and * Treasurer Adorisio, Champlain Valley CU, Essex Junction.
Bergeron was honored by the association for 30 years of service and was presented with a Rado watch. Speakers at the meeting included Dennis Dollar, former National Credit Union Administration board chairman and principal partner of Dollar and Associates; Mark Sievewright, corporate senior vice president at Fiserv; and Tom Glatt, CEO of Continental FCU, El Segundo, Calif.
Joe Bergeron (left), president of the Association of Vermont Credit Unions (AVCU), receives a Rado watch from John Benoit, AVCU board chairman, to honor Bergeron's 30 years of service.
From left: Jim Adorisio, Susan Best and Jeff Morse were re-elected to three-year terms on the Association of Vermont Credit Unions board of directors at its annual meeting May 31. (Photos provided by the Association of Vermont Credit Unions)

CUs tough stance on ID theft commended in editorial

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MOLINE, Ill. (6/9/08)--Using bogus official-looking e-mails and auto dialers, identity thieves have initiated several scams this year to try to trick IH Mississippi Valley CU’s 85,000 members into disclosing their personal account information. The credit union’s response has been lauded by a local newspaper. The $601.7 million asset, Moline, Ill.-based credit union has immediately responded at least three times this year to thwart the scammers’ attempts (Quad-Cities Times June 6). The newspaper said in an editorial: “IH Mississippi Valley has been an ardent community supporter in addition to a successful credit union. We commend its extensive security and public information efforts to fight this scam head on. And we urge readers to follow the credit union’s advice and contact it and the police if scammers hit again.” The credit union has been targeted with identity theft attempts with a frequency that is frustrating the credit union and its members, Laura Ernzen, IH Mississippi spokesperson, told the paper. A few members have fallen for the scams, although none have endured permanent losses, she said. Federal authorities are investigating the scams, Ernzen added.

CUNA Mutual 401k program expands to SEGs business

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MADISON, Wis. (6/9/08)--CUNA Mutual Group is expanding its 401(k) retirement program beyond credit unions to include select employee groups (SEGs), business members and other local businesses. The expansion means credit unions with a business services strategy can enter the institutional retirement plan market, said CUNA Mutual President/CEO Jeff Post. “This is much more than just offering a new product. It’s about helping credit unions develop a new business model that can provide them with sustainable growth in income and membership for many years,” Post said. Many credit unions are excellent at helping individual members prepare for retirement through certificates of deposit, mutual funds and annuities. It's a natural progression for them to also help members with their "institutional" retirement plans at work, said Kevin Thompson, CUNA Mutual vice president of asset accumulation products. The expanded 401(k) sales program is already in place at more than 60 credit unions nationwide. It targets credit unions that already have a financial advisor serving members’ retirement and investment needs. “More than 97% of all 401(k) plans in the industry are sold through an advisor or broker, which is why it makes sense to build resources and a distribution channel based on an advisory model,” Thompson said. Thompson said offering a 401(k) program as part of a business services strategy can help credit unions:
* Attract and retain members (including younger ones); * Generate significant and ongoing fee income from plan sales; * Attract 401(k) rollovers and individual rollovers from participants throughout their lifetime as they change jobs or retire; * Strengthen current relationships with SEGs and business members; * Increase cross-selling opportunities for credit union products; * Increase retirement expertise awareness within the community; and * Remain relevant to baby boomers while helping them save more for retirement.
CUNA Mutual has 60% of the 401(k) marketplace in credit unions--about 4,500 plans and 125,000 plan participants. “We’ve built an experienced wholesaling team to help financial advisors sell plans through strategic marketing programs, training, sales support and face-to-face client meetings,” Thompson said. To kick off the expanded program, CUNA Mutual hosted about 60 financial advisors June 2-4 at its Retirement Plan Services Symposium in Boston. CUNA Mutual is seeking to acquire businesses in the 401(k) provider space and has hired an investment banker to find such opportunities, Thompson said.

CU System briefs (06/06/2008)

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* WASHINGTON (6/9/08)--The deadline is Friday for registering for “How You Can Help Car Buyers Steer Clear of Predatory Loans,” an auto lending summit sponsored by the National Credit Union Foundation (NCUF). The event will take place July 22 at Credit Union House on Capitol Hill in Washington, D.C. and is limited to 40 executives. Best practices in credit union auto lending to non-prime borrowers will be discussed. For more information, contact Lois Kitsch, NCUF REAL Solutions program director at lkitsch@ncuf.coop ... * BOSTON (6/9/08)--Telephone Workers’ CU, Boston, is changing its name to Liberty Bay CU. The catalyst for the name change was a change in the credit union’s charter, which expands membership eligibility to include anyone who lives, works, or attends school in the Boston area. Liberty Bay’s downtown Boston and Braintree branches will relocate. Liberty Bay has $529 million in assets ... * SYRACUSE, N.Y. (6/9/08)--Empower FCU, Syracuse, N.Y., has merged with Fulton, N.Y.-based Nestegg FCU. The relationship presents opportunity for both credit unions’ members, said Jim Reynolds, Empower vice president of communications. Fulton members had wanted branches on both sides of the city, and the merger will fulfill that need, he said. The combined credit union will keep the Empower FCU name (The Post Standard/Herald-Journal May 29) ... * WINSTON-SALEM, N.C. (6/9/08)--Piedmont Aviation President/CEO Judy Tharp is featured on the June cover of Forsyth Woman Magazine, a monthly publication distributed in the Triad. She is featured in an article, "One Woman's Leadership Journey," which highlights her career in credit unions since 1979, when she helped start Cape Fear Employees CU in Wilmington. Tharp discusses the credit union movement and her passion to promote it to as many people as possible. The article highlights her commitment to further credit union progression to more people and the value credit unions provide consumers. (Photo provided by the North Carolina Credit Union League) … * RALEIGH, N.C. (6/9/08)--Coastal FCU has donated $10,000 to the National Veterans Freedom Park Foundation campaign to build a 12-acre site in Cary, N.C., honoring the sacrifices of American servicemen. The park will ensure that their firsthand accounts of history will be preserved. The project's centerpiece will be a 150-foot tall Light of Freedom spire. The location also will house a 25,000 sq. ft. education center, with classroom, auditorium, art gallery and other memorabilia exhibits. In 1973, a fire at the National Personnel Records center in St. Louis wiped out service records of millions of veterans. The foundation is working to record, restore and preserve those veterans' legacies, and is seeking photos, letters, travel orders, separation documents and more. It also will record veterans' stories … * PORTSMOUTH, N.H. (6/9/08)--Service CU of Portsmouth has increased its support, with a $10,000 donation, for an Air Force memorial to honor state men and women who served in the Air Force (Fosters.com June 4). The donation went to the New Hampshire chapters of the Air Force Sergeants Association and the Air Force Association. It makes the credit union the largest contributor to the memorial with a total contribution of $30,000. It gave $5,000 in February of 2007 and another $15,000 in November. A groundbreaking ceremony at the New Hampshire Veterans Cemetery in Boscawen is scheduled for Nov. 11 … * RANCHO CUCAMONGA, Calif. (6/9/08)--The California and Nevada Credit Union Leagues promoted Melissa Ameluxen to state legislative and regulatory lobbyist from political grassroots development specialist. She succeeds Keri Bailey, who is now the leagues' director of state government affairs. Ameluxen, who will continue to work out of the leagues' Sacramento office, will be responsible for assisting leagues boards and government relations committees in developing league policy on government affairs issues. She also will represent those positions to legislative and regulatory decision-makers in the two states. Prior to joining the league, Ameluxen served as field representative, legislative assistant, and district director for former state Assemblyman Russ Bogh. She was a campaign manager for several state legislators, including Assemblyman Bill Emmerson …

California DFI announces approval of five mergers

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SACRAMENTO, Calif. (6/9/08)--California Commissioner of Financial Institutions William S. Haraf announced the state credit union regulator has approved five mergers of credit unions in the state. Approvals were for:
* Monterey Columbia FCU, Monterey, merging with and into Monterey County Employees CU, Salinas, effected May 31. * First Future CU, San Diego, merging with and into California Coast CU, San Diego, approved May 1. * Church/Co-op CU, Sacramento, merging with and into The Golden 1 CU, Sacramento, approved April 29. * California Preferred CU, San Francisco, merging with and into Redwood CU, Santa Rose, approved Feb. 5. A press release from Redwood noted the merger was effective June 1. The combined credit union will serve nearly 143,000 members with total assets of nearly $1.8 billion. * Arrow CU, San Leandro, merging with and into Spectrum FCU, San Franciso, approved April 7.