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CU System Briefs (06/06/2013)

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  • ATLANTA (6/6/13)--Rob Braswell, commissioner of the Georgia Department of Banking and Finance, retired June 1. Braswell had held his position since 2005 and served in the department for 30 years. Steven Pleger, the former senior deputy commissioner, has been named interim commissioner. "During the first half of my career I learned so much from supervisors and experienced examiners that acted as mentors to me, and in the second half of my career I have been blessed to be supported by a strong group of dedicated, hardworking professionals that truly wanted to make a positive impact on the entities we regulate and the citizens of Georgia," Braswell wrote in a letter to the department.
  • MADISON, Wis. (6/6/13)--IDG's CIO magazine has announced CUNA Mutual Group is among its 2013 CIO 100 award recipients. The 26th annual awards program recognizes organizations worldwide that exemplify the highest level of operational and strategic excellence in information technology. This year's honored project for CUNA Mutual was for its Retirement Radar mobile annuity planning application. Launched in November, Retirement Radar leverages "gamification" techniques for tablet (iPad), mobile, and PC use. By integrating gamified design and mechanics, Radar creates a clear sales experience for customers and financial advisors. Easy-to-understand icons and visual imagery enable the advisor to illustrate a fun, personalized solution to an otherwise serious, sometimes frightening, and complex topic of retirement income, CUNA Mutual said. This year's award recognition marks the sixth time CUNA Mutual Group has received the CIO 100 honor since 2004 ...

Georgia CU Affiliates, Wells Fargo Studies Shed Light On Student Debt

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DULUTH, Ga. (6/6/13)--More than 22% of respondents to a Georgia Credit Union Affiliates (GCUA) survey said they have an existing student loan, and 12.8% said they are not on track to pay it back. And a separate Wells Fargo survey indicates about one third of millennial respondents wish they had entered the workforce instead going to college.

More than 5% of respondents owe between $10,000 and $20,000, and 10% of respondents owe more than $20,000, the GCUA survey revealed.

"Falling behind on your student loan payments can be very costly," said Michael Huff, project management manager of Associated CU in Norcross, Ga. "It also damages your credit, which can have negative ripple effects to all aspects of your financial life."

The soft job market has led many people to choose extended repayment plans of up to 25 years, Huff explained. "The extended payment option can turn a $25,000 student loan debt into $52,000 in total amount paid," Huff added. "And 25 years spent in paying off college debt can really impact their borrowing power for future purchases like a new car or home."

As student loan balances increase and job prospects continue to look bleak for young graduates, it is harder for students to repay the money it took to complete their degrees, GCUA said.

Tuition costs have risen by more than 26% since 2005. As a result, student loan debt is rising too, currently estimated at $986 billion, according to the National Center for Education Statistics. A recent study by TransUnion reports more than half of all student loans are now delinquent or in deferral.

While students are borrowing twice what they did a decade ago, they face more challenges in repaying their debt. A study by the Associated Press found 53.6% of Americans under age 25 are either unemployed or underemployed. Many young Americans graduate with their degrees only to find it impossible to repay their student loan debt, GCUA said. More than 13% of graduates default on their student loans within three years of leaving college, according to the U.S. Department of Education.

Also, roughly one out of three millennials (between the age of 22 and 32) of the 1,414 surveyed in a recent Wells Fargo study said they now believe they would have been better off directly entering the workforce after high school instead of going to college (LoneStar Leaguer May 29).

The reason for that that about-face is that more than half of those surveyed used student loans to finance their college education, and that many found they created a an overwhelming financial  burden.  Currently, U.S. student loan debt is totaling roughly $798 billion--exceeding U.S. credit card debt.

The Credit Union National Association's first annual High School Student Borrowing Survey, released in April, found that nearly half of high school seniors don't know how much they will need for college costs. That lack of knowledge translates to a greater student-debt burden after college.

In a recent meeting with Consumer Financial Protection Bureau officials, CUNA said credit unions could do more to help debt-saddled grads if the maximum credit union student loan maturity of 15 years was increased.

CUs Participate In Underbanked Solutions Exchange(1)

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SAN JOSE, Calif. (6/6/13)--Credit unions were among the financial institutions that participated in the Center for Financial Services Innovation's (CFSI) 10th Underbanked Solutions Exchange.

The group gathered in Miami, which the Federal Deposit Insurance Corp. recently reported as the most unbanked city in the U.S.  Senior executives from the participating institutions examined strategies to engage and transform the underserved market.

"The Underbanked Solutions Exchange is a one-of-a-kind program designed to offer these financial services providers the opportunity to acquire knowledge about emerging consumers in the U.S. and to learn from each other about winning strategies and solutions to profitably serve these customers," said Karen Andres, CFSI director of networks, advisory services.

Participants will get a first-hand look at the value of consumer-focused marketing and financial technology during a site visit to one of the newest locations of Boom Financial. Boom mobile banking service is the first to completely eliminate the need for traditional cash wire-transfer services.

Boom members use their mobile phones to make low-cost, bank-grade domestic and international money transfers through text messages. Members can also make purchases and withdrawals at thousands of participating Boom merchants and at more than 100,000 Boom ATMs. The visit will highlight the partnership between Boom and Self-Help FCU, Durham, N.C., an exchange participant and the financial institution issuing Boom's prepaid card.

The exchange will also provide participants with time to share updates on their current efforts in the underserved market, examine other financial solutions being introduced by innovators nationwide, and explore recent changes in the regulatory environment.

The exchange will feature a discussion on small-dollar credit. Participants will be offered a special preview of CFSI's upcoming qualitative research on several forms of small-dollar credit, which illuminates the complexity of the needs and circumstances of small-dollar credit customers.

Randy Dotemoto, senior vice president, Kinecta FCU, Manhattan Beach, Calif., and president, Kinecta Alternative Financial Solutions, will underscore this discussion by presenting Kinecta's efforts to effectively address members small-dollar credit needs through innovative product design.

Other credit unions participating in the exchange include:

  • Centris FCU, Omaha, Neb.;
  • ESL FCU, Rochester, N.Y.;
  • Redstone FCU, Huntsville, Ala.;
  • Hudson Valley FCU, Poughkeepsie, N.Y.; and
  • Vancity CU, Vancouver, B.C., Canada.

League President Dan Egan To Retire In December

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MARLBOROUGH, Mass. (6/6/13)--President Daniel F. Egan, Jr. of the Massachusetts Credit Union League, New Hampshire Credit Union League, and the Credit Union Association of Rhode Island, has announced that he will retire on Dec. 31.

Egan said he will be retiring as the president and CEO of the three trade groups as well as New England Credit Union Services, the jointly owned firm which manages and provides services to the three trade associations.

Credit Union National Association President/CEO Bill Cheney said of Egan: "Dan's long service for credit unions, and particularly his leadership at the state and national levels, has strengthened and enhanced the credit union movement at all levels. While he will be retiring from the movement, his legacy of service and contributions to the movement will no doubt stand for years to come."

Massachusetts Credit Union League Chairman David Surface added that Egan will be greatly missed: "He has been many things to many people in our credit union community: a leader, an innovator, a consensus builder, and a trusted advisor, to name a few."

He went on to say, "Fortunately, he has constructed a tremendous foundation and we are confident that his successor will build on the many accomplishments we have seen under Dan's leadership." Surface is the president of St. Jean's Credit Union in Lynn, Mass.

Egan reflected on his 32-year career in the credit union movement, saying: "It's been a true privilege to assist the credit unions in Massachusetts, New Hampshire, and Rhode Island in their mission to provide outstanding financial services. I'm proud to have had a part in this great cooperative effort to improve the financial lives of working families."

A committee comprised of members of the boards of the credit union trade groups from the three states has selected O'Rourke & Associates, a consulting firm headquartered in South San Francisco, Calif., to conduct a search for a new leader. The firm will begin recruiting immediately and interested individuals should contact Mike Juratovac, CEO of O'Rourke & Associates.

Michigan CUs See Record Lending, Membership Growth

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LANSING, Mich. (6/6/13)--Michigan consumers strengthened their relationship with credit unions in the first quarter of 2013 as membership continued to grow. Michigan credit unions also continue to finance record levels of loans--all of which helps contribute to the state's economic recovery, according to an analysis of data from the National Credit Union Administration released Wednesday by the Michigan Credit Union League.

"The growth in credit union deposits and lending in the first quarter shows very clearly that families, students, and businesses continue to join credit unions, and to deepen their relationship with credit unions because they understand the value of credit union membership now more than ever," said MCUL CEO David Adams.

"Michigan credit unions provide members access to historically low rates on loans, and lower fees on checking accounts," he added. "This in turn frees up cash for households and allows members to pay down debt, save for the future, and spend more at local businesses."

The data showed these highlights for the first quarter of 2013:

  • Michigan credit union membership is at its highest level, and has grown for seven straight quarters. The state now has 4.56 million credit union members, up 15,776 from the previous quarter. Today, 46% of Michigan residents are credit union members--16 points higher than the national rate.
  • Checking account balances grew more than 9% in the first quarter. Since the end of 2008, checking balances are up over $2 billion, representing 50% growth in slightly more than four years.
  • Michigan credit unions financed more than $1 billion in home loans, up from $882 million from the same period in 2012. Michigan credit unions financed more in fixed-rate mortgages in 2012 than in any previous year.
  • Credit union loans to businesses rose 6.9%, compared with 2.6% growth in the same period in 2012 and more than four points higher than the national rate.
  • Loans for new- and used-automobiles also ticked upward, reflecting the national trend of strong auto sales.
  • The boom in student loans is impacting Michigan credit unions, with total loans having reached $100 million for the first time, with growth of 5.4% in the first quarter.
News Now recently covered the National Credit Union Administration's announcement of first-quarter financial results for credit unions. Use the link.

Wis. CU Activists Win Budget Bill Battle

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PEWAUKEE, Wis. (6/6/13)--After working through the evening, the Wisconsin State Legislature Joint Finance Committee (JFC) completed its budget process Wednesday morning without adding any measures that would hurt state credit unions, the Wisconsin Credit Union League reported Wednesday.

The Wisconsin Credit Union League previously lobbied to defeat Wisconsin Bankers Association (WBA) efforts to eliminate credit unions' independent state regulator as part of the state budget process.

This is a noteworthy development given that WBA was able to add last minute anti-credit union policy into two budget bills in 2009 and 2011, the Wisconsin league said. Credit union activists were able to secure a gubernatorial veto of the WBA provision in 2009.  

Two new credit union examiner positions, which credit union activists lobbied for during the State Government Affairs Conference, are included in this year's final JFC budget.

Corporate One FCU Elects Board

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COLUMBUS, Ohio (6/6/13)--Corporate One FCU, Columbus, Ohio announced the the results of its board elections at its recently held annual meeting.

Charles F. Plassenthal, CEO/manager Dayton Firefighters (Ohio) FCU, and John J. Shirilla, president/CEO, Best Reward FCU, Brook Park, Ohio, were elected to three-year terms.

Plassenthal was re-elected to his fourth term on Corporate One's board of directors. Shirilla, was re-elected to his fifth term.

At the Nov. 30 board meeting, a resolution was approved to reduce the size of the of Corporate One FCU board from eleven back to nine in accordance with Corporate One FCU Bylaws effective as of the Annual Meeting held in April.

Other Corporate One board members and officers include:

  • Chairman--Jerry Guy,  KEMBA FCU, West Chester, Ohio;
  • Vice Chair--Jan Thomas, PSE CU, Warren, Pa.;
  • Treasurer--Shirilla;
  • Secretary--Phillip Buell, Superior FCU, Lima, Ohio;
  • Bob Burrow, Bayer Heritage FCU, Proctor, W. Va.;
  • Lee Powell,  DESCO FCU, Portsmouth, Ohio;
  • Robert Fertitta, Navigator CU, Pascagoula, Miss.;
  • Timothy McMurry, PowerNet CU, Tampa, Fla.; and
  • Charlie Plassenthal of Dayton Firefighters FCU.

MCUL Offers BET Founder Help In Ending Payday Lending

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MACKINAC ISLAND, Mich. (6/5/13)--The founder of Black Entertainment Television said he wants to offer an alternative to payday lending--and the Michigan Credit Union League says credit unions can help (Michigan Monitor June 3).

Robert L. Johnson, BET founder, in speaking at Detroit Regional Chamber's Mackinac Policy Conference on May 29 (Mlive.com), told the group there is no reason why the nation should allow that kind of lending process to take place if there are alternatives, and he noted "there are alternatives."

Although Johnson is working with a Texas Finance company, credit unions would be a great partner for the program, said MCUL & Affiliates CEO David Adams (Michigan Monitor June 3).

Adams said that "credit unions would be a fabulous partner with him and his organization to provide these alternatives to consumers. Alternatives to payday lenders who--not it all cases but in many cases--take advantage of people."

He noted many credit unions have programs aimed at replacing payday lenders. Community Promise FCU in Kalamazoo was set up specifically to put an end to payday lenders in its neighborhood, he said.

This summer, Johnson plans to announce a new program that offers wage advance lending in partnership with employers. The loans would have lower rates and longer terms than payday lenders and would offer rate discounts for consumers who pass a financial literacy test, set up savings accounts and pay on time.

Study: FI Branch Transactions Down 45% Since 1992

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ATLANTA (6/6/13)--Branch transactions at credit unions and community banks have declined 45% since 1992, according to the 2013 FMSI Teller Line Study. The average cost per transaction has increased to $1.08 from 48 cents. Meanwhile,  mobile banking is on the rise, the study said.

FMSI provides business intelligence systems to financial institutions.

The study is a compilation of statistics from credit unions and community banks in geographic regions across North America. The March 2013 study encompasses more than 17 million teller transactions and compares the same to the previous 21 years of the study.

Regarding mobile banking, the study said worldwide mobile payment transactions surpassed $171.5 billion in 2012, up 62% from $106 billion in 2011. Usage in U.S. increased by 50% since 2011.

However, despite its growth, mobile banking still only accounts for less than 3% of transactions for the majority of FMSI's clients.

Among the reasons for the decrease in branch productivity is that the number of branches have increased at a higher rate than the population, the study said.

The ratio of population to branches had declined dramatically by 2008 from where it was in 1970, the study said.  In 1970, 9,340 people were served per branch; by 2008 that number dropped to 3,683 per branch, according to the report.

"This metric is a result from a nearly 300% growth in the number of branches while the population growth was nearly half of that."

Overall, credit unions and community banks have experienced a 17.9% decline in transactions per teller hour, the study said.

Based on average branch monthly volume, credit unions have seen a 12.1% drop, while banks have seen a 26.2% decline.

Teller processing labor cost per transaction has increased 6.5% at credit unions, and jumped 18.4% at banks.

"It is now more important than ever for bank and credit union management to pay closer attention to their operating expenses. The labor cost savings associated with a focused and dedicated workforce optimization program for branches has become too great to ignore," the study said. "Maximizing the staffing investment through a more sophisticated scheduling approach also leads to improving sales and service levels."

"By paying closer attention to teller idle time, or the time tellers are waiting for transactions, an institution can get more accomplished during these systematically identified lull periods through proactively scheduling outbound selling campaigns," the study concluded.