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CU System Briefs (06/07/2013)

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  • BASKING RIDGE and TOMS RIVER, N.J. (6/7/13)--In their second wave of fundraising, employees of Affinity FCU, based in Basking Ridge, N.J., collected more donations for victims of last October's Hurricane Sandy, reported the New Jersey Credit Union League (The Daily Exchange June 6). A truckload of nonperishable food, bleach, pillows and blankets and a check for $1,438 were presented to the People's Pantry in Toms River. Employees and members not only donated the times but a team delivered the goods and spent the day volunteering at the pantry. "We call it 'walking the dollars,'" said Beth Degnan, executive director of Affinity FCU Foundation. The credit union also raised $1,887 and donated a large amount of goods in December. Pictured are, from left: Sal Galati, Affinity member experience officer;  Pat Donaghue, People's Pantry director;  Ralph Matatea and Ed Burke, pantry volunteers; Grant Gallagher, Affinity external affairs; and Degnan.  (Photo provided by the New Jersey Credit Union League) ...
  • CORPUS CHRISTI, Texas (6/7/13)--USO South Texas Inc. has received a $10,000 grant from Security Service Charitable Foundation--the charitable arm of San Antonio-based Security Service FCU--to support active duty military families at Naval Air Station Corpus Christi and Naval Air Station Kingsville.  In the photo, USO South Texas President Nancy Allen accepts the grant from Mike Martinez, senior vice president of military affairs for SSFCU, and Jim Bounds, area director of business development for the credit union's South Texas region and USOSTX board member. They are flanked by representatives of the U.S. Navy and Marines serving at NAS Corpus Christi. (Photo provided by USO South Texas, Inc.)  ...
  • NORTH CANTON, Ohio (6/7/13)--ATM manufacturer and CUNA Strategic Services provider Diebold Inc., has named Andy W. Mattes as president/CEO, effective immediately. He also was named a board director. Mattes has more than 25 years of experience in the information technology and telecommunications industries, primarily with Hewlett-Packard Co. and Siemens AG. He most recently was senior vice president, global strategic partnerships at Violin Mercury, a manufacturer of flash memory computer storage systems. He will remain with Violin in an advisory role.  Also, Henry D.G. Wallace, Diebold's executive chairman of the board, will assume the non-executive chairman role, effective Aug. 15 ...
  • DES MOINES, Iowa (6/7/13)--DianneTaylor, management consultant for the Iowa Credit Union League, will retire on June 21 after 32 years in the Iowa credit union industry. She began her credit union industry career in 1981 at what was then Deere Employees CU. She joined ICUL in 1984 and moved in 1988 to a league-owned data processing company to manage customer service and training. Taylor was ICUL director of education from 1990 to 1998, when she became operations manager at Tri-County CU (now known as Advantage CU). She served as management consultant for the league for the past 14 years. She also was an inaugural member of the CUNA HR Council executive board and served as an Iowa Jump$tart Coalition board member for more than 10 years, including a term in 2007 as president ...

NEW: Report Debunks Myth Of The Uneven Playing Field

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FEDERAL WAY, Wash. (Filed  6/7/13 at 1:05 p.m. CT)--All of the major claims made by critics of credit unions in terms of uneven playing field  are unsubstantiated, says an economic analysis released today. What's more, there is "no evidence that state and federal tax policies give credit unions unfair competitive advantages over banks."

"Credit Unions vs. Banks: The Myth of the Uneven Playing Field" is authored by

ECONorthwest's Randall Pozdena, managing director and senior economist, and Michael Wilkerson, senior economist.  The report was commissioned by the Northwest Credit Union Association.

The  independent economic analysis was commissioned after bank trade associations in Oregon and the U.S. lobbied to eliminate not-for-profit credit unions' tax-exempt status in the state and in Congress.

"In our view," wrote the authors, the difference in organizational forms of credit unions and commercial banks, the asymmetry of powers enjoyed by the respective institutions, and the trends in credit union development are not consistent with the claim that credit unions enjoy unfair competitive advantages."

In the study, they reviewed the theory and historical performance of credit unions, then statistically tested where there is a comparative performance difference based on the adoption of the community common bond membership criterion, or credit unions' exemption from corporate income taxation.

"All the major claims made by critics of the credit union industry are unsubstantiated," said the report.  Contrary to the claims of banks, the study concluded:

  • Credit unions' share of consumer deposits have not been growing for more than a decade.
  • There is no evidence that either the community bond designation or corporate tax policy has had any positive statistical effect on deposit or institution share trends.
  • Credit unions' growth and consolidation is mainly a response to the risk and inefficiency of reduced scale revealed by credit union liquidations in the 1970s and 1980s--not a consequence of changes in common bond designation or tax policy.
  • Untaxed credit union net income is not going to higher credit union labor compensation.
  • Consistent with the theory of cooperative banking, credit unions continue to provide superior deposit and loan rates, in addition to greater protection from portfolio risk relative to outside-ownership commercial banks.
  • The channeling of free cash flow to savers and borrowers means that free cash flow does not go untaxed.
  • Credit unions have not abandoned small account holders.
For the full report, use the link.

CUNA To Medill: People Discovering CUs Are Best Choice

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CHICAGO (6/7/13)--A story and video on Medill News Service's Chicago news page shine a spotlight on the credit union difference with a feature about Chicago-based First Financial CU's business model. The Credit Union National Association notes in the article that people are discovering that credit unions are the best choice.

People wary of banks are searching for better interest rates and have been moving toward credit unions like First Financial CU, which mirrors a national trend of increases in deposits, loans and members over the past five years "right through the recession," says the Wednesday article, "First Financial CU Growth in-line with credit union industry."

In it, CUNA Senior Economist Mike Schenk says that "people are reacting negatively to the [bank] fees and discovering credit unions are their best choice." 

First Financial CU CEO Patrick Basler and New Brunswick, N.J.-based Internet Archive FCU CEO Jordon Modell describe features that make credit unions attractive to consumers. They say that credit unions:

  • Never got into collateralized  mortgage obligations, which helped crash the economy in 2008;
  • Are built around their members, not around investors, and are not-for-profit;
  • Have lower overhead costs and fewer branches, which means they have less upkeep and maintenance; and
  • Have "total camaraderie."  "We're the 'It's a Wonderful Life' institution," says Modell.
The article notes recent national statistics on increases in deposits, membership and assets as well as describes results of the Northwestern University Kellogg School of Management's Financial Trust Index: 62% of American's surveyed earlier this year trust credit unions. That compares with 28% who trust national banks and 56% who trust local banks.

The story also features a video of Basler describing the credit union's business model. To view the video and read the entire Medill article, use the link.

Auto Leasing At Record High, Says Experian Automotive

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SCHAUMBURG, Ill. (6/7/13)--Vehicle leasing increased by 12.5% to reach the highest level since 2006, Experian Automotive reported this week.

Credit union market share also increased 0.4% from first quarter 2012 to 16.7%, Experian reported.

Leasing accounted for a record 27.5% of all new vehicles financed in the first quarter, up from 24.4% a year earlier, according to Experian's State of the Automotive Finance Market report. The average monthly payment for a new vehicle financed was $459, down from $462 for the same quarter in 2012.

"Consumers tend to shop for vehicles based within the limits of their budget, and leasing is often seen as a viable path to a lower monthly payment," said Melinda Zabritski, Experian senior director of automotive credit. "Lenders have seen overall stability come back to the market since the recession, and leasing has gradually returned as a larger part of many lender strategies."

While leasing a vehicle can help consumers achieve a lower monthly payment, the report also showed the term length increased to 65 months in the first quarter, up from 64 months in 2012, and a decrease in interest rates--4.5% in 2013, down from 4.6% in 2012--that helped to keep payments low for new vehicles financed.

In the first quarter, the average loan amount for a new vehicle financed rose by $628, to $26,648 from $26,020. The average used-vehicle loan increased $461, to $17,532 from $17,071.

The report also indicated that consumers within all credit tiers obtained financing in the first quarter. Loans going to consumers with credit outside of prime (nonprime, subprime and deep subprime) jumped to 45.2% of the overall loan market, up from 44.4%.

For new vehicles, loan share increased to 25.1%, up from 23.2%. For used vehicles, nonprime, subprime and deep-subprime loans accounted for 57.7% market share, up from 56.8% in the same period last year.

In other trends:

  • The average credit score for a new vehicle loan dropped to 755, down from 760;
  • The average credit score for a used-vehicle loan dropped to 657, down from 659;
  • Finance companies had 15.5% market share, up 5.1%;
  • Banks had 39.5% market share, down 1.7%;
  • Captive finance companies had 17.3% market share, up 3.4%; and
  • Buy here/pay here financing had 10.7% market share, down 6.4%.

Cornerstone FCU's Mortgage-free Promo Response 'Overwhelming'

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CARLISLE, Pa. (6/7/13)--Cornerstone FCU in Carlisle, Pa., launched its Win the Race to Become Mortgage Free promotion and received an "overwhelming" response from members in less than one week, the credit union said.

The promotion helped homeowners lower rates on mortgages with smaller balances or shorter terms that may not otherwise benefit from a mortgage refinance program (Life is a Highway June 6).

"We knew there was a need for such a promotion, but we were very surprised and impressed with the immediate response received," said Dave Keffer, Cornerstone CEO.

Cornerstone received about $7 million worth of inquiries and had more than 60 applications in the cue in less than a week, Keffer told News Now. The number of applications and dollar amount to be refinanced had exceeded the allotted program amounts. Due to the overwhelming response, the promotion ended almost as quickly as it had begun.

The program offered terms of 10, 15, and 20 years, with no closing costs, points, or fees usually incurred during a refinance. The promotion advertised that limited funds were available for loans, so members knew to respond quickly.

For members who did not get their applications to the $94 million asset credit union before the lending limits were reached, a waiting list of names has been started in case the promotion is reinstated.

Filene: Use Design Thinking to Serve Underserved

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MADISON, Wis. (6/7/13)--Using design thinking when planning new products to help the underserved banking population is the subject of a new Filene Research Institute report.

Design thinking refers to a set of methods and a mindset that create empathy by putting people at the center of the design and development process, according  to "Using Design Thinking to Serve the Underserved," authored by design researcher and strategist Julie Norvaisas.

Rather than designing a product that responded to the planners' assumptions about the underserved, Filene's young professionals network workshop participants--members of the Cooperative Trust--met the underserved, talked to them--and perhaps most importantly--learned how to listen and understand their stories without judgment, said the report. From there, creating a product designed around their members' real needs and wishes came naturally.

The process is a highly collaborative, human-centered approach that yields innovative solutions through a flexible but standardized process, the paper said. Design thinking can be applied to any business, but it is particularly critical for credit unions to understand members more deeply for a few reasons:

  • The knowledge gap: The distance between how credit unions think about financial services and how most consumers understand and experience the financial realm is likely vast, said the paper.
  • The emotional gap: While it all seems quite rational to some, managing finances can be emotionally charged and confusing for most people. As a result, many consumers do a poor job managing their finances.
  • The credit union mission: Credit unions are different from other financial institutions--a difference manifested by standing with consumers rather than against them, the paper said. In that light, adopting a design-thinking mindset is an emerging capability credit unions need to develop to remain competitive and relevant, it said.
The paper outlines design-thinking methods, tells the story of how the Cooperative Trust employed design thinking to spark innovation, and introduces the resulting Tru Account product currently in development as a result of participants' efforts.

For more information, use the link.

Louisiana, Iowa CUs Report Growth In Key Areas

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HARAHAN, La. and DES MOINES, Iowa (6/7/13)--Credit unions in Iowa and Louisiana reported growth in several key areas in the first quarter, according to National Credit Union Administration call report data.

Iowa credit unions--in the year ended March 31--led the U.S. in asset and deposit growth, and ranked fourth in the nation in loan portfolio growth, according to NCUA data (The Gazette June 5).

The state's credit union assets rose 10.4% in the first quarter, while deposits gained 10.8% and loans rose 9.9%.

Membership growth at Iowa credit unions expanded 2.4% to rank 24th in the U.S.

Louisiana's 209 federally insured credit unions added 5,933 memberships in the quarter--a 0.5% rise from December 2012, said the Louisiana Credit Union League (eNews June 5). Since March, memberships at Louisiana credit unions have increased by 21,490.

Also, assets at the state's credit unions have risen 3.3% to nearly $9.63 billion at the end of the first quarter from $9.32 billion at the end of 2012. In that same time frame, loans at Louisiana credit unions grew 0.2%.

FBI, Microsoft Remove 1,000 Botnets From Cybercrime Battle

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REDMOND, Wash. (6/7/13)--More than 1,000 of the estimated 1,462 Citadel botnets controlling millions of computers were taken down  week by Microsoft and the Federal Bureau of Investigation in collaboration with a number of groups, Microsoft announced Wednesday.

The Citadel botnets --networks of comprised computers infected by malicious software and controlled by cybercriminals known as botherders--are responsible for more than $500 million in losses among people, businesses, and financial institutions--including credit unions--in 90 countries worldwide. The malware impacted more than five million people, Microsoft said in a press release.

The coordinated effort to take down botnets won't completely eliminate the cybercrime problem, Microsoft said, but it is expected that the loss of so many botnets will "significantly disrupt the botnets' operation, making it riskier and more expensive for cybercriminals to continue doing business."

Disrupting the botnets also allows victims to free their computers from the malware with malware removal or antivirus software to help prevent additional security issues, said Microsoft.

This could mean that credit unions and other financial institutions may see a reprieve in fraudulent activity or a possible decrease in the number of compromised debit and credit cards they reissue because of fraud.

Microsoft also announced it filed a civil suit last week against the cybercriminals operating the Citadel botnets and received authorization from the U.S. District Court for the Western District of North Carolina to simultaneously cut off communication between the botnets and the infected computers.  And on Wednesday, Microsoft and U.S. Marshals seized data and evidence from the botnets, including computer servers from two data hosting facilities in New Jersey and Pennsylvania.

This is the second time Microsoft and authorities have worked together to attack a group of botnets. In March of 2012, Microsoft and a coalition of financial industry players coordinated actions against botnets using the Zeus malware to steal from online banking accounts. The company and its partners in the attack filed a civil lawsuit in a federal court in New York against 39 John Does  (News Now March 28, 2012).

In this week's attack on the botnets, the FBI provided information to foreign law enforcement counterparts so they could take voluntary action against the botnet structure outside the U.S.

"Today's coordinated action between the private sector and law enforcement demonstrates the power of combined legal and technical expertise and we're going to continue to work together to help put these cybercriminals out of business," said Brad Smith, Microsoft general counsel and executive vice president, legal and corporate affairs.

Other groups involved in the collaborative effort include the Financial Services--Information Sharing and Analysis Center (FS-ISAC), NACHA--The Electronic Payments Association, the American Bankers Association, and several technology industry groups.

Minnesota Foundation Committee Members Honored

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BLOOMINGTON, Minn. (6/7/13)--The Minnesota Credit Union Foundation recently honored two individuals for their service and contributions on foundation committees.

Click to view larger image Mark Cummins, left, Minnesota Credit Union Network president/CEO, presents Marty Kelly, senior vice president of marketing and business development at U.S. FCU, Burnsville, Minn., Minnesota Credit Unions for Kids Volunteer of the Year Award.
Marty Kelly of U.S. FCU, Burnsville, and Andrea Molnau of United Educators FCU, Apple Valley, were recognized during an awards banquet at the Minnesota Credit Union Network's (MnCUN's) 2013 Annual Meeting & Convention in May.

Kelly, U.S. FCU senior vice president of marketing and business development, was honored with the Minnesota Credit Unions for Kids (MnCU4Kids) Volunteer of the Year Award. Kelly became a member of the MnCU4Kids committee in 2006 has been instrumental in the success of the Credit Unions for Kids golf tournament, annual meeting fundraiser and the Bowl-O-Rama event.

Click to view larger image Andrea Molnau, right, vice president of marketing of United Educators FCU, Apple Valley, Minn., was honored with the Minnesota Credit Union Foundation's Family Involvement Council  Outstanding Volunteer award. Here, she receives the award from Mark Cummins, Minnesota Credit Union Network president/CEO. (Photos provided by Minnesota Credit Union Network.)
CU4Kids is a nonprofit collaboration of credit unions, chapters, leagues/associations and business partners nationwide engaged in fundraising activities to benefit 170 Children's Miracle Network Hospitals. Credit unions are the third-largest corporate sponsor of the hospitals.

Molnau, United Educators CU vice president of marketing, was chosen for the Minnesota Family Involvement Council's (FIC) Outstanding Volunteer Award for her longtime service on the committee. Currently the FIC's vice chair, Molnau has been a part of the council since 2002, and has also served as secretary.

The FIC mission is to enhance the future of the credit union movement by providing financial awareness to families. It focuses on providing scholarships to Minnesota credit union members to help further their education and to nurture their relationship with credit unions. Council members vote for the Outstanding Volunteer Award recipient.

SaveUp Selected As Finalist In Innovators Mega Challenge

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LIVONIA, Mich. (6/7/13)--SaveUp, a partner of CU Solutions Group, Livonia, Mich., is one of 11 finalists competing for the Annual Core Innovators Mega Challenge from Core Innovation Capital and the Center for Financial Services Innovation (CFSI).

The competition will name the most promising new idea in serving the 80 million underbanked American consumers known as the emerging middle class. The winner receives $10,000, broad media exposure and a complementary consulting session with the CFSI Advisory Services team.

SaveUp is a member engagement program that rewards members for saving and paying down debt. CU Solutions Group and SaveUp first joined forces in October to help credit unions build stronger member relationships and generate new leads for products.  As of May, the program helped users save $449 million and pay down $296 million (News Now May 28).

The 2013 Mega Challenge will be featured at the eighth annual Underbanked Financial Services Forum in Miami this month. Finalists will present a demonstration of their products and take part in question-and-answer sessions. The winner will be selected by interactive audience voting.