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CU System briefs (06/30/2012)

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  • SCRANTON, Pa. (7/2/12)--Due to a recent reduction in salary for the City of Scranton , Pa., employees, Tobyhanna FCU, with  $162 million in assets, has reached out with financial solutions to assist city employees affected by recent salary reductions. The credit union is granting the City of Scranton employees a "holiday" on their loan payments, which will allow employee members to skip their monthly loan payments in July and August, according the Pennsylvania Credit Union Association (Life is a Highway June 28). The assistance is a response to Mayor Chris Doherty's announcement Wednesday that, due to the city's financial crisis, he is unilaterally cutting employees' pay to the federal minimum wage of $7.25 an hour …
  • WALTHAM and BROOKLINE, Mass. (7/2/12)--Medical Area FCU (MAFCU), a $73 million asset credit union based in Brookline, Mass., announced Friday it finalized a merger with RTN FCU, a $705.8 million asset, Waltham, Mass.-based credit union. The merger will become effective Aug. 1.  MAFCU's Brookline and Dorchester branches will be known as the Medical Area Division of RTN. The legal name of the combined credit union will be RTN FCU. All current MAFCU employees will continue their employment with the credit union. MAFCU has 10,801 members, while RTN FCU has 37,629 members …
  • ALTOONA, Pa. (7/2/12)--Linda A. Holland, 53, former manager of Altoona, Pa.-based Your Choice CU, was arraigned Wednesday on 116 felony counts related to embezzlement of more than $61,807 over a three-year period from the $10.1 million asset credit union (Altoona Mirror and Associated Press June 28). An audit revealed that Holland allegedly removed cash from her drawer 58 times between June 11, 2008, and April 1, 2011. Paperwork falsely attributed the missing cash to business-related expenses such as building maintenance, marketing, office supplies and employee travel, said authorities. Police say the thefts ranged from $33 to $4,500. A preliminary hearing will be held Thursday  …
  • GREENSBORO, N.C. (7/2/12)--First Carolina Corporate CU moved during the weekend to a new office space and has a new mailing address, according to a notice in the North Carolina Credit Union League's Web newsletter Weekly Conversation  (June 29).  As of Sunday, the corporate's address is: 7900 Triad Center Drive, Suite 410, Greensboro, N.C. 27409 …
  • SAN ANTONIO (7/2/12)--An employee of San Antonio-based SACU was inducted into the Credit Professionals International (CPI) Hall of Fame at the CPI annual conference recently. James "Jim" Peters, Bank Secrecy Act compliance officer/loss prevention adviser of  SACU's risk advisory services division, was recognized  for his outstanding support of CPI, a professional organization in which several of his employees have been integrally involved, said SACU. Peters, a member of SACU since 1977, is not a member of CPI himself. CPI said his support has been instrumental in keeping Alamo Credit Professionals International and CPI District 8 viable for the past 10 years.  Peters was named Alamo CPI's Boss of the Year in 2003 and 2011. From left, Linda Simbeck and Pat Evans, CPI president, congratulate Peters on his induction. (Photo provided by SACU) …

Conn. league CEO Why political advocacy matters

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MERIDEN, Conn. (7/2/12)--Credit unions should include government affairs and political advocacy in all their strategic plans and give these areas the same priority as any other important operational strategy or initiative, according to Tony Emerson, president/CEO of the Credit Union League of Connecticut.

Emerson's article, "The 'business' of governmental affairs," which was published in CUinsight (June 29), outlined why credit unions should be involved in political advocacy. In essence: "If a credit union were an animate body, governmental affairs would be analogous to an antibody that protects it from illness," he wrote.

Political advocacy is not an optional activity and not something that can be done part time, he wrote. "Yes, we must be strategic about the way we are involved, but choosing not to be involved and support our governmental affairs initiatives could lead to the diminution or extinction of our movement," he added.

"I can't imagine any credit union allowing a competitor to come into its board room annually to conduct its strategic planning sessions, and be allowed to set the agenda and state the desired goals for the upcoming year," Emerson said. "However, when we fail to involve ourselves in our movement's political advocacy activities, this is exactly what we are doing."

In strategic planning sessions, credit unions most often concentrate on growth strategies, products and services, the economy, expense controls and income opportunities, he wrote. "I would suggest that we add government affairs to that list."

For the full article, use the link.

IMSNBCI IWash. PostI report on switching-banks study

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WASHINGTON (7/2/12)--National media including the Washington Post and MSNBC  last week reported on consumers' dissatisfaction with banks and a study that says banks are still vulnerable to losing customers to credit union and smaller institutions.

The study, a Financial Institution (FI) Vulnerability Index from Javelin Strategy & Research, was the subject of a story on June 26 in News Now. (See the resource link to "FI vulnerability: 11% of consumers likely to switch PFIs.")

The Washington Post blog, "'Move your money' threatens big banks in 2012," (June 27), noted that "Americans' trust in banks has fallen to a record low, with only 21% saying they have a 'great deal' or 'quite a lot of confidence' in them." It included  Javenlin's finding that 11% of consumers say they are likely to switch their primary financial institutions and repeated Javelin's conclusion that big banks are the most vulnerable.

It added, however, that convenience may trump customer dissatisfaction. Javelin's report said credit unions and other community institutions and regional banks "must smartly prioritize investments in technology that redefines personal banking and personal security by sharing control with customers--with an urgent emphasis on mobile banking and mobile deposit."

In MSNBC's "The ConsumerMan," Herb Weisbaum wrote that many banks have apparently not learned the lesson of how to make customers happy and reported that customer dissatisfaction runs high at four megabanks: Bank of America (BofA), Chase, Citibank and Wells Fargo. Citibank and BofA have double the vulnerability of banks overall, the article reported.

The column indicated that only 3% of the country's bank customers switched financial institutions during fourth quarter 2011, but people opened up accounts at smaller institutions and "many credit unions are happy as a result of that."

Weisbaum also said it may take time and cost a few dollars to switch financial institutions. "But if you don't like the one you have, find a new one. Bank protests won't bring about change. If you really want to send a message: vote with your wallet," he advised.

Quarterly poll Georgia members saving more

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DULUTH, Ga. (7/2/12)--While consumers are saving their money, they remain worried about their financial future and wonder whether they will be able to retire, according to the latest "Paying Attention" report released earlier this month by Georgia Credit Union Affiliates (GCUA).

Other insights gathered from the report revealed:

  • Used-vehicle loans among members in the state are up 7.08% in the past 12 months;
  • First mortgages rose 10.12% in the past year;
  • Bankruptcy filings fell 2.34% during the first three months of the year, compared with the first three months of 2011; and
  • Total loans increased 0.61% in the first three months of 2012.
The "Paying Attention" report combines savings and lending data from 38 credit unions from across the state--representing 91% of credit union assets and 85% of members in Georgia--with poll responses from more than 2,400 credit union members.

Maine reports 4 hike in members age 18-25

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PORTLAND, Maine (7/2/12)--Maine credit unions reported a 4% growth in members age 18  to 25 during the past 12 months, which moved the average age of credit union  membership in the state down--to 45 from the previous year's 47.

The Maine Credit Union League attributed the spike in the highly sought-after demographic group to its Young & Free Maine Program (Weekly Update June 29). The program involves a young spokester who attracts young members to credit unions through blogs, videos and participating in events in the state. Spokesters have a one-year term in the position.

Nearly 3,000 Free4ME checking accounts were opened in the program's first year.

The average age of Free4ME accountholders is 20 years old, and the average share balance is $699, the league said in its newsletter.

Of members in the checking account program, 15% have taken out loans with their credit union, with loan balances averaging $6,709.

The growth has been more significant in the past six months. "Since November, Maine credit unions have reported consistent 7% account growth, with 60% of relationships new to credit unions," said Debra Trautman, corporate marketing manager at the league. "Clearly, Young & Free Maine is having a positive impact on Maine's credit unions in attracting more 18-25 year-old members," she added.

Young & Free Maine's first-year spokester, Seth Poplaski, has ended his term. League President John Murphy noted that Poplaski's "ability to attract more than 100,000 visitors to the Young &

Free Maine website, as well as gain more than 1,100 Facebook friends, reinforces how well he communicated and connective with his peers."

Kylie Keene took over the spokester spot on Sunday. She is a recent graduate of the University of Maine in Orono. She was introduced to state media outlets in a series of radio and newspaper interviews last week.

CUAid activated to assist Colorado wildfire victims

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MADISON, Wis. (7/2/12)--Credit unions' online disaster relief system, CUAid.coop, was activated Friday by the National Credit Union Foundation (NCUF)  to raise money for credit union people affected by the deadly wildfires in Colorado.

"The impact of the Colorado wildfires on the community is an immediate concern," said Scott Earl, president/CEO of the Mountain West Credit Union Association (MWCUA).

"With more than 32,000 people evacuated and 350 structures already destroyed, our thoughts and prayers go out to the communities in distress during these difficult times. The support of the credit union community and the National Credit Union Foundation through the activation of CUAid will be indispensable."

At least one person has been killed in the fires, which closed some credit union branches in the Colorado Springs area. President Barack Obama declared Colorado a major disaster area and visited the area on Friday.

Credit union supporters in every state can make donations through CUAid, which is a secure website that accepts credit cards and includes information on wire transfers and mail donations. (Use the link.) CUAid is the only program of its kind that enables credit union employees, volunteers and members, as well as credit unions and state credit union foundations across the U.S., to contribute directly to support other credit union people, said NCUF. To donate, use the link.

"One hundred percent donated through CUAid--every cent of every dollar--goes to credit union disaster relief," said Christopher Morris, NCUF director of communications. "We encourage credit union leaders all across the country to use CUAid.coop as a channel to collect donations from their employees, volunteers and members."

As donations are posted through CUAid.coop, NCUF will coordinate with MWCUA to distribute money efficiently to credit union employees and members in the affected areas.

CUAid was developed by NCUF in cooperation with state credit union foundations, state credit union leagues, and the Credit Union National Association's Disaster Preparedness Committee in 2006.

The secure online tool links the entire credit union system to raise money for disaster relief, most recently after Tropical Storm Lee and Hurricane Irene last year.  CUAid was active four times in 2011, which was unprecedented.

Organizations and individuals can use a variety of CUAid Web buttons for their website. Use the links.

Wis. CUs invited to state dialog on financial sector

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PEWAUKEE, Wis. (7/2/12)--Wisconsin credit unions have been invited to a July 26 dialog with the Wisconsin Economic Development Corp. (WEDC) to look at ways to make Wisconsin's financial industry a more competitive and robust sector of the state economy, said the Wisconsin Credit Union League.  

WEDC is the state's leading economic development entity, created by Gov. Scott Walker's special session on jobs. It replaced the Department of Commerce in July 2011.

The dialog will begin with analyses from state and credit union industry economists. Credit unions will receive an update on the organization's plans and progress, share insights affecting the financial services industry, and explore forming a financial services consortium.

The consortium will ask financial professionals to advise on financial services issues and remain involved in the communication process by which Wisconsin's schools and universities, skilled labor pool, producers and customers come together.

"Effectively, it would help keep credit unions plugged into state policymaking as a means of stimulating economic growth," said Brett Thompson, league president/CEO.

The dialog with WEDC will feature issues that affect credit unions' contribution to the state's economic engine, including, but not limited to, employee education, training, recruitment and retention.

Credit unions are a vital part of the state economy, paying millions in taxes annually while providing financial services through a cooperative structure, the league said. Their member-ownership structure returned $201 million to 2.2 million Wisconsin citizens in 2011 via higher interest rates on savings, lower loan rates and lower or fewer fees. Bank customers saved $66 million in 2011 because of credit union competition, the league said. 

Wisconsin's credit unions employ more than 7,535 full- and part-time staff with an annual payroll of $278.6 million. They spent $581 million locally in 2011.

CU Direct announces board re-elections

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ONTARIO, Calif. (7/2/12)--CU Direct Corp., the parent company of the CUDL, Lending Insights, Lending 360, CUDL Retail and Vero brands, announced the results of its board of directors elections and honored long-serving board members during CU Direct's Annual Shareholders Meeting in Chicago.

Joe Brancucci, left, board chairman of CU Direct and president/CEO of GTE FCU, Tampa, Fla., presented Larry Wilson, president/CEO of Coastal FCU, Raleigh, N.C., with an excellence award for his service and contributions at the credit union service organization's Annual Shareholders Meeting in Chicago. Wilson, who will retire this month after 38 years in the credit union industry, has served on CU Direct's Board of Directors since 2004. (Photo provided by CU Direct)
The elections were held in May at the credit union service organization's corporate offices in Ontario, Calif.

Three board members of CU Direct's nine-member board were re-elected to three-year terms: Diana Dykstra, president, California Credit Union League; Donna Bland, president/CEO, The Golden 1 CU, Sacramento; and Sterling Nielsen, president/CEO, Mountain America CU, West Jordan, Utah.

During the company's shareholder's meeting, the board, along with Chairman Joe Brancucci, president/CEO of GTE FCU, Tampa, Fla., recognized outgoing board member Larry Wilson, president/CEO of Coastal FCU, Raleigh, N.C. Wilson, who will retire this month after 38 years in the credit union industry, has served on CU Direct's board since 2004. 

Henry Wirz, president/CEO of SAFE CU, North Highlands, Calif., and Marge McNaught, president/CEO, Premier America CU, Chatsworth, Calif., were recognized for their service to CU Direct. Wirz stepped down in January after serving on CU Direct's board for 12 years, including two years as the board's chairman, from 2005-2007. McNaught served on CU Direct's board from 2003-2011, including two years as chairman, from 2009-2011.

Also serving on CU Direct's board are:

  • Board vice chairman--John Lund, executive vice president, America First CU, Riverdale, Utah;
  • Secretary/ treasurer--Jeff March, CEO, Citadel FCU, Exton, Pa.;
  • David Reynolds--president/CEO, Security Service FCU, San Antonio;
  • Barry Jolette, president/CEO, San Mateo CU, Redwood City, Calif.; and
  • Associate director--Nader Moghaddam, president/CEO, Financial Partners CU, Downey, Calif.

CU 24s Park to retire Guerry named successor

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TALLAHASSEE, Fla. (7/2/12)--Jim Park, president/CEO of Credit Union 24 (CU 24), will retire at the end of the year after 30 years of leading the credit union-owned ATM and point-of-sale network, the company announced Friday. 

Mansel Guerry, who joined the Credit Union 24 in January as executive vice president of administration, will succeed Park. 

Park was selected to lead CU 24 when it was purchased by the Florida Credit Union League, now the League of Southeastern Credit Unions, in the early 1980s. To compete with the more than 100 networks in existence at the time, Park spearheaded the concept of a network of networks, leading CU 24 network's growth beyond the state of Florida to become a national network. 

Before joining CU 24, Guerry served as president/CEO of Brightview CU, in Ridgeland, Miss. He first became involved with Credit Union 24 in 1995 as one of the company's first marketing representatives.  He was also one of the founding board members when the network became a cooperative in 1998, serving at times as board treasurer, vice chairman and chairman.

Chicago CU helps nine small businesses with loans

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CHICAGO (7/2/12)--For the past year, the North Side Community FCU, Chicago, has partnered with the Chicago City Treasurer to offer $218,500 in member business loans (MBLs) through the city's Small Business Development Fund.

Since the program's launch, North Side Community FCU has assisted nine businesses with loans ranging from $5,000 to $35,000, according to the Illinois Credit Union League.

Loan purposes include working capital, establishment of a new business; expansion of existing business; job creation and/or retention; purchase of equipment/machinery/supplies or inventory; and other crucial operational needs. 

Among the types of business the credit union has assisted are a day-care center, a hand car wash, a children's retail clothing store, a cosmetics manufacturing company, a trucking company, a medical supply business, a medical concierge business, a printing and design company and an eye wear manufacturer.

Loan funds are guaranteed by the City of Chicago. However, North Side Community FCU administers the loan approval process through a dedicated part-time staff person and its small-business loan committee.

"North Side Community FCU's small business loan program furthers our mission to provide resources and affordable services to our diverse community, which includes small businesses," said Jennifer Sierecki, CEO of the $12 million asset credit union.  

In September 2011, H.D. Printing received a loan of $12,500 to purchase a new die cutter and a computer, and provide additional working capital to help with operating expenses.

"This loan helped us with our cash flow and equipment purchases that we wouldn't have been able to do otherwise," said H.D. Printing co-owner Andy Holck. "It has allowed us to do work in house at 25% of the cost that we would have paid to contract out, which has led to us bringing on a new employee."

The Credit Union National Association (CUNA) and credit unions are urging the U.S. Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

More frivolous suits CCUL may file countersuit

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ONTARIO, Calif. (7/2/12)--After speaking to six California credit unions targeted in "frivolous" lawsuits alleging improper overdraft policies and practices, Diana Dykstra, president/CEO of the California Credit Union League, said the league is contemplating a countersuit.

"The league is looking to perhaps file a countersuit against the attorneys and possibly get sanctions and/or fines because of what they did to the reputations of the credit unions by cutting and pasting complaints and not doing due diligence," Dykstra told News Now.

"They [the lawsuits filed] are absolutely malicious and frivolous," Dykstra said. "It is absolutely cut-and paste documentation. There was no duty of care."

At one credit union, management looked up the name of a plaintiff listed in a class action suit, and found that he never paid an overdraft fee, Dykstra said. 

"If the attorney had done some research, he never would have filed the suit," she added. "Some attorneys see big settlements with banks and they're looking to force a fast and easy settlement [and get money] just like [with] ATM suits," she said, referring to a wave of lawsuits over ATM fee disclosures at the machines.

"The credit unions here in California are not going to pay, because there was no wrongdoing committed," Dykstra concluded.   

The new wave of multiple, duplicative lawsuits targets banks' and credit unions' overdraft policies and processes, very similar to the multiple lawsuits that attacked fee disclosures or lack of them at ATMs of credit unions and banks the past two years  (News Now June 28) .

The law offices of Fernando F. Chavez, a San Jose-based attorney representing members of the three credit unions, filed three cookie-cutter class-action lawsuits against California-based credit unions Thursday. Six credit unions have been sued, so far. The suits, like earlier bank lawsuits, allege that the institutions processed transactions in a way that resulted in unnecessary or excess overdraft fees, according to the court documents.

The complaints were filed in the U.S. District Court for the Northern District of California, San Jose.

They are worded identically, except for several paragraphs in two lawsuits that refer in error to the third credit union--indicating that those complaints used one complaint as a template for the other two. They also contain the same language as in similar suits filed by others against Bank of America, Wells Fargo, JPMorgan Chase and PNC Bank, among others.

NEW NCUF activates CUAid to assist wildfire victims

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MADISON, Wis. (6/29/12--Filed at 2:30 p.m. CT)--The National Credit Union Foundation (NCUF)  has activated the online disaster relief system CUAid.coop to raise money for credit union people affected by the deadly wildfires in Colorado.



"With more than 32,000 people evacuated and 350 structures already destroyed, our thoughts and prayers go out to the communities in distress during these difficult times. The support of the credit union community and the National Credit Union Foundation through the activation of CUAid will be indispensable."

At least one person has been killed in the fires, which closed some credit union branches in the Colorado Springs area. President Barack Obama declared Colorado a major disaster area ahead of his visit to the area Friday.

Credit union supporters in every state can make donations through CUAid, which is a secure website that accepts credit cards and includes information on wire transfers and mail donations. (Use the link.) CUAid is the only program of its kind that enables credit union employees, volunteers and members, as well as credit unions and state credit union foundations across the U.S., to contribute directly to support other credit union people, said NCUF. To donate, use the link.

"One hundred percent donated through CUAid--every cent of every dollar--goes to credit union disaster relief," said Christopher Morris, NCUF director of communications. "We encourage credit union leaders all across the country to use CUAid.coop as a channel to collect donations from their employees, volunteers and members."

As donations are posted through CUAid.coop, NCUF will coordinate with MWCUA to distribute money efficiently to credit union employees and members in the affected areas.

CUAid was developed by NCUF in cooperation with state credit union foundations, state credit union leagues, and the Credit Union National Association's Disaster Preparedness Committee in 2006.

The secure online tool links the entire credit union system to raise money for disaster relief, most recently after Tropical Storm Lee and Hurricane Irene last year.  CUAid was active four times in 2011, which was unprecedented.

Organizations and individuals can use a variety of CUAid Web buttons for their website. Use the links.

NCUA close to approving Lakota FCU charter

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RAPID CITY, S.D. (6/29/12)--A new charter for a credit union that would serve South Dakota's 3,500-square mile Pine Ridge Indian Association is "very close" to being approved, said National Credit Union Administration Chairman Debbie Matz.

Matz spoke at the annual summit of the Credit Union Association of the Dakotas Wednesday in Rapid City, S.D., and said she supports the proposed  Lakota FCU (Rapid City Journal June 28).

Lakota FCU, which would be headquartered in Kyle, is sponsored by the Lakota Funds certified Native Community Development Financial Institution, which makes small business loans on the reservation. It also offers programs to help individuals grow personal assets, said the article.

Matz told the newspaper that the credit union fills a dire need. No credit unions or banks are located on the reservation, and there is no access to insured deposits and non-predatory lending there.

Lakota Funds Executive Director Tawney Bruncsh told the Journal  that NCUA officials will visit in July.

The credit union would provide services such as personal loans; savings accounts; ATM cards with access to no-surcharge ATMs in each of the reservation's nine districts; direct deposit for paychecks; and low-fee check cashing and money order services. It also hopes to eventually offer checking accounts.

Colorado wildfires close several CU branches

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COLORADO SPRINGS, Colo., and MADISON, Wis. (6/29/12)--Two credit unions in Colorado Springs, Colo., have been forced to evacuate and one is in danger of losing a branch due to the wildfires spreading across Colorado. Other credit unions have experienced branch closings, and  thousands of credit union members may be impacted, directly or indirectly, by the fires.

Mike Retelle, CUNA Mutual Group property and casualty claims manager, in a video update Thursday afternoon, said that the insurance company is tracking the six major fires crossing Colorado.

Click to view larger image Wildfires in Colorado Springs, Colo., as seen by Evangelical Christian CU's (ECCU) Colorado Regional Office, in this photo taken Tuesday by Vice President Gary Kehr. ECCU said hundreds of its members have been affected by the fires, and many are still at risk. (Photo provided by ECCU)
"One of the biggest, in Colorado Springs, is greatly impacting a lot of homes and businesses. We're concerned about the credit unions there as well as credit union members impacted by the fires. We have reached out with credit unions that we insure in Colorado and in Colorado Springs to determine their special needs and tell them about resources we have and who our disaster team members are," he said.

The Colorado Springs area has about a dozen credit unions. "We estimate more than 250,000 members belong to credit unions in the impacted area," Phil Tschudy, media relations manager, told News Now.

Retelle said CUNA Mutual is "aware of two credit unions that have been forced to evacuate because of smoke and soot, but they have not been impacted directly by fire." However, "there is a concern that one of them may lose its branch. If it does, it will happen in the next couple of days."

Credit unions can call CUNA Mutual's hotline at 800-637-2676. "It's open 24 hours a day. All they have to do is call and tell the claims manager answering what their special needs are," Retelle said. "We will put people onsite as close as we can be allowed by the authorities but our main drive right now is to find out what their needs are," he added.

The Evangelical Christian CU (ECCU), based in Colorado Springs and serving evangelical ministries and churches, in a press release said fires around that city have destroyed 300 homes, endangered church and ministry facilities and displaced thousands of people. "Hundreds of ECCU members have been affected, with many still at risk."

"We are getting word of potential damage," tweeted Doug Goodin, senior pastor of Front Range Alliance Church Wednesday. "The church building seems sound, but many homes are gone."

The credit union said 32,000 people in the area were under mandatory evacuation. Some of the churches are official staging areas for evacuees.

ECCU's Colorado Springs regional office said staff have been affected by the wildfires and some members have lost their homes.  The credit union urged:  "Pray for ECCU members--120 ministries and more than 500 individuals--who find themselves in harm's way."

Other credit unions also made reports on their websites.

  • Air Force Academy FCU (AAFCU)  noted that due to evacuations, the AFA branch is closed until further notice. The credit union provided phone numbers to call and offered assistance for members with their savings/checking accounts, ATM locations, loan options such as Skip-A-Payments at no charge to the members, personal loans and late fee waivers, as well as mortgages and online access.  "'People Helping People' is the credit union philosophy and we are working diligently with our staff on their initiatives to assist our members, both inside the credit union and throughout the community," the credit union said.
  • The Colorado Springs branch of Palo Alto, Calif.-based First Tech FCU, was closed Thursday due to an evacuation order for the Waldo Canyon fire, said its website.  Members were instructed to visit ww.cuswirl.com for shared branch and CO-OP Network ATM locations in the area.  Members can check account balances, transfer funds and pay bills through online and mobile banking.  The credit union also offered short-term loans to members affected by the Waldo Canyon and High Park wildfires.
  • Ent FCU's website reported that  its Centennial and Woodland Park Service Centers are "closed until further notice." It told members that if their home or business was damaged as a result of the Waldo Canyon fire to contact its service center locations. "We will work with you to identify your top financial priorities and assist you with: loans, instant issue debit cards, temporary checks and other services," said Ent.  It also offered assistance with mortgagees, home equity loans, business, and, insurance coverage,  and said emergency loans and loan payment adjustments are available.  It also offered advice on preparing financially for a natural disaster, and directed visitors to sites where they can make donations to help victims of the fires.
  • Credit Union of Colorado, which is based in Denver, has a branch in Colorado Springs.  "We will do our part to help you navigate through any financial difficulties caused by these fires." Its foundation announced it will donate $5,000 to help fund relief efforts for those impacted by the fires.  It also is accepting donations to aid in the relief.
  • Farmers Insurance Branch FCU, which is headquartered in Los Angeles, said Thursday its Colorado branch is open.

NCUA files brief in union suit vs. Wall Street banks

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NEW YORK (6/29/12)--The National Credit Union Administration (NCUA) has filed an amicus brief in a lawsuit brought by New Jersey Carpenters Health Fund against Wall Street banks over residential mortgage backed securities (RMBS) the union bought from them.

In the brief, NCUA urges a federal appeals court to reverse a lower court's dismissal of the case and to clarify what key elements an injured RMBS investor must allege to state a claim under the Securities Act.

The case, said NCUA, is the first case in the court to present the question. Similar cases have permitted complaints based on the same type of allegations as the union's, but the lower court, the U.S. District Court for the Southern District of New York, dismissed the union's case. The case was appealed to the U.S. Court of Appeals for the Second Circuit, and NCUA filed its amicus brief before that court on Monday.

Many of the union's arguments are the same as NCUA's arguments in cases it has filed against big banks in its role as liquidating agent for four failed corporate credit unions--U.S. Central FCU, Western Corporate FCU, Members United Corporate FUC and Southwest Corporate FCU.

The union's suit is against The Royal Bank of Scotland Group (RBS), Greenwich Capital Holdings Inc., Greenwich Capital Markets Inc., Wachovia Capital Markets LLC (Wachovia Securities) and Deutsche Bank Securities Inc.  

NCUA has filed similar lawsuits against NovaStar, RBS, Wachovia and other entities who issued or underwrote RBMS for the corporates it liquidated.

NCUA told the appellate court that credit unions purchased "extremely safe  investment-grade, triple-A rated RMBS," including some issued by defendants in the union's lawsuit. Most of the ratings were downgraded to "junk" status by the time the corporates underwent conservatorship.  NCUA had maintained in its lawsuits that the companies that originated the defective loans had "systematically disregarded underwriting guidelines."

In its brief, NCUA said, the case presents "an important opportunity to consider and correct the district court's ruling, which adopted a novel and unjustified pleading standard that would prevent legitimately injured investors from obtaining relief. The standard would require a plaintiff in an RMBS case to identify and allege underwriting defects specific to individual mortgages in the loan pool." The requirement "also imposes a burden that investors cannot meet without the benefit of discovery," NCUA said.

NCUA maintained "the district court erred in ruling that boilerplate cautionary language was sufficient to render immaterial as a matter of law the undisclosed fact, which plaintiff has properly alleged, that the originator of the loans in this case systematically disregarded the underwriting guidelines stated in the offering documents for the RMBS in this case."

NCUA argued that determining whether a complaint has enough factual matter for obtaining relief generally include:

  • Widespread systematic disregard of mortgage loan underwriting guidelines, which provides background for assessing plausibility;
  • Objective evidence about loan performance as an indicator of systematic disregard, such as early default and delinquency rates and collapses in credit ratings; and
  • Representations in the offering documents of the RMBS that state or reasonably imply that the loans generally adhered to underwriting standards.
Narrative allegations about the originator's conduct may strengthen a complaint but should not be required, said NCUA's brief.

NCUA concluded the lower district court erred by adopted a standard requiring loan-specific factual allegations; that its heightened pleading requirement would foreclose injured investors from filing meritorious lawsuits; and that it erred by declaring misstatements and omissions immaterial as a matter of law.

Matz addresses Dakotas summit

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National Credit Union Administration Chairman Debbie Matz Thursday spoke at a summit for the Credit Union Association of the Dakotas (CUAD) and met with CUAD's Board of Directors. From left, CUAD board members Dave Gleason, Jerry Peterson, Travis Kasten, Jennifer Starks and Steve Davis; Matz; CUAD President Robbie Thompson; and CUAD board members Darrell Olson, Darwin Brokke and Veronica Holweger. (Photo provided by the Credit Union Association of the Dakotas)
RAPID CITY, S.D. (6/29/12)--Speaking at the Credit Union Association of the Dakotas  (CUAD) Summit Wednesday, National Credit Union Administration (NCUA) Chairman Debbie Matz began with the corporate crisis, saying  it is a delicate balancing act between too much and too little regulation.

It is especially difficult with regulations in the Dakotas, since there are such positive trends with credit unions growing stronger there, she added.

South Dakota loan delinquency is the seventh-lowest in the U.S., and in North Dakota, the second-lowest delinquency in the nation. Still, credit unions must be diligent, Matz said.

"NCUA will be re-allocating resources to those credit unions that pose a greater risk, and will be spending less time in well-performing, smaller credit unions," Matz told attendees.

NCUA also will apply greater transparency with a more intuitive website, sharing more information, she added.

Credit unions may receive the NCUA Report by signing up at its website. The report will clearly say what NCUA is doing, and why.

She concluded by saying the goal of NCUA is consistent with the goals of credit unions:  Stronger, safer credit unions with a vibrant future.

Before the general session at the summit in Rapid City, S.D., Matz met with CUAD's board.

CUAD serves 78 credit unions in North and South Dakota.

CUs accepting municipal deposits in several states

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MADISON, Wis. (6/29/12)--Credit unions in several states nationwide are increasingly accepting municipal deposits from city and town governments. More states are trying to get laws passed to obtain that capability.

Many municipalities are not aware they can use credit unions as depositories. Education is a key focus of credit unions that do accept these deposits. 

"We had to go out and educate municipalities that they can invest with us," Gary Hinrichs, president /CEO of West Community CU in O'Fallon, Mo., told News Now. "We have a relationship with the city [Brentwood], and having a good relationship gets you in the door to be on their list. The government bodies tend to be more thoughtful because they are under public scrutiny."

West Community CU, a $140 million asset institution, has one account from Brentwood, Mo., a city with 3,000 to 4,000 residents, said Hinrichs.

"It's not unusual that we would get an RFP [Request for Proposal from a municipality] saying 'we have money to invest,'" Hinrichs added. "We would then compete against other financial institutions. So we would determine if we wanted to bid, based on liquidity needs and asset liability management."

As an example, an RFP might say the municipality has $300,000 to invest for 12 months. "We would then bid on it straightforward," Hinrichs said.

A city's decision is based on the amount of expenditures coming up for a city's work that needs to be done or as determined on what the bid revealed about the interest rate that the credit union and other financial institutions would provide the city for its investment, he explained.

Some municipalities slice their RFP into pieces and accept bids that way, while others want the RFP to cover all their financial needs such as credit cards, checking accounts, and so on, he added.

United CU, a $17 million asset credit union in Mexico, Mo., has had one active municipal deposit account since 1998--the small town of Vandalia, Mo., with 1,300 residents. 

"They came to us," Brent Sandler, United president/CEO, told News Now. "We've always had pretty good representation on our board from local communities, so there are good connections there. We provided the same [interest] rate as we provide our members. [Vandalia] knows our rates, we didn't negotiate them."

Accepting municipal deposits does nothing but help credit unions, Sandler added. Credit unions need to better maintain connections and let cities and towns know that credit unions accept municipal deposits, he said.

"It's more of an education process," Sandler explained. "Some businesses don't understand that option is there. There is a whole misconception of who we are, what we can do and who we can serve.

"Credit unions need to be more aggressive and educate businesses and reach out to them. And that can open many doors, not just municipal deposits," he concluded.

Dane County CU, a $120 million asset credit union in Madison, Wis., has two municipal deposit accounts that arose from relationships it developed from its select employee groups (SEG) when it had an SEG charter.  In the early 1980s, it became community credit union.

The city of Fitchburg and the town of Madison are two smaller suburbs of the city of Madison.

The credit union hasn't seen much demand for municipal deposits other than those two for places to put their investments, Jon Lowrey, president/CEO of Dane County CU, told News Now.

"Essentially they came to us," Lowrey explained. "I'm not sure if their particular requirements include bidding. Primarily when it comes to fairly liquid investments those groups will shop around. But they came to us, knew our rates and we did the deal.

"We've had their deposits for several years, and we consider them to be like our other members and we try to meet their needs," he added. "We don't want to lose them to other financial institutions in the area."

Dane County CU is generally in the upper third of financial institutions in it area when it comes to the interest rates it offers, Lowrey said.      

Momentum has been building nationwide for cities to pass Responsible Banking Ordinances, which would provide credit unions more opportunities to accept municipal deposits.

Portland, Ore., adopted the Responsible Banking Resolution in May, which resulted in the city depositing $250,000 in each of 10 Oregon credit unions and banks.  Two Oregon credit unions--the $810 million asset Advantis CU in Milwaukie and $2.93 billion asset OnPoint Community CU in Portland received deposits (Portland Business Journal June 20). 

Those with Responsible Banking Ordinances include Brockton, Mass.; New York City; Los Angeles; Kansas City, Mo.; and Portland, Ore.

Similar ordinances are being considered in Austin, Texas; Boston; Chicago; Minneapolis; San Jose, Calif.; and Seattle (The Wall Street Journal March 20).

States governments are involved as well. Washington Gov. Christine Gregoire signed Senate Bill 5913--known as the public funds bill--into law March 7, and it became effective June 8. The bill allows public entities for the first time to deposit funds in any credit unions in Washington up to the federal maximum of $250,000, said the Northwest Credit Union Association (News Now March 12). 

Other states with public funds or municipal deposits bills pending or awaiting implementation include Alabama, Ohio, New Jersey, Minnesota and New York.

NCUF 2011-12 Annual Report available

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MADISON, Wis. (6/29/12)--The National Credit Union Foundation (NCUF) has released its 2011-2012 Annual Report.

The report's theme, "Making Financial Freedom Achievable," corresponds with the mission and logo the NCUF announced earlier this year and provides foundation highlights from the past 12 months.

"Over the last year and a half, we've become more focused on financial education and building consumer financial capability through credit unions," wrote Bucky Sebastian, NCUF executive director, in the report's introduction. "It's a natural fit for us and allows the foundation to make a bigger impact through our programs and grants. As you read about our many activities throughout the past year in these pages, know that they are only made possible with the support of the credit union community."

The report also includes:

  • "Year in Review"--a timeline of NCUF highlights;
  • Description of REAL Solutions' financial education initiatives;
  • Biz Kid$ updates;
  • Credit Union Development Education Program updates;
  • Financial Education Grant highlights;
  • CUAid--disaster relief updates;
  • Community Investment Fund overview and investor listing;
  • 2012 Supporter listings;
  • 2011 NCUF donor listings;
  • 2011 financial statements; and
  • 2012 Herb Wegner Memorial Award winners.
To download the annual report, use the link.

CUNA Mutual analyzes Supreme Court health insurance ruling

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MADISON, Wis. (6/29/12)--In the immediate aftermath of the U.S. Supreme Court's decision Thursday to uphold President Barack Obama's landmark health care law, Brad Pricer, human resources process leader for CUNA Mutual Group, offered credit unions a direct but gentle piece of advice: It's time to get off the fence.

In a YouTube video offered by CUNAMutual, Pricer said that most credit unions, like just about every other type of U.S. employer, were waiting to hear the court's ruling before implementing the requirements of the Patient Protection and Affordable Care Act.  But the compliance requirements have been effectively put on hold for two years, Pricer said. It's time to start moving forward, he advised.

"If you've been waiting to see if the court was going to throw it out, now is the time to work with brokers and consultants and take stock with what you have done or what you might need to do going forward," Pricer said.

CUNA Mutual provides a timeline for credit unions to get up to speed on the legislation. Use the link.

The court's 5-4 ruling was based on the power of Congress to impose taxes, according to Reuters (June 28). It preserved the law's "individual mandate" requiring that most Americans obtain health insurance by 2014 or pay a tax. The justices also preserved, with some changes, a provision of the law expanding the Medicaid health insurance program for the poor.

The Patient Protection and Affordable Care Act is the biggest overhaul of the U.S. healthcare system in about 50 years. It was signed by Obama in March 2010 and tested in the courts by 26 of the 50 U.S. states and a trade group for small businesses.

Regardless of which side of the fence healthcare law watchers were leaning, Pricer said Thursday's ruling does provide opportunities for credit unions and other employers.

He specifically mentioned the rise of private health insurance exchanges. The new healthcare law will require each state to put in place health insurance exchanges or have the federal government put in place an exchange for them. Government exchanges are likely to provide employees and employers with limited choices for healthcare. Private exchanges will offer much richer choices for employees or employers, Pricer said.

The new law will likely allow credit unions to change how they fund healthcare offerings to employees, he said. Instead of the traditional defined benefits approach, through which an employer offers one or two plans with likely annual cost increases, exchanges will provide employers the flexibility to provide employees with a set amount of dollars to make their own healthcare own choices.

"This will make budgeting [for credit unions] much easier on a year-over-year basis," Pricer said.

U.S. CUs immerse to study Guatemala growth

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GUATEMALA CITY, Guatemala (6/29/12)--Nine young credit union professionals from five U.S. states recently returned from Guatemala City after two weeks of participation in the second phase of a World Council of Credit Unions' (WOCCU) International Credit Union Leadership Program (ICULP) cultural exchange initiative.

Nine young U.S. credit union professionals spent two weeks in Guatemala participating in the second phase a World Council of Credit Unions International Credit Union Leadership Program cultural exchange. Here, participants and their Guatemalan hosts delivered services to rural members through a credit union's mobile branch. (Photo provided by the World Council of Credit Unions.)
Participants in ICULP were hosted by Guatemala's largest credit union system, MICOOPE, to learn about the growth strategy that helped it reach more than one million members.

ICULP is supported by a grant from the U.S. Department of State, Bureau of Educational and Cultural Affairs, Office of Citizen Exchanges.

The program develops professional skills among young credit union leaders worldwide. U.S. applicants were evaluated on leadership skills, adaptability to new surroundings and the potential to initiate change in their credit unions. Program participants included:

  • Mayra Gamarra, Truliant FCU, Greensboro, N.C.;
  • Claudia Germeshausen, Patelco CU, Pleasanton, Calif.;
  • David Jamshid, Coastal FCU, Raleigh, N.C.;
  • Maricela Jauregui, Mid Cities CU, Compton, Calif.;
  • Hector Montano, Verity CU, Seattle, Wash.;
  • Maria Martinez, San Francisco (Calif.) FCU;
  • Oscar Porras, MAPS CU, Salem, Ore.;
  • Hector Santos, Seasons FCU, Meriden, Conn.; and
  • Alejandra Seluja, Guadalupe CU, Santa Fe, N.M.
"The leadership program is developing young credit union leaders from Guatemala and the U.S. by helping them understand both the cultures and credit union systems of each other's countries," said Brian Branch, WOCCU president/CEO. "In addition to strengthening the individuals and the systems they represent, this type of exchange program also helps enhance the global credit union movement."

During the group's first week in Guatemala, WOCCU provided an onsite orientation of logistical and cultural aspects of the trip. MICOOPE executives provided an overview of the Guatemalan credit union system and explained their shared branding strategy and consolidated back-office operations. All MICOOPE system credit unions use the same branding and adopt consistent member service standards, while sharing back-office operations such as human resources and marketing.

From Guatemala City, group members traveled to Esquipulas, near the Honduran border, where they took part in two community events organized by COOSAJO, MICOOPE's largest credit union. First, they accompanied COOSAJO's mobile branch, which is mounted on the back of a trailer, to a rural community. The mobile branch serves members in small communities who otherwise can't travel to the nearest branch. Next, the group joined COOSAJO mascots and employees while it interacted with local schoolchildren and spread the word about the benefits of credit unions and youth savings.

After their first week, participants moved from their hotels to stay with families of credit union staff. Spending time with Guatemalan families is part of the program's cultural aspect and designed to help participants experience what life is like for a typical Guatemalan.

Participants then spent the week serving credit union internships. Each participant was placed in one of the 26 MICOOPE credit unions to get in-depth operational training by shadowing employees across departments. Through the internship, participants learned best practices and strategies the credit unions use to overcome their limited resources and attract new members.

This year in May, 10 Guatemalans visited credit unions in California and Iowa during the first phase of World Council's inaugural program. In January, ICULP's fourth and final phase, 11 U.S. credit union participants will visit the Dominican Republic for two weeks in a program similar to the one in Guatemala. The application period for the Dominican Republic program will open in October.

U.K. government announces more investment in CUs

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LONDON (6/28/12)--British credit unions will receive up to US$59.3 million from the government to modernize and expand so they can support one million more members, announced Lord Freud, Minister of Welfare Reform, Wednesday.

The money is on top of $20.3 million invested last year (MoneySavingExpertNews.com June 27 and TotalInvestor June 27). All amounts are in U.S. dollars.

"Credit unions are too often forgotten, but they offer people a real alternative and often have some of the best deals on the market," he said, noting that they offer "the most competitive interest rates in the United Kingdom on personal loans" of up to $4,700.

"Members sing the praises of the 400 UK credit unions and for a good reason. Credit unions serve their communities and help hundreds of thousands of people to save and borrow," Lord Freud added. People borrowing with credit unions "are not turning to doorstep lenders, payday loan merchants and illegal loan sharks--where people face outrageous four-digit interest rates and short-term loans that roll over into long-term crippling debts," he said.

"I want credit unions to be a mainstream alternative to the banks--so they can offer current accounts, savings, Individual Savings Accounts and loans," he said in explaining why the government is investing in credit unions.

The funds will help credit unions buy into new information technology systems and infrastructure to help them serve more members. He noted that credit unions nearly doubled their membership in 2006.

The investment comes after the government decided earlier to follow recommendations of an independent Credit Union Feasibility Study to help secure the industry's long-term sustainability.

CU System briefs (06/27/2012)

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  • DUBLIN, Ohio (6/18/12)--The Miracle Match program from CO-OP Financial Services has added another $25,000 to Ohio Credit Unions' Marching Miles for Miracle Kids event, moving the $146,000 total raised to $171,000. The additional $25,000 will be split among the Children's Miracle Network Hospitals residing in Ohio. This year's Marching Miles activities have raised 31% more funds than activities in 2011. Efforts include online fundraising to support walk events statewide, as well as individual fundraisers within participating credit unions. Ohio's Credit Unions have raised more than $1 million for Ohio's Children's Miracle Network Hospitals since the inception of Marching Miles in 2007 ...
  • RALEIGH, N.C. (6/28/12)--Two North Carolina credit unions and  the Winston-Salem Journal have teamed up to rescue an annual Fourth of July fireworks display, and the show will go on.  Tanglewood Park in Winston-Salem has hosted an annual fireworks display for more than 20 years that attracts about 8,000 people. It announced the event was cancelled due to budget cuts in the Forsyth County Parks and Recreation Department and the lack of a sponsor. In stepped Winston-Salem FCU, Piedmont Advantage CU and the Journal to save the event.  "Fireworks are a big part of the Fourth of July holiday, and we didn't want to see thousands of people miss out on something that is an important part of their celebration each year," said Winston-Salem FCU President/CEO Tony Ebron.  Piedmont Advantage CU President/CEO Judy Tharp, noted her credit union "is committed to the Winston-Salem community and this is one way we can give back." ...
  • TULSA, Okla. (6/28/12)--Jason Andrew Day of Tulsa, Okla., dubbed the "Fake Beard Bandit," was sentenced Tuesday to 135 months in prison for his role in robbing eight banks in four states, and a suspected robbery attempt of River Town FCU, a $14.4 million asset credit union in Fort Smith, Ark. (Southwest Times Record June 26). Day was sentenced in U.S. District Court in Fort Smith.  Beyond his prison sentence, Day was ordered to pay $75,000 in restitution, assessed a $5,000 fine and will be placed under supervised release for five years after serving his prison sentence, said court documents …
  • TALLAHASSEE, Fla. (6/28/12)--The League of Southeastern Credit Unions (LSCU) has announced two promotions in its governmental affairs section.  Jared Ross has been promoted to LSCU vice president of governmental affairs. Ross joined the league in January 2011 as director of legislative affairs for Florida. Also, Jason Cochran of the league's governmental affairs team will serve as director of the league's Birmingham, Ala., office and as director of governmental affairs for Alabama He will oversee daily operations in Alabama, including serving as primary staff liaison to senior management on issues related to the Birmingham office …
  • RAPID CITY, S.D. (6/28/12)---National Credit Union Administration Chairman Debbie Matz was among those scheduled to address nearly 200 credit union professionals from South and North Dakota gathering this week at the Credit Union Association of the Dakota's (CUAD) Annual Summit. The meeting ends Friday.  South Dakota's own Olympic Gold Medal winner Billy Mills, who won the 10,000 meter run at the 1964 Tokyo Oympics to become the only American ever to win the gold in that event, and inspirational speaker Loretta Claiborne also were on the speaking agenda. Credit union managers, volunteers, and employees also were able to attend their choice of multiple break-out educational sessions on such topics as "The Economy and Credit Union Operations," "Integrated Social Media Marketing," "Avoiding Director Liability," and more.  CUAD serves credit unions in North and South Dakota with assets in excess of $4.2 billion and nearly 450,000 members …

A FCUs challenge helps small businesses to success

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AUSTIN, Texas (6/28/12)--Just over one year ago, Austin,Texas-based A+ FCU announced six local entrepreneurs as winners of a $25,000 small business loan with 0% interest in its myBusiness Challenge. Today, all six businesses have experienced measurable success, the credit union said.

The program is an example of the extra mile that credit unions go in working with small businesses that may not be able to get a loan from a bank.

Since the challenge last year, the entrepreneurs have met regularly with the $858 million asset credit union's business services representatives, as well as with counselors and mentors from BiGAUSTIN,SCORE and the Texas State Small Business Development Center.  The final meeting took place May 16.

"All businesses have experienced measurable success, have established themselves in the Austin metro market, and are poised to grow in the coming years," said the credit union, summarizing the last meeting. They "shared how beneficial the process was to them as business owners and individuals. They each found significant value in the courses, mentors, and supportive meetings.

Sharing their experiences, both good and bad, was an added benefit to the educational requirements.

Here's an update on how the new businesses are doing:

  • Brooke Davis, Make+Shift Design Studio, focuses on promoting her business by attending events, networking with potential clients, and participating in machining and design trade organizations. So far, her business has been strong enough to break even, and she expects to see business pick up in the coming year.
  • Judy Saal, Meat Up and Veg Out, had a difficult time getting started, but business at her food trailer is starting to take off with "regulars" stopping by for both breakfast and lunch. She has extended her working hours to accommodate more customers and increase sales. Her menu has been well-received by the public.
  • Melissa and Zoe Moon, The Moon Bakery, have experienced so much success that they are having problems with scalability. The demand has become so high that they need a larger oven and more kitchen space to accommodate the orders. They are seeking additional assistance from family members.
  • Nina Gordon, Take Heart, reported the year was a tremendous learning experience. Her largest challenge was knowing what to order, when, and how much. She  has had a successful year, generato\ing sales and earning repeat customers. Gordon officially hired her first employee--her mother.
  • Nora Jeanne Welsh, Benefit Mind and Body, has been embraced by the Lakeway community. Her customers are engaged in the yoga community, and her memberships are increasing. Welsh  established a stable routine and has experienced no turnover with her staff. She has been so successful that she has been able to reach out and support other yoga studios in the area.
  • Eduardo Reyna, Austin Machining and Welding, recently completed the finish out for his shop in North Austin and says he looks forward to adding more clients.
"Each of these business owners has reached yet another critical point. From this time going forward, they must scale up, grow sales and manage costs to generate a livable income," said the credit union.

Credit unions across the country are urging Congress to lift their member business lending (MBL) cap to 27.5% of assets from the current 12.25%, so they can make even more MBLs to small businesses. According to the Credit Union National Association, lifting the cap means credit unions could help the economy by injecting $13 billion in loans to small businesses, which would create 140,000 jobs the first year, at no expense to the taxpayer.

First mortgage delinquencies down 37 from 2010

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ATLANTA (6/28/12)--First mortgages that were severely delinquent--90 days or more past due-- in May totaled $450 billion, a 37% drop from delinquency levels that peaked in January 2010, according to Equifax's May National Consumer Credit Trends Report.

Also declining were home equity loan severe delinquencies, student loan write-offs, and bankcard write-offs, said the report.

Seventy percent of outstanding delinquencies among first mortgages still remain tied to loans that were opened between 2005 and 2007, said Equifax.

Non-agency first mortgage loans accounted for the greatest level of change with their severely delinquent loans falling 45% to $320 billion in May from January 2010's peak of $580 billion.

Severely delinquent agency loans--from Fannie Mae, Freddie Mac, the Federal Housing Authority and the Veterans Administration--totaled $130 billion in May, a 9% decline from $142 billion in January 2010.

Home equity installment loans also saw declines in severe delinquency numbers, dropping 31% to $615 million in May from a peak in February 2011 of $880 million, said Equifax.

"That severe mortgage delinquencies are trending downward is not surprising given the generally improving economic conditions," said Equifax Chief Economist Amy Crews Cutts. "What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery," she said. "If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014."

The report also included data on home mortgage finance, student loans and bankcards.

Home equity revolving balances fell 18% to $560 billion in May from $680 billion in May 2009. Total credit limits among these accounts declined 27% to $1.02 trillion from their peak in March 2008 of $1.3 trillion.

Year-to-date, mortgage write-offs through May 2012 are down 28% from their 2010 peak. Home mortgage balances in May declined 12.5% from their peak of $9.8 trillion in October 2008. Total mortgage debt outstanding is at $8.6 trillion, said Equifax.

Student loan write-offs declined $4.6 billion in May from $4.8 billion a year earlier, but still posted the second highest total in seven years, said the report.  Student loan amounts originated year-to-date in March totaled $12.9 billion, or 19.7% less than the $16.1 billion in the same period for 2011.  May's total balance of existing student loans rose 48% to $750 billion from its lowest level at $390 billion during September 2007.

Bankcard balance write-offs, in the two years prior to May 2012, decreased by more than half--to 5% from 11%. Roll rates--the rate at which consumers progress from a "current" stage in payments to 30-days past due--have remained below 1% since February. That is the first time in more than five years that these rates have stayed at that level for at least three months, Equifax said. Card balances totaled $530 billion in May, or 28% below the peak of $740 billion in January 2009. Total bankcard credit limits for May remained at $2.4 trillion for the seventh month in a row and were roughly 6.6% higher than the low point set in February 2011, said the report.

iWSJi CUs biz loan helps Mich. community revitalize

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BENTON HARBOR, Mich. (6/28/12)--An article in The Wall Street Journal recently highlighted the member business lending (MBL) efforts of United FCU, St. Joseph, Mich., which helped a local developer finance a $70 million project on a former Whirlpool factory site.

The mixed-use project on 20 acres will include a hotel, condos, cottages, a conference center and a 105-slip marina on the St. Joseph River, according the Journal (June 26). United FCU provided $8.5 million in financing to Edgewater Resources for the project's $22.5 million first phase.

The Benton Harbor-St. Joseph, Mich.-area, located in the Rust Belt, is in the process of reinventing itself after the opening of a Jack Nicklaus Signature golf course two years ago, the Journal said.

United FCU President/CEO Gary Easterling cited the importance of financing "hometown" projects.

"We feel like it's a good risk and the thing to do for the community," Easterling told the Journal.

The Wall Street Journal article also cited Credit Union National Association (CUNA) statistics to illustrate how small businesses are using credit unions for their financing needs at time when many banks have tightened credit.

From the end of 2007 through March, credit union MBL loans rose 47% to $41 billion, according to CUNA. During the same period, business loans held by banks declined by 14% to $654 billion, CUNA said.

CUNA and credit unions also are urging the U.S. Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

To read complete The Wall Street Journal article, use the link.

Study cites plans training needs for small biz lenders

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MADISON, Wis. (6/28/12)--A "2012 Small Business Lending Activities Survey" by Omega Performance cites the importance of planning and training for small business lenders and gives credit unions an idea of what banks' plans are for business lending.

Credit unions aiming to offer more member business loans (MBL) will note that the findings and training mentioned are useful.

The report found that 74% of the bankers surveyed worldwide were likely to increase their small-business lending. Small business is a key area that banks are planning to actively pursue, with 76% of the respondents saying small business lending was a priority.

If banks follow through on their plans, credit unions who have supported small businesses throughout the recession as banks tightened credit, will see more competition for business loans. 

Key findings of the survey are:

  • Banks worldwide are placing more importance on small-business credit training for their staff.
  • Many bankers have concerns about the level of small-business underwriting ability in the industry. Worldwide, less than half of the lenders were rated as "good' at underwriting small business, and 36% were rated "fair" to "poor."
  • More than half of respondents expect to increase or increase substantially the amount of small-business credit training for the rest of 2012. Less than 3% expect a decrease.
  • On-the-job training is the most popular training option--workshops, internal coaching and on-the-job training all rated above 60% worldwide, and online training registered just under 30%.
  • Worldwide, distribution was the most sought-after sector for lending, with wholesale in the second spot, and retail and manufacturing close behind.
  • Despite the subpar underwriting ratings, roughly half the world's lenders and small-business personnel are perceived to have good small-business acumen by their peers.
  • On average, about 30% of lenders were rated "fair" to "poor" in small-business acumen, which supports the survey's finding of a need for small-business credit training, said Omega.
  • North American respondents ranked the ability of lenders in their regions to effectively underwrite small-business lending opportunities higher than most, with 54% receiving good ratings.
There were 267 respondents worldwide who participated after receiving an invitation to the quarterly Omega Performance survey. Omega provides small-business credit training for financial institutions.

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

Court certifies class action in ATM case

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MEMPHIS, Tenn. (6/28/12)--A federal court in Tennessee on Tuesday certified the class action status of a lawsuit that alleges Hope Community CU, Jackson, Miss., violated the Electronic Funds Transfer Act (EFTA) by failing to provide a fee disclosure at three of its ATMs.

In the lawsuit, filed in the U.S. District Court for the Western District of Tennessee, plaintiff Vicki Campbell alleges that Hope Community's Memphis, Tenn. branch did not provide disclosures at three ATMs. Campbell is seeking to represent "as many as several thousand" consumers who initiated transactions at the ATMs, according to court documents filed Tuesday.

Under the ruling, U.S. District Judge S. Thomas Anderson said the suit met four requirements for class action certification:

  1. The class is so numerous that joinder of all members is impracticable. Because the plaintiff indicated that the total number of class members could be "as few as one hundred and as many as several thousand," Anderson ruled joinder of all members was impractical.
  1. There are questions of law or fact common to the class. Anderson ruled that although the claims of plaintiffs are not identical, legal and factual issues such as whether Hope Community operated the ATM and questions of compliance, damages and fees are common.
  1. The claims or defenses of the representative parties are typical of the claims or defenses of the class. "Like all of the members of the class she seeks to represent, plaintiff's claim is based on an alleged failure to provide statutory notice of the ATM fee," Anderson wrote. "The court has already identified a number of common issues of fact and law in this case as well. The resolution of these common issues will not only advance the litigation but largely establish plaintiff's proof of her own claims as well as the claims of the members of the class."
  1.  The representative parties will fairly and adequately protect the interests of the class. Anderson noted the defendant did not challenge the qualifications of plaintiff's counsel to prosecute the case. The court also found that plaintiff's claims present common questions of law that are typical of the claims of the proposed class members. "The court finds that the interests of plaintiff are aligned with the interests of other class members in pursuing these claims," Anderson wrote in his decision.
To certify the case as class action, the court also found "that common questions predominate and that a class action is a superior way to resolve the controversy."

The court established three subclasses for the suit, one for each of the ATMs involved in the case.

The Tennessee court's decision differs from two recent rulings by federal courts in other states on similar ATM lawsuits. Earlier this month, in the case of Jimmie Lee Pfeffer vs. Three Star Venture Inc., Dixie Farm Texaco Inc., and RBS Citizens, N.A., filed in the U.S. District Court for the Western District of Texas, San Antonio, U.S. District Judge Xavier Rodriguez denied Pfeffer's motion for a class action certification, but left open the possibility for reconsidering its ruling if the plaintiff can satisfy certain requirements (News Now June 7).

Last week, Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska ruled that plaintiff Jarek Charvat lacked constitutional standing to file suit against First National Bank of Waterloo for violating EFTA as it applies to fee disclosure notices on the ATMs.

Credit unions and banks across the country have been targets of multi-lawsuits by a few plaintiffs over ATM fee notices. As a result, the Credit Union National Association and others sought legislation to ease ATM regulations.

On Tuesday, legislation that would help credit unions and other financial institutions by easing duplicative ATM regulations was unanimously approved by a House Financial Services Committee voice vote.

H.R. 4367 would eliminate portions of Regulation E that require credit unions and other financial institutions that provide ATM services to display a physical notice on the ATM that a fee will be charged. Under the legislation, ATMs would only be required to display the ATM disclosures on a screen, and give ATM users the choice of opting in to such a fee.

The full U.S. House of Representatives could vote on the legislation after the July 4 recess.

New research CUs garner top customer service ratings

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WABAN, Mass. (6/28/12)--Credit unions were among the top customer satisfaction rankings  in Temkin Group's release of its 2012 Temkin Customer Service Ratings, which examines how U.S. consumers rate the customer service of 174 large companies across 18 industries.

This is the second year that Temkin Group, a customer research and consulting firm, has published these ratings.

Consumers gave the highest marks for customer service to Publix, Hy-Vee, credit unions, Chick-fil-A, H.E.B., Sam's Club, Winn-Dixie, ShopRite, Aldi, Starbucks, Giant Eagle and JCPenney. No banks rank in the top group.

Consumers gave the lowest ratings to Charter Communications, Time Warner Cable, Comcast, Citibank, Qwest, Cigna and Bank of America--which ranked lowest.

"Customer service is a critical moment of truth for many customers," said Bruce Temkin, author of the research and managing partner of Temkin Group. "It's nearly impossible to deliver an overall great customer experience if you don't get customer service right. It's very encouraging to see that most companies have made improvements between 2011 and 2012."

Temkin Group examined industry averages and found that grocery chains were the only industry to earn a "strong" rating. Retailers, fast food chains, appliance makers, and investment firms round out the top five. Consumers gave very low ratings to TV service providers and Internet service providers.

The research also examines how individual companies are rated relative to their industry peers. Led by credit unions (banks), Kaiser Permanente (health plans), Bright House Networks (TV service), and American Express (credit cards), 15 companies outperformed their industry average Temkin Customer Service Ratings by 10 percentage points or more.

Sixteen firms fell below their industry average by 10 or more percentage points, with Charter Communications (TV service and Internet service), Citibank (banks), Hyundai (auto dealers), Bank of America (banks), and Super 8 (hotels) falling the farthest behind.

Temkin Group also analyzed changes in Temkin Customer Service Ratings between 2011 and 2012. Led by computer makers and health plans, 10 of the 12 industries that were in both the 2011 and 2012 ratings improved since last year.

Seventy-five percent of companies that were in the 2011 and 2012 Temkin Customer Service Ratings showed improvement. Fifteen organizations improved by at least 10 percentage points, with these five firms leading the way with improvements of 20 percentage points or more: PNC, Gateway, Toshiba, Farmers, and HSBC. Only two companies had double-digit declines: Edward Jones and Old Navy.

The 2012 Temkin Customer Service Ratings is based on a survey of 10,000 U.S. consumers in January that covers these 18 industries: Airlines, appliance makers, auto dealers, banks, car rental agencies, computer makers, credit card issuers, fast food chains, grocery chains, health plans, hotel chains, insurance carriers, Internet service providers, investment firms, parcel delivery services, retailers, TV service providers and wireless carriers.

Visit the Temkin Group blog Customer Experience Matters for more details. Use the link.

Credit unions have ranked high on previous Temkin Group customer satisfaction surveys. Credit unions and Amazon.com were among the top-rated organizations and industries ranked according to the Web experience they provide in Temkin Group's release of its 2012 Temkin Web Experience Ratings that examine how U.S. consumers rate the online experiences of 159 large companies across 18 industries (News Now May 31).

Multiple overdraft lawsuits filed vs. CUs banks

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SAN JOSE, Calif. (6/28/12)--Much like the multiple lawsuits that attacked fee disclosures or lack of them at ATMs of credit unions and banks the past two years, a new wave of multiple, duplicative lawsuits has begun, this time targeting banks' and credit unions' overdraft policies and processes.

Dozens of lawsuits have been filed across the country against big banks in the past several months, but the latest suits are involving credit unions.

Three cookie-cutter class-action lawsuits were filed against California-based credit unions Thursday by the law offices of Fernando F. Chavez, a San Jose-based attorney representing members of the three credit unions. The suits, like the bank lawsuits, allege that the institutions processed transactions in a way that resulted in unnecessary or excess overdraft fees, according to the court documents.

The complaints were filed in the U.S. District Court  for the Northern District of California, San Jose.

They are worded identically, except for several paragraphs in two lawsuits that refer in error to the third credit union--indicating that those complaints used one complaint as a template for the other two. They also contain the same language as in similar suits filed by others against Bank of America, Wells Fargo, JPMorganChase and PNC Bank, among others.

The suits against banks have resulted in a number of multi-million dollar settlements.  For example, PNC  Bank, Coral Gables, Fla., said  Tuesday it will pay $90 million to settle an overdraft lawsuit, part of multidistrict litigation involving more than 30 banks in a federal court in Miami (PR Newswire June 26). That lawsuit claimed PNC's internal computer system re-sequenced the order of its customers' debit card and ATM transactions. By settling the suit, PNC Bank makes no admission of liability.

Also, JPMorganChase announced earlier, as part of a $110 million class action lawsuit settlement, that  it will stop charging overdraft fees for debit card purchases of $5 or less.

Security Service FCU assists with wildfire relief

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SAN ANTONIO (6/27/12)--Security Service FCU (SSFCU) officials announced Monday the credit union would expand its assistance for the American Red Cross' (ARC) wildfire relief efforts by accepting donations at all 19 of its Colorado area locations.

Colorado has been hit with eight extensive wildfires the past two weeks in its worst wildfire season in a decade. The San Antonio-based credit union has members in Texas, Colorado, Utah, and around the world and is the third-largest credit union in Colorado.

On June 15, the Security Service Charitable Foundation announced it had approved a $10,000 donation to the Red Cross' Northern Colorado Chapter to help ARC's efforts to assist many families--including SSFCU members--affected by the wildfires spreading in the state.

"These wildfires have caused unprecedented damage, and we hope to assist our members and others affected by these fires by helping the Red Cross collect funds to assist those in the most need," said David Reynolds, president/CEO of the $6.7 billion asset credit union. "We are doing everything we can to help out during this difficult time."

Security Service is also helping to assist members with short-term, low-interest emergency loans, SSFCU said Monday. It said members who need immediate assistance should contact their local branch or call the Member Contact Center at 888-415-7878.

More than 248 homes were destroyed by a two-week old fire near Fort Collins. The newest fire, which began Saturday near Colorado Springs, spread over six miles Sunday and forced the evacuation of 11,000 residents and an unknown number of tourists.  This past weekend a fire destroyed 22 homes and two outbuildings about five miles from the YMCA campsite in Estes Park, where the Credit Union National Association was founded in 1934. That fire has been contained.

Interchange law impacts Ga.s recovery says study

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ATLANTA (6/27/12)--Federal regulations that cap the swipe fees on debit card transactions will harm the ability of Georgia's credit unions and banks to lend to small businesses and could hamper the state's economic recovery, says a new study by the Competitive Enterprise Institute (CEI) for the Georgia Public Policy Foundation.

A provision amending the Dodd-Frank Wall Street Reform Act and implemented by the Federal Reserve Board limited the interchange fee that credit unions and banks can charge retailers for transactions on consumers' debit cards, said the study, entitled "Government Barriers to Georgia's Growth: How Dodd-Frank Price Controls Poach the Peach State's Prosperity." The report was written by John Berlau, senior fellow for finance and access to capital at CEI.

Credit unions and banks are feeling the impact of the amendment in a state that was especially hard-hit during the financial crisis, the study said. Many financial institutions in Georgia saw thousands of mortgages sour beginning in 2008, and dozens of banks collapsed. The Federal Deposit Insurance Corp. (FDIC)  has closed at least 80 banks in Georgia since 2008--the most bank failures of any state.  Even the largest banks in the Peach State are facing a struggle, said the study.

"Without healthy banks with money to lend, it will be much harder for local entrepreneurs to find the funding they need to grow their business," Berlau said. "Georgia's banks were already weakened by the recent, harsh recession. New regulations coming out of Washington, like the Durbin Amendment, are making it even harder for the banks to recover and do their part to kick-start the state's economy," he added.

The interchange provision will cost banks $8 billion in reduced revenue due to lower interchange fees, in addition to $7 billion in direct compliance costs from the rest of the Dodd-Frank Act, the CEI reported. "And contrary to the claims of proponents of these price controls, it does not look like much of this retailer windfall has been passed on to consumers," it added.

The interchange fee rule limits the amount bank and credit unions can charge to no more than 21 to 26 cents per transaction, no matter how large or risky that transaction is, said the study.

Since the rule took effect in October, revenues from interchange have been cut in half.

"For banks and credit unions already struggling with souring loans…this blow to a stable source of revenue may be more than they can handle. To economic observers, one of the most disturbing aspects of the Durbin Amendment is that it appears to require pricing below cost" and "does not even allow banks and credit unions to reap a profitable 'rate of return.' Rather, the statute says that banks and credit unions may not even cover the costs of the technology associated with the card network infrastructure, only the 'incremental costs' per transaction."

Berlau likened this to telling 7-Eleven Corp. that price controls on Slurpees meant the cost of sugar and water are covered, but not the Slurpee machine. The company would have to make up the costs through higher prices on other products and services.

"If banks and credit unions can't make a profit or even cover costs on what they charge retailers to process debit cards, they will have to make it up in significant part through what they charge their customers," said the report. However, only so many costs can be transferred to consumers. Quality and quantity of services may suffer, it added.

"But even more importantly, the strain the Durbin Amendment puts on Georgia's banks means that they will have less ability to fund the Georgia entrepreneur building the next Home Depot or Coca Cola…Georgia's history shows that hurting the banks would harm the entrepreneurs as well, since Georgia's financial institutions have been linked to the fortunes of its manufacturers and retailers, and to the growth of the Peach State economy as a whole," the report said.

NCUA agencies targets of suit on CFPB constitutionality

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WASHINGTON (6/27/12)--A Texas bank and two organizations have filed a lawsuit in a federal court in Washington, D.C., contesting the constitutionality of the Consumer Financial Protection Bureau (CFPB), the appointment of CFPB Director Richard Corday and the Financial Stability Oversight Council  (FSOC).

The suit names as co-defendants nine top officials of various federal agencies--including National Credit Union Administration Chair Debbie Matz and Cordray. The officials are all ex officio members of FSOC.

The suit was filed June 21 in the U.S. District Court for the District of Columbia by State National Bank of Big Spring (Texas), the 60 Plus Association, and Competitive Enterprise Institute (CEI).  CFPB is an agency created by Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The FSOC was created by Title I of that act.

The complaint alleges that Titles I and X of the Dodd-Frank Act "comprise unprecedented violations of  'the basic concept of separation of powers and the checks and balances that flow from the scheme of a tripartite government'" in three ways:

  • Title X "delegates effectively unbounded power to the CFPB, and couples that power with provisions insulating CFPB against meaningful checks by the legislative, executive and judicial branches….Taken together, these provisions remove all effective limits on the CFPB director's discretion, a violation of the separation of powers."
  • "The president unconstitutionally appointed" Cordray to the CFPB directorship "by refusing to secure the Senate's advice and consent while the Senate was in session, one of the few constitutional checks and balances on the CFPB left in place by the Dodd-Frank Act."
  • The FSOC "has sweeping and unprecedented discretion to choose which nonbank financial companies are 'systemically important' (or 'too big to fail'). That designation signals that the selected companies have the implicit backing of the federal government--and accordingly, an unfair advantage over competitors in attracting scarce, fungible investment capital." The complaint filed also noted FSOC's "sweeping powers and discretion are not limited by any meaningful statutory directives" and that it "is insulated from meaningful judicial review…"
The bank, a federally chartered community bank with $275 million in deposits, said that CFPB promulgated a final rule on Feb. 7 regulating international remittance transfers that imposed "burdensome requirements on financial institutions and other providers of those services" and resulted in the bank's dropping that service on May 23. The bank said it "must conduct its business, and make decisions about what kinds of business to conduct, without knowing whether the CFPB will retroactively announce that one or more of the bank's consumer lending practices is 'unfair,' 'deceptive,' or 'abusive.'"

60 Plus Association, a senior advocacy group, alleged that its seven million members are harmed because CFPB has reduced, or will reduce "the range and affordability of banking, credit, investment and savings options available to them." CFPB provisions have "reduced the availability of free checking, and the number of banks offering it; they have reduced the number of companies offering mortgages; and they have increased mortgage fees," the court document said.

Competitive Enterprise Institute (CEI), a tax-exempt, non-profit public interest organization, said it has checking and brokerage accounts and certificates of deposit in banks and brokerage firms regulated by CFPB that qualify as systemically important as enforced by FSOC, and that CFPB's regulation has jeopardized the nature and cost of its accounts and over the institutions in which they are based.

The complaint argues that Title X "delegates effectively unlimited power to the CFPB to litigate, investigate or regulate over practices that the CFPB deems to be 'unfair,' 'deceptive' or 'abusive,' but does not define the terms, "leaving those terms to the CFPB  to interpret and enforce, either through ad hoc litigation or through regulation."  That leaves entities such as the bank "to discover CFPB's interpretation of the law only after the bank has executed a mortgage or consumer lending transaction" and results in a "chilling effect" forcing lenders "to either risk federal prosecution or curtail their own services and products."

In addition to discontinuing its remittance services, the bank said in the complaint it discontinued its mortgage lending service in October 2010.

In addition to CFPB, Cordray, FSOC, and Matz, other defendants in the case include: U.S. Secretary of the Treasury Timothy Geithner; the U.S. Treasury; Federal Reserve Chairman Ben Bernanke; Federal Deposit Insurance Corp. Vice Chairman and Acting Chairman Martin Gruenberg; U.S. Comptroller of the Currency Thomas Curry; Securities and Exchange Commission Chairman Mary Schapiro; U.S. Commodity Futures Trading Commission Chairman Gary Gensler; and S. Roy Woodall, member of the FSOC.

New Filene report examines re-inventing homeowners

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MADISON, Wis. (6/27/12)--The average American household lives in the same home for only seven years. That statistic implies that most, or a very large swath of Americans, would fare better with a shorter term fixed interest rate, which would result in lower monthly interest payments.

That is among the ideas offered in a new Filene Research Institute report "Reinventing Homeownership: A Compendium of Concepts to Consider." The study presents a compendium of innovative mortgage products that challenge the dominant mortgage product of the 20th century: the high-down-payment, 30-year amortization, fixed-interest-rate mortgage.

Among the products explored is the partially adjustable rate mortgage (PARM), an idea offered by Bill Hampel, senior vice president of research and policy analysis and chief economist for the Credit Union National Association.

The PARM features an initial fixed rate of one to three years, and then experiences incremental adjustments based on its index, creating member-friendly and asset/liability-friendly first mortgages that credit unions can safely hold on their balance sheets.

Despite current economic conditions, credit unions originated a record $94 billion in first mortgages in 2009, according to Hampel, but they also sold off a record $51 billion instead of holding the loans in their portfolios. At a time when credit unions are deposit-rich, they are not offsetting their liabilities with the prime assets that mortgages typically represent. There is too much risk to the credit union from the 30-year fixed-rate mortgage. The PARM provides an acceptable risk to both borrowers and the credit union, making it mutually beneficial.

The paper also explores one of the biggest barriers to homeownership: large down payment requirements. Among the programs explored is a work benefit plan through which employers match employee contributions to a down payment savings plan.

Another program provides financing for the down payment, along with the mortgage, at a blended interest rate that factors in both components.

To download the white paper, use the link.

FI vulnerability 11 of consumers likely to switch PFIs

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MADISON, Wis. (6/27/12)--About 11% of consumers are likely to switch primary financial institutions (PFI) this year, according to a new report from Javelin Strategy & Research. Giant banks face even larger defections, with Bank of America and Citibank at risk of losing twice as many customers. This means credit unions have opportunities to gain new members.

The Javelin FI Vulnerability Index estimates huge potential losses for FIs because switchers manage $675 billion in deposits and manage deposits that are 30% higher than customers who are unlikely to switch. Likely switchers also are willing to pay an estimated $92 million in fees for just four value-added services: money orders, cashier's checks, safe-deposit box rentals and mobile deposit.

The report examines the factors behind why customers stay--or leave--their PFI and recommends specific strategies that giant banks, regional banks, community banks and credit unions can use to compete and capture these switchers--and their billions in deposits.

"Our Bankographic Benchmark research shows that banks are still in danger of losing customers to FIs that can better respond to their needs, especially in the areas of mobile banking and self-service technology," said Mark Schwanhausser, senior analyst, Multichannel Financial Services at Javelin. "With $675 billion of deposits and $92 million in fee revenue at play, smaller banks and credit unions really have the opportunity to win new customers [and members]."

"Ultimately, consumers are driven by convenience more than fees and protests," said Jim Van Dyke, Javelin president. "Giant banks will need to drive home their messaging around convenience, mobile banking, and other services that smaller banks don't--or can't--offer. Smaller banks can play to their strengths of lower fees, convenience and customer service, but they will need to beef up their mobile banking and mobile deposit offerings." 

Javelin's Bank Switching in 2012: Giant Banks Remain Highly Vulnerable as Consumers Weigh Fees and Convenience Fees report assesses the prevailing attitudes of consumers toward staying with or leaving their PFIs. The 31-page report is based on three online surveys of 4,800 to 5,000 consumers each.

Some key report findings are:

  • More than half of recent switchers are under 35 years of age and use mobile technologies--smartphones and tablets--frequently.
  • Mobile banking has emerged as a compelling factor for switchers because they are more than twice as likely as all consumers to use mobile banking.

Survey Most small loans come from CUs

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FORT ATKINSON, Wis. (6/27/12)--RateWatch, a banking data and analytics service owned by TheStreet, Inc., reported Friday that 60 % of those institutions granting small-dollar loans were credit unions, in a survey of 259 financial institutions.

More than 28% of U.S. financial institutions in an industry-wide survey offer small dollar or direct deposit loans. These loans provide clients a less expensive and risky alternative to high-fee payday lenders while providing financial institutions additional revenue, RateWatch said.

"We were pleasantly surprised at the high numbers from credit unions," said David Gwidt, director of sales and marketing. "We were also impressed with the potential for growth in this area by mainstream lenders."

Despite positive results from a two-year Federal Deposit Insurance Corp. test program, fewer than one bank in nine, or only 12% of responding banks, offers the loan, the survey found.

Credit unions have several programs that offer short-term small-dollar loans. One of the most well-known is the Credit Union Better Choice program, which is sponsored by the Pennsylvania Credit Union Association in partnership with the Pennsylvania Treasury Department and the Pennsylvania Department of Banking.

Credit Union Better Choice is a short-term loan that offers:

  • A 90-day repayment term;
  • A flexible monthly, bi-weekly, or weekly payments;
  • A $20 application fee;
  • A $200 minimum loan;
  • A $500 maximum loan;
  • An 18% annual percentage rate;
  • A built-in savings benefit; and
  • An optional financial counseling.
Other small loans are offered by credit union through REAL Solutions, the signature program of the National Credit Union Foundation. Working through state credit union leagues or associations, the program aims to help credit unions provide new products and services for low wealth households. For more information, use the link.

The  National Credit Union Administration (NCUA) amended its general lending rule to enable federal credit unions to offer short-term, small amount loans (STS loans) as a viable alternative to predatory payday loans. The amendment permits federal credit unions to charge a higher interest rate for an STS loan than is permitted under the general lending rule, but imposes limitations on the permissible term, amount and fees associated with an STS loan. To see the final NCUA Rule and the Credit Union National Association final Rule Analysis, use the links.

Additional findings of the RateWatch survey:

  • More than a third of the surveyed institutions without plans to offer the loans --or 35.4%--said the market did not "demand this type of product" and another 34% said the approach would not be profitable to them.
  • Of institutions offering short-term loans, more than half had done so for more than five years. Only 4.5% have started offering the loans in the past year.
  • Roughly 12.97% of those institutions not currently offering small dollar loans plan to explore the program within the next year.
  • More than 67% of the institutions offering the loans did so to serve "underbanked" lower-income clients more effectively. Another 21% said the service allowed them to increase revenues.
  • Foot traffic and onsite advertising accounted for the bulk--or 89%--of customers seeking these loans.

CUANY honors professionals volunteers

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ALBANY, N.Y. (6/27/12)--The Credit Union Association of New York recognized outstanding credit union professionals and volunteers at its annual meeting and convention earlier this month.

Linda MacFarlane, CEO of Columbia-Greene FCU, Hudson, was named Outstanding Professional. MacFarlane has served as the credit union's CEO since 2009, when she was selected to lead a regeneration effort for the organization. Prior to her hiring, Columbia-Greene FCU had endured a period of declining financial results and operational challenges. Through staff reorganization efforts and a commitment to communication, MacFarlane empowered employees and successfully returned the credit union to profitability.

Heather Wood, financial center manager at AmeriCU CU, Rome, was named Outstanding Young Professional. Wood is the secretary of the CUANY Young Professionals Commission (YPC). She participated in projects at AmeriCU to help create new efficiencies and enhance member service, including platform updates and the creation of a member Switch Kit. She also helped plan and execute an awareness campaign focused on the refugee population in and around Upstate New York.

Outstanding Volunteer in the $50 million to $250 million in assets category. After joining the credit union as a member in 1959, he began volunteering as assistant treasurer on the board of directors in 1972. He has served as treasurer since 1978. Thanks in large part to DiAcetis' leadership, Community Resource FCU has grown to $65 million in assets with more than 6,000 members from $2 million in assets with just under 1,300 members.

outstanding volunteer in the more than $250 million in assets category. Suriano has served on Sidney FCU's board of directors for 40 years, acting as chairman since 1982. Under his leadership, Sidney FCU has grown to more than $330 million in assets with more than 160 full-time employees.

instrumental in the passage of the Credit Union Member Access Act, H.R. 1151. He also served on the board of the Credit Union National Association (CUNA) for three years.

Credit Union House was constructed through the cooperative efforts of every state credit union league, American Association of Credit Union Leagues and CUNA and is sustained by annual contributions from credit unions, system groups and individuals.

It is housed in Washington, D.C., as a place for credit union groups to meet when visiting lawmakers.

CUs use online lending to get market share

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MEQUON, Wis. (6/27/12)--Mortgagebot has tracked a growing trend by small mortgage lenders--including credit unions--to adopt Web-based, transactional online lending technology as a way to narrow big lenders' competitive advantages.

They are doing so by creating greater visibility and accessibility in the online channel at affordable cost.

Community lenders, limited by more modest resources, are countering big lenders' deep pockets and brand-name dominance with transactional online technology.

The technology is leveling the playing field against big lenders, said Matt Cotter, Mortgagebot's senior vice president of sales and marketing.

The switch to advanced online technology expanded lending opportunities for community banks and credit unions--including Community West CU, based in Kentwood, Mich. The lenders went from no online-application capability to full deployment within the last year. They achieved:

  • Accessible online presence. A user-friendly website branded to the lender's corporate site features products for 24/7 accessibility by online borrowers.
  • New Members/Customers. Lenders attract new, often younger borrowers, who are largely comfortable with the online space.
  • Operational cost savings. Lenders gain virtual branches with no additional cost.
  • Stable referral relationships. Realtors and referral partners appreciate the solution's convenience and ease-of-use.
Community West CU sees similar benefits, Mortgagebot said. Automation immediately enters applicant data into the $114.2 million-asset credit union's systems, eliminating redundant data entry.

On-the-spot rates and multi-channel flexibility--the ability to work on the same application online, over the telephone, or in-person at a branch--further creates a seamless experience, Mortgagebot said. Applicants can begin an application online and later complete it in person. Heidi Hunt, mortgage specialist of Community West CU, directs members to the credit union website.

"I can view an application in progress and collaborate with borrowers," Hunt said. "This flexibility provides a stress-free experience for members."

Mortgagebot create websites for credit unions and banks. It provides integrated point-of-sale solutions for taking applications in every mortgage business channel: consumer-direct via the Internet, in the branch or call center, or through loan officers.

SE CUNA Management School graduates 35 leaders

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COLUMBIA, S.C. (6/27/12)--The 2012 Southeast Regional Credit Union Schools' CUNA Management School in Athens, Ga. concluded June 15 with 35 graduates from Southeastern states, as well as the Midwest, Pacific Northwest and West Africa.

Thirty-five credit union leaders graduated from the 2012 Southeast Regional Credit Union Schools' CUNA Management School in Athens, Ga. earlier this month. (Photo provided by 2012 Southeast Regional Credit Union Schools' CUNA Management School)
 

The Southeast CUNA Management School is held each summer at the University of Georgia's Georgia Center with faculty from the Terry College of Business and credit union industry experts.

The 2012 class size is an increase from the 2011 graduating class of 21 professionals, who began the three-year school in 2009 at the beginning of the economic downturn.

This year's graduating class was joined by Bill Cheney, president/CEO of the Credit Union National Association (CUNA), and Mike Mercer, CUNA chairman of the board and president/CEO of Georgia Credit Union Affiliates. Cheney reviewed with the class the challenges credit unions face today and the role CUNA plays in addressing them and supporting the movement.

For a list of graduates, use the link.

LSCU co-op image campaign in second round

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BIRMINGHAM, Ala. (6/27/12)--The League of Southeastern Credit Unions (LSCU) launched a second round of advertising for its Cooperative Image Campaign this week. The $1.2 million campaign aims to raise awareness of and membership for credit unions in Alabama and Florida.

Click to view larger image The League of Southeastern Credit Unions began its second run of advertising for its Cooperative Image Campaign this week aimed at raising awareness of and membership for credit unions in Alabama and Florida. Actor Peter Linds, shown here filming a scene for the campaign, also appeared in the first campaign. (Photo provided by the League of Southeastern Credit Unions)
The six-week campaign employs the tagline, "Credit Unions: we're giving banking a better name," and builds on awareness created by LSCU's 2011 campaign.  Pre- and post-campaign research indicated an 8% rise in awareness about credit unions in Florida and a 6% increase in Alabama after the campaign ran in September 2011.

The league said research indicates that 14% of consumers that had secondary relationships with credit unions--such as a car loan or savings account while using another institution for main banking services--moved their money into a credit union during third quarter of 2011. Third quarter Call Report data from the National Credit Union Administration also showed a spike in membership for that period.

"The ads resonate with consumers," said LSCU President/CEO Patrick La Pine, citing positive feedback from credit unions about the campaign. "They show that credit unions are modern and that they offer better rates and lower fees. Last year 65,000 consumers visited the campaign website in six weeks. Consumers are becoming more aware of why credit unions are a better place to do their banking."

As in the 2011 campaign, this year's campaign targets Generation X, the largest demographic group in the Southeast that doesn't currently belong to a credit union. It will again use a combination of  TV, radio, Web, social media and public relations efforts, depending on funds raised in each media market. A second TV ad, employing the same actor from the first campaign, continues to explore why more people don't know what a credit union is.

The ads push consumers to a website that illustrates the credit union difference by showing how much money a potential member will save on a mortgage or auto loan and helps them locate a credit union near them. One section highlights the benefits of shared branching and features a real-time social media feed showing what people are saying about credit unions. Use the link to view the site.

More than 110 credit unions are contributing to this year's campaign on a voluntary "fair share" concept. The league contributed the first $100,000, which directly funds the creative efforts. Shared branching networks in the two states each contributed $25,000, underscoring the share-branching message in the radio ads and website.

Scout Branding of Birmingham, Ala., again developed the creative aspects of this year's campaign. The ads, which began in many of the two states' 13 media markets on June 18, also have run in Mississippi and Connecticut.

Survey 58 of FIs to increase anti-fraud resources

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PRINCETON, N.J. (6/26/12)--Fifty-eight percent of financial institutions surveyed--including credit unions--expect to  increase their anti-fraud resources this year after several years of slashed  budgets, says a new survey report.

That's the good news. The bad news is that many aren't prepared to conform to the Federal Financial Institutions Examination Council (FFIEC) guidelines for online banking security issued in 2011. Just 11% have come into conformance since the guidelines were issued, 29% say they don't understand regulators' expectations on fraud; and 88% expect no significant reduction of online fraud as a result of that guidance.

The report, "Faces of Fraud: Complying with the FFIEC Guidance," was based on research conducted by Information Security Media Group (ISMG).

Although 90% of respondents have conducted a risk assessment since FFIEC issued its guidance, less than half--41%--have remediated any vulnerabilities found during the assessment.

Although 26% of survey respondents say their budget for anti-fraud resources won't change this year, and 2% say it will decrease, 34% expect increases of 1%-10% while 7%  anticipate hiking their resource budget above 20%.

Those surveyed were asked to assess their current level of conformance with the new guidelines: 44% are in partial conformance but expect full conformance later this year, 15% were already in full conformance before the guidance was issued, and 11% are in full conformance now. Six percent say they won't be in full conformance by the end of the year--and 24% don't know.

More than half (59%) say that investigation, forensics and recovery represent their biggest expense in combatting fraud. Yet,  for 82% , member/customers are the first to alert them to fraudulent activity, an increase from 76% in 2010's survey.

ISMG asked financial institutions what kinds of fraud they had experienced. Here are the top types, followed by the percentage of financial institutions experiencing that type of fraud--the top three are the same as last year's survey):

  • Credit/debit card, 84%;
  • Check, 76%;
  • Phishing/vishing, 50%;
  • ACH/wire (account takeover), 43%;
  • ATM/ABM (skimming, ram raid), 35%;
  • Money-laundering, 25%;
  • Third-party point of sale skimming, 23%;
  • Internal financial theft, 21%;
  • Information theft, loss or attack, 18%;
  • Online banking breach, 17%;
  • Bill Pay, 17%;
  • Theft of physical assets, 17%;
  • Mortgage, 15%;
  • First-party, 11%;
  • Cross-border, 10%;
  • Vendor, third-party or supplier (non-skimming), 7%
  • Corruption or bribery, 6%;
  • Internet provider theft or piracy, 5%; and
  • Mobile devices (malware, hacking), 5%.
The researchers also discovered a disconnect between the actual threats financial institutions face, and those they feel best prepared to prevent and detect. For example, payment card fraud and phishing are among the top threats, but money-laundering and theft of physical assets are among the top threats financial institutions feel best prepared to thwart.

Credit unions and banks surveyed said their biggest challenge to fraud prevention is lack of customer awareness (68%). That was followed by insufficient resources (budget/personnel), 57%; inadequate fraud detection tools and technologies, 47%; and difficulty integrating data from various sources, 46%. Lack of staff awareness, difficulty investigating crimes across borders, organizational silos, and poor coordination with law enforcement were also challenges, said ISMG.

Other financial fraud trends:

  • 82% surveyed said fraud threats increased during the past year;
  • Key factors in the increase were: evolving online threats, poor economic conditions and information technology infrastructure complexity, which provides more points for attack; and
  • $5,000  is the most common threshold--at which an institution will take action, instead of writing off the loss.

CU System briefs (06/25/2012)

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  • RICHLAND, Wash. (6/26/12)-A Kennewick, Wash., man was under arrest, accused of charging $900 worth of purchases on a debit card allegedly left behind in an ATM at the HAPO Community CU, Richland. The suspect, Alfredo Ozuna Ahumada, 31, allegedly used his own debit card in the ATM after taking the debit card, said Kennewick police. The incident occurred June 15. The charges on the card were for lumber from a hardware store and gasoline. Ahumada was booked on suspicion of possession of methamphetamine with intent to deliver and second-degree theft, said police (Tri-City Herald June 22) …
  • RIVERDALE, Utah (6/267/12)--Tom Connors, board member and former chairman of Ogden, Utah-based America First CU, died June 19 after an apparent heart attack. He was 72.  Connors, a long-time credit union advocate, began his volunteer service at America First on its Credit Committee in 1982. In 1992, he was elected to the board and later served as chair, said the credit union's website. "His dedication to the credit union movement and his commitment to serve the underserved was commendable and a true passion of his. We are truly appreciative of the many years of volunteer service Tom has given to America First members and its associate organizations," said Linda Carver, board chair. Connors had returned home June 17 from a credit union conference in Atlanta on serving the underserved. He also was a development educator with World Council of Credit Unions and involved in the community development program …

Court upholds mortgage loan officers overtime ruling

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WASHINGTON (6/26/12)--A U.S. District judge in Washington, D.C., has upheld a Department of Labor (DOL) administrative interpretation that says mortgage loan officers are not exempt from overtime under the Fair Labor Standards Act (FLSA).

The Mortgage Bankers Association (MBA) had filed a lawsuit against the department and its Wage and Hour Division over a DOL "administrative interpretation" issued on March 24, 2010, that said loan officers in the banking industry typically do not qualify as exempt employees under the FLSA.

MBA said the interpretation had reversed and rescinded a contrary DOL opinion letter that had concluded that mortgage loan officers were generally exempt under the administrative exemption, according to the judge's opinion issued June 6.  It noted that many members of the financial services industry, including many of the association's members, classified mortgage loan officers as exempt employees under the 2006 opinion letter.  Thus, mortgage loan officers were not compensated with overtime pay were well compensated through other means such as competitive salaries, bonuses and commissions.

MBA argued that once an agency interprets a regulation it can change the interpretation only through the process of notice and rulemaking, and that to do otherwise would be arbitrary, capricious and an abuse of discretion. It also argued that employers cannot be held liable if they rely in good faith on the opinion of the DOL's administrator.

In the decision, which could have repercussions for credit unions, U.S. District Judge Reggie B. Walton denied MBA's motion for summary judgment and granted in part and denied in part DOL's cross-motion to dismiss the case, saying that the 2010 opinion letter interpretation was not inconsistent with the FLSA regulations and was therefore not arbitrary, capricious or otherwise unlawful.

Judge Walton also let stand the DOL's interpretation that employees performing mortgage loan officer duties do not qualify for the administrative exemption and are entitled to receive minimum wages and overtime compensation under the FSLA.  And he said MBA had failed to satisfy the established Paralyzed Standards case doctrine of "substantial and justifiable reliance" on previous interpretation.

Mortgage lending companies had challenged the DOL interpretation because many are facing facing lawsuits by loan officers seeking back overtime pay.

Spokane CEO seizes moment to talk MBL with SBA

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SPOKANE, Wash. (6/26/12)--Tom Johnson, CEO of Spokane (Wash.) Teachers CU, took advantage of a chance meeting with Karen Mills to update the administrator of the Small Business Administration (SBA) on credit union member business lending (MBL) lobbying efforts during a recent visit to Washington, D.C.

Earlier this month, as Johnson waited for an elevator in his hotel lobby while he was in town to participate in Hike the Hill visits with other Washington state credit unions, a woman who was also waiting for the elevator struck up a conversation with him (Northwest Credit Union Association Anthem June 19)

Johnson told her he was in Washington to lobby on behalf of credit unions for MBL legislation, which would raise credit unions' MBL lending cap to 27.5% of assets from 12.25%. She wished Johnson success in his lobbying efforts.

The woman introduced herself as Mills, administrator of the SBA, the federal agency charged with helping small businesses grow and create jobs by helping them get access to capital and training.

During the rest of the elevator ride, Johnson found Mills was familiar with MBL legislation.

Whether in a formally scheduled meeting or during a random chance to give an "elevator speech," Johnson said he is always read to tout the benefits of MBL. "I'm on the road talking about it any times I can, just beating a drum for it," he said.

Spokane Teachers CU had already granted 109 new member business loans in the first quarter.

The credit union has experienced the challenges of balancing net worth ratios that resulted from membership growth experienced through Bank Transfer Day last year. "With the large increase in deposits in the first quarter, our ratio shrunk a little," Johnson said.

The Spokane financial services market is very competitive, with community banks aggressively pricing business loans to win back some of the customers the big banks chased away, Johnson said.

STCU also is working to develop higher-level member business products and services--making the MBL initiative critical. "This is important legislation for us, so we chose to take a leadership role," Johnson said.

He credited his staff, including senior communications officer Dan Hansen, with organizing a united credit union community effort--an effort that has already resulted in widespread media coverage. More than 5,000 Spokane Teachers CU members have signed petitions that have been shared with Congress and the credit union's staff has been politically active supporting in the legislation. Business owners have shared their success stories in letters personally written to Washington's senators.

"When we speak with one voice as credit unions, it is so much more effective," Johnson said.

The Credit Union National Association (CUNA) has estimated that lifting the MBL cap to 27.5% of assets from 12.25% would create 140,000 jobs and inject $13 billion in new funds into the economy during the first year after enactment. Both benefits come at no cost to taxpayers.

CU mergers planned in five states

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MADISON, Wis. (6/26/12)--Credit union mergers are planned or are in various stages of completion in five states.

They include:

  • Medical Area FCU (MAFCU) in Brookline, Mass., with $73 million in assets, plans to merge with RTN FCU, a $705 million asset Waltham, Mass.-based credit union (Waltham News Tribune June 20). Medical Area FCU members and the board of directors will vote on the proposed merger Wednesday. If approved, MAFCU's   branches will eventually be renamed "Medical Area Division of RTN," Sarita Ledani, MAFCU vice president of development and marketing, told the newspaper.
  • Sparks (Nev.) Employees FCU members overwhelmingly approved a merger earlier this month with Great Basin FCU in Reno, Nev. The official merger was effective June 8 (CUinsight June 11). Sparks City Employees FCU was established in 1958, and has $13.3 million in assets, more than 1,900 members, and one branch. Great Basin FCU was established in 1951, and has more than $100 million in assets, more than 14,500 members and three branches (News Now Feb. 24). The three employees of Sparks FCU will continue their employment with Great Basin.
  • The board of Quimper Community FCU, a $47 million asset credit union, based in Port Townsend, Wash., has signed a letter of intent to merge with Kitsap CU, a $901 million asset credit union based in Bremerton, Wash. (peninsuladailynews.com June 24). The merger still requires a vote by Quimper members and the approval of state and federal regulators.
  • The National Credit Union Administration approved the merger of Moapa Valley CU, a $71.2 million asset credit union in Overton, Nev., with America's First CU, a $5 billion asset credit union based in Ogden, Utah. The merger will take effect July 1, according to America First's website.
  • Heritage Family FCU (HFCU), a $270 million asset credit union based in Rutland Vt., announced its merger with Central Vermont Public Services Employees' CU, an $18.6 million asset credit union also in Rutland. On April 2, CVPESCU's members and board met with HFCU's executive management team. After CVPESCU's members voted in favor of the merger, its board signed the merger agreement (Newslines Express June 15).

Fire near CU historic site in Estes Park contained

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ESTES PARK, Colo. (6/26/12)--A Colorado wildfire this past weekend posed a threat to one of the most well-known scenes in credit union history--Estes Park, where the Credit Union National Association (CUNA) was officially founded. However, the fire, one of  eight in the state, has been 100% contained.

Click to view larger image This iconic photograph in credit unions' history records pioneers of the U.S. credit union movement--including Edward Filene, Roy Bergengren and Claude Orchard--at the YMCA campsite at Estes Park, Colo., where the group founded  the Credit Union National Association on Sept. 10, 1934. The location is five miles from wildfires that threatened the park last week.
Nearly 78 years ago, credit union pioneers such as Edward Filene, Roy Bergengren and Claude Orchard posed with 52 credit union delegates from 21 states and the District of Columbia who met at Estes Park's YMCA campsite after the founding of CUNA on Sept. 10, 1934. The photo has become an icon in the U.S. credit union movement history books.  During  CUNA's 75th anniversary celebration in 2009,  about 150 credit union leaders gathered in the same spot to meet and recreate that photo (News Now Sept. 17, 2009).

The group's camp was located  five miles southwest from the wildfires that engulfed 27 acres during the weekend. The wind was blowing northeast, away from the camp.  About 1,967 guests and 571 staffers at the camp were advised to stay on the property to avoid clogging the roads. Guests could see the smoke from the camp (Denver Post June 23).

Sunday it was announced that the Estes Park area fire had been contained, after burning 22 homes and two outbuildings in the western section of the park, a region known as Woodland Heights, said an Estes Park newspaper (Trail-Gazette June 24).

Click to view larger image On Sept. 16, 2009, leaders and supporters of the credit union movement commemorated the founding of the Credit Union National Association 75 years earlier by posing as the founders did, in at the same Estes Park, Colo., location (Photos provided by CUNA)
The fire, which was sparked after a cabin caught fire early Saturday afternoon, destroyed vacation cabins and closed the most commonly used entrance to the park. The road to the YMCA campsite was closed temporarily but  reopened Saturday night. On Sunday night, firefighting there was said to be in the "mop up" stage, while crews waited on gas lines to be shut off in the area. Residents had reported hearing explosions.

City officials said that having air resources nearby helping fight a bigger fire west of Fort Collins enabled the city to divert an even bigger tragedy. Helicopters arrived quickly and made numerous trips between the fire and two nearby lakes--Lake Estes and Mary's Lake.

Colorado is having its worst wildfire season in a decade, with more than 248 homes destroyed by a two-week old fire near Fort Collins. The newest fire, which began Saturday near Colorado Springs, spread over six miles Sunday and forced the evacuation of 11,000 residents and an unknown number of tourists. The fires in the state have demanded half the nation's firefighting fleet, said the Washington Post.

Pa. governor signs HEMAP bill

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HARRISBURG, Pa. (6/26/12)--Pennsylvania Gov. Tom Corbett on Friday signed SB 1433, the Homeowners Emergency Mortgage Assistance Program (HEMAP), according to the Pennsylvania Credit Union Association (PCUA), which supported the bill.

Of note to credit unions is that the bill corrects an Act 91 notice that directs a homeowner where to go for emergency homeowner assistance to avoid foreclosures (Life is a Highway June 25).

"Credit unions are glad to see HEMAP reinstituted," said PCUA President/CEO Jim McCormack. "HEMAP has a terrific success rate of helping homeowners and should be considered a nationwide model for its success rate, return on investment and efficiency.

"Most importantly, this legislation will protect credit unions from potential litigation/settlements due to a defective notice," he added.

Pair sentenced in 12-year-old Mich. robbery death

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DEARBORN, Mich. (6/26/12)--Two men have been sentenced for their role in the 2001 killing of an armored truck courier during a heist at Dearborn (Mich.) FCU.

Kevin Watson, 41, was sentenced to life in prison without the possibility of parole by U.S. District Judge Victoria Roberts. Norman Duncan, 43, was sentenced to 37 years in prison (CBS Detroit June 23).

On Dec. 14, 2001, Watson, Duncan and four other men allegedly robbed an armored truck delivering money to ATMs at Dearborn FCU, now DFCU Financial CU. The truck's courier, Norman "Anthony" Stephens, 30, the father of six, was shot twice and died at the scene.

Witnesses testified that Watson and co-defendant Timothy O'Reilly, 37, shot Stephens. In August 2010, O'Reilly was convicted in the murder and was sentenced to life without parole last February.

O'Reilly faced the death penalty, but the jury could not reach the unanimous agreement required on who pulled the trigger (News Now Feb. 10 and Aug. 27, 2010). O'Reilly's death penalty case was rare, because Michigan was the first state to abolish capital punishment in 1846. However, the penalty can still be imposed in federal trials.

In January, Duncan entered a guilty plea to the murder charge just before selection of jury for his trial was to begin.

CU to close Career Center branch in Vermont

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BRATTLEBORO, Vt. (6/26/12)--River Valley CU, Brattleboro, Vt., will close a branch designed to promote financial literacy among high school students because of low participation and a new curriculum schedule, the credit union said.

The branch fell short of meeting its social mission, and the River Valley CU board did not anticipate that student participation would increase during the next school year, Jeff Morse, River Valley president/CEO, told Brattleboro Reformer (June 23).

Students participated in operating the branch. The credit union leased space for the office in the Windham Regional Career Center, which is designed to provide learning experiences to help students participate in the work force.

On July 27, the credit union also will close a drive-up window on the Brattleboro Union High School campus. However, the credit union may locate an ATM near the high school. Staff from the branch will be reassigned to other locations.

Changes in the career center's curriculum and increasing pressures to meet high school graduation requirements have made it more difficult for students to spend time in the branch during the school hours, David Coughlin, the center's director, told the Reformer.

System Brief

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FORT COLLINS, Colo. (6/25/12)--The Security Service Charitable Foundation has donated $10,000 to the American Red Cross Northern Colorado Chapter.  The donation will help Red Cross assist the many families, including Security Service FCU members, affected by the wildfires spreading in Colorado. With more than $6.7 billion in assets and more than 875,000 members, Security Service FCU, is based in San Antonio …

Filene Identify and manage overstaffed branches

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MADISON, Wis. (6/25/12)--It will be increasingly hard to justify building and staffing credit union branches in traditional ways without strategic thinking on how to drive down branch costs or drive up branch-dependent revenue, according to a new report from the  Filene Research Institute.

The Report, Identifying and Managing Overstaffed Branches, by Joseph Prunty, president/CEO of Core Profit Solutions--a cost development and customer profitability measurement and management company, is the third in a four-part series that identifies and quantifies cost items at credit unions.

Credit unions should have a firm grasp on their costs, but detailed cost analysis is not always easy to do. This report's primary purpose is to point the way for credit unions that would like to analyze their own offerings and to offer benchmark numbers to credit unions without the resources to do their own detailed cost analysis. Thus, the data given are directionally useful, even if the credit unions cited differ from the reader's in size.

What are the implications for credit unions?

When branch transactions are fully burdened, the cost discrepancy between branch and remote delivery becomes apparent, and the magnitude is impressive. Prunty's analysis of one $1 billion credit union shows that all common transactions are significantly more burdensome through a branch.

Opening a savings account at a branch costs three times as much as opening a savings account at a call center, a consumer secured loan at a branch costs two times as much as a loan at a call center, a checking deposit at a branch costs four times as much as a deposit at an ATM, a credit card payment at a branch costs two times as much as a payment at a call center, and a checking withdrawal at a branch costs seven times as much as a withdrawal from an ATM.

Branch-centric members consume an inordinate share of a credit union's costs, without necessarily being profitable. An analysis of 25 credit unions with assets between $300 million and $2 billion revealed that 28% of their checking and savings deposits occurred at branches, and that segment accounted for 77% of the cost of all deposits in all channels

A separate analysis at one large credit union shows that while only 17% of overall withdrawals took place at a branch, those withdrawals accounted for 63% of the total costs of withdrawals in all channels. All the members who solely used the branch for savings account withdrawals, fully 65% of them were unprofitable at a member level.

The report does not take a position on whether branches themselves are a problem, Filene emphasized.  Branches are too intertwined in most credit unions' delivery strategies to consider abandoning altogether. Instead, the report is a critique of the urge to drive transactions to the branch when they can be better conducted elsewhere. Moving the members with a low profitability profile toward channels that will improve their profitability profile will better serve all members, who expect the credit union to grow and thrive.

To obtain the full report, use the link.

Mortgage mods help but delinquency rates still high

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CHICAGO (6/25/12)--Consumers who received mortgage modifications outperformed those who did not on new consumer loans that were opened after their initial mortgage delinquency, according to a new TransUnion study. However, despite the improved performance, nearly six in 10 mortgage modifications went 60 or more days delinquent, 18 months after the modification date. Credit unions should take note.

The study confirmed that consumers who defaulted only on their mortgages are better risks than consumers with multiple delinquencies--even when controlling for credit score.

"The purpose of this study was to learn how consumers performed on other loans opened following serious mortgage delinquency, and what impact mortgage mods might have on that performance," said Steve Chaouki, group vice president in TransUnion's financial services business unit.

"In the 12 months after new loan origination, consumers with a mortgage mod had an average 18% lower delinquency rate on new credit cards than those with no modification, and a nearly 50% lower delinquency rate on new auto loans," Chaouki added.

The study only looked at loan modifiers and non-modifiers, with comparable VantageScore credit scores, who had originally been 120 or more days past due (DPD) on their mortgage loans. It found the recidivism rate--the rate at which modified mortgages again went 60 or more DPD-- was 41.9% 12 months after modification. After 18 months, that rate had risen to 59.1%.

Within the population of modified mortgages, certain sub-segments of borrowers performed relatively better following modification. In particular, the study compared borrowers who had previously gone delinquent only on their mortgages--but no other loans--to those borrowers who went delinquent on other loans as well as their mortgages. The 12-month recidivism rate for mortgage-only defaulters was 38.8%, while the recidivism rate for multiple delinquency borrowers was 46.2%.

States with the highest mortgage recidivism rates included: Delaware (67.5%), Rhode Island (66.3%), Maine (64.3%), Florida (64.2%) and Texas (64.2%).

States that had the lowest recidivism rates--and much lower than the national average of 59.1%--included Wyoming (46.3%), Montana (48.2%), the District of Columbia (50%), New Mexico (50.7%) and Michigan (53.2%).

TransUnion's mortgage loan modification study reviewed more than five million mortgage loans that were originated prior to 2008 and went 120 days or more past due between January 2008 and June 2010. Of those mortgage loans, roughly 559,000 records of mortgage modifications between January 2008 and July 2011 were identified. Mortgage modifications were analyzed for 6-, 12- and 18-month performance.

NCUF grants helps financial literacy program expand

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GLENELG, Md. (6/25/12)--The Credit Union Foundation of Maryland & D.C. will expands its high school after-school financial literacy initiative into four  additional Maryland high schools this year with the help of a National Credit Union Foundation (NCUF) Financial Education Grant.

The Millionaire's Club, an after-school financial literacy club sponsored by the Credit Union Foundation of Maryland & DC, expanded into four high schools last year with the help of a grant from the National Credit Union Foundation. Millionaire's Club members gather after a meeting at Gaithersburg High School in Gaithersburg, Md. (Photo provided by the National Credit Union Foundation)
The foundation also expanded into four high schools last year. Each club is paired with a local credit union to help with mentoring, curriculum development and to serve as the supporting financial institution for the cub. Close ties between the clubs and credit union partners also ensures that the credit union philosophy is properly and prominently applied.

"The Millionaire's Club concept is growing faster than we had expected," said Kyle Swisher, executive director of the Credit Union Foundation of Maryland & DC. "As schools launch their new clubs, word has been spreading within administrative and faculty groups creating demand from within school districts. We recently launched a new club after a student contacted our foundation asking how they could get the effort up and running in their school."

The Millionaire's Club seeks to guide high school students to envision and prepare for their futures through a club structured after-school financial literacy effort presented by professionally educated staff. The program offers a detailed monthly curriculum for after-school programs led by paid teaching staff already embedded at the participating high schools. The curriculum focuses on interactive activities to allow the members to learn how money influences their day-to-day activities, their culture and their futures.

Members of the Millionaire's Club at Frederick Douglass High School, sponsored by Educational System FCU, Greenbelt, Md., gathered recently to celebrate their first-place regional and fourth-place state finish in the Stock Market Game. Club members competed among 1,148 teams in Maryland and 136 teams regionally.

Member of the Millionaire's Club at Howard County's Applications & Research Lab, sponsored by State Employees CU of Maryland, Linthicum, Md., were recently recognized for their placement in the upper percentile of the Department of Treasury's National Financial Capability Challenge.  More than 80,000 students nationwide participated in the challenge.

Internatl CU Regulators tackles tough issues

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TORONTO (6/25/12)--Attendees of the Regulators' Roundtable, the annual event of the International Credit Union Regulators' Network (ICURN) held last week in Toronto, Ontario, Canada, tackled tough issues with the goal of developing guidance for supervision, corporate governance and regulatory capital in the coming year, according to the World Council of Credit Unions (WOCCU).

Click to view larger image Click for larger view

Sixty-four credit union regulators from 17 countries attended the International Credit Union Regulators' Network annual Regulators' Roundtable in Toronto last week to address tough issues and develop guidance for supervision, corporate governance and regulatory capital in the coming year. (Photo provided by the World Council of Credit Unions)
Three of the several topics discussed were sustainability of the financial cooperative business model, the application of prudential capital standards in light of the new the Basel III capital accord, and the relative merits of various supervisory risk-rating systems.

At this year's meeting, 64 regulators from 17 countries responsible for the supervision of more than 15,000 financial cooperatives shared their experiences and exchanged ideas to enhance the prudential supervision of such institutions. Regulators from Australia, the Bahamas, Brazil, Canada, El Salvador, Guatemala, Haiti, India, Ireland, Kenya, Lesotho, Mexico, Peru, Poland, Singapore, the United Kingdom and the U.S. were in attendance.

Representatives from WOCCU, which serves as ICURN secretariat, and the German Cooperative and Raiffeisen Confederation also participated in discussions. The Deposit Insurance Corporation of Ontario (DICO) hosted the conference.

Participants in the three-day meeting also discussed capital and liquidity requirements, interest rate risk management and governance issues. Presenters reviewed the expectations of governance regimes, desirability of enterprise risk management at the institutional level and emerging risks financial cooperatives face in a changing economic environment. Regulators also shared their experiences during the past year on supervisory challenges in their respective systems.

"The meeting has been a great initiative for credit union supervisors around the world to discuss common issues and challenges and how different jurisdictions are responding to these challenges," said ICURN Chair Andy Poprawa, DICO CEO. "The supervision of credit unions and other financial cooperatives around the world continues to be strong, thus contributing to their safety and soundness."

ICURN is an independent international network of credit union regulators that promotes the guidance given by the leaders of the Group of 20 nations for greater international coordination among financial services regulators. ICURN facilitates the sharing of information and positions of common interest among financial cooperatives, initiates research on financial cooperatives and their oversight, identifies best practices and provides direct access to an exclusive forum for thought leaders worldwide on issues critical to sound credit union regulation.

ICURN was formed in 2007 and currently has members in 30 countries and jurisdictions. A steering committee of representatives from six regions across the world leads ICURN.

For more information about ICURN, use the link.

McGraw-Hill FCU CEO highlights aSmarterchoice.org in iNY Daily Newsi

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NEW YORK (6/25/12)--Shawn Gilfedder, president/CEO of McGraw-Hill FCU, East Windsor, N.J., authored a recent article on the New York Daily News website explaining the different options consumers have to lower their monthly bills and reduce debt, including credit union membership.

A reader posed a question to the New York Daily News' "Money Pros" group asking for ideas on how to cut monthly bills and bring down debt more quickly. The reader had recently refinanced his mortgaged.

In the article, headlined, 'Money Pros: Need a financial tune-up? Credit unions are a good place to start,' Gilfedder suggested readers find a trusted financial institution to review their loan portfolios. "The right financial institution can guide you into programs to consolidate debt, lower your monthly payments, and even shorten your repayment term to pay down your debt faster," he wrote. "Mission-driven institutions such as credit unions and community banks are great places to start."

He directed readers to asmarterchoice.org to find a credit union in their area.

Gilfedder also advised readers to review their account statements every month and check their financial institution's fee schedule regularly to identify excessive fees.

Study Consumers value both personal virtual service

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SAN JOSE, Calif. (6/25/12)--The personal service credit unions stake their reputation on is still valued by consumers--but they also value service through virtual channels, according to a new study by Cisco. Despite the popularity of virtual banking, consumers still value branches for personal attention and favor expanded services that include different kinds of financial advice, the study revealed.

The findings are the result of the Cisco IBSG Omnichannel Banking Study of 5,300 consumers in five developed countries--Canada, France, Germany, U.S. and U.K.--and three emerging countries--Brazil, China and Mexico.

Financial institutions, including credit unions, are operating in a challenging environment of rapid economic change, more technology-savvy customers, thinner margins and increasing regulations, the study said.  Many credit unions and banks are looking to adopt an "omnichannel" banking strategy to optimize their retail channels based on customers' preferences to offer more personalized financial services.

The Cisco Omnichannel study was designed to discover consumers' attitudes and preferences towards different channels, both physical (in person at branches) and virtual (mobile, online, video conference, social media).  The study recommends strategies for financial institutions to implement that will drive profitability and increase member or customer satisfaction.  Among the study's findings:

Despite the popularity of virtual banking, consumers still value branches for personal attention and favor expanded services that include different kinds of financial advice:

  • Consumers globally rejected the idea of highly automated branches with limited personal attention and expertise, with 26% consumers saying they would leave their current financial if personal attention and advice were eliminated from their bank branch;
  • 65% of respondents globally (56% in developed countries and 81% in emerging countries) would be in favor of bank branches that offered an expanded portfolio of financial and advisory services (financial education, legal, accounting, tax and insurance);
  • Overall, consumers want to use all the options available to them across physical and virtual channels. Frequent users of virtual channels also visit branches more frequently, with 30% of users of virtual banking channels also being frequent branch visitors--(two or more visits per month);
  • 45% of consumers strongly favor a total virtual banking alternative over one where they'd use highly automated branches with limited advice or personal attention (23%);
  • Consumers' concerns in protecting personal information could be a roadblock to quick adoption of omnichannel banking; and
  • Significant concerns about privacy, security and identity theft was prevalent among consumers in both developed markets (65%) and emerging countries (53%).

Southeastern league names new chair announces annual awards

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BIRMINGHAM, Ala. and TALLAHASSE, Fla. (6/22/12)--The League of Southeastern Credit Unions (LSCU) announced a new chairman and its annual award winners at the recently held third annual LSCU Annual Convention and Exposition.

The League of Southeastern Credit Unions recognized winner Jimmy Lankford, former president/CEO of Alabama CU, Tuscaloosa, Alabama, with its Distinguished Service award at the league's recently held Annual Convention and Exposition. From left, Patrick La Pine, LSCU president/CEO, Lankford; and Tina Williams, chair of the LSCU Awards Committee, vice chair of the league board and CEO of Mobile (Ala.) Educators CU.
Mary Ott Wood, CEO of Florida West Coast CU in Brandon, Fla., was elected to succeed Joe McGee, CEO of Legacy Community FCU of Birmingham, Ala.

Wood becomes the third chairman of the LSCU board. McGee served two years.

The executive committee for the LSCU board includes:

  • Chairman--Wood;
  • Chairman-elect--Steve Swofford, CEO, Alabama CU, Tuscaloosa, Ala.;
  • Vice chairman--Tina Williams, CEO, Mobile (Ala.) Educators CU;
  • Secretary--Brent Lister, CEO, First Florida CU, Jacksonville, Fla.;
  • Treasurer--Alvin Cowans, CEO, McCoy FCU, Orlando, Fla.
The LSCU board welcomed three new members. They include:

  • Leianne Harden--manager, Florida Customs FCU, Tampa, Fla.;
  • Jeanette Keller – CEO, Blue Flame CU, Mobile, Ala.; and
  • Steven Nazaruk – CEO, Tallahassee (Fla.) FCU.
From left, Patrick La Pine, League of Southeast Credit Unions president/CEO, 2012 Professional of the Year Rich Helber, president/CEO, Tropical Financial CU, Miramar, Fla.; and Tina Williams, Chair of the LSCU Awards Committee, vice chair of the league board and CEO of Mobile (Ala.) Educators CU.
LSCU Award categories and winners were:

  • Distinguished Service Award--James G. "Jimmy" Lankford, past president,
  • Alabama CU, Tuscaloosa, Alabama;
  • Professional of the Year--Rich Helber, president/CEO, Tropical Financial CU, Miramar, Fla.;
  • Volunteer of the Year--Martha Frasier, board vice chair, Space Coast CU, Mebourne, Fla.;
  • Credit Union of the Year, up to $100 million in assets, Monroe County Teachers FCU, Key West, Fla.;
  • Credit Union of the year, $100 million to $500 million in assets: Alabama CU, Tuscaloosa, Ala.;
  • Credit Union of the Year, $500 million or more--Army Aviation FCU, Daleville, Ala.; and
  • Brother's Keeper--Pen Air FCU, Pensacola, Fla.
From left, Patrick La Pine, League of Southeast Credit Unions president/CEO, 2012 Volunteer of the Year Martha Frasier, board vice chair, Space Coast CU, Melbourne, Fla.; and Tina Williams, chair of the LSCU awards committee, vice chair of the league board and CEO of Mobile (Ala.) Educators CU. (Photos provided by League of Southeastern Credit Unions)
Distinguished Service Award honoree Jimmy Lankford was the president/CEO of Alabama CU for 36 years. He took the credit union from $101,000 in assets and 300 members to $87 million in assets and 14,000 members. Lankford has spent the past 14 years as a consultant to Alabama

CU working on the credit union's Call Report Data, maintains the policy manual and the credit union's history.

Professional of the Year Rich Helber, president/CEO of Tropical Financial CU in Pembroke

Pines, Fla. was named CEO in 2010 and took a struggling credit union to profitability in 2011.

The credit union's net worth ratio rose to 8% from 6.8 %. In one year, the total delinquent loans fell by $4 million and net charge offs to loans fell by 50%.

Volunteer of the Year Martha began her career as a teller in 1959 and rose to become the manager of the credit union in 1975. She oversaw an asset growth of more than $100 million. Frasier retired in 1986 and began serving on the board. She has served as chairman, treasurer and secretary; and is currently vice chair. Frasier was the league chapter chair for a number of years. She was also the Credit Union Executive Society Florida Council chair that won the national council of the year award for three straight years. She has been a member of the Southeast Corporate board.

Monroe County Teachers FCU, Credit Union of the Year, in the up to $100 million in assets category, is based in Key West, Fla. Monroe County Teachers FCU added $4.7 million in assets in 2011 to reach 15 million, while maintaining a 9% net worth ratio. The credit union is in the 99th percentile for membership, share, loan, asset and net worth growth. When compared to peer credit unions, Monroe County Teachers is below its peers in delinquencies and net charge offs.

Alabama CU, Credit Union of the Year in the  $100 million to $500 million in assets category, grew its assets to $91 million while maintaining a nearly 9% net worth ratio and a 1.4% return on assets--almost double the national average. Alabama CU opened a new branch in Gulf

Shores. The credit union was honored with a Dora Maxwell award for its Secret Meals for Kids

Program, which provides kids meals in their backpacks without them knowing it so they will have food over the weekend. The program has grown to 52 schools and reaches more than 1,000 students.

Army Aviation Center FCU, Credit Union of the Year in the more than $500 million in assets category, reached $1 billion in assets in 2011 while also having a nearly 1% return on assets. The credit union received a five-star rating from Bauer financial for 15 years. Army Aviation introduced to its members an iPhone and Android app and an upgraded bill pay feature. It opened a new branch and is building a new headquarters. The credit union supports eight in-school branches along with financial literacy, a service it also provides to churches and other civic groups. Army Aviation awards 10 scholarships per year to area high school students, while also maintaining a Youth Council to teach students about credit unions and receive feedback on services for that age group.

Brother's Keeper Pen Air FCU loaned its mobile branch to Community CU of Gadsden, Ala. in 2011 after its Rainsville branch was destroyed by a tornado. Pen Air also loaned its mobile branch to Secure First CU of Birmingham, Ala., when Secure First was damaged during a tornado in 2012. Each time the mobile branch was loaned with no time limit. Pen Air also donated supplies to the tornado victims.

Global Womens Leadership Network announces scholarship recipients

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MADISON, Wis. (6/22/12)--Five women from five countries will attend the 2012 Global Women's Leadership Forum in Gdańsk, Poland on scholarships provided by the Global Women's Leadership Network.

The network, co-founded by World Council of Credit Unions (WOCCU) and the Canadian Co-operative Association, will hold its annual education and networking forum in conjunction with WOCCU's World Credit Union Conference next month.

"The Global Women's Leadership Network is designed to empower and support women credit union leaders worldwide," said Brian Branch, WOCCU president/CEO. "This is one example of our focus on building a strong global credit union community."

This year's recipients include:

  • Lara Thomas, founder of The MILLA Project in the U.S.;
  • Jedidah Nyongesa Musamali, program manager at the Social Entrepreneurship Program under Goezraal Springs Empowerment Foundation in Kenya;
  • Gail Rajkumar, executive director and public relations officer at TATECO Credit Union Co-op Society, Ltd., in Trinidad;
  • Yamata Karki, program coordinator and social worker at the Prakritinagar Women Independent Group and Nayapati Savings and Credit Cooperative, Ltd., in Nepal; and
  • Arou Christine Tanyi, network operations manager for the Cameroon Cooperative Credit Union League.
The five recipients will receive a one-year membership to the network and a cash stipend to attend the 2012 forum.

The Global Women's Leadership Network was formed in 2009 to promote the professional and personal development of credit union women around the world through one-to-one networking, social media, peer-to-peer partnerships and educational workshops.

This year's Global Women's Leadership Forum, scheduled for July 15 prior to the start of the World Credit Union Conference, will offer members the opportunity to connect face-to-face with women from other credit union movements around the globe, create lifetime alliances and learn from successful women outside the industry. Speakers include branding expert Jiao Zhang, a partner with marketing research and strategy firm Attune, and international development professional Gabriela Zapata, consultant for the Consultative Group to Assist the Poor.

WOCCU New Zealand CUs turn to Canada for growth strategies

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VANCOUVER, British Columbia (6/22/12)--The New Zealand Association of Credit Unions (NZACU) was recently asked by its member institutions, "How can a credit union system best grow in the face of increasing competition and growing regulations?" It turned to one of its counterparts in Canada to explore similar experiences and solutions to the challenges both systems face, said the World Council of Credit Unions (WOCCU).

Representatives from the New Zealand Association of Credit Unions (NZACU) and Central 1 Credit Union of Canada who met in Vancouver earlier this month to discuss credit union system growth included, from left, Jonathan Lee, NZACU; Linda Archer, Central 1; Richard Thomas, Central 1; Henry Lynch, NZACU; and Simon Scott, NZACU. (Photo provided by the World Council of Credit Unions)

NZACU officials recently traveled to Central 1 CU in British Columbia as part WOCCU'S International Partnerships Program. The visit brought together two developed credit union systems with similar goals and objectives for mutual benefit and collaboration, according to Brian Branch, WOCCU president/CEO.

"Many of our partnerships pair developed and developing systems together to help grow the credit union presence on a global level," Branch said. "There is also tremendous benefit to pairing two developed systems to share strategies and techniques for improving member service."

New Zealand's 22 credit unions serve nearly 200,000 members, according to WOCCU's 2011 Statistical Report. During its Canadian visit, NZACU hoped to learn about new growth strategies as well as improve its advocacy capabilities and better understand Canadian credit union governance structure, according to Henry Lynch, NZACU CEO.

"New Zealand has one of the most developed banking systems in the world, and our credit unions are competing in a very regulated and competitive market," Lynch said. "Our World Council partnership will allow NZACU to learn from Central 1 around growth activity in a very competitive market. We found the visit to be worthwhile, stimulating and of great assistance."

Simon Scott, NZACU chair and chair of First CU in Hamilton, N.Z., and Jonathan Lee, NZACU general manager, also represented New Zealand's credit unions.

Canadian hosts for the delegation included Central 1's Don Rolfe, president/CEO; Linda Archer, senior vice president of marketing and human resources; and Richard Thomas, senior vice president of government relations and corporate secretary. Victor Miguel Corro, WOCCU vice president of the Worldwide Foundation for Credit Unions and the partnerships program, coordinated the visit.

The New Zealand delegation also visited several Vancouver-area credit unions, including Aldergrove CU, First West CU, North Shore CU and VanCity, Canada's largest credit union. The visits were based on the individual niches each credit union serves, according to Archer.

The opportunity to meet with the New Zealand delegation and to find out more about their system was informative, Archer said. "Credit unions are and must continue to be a credible local alternative to the big banks," he added. "Although separated by distance, it's always interesting to see that we face many similar issues in continuing to raise awareness of credit unions and the value they provide to not only their members but to the communities they serve."

Central 1 plans to continue the discussion when it sends delegates to visit NZACU and its credit unions in New Zealand in December.

Wisconsin league urges lawmakers to support ATM bill

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PEWAUKEE, Wis. (6/22/12)--The Wisconsin Credit Union League joined the Wisconsin Bankers Association and the Community Bankers of Wisconsin in urging state lawmakers to support  a bill that would eliminate the requirement that a physical disclosure be placed on ATMs stating that fees may be charged.

The associations issued a joint letter to Wisconsin's entire U.S. congressional delegation to share their support for S. 3204, which would repeal the requirement that a physical disclosure be placed on the ATM, but would preserve the requirements that consumers be notified of potential fees associated with an ATM transaction through an electronic disclosure and then make an affirmative opt-in to accept any fee.

Also, on Wednesday the league announced both Wisconsin members of the House Financial Services Committee--U.S. Reps. Sean Duffy (R-Wausau) and Gwen Moore (D-Milwaukee)--have agreed to co-sponsored the House ATM legislation, H.R. 4367. U.S. Rep. Tom Petri (R-Fond du Lac) has also agreed to co-sponsor the bill.

Current law requires ATM operators to provide two separate notices to consumers regarding any fees charged for the use of the ATM. This fee is disclosed on the ATM screen, and must be agreed to by the user to proceed with the transaction. Current federal regulations also require ATM operators to attach an additional notice to the ATM itself, in the form of a physical placard stating that a fee may be charged. If the placard is not attached, the statute prescribes that in a successful class action, plaintiffs are entitled to recover "the lesser of $500,000 or 1% of the net worth of the [ATM operator]," plus attorneys' fees and costs.

Financial institutions claim the physical disclosure requirement has led individuals to remove the placard and sue the ATM operator for noncompliance, costing financial institutions hundreds of thousands of dollars in litigation costs. The threat of lawsuits has caused financial institutions to document compliance with the redundant, passive fee notice placard, increasing the cost of operating ATMs to the detriment of consumers, financial institutions said.

Texas bank challenges Dodd-Frank CFPB

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WASHINGTON (6/22/12)--The State National Bank of Big Spring, Texas, announced Thursday it will file a lawsuit asking the U.S. District Court for the District of Columbia to hear its case challenging the constitutionality of provisions of the Dodd-Frank Act, including the formation of the Consumer Financial Protection Bureau (CFPB).

The Competitive Enterprise Institute and the 60 Plus Association also are joining the community bank in the lawsuit.

"No other federal agency or commission operates in such a way that one person can essentially determine who gets a home loan, who can get a credit card and who can get a loan for college," said Jim Purcell, State National Bank CEO. "Dodd-Frank effectively gives unlimited regulatory power to this so-called Consumer Financial Protection Board … with a director who is not accountable to Congress, the President or the Courts. That is simply unconstitutional."

The lawsuit alleges that Congress exercises no "power of the purse" over the CFPB, because the agency's budget comes from the Federal Reserve and is not regulated by Congress.

The suit also claims the president cannot carry out his constitutional obligation to "take care that the laws be faithfully executed," because he or she cannot remove the CFPB director except under limited circumstances.

The suit also alleges that review of the CFPB's actions is limited, because Dodd-Frank requires the courts to give extra deference to the CFPB's legal interpretations.

CUNA recognizes 171 with CUCE certification

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MADISON, Wis. (6/22/12)--The Credit Union National Association announced that 171 credit union compliance professionals have earned or recertified their CUNA Credit Union Compliance Expert (CUCE) designation at the CUNA Regulatory Compliance Schools.

CUNA Regulatory Compliance Schools feature annual regulatory updates, general overviews and advanced sessions. The schools provide credit union professionals an understanding of the major regulations affecting credit unions and their regulatory duties. In addition to attending the required sessions at CUNA Regulatory Compliance Schools, all CUNA CUCE certified professionals passed on-site exams that tested their knowledge of the overall compliance environment.

The CUNA CUCE designation was created by CUNA to help credit union compliance professionals stay up-to-date with the latest compliance regulations and ensure credit unions are operating within the current laws. Due to the ever changing compliance environment, the designation must be renewed every three years.

The CUNA CUCE designation will be offered again this year. Use the links.

CUNA Mutual at ACUC Leadership must help develop talent

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SAN DIEGO (6/22/12)--It is imperative that credit union leadership be involved in acquiring, retaining and motivating talented employees--and not expect that task to be the sole job of human resources,  CUNA Mutual Group's Randy Kohout told an America's Credit Union Conference (ACUC) Discovery breakout session Wednesday.

Randy Kohout, CUNA Mutual Group, shares research on employee engagement and said it is imperative credit union leadership be involved--not just human resources, during a Discovery breakout session at America's Credit Union Conference on Wednesday. (Photo provided by CUNA Mutual Group)
Despite a volatile economy and high unemployment, the majority of companies struggle to attract critical-skill employees, a Towers Watson 2011 survey found. At the same time, organizations are squeezing merit increases and expecting longer hours, which have led to 57% of female and 59% of male employees being dissatisfied, with one-third having plans to seek other opportunities as the economy improves.

"The good news is that there are tools credit union leaders can use to engage current employees and create an environment that is attractive to potential employees," said Kohout, CUNA Mutual vice president, organizational capability.

To start, credit unions need to understand there is value in integrating their engagement, retention and acquisition processes, Kohout said. By integrating these processes, it will be easier to attract the right talent, retain top performers, and have a better chance of being known as a high-performing credit union.

"The trouble is many credit unions not only have separate engagement, retention and acquisition processes, but they treat all generations of employees the same, which is not wise," Kohout said.

Kohout emphasized that employee demographics are not in credit unions' favor either--demand will exceed supply. More Baby Boomers are reaching retirement age and younger generations are smaller in size. Plus, immigration will not plug this demographic hole, with many skilled immigrants returning to their country of origin after earning a degree or experience in the U.S.

There are three generations of employees: Gen Y (under age 30), Gen X (ages 30-46), and Baby Boomers (ages 47-66), Kohout explained. "Each generation is somewhat unique in what they expect from their employment deal," said Kohout. "You need to be prepared to accommodate different needs," he added.

"As credit union leaders, we need to re-think the key skills we need to run our credit unions and differentiate our value proposition based on generational considerations," Kohout said. "We need to arm ourselves with being in the business of talent."

Credit unions must look at their talent from three perspectives: engagement and productivity of talent already in the organization, attraction or recruiting of new talent from the market, and the retention of the organization's most talented employees, Kohout said.

From the Towers Watson 2011 Survey, it is learned that what engages employees may also help to retain them, and investing in career development can positively impact attraction, retention and engagement of employees, Kohout said.

Kohout explained that market-based pay is a plus for attraction of employees, but for retention and engagement, it is more than base pay and includes bonus or performance pay and other rewards. Also, a company's image includes not only its financial performance but also how the company is viewed by its customers, employees and community. These varying factors make it necessary for credit unions to develop an integrated approach to managing talent.

"The trouble is most credit unions view it as human resources' job to make these changes," said Kohout. "This mindset must change. As leaders in the credit union business, you must get involved," he added.

Kohout suggested credit union leaders get involved in their credit unions' talent management process by speaking with new hires about why they joined the credit union, conducting an engagement survey to help identify areas of focus, and taking time to talk with key employees on a regular basis to encourage retention.

"The best thing you can do for your credit union is to understand the true talent needs, and then adapt your current talent management processes to fit those needs," said Kohout. "This will take time. Don't expect perfection. Be willing to learn and continually improve."

Kohout wrapped up the session by reminding attendees that while employees are often the largest expense they are also a huge asset, particularly, in customer-focused businesses such as credit unions.

Federation marks CDCU growth

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NEW YORK (6/22/12)--More than 275 credit union executives, board members and other financial services representatives attended National Federation of Community Development Credit Unions' (CDCUs) the 38th Annual Conference on Serving the Underserved, held June 13-16 in Atlanta. 

The National Federation of Community Development Credit Unions' held its 38th Annual Conference on Serving the Underserved in Atlanta June 13-16. Among the attendees were  Bill Cheney, president/CEO of the Credit Union National Association (CUNA) federation Chairman Lynda Milton and Mike Mercer, CUNA board chairman and Georgia CU and Affiliates CEO. (Photo provided by National Federation of Community Development Credit Unions)
Among dignitaries at the conference were Deborah Matz, chairman of the National Credit Union Administration; Bill Cheney, president/CEO of the Credit Union National Association (CUNA); Mike Mercer, CUNA board chairman and Georgia CU and Affiliates CEO; Donna Gambrell, Community Development Financial Institution Fund (CDFI) director; Melvin Edwards, Caribbean Confederation of Credit Unions CEO; Bill Myers, NCUA Office of Small Credit Union Initiatives director; and the federation's former president/CEO of more than 32 years, Clifford N. Rosenthal, who made his final farewell address at the conference.

"We are extremely pleased that CUNA Board Chairman Mike Mercer and CUNA President/CEO Bill Cheney were able to join us for the opening ceremonies this year," said Pamela Owens.  She said their presence showed "the  industry's growing commitment and recognition of credit union efforts to serve low- and moderate-income people and communities."

In his remarks at the opening ceremonies, CUNA Chairman Mike Mercer pointed to the impact these community development financial credit unions have made. "During the depth of those crisis years, lending at banks fell by 10%, but lending grew at credit unions by 8% and at CDCUs, lending grew by nearly 11%," Mercer said. "Over the same time period, credit unions saw a savings influx of 18%, but saving grew by 24% at CDCUs."

CDFI Fund Director Donna Gambrell noted that the number of CDFI certified credit unions continues to grow. As of May 31, the CDFI Fund had certified 992 CDFIs, and 221--or 22.7%--of all CDFIs---were credit unions. "One year earlier, we had certified 202 credit unions, so the number of certified credit unions has increased by almost 10 percent just in the past 12 months," Gambrell said.

The federation's director of membership, Pablo DeFilippi, noted that membership in the federation is at a historical high. The federation now include 250 CDCU policy members, he said. "These credit unions are dedicated to serving communities marginalized by mainstream financial institutions and currently serve more than two million Americans and represent more than $13 billion in combined assets," DeFilippi said.

In his farewell address Rosenthal remarked upon the impact of the federation on CDCUs. "In 1983, the federation had no net worth--zero. Today we have nearly $9 million in net worth ... [and] the federation has been able to make more than $15 million in secondary capital investments, more than $100 million in deposits, and several millions of dollars in grants to our members. The CDFI Fund we helped create has made more than $100 million in grants to CDCUs [and] the community development capital initiative program [and] made $69.9 million in secondary capital loans [to CDCUs]," he said.

Five best practices for online cross-selling

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SAN DIEGO (6/21/12)--Geoff Knapp has a message for credit unions that want to model their online banking systems after high-profile, online retailers: "You're not Amazon.com."

Knapp, Fiserv's vice president of digital channels, told America's Credit Union Conference attendees that credit unions can borrow some ideas and practices from online retailers, but they should keep in mind their very different business models.

"Amazon's business model is based around throwing ads at the consumer, while the credit union model is based on service," he said. "People hold financial institutions to a higher standard than retailers. I expect Amazon to sling stuff at me, but not my credit union."

That said, Knapp offered five best practices for online cross-selling that credit unions can borrow from online retailers:

1. Make it easy for users to find what they want. Ease of use is the primary driver of satisfaction with online banking. Make it easy for members to locate and accomplish specific tasks by prominently positioning frequently used service.

"Members don't want to click eight times to find what they want," Knapp said. Plus, online banking users are task-oriented and become annoyed if the flow of a task is interrupted, so credit unions should strive to make related offers as part of the task flow or when a task is complete.

2. Offer a personalized online experience. Personalization doesn't have to be complex; it can be as simple as providing a personalized greeting when members log on, or allowing members to edit their profiles and account information.

"Just use my name and recognize that I'm there," Knapp said. "This is an area in which the online banking experience lags the online buying experience."

3. Target the message to the right member the right way. Present products and services to users based on their needs, rather than blanketing all members with an offer or relying solely on sales goals to define offers.

"Make the offers conversational, contextual and relevant to add value," Knapp said.

4. Position recommendations in a helpful, friendly manner. Online retailers are adept at positioning products for cross-sell without appearing to actually advertise the products--mainly by presenting recommendations in a friendly, helpful way.

Credit unions should consider adding social elements to their sites to promote their products and services with a conversational approach.

5. Focus on what you know. "Don't get carried away with opportunities to sell other companies' stuff," Knapp suggested. "Members are open to offers from their credit union--not so much for discounts to local restaurants."

Focus on helping members save money and providing valuable financial tools.

"Focus first on who you are and what you do," Knapp said. "Members aren't opposed to cross-selling within online banking, and a large percentage are receptive to offers they perceive to be targeted and relevant. The key is to enable users to conduct their banking business quickly and efficiently while leveraging marketing to deliver a more personal and valuable experience."

What CUs can expect in mobile services

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SAN DIEGO (6/21/12)--
"Just having an app is not a strategy" for a credit union's use of mobile devices, Shahab Choundhry,co-founder of Propelics and mobility strategist, told attendees of a Discovery Breakout Session at the America's Credit Union Conference in San Diego Tuesday afternoon. His session explained what credit unions can expect to encounter in taking the mobile path, which should focus on the user experience. See related story "What CUs can expect in mobility." (Photo provided by CUNA)
Change is occurring four times as fast as anything in the past, and "a new channel that we're not ready for--but people are already using—is taking hold," said a speaker at America's Credit Union Conference (ACUC) Tuesday. By 2015, about 70% of member/customer interactions will originate from a mobile device.

"Just having an app is not a strategy" for a credit union's use of mobile devices, Shahab Choundhry, co-founder of Propelics and mobility strategist, told attendees of a Discovery Breakout Session at the ACUC in San Diego. His session explained what credit unions can expect to encounter in taking the mobile path, which should focus on the user experience.

Already, 70% of iPads and other tablets have completely or partly replaced functions on a laptop or desktop. "Everything you do at work will be replaced by a mobile device," Choundhry said. "The big shift is in how people see these as business devices."

Financial services has jumped out as one of the areas that have really embraced the technology, which is interesting because financial services are usually risk-averse, Choundhry said. "None of the other industries seem to be catching up. A lot of people still haven't embraced mobile, but 90s of chief information officers expect to deploy mobile apps in their company in the next 12 months.

Branded apps are growing, and for credit unions and banks, their apps are starting to look the same, with the menu of accounts, transactions, transfers, image capturing, locations of branches, calculators, payments and deposits.  If  both sectors have apps that can be downloaded, where is the innovation, he asked.

In addition to member apps, there are apps that associates and employees can leverage, said Choundry. About 97% of organizations have indicated that either some or all of their employees have employee-liable devices, which brings up issues about security policies and managing risk of data loss.

He outlined seven considerations:

  1. Decide whether to build or buy a member app. "You can't skim someone else's app  and put your logo on it. This will be part of consumers' brand experience with your credit union. Once the app is out there, you can't pull it back."
  1. Decide whether to build a member app or allow "lean back devices" that don't create content, but use it.
  1. Know that the app is not a strategy. Is this the first thing you should build? Step back, and look beyond your industry.
  1. Think scenarios, not point apps. There is a danger of having too many apps when you need to pull out all types of information to present to the member.
  1. Simplify. The mobile enterprise is different from the typical enterprise. If has lots of features and complex systems and the mobile app needs to shield that complexity, while being elegant and simple. One can't slap on the same functions as a desktop. "You have to think through a lot of technical plumbing," Choundhry said.
  1. Begin a Mobile Device Management roadmap network. It will assess the types of data that will be touched by a variety of devices. How will the credit union address the employee coming to work with a smartphone, iPad or other device and the risk of exposing member data through the personal devices? What will the loss strategy be if an employee's device is lost or stolen with member information? "Don't ignore this aspect. It's your risk," he said.
  1. Focus on the user experience to allow an immersive experience. Having a broader mobile strategy will help stop the wild west of app development," Choundhry said.

ACUC Access trust are CUs competitors Brogan

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SAN DIEGO (6/21/12)--Credit unions are in the relationship business, which means they are in the business of facilitating desire, success and eventually legacy, not just a place for members to stick their money. That also means that access and trust--not banks--are their competitors.

Click for slide showWhen credit unions think of competition, they think of banks, but their competition is actually access and trust, said Chris Brogan, president of Human Business Works and co-author of Trust Agents in his keynote address, "Harness the Power of Social and Online Networks to Build Influence, Reputation and Results," at Wednesday's closing General Session at America's Credit Union Conference. "You are in the relationship business," he said. "You are in the business of facilitating desire, facilitating success and eventually facilitating a legacy." (Photo provided by CUNA)
So says Chris Brogan, America's Credit Union Conference's closing General Session keynoter. Brogan is president of Human Business Works and co-author of the New York Times bestseller, Trust Agents.

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Brogan told the conference attendees that he has been a member of a credit union for more than 20 years. When he was 19 and working a new job at a company, he deposited his first paycheck at the credit union and asked for a car loan the same day. "I'm a big believer in credit unions."

"Which costs more--retaining a member or acquiring a new one?" he asked. "What is the larger business goal of your organization? You're in business of facilitating desire, facilitating success, and eventually facilitating legacy" so the credit union "isn't just a place to stick my money.

"We think of competition as banks, but no, it's access and trust. Financial turmoil is worse than it's ever been. Even with the recovery, people don't know what to do. You win the trust thing, but access is an issue "if you make me drive to the facility or call only during business hours."

Technology is a key to access. Social network media such as FaceBook are attracting 750,000 new joiners in the 35- to 65-age bracket, mostly women who use it to look at photos of their grandchildren and showing photos on their iPhones.

Technology must meet those needs. "Sixty percent of Web sites are not mobile-friendly, which means that 60% of your marketing isn't reaching the mobile devices. Sixty-eight percent of Web traffic to a site comes from a mobile device."

Brogan urged credit unions to fix their websites and build an app to make it easy for members to get their money. "You don't have to build the coolest app, just build access."

He also noted that most credit unions' websites indicate how they believe in their community, in what surrounds the marketplace. They need to develop listening tools and learn what to listen for in order to facilitate meeting members' needs. Community presents an opportunity to earn trust.

"Start using social media tools, such as FaceBook or Twitter," he said, but he cautioned against hiring a 24-year-old as the social media strategy because the credit union's brand may end up in inexperienced hands. "If you consider social media, including blogs, as the kiddie table, oh, are you mistaken," he said.

Also consider the social media landscape. FaceBook has nearly $1 billion people, but none of the information shows up on Google. Google Plus is the dominant search engine system on mobile devices, he said. YouTube can be used for tutorials, and passionate fan-made tutorials are being used. However, note the person on the video should be passionate. "CEOs are not fired for their video ability," Brogan said.

Other advice:

  • Go mobile and fix the problems on your website so it's easy to navigate on a mobile device. "You can't navigate through 700 buttons. Too many choices equal no action."
  • Make e-mail newsletters interesting and cut some relationship-killer language.  Make them less than 500 words, with only one action a day, don't use the unfriendly "FROM: Do not reply," and delete "click this to view in browser." The e-mail's first line should be smart and have the person's name."
  • Use leads such as the "likes" on FaceBook and other social media as an opportunity to do business. "We buy from people we like." Treat these as an opportunity for customer acquiring and retention, he concluded.

Irving CUs can improve credit card operations

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SAN DIEGO (6/21/12)--Credit unions can improve their credit card programs through better operations and  management programs, improved marketing and avoiding some common mistakes, Ondine Irving, owner and founder of Card Analysis Solutions--an advocate for credit unions in card program management--and credcardcconnections.org, told a Discovery breakout session  Wednesday at America's Credit Union Conference in San Diego.

The Discovery breakout sessions are sponsored by CUNA Mutual Group.

Looking at the 2012 credit card  payment  landscape, 53%  of U.S. credit unions--3,740 out of 7,094--issue their "own' credit card program. That generates $37.3 billion in credit card loans, Irving said.

Although credit card loan growth has declined to 2.8% in 2011 from 12.5% in 2006, Irving said, 2012 is the "year of credit: as more consumers are being approved for credit, and credit unions can compete well against common bank card fees. 

In terms of operations and product structure, some common  mistakes that credit unions make include:

  •  Multiple programs (too many to manage);
  • Low and outdated fee structure;
  • Lack of outgoing management of card program;
  • Credit union employees not given a card, so they can't be expected to sell it;
  • Over-reaction to delinquencies and charge-offs; and
  • A weak website presence, making it hard to find credit card information.
What the best-run credit card programs have in common, Irving said are a commitment from management; fair and ethical program structures; a product champion; willingness to take risk; and ongoing education.

"Make sure your card program is not an orphan," Irving said. "Determine who has responsibility. The characteristics of a good card-product owner include someone who is part operational management and part analytical management."

A credit union's credit card program should look like this, Irving said:

  •  A platinum card;
  •  Fixed rates (at least one);
  • Risk-based pricing;
  • No balance-transfer fees;
  • No penalty pricing;
  • A late fee that is than $25;
  • No annual fee;
  • Strong credit lines; and
  • Optional rewards.
Credit unions should average $75 to $100 annual net income per account, Irving said. Some other benchmarks for where credit unions' credit card numbers should be include a ratio of credit card loans to total loans of at least 10%; an active account percentage of 65%; an average credit line of at least $7,500; and less than a 2% charge-off rate.  

The mix of credit card revenue should be 70% from finance charge income, 15% from interchange income, and 15% from fee income, Irving said. 

"I recommend that you do a fee audit because many credit unions are missing late-fee income," Irvin said, adding that credit unions should verify the late-fee grace period with their processor to make sure the system parameter is reflecting disclosure information.

Regarding marketing guidelines, Irving said credit unions should focus on the specific needs of their portfolio; not what everyone else is doing or what the processor wants to sell to you.

Also, all new members should automatically get credit cards as part of their membership and shouldn't have to ask for one. And finally, credit unions need to make certain there is a good website presence for their credit card, Irving concluded.

CU sustainability A long-term model for success (06/20/2012)

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SAN DIEGO (6/21/12)--A challenge for credit unions is that they have a dual mandate to maximize member benefits but also to measure a return on assets (ROA).

In a cooperative world where those two mandates are in competition, sustainability is a harmonious No. 1 priority, Mike Higgins Jr., a consultant for credit unions and community banks, told a breakout session Tuesday at America's Credit Union Conference (ACUC) in San Diego. The ACUC ended Wednesday.

Higgins, who authored a white paper for the Filene Research Institute on the topic of strategic growth and budgeting and is an applied research adviser with the institute, said, by contrast, banks have just a singular profit mandate to maximize ROA.

"Sustainability is the degree to which the credit union can support its long-term survival and create recurring member value and job security," Higgins said. 

Member value involves favorable pricing, member participation, expense efficiency, and avoiding excessive credit losses, he added. 

"Three keys to credit union sustainability are a strong balance sheet at reasonable rates, staying efficient and keeping credit losses in check," Higgins said.

Evaluating performance involves looking at top-line net revenue--the gross profit margin in net sales; operating expense--the efficiency (expense) ratio, which is personnel and other expenses divided by net revenue; provisions for loan-loss expense; and "noise," which is an extraordinary gain or loss in income or expense.

"Creating value is simple," Higgins said, listing these steps:

Establish a target net revenue ROA (mix/rates);

Establish a target efficiency ratio;

Establish a target for credit losses;

Manage to targets (start moving the needle); and

Don't get distracted; stay focused.

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Nebraska court Consumer lacks status in ATM case

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OMAHA, Neb. (6/21/12)--A U.S. District Court has ruled that a plaintiff lacked constitutional standing to file a claim against a financial institution for violating Electronic Funds Transfer Act (EFTA) as it applies to fee disclosure notices on the ATMs.

In determining that plaintiff Jarek Charvat lacked constitutional standing to file suit against First National Bank of Waterloo (FNBW), Judge Laurie Smith Camp of the U.S. District Court for the District of Nebraska noted that the plaintiff suffered no injury.

The court said that constitutional standing requires "more than just an injury-in-law, but instead an injury-in-fact."

Charvat did not allege an injury in fact to satisfy the constitutional minimum requirement of standing.

"This court agrees that the EFTA should be construed broadly in favor of the consumer, but the provision for actual and statutory damages in the EFTA does not automatically mean that a litigant is entitled to damages when he has alleged no injury in fact," the court said in making the ruling.

Under EFTA, an ATM operator who imposes fees on consumers for electronic fund transfers is required to post two notices, one on or at the ATM, and another on the screen of the ATM. Charvat claimed that FNBW failed to provide notice on or at the ATM, but did not allege failure to provide an on-screen notice or that he suffered any injury-in-fact at all, the court said.

CUs only scratching surface on member needs

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SAN DIEGO (6/21/12)--Members' financial needs generally run deeper than the purchase of a single product, and credit unions need to tap into those opportunities or competitors will, attendees of CUNA's America's Credit Union Conference were told Tuesday.

Click to view larger image David Polet, CUNA Mutual Group's Voice of Customer program manager, offers insight on how to deepen member relationships during a Discovery breakout session at the Credit Union National Association's America's Credit Union Conference on Tuesday. (Photo provided by CUNA Mutual Group)
David Polet, CUNA Mutual Group's Voice of Customer program manager, told a Discovery breakout session that research shows a product purchases can lead to other opportunities that will deepen the relationships and provide unmet needs. For instance, members might re-evaluate their auto insurance if they bought a new car, Polet suggested. That might lead them to consider bundling that insurance with their homeowners coverage.

"Research shows members are looking for financial reviews and money management tools from their credit unions," Polet said. "Credit unions can't be passive about making members aware of what they offer. Given that two out of three dollars members spend on consumer loans are being borrowed elsewhere, it behooves credit unions to aggressively make members aware of what they have to offer."

A single transaction can provide credit unions with indicators of other needs the member might have, Polet said. "For example, if they purchased life insurance in the last two years, research shows more than 60% of those new policyholders say they would be open to advice from their credit union on eliminating debt."

One of the keys to identifying member needs is through member data, Polet said. Data indicate whether a member has a loan elsewhere and whether it might be worthwhile to initiate a loan recapture program to retrieve some of those outside loans.  Accessing that data "provides you with fodder for conversations on how to gain a bigger share of their business," Polet said.

Key to identifying members' additional needs are front-line employees. "Employees who ask the right questions of members can provide a multitude of opportunities that will benefit the member and credit union," Polet said. Those interactions are vital to prevent "leakage" of business to other financial institutions.

"Members have shown a willingness to work with their credit unions," Polet said. "However, they aren't aware of how their credit union can work for them."

CU sustainability A long-term model for success

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SAN DIEGO (6/20/12)--A challenge for credit unions is that they have a dual mandate to maximize member benefits but also to measure a return on assets (ROA).

In a cooperative world where those two mandates are in competition, sustainability is a harmonious No. 1 priority, Mike Higgins Jr., a consultant for credit unions and community banks, told a breakout session Tuesday at America's Credit Union Conference (ACUC) in San Diego. The ACUC runs through today.

Higgins, who authored a white paper for the Filene Research Institute on the topic of strategic growth and budgeting and is an applied research adviser with the institute, said, by contrast, banks have just a singular profit mandate to maximize ROA.

"Sustainability is the degree to which the credit union can support its long-term survival and create recurring member value and job security," Higgins said.

Member value involves favorable pricing, member participation, expense efficiency, and avoiding excessive credit losses, he added. 

"Three keys to credit union sustainability are a strong balance sheet at reasonable rates, staying efficient and keeping credit losses in check," Higgins said.

Evaluating performance involves looking at top-line net revenue--the gross profit margin in net sales; operating expense--the efficiency (expense) ratio, which is personnel and other expenses divided by net revenue; provisions for loan-loss expense; and "noise," which is an extraordinary gain or loss in income or expense.

"Creating value is simple," Higgins said, listing these steps:

  • Establish a target net revenue ROA (mix/rates);
  • Establish a target efficiency ratio;
  • Establish a target for credit losses;
  • Manage to targets (start moving the needle); and
  • Don't get distracted; stay focused.
Keep up with events at ACUC by following it on Twitter via #ACUC.

NEW Federal Reserve to buy 267 billion in Treasuries

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WASHINGTON (UPDATED: 2:20 P.M. ET, 6/20/12)--The Federal Reserve's Open Market Committee today said it would extend "Operation Twist" by purchasing $267 billion in long-term Treasuries to reduce borrowing costs for American consumers and businesses.

Operation Twist, established by the Fed last September, is intended to extend the average maturity of its holdings of securities.

"The committee intends to purchase Treasury securities with remaining maturities of six years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately three years or less," the Federal Reserve said in a statement released this afternoon. "This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative."

The committee--the Federal Reserve's monetary policymaking group--also said it would maintain the federal funds rate at 0% to 0.25%.

Business investment has increased, the committee said.  Household spending is rising at a slower pace than last year. The housing sector has shown signs of improvement but remains "depressed," the committee said.

Inflation has declined, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

Economic growth is expected remain moderate and then to pick up very gradually, the committee projected. It also anticipated that the unemployment rate will decline slowly.

Troubles with the European market are expected to pose significant downside risks to the U.S. economic outlook, the committee said.

Embrace members to thrive in economy

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SAN DIEGO (6/20/12)--To thrive in today's economy, credit unions need to develop their sales culture to be member-centric. A panel of credit union leaders told an America's Credit Union Conference (ACUC) Discovery breakout session audience Tuesday that credit unions must work harder to meet the needs of current and future members. The ACUC runs through today.

John Cassidy, president/CEO, Sierra Central CU of Yuba City, Calif., and Dan Sutton, chief operating officer, Kemba CU of Cincinnati, Ohio, engaged ACUC session attendees in a conversation about applying best-practice strategies to achieve above average financial results in a constantly changing environment by sharing their experiences with their credit unions. Bob Larson, financial support consultant, CUNA Mutual Group, facilitated the discussion.

"You will do better in today's economy by focusing on what you can control, not on what you can't control." Cassidy said. "Understand your credit union's strengths and weaknesses and the market's strengths and weaknesses then develop a strategic plan keeping that information in mind and stay focused."

Cassidy warned that credit unions must avoid reacting from one news event to the next. It's important to transition from a "worst case scenario" mindset to a positive one, Cassidy added. "Achieving balanced financial performance requires: focus, communication, and efficiency," Cassidy said.

Sutton echoed Cassidy's words. "You must stay disciplined to your strategy. Do not get greedy. Follow your strategic plan and stay the course," Sutton said. Keep in mind; you're dealing with the members' money," Sutton added.

Striving to be efficient should always be top of mind during a difficult economy, but be careful to cut the right expenses. "Having the right people in the right job can make all of the difference in the world," Sutton said.

"And don't forget to tell your credit union's story," Sutton added. "One of the keys to our success was adjusting our sales culture to tell 'the Kemba Credit Union story' and then living it by being a member-centric organization." This change allowed the credit union to increase services per member.

Cassidy and Sutton agreed that in order to have a balanced financial performance you must show up on time, give 100% and have fun. "Doing these things combined with a positive outlook and understanding what you can control will do more for your credit union than focusing on worse-case scenarios," said Sutton.

Larson wrapped up the session by recommending attendees read CUNA Mutual's latest "Credit Union Trends Report" to stay on top of the challenges facing credit unions today. 

Keep up with events at ACUC by following it on Twitter via #ACUC.

ACUC Achor--Train your brain for happiness success

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SAN DIEGO (6/20/12)--People can rewire their brains for higher levels of happiness--and in the process become more successful in business and relationships, Shawn Achor told America's Credit Union Conference (ACUC) attendees Tuesday morning.The ACUC runs through today.

People can rewire their brains for higher levels of happiness--and in the process become more successful in business and relationships, Shawn Achor told America's Credit Union Conference attendees Tuesday morning. He cited three main predictors of happiness: an optimistic mindset, social support, and the ability to see stress as a challenge instead of a threat. Achor is author of The Happiness Advantage: Linking Positive Brains to Performance. (Photo provided by CUNA)
Achor, author of "The Happiness Advantage" and former Harvard professor, conducts research on the link between happiness and success. He found three main predictors of happiness: an optimistic mindset, social support, and the ability to see stress as a challenge instead of a threat.

"Happiness is the precursor to success--not the result of it," Achor said. "People will say things like, 'I'll be happy when I lose 20 pounds.' But that doesn't work.

"Our formula is broken: If I work harder now, I'll be more successful, and then I'll be happy," he continued. "But that's placing happiness at the opposite side of success."

In the workplace, happiness leads to better business outcomes. Achor's research has shown that optimists at work had:

  • 37% greater sales;
  • Three times more creativity;
  • 31% more productivity;
  • 40% greater likelihood of being promoted;
  • 23% lower fatigue symptoms;
  • Up to 10 times more engaged in their jobs; and
  • 39% more likely to live to age 94.
 

Achieving and maintaining long-term happiness requires training your brain to focus on positive patterns, Achor said. He cited five steps people can take to become happier:

  • Three gratitudes. Each day, write down three new things that happened during the previous 24 hours for which you're grateful.
  • The Doubler. For 21 consecutive days, write down one meaningful thing that happened to you during the previous 24 hours. "This changes us from being task-based to meaning-based," Achor said.
  • Fun 15. Participate in 15 minutes of active and mindful activity each day, such as walking or gardening. Doing this every day for the long-term has the same effect on the brain as an anti-depressant.
  • Meditation. For two minutes a day, focus only watching your breath go in and out.
  • Conduct acts of kindness. Send an e-mail to a friend or relative each day to recognize, praise, or thank them. This helps build up social networks.
"The lack of a social network has the same effect on your health as smoking and heart disease," Achor said.

People who follow these steps for 28 days experience physical changes in their brains, he added. "These things sound like tips and tricks, but they're the building blocks of developing positive patterns."

Building positive patterns and creating social networks can lead to success in business: Those who have strong social support are 10 times more engaged at work than those without it, and they're 40% more likely to be promoted.

"If you give to the social support you reap an advantage not only in terms of happiness, but a financial one as well," Achor said. "The more we smile, the more optimistic we are, and the more we're positive actually ripples out to other people around us--our co-workers, our family members, and our customers."

Keep up with events at ACUC by following it on Twitter via #ACUC.

Hogshead Fascination can help CUs build their brand

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SAN DIEGO (6/20/12)--When a brand such as a credit union fascinates people, they will pay up to four times more for it, make greater efforts to find it, have higher engagement with it and they will stay more loyal, keynoter Sally Hogshead, marketer and author of the book FASCINATE, told America's Credit Union Conference (ACUC) Tuesday in San Diego.

Click to view larger image When a brand such as a credit union fascinates people, they will pay up to four times more for it, make greater efforts to find it, have higher engagement with it and they will stay more loyal, keynoter Sally Hogshead, marketer and author of the book FASCINATE, told America's Credit Union Conference Tuesday in San Diego. (Photo provided by CUNA)
 

The ACUC runs through today.

"Fascination is an intense emotional focus," said Hogshead, the creator of The F-Score, the first personality test to measure exactly how a person fascinates. Fascination is when your brain is completely focused on one thing and is not distracted. Hence, we can realize our greatest achievements and be the most effective, similar to when an athlete is "in the zone," she explained. 

"Your brain is hardwired to fascinate and your brain is hardwired to be fascinated," Hogshead said. Marketing adds fascination to a brand and adds value, resulting in the four outcomes previously mentioned. By tapping into the seven triggers of fascination, credit unions can command the attention of members to get on the path to building trust, loyalty and bottom line-line growth. 

"However, being the best is not enough if nobody notices or cares," Hogshead added. She then listed the seven triggers of fascination.

  1. Power--Take command;
  2. Passion--Attract with emotion;
  3. Mystique--Arouse curiosity;
  4. Prestige--Increase respect;
  5. Alarm--Create urgency;
  6. Rebellion--Change the game; and
  7. Trust--Build loyalty.
"Every time you communicate, you are using one of these seven triggers," Hogshead explained. "The question is, are you using the right trigger in the right way to get your [desired] results."

She went on to explain that everyone is born with a primary trigger. When that trigger is combined with one of the seven secondary triggers (which are the same), there are 49 different personality combinations--all individually named--of how people fascinate the world around them, her research shows.

For example, the primary Power trigger combined with the secondary Passion trigger results in The Ringleader (Richard Branson); Power plus Trust creates The Guardian (Warren Buffett); Power and Mystique yields The Mastermind (Mark Zuckerberg).

For a credit union, understanding the 49 personality types can help place people in the right place in the organization, she said.  

Hogshead said organizations such as credit unions can hire the right person with these primary triggers associated with these roles and working traits:

  • Power: Decision-maker with big goals;
  • Passion: Relationship builder with consistency;
  • Mystique: Solo intellect behind the scenes;
  • Prestige: Over-achiever with high standards;
  • Alarm: Precise detail manager;
  • Rebellion: Innovative problem-solver; and
  • Trust: Stable team player.
Credit unions should think long-term about how they can serve a member one year from now and 10 years from now, Hogshead said. "The greatest value you can add [with your organization] is to be more of yourself," she concluded.

Keep up with events at ACUC by following it on Twitter via #ACUC.

2012 elections have implications for CUs

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SAN DIEGO (6/20/12) --Using hand-held devices to electronically record their votes, credit unions attending Tuesday morning's Thought Leader session, entitled "2012 Elections: Implications for Credit Unions," had a chance to weigh in on the elections, the economy and how those factors affect their credit unions at America's Credit Union Conference (ACUC).

Click to view larger image Credit Union National Association (CUNA) Chief Economist Bill Hampel, far left,  sums up a forecast for credit unions during a Thought Leader Session Tuesday morning on the "2012 Elections: What's the Implication for Credit Unions?" during America's Credit Union Conference. Other panelists were, from left, Richard Gose, CUNA senior vice president of political affairs; Mike Schenk, CUNA vice president of economics and statistics; and moderator Ryan Donovan, CUNA's senior vice president of legislative affairs. (Photo provided by CUNA)


The conference, in San Diego through today, was presented by the Credit Union National Association (CUNA). The session, moderated by Ryan Donovan, CUNA's senior vice president of legislative affairs, featured Bill Hampel, CUNA chief economist; Richard Gose, CUNA senior vice president of political affairs; and Mike Schenk, CUNA vice president of economics and statistics.

The session began with audience members voting electronically on a series of questions related to the elections and national political atmosphere and the economic environment. (For the record, the question that prompted the biggest laugh in the room asked the credit unions whether they approved or disapproved of the job Congress is doing.) The panelists then compared the audience's results with national findings.

Lesson learned: the economy will have an impact on the elections, or the elections will have an impact on the economy, or both.

Hampel noted the Consumer Confidence Index, which bottomed out in 2009 during the recession at 25--the lowest ever--now is in the mid and low 70s.  "The consumer in general feels better than four years ago, but not as good as before the recession," he said.  The recession was mostly concentrated in areas where the real estate industry collapsed.

Credit unions, which had operated more prudently going into the recession, were not as exposed to its effects, he said. Prior to 2007, the safest thing on the books, besides Treasury bills, was real estate.  The charge-offs in real estate have increased loan losses for credit unions. Credit unions' net income during 2008-2009 was essentially zero, and net capital to assets is rising and is up to 10%.

Gose told the packed audience that 41% of voters are credit union members, and that credit union CEOs tend to be slightly more Republican, while board members are slightly more Democrat, he said. The upcoming election will be interesting, since most people are more conservative on financial issues than on social issues.

He noted that 79% of those polled in the national survey disapprove of the job Congress is doing. "It's never been that high. About 43%-44% is the highest I remember." A rating in the 40s "is a fairly good number."

In the presidential election, the winner needs 270 electoral votes, said Gose. Currently, President Barack Obama  has 227 electoral votes (36 states) leaning his way, while Republican presidential candidate Mitt Romney has 191 electoral votes. Nine other states, or 120 electoral votes, are a toss up, he said.

Hampel said the unemployment rate is very high (8.2%) and usually when the rate is high, it is very hard to re-electe an incumbent president. No incumbent since Franklin Delano Roosevelt has been re-elected with an unemployment rate above7.2%. However, the rate has been falling since the economy turned and could be sufficient for a re-election, he said.

How to reduce the $1.3 trillion deficit--whether to cut spending or increase taxes--will be a factor in the election as well as the 8.2% unemployment rate, the panelists said.

Schenk told attendees that Bank Transfer Day brought significant membership growth to a lot of credit unions, although some have experienced declines or have not grown a lot. Overall, from September to March, credit unions gained 1.1 million in new members, a 3.4% annual growth rate and three times the normal 300,000-member growth.

"Nonmembers are discovering the good things that credit unions do, despite how tough the [economy] was," said Schenk. "Credit unions behaved as credit unions historically have behaved during the downturns. Credit unions are different from the for-profit sector in that we make loans and are a safe haven for consumers' savings growth."

Inflation likely will average around 2.13% over the next two years. The Fed has kept the federal funds target rate at almost zero for three years, Hampel noted, saying that the Fed never said it would not raise rates until 2013 but instead engaged in a negative forecast, saying the Fed expected the economy to remain weak until that time.  "If the economy gathers momentum faster, the Fed likely will raise interest rates faster," Hampel said. Historically, data indicate the nation will avoid another recession. However, "the Fed is firmly planted on the accelerator."

Schenk noted two big risks:  the federal budget deficit and the Eurozone's economic woes. Early in 2013 (after the election), the variety of spending cuts and tax cuts spurring the election will go away, and "that could have a dramatic effect on the economy. If the Congress or the president does nothing, it would be a $600 million or 4% hit to the economy, and that can clearly put us into a recession. Hopefully cooler heads will prevail."

Europe's financial crisis could be a big risk on the financial market, said Schenk. "The so-called experts [on foreign economies] have no idea what the effects could be." Exports  are 14% of the U.S. gross domestic product and exports to Europe are 20% of total exports. A 20% decline would be a 0.6% hit to the economy, he said. Schenk also noted that Europe's institutions finance trade in developing nations, which could result in significant supply disruptions. U.S. companies depend on imports, he added.

"The big risk is that there is no data on the financial interconnections of the world economy and Europe" impact on the U.S. market.

Hampel summed up a forecast for credit unions:  Expect improving loan growth, stable savings growth, improved net income, lower loan loss provisions, some net interest income, non-interest income threats and opportunities, and lower Corporate Stabilization Assessments.

Follow ACUC's events on Twitter at #ACUC.

Mercer to ACUC Good wont be good enough

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SAN DIEGO (6/20/12)--Credit unions are good at what they do. But is that enough?  Credit Union National Association (CUNA) Board Chairman Mike Mercer used sports analogies to urge credit unions to take further steps to secure their place in the future, during his speech Tuesday morning at America's Credit Union Conference (ACUC)  in San Diego.

Click for slide showCredit Union National Association (CUNA) Board Chairman Mike Mercer, speaking at CUNA's America's Credit Union Conference in San Diego Tuesday morning, noted that credit unions should aim for nothing less than being the premier financial partners for American citizens, and to do that, "Good won't be good enough." Mercer, president of the Georgia Credit Union Affiliates, compared credit unions to playing well enough to get in the playoffs, but not winning the big game. (Photo provided by CUNA)
 

"Good won't be good enough," said Mercer, who is the president of the Georgia Credit Union Affiliates. He spoke at the morning's general session. He likened the movement to very good sports teams that make it to the playoffs but haven't yet won the big game.

"In some ways, being good is worse than being bad," he said. "If you're bad, you have the license to make change--big changes. If you're good, it's 'well, let's not mess with things,' or 'we'll just work a little harder next year.'" It's not about the history of results but more about the attitude for approaching the future and doing "what it takes to win it all," Mercer told the group.

Credit unions have had impressive victories, such as surviving the great recession in good shape, handling the "corporate network solvency problems without affecting public confidence," being recognized by high profile consumer advocates, and being "named beneficiaries of the Bank Transfer Day uprising.

"But we're having trouble winning the play-offs.  There's not much noticeable gain in market share; we're not that exciting to Gen Y or so they say, we're burdened by regulation, we're confined by internal capital growth rates; and we're obstructed by  banks, retailers and Wall Street muscle in Washington," Mercer told attendees.

"Does being good for decades keep us from doing what it takes to be great? Keep us from claiming big chunks of new market share? Keep us from leveraging the buying power of 90 million members?" Mercer asked, adding, "These will be the pivotal questions for our generation of leaders in American cooperative finance," Mercer said.

In other countries, cooperatives are devoting themselves to the challenge of wealth accumulation for their members. "They are committed to empowering people through the development of cooperative business organizations. When I look at these other cooperative systems, it's not just their results which are spectacular, it's the audacity of their vision for the future. It's their attitude that 'We're going to solve big problems that make a difference to lots of people,'" he said. "Where will we choose to become the best?  The unquestioned leader of the pack?"

"The good won't be good enough'' frame of mind should also be applied to the CUNA league support system. "The leagues and CUNA exist fundamentally to project influence outside the credit union world and to cause consensus inside. One can't be done without the other."  Without consensus, he said, "there can be no meaningful influence.

The system has been good for decades, he said, citing accomplishments on share drafts, the tax exemption, field of membership, and member business lendings. CUNA and the leagues have deflected Community Reinvestment Act, obtained carve-outs for most credit unions in the Dodd-Frank Act although that work isn't done yet, fixed troublesome provisions in the Credit CARD Act, turned back the Internal Revenue Service's unrelated business income tax and others. There's enough good to rationalize any degree of resistance to change, he added.

"There are still formidable players that can roll us under the right circumstances--trial lawyers, retailers, Wall Street interests, insurance lobbyists and others. I don't think the banks can roll us, but they have had some success in blocking us. Generally, credit unions are respected in government, but not feared," he said.

"We can't play at the same level by working harder using the same techniques. The trend toward fewer and larger credit unions is changing the dynamics of consensus formation inside the credit union world. Like credit unions, CUNA and the leagues will have to embrace a strategic perspective grounded in the conviction that 'good won't be good enough,'" he said. To that end, he praised CUNA CEO Bill Cheney's initiative to develop a longer term strategic vision for the credit union system, which Cheney outlined in his remarks to the ACUC the previous day.

New structures that foster greater interdependence--not independence--should be designed for the future framework of consensus building. Big ideas that address major problems affecting millions of people should be cultivated, metrics for evidence of success should be embraced, and credit unions should aim for nothing less than being the premier financial partners for American citizens,'" he concluded.

ACUC, which is presented by CUNA, ends today. Keep up with this morning's activities on via #ACUC on Twitter.

Plan to migrate to chip technology

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SAN DIEGO (6/20/12)--Credit unions issuing debit or credit cards should plan to migrate to chip technology soon or risk becoming less competitive and more vulnerable to traditional magnetic stripe fraud, three speakers told an America's Credit Union Conference Discovery breakout audience Monday.

The conference, hosted by the Credit Union National Association, runs through today.

Click to view larger image Three Discovery Breakout Session leaders at America's Credit Union Conference in San Diego offered their perspectives on chip technology but agreed it's time for credit unions to move away from the magnetic stripe. From left are: Leanne Phelps, senior vice president of card services at State Employees' (N.C.) Credit Union, Raleigh, N.C.; Ann Davidson, CUNA Mutual Group senior consultant, Risk Management: and Hap Huynh, business leader, Chip Infrastructure Management with Visa. CUNA Mutual Group sponsored the 17 breakouts. (Photo provided by CUNA)
Ann Davidson, CUNA Mutual Group senior consultant, risk management; Hap Huynh, business leader, chip infrastructure management with Visa, and Leanne Phelps, senior vice president of card services at State Employees' CU, Raleigh, N.C., agreed it's time for credit unions to move away from the magnetic stripe.

"The U.S. is the last country in the world to convert to chip technology across its payment structure, which has made us the magnetic stripe fraud hot spot for criminals worldwide," Davidson said. "We're easy money."

The Secret Service reports magnetic stripe skimming cases have risen by 10% during the past three years. In addition, Nilson Report research indicated U.S. card fraud losses are more than twice as much as global fraud losses --nine cents compared to 4.5 cents for every $100 in transactions.

Migrating to Euro MasterCard/Visa (EMV) contact and contactless chip technology will help combat card-present magnetic stripe fraud. "By having chip technology as an additional payment option, credit unions will likely experience a significant decrease in counterfeit magnetic stripe fraud provided their cardholders use the chip capability on the card," Davidson said.

Chip technology offers various options for credit unions including chip and PIN or contactless technology (Visa payWave/MasterCard PayPass).

Huynh explained how chip technology works, emphasizing it is safer than the antiquated magnetic stripe, and it paves the way for innovation. "Dynamic authentication employs unique data in each transaction, which enhances security," he said. "The standard chip fields also support mobile near-field communication and contactless and contact chip transactions."

Other forces are pressuring card issuers to make the switch. Visa announced last August plans to accelerate the migration to EMV chip technology in the U.S., MasterCard also announced all Maestro ATM transactions occurring in the U.S. will need to be compliant with EMV standards to avoid a liability shift.

"If the acquiring entity does not support the chip transactions, they may be financially liable for magnetic stripe fraud," Huynh said. Visa's liability shift to the acquirer is Oct. 1, 2015 (Oct. 1, 2017 for fuel merchants), while MasterCard's shift of liability to the ATM owner for Maestro transactions is April 2013.

"When merchants become responsible for fraud losses, many will opt to no longer accept the increased risk of accepting magnetic stripe transactions," Huynh said. "If you're not offering chip technology, your cards may not be accepted, which will create PR and member service issues and put your credit union at a competitive disadvantage."

U.S. cardholders are already finding it increasingly difficult to use their magnetic stripe cards in foreign countries.

Credit unions that have deployed chip technology anticipate eliminating their risk to magnetic stripe fraud when cardholders fully utilize the chip capability. State Employees' CU successfully started its switch to chip technology in 2011 for more than 1 million debit cards, Phelps said. The credit union is currently migrating their existing credit cards.

Davidson and Phelps emphasized employee and member education is key to a successful migration to chip technology. They advised developing print and online educational information that help members understand how chip technology works when performing a transaction.

Accelerating the deployment of chip technologies will create a much more secure payment environment, Davidson said.  It will also continue to move the U.S. payment system toward using mobile payments by building the necessary infrastructure to accept and process chip transactions that support either a signature or PIN at the point of sale.

"Plan your migration now," Davidson said. "Early adopters will minimize their risks, and those that wait will put themselves at risk because they'll be the most vulnerable to fraud."

Corporate Central CU announces board election results

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MUSKEGO, Wis. (6/20/12)--Corporate Central CU, Muskego, Wis., announced the results of its board elections at its recently held annual meeting.

Because the corporate credit union received no additional board nominations, directors declared as continuing board members included:

  • Sally Dischler, president/CEO, Heartland CU, Madison, Wis.;
  • Daniel Ige, Golden Rule Community CU, Ripon, Wis.;
  • James Schrimpf, Brewery CU, Milwaukee; and
  • Ronald Vogel, Fort Community CU, Fort Atkinson, Wis.
 

At the organization meeting held immediately after the annual meeting, the four board members comprising the executive committee were determined. Committee members included:

  • Chairman--Greg Hilbert,  president/CEO, Fox Communities CU, Appleton, Wis;
  • Vice Chairman--Kim Sponem, president/CEO, Summit CU, Madison, Wis.;
  • Secretary-- Vogel; and
  • Treasurer--Schrimpf.

Building a comp plan Consider entire exec team

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SAN DIEGO (6/20/12)--Credit unions must build compensation structures that will maintain the entire executive team and provide stability during a time of transition, said CUNA Mutual Group's Scott Albraccio, executive benefits sales manager, Monday, during a Discovery breakout session at the Credit Union National Association's (CUNA) America's Credit Union Conference. 

Credit unions were urged to consider compensation packages for all C-level executives by Scott Albraccio, CUNA Mutual Group executive benefits sales manager at America's Credit Union Conference, hosted by the Credit Union National Association. (Photo provided by CUNA Mutual Group)
During the next five years, credit unions nationwide will be challenged with the task of replacing their existing CEOs. The CUNA 2011-2012 CEO Total Compensation Survey suggests 21% of credit union CEOs will retire during that time.

To prepare, credit unions should develop proper compensation packages for their top executives, Albraccio said. Deferred compensation plans for C-level executives can create "golden handcuffs" that will encourage them to stay and provide continuity during a transition period if a new CEO joins the team.

Without a proper executive benefits package in place, credit unions risk losing potential CEO replacements to other organizations, competing banks and other credit unions, Albraccio said. "Credit union compensation plans can no longer just focus on the CEO," he added. "We also need to look out for our C-level executives, those that are likely to be the future CEOs."

At the same time, existing CEOs are facing a potential compensation gap when they do decide to retire. The guidelines illustrated by the Employee Retirement Income Security Act (ERISA) restrict the amount of money highly compensated employees can contribute to their 401k compared to lower-compensated employees.

On average, retiring executives receive 38% of their current income upon retirement, whereas frontline employees receive 60% to 65% of their income. Credit unions should begin implementing a supplemental executive retirement plan (SERP) to eliminate the large disparity and avoid the potentially troublesome guidelines of ERISA, Albraccio suggested.

SERPs put credit unions in a position to maintain continuity of strategic decision making while addressing financial needs of senior executives so they can focus on the long-term strategic goals and financial success of the credit union, Albraccio said.

Albraccio also advised attendees to have a formal CEO succession plan in place that has an executive development component along with financial incentives to retain top talent. Only 63% of credit unions have a formal succession plan in place.

Some have a "real" succession plan, while others have what Albraccios termed a "Break in Case of Emergency" plan. The latter is an emergency CEO succession plan that prepares the credit union for the death or rapid, unexpected departure of the CEO. It's a short-term disaster recovery plan to keep the institution going until a new, permanent CEO is hired.

"The 'Break in Case of Emergency Plan' is important, but a true succession plan doesn't choose internal successors to a credit union's top executive positions," Albraccio said. "It prepares internal successors, which provides more stability and consistency with the organization's strategic plan."

Court rules in favor of Philadelphia FCU in ATM suit

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PHILADELPHIA, Pa. (6/20/12)--A federal judge in Philadelphia has dismissed a lawsuit alleging that the fee disclosure notices on the ATMs of Philadelphia FCU violated the Electronic Funds Transfer Act (EFTA) and the Americans with Disabilities Act (ADA).

U.S. District Court Judge Thomas O'Neill ruled that plaintiff Gerald Reviello's claim that the fee notice violates the EFTA should be dismissed because the credit union's signage "complies with the requirements set forth in the EFTA.'' He cited another ruling which stated that the statute and subsequent regulation don't specify the size, features or other attributes for the sign.

In this suit, Reviello alleged he was charged a fee for the transaction and alleged that at the time there was "no clear and conspicuous external notice at or near the ATM that a fee would or may be charged." A similar lawsuit filed by Revello, who is sight-impaired but not legally blind, against Pennsylvania State Employees CU was dismissed by another federal judge in March.

Reviello's lawsuit against Philadelphia FCU, which has assets of $854 million, stems from him having been charged $2 when he used one of the credit union's ATMs on Jan. 31, 2011. In addition to dismissing the EFTA claims against Philadelphia FCU, O'Neill ruled that Reviello lacked sufficient standing to file an ADA claim.

O'Neill noted that Reviello had never been to the ATM before and lived far enough away from the machine that he was unlikely to use it again. He concluded that Reviello's "proximity to the ATM in question does not clearly establish a likely intent to return.'' This is relevant because when ruling  if a plaintiff has standing, a judge must determine whether the plaintiff has "alleged that he is likely to return to the place of the alleged  ADA violation,'' O'Neill wrote.

The judge gave Reviello two weeks to file an amended complaint to establish standing and can "allege standing and can allege sufficient facts to show that he had no notice of the ATM fee or was unable to complete his transaction.''

A rash of lawsuits in 2010 prompted CUNA Mutual Group to warn credit unions to develop and write procedures for regularly inspecting their ATMs to ensure their signs are posted, to photograph the ATMs at the time of inspection, and to maintain the inspection log for all ATMs and have credit union management review the log.

The House Financial Services Committee is scheduled to vote June 27 on a bill to ease the current ATM fee disclosure regulations, which are, in some cases, leading to bogus lawsuits against ATM operators.

PCUA to present Better Choice at payday lending program

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HARRISBURG, Pa. (6/20/12)--The Pennsylvania Credit Union Association (PCUA) has been invited to present its Credit Union Better Choice Program at a Ford Foundation Payday Loan Reform and Consumer Credit Innovation Convene at the Federal Reserve of Chicago, July 12-13.

The invitation-only event will be hosted by the Center for Financial Services Innovation, the Center for Responsible Lending, the National Federation of Community Development Credit Unions, and Woodstock Institute (Life is a Highway June 19).

Mike Wishnow, PCUA senior vice president, will provide an overview of the program at the convene.

"For more than five years, credit unions in Pennsylvania have been providing affordable short-term, small-dollar loans to their members using the Credit Union Better Choice program," said PCUA President/CEO Jim McCormack. " The money saved by these consumers is hard-earned dollars back into the family budget."

More than 53,000 Credit Union Better Choice loans have been issued to credit union members for short-term cash needs since the program was initiated in 2006. Through the 79 participating credit unions statewide, 53,714 loans totaling nearly $26 million dollars have been originated.

The program has saved borrowers more than $18 million over using a traditional payday lending product, PCUA said.

Two W. Va. CUs settle ATM lawsuits

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PARKERSBURG, W. Va. and RAVENSWOOD, W. Va. (6/20/12)--Two West Virginia credit unions have reached settlements with a Michigan retiree who has filed nearly 40 lawsuits against financial institutions alleging they violated the Electronic Funds Transfer Act (EFTA) by failing to post notices of ATM surcharges.

Mountain Heritage FCU, Parkersburg, and Ravenswood (W. Va.) FCU reached separate settlements with Nancy Kinder. The cases were dismissed without prejudice by the U.S. District Court, Southern District of West Virginia, according to the court settlement documents

The amount of the two settlements was not disclosed.

In April, two Michigan credit unions, ACC Community CU in Grand Rapids and Lenco CU in Adrian, had settled separate ATM class-action lawsuits brought by Kinder (News Now April 25).

In the Michigan settlement, both credit unions have agreed to pay nonmember users of specific ATMs up to $250 to settle EFTA violations. Each credit union also will pay $1,000 to Kinder and $15,000 in legal fees. Lenco CU agreed to set aside $23,500 to satisfy potential claims.

Kinder and Ray Harrison of Fowlerville, Mich., have traveled around the country in search of ATMs without proper fee notification signs. The couple then photographed ATMs that did not have legal signage and filed class actions against the credit unions and banks that own the ATMs, saying that nondisclosure of fees for ATM transactions violates EFTA, according to court records. In 2010 and 2011, Kinder and Harrison filed dozens of lawsuits in Michigan, New Mexico and Texas (News Now May 24).

The EFTA requires ATM owners to post a fee notice on the outside of their machines.

Gen Y merits different approach from CUs

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SAN DIEGO (6/19/12)--To reach Young Gen Y members, credit unions need to take a different- than-mainstream approach, Josh Allison, founder and chief ideator, Think Café Consulting, a credit union consulting company, told America's Credit Union Conference (ACUC) in a Discovery breakout session Monday.

Click to view larger image Gen Y lives in a Marketing 3.0 human-centric world in which all products are considered equal, and values are the new differentiator, Josh Allison, founder and chief ideator, Think Café Consulting, a credit union consulting company, told America's Credit Union Conference in a Discovery breakout session Monday. He said credit unions should stop talking about themselves, invite collaboration and communicate the purpose behind what they are doing. "If you sell an authentic idea, young people who believe in the idea will become advocates for the brand," he explained. (Photo provided by CUNA)


The conference,  presented by the Credit Union National Association, runs through Wednesday in San Diego.

Today, there is a consumer awareness crisis because 70% of those aged 18-24 are not familiar with credit unions. That age group constitutes only 9% of all credit union members, Allison said.

There are several reasons for this, he explained. Credit unions are just one of many options amid  a wide array of financial services companies, banks and Walmarts. There also is a blurred vision proposition with everyone in the market saying "we are better" or "we have a better product."

However, the real key is that Gen Y lives in a Marketing 3.0 human-centric world in which all products are considered equal, and values are the new differentiator, Allison explained.

"Gen Y believes in self-reflecting products," he added. "They like products that reflect their own values. So what can credit unions offer that other for-profit financial institutions cannot? Purpose."

The values of Gen Y/Millennials are:

1) Optimism/confidence;

2) Diversity;

3) Variety and multi-tasking;

4) Flexibility/upward mobility; and

5) Social responsibility.

Characteristics of a brand targeted to Gen Y are: simple, quirky, happy and committed to social causes, Allison said. However, he offers some caveats.

"Youth education does not equal youth recruitment," he said. "Just because you're winning Desjardins awards, doesn't mean you're gaining youth members."

Also, about 74% of young adults use social networks to talk about products with friends and make recommendations. But only 12% want to "friend" a brand. "So, social media is not the answer in itself," Allison noted.

How do you create advocacy with young consumers? Give them something they can believe in, Allison said.

He then played a clip of an Apple ad in which its late founder Steve Jobs never mentioned a product trait or anything about what Apple was selling, but rather focused on values people need to embrace in a changing world. Nike and Firefox are other companies that have often advertised by promoting values rather than product features, he added.

"Credit unions can do the same thing," he said. "Stop talking about auto-loan rates and illustrate an idea worth believing in. One thing credit unions can give Gen Y is not just the product, but the idea as well. A key to reaching that generation is being environmentally responsible and socially responsible.

"Invite collaboration and creativity," he concluded. "Credit union brands need to focus on being so relevant that Gen Y will be won over. Stop talking about yourself, invite collaboration and communicate the purpose behind what you are doing. If you sell an authentic idea, young people who believe in the idea will become advocates for the brand."

The Discovery session was sponsored by CUNA Mutual Group. Keep up with events at ACUC by following it on Twitter via #ACUC.

Six principles of Hispanic community engagement

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SAN DIEGO (6/19/12)--The Hispanic population has grown from 14.6 million or 6.4% of the U.S. population in 1980, to 50.4 million or 16.3% in 2010, fueled by high fertility rates, according to Barbara Robles, senior community affairs research liaison for the Federal Reserve Bank.

"This is driven not by immigration but by national fertility rates," she said, speaking at the Network of Latino Credit Unions & Professionals' Seventh Annual Latino Credit Union Conference, held in San Diego in conjunction with the America's Credit Union Conference.

That's important because, regardless of changes to immigration policies, the Hispanic population will continue to grow for generations. And credit unions need to plan accordingly. "Fertility rates tell us this will be the new market," she says.

The top five metropolitan areas in terms of Hispanic population are New York, Los Angeles, Houston, San Antonio, and Chicago.

Latinos are a young group, by and large, with a median age of 27 (versus 42 for whites). More than one-third (35%) of Hispanics are under the age of 18 (versus 23% for whites), attendees at the conference were told.

Many Hispanic households are experiencing a "boomerang" effect, with relatives of all ages living together due to the struggling economy. "We've seen the highest growth in multigenerational households since the 1940s," Robles says. "That opens the window for multigeneration financial services. We need to determine how these households pool their resources, and what products and services to offer these households."

Despite recent economic difficulties--including a staggering unemployment rate (32.2%) among young Hispanics--Latinos' buying power has grown from $210 billion in 1990 to $1.7 trillion in 2012, Robles reports. That's an increase from 5% to 11% of the total U.S. consumer market.

Despite this dramatic increase, many financial institutions are ill-prepared, she says. "What's disturbing about financial institutions is the belief that language is the only piece of the puzzle. You need a cultural competency piece. Financial education is significant, but not the only piece. We need familiarity with the market and financial institutions."

The financial services industry also needs place-based initiatives to better integrate Hispanic communities into the financial mainstream, she says.

Robles outlined several principles of community engagement:

  • Learn about specific cultures in the community, including their needs and issues;
  • Engage "cultural brokers" to introduce you to community advocates and leaders;
  • Be flexible with your agenda;
  • Ensure that community partnerships are reciprocal;
  • Be present in the community; and
  • Understand that relationship-building takes time--and one negative event can destroy all progress.
 

"Volume is the biggest seller of the need to serve this market," Robles says. "If you had the biggest population in your pocket, think what you could do. It's a huge and loyal market."

States with the fastest-growing Hispanic populations are:

  • North Dakota;
  • Oklahoma;
  • South Dakota;
  • Iowa;
  • Vermont;
  • Arkansas
  • Tennessee;
  • South Carolina;
  • Maryland; and
  • Virginia

CUNA Chair Mercer Embrace service to Hispanics

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SAN DIEGO (6/19/12)--Credit unions need to make Hispanic outreach a priority to infuse the movement with much needed youth, said Credit Union National Association (CUNA) Board Chair Mike Mercer, president of the Georgia Credit Union League Affiliates, during the Network of Latino Credit Unions & Professionals' Seventh Latino Credit Union Conference in San Diego Saturday.

Making Hispanics aware of credit unions seemed was a focus at the meeting. Maria Martinez, chair of the network and CEO of Border FCU, Del Rio, Texas, told attendees that when she moved to the U.S. from Mexico, she had no idea what a credit union was--until she started working for one.

Martinez isn't unique in that regard. "Most of my family is still confused with the idea," she told  the conference , which met in conjunction with the America's Credit Union Conference.

Although many Hispanics have had bad experiences with financial institutions in their native countries, that's changing, Martinez said. This change can only help credit unions in the U.S.

"There's a lot of room for credit unions in the Hispanic market," she said. "Hispanics are leaving banks, and that's where credit unions come in. If we do good for them and make them feel wanted, they'll be back--and they'll bring 10 people with them.

There's no use fighting long-term demographic trends, added Lucy Ito, senior vice president of the California and Nevada Credit Union Leagues. According to U.S. Census data:

  • Minority births have outpaced white births in the U.S. for the first time;
  • Hispanic births accounted for 26% of the nation's births;
  • The white population is no longer the majority in 348 of the country's 3,006 counties; and
  • Minorities accounted for 92% of U.S. population growth from 2000 to 2010.
"These are compelling figures--we need to wake up the credit union system to these statistics," Ito said. "We knew this would happen 20 years ago. The future arrived 12 months ago.

"This is a God-send for our country," she adds. "We'll have people to support our seniors--we won't become top-heavy with old people."

Mercer cited several credit union system resources that can help credit unions approach and serve the Hispanic community:

  • The Hispanic Resource Center, which will be housed on creditunionmagazine.com;
  • An updated "quick-start" guide to help credit unions enter this market;
  • The partnership between CUNA and Coopera, the industry's leader in Hispanic outreach;
  • The Juntos Avanzamos program started by the Texas Credit Union League to recognize credit unions' outreach efforts; and
  • El Poder es Tuyo, a Spanish language personal finance website.
Credit unions need to be aware that "the Hispanic community is diverse, with many different nations or origin," Mercer said. "It's not just new immigrants."

Likewise, the Hispanic community needs to know more about credit unions, he added. "We need to educate the Hispanic community about the credit union difference, using financial education as a tool. And we need to recruit bilingual and bicultural staff. This is very important to the credit union movement."

ACUC Tom Peters Stop talking and start doing

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SAN DIEGO (6/19/12)--Stop talking. Start doing. Put people first. That was the essence of  business guru  Tom Peters' presentation Monday at the America's Credit Union Conference (ACUC)  in San Diego. Too often, he says, companies get bogged down in planning and fail to act.

"Stop talking, start doing, and put people first, has been my message for the past 40 years," management guru Tom Peters told America's Credit Union Conference Monday in a keynote presentation. He added that credit unions have enormous potential because they can provide intimacy to members. The author of the best-selling business book In Search of Excellence said he has a 44-year relationship with credit unions, dating back to 1968 when he went to a credit union to obtain a loan to buy a $26,000 townhouse. (Photo provided by CUNA)
 

That's why Peters prefers business mogul Ross Perot's philosophy or "ready, fire!, aim" to the old General Motors strategy of "ready, aim, aim, aim," he says. "Whoever tries the most stuff wins."

Peters, the author of the influential In Search of Excellence, is a fan of small- and mid-sized companies, including credit unions, asserting that "all of the big companies are ugly.

"If you're a mid-sized organization and can't beat the giants, you should be ashamed," he says. "Being mid-sized is an opportunity to be different and special. You're the agile creature that darts between the legs of the monsters."

One of Peters' favorite business books is "Retail Superstars: Inside the 25 Best Independent Stores in America," which highlights such companies as Jungle Jim's International Market and Bronner's Christmas Wonderland.

"They should be at an infinite disadvantage to Costco and other retail giants, but they're not," he says. "Being close to their community gives them a leg up. The book has a great line: 'Be the best: It's the only market that's not crowded.'"

Peters offered attendees many business lessons gleaned over his years of experience that will help create sustainable success:

Take care of your people, giving them the respect and recognition they deserve. "Every day is worth a thank you," he says. "There are no normal days. Employees who don't feel significant rarely make significant contributions. We are as strong as our work force--period.

Peters says the four most important words in any organization are "what do you think?"

Realize the importance of front-line supervisors. They run the show. "Any idiot can be a vice president," he says.

Strive for excellence every day, in everything you do, even if you don't achieve it. "I don't understand people who don't pursue excellence everyday--it's a personal affront," Peters says. "You won't necessarily get there, but why not try?"

Focus on the small things--tiny touches can have a huge payoff. For example, when Walmart increased the size of its shopping carts, customers' purchases also grew.

And during a flight on India's Kingfisher Air, a stewardess walked down the aisle asking passengers if she could clean their spectacles before landing.

"I'll never forget that," Peters says. "Little is big."

ACUC, presented by the Credit Union National Association, continues until Wednesday at noon.  To stay updated on its events, check its tweets on #ACUC.

Lass Impact of the digital age of CUs

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SAN DIEGO (6/19/12)--The digital age has changed the way we read, listen to music and do business. And the effects of our digital lives are having an enormous impact on the credit union system. "Are we at a tipping point?"

Click to view larger image John Lass, CUNA Mutual Group senior vice president, Strategy and Business Development, shares real-time case studies to illustrate the impact of the digital age on credit unions at the America's Credit Union Conference Wednesday in San Diego. (Photo by provided by CUNA Mutual Group)
 

That question was at the center of a presentation Monday, at CUNA's America's Credit Union Conference (ACUC). John Lass, CUNA Mutual Group senior vice president, Strategy and Business Development, presented a Thought Leader Session, "Building the Credit Union of the Future."

Lass raised the issue that "the credit union system could be in the midst of a 'strategic inflection point' due to rapid changes in the competitive landscape, digital technology and customer channel preferences." A strategic inflection point is a major shift in an industry's competitive dynamic.

"A strategic inflection point is a period when we have to take a close look at the way we've been doing business for so many years," Lass added.

He explained strategic inflection points in more detail for the audience using examples from the movie, music and publishing industries. For instance, after Apple launched iTunes in 2003, the music industry rapidly evolved into the digital age and, since then, 2,700 record stores have closed.

"iTunes is a vivid example of the music industry caught off guard by the digital movement and as a result, the CD and record industry has been hit with devastating losses," Lass said.

There were more examples of strategic inflection points given by Lass: Netflix vs. Blockbuster, Kindle vs. bookstores, and the rapid decline of Kodak due to the explosion of digital camera sales.

"The key point here is that digital and mobile technologies all played roles in these industry tipping points," said Lass. "The credit union system now faces the challenges, but also the opportunities of incorporating digital convenience into the cooperative model."

"Unlike the music industry, the cooperative model provides credit unions with powerful competitive advantages." Lass continued. "There are some tremendously successful examples of credit unions embracing the 'do-it-yourself' banking, and it's paying off for their institutions and their customers.

"The challenge for our industry is to adapt to the new competitive dynamic without sacrificing our powerful core values and attributes," Lass concluded.

ACUC Cheney--Look to the future with common purpose

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SAN DIEGO (6/19/12)--The state of the credit union industry is "outstanding," with $1 trillion in assets and two million new members, but by collaborating together with a single vision, credit unions could influence many more lives toward financial well-being, Credit Union National Association (CUNA) President/CEO Bill Cheney told the America's Credit Union Conference (ACUC) Monday morning.

Click for slide showCredit Union National Association President/CEO Bill Cheney was happy to report that the state of the credit union industry is "outstanding," with $1 trillion in assets and two million new members in the 15 months leading up to March 15. He announced CUNA would roll out a new initiative for the movement to work together with a vision that would include containing oversight and needless regulations. (Photo provided by CUNA)
Speaking on the "state of the credit union industry," Cheney noted that credit unions face such regulatory burden and "partisan gridlock" in Congress that they will need to collaborate and look to the future with a common purpose and vision dedicated to the financial well-being of their members and all Americans, he said. He announced several initiatives to address the future

.

"For too long we've let others define what credit unions are and what we should be," Cheney said, adding that CUNA is close to rolling out a new vision for the credit union movement based on "common values that can be building blocks for the future: People helping people and people before profit are part of our foundation. We're all member-focused, cooperative, not for profit."

"These common values and purposes create a vision all credit unions can play a part in. What if we could agree on a vision that Americans choose credit unions as their best financial partner?  A vision that can lead from today's combined 95 million members today to 100 million?"  he said. However, only half use credit unions as their primary financial institution, "so we have a long way to go," he said.

"What will it take to remove barriers in regulations and legislations, modernize state and federal charters, and create awareness of credit unions…especially among the younger members? We're the best kept secret," he noted.

Credit unions should work to create awareness and foster service excellence of which credit unions can be proud. That means fostering collaboration on a large scale--with 95 million members, 7,200 credit unions with $1 trillion in assets "all with the same goals."

Cheney noted that too many say that credit unions are less accessible because of membership requirements, less sophisticated, and less convenient, and "we know nothing could be further from the truth." 

CUNA will be working further in the coming weeks on the vision, on how to best communicate the vision, get feedback and measure its progress.  One way being considered is adding member value. "Credit unions deliver $6 billion in value to members. What if in 10 years we could triple that?" He noted it has taken 104 years to get to the $1 trillion asset mark, but in 10 years it could be $2.5 trillion.

The noted business excellence guru Tom Peters, whose keynote address followed Cheney's, made it a point to compliment Cheney and CUNA for addressing a larger strategic vision for credit unions and setting goals looking into the decade.

Cheney also addressed legislative and regulative issues, noting Washington's current  "partisan gridlock is a disservice to the people who elected" their representatives, and the current pendulum of regulatory burden and oversight in credit unions' examinations and supervisions continues to swing

.

There have been times when credit unions could deal with the level of regulatory burden and times when it got tougher. Now, he said, there are "glimmers of hope"-- such as the National Credit Union Administration's 11th hour changes following input from a CUNA/league working group to the Troubled Debt Restructuring Rule, which, "will save credit unions millions of dollars in regulatory compliance costs" and help keep members in their homes.

But credit unions "have our work cut out for us" with the "tens of thousands of pages of new regulations" expected under the new Consumer Financial Protection Bureau, which could cripple community-based financial institutions.  "How do you 'simplify' regulations--with new regulations?" he asked. He announced that CUNA would be rolling out a new initiative: Operation CONTAIN to "contain oversight and needless rules to achieved improvement (in the regulatory burden) now."  Operation CONTAIN "will need your help," he told the 1,300 conference attendees at ACUC.

On the legislative side, credit unions are "fighting the calendar" with Congress's session nearly over. "We have legislation we want to advance ," referring to the push to lift the member business lending cap to 27.5% of assets from 12.25%, which $13 billion into small businesses and create 140,000 new jobs at no cost to the taxpayer, he said.

"Banks are the only group opposing it. Many groups have supported us and we've won the public policy argument," Cheney said. CUNA is aiming to put together a package to help banks and credit unions in the Senate and House, but "banks would rather burn down Pennsylvania Avenue than help credit unions. That is not playing well in Washington," he added. "If we put together a package that credit unions support and that banks should support, then we would have an overwhelming majority fighting the [congressional] calendar."

Even if a credit union has never made a business loan, it is "extremely important" to support advancing the legislation. "Do you want to be able to determine [your future] in the board room? Or have ABA and ICBA decide for you?"

ACUC, presented by CUNA in conjunction with Discovery sessions and an executive series provided by CUNA Mutual Group, will run through noon Wednesday. To follow the events on Twitter, go to #ACUC.

Albright to speak at International Summit of Cooperatives

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QUEBEC CITY (6/19/12)--Former U.S. Secretary of State Madeleine K. Albright will be a keynote speaker at the International Summit on Cooperatives, which takes place Oct. 8-11.

Albright will address the contribution of cooperatives to global security, of the resilience of the cooperative model in times of economic crisis and their contributions to the empowerment of women and gender equality.

She will participate in a lunch-and-learn event on Oct. 10.

2012 was designated by the United Nations to as the International Year of the Cooperative, with the theme "Cooperatives build a better world."

Ohio offers collateral enhancement program for CUs

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COLUMBUS, Ohio (6/19/12)--The Ohio Credit Union League has secured an agreement with the Ohio Department of Development (DOD) to allow credit unions to participate in the state's Small Business  Credit Initiative.

The state initiative is supported by $55 million in federal funds to provide financing to credit-worthy small businesses. Credit unions were not previously eligible to participate because they can't accept public funds.

The league worked with the DOD's Minority Business Enterprise Division to modify the program. Eligible federally insured credit unions now can participate without taking deposit of public funds.

A credit union still must guarantee 30% to 50% of the loan as a collateral shortfall, enter into a collateral enhancement agreement for credit unions, and meet reporting and other requirements.

The Credit Union National Association (CUNA) and credit unions also are urging the U.S. Congress to increase credit unions' member business lending cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

CUNA economists featured in national media

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MADISON, Wis. 6/19/12)--Two national media outlets featured comments from Credit Union National Association (CUNA) economists in the past week.

CUNA Bill Hampel, senior vice president of research and chief economist, was featured in The Wall Street Journal's "Real Time Economics," on Fridayproviding an analysis of possible actions the Fed might take Wednesday to boost the economy. 

Mike Schenk, CUNA vice president of economics and statistics, was interviewed by Bloomberg News economics reporter Lorraine Woellert for an article on the U.S. housing market.

Hampel discussed the chances that the Federal Reserve would continue Operation Twist--a strategy that calls for selling $400 billion in shorter-term Treasury securities and re-investing the proceeds in longer-term bonds.

Continuing Twist would send the message that the Fed is willing to do more if needed at a time when U.S. budget policy could slow growth, Hampel said. With interest rates already at record lows, Twist's effects are largely psychological, primarily bolstering consumer confidence, Hampel said. The Federal Open Market Committee, the fed's policymaking group, meets today and Wednesday.

Schenk commented on the level of previously owned home sales in May, which dropped to a 4.56 million annual rate from 4.62 million in April, according to the median estimate in a Bloomberg News survey.

"We're bumping along the bottom," Mike Schenk said in the article, written by Woellert. "The housing recovery is going to be a long, slow affair."

Mich. league foundation honors leaders volunteers

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LANSING, Mich. (6/19/12)--The Michigan Credit Union League (MCUL) and the Michigan Credit Union Foundation announced the winners of the league's annual awards and the Michigan Credit Union Foundation Volunteer of the Year Award at the MCUL's recently held annual convention and expositions.

The award recipients are:

  • Credit Union Professional of the Year--Jeffrey Benson, president/CEO , CASE CU, Lansing;
  • Outstanding Credit Union of the Year--Genisys CU, Auburn Hills;
  • Distinguished Service Award--George Isola, president/CEO, Ishpeming (Mich.) Community FCU and MCUL board chairman;
  • Chapter Effectiveness Award--Oakland County Chapter;
  • Young Professional of the Year Award--Jeremy Cybulski, youth and community development coordinator, Co-op Services CU, Livonia;
  • Excellence in Consumer Education Award--Vickie Smith, director of business development and community involvement, Lake Michigan CU, Grand Rapids, and
  • MCUF Community Volunteer of the Year Award--David Cook, board chairman, Michigan One Community CU, Ionia.
In his first year as CEO at CASE CU, Jeffrey Benson guided the credit union through a rebranding campaign with the tagline, "Our service, your success." Under his leadership, the credit union experienced significant growth and upgraded its technology. In 2011, CASE saw loan growth of 47.8%, asset growth of 7.2% and membership growth of 8.3%. Employee turnover declined to 4% in 2011 from 25% in 2010. Benson implemented cost savings that saved the credit union an estimated $450,000 in 2011.

Genisys was selected as CU of the Year for its outstanding financial performance, high member satisfaction, expansive dedication to the community and its commitment to political advocacy.

In 2011, Genisys once again received a Bauer Financial five-star rating for safety and soundness, while having an outstanding financial year with very strong results. New members joining in 2011 increased 20.7% over 2010. In 2011, the credit union sponsored about 310 community events by providing monetary donations, gifts-in-kind, and over 4,000 hours of hands-on volunteer support.

George Isola has been a leader within the credit union system since 1993. During Isola's 20 years of service, Ishpeming Community FCU's assets have grown to more than $119 million from $25 million.

In 2011, the Oakland County Chapter helped bring recognition to the OLSHA Walk for Warmth and matched donations of $2,100. The chapter also held more than 13 networking and education events in 2011 and each year organizes the well-attended annual bus trip to Lansing where chapter leaders meet with lawmakers to discuss the importance of credit unions in their districts.

Jeremy Cybulski oversees Co-op Services CU's student-run branches and gives financial presentations across the area. This year he added another middle school, making a total of nine school partnerships. He also hit a major milestone, giving his 500th presentation since joining Co-op Services three years ago.

Each year, Vickie Smith delivers more than 140 presentations on consumer-related issues, reaching more than 3,500 students with the crucial message of the importance of saving and building good credit through Lake Michigan CU's "Money Matters" program. Smith also presents regularly at five local colleges, and her program is now part of the English as a Second Language curriculum at Grand Rapids Community College.

The MCUF recognizes excellence through the Community Volunteer of the Year Award, and provides a $5,000 scholarship to a student named by the winner. In addition to serving as chairman of the board for Michigan One Community CU, where he has been an active volunteer for nearly 40 years, this year's winner, David Cook, volunteers with organizations in the Ionia area, including the Ionia Area Chamber of Commerce, the Kiwanis Club, Enrich of Ionia County, and the Grand Rapids Chapter of the March of Dimes.

ACUC opens in San Diego

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SAN DIEGEO (6/18/12)--The Credit Union National Association opened its annual America's Credit Union Conference (ACUC) "Discover" Sunday in San Diego with a look at how the conference has evolved over the years, an award for a credit union hero, and a keynote speech by an F-16 fighter pilot who found inspiration in Iraq that led to philanthropy.

Click for slide show Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, welcomed attendees at America's Credit Union Conference in San Diego on behalf of the states' 425 credit unons and 10 million members. She noted that California has 15,000 technology companies, boasts 17 major professional sports teams, and is a leading producer in \"fruits and nuts\" (800 wineries, 83% of the nation's strawberries, raisins, and 99% of almonds). One in eight people in the U.S. live in California. San Diego has 800,000 credit union members and the largest Navy presence in the world, she told attendees. (Photo provided by CUNA)
The opening day also featured the Grand Opening of the ACUC exhibit hall and the promise of more to come throughout the conference until it ends on Wednesday.

Roughly 1,300 attendees are partaking of the activities this week. Emcee Greg Schwem gave attendees a look at where the convention has been in the past and provided video clips of past keynoters who gave advice to credit unions. Among them:

Lou Holtz in 2006 said Credit unions are doing great things, are helping people--and that is the reason credit unions have expanded, because they help people get what they want. He advised credit unions to "continue to update and change."

Christopher Gardner in 2007 told conference attendees about being homeless and noted that many working families are homeless and "some of them may be your members."

Guy Kawasaki, who loved fancy cars growing up—"before children"--noted credit unions' lower interest rates saved so much money that he said "credit unions equal Porsches."

Jim Collins gave this advice: "Have 100% of your key seats with the right people. Of the top 10 decisions you make, seven should be people decisions."

At last night's session, following a welcome by Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, 1,300 conference attendees witnessed the presentation of the Credit Union Magazine CU Hero of the Year Award by Credit Union National Association (CUNA) President/CEO Bill Cheney to Ron Kase, Landmark CU, New Berlin, Wis. (See related story: Hero Kase proud to help members start financial lives).

That was followed by Major Dan Rooney, the fighter pilot who told credit unions about founding the Folds of Honor Foundation in 2007, which provides scholarships and other financial assistance to the spouses and children of soldiers killed or disabled. (See related story, "Major Dan Rooney: Take life's chances with a purpose."

After that, the Exhibit Hall Grand Opening featuring 137 booths with 115 different companies capped the evening.

To review the opening day in photos, check today's slide show.

Hero Kase proud to help members start financial lives

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SAN DIEGO (6/18/12)--An eventful year for the Dairy State--replete with an attempted gubernatorial recall and "Dancing With The Stars" glory for Green Bay Packers receiver Donald Driver--has become still more noteworthy: Landmark CU CEO Ron Kase accepted Credit Union Magazine's 2012 Credit Union Hero of the Year Award during the America's Credit Union Conference in San Diego.

Ron Kase, CEO of Landmark CU in New Berlin, Wis., accepted Credit Union Magazine's 2012 Credit Union Hero of the Year Award Sunday during the America's Credit Union Conference in San Diego. Among his accomplishments, he created  450 jobs in Southeastern Wisconsin and established a first-time homebuyer program.  (Photo provided by CUNA)
"This award will top all of those other things," Kase joked during his acceptance speech Sunday.

Kase will retire in January 2013 after nearly 40 years serving the credit union movement. He has a lot to be proud of, including the creation of 450 jobs in Southeastern Wisconsin. But Kase says he's most proud "of the fact that through my years here at Landmark, we've been able to help many people help themselves at the start of their economic lives."

Those efforts include the creation of:

  • A first-time homebuyer program, which waives all closing costs for qualifying first-time buyers;
  • A rescue refinance program, which helped members at the beginning of the recent recession break free of subprime mortgages;
  • Home-buying and credit counseling seminars, offered in English, Spanish, and Hmong; and
  • A Hispanic initiative, which includes hiring bilingual staff, serving as an authorized Internal Revenue Service representative in issuing individual taxpayer identification numbers, issuing Matricula Consular cards, and offering inexpensive ($5) wire transfer services.
In addition, Kase's leadership and dedication to commu­nity service helped Landmark win second place in the national 2008 Dora Maxwell Social Responsibility Award program.

In 2010, Kase accepted the Midwest Urban Empowerment Award in the finance category for his leadership in developing financial services for Milwaukee's urban community.

Major Dan Rooney Take lifes chances with a purpose

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SAN DIEGO (6/18/12)--A key concept in life is synchronicity--or taking life's chances with a sense of purpose, fighter pilot Major Dan Rooney told the opening session of the 2012 America's Credit Union Conference Sunday evening in San Diego. The conference runs through Wednesday.

Major Dan Rooney, an F-16 fighter pilot who flew three combat tours in Iraq, a professional golfer, an author and a philanthropist who helps families of disabled and deceased war veterans, is pictured in front his plane during Sunday's opening session of America's Credit Union Conference in San Diego. He founded the Folds of Honor Foundation in 2007, which through scholarships and other financial assistance, gives back to the spouses and children of soldiers killed or disabled in service to our country. (Photo provided by CUNA.)
Rooney is an F-16 pilot who flew three combat tours in Iraq, a professional golfer, an author and a philanthropist who helps families of disabled and deceased war veterans.

He founded the Folds of Honor Foundation in 2007 that through scholarships and other financial assistance, gives back to the spouses and children of soldiers killed or seriously wounded in service to our country.

"Synchronicity is all around us--signs on the highway of life," Rooney explained. "It's the divine current of life leading us to our essence. It's the courage to take action when that inspiration comes into your path."

His dad told Rooney two things when he was young. Find your passion in life. And once you find it and develop it, you can accomplish anything. Consequently, when Rooney was 12 years old, he told his dad that he wanted to be golf pro and a fighter pilot.  

When he was a college student at Kansas University, a professor wrote the word "volition" on a classroom chalkboard and asked rowdy students if they knew what the word means. When no one answered, he told them: "Volition will define your life; it is the power to choose. It is the path to build things up or tear them down. In the end, no one but you controls your choices. Volition defines your life."

When people push themselves, they become that change in their lives, Rooney said.  "If you are comfortable, you're not reaching your potential," he added. "Flexibility is the key to life." That flexibility led to a calling he had when flying his second to-last mission in Iraq and after seeing one person fly his dead brother's remains back home to the U.S.   

Years of seeing people going home from combat who are physically and mentally disabled gave Rooney inspiration. "But inspiration means nothing in life unless you do something about it," he added.

So Rooney had a moment of synchronicity, realizing what he was supposed to do--and founded a Patriot Golf Day that started out small, but then was launched nationally in August 2007, prompting 3,300 golf courses nationwide to sign up. That year, $1.1 million was raised to help military families. Since then, $13 million has been raised. That year, Rooney founded the Folds of Honor Foundation.

"We all have a calling," Rooney concluded. "When you walk out of here, experience that power of volition in your life. At the end, what did you do with your talents to make the world a better place?"

Small CU Roundtable meets at ACUC

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SAN DIEGO (6/18/12)--Small credit union professionals kicked off the 2012 America's Credit Union Conference (ACUC) Sunday afternoon, gathering for the second annual ACUC Small Credit Union Roundtable meeting. The group discussed issues of importance to smaller institutions, including compliance burden, regulatory relief and cooperation and collaboration initiatives. ACUC runs through Wednesday.

Click to view larger image Mike Schenk, vice president of economics and statistics at the Credit Union National  Association (CUNA) and staff liaison to CUNA's Small Credit Union Committee, addressed the second annual Small Credit Union Roundtable meeting at 2012 America's Credit Union Conference Sunday afternoon. The group discussed issues of importance to smaller institutions, including compliance burden, regulatory relief and cooperation and collaboration initiatives. (Photo provided by CUNA Mutual Group)
 

Mike Schenk, vice president of economics and statistics at the Credit Union National Association (CUNA) and staff liaison to CUNA's Small Credit Union Committee kicked off the discussion noting several resources available to small credit unions, including a section of the CUNA website and a newly developed site dedicated to highlighting interesting collaborative efforts. Use the link.

The need to reduce operating expenses by reducing back-office redundancy is one of the top issues facing credit unions--both small and large--and increased collaboration is the key to doing so, Schenk said.  "Research shows that credit unions know that collaboration can help but say they don't collaborate more because they simply aren't aware of successful efforts," Schenk explained.

"To that end, we've created a repository to collect examples of successful efforts and to find ways to encourage credit unions, leagues and credit union service organizations (CUSOs) to share their stories.  It's certainly not 'the' solution--but we hope it's a small step in the right direction."

Lucy Ito, president/CEO at CURoots Cooperative and senior vice president of the California and Nevada Credit Union Leagues, joined the meeting to describe the league's CURoots Cooperative. Launched in 2010, CURoots is a service organization established by several credit unions and the California and Nevada leagues. CU Roots' services address the industry's long-standing need to reduce operational costs through back-office collaboration. Ito described the cooperative's current service offerings, including shared compliance services, internal audit services, and "CUVitality"--a collective health-benefits solution.

She explained how the services help credit unions of all sizes reduce the operational costs and enable them to collectively engage in activities they could not otherwise afford on their own. Future plans include the introduction of Enterprise Risk Management services, asset/liability management and loan portfolio analysis. Other back-office services also may be added in the future, such as collections and IT servicesan initiative that provide auditing, compliance and insurance.

CUNA Board member John Graham, CEO of Kentucky ECU, Frankfort, and chair of CUNA's Small Credit Union Committee, also addressed attendees, outlining the Small Credit Union Committee's recent activities and initiatives. Graham summarized conversations the committee had with National Credit Union Administration Chair Deborah Matz prior to CUNA's  Governmental Affairs Conference and detailed some of the positive developments that have occurred at the agency.

These included the hiring last year of Bill Myers, director of the NCUA Office of Small Credit Union Initiatives (OSCUI), the possibility of raising the current $10 million threshold-definition of "small," and recent efforts to shorten and better direct examinations for small credit unions.  Graham described how the Small Credit Union Committee has weighed in on recent regulatory initiatives including the Troubled Debt restructures rule, and the CUSO and loan participation proposals.

Representatives from NCUA's OSCUI were in attendance and Diane Rector, manager of OSCUI's training division, shared insights and described recent improvements to the Small Credit Union Program and to OSCUI's Small Credit Union Workshops.

CU in Iowa revs its Hispanic outreach

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SAN DIEGO (6/18/12)--Iowa, says Michael Adams, suffers unfairly from what he calls the "state fair" stereotype.

"That's the perception that we're all white, we all grow corn, and we all go to the state fair," says Adams, vice president of marketing and public relations for Greater Iowa CU in Ames.

But Iowa ranks fourth in the nation in Hispanic population growth, according to the Federal Reserve. That's partly why Greater Iowa expanded its footprint from a university credit union to a community-based institution that embraces the Hispanic community, Adams told the Seventh Latino Credit Union Conference in San Diego.

The journey has had its bumps along the way, but the credit union has made great strides in serving a community that, at some branches, accounts for up to 40% of members, he says.

The effort began in earnest when Greater Iowa received a grant from the World Council of Credit Unions to fund a remittance program. "When we did that, we were off to the races," Adams says.

He outlined the steps Greater Iowa took to approach the Hispanic community:

  • Partnered with Coopera, which has a strategic alliance with the Credit Union National Association. Coopera provided translation services, cultural awareness training, financial education material, and other services. "They told us, 'This is what you need to do,'" Adams says.
  • Established a customer identification program. The credit union accepts international documentation as a basis for membership and Individual Taxpayer Identification Numbers (ITIN) for loans, and other accounts.
The credit union also offers stated-income loans to help members build credit. The first loan is for $1,000 and must be repaid in seven months. The second loan is $1,500, with a 13-month term. After members successfully repay these loans, they're eligible for all credit union services.

"It took about two years to get the board to sign off on that, but it has worked out well," says Adams, citing a 1.5% delinquency rate on these loans.

  • Took a multipronged approach to marketing, including print and television advertising, festival sponsorships, community outreach, and three scholarships named after Coopera founder Warren Morrow, who passed away this year.
  • Hired bilingual and bicultural staff;
  • Formed an employee implementation team to launch, monitor and promote the initiative and to gain staff buy-in; and
  • Offered a Spanish-language personal finance website for Hispanic members called El Poder es Tuyo, which translates to "the power is yours" in English.
One of the biggest challenges Adams faced was internal politics. Not everyone on the management team and board agreed with these changes. But that has changed over time--in large part due to the effort's success: While the credit union's overall membership growth was 2.2% in 2011, growth in Latino membership was 12.7%.

While Greater Iowa might not be the Ferrari of Hispanic outreach, Adams says, "We're in a sturdy car with tank full of gas."

Serving small biz important to Latino CUs

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SAN DIEGO (6/18/12)--Sixty percent of the general business market is not getting needed loans, and for Hispanic businesses, that number nearly doubles. Credit unions are a key source of business loans for Hispanic small businesses in a time where 61% of small businesses are facing worse credit accessibility than a few years ago.

From left, Jesse Salazar, vice president of government relations and policy at the U.S. Hispanic Chamber of Commerce, and Ruben Garcia, district director of the U.S. Small Business Administration in San Diego, agreed that credit unions have an important role in small business lending to Hispanic businesses during a panel on that topic at the Network of Latino Credit Unions & Professionals' Seventh Annual Latino Credit Union Conference this past weekend in San Diego. The conference was in conjunction with America's Credit Union Conference, which began Sunday. (CUNA photo)
That's according to Jesse Salazar, vice president of government relations and policy at the U.S. Hispanic Chamber of Commerce, who, along with Ruben Garcia, district director of the U.S. Small Business Administration (SBA) in San Diego, spoke Sunday at a small business lending breakout during the Network of Latino Credit Unions & Professionals Seventh Annual Latino Credit Union Conference.

Salazar noted that small business lending is shrinking, citing Federal Deposit Insurance Corp. statistics that indicated the total loans outstanding are down 15% since June 2008. "Less and less, the banks giving out loans are unable to meet the needs of small businesses," he said.

"Credit unions are really an important source of lending, and they are making a big push to enhance their small business lending so they can do more," he said, noting the bills they are pushing in Congress that would raise credit unions' member business lending cap to 27.5% of assets from 12.25%.

"We have been supporting that in the past and likely will in the future," Salazar told the group.

He said poor people turn to payday loans because they can't access to credit, and that small-bank lending approvals fell 50% in 2011. Of the decrease in overall bank loans, he said, "we haven't seen any indication that they will expand their SBA loans. Small business lending is often "capital intensive and risky." "If banks are not lending, there's very little confidence that small business can turn the economy. That's troubling and another reason to increase credit unions' small business loans," he said.

SBA's Garcia noted that in the past credit unions have not been very involved with SBA lending.  But getting credit unions involved and making Hispanics aware that credit unions engage in small business lending means "credit unions can offer something no one else is offering."

Garcia told of his father, a cotton picker turned gas station entrepreneur, who in the late 1950s could not get a loan to put a car wash and a hot dog stand on the station's premises because he had no collateral. The banker told his father that he wouldn't be able to get a loan anywhere, even though an SBA office, which would have loaned his father $10,000, was six miles away. Discouraged, his father sold the station "and gave away his dream."

Garcia said that in his position with SBA, "I never want to see what happened to my father happen to anyone else. SBA is an answer," he said, noting 66.7% of businesses in the U.S. is small business. "Take away small businesses, you take away the lifeblood of the economy."

"The future is the Hispanic community--one of the  fastest growing communities in the nation. It will determine the country's future, politically and economically," Garcia said.

Credit unions will need to learn that Hispanic families turn to a "trusted adviser"--someone with influence in their community--when seeking advice. "It's not the shiny ads with the beautiful Hispanic family" that influence Hispanics' financial decisions, "it's the trusted adviser," Garcia said.

He outlined resources from SBA that can educate Hispanic small businesses, including Small Business Resources Magazine, available on SBA's website at sba.gov.

The conference, which began Friday and ended Sunday, was held in conjunction with America's Credit Union Conference presented by the Credit Union National Association, in San Diego.

See related stories of on-site coverage of ACUC.

CU System briefs (06/16/2012)

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  • JERSEY CITY, N.J. (6/18/12)--
    Click to view larger image Click for larger view
    Liberty Savings FCU in Jersey City, N.J., hosted a visit from representatives of the Rural Credit Banks Funds Clearing Center-Cooperatives from the Republic of China at its main branch on June 8, according to the New Jersey Credit Union League (The Daily Exchange June 13). Liu Yongcheng, deputy president of the center-cooperatives thanked the credit union for its warm hospitality. The group of more than 20 Chinese credit union administrators toured the credit union and were welcomed by Liberty Savings' staffers Maria Solorzano, vice president, chief financial officer; Michele Weiss, assistant vice president; and Karen Velasquez, marketing and business development officer, who, through an interpreter, answered many questions. (Photo provided by the New Jersey Credit Union League …
  • CLAYTON, N.C. (6/18/12)--Local Government FCU member Gracie Wells shares how the credit union has impacted her life, her career and the savings habits of her two sons in a video, according to the North Carolina Credit Union League (The Weekly Conversation June 15.. Wells, who lives in Clayton, N.C., is employed by the city of Durham. Click the link to watch the video. http://www.ncleague.org/Join-the-Conversation/People-not-Profit/Videos/In-the-Spotlight.aspx ...

Cheney meets N.M. candidates CUANM elects officers

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ALBUQUERQUE (6/18/12)--The 53rd annual meeting of the Credit Union Association of New Mexico (CUANM)  included a meeting of Credit Union National Association (CUNA) President/ CEO Bill Cheney with congressional candidates from the state, and the election of  CUANM's board and officers.

Cheney met up with VIP guests Janice Arnold-Jones, Republican candidate for congressional District 1; Michelle LuJan Grisham, Democratic candidate for District 1; and Lt. Gov. John Sanchez. Credit unions active in political advocacy on behalf of the industry met with Cheney and the candidates during the event.

Cheney also was keynote speaker, and he met with the Credit Union Leaders of Tomorrow, a group of credit union staffers under the age of 30 who hope to become activists and have a career with credit unions.

In other action at the conference, CUANM's board re-elected its chair, Chris Fitzgerald, CEO, Rio Grande CU, Albuquerque, and vice chair, Harold Dixon, CEO, State Employees CU, Santa Fe.

Newly elected officers included secretary Ronnie Johnston, CEO, Artesia (N.M.) CU, and treasurer Ron Moorehead, chief financial officer, First Financial CU, Albuquerque.

Newly elected directors are:

  • Juanita Whiteside, CEO, Otero FCU, Alamogordo;
  • Jeff Bruce, CEO,  Lea Community FCU, Hobbs;
  • Marty Tressell, CEO, High Plains CU, Clovis;
  • Kathy Cranage, CEO, New Mexico Energy FCU, Albuquerque; and
  • Matt Schmidt, CEO, Los Alamos Schools CU.
Remaining on the board are Larry Lujan, CEO, Northern New Mexico School Employees FCU, Santa Fe; and Phyllis Crawford, CEO, Four Corners FCU, Kirtland.

League reports successful elections in Iowa

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DES MOINES, Iowa (6/18/12)--Like credit unions in many states, Iowa credit unions were active in their state's primary election.  They actively supported several legislative incumbents who won their primary election on June 5, said the Iowa Credit Union League (ICUL).

Incumbent State Sens. Pat Ward (R-West Des Moines) and Shawn Hamerlinck (R-Muscatine/Davenport), and incumbent Rep. Kevin Kosester (R-Ankeny) all defeated opponents in the primary election, said the league.

ICUL said it put in extra effort in the Ward primary because she was involved in a difficult race. The league worked with three credit unions--Community Choice CU, Financial Plus CU and First Class CU--which have significant membership in Ward's district. They sent three direct mail pieces to members in the district, with the final two pieces going to all Republicans who voted in the last primary election.

The league also coordinated volunteers from credit unions and helped Ward with a door knock campaign a week prior to the primary. Volunteers reached 600 doors in a three-hour window in targeted precincts.

"Iowa credit unions are happy to help legislative candidates who support credit unions," said Justin Hupfer, league vice president of government affairs. "Friends help friends, and we'll continue to do our best to help those friends get re-elected."

N.C. league annual meeting highlights

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RALEIGH (6/18/12)--During its annual meeting last week, the North Carolina Credit Union League recognized three members of the state's General Assembly with Credit Union Advocate Awards for their support in helping credit unions pass Save to Win legislation.

Rep. Efton Sager attended the league's annual meeting to accept Credit Union Advocate Award for his support in helping state credit unions pass the Save to Win legislation. From left, John Radebaugh, North Carolina Credit Union League (NCCUL), president/CEO; Sager; Mark Lesnau, president/CEO, North Carolina Community FCU; and Lauren Whaley, NCCUL.
Save to Win offers savings account programs tied to monthly raffles and grand prize drawings.

This year's Credit Union Advocate Awards recipients are Reps. Efton Sager (R) and Rep. Susan Fisher (D) and state Sen. Rick Gunn (R).

Sager attended the league's annual meeting to accept the award.

A group of young credit union professionals met during the North Carolina Credit Union League's as part of the Young Professionals Track. (Photos provided by the North Carolina Credit Union League.)
Pat McCrory, the Republican nominee for governor, also spoke at the meeting. McCrory discussed overhauling the state tax code and reforming education. He talked about job creation and praised credit unions for their willingness to provide small-business owners with access to capital.

"As citizens, we need someone that can work on the difficult issues that North Carolina faces," John Radebaugh, league president said in his introduction of McCrory. "As representatives of our credit unions, we need a governor that appreciates the vital role North Carolina's 94 credit unions play in delivering affordable financial services to working families in the state."

Democratic challenger Walter Dalton also was invited to speak at the meeting, but was unable to attend.

During the meeting, 28 young credit union professionals met as part of the Young Professionals Track. They networked and discussed career opportunities within the credit union movement.

Sessions held for the group focused on how young professionals can successfully share and implement their ideas within their credit unions. Ben Rogers, the Filene Research Institute's research director, facilitated the interactive series of sessions.

CUNA announces new collaboration initiative site

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MADISON, Wis. (6/18/12)--The Credit Union National Association (CUNA) is introducing a new website for the collaboration of ideas and initiatives to discuss issues that affect credit unions and to find solutions when needed.

The announcement was made during the 2012 America's Credit Union Conference in San Diego.

Last year, CUNA's Small Credit Union Committee affirmed previous feedback identifying back-office redundancy and lack of collaboration as one of the top issues facing credit unions and asked that CUNA develop a way to help member credit unions of all asset sizes find out more about collaborative efforts. 

Click to view larger image CUNA is introducing a new website for the collaboration of ideas and initiatives to discuss issues that affect credit unions and to find solutions when needed.
 

"As we explored options, we discovered that Filene Institute research shows that credit unions know that collaboration can help but say they don't cooperate or collaborate more because they aren't aware of successful efforts," said Mike Schenk, CUNA vice president of economics and statistics and CUNA's liaison to the committee. "To that end, the committee urged us to create a repository to collect examples of successful efforts and to find ways to encourage credit unions, leagues and credit union service organizations (CUSOs) to share their stories.

"As a start, we've created a website," Schenk added. "It presents users with the opportunity to join a collaboration listserv, to share information about initiatives, and to read about some of the examples of interesting cooperative efforts that seem to be making a difference. It also includes links to additional resources such as Credit Union Magazine articles and several Filene studies."

Schenk emphasized that the website is for credit unions of all sizes--not just small credit unions.  

Some features of the website include:

  • Add Your Collaboration--A place where credit unions can click and share their collaborative efforts with other credit unions.
  • Featured Collaboration Projects--A short collection of various collaboration initiatives that appear to be interesting and effective examples of leagues, credit unions and/or CUSOs working cooperatively to solve problems and increase credit union effectiveness in the marketplace.
  • White Papers and Articles--Related to collaboration.
 To view the website, use the link.

America's Credit Union Conference, which is presented by CUNA, runs until Wednesday afternoon.

Statewide award winners announced by N.C. league

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RALEIGH, N.C.(6/18/12)--The North Carolina Credit Union League announced its statewide award winners June 11 at its 77th annual meeting.

Curtis J. Ring, a board member at Summit CU, was recognized with the Larry Johnson Order of Merit Lifetime Achievement Award by the North Carolina Credit Union League last week during the league's annual meeting. The league announced its statewide award winners during a special dinner. (Photo provided by the North Carolina Credit Union League)
The league honored credit unions and individuals during a special awards dinner (The Weekly Conversation June 14.)

Larry Wilson, president/CEO of Coastal FCU, Raleigh, was recognized at the Larry Johsonn Order of Merit Lifetime Achievement Award in the executive category. For more information, read 'Wilson receives N.C. league lifetime achievement award.' Use the link.

Curtis J. Ring, a board member at Summit CU, Greensboro, also received the Larry Johnson Order of Merit Lifetime Achievement Award. Ring began his service to credit unions in 1975 when he joined the board of directors of the Pope FCU. In 1978, the North Carolina Credit Union League hired Ring as its vice president of governmental and public affairs, where he was a driving force in the creation of the North Carolina Credit Union Foundation (now the Carolinas Credit Union Foundation.

The award is the league's highest individual credit union honor recognizing individuals who have dedicated their careers to promote the credit union philosophy, and whose leadership to North Carolina credit unions and related organizations has been sustained throughout their careers.

Bob Donley, executive vice president of Members CU, Winston-Salem, was recognized with the Ronald J. Hutchins Award as the executive outstanding Credit Union Person of the Year.

Elizabeth "Sis" Hamilton of Summit CU won the Ronald J. Hutchins Award as the outstanding Credit Union Volunteer Person of the Year.

The Ronald J. Hutchins Award is presented each year to a credit union professional and volunteer to recognize their outstanding accomplishments, time and effort  in support and promotion of the credit union ideal of "people helping people."

Credit unions recognized as first-place Dora Maxwell Social Responsibility award winners included:

  • American Partners FCU, Reidsville, $20 million to $50 million in assets;
  • Carolina Postal CU, Charlotte, $50 million to $100 million; and
  • Mountain CU, Waynesville, $100 million to $200 million;
  • Fort Bragg (N.C.) FCU, $200 million to $500 million; and
  • State Employees' CU, Raleigh, more than $1 billion.
Credit unions recognized as first-place Louise Herring Philosophy in Action Member Service Award winners included:

  • Winston-Salem FCU, $50 million to $250 million in assets; and
  • State Employees CU, more than $1 billion.
Mountain CU also was recognized as the first-place winner of the Desjardins Youth Financial Education Award in the $50 million to $150 million in assets category.

Winston-Salem FCU was recognized as the first-place winner of the Desjardins Adult Financial Education Award in the $50 million to $150 million in assets category.

CU System briefs (06/14/2012)

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  • COLUMBUS, Ohio (6/15/12)--Karen Reams, CEO of Millstream Area CU, Findlay, Ohio, has been appointed by the Ohio Credit Union Foundation Trustees to fill a vacant At-large seat on the foundation board, reported the Ohio Credit Union League (eLumination Newsletter June 13). The seat was previously held by Tim Furrey, CEO of Western CU, Columbus, who retired in December. Reams has led the Millstream Area CU for more than 20 years. She is president of the Western Buckeye Chapter of Credit Unions, president of the Ohio CUES Council, a graduate of CUNA Management School and a credit union development educator …
  • COLUMBUS, Ohio (6/15/12)--Ohio Credit Union League Chair Tim Boellner has appointed Tom Griffiths, CEO of Atomic CU, Piketon, to fill a vacant large-credit-union seat on the Ohio Credit Union Defense Coalition Advisory Council. The coalition promotes the common business interests of the credit union industry and advocates in federal and state legislative and regulatory arenas. It engages in lobbying, litigation and regulatory advocacy, conducts research on credit unions'  legislative and regulatory issues, and assists credit union organizations with legislative and regulatory activities (eLumination Newsletter June 13) …
  • MONTCLAIR, N.J. (6/15/12)--John McBryan Jr., manager and treasurer of Montclair (N.J.) Postal FCU, died recently after a brief illness. He was a member of the credit union for more than 45 years and served as manager/treasurer for 40 years, according to the New Jersey Credit Union League (The Daily Exchange June 13). "He was the credit union," said Frank Phillips, president. "I used to tell John he was the owner and he would always correct me that the members were the owners. He touched thousands of people," he told the league. McBryan is survived by his wife, Elinore; two daughters; and four grandchildren. A memorial service will be held today at 6 p.m. at the Rockaway Methodist Church in Rockaway Borough, N.J. …

Summer of the iPad giveways worth 25K

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KENTWOOD,  Mich. (6/15/12)--During the summer months, $25,000 worth of iPads will be given to young adults by Kentwood, Mich.-based Community West CU in a "Summer of the iPad " giveaway.

Young people are the future to not only credit unions but also the greater Grand Rapids community, said the credit union in a news release. The initiative will provide iPads to recent high school graduates and current college undergraduates as they purse their careers or further their education.

"When the board expressed intent to give back a patronage dividend to our membership base, we wanted to do something different," said Jon Looman, president/CEO of the $115 million asset credit union. "At the same time, we wanted to reach out to a younger demographic and shed light on some of the great student products we offer. The iPad giveaway is a great way to do both," he added.

To be eligible, the iPad recipient must be 18 to 23 years old and a member of the credit union. Members and prospecting members must register at the credit union's website.  For more information, use the link to the website.

Couple to pay restitution in AEA FCU fraud

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PHOENIX (6/15/12)--The former vice president of business lending at Yuma, Ariz.-based AEA FCU,  his wife, and a local businessman have entered into an agreement to pay restitution totaling more than $25.3 million for their role in a $50 million fraudulent loan scheme that caused the near collapse of the credit union.

William and Rhonda Liddle will be responsible for restitution of the full amount of AEA's projected loss of more than $25 million, according to the restitution stipulation filed in the U.S. District Court for the District of Arizona in Phoenix. Co-defendant Frank Ruiz, a businessman, will be apportioned one-fourth of the projected net loss in restitution, amounting to $6.3 million.

Originally, court had ordered a fine, but it was waived and determined that restitution would be set at a June 19 hearing. However, the parties settled and filed the notice of the restitution stipulation on Tuesday.

Cumis Insurance Society, which paid the credit union's bond claim, will receive the first $5 million in restitution payments, and AEA will receive restitution for the amount in excess of that, according to the document.

William Liddle was sentenced June 1 to 15 years in prison, plus five years of supervised release, for his role in the business loan scheme. He was convicted in February on 54 counts of fraud, conspiracy and money laundering related to allegedly accepting more than $1 million in bribes in exchange for approving the loans (Yuma Sun.com June 1).

Rhonda Little, convicted on 36 counts of money laundering, was sentenced May 21 to 12 months of home incarceration to remain with the couple's two young daughters, plus five years of supervised release, said the Sun.

Ruiz was sentenced to two years in prison plus three years' supervised release after an alleged plea agreement on two charges in return for his agreeing to testify against the Liddles (Yuma Sun).

The National Credit Union Administration placed AEA FCU into conservatorship in late December, saying it was not adequately capitalized and had insufficient earnings due to problems in its lending portfolio (News Now May 4). Since then the credit union has been gradually improving and reported $839,096 in income and $245.1 million assets for first quarter 2012, the agency said.

Blanchard receives CFAs top honor

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WASHINGTON (6/15/12)--Larry Blanchard, one of the credit union industry's most celebrated consumer advocates, received another national honor Wednesday at the Consumer Federation of America's (CFA) 42nd Annual Awards Dinner.

Blanchard received the highest civilian honor from the consumer movement organization, the 2012 Esther Peterson Consumer Service Award.  Peterson was a lifelong consumer advocate who served in the administrations of Presidents John F. Kennedy, Lyndon B. Johnson and Jimmy Carter.

Click to view larger image In accepting the Consumer Federation of America's highest honor, the 2012 Esther Peterson Consumer Service Award, credit union industry and consumer advocate Larry Blanchard (center) quoted Peterson, saying, "'Everyone wins when enterprises are fair, open and honest'--and that's what we're (credit unions) are all about." He emphasized that people helping people is a "core principle" of credit unions. Blanchard is shown with, from left: Pete Crear, former World Council of Credit Unions president/CEO, and Bill Cheney, Credit Union National Association president/CEO. (Photo provided by CUNA)
Blanchard, who retired in 2008 as senior vice president of corporate and legislative affairs for CUNA Mutual Group and is currently a senior consultant for the company, was recognized along with Philip Hart Public Service Award winners U.S. Jeff Merkley and Brooksley E. Born, former chairperson, Commodity Futures Trading Commission, and Betty Furness Consumer Media Service Award winner, Marketplace, a radio program on business.

Blanchard was vice president of communications in the Credit Union National Association (CUNA) Washington office in the late 1980s-early 1990s before joining CUNA Mutual.

"Larry has been a champion of credit unions in every sense of the word," said CUNA President/CEO Bill Cheney. "He has devoted his career to credit unions, much of that time advocating for policies that will make credit unions more accessible to consumers. During our battle to enact HR 1151, his role as coordinator of the Credit Union Campaign for Consumer Choice was invaluable. Whenever an obstacle rose, he found a way to bring everyone together and get past it. It's a talent that is easy to underestimate, but absolutely essential for victory."

In presenting the award to Blanchard, Pete Crear, former president/CEO of the World Council of Credit Unions, also referred to Blanchard's critical role in the passage of HR 1151,the Credit Union Member Access Act, reminding the audience that if the legislation had not passed, "there would be no credit union movement--it's just that simple." He credited Blanchard with "strengthening credit unions and the credit union movement for more than half a century with his committed, energetic and skillful work."

Blanchard began his credit union career with credit unions at age 17. He is National Credit Union Foundation Herb Wegner Memorial Award recipient, a Credit Union House Hall of Leaders inductee, a CUNA Mutual Group Bergengren Award winner, was inducted into the National Cooperative Business Association Hall of Fame in 2010, and recognized by several other credit union organizations.

"Larry has been unrelenting in his fight for credit unions, co-ops and consumers throughout his distinguished career," said Jeff Post, president/CEO of CUNA Mutual Group. "CUNA Mutual and the credit union movement have been fortunate to have someone of his conviction as its advocate in preserving the people helping people philosophy."

Wilson receives N.C. league lifetime achievement award

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RALEIGH, N.C. (6/15/12)--The North Carolina Credit Union League has recognized Larry Wilson, retiring president/CEO of Coastal FCU, with the Larry Johnson Order of Merit Lifetime Achievement Award.

The award is the highest individual credit union honor recognizing individuals who have dedicated their careers to promote the credit union philosophy, and whose leadership to North Carolina credit unions and related organizations has been sustained throughout their careers.

Wilson will retire at the end of June, ending his 38-year tenure with Coastal FCU, Raleigh, N.C. He has been instrumental in the credit union's growth, to $2.1 billion from $3.5 million in assets. Coastal FCU has 400 employees and 193,000 members representing more than 1,200 organizations.

He also has served with organizations throughout the credit union movement, receiving many honors and awards throughout his career, and has been involved within his local community.

CU House website offers online contributions

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WASHINGTON (6/15/12)--Contributors to the Credit Union House can now make donations through its website.

Contributors can indicate whether they are donating on behalf of a credit union or as individuals and can specify their recognition name.

Credit Union House was constructed through the cooperative efforts of every state credit union league, American Association of Credit Union Leagues and the Credit Union National Association and is sustained by annual contributions from credit unions, system groups and individuals.

It is housed in Washington, D.C., as a place for credit union groups to meet when visiting lawmakers.

Credit Union House is now active on Facebook, Twitter and Foursquare.

Mortgage assistance bill heads to Pa. governor

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HARRISBURG, Pa. (6/15/12)--The Homeowners Emergency Mortgage Assistance Program (HEMAP), SB 1433, unanimously passed the Pennsylvania State Senate Wednesday morning.

After being signed in the House and Senate on Wednesday, the bill is now headed to Gov. Tom Corbett for his signature, said the Pennsylvania Credit Union Association (PCUA) (Life is a Highway June 14).

Pennsylvania credit unions and the PCUA supported the measure through grassroots efforts.

HEMAP was a program that aimed to help troubled homeowners avoid foreclosures. The program ended last year when funding ran out (News Now June 13).

The bill would use 90% of Pennsylvania's share of the national mortgage servicing settlement agreement between most states' attorneys general and the five largest HEMAP mortgage servicers.

Americas CU Conference to kick off Sunday

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SAN DIEGO (6/15/12)--America's Credit Union Conference (ACUC) will kick off Sunday afternoon at the San Diego Convention Center with nearly 1,300 credit union decision makers in attendance, according to the Credit Union National Association (CUNA). The conference runs through noon Wednesday.

Sunday's General Session will open with welcoming addresses from Emcee Grewg Schwem: Cheney; and California and Nevada Credit Union Leagues President/CEO Diana Dystra.  First item on the agenda will be the recognition of Credit Union Magazine's CU Hero of the Year, awarded to Ron Kase, president/CEO of Landmark CU, New Berlin, Wis.

The conference will include 17 Discovery Sessions from CUNA Mutual Group on topics ranging from changing trends in executive compensation, to reaching Gen Y and Millennials,  to credit union sustainability, to online cross selling, innovation technology, the future of the branch, chip technology and fraud, and more.

Also, six thought leaders sessions will include sessions on the upcoming elections, leadership, growing loans, streamlining efficiencies, staff dynamics and tapping into new markets.

Several other venues will be holding conferences or workshops in conjunction with the conference. The Network of Latino Credit Unions & Professionals Seventh Latino Credit Union Conference will be held Friday through Sunday.  The Small Credit Union Roundtable will meet Sunday. The American Association of Credit Union Leagues' league education directors and the Massachusetts Credit Union League also have scheduled meetings.

Reporting the events from on-site will be News Now staffers Leigh Gregg, director of online editorial, and Rick Roseneck, Web assistant editor, and Bill Merrick, Credit Union Magazine senior managing editor.

Mobile underbanked consumer a strategic marketing segment

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SAN FRANCISCO (6/15/12)--As mobile technology becomes further integrated into modern culture, mobile banking has emerged as the most effective way for credit unions and other financial institutions to engage the unbanked and underbanked segment of the population, according to a new report from Javelin Strategy & Research.

Credit unions also have a history of serving as advocates for the unbanked and underbanked consumer segments.

Underbanked consumers use mobile banking at higher rates than other consumers, according to the Javelin report. About 32% of the unbanked surveyed used mobile banking in the past 30 days, compared with 25% for all mobile consumers surveyed.

Comprising an estimated 35 million U.S. adults, or 15% of the U.S. population, the underbanked are typically young, ethnically diverse, and more likely to use the "computer in their pocket" to conduct their banking. The underbanked also are less likely to own computers than all mobile consumers--60% vs. 72%-- the report said.

The report outlined two areas that can attract the unbanked—wire transfers/remittances and prepaid cards. Twice as many underbanked consumers sent wire transfers as the average consumer, a market that totaled $48 billion in outflows from the U.S. Underbanked consumers make twice as many person-to-person (P2P) transfers than the average mobile consumer. One in three underbanked consumers are likely to conduct international mobile money P2P transfers, taking a lion's share of the $501 billion global remittance flow in 2011.

Prepaid accounts will be another important offering, according to Javelin. Prepaid cards are second to cash as payment of choice for the underbanked.

Credit unions can leverage their mobile P2P transfers and prepaid accounts to build the foundation of a relationship with the underbanked. By offering simple, easily understood mobile banking services, credit unions can save the underbanked consumer time and expense at check cashers, and develop positive new relationships with these younger customers.

With their lower checking fees, small financial institutions, including credit unions, can engage the underbanked through mobile banking, said Mary Monahan, Javelin executive vice president and research director.

"Smaller [financial institutions] have a lower fee structure for traditional banking in place that is more appealing to this segment, but aren't as likely to have mobile banking services," Monahan said. "Larger banks are more likely to have the mobile banking infrastructure, but also charge higher fees on average than the smaller [financial institutions]."

The report also indicates that Gen X and Y income will rise, making this tech savvy consumer segment more important to engage with mobile banking. In less than five years, Gen Y and Gen X incomes will outpace those of all other generations. By 2025, Gen Y will be responsible for almost half (46%) of total personal income.

"Financial institutions need to zero in on the youth and the tech habits of the underbanked who have the fastest growing income potential ahead of them," said Jim Van Dyke, Javelin president. "FIs need to connect with the underbanked and unbanked where they live and work and how they prefer to transact."

Bethpage Error exposes card accounts to Internet

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BETHPAGE, N.Y. (6/14/12)--Bethpage (N.Y.) FCU told it members Tuesday that an employee's error resulted in members' information being "electronically placed in a non-secure file that was accessible via the Internet."

"This was not a hack or breach of our core system but an isolated incident. At this point no accounts have been compromised and no fraud or losses have been found," said Bethpage Federal CEO Kirk Kordeleski, in a letter to Bethpage members posted on its website Tuesday.

According to several local media outlets, personal information from 86,000 members' Visa debit card accounts were exposed when an employee on May 3 posted data on a file transfer protocol site that the employee believed was secure. Bethpage found out the data could be accessed through search engines and removed the data on June 3 when it became aware of the breach (Long Island Business News June 12).

The files posted to the non-secure site did not contain Social Security numbers, the three-digit CVV-2 security code located on the back of the cards, or personal identification numbers for the accounts, said the credit union's notice to members.

Information that was exposed included Visa debit card numbers and expiration dates; members primary savings account numbers; checking account numbers linked to the debit cards; and the members' names, mailing addresses and date of birth.

"Upon discovering the situation, we immediately eliminated all access to the non-secure file and implemented enhanced security questions for member inquiries. In addition, beyond the standard measures we take for fraud protection, we have placed additional fraud monitoring on all accounts and debit cards. Affected members will be protected from, and will not suffer any financial loss based upon any fraudulent charges on their account related to this incident," Kordeleski said in the notice to members.

As a result of the incident, all members with a Visa debit card will get a replacement card before June 30, and members whose accounts were compromised will be offered individual Credit Monitoring at the credit union's expense for one year, through Experian. The credit union noted that its new MasterCard debit card was not compromised.

Bethpage recommended that members affected take these measures to protect themselves from the risks of fraud and identity theft:

  • Review account statements or online history regularly;
  • Remain vigilant during the next 12 to 24 months and report immediately any suspicious activity;
  • Use Bethpage's website to learn more about identity theft; and
  • Contact the Federal Trade Commission, which provides identity theft information.
The credit union has more than 200,000 members.

SE Corp merger into Corp One set to be final

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COLUMBUS, Ohio, and TALLAHASSEE, Fla. (6/14/12)--The last hurdle to a successful merger between Ohio-based Corporate One FCU and Florida-based Southeast Corporate FCU--raising sufficient perpetual contributed capital (PCC)--has been achieved, announced the corporates Wednesday.

That means the merger will become effective July 1.

The capital campaign was deemed a success when Southeast members' total PCC capital investments reached $68 million. That, combined with Corporate One's present capital position creates an entity with more than $375 million in total regulatory capital, of which $213 million is in PCC.

This total capital maintains Corporate One's status as "well-capitalized" after the merger is completed. Corporate One continues to have the most total regulatory capital dollars of any corporate credit union with one of the strongest reserves and undivided earnings (R&UDE) ratios, the corporates said in the announcement. Also, it will meet the well-capitalized Permanent Leverage ratio, which becomes effective in October 2013.

"The goals of this merger were to preserve Southeast members' capital, provide them with continuity of services, and protect and enhance the value of the franchise of Southeast Corporate, a franchise that remains valuable thanks to the continuing support of its members," said Lee Butke, Corporate One's president/CEO. "With a successful capital raise behind us, we can now focus on providing those solutions that our members need with the benefits that they deserve."

According to Jerry Guy, president/CEO of KEMBA Financial CU, Gahanna, Ohio, and Corporate One's board chairman, "The board looked at this transaction very closely and agreed that the PCC commitments from Southeast's membership were sufficient to maintain Corporate One's "well capitalized" Permanent Leverage position as defined in the new [National Credit Union Administration] corporate regulation."

He added that the board's "first obligation was to protect the capital of Corporate One's loyal membership, and maintain our exceptionally strong capital position. We also wanted to see the creation of a solid business model result from the combined resources of the merger entity, and we wanted to do what was best for the membership of Southeast Corporate."

The board also "wanted to protect the credit union system from another black eye caused by a corporate credit union failure and the resulting loss of capital that would leave the credit union system. I'm proud to say we've accomplished these goals with this merger."

With the Southeast capital offering now closed, and with Southeast's membership having voted to support the merger last month, the merger is a go. On July 1, at 12:01 a.m., Corporate One will shifts its focus on integrations of systems and product solutions as quickly as it can without disrupting members' operations.

CUNAs application only one for CU domain name

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WASHINGTON (6/14/12)--The Credit Union National Association's (CUNA) application for the ".creditunion" domain name to the Internet Corporation for Assigned Names and Numbers (ICANN)  is the only application for that domain or anything similar.

ICANN on Wednesday released the list of applications it has received for the new top-level domain names: 1,930 applications from 60 countries, with the plurality from North America. Domain names are the words to the right of the dot in an Internet address.

"Ours was the only application for .credit union or anything similar," said CUNA General Counsel Eric Richard. "The bankers appear not to have been so lucky; their applications for .bank and .insurance both appear to have competing applications, which could trigger an auction process or other challenges," he said.

Many applications were from large financial institutions seeking domain names reflecting their own brand, such as .UBS. Other domain applications suggested particular financial products, such as .loans. The identity of the applicant isn't obvious in many applications, with names masked behind an LLC or holding company that doesn't have a familiar name.

ICANN also announced a 60-day period for comments on the applications. Wednesday also marked the beginning of a seven-month "objection period," during which parties can object to the grant of any application.

CUNA's next step is to develop a business plan for the domain to have ready if the application is approved.  Approved domain names will likely go live in 2013.

The ".creditunion" top level domain, if obtained, would be available to credit unions to supplement or replace their existing Web names at a roughly estimated cost of $100-$200 annually per credit union, according to CUNA.

CUNA President/ CEO Bill Cheney has said the move to reserve a credit union-specific top-level domain "ensures this important identifier will stay in credit union hands and will allow the credit union movement to collectively take full advantage of the next stage of the Internet's development and growth."

A CUNA survey of member credit union CEOs and others found that nearly 60% of respondents favored purchasing the ".creditunion" domain name. Nearly 70% said they would create an additional ".creditunion" domain name, or move their existing Web page to a new ".creditunion" address, if the new top-level domain name is approved.

Federation joins Clinton low-income seniors effort

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NEW YORK (6/14/12)--The National Federation of Community Development Credit Unions was among the more than 900 participants at this year's Clinton Global Initiative America (CGI America), held June 7-8 in Chicago.

CGI America is dedicated to finding collaborative solutions to top economic challenges in the U.S.

The federation was one of 58 institutions to present a CGI commitment at the event through its Better Directions: Financial Security Has No Age Limits program, which commits the federation to expanding its program to build economic security for low-income seniors. The federation participated at CGI as part of the Financial Inclusion Working Group.

Better Directions connects low-income and minority aging populations with financial services, loans and investment products that safeguard their assets and build economic security. It brings together networks of advocates for the aging in communities served by community development credit unions (CDCUs) to deliver a holistic approach to economic security for older adults.

The products and services offered by CDCUs participating in the program include savings products, affordable financing, pre-retirement investment products and debt-reduction loans.

To date, credit unions in eight cities have participated in the Better Directions pilot program. They have worked with more than 800 seniors, providing more than $1.2 million in debt consolidation loans, anti-predatory loans and low-cost auto loans, and offering basic checking and savings for previously unbanked seniors.

At CGI, Federation Senior Program Officer Melanie Stern committed to doubling the number of participating Better Directions sites to 16 from eight to demonstrate that the existing model of CDCUs in partnerships with social service agencies can create positive impacts on a larger scale.

"This growth in the Better Directions program will create momentum for a broader expansion to other financial institutions," Stern said. "Our goal is to see a total of at least 1,600 additional low-income seniors improve their economic and income status during the commitment period."

Also, Hope Community CU in Jackson, Miss., a $68 million asset regional community development financial institution, was recognized as an attendee of the 2012 CGI America (News Now June 11).

Hope Community was among the leaders from government, business, and nonprofit sectors that made more than 50 new commitments valued at more than $1 billion, which will create an estimated 32,000 jobs and fill more than 500,000 vacant jobs.

Md. regulators OK merger of largest state CU

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BALTIMORE (6/13/12)--Maryland regulators approved a merger Tuesday of Linthicum-based State Employees CU (SECU) of Maryland--the largest state-chartered credit union in the state--with Millersville-based Anne Arundel County Employees FCU (AACE FCU).

The merger---announced in March--is expected to be completed in August, now that it has been approved by credit union members, as well as state and federal regulators (Baltimore Business Journal and Associated Press June 12).

Under terms of the merger, the $2.2 billion asset SECU will acquire the $81million asset AACE FCU--one of the smallest credit unions in the state. It has with two branches, and SECU has 19.      

SECU's members approved the merger at their annual meeting. AACE FCU members gave their consent in April through mail-in ballots, AP said.

AACE FCU will operate under its current name until August when account, service and system integration is finalized, at which time it will convert to the SECU name.

Raising CU marketing standards in Belarus

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MINSK, Belarus (6/14/12)--A U.S. credit union marketer and member of the Global Women's Leadership Network recently traveled to Belarus to help raise credit union marketing standards, according to the World Council of Credit Unions (WOCCU).

Cindy Schrader (center), marketing director for Heritage CU in Madison, Wis., met with Vladimir Karyagin (right), chairman of both the Minsk Capital Association of Entrepreneurs and Employers and the ALE Republic Confederation of Entrepreneurship, and Steshko Grigory (left), director at the Learning Center for Microfinancing, during her Global Women's Leadership Network visit to Minsk, Belarus. (Photo provided by the World Council of Credit Unions)

Click to view larger image
Credit unions in Belarus rely heavily on "social networking" to spread their marketing message, but their efforts have little to do with computers or Internet-based programs. Old fashioned word-of-mouth is the key method by which members in the former Soviet satellite nation learn about credit union rates and services, according to one U.S. credit union marketer who recently visited Belarus to help boost the country's credit union marketing efforts.

Cindy Schrader, marketing director for Heritage CU in Madison, Wis., traveled to Belarus last week to share her marketing expertise as a member of the Global Women's Leadership Network, a joint initiative by WOCCU and the Canadian Cooperative Association to bring together women leaders from credit unions worldwide to share mutually beneficial ideas and solutions. The network sponsored Schrader's visit due to the growing demand for marketing knowledge in countries in transition, said Brian Branch, WOCCU president/CEO.

"Many things credit unions in western countries take for granted are new to credit unions in nations like Belarus," Branch said.

Belarus credit unions are small and have limited resources, said Schrader, a 10-year Heritage CU veteran. Lack of general awareness about credit unions and their benefits have made it a challenge for Belarusian credit unions to grow.

"Credit unions are spreading their message through members, their business association and education," Schrader said. "With many credit unions run by only one or two people, they do not have dedicated staff to help get the word out."

The country's credit unions also face other challenges. Credit unions pay an income tax that banks are not required to pay. The high cost of funds sometimes makes credit union loan rates higher than those of banks. Despite the challenges, Belarusian credit unions are becoming an increasingly critical resource for consumers with whom banks will not do business. That makes the credit unions part of the country's social fabric and increases marketing's importance, Schrader said.

"Marketing is a brand new idea to many people, and they are grasping the concept and understanding the difference," Schrader said. "Hopefully, I taught them to think differently and put themselves in the shoes of members they are trying to reach."

While Schrader met with representatives from the Republican Association of Consumer Cooperatives for Mutual Financial Assistance, Belarus' credit union trade association and a World Council member, she focused on target and life-stage marketing, helping credit unions understand the nature and needs of the members they serve. By marketing to member needs rather than focusing on the financial products themselves, credit unions could more effectively extend their reach. Limited marketing resources make targeting specific members even more important to credit union success, she said.

"The credit unions need to work toward developing top-of-mind awareness by keeping the credit union name in front of both members and potential members," Schrader said. "There as well as here, when a financial need arises, members need to think of the credit union first."

For Schrader, the visit to Belarus was eye-opening and helped reaffirm her commitment to credit unions.

"There have been many times in my current position that the credit union philosophy has warmed my heart," Schrader said. "To see it at work on a grander scale helping lower-income people, funding company startups and offering members a real opportunity to fulfill a dream is inspiring."

For more information on the Global Women's Leadership Network, use the link.

Four Pa. CUs targeted by phishing scams

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STATE COLLEGE, Pa. (6/14/12)--Four Pennsylvania credit unions appear to be the targets of a coordinated phishing scam.

Penn State FCU, Bellefonte; State College (Pa.) FCU, SPE FCU, State College; and Titan FCU, Pleasant Gap, reported their members have received text messages informing them that their debit cards had been deactivated. The texts ask them to call a number to change their personal identification numbers. Information provided has in some cases been used to make ATM withdrawals.

Private member information databases had not been compromised at any of the credit unions (Centre Daily Times June 12).

Penn State FCU and SPE FCU posted messages on their websites warning members of the scam.

Penn State FCU CEO Connie Wheeler said the credit union has been inundated with calls about the scam. Wheeler was not certain how many members had been affected.

The scam is specifically targeting credit union members in Pennsylvania's Centre County, though it appears to have been initiated outside the area, Wheeler told the publication.

Some members of Penn State FCU did provide account information to the scammers, Wheeler said.

Russell Brooks, president/CEO of SPE FCU, told the newspaper that some of his members called the number but hung up when they realized the message was a scam.

SPE FCU has not suffered any losses, Brooks said.

Global Payments breach update 1.5M affected

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ATLANTA (6/14/12)--Global Payments Inc. said Tuesday it continues to believe that no more than 1.5 million accounts were compromised in a recent breach of its processing system.

The Atlanta-based payments processor was removed from Visa's and MasterCard's "compliant service providers" list after revealing March 30 that part of its third-party card processing system had been breached (News Now May 18).

The company had previously said the breach was limited to about 1.5 million accounts. After making "substantial progress" in its investigation, Global Payments said Tuesday actual card numbers did not exceed that figure.

The number of credit unions affected by the Global Payments data breaches could number into the hundreds, CUNA Mutual Group Risk Manager Ann Davidson predicted in April (News Now April 12).

The company said Tuesday that its continuing investigation confirms that cardholder information that may have been stolen included on Track 2 data, and not customer personal information such as names, addresses and Social Security numbers.

The investigation did reveal potential unauthorized access to servers containing personal information collected from a subset of merchant applicants. Notifications resulting from the discovery are unrelated to cardholder data but pertain to individuals associated with a subset of the company's U.S. merchant applicants, the company said.

Global Payments said it will provide another update on its investigation by July 26.

Manitoba CUs popularity surges among small biz

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WINNIPEG, Manitoba (6/14/12)--The collective assets of the 41 credit unions in Canada's Manitoba province achieved a major milestone--$20 billion in assets--in April.

About half of Manitobans are credit union members, reports the Credit Union Central of Manitoba, the trade association for credit unions in the province.

That $20 billion milestone was reached relatively, quickly noted Garth Manness, CEO of the Credit Union Central of Manitoba. Since hitting $10 billion in the fourth quarter of 2005, Manitoba credit union assets have grown at an annual rate of 11.25%. Their assets have quadrupled since September 1999.

Much of the credit union strength comes from small business, Manness told the Winnipeg Free Press (June 13).

Of the $18.6 billion currently on deposit with credit unions, $16.2 billion is out on loan to Manitobans, adding to the success of local communities by being invested directly in businesses and indirectly in the purchase of goods and services that drive economic activity, said the trade association. With a total payroll of $150 million, credit unions also provide full-time employment for 3,200 Manitobans.

While the number of credit unions has decreased to 41 from 57 since 2005 as the result of mergers, Manitoba has 13 more credit union branches. Credit union market share, as measured by comparable assets in Manitoba of credit unions and major banks, stands at 42%.

"In 67 of the 117 communities they serve, a credit union is the only financial institution in place for local consumers, businesses and producers," Manness said.

"In addition to their appeal as excellent financial institutions, the success of credit unions is also attributable to the fact that they are co-operatives--owned and democratically controlled by the same people, their members, who are their customers, and guided by a common set of principles that set them apart in the marketplace," Manness added.

CU System briefs (06/12/2012)

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  • NEW YORK (6/13/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney and CUNA Board Chairman Mike Mercer, president of Georgia Credit Union Affiliate, will open the 38th Annual Conference on Serving the Underserved today in Atlanta, Ga.  The conference, with the theme, Celebrating Cooperative Finance 2012, runs through Saturday and is presented by the National Federation of Community Development Credit Unions.  For more information, use the link …
  • SALT LAKE CITY (6/13/12)--Helama Jose Bar Pragana, 22, of Kearns, Utah, was sentenced to 35 years to life in prison for an eight-month crime spree last year that included robbery, kidnapping, sexual assault, and burglary. According to court documents, Pragana allegedly was armed when he would approach people at credit union ATMs in the Salt Lake Valley and threaten them at gunpoint to give him cash. He would force female victims to drive to another location where he allegedly assaulted them. In one incident, he ordered a male victim to drive to another ATM after he was unable to withdraw from the first machine. He originally faced 39 counts but pleaded guilty to eight counts of aggravated robbery, two counts of aggravated burglary, five counts of aggravated kidnapping, and two counts of sexual assault. The remaining charges were dismissed. He also agreed to pay at least $10,000 in restitution to the victims. (The Salt Lake Tribune June 9) …
  • MONTREAL (6/13/12)--The website of a credit union for Montreal, Quebec police employees was hacked into and defaced Monday night, according to the Montreal Gazette (June 11). The website for Caisse des policiers et policieres was replaced with a black template with links to activism resources, the names and e-mails of what appeared to be members and employees, a video by "Anonymous media" denouncing violence by a police intervention squad, and a poem eulogizing a student-led movement and censuring alleged police actions.  The hacking is believed to be the work of the cyber-activism group called "Anonymous." However, the group has not claimed credit for the work in its public communication channels. The site was taken off line by administrators. It was the third attack in a month against websites associated with social unrest in Quebec …

Ohio CU marchers raise 146K for childrens hospitals

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DUBLIN, Ohio (6/13/12)--Ohio's credit unions raised $146,000 for Ohio's Children's Miracle Network Hospitals during their sixth annual Marching Miles for Miracle Kids event.

The credit unions have raised $1 million in the past six years through Marching Miles and other Credit Unions for Kids events.

Credit unions held a variety of activities around the state to support Marching Miles. Participants raised funds online and requested walk pledges for walks throughout the state during the week of May 6.  They also conducted fundraisers at their offices, including balloon sales, change drives, candy bar sales and bake sales.

This year's campaign raised substantially more than in past years, said Steering Committee

Chair Jaime Crooks, marketing director of Ohio Healthcare FCU, Dublin, Ohio.

"This is another example of how credit unions are making a difference in the communities they serve," said Paul Mercer, president of the Ohio Credit Union League. "When credit unions collaborate, good things happen. And in this case, the collaboration is helping to support the high-quality pediatric care that thousands of families count on."

Credit Unions for Kids, a nonprofit collaboration of credit unions, chapters, leagues/associations and business partners nationwide, raises funds for 170 Children's Miracle Network Hospitals. Credit unions are the third largest sponsor of the hospitals, and 100% of every dollar donated goes to support research and training, purchase equipment or pay for uncompensated care for children.

To view photos of individual walks or to obtain more information, use the link.

Fees backlash helps Calhoun County CUs grow

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ANNISTON, Ala. (6/13/12)--Like much of the country, credit unions in Calhoun County, Ala., are reporting significant membership and asset growth in 2011, fueled by consumers' frustration over increasing fees at banks, according to The Anniston Star (June 11).

The Star interviewed three local credit unions about their growth, including the $167 million asset Fort McClellan CU, Anniston, which reported "phenomenal" growth. President CEO Curt Sasser told the publication that deposits have grown 6% so far this year, adding to the 15% deposit growth the credit union experienced last year.

Sasser said the credit union has gained 500 members since the beginning of the year, reaching a total of about 21,116 members. He attributed the growth mainly to customer backlash against rising debit card, checking and overdraft fees at banks, said the article.

Also featured were statistics from the League of Southeastern Credit Unions, which serves credit unions in Alabama and Florida. The league noted that overall, Alabama credit unions experienced record growth in membership and assets during first quarter.

Andreas Rauterkus, associate professor of finance at the University of Alabama at Birmingham's school of business, noted in the article that credit unions' growth is not a fluke. "It's kind of a new movement in customer awareness," she said.

Several other credit unions said that credit unions low fees and better rates have helped them grow as well.

Dutch man charged in theft of 44000 card numbers

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SEATTLE (6/13/12)--A 21-year-old Dutch man has been charged with allegedly hacking into the sales systems of businesses to steal 44,000 credit card numbers worldwide, including some that belong to members of Boeing Employees CU (BECU), based in Tukwila, Wash.

On Monday, following an extradition from Romania, David Benjamin Schrooten appeared in federal court in Seattle to face a 14-count indictment that alleged aggravated identity theft, conspiracy, fraud and intentional damage to a computer (Associated Press and IDG-News-Service  June 11).

Schrooten is accused of creating "carding" websites, which are online outlets that sell stolen credit card information to criminals. His alleged accomplice, Christopher A. Schroebel, 21, of Keedysville, Md., was arrested in November, pleaded guilty in May and is set to be sentenced in August, said IDG-News-Service.  

The indictment indicates Schrooten allegedly obtained access to point-of-sale devices that belong to commercial businesses and that he recorded customers' credit card numbers. He also targeted the computer networks of payment processors, the indictment added. 

The investigation was started when an Italian restaurant owner in Seattle heard several complaints from his customers about suspicious credit card charges appearing on their accounts after dining at his restaurant. The owner contacted computer experts and the police.

The police investigation led to Schroebel and then Schrooten, said AP and IDG-News- Service.

Pa. House passes emergency mortgage program

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HARRISBURG, Pa. (6/13/12)--The Pennsylvania House unanimously passed the state's Homeowners Emergency Mortgage Assistance (HEMAP) legislation Monday evening, according to the Pennsylvania Credit Union Association (PCUA), which backed the bill.

The legislation has been part of PCUA's grassroots effort since late last month (Life is a Highway June 12). HEMAP was a program that aimed to help troubled homeowners avoid foreclosures. The program ended last year after state funding dried up.

PCUA is working with the Pennsylvania Housing Finance Authority (PHFA) to re-establish HEMAP, which is administered by PHFA (Life is a Highway June 4). The bill would use 90% of the state's share of a national mortgage servicing agreement entered into by most states' attorneys general and the five largest HEMAP mortgage services to fund the program.

The bill now goes to the State Senate for concurrence. PCUA urged its member credit unions to contact their state senators.

CU signs consent decree in ADA-ATM lawsuit

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PITTSBURGH (6/13/12)--Century Heritage FCU, based in Pittsburgh, signed a consent decree last week before a federal court in Pennsylvania, which will dismiss a class-action lawsuit alleging its ATMs violated the Americans with Disabilities Act (ADA).

In the decree, the credit union agreed to update its ATMs within 90 days to offer accommodations for the blind and visually impaired individuals so that it will be in compliance with the ADA.

Other stipulations of the agreement include that the credit union does not admit liability and instead clearly states that it always intended to comply with all aspects of the ADA. Century Heritage FCU also will provide 12 monthly certificates to the plaintiff's counsel that it remains in compliance with the 2010 ADA standards and that the voice guidance functions at each of its ATMs is properly working.  

Robert Jahoda, 30, filed the class-action suit on May 9 in the U.S. District Court in the Western District of Pennsylvania against the $128.6 million asset credit union, alleging the Title III violation, according to the court documents (News Now May 17).

Jahoda, as of April 23, had filed similar suits against at least seven banks during the previous four weeks claiming their ATMs did not comply with the law, according to the Pittsburgh Post-Gazette (April 23).

"Title III of the ADA prohibits discrimination in the activities of places of public accommodation and requires places of public accommodation to comply with ADA standards and to be readily accessible to, and independently usable by, individuals with disabilities," said the complaint filed with the court.

Jahoda's complaint alleges that he is blind and visited the credit union's ATM in McKeesport, Pa., after March 15, the date in which certain 2010 revised communications provisions of the ADA became fully effective.

Jahoda's lawsuits against financial institutions allege some ATMs "are not, and have never been, speech enabled, or they have a speech-enabling feature that is not functional." It also alleges that some input keys do not have the correct tactile symbol, do not contrast visually from background surfaces, do not meet font and visual contrast requirements, and do not provide auxiliary aids or services for full accessibility.

Bill to merge Pa. bankingsecurities departments

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HARRISBURG, Pa. (6/13/12)--The Pennsylvania State House Commerce Committee unanimously passed legislation to merge the state Department of Banking and  its Securities Commission, which should help credit unions, according to the Pennsylvania Credit Union Association (PCUA).

The new combined agency will be known as the Department of Banking and Securities, said the PCUA (Life is a Highway June 12).

The agency will be headed by the Secretary of Banking, with functions of the Securities Commission transferring to the Department of Banking. The securities division will be overseen by a deputy secretary. A new five-member commission will consist of the Secretary of Banking, governor designee, and three individuals appointed by the governor with the advice and consent of the state Senate. 

"The proposed merger of the Department of Banking and Pennsylvania Securities Commission is good government," said Jim McCormack, PCUA president/CEO. "The Department of Banking will maintain its current powers and duties, and operationally, we can expect more efficiency and a reduction in operational costs."

State-chartered credit unions will receive more information about the merger process/legislation from the association in the near future, McCormack said.

CUANY re-elects three directors officers

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The 2012 board of directors of the Credit Union Association of New York are: first row, from left, Marie Betti, Western New York FCU; Barbara Dillon, SUNY Geneseo FCU; Robyn Young, Great Erie FCU; Vice-chair Laurie Baker, The Summit FCU; Shirley Jenkins, Municipal CU; and Alfred Frosolone, Niagara's Choice FCU. Second row, from left are: Michael Tobler, Albany Firemen's FCU; John Gibardi, Entertainment Industries FCU; Treasurer Mark Pfisterer, AmeriCU CU; Chair Louis Jimenez, Montauk CU; and Secretary Ann Hynes, St. Pius X Church FCU. (Photo provided by the Credit Union Association of New York)
ALBANY, N.Y. (6/13/12)--Three directors were re-elected to the Credit Union Association of New York's board of directors Sunday at its annual meeting in Albany.

Re-elected to three-year terms were: John Gibardi, president/CEO, Entertainment Industries FCU, New York; Mark Pfisterer, president/CEO, AmeriCU CU, Rome; and Robin Young, CEO of Great Erie FCU, Orchard Park.

The board's current slate of officers were also re-elected for one-year terms. They are:

  • Board Chairman Louis Jimenez, CEO, Montauk CU, New York;
  • Vice-chairman Laurie Baker, senior vice president/chief operating officer, The Summit FCU, Rochester;
  • Treasurer Pfisterer; and
  • Secretary Ann Hynes, president/CEO, St. Pius X Church FCU, Rochester.
 Completing the 11-member board are:

  • Marie Betti, treasurer/CEO, Western New York FCU, West Seneca;
  • Barbara Dillon, CEO, SUNY Geneseo (N.Y.) FCU;
  • Alfred Frosolone, CEO, Niagara's Choice FCU, Niagara Falls;
  • Shirley Jenkins, board secretary, Municipal CU, New York; and
  • Michael Tobler, president/CEO, Albany Firemen's FCU.
The directors represent three asset categories: up to $25 million, $25 million to 100 million and more than $100 million.

Judge blocks implementation of taxi medallion law

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NEW YORK (6/13/12)--A lower court judge in New York has temporarily blocked a state law that would increase New York City yellow taxi medallion purchases, granting the request brought by an association of credit union lenders alleging the state usurped the Municipal Home Rule provision of the state Constitution.

In the temporary restraining order issued June 1 in New York Supreme Court, Justice Arthur F. Engoron agreed with the Taxicab Service Association (TSA)--an association of credit union lenders that finance the yellow taxi medallion purchases in New York.

TSA and four individual credit unions had asked the court to invalidate the Street Hail Livery Law, or Hail Act, which was passed in 2011 to shore up an insufficient supply of taxis in the city and its outer boroughs. The Hail Act allowed up to 18,000 new taxi licenses in the city and its outer boroughs, according to court documents. 

They maintain that the act is illegal and unconstitutional because it "imposes dramatic private costs" on the existing taxi drivers and lenders "to address a public problem, but provides no just compensation for medallion owners or lenders," said the complaint. They also argued that the Hail Act  is invalid because it represents an illegitimate state takeover of many aspects of New York City's local property, affairs and government, thus violating the Home Rule provision.

"The question here is basically whether the number of taxi medallions and the rules of outer-borough hails is primarily a matter of local or state concern," said Engoron in granting the injunction.

"The argument that the City is in the State, and so is a State concern, simply proves too much," he wrote. "This court has trouble seeing how the provision of taxi service in New York City is a matter that can be wrenched from the hands of city government, where it has resided for some 75 years, and handed over to the state. Both governments are democracies, but only one is solely answerable on election day to the constituents of the five boroughs, those directly affected by the taxi service at issue here." (New York Law Journal June 6).

The individual credit unions joining TSA's suit include Lomto FCU, Melrose CU, Montauk CU and Progressive CU--all from the New York area. 

Taxi medallions are symbols that are usually attached to the hood of New York City cabs. The medallions are licenses that are regulated by the city and allow drivers to pick up curb-side passengers who "hail" a cab. Credit union service organizations may originate business loans that are used to purchase taxi medallions, the National Credit Union Administration said in a legal opinion released in October 2010 (News Now Nov. 1, 2010).

Three Illinois CUs targeted in phishing scam

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WAUKEGAN, Ill. (6/13/12)--Three Illinois credit unions were targets of a recent phishing scam.

Members of Great Lakes CU, North Chicago, Ill.; Consumers CU, Waukegan, Ill.; and Community Trust CU, Gurnee, Ill., received automated calls and were asked to provide account information (Pioneer Press June 12).

Members who provided any personal information were advised to contact their credit unions.

Great Lakes CU and Consumers CU have placed fraudulent activity warning on their web sites.

The website messages state the credit unions normally don't contact members to ask personal account information or Social Security numbers.

2012 Pro Blockbuster Awards announced

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MADISON, Wis. (6/13/12)--The Credit Union National Association (CUNA) recognized outstanding league and league service corporation (LSC) communications efforts with the presentation of its Pro and Blockbuster Awards last week.

The awards were presented at the American Association of Credit Union Leagues (AACUL)/Governmental Affairs and Political Specialists (GAPS)/Communicators Conference in Washington, D.C.

Pro Awards honor the best in public relations and publications. Blockbuster Awards pay tribute to excellence in marketing and advertising. These awards are the highest communications awards bestowed on leagues and LSCs.

Credit Union of the Dakotas was recognized as CUNA Pro Best of Show for The Memo newsletter.

Maine Credit Union League was recognized as Blockbuster Best of Show for its Share Branching Here/There campaign.

Pro Award categories and first-place winners include:

  • Blow Your Own Horn--Montana Credit Union Network, BSA/OFAC E-mail Training Series;
  • Best Community Relations Program--Credit Union Association of the Dakotas, Minot Floods "We're Here to Help" and "Your Money is Safe & Sound";
  • Best Public Relations Project--Georgia Credit Union Affiliates, Paying Attention: To People and Their Money;
  • Best League Piece on the Uniqueness of Credit Unions--Wisconsin Credit Union League, 2010 Annual Report for Credit Unions;
  • Best League Publication-Newsletter--Credit Union Association of the Dakotas, The Memo;
  • Best League Publication-Magazine--Pennsylvania Credit Union Association, Key Notes;
  • Best League Annual Report or Yearbook (print)--League of Southeastern Credit Unions, 2010 LSCU Annual Report;
  • Website--California and Nevada Credit Union Leagues, AMC 2011 Mobile Web Application;
  • On-line Publication--Pennsylvania Credit Union Association, Life is a Highway; and
  • Best Use of Social Media--Credit Union Association of the Dakotas, Dakota Connect
Blockbuster Award categories and first-place winners were:

  • Best Print Ad--Missouri Credit Union Association, Redefine Your Check Mate;
  • Best Print Materials--LEVERAGE, League of Southeastern Credit Unions, LEVERAGE Solutions Folder and Product Sheets;
  • Best Campaign--Maine Credit Union League, Shared Branching: Here/There;
  • Best Credit Union Campaign--Maine Credit Union League, free4Me Checking; and
  • Logo Design--Northwest Credit Union Association, 2011 Convention Logo.

Economy takes toll on consumers median income

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WASHINGTON (6/12/12)--The economy between 2007 and 2010 took a toll on consumers' median income and net worth, according to a Federal Reserve survey on consumer finances for 2010.

Although the survey should be no surprise to credit unions, given the recession's impact on middle-class families who saw declines in their home values, it may indicate more in terms of the recessChanges in U.S. Family Finances (full report)

ion's impact on household finances. The Fed report, "Changes in U.S. Family Finances from 2007-2010: Evidence from the Survey of Consumer Finances," was released Monday.

The Fed statistics indicate that the median value of inflation-adjusted family income before taxes fell 7.7%--to $45,800 in 2010 from $49,600 in 2007.  Mean income experienced a sharper decline--11.1%--to $78,500 from $88,300.

Net worth dropped even more dramatically, with the median net worth falling 38.8% to $77,300 in 2010 from $126,400 in 2007, as compared with $107,000 in 2004, and from $106,100 in 2001.

The mean net worth fell 14.7% in 2010 to $498,800, down from $584,600 in 2007 and $517,100 in 2004, but more than $487,000 in 2001.

The numbers were impacted by near collapse of the real estate market during the recession, which left many people underwater on their mortgages, owing more than their home is now worth.

Middle-class families in the 60th to 79.9th percentiles of income experienced the worst drop in wealth--40.4%--with the second worst drop--35%--among those in the 20th to 39th percentiles of income, said the Fed. Those in the top 10% saw their income increase 1.8%.

Those earning in the top 10% saw their net worth at $1.19 million, or 192 times the $6,200 median net worth for those in the bottom 20% of earners. In 2001, the difference was 106 times.

Other findings:

  • Fewer families saved their money in the most recent survey. In 2010, roughly 52% of families saved, while in 2007, 56.4% of families saved.
  • In a reversal of a trend going back to 2001, debt among families decreased. In 2010, roughly 74.9% of families were in debt, compared with 77% in 2007.
  • Fewer families carried a credit card balance--39.4% in 2010 vs. 46.1% in 2007.  The median balance in 2010 on these cards was $2,600, a 16.1% decrease from 2007.
  • Fewer families (50.4%) had retirement accounts in 2010 than in 2007 (53%).

CU System briefs (06/11/2012)

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  • RALEIGH, N.C. (6/12/12)--Ninety-eight percent of members of State Employees' CU (SECU), Raleigh, N.C., surveyed recently were satisfied with the credit union, with 90% saying they were "very satisfied," according to a member survey conducted by the Credit Union National Association (CUNA) Research. SECU's 2012 survey results also indicated that 60% of its members surveyed had "high loyalty" to the credit union, an increase over the previous year and nearly double the credit union peer average of 32%, said the $23.7 billion asset credit union, Loyalty rankings evaluated three criteria: if SECU is considered the member's primary financial institution (PFI), if the member "definitely would" recommend SECU to others, and if the member "definitely would" contact SECU for future services. Of those surveyed, 75% consider SECU as their PFI, well above the 61% norm established by other peer credit unions.  The positive results signify that members appreciate SECU's ongoing efforts to "Do the Right Thing" for its membership, said the 75-year-old credit union. SECU has been aggressive in implementing and modifying programs to benefit its members who are struggling in a weak economy. SECU has more than 1.7 million members …
  • AUGUSTA, Ga. (6/12/12)--Two Georgia credit unions--$59.2 million asset Augusta VAH FCU in Augusta and $1.7 billion asset Georgia's Own CU, Atlanta, have been working out of the same space in August since January (The Augusta Chronicle June 6). The two credit unions decided during the summer of 2011 that they would share the address after Georgia's One contacted Augusta VAH about possibly sub-leasing space from the latter credit union. The credit unions have benefitted from decreased overhead costs and have gained greater security from having more employees--20 staffers-- working in the 4,000-square-foot building.  Both credit unions are members of Credit Union Service Centers, a nationwide network of shared branches. Augusta VAH serves primarily federal employees; Georgia's Own serves any resident in the state …

IWash. PostI INPRI IWTOPI Biz lending stymied by limits

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WASHINGTON (6/12/12)--Credit unions' small business lending efforts received recognition in  three separate features in prominent Washington,D.C. media, including National Public Radio (NPR);  the Washington Post's weekly business journal, Capital Business; and WTOP. They told how the financial crisis has made it harder to acquire a small business loan and how credit unions are helping but could do more if their member business lending (MBL) cap were raised.

Credit Union National Association (CUNA) President/CEO Bill Cheney discussed credit unions' efforts to help small businesses by urging Congress to lift their MBL cap to 27.5% from 12.25%  in a segment, "Tough Times Financing Small Businesses," on NPR's "Kojo Nnamdi Show."

"Credit unions have actually expanded their business lending," Cheney said. "From the beginning of the financial crisis to the end of last year, credit unions' member business lending expanded by 45%. During the same period, banks' small business lending fell 15%--That's a pretty dramatic difference," he told Nnamdi.

"Part of it is people are having a harder time getting a loan from a bank. They have a different relationship with their credit union, in that they are not just a customer but also an owner," he said, noting that "credit unions have stepped forward to fill that void in some markets in terms of business lending."

Prior to 1998, there were no restrictions on credit union business lending, Cheney said. The current MBL cap--12.25% of assets--"is a very low percentage.  We're trying to raise the cap modestly for credit unions that have experience in business lending and are close to the cap, so they can do more to help small businesses, and we have legislation pending in Congress to do just that."

Lifting the cap would, during the first year, free up $13 billion in capital for small businesses, translating into 140,000 jobs at no cost to taxpayers. "All we need is to lift the cap, and credit unions could do more to help small businesses," Cheney said.

He answered banks' opposition that credit unions weren't meant to do business lending: "Credit unions were meant to make loans to their members, for whatever purpose, and we've been making business loans for more than 100 years. The cap unnecessarily restricts lending. Credit unions are careful lenders; they're strong underwriters. Credit unions business loans perform better than bank business loans. Credit unions are increasingly involved in small business lending, and we think there's no good policy reason to restrict the lending.

"We need strong banks making loans to small businesses, and no one is suggesting that that should stop. We just think that credit unions should be able to do more," the CUNA CEO said.

Although it is difficult to get anything done in Washington during an election year, Cheney said the bill to raise the MBL cap has "strong, bipartisan support in both the House and the Senate. We're working hard every day to convince lawmakers that this is good public policy and hoping to get around the politics of an election year."

Another show guest, Small Business Administration (SBA) Regional Director Bridget Bean, agreed that credit unions "play a critically important role" in small business lending.  "There is enough need out there to have as many lenders as we can commited to helping small businesses," she said.

"The Kojo Nnamdi Show" airs live weekdays on WAMU FM, the major NPR affiliate in the Washington, D.C., area. It is a live magazine program highlight news, political issues and social trends of the day. (To hear the entire segment, use the resource link.)

On WTOP, a local radio station, on its "Call for Action," segment, Steve Pociask, president of the American Consumer Institute, a non-profit research group, discussed the tougher environment that small businesses find themselves in and barriers inhibiting the entry of new small businesses--restricted access to capital, and regulations and taxes.

"Going to a bank and getting a loan is pretty tough to do," he said, adding that there was a 20% decline in loans to small businesses during the recession. "Last year, 60% of small businesses experienced a rejection from banks. That is high," Pociask told the show's host, Shirley Rooker.

"It's not that the funds aren't available," he continued, citing data that "credit unions have expanded loans to small businesses by 40%, but regulators have capped credit unions' lending and the cap slows down credit unions' ability," he said, adding that banks are holding back small business lending.

"It's a tough market, but stimulating small business is essential because it has huge multiplier effects" in creating new dollars, and "the competition drives down prices," Pociask said. (Use the link to hear the episode.)

Also, an article in the Washington Post's weekly business journal, Capital Business, headlined "Credit unions feel stymied by lending limitations," featured business people who were helped by credit unions that are nearing their MBL cap. 

Nick Irons, who had five years' experience as a personal trainer, told of his attempt in 2010 to obtain financing to open a fitness studio in Bethesda, Md.  Banks refused to loan to him, but with the help of a $250,000 small business loan from Mid-Atlantic FCU, Germantown, Md.,  he opened Irons Fitness. He has hired four trainers and a dietician.  Mid-Atlantic FCU said it has had to pull back on making loans because 10% of its assets are listed as business loans, and new loans would mean it would bump against the MBL cap.

Credit unions' small business lending rose 5.8% over the past year to $37.89 billion in first quarter, said the National Credit Union Administration.  The Federal Deposit Insurance Corp. recorded a 3.7% decline to $584 billion in small business loans at banks for the same period.

CUs account helps fee-frustrated consumers

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EAST WINDSOR, N.J. (6/12/12)--McGraw-Hill FCU in East Windsor, N.J., has introduced the S3 Account in response to consumer frustration with checking accounts that feature more fees, minimum balances to avoid fees, increased penalties and confusing terms and conditions. The account pays 16 times the national checking average annual percentage yield (APY).

The account allows consumers to "save, spend and simplify" with no monthly fees and

no minimum balance requirements, said the credit union. The account also features monthly ATM surcharge rebates.

The $278 million asset McGraw-Hill FCU is counting  on consumers' reaction to the account's main selling point--its high APY. The account requires direct deposit and allows consumers to choose their direct deposit minimum, which also is unique to the marketplace, the credit union said.

The move positions McGraw-Hill FCU, with more than 71% of its national membership-base

located in the greater New York City region, to gain market share from consumers who are

increasingly dissatisfied with large commercial banks, the credit union said. During The S3 Account rollout, the credit union plans to support its foundation of helping its members achieve financial wellness through a caring approach rooted in financial literacy and education.

"We recognize the financial pain of New York City-area consumers, and others nationwide,

whose hard-earned funds are being steadily drained by the fees and confusing conditions

imposed by for-profit institutions whose products offer little or no yield," said Shawn

Gilfedder, president/CEO of McGraw-Hill FCU.

"The S3 Account is a perfect example of the credit union's mission to deliver extraordinary value in a clear, conspicuous manner to the consumer," Gilfedder added. "The S3 Account says to our members, 'We want your personal banking relationship at McGraw-Hill FCU.'"

Man deposits 20 years worth of coins at CU

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HERNDON, Va. (6/12/12)--George Shoemaker, a member of Northwest FCU, Herndon, Va., is proof that saving pocket change can pay off.

After 20 years of collecting pocket change, George Shoemaker, a member of Northwest FCU, Herndon, Va., delivers $7,124 in coins for deposit. (Photo provided by Northwest FCU)
Shoemaker recently brought in change that he had been saving for 20 years. After two hours of processing the change through the coin counter, Northwest FCU member service representatives informed Shoemaker he had accumulated $7,124.

Shoemaker said he will use the money toward his retirement.

"Some may see pocket change as a small or unimportant amount of money," said Northwest FCU President/CEO Gerrianne "Winky" Burks. "George's experience illustrates how saving small quantities can really add up."

Latino Community CU impact more than financial

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DURHAM, N.C. (6/12/12)--Latino Community CU, Durham, N.C., was featured in an article published by One Nation Indivisible, an organization that celebrates people working to improve their socioeconomic status of communities, workplaces and social institutions.

The article, titled 'Wealth for Everyone,' describes how Latino Community CU was launched 12 years ago as place for Durham, N.C.-area Hispanics to safely deposit their paychecks when many financial institutions didn't see them as viable customers. Unbanked Latinos carrying large amounts of cash were also easy targets for street crime.

Latino Community CU, with $116 million in assets, has a "very pointed" mission to incorporate low-income and traditionally unbanked people into the financial system, Erika Bell, the credit union's vice president for strategy and services, told One Nation Indivisible.

The credit union also has a dedicated outreach program to increase its members' financial sophistication. It holds free workshops to teach its members basic financial concepts such as using debit cards, building credit, maintaining a budget and buying a house.

The article shares stories about members who have received financial help from the credit union. Among those members is Lima Marchan, a native of Trinidad, who received a loan from the credit union to expand her cleaning business. Marchan also attended the credit union's workshops to improve her personal financial status.

To read the article, use the link.

President of Costa Rica Co-ops offer solutions

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ROME (6/12/12)--In a globalized world in which crises such as climate change affect everyone, the cooperative model--which includes credit unions--offers singular solutions to help people overcome hunger and poverty, the  president of  Costa Rica told a meeting of the  Food and Agriculture Organization (FAO) of the United Nations last month in Rome.

Costa Rican President Laura Chinchilla in her speech to the FAO used the example of her country to highlight how cooperatives can make key contributions to the competiveness of small agricultural producers and to sustainable development.

Also, FAO Director-General Jose Graziano da Silva cited the production by Costa Rican cooperatives of carbon neutral coffee as a model example of the economic, environmental and social role cooperatives can play.

2012 has been designated as the International Year of the Cooperatives. See the link.

Northwest consumers businesses flock to safety of CUs

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BEAVERTON, Ore. and FEDERAL WAY, Wash. (6/12/12)--Northwest credit union members' savings grew an average 4.85%--or 4.9% in Oregon and 4.8% in Washington--quarter over quarter from Dec. 31 to March 31, to nearly $43.38 billion--or $29.74 billion in Washington and $13.64 billion in Oregon--according to the National Credit Union Administration (NCUA).

This occurred as consumers financed their 2.7% growth in national spending by cutting their savings rate to 3.6% from 4.2% of disposable income, the Northwest Credit Union Association (NWCUA) said, citing NCUA's statistics (Anthem June 7).

Credit union membership continued to rise for Washington and Oregon credit unions during first quarter, though less dramatically than the historic numbers posted during 2011's Bank Transfer Day season, NWCUA said. In Washington, the change was 1.2%, with 34,437 new members. During the same three months, Oregon credit union membership grew by 11,172 members, or 0.8%.

Total credit union membership in the Northwest now stands at 4,256,778--with 2,869,764 members in Washington, and 1,387,014 in Oregon. Data also suggest that more than 600,000 additional Northwest consumers hold accounts in credit unions headquartered outside the two states.

"It's obvious from the overall growth that credit unions continue to be the consumer choice for honest safekeeping of their financial future," said NWCUA CEO John Annaloro. "And when Congress realizes that credit unions are increasingly becoming the entrepreneur's choice for small-business financing, we're certain that market will grow as well."

Credit union member business loans (MBL) in the Northwest now total nearly $2.41 billion--$1,496,264,131 in Washington and $910,666,509 in Oregon--for a quarter-over-quarter increase of more than $44.62 million, said the most recent NCUA Financial Progress Report.

"Small-business-owning members have been receiving safe, affordable and dependable financing from their credit unions for decades, in good times and bad," said NWCUA President Troy Stang. "This proven fortitude is clear evidence that the cooperative model works in any economy."

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

Montana First members to vote second time on merger

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MISSOULA, Mont., (6/12/12)--Montana First CU, Missoula, Mont., are voting on a proposed merger with Washington-based Horizon CU for a second-time, after rejecting a merger less than a year ago.

Ballots for the latest merger were sent to Montana First CU members on Thursday after the National Credit Union Administration approved the proposal (Missoulian June 11).

Montana First CU is Montana's oldest credit union (News Now Jan 18).

Among the benefits Montana First CU's management team cites for the proposed merger are opportunities to expand its technological capabilities, including online banking, and improved lending capacity.

Members have until June 18 to return ballots. Members also can vote at a special meeting June 26, where the result of the merger will be announced.

Montana First CU members rejected the first merger in January. Members complained about a lack of information prior to the first vote, Montana First CEO Chris Sisco told the Missoulian.

Before reapproving a new plan this spring, the Montana First CU board hosted five public meetings to share information and answer questions.

The credit union also has launched a marketing campaign that includes TV, billboard and newspaper messages urging members to approve the merger.

A merger would mean branches in Missoula will keep the Montana First name, and Montana First members will elect one member to Horizon FCU's board.

Montana First, with $60 million assets, serves 9,700 members through two branches. Horizon, with $420 million in assets, has 38,000 members and 18 branches.

Other mergers taking place throughout the country include:

  • Electric FCU, with $10.7 million in assets, San Jose Calif., will merge into Alliance CU, with $345 million in assets, also of San Jose.
  • El Camino Hospital FCU, with $6 million in assets, Mountain View, Calif., will merge into $1.7 billion Provident CU, Redwood City, Calif.

CU program part of Clinton global intitiative program

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JACKSON, Miss. (6/11/12)—Hope Community CU, a regional community development financial institution, was recognized this weekend by being among the attendees of the 2012 Clinton Global Initiative America (CGI America), a meeting dedicated to forging collaborative solutions to the United States' top economic challenges.

Hope Community was among the leaders from government, business, and nonprofit sectors that made more than 50 new commitments valued at more than $1 billion that will, it is estimated, create 32,000 jobs and fill more than 500,000 vacant jobs.

With its project titled "Eliminating Bank Deserts in the Mid-South," the Jackson, Mississippi-based credit union committed to adding 11 new branch locations and increasing its membership from 26,000 to 51,000 individuals.  The commitment is designed to provide residents in underserved and distressed mid-South communities with access to its retail financial services, small business loans, and mortgages.

Hope Community (HOPE), on its website, explains that one in four American households lacks access to key financial products and services, including savings and checking accounts.

"Fourteen of the nation's poorest 30 counties are located in HOPE's service area, which encompasses Arkansas, Louisiana, Mississippi and Tennessee. This contributes to a disproportionate absence of banking services in the region, a fact that severely limits the economic prospects of families, businesses and communities.

Hope Community notes that, in the Mid South region, entrepreneurs "face limited access to capital to start, grow and sustain their businesses; individuals fall victim to predatory lenders that target underbanked, low-income, elderly and other vulnerable populations; and communities erode as vital health care, housing and other infrastructure decline in the absence of capital and investment."

HOPE CEO Bill Bynum observes, "Since the recession, HOPE has filled the financial service gap for thousands of low-income residents in the Mid South by establishing a presence in towns that were losing financial services.

"Our aim is to make sure that no one is victimized by the growing number of predatory lenders that prey on these communities when they are abandoned by traditional banks."

Former President Bill Clinton established CGI America in 2005 to stimulate economic growth, foster innovation, and support workforce development and reports that since its first meeting in June 2011, participants have made more than 100 commitments valued at $11.8 billion.

CFA study Big banks overdraft fees up

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WASHINGTON (6/11/12)--After two years at the same level, fees charged by the 14 largest U.S. banks when customers overdraw their bank accounts are starting to inch upward, says new research from the Consumer Federation of America (CFA).

The survey comes as credit unions continue their growth spurt in membership into 2012 after record growth during fourth quarter of 2011. Much of that growth stemmed from consumers' dissatisfaction related to higher fees charged by big banks. That dissatisfaction culminated into the Nov. 5 Bank Transfer Day movement and nationwide visibility for credit unions touting their  lower fees and better rates, cooperative structure and service philosophy.

Since the rebellion, consumers have been warned repeatedly that banks will start trolling for other ways to raise fee revenues.

As for the overdraft fees, "the two-year period of flat fees coincided with the implementation of a new Federal Reserve Board requirement that banks get affirmative permission from consumers to incur overdraft fees on debit card and ATM overdrafts," said CFA in a press release. "While the typical overdraft fee remains at $35 per transaction, two of the largest banks--U.S. Bank and Fifth Third Bank--have announced changes to their tiered-fee structures that indicate rates are again on the rise," the organization said.

"Big bank overdraft fees for a single transaction are very high, ranging from $33 to $37 at the largest banks," said Jean Ann Fox, director of financial services for CFA. "Consumers can be charged $370 in one day, according to the maximum fee and daily limit fee policies that banks have."

Of the 14 banks surveyed, five--Fifth Third, PNC, RBS Citizens, SunTrust and U.S. Bank--charge tiered fees that vary depending on how many overdrafts are incurred in a 12-month period, said CFA.  Starting later this month, Fifth Third Bank will charge $37 per overdraft after a $25 fee is assessed for an initial overdraft transaction. Currently it charges a $33 fee for the second, third and fourth overdrafts in a 12-month period.

U.S. Bank will charge $15 for an overdraft transaction that is $15 or less, and $35 for any overdraft over that amount. Currently it charges $10 if the overdraft is $20 or less, and $33 per item if it is more than $20.

Nearly two-thirds of those surveyed pile on second or per-day fees if customers do not pay the overdrafts immediately, said CFA. SunTrust charges $36 on the seventh day an overdraft remains unpaid while RBS Citizens charges $6.99 a day on the fourth through 13th day the overdraft is owed. Fifth Third is dropping its sustained overdraft fee that adds $8 per day after the overdraft remains unpaid for three days.

Three banks--Bank of America, Citibank and HSBC--do not allow customers to incur overdraft fees when using a debit card for purchases. The latter two also prevent overdraft fees triggered at an ATM. The other 11 largest banks encourage their customers to opt-in to pay overdraft fees on very small purchases.

The survey found the biggest changes related to the order in which banks processed payments from accounts. As recently as 2010, almost all major banks paid transactions from largest to smallest received (or reserved the right to do so)--a practice which can result in consumers with low balances overdrawing their accounts and paying even more overdraft fees, said CFA.

Since 2010, CFA found that some banks have changed their processing order policies, paying time-stamped transactions in the order received, before processing checks and other transactions from largest to smallest. Eleven of the banks surveyed still pay some transactions from largest to smallest.

"Bank overdraft loans are a form of payday lending," said Fox. "Banks are charging staggeringly high rates for short-term borrowing when fees are computed the same way payday loans are calculated."

To review the entire report, use the link.

CU was our savior says New Mexico small biz

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ALBUQUERQUE, N.M. (6/11/12)--Albuquerque, N.M., small business owner Jay Rembe supports credit unions' efforts to make more business loans. He says they saved his business two years ago.

Rembe, who owns Rembe Urban Design and Development, was looking to refinance loans he had on commercial properties and infill projects in the Albuquerque area two years ago, according to the New Mexico Business Weekly (June 8). 

"We looked at every possible source of refinancing the properties, but the banks weren't renewing loans [on commercial real estate]," he told the publication. "We went to Sandia Laboratory FCU, and they refinanced a lot of difficult properties that the banks wouldn't touch. In all, we got $7 million worth of financing on various properties. The credit union was our savior," he added.

Bill Cheney, president/CEO of the Credit Union National Association (CUNA), is prominently featured in the article.

"It's kind of difficult in this economy, especially when we look at the most recent jobs report, to argue that small businesses don't need more access to capital. The only thing holding us back is the artificial cap," Cheney said, referring to credit unions' current member business lending (MBL) limit of 12.25% of assets.  He spoke in Albuquerque Thursday at the Credit Union Association of New Mexico's annual meeting and outlined reasons why CUNA and credit unions are urging Congress to increase that limit to 27.5% of assets, said the newspaper.

He noted that credit unions have $40.5 billion in small business loans on their books, and that raising the cap would raise an additional $13 billion in small business loans, creating 140,000 more jobs. In 2011, community banks' business lending dropped 14.9% while at credit unions, MBL increased 45%.

In New Mexico, banks' business lending dropped 19% while credit unions' business lending rose 38%, Cheney told the group. Credit unions in the state have $292 million in small business loans, with an average loan of $303,585. Lifting the cap would create 1,500 jobs in New Mexico the first year. 

He urged New Mexico's credit unions to tell their congressional delegation to work to raise the limit.

League endorses ex-governor for Senate two incumbents

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PORTLAND, Maine (6/11/12)--The Maine Credit Union League board unanimously voted to endorse the candida­cy of former Maine Gov. Angus King for U.S. Senate, and the re-election efforts of U.S. Reps. Michael Michaud (D) and Chellie Pingree (D) in their respective House campaigns.

The board's vote was a few days after the league's Political Involvement Committee met to discuss endorsing King prior to the June primary, as well as endorsing Michaud and Pingree at the same time (Weekly Update June 8).

League President John Murphy highlighted the positive relationship that Maine's credit unions had with King when he served as the state's governor from 1995 through 2003. "As governor, Angus King supported credit unions and our issues, and we welcome the opportunity to work with him again as a U.S senator," Murphy said.

Prior to announcing the endorsement, members of the league's Governmental Affairs Team met with King at his campaign headquarters in Brunswick. There, King spoke highly of the efforts of the state's cred­it unions.  "I am familiar with the strength of and high level of in­volvement Maine credit unions have with their members and communities," he said.

King expressed his appreciation to the league for its "early support and willingness to help me get elect­ed. This endorsement means a lot to me and my campaign."

In endorsing Michaud and Pingree, Murphy said both have been "strong and early supporters of credit union issues, including becoming among the first co-sponsors of legislation to raise the cap on member business lending and signing on as co-sponsors of legislation that would allow credit unions access to supplemental capital.

"Both are solid advocates for credit union interests in Congress," he added.

Gabriel appointed to CUNA Mutual Holding Co. board

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MADISON, Wis. (6/11/12)--Caren Gabriel, president/CEO of Ascend FCU, Tullahoma, Tenn., has been appointed to the board of directors of CUNA Mutual Holding Co.

Gabriel has been with Ascend FCU since 1985 and has served as CEO for the past eight years. Under her leadership, the credit union has grown to $1.6 billion in assets from $960 million.

Gabriel has led Ascend through a rebranding initiative and a branching strategy that expanded Ascend's footprint within the 11-county area it serves. Also under her tenure, the credit union has returned $39 million to members through bonus dividends and loan-interest refunds.

2012 International CU Day Members Matter Most

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MADISON, Wis. (6/11/12)--The message is simple, direct and embraces the key concept behind credit unions: Members Matter Most. Those three words, which comprise this year's International Credit Union (ICU) Day theme, speak to the heart of the credit union philosophy.

The World Council of Credit Union's International Credit Union Day Poster was unveiled. (Image provided by the World Council of Credit Unions)
"In the face of all challenges, credit unions have always existed to serve their members," said Brian Branch, World Council of Credit Unions (WOCCU) president/CEO. "The clear and simple message, 'Members Matter Most,' summarizes credit unions' reason for being."

"Members are the heart of the credit union system. This year's theme speaks perfectly to the sentiment all staff carry through on every day," said Bill Cheney, president/CEO of the Credit Union National Association (CUNA). "Further, it differentiates credit unions from other financial institutions as member-owned financial cooperatives. At credit unions, members matter most."

ICU Day, celebrated annually on the third Thursday of October, will take place this year on Oct. 18. This year is also the United Nations' International Year of Cooperatives, a year-long celebration that began Oct. 31 and has provided greater visibility to credit unions and other cooperatives worldwide.

This year's theme was submitted by Sinéad Butler from the marketing services department of the Irish League of Credit Unions. "Members Matter Most" was one of more than a dozen themes submitted by representatives from Abacus Australian Mutuals, Credit Union Central of Canada, CUNA (USA) and World Council.

Committee members also voted on the design of this year's ICU Day international poster, which incorporates photos of credit union members from Mexico, Poland, Tanzania and other countries from around the world. The seven cooperative principles in English, Spanish and French form the poster's background.

Official ICU Day graphics are available to download on WOCCU's website.

Use the link.  Promotional materials and other ideas to help celebrate International Credit Union Day will soon be available.

The Credit Union National Association (CUNA) revealed its design for International Credit Union Day 2012 for U.S.-based credit unions. (Image provided by CUNA)
CUNA revealed its design for ICU Day 2012, based on the WOCCU-selected theme,  "Members Matter Most."

"Members are the focal point this year, just as they are every single day in credit unions," said Joanne Sepich, CUNA's ICU Day coordinator for U.S.-based credit unions. "While credit union staff always put members first, this is an opportunity to remind members that credit unions are different by design--it's the members who make credit unions unique and set them apart as for-people, not-for-profit, cooperatively owned financial institutions."

Posters for the international day and U.S.-based celebrations are similar, but different in color and in some of the photos on the posters' collage. The WOCCU poster features more rural and international representation.

Credit unions have celebrated ICU Day since 1948. The day reflects upon the credit union movement's history and promotes its achievements. It is a day to recognize the dedication of those working in the credit union industry, appreciate current members and invite eligible consumers to join.

Historically, credit unions and associations worldwide celebrate the day with open houses, contests and picnics, fairs, festivals and parades; others hold athletic competitions and essay or art contests for young members. Public gatherings with visiting dignitaries have effectively attracted media attention and public involvement, as have educational and public service events.

For celebration tools and additional resources about the 2012 ICU Day, use the link.

For questions about ICU Day, e-mail icuday@cuna.coop, or contact Joanne Sepich at 800-356-9655, ext. 4867, or e-mail at jsepich@cuna.coop.

CUSN elects new board members

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LAKEWOOD, Colo. (6/11/12)--CU Service Network (CUSN) announced the results of its board of directors elections, which took place during the organization's annual meeting in May.

Election results include:

  • Keith Cowling, president/CEO, Credit Union of Denver, Lakewood, Colo., incumbent, was re-elected for a three-year term;
  • Dan Kester, president/CEO, Sooper CU, Arvada,  incumbent, was re-elected for a three-year term;
  • Stephanie Teubner, president/CEO, Warren FCU, Cheyenne, Wyo., incumbent, was re-elected for a two-year term;
  • Mark Uden, president/CEO, Mutual 1st FCU, Omaha, Neb., incumbent, was re-elected for a two-year term;
  • Mike Williams, president/CEO, Colorado CU, Littleton, was elected to his first term.
CUSN table officers for 2012 are:

  • Chairman--Carla Hedrick, president/CEO of Denver Community FCU;
  • Vice Chair--Kester; and
  • Secretary/treasurer--Uden.

West to East co-op bike tour kicks off in California

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AMHERST, Mass. (6/11/12)--A coast-to-coast tour promoting U.S. cooperatives--celebrating 2012 as the United Nations International Year of Cooperatives--has already received strong support from credit unions and is seeking more credit union assistance as it moves from the West Coast to the East Coast.

The Co-cycle Project is a student-led, bike-powered tour linking co-operatives across the U.S. The journey consists of regional legs, with each leg divided by events in key locations along the route. Events will be hosted by different communities and may include educational workshops or public showcases of co-operatives.

Click to view larger image The Co-cycle Project, a coast-to-coast bike tour promoting cooperatives across the U.S.,  stopped in Redwood CU, Santa Rosa, Calif., on June 3. UMass Five Colleges CU, Amherst, Mass., is among the tour's sponsors. (Photo provided by Redwood CU.)
The tour was organized by students of Hampshire College, which is among the membership groups served by UMass College Five FCU, Amherst, Mass.

When Hampshire College student Megan Meo, one of the Co-cyle Project's organizers, visited UMass Five College FCU to open an organizational account for the tour, she captured the interest of Jon Reske, the credit union's vice president of marketing, who thought the credit union might be interested in supporting the effort.

"We gave them a laundry list of questions that basically asked, 'How are you going to do this?'" Reske said. "We just wanted to be sure they were moving in the right direction."

Reske was impressed with the group's efforts to answer the list of questions, so he enlisted the credit unions' support, he told News Now.

UMass Five College FCU is among the tour's sponsors, along with the United Nations 2012 International Year of Cooperatives, Stonyfield Organic, Clif Bar, Rainbow Groceries Cooperative and CollectiveCopies.

Among the groups making donations to the tour was the Massachusetts Credit Union League.

"We thought it was nice way to share the cooperative celebration with the younger generation," said Rob Kimmet, the Massachusett's league's senior vice president of public relations and marketing.

The ride kicked off in San Francisco on June 2. One of the tour group's first stops was at Redwood CU, Santa Rosa, Calif., on June 3.

Meo had contacted RCU through a recommendation from Lucy Ito, senior vice president of credit union growth at the California and Nevada Credit Union Leagues.

Lee Alderman, Redwood CU assistant vice president of training and financial literacy, and an avid cyclist, met the group at the credit union's branch and administrative offices and provided a tour of the building mall/gallery, which presents key information about RCU and credit unions. Alderson also described RCU's mission, vision and values, focusing the credit union's exceptional service, community commitment and its green initiatives.  

The cycling group arrived in waves, and stayed for about two hours total.

Reske said UMass Five College FCU will continue to seek out credit union connections for the group as it moves across the country.

"We are just trying to stay ahead of them as they move across the country, but the trip is just starting," Reske. "Our goal from a credit union standpoint here at UMass Five is to connect the group with credit unions in their key city stops." For a tour itinerary, use the link.

Other cooperative organizations are making similar efforts.

"We are working on the credit unions sector and other national groups are working on their own cooperative sectors," Reske said. "It's really powerful to see this all coming together in the International Year of Cooperatives."

UMass Five FCU will host Co-Cycle's final stop in Amherst, Mass., on Sept. 3.

Another bicycle tour also celebrates the International Year of Cooperatives. The Cabot 2012 East Coast Community Tour is a 2,300-mile bicycle ride along the East Coast Greenway. The tour started in Miami on May 12 and will end on July 7 in Portland, Maine. Cabot Creamery Cooperative is one of the sponsors of the Credit Union National Association's weekly Home & Family Finance Radio Show.

N.C. commission to hear appeal on conservatorship

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RALEIGH, N.C. (6/11/12)--Greater Kinston (N.C) CU former board members are appealing a decision by state regulators to place the $17 million asset credit union into conservatorship.

The appeal to the North Carolina Credit Union Commission will be held Tuesday, Jerrie Jay, administrator for the North Carolina Credit Union Division, told News Now

Kinston CU was placed into conservatorship in early February, and a first appeal was made to Jay in March. At that time, the order of conservatorship was upheld, Jay said. She declined to tell News Now why the credit union was placed into conservatorship, citing the ongoing process.

As part of the February action, Jay took out the credit union's management team and board of directors (Triangle Business Journal June 8).

The credit union division brought in Napoleon Wallace to replace CEO Jennifer Wallace. In his current capacity as acting manager of Greater Kinston CU, Wallace will deal with any credit problems and examine the credit union's financial records, the Journal said.

Wallace previously worked at Self-Help CU, based in Durham, N.C., the publication said. 

A  Greater Kinston CU branch in New Bern was closed at the time of the February takeover, but the credit union main office in Kinston has maintained normal business hours, the Journal said.

CU System briefs (06/08/2012)

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  • MADISON, Wis. (6/11/12)--Brian Nelson, a 24-year employee of the Credit Union National Association (CUNA), has been named chief financial officer (CFO) and senior vice president of CUNA. Nelson has acted as interim CFO since November, when Joanne Duncan left to work for another organization. He will direct and administer the trade association's overall financial plans, business policies and accounting practices and will be headquartered at CUNA's Madison, Wis., offices. "Brian's long career with our association, and his familiarity with the credit union movement, are factors that contributed greatly to his promotion," said CUNA President/CEO Bill Cheney. "He has given credit unions and CUNA outstanding service over that time, and we look forward to many more years of his financial counsel and leadership." Prior to joining CUNA, he worked for a CPA firm in Madison for six years. He joined as manager of financial reporting, then held a variety of positions. He became vice president and controller in 1998 …
  • LATHRUP VILLAGE, Mich. (6/11/12)--Austin Chapman, a Benton Harbor, Mich., native and student at Lawrence Tech, has been named the
    Click to view larger image Click for larger view
    2012-2013 spokesperson for Young & Free Michigan, announced Lathrup Village, Mich.-based Michigan First CU. The "spokester," shown here spreading a positive financial message to young adults in metro Detroit, represents Michigan First through a daily blog, weekly video updates at local events and media appearances. "The Young & Free Michigan program is about demystifying money and helping 17-25-year-olds understand that being financially smart can be entertaining and gratifying," said Michael Poulos, president/CEO of the $600 million asset credit union. Chapman was one of more than 35 candidates. In "Spokester Search" voting, consumers cast more than 10,500 votes to narrow the search to 15 candidates, who participated in an in-person event and online challenges that tested each finalist's video production knowledge, writing ability, creativity, interview skills and outgoing personality. Chapman won an Apple MacBook Pro, an HD video camera and a smartphone to use on the job. He also will drive the Young & Free Michigan Chevy Cruze for the year. Two runners up received iPads and the other 12 finalists received a Kindle Fire. Last year's spokester, Janelle O'Hara, will continue her work at Michigan First, focusing on social media. (Photo provided by Michigan First CU) …
  • HARRISBURG, Pa. (6/11/12)--First Heritage Financial LLC, a credit union-owned mortgage service provider based in Philadelphia, ended May with $1.016 billion in mortgage loans serviced, according to the Pennsylvania Credit Union Association (PCUA)(Life is a Highway June 8). First Heritage Financial provides turnkey, behind-the-scenes mortgage support to 57 credit unions with combined assets totaling more than $5.5 billion and more than 698,000 members in Pennsylvania and Delaware. It began as a wholly owned subsididary of American Heritage FCU. In August, 2011, three other credit unions--Service 1st FCU in Danville; Erie FCU; and People First FCU in Allentown--purchased ownership in First Heritage …

U.K. group Offer CU services in post offices

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KIDDERMINSTER, U.K. (6/8/12)--Research of consumers in the United Kingdom indicates that credit unions can expand their services by offering them through the U.K.'s Post Office network, which would significantly increase their potential to provide long-term banking alternatives for people on low incomes.

Of consumers surveyed, 34% of them (and 40% of those on lower incomes) would be interested in joining a credit union. However, two-thirds indicate they cannot do so because they don't think a credit union in nearby, said Consumer Focus, in its report, "Credit where credit's due." (Kidderminster Shuttle May 24).

Employing post offices would help plug a credit gap for low-incomers who turn to payday loans because they cannot access affordable credit through banks, said the watchdog organization.

Other findings:

  • Forty-six percent of those surveyed said the post office would be a convenient way to access credit union services, and 57% of the poorest social groups said so.
  • Nearly half (46%) said they would trust credit unions more if they were available at the Post Office; more than half of low incomers said this.
  • Of low-income consumers, 40% said they would be more likely to open a credit union account or consider applying for a small loan if they could do so at the Post Office.
  • Of those interested in opening a credit union account at a Post Office, 49% said the main reason was because the office is local and 35% said the reason was because they trust the Post Office.
  • Nineteen percent of low- to middle-income consumers and 28% of low-income groups said they were satisfied with high street banks and would be unwilling to consider other options.
The Association of British Credit Unions (ABCUL) estimated that in 2010, eight million adults in the U.K. were unable to access credit unions because of limited geographical coverage.

Restaurant chain LinkedIn hit by breaches

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DAYTON, Ohio and MOUNTAIN VIEW, Calif. (6/8/12)--A restaurant chain in Ohio warned of a data breach in fiveof its restaurants in an area already seeing a spike in debit card fraud, and credit unions using social media networks learned that the LinkedIn social network and  eHarmony site were compromised in other data breaches announced this week.

Penn Station Inc., based in Milford, Ohio, said that Dayton area customers should be alert to false charges to their debit and credit card accounts after a breach occurred at its Penn Station and  East Coast Subs restaurants. The company said names and credit/debit card information may have been accessed beginning in March at 59 of its 238 restaurants (Dayton Daily News June 7).  Penn Station said a customer alerted it to a potential problem at the end of April.

Twenty-five Penn Station locations in Ohio were possibly impacted, including five in the Dayton area. The company is working with Verizon Forensics, Heartland Payment Systems and law enforcement to determine how hackers obtained the data.

A number of credit unions in the Dayton area already were reporting a surge in fraudulent charges on members' and other consumers' cards in the area, but, so far, the Penn Station data breach has not been tied to the spurt of fraud. News Now reported Wednesday that credit unions and community banks in the area said they have seen more debit card fraud incidents so far in 2012 than the entire year last year. (Access the article by using the link).

In other data breach developments, Mountain View, Calif.-based  LinkedIn, a social network with more than 161 million members worldwide, was assessing the situation caused by a data breach of its network, in which computer security experts discovered files with about 6.4 million scrambled passwords on Tuesday on underground websites where cybercriminals exchange stolen information. The files included only passwords and not e-mail addresses (Reuters.com June 6).

Some security experts were critical of security practices at the network, saying LinkedIn used a basic encrypting technology to scramble passwords, according to Reuters. USA Today reported Thursday that earlier LinkedIn's mobile app on Apple devices tracked calendar events and synched them to its server without users' knowledge, a practice that violates Apple's privacy regulations. The encrypted passwords have hash codes that can be deciphered to uncover users' passwords and give hackers access to their accounts.

Also, eHarmony reported passwords had been compromised in a breach of its site, which has more than 20 million registered online users. Roughly 1.5 million passwords were leaked online that appeared to be from eHarmony users, USA Today reported.

The recent rash of breaches reinforces the need for credit unions to make sure their third party vendors and their networks are secure. Mobile and online banking, as well as social media efforts at marketing their products and services, are also being targeted by hackers.

Regulators tell FIS to beef up security

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JACKSONVILLE, Fla. (6/8/12)--Security issues following a data breach last year at a global provider of banking and payments technologies serving more than 14,000 financial institutions, including credit unions, were the topic of a confidential report sent earlier this year to the company by the Federal Deposit Insurance Corp. (FDIC), according to The Wall Street Journal (June 5).

A letter sent to Fidelity National Information Services Inc. (FIS), based in Jacksonville, Fla., is the latest evidence that regulators--including the National Credit Union Administration (NCUA)--are concerned about the security of financial and personal information that third-party processors store and the wave of data breaches in a variety of industries.

In the past two years, hackers have targeted processors such as FIS, whose breach last year involved prepaid cards; Citigroup Inc.; credit card processor Global Payments Inc.; and Epsilon Data Management LLC., an e-mail marketer. The latest breach announced this week is that of the LinkedIn social network, which compromised 6.4 million passwords.  (See related story, "Restaurant chain, LinkedIn hit by breaches" in today's News Now.)

The Journal reported that NCUA saw a letter that was sent to FIS's CEO after an October 2011 examination conducted by the Federal Deposit Insurance Corp., the Federal Reserve Bank of Atlanta, and the Office of the Comptroller of the Currency. The six-page letter, which the Journal said it reviewed, outlined several security issues and centered on oversight issues involving a 2011 breach that resulted in at least $12.7 million in fraud.

The Journal also said that NCUA forwarded the letter to credit unions in March.

The NCUA, when contacted by News Now, would not verify for the record sending a letter to credit unions. However, John Zimmerman, NCUA's public affairs specialist, told News Now, "It is a longstanding interagency practice to share these reports, in this case produced by one of the banking agencies, with clients of record. We provided this information, as do the other agencies, to facilitate due diligence."

FIS, in its year-end 2011 report filed with the Securities and Exchange Commission, noted it was "the victim of a cyberattack against one of our prepaid clients on our Sunrise prepaid card platform in early 2011, which resulted in a financial loss to FIS of approximately $13 million." FIS identified information for  about 7,200 prepaid accounts may have been viewed, and that three individual cardholders' information may have been disclosed.  No financial institutions or their customers suffered any financial loss in that attack, the report said.  The report also outlined security measures FIS has taken since the incident.

They include:

  • Increased review of all servers in its environment to identify any potential impacts of the unauthorized activity and enhancing fraud monitoring and network controls;
  • Re-certifying Payment Card Industry (PCI) Data Security Standard compliance of the Sunrise prepaid platform, which is required after any breach incident;
  • Enhancing information security processes including creating a cross-functional team to implement enhanced transaction monitoring to detect or prevent fraudulent activity;
  • Expanding risk assessment coverage and performing a risk assessment of all Internet-facing products;
  • Enhancing its Information Security Strategic Plan with short-term measures to improve its information security;
  • Adding a new chief information security officer with extensive security and fraud experience; and
  • Improving its inventory of technology, data and information security assets worldwide.
It also increased the amount spent on information security in 2011 "and will nearly double this spend[ing] in 2012."

RSA fraud report CUs see 13 hike in online fraud

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MADISON, Wis. (6/8/12)--Credit unions nationwide saw a 13% increase in May in online fraud attacks--to 20% of brands attacked from 7% in April, according to the RSA Monthly Online Fraud Report.

In a shift for banks nationwide, they experienced a 20% drop in attacks; credit unions saw a 13% increase and regional brands a 7% increase.

Most phishing attacks are distributed through mass e-mail blast campaigns that are not region-specific, RSA said. Consequently, phishers increased the chances of a spam recipient being responsive if they target consumers of nationwide brands, the report indicated.

Additional statistics from the report indicate:

  • Phishing volume increased by 7%, continuing the upward curve recorded in April, mainly as a result of highly targeted phishing campaigns launched against small financial institutions.
  • Year-over-year, phishing volume is up 164% due to technical advancements in site-hijacking methods and FaaS offerings. FaaS stands for functionality as a service, and is a software development model in which one or more functionalities of the software are hosted centrally--typically in the (Internet) cloud.
  • The United Kingdom remains the most heavily targeted country for the third consecutive month. All of most-targeted countries from April retained their status in May, with the exception of Canada, which saw a drop to 3% from 28% of the global phishing volume.
In the most recent report, RSA researchers monitored ransomware campaigns and ransomware Trojan attack waves, and have recently analyzed a new variant that holds infected personal computers hostage until their owners make a 100-euro payment to the botmaster. A key part of this malware's operations is its location--what appears to be a server most likely orchestrating botnet monetization and affiliate infections deals, RSA said.

Ransomware is the type of malware that can infect a personal computer and then lock the user's data most commonly by encrypting files or by injecting a rogue master boot record (MBR) to the system's start-up routine, the report indicated.

Ransomware can come as standalone malicious code or coupled with other malware. Ransomware campaigns have been on the rise since the beginning of the year, with recent cases combining banking Trojans with ransomware, RSA said. While the user's files are typically locked until the ransom is paid, the victim is still free to browse the Internet, thus allowing the banking Trojan uninterrupted activity.

The Trojan involved in the cases studied by RSA is a ransomware that checks for the future victim's geolocation, adapts a ransom page to the local language and police, for 13 countries. The fact that this malware aims at 13 specific countries may seem targeted enough at first sight, but it is only the case of one variant--if this malware is shared or sold with other criminals, they could easily adapt it to their own needs and targets, and aim at any country on the globe, the report said.

CU System briefs (06/07/2012)

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  • RANTOUL, Ill. (6/8/12)--
    Click to view larger image Click for larger view
    The John L. Kelley Chapter of Credit unions in Rantoul, Ill., hosted a Mad City Money reality simulation for 35 students from the Christian Life Church Rantoul United Pentecostal Church youth groups. Mad City Money was created by the Credit Union National Association. Employees from Credit Union 1, University of Illinois Employees CU, Central Illinois CU and Community Plus FCU volunteered their time to organize and work at the reality fair as merchants.  Students aged 15 to 18 years old received an "About Me" sheet containing an occupation and salary, student loan debt owed, credit card debt owed, and cost of medical insurance. Participants built a monthly budget based on their  incomes and visited nine "merchants" to purchase housing, transportation, food, day care and other needs. The Fickle Finger of Fate randomly visited each participant to deliver unexpected windfalls and unplanned expenses. The exercise helps development good judgment for spending and making a budget, said the Illinois Credit Union League. Pictured are Kristel Hethke and Melissa Roberts from Credit Union 1 at the credit union station as part of the event. (Photo provided by the Illinois Credit Union League) …
  • FARMERS BRANCH, Texas (6/8/12)--The Texas Credit Union League (TCUL) is launching an effort to build a bridge between young credit union professionals and the information they need to stay abreast of what is happening in the credit union movement (LoneStar Leaguer June 5).  The league is seeking one liaison per member credit union to be responsible for ensuring other young professionals within their respective credit unions have important credit union news and information, as well information on activities and events happening at TCUL and in the movement.  A liaison must be 35 years of age or younger and a full-time employee of a credit union. To be considered for the role of liaison, a person must complete a brief online form.  Once an application has been submitted, a TCUL representative will follow up.  If more than one person from a credit union submits an application, TCUL will select only one to serve as the liaison. Questions may be directed to TCUL's Jim Phelps at 469-385-6481 or jphelps@tcul.coop

Arizona state lawmaker sentenced for charity fraud

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WASHINGTON (6/8/12)--Richard David Miranda, a former Arizona state representative, Monday was sentenced to 27 months in prison for embezzling $144,000 in funds from a charity and evading income tax on the stolen money. As part of the scheme, Miranda allegedly wired funds to and from the charity's credit union account.

Miranda, 55, of Tolleson, Ariz., served as a member of the Arizona House of Representatives for the 13th District from 2011 until his resignation in February, according to the Department of Justice. He previously served as a member of the Arizona State Senate from 2002 until 2011, and the Arizona House from 1999 until 2002.

Since July 2002, Miranda also served as executive director of Centro Adelante Campesino Inc., a non-profit charitable organization that provided food, clothing and educational assistance to persons in need, including migrant farm workers, in and around Maricopa County, Ariz.

Miranda pleaded guilty on March 14 to defrauding Centro and evading income tax related to the stolen funds, said the Justice Department. As part of his plea agreement, Miranda agreed to resign from office. Miranda was also ordered to pay a total of $230,342 in restitution--$212,220 for funds unlawfully obtained from Centro, plus $18,122 unlawfully obtained from the Arizona Latino Caucus Foundation.

During his plea, Miranda allegedly admitted that, in May 2005 he initiated a scheme to wind down Centro, selling the building that the organization was housed in, and using the proceeds of the sale for personal expenses.

As part of the scheme, Miranda allegedly removed the Centro's volunteer accountant as an authorized signer on the charity's bank and credit union accounts, and assumed sole control of the charity's accounts and financial records. Miranda told the accountant that the proceeds of the sale would fund scholarships, said the department.

In March 2007, the building was sold for $250,000, and $144,576 allegedly was wired across state lines into Centro's credit union account.

Within one week of the wire transfer, Miranda allegedly began to withdraw the proceeds from Centro's credit union account without authorization from or knowledge of Centro's board of directors.

Miranda obtained two checks totaling $37,000 payable to himself and paid off personal credit card debts totaling more than $60,000. By Dec. 31, 2007, Miranda had withdrawn about $46,836, and used the funds to pay off other personal debts and make purchases for personal travel, services, clothing, food and household items.  Miranda also failed to report the proceeds of the sale as income on his 2007 income tax forms, said the Justice Department.

Cheney updates Alaska league on legislation MBLs

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SEWARD, Alaska (6/8/12)--Bill Cheney, president/CEO of the Credit Union National Association (CUNA), updated attendees at the Alaska Credit Union League's annual meeting in May on CUNA's push to increase member business lending (MBL) for credit unions and legislation to provide them more supplemental capital. 

His speech was given prominent play in the Alaska Journal of Commerce (June 7).

CUNA and credit unions are urging Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

Senate Bill 5089 and the House of Representatives versions, H.R. 1418, are being considered to raise credit unions' MBL cap.

If credit unions had the ability to lend more, more businesses could expand and create more jobs. It's dispiriting to see people leave the job market because not enough jobs exist, Cheney told credit unions.

With the legislative battle between credit unions and banks becoming more intense, it would perhaps help to match increased MBL for credit unions with items that banks could reasonably be expected to support, Cheney told the league.

Cheney also noted that H.R. 3993 would allow credit unions to look for outside sources of capital, providing they don't alter member and ownerships standards, the publication said. Although the legislation likely will not proceed in this session of Congress, it is important to have it introduced, Cheney added.

CUNA supports H.R. 3993, which would allow credit unions to strengthen their ability to manage risks through supplemental capital.

Southeastern CUs break assets membership records

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BIRMINGHAM, Ala. and TALLAHASSE, Fla. (6/8/12)--Southeastern credit unions experienced record-breaking growth in assets and membership during the first quarter, a trend attributed to the prolonged effects of Bank Transfer Day, according to the League of Southeastern Credit Unions (LSCU).

In Florida, assets grew to record $45.3 billion, while state credit unions added 48,000 new members to reach a record 4.65 million. Alabama credit unions increased assets to a record $17.5 billion and 20,000 new members, bringing total membership to a record 1.8 million.

The asset and membership growth rates in both states exceeded the national credit union average.

"The record growth for Alabama and Florida credit unions follows a trend that began in the third quarter of 2011," said LSCU President/CEO Patrick La Pine. "The jump in assets and membership proves once again that consumers are looking for locally owned financial institutions. The money they deposit in credit unions stays in that respective community and helps their neighbors purchase a car or a home. It goes right back into the local economy."

Return on assets (ROA) also matched or exceeded national averages. Alabama is 10 basis points (bp) above the national credit union average, while Florida is right at the national average, but 72 bp better than in 2010.

Alabama credit unions have a net worth ratio of 10.76%, nearly 1% higher than the national credit union average. Florida credit unions have a 9.7% net worth ratio, just below the national credit union average. A 7% net worth ratio is considered well-capitalized.

Each quarter, Alabama credit unions continue to help small businesses. Alabama credit unions added $13 million in new member business loans (MBL) in the first quarter. This equates to a 3.1% growth, nearly double the national credit union average. Alabama credit unions have made $114 million in MBL loans in the past five years. Florida credit unions also continue to make MBL loans, but saw a flat growth for the first quarter.

"While the arbitrary cap on MBL loans for credit unions stays intact--12.25% of assets, the needs of many small businesses will not be met," said La Pine. "Alabama credit unions have done a great job of working with small businesses to get them the loans they need. The economy continues to hinder the growth in Florida. However, there is so much more credit unions could do, if given the authority by Congress."

S. 2231, which would raise the credit union lending cap to 27.5% of assets, is currently in the Senate, awaiting a vote.

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase the cap. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

Overall, the quality of lending by Florida and Alabama credit unions remains high, said the league. For the third-straight year, delinquent loans to loans has fallen in both states and net charge offs have decreased.

Alabama credit unions delinquencies and charge offs are each well below the national credit union average. In Florida, the delinquency rate has fallen 50 bp since 2010 and net charge offs have fallen 78 bp.

Alabama and Florida credit union members also are saving more. In Alabama, members' savings grew at a 5% rate, which was higher than the national credit union average and continues a five-year trend of positive savings in the state. In Florida, member savings grew at a 4.7% rate clip, right at the national average and almost double the savings rate in the state in 2011.

CU System briefs (06/06/2012)

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  • SAN ANTONIO (6/7/12)--
    River City FCU, based in San Antonio, was presented its Juntos Avanzamos ("Together We Advance") flag by the Texas Credit Union League during a ceremony Monday at the credit union. The program identifies Texas credit unions that have the commitment, compassion and capacity to meet the financial needs of Hispanic families in the state. To earn the designation, credit unions provide products and services that specifically address the market and have a strategy for serving the demographic group. River City is the 18th credit union to earn the designation (LoneStar Leaguer June 5). Pictured are, from left: Texas league President/CEO Dick Ensweiler; River City FCU CEO Kim Heinze, Board Chair Del Deleon, and Senior Vice President of Marketing and Business Development Eve Hernandez; and Ramiro Cavaos, CEO of the San Antonio Hispanic Chamber of Commerce. (Photo provided by the Texas Credit Union League) …
  • TALLAHASSEE, Fla. (6/7/12)--In a name change that the credit union says reflects its commitment to "offering the people of the region an alternative to large, for-profit banks beholden to Wall Street," the credit union that has been known for 72 years as Florida Commerce CU announced state regulator's approval of its new name, First Commerce CU. The credit union announced that its first planned step toward regional expansion will be the opening this summer of a financial center in Thomasville, Ga. Throughout the summer the credit union's signage, websites, forms, member resources and communications materials will be changed to reflect the change from "Florida" to "First." "Our commitment to the greater Tallahassee area community, residents, and business leaders is unwavering. Our headquarters, volunteer board and executive team are all remaining the same and in Tallahassee," said Dr. Jerry Osteryoung, board chairman of Florida Commerce …
  • DUBLIN, Ohio (6/7/12)--The healthcare work force in Northeast Ohio can now join Ohio HealthCare FCU (OHCFCU) in Columbus as the result of a collaborative effort between the credit union and The Center for Health Affairs, an advocate for Northeast Ohio hospitals. "As the value of a credit union membership gains ground in the public eye, OHCFCU continues to offer competitive loan rates and ways to help members maximize their spending dollars by creating unique programs like its Professional Development Savings Club," said Lisa Anderson, vice president of the center's member services division. The partnership means "the healthcare community in Northeast Ohio will have a trusted financial institution dedicated exclusively to meeting their unique needs," said Bill Butler, CEO of OHCFCU …

CUAD Why farm bill is important to CUs

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BISMARCK, N.D. (6/7/12)--The Credit Union Association of the Dakotas (CUAD) sent letters to all senators in North Dakota and South Dakota, as well as to the committee chairwoman U.S. Sen. Debbie Stabenow (D-Mich.), expressing its support for passage of the 2012 Farm Bill, out of the Senate Agriculture Committee. The U.S. Senate is expected consider the bill this week.

North Dakota's Republican Sen. John Hoeven serves on the committee.

In the letter, Jeff Olson CUAD vice president of advocacy and awareness, urged Dakota senators and members of the Senate Committee on Agriculture to support "consistent levels of funding for federal crop insurance and passage of the 2012 Farm Bill."

"Credit unions, as part of the broader cooperative community, understand the local needs of our members," Olson wrote. "In particular, farmer-owned cooperatives are an integral part of this local economy and these producers are heavily reliant upon crop insurance protection. Without continued access to comprehensive crop insurance as a broad-based safety net, the negative impact would ripple throughout our local and rural economies."

Many Dakota credit unions provide necessary credit in their local rural areas; more specifically, many are providing agriculture loans. Credit unions across the rural Dakotas believe that federal crop insurance should be strengthened as it provides an important risk management tool for farmers, many of whom belong to credit unions. 

To date, the public-private relationship for the delivery of crop insurance has worked very well, CUAD said. It encourages Congress to preserve and improve upon this level of success.

Also, in another example of understanding and supporting their communities, credit unions and cooperatives worldwide have launched the 2012 International Year of Cooperatives (IYC).

In the U.S., the IYC movement is sponsored by the nation's cooperatives, credit unions and the National Cooperative Business Association. They are urging cooperatives to tell their story on www.stories.coop.

Designated by the United Nations, IYC highlights the contributions cooperatives have made to help reduce poverty, create jobs and promote socio-economic development worldwide (News Now Jan. 4).

Co-ops East Coast tour attracts bikers

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DURHAM (6/7/12)--The Cabot Creamery Cooperative's 2012 Community Tour--including a contingent of credit union bikers raising money for children's hospitals--was greeted Saturday by 2,000 attendees of the first Co-op-A-Fair in Durham, N.C.'s Diamond View Park.

North Carolina's Raleigh-Durham-Chapel Hill-area credit unions, cooperatives and community partners held the first Co-op-A-Fair Saturday. Bike riders taking part in the the Cabot Creamery Cooperative's 2012 Community Tour stopped at the event. (Photo provided by the North Carolina Credit Union League)
The Co-op-A-Fair, which was produced by Raleigh-Durham-Chapel Hill-area credit unions, cooperatives and community partners, included music, games, food and educational activities.

The Cabot Creamery Cooperative 2012 Community Tour is a two-month tour to celebrate the United Nations International Year of the Cooperatives, which honors farmers, cooperatives, credit unions and volunteer groups who take time to strengthen their communities, according the North Carolina Credit Union League.

The tour, which departed from Miami on May 12, will pass through every state along the Atlantic coastline, finishing July 7 in Portland, Maine (News Now May 7).

Among the tour's participants was Team Little Guy, which completed its 366-mile journey in Clarksville, Va., on Sunday. The team raised money for the Levine Children's Hospital in Charlotte and Children's Hospital in Greenville, S.C.

Members of Team Little Guy included John Radebaugh, president/CEO of the North Carolina league; Eric Gelly, executive vice president/chief operating officer of the league; David Brehmer, CEO of First Carolina Corporate CU; and Jeff Jones, CEO of Freedom FCU, Rocky Mount, N.C. John McGrail, president/CEO of the Carolinas Credit Union Foundation, provided support for the team throughout its journey.

The team rode five to seven hours each day from May 29 through Sunday. Among the obstacles they encountered along the way was Hurricane Beryl, which brought torrential rains and severe winds.

"I am amazed at the physical limits they endured," McGrail said of the team members. "There were some stiff muscles, but other than that they didn't show any signs of wear. A ride like that takes a certain amount of focus and determination."

The cooperative partners planned the Durham event working in collaboration with Cabot Creamery Cooperative's 2012 Community Tour.

"It's been a real honor for us to work with the co-ops here," Diana Meehan, Cabot's director of marketing, national promotions, said of the Co-op-A-Fair.

Credit unions taking part in Co-op-A-Fair designed an interactive "CU Path" that illustrated how cooperative finance benefits consumers and local communities. The CU Path included a coloring exercise to signify that credit union members each owned a piece of the institution and a three-dimensional game designed to illustrate how money deposited in a credit union stays in the local community, while money deposited in large banks often goes elsewhere.

"It opened people's eyes to what credit unions are all about," said Michael Spink, innovation strategist at Local Government FCU, Raleigh.

Many attending had not previously made the connection that credit unions were cooperative financial institutions, Spink noted. "I think people got a real sense for what credit unions are all about," he added.

Credit unions  participating in the Co-op-A-Far included:

  • Duke FCU, Durham.;
  • Generations Community CU, Durham;
  • Latino Community CU, Durham;
  • Local Government FCU, Raleigh;
  • Self-Help CU, Durham, and
  • State Employees' CU, Raleigh.
"Each of these organizations did a wonderful job and made important contributions to the success of the Co-op-A-Fair," said Radebaugh.

The National Cooperative Business Association will host a reception to celebrate the Cabot Creamery Cooperative's 2012 Community Tour's Washington, D.C., stop at 5:30 p.m. on June 11 at the Courtyard by Marriott.

Other credit unions in the nation are participating in a west-to-east co-op bike ride for International Year of the Cooperatives. Watch News Now for a future story.

ArrowPointes one-day BTD promo nets 826400 in loans

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CATAWBA, S.C. (6/7/12)--ArrowPointe FCU recently elevated the "Every Day is Bank Transfer Day" concept into the lending realm with a one-day promotion that garnered more than $826,400 in new loan dollars.

To attract new dollars ArrowPointe FCU, based in Catawba, S.C. with $115 million in assets, slashed rates by 1% and offered discounts earned through the credit union's loyalty program.

"With so much talk of hidden fees from banks, ArrowPointe FCU wanted a way to bring loans back to the credit union and find a way to show members that we are here for them and not-for-profit," Felicia Pope, ArrowPointe FCU marketing director, said.

The credit union used social media, billboards and posters to promote the "One-Day Loan Sale," which excluded real estate loans, credit cards and share secured loans.

The initiative more than tripled loan volume from a similar promotion last year.

NCUA gives preliminary OK for CUs FOM

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DUMFRIES, Va. (6/7/12)--The National Credit Union Administration (NCUA) has given preliminary approval for the field of membership (FOM) for a proposed new credit union--Green Energy FCU, the credit union's organizer said Wednesday. 

Green Energy FCU, Allentown, Pa., will be chartered as a multiple common bond union, said W. Robert Hall of Hall Associates Consulting. It seeks designation as a low-income credit union and as a community development financial institution (CDFI).

NCUA spokesman John Zimmerman confirmed Green Energy's field of membership approval. "They are at the beginning of the process," Zimmerman said.

The proposed FOM includes businesses and organizations focused on residential and commercial energy efficiency and renewable energy improvements, Hall said.

As part of its charter application, Green Energy FCU will also request inclusion of an underserved area of about 100,000 people in the Allentown area within its FOM.

The primary sponsor will be Allentown-based AFC First Financial Corp., a provider of residential energy-efficiency and renewable energy lending and rebate programs. The company also manages a network of more than 3,000 companies involved in selling, installing and servicing high-efficiency heating, air conditioning, weatherization and "whole house" remodeling and alternative energy-related home improvements.

Access to affordable financing for energy-efficiency and renewable-energy improvements has been identified in a number of studies as a barrier to many homeowners lowering their energy consumption, Hall said.

"Research has found that the average low-income household spends as much as 20% of total monthly income on energy costs," Hall added. Lowering these costs can play an important part in a broader effort to build wealth and economic opportunity in these households and communities."

Hall pointed to a recent study by the Filene Research Institute, "Finding Sustainable Profits: Green Lending in Credit Unions," that found a growing number of credit unions are offering their members loans for energy-saving improvements.

Organizers hope to complete the charter application by year end, Hall said. Initial plans call for phasing in a range of products and services.

CUNA WOCCU ABCUL discuss CU models for U.K.

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MANCHESTER, England (6/7/12)--The government of the United Kingdom says that one million more U.K. residents across a range of income levels could benefit from a strengthened credit union system during the next seven years, according to discussions that took place among national and international credit union organizations, including the Credit Union National Association (CUNA).

Credit Union National Association (CUNA) President/CEO Bill Cheney (left) and World Council President/CEO Brian Branch (right) shared insights on global credit union systems with Association of British Credit Unions Ltd. CEO Mark Lyonette on possible alternatives to help credit unions in the United Kingdom grow. (Photo provided by the World Council of Credit Unions)
However, the country's credit unions would have to expand their markets and modernize the way they do business to reach a wider population. CUNA President/CEO Bill Cheney and World Council of Credit Unions (WOCCU) President/CEO Brian Branch visited the U.K. this week to share possible scenarios that may aid in the country's credit union system evolution.

In the U.K., 1.4 million low-income residents lack transactional financial accounts; four million residents pay some form of bank fees; and up to seven million tap sources of high-cost credit, which drive many of them further into debt, according to a study released May 10 by the U.K government's Department of Work and Pensions (DWP).

The country's credit unions, mostly small local institutions, already have credibility among the low-income population, the report noted. A strengthened and expanded credit union system would put local institutions in good position to meet the needs of consumers at a variety of income levels and significantly expand market penetration, Branch said.

Cheney shared the strengths of U.S credit unions. CUNA, WOCCU's U.S. member, represents one of the world's largest credit union systems with 7,200 distinct institutions, 95 million members and $1 trillion in assets.

"Credit unions are member-owned cooperatives, so when our system operates more efficiently, those benefits flow directly to our members," Cheney said. "We've seen the results both in terms of how much U.S. credit union members save in better rates and lower fees using credit unions rather than banks--currently more than $6 billion a year--and in the recent surge of new people joining credit unions."

Cheney noted that the growth of collaborative efforts, such as nationwide surcharge-free ATM networks, shared branching networks and other service and support mechanisms offered through credit union service organizations, have helped increase the U.S. credit union system's efficiency. By embracing products and services that offer low-cost alternatives to payday loans and financial literacy or counseling programs, credit unions become more attractive to a wider array of people, including those with lower incomes.

"Collaborative models exist within the global credit union system that could be highly applicable to credit unions in the U.K.," said Branch. Branch and Cheney met with staff from the Association of British Credit Unions Ltd. (ABCUL), WOCCU's U.K. member, and other financial cooperative groups last week to discuss the issue. "Credit unions in the U.K. are well-positioned to significantly increase their public presence and their member service levels," Branch added.

The DWP report stressed the need for credit unions to introduce automated processing systems that reduce operating costs and increase the availability of services, and the need to attract a broader range of members to increase financial stability and offer more services--including a wider array of loans. As possible alternatives to help meet DWP's demands, Branch discussed ABCUL collaborative credit union systems that operate from single back offices, and market financial services under a unified national brand.

"Credit unions collaborate to achieve scale, create efficiencies and maximize investments in technology," Branch said. "Centralizing and outsourcing services can reduce costs and allow small credit unions to implement programs that they could not otherwise do."

In addition to ABCUL, Branch and Cheney also met with DWP representatives, Her Majesty's Treasury and several credit unions to discuss potential alternatives to current delivery models. Based on DWP estimates, a modernized and expanded system could more than double the nearly 800,000 members currently served by just over 400 credit unions. The growth potential for credit unions in the United Kingdom is strong, Cheney said.

"We had a good exchange of ideas on policies and strategies that will give credit unions greater flexibility to meet their members' needs and remain consumers' best option for financial services," Cheney explained. "That is a core objective, one we share in the U.S. and the U.K."

DWP is accepting public comment to the recommendations in its report through Friday.

Court explains denying ATM fee class action

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SAN ANTONIO (6/7/12)--A federal judge in San Antonio has denied an individual's class action certification in one of the lawsuits brought against financial institutions alleging they violated the Electronic Funds Transfer Act (EFTA) by failing to post notices of ATM surcharges.

Although credit unions were not involved in the case, the court's analysis of the issues may be of interest to credit unions, says the Credit Union National Association. Several individuals have filed multiple lawsuits against credit unions and banks related to their ATM fee notices.

In the case of Jimmie Lee Pfeffer vs. Three Star Venture Inc., Dixie Farm Texaco Inc., and RBS Citizens, N.A., filed in the U.S. District Court for the Western District of Texas, San Antonio, U.S. District Judge Xavier Rodriguez denied Pfeffer's motion for a class action certification, but left open the possibility for reconsidering its ruling if the plaintiff can satisfy certain requirements.

The May 24 order outlined three reasons for the denial:

1. The plaintiff did not satisfy the numerosity requirement for class action suits. The plaintiff must establish that the class is "so numerous that joinder of all members is impracticable."  Judge Rodriguez noted that "a mere allegation that the class is too numerous for joinder is insufficient … Rather, 'a plaintiff must ordinarily demonstrate some evidence or reasonable estimate of the number of purported class members.'

"While plaintiff apparently intended to supplement his motion with supporting materials, at this point he has yet to provide any such additional evidence or explanation," said the court, noting that the plaintiff's reply makes no mention of the numerosity element. He "does not offer any type of evidence indicating the probable number of class members, nor does he provide an explanation indicating how many individuals the class might ultimately contain. Thus, without being presented with even an estimate of the expected number of class members, the court cannot find that numerosity has been satisfied."

2. The plaintiff failed to provide a sufficiently precise time period for the class definition. "Before a court may certify a class, it must ensure that the proposed class is clearly defined so that it will be 'administratively feasible for [the] court to determine whether a particular individual is a member." Judge Rodriguez added that "a court must be able to identify class members without resorting to 'intensive, individualized factual inquiries."

"Here, the plaintiff seeks to include in the class all non-customers who withdrew funds from defendant's ATM  'between Oct. 8, 2011 through the date on which defendant came into compliance with the ATM fee posting requirements of the EFTA….' Since plaintiff has not yet provided the date on which defendant came into compliance with the EFTA, the class time period remains open-ended…Without an exact date on which to cut off class membership, the court has no way of properly identifying those consumers who should be included…and those who should be excluded."

The court also expressed an "additional concern": whether the definition would allow the court to ascertain individual class members without resorting to fact-intensive, individualized factual inquiries." It would have to conduct a two-step inquiry--identifying consumers who used the ATM for an electronic funds transfer in the time period, and because the EFTA's free notice provision only applies to accounts established primarily for personal, family, or household purposes…, the court would have to determine the nature of each consumer's account to ensure consumers using commercial accounts were excluded from the class. The plaintiff has not shown the court how it could conduct the second inquiry without resorting to individualized analyses, said the ruling.

The plaintiff had suggested the court could identify class members by looking at ATM records, but he has not shown how it could use either a personal account number or bank identification number to determine whether an account was established primarily for personal or commercial use, said the court. It "would still be faced with the task of determining the nature of each consumer's account," or "fact-intensive, individualized queries" that "would not be administratively feasible for the court to ascertain class members."

The judge also discounted the relevance of Cobb v. Monarch Finance Corp., cited by both parties in the suit. Cobb examined EFTA's definition of "account" and compared how similar language in the Truth in Lending Act was interpreted by other courts. Although the Cobb court engaged in "a fact-intensive inquiry," it involved bank customers signing forms--"a similar mechanism for a similar purpose," so it was possible for Cobb to make a classwide determination regarding the personal nature of each consumer's account, said the court document. 

The court said the "plaintiff has not shown how this court could determine the nature of consumers' accounts through a single class-wide inquiry.  Rather, this case involves accounts that were established independently by different consumers, at different banks, and for different purposes, it appears that the court would have to consider each consumer's account separately."

3. A policy argument, that "class relief is the only realistic alternative to no relief at all," did not apply to the case, said the court. The decision to certify a class is within the broad discretion of the court, but that discretion must be exercised within the framework of the Federal Rule of Civil Procedure, and the plaintiff had not met the numerosity and class definition requirements, said the court.

The court said it was open to reconsidering the ruling if the plaintiff met the numerosity requirement and specified a definite time period for the class definition and addressed the additional concerns.

A surge of nuisance ATM fee notice lawsuits against financial institutions the past year has resulted in the introduction in Congress of legislation that would ease ATM fee disclosure regulations. The bill would protect credit unions and other ATM operators from frivolous lawsuits while maintaining important consumer protections, according to CUNA.

Index CUs outdo banks in small-biz loans

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MADISON, Wis. (6/7/12)--Credit unions in the U.S. have outdone banks in the past year when it comes to small-business loans, according to the Biz2Credit Small Business Lending Index, an analysis of 1,000 loan applications on Biz2Credit.com., the company said.

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From March 2011 through May 2012, credit unions have approved a higher percentage of loans each of those months than big banks--those with more than $10 billion in assets-- and small banks--those with less than $10 billion in assets. See chart to compare the loans.

Credit unions' May 2012 loan approval rate increased to 57.6%--up 0.2% from April and up more than six percentage points than in May 2011.

Also, alternative lenders--which include account receivable financers, merchant cash advance lenders, community development financial institutions, micro lenders and others--increased their loan approval rate to 63.2% in May from 63% in April.

A drop in small-business loan approvals comes after a Jobs Report issued on June 1, which found that only 69,000 jobs were created in May while unemployment rose to 8.2%.

"This is the third month in a row that big bank lending to small businesses dropped," said Rohit Arora, CEO of Biz2Credit, who oversaw the research. "Small banks decreased their lending approvals for a second straight month, as well. Combined with another poor jobs report, continued jitters in Europe and uncertainty on Wall Street, the economy looks like it is slowing. Look for both Mitt Romney and President Obama to debate where the country is economically from now until Election Day. One thing cannot be denied--lending for small businesses, which create the lion's share of new jobs, has stalled."

Unlike other surveys, the results are based on primary data submitted by more than 1,000 small business owners who applied for funding on Biz2Credit's online lending platform.

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

CUNA Mutual is CIO 100 award honoree (06/06/2012)

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MADISON, Wis. (6/6/12)--CIO magazine has named CUNA Mutual Group as one of its 2012 CIO 100 honorees. CIO 100 is an awards program that recognizes organizations around the world that exemplify the highest level of operational and strategic excellence in information technology.

CUNA Mutual Group was honored for its recently released Smartphone Loan technology, a mobile web application that enables credit union members to apply for a loan anywhere they take their smartphones.

The Smartphone Loan technology is the industry's first mobile web lending application that integrates with CUNA Mutual Group's loanliner.com system.  CUNA Mutual Group has said that by connecting mobile web technology to loanliner.com, its application not only provides lending information and approvals anywhere on any mobile device, it also delivers loan applications with the most current conditional approvals and compliant electronic disclosures in less than 15 seconds.

As of May 31, CUNA Mutual Group reports it has facilitated nearly $290 million in mobile loan application submissions. More than 550 credit unions have implemented the Smartphone Loan technology since its debut in June 2011.

This year's award recognition marks the fifth time CUNA Mutual Group has received the CIO 100 honor since 2004. CIO has been presenting the awards for 25 years.

CIO is published by IDG Enterprise, a subsidiary of International Data Group (IDG), a leading media, events, and research company.

Complete coverage of the 2012 CIO 100 awards will be online at www.cio.com starting Aug. 1.

CUNA Mutual is CIO 100 award honoree

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MADISON, Wis. (6/6/12)--CIO magazine has named CUNA Mutual Group as one of its 2012 CIO 100 honorees. CIO 100 is an awards program that recognizes organizations around the world that exemplify the highest level of operational and strategic excellence in information technology.

CUNA Mutual Group was honored for its recently released Smartphone Loan technology, a mobile web application that enables credit union members to apply for a loan anywhere they take their smartphones.

The Smartphone Loan technology is the industry's first mobile web lending application that integrates with CUNA Mutual Group's loanliner.com system.  CUNA Mutual Group has said that by connecting mobile web technology to loanliner.com, its application not only provides lending information and approvals anywhere on any mobile device, it also delivers loan applications with the most current conditional approvals and compliant electronic disclosures in less than 15 seconds.

As of May 31, CUNA Mutual Group reports it has facilitated nearly $290 million in mobile loan application submissions. More than 550 credit unions have implemented the Smartphone Loan technology since its debut in June 2011.

This year's award recognition marks the fifth time CUNA Mutual Group has received the CIO 100 honor since 2004. CIO has been presenting the awards for 25 years.

CIO is published by IDG Enterprise, a subsidiary of International Data Group (IDG), a leading media, events, and research company.

Complete coverage of the 2012 CIO 100 awards will be online at www.cio.com starting Aug. 1.

Michigan First CUs card supports state with each swipe

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LATHRUP VILLAGE, Mich. (6/6/12)--A Michigan credit union has created a new credit card that rewards members for buying local and supporting the state. Other credit unions looking for ideas for their own rewards programs might check out the features offered.

Michigan First CU, a $600 million credit union based in Lathrup Village, said its Experience Michigan First Rewards Visa can earn members points for local purchases and help them build up reward points toward statewide and national travel, shopping and attractions, or donating to 20 local charities.

"Our state is making a comeback because of the local institutions and local leaders we're partnering with as part of Experience Michigan First. Now users can continue to buy local and be rewarded for it," said Michael Poulos, Michigan First president.

"When we sat down to create a rewards credit card, we knew we wanted to encourage supporting Michigan. We love this state and know consumers want to show off their passion in everything they do," Poulos added.

For example, members can show their state pride by choosing from 12 photographs spotlighting state attractions such as Greektown, the Detroit skyline, Mackinac Bridge and Sleeping Bear Dunes.

The Experience Michigan First card has no annual fee, no balance transfer fee and a low rate, said the credit union. Its rewards program adds one point for every dollar and 1.5 points for spending in Michigan. Use the link for more information.

Membership at 4.5M growth sets 1Q Michigan milestone

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LANSING, Mich. (6/6/12)--More than 4.5 million people are now members of Michigan credit unions--a record, according to the 2012 first quarter data from the National Credit Union Administration. That growth is also translating to new milestones in checking account balances and loan originations.

The Michigan Credit Union League (MCUL) says that it was the best first quarter in 10 years for loan originations. It attributed the growth to heavy mortgage refinancing, continued business loan growth and an improved lending environment for both new- and used-auto loans.

"Michigan consumers are not letting up in moving their money to credit unions because they recognize the credit union difference of putting Main Street families and businesses first," said David Adams, MCUL CEO.

The first quarter results "further illustrate that 2011's much talked about Bank Transfer Day was not an isolated event. Michigan consumers want the straightforward, no-nonsense pricing, low fees, low rates on loans and credit cards and superior member service that credit unions provide, and are moving more of their money to credit unions every day," he said.

Credit unions added 30,000 members in the state during first quarter, compared with 25,000 for first quarter 2011.  Michigan's credit unions continue having the highest membership penetration rate among the 10 most populous states, with nearly half its population with credit union membership. MCUL calls that particularly noteworthy because of Michigan's continued decline in population.

During the quarter, Michigan's credit unions saw near-record deposits, with an 11.8% increase in share draft balance growth, a near record quarterly growth rate. Members opened 90,000 new accounts and total deposits rose 5.5% in first quarter.

Michigan credit unions continued lending when other institutions in the state would not, said the league. The quarter saw a 1.7% growth in first mortgages, which increased steadily the past five quarters.

Both new- and used-auto loans improved in first quarter, compared with first quarter 2011.  Member business lending was up 2.6%, while purchased business loans were up 9.6% for a total quarterly increase of about 4.4% in business loans.

The league noted that credit unions are ready and willing to lend but are hampered by the member business lending (MBL) cap. Credit unions are urging Congress to lift the cap to 27.5% of assets from 12.25% for well-capitalized credit unions. (The Credit Union National Association estimates that raising the cap would inject $13 billion in new business loans into the economy and help create 140,000 jobs at no expense to taxpayers.)

The overall delinquency rate for loans at Michigan credit unions dropped to pre-recession rates--to 1.3% from 1.49% as of the end of 2011.

"While other lenders are holding back, credit unions continue to increase lending to small businesses, homeowners, auto-buyers and more, helping bring back Michigan's economy," Adams said. "The continued growth of credit union membership and access to capital means money stays in Michigan, goes back to credit union members and drives local economic expansion," he added.

Three credit unions were cited as examples.  Community Financial CU, based in Plymouth, saw an 8% increase in membership and record growth in checking accounts at 7.7%, compared with 2011. Annual it averages a growth rate of 9% in new members and checking accounts. It also reports double-digit increases in first-time home loans, which increased 13% over the same period last year.

Community Choice CU, Farmington Hills, said its MBLs increased 100% compared with May 2011. As of April, it approved more than $8.1 million in MBLs, with another $9.1 million expected to be approved in the near term. Loans to first-time homebuyers rose 239% and auto loans rose 309% between April 2011 and April 2012.

Co-op Services CU, Livonia, provided innovative programs to help members save, said MCUL. Its low auto-loan rates were lowered even more if members with checking accounts used automatic payments. As a result, auto loans increased 30% during first quarter, compared to the same period last year. Its membership grew 10.5% and checking accounts increased 17.2%.

Debit card fraud spikes in Dayton area CUs

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DAYTON, Ohio (6/6/12)--Credit unions and community banks in the Dayton, Ohio, area say that debit card fraud has spiked, with more incidents so far this year than the entire last year for some institutions.

Credit unions taking extra security precautions because of the increase in fraud include Wright-Patt CU, a $2.3 billion asset credit union in Fairborn; Code CU Inc., Dayton, with $100 million in assets; River Valley CU, Miamisburg, with $209 million assets; FirstDay Financial FCU, Dayton, with $86 million assets; and DayMet CU Inc., Dayton, with $90 million assets (Dayton Daily News June 5).

Warnings have also been issued at $83 million asset Heartland FCU and the $355 million asset Universal 1 CU, both in Dayton, and at National Bank and Trust Co. (Springfield News-Sun June 4). The bank said more than 100 of its customers reported fraudulent transactions amounting to tens of thousands of dollars, an unusual amount, it told the Daily News.

Wright-Patt and Universal 1 blocked signature-based transactions of members in certain states outside Ohio and required members to enter their Personal Identification Number (PIN). Darrick Weeks, chief operating officer at Wright-Patt, told the Daily News that debit card fraud is an industry issue and a cost of doing business, but it still impacts a small number of debit card holders. 

Banks in the state reported nearly 19,000 suspected instances of debit card fraud in 2011--an increase of 7% from 2010's reported 17,600 incidents, according to Financial Crimes Enforcement Network.

Authorities believe many of the account numbers were gathered from a data breach an out-of-state processing firm earlier this year, the reports said.

Ann Davidson, senior consultant of risk management at CUNA Mutual Group in Madison, Wis., told the newspaper that debit card fraud is expected to be a problem until the U.S. adopts chip technology, which increases card security. 

Davidson will speak on "2012--The Year of Chip Technology: How to Eliminate Magnetic Stripe Card Fraud" during a CUNA Mutual Discovery Breakout Session on June 18 at the Credit Union National Association's America's Credit Union Conference, held June 16-20 in San Diego. For more information, use the link.

CU System briefs (06/05/2012)

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  • MADISON, Wis. (6/6/12)--Denise Gabel, chief finance and strategy officer of the Filene Research Institute in Madison, Wis., has been named emcee of the National Credit Union Foundation (NCUF)   dinner presenting the Herb Wegner Memorial Awards. The 25th annual dinner will take place Feb. 25 in conjunction with the Credit Union National Association's Governmental Affairs Conference in Washington, D.C.  Gabel succeeds Bob Schumacher, former CEO of MountainCrest CU, Arlington, Wash., who emceed the dinner for 15 years and is now retired. Tickets for the event will be available in late fall.  NCUF is accepting nominations electronically until June 29 for Individual Achievement Award, Outstanding Organization/Program Award; and Lifetime Achievement Award. For more information use the link …
  • HARRISBURG, Pa. (6/6/12)--York (Pa.) Educational FCU (YEFCU) has promoted Nicholas Spangler to president/CEO, effective this past Monday, according to the Pennsylvania Credit Union Association (Life is a Highway June 5). He has served the credit union as vice president for the past 10 years. Prior to arriving at YEFCU, he worked at Pentagon FCU and HEW FCU in Washington, D.C. Spangler succeeds Dave Baker, who retired after 40 years with the credit union …

Memberconsumer interest in mobile banks wallets up

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MADISON, Wis. (6/6/12)--More credit union members and consumers are looking to use mobile banking applications, according to some state credit union leagues and media reports.

Pennsylvania State Employees CU (PSECU), Harrisburg, is offering its 388,000 members two new mobile banking applications: a Kindle Fire app available on the Amazon Appstore and one for large-screen Android tablets available on Google Play. Functionality includes balances and histories, transfers, bill pay, ATM locators, and remote deposit check capture (Life is A Highway June 5).

PSECU already had been offering mobile apps for Android phones and tablets and Apple's iPhone, iPad, and iPod touch. The credit union said it last introduced a new mobile app to its PSECU Mobile+ service in September, and since then has seen 41,906 account enrollments. In April, there were 397,928 logins from 31,716 unique, active members, PSECU said.

Associated CU in Norcross, Ga., has offered mobile banking to its members since October 2010. Members can use mobile banking to view accounts, check balances, make transfers, locate ATMs and branches, pay bills and check Purchase Rewards, according to Greg Connor, executive vice president. "Currently, we have about 9,300 members utilizing mobile banking and those numbers are rising consistently," Connor said. "We feel that in the future mobile banking will play as major a role in personal finance as home banking. It's all about convenience, convenience, convenience."

The Georgia Credit Union Affiliates (GCUA) 2011 Year-End Consumer Poll indicated 31.3% of respondents use mobile banking. Of those who do, 15.5% use the service weekly. Among those who do not use mobile banking, only 12.3% cited security concerns as their reason, while 20.1% said they had no need for mobile banking.

The most common reason (29.8%) for respondents not using mobile banking was that they do not have a smartphone. However, that obstacle to mobile banking is on the decline, GCUA said.

In November 2011, Nielsen reported that 44% of Americans owned smartphones, and that number is growing. As the number of Americans who have access to mobile banking continues to increase, experts agree that mobile banking will become a common financial tool, GCUA said.

Credit unions will have stiff competition in the mobile world. Nearly half of U.S. consumers would like to try using a mobile wallet, according to a new survey by financial consulting firm Carlisle & Gallagher Consulting Group (American Banker June 4). Consumers want to use the product to help them manage card payments, but many of those surveyed would not consider a bank to be the provider of this service. Of those surveyed, 80% said they would use PayPal as their primary bank if it provided banking services. Also, 60% said they would consider Google, and 60% of respondents would use Apple--even though it doesn't yet provide a digital wallet.

Judge Common questions allow consolidation of NCUA suits

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KANSAS CITY, Kan. (6/6/12)--A federal judge in Kansas granted a motion made by Wachovia Capital Markets to consolidate a lawsuit brought against it by the National Credit Union Administration (NCUA) with a similar suit NCUA filed against RBS Securities. The lawsuits involve residential mortgage-backed securities (RMBS) sold to corporate credit unions.

"It is clear to this court that these cases contain common questions of fact and law and that consolidation would serve the interest of judicial efficiency," wrote U.S District Judge Julia A. Robinson, in the U.S. District Court for the District of Kansas, in granting the consolidation.

NCUA's original complaint against Wachovia alleged that originators of the RMBS had systematically abandoned the stated underwriting guidelines, resulting in riskier RMBS that the corporates would not have bought, had they known, said NCUA. Wachovia representatives sold about $100 million in RMBS to the now-defunct U.S. Central FCU and Western Corporate FCU in 2006. U.S. Central purchased roughly $80 million in RMBS underwritten by Wachovia, according to court documents (News Now April 3).

NCUA presented similar complaints in its suit for $565 million in damages from RBS in the same court, alleging that the firm violated federal and state securities laws when it sold securities to U.S. Central. The agency claimed that RBS sellers and underwriters made numerous material misrepresentations in the offerings documents that caused U.S. Central to believe the risk of loss associated with the investment was minimal.

Wachovia asked in a motion filed March 28 to consolidate the cases "in light of the existence of common questions of law and fact" of the two cases.  

Also, Wachovia filed a motion April 6 to dismiss the lawsuit. In its motion to dismiss, Wachovia argued that the MBS bought by U.S. Central and WesCorp before they were placed into conservatorship by NCUA fell into a category known as "Alt-A" or mortgages that are neither "prime" nor "subprime" and that its prospectuses for the investments outlined clearly the risks involved (News Now April 10).

In its motion, Wachovia says that "approximately 73% of the loans were reduced documentation or no documentation loans, i.e., loans for which the borrower was not required to submit proof of his or her income, assets, or both."

Paraguay VP CUs key to countrys development

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A delegation from the Minnesota Credit Union Network and Paraguay's credit union association (CENCOPAN) met with Paraguay Vice President Luis Federico Franco Gómez, seated in foreground, to advocate on behalf of the country's credit union system. Sitting clockwise from Franco are: World Council of Credit Unions' Manuel Rabines, Victor Miguel Corro and Michael Suing, seated across from Central Minnesota CU's Jason MacDonald, Mark Cummins and CENCOPAN's Pedro Loblein.
ASUNCION, Paraguay (6/6/12)--Paraguay Vice President Luis Federico Franco Gómez expressed his support for credit unions during a recent meeting with delegates from the World Council of Credit Unions (WOCCU), the Minnesota Credit Union Network (MnCUN) and Central de Cooperativas del Áreas Nacional Ltda. (CENCOPAN), Paraguay's credit union association.

Gomez, a credit union member, believes strong and prosperous cooperatives are key to the country's continued economic growth, said WOCCU.

The delegation traveled to Asunción, Paraguay, to advocate on behalf of credit unions with high-level government officials and share best practices in information technology at individual credit unions. The visit was part of MnCUN and CENCOPAN's long-standing partnership under World Council's International Partnerships Program.

"Meeting with the acting president of Paraguay to discuss credit unions demonstrates the importance placed on cooperatives in the socioeconomic development of Paraguay," said delegation member Mark Cummins, MnCUN president/CEO. He was joined by Jason MacDonald, Central Minnesota CU (in Melrose) director of information technology; WOCCU's Manuel Rabines, board chair; Victor Miguel Corro, Worldwide Foundation for Credit Unions vice president; and Michael Suing, program specialist.

World Council of Credit Union Chair Manuel Rabines addressed more than 150 credit union representatives at Paraguay's credit union association annual seminar. Minnesota Credit Union Network President/CEO Mark Cummins and Central Minnesota CU Director of Information Technology Jason MacDonald also presented at the event. (Photos provided by the World Council of Credit Unions)
Cummins said Franco, who also voiced his appreciation to World Council and MnCUN for their work in Paraguay, had tremendous knowledge of the cooperative movement.

Through their partnership, MnCUN and CENCOPAN have focused on promoting a sound regulatory environment in Paraguay to ensure the safety and security of credit union members' funds. In the first of a series of government visits, the delegation met with representatives from the Instituto Nacional de Cooperativismo (INCOOP), the national regulator of Paraguay, to discuss the business model of credit unions and how their focus on community and social development calls for a distinct set of regulations.

The delegation also met with Humberto Blasco Gavilán, Paraguay's minister of justice and labor, to discuss credit union contributions in the country. The visit underlined the role of Paraguay's credit unions in generating employment and spurring community development and economic empowerment.

"Importantly, the coordinated meetings with Paraguayan government officials served to strengthen and solidify the credit union movement there," Rabines said.

Another goal of the international exchange was to build confidence in information technology systems and convince credit unions that technology is a prudent investment. MacDonald spoke at CENCOPAN's annual seminar about the importance of credit unions investing in technology, while Cummins underscored the importance of sound regulation through a presentation on the U.S. regulatory environment. More than 150 credit union representatives from Paraguay attended the seminar.

"World Council's active presence in Paraguay is of tremendous benefit to the Paraguayan credit union movement," said Pedro Loblein, CENCOPAN board chair. "Government officials in Paraguay recognize the benefits of CENCOPAN's partnership with the Minnesota Credit Union Network and the advantages of being connected to World Council and the U.S. credit union movement."

Fed response filed in interchange suit

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WASHINGTON (6/5/12)--The Federal Reserve Board Friday filed its response in a federal court in Washington, D.C.,to merchants' arguments for summary judgment in their lawsuit challenging the board's debit card interchange fees rule mandated by the Dodd Frank Act.

The lawsuit was filed in March seeking a summary judgment declaring the interchange rule and network non-exclusivity regulation invalid. The merchants' suit alleges the Fed interchange cap--which became effective in October and caps interchange fees for debit transactions for issuers with assets of $10 billion or more at 21 cents--is too high and that the Fed exceeded its authority on the rule.

The Credit Union National Association (CUNA)  and a coalition of associations representing thousands of small and large financial institutions held a conference Monday to review the brief. The coalition, including CUNA,  filed their own amicus brief earlier in the case, providing financial institutions' perspective on the rule. They argue the rule's interchange cap is too low and that it does not allow debit card issuers to cover their costs and earn a reasonable rate of return on their investments.

The Fed's brief, filed in the U.S. District Court for the District of Columbia, made several arguments that it had interpreted the interchange statute reasonably.

First, said the brief, the Fed properly implemented Congress' directive to consider incremental authorization, clearance or settlement (ACS) costs in setting standards for debit card interchange fees that are reasonable and proportional to the cost, and to not consider costs that are not specific to a particular electronic debit transaction. However, the Fed found a third category of costs on which "the statute is silent with respect to costs that are specific to a particular transaction other than incremental costs incurred by an issuer for authorizing, clearing and settling the transaction."

The brief also noted: "Congress did not use parallel language to instruct the board on what to consider and what to exclude, and the board reasonably interpreted the language of the statute to allow for the consideration of costs that fall into neither category identified in the statute."

The Fed  prefaced its final rule with "an elaborate description of the process of [ACS]."  And it noted the "grave practical difficulties" in attempting to define concisely which costs were incremental, ACS costs, and which were not.

Second, "Congress' authorization to the board to collect a broad spectrum of information supports the board's view that it has authority under the statute to consider more than incremental ACS costs in setting the statutory standard," said the Fed in its brief.

Third, the Fed board did not "misread" a recent U.S. Supreme Court opinion in Entergy Corp. v. Riverkeeper, which rejected the argument that statutory silence regarding a factor for consideration prohibited consideration of that factor. 

Fourth, the Fed argued that the floor statement of the sponsor of the amendment requiring the interchange rule "cannot trump a statute's text."  It pointed out that Sen. Richard J. Durbin (D-Ill.), who sponsored the amendment, issued a floor statement on July 15, 2010 (and reiterated it in an amicus brief filed in the lawsuit)  that "appears to divide the universe of costs into two categories--those incurred in ACS as part of a particular electronic debit transaction and those that are not."

"Here, Sen. Durbin's floor statement conflicts with the actual language enacted by Congress," the Fed brief said, adding that the statute is silent as to costs that do not fall into either category and the statute "must govern over the floor statements of the bill's sponsor."

Also, "the statute is ambiguous with regard to categories of costs it does not expressly address. The settled Chevron presumption as articulated by the Supreme Court and the D.C. Circuit is that the board may fill those gaps, as long as it acts reasonably in doing so."

The Fed "reasonably construed" the statute "by excluding consideration not only of costs that are not incurred in the course of a particular transaction, but by broadening the prohibition to exclude consideration of costs not incurred in the course of effecting any electronic debit transaction," said the brief.

"Moreover, had Congress intended the phrase 'which are not specific to a particular electronic debit transaction' to be merely descriptive of 'other costs,' it would have set that phrase off with a comma or parentheses, which it did not do … Because the board's interpretation gives life and meaning to that phrase … it is the preferred construction."

The board also argued it did not believe it was reasonable to promulgate standards for assessing whether interchange transaction fees are 'reasonable' or 'proportional' to costs by reading [the statute] to eliminate from consideration almost all costs incurred by the issuer." Instead the board interpreted the phrase to mean "those costs that are not incurred in the course of effecting any electronic debit transaction," and gave as examples: corporate overhead and account relationship costs; debit card program costs such as card production and delivery; marketing; costs of research and development; and costs of non-sufficient funds handling."

The board "distinguished among costs that are related in some way to electronic debit transactions, but are not specific to any particular electronic debit transaction, and excluded those costs from consideration, as the statute requires."

It also noted it properly considered four specific costs contested by the merchant plaintiffs in setting the statutory standard:

  • Fixed costs of ACS;
  • Transaction monitoring costs (preauthorization costs associated with confirming that a debit card is valid and the cardholder authentic, which the Fed said was "an integral part of the authorization of a particular electronic debit transaction";
  • Fraud losses, which "are specific to a particular transaction [and] generally the result of the ACS of an apparently valid transaction that the cardholder later identifies as fraudulent," the Fed said, distinguishing between fraud losses and fraud prevention. The board noted that allowing issuers to recover a portion of fraud losses through interchange fees will not eliminate their incentive to monitor and prevent fraud, as the plaintiffs claimed, because "issuers will continue to bear the cost of some fraud losses and consumers will continue to demand protection."
  • Network processing fees--fees paid by an issuer to a network. The board noted that "these fees, which are both specific to a particular transaction and vary with the number of transactions processed by the network for that issuer…were properly included in the setting of the standard."
The Fed's brief also noted that contrary to amicus briefs filed in the case, "the final rule does not require networks to raise interchange fees on small transactions, which was an independent business decision by the networks."

SECU funds state agencys student loan rehab program

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RALEIGH, N.C. (6/5/12)--Raleigh, N.C.-based State Employees' CU (SECU)  has agreed to purchase up to $25 million in federally insured student loans from the North Carolina State Education Assistance Authority (SEAA).

Students can use the SEAA's Loan Rehabilitation Program to reestablish their credit standing, restore federal insurance on their loans and continue their education by participating in the program.  SECU's purchase of the loans also provides funds to SEAA for use to assist other student loan borrowers and to develop more educational offerings for the state's students and their parents.

The program was put in place to help student borrowers who defaulted on Federal Family Education Loans earn a second chance to repay the loans, repair their credit histories and improve their lives, said SECU. The federal guaranteed of the payment of principal and interest that existed at the original participation in the federal student loan program follows the rehabilitated loan.

SECU will be reimbursed an average of 97% of the outstanding loan principal and interest if a default occurs a second time. A loan can be rehabilitated once.

"Through the purchase of these student loans, SECU is providing the capital to expand the rehabilitation program and thus help even more borrowers in North Carolina's program earn a fresh start," said Dr. Steve Brooks, executive director of SEAA.

Student loan borrowers must make nine consecutive voluntary payments at an amount they can sustain into the future to qualify for participation in the program. After they are qualified, they may get new repayment terms as well as being reinstated for eligibility for federal and state financial aid. Also, the defaulted loan status is removed from the borrower's credit record.

CU System briefs (06/04/2012)

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  • CHULA VISTA, Calif. (6/5/12)--A 69-year-old man who was a long-time member of San Diego Metropolitan CU, Chula Vista, Calif., shot and killed himself Friday on the pavement outside the city's police station across the street from the credit union (UT-San Diego.com June 1). He apparently visited the credit union before the incident and told the teller he wanted to put his affairs in order, said he was going to take his life, and showed her the gun. He told employees there he had health issues, and they tried to convince him to seek help and counseling, the credit union said in a statement in the newspaper.  Several people including a police dispatcher arriving for work and two tellers witnessed the shooting. The dispatcher, concerned the man might try to shoot someone else, got out of her car and kicked the gun away from him. He died at the scene, a suicide note in his left hand. The incident occurred at about 9:25 a.m.  …
  • MEMPHIS, Tenn. (6/5/12)--A man wearing a bandanna and wielding a gun ambushed employees of Memphis, Tenn.-based LG&W FCU as they arrived for work Monday. He forced them inside the building and ordered them to open the vault, said the Safe Street Task Force. He ordered the employees to the floor and took money from the vault before fleeing on foot. The incident happened at 8 a.m. The suspect remained at large at press time (Commercial Appeal June 4) …

Liddle sentenced to 15 years in fraud against AEA FCU

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PHOENIX (6/5/12)--William Liddle, former vice president of business lending at Yuma, Ariz.-based AEA CU, was sentenced Friday to 15 years in prison, plus five years of supervised release, for his role in a $50 million fraudulent business loan scheme that nearly collapsed the credit union.

He was convicted by a jury in February on 54 counts of fraud, conspiracy and money laundering in connection with accepting more than $1 million in bribes in exchange for approving business loans. His wife, Rhonda Liddle, was convicted on 36 counts (Yuma Sun.com June 1).

Rhonda Liddle was sentenced May 21 to 12 months of home incarceration plus five years of supervised release, which would enable her to remain with the couple's two daughters, ages 9 and 15, said the Sun.

Also convicted in the scheme was Yuma businessman Frank Ruiz, who was sentenced to two years in prison plus three years' supervised release (News Now May 4) after an alleged plea agreement on two charges in return for his agreeing to testify against the Liddles (Yuma Sun).

A restitution hearing is set for June 19 for the three.

The case took a turn on May 21 when William Liddle, scheduled to be sentenced that day, reported being stabbed in the chest (Yuma Sun May 22). The minor stab wound was treated at a local hospital and he was released. He allegedly said he was struck on the head in his back yard and when he regained consciousness, he found he had been stabbed.

The National Credit Union Administration (NCUA) placed AEA CU into conservatorship in late December, saying it was not adequately capitalized and had insufficient earnings due to problems in its lending portfolio (News Now May 4). Since then the credit union has been gradually improving and reported $839,096 in income and $245.1 million assets for first quarter 2012.

Southeast Corporate extends PPC deadline a month

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TALLAHASEE, Fla., and COLUMBUS, Ohio (6/5/12)--The deadline for members of Southeast Corporate FCU in Tallahassee, Fla., to contribute Perpetual Contributed Capital (PCC) before a planned merger with Corporate One FCU in Columbus, Ohio, has been extended a month. As of Monday afternoon, $66.4 million of the $75 million in PCC required for the merger had been raised.

"Last week, we announced to our members that we are extending our capital subscription period for a month to June 29 [from the previous May 31] to allow more time for the dollars to roll in that we still expect," Brad Miller, Southeast Corporate president/CEO, told News Now. "Not everyone had all their paperwork finished and signed, sealed and delivered. So we needed to extend the offering.

"The target still is $75 million, and we are sitting at $66.4 million in PCC commitments from subscriptions we received so far from 204 credit unions," he added. "We're in pretty good shape. I feel confident we will get to the capital level necessary to close the merger. But we still have a little more work to do this month to get to that dollar level."

The merger's completion is contingent on Southeast Corporate members subscribing to $75

million in Corporate One PCC by conversion of members' existing $62 million in Southeast Corporate Member Capital Shares and/or by purchase and subscription of new PCC, according to a merger update posted on Southeast Corporate's website. "The merger with Corporate One is the best and only remaining option to protect your existing capital and the $62 million in collective capital held by the members of Southeast while preserving the franchise value built over 30 years of dedicated service to credit unions," the update added.

"We are grateful to the many members who have returned their subscriptions in support of the merger at the full Partner level (minimum requirement is 0.9% of assets, capped at $900,000 in PCC) and those who have confirmed approval and execution of the PCC subscription," the update said.

It is anticipated that the "fence-sitters" will soon send enough capital to meet the $75 million goal, Lee Butke, Corporate One president/ CEO, told News Now.  About 15 people have committed to the offering, but have not finalized their paperwork, he explained.  "Other folks said, if needed, they would come forth with additional capital," he added. "The good news is the vast majority of credit unions associated with Southeast Corporate support this."

The merger will protect member capital and is cost-effective, Butke said. "It's the best way to solve problems in the industry," he concluded. 

The merger should become effective July 1, Butke and Miller said.

IBankrateI notes CUNAs support on privacy notices bill

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MADISON, Wis. (6/5/12)--The Credit Union National Association's (CUNA) support for financial privacy issues was noted Monday on the Banking Blog by Bankrate.com.

New legislation, H.R. 5817, would allow federal financial institutions that haven't made any changes to their privacy practices to eliminate the annual notice requirement, the publication said.  

"Among the supporters of the bill to eliminate some of the annual mailings is … CUNA, a trade group that represents credit unions," wrote author Marcie Geffner, in an article titled "Too many bank privacy notices?" 

"CUNA CEO Bill Cheney said in a statement that the bill would eliminate a number of unnecessary and confusing mailings that consumers often ignore," she added.

The bill also "will reduce costs for credit unions and reduce confusion for credit union members," said CUNA President/CEO Bill Cheney (News Now May 21).

To read the article, use the link.

Michigan pairs lawmakers CUs on fin lit challenge

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LANSING, Mich. (6/5/12)--The Michigan Credit Union League's (MCUL) ninth Annual Financial Literacy Legislative Challenge paired lawmakers with credit unions in their communities to schedule joint youth financial education events during National Financial Literacy Month in April. The challenge facilitated 30 matches this year.

Michigan State Sen. John Proos (R-St. Joseph) speaks to fifth grade students at Howard Ellis Elementary School in Niles as a Michigan Credit Union League Financial Literacy Legislative Challenge partner with Honor CU in St. Joseph. (Photo provided by the Michigan Credit Union League)
The challenge is a cooperative effort that looks to build relationships between Michigan legislators and their constituents in the credit union community while teaching youth money management skills (Michigan Monitor June 4). 

Honor CU in St. Joseph partnered with three lawmakers this year to teach students about finances.

"Financial literacy is important no matter what the age and we are thankful for the opportunity to partner with our local representatives and our schools," said Honor's Nile Branch Manager Jason Dillenbeck. Dillenbeck partnered with State Rep. Sharon Tyler (R-Niles) to speak during an economics class at Brandywine High School and with state Sen. John Proos (R-St. Joseph) during a fifth-grade Junior Achievement class at Howard Ellis Elementary in Niles.

Honor's Coloma Branch Manager Dave Scheur partnered with State Rep. Al Pscholka (R-Stevensville) to speak at a financial management class at Coloma High School. 

For additional impact, many of the events were set during the week of April 22, which was Credit Union Youth Week, sponsored by the Credit Union National Association, and Money Smart Week Michigan, an initiative of the Federal Reserve Bank of Chicago.

State Sen. Geoff Hansen (R-Hart) paired with three credit unions that week for youth financial education in the schools. They are First General CU, Muskegon; Gerber FCU, Fremont; and Harbor Light CU, Whitehall. Other financial education events were held in May as participating credit unions worked around lawmakers' busy calendars to schedule events. 

Credit union activities also were spotlighted for members of the Michigan House Banking and Financial Services Committee at its May 2 meeting where committee members heard testimony about credit union financial education initiatives and viewed an MCUL CUBE TV special report video about the challenge. The video featured State Rep. Peter Pettalia (R-Presque Isle), who is a member of the committee.

To see the video, use the link.

Governor names CU CEO to Oregon Growth Board

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BEAVERTON, Ore. (6/5/12)--Scott Burgess, president/CEO of Rivermark Community CU, Beaverton, Ore., has been appointed by Gov. John Kitzhaber to the newly formed Oregon Growth Board, which will work to bring business and job growth to the state.

The Oregon Growth Board was part of HB 4040, the Oregon Investment Act, one of a series of jobs bills passed in February's state legislative session to support Oregon businesses. The legislation was supported by the Northwest Credit Union Association (NWCUA) (Anthem May 31).

"Credit unions have a long history of helping members and small-business owners be financially successful, through both good and challenging economic times," Burgess said. "That strength aligns well with the objectives of the Oregon Investment Act, and I look forward to bringing the credit union perspective to the table."

HB 4040 included efforts to put all state economic development efforts in a single streamlined organization and was the product of months of outreach to community and business leaders statewide.

Under HB 4040, the Oregon Growth Board will coordinate and establish a unified strategic framework for all economic development resources.

"With our background in local communities in Oregon, credit unions have first-hand experience in deploying capital locally," said Pam Leavitt, NWCUA contract lobbyist.

"We continue to see how our members are affected by the local economy, and because of this, the association worked hard to get credit unions a seat on the board. We believe the Oregon Investment Act can build on the public-private partnerships that are currently working and improve them by adding leverage from the private sector so we can expand and diversify efforts to grow and improve all our communities," Leavitt added.

Worldwide Foundation seeks donations for online auction

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MADISON, Wis. (6/5/12)--The Worldwide Foundation for Credit Unions is seeking donations for the World Council of Credit Unions' (WOCCU) online charity auction.  

Popular items in the past include state-themed baskets, tickets to sporting events, unique travel experiences and items related to a credit union's primary membership.

Donations must be pledged before the auction starts on July 6.

"This is a wonderful way to support developing credit unions," said Judy Ensweiler, wife of Texas Credit Union League President/CEO Dick Ensweiler. Judy Ensweiler is co-chairing the auction this year with Crissy Cheney, wife of Bill Cheney, president/CEO of the Credit Union National Assocation. "Get creative and donate something that represents you, your credit union, league or location. Bidders always love the variety and unique items."

All proceeds will go to the Worldwide Foundation for Credit Unions, WOCCU's charitable arm, to support credit union development programs.

USA One National CU in Illinois liquidated

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DUBLIN, Ohio (6/5/12)--USA One National CU, Matteson, Ill., Thursday was closed by the Illinois Division of Financial due to inadequate capital.

Private deposit insurer American Mutual Share Insurance Corp. (ASI) was appointed liquidating agent.

Credit Union 1, a $68 million asset credit union in Lombard, Ill., purchased all of USA One's loans and other assets and assumed all of its share account liabilities, said ASI in a press release.

USA One members will continue to receive uninterrupted credit union services.

USA One reported total assets of $38 million as of March 31, and served 8,000 members.

Each member's individual share/deposit account at USA One is insured to $250,000 by ASI, a

credit union-owned share guaranty corporation licensed in Ohio.

More briefs filed in interchange rule lawsuit

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WASHINGTON (6/4/12)--The Credit Union National Association (CUNA)  and a coalition of trade associations working with The Clearing House Association have scheduled a conference call today to review a brief that the Federal Reserve Board filed Friday in response to retailers' lawsuit contesting the Fed's interchange rules for debit cards under the Dodd-Frank Act.

The Fed's brief was filed in the U.S. District Court for the District of Columbia. CUNA will provide an analysis in News Now after the coalition's meeting.

It also was learned Friday that  a group of small-ticket merchants filed an amicus brief urging the court  to invalidate the rule, saying that since it went into effect their interchange fees have risen.

The amicus brief--a friend-of-the-court document that allows interested parties to weigh in on aspects of the case without being party to the actual litigation--was filed May 22 by 7-Eleven Inc.; Auntie Anne's Inc.; Burger King Corp.; CKE Restaurants Inc., which owns Carl's Jr. and Hardee's; Jack in the Box Inc., which owns Jack in the Box and Qdoba Mexican Grill; Starbucks Corp., and The Wendy's Co.

In their brief, they maintain that "nothing could better demonstrate the unlawful nature of the board's rulemaking than the fact that, just a few months after the ink was dry on the board's final rule, the debit networks used it to justify hitting small businesses in the fastest-growing debit segment … with a massive price increase."

The brief noted that in the 1990s, competition in the market "began to fail when Visa and MasterCard leveraged their market power in credit cards to gain a dominant position in debit cards." They eliminated at-par pricing and replaced it with a system "based on continually-escalating interchange fees." As a result, the brief said, "debit card swipe fees increased 234% between 1998 and 2006 for PIN debit alone, and they have continued to increase since then."

"Specifically, Congress sought to restrain the dominant networks from exercising market power through the imposition of supracompetitive debit interchange fees by requiring that such fees be 'reasonable and proportional to the cost incurred by the issuer,'" the merchants' document said.

Instead, "the final rule made matters worse," the merchants alleged.  "All regulated debit transactions below $12--the 'holy grail' of debit card growth--are now substantially more expensive than they were before the final rule.  The harmful impact on small-ticket merchants increases as transaction sizes decrease."

The merchants said an interchange fee on a $10 debit transaction is now 15% higher while a comparable fee on a $2 debit transaction "is now a whopping 211% more expensive."  The brief noted that debit cards often comprise more than 30% of the merchants' transactions and the "vast majority" of the transactions are below $12.  The amicus brief's merchants claim the price increase can range from 15% to more than 200% on the fastest-growing segment of debit transactions."

The lawsuit was filed in March seeking a summary judgment declaring the interchange rule and network non-exclusivity regulation invalid. The merchants' suit alleges the Fed interchange cap--which became effective in October and caps interchange fees for debit transactions for issuers with assets of $10 billion or more at 21 cents--is too high and that the Fed exceeded its authority on the rule.

CUNA and a collation of trade associations representing thousands of small and large financial institutions filed their own amicus brief in the case, providing financial institutions' perspective on the rule. They argue the cap is too low and that it does not allow debit card issuers to cover their costs and earn a reasonable rate of return on their investments.

CU System briefs (06/01/2012)

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  • BIRMINGHAM, Ala. (6/4/12)--April Mayfield McLemore, 30, of Guin, Ala., was indicted by a federal grand jury in Birmingham Thursday in the embezzlement of $239,000 from Muscle Shoals-based Listerhill CU. The indictment charges that McLemore allegedly embezzled and falsified credit union records while she was employed at the credit union's Winfield branch. The embezzlements occurred between May 2006 and March 2011. The indictment also charges McLemore allegedly made false entries in the credit union's computer on March 24, 2011, to hide the embezzlement. If convicted, she faces a maximum penalty of 30 years in prison and a maximum $1 million fine (ShoalsInsider.com May 31) …
  • LAFAYETTE, Ind. (6/4/12)--A Lafayette, Ind., man was sentenced Thursday to 30 years in prison for an armed robbery at Lafayette-based Purdue FCU during which he allegedly held a handgun to a woman's head. Christopher A. Whirl, 25, was one of two defendants who pleaded guilty in Tippecanoe Superior Court to 12 felony charges of conspiracy to commit robbery, theft, three counts of robbery and seven counts of theft. The other defendant, Xxavier Jones, 26, also of Lafayette, is scheduled to be sentenced on June 20. Whirl also was ordered to pay more than $25,000 in restitution. The robbery occurred May 24, 2011. The alleged getaway vehicle, registered to Whirl and his girlfriend, was found nearby with the suspects' cellphones, which included photos of the handguns used in the robbery and a photo of Jones pointing a gun at the camera, said police  (JCOnline.com June 1) … 
  • SEATTLE (6/4/12)--A 43,999-square-foot building that housed the former Watermark CU, Seattle, has been sold to R.C. Hedreen Co., a Seattle-based developer, owner and management company for $9.7 million. Watermark merged last year with South CU, Tacoma, and closed its Seattle operation. The building is part of a redevelopment project that will include a convention center hotel, a restaurant and street-level retail. (Costar.com May 30) …

Filene sells Debt in Focus tool to SavvyMoney

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MADISON, Wis. (6/4/12)--The Filene Research Institute has entered a deal to sell its Debt in Focus tool to San Francisco-based SavvyMoney, a resource company that provides tools, information and a fully  automatic debt reduction plan to help individuals get out of debt quickly.

Terms of the deal were undisclosed.

Debt in Focus is the product of a Filene's i3 innovation team's goal to make financial guidance simple, powerful and anonymous. More than 500,000 consumers have received financial assessments, workable budgets, and guidance through 300 credit unions since the tool launched in April 2010.

The result will be a comprehensive solution for all consumers that is particularly attractive to those intimidated by traditional offerings, said Filene. The tool provides a debt analysis, with support to help consumers reach their debt management goals. Credit unions will benefit from better technology, increased branding flexibility, enhanced administrative tools and a soup-to-nuts solution for members, Filene said.

"The Filene Research Institute tries to live by this quote from [credit union movement pioneer] Edward Filene: 'Progress is the constant replacing of the best there is with something better still,'" said Filene CEO Mark Meyer.  "With Filene's success, we have also learned our limitations. In order to be our best, Debt in Focus found SavvyMoney to be the best company to align with in order to meet our members' ever-evolving needs," he added.

League analyzes debit card holds on gas in media

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PORTLAND, Maine (6/4/12)--The Maine Credit Union League provided analysis for a statewide news report that shed light on the debit card hold process and how it works at the gas pump.

The story, which aired multiple times, including the coveted 6 o'clock evening newscast on WCSH 6 and WLBZ 2, was four minutes long and was prompted by the rise in gas prices earlier this spring, said the league (Weekly Update June 1).

In the story, Rebekah Higgins, assistant vice president of card services with the league's subsidiary, Synergent, explained what happens when consumers swipe their debit cards at the pump.

"The gas station has to approve the transaction before you start filling up," she said. "So, to make sure you have enough to pay for it, some stations will allot an amount between $75 and $175 and run that as a transaction--simply to ensure you have enough money for it.

"The problem is, depending on how quickly their system works, and how quickly a consumer's financial institution can process it, that $150 transaction could be on your account for up to 48 hours," Higgins said. "The best way to avoid that extra charge up front is to choose the credit option rather than debit, or simply pay inside before you pump," she added.

League President/CEO John Murphy noted that "stories like this reinforce the knowledge and expertise that credit unions have, and further positions credit unions as focused on educating and serving consumers. Opportunities like this are very valuable, especially when they air statewide."

U.S. rep. visits fire department that received MBL

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RALEIGH, N.C. (6/4/12)--U.S. Rep. Renee Ellmers (R-N.C.) paid a Memorial Day weekend visit to Raeford, N.C.-based Rockfish Volunteer Fire Department (VFD)  to learn first-hand about how a member business loan (MBL) from Raleigh-based Local Government FCU (LGFCU)  helped it expand.

The fire department received a loan from LGFCU in 2009 that allowed it to perform a much-needed expansion and renovation, said the North Carolina Credit Union League (The Weekly Conversation May 31).  The congresswoman's visit was on May 25.

The credit union learned the VFD was pursuing a loan and contacted the department "to see if we could help," said Bill Carter, vice president of commercial lending at LGFCU Financial Partners. LGFCU was able to provide the fire department "a much-needed option" to better serve the department's construction financing needs, thereby enabling it to better serve its community, he said.

During Ellmers' tour, Rockfish VFD Chief Todd Wood and former board chairman George Blue discussed the work of the department and the help that LGFCU provided. Wood also provided Ellmers with a tour of the stationhouse, including a new training room, which is open for use by community groups.

'"We talk a lot about the good work that credit unions are doing in communities across North Carolina when we meet with our members of Congress in Washington,D.C.," said Dan Schline, league senior vice president of association services, who also attended the meeting. "Congresswoman Ellmers' visit to Rockfish was an opportunity for her to see firsthand how credit unions are having an impact."

Ellmers is co-sponsor of HR 1418, legislation that would increase the ability of credit unions to make MBLs. To view a video of the visit, use the link below.

The Credit Union National Association (CUNA) and credit unions are urging Congress to raise credit unions' MBL cap to 27.5% of assets from 12.25% so that credit unions can make more MBLs. Raising the cap would inject $13 billion in loans to small businesses, help the economy, and help create 140,000 new jobs at no expense to the taxpayer, CUNA said.

PCUA works on emergency mortgage assistance bill

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HARRISBURG, Pa. (6/4/12)--The Pennsylvania Credit Union Association has been working on legislation with the Pennsylvania Housing Finance Authority (PHFA) that would re-establish the Homeowners Emergency Mortgage Assistance Program (HEMAP) administered by PHFA.

HEMAP was a program geared to help troubled homeowners avoid foreclosure. HEMAP ended last year after receiving insufficient state funding (Life is a Highway June 1).

The bill, SB 1433, sponsored by state Sen. John Gordner (R-Columbia), would use 90% of Pennsylvania's share of the national mortgage servicing settlement agreement between most of the state's attorneys general and the five largest HEMAP mortgage servicers.

The legislation recently was amended in the state House Urban Affairs Committee to make a technical correction to the Act 91 Notice that directs a homeowner where to go for emergency homeowner assistance to avoid foreclosures. Earlier this year, the Pennsylvania Superior Court ruled that the Act 91 Notice, originally crafted by PHFA, was defective because it failed to explain the borrower's right to a face-to-face meeting with a lender.

PHFA changed its HEMAP notice administratively in 1999 and by statute in 2008 to require the borrower to meet with a PHFA-approved housing counselor, instead of the lender or servicer, to learn about HEMAP. PHFA and other groups are appealing the judgment to the Pennsylvania Supreme Court, but due to its time sensitivity, a legislative fix also is being pursued, the association said.

CUs annualized ROA on fastest pace since 2006

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MADISON, Wis. (6/4/12)--So far this year, credit unions' return on assets is the best in six years, according to a Credit Union National Associations (CUNA) economist's analysis of CUNA's monthly sample of credit unions for April.  

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"Better credit quality reduced loan-loss provisions, raising return on assets," Steve Rick, CUNA senior economist, told News Now. "For the first four months in 2012, credit union return on assets is running at 90 basis points on an annualized basis, the fastest pace since 2006."

Credit union loans outstanding grew 0.4% in April 2012, compared with remaining constant during March. Adjustable-rate mortgages led loan growth with a 0.9% increase, followed by unsecured personal loans (0.8%), used-auto loans (0.6%), new-auto loans (0.4%), and credit card loans (0.3%). Fixed-rate mortgages and home equity loans each fell 0.7% and 2.1% respectively. Credit union loans totaled $587.5 billion in April, compared with $574.2 billion in April 2011.

"The pace of credit union loan growth accelerated in the first four months of 2012 relative to the same period one year earlier," Rick said. "Loan balances rose 0.1% in the first four months of this year as compared with a 1.1% drop in loan balances for the January to April period of 2011.

"Loan balances typically decline 1.25% in the first four months due to seasonal factors, so the 0.1% gain reflects an underlying trend monthly growth of 0.34%," he explained. "This translates into an annual growth rate of slightly better than 4% for 2012."

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Credit union savings balances fell 0.7% in April compared with a 2.5% increase in March. Money market accounts grew less than 0.1%, while individual retirement accounts declined 0.2% and regular shares and one-year certificates each dropped 0.3%. Share drafts decreased 4%. Credit union savings in April totaled $875.2 billion--or $39.9 billion more than the $835.3 billion in April 2011.

Regarding asset quality, credit unions' 60-plus-day delinquency rate remained constant in March at 1.5%.

"The credit union loan delinquency rate fell to 1.51% in April from 1.53% in May and 1.64% in April of 2011," Rick said. "The year-over-year decline in the delinquency ratio was caused by a 5.9% drop in delinquent loan balances and a 2.3% increase in total loan balances."

The loan-to-savings ratio grew slightly to 67% in April from 66% in March. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--fell to 20% in April from 22% in March.

The movement's overall capital-to-asset ratio remained at 10%. The total dollar amount of capital is $103 billion.

IBiz KidI produces prime-time special

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MADISON, Wis. (6/4/12)--The producers of Biz Kid$ have created a new one-hour prime-time special for the Ashoka organization, which supports social entrepreneurship worldwide. "Biz Kid$-Three Minutes to Change the World" follows four young entrepreneurs as they compete in an international contest to change the world.

Four Ashoka Youth Social Entrepreneur Competition semi-finalists from the U.S., Canada, India and Singapore appear onstage in Tucson, Ariz. (Photo provided by the National Credit Union Foundation) 
The semi-finalists must present their business ideas to some of the world's most influential technology leaders in 180 seconds. 

Biz Kid$ is the credit union funded public television series that teaches kids about money management and entrepreneurship.

"The special is meant to inspire people of all ages to use innovation and technology to bring about change in their communities," said Danielle Brown, Biz Kid$ national program coordinator for the National Credit Union Foundation (NCUF). "The two funder credits we have on each episode for 'America's Credit Unions' and 'lovemycreditunion.org' will be on the top and end of the special, which is great brand extension for credit unions as well as Biz Kid$."

The special began airing in May and will continue to air in pre-prime or prime-time spots in various cities on public television through 2012.

To watch a promo for the special, use the link.

Also, The Biz Kid$ producers were asked last year by the Goodheart-Willcox publishing company to author a high school textbook on banking and financial systems, which is now available. This is the first textbook to receive the Jump$tart Coalition's seal of approval.

The book is branded with the Biz Kid$ look and logo and QR codes are contained in each chapter for students to connect to corresponding Biz Kid$ episode clips via mobile phones. The online and DVD versions of the textbook also include a chapter on in-school credit union branches that was authored by Cathy Brorson, outreach coordinator at Kitsap CU in Bremerton, Wash.

NCUF oversees fundraising, outreach and administrative responsibilities of Biz Kid, which recently started its fifth season. During the past six years, more than 290 credit unions and affiliated organizations have raised over $13.2 million to support the show's production, website and curriculum.

Calif. farm laborers offer mobile banking lessons

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OXNARD, Calif. (6/4/12)--A recent engagement program for members of the Global Women's Leadership Network studied the success of a mobile banking program that uses handheld technology to bring credit union services to members in the California fields where they work.

Click to view larger image Members of the Global Women's Leadership Network recently gained a first-hand understanding of a mobile banking program that brings services to members of Ventura (Calif.) County CU (VCCU) in the produce fields where they work. Joe Schroeder, right, president/CEO of VCCU, looks over greens from Boskovich Farms headed for the credit union-supported Food Share program. Joining Schroeder are network members Kim Vermander, vice president of Communication Arts CU in Detroit (left), and Beth Carr, CEO of Santa Cruz (Calif.) Community CU.
The mobile banking program was initiated by Ventura (Calif.) County CU (VCCU) and serves workers at Boskovich Farms, which grows and processes produce in California's central agricultural valley. It was modeled after a World Council of Credit Unions (WOCCU) development program in Mexico.

The Global Women's Leadership Network is a WOCCU initiative that brings together women credit union leaders from around the world.

The leadership network's nine participants from the U.S. and Mexico studied VCCU's program first hand for possible adaptation by other credit unions interested in serving difficult-to-reach population segments, such as immigrants and the elderly, said Brian Branch, WOCCU president/CEO.

"Our past success serving previously underserved rural Latin American populations through mobile technology illustrated a new way that credit unions can prosper while meeting member needs," Branch said. "Ventura County CU's application of cellphone technology to bring services to members has not only helped the credit union fulfill its mission, but also has given it a competitive edge in expanding market share."

Click to view larger image Ventura (Calif.) Community CU brings financial services to workers at Boskovich Farms through their mobile phones. (Photos provided by the World Council of Credit Unions)
VCCU began its program in late 2010. Roxy Ostrem, the credit union's chair and a member of Boskovich management, had heard a presentation by Dolores Rivera, general manager of Caja Zongolica, about her credit union's success through WOCCU's program in Mexico at the 2010 Global Women's Leadership Forum in Las Vegas.

Ostrem saw potential application for the outreach approach back home and brought her two organizations together to launch the VCCU pilot program. To date, 160 Boskovich employees have enrolled in the program, said Joe Schroeder, Ventura County CU president/CEO.

"Agriculture has been a vital part of Ventura County's economy for more than a century, and we know that the field workers who contributed to the industry's success here have limited access to financial services," Schroeder said.

Participants in a follow-up engagement program to Querétero, Veracruz, Mexico, later this year will see the latest advances in the mobile technology program that led to VCCU's initiative.

For more information and to register for the program, Nov. 5-10, use the link.

Foreclosure gift card bills pass N.J. Senate

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TRENTON, N.J. (6/4/12)--The New Jersey State Senate Thursday passed bills related to gift cards and mortgage foreclosures, both of interest to the state's credit unions.

The gift card bill reverses a two-year-old law that allows the state to claim the value of dormant gift cards to help balance state budgets, said the New Jersey Credit Union League (NJCUL) (Daily Exchange June 1).

After a failed court challenge to the law, gift card sellers American Express, Blackhawk and InComm have announced they will exit the New Jersey market.

The bill passed the state Senate by a 31-0 vote. A similar bill has passed the state Assembly. NJCUL supports the repeal.

The foreclosure bill would create a cause of action against a lender for failing to maintain vacant properties in foreclosure proceedings. The bill calls for a $2,500 per day fine for non-compliance. NJCUL opposed the bill, which passed by a 35-0 vote.

Another foreclosure-related bill, the "Foreclosure to Affordable Housing Act," was amended on the floor by a party-line vote.

The bill would establish the "New Jersey Foreclosure Relief Corp." to purchase vacant foreclosed residential properties from lenders and convert them to affordable housing. Under the amendment, the bill will be sent back for a second reading.

Top 10 iNews Nowi stories for May (06/01/2012)

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MADISON, Wis. (6/4/12)--Articles about credit unions' reputation with consumers, benchmark asset growth and member growth were among the top News Now stories in May.

The top 10 stories for the month were:

10. ATM disclosure fix introduced in Senate

WASHINGTON (5/18/12)--The Credit Union National Association (CUNA) strongly supports Sen. Mike Johanns' (R-Neb.) introduction of legislation that would ease current ATM fee disclosure regulations, which "will protect credit unions and other ATM operators from frivolous lawsuits while at the same time maintaining important consumer protections," CUNA President/CEO Bill Cheney said.

9. Man files multiple lawsuits citing ADA

PITTSBURGH, Pa. (5/17/12)--A Pennsylvania man who has filed multiple lawsuits against banks and claimed their ATMs have violated Title III of the Americans with Disabilities Act (ADA) by not offering accommodations for the blind has sued a Pittsburgh, Pa.-based credit union.

8. Auto leases' growth rate twice that of auto loans

ATLANTA and NEW YORK (5/11/12)--Total U.S. auto lease balances rose 9% in March over a year ago, more than twice the growth rate of auto loan balances, which grew 4.2% during the same period, said a study conducted by Equifax and Moody's Analytics' CreditForecast.com.

7. Unneeded regs costly for CUs, members: CUNA witness

WASHINGTON (5/10/12)--The burden of excessive financial regulations has resulted in more than $2 million in additional costs for his credit union, and, in some cases, reduced service to members, Terry West, president/CEO of Vystar CU, Jacksonville, Fla., said during a Wednesday House subcommittee on financial institutions and consumer credit hearing on the impact of regulations on small financial institutions.

6. Durbin files amicus brief in retailers' suit vs. Fed

WASHINGTON (5/11/12)--The Credit Union National Association (CUNA) will participate Monday in a call with the Clearing House Association and others to review the amicus brief filed Thursday by U.S. Sen. Richard Durbin (D-Ill.), the primary author of the debit interchange fee proposal in the Dodd-Frank Act, in support of retailers' lawsuit against the Federal Reserve's rule that implements the interchange fee cap.

5. Member growth spurt: Half a million in March

MADISON, Wis. (5/9/12)--Credit unions gained half a million new members in March, bringing total membership to 95.2 million, according to the Credit Union National Association's (CUNA) Credit Union Monthly Estimates. The growth spurt indicates the momentum credit unions gained leading up to Nov. 5's  Bank Transfer Day activities is alive and well five months after that  event, and credit unions should continue to make the most of that momentum, said CUNA.

4. TDR rule model of  'collaboration': CUNA, NCUA

ALEXANDRIA, Va. (5/25/12)--The National Credit Union Administration's (NCUA) new Troubled Debt Restructuring (TDR) rule, which was approved at Thursday's open board meeting, is "a model of collaboration among the agency, the Credit Union National Association (CUNA), leagues and concerned credit unions," CUNA President/CEO Bill Cheney said, and he urged the agency to use this collaborative approach in future rulemakings.

3. CUs' assets hit an eye-popping $1 TRILLION

MADISON, Wis. (5/4/12)--Credit unions in the U.S collectively reached a major milestone--$1 trillion in assets--as of the end of March, according to the Credit Union National Association's (CUNA) monthly sample of credit unions.

2. NEW: Fed releases interchange survey

WASHINGTON (UPDATED: 12:30 p.m. ET, 5/1/12)--The Federal Reserve's interchange study, as required by the Dodd-Frank Act, was released earlier today.

1.CUs have best reputation of any sector--survey

DENVER (5/14/12)--Credit unions were rated No. 1 in a new survey in which 5,000 consumers were asked to rate the reputation of 34 business sectors.