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CU System Briefs (07/12/2013)

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  • SAN DIEGO (7/1213)--A man jumped up on the counter and fired a shot during a robbery of the El Cajon branch of San Diego-based California Coast CU Tuesday. No one was injured (U-T San Diego First Edition July 10 and abc10news.com July 10). The incident occurred at about 5 p.m., when the man entered, jumped up on the counter and shouted at employees to give him money. He pointed what appeared to be a semi-automatic pistol at employees and repeatedly threatened them, discharging the weapon once, said the Federal Bureau of Investigation. The tellers complied and he placed the money into a bag he was carrying and left, getting into a dark-green sports utility vehicle driven by a second person. He wore  a dark cap and sunglasses, had dark hair and had tattoos on his right cheek, said the FBI ...
  • PORTSMOUTH, N.H. (7/1213)--The new Portsmouth, N.H., corporate headquarters of Service CU has been certified by the U.S. Green Building Council as Leadership in Energy and Environmental Design (LEED) Gold.  The four-story building  uses 36% less energy, consumes  40% less water, emits 63% less carbon dioxide, and achieved a 98 Energy Star Rating, meaning it uses 98% less energy than a typical non-environmentally building of equal square footage. Some of its green elements include: a light-colored roof to reflect sunlight and produce heat gain; geothermal heating and cooling; solar hot-water heating; and reduced water use. It has a brownfield redevelopment site, bike racks, fuel efficiency and carpool parking spaces.  "Our goal from the beginning was to use American materials and labor in constructing our new environmentally sound Service CU corporate offices," said President/CEO Gordon A. Simmons ...
  • KENTWOOD, Mich. (7/1213)--Community West CU, a $118 million asset credit union in Kentwood, Mich., will be giving away money to young adults during a six-week $20K Cash Giveaway promotion this summer. As part of the registration process for the promotion, participants must watch a short video of local DJ Eric O'Brien talking about a financial topic. The video topics include avoiding ATM fees, dodging the downfall of payday loans and finding free checking accounts that pay interest. "We hope the young adults will take something away from the videos as we continue to look for ways to financially educate the next generation," said Marketing Director Jillian Gajtka. The giveway will include 40 prizes of $500 each. To encourage membership growth, most of the prizes will be given away to current and new members who are 18- to 24-years old and who register for the promotion.  To help new members get on the right track, Community West will pay their initial $5 membership deposit ...

Ohio's Final Budget Minimizes Impact On CUs

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COLUMBUS, Ohio (7/12/13)--The $62 billion Ohio state budget was signed into law without a huge expansion of the sales tax base--owing to the work of the Ohio Credit Union League and credit union peers on the State Budget Impact Work Group, said the league.
 
While credit unions came out of the budget process relatively untouched, the final version did include a 0.25% sales tax increase, to 5.75% from 5.5%, meaning state-chartered credit unions will pay a little more on taxable goods and services, the league said (eLumination Newsletter July 10).
 
Also, credit union service organizations currently subject to the Commercial Activity Tax will likely see an increase because that tax was changed to an incremental-scale based on gross receipts, the league said.
 
The league also noted that Gov. John Kasich remains steadfast in finding a legislative avenue to expand Medicaid. Several bills addressing this effort have been introduced, and any expansion of a state program likely means additional changes to tax policy in order to generate funding, the league added, saying it will remain watchful.

'Mortgages Are Memberlicious' Blog Touts CU Home Financing

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FAIRBORN, Ohio (7/12/13)--A new blog, "Mortgages are Memberlicious," discusses how credit unions can become more meaningful to their members through home financing.

"I believe credit unions are the best source for Americans to get a home loan," said Tim Mislansky, who established the blog. "Unfortunately, only about 7% of Americans seem to agree with me. But I am out to change that."

Mislansky is president of myCUmortgage and senior vice president and chief lending officer at Fairborn, Ohio-based Wright-Patt CU. The blog represents his thoughts and observations and is meant to inspire credit unions to become more active in real estate lending, he said.

With more than 20 years' experience with credit unions and their members, Mislansky has served on Fannie Mae's Credit Union Advisory Council Board, the Prime Alliance Advisory Board, and the Ohio Credit Union Foundation Board.

He currently serves on the Mortgage Cadence Advisory Board and on the boards of American Credit Union Mortgage Association and CU Realty Inc.  He also has participated in the Filene Research Institute's innovation group, i3.

By writing the blog, he hopes "to cause credit union leaders to re-think what their credit union is, or isn't, doing to help their members with mortgages."

Debit Card Issuers Report Strong Performance In Key Areas

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HOUSTON (7/12/13)--Debit card users performed more transactions and spent more per card during 2012, leading to a strong performance for debit card issuers in key areas, said PULSE's 2013 Debit Issuer Study, released Wednesday.
 
The average active cardholder performed 19.4 debit transactions per month in 2012, up from 18.3 transactions in 2011, said the study. As a result, the total annual amount spent per active consumer debit card rose to $8,753 from $8,326.
 
Penetration and active rates both improved year-over-year. Penetration increased to 77% in 2012 from 76% in 2011. Active rates rose to 68% from 66%, said the study, which was conducted by Oliver Wyman. It surveyed 64 large banks, credit unions and community banks.
 
Issuers also reported a decline in debit card fraud. Net fraud losses dropped 30% for both signature and PIN  debit. Signature fraud losses were $0.02 per transaction, compared with $0.031 cents in 2011.  PIN debit remained eight times more secure than signature debit, with fraud loss rates dropping to $0.003 from $0.004 per transaction, PULSE said.
 
Beyond the core debit business, issuers reported mixed outlooks on prepaid cards, chip-based Euro MasterCard Visa (EMV) cards and mobile payments.
 
Roughly 84% of issuers surveyed offer a prepaid card, with 73% offering gift cards. Because of low sales, issuers expressed indifference toward this product, said PULSE. By contrast, sales of general purpose reloadable (GPR) prepaid cards more than doubled in 2012-- to 36% from 19% in 2011.
 
Some positioned their GPR cards as supplemental accounts for existing account holders, while others targeted the cards to consumers outside mainstream banking.  Financial institutions projected a 55% year-over-year growth for their GPR cards in 2013. That compares with a projected 2% decline in prepaid gift card sales.
 
As for the EMV standard, 95% said they are aware of payment networks' plans to shift in 2015 the liability for disputed transactions. Roughly 38% planned to issue chip-based debit cards in 2014; another 8% planned to do so in 2015. However, many were unsure how to support EMV while adhering to merchant routing choice obligations. "In this environment, more than half the issuers reported that their plan is to wait to see if the industry converges around a common solution," PULSE said.
 
More issuers were testing mobile solutions: 13% are participating in a mobile payments pilot, up from 9% in 2012. Large banks are the most active, with 26% testing a solution, up from 15% last year.
 
Many participants viewed the shift from card to mobile payments as inevitable with 93% expecting more than 5% of debit transactions to migrate to mobile in the next five years. However, they also cited a need for a compelling solution that goes beyond the novelty factor of paying with a phone to drive meaningful uptake.
 
News Now reported Thursday that the study also found that interchange revenue caps have impacted all issuers, whether "regulated" or "exempt" from the cap. Use the link to see the story, Debit Study: Interchange Rule Affected Regulated, Exempt Issuers.

Filene Report Helps CUs Nudge Members From Intent To Action

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MADISON, Wis. (7/12/13)--Credit unions can build gentle "nudges" into products and services that don't limit their members' options but place higher value on better choices, according to a new report from the Filene Research Institute.
 
A nudge is any aspect of the decision process that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic consequences, said the report, "A Practitioner's Guide to Nudging."
 
Increasing participation in retirement savings plans is a common topic in behavioral economics. As an example, the report outlines the work of a team of Dartmouth College researchers who worked with a not-for-profit institution to help increase participation in its supplementary pension program. After conducting interviews, surveys and focus groups, the team found potential savers struggling with three barriers, including:
  • A lack of knowledge and information about where to start saving;
  • A belief that they did not have enough money to start saving; and
  • A lack of financial self-control.
The research team believed that one of the major reasons individuals do not reach their savings goals is a lack of planning. Coupling this insight with the barriers identified, the team designed a planning aid to reduce the complexity of opening an account and contributing to the pension program. The aid simplified the steps so that the process took no more than 30 minutes.
 
The planning aid highlighted a range of contribution amounts, from as little as $16 per month to a maximum of $1,666.67 per month, suggesting that it does not take much money to open an account and contributed to a pension program. The planning aid doubled enrollment within 60 days of implementation.
 
The report offers additional case studies and outlines the process for nudging members and customers.
 
To download the report, use the link.

League Working Toward Public Funds Bill In Ohio

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COLUMBUS, Ohio (7/12/13)--The Ohio Credit Union League has worked with State Rep. Lou Terhar (R-Cincinnati) and House Minority Leader Tracy Maxwell Heard (D-Columbus) to introduce state legislation that would permit credit unions as eligible depositories for public funds (House Bill 221).
 
Under the bill--which is important to many Ohio credit unions, the league said--credit unions also would be eligible to participate in programs and initiatives offered through the state and local governments, including GrowNow, SaveNow, and the Small Business Collateral Enhancement Program (e-Lumination Newsletter July 10).
 
There currently are 15 co-sponsors--eight Republicans and seven Democrats--in addition to the two joint sponsors. The bill has been referred to the House State & Local Government Committee, said the league.
 
The league is again working with county commissioners and township trustees, who supported a previous bill, to convey the need and validity of the legislation.
 
Several other states allow credit unions to accept public deposits or have considered or are considering legislation. They include California, Illinois, Missouri, New Jersey, New York, Oregon and Washington.

Young Entrepreneur Gets Start With CU Biz Account

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LIVONIA, Mich. (7/12/13)--"If you don't have a good reason to start a business, you won't succeed." That's the advice of Sasha Popkov, an eighth-grade student who opened a business checking account for her duct tape crafts business at Co-op Services CU in Livonia, Mich.
 
Click to view larger image Eighth grader Sasha Popkov shows off duct tape crafts from her business, "Crafts 4 the Cure." Co-op Services CU in Livonia, Mich., was the only financial institution that would let her open a business checking account for her business. (Photo provided by the Michigan Credit Union League).
Popkov, an eighth-grader at Livonia's Clarenceville Middle School, is a supervisor in the school's student credit union, which is sponsored by the $401 million asset Co-op Services CU (Michigan Monitor July 8).
 
Co-op Services was the only financial institution that would let her open a business checking account for her company, "Crafts 4 the Cure," reported the Michigan Credit Union League.
 
Popkov opened the business after her mother was diagnosed with breast cancer more than three years ago. Her business makes and sells duct tape wallets, purses, flowers, glasses cases, I.D. holders and more. She runs the business but has recruited her mom, grandmother and two brothers for production operations. All proceeds from her business are donated to the American Cancer Society.
 
Popkov stressed that running a business is not easy and it takes effort and dedication. "It's fun and cool--a lot of people my age don't think about this," she said, adding that volunteering at the credit union helped her sort out her money better and become more organized.
 
"It's very rewarding to watch someone like Sasha use her amazing drive and volunteer experience at our student credit union to start a business as such a young age," Jeremy Cybulski, Co-op Services' youth and community development coordinator, told the league.
 
Popkov plans to continue her business "forever" or perhaps until she achieves her next goal of becoming an attorney.

Citizens Community Nabs Four CUAD Awards

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BISMARCK, N.D. (7/12/13)--Citizens Community CU of Devils Lake, N.D., collected four first-place awards at the annual Credit Union Association of the Dakotas Summit June 7 in Devils Lake, N.D.
 
Click to view larger image Darwin Brokke, left, president/CEO of Citizens Community CU, Devils Lake, N.D., accepts a community services award from Robbie Thompson, president/CEO of the Credit Union Association of the Dakotas (CUAD). The credit union was recognized with four awards at the annual CUAD Summit. (Photo provided by CUAD)
Citizens Community CU captured first-place state-level awards in these categories:
  • Dora Maxwell Social Responsibility Award, $100 million to $200 million in assets;
  • Louise Herring Philosophy in Action Award, $50 million to 250 million in assets;
  • Desjardins Youth Financial Education Award, $50 million to $150 million in assets; and
  • Desjardins Adult Financial Education Award, $50 million to $150 million in assets.
The awards recognize the credit union's efforts in the areas of community involvement and financial literacy.
 
The Dora Maxwell Awards for Social Responsibility Award signifies a commitment to volunteering time, energy and resources to boost the living standards of others.
 
The Louise Herring Awards for Philosophy in Action Award display how credit unions put People Helping People credit union philosophy into action.
 
The Desjardins Financial Education Awards recognize the financial literacy efforts of credit unions in educating youth and adults.
 
Winners of these state-level awards go to the national awards competition sponsored by the Credit Union National Association.

NCUA 'Respectfully Disagrees' With, Reviewing Barclays Ruling

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ALEXANDRIA, Va. (7/12/13)--The National Credit Union Administration did not comment Thursday on whether it will appeal the decisions by a federal judge in Kansas dismissing its claims for losses from the sale of residential mortgage backed securities to U. S. Central FCU and Western Corporate FCU by Barclays Capital and Credit Suisse. However, it said it is reviewing the decisions.
 
"We respectfully disagree with the rulings, and we are reviewing them," said NCUA spokesman John Fairchild, public affairs specialist. "We will continue to vigorously pursue our claims against the parties that sold the faulty securities to the corporate credit unions."
 
The suits, part of eight suits filed in U.S. District Court in Wichita, Kan., as well as suits against brokers in other districts, were filed by NCUA acting as the corporates' liquidating agent and were an attempt to recoup losses from the RMBs that contributed to the corporates' conservatorship and liquidation in 2009.
 
In the rulings Wednesday, U.S. District Judge John W. Lungstrum said NCUA'a claims were time-barred, which meant NCUA did not file the lawsuits against the brokerage firms in time.  NCUA had argued that it had met the statute of limitations for filing the lawsuits because it had entered into a tolling agreement that delayed the filing deadlines and that it had an extended time to file under an "extended statute."
 
Lungstrum said that NCUA was required to file the claims by March 20, 2012, three years after it was appointed conservator of U.S. Central and WesCorp, but that NCUA did not initiate the suit until Sept. 25, 2012.
 
The case has implications for other lawsuits filed by NCUA against brokerage firms that sold RMBS certificates to various corporate credit unions and that use the same arguments relying on tolling agreements and extender statutes. It also has implications for lawsuits filed by other agencies such as the Federal Deposit Insurance Corp., which had submitted an amicus brief supporting NCUA's arguments in the Credit Suisse case. The judge rejected FDIC's arguments as well as NCUA's.
 
See related story:  Court Dismisses NCUA Lawsuit Over Corporate CU Losses Vs. Barclays in Thursday's News Now by using the link.