Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

Low-income Mich. CUs powers expanded

 Permanent link
PLYMOUTH, Mich. (7/15/08)--The Michigan Office of Financial and Insurance Regulation (OFIR) issued an order June 20 expanding the powers of state-chartered credit unions approved for low-income designation by the National Credit Union Administration (NCUA), according to the Michigan Credit Union League. Michigan state-chartered credit unions now have the authority to exercise all powers granted to low-income designated federal credit unions. Low-income designated, state- chartered credit unions can accept non-member deposits; participate in the Community Development Revolving Loan Program; offer secondary capital accounts; and qualify for an exception from the aggregate loan limit for member business loans (Michigan Monitor July 15). “This is a very important development for state chartered credit unions in Michigan, and we encourage all those affected to read through the letter and develop an understanding of what actions they are now able to take that they previously could not," said league Executive Vice President Patrick La Pine. The Michigan Credit Union Act does not address low-income credit unions. The NCUA has approved the low-income designation for a number of Michigan's state-chartered credit unions with OFIR concurrence. However, until now, act provisions restricted the ability of the credit unions from exercising all powers available to low-income federal credit unions, the league said. For a copy of the order, use the link.

U.S. Central restates 2007 earnings Fitch upholds AA rating

 Permanent link
LENEXA, Kan. (7/15/08)--U.S. Central FCU, the nation’s only wholesale corporate credit union, announced Monday its 2007 and first-half 2008 financial results. The corporate also anounced that Fitch Ratings made no change in U.S. Central's long-term debt rating. U.S. Central, which has total assets of more than $45 billion, reported a net loss for 2007 of $51 million. This compares with net income of $63 million in the prior year. For the six months ended June 30, 2008, U.S. Central generated net income of nearly $30 million. The 2007 loss primarily reflected the turbulent conditions in the global credit markets and the resulting impairment of the value of some securities held in U.S. Central’s investment portfolio, the corporate credit union said. “In a challenging period for the financial institution sector, U.S. Central is in a strong and highly liquid position,” said Francis Lee, president/CEO of U.S. Central. “Our $2.6 billion in total regulatory capital, and access to more than $20 billion in liquidity overall, ensure that U.S. Central will continue to serve as a source of liquidity and support to the Corporate Credit Union Network. “More importantly, due to our solid earnings through the first half of 2008, we have already recouped more than half of the previous year’s loss,” he continued. Principal factors affecting U.S. Central’s 2007 results included losses representing market-to-market adjustments on trading assets and write-downs on certain residential mortgage-backed securities. Offsetting these losses was an increase in net interest income after dividends on membership capital shares of 37%, to $145 million, a 3% increase in fee income, to $19 million, and a 4% decline in operating expenses, to $60 million. “The soundness of our investment portfolio and our prudent risk management practices have enabled U.S. Central to perform well despite the turmoil in the financial services industry,” noted David Dickens, executive vice president of asset/liability management, U.S. Central. “After an in-depth evaluation of our investment holdings by both internal and third-party experts, we are confident our $40 billion investment portfolio consists of high-quality assets that will continue to perform in these difficult markets,” he added. U.S. Central also stated Monday that Fitch Ratings made no change in the credit union liquidity provider’s “AA+” long-term debt rating, which was assigned to U.S. Central in March of 2008. U.S. Central’s short-term rating of “F-1+,” individual rating of “A” and support rating of “1” also are unchanged and remain at the highest levels given by Fitch. Fitch issued a statement after its assessment of U.S. Central’s results of its 2007 financials, which showed a $51 million net loss for the year. Fitch’s release stated “… the losses are of a magnitude that Fitch considers absorbable for U.S. Central’s earnings and capital position.” “During this challenging period for the financial institution sector, U.S. Central is in a strong and highly liquid position,” said Francis Lee, president/CEO of U.S. Central. “Our $2.6 billion in total regulatory capital, and access to more than $20 billion in liquidity overall, ensure that U.S. Central will continue to serve as a source of liquidity and support to the Corporate Credit Union Network. "More importantly, due to our solid earnings through the first half of 2008, we already have recouped more than half of the previous year’s loss," he added. "The ‘AA+’ rating is shared by only two other U.S. depository institutions and, at a time of considerable uncertainty in the financial markets, we believe that Fitch’s release is an ongoing acknowledgement of the continued strength of our balance sheet and our high liquidity position.”

CU member appreciation event has 200 response

 Permanent link
SALT LAKE CITY (7/15/08)--Free tickets. Free food. No lines. Who could pass that up? Not very many. A member appreciation event that involved the showing of a popular new Indiana Jones movie at Mountain America CU (MACU) garnered a 200% response rate to direct mail invitations. Michael Turner, senior vice president of commercial lending at the $2.7 billion asset, West Jordan, Utah-based credit union, had seen this type of event work at other organizations and decided to give it a try. “First, I knew we needed to get a blockbuster movie and Indiana Jones: Kingdom of the Crystal Skull surely fit the bill,” said Turner. “Second, we needed to provide a pre-movie forum to give us the opportunity to thank our members, talk briefly about our products and services and allow them time to network.” The credit union has held member appreciation events in the past, but wanted to do something different. “Finally, since MACU is a family friendly organization we decided that it would be great to include not only our business members, but their families,” Turner continued. The credit union sent out just over 150 invitations to its business services members and had nearly 300 people show up. “The turnout was phenomenal. An average rate of response from direct mail is 1% and we saw a 200% response,” said Nathan Anderson, senior vice president of marketing. Turner agreed. “It was a resounding success. After the movie was over, I had several members stop me on their way out and tell me what a great event it was and how much they love doing business with us,” he said. “We wanted to thank our business members for their partnership and let them know that we appreciate them, but by the time the event had ended and they were leaving they were truly thanking us,” Anderson added.

New Hampshire payday loan bill signed into law

 Permanent link
MANCHESTER, N.H. (7/15/08)--New Hampshire Gov. John Lynch last week signed House Bill 267--an act relative to certain small loans--that caps interest rates for payday loans and car-title loans at 36% in the state. The cap, which takes effect Jan. 1, will protect New Hampshire citizens from a cycle of debt that occurs when payday lenders make high-interest loans to cash-poor borrowers. “Hopefully the bill will have the effect of not only preventing consumers from falling into a predatory payday lending trap, but it will also help draw their attention to the fact that there are far better ways to finance small amounts over short periods of time or to get their finances in order so that they will not be dependant on short-term financing,” Rob Kimmett, senior vice president of public relations and marketing for the Massachusetts, Rhode Island and New Hampshire credit union leagues, told News Now. When the state’s small-loan rate cap was eliminated in 2000, pay day lending was effectively legalized in New Hampshire, according to the Center for Responsible Lending. Service CU, Portsmouth, and St. Mary’s Bank, Manchester, are two New Hampshire credit unions that have programs that aim to meet the needs of payday borrowers, Kimmett said. New Hampshire is now among 15 states and the District of Columbia that have capped interest rates at or around 36% to stop predatory lending, the center said. Congress passed a 36% cap to protect military families nationwide at the request of the Department of Defenses, the center added.

CUNA institute can help keep CU staff financially fit

 Permanent link
MADISON, Wis. (7/15/08)--The Credit Union National Association’s (CUNA) first-ever Personal Finance Institute will help attendees learn how to develop financially fit staff and credit union members. The institute takes place Sept. 10-12 in Lansdowne, Va. The CUNA Personal Finance Institute was designed to help attendees draft a strategic financial literacy plan for their credit unions to educate youth, adults, and the underserved, with special focus on measuring the effectiveness of those educational efforts. Credit union professionals will learn how to create new financial behaviors and build a culture of financial learning to attract and help members. Also, the “Creating New Behaviors That Last” session will explore how the brain works and how it affects the way people manage money. Attendees will receive a prework packet to complete prior to the institute, as well as a copy of CUNA’s new Model Youth Program Guide. The institute was one of seven key recommendations of the CUNA Financial Literacy Task Force in its “Long-Term Strategic Plan to Empower Members by Improving Financial Literacy.” The plan was created to help elevate financial literacy to the level of a core value within credit unions to help sustain the movement’s ongoing philosophy of service to members and communities. The task force operated under the belief that long-term credit union growth depends on improving members’ financial literacy. And that the more financially literate consumers become, the more likely they are to:
* Save and borrow; * Generate fewer loan losses; * Resist competitor’s teaser rates: * Recommend membership to others; and * Raise their children to be members.
With the current economic conditions, there isn’t a topic that is more important or relevant right now than financial literacy, said Juri Valdov, task force chair and senior vice president for external affairs, Northwest FCU, Herndon, Va.

Wis. teachers learn to help students be millionaires

 Permanent link
MADISON, Wis. (7/15/08)--A group of 50 educators will learn how to teach their students about finances during the second session of the 2008 National Institute of Financial and Economic Literacy (NIFEL), held through Friday at Edgewood College in Madison, Wis. The Wisconsin Department of Financial Institutions (DFI) is conducting the NIFEL sessions. Attendees will spend the week learning how to teach their students about investing, financial plans, insurance and “how to be a millionaire,” the DFI said in a release. The Wisconsin Credit Union League is helping to sponsor the event, as it has done every year since 2001, according to Chad Helminak, Wisconsin Credit Union League public relations specialist. “Wisconsin credit unions have been amazing in stepping up to the plate and providing support for local teachers,” Helminak told News Now. Jim Drogue, vice president of credit union development at the league, was scheduled to present Monday about the payday lending industry, dangers of payday loans, and viable credit union alternatives, such as StretchPay. NIFEL is organized by The Jump$tart Coalition for Personal Financial Literacy. It was organized in 2001 in response to the fact that most educators lack the skills to teach personal finance, the DFI said.

WOCCU conference opens in Hong Kong

 Permanent link
HONG KONG (7/15/08)--The World Council of Credit Unions (WOCCU) opened its 2008 World Credit Union Conference Sunday in Hong Kong, with WOCCU Chair Melvin Edwards stressing the importance of member service.
John Tsang, financial secretary for the Hong Kong Administrative region of China, addresses the World Council of Credit Unions’ World Credit Union Conference opening general session crowd in Hong Kong.
“The primary purpose of any such gathering is a realization of our identity and a reaffirmation of our purpose,” said Edwards, who represents the Caribbean Confederation of Credit Unions, during his welcoming remarks. “As members of this unified body, we are one group and together we will achieve the mission which defines our reason for being here. It is la raison d'être, as we say in French, our ‘reason for existence' that means so much to us and to the members we serve.” The conference is being held through Wednesday at the Hong Kong Convention and Exhibition Center. More than 1,300 attendees are expected for the event, which is co-hosted by the Credit Union League of Hong Kong and the Association of Asian Confederation of Credit Unions. Officials from hosting organizations and Hong Kong government agencies welcomed attendees. Dignitary John C. Tsang, financial secretary for the Hong Kong Special Administrative Region of China, also welcomed participants, recognizing credit unions and WOCCU for their contributions to the financial well-being of middle- and low-income people worldwide. WOCCU's efforts to bring its conference to Asia for the first time in 30 years says a great deal for the organization's commitment and the growth of Asian credit unions, he added. “This conference is like the Olympics for credit unions,” said Tsang, referencing the upcoming Beijing summer games in August. “We're deeply honored that WOCCU has chosen our city.” Prior to Sunday's opening ceremonies, WOCCU held several other meetings, including its sixth annual Regulators' Roundtable, which attracted 37 regulators from 18 countries across six continents. The event convenes regulators from both mature and developing credit union systems to exchange ideas and regulatory best practices.
World Council of Credit Unions Chairman Melvin Edwards (left), and Liu Kwei-Kin, assistant director and registrar of credit unions in Hong Kong, at the World Council of Credit Union Conference in Hong Kong. (Photos provided by the World Council of Credit Unions)
The regulators participated in wide-ranging discussions on topics such as the credit crisis and its impact on credit unions, off-site surveillance as a supervisory tool, and supervising in a distressed environment. Most of the discussion focused on the day-to-day difficulties regulators face. Usha Thorat, Central Bank of India's deputy governor and Saturday's keynote speaker, identified several of these in her presentation on the components of a strong supervisory system. First time participant Loi Bakani, deputy governor and deputy registrar of Savings and Loan Societies for the Bank of Papua New Guinea, said the roundtable, “gave him valuable insight into the way that other regulators from around the world implement regulations and exercise their supervisory authority.” While the regulators discussed policies, this year's nominees for WOCCU's Young Credit Union People Program (WYCUP) and other conference attendees age 35 and under spent Sunday discussing strategies for credit unions worldwide to attract and retain younger members. Conversations developed from an analysis of marketing to the 18-35 market, with countries sharing personal stories of their own strengths, weaknesses, opportunities and threats in this area. “It is apparent that no matter the country, we all face similar challenges,” said Eleonora Zgonjanin Petrovik, 2007 WYCUP winner and a co-facilitator of the session with fellow 2007 WYCUP winner Izabela Rutkowska. “We need to take advantage of these similarities and learn from each other, if we want to make more headway with the younger credit union market.”