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CU System briefs (07/20/2009)

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* MIRAMAR, Fla. (7/21/09)--Counterfeit cashier's checks bearing the name of Tropical Financial CU, Miramar, Fla., are in circulation, says the Federal Deposit Insurance Corp. The counterfeit items display Tropical Financial's routing number, 267077847, and are similar to authentic checks. However, the counterfeits show a security feature statement embedded in the top border and along the bottom border between two padlocks. In the top left corner, they display the logo in blue and green. Authentic checks are light blue and have blue print. Their top border displays an elongated blue circle with this security feature statement, in all capital letters: "Original check has an artificial watermark on reverse side. Hold at an angle to view." A white watermark logo is in the middle … * READING, Pa. (7/21/09)--Berks Community FCU, Reading, Pa., and Bellco FCU, Wyomissing, Pa., intend to merge, pending membership and regulatory approval. According to Berks Community FCU's website, its board approved a merger proposal on July 6. "The board of directors feels strongly that this merger is in the best interest of our members," said Chairman Forrest D. Wanner in a message to members. The $44 million asset credit union sent ballots to its 7,000 members last week and will conduct a special membership meeting July 27. Bellco FCU is a $55 million asset credit union with 8,000 members. If a merger is approved, the combined credit unions would be called Bellco FCU … * MOBILE, Ala. (7/21/09)--A former high school basketball captain who became a member of a "Hoodies" gang was sentenced to more than 11 years for two bank and credit union robberies. The sentence will be added to a 45-year sentence he already is serving for heists in Mobile County, Ala. Kenterrio Scott, 23, pleaded guilty in March to robbing a Peoples Bank in Dallas County in September 2007 and the Alabama Central CU's Creola branch in December 2007 (Press-Register July 11). He is serving the first prison sentence for robberies of a general store in Theodore in January and theatre in Mobile in 2006. Scott will not be eligible for parole for at least 17 1/2 years. He also was ordered to pay Peoples Bank $5,826 and the credit union $33,229 … * HIGHTSTOWN, N.J. (7/21/09)--Four colleges have agreed to offer private student loans through a credit union student lending program, says the New Jersey Credit Union League (The Daily Exchange July 17). New York University, William Patterson, Lehigh University and York College of Pennsylvania will promote the Ed Access Private Student Loans to their students through CU Student Loans. The colleges will promote the program by offering a link on the financial aid section of their websites … * HIGHTSTOWN, N.J. (7/21/09)--New Jersey Gov. Jon Corzine has nominated Neil Jasey to succeed Steven Goldman as commissioner of the state's Department of Banking and Insurance. Jasey began working Monday as acting commissioner, even though the nomination must still be confirmed by the New Jersey Senate. Jasey is an attorney, most recently employed at Prudential Financial in Newark. He is married to first-term Assemblywoman Mila Jasey (D-27), according to the New Jersey Credit Union League (The Daily Exchange July 20) …

SECUs free coin sorting saves charities 25000

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RALEIGH, N.C. (7/21/09)--State Employees' CU (SECU) has helped North Carolina charities save nearly $25,000 through using its no-cost coin sorter machines. Many charitable groups collect a large volume of change through penny drives and coin collection events, and need a way to count the coins, said SECU in a press release. Typically, coin sorter fees begin at 7%, with some as high as 10%, but SECU offers its sorters at no charge. To date its coin sorters have counted about $317,000 in coin from charity groups. One of the organizations that uses the coin sorter at SECU's Raleigh-Stonehenge branch is the Knights of Columbus. Knights of Columbus spokesman Jerry Powell said the group sponsors campaigns to support people with disabilities, such as its Tootsie Roll campaign. "SECU makes it practical, enabling us to deal with the coins through the use of their coin machines. The folks at SECU show they are committed to the needs of others by helping us in this manner," Powell said. Each of SECU's 225 branch offices across the state has coin sorters, which were installed in 2005. They feature FAT CAT, SECU's youth program mascot.

Former CEO pleads not guilty to embezzlement

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WISCONSIN RAPIDS, Wis. (7/21/09)--The former president of the now defunct Rapids Municipal CU in Wisconsin Rapids, Wis., pleaded not guilty Thursday in a U.S. District Court to charges of embezzling about $634,222 from the credit union. David K. Henke, 50, was charged with bank fraud and embezzlement over a period from November 1999 to October 2008 from the credit union (Wausau Daily Herald July 18). The Western District of Wisconsin U.S. Attorney's Office said Henke allegedly made false entries into general ledger accounts, added unauthorized loan amounts to members' new and existing loans without their knowledge, converted members' share certificates for his own use and used credit union checks to pay personal expenses. The credit union served employees of the city, Riverview Hospital, Family Heritage Nursing Home and the Wisconsin Rapids School District. Rapids Municipal CU was acquired Dec. 31 by another credit union, Bull's Eye CU, which is beginning work on returning the money (WisconsinRapidsTribune.com July 17). Bull's Eye President David Stark told the newspaper that its employees will contact members affected in the next few days to explain the claims process. Henke was never associated with Bull's Eye CU. If convicted, he faces a maximum 600 years in federal prison, a $1 million fine, a $2,000 special assessment and a restitution order, said the Wausau newspaper.

CUs have chance to gain new members says econ editor

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MINNEAPOLIS (7/21/09)--Credit unions have a unique opportunity to add members by giving them good service at low prices, said an economics editor for a national radio show in a column in Saturday’s Minneapolis Star Tribune. When asked what advantages a megabank has over a smaller local financial institution, Chris Farrell, economics editor for American Public Media’s Marketplace Money radio show, wrote that big banks’ behavior of increasing fees and penalties to bolster their “crumbling finances” has created an opportunity for competitors such as credit unions. “In many cases, community development banks and credit unions have low-fee and no-fee savings and checking accounts,” Farrell wrote. “And many of those local financial institutions now have excellent online services, too. “Management at community banks and credit unions has a once-in-a-lifetime opportunity to grab customers by giving them good service at a cheap price, by eliminating fees and refusing to impose unexpected charges. It always pays to shop around, but now more so than ever,” he concluded. To read the full column, use the link.

Who takes care of consumers Only CUs IFree PressI

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DETROIT (7/21/09)--Credit unions are the only lenders taking care of their consumers, noted a Saturday Detroit Free Press article. The newspaper also prominently mentioned the Michigan Credit Union League and its Invest in America program in contrast to the tightened access to credit consumers face at banks and other lenders. Credit unions financed 170,000 loans to Chrysler and General Motors (GM) customers through the Invest in America program in the first half of this year. The program offers credit union members discounts and rebates when they purchase Chrysler or GM vehicles, the Free Press said. Credit unions are the only lenders that are taking care of their customers, Joe Ricci, a former Dodge dealer who now operates a buying service, told the Free Press. The newspaper also noted that credit unions are an alternative for creditworthy borrowers rejected by banks. They offer lower interest rates and more flexibility, and they account for one of every four new car loans. Credit unions also have more money to lend, the newspaper said. A graph appearing in the article indicated that credit unions had $189.7 billion available in consumer loan cash during the first quarter. Credit unions in Michigan financed 27% of new vehicle purchases in May. New car loans at Michigan credit unions increased by 19% from Sept. 30 to March 31--when car sales plunged to their lowest levels in 30 years. The growth at credit unions is expected to continue, according to the Michigan Credit Union League (MCUL). Credit unions are nonprofit and have lower rates, added MCUL President/CEO David Adams. “We didn’t swing for the fences and end up in trouble, like many commercial banks,” he told the newspaper.

Members 1st CEO Structure keeps CUs strong

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HARRISBURG, Pa. (7/21/09)--Bob Marquette, president/CEO of Members 1st FCU, summed up the difference between credit unions and banks for a local newspaper in two words: "Our structure." Marquette, whose credit union is based in Mechanicsburg, Pa., said structure was the reason credit unions haven't needed to take the recession lying down (The Patriot-News July 20). "Because we have no stockholders, we're not driven to maximize profits every quarter. So we can take long-term view on things. If we want to expand branches and expand our market area, or improve our technology, and if the net result is that our net income drops, that's OK, we can do that," Marquette said. He noted that while others are retrenching to prop up their net income during the recession, the credit union doesn't have to do that. "We've not had layoffs here, ever. We don't have to take those drastic steps to increase our net income. That is a strategic advantage of ours. We're not in a market and out tomorrow." Marquette compared today's recession situation with the Great Depression, saying the Federal Credit Union Act was passed because "the for-profit financial institutions had abandoned the average American market because there were other areas where they could have less risk and be more profitable. In essence, they abandoned the average American." America's current financial situation is "scary and exciting," he said, noting that credit unions did not cause the "financial mess." The situation is an "opportunity for credit unions to show consumers what credit unions are all about." Members 1st FCU has $1.5 billion in assets. For the full story, use the link.

IWall St. JournalI features Mich. CUs push for savings

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NEW YORK (7/21/09)--The “Save to Win” program, launched earlier in 2009 for members of eight Michigan credit unions, was featured in a Saturday article in The Wall Street Journal. Author Jason Zweig mentioned the program in an article about using a lottery or gambling effect to make saving more “exciting” and as an incentive to get people to save more. The Saving to Win program, designed by Peter Tufano of the Harvard Business School, is a combination of a certificate of deposit (or share certificate) and a raffle ticket, Zweig wrote. By placing $25 or more into a Save to Win one-year certificate, members are entered into a monthly savings raffle to win prizes up to $400, plus an annual drawing for a $100,000 jackpot, Zweig explained. The certificate, which the National Credit Union Administration federally guarantees, pays interest of between 1% and 1.5%--slightly lower than conventional rates, the article said. The program has brought in roughly $3.1 million in new deposits--including from members who have been unable to save money in the past, he added. The article also quoted a member of Communicating Arts CU of Detroit and the credit union CEO. The Save to Win program is supported by a partnership among the Filene Research Institute, the D2D Fund, and the Michigan Credit Union League. “This recognition feels like being called up to the Big Leagues,” says Denise Gabel, Filene chief innovation officer. “Everyone involved has been working tirelessly to help consumers save, and it’s gratifying to earn this kind of national notice.” For the full article, use the link.

Calif. CUs bask in good publicity on IOUs

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SAN DIEGO (7/21/09)--Credit unions in California continued to bask in positive publicity after more than 80 credit unions agreed to accept the state's registered warrants, or IOUs, stemming from the stalemate on the state's budget. Banks still are garnering negative publicity for not accepting the checks. The latest article on the topic is in the San Diego Business Journal (July 20) and entitled "Banks Tell State to Keep Its IOUs; Credit Unions Rejoice." It outlines why the banks are receiving negative publicity--many wouldn't accept the IOUs and larger banks put a July 10 deadline on their acceptance, in an effort to force the legislature to a budget agreement. The resulting brouhaha over that decision prompted Citibank to extend its deadline to July 17. "It's a far different story with the state's credit unions, which have mostly accepted the warrants," said the article. California Coast CU, a $1.8 billion asset credit union based in San Diego, told the publication that so far, it had cashed 25 IOUs ranging from $12 to $3,000. The credit unions are using the fact that they're taking the IOUs to differentiate themselves from banks, said the article. Henry Kertman, spokesman for the California and Nevada Credit Union Leagues, noted that credit unions also cashed in similar warrants in 1992, the last time the state issued them. They were simply serving their members in a time of need. "It's just part of the credit union mission," Kertman told the publication, noting that credit unions have many members who are state workers, who are unemployed or who have been laid off, "and we're here to help them." Late last night, The New York Times reported that California broke its budget stalemate as lawmakers worked out an agreement with Gov. Arnold Schwarzenegger to close a $26 billion budget gap.

CUs pricing better than Wal-Mart PCUA tells media

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HARRISBURG, Pa. (7/21/09)--Credit unions offer better pricing than Wal-Mart Money Centers, the Pennsylvania Credit Union Association (PCUA) told a Pennsylvania business publication. The Central Penn Business Journal published an article Friday regarding a Wal-Mart Money Center debuting in Pennsylvania. Wal-Mart Money Centers are designed to provide financial services to consumers who do not have bank accounts and who are tired of payday lending fees. Mike Wishnow, PCUA senior vice president of marketing and communications, told the Journal that credit unions remain an attractive choice for consumers. “I think our pricing model is still better than Wal-Mart’s would be,” Wishnow said. However, he added that it’s good to see any financial services business charging fairer prices than traditional payday lenders. To see the full article, use the link.

PCUA Credit card delinquencies lower in CUs

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HARRISBURG, Pa. (7/21/09)--Credit card delinquencies are lower at surveyed credit unions than at banks, according to the Pennsylvania Credit Union Association (PCUA). PCUA reviewed the card portfolios of more than 200 credit unions it services through its service corporation. It found that although delinquencies at surveyed credit unions have increased, they have fewer delinquencies than banks. Bank card delinquencies rose 23 basis points to 4.75% of all accounts, up from 4.52% in the previous quarter, according to statistics released by a banking trade group, said PCUA. About 1.8% of the total accounts in PCUA’s program are 30 days or more delinquent--the same as June 2008. The percentage of loans outstanding, 30 days or more delinquent, is 2.9%--up slightly from 2.8% in June 2008, PCUA said. “These data confirm that credit unions are prudent lenders,” said PCUA Vice President Corinne Sherman. “Despite a downturn in the economy, credit union members are for the most part making their credit card payments.”

Baltimore City Council examining fin lit requirements

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BALTIMORE (7/21/09)--The Baltimore City Council will meet this week regarding a bill on financial literacy requirements in city schools. The bill would request that the city’s school board examine the feasibility of requiring students to pass a course in financial literacy to graduate from Baltimore City Schools. The bill is pending in the council’s Education Committee. The Maryland and District of Columbia Credit Union Association (MDDCCUA) supports efforts to promote financial literacy on behalf of the Maryland State Task Force on Financial Literacy and the Maryland Board of Education. MDDCCUA said it strongly believes that financial literacy education should be promoted within Maryland’s schools. Seven counties in Maryland already have a financial literacy requirement to graduate from high school.