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CU System briefs (07/21/2008)

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* WAYNESBORO, Va. (7/22/08)--Slade A. Woodson, 19, pleaded guilty Monday in a Waynesboro, Va. Circuit Court to six felony charges stemming from a March 27 shooting spree along Interstate 64, at DuPont Community CU in Waynesboro, and at a home. No one was in the credit union at the time; the incidents occurred late at night. The interstate shootings slightly injured two motorists and closed an 11-mile stretch of the highway. Video surveillance at the credit union helped identify Woodson's 1974 Gremlin. Bullets from a .22-caliber rifle struck the credit union's sign, an office window and a repossessed van in the parking lot. Woodson pleaded guilty to felony destruction of property, three counts of discharging a firearm from a vehicle and two counts of firing into an occupied dwelling. He still faces 15 felony charges in Albemarle County for the I-64 shootings. In May, a judge recommended that a 16-year-old accomplice service 12 to 18 months for his role (Newsleader.com July 14) … * OLYMPIA, Wash. (7/22/08)--Washington State's Department of Financial Institutions has set a hearing from 10 a.m. to noon PT Aug. 27 about its proposed rule that would increase credit union assessments and fee rates. The increases would be in accordance with a "fiscal growth chapter" in its regulations. The proposed rule also would make technical changes. The regulation for safety and soundness of state-chartered credit unions is supported by the industry fees and assessments instead of the state's general fund. DFI says the last increase was in 2002. (RegAlert July 16) … * HARRISBURG, Pa. (7/22/08)--Raymond R. Barber, former director of the Pennsylvania Credit Union Association, died July 19 in Erie, Pa. (Life is a Highway July 21). Barber, 90, served on the board for nearly 30 years. He retired from Continental Rubber Works in Erie after 44 years, and served as treasurer of Rubber Employees FCU. He was an active member of the Erie chapter and served on its board for more than 20 years. He is survived by one son, one grandson, and one great-grandson. A mass will be held today at 10 a.m. ET at Holy Rosary Church …

More leagues join CUNA to reassure members of soundness

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MADISON, Wis. (7/22/08)--Several more credit union leagues have joined the Credit Union National Association (CUNA) and credit unions in reassuring credit union members that their deposits are safe. The Indiana Credit Union League has released a statement with information about credit unions’ safety, including facts about Indiana credit unions. John McKenzie, league president, also sent letters to credit union CEOs with background on the safety and soundness issue, Kay Neidlinger, vice president of league communications, told News Now. The Credit Union Associations of Colorado and Wyoming sent memos to its credit unions about the issue. It is offering two free webinar sessions on National Credit Union Administration Share Insurance Thursday and on July 30. The hour-long sessions will provide information on share insurance rules and teach attendees how to calculate coverage on member accounts. The association also sent a media alert with background information on the states’ credit unions and their capital. Overall, Colorado and Wyoming credit unions are well-capitalized which means they are able to weather problems caused by the current economic crisis, the association said. Sample newsletter articles and talking points also were produced and sent to local media, the association said. CUNA President/CEO Dan Mica Monday sent out an update with information on how it is spreading the word on credit unions’ safety and soundness. CUNA has contacted national media outlets, such as CNN, USA Today and Fox Business Network and sent letters to members of Congress. It also sent out talking points and resources for credit unions to use when reassuring their members and communicating with local media. CUNA’s NewsWatch also is putting together a special edition highlighting the safety and soundness of credit unions.

Mich. OFIR clarifies single premium debt cancellations

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NORTHVILLE TOWNSHIP, Mich. (7/22/08)--Michigan's Office of Financial and Insurance Regulation (OFIR) has clarified its position on debt cancellation contracts (DCC) offered by the state's credit unions and other depository institutions. The Michigan Credit Union League, working with CUNA Mutual Group, had requested that OFIR clarify its 2004 declaratory ruling, which authorized depository institutions to use the contracts and debt suspension agreements without being subject to the Insurance Code. (Michigan Monitor July 21). In the ruling, OFIR said if depositories complied with an Office of the Comptroller of the Currency regulation on the subject, OFIR would consider them operating in a safe and sound manner. It also said that unless a periodic premium payment plan also was offered, the depository could not offer a single or lump sum premium plan. The new bulletin, issued July 11, supersedes the first ruling. "The commissioner has concluded that state-chartered depository institutions do not have to offer a customer the option of paying the fee for a DCC in monthly or other periodic payments when the product is what is commonly known as GAP ('guaranteed auto' or 'guaranteed asset' protection) coverage or waiver," the new bulletin said. The position is similar to that taken by a small but growing number of states, said the league.

Economy boosts surcharge-free ATM networks

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CHICAGO (7/22/08)--An ATM industry publication says the U.S. economic downturn is boosting business at surcharge-free ATM networks while cost-conscious consumers look for ways to cut costs. Community banks and credit unions are joining the four largest surcharge-free ATM networks--Allpoint, Credit Union 24, CO-OP Network and MoneyPass--to help depositors and reduce credit union members' fees during challenging economic times, reported ATM & Debit News (July 17). In the past few months, surcharge-free ATM networks announced several new deals, all resulting in growth. The largest is a 2.5 year contract between Tallahassee, Fla.-based Credit Union 24 and Bethesda, Md.-based Allpoint. The agreement means the "CU Here Premium" network will have 50,000 ATMs nationwide. Minneapolis-based MoneyPass, which has 13,000 ATMs and has added 100 financial institutions since January, also belongs to CU Here Premium, said the article. CO-OP Network, based in Rancho Cucamonga, recently announced that 111 credit unions--with more than 500 ATMs--had joined the network during the first half of the year. Jim Gowan, Credit Union 24 executive vice president and chief operating officer, told the publication that the networks help credit unions and community banks having fewer ATMs individually compete on a national scale against banks with thousands of ATMs. The networks emphasize their surcharge-free withdrawals, and CO-OP also stresses locations of ATMs for members' convenience, said James A. Hanisch, CO-OP executive vice president of development. Its network has 25,000 machines with 9,000 accepting deposits. Consumers' need to save money means that credit union membership is a viable, needed alternative to other financial institutions, said Jim Park, Credit Union 24 president/CEO. MoneyPass President Doug Miraglia noted that financial institutions are responding to their cost-conscious customers' demand that they get access to surcharge-free transactions. Banks typically charge nonblank customers surcharge fees averaging $1.78 per withdrawal, said Bankrate.com. Both the ATM owner bank and the consumer's bank charge a surcharge, meaning a cash withdrawal may cost more than $3 in fees per transaction.

Newspaper Arkansas CUs strong despite economy

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FORT SMITH, Ark. (7/22/08)--Despite a slow economy and problems in the financial markets, Arkansas credit unions are going strong, according to an Arkansas newspaper. As of March 31, about 26,000 members at seven credit unions in Fort Smith, Ark., have deposits totaling roughly $112 million (Times Record July 20). Although credit unions operate like banks, they have different goals, Katye Long, public relations specialist with the Credit Union National Association (CUNA), told the newspaper. “One of the big differences is that [credit unions] are not-for-profit cooperatives, which means that they’re existing to serve their members rather than make a profit like a lot of financial institutions,” Long said. Members of Fort Smith Dixie Cup FCU, located on the grounds of the Dixie manufacturing company, have a sense of responsibility not only with their money but with that of their co-workers because the credit union is close to the company, Vickie Newton, manager/CEO of the $11.2 million asset credit union, told the paper. Delinquencies at the credit union are less than 1%, Newton said, adding that the low delinquency rate stems from members realizing that it is their money at the credit union--not someone else’s--and that they are working together to build financial security. Credit union members in Arkansas received $27.09 million in direct financial benefits in 2007--equivalent to $94 per member, CUNA statistics reveal. In the face of economic trouble, such as the U.S. mortgage crisis, Arkansas Best FCU, an $87.4 million asset credit union, has seen minimal change in its financial status the past six to 12 months--with the exception of higher loan losses experienced by most credit unions, Norma Mears, president/CEO of the credit union, said. Because credit unions in the Fort Smith area don’t necessarily provide mortgages, they haven’t been affected by the subprime mess that has hit many banks, Newton said. Area credit unions also have benefited from the fact that banks have had to raise their rates to offset losses in the subprime mortgage area, Newton added.

CUs are exempt from Michigans new gift card law

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NORTHVILLE TOWNSHIP, Mich. (7/22/08)--Credit unions are exempt from a new gift card legislation signed into law July 10 by Gov. Jennifer Granholm, says the Michigan Credit Union League. House Bill 4680, introduced by State Rep. Michael Sak (D-Grand Rapids), is now Public Act 209 of 2008. It prohibits retailers from assessing inactivity fees against gift cards or gift certificates (Michigan Monitor July 21). It also establishes a minimum five-year expiration period from the date of issue on the gift card. Financial institutions that use multi-use gift cards, including credit unions, are exempt, said the league.

NBC News Consider a CU in search for bank

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NEW YORK (7/22/08)--Consumers should not rule out credit unions when looking for a place to bank, according to a financial editor appearing on the NBC News show “Sunday Today.” Stephanie Auwerter, editor of Smartmoney.com, discussed the economy, the failure of IndyMac Bank in California, and banking issues during the show. When Auwerter was asked if consumers are better off with bigger banks as opposed to smaller banks, she responded: “When you’re looking for a bank, don’t discount the small guys and your local credit union. You might find that the fees are lower and their interest rates are higher. They may be willing to work a little harder to get your dollars.”

Survey Small CUs look internally for new CEO

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MADISON, Wis. (7/22/08)--When replacing a credit union CEO, small credit unions are more likely than credit unions overall to give internal applicants first preference, according to the latest Credit Union National Association (CUNA) salary survey. About 48% of credit unions with $1 million to $35 million in assets give internal applicants first preference, according to the 2008-2009 Small Credit Union Staff Salary Survey, published by CUNA’s center for research and advice.
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An additional 40% of small credit unions post the job both externally and internally, while only 9% give external applicants first preference, the survey said. Credit unions overall are about evenly split between giving internal applicants first preference and posting the job externally and internally at the same time. “At a time when more and more companies are looking externally to replace their CEO, small credit unions may have an edge in recruiting candidates who are looking to eventually advance into leadership roles,” said Beth Soltis, senior research analyst for CUNA’s center for research and advice. In addition to base salaries and ranges, the report details the average incentives, bonuses, total cash compensation and job descriptions for the 24 full-time positions most commonly found in small credit unions, along with hourly wage and variable pay data for eight part-time positions. The small credit union report has a narrower asset category breakdown than the full salary report. It also displays results by region, number of full-time employees, number of services offered, number of members, number of branch offices, and the total amount of loans outstanding. For more information, use the link.

Mortgage study attracts legislators media

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ST. LOUIS, Mo. (7/22/08)--Fifty credit union representatives, legislators, consumers and the media learned about the mortgage crisis at a series of statewide meetings held by the Missouri Credit Union Association.
From left: Suzie Sifuentes, Burlington Northtown Community CU; State Rep. Jerry Nolte (R-33); and Dr. Nancy Pierce discuss the subprime mortgage situation in Kansas City. (Photos provided by the Missouri Credit Union Association)
Judy Hadsall, CU Community CU CEO, was interviewed by KSMU reporter Benjamin Fry in Springfield one of several statewide meetings hosted by the Missouri Credit Union Association.
The meetings, held July 8, 10 and 11 in St. Louis, Springfield and Kansas City, were based on a study the association commissioned, “The Subprime Mortgage Impact on Missouri Consumers” (CourierNet July 16). Dr. Nancy Pierce, study co-author, outlined how the crisis developed and its effect on consumers. “It’s not just the subprime loans that created this situation,” she said. “It’s all the greed that went along with it, including the greed of the homeowners who bought homes they could not afford.” “It’s frustrating as a lender that consumers don’t come looking for help when they get into trouble,” added Judy Hadsall, CU Community CU CEO, Springfield. “It they would come to us sooner, there’s a better opportunity for credit unions to help. It’s just really so sad.” The study suggests that credit unions:
* Provide members and the community with foreclosure avoidance education; * Conduct community presentations on foreclosure avoidance/refinancing; * Participate in the Credit Union National Association Home Loan Payment Relief program; * Include messages in marketing efforts about loan evaluation options and help; and * Develop a credit damage control plan for members facing delinquencies with other loans as a result of mortgage problems.
Lawmakers attending the meetings include: State Reps. Charlie Denison (R-135), Mike Cunningham (R-145), Jerry Nolte (R-33), Jeff Roorda (D-102), Shane Schoeller (R-139), Pat Yaeger (D-96) and Jill Schupp, Democratic District 82 candidate.

Renaissance CDCU is only FHA lender in New Jersey

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SOMERSET, N.J. (7/22/08)--Renaissance Community Development CU (RCDCU) has been approved by the U.S. Department of Housing and Urban Development (HUD) as the only Federal Housing Administration-approved community development credit union lender in the state. RCDCU Board President Shirley Spruill made the announcement Monday. “With so many small credit unions closing or merging, it’s a good feeling to know that just because you are considered small based on your asset size, that with determination and the will to succeed, you can,” Spruill said. “The key to survival for small credit unions is to drop the fear of ‘we can’t because of our size’ and offer products and services that meet the needs of our members,” she added. RCDCU is a member of the National Federation of Community Development Credit Unions. The credit union has $801,014 in assets. HUD must approve all lenders that offer FHA-backed mortgages. Through the FHA program, borrowers within minimum credit scores of 520 can qualify for mortgage insurance, make lower down payments with assistance from grants. FHA currently insures about five million mortgages.