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Woman sentenced in fraud scheme at defunct CU

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BLUEFIELD, W. Va. (7/25/11)--A former employee of the now-defunct N&W Poca Division FCU in Bluefield, W. Va., was sentenced Thursday to four years and three months in prison for her role in a $2.4 million fraud scheme that resulted in the credit union's liquidation. Rebecca L. Poe, 36, of Falls Mills, Va., a former employee at the credit union, also was ordered to pay restitution totaling more than $2.4 million ( July 21 and The State Journal July 21-22). The embezzlements occurred from 2003 to August 2008 when Poe allegedly created fictitious deposits into her account and the accounts of family members for personal use. The credit union received no funds to support the deposits. Also, she took funds through credit union loans and posted fictitious payments to the accounts as well as issued official checks from the credit union to herself, family members and third parties for expenses without recording the checks in the credit union's books. U.S. District Judge David A. Faber during the sentencing said her conducted substantially jeopardized the safety and soundness of the institution. The National Credit Union Administration placed the credit union into involuntary liquidation in October 2008. Another former co-worker, Pamela Mullins, 46, of Bluefield, has pleaded guilty to aiding and abetting the crime and is scheduled for sentencing on Sept. 19.

Governor during Rhode Island financial crisis dies

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PROVIDENCE, R.I. (7/25/11)--Former Rhode Island Gov. Bruce Sundlun, whose first acts of office in 1991 included shutting down 45 credit unions and banks after the collapse of their private deposit insurance company, has died at the age of 91. Sundlun died Thursday at his home in Jamestown, R.I. He served as governor from 1991 to 1995 during one of the state's deepest recessions and the worst banking collapse in the state's history ( July 21). The crisis occurred after Heritage Loan and Investment Bank President Joseph Mollicone and $13 million disappeared in 1990. The bank collapsed, causing a run on other banks and credit unions insured by the Rhode Island Share and Deposit Indemnity Corp. (RISDIC). That led to RISDIC's collapse. On Jan. 1, 1991, Sundlun as governor shut down the 45 institutions (News Now April 10, 2002). The closures and the struggle to find a method to pay off depositors dominated his first 18 months of office. Depositors got their money back through a $700 million bailout plan financed by state sales tax revenues. The events also changed the share insurance landscape for credit unions. Today, only one private share insurer remains.

Smishing attacks members across the country

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MADISON, Wis. (7/25/11)--Financial institutions--including credit unions--from around the country have been reporting for several days that their customers and members are being "smished" with bogus text messages claiming to be from bank or credit union related services. The messages attempt to con the recipient into divulging sensitive financial information, such as credit card and banking account numbers. They advise the recipients their card has been deactivated and to to call a number listed in the message to reactivate the card. In some cases, the recipients, including credit union members, have called the number and provided the requested information (, and July 21). In credit unions' case, the bogus text message says it is from "Credit Union Services," said a scam alert from CUNA Mutual Group that did not name any credit unions whose members received such messages (Daily Exchange July 22). A number of banks also have been targeted in both phishing and smishing attacks. In Southern Utah, many people received phone calls and text messages the past few days from someone claiming to represent Wells Fargo bank ( July 21). The text messages use a variety of telephone numbers, including numbers from legitimate businesses, which makes it harder to shut down the bogus text messenger.

Federation funds eight grants to service older adults

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NEW YORK (7/25/11)--Eight community development credit unions (CDCUs) will receive $240,000 in grants to enhance the economic security of low-income older members and the disadvantaged aging in their communities, announced the National Federation of Community Development Credit Unions Friday. The CDCUs will receive the funding to reach out to older adults struggling with debt and limited resources. Savings programs, low-interest loans, consumer counseling and debt-reduction plans will be offered as part of the "Economic Security for the Low-Income Aging" campaign. Participating CDCUs will partner with local economic security sites that provide one-on-one counseling to help seniors regain their economic footing and will receive a total of $80,000 in federation grants. "Low-income seniors have been battered by debt, while others have been pummeled by rising prices, or preyed upon by so-called "payday" lenders and unscrupulous debt consolidation scammers," said Senior Program Officer Melanie Stern, who leads the federation program. "Our emphasis on economic security, offered at the local level by well-established, federally regulated, and consumer-friendly credit unions, could be a real ray of hope," she said. The "Creating a Path" program is funded by the New York-based Atlantic Philanthropies, through its Aging Program, which seeks to help vulnerable seniors become financially secure and advancing supportive measures by effecting long-term change. "Many credit unions already offer competitive loan and savings rates, as well as free checking accounts to their members, but through this program, we will help the credit unions chosen for the pilot to tailor their existing services to low-income seniors and those approaching retirement age," said federation President/CEO Cliff Rosenthal. "Additionally, we will help these institutions develop partnerships to get the word out to other older adults who may never have realized now beneficial a credit union could be for them." The federation and the selected CDCUs will collaborate with several national organizations working with older adults--including the National Council on Aging, the National Disability Institute and others--in implementing the campaign and in disseminating its information gleaned from it. Recipients include:
* Cooperative FCU, Woodbridge, N.Y. The $17 million asset credit union will partner with Catholic to provide the underserved aging with financial education and counseling, transactional services, savings accounts and loans with built-in savings components. * East River Development Alliance FCU, Long Island City, N.Y. The $102,419 asset credit union serves residents of four public housing developments. It will work with its partner, The East River Development Alliance, to develop a "Senior Saver Campaign" offering a senior savings product; a gateway product emphasizing loans for credit building; free direct deposit; free automated rent payment; free identity theft protection service; and free accounts for up to three grandchildren. * Fairfax County FCU, Fairfax, Va. The $238.5 million asset credit union will partner with the Virginia Workforce Resource Center to provide affordable financial products and services and access to public services and benefits available. It plans to offer one-on-one counseling and financial education workshops; customize existing and create new products and services to allow seniors to save, borrow, build credit, reduce debt; and provide information to help avoid fraud and scams. * Holy Rosary CU, Kansas City, Mo. The $9.2 million asset credit union serving seven Catholic parishes and a community senior center will partner with the Don Bosco Senior Center, to provide financial education/counseling at the center and offer enhanced savings accounts, and credit builder loans. * Mid-Cities Financial CU, Compton, Calif. The $26 million asset credit union will partner with Los Angeles County office of Community and Senior Services to create an educational website with retirement planning information and short courses, and offer education booklets, branch seminars and community seminars. * North Side Community FCU, Chicago. The $10 million asset CDCU will work with partner Rogers Park Community Council. The federation's Creating the Path grant will enable the credit union to focus on marketing and community outreach efforts; new relationships; new products; and financial programs for low-income older and potential new members. * Opportunities CU, Burlington, Vt. The $33 million asset credit union and its partners will expand current products and services and launch new ones to leverage local social service agencies' skills in providing casework and counseling to older adults as part of a SENIOR POWER PATH program. They plan to offer a revolving pool of low cost, small loans for emergencies and personal loans, refund anticipation loan, and a Senior Financial Safety curriculum developed by the Institute for Financial Literacy. * Pyramid FCU, Tucson, Ariz. The $77 million asset credit union will partner with United Way of Tucson and Southern Arizona to promote economic security for the aging with products and services such as debt consolidation loans, benefits fairs, payday alternative loans, and retirement savings planning.

Elevations St. Vrain to merge

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LONGMONT, Colo. and BOULDER, Colo. (7/25/11)--St. Vrain Valley CU, Longmont, Colo., and Elevations CU, Boulder, Colo., Thursday signed a letter of intent to merge, resulting in a local financial institution with roots in both Longmont and Boulder. The merger is subject to a “yes” vote by the members of the $81.3 million asset St. Vrain Valley CU. The merger also requires approval by the National Credit Union Administration (NCUA) and the State of Colorado, Division of Financial Services. If approved, the merger would take effect Oct. 1. Each credit union would operate separately until integration of the two organizations, which would require several months, is complete. The merger would mean added convenience for both memberships, with a total of 11 branches from Loveland to Westminster, and access to additional products and services. The $968.2 million asset Elevations CU began in 1952 serving faculty and staff of the University of Colorado-Boulder. St. Vrain Valley CU opened in 1954 to serve the St. Vrain Valley School District. Once the merger is approved, the organizations would operate under the Elevations name, with Gerry Agnes continuing as president/CEO. Eva Gaudio will join Elevations’ senior executive team, and two St. Vrain board members will sit on the combined board of directors. Full integration of the two operations would take place during the spring of 2012.

Hawaii Firsts CDFI grant to help underserved in Hilo

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WASHINGTON (7/25/11)--Hawaii First FCU in Kamuela, Hawaii, will use a government grant to help establish a second location for its award-winning Community Resource Center (CRC), expanding service to underserved residents of Hilo, who are separated from the current CRC by distance and an active volcano. Hawaii First FCU was awarded $1,242,690 on July 18 through the U.S. Treasury Department’s Community Development Financial Institutions Fund as part of the $23 million awarded to 25 credit unions. The $40.4 million asset credit union is a pioneer of community development banking in Hawaii, launching development services even before the Treasury Department founded the CDFI Fund, Hawaii First FCU said. Today, its CRC in Kamuela, is a best practice revered by credit union industry experts, the credit union said. That’s why Hawaii First sought to duplicate the CRC in Hilo and extend services to a low--and very low--income target population (LITP) on the other side of the island. Those in LITP in Hilo are isolated from much needed financial services by travel time of three hours to the Kamuela CRC. “Credit unions in struggling communities, like the Big Island of Hawaii in particular, can leverage CDFI awards to have a significant impact on improving individual lives, our communities and helping with economic recovery,” said Laura Aguirre, spokeswoman for Hawaii First FCU. “Our programs align with the vision of CDFI Fund, which is the creation of an America in which all people have access to affordable credit, capital and financial services.” This CDIF grant will help Hawaii First FCU provide financial education, credit counseling and affordable loans for its members. The funding is a part of a nationwide round of awards totaling $142.3 million for 155 CDFIs serving struggling communities in states nationwide.

Rule change means more risk CUNA tells IUSA TODAYI

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MADISON, Wis. (7/25/11)--A provision of the Dodd-Frank financial reform law that took effect Thursday will double the amount of money financial institutions make available to customers after they deposit a check. That could create more risk for financial institutions, including credit unions, the Credit Union National Association (CUNA) said in USA TODAY Thursday. “The provision requires banks and credit unions to make a minimum of $200 available to depositors in one business day, up from the current minimum of $100,” wrote USA TODAY financial columnist Sandra Block in an article titled, “Credit score is free if you’re rejected for a loan.” Exceptions to the provision are made if financial institutions can hold on to funds for a longer time period if the check is in excess of $5,000 or if the customer has repeatedly overdrawn the account, the newspaper said. Most banks already exceed the new requirement, Nessa Feddis, senior counsel for the American Bankers Association, told the paper. “I don’t think many consumers are going to notice [the change],” she added. However, some financial institutions are worried that the rule change will make it harder for them to spot fraudulent checks, Block wrote. “There’s going to be more of a risk exposure to financial institutions in general as a result of this [rule change],” Mary Dunn, CUNA deputy general counsel, told the paper. To read the article, use the link.

California law affects short sales

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ONTARIO, Calif. (7/25/11)--A new California law will protect homeowners who are pursuing short sales by prohibiting second lien holders from pursuing deficiency judgments. Gov. Jerry Brown signed Senate Bill 485 into law on July 18. SB 458 extends the protections of SB 931 to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans. A short sale is a transaction in which the homeowner owes more than the property is worth. To sell the home, all lien holders must approve the sale because the amount owed will be short of what is owed by the borrower. Under the previous law, a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance, but the rule did not apply to second or “junior” lien holders. The measure also will encourage more short sales in California, according to Melissa Ameluxen, the California Credit Union League’s director of state government affairs. Additional borrower protection could encourage some owners to proceed with short sales who may have just moved into foreclosure for fear of liability to second lien holders, Ameluxen said. “Only lenders that actually agree to the short sale will be affected, and sellers that cannot complete an acceptable sale may still explore additional options, such as foreclosure or even bankruptcy,” she added.

WOCCU Record number of countries see more savings reserves

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MADISON, Wis. (7/25/11)--Credit union organizations from a record 100 countries provided data for World Council of Credit Unions’ (WOCCU) recently released 2010 Statistical Report, which reveals the continued growth and resiliency of the global credit union movement.
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The report shows an estimated 188 million people worldwide are served by 52,945 financial cooperatives and includes data from new reporting countries Iran, Tanzania and Zambia. An additional 24 countries have financial cooperative systems but did not report figures. Aggregate credit union savings for 2010 grew to $1.23 trillion from a record-high $1.1 trillion reported in the 2009 Statistical Report. Credit unions continued the global deleveraging trend in 2010 as they collectively reduced debts and grew capital reserves by 10% over 2009 levels, the highest rate in five years. Credit union members increased their savings in all regions except Europe, and decreased borrowing in the Caribbean, Europe and North America. Credit union movements in Africa, Asia and Latin America continued to grow the fastest, keeping pace with their surging economies. Credit unions received recognition in 2010 for their role in expanding financial access in rural and underserved areas in a report released by the Consultative Group to Assist the Poor and The World Bank Group. The report, “Financial Access 2010: The State of Financial Inclusion Through the Crisis,” revealed that 45% of financial cooperative branches--more than any other type of financial institution--are located in rural areas where financial services tend to be least accessible. Next year, credit unions will join cooperatives from all sectors to celebrate the United Nations designation of 2012 as the International Year of Cooperatives, highlighting cooperatives’ contributions to poverty reduction, job creation and social integration. 2011 is the 39th consecutive year WOCCU has collected annual statistics on the international credit union movement. WOCCU reports data based solely on country responses to the survey and does not make estimates for non-reporting countries. The report provides the most comprehensive data on the global credit union movement and is cited widely by governments, international institutions and analysts, WOCCU said. To download a free copy of the 2010 report, use the link.

Filene outlines model CU warns of ALL errors

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MADISON, Wis. (7/25/11--A new report, “The Allowance for Loan Losses: Critical Issues for Credit Union Leaders,” helps credit unions get a handle on a calculation that has become increasingly elusive amid regulatory and economic turbulence, said the Filene Research Institute. As credit unions face unpredictable delinquencies, lingering high unemployment, frightening charge offs and strategic defaults, Michael Sacher, a certified public accountant and industry veteran, describes the various accounting standards and matches them with the changing expectations of chief financial officers and credit union examiners. “We have been hearing, with increasing regularity, requests from Filene members for guidance with the complex judgments required to properly manage the allowance for loan losses (ALL),” said Mark Meyer, Filene Research Institute CEO. “This report will help.” Regulations and accounting standards are designed to control and measure credit losses. However marketplace volatility created by collateral devaluation and negative earnings has brought increased scrutiny to ALL. Add to the mix complex accounting requirements previously not applicable to most credit unions, and the result is confusion, disagreement and contention. The research “combines the theory, reporting requirements, financial market information needs, and common sense into a clear picture of how credit union loan valuation reporting should be handled,” writes Dr. Harold Sollenberger, a professor emeritus of accounting at Michigan State University, in his foreword for the report. The report breaks down into four parts:
* An introduction to the current ALL trends among U.S. credit unions; * An examination of the relevant accounting standards and interpretations, including credit union-specific guidance around Financial Accounting Standards Board and National Credit Union Administration requirements; * A model ALL approach for credit unions, with specific guidance and suggestions for qualitative and environmental factors; and * Common ALL mistakes and a Great Recession post-mortem that identifies specific areas for review for those involved in day-to-day management or long-term supervision of the allowance.
Credit unions and other interested parties can register for a free half-hour video discussion of the report on Thursday at 1 p.m. (ET). For details on the report and to sign up for the video, use the link.

Numerica CEO hits road to give away 25K

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SPOKANE VALLEY, Wash. (7/25/11)--Dennis Cutter, president/CEO of $1 billion asset Numerica CU, Spokane Valley, Wash., recently took a road trip around Spokane, making stops at five non-profit organizations--giving them each $5,000. The donations were a surprise for the organizations, which included Women’s & Children’s Free Restaurant, the Vanessa Behan Crisis Nursery, Union Gospel Mission, The Hutton Settlement, and the American Childhood Cancer Organization. “I thought it went better than I expected,” Cutter said in a video of the event recorded by Numerica CU employees who joined him for the road trip. “Everyone was very, very appreciative, but I think that the best part was the surprise.” “Giving back to our communities is what a credit union is all about,” Cutter said when asked why he wanted to spend the afternoon hand-delivering donations rather than mailing them. Use the link to view the video.

N.Y. CUs originated 735M in MBLs last year

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ALBANY, N.Y. (7/25/11)--Loan originations at New York credit unions last year increased 22.5% from the first quarter of 2010 to first
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quarter 2011, nearly double the 12.7% increase of loans originated by credit unions nationwide. New York credit union growth figures for assets and shares all exceeded national averages as well, said the Credit Union Association of New York (CUANY). Member business loans originated by New York credit unions totaled $735 million through March 2011--a 62.3% increase from March 2010. More than half of the MBL portfolio is made up of commercial and industrial loans. Other highlights for New York credit unions:
* They originated $1.3 billion in first mortgages through the end of March, up 38.6% from March 2010; * The membership growth rate was 2.43% since the previous March, which is more than four times the national 0.56% average for the same period; * Assets grew 6.95%, vs. 4.59% for credit unions nationally; * Shares rose 7.82%, compared with the national average of 4.92%.
With an average core capital of 11.1%, New York credit unions remain more highly capitalized than New York banks and thrifts, as well as credit unions and banks nationwide. "These numbers show how well our credit unions have weathered and continue to weather the current recession," said William J. Mellin, president/CEO of CUANY. "During this challenging economy, where consumer trust in traditional financial institutions has slipped, more and more people are learning about credit unions and their commitment to their members and the communities they serve."