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Maine league presents annual awards

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WESTBROOK, Maine (7/3/14)--The Maine Credit Union League recently honored five credit union advocates as the recipients of the state's annual individual award program.

The recipients were recognized and presented with their awards at a ceremony held in Portland, Maine, in conjunction with the league's recent 76th annual meeting and convention.
 
Raymond Gagnon, board member, PeoplesChoice CU, Saco, with $155 million in assets, was recognized with the Alexander Ferguson Award for Outstanding Credit Union Volunteer. Gagnon helped found the credit union (formerly known as St. Joseph's CU) in 1953. He has served as a volunteer with the credit union ever since. Gagnon now serves in the role as board member emeritus.
 
Phil Moreau, president/CEO, Rainbow FCU, Lewiston, with $183 million in assets, was honored with the James M. Gratto Award for Outstanding Credit Union Manager. For the past 42 years, Moreau has served as president/CEO of his credit union. He has served several terms on the league board including service as chairman at two different times.  He currently serves as board treasurer. Moreau announced earlier this year his intention to retire on June 30, 2015.
 
Linda Howe, vice president of marketing and public relations, Down East CU, Baileyville, with $114 million in assets, received the Jeannette G. Morin Award for Outstanding Credit Union Employee. Howe was recognized for her work at the credit union and in the community, including winning a national Louise Herring Award from the Credit Union National Association, Maine State Chamber of Commerce Volunteer of the Year and numerous marketing awards. 
 
Howe gave her time to causes such as hunger relief, the Children's Miracle Network and youth financial education.  Receiving the award was Howe's last "official" work duty, as she had previous announced her retirement at the conclusion of the convention.
 
John Doe, board chair, Eastmill FCU, East Millinocket, with $60 million in assets, was recognized with the League President's Award for Outstanding League Volunteer. A volunteer for 28 years, Doe also serves as president of the Northern Penobscot Chapter of Credit Unions. Since 2000, Doe has also served on the Maine Credit Union League's board of directors. Doe, a retired educator who held a variety of positions including superintendent of schools for several school districts, is also active in youth financial education and is a high school basketball referee.   
 
Veronica Levesque, assistant vice president of accounting, Maine Savings FCU, Hampden, with $278 million in assets, was honored with the Diane L. Oceretko "People Helping People" Award.  A 25-year employee of the credit union, Levesque was described as the credit union's "driving force behind all of our community projects including ending hunger, Susan G. Komen Race for a Cure, MDA, Children's Miracle Network and many others."

ACUC: Supplemental retirement can help fight exec 'churn'

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SAN FRANCISCO (7/3/14)--To keep and attract executive talent, credit unions should look to supplementing their retirement plans, a CUNA Mutual Group benefits specialist told a Wednesday breakout session at the Credit Union National Association's 2014 America's Credit Union Conference.
 
"Your top talent is feeling financially vulnerable," said Bruce Bauer, CUNA Mutual Group senior executive benefits specialist. Supplemental executive retirement programs are tools credit unions can use to recruit, retain and compensate executives, Bauer told a Discovery session at the Credit Union National Association's 2014 America's Credit Union Conference Wednesday. (CUNA Mutual Group Photo)
"Jobs are opening up, executive talent is being aggressively wooed away from you, and your top talent is feeling financially vulnerable," said Bruce Bauer, senior executive benefits specialist. "Credit union executives who might retire at only 40% of their current salary may seek other employment options."
 
Given the restrictions on retirement plan contributions and distributions, many credit union CEOs may end up retiring at 30%-40% of their salary, even after including Social Security and 401(k) plan savings.
 
Non-qualified compensation options, such as supplemental executive retirement programs (SERPs), are tools credit unions can use to recruit, retain and compensate executives.
 
Nearly 50% of U.S. employers are challenged to fill mission-critical positions, according to a 2012 Manpower Group Talent Shortage Survey, and 63% of organizations say other companies are trying to recruit their leadership.
 
SERPs--which include 457(b) and 457(f) plans and split-dollar life insurance--are non-qualified retirement plans that can be coupled with a strong continuing education program to form the foundation of a solid leadership continuity program. "Maintaining your bench strength can prevent disruption in the attainment of your credit union's strategic and financial goals while providing consistency in decision making," Bauer said.
 
Proper due diligence is a must to analyze the risks associated with a SERP, evaluate alternatives and determine required ongoing regulatory reporting.
 
When developing compensation plans, Bauer recommended credit unions:
  • Align compensation philosophy with their mission, organizational and financial goals;
     
  • Encourage leadership continuity by defining a scope that addresses the CEO and key executives;
     
  • Use peer compensation data to establish a desired level of competitiveness and include it in their overall succession plan; and
     
  • Ensure regulatory soundness by working with a firm with a trusted long-term service commitment. Consider their ability to provide flexible designs, top products and funding options, exceptional knowledge and strong regulatory adherence.
Be sure to visit  News Now and Credit Union Magazine frequently this week to keep up with all the ACUC action in San Francisco. You can also follow ACUC on Twitter using the handles and hashtag below:

ACUC: CUNA Chair Pierce dreams big for credit unions

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SAN FRANCISCO (7/3/14)--The early pioneers of the credit union movement, the likes of Edward Filene and Roy Bergengren, probably never dreamed that credit unions would ever touch 100 million memberships, a milestone the industry expects to realize later this year.

Back then, 80 years ago when the credit union movement began to gain steam, there may not have been many more than 100 million people living in the United States.

Click for slide show "If we're valid, if we have a purpose, and if we're providing something unique to Americans, I think credit unions have an opportunity to look back 80 years from now and celebrate similar kinds of success that we've had up to this point," emphasizes Credit Union National Association Board Chair Dennis Pierce during his general session speech Wednesday at CUNA's 2014 America's Credit Union Conference. (CUNA Photo)

Dennis Pierce, board chair of the Credit Union National Association, highlighted this achievement as he addressed his audience at CUNA's 2014 America's Credit Union Conference Wednesday to back up his belief that credit unions can continue to accomplish remarkable feats, now and into the future.

"If we're valid, if we have a purpose, and if we're providing something unique to Americans, I think credit unions have an opportunity to look back 80 years from now and celebrate similar kinds of success that we've had up to this point," said Pierce, who's also the CEO of CommunityAmerica CU, Lenexa, Kan., with $1.9 billion in assets.
 
In the chairman's speech, Pierce outlined specific numbers he believes the industry can conquer in the short term. By 2023, he believes credit unions can lock in 55 million primary financial institution members and expand member financial value to $20 billion.
 
One way to reach such goals, Pierce said, is to continue to aim for the vision the industry has developed: Americans choose credit unions as their best financial partner.
 
Credit unions also will have success if they continue to put together coordinated efforts such as the "Don't Tax My Credit Union" campaign, which helped the industry maintain its tax-exempt status earlier this year, Pierce added.
 
"We had one-and-a-half million contacts sent to Congress," Pierce said. "Those of you who have any awareness of what that number means to an elected official: That makes a difference. That's something they pay attention to.
 
"We continue to have record numbers of attendees at our Governmental Affairs Conference," Pierce added. "I think that's reflective of your work, your engagement, and understanding the importance of making sure that we not only protect what we have, but that we establish an opportunity for us to have a future."
 
Pierce also recognized the work CUNA continues to do on behalf of the credit union industry, specifically calling out Bill Hampel, interim president/CEO, for taking the helm during this transition period while the organization considers candidates to become the CEO.
 
"I think from his comments yesterday you can tell that our organization is in great hands, and we're not missing a beat in terms of where we're headed, in our focus and our ability to represent credit unions, and ultimately credit union members, and providing value back to them as part of what the association does," Pierce said.
 
Pierce also noted that the board is actively searching for a new CEO and believes by this fall, they will have selected the person to succeed Bill Cheney, who stepped down from his post as the head of the trade association in June.
 
"But ultimately, our target is to make sure that we find the right person," Pierce said. "This organization deserves leadership at a level that can take it where you need it to go, in terms of your needs as members of CUNA."
 
Be sure to visit News Now and Credit Union Magazine frequently this week to keep up with all the ACUC action in San Francisco. You can also follow ACUC on Twitter using the handles and hashtag below:

CUNA closed for 4th of July, no News Now Friday

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WASHINGTON and MADISON, Wis. (7/3/14)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association will be closed Friday in observance of Independence Day.
 
News Now will not publish an issue Friday but will resume regular publication Monday.

NFCC pushes consumers to declare independence from debt

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WASHINGTON (7/3/14)--This July 4, the National Foundation for Credit Counseling (NFCC), in the spirit of Independence Day, challenges Americans to declare their own personal financial independence by making a commitment to become free from the bondage of debt.
 
"The stress of unmanageable debt has destroyed marriages, shattered families and contributed to lost jobs," said Gail Cunningham, NFCC spokesperson.  "No one ever scripts financial ruin as a part of their life plan, but when financial distress occurs, it is a very real part of a person's daily activities, as debt is a burden people carry with them 24 hours per day."
 
Aside from the personal problems associated with debt, NFCC offers consumers these reasons to take action and begin resolving their debt issues:
  • A blemished pay history reflecting late or missed payments tarnishes a person's credit report, which could result in a lower credit score;
  • A low credit score often results in a higher interest rate when borrowing money, making the cost of credit more expensive
  • A tarnished credit record could diminish access to additional credit needed for emergencies or unplanned expenses;
  • With an unrealistic amount of money earmarked for debt repayment, saving and investing are often neglected, and
  • Planning for future needs such as college or retirement is often delayed.
Consumers may mistakenly think they are responsibly managing debt by making the minimum payments due on time every month. They don't bother to calculate how long it will take them to become debt free, or how much they will have paid in interest. 
 
Consider: With a $10,000 credit card debt at 18% interest, even if no additional purchases or fees are added to the account, and the card holder makes monthly on-time payments of 2% of the balance, it will take 48 years to pay the balance. That original debt of $10,000 will cost $36,825, with $26,825 going toward interest.

AmberMac: Successful social media means staying in the fast lane

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SAN FRANCISCO (7/3/14)--Amber MacArthur, president of Konnekt Digital Engagement, quoted
Click to view larger image When Amber MacArthur (shown here at the America's Credit Union Conference) discusses social media and technology trends, she quotes race car driver Mario Andretti: "If everything seems under control, you're not going fast enough." (CUNA Photo)
 race car driver Mario Andretti when discussing social media and technology trends: "If everything seems under control, you're not going fast enough." 
 
MacArthur, addressing the Credit Union National Association's America's Credit Union Conference Wednesday, said her 2010 book in which she wrote about the ABCs of social media--authenticity, bravery, consistency--is about 70% irrelevant today.
 
The social media maven offered eight social media best practices:
  • Protect your digital reputation. Musician Dave Carroll witnessed  United Airlines baggage handlers "chuck his Taylor guitar." When he complained about the damage, he received no response from the airline. So he made his own video on YouTube: "United Breaks Guitars." According to MacArthur, "this was the moment things changed" in the social media world. 
  • Put the right person in charge. Don't allow accidental tweets to damage your reputation. If you use a social media dashboard, don't combine personal and business Twitter accounts, for example. And create social media policies.
  • Follow contagious trends. Don't reinvent the wheel, she said. "Study Like a Scholar"--a YouTube video about the library at BYU--is a takeoff on an Old Spice commercial. When credit unions gather in Denver next year, MacArthur hopes a credit union will have done its own version of this video.
  • Beware of the social media storm. Be mindful of national and regional events, such as a Superstorm Sandy, that might make your social media efforts inappropriate. "Social media distribution happens quickly," she said.
  • Increase visual social media. Adding video or pictures to your social media will bump engagement by 50%.
  •  Set member expectations. "About 42% of Twitter users expect answers to questions within an hour," MacArthur noted. That's not realistic. Manage expectations like Florida Power & Light Co. does, by posting Twitter hours.
  • Share authentic moments. Tell stories about your community and member service.
  •  Build a mobile-friendly home base. How does your home page or website display on mobile? "That's where you should be driving everybody to," she emphasized. Responsive design websites will give you that flexibility no matter which device members use.
MacArthur told her ACUC audience she now has a new slate of ABCs: 
  • Adapt quickly. Lucky Charms remixed old commercials and found a new audience on YouTube.
  • Be responsive. Oreos quickly created a new commercial in the wake of the Super Bowl blackout last year ("You can dunk in the dark.") .
  • Create value. She used her #CUNAChat several weeks ago as an example, adding value to messages she planned to share today.
Be sure to visit  News Now and Credit Union Magazine frequently this week to keep up with all the ACUC action in San Francisco. You can also follow ACUC on Twitter using the handles and hashtag below:

Debit rewards program buys 13,000 meals for hunger relief

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ONTARIO, Calif. (7/3/14)--The California and Nevada Credit Union Leagues reported more than 13,000 meals have been donated through its card reward partnership with MOGL.
 
Thirteen credit unions with more than 87,000 member payment cards are enrolled in the program, and another five are in the queue ( In the News June 30).
 
Members receive 10% cash back every time they use a registered credit or debit card at one of MOGL's participating restaurants.
 
Diners can choose to donate some or all of their cashback reward to a local food bank.
 
And, for every dining transaction that is more than $20, a meal will be donated to a community food bank via Feeding America.
 
Because it is tied to a debit or credit card, the rewards program does not require coupons, punch cards or check-ins.
 
Including all of its partnerships, MOGL has donated 761,702 meals through its program.

Carefully consider nontraditional mortgages, Schenk tells Fox Biz

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NEW YORK (7/3/14)--Even with historically low interest rates, a traditional mortgage just won't work for some potential homeowners. In those cases, there are options, but ones that should be carefully considered, Credit Union National Association interim Chief Economist Mike Schenk told Fox Business Wednesday.
 
Consumers can look to borrowing funds from a family member or their own 401(k) or consider a lease-to-own type of contract.
 
Schenk advised borrowers to do their homework because "in some cases ... the transactions can be complicated and confusing."
 
Wannabe homeowners may be tempted to tap into a retirement account to cover a down payment, but Schenk said, that's "almost always a bad idea." Early withdrawal penalties and a less stable retirement situation could be the consequences.
 
Other experts suggested the debt averse could take out a loan against the principal of a life insurance policy or lease-to-own contract in which residents pay the owner each month. The ultimate option for those who don't want a mortgage loan is to save up and pay cash.
 
To read the full Fox Business article, use the resource link.

ACUC: There's no magic pill for attracting young members

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SAN FRANCISCO (7/3/14)--With seemingly infinite competition for the attention of young consumers, it's not a surprise a credit union marketing expert who presented strategies Wednesday on how credit unions can attract younger generations led off his discussion with a stark message. 

There is no magic pill that will miraculously make your credit union attract younger members.

"I don't have that," said Tim McAlpine, who heads the Canadian marketing company Currency, during his breakout session at the Credit Union National Association's 2014 America's Credit Union Conference.

McAlpine said that even though it is not always easy to chart a marketing course to attract younger consumers, the reasons to do so are compelling. Generations Y and Z, or those born after 1980, make up more than half the U.S. population, making it crucial for credit unions to appeal to them.

Further, credit unions in particular must be mindful of these youthful demographics, as the average age of a credit union member continues to climb. In the United States it has reached 48, which is nearly 10 years older than the North American average.

"This should be a major concern," the marketer said.

McAlpine also discredited the assertion that less effort should be expended marketing to young people because they don't have any money.

While that may or may not be true now, a massive transfer of wealth from Baby Boomers and older generations to their children is on the horizon, he said. An amount of money some estimate could total $40 trillion over the next 30 years is about to change hands and studies show it will be searching for a new home.

McAlpine said that after receiving inheritances, 98% of people transfer to a new financial institution, a fact that essentially puts the $40 trillion in play over the next few decades.  

Another reason McAlpine offered for credit unions to get into the young-person game was to beat back the mega-banks who are "swallowing" the market.

"The absolute dominance of the top 100 banks is the real elephant in the room," McAlpine said. "So while credit union market share has increased slightly over the last 20 years, the community bank share has dropped by nearly two-thirds, literally being swallowed by the big banks."

Be sure to visit  News Now and Credit Union Magazine frequently this week to keep up with all the ACUC action in San Francisco. You can also follow ACUC on Twitter using the handles and hashtag below:

Cybersecurity is responsibility of more than IT, says CMG

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SAN FRANCISCO (7/3/14)--Cyberliability exposures continue to evolve, and credit unions can no longer rely solely on their information technology staff to ward off a cyber attack. Network security now requires solid governance and oversight with active participation by management and the board of directors, CUNA Mutual Group's Jay Isaacson told a Discovery session Wednesday at the Credit Union National Association's 2014 America's Credit Union Conference in San Francisco.
 
Isaacson, CUNA Mutual Group's vice president of commercial products, said data breaches are increasing across all businesses, resulting in significant dollar losses and reputational damage. He cited the Verizon 2014 Data Breach Investigation Report, which indicated 1,367 data breaches occurred in 2013, with 465 involving the finance industry.
 
And the price tag is high. In May, the Ponemon Institute reported in its Cost of a Data Breach Study, the average total cost of a data breach was $3.5 million, with a global average cost of $145 for each lost or stolen record containing sensitive and confidential information.
 
"Think of your own credit union and do the math. While a data breach might seem somewhat remote, it's within the realm of possibility and could threaten the safety and soundness of your institution," Isaacson said.
 
Within the financial sector, the most common security breach incidents involved Web application attacks, denial of services (DDoS) attacks, payment card skimming and insider misuse, according to the Verizon study. While financial gain motivates most data breach perpetrators, cyber espionage is also increasing. Isaacson said the most common sources of data breaches are hacking, followed by malware.
 
Specific to credit unions, Isaacson said the most common cyber claim themes reported to CUNA Mutual Group under its Cyber and Security Incident insurance coverage involved DDoS, third-party service providers, employee errors and lost or stolen devices.
 
"Network security is only as strong as the weakest link," he said. "You may have an air-tight data system, but if a third-party provider you use is lax, or a laptop containing confidential data goes missing, your credit union is at risk."
 
Isaacson said risk management considerations include education and training for all employees--not just IT staff; development and frequent testing of an incident/breach response plan; and the creation of a data security incident response team. Member education is also vital.
 
"There's a need to balance security and convenience," he said. "Members need to understand why certain security measures they might not consider convenient are necessary for their protection and the credit union."
 
He also encouraged attendees to consider transferring some of the risk to a cyberliability insurance policy. The two main components of a good cyberliability policy include expense coverage to assist in managing and mitigating a data breach and liability coverage to protect against related lawsuits.
 
In closing, Isaacson asked the audience to consider the following questions to help determine their level of preparedness for cyberattacks:
  • Does the credit union have an incident/breach response plan?
  • Is access provided to the necessary level of internal and external expertise to manage through a breach (IT professionals, public relations and legal counsel)?
  • Does the credit union understand the notification obligations and requirements in its state or any other state in which it has a record?
  • Does the credit union regularly review the controls and security of third parties housing your data?
  • Does the credit union have mechanisms in place to detect and react to potential DDoS attacks?
Be sure to visit  News Now and Credit Union Magazine frequently this week to keep up with all the ACUC action in San Francisco. You can also follow ACUC on Twitter using the handles and hashtag below:

CU loan growth fastest since 2005, MCUE survey reveals

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MADISON, Wis. (7/3/14)--Credit union loan portfolios jumped 1.2% in May, the most significant monthly increase in nine years, according to the Credit Union National Association's monthly sample of credit unions.
 
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The last time overall loan growth exceeded May's pace was August 2005. 
 
"Importantly, the increases were seen across the entire loan portfolio,"  Mike Schenk, CUNA's interim chief economist, told News Now .
 
New auto loans led loan growth, rising 2.6%, followed by used-auto loans (1.6%), unsecured personal loans (1.2%), home equity loans (1.3%), adjustable-rate mortgages (1%), credit card loans (0.9%) and fixed-rate first mortgages (0.1%).
 
"The U.S. economy floundered a bit recently--with a nearly 3% contraction in overall growth in the first quarter," Schenk said. "But we view the weakness as temporary--largely reflecting the lingering effects of the government shutdown/furloughs late in 2013 and, more importantly, a brutal winter across much of the United States. The loan growth were now seeing confirms our view that a second-quarter rebound is on the horizon.
 
Click to view larger image Click for larger view
"Low market interest rates, combined with a tremendous amount of pent-up demand, means we can expect more borrowing and lending during the summer months," Schenk added. "That, of course, should help to boost credit union bottom-line results as lower-yielding investments are replaced with higher-yielding loans."
 
Credit union savings balances grew 1% in May compared with a 0.5% decrease in April. Share drafts (5.0%), regular shares (0.8%), and money market accounts (0.5%) increased during May. On the decline were one-year certificates (0.4%) and individual retirement accounts (0.2%).
 
Total credit union membership grew 0.3% during May for a total of 99.9 million as credit unions prepare to reach the 100 million membership milestone.
 
The net capital-to-asset ratio held steady at 10.5% during May while the loan delinquency rate fell to 0.8% of loans outstanding.

CUs told to 'humanize' digital banking experience: ACUC

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SAN FRANCISCO (7/3/14)--There's a "seismic shift" that nontraditional providers are causing in the financial services industry, James R. Lay told America's Credit Union Conference attendees Wednesday.

"It's time to admit the traditional banking model is broken and flawed," Lay said. "The banking industry is at high risk of disruption."

Add to that the fact that young adults aren't showing traditional financial institutions much love. Lay cited a recent survey that revealed 71% of Generation Y respondents would rather go to the dentist than to a bank--and that 33% believe they don't need a bank at all.

The remedy? Digital "storyselling," he told the Credit Union National Association conference attendees, where credit unions use member stories to position and sell their products. "People trust people--and they buy stories, not features. The key to success is humanized content and distribution channels."

He advised taking a seven-step interconnected digital strategy that asks:
  • Who is the market segment? "Define the persona of your 'heroes'--targeted members--to document their challenges," he said. "The credit union is the guide."
  • What's your solution? Define how you can help your heroes overcome their challenges.
  • When does the hero need help in that journey? Define the help you will provide.
  • Where will you help them? "This is a critical piece that requires selecting a digital marketing platform," Lay said.
  • Why should they trust you? "Build credibility with your heroes by sharing stories of how you've helped others," he said.
  • How will you guide your heroes to success? Map your plan.
  • How will you tell a story that helps you grow?
"The time to act is now," Lay said. "We've seen the casualties: Borders, Blockbuster, Tower Records. They built businesses models based on the branch model.

"We have to change how we operate and generate leads," he continued. "That's through storytelling. It's the real moment that sells online. Those stories start with people--and that's the credit union model."

Be sure to visit News Now and Credit Union Magazine frequently this week to keep up with all the ACUC action in San Francisco. You can also follow ACUC on Twitter using the handles and hashtag below: