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CU System briefs (07/30/2009)

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* LANSING, Mich. (7/31/09--Two Michigan credit unions have announced their members have approved a merger, according to the Michigan Credit Union League (Michigan Monitor July 27). Trenton FCU, a $50 million asset credit union in Trenton, and Wyandotte FCU, a $80 million asset credit union in Wyandotte, said the merger will be completed by Oct. 1. The surviving credit union, which will be named Shore to Shore Community FCU, will adopt Trenton FCU's community charter. Shore to Shore Community FCU will have $135 million in assets and more than 20,000 members … * ROCHESTER, N.Y. (7/31/09)-- Kenton FCU, based in Tonawanda, N.Y., and Rochester, N.Y.-based Summit FCU are planning to merge, the credit unions announced Monday. The merger will be finalized on Oct. 1. The majority of Kenton's 3,000 members voted July 23 to approve the merger into Summit. The combined credit union will keep the Summit name and will have 59,000 members and more than $480 million in assets. Summit CEO Michael Vadala told local newspapers that the credit union expects to retain all of Kenton's employees (Democrat Chronicle.com July 25 and Buffalo Business First July 27) …

Bank failures far outnumber CUs

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WASHINGTON (7/31/09)--The number of bank failures during the first half of 2009 far outnumber credit unions that have closed or been put into conservatorship, according to statistics released by the Federal Deposit Insurance Corp. (FDIC). For the first six months of 2009, roughly 72 institutions--including seven banks from just last weekend--were either closed or taken over by regulators (Bank Info Security July 28). So far this year, failed banks total 64, which is more than double bank closures for the entire year of 2008, when 25 banks were shuttered. Troubled banks so far this year number 305, about double last year's total of 117. Total cost to FDIC's Insurance Fund is $13.553 billion. That compares with eight credit unions shuttered or put into conservatorship this year. That number is on pace with last year's numbers. In 2008, 15 credit unions were placed into conservatorship or were closed. The National Credit Union Administration did not report any impact to the National Credit Union Share Insurance Fund for the eight credit union failures, the article said. Why so few credit union failures? Many aren't exposed to commercial real estate, like banks are, and most are more conservative in their underwriting of loans. Still, they are experiencing some collateral damage from members in financial difficulties due to the4 economy. All of the current bank closures are due to under capitalization or poor loan portfolio performance. And the number of institutions closing due to economic conditions, mortgage and other loan defaults is growing, said Bank Info Security. Studies of banks indicated they have been charging off bad commercial mortgages at the fastest pace in nearly 20 years. Losses at that pace could add up to $30 billion by year end. Many of the most troubled banks have heavy exposure to commercial real estate. The states with the most failures in banks are Georgia with 16 banks, Illinois with 12, California with eight and Florida with three bank failures. Three credit union failures were in hard-hit California. Other states with one credit union failure each are West Virginia, Kansas, Florida, Michigan and Alabama. An interactive map pinpoints where the closures have occurred. Use the link to access the map from bankinfosecurity.com.

Tyndall launches online-only CU in two counties

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PANAMA CITY, Fla. (7/31/09)--Tyndall CU has launched tyndallonline, an online-only credit union that will be available solely to Okaloosa and Walton Counties in Florida. The Panama City, Fla.-based credit union said the online credit union will offer checking accounts, savings products, and several types of consumer loans and mortgages through its website, tyndallonline.com. The credit union is wholly owned by Tyndall FCU, a $950 million-plus credit union, and is insured by the National Credit Union Administration. According to Tyndall FCU President/CEO Jim Warren, "tyndallonline is designed to have very low operating costs with an industry-leading website." The credit union is offering several promotions: a 2.l99% annual percentage rate (APR) rate on new- and used-auto loans; a rebate of $450 on mortgage loan closing costs; and several certificate specials for deposits.

WesCorps June financials An OTTI hit of 541M

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SAN DIMAS, Calif. (7/31/09)--Western Corporate FCU (WesCorp) recorded an additional $541.1 million in Other-Than-Temporary-Impairment (OTTI) costs on its term portfolio for second quarter, WesCorp announced Thursday. That resulted in a net loss for the corporate credit union totaling $538.3 million in June. It was the third consecutive month that OTTI overshadowed WesCorp's positive income from core operations, which reached $2.9 million in June. Most of the OTTI originated with securities that had already experienced prior credit impairment and had further credit deterioration, WesCorp said in a news release. The OTTI on securities previously impaired totaled $519 million, while $22 million of OTTI were from securities not previously impaired. Roughly 70% of June's OTTI is from the portfolio's Option ARM sector, with another 11% from Alt-As. To date, WesCorp has recorded a total OTTI of $6.1 billion, with $4.7 billion--or 77%--stemming from Option ARMs. Net-interest income in June decreased by $700,000 while fee income rose by $1.2 million from May 2009, the corporate said. SFAS 133 expense adjustments of $2.5 million, previously recognized as income during 2007, contributed to the decrease. Adding to that was the recognition of $702,000 previously written down in December 2008 for the restoration of the National Credit Union Share Insurance Fund. Also, operating expenses increased overall by $78,000 from May 2009. "I'm disappointed but not shocked by further OTTI losses in our portfolio," said WesCorp President/CEO Philip Perkins. "Housing market conditions, loss severities, and delinquency pipelines not only failed to improve in the second quarter, there were pockets of further decline which the additional credit losses reflect." Perkins, along with Chief Financial Officer Jim Hayes and Chief Investment Officer Joseph DeMichele, hosted a WesCorp Member webcast Thursday. They provided commentary and analysis on the statements and took questions from participants. For more detail, use the link to WesCorp's website and click on the Financial Report icon.

Some banks send bailout bills to biz customers

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NEW YORK (7/31/09)--Here's yet another opportunity for credit unions to attract members fed up with banks' fees. Some banks are passing the cost of their bailout insurance assessments along to some of their business customers. In May, the Federal Deposit Insurance Corp. (FDIC) assessed the nation's banks $5.6 billion to restock its insurance fund after costly bank failures, reported Dow Jones News Service (July 29). Such costs are not passed along by credit unions to their members, said Bill Hampel, chief economist at the Credit Union National Association. "To my knowledge, credit unions do NOT pass on their share insurance costs to any specific group of members," he told News Now. Dow Jones noted that JPMorgan Chase & Co. paid $675 million out of second-quarter earnings and Wells Fargo & Co. paid $565 million. "But those two banks, along with many others, are passing their FDIC bills to some business customers," the article said. Both banks confirmed to Dow Jones that they are passing along the FDIC fees to some business customers, including some small businesses. A Wells Fargo spokesman said the fees affect business customers that account for a very small portion of its total deposit customer base. Cincinnati-based Fifth Third Bancorp said it began passing its $55 million special assessment costs along to commercial customers in March. Other banks, such as Bank of America Corp., KeyCorp., SunTrust Banks Inc., BB&T Corp. and Capital One Financial Corp., could not verify whether they charge fees to offset the assessment. The article said line-item details of the fees aren't readily visible and usually are found in "account analysis" or invoice documents, not on the account's statement. It also noted banks levy the charges in a variety of ways, including basing fees on average account balance and fixed fees that mirror a bank's assessment costs. Since banks likely will see even more assessments due to failures' impact on the FDIC insurance fund, the article said.

N.J. CUs statewide ads make impact via Comcast.net

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HIGHTSTOWN, N.J. (7/31/09)--The New Jersey Credit Unions’ Statewide Advertising Initiative began advertising in June on the e-mail login page of Comcast.net--one of the most visited pages in the state, said the New Jersey Credit Union League. Together with the Internet advertising, the league also began on-air commercials and a two-minute on-demand video (The Daily Exchange July 30). The advertising made an impact for the state’s credit unions because during the months of June and July, the click-through rate (CTR) on the Internet ads went from 0.08% to 0.26%. Comcast.net Internet advertisers usually receive, on average, 0.03% to 0.05% CTRs. New Jersey credit unions exceed the average with a 0.21% higher CTR, the league said. The CTR measures the success of an online advertising campaign. A CTR is obtained by dividing the number of users who click on an ad on a Web page by the number of times (impressions) the ad was delivered.

Corporate One reports loss in first-half 2009

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COLUMBUS, Ohio (7/31/09)--Corporate One FCU Wednesday reported an $8.2 million first-half 2009 net loss in income. The corporate said the loss stems mostly from impairment charges taken in May 2009 on mortgage-backed securities. The loss is before the net recovery of the National Credit Union Shared Insurance Fund (NCUSIF) deposit and premium assessment. The estimated impairment loss of $17.1 million represents the estimated credit loss on 30 of its mortgage related securities, the corporate said. The Columbus, Ohio-based corporate said its net income loss is a decrease of $21 million from the same period in 2008. Corporate One had losses at mid-year of $332.1 million on its total book value of $4.132 billion of securities. Roughly $222 million--or two thirds of that loss--are attributable to mortgage-backed securities. However, the corporate is reporting a positive budget variance in net income of $1.7 million for June 30, 2009, year-to-date before other-than-temporary impairment charges and the net recovery of the NCUSIF deposit and premium assessment. Also, net interest income was about $628,000 greater than budget for the first-half 2009. For more information, use the link.

MCUA forms state fed regulatory task force

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ST. LOUIS (7/31/09)--The Missouri Credit Union Association (MCUA) board of directors organized a new task force to focus on state and federal regulatory issues. The group met for the first time July 22. “Credit unions are currently experiencing very rapid regulatory and legislative changes,” said Board Chair Stan Moeckli, president/CEO of Electro Savings CU in St. Louis. “This task force is designed to help MCUA share the operational impact and credit union concerns created by legislation and regulations with the people responsible for creating them” (The Missouri difference July 24). Moeckli and the board appointed more than two dozen representatives from Missouri credit unions to the task force. The group will assess the operational impact of state and federal regulatory actions and initiatives, provide operational impact data, assist in reviewing comment letter responses and assist in meeting with state and federal regulators to convey credit union concerns, operational impact and supporting data, MCUA said. Participants were selected based on their expertise in areas such as investments, corporates, overdraft protection, mortgages, regulatory restructuring, business lending, consumer lending, credit cards, savings programs, community development and collections, the association said.

Social networks will change brand marketing

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FARMERS BRANCH, Texas (7/31/09)--Within the next four to five years, the social web is expected to morph through several stages that will change the way brands are marketed, according to a Forrester Research white paper. The paper, “The Future of the Social Web,” explains several ways that marketers should prepare for the changes. Credit unions may be interested in these changes as they continue to attract new and young members. “Today’s social experience is disjointed because consumers have separate identities in each social network they visit,” says the paper’s author, Jeremiah Owyang of Forrester Research. “A simple set of technologies that enable a portable identity could soon empower consumers to bring their identities with them” (LoneStar Leaguer July 24). In the future:
* Social networks will aggregate member activities and preferences, and leverage this data with brands; * Consumers will be able to expose all or portions of their personal and network information to the websites they visit; * Websites will be able to use the personal information to personalize consumers’ Web experiences; * Consumers will visit websites and know their communities’ usage, likes and dislikes, views of products or services; and * Social communities will feed data and insights about websites, brand experiences, product and services, and more to members on an as-wanted basis. The future social web will make “portable” the opinions, insights and knowledge of friends, which all research shows is much more trusted than any other information source.
Marketers should note that:
* Segmentation potentially will move from traditional schemes to social networks. This will be an aggregated set of individuals who tend to be like them based on habits, practices and preferences; * Influencers, or amplifiers, will become more important because they will be omnipresent. They will become portable and lead their non-amplifier friends and inform them as they travel the Web. Marketers must identify these amplifiers and develop programs to interact with and influence them; * Consumers will be able to see what their social network--either their immediate network or people like them--think of a given store, product or service, wherever they go on the Web. Marketing organizations will need to develop new tools to influence and monitor this new content; and * Consumers will come to a website, with information about themselves and their network. Brands can use this data to personalize the experience and recommend products.

WOCCU names Distinguished Service WYCUP winners

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BARCELONA, Spain (7/31/09)--Two credit union veterans--one from the U.S., the other from Canada--received the World Council of Credit Unions' (WOCCU) Distinguished Service Award during closing ceremonies at WOCCU's World Credit Union Conference Wednesday.
Click to view larger image The U.S.'s Dave Chatfield, left, receives one of two 2009 Distinguished Service Awards from the World Council of Credit Unions (WOCCU) during the World Credit Union Conference in Spain. Presenting the award is WOCCU director Ron Hance.
Click to view larger image Canada's Wayne Nygren accepts the Distinguished Service Award from WOCCU director Ron Hance during the World Credit Union Conference in Barcelona, Spain.
Click to view larger image World Council of CUs (WOCCU) presented the 2009 WOCCU Young Credit Union People (WYCUP) Program scholarships to these recipients during the World Credit Union Conference in Spain. ( Photos provided by the World Council of Credit Unions)
Also five nominees received scholarships through the WOCCU Young Credit Union People (WYCUP) Program during the conference, held in Barcelona, Spain this week. The 2009 Distinguished Service Awards, WOCCU's highest honor, went to David Chatfield, retired president/CEO of the California and Nevada Credit Union Leagues, and to Wayne Nygren, retired CEO of Credit Union Central of British Columbia. Chatfield spent his entire career in the U.S. credit union movement. Nygren is a former economist for the bank of Canada who joined the country's credit union movement in 1975. Both Chatfield and Nygren served as members of WOCCU's board of directors prior to their retirements in 2006. Nygren's service included development activities in Hungary, Thailand and Latin America. Upon Chatfield's retirement, WOCCU's Worldwide Foundation for Credit Unions established the David L. Chatfield International Training Fund to support international credit union development. Also honored were 16 WYCUP participants from nine countries. Of those, five received scholarships. They are:
* Julie Ferguson, Ireland; * Ross Lambrick, Australia; * Carolyne Luvembe, Kenya; * Jeff Rout, Canada; and * Amy Stanton, U.S.
The five will each receive an all-expenses-paid trip to The 1 Credit Union Conference, a combined event held jointly by WOCCU and the Credit Union National Association (CUNA) in Las Vegas next July. Also recognized were members of the first "international" class of Credit Union Development Educators (DE). The National Credit Union Foundation program requires those working toward the international DE classification to attend an international event, such as WOCCU's conference in Barcelona. For more highlights of the conference, use the resource link. All presentations and photos are available to download.