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CU System briefs (07/07/2014)

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  • WARMINSTER, Pa. (7/7/14)-- Forget about a polar bear plunge --Freedom CU staffers slid into sloppy Jell-O to benefit the Kids-N-Hope Foundation. During the 21st Annual Gelatin Olympics, Frank Dwyer, senior network engineer of the $647 million-asset credit union, dressed like a hula dancer and glided into 700 gallons of strawberry gelatin. He also took home the awards for best costume and top donor at the June 11 event. The Warminster, Pa., credit union donated $700 to the Kids-N-Hope Foundation, which supports programs such as music therapy for the Children's Seashore House at the Children's Hospital of Philadelphia (Freedom CU Photo) ...
  • MADISON, Wis. (7/7/14)-- Jim Metz, president/CEO of CUNA Brokerage Services Inc., will retire from CUNA Mutual Group's broker-dealer . "Since Jim joined CUNA Mutual Group in 2006, he has provided strong leadership to CUNA Brokerage Services Inc., as president and CEO of our broker-dealer business," said Mike Defnet, senior vice president of sales and marketing. Metz has more than 26 years in the insurance and investment business ...
  • MADISON, Wis. (7/7/14)--As the second half of 2014 gets under way, many credit unions will have a different course for the rest of the year because of recent mergers. Tri-Co FCU, a $134 million-asset credit union in Randolph, N.J., merged with $3.3 billion-asset Visions FCU, Endicott, N.Y., July 1 . All four branches of the education-based credit union and its ATM locations will remain open ( Central New York Business Journal July 2). Federal Employees CU, Des Moines, Iowa, with $19 million in assets, merged with Collins Community CU, Cedar Rapids, Iowa, with $773 million in assets. The merger was effective July 1 after an affirmative membership vote by the smaller credit union. Federal Employees CU also has branches in the Iowa City VA Medical Center and the federal building in downtown Des Moines, which will be kept open ( The Gazette June 28).  Grand Island, Neb.-based NAFCO Nebraska FCU, with $2.7 million in assets, will merge with SAC FCU, Papillion, Neb., with $705 million in assets, by Aug. 1 ( The Daily Nonpareil June 29). NAFCO Nebraska's field of membership included employees of Michigan-based SpartanNash, its affiliated stores and their immediate families. Members of Greater Minnesota CU, Mora, Minn., with $145 million in assets, voted in favor of a merger with SPIRE FCU, Falcon Heights, Minn., with $626 million in assets. The merger will make SPIRE the third-largest in the state of Minnesota, according to the credit union ...

ACUC: CUs need to adapt to serve the un-branched member

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SAN FRANCISCO (7/7/14)--Like it or not, with consumers able to carry around mobile bank branches on their smartphones and tablets, credit unions, like all financial institutions, are going to have to figure out ways to adapt to the change in the way members receive financial services.
In addition to the unbanked, credit unions need to consider the "un-branched"--those members who do not need a physical location to conduct their financial transactions--consultant Tim Harrington advises during last week's breakout session at the Credit Union National Association's 2014 America's Credit Union Conference. (CUNA Photo)
"We're talking about those who don't need branches, and do you know who that describes? Everybody here," said Tim Harrington, president of T.E.A.M. Resources, a credit union consulting firm. "We may want branches, we may like branches, but the fact is we don't need branches except for a very few things."
Harrington--during his discussion Thursday at the Credit Union National Association's 2014 America's Credit Union Conference, called "Serving Members Who No Longer Need Branches"--described how various financial institutions are trying to get out in front of this evolution.
The image Harrington first painted for attendees was stark--anyone born after 2013 likely will never set foot into a physical branch location, at least according to research compiled by SAP.
But Harrington doesn't necessarily agree. Instead, he believes that rather than a mass-exodus of branches it's more likely they will simply feel and operate in much different ways in the future.
With traditional services almost entirely consumed by the capabilities of the digital mobile device, one way branches can evolve, Harrington said, is by offering non-banking-related products that could potentially drive consumers to the physical locations.
Harrington's first example of a financial institution taking this route was Capital One 360, which has opened up coffee shops that double as bank service centers throughout the United States. Each barista can switch hats and serve up financial guidance, in addition to that 12-ounce cup of coffee consumers may first have come for.
"If you spend time in their branch, chances are you're going to talk to a customer services representative and you're going to learn about their products and services," Harrington said.
This idea is slowly catching on throughout the national and international world of financial services, and in various forms. Credit unions and others are offering coffee, yoga classes, meeting spaces and more in order to drive consumers to their branches, consumers who don't need the old style of branch any longer and likely wouldn't have frequented the branch in the first place.  
Financial institutions also are creating micro-branches that keep services simple, and boutique branches that feel more like Apple stores--like Harrington's slide of an Indonesian bank branch--than the traditional credit union branch.
While Harrington said these methods are still largely untested, and not guaranteed to work, they demonstrate how financial institutions have acknowledged the evolution of the branch, and are testing ways to adapt.
Further, even if the methods prove successful, the majority of financial services will continue to be driven by mobile technology, which will still limit a credit union's ability to sell products through its physical branches.  
So, Harrington posed--citing a study that found that financial institutions are making 25% fewer transactions per month than they were five years ago--how do you sell products to members you never see?
By building a relationship with them, and maximizing the time with the member, whenever and wherever contact can be made whether it's on the Web, through social media, on the phone and even the rare in-person opportunity, he said.  
"Physical branch locations will still be important to attracting people and handling complex transactions," Harrington said. "But it's going to change."

N.Y. CUs raise $83K for charity at annual convention

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ALBANY, N.Y. (7/7/14)--Attendees of the Credit Union Association of New York's annual meeting and convention participated in several fundraising initiatives, netting more than $83,000 for three causes: the New York Credit Union Foundation, the state-level Credit Union Political Action Committee (CUPAC) and the Children's Miracle Network Hospitals that serve New York.
The four-day event, held June 19-22, drew nearly 700 New York credit union professionals, volunteers and suppliers to the Saratoga Hilton at City Center in Saratoga, N.Y.
"On behalf of New York's credit unions, I would like to thank everyone who made this year's convention such a great success," said William J. Mellin, league president/CEO. "Over the course of just four days, we were able to raise more than $83,000, illustrating--once again--that New York's credit unions truly are 'United for Good.'"
Among the fundraising activities the group participated in:
  • New York Credit Union Foundation: Through sponsorships and credit union support for the annual golf tournament held June 19 and June 21, CUNA Mutual Group provided  the foundation with more than $40,000.
  • Credit Union Political Action Committee (CUPAC): By supporting the annual bingo event and silent auction, convention attendees raised more than $19,000 for CUPAC.
  • Children's Miracle Network Hospitals: Through sponsorships, donations and a match from CO-OP Financial Services' Miracle Match program, a wine pull to benefit the Children's Miracle Network Hospitals that serve New York raised more than $24,100.

Hope FCU steps in to fill empty space left by bank

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TERRY, Miss. (7/7/14)--The opening of a Hope FCU branch in Terry, Miss., last week brought much needed financial services back to the town. Just as importantly, it introduced the credit union services to the town of 1,063 residents.
The town's only bank, Regions, closed in March, forcing residents to drive about 15 miles to Jackson for their financial service needs ( The Clarion-Ledger July 3).
Soon after, Terry residents began efforts to bring Hope FCU to town. After an initial meeting drew 40 enthusiastic residents, Bill Bynum, CEO of the $187 million-asset credit union, which is based in Jackson, kept in weekly contact with Terry Mayor Rod Nicholson.
Regions agreed to donate the former bank building to Hope FCU, a gesture that helped the credit union open the branch much sooner, Bynum said.
"Today's celebration is a testament to what can happen when the community comes together to work towards a common goal," said Bynum said at the branch opening last week.
The decision to open a branch in Terry is part of HOPE's five-year strategic plan to double the number of places and people served--particularly in bank deserts. Bank deserts are defined by the U.S. Postal Service as a ZIP code in which fewer than two bank branches exist.
For local people, the opening of the branch is a welcome sight. "I've been a member and maintained my business account with HOPE for a number of years and they've always provided high quality products and services," said Debra Hunter, a small business owner and resident of Terry. "By opening a branch on Main Street, the credit union is not only bringing HOPE to downtown, but to all of the people who live in Terry."

ACUC: Be aware of continued shifts in mortgage rules

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SAN FRANCISCO (7/7/14)--The Consumer Financial Protection Bureau (CFPB) changed the fundamental nature of how credit unions go about their day-to-day lending activities, CUNA Mutual Group's Regulatory Compliance Manager Jon Bundy told a Credit Union National Association America's Credit Union Conference Discovery breakout session audience last week.

CUNA Mutual Group's Regulatory Compliance Manager Jon Bundy speaks to an America's Credit Union Conference (ACUC) Discovery breakout session Thursday. (CUNA Mutual Group Photo)
"Credit unions have spent the past six months adjusting to the CFPB's new mortgage rules, and they're not done, yet," said Bundy.
Credit unions have implemented six new mortgage rules in 2014 with a seventh mortgage rule compliance deadline looming in 2015. In total, the CFPB issued more than 6,400 pages of new regulations for credit unions to comply with.
Bundy reminded the audience that each new mortgage rule has a different scope, and that many of the new rules apply to both open-end and closed-end loans. Almost all of the new mortgage rules impact dwelling-secured transactions, including motor homes, RVs, trailers, and boats, Bundy added.
"If you do any lending secured by a dwelling, you will be impacted," said Bundy. "And that includes small credit unions, too."
There are very few exceptions for small creditors and small servicers, which can be confusing because there are different definitions for small creditor relief in different rules. Bundy recommended credit unions take time to read each rule carefully to ensure compliance.
Bundy continued his session by engaging ACUC session attendees in a discussion about each new mortgage rule, and the pain point's credit unions have experienced while implementing the rules as well as how to avoid these pains.
"Stay focused, take time to understand the changes, and make adjustments where necessary," Bundy said. "Doing these things combined with a positive outlook and understanding what you can control will do more for your credit union than focusing on the pains of change."
Bundy continued the session by giving attendees a glimpse of what's on his radar for regulatory compliance, including the expedited funds availability act (Regulation CC), business lending data act (Regulation B), and home mortgage disclosure act (Regulation C), as well as educating audience members on the CFPB's enforcement activities, including student lending and indirect auto lending, and consumer education efforts, too.
"Keep in mind, the CFPB is not done, yet," Bundy said. "Looking at what the CFPB plans to accomplish in the next couple of years is daunting, but you have the tools to succeed as long as you start adapting now."
Bundy recommended credit unions prepare for a fast pace of compliance change by investing time, money and energy into developing a strategic plan and budget to navigate compliance risk and continue to implement the CFPB's changes.
"Be an active participant with the CFPB by taking part in the comment process," he said.  "Provide real examples of the cost of compliance and impact for members, and be sure to take the long view of educating the CFPB on the value of the credit union movement. In the end it will all be worth it," he added.

Tablets gateway to banking for 138M by 2018: Javelin

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SAN FRANCISCO (7/7/14)--With tablet adoption cresting the 50% crossover point, consumers are using smart devices for their mobile banking, with a third viewing and paying bills via the devices, according to recent research by Javelin.
About 1 in 3 consumers use tablets as the primary device to email financial institutions (FIs), and Javelin estimates about 138 million adults will use their tablets to access their accounts by 2018.
"The biggest constraint to consumer tablet banking in the next several years is the speed at which FIs adapt to consumers' changing technology needs to provide robust tablet banking apps, especially for the complex Android market," said Mary Monahan, Javelin executive vice president and research director of mobile. "FIs have worked diligently to finesse mobile banking for smartphone users, but they are less prepared for tablet bankers."
Users also are turning to tablets at higher rates to perform advanced mobile banking tasks, according to Javelin's "Tablet Banking Forecast 2014--2018: Design and Deployment Strategies for Mass Adoption."

ACUC: CUs should help members navigate changing waters of retirement

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SAN FRANCISCO (7/7/14)--Longevity, demographics and the economic climate are coming together to take the polish off retirement's "golden years," and credit unions need to be prepared, advised a CUNA Brokerage Services Inc. (CBSI) speaker at the Credit Union National Association's 2014 America's Credit Union Conference last week.
"Most baby boomers don't have a retirement income plan or a plan for funding long-term care. That's where the credit union fits in," Hendrix Niemann, managing director of wealth management, CUNA Brokerage Services Inc., tells a Discovery breakout session audience at the Credit Union National Association's 2014 America's Credit Union Conference. "Credit unions have a major role to play in educating their members about these issues and helping them navigate the new normal environment." (CUNA Mutual Group Photo)
"Credit unions are facing major changes to their membership and their asset base," said Hendrix Niemann, CBSI managing director of wealth management. "Baby boomers are starting to enter retirement, which means their money will be leaving the credit union as they spend down what they have saved and invested for 30-40 years. They will not be borrowing or depositing."
He told the Discovery breakout session audience that credit unions need to have a concrete plan in place for replacing those assets and also for retaining assets that are going to be passed on to the next generation.
Niemann said that in the past 800 years there are no documented examples of an economy that had to emerge from a financial crisis while simultaneously absorbing the effects of an aging population.
"Two-thirds of all the people in the history of the world who have lived past the age of 65 are alive today," said Niemann. "People didn't use to age. They died."
Today, the average 65-year-old male has a 50% probability of living to be 85 years old, with the average 65-year-old female living to be 87--making the average length of retirement 21 years. If the person is part of a couple, there is a 50% chance one of them will live to be 91, which makes the average length of retirement jump to 26 years, Niemann told audience members.
"Many people don't realize it, but we've entered a new normal for retirement," said Niemann. "The golden age of retirement is not coming back. Many credit union members think it will, but it's not coming back."
The baby boomers are the largest generation in U.S. history ever to retire--and the vast majority of them have not saved enough for retirement. When they realize this, they postpone retirement or re-enter the workforce.
"The boomers are relying on social safety net programs, such as Social Security and Medicare, that were never designed or intended for a large contingent of beneficiaries who will probably live 25 or 30 years--or more--in retirement," he said, adding, "Those programs, under their current models, will be unable to pay the benefits seniors believe they are entitled to."
Today, there are 30 million fewer people in Generation X than in the baby boomer generation, which means 30 million fewer people paying into the retirement system for this massive retiring population.
The effects of these demographic trends are exacerbated by fundamental changes to the U.S. economy since the 2008 financial crisis and the start of the "new normal" economy we're currently in, he added.
"The bottom line is this--what retirement looks like, or will look like, for those in retirement or about to retire may be a lot different than they thought it would be," said Niemann. "There's a very real and valid fear among retirees that they will outlive their assets or run out of money because their nest egg is simply not large enough, particularly because they have not saved for out-of-pocket health care costs in retirement that are not covered by Medicare."
Niemann told his audience they can expect these fears to escalate among members as credit unions' membership continues to age.
"Members need credit unions more today than ever before, but they just don't know it, yet," said Niemann. "Most Baby Boomers don't have a retirement income plan or a plan for funding long-term care. That's where the credit union fits in. Credit unions have a major role to play in educating their members about these issues and helping them navigate the new normal environment."
Niemann concluded his session by encouraging credit unions to help members, old and young, navigate these changes by starting the conversation.
"Don't wait for members to come to you. Reach out to them. Ask members to visualize their future, and then help them figure out a realistic retirement plan," said Niemann. "Credit unions have the knowledge, expertise, and resources to help members navigate these changes, but they can't delay. They must start today."

ACUC: 'Lone Survivor' Luttrell captivates, caps conference

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SAN FRANCISCO (7/7/14)--The story told by Marcus Luttrell, a former U.S. Navy SEAL who narrowly escaped certain death after being ambushed by a large Taliban force during a mission in Afghanistan in 2005, was nothing short of captivating.
Click to view larger image Marcus Luttrell, a former U.S. Navy SEAL, carries his message of "You go up together, and you go down together," during his appearance at the Credit Union National Association's 2014 America's Credit Union Conference. As Luttrell prepares to close the final general session, his service dog, Rigby, waits in the wings. (CUNA Photo)
The credit union crowd Thursday at the final general session of the Credit Union National Association's 2014 America's Credit Union Conference, seemed to hang on every word that the self-described "Texas-boy gunfighter" said.
The horrific sequence of dozens of enemy fighters ambushing Luttrell and three other squad-mates. The levity injected into the heavy material, as he joked about the mistakes the filmmakers made in recreating the story in "Lone Survivor." And the recounting of the terrible moments when he realized that his friends--his brothers--had been killed.
But the part of the story that may have resonated most with the credit union professionals in the room, people who themselves have made commitments to serve connected groups of members and communities, came at the beginning.
Luttrell shared how he as a teenager, his twin brother and several childhood friends approached a local resident of their hometown to train them for the special operations forces.
A Vietnam veteran, he was the first to teach Luttrell that teams, especially those in the U.S. Army Special Forces, succeeded and failed together.
"To kind of give you a little background on this joker--those of you from small towns you can appreciate this--he was our town psychopath, alright?" Luttrell said. "Literally, he was the guy you see in the supermarket just screaming at the bread."
"But," Luttrell continued. "He could get you right; he could get you ready to go into the Special Forces."
The very first exercise this man put them through was to do 300 pushups together, in unison, at 4:30 in the morning.
"We start trying to bang these pushups out, and we got to about 200 and something, and eventually some of us were going down while the rest of us were coming up," Luttrell said. "And he says, 'Stop what you're doing. As a team you're going to go down together, and you're going to come up together. You're going to live together, you're going to die together. You guys are a team. And you're going to start over.'"
The group repeated the exercise several times, and each time they failed to stay together, until their trainer, Billy Shelton, sent them home.

Though they may have failed, the message--one that Luttrell carried with him as a U.S. Navy SEAL--was delivered loud and clear: You go up together, and you go down together.

Community helps choose winners of CU's GROW grants

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PORTLAND, Ore. (7/7/14)--Advantis CU turned to the Portland, Ore., community to help decide which of 12 nominated nonprofit groups should be the beneficiaries of grants from its $50,000 GROW Community Fund.
The six winners were determined by more than 37,000 votes cast on Facebook and the $1.1 billion-asset credit union's website.
This year's grant recipients are:
  • Cafe au Play, Portland, will receive $10,000 to support the Barista Training Program, which provides free job skills training to local high school students.
  • North Clackamas Education Foundation, Clackamas, will receive $6,500 to purchase musical instruments to help provide all students with equal access to music education.
  • Portland Institute for Contemporary Art will receive $3,500 to fund the youth programming portion of its Time-Based Art Festival Sept. 11-21.
  • Rose Haven, Portland, will receive $10,000 to purchase paint and furniture to refurbish the facility, which supports homeless and abused women and children.
  • The Pixie Project, Portland, will receive $10,000 to build three permanent shelter kennels for dogs awaiting adoption.
  • Trillium Family Services, Portland and Corvallis, will receive $10,000 to support access for its mental and behavioral health clients to safe recreation including new basketball hoops and pouring new concrete sport courts.
"Supporting the communities we serve is an essential part of Advantis' commitment to being a local credit union," said Senior Vice President/Chief Administrative Officer Wendy Edwards. "We share the same passion for these organizations that our members and communities do."