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CU System briefs (07/09/2010)

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* TALLAHASSEE, Fla. (7/12/10)--Two men--one a credit union president, the other a director of Florida A&M University Institute on Urban Policy and Commerce--pleaded not guilty Thursday to stealing federal grant funds from the university (Tallahassee Democrat July 8). Robert Nixon, director of the institute, and Eugene Telfair, president at FAMU FCU, Tallahassee, were indicted Wednesday on charges of conspiracy, theft from an organization receiving federal funds and embezzlement of funds instructed to a federally insured credit union. About $134,253 was stolen, said the U.S. Attorney's Office (News Now July 9) ... * FARMERS BRANCH, Texas (7/12/10)--The Texas Credit Union League presented awards to two chapters for their work in developing and implementing creative, beneficial programs for their members, the league reported Friday (LoneStar Leaguer July 9). Its 2009 Chapter of the Year Award went to the Fort Worth Chapter, and the Austin Chapter received the Star Award. The chapters emphasized expanding involvement in education, public relations, community service, fundraising, political advocacy, chapter involvement and credit union system participation. The Texas league has 26 chapters ...

Bank responds to CUs trademark suit

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ANN ARBOR, Mich. (7/12/10)--The president of a bank being sued for trademark infringement by Michigan First CU said the bank intends to defend the suit "vigorously." David Provost, president, chairman and CEO of the similarly named First Michigan Bank, which is based in Troy, Mich., made the statement in Crain's Detroit Business, saying the suit is "baseless." The $550 million asset credit union filed the suit on May 12 in U.S. District Court for the Eastern District of Michigan in Ann Arbor, less than two weeks after the bank acquired a failed bank that would put the bank and credit union in competition in the same market (News Now May 18). It seeks an injunction to prevent the bank from using the name. Michigan First CU owns the service marks that feature prominently the words "Michigan First." These include "Michigan First Credit Union" for its credit union services, "Michigan First Credit Union Moneyworks," for its internet banking services, "Michigan First Wealth Management Group" for its financial planning and estate planning services, and "www.michiganfirst.com," the credit union's website. Provost told Crain's that the bank's use of the name does not create a likelihood of confusion because a large number of financial institutions use the terms "first" and "Michigan" in their names in varying ways. "Michigan-based consumers of financial service are discriminating customers who understand the difference between a bank and a credit union," he told the publication.

Mid-Atlantic Corporate has new cap structure consolidates

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MIDDLETOWN, Pa. (7/12/10)--Mid-Atlantic Corporate FCU announced Friday its new membership plan will require a level of capital commitment as a condition of continued membership. It also will consolidate departments and realign staff, which will reduce its full-time employees by 16%. Through the actions, the corporate is building on plans to ready itself for new regulatory realities and other marketplace changes, the corporate said in a press release. "Opinions about what's going to happen with corporates are diverse, from those who want to operate as they always have, to those who are ready to throw in the towel," said Jay R. Murray, president/CEO of the $4 billion corporate. “At Mid-Atlantic, we believe the right course is to recognize the vital role corporates play for credit unions.” Murray says that doesn’t mean it should be business as usual. “The corporate model isn’t broken, as some would say; we perform key functions that most credit unions would have difficulty replicating as efficiently or cost-effectively on their own. But we need to introduce changes where it makes sense that will strengthen both our organizations and the entire movement.” The changes aren't a surprise. Mid-Atlantic prepared members for the planned changes. Marry and other senior managers held town hall meetings in first quarter and spoke about “what’s next for corporates” at chapter meetings, webinars and other events, including Mid-Atlantic’s recent annual meeting. Mid-Atlantic's first step was to introduce a new membership plan requiring a level of capital commitment as a condition of continued membership. To date, Murray says, the corporate has received commitments from 637 members totaling $116.8 million in capital. To achieve and maintain the regulatory “well capitalized” designation, the corporate will monitor its total deposits and introduce a maximum deposit limit for each member. “We’re very heartened by our members’ response, and we are making sure that Mid-Atlantic remains strong and able to support credit unions’ financial service needs for many years to come,” Murray said. “Our members have given us a resounding vote of confidence that they want Mid-Atlantic not only to continue, but to thrive.” In the second step, Murray said, the corporate is adjusting staff levels to meet business levels to ensure Mid-Atlantic's continued strength and efficiency, and its ability to deliver services credit unions need. "At the heart of the staff repositioning is making sure we have the right people in the right places." Most staff changes are the result of department consolidation and a reduction in management. The corporate combined its call centers, marketing and member services have been combined into one department, and its accounting, product strategy and information systems into another. The changes will reduce expenses and enable the corporate to accumulate more capital "adding to our long-term strength," Murray said.

Mergers announced in Maine and Kentucky

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LOUISVILLE, Ky., and AUGUSTA, Maine (7/12/10)--Credit unions in Maine and Kentucky have announced two pending mergers. In Louisville, Ky., Louisville Metro Police Officers CU, a $14.4 million asset credit union, and Alcan Employees CU Inc., with assets totaling $1.8 million, received approval from members to merge later this year, pending approval from state regulators. The combined credit union will continue to operate as Louisville Metro Police Officers CU, with both branches remaining open, Gale Stivers, president of the credit union, told Business First of Louisville (July 9). Virginia Adcock, manager and president of Alcan will continue to work at its location. Alcan serves families of employees at Reynolds Flexible Packaging. Louisville Metro Police serves members of law enforcement and their families in Louisville and Jefferson County. In the second merger, which will be effective Oct. 1, Alliance of Maine FCU, Augusta, and Hannaford Associates FCU, Portland, will join forces to become Trademark FCU, according to the Maine Credit Union League's Weekly Update (July 9). The merger announcement said both credit unions had similar histories serving employees and families of one company. Alliance of Maine, a $30 million asset credit union, serves Central Maine Power employees and families, while Hannaford Associates serves Hannaford Bros. employees and families. Judy Griffin, president/CEO of Alliance of Maine FCU, and J Hunter King, president/CEO of Hannaford Associates FCU, said the merged credit union will serve employees of more than 25 companies in their original groups.

Greater global CU involvement stressed at The 1 conference

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LAS VEGAS (7/12/10)—The chairmen from the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) welcomed more than 2,800 attendees from 60 nations to The 1 Credit Union Conference, which convened in Las Vegas Sunday.
Click for slide show Harriet May, chairman of the Credit Union National Association (CUNA), outlined key issues for U.S. credit unions at the opening of The 1 Credit Union Conference in Las Vegas.
It was the first time the two trade organizations joined forces to present a major credit union industry event. Speakers stressed the need for greater global unity among credit unions and the inherent strengths offered by the financial cooperative model. The global movement has made great strides during the past year, but there is more work to be done, presenters said. Harriet May, chairman of CUNA and president/CEO of GECU of EL Paso, Texas, outlined issues U.S. credit unions are grappling with that stem from the economy and legislative and regulatory changes. The economy and financial meltdown have:
* Underscored for U.S. credit unions the importance of capital, with CUNA’s priority to create a means to pursue secondary capital--“a change we’ve been seeking for years”; * Presented an opportunity for more people to discover credit unions. “We’ve added new members--1.2 million in 2009, bringing our total to nearly 92 million Americans (about one in four) who are credit union members,” May said, adding that national media have been filled with good stories about credit unions. “We think the gains we have seen in consumer awareness will last and benefit credit unions in the long-term,” she said. * Resulted in difficulty for small businesses in getting credit from banks, which is an opportunity for credit unions. “We have been urging Congress to pass a bill that would raise the limit on the amount of small business loans credit unions can make” and “it wouldn’t cost taxpayers a dime,” she added.
She also noted the growing regulatory burden credit unions face, including the amendment in the regulatory reform bill that would affect interchange on debit card processing. “The escalating burden is becoming a major concern for credit unions especially when you consider that, pound for pound, credit unions are already the most heavily regulated depository institutions in the U.S. That’s not just my opinion. That’s the U.S. Treasury’s,” she said. CUNA’s Examination and Supervision Subcommittee will conduct a survey soon to quantify the costs and resources spent diverted to compliance issues, she concluded. WOCCU Chair Barry Jolette told the assembly that greater global credit union unity requires efforts not only on the part of the institution and its trade association, but also from individuals involved in the movement. “As U.S. credit unions have often heard, a movement begins at the grassroots level one person at a time and it grows with the addition of each new voice and the involvement of each helping hand,” said Jolette, president/CEO of San Mateo CU in Redwood City, Calif. “That movement will never stop growing until the needs of all its members are met.”
Click to view larger imageThe second annual Global Women’s Leadership Forum, part of World Council of Credit Unions' (WOCCU)Global Women’s Leadership Network, met Sunday before The 1 Credit Union Conference began in Las Vegas. More than 90 participants gathered--double the group’s inaugural forum last year at WOCCU’s 2009 World Credit Union Conference in Barcelona, Spain. The network helped 11 people from eight other countries attend this year's conference, according to WOCCU Chairman Barry Jolette.
Prior to Sunday afternoon’s opening session, WOCCU held several other meetings for various credit union groups, including the second annual Global Women’s Leadership Forum, part of WOCCU’s Global Women’s Leadership Network. More than 90 participants gathered for the day-long forum Sunday--double the attendance at the group’s inaugural forum last year at WOCCU’s 2009 World Credit Union Conference in Barcelona, Spain. The rapidly growing participation indicates increasing interest in the organization designed to foster networking and professional growth for women credit union leaders worldwide, according to network chair Sue Mitchell. “Women are central players in community development worldwide and if we can increase their ability to connect, we have a very good chance of changing the world,” said Mitchell, CEO of credit union consulting firm Mitchell, Stankovic & Associates. “We want credit unions to play a central role in this important effort.”
Click to view larger imageWorld Council of Credit Unions' (WOCCU) Young Credit Union People (WYCUP) met before the joint WOCCU-Credit Union National Association's The 1 Credit Union Conference.WYCUP attracted 57 participants from 15 countries, about double the attendance at WYCUP's program last year in Barcelona, Spain.
Educational sessions during the forum focused on strategies to cultivate institutional growth and professional development for participants. In addition, Greta Greathouse, the head of WOCCU’s development efforts in Haiti, gave a first-hand account of serving credit unions in the wake of the Jan. 12 earthquake. Currently, the Global Women’s Leadership Network has 85 members representing 21 countries, but Mitchell expects that number to grow to more than 100 as conference attendees sign up for the organization. Sunday’s meeting was preceded by a Saturday golf tournament that raised more than $40,000 to help support network scholarships, she added. The WOCCU Young Credit Union People Program (WYCUP) also convened Sunday, attracting 57 participants from 15 countries, roughly double the number in attendance at WYCUP’s Barcelona program last year. Participants networked and heard from several educational speakers. Five participants will be chosen for all-expenses-paid scholarships to attend WYCUP 2011 program and WOCCU’s World Credit Union Conference in Glasgow, Scotland. The 1 Credit Union Conference runs through Wednesday. For live updates, use the links.

Baltimore MECU pays members 4.2M in cash bonuses

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BALTIMORE (7/12/10)--MECU of Baltimore Inc. members received loan interest rebates and extraordinary dividends on June 29 and June 30, depositing more than $2.1 million into their accounts. The payments are the first half of an anticipated annual cash bonus totaling more than $4.2 million. “MECU has paid its members a cash bonus every year since 1981,” said Herman Williams Jr., MECU board chairman. “We are especially glad that we can continue this during a time of economic hardship. Many of our members work for Baltimore City and have had furlough days and other cutbacks. We’re glad that we can make finances a little easier for these members.” “The safety and security of our members’ money is at the forefront of what we do on a daily basis,” said MECU President/CEO Bert J. Hash Jr. “Because of this approach to financial management, MECU has grown steadily to where we reached more than $1 billion in assets last year.”

INews NowI providing live updates from conference

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LAS VEGAS (7/12/10)--Couldn't get to The 1 Credit Union Conference now in progress in Las Vegas? Credit Union National Association's (CUNA) and the World Council of Credit Unions' (WOCCU) joint conference will get full coverage in News Now and other sources. News Now is covering the event daily and also will provide live updates throughout the conference on "Live at The 1" in real time. Readers can also follow events via News Now's Twitter account, LiveWire. CUNA*verse--CUNA's official blog site--will blog from the event also. CUNA's Credit Union Magazine will produce the conference daily on its website, www.creditunionmagazine.org. And WOCCU's website, the official conference website, will feature daily stories on its website. The conference will end Wednesday.

CUNA Mutual issues 85M in surplus notes

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MADISON, Wis. (7/12/10)--CUNA Mutual Group has entered into an agreement with several institutional investors to issue $85 million in fixed-rate, 20-year surplus notes, in a move aimed at creating opportunities for future growth. “Surplus notes are a cost-effective opportunity in this low-interest environment to take advantage of our financial strength and raise new capital,” said Jeff Post, president/CEO of CUNA Mutual. “The new capital increases our already strong financial position and gives us flexibility to invest in opportunities that will drive future growth.” A surplus note is a bond-like instrument issued primarily by mutual insurance companies. They are debt-like in that they pay an interest rate and have a finite maturity. During that period, CUNA Mutual pays an interest rate to its investors. “Investors’ willingness to purchase our surplus notes is a major achievement for CUNA Mutual,” Post said. “The ready acceptance of these notes by sophisticated investors is a major vote of confidence in CUNA Mutual’s strategy, our relationship with our customers--and our future.” CUNA Mutual will use the infusion of capital to support its credit union market and diversification strategies that will drive future profitable growth. The initiatives could include acquisitions and/or investment in business-to-consumer initiatives in the credit union marketplace, the company said. “Essentially this is a form of subordinated debt--analogous to alternative capital for a credit union--that is issued to sophisticated investors to raise capital,” Eric Richard, executive vice president and general counsel for the Credit Union National Association, explained. “The issue process is complicated, involving rating agencies, investment analysts, and other due diligence comparable to what happens in an initial public offering--except this is debt, not equity.”

Calif. league CUs MBL interchange positions in two newspapers

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ONTARIO, Calif. (7/12/10)--Two California-based newspapers recently touted credit unions’ positions on two hot-button issues--interchange and member business lending. La Opinion, a Spanish newspaper, noted the California Credit Union League is promoting a bill that would raise the cap on member business lending at credit unions to 27.5% from 12.25%. U.S. Sen. Mark Udall (D-Colo.) recently filed an amendment to a budget stimulus bill that would raise the cap. The amendment is supported by the Credit Union National Association (CUNA) and credit unions. Bob Arnould, league senior vice president, told the newspaper that the measure would help create 20,000 jobs in California. The Bakersfield Californian mentioned credit unions’ worries about the Senate provision in the regulatory reform bill, which would allow the government to set interchange fees. CUNA and its credit unions oppose the measure because it would make it harder for credit unions to offer card products and services, CUNA has said. The newspaper noted that many credit unions fear merchants will stop accepting credit union members’ cards because they may carry higher fees. Although the bill contains an exemption for small institutions, including credit unions, credit unions worry the exemption for could have no effect and credit unions would be unable to absorb debit card costs, the newspaper said. Bakersfield-based Kern Schools FCU President/CEO Steve Renock told the newspaper that credit unions would be hard-pressed if the legislation passes, and it’s “going to be hard to make up for the lost revenue.” Arnould added that the “biggest losers” of the bill would be credit unions and community banks. Donna Severs, CEO and manager of Bakersfeld City Employees FCU, said if the legislation passes, her board would have to decide whether to continue offering free checking. The likelihood of that is slim, she added.

Blame weather Insurance industry losses outpace the past

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MADISON, Wis. (7/9/10)--Although there has been a recent increase in the number of weather-related catastrophe-driven events, insurers have been financially adept at handling the increased losses, according to experts. A credit union insurer said it is prepared. Disasters have been significantly increasing worldwide from less than 200 events in 1980 to 440 for the first half of 2010, said Peter Hoppe, Munich Re head of geo risks research (P&C National Underwriter July 8). The comments were made during a recent webinar, sponsored by Munich Re, which reviewed the first half-year of natural catastrophes for 2010. “No one can predict catastrophic events, but it’s important to plan for them,” Chad Nitschke, vice president and product executive, Credit Union Protection at CUNA Mutual Group, told News Now.“As the primary property and casualty insurer for credit unions, CUNA Mutual always seeks to offer valuable protection products for credit unions that are priced fairly and that help ensure we have the financial strength to meet our future obligations as an insurance company. “Every year we expect and anticipate our customers will be faced with natural catastrophes, and we work individually on crafting unique insurance and risk management solutions that will meet their needs,” he continued. “We also are prepared from a claims perspective to mobilize catastrophe teams in the event a concentration of our customers are impacted. Individual premiums paid by our policyholders are driven by a number of factors, one of which is actual loss experience. “That said, our pricing plans do contemplate a certain degree of risk associated with weather-related catastrophic events,” Nitschke concluded. While insurers and re-insurers have seen an increase in the number of catastrophes, they still have been able to cover losses, and there is no reason to believe that won’t continue, Robert Hartwig, president of the Insurance Information Institute, told the publication. He attributed insurers’ success to their strong ability to underwrite risk and a financial model that helped them avoid the major thrust of the economic meltdown. Despite the economic and risk pressures, insurers have managed to remain solvent, but as the insurance industry goes through its inevitable cycle, impairments may increase in the future, Hartwig added. To read the article, use the link.