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Four CU board members running for Maine House seats

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PORTLAND, Maine (8/2/10)--Four credit union board members are running for seats in the Maine House, according to the Maine Credit Union League. The league board said it endorsed the candidacies of three recently--two incumbents and one newcomer--and a fourth before the spring primary, the league said in its newsletter (Weekly Update July 30). The candidates from credit unions are:
* Rep. Herbert Clark, a long-time legislator and vice chair of the board at Katahdin FCU, Millinocket; * Rep. Michael Lajoie, who is up for a second term and is board vice chair at Lewiston (Maine) Municipal FCU; * John Picciotti, board chair of KSW FCU, Waterville, who is running for an open seat; and * Ken Fredette, board member of Sebasticook Valley FCU, Pittsfield, and the only board member who was involved in a primary race.
"We are very fortunate to have credit union board members serve in the legislature, advocating on behalf of credit unions and our issues," said John Murphy, league president. He noted it was important to support credit union candidates early on. The league's political involvement committee will meet Aug. 11 to consider the majority of legislative candidates for endorsement, he said.

VolCorp forum focuses on innovate impact change

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NASHVILLE, Tenn. (8/2/10)--Volunteer Corporate CU (VolCorp) will host its annual forum Aug. 19 in Nashville. The day will feature presentations by Kelley Parks, Matt Davis and Joe Calloway. They will speak on Innovate, Impact and Change, the forum’s theme to help members develop new ideas for their credit union. Parks, the creative catalyst of gira{ph}, was the 2008 CUNA Marketing & Business Development Council’s Marketing Professional of the Year. She has served as a member of Filene Research Institute’s i3 team. Parks will show attendees how to make the most of a marketing budget during tough economic times in "How Low Cost Guerilla Marketing Can Really Work." Parks will share the internal and external changes at her credit union after it rebranded and reached 90% of its potential membership. Davis, of the Filene Research Institute, is an adviser specializing in implementation. He will speak about "The Magic of Doing", which will look at common innovation barriers from a human-centered design perspective and make the case that inaction can be riskier than action. Participants will learn how to sell ideas, how to build effective innovation teams, and why the public is counting on the magic of “doing.” Calloway is a partner in Engage Consulting Group and the author of best-selling business books including, Becoming a Category of One and Indispensable. He will be speaking on “Minds Wide Open: Creating a Mindset of Everyday Innovation, Ideas and Improvement.” Minds Wide Open is about ordinary people doing extraordinary things, while creating differentiation and a competitive advantage. VolCorp’s Annual Meeting will be held with Forum ’10. Members will hear about VolCorp’s accomplishments during the past year, its future direction and board election results.

CU System briefs (07/30/2010)

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* WASHINGTON (8/2/10)--Tom Glatt has departed Realtors FCU as CEO, as of Sunday. Glatt was named CEO of the new Internet-based credit union on Dec. 15, 2008. He is a 20-year veteran of the credit union movement, previously serving as CEO of Continental FCU, Tempe, Ariz., and in executive positions with OnPoint Community CU (formerly Portland Teachers CU), Portland, Ore.; First Financial FCU, West Covina, Calif; and 66 FCU, Bartlesville, Okla. News Now will carry a full story in Wednesday's edition ... * SACRAMENTO, Calif. (8/2/10)--The Golden 1 CU, based in Sacramento, announced Friday that Donna Bland has been named interim president/CEO, effective immediately. Bland, formerly the credit union's senior vice president and chief financial officer, has been with the credit union for 16 years and has more than 20 years experience in the financial services industry. In her previous position, she had been responsible for finance and accounting, investment management and compliance, among other duties. Golden 1 is the sixth largest credit union in the U.S., with more than $7 billion in assets and nearly 700,000 members with 84 branches ... * MARLBOROUGH, Mass. (8/2/10)--Al LaRiviere, former board chairman of the Massachusetts Credit Union League, died July 17. He was 93, said the league (e-Weekly July 28). LaRiviere began his 58-year in credit unions in 1947 as a board member of Chapman Valve CU and became its manager in 1952. In 1960 he became president of Western Mass Telephone Workers' CU (now Freedom CU), retiring as its CEO in 1995 at the age of 78. He was on the league board for 36 years and was chairman 1961-1963. He also served as chairman of the Massachusetts Credit Union Share Insurance Corp. and the Credit Union Employees Retirement Association; treasurer of the Central Credit Union Fund, and president of the Pioneer Valley chapter of the league. He also was trustee of the Credit Union Affordable Housing/Homeless Trust from 1991 to 2005 and a trustee of the Joseph Fisher Memorial Trust. He worked to advance credit union legislation including the establishment of the share insurance corporation and authorization for credit unions to issue NOW accounts in 1983 ...

Arrowhead CEO takes job with Cal State

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SAN BERNARDINO, Calif. (8/2/10)--The former CEO of Arrowhead Central CU, San Bernardino, Calif., has accepted a position as vice president for university advancement at Cal State, according to local media reports. Larry Sharp, who was dismissed by the National Credit Union Administration (NCUA) as CEO of the credit union, will be in charge of development, public affairs and alumni affairs at Cal State San Bernardino. Sharp has a master’s degree in business administration. He will replace Francois Aylmer, who moved to Portland State University (The Press-Enterprise July 29). Al Karnig, Cal State president, said the university would benefit from Sharp’s skills. “While recent developments at Arrowhead CU, which grew out of the deep recession that severely damaged the [local] economy, have been very unfortunate, the university will benefit extraordinarily by the skills and perspectives that [Sharp] has developed over his outstanding career,” he said. NCUA assumed control of Arrowhead June 25 and fired senior-level four employees, including Sharp. The $876-million-asset credit union had been placed into conservatorship due to declining financial condition. The employees were Sharp; Daniel Marciante, chief financial officer; Gene Shabinaw, senior vice president of lending; and Ray Messler, senior vice president of strategic development (Fontana Herald News July 16). Arrowhead is open for business and has continued uninterrupted service to members since June 25, John McKechnie, NCUA director of public and congressional affairs, told News Now (July 19).

CUNA Mutual fine-tuning for the future

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MADISON, Wis. (8/2/10)--CUNA Mutual Group will fine-tune its operations as it heads into the future to build on momentum from the changes it has made in recent years. “We have to continue to do the things we’re doing to make ourselves more efficient,” CUNA Mutual CEO Jeff Post, who arrived in 2005 to restructure the company, told (Wisconsin State Journal Aug. 1). “I got a lot of questions when I first got here--people almost with their eyes closed, (saying), ‘Tell me when it's over,’” Post told the newspaper. “But the world keeps changing, so to think your business doesn't have to change is a bit naive. Our business doesn't stand still.” With credit union consolidation and competition from other insurance companies, CUNA Mutual’s board directed Post to make core operations more efficient and to position the company for new growth opportunities outside the credit union sector, he told the paper. Those changes resulted in program cuts, repositioning, job losses and reorganization that is ongoing today. “I knew that change would be tough for the organization and that there would need to be a fair amount of it,” Post said. “On the credit union side, our goal was to shrink the number of products to what we did well. We also wanted to build some businesses outside the credit union space.” CUNA Mutual will continue to modify its credit union operations while keeping an eye out for opportunities to diversify its products and markets, Post told the paper. Some of the company’s major acquisitions and divestitures in keeping with those goals include:
* The June 2009 purchase of CPI Qualified Plan Consultants, a Kansas-based administrator of employee benefit plans. The move doubled CUNA Mutual’s stake in the retirement-plan business and was its first full-scale venture beyond the credit union marketplace. The company administers about 7,500 retirement plans with assets nearing $10 billion, about half for clients outside the credit union market. * The July 2009 sale of its IRA Services division to Ascensus, a retirement services firm based in Dresher, Pa. The division’s 47 employees kept their jobs in Middleton, Wis. Post said CUNA Mutual couldn’t compete effectively against a much bigger main player in the market. * The September 2009 purchase of Producers Ag Insurance Group, an Amarillo, Texas-based crop insurer that serves farmers and agricultural producers nationwide. At CUNA Mutual, Pro Ag is a stand-alone subsidiary with about 400 employees. Crop insurance is a new business for CUNA Mutual, but one that Post had experience with at his prior company, Fireman's Fund.
CUNA Mutual last month raised $85 million by selling fixed-rate, 20-year surplus notes to investors for the first-time, the paper said. A surplus note is a bond-like instrument that pays an interest rate and has a finite maturity. Company officials hope the added capital will help CUNA Mutual grow or diversify, the paper said. For the full article, use the link.

June CU loans credit quality membership all up

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MADISON, Wis. (8/2/10)--Credit union loan balances, credit quality and membership all improved in June, according to a Credit Union National Association (CUNA) economist's analysis of CUNA’s monthly review of credit unions. Credit union loans outstanding rose 0.3% during June 2010, compared to a 0.2% increase during May, according to the Monthly Credit Union Estimates. Credit union loans in June totaled $582 billion, compared with $585.9 billion in June 2009.
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“This year is going to be considered the ‘off year’ when it comes to credit union loan balances,” Steve Rick, CUNA senior economist, told News Now. “This refers to members paying off loan balances and credit unions charging-off and selling-off loans. CUNA is forecasting zero loan-balance growth in 2010, the first year in credit union history where loan balances did not rise.” Adjustable-rate mortgages rising 1.2%, led loan growth, followed by unsecured personal loans and used-auto loans, which went up 1% and 0.8%, respectively. Credit card loans increased 0.3%, while fixed-rate mortgages and new-auto loans decreased 0.2% and 1.4%, respectively. Credit union loan balances’ increase was the “second consecutive month of loan growth after six months of decline,” Rick said. “For the second quarter, credit union loan balances increased 0.44%, corresponding with Friday’s gross domestic product release that showed durable good spending--cars, appliances, furniture--rose 1.8% in the second quarter.
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Credit union savings balances decreased 0.3% in June, compared to a 0.1% decline during May. Regular shares rose 0.5%, followed by money market accounts (0.4%) and one-year certificates (0.2%). Individual retirement accounts and share drafts dropped 0.3% and 4.8%, respectively. Credit union savings in June totaled $796 billion--or $43.8 billion more than the $752.2 billion saved in June 2009. Credit unions’ 60-plus-day delinquencies decreased slightly to 1.7%. “Credit union loan credit quality continued to improve in June,” Rick said. “Loan delinquency rates fell to 1.71%--down from 1.77% in May and below the recent cyclical peak of 1.85% in January. The self-sustaining economic recovery and faster loan growth should reduce delinquency rates significantly in 2011.” The loan-to-savings ratio remained at 73% in June. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 19%. The movement’s overall capital-to-asset ratio remained at 10% in June 2010. The total dollar amount of capital for credit unions is $91 billion. “Credit union wholesale borrowings dropped 27% over the past 12 months, from $40 billion to $29 billion,” Rick said. “Weak loan demand, excess credit union liquidity and a desire to shrink balance sheets to boost capital-to-asset ratios are three factors causing the decline. This drop in wholesale funding caused 12-month credit union asset growth (4%) to be less than credit union savings growth (5.8%).” Credit union membership rose 0.32% in June--the fastest pace since August 2009--to reach 92.815 million members, Rick said. “During the past 12 months, however, memberships are up only 1.15%,” he added.

Louisiana league launches Smartphone app for convention

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HARAHAN, La. (8/2/10)--Credit union representatives attending the 2010 Louisiana Credit Union League convention and annual business meeting can get more information about the conference through a new Smartphone application. The Louisiana league has launched a Smartphone application for the meeting that provides educational program updates, maps and speaker bios. With the application, attendees can:
* Create an itinerary with session information; * Find meeting rooms and other points of interest on an interactive map; * Mark exhibitors they are interested in as favorites; * Enter and share contact information with others; and * Interact via Twitter.
The application is sponsored by CU Cooperative Branching. For more information, use the links.

Remittances first step in serving Hispanics says webinar

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MADISON, Wis. (8/2/10)--Understanding the Hispanic culture is the key to successfully providing financial services to the fastest-growing minority group in the U.S., according to the World Council of Credit Unions (WOCCU). In a recent webinar, “Reaching the Hispanic Market,” three Iowa credit unions shared best practices ideas to help credit unions reach out to Hispanics. About 64 participants from credit unions across the U.S. joined the online event, which highlighted the experiences of Greater Iowa CU, Ames; Village CU, Des Moines; and The Family CU, Davenport. It chronicled their success in reaching out to their respective Hispanic communities through WOCCU’s IRnet international remittances program. The high level of member trust enjoyed by the presenting credit unions is attributable in part to the strong working relationship that had been built over the course of two years with WOCCU, Iowa Credit Union League subsidiary Coopera Consulting and members of the Hispanic communities the credit unions serve. The webinar discussed acceptable forms of identification, specifics on loan products tailored for the Hispanic community, successful marketing techniques and ways to track member outreach. The three presenting credit unions lauded the benefits gained from their outreach efforts. “This has been the best step that we had to take,” said Michael Adams, marketing vice president for Greater Iowa CU. “We are an employee implementation team, taking the foundation of what we have now and extending it beyond the marketing department so that we can emerge as a best-practices credit union. “As part of introducing these products and services, individual taxpayer identification number lending, quinceañera [coming of age ceremony] loans and other products, we’ve also introduced a financial education program. But I can’t stress enough how this all started with a remittance product and grew from there,” he added. A 32-page WOCCU report, also called “Reaching the Hispanic Market through Remittances,” details the three credit unions’ experiences and guiding principles to attract Hispanic membership through remittance programs. Areas discussed include building strong internal commitments, developing a proper business plan, tailoring marketing efforts towards Hispanic members and tracking results.

Western CMS honors dean and graduates

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ONTARIO, Calif. (8/2/10)--Western CUNA Management School (WCMS) President and Dean James D. Likens was honored for leading the school for the past 35 years at the 2010 WCMS graduation ceremony July 22 at Pomona College, Claremont, Calif.
At this year's Western CUNA Management School (WCMS) graduation ceremonies are, from left: President/Dean Jim Likens, who received a special award for leading the school for 35 years; commencement speaker Sylvia Lyon, president/CEO of the Credit Union Association of New Mexico and a 1997 WCMS graduate; Patsy Van Ouwerkerk, WCMS Board vice chairman and Travis CU CEO; and WCMS Associate Dean Michael D. Steinberger. (Photo provided by the California Credit Union League)
WCMS Board Vice Chairman and Travis CU CEO Patsy Van Ouwerkerk presented Dr. Likens with the special award, which commemorated his influence on thousands of students attending the school through the years. Seven students graduated with “High Honors” and were inducted into the Academic Hall of Fame, while an additional eight students graduated with “Honors” during the school’s 49th session, held July 11-23 at Pomona College. Of the 275 students attending this year, 87 were first-year students, 70 were second-year students, and 118 were third-year students. Students earning “High Honors” were:
* Chad M.Bollinger, Colorado CU, Littleton,Colo.; * Kristopher L. Distefano, America First CU, Ogden, Utah; * David Flood, Spokane (Wash.) Teachers CU; * Alan Jackson, Rogue FCU, Medford, Ore; * Janet Sanchez, Community CU of Southern Humboldt County, Garberville,Calif.; * Steven Craig Schmidle, Elevations CU, Boulder, Colo.; and * Kristin M. Zeller, Coast Central CU, Eureka, Calif.
“Honors” students this year were:
* Julie H. Arenz, iQ CU, Vancouver, Wash.; * James R. Belford, TwinStar CU, Lacey, Wash.; * Shelly Berryman, SchoolsFirst FCU, Santa Ana, Calif.; * Darin Daggett. Kinecta FCU, Manhattan Beach, Calif.; * Lauren Risinger Davison, Coors CU, Golden, Colo.; * Craig A. Durkey, Redwood CU, Santa Rosa, Calif.; * Kristina M. Hooper, Cal State L.A. FCU, Los Angeles; and * Gregory Shaver, Otero FCU, Alamogordo, N.M.
Receiving the Charles M. Clark Memorial Award was Theta class President Robert York of California Bear CU, Los Angeles. The award is given to the senior student nominated by his or her class who best represents high moral character, leadership, credit union dedication, and academic achievement. RaAnn Wood, deputy commissioner of credit unions for the California Department of Financial Institutions, was named as the 20th recipient of the James D. Likens Alumni Recognition Award, founded by the Alumni Association of Western CMS. The award is given to a graduate who has made significant achievements in the credit union field since graduation. Sylvia Lyon--president/CEO of the Credit Union Association of New Mexico and a 1997 WCMS graduate--delivered the commencement address. The third-year graduating class presented $50,000 to the school to help keep tuition costs down and to underwrite scholarships for future WCMS students. The funds resulted from the Theta Class working together and hosting fundraisers during its three years at WCMS. Students of all three classes raised an additional $12,000 at the 2010 auction. The speaker at the 2010 Richard Myles Johnson Colloquium in Credit Union Philosophy was Mary Cunningham, WCMS board chairman and CEO of USA FCU, San Diego. This year’s session included students from Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Missouri, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

Cheney CUs can do more small biz lending

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NEW YORK (7/30/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney took another opportunity to advocate for increased member business lending in an article in Bloomberg Business Week Thursday. Credit unions are lending--but they can do more, Cheney emphasized. CUNA supports lifting the lending caps on credit unions’ assets, currently at 12.25%, and the group's new CEO has been featured in a variety of publications since taking the CEO position on July 5. Cheney said if the cap was raised to 25% of assets, credit unions could provide $10 billion in lending to small businesses, which could create 108,000 new jobs in the next year. The U.S. unemployment rate fell to 9.5% from 9.7% in May, Bloomberg noted. Companies with fewer than 500 workers employ about half the working population and account for 60% of gross job creation, the publication added, citing Federal Reserve Board Chairman Ben Bernanke.

Michigan league trains 85 new financial counselors

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LANSING, Mich. (7/30/10)--Eighty-five credit union financial educators participated in a program July 15-16 that was offered by the Michigan Credit Union League. The program aimed to help the educators work toward a Certified Credit Union Financial Counselor status. The educators represented 34 credit unions. The training sessions took place at University of Michigan CU in Ann Arbor. Instruction was provided by Kathryn Greiner, director of credit at U of M CU; Beth Blanco, budget counselor at U of M CU; and REAL Solutions Field Coach Mark Lynch. A National Credit Union Foundation’s REAL Solutions program grant funded 20 of the training opportunities. The self-study program began in April and will end in October. It will be enhanced by live group support, networking and testing provided by the Michigan league. “This program will put more trained personal finance experts in the field to help Michigan’s credit union members and to strengthen our communities,” said David Adams, president/CEO of the Michigan league. Using CUNA’s Credit Union Financial Counseling Certification Program (FiCEP), participants who complete the program and tests will be designated as Certified Credit Union Financial Counselors. FiCEP includes two parts of four learning modules each. The modules are:
* Introduction to Financial Counseling; * Financial Counseling Essentials; * Special Issues in Financial Counseling; * Using Communication Skills During Financial Counseling; * Taxes, Insurance and Investments; * Controlling Living Expenses and Understanding Consumer Credit; * Matching Values to Money; and * Retirement and Special Issues.
For more information, use the link.

CU System brief (07/29/2010)

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* NEWARK, N.J. (7/30/10)--The attorney general of New Jersey, Paula Dow, said she will not investigate the fatal police shooting of a credit union CEO from Atlanta. Defarra “Dean” Gaymon, former CEO of Credit Union of Atlanta, was shot and killed by a police officer July 16 in a Newark, N.J., park known for public sex acts (Associated Press July 29). The officer said in a statement that Gaymon had threatened him after the officer tried to arrest him for unlawful activity (News Now July 22). The New Jersey state chapter of the American Civil Liberties Union had requested last week that Dow open an inquiry into Gaymon’s death. Dow stated that there is no indication of conflict with the Essex (N.J.) County prosecutor’s office, which handled the case ...

Irish league CU review an opportunity

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DUBLIN, Ireland (7/30/10)--The Irish League of Credit Unions has welcomed the appointment of independent consultants to conduct a review of the credit union sector in Ireland. Kieron Brennan, CEO of the Irish League of Credit Unions, said he sees the review as an opportunity to strengthen the credit union movement, and allow it to take a more influential position in Irish society ( July 28). Brennan said that there were increasing bad debts across the credit union movement. However, he reassured members that their savings are safe. “On the whole I think we would expect the review to find that credit unions are safe, strong and secure,” he told the newspaper. “But, I have to say, the movement is a large and diverse one with 500 credit unions north and south, and we would expect that not all of those will necessarily be operating to the peak level of efficiency.” Brennan was unable to say exactly how many credit unions were in financial trouble, but said that across the whole movement, up to 13% of the 6.8 billion euros ($8.9 billion) it had lent to customers were bad debts, according to the paper. “Let’s be clear there are increasing bad debts across the credit union movement,” he told the paper. “We wouldn't argue with that. We’ve seen those figures, they are a concern.” In comparison to other financial institutions, credit unions were in good shape, Brennan added. "Credit unions have performed extremely well throughout this financial crisis,” he told the paper. “In sharp contrast to the banks, they have not had to be bailed out … and no single cent of taxpayers’ money has gone into credit unions.” The Central Bank and Financial Regulator Wednesday announced the appointment of Grant Thornton to conduct the new review, which was requested by Minister for Finance Brian Lenihan.

Ohio CU opens new location after tornado destruction

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PERRYSBURG, Ohio (7/30/10)--Less than two months after a tornado destroyed its Millbury, Ohio-based office, Woodco FCU is up and running in its new Perrysburg location as of July 19. “The new place is very nice, much nicer than before,” Juanita Zunk, Woodco CEO, told News Now. “We miss the old place and the people there. It will take some time getting used to the new location. It’s a very positive move for the credit union. We’re more centrally located in Wood County now, so that’s a positive thing.” A June 6 tornado destroyed Lake High School in Millbury, southeast of Toledo, which housed the credit union. The credit union, led by Zunk, immediately activated its disaster recovery plan and was up and running within days in temporary space at CanDo CU, three miles away in Walbridge (eLumination Newsletter Jul 28). Back-office operations were set up in CanDo CU’s conference room, and front-line services operated out of a vacant position on the teller line and dedicated drive-thru lane. Several area credit unions and the Ohio Credit Union Foundation stepped in to offer assistance in the aftermath of the disaster. Woodco FCU has $9 million in assets.

WOCCU board unanimously approves CUDE resolution

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WASHINGTON (7/30/10)--Following the lead from the United Nations designating 2012 as the International Year of Cooperatives, the World Council of Credit Unions’ (WOCCU) board of directors unanimously passed a resolution--underscoring the cooperative nature of credit unions--by Credit Union Development Educators (CUDEs) at The 1 Conference in Las Vegas. The resolution was sponsored by Melvin Edwards, the most recent past chair of WOCCU. He participated in a 2009 Development Educator training program to become a certified CUDE. The National Credit Union Foundation (NCUF) is the primary sponsor of the Development Educator (DE) program. The resolution states that:
* Credit unions designate themselves more closely as financial cooperatives within a wider cooperative sector that includes production and service cooperatives; * The designation as financial cooperative focuses on credit unions’ distinct business model, ownership structure and cooperative principles in preparation for the International Year of Cooperatives and pursuance of increased member advantages and benefits; * Based on the track record of the DE movement--2,500 DEs from over 60 countries--its international structure and representation, that DEs participate as a key resource in the educational component role necessary to articulate and highlight credit unions’ role as financial cooperatives within the larger cooperative system; and * The 97 countries where credit unions thrive and serve should be urged to have their respective governments also, in 2011, declare their support and active participation in the 2012 International Year of Co-operatives.

Global womens network gives award to Hollen

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LAS VEGAS (7/30/10)--Stan Hollen, president/CEO of CO-OP Financial Services, has received the first of what will be an annual award for contributions to worldwide credit union women’s leadership development from the Global Women’s Leadership Network, a program of World Council of Credit Unions (WOCCU).
Kimberley Hester, executive vice president of network services for CO-OP Financial Services (second from right), accepts the first Global Women’s Leadership award on behalf of network supporter Stan Hollen, CO-OP Financial Service’ president/CEO. Joining Hester are, from left, Patsy Van Ouwerkerk, president/CEO of Travis CU, Vacaville, Calif.; Diana Dykstra, president/CEO of San Francisco Fire CU; Susan Mitchell, network chair and CEO of credit union consulting firm Mitchell, Stankovic & Associates, Boulder City, Nev.; and Caroline Lane, senior vice president of business development and marketing for CO-OP Financial Services. (Photo provided by World Council of Credit Unions)
The award was accepted by Kimberley Hester, CO-OP Financial Services’ executive vice president of network services, at a reception for the 2010 Global Women’s Leadership Forum held in conjunction with The 1 Credit Union Conference, the recent joint event co-sponsored by the Credit Union National Association and WOCCU. “Stan Hollen is a key leader within the credit union industry,” said Susan Mitchell, network chair and CEO of credit union consulting firm Mitchell, Stankovic & Associates in Boulder City, Nev. “He believes in developing future leaders-- especially women leaders--throughout the credit union movement. His actions support the network’s vision to provide women with the resources to make a measurable difference in the lives of each other, of credit union members and their communities.” Hollen was recognized for his ongoing support of individual U.S. women credit union leaders, and of the Global Women’s Leadership Network, according to Mitchell. At Hollen’s direction, CO-OP Financial Services sponsored the network’s inaugural golf outing, an event that raised more than $40,000 for the network. “It is with pleasure that I accept this award from WOCCU and The Global Women’s Leadership Network,” said Hollen. “I believe in supporting the credit union industry and leadership development is of critical importance as we face future challenges. It is an honor to know that I have helped to create opportunities for women.” The Global Women’s Leadership Network is designed to foster networking and professional growth for women credit union leaders worldwide. It has seen rapidly growing participation at its annual forum, held earlier this month as part of The 1 Credit Union Conference in Las Vegas (News Now July 12).

FBI reports breakthrough in infamous botnet case

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WASHINGTON (7/29/10)--Slovenian police have questioned a 23-year-old man suspected of creating the Maripos Botnet--a network of remote-controlled compromised computers that stole passwords for websites and financial institutions, captured credit card and bank account information, launched denial of service attacks and spread viruses to nearly 12 million computers in 190 countries. According to the Federal Bureau of Investigation (FBI), the software that created the botnet had been sold the past two years to hundreds of other criminals. That made it "one of the most notorious in the world," said FBI Director Robert S. Mueller III in a press release issued Wednesday. It is not known if the botnet directly affected credit unions or their members, or if they suffered losses as a result of fraud initiated by the botnet participants. The Slovenian man, known only as "Iserdo," was arrested last week in a partnership of law enforcement agencies worldwide. Slovenian authorities said the man, arrested 10 days ago, was released but would be charged with computer crimes (Associated Press via The New York Times July 28). In an earlier development, police in Spain arrested suspected three Mariposa Botnet operators, "Netkairo," "Jonyloleante," and "Ostiator"--also known as Florencio Carro Ruiz, Jonathan Pazo Rivera and Juan Jose Bellido Rios--in February. They are charged with computer crimes in Spain. The Mariposa Botnet was built with a computer virus known as "Butterfly Bot," which was sold the past two years to criminals. In addition to selling the program, the Slovenian who allegedly created it developed customized versions for clients and created and sold plug-ins or add-ons to augment the botnet's features and functionality, said the FBI. Mariposa had infected the computers of Fortune 1000 companies and major banks. Its authors changed the botnet's code as frequently as every 48 hours to stay undetected by security software. However, Mariposa's controllers used one of their real names to register domains that were used to control the bots. Although they used a private domain name registrar, the company cooperated with investigators. Security researchers formed the Mariposa Working Group in order to take down the botnet. Its command-and-control servers were disabled in December, and the group passed information to law enforcement agencies in Spain and the U.S.

CU System brief (07/28/2010)

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* GREENSBORO, N.C. (7/29/10)--Forty representatives from North Carolina and South Carolina credit unions stood along the main entryway to Victory Junction Gang Camp in near 100-degree heat Sunday to welcome nearly 70 incoming campers from as far away as Wisconsin and Kansas. Credit unions are the largest non-NASCAR donors to the camp, which provides young people living with serious conditions such as spina bifida, hemophilia, diabetes and heart/lung disease a fun-filled week. Credit unions have donated nearly $2 million to the camp and are sponsoring "Pirate Week" this week." The Carolinas Credit Union Foundation coordinated the credit union sponsorship, so no camper had to pay to attend the camp. "Times are tough and money is tight for all of us," said foundation President/CEO John Slack, "but good times or bad--this is money well spent." For a video report, use the link (North Carolina Credit Union League Weekly Update July 28) ...

CO-OP monitoring bills impact on debit exclusivity

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RANCHO CUCAMONGA, Calif. (7/29/10)--CO-OP Financial Services, which operates the CO-OP Network for credit unions, said it is actively monitoring a clause included in the regulatory reform bill that could affect debit exclusivity. Specifically, the provision states that an issuer or network cannot restrict the number of payment card networks on which a transaction can be processed to one or more networks that are owned, controlled or operated by affiliated networks. Some financial services companies, including Discover Financial Services, told American Banker (July 28) that the provision could boost their business, while others said the changes could impact financial institutions’ debit programs. American Banker said most executives it talked to interpret the rule to mean debit cards must be connected to at least one network other than those operated by Visa and MasterCard. CO-OP Financial Services, whose CO-OP Network has more than 160 million transactions per month, told News Now the “clause is of great interest to us.” “For now, we are monitoring to see how it is interpreted in the rule-writing process,” said Caroline Lane, CO-OP senior vice president of business development and marketing. “It is our hope that financial institutions will retain their [current] competitive choices.” CO-OP offers more than 28,000 surcharge-free ATMs and 4,000 shared branch locations for credit unions.

CUs in IHuffPoI IBlack EnterpriseI IConsumer ReportsI

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MADISON, Wis. (7/29/10)--Credit unions can benefit college students, consumers seeking credit cards, and kids looking to learn financial lessons, according to articles in the Huffington Post, Consumer Reports and Black Enterprise magazine, respectively. Credit unions can help ensure that college students get a good deal when they look for credit cards, according to a Tuesday article in the Huffington Post titled “The Lifeline for College Students: Credit Unions,” by Scott Gamm, founder of “If you see credit card companies on your campus, stay away,” Gamm wrote. “Most colleges have their own credit union, which offers credit cards to students at much lower interest rates than the ones available at a marketing booth from a credit card company. As an incoming college student at New York University’s (NYU) Stern School of Business, the credit union I use, the NYU FCU, offers a credit card to NYU students with an interest rate of about 7%--much better than 25% at a regular bank. “Another benefit at credit unions is limited fees,” he added. “For-profit banks generate tens of billions of dollars from charging consumers high annual fees.” The October issue of Consumer Reports, which will go on sale Sept. 2, analyzed hundreds of credit cards in a an article titled “Best and Worst Credit Cards, According to Consumer Reports.” “Consumers should select the right card for the type of borrower they are,” the magazine said. “Consumer Reports also found that smaller issuers including credit unions and community banks, are worth checking out for various interest-free offers,” said the article. The Credit Union National Association’s Thrive by Five program--which teaches preschoolers about spending and saving--is listed as a resource in Black Enterprise magazine’s article on communicating financial lesson to kids, titled “Teach Them Well.” To read the articles, use the links.

Australian banks behind CUs in customer satisfaction

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SYDNEY, Australia (7/29/10)--Australia's credit unions and building societies have maintained their edge over the country's banks in the latest customer satisfaction survey. Australia's banks improved their customer satisfaction rate the past year but are still well behind credit unions and building societies, according to a June survey by Roy Morgan Research, an Australian marketing and public opinion survey firm (Business Day July 28). Credit unions had 86.3% in customer satisfaction, compared with banks' 73.5% and building societies, which are mutual associations, with 89%. Although Australia and New Zealand Banking Group (ANZ), the third largest bank in Australia, was the market leader among the nation's Big Four, it remained at 75.5% in customer satisfaction. Commonwealth Bank of Australia, which has the largest market capitalization, gained a little on ANZ, the study said. A similar poll studying small business owners' satisfaction with banks found that the small businesses' satisfaction level with each of the four big banks--ANZ, CBA, NAB and Wespac--fell further behind the rate for smaller financial institutions. Their satisfaction level was nine percentage points lower than other customers' satisfaction with the four banks and 8.9% lower for all banks. Generally, small businesses rated their satisfaction levels 7.3 percentage points lower than other bank customers, according to a press release ( July 10).

Calif.-Nevada league small-CU summit attracts 50

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At the networking reception before the California and Nevada Credit Union Leagues’ Shapiro Summit are, from left, California Credit Union League Board Chairman and CoastHills FCU (Lompoc, Calif.) CEO Jeff York; Interim California and Nevada Credit Union Leagues President/CEO David Chatfield; and Jon Hernandez, CEO of CalCom FCU, City of Downey FCU, and Mattel FCU. (Photo provided by the California and Nevada Credit Union Leagues)
ONTARIO, Calif. (7/29/10)--The California and Nevada Credit Union Leagues’ annual Shapiro Summit attracted more than 50 credit union leaders from the two states Friday and Saturday. The summit provided a networking and learning forum for small asset-sized credit union members of the leagues. The event was held at the leagues’ offices in Ontario, Calif. “It was a great event; one that offered crucial survival tips and growth strategies participants could take back and implement at their credit unions,” said Cathy Arra, staff liaison to the leagues’ Shapiro Advisory Committee, which hosted the event. Participants took in presentations by credit union leaders and league representatives, including interim league President/CEO David Chatfield and California League Board Chairman Jeff York, CEO of CoastHills FCU, Lompoc, Calif. “Smaller credit unions are special, have special needs, and need to continue maintaining their independence,” Chatfield said. “This is a strange time, and we’ve got some big challenges ahead. But with your support, we’re moving ahead.” Jon Hernandez--CEO of CalCom FCU, City of Downey FCU, and Mattel FCU--moderated a panel presentation on “Taking the Bullets Out of the Regulator’s Gun.” Panelists included Eric Bruen, CEO of Desert Valleys FCU, Ridgecrest, Calif; Diana Michaels, CEO of Western Healthcare FCU, Concord, Calif.; and Linda White, CEO of United Health CU, Burlingame, Calif. Other presenters included executive leadership coach Larry Gassin and Pat Neighbors, strategic development officer with the Sacramento, Calif.-based The Golden 1 CU. The leagues’ Shapiro group is a cooperative effort to pool the resources of the Nevada-California credit union community to help small credit unions operate efficiently and effectively. The group consists of credit unions with $42 million or less in assets.

DuTrac assists Iowa flood victims

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Jason Norton, left, senior vice president, marketing and development, at DuTrac Community CU, Dubuque, Iowa, presents a check for $500 to Danny “Sully” Sullivan from Queen B Radio, and Jill Reimer from Rainbow Oil to support the Trucks of Love program assisting flood victims in northeastern Iowa (Photo provided by DuTrac Community CU).
DUBUQUE, Iowa (7/29/10)--DuTrac Community CU was one of the first organizations to step up and help area residents impacted by recent flooding in and along the Maquoketa River in northeast Iowa. Record flooding reached the river Monday, sending the river more than 11 feet above flood stage ( July 26). “After a site review of the Lake Delhi area and after conversations with local, regional and state relief organizations there is an incredible, broad-scale need for relief supplies to those affected by recent flooding,” said Jason Norton, DuTrac senior vice president, marketing and development. “Relief organizations are stating they simply don’t have the resources to respond to the growing flood damage need. “Therefore, DuTrac wanted to be first out of the door to help provide a cash donation and challenge other area residents and businesses to donate to those in need,” he added. DuTrac presented a check for $500 to the Trucks of Love program sponsored jointly by Rainbow Oil--the parent company of the Kwik Stop convenience stores--Cumulus Radio, Queen B Radio and Radio Dubuque Residents and businesses are being encouraged to take household items, cleaning products, diapers and other much needed supplies to any Kwik Stop location where semi tractor trailers--Trucks of Love--and volunteers are on hand to accept in-kind and cash donations. DuTrac is offering its members impacted by flooding a Water Damage Loan Program--a personal loan offered at a reduced rate. DuTrac, based in Dubuque, Iowa, has $465 million in assets.

Missouri league welcomes NYIB conference attendees

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ST. LOUIS (7/29/10)--More than 100 credit union representatives gathered in St. Louis for the National Youth Involvement Board (NYIB) Conference, which started Monday and ends today.
Rosie Holub, Missouri Credit Union Association president/CEO, welcomes attendees of the National Youth Involvement Board Conference on Tuesday.
Missouri Credit Union Association (MCUA) President/CEO Rosie Holub welcomed attendees. “The NYIB is an integral part of the credit union industry, and our future,” she said. “One of our biggest challenges is to engage the younger population as a part of the greater credit union community.” Vantage CU, Bridgeton, Mo., presented a breakout session, “Top of the Class Techniques.” Rachel Parrent, community education specialist, shared new ideas for engaging young students in financial literacy concepts.
Rachel Parrent, Vantage CU, Bridgeton, Mo., presents a breakout session during the National Youth Involvement Board Conference in Missouri. (Photos provided by the Missouri Credit Union Association).
NYIB fosters youth participation in the credit union movement on a national scale. The conference offers four days of workshops for credit union representatives focused on youth. Some of the sessions scheduled to take place at the conference included:
* Becoming Your Younger Members’ Financial Advocate; * Truly Connecting With the Youth Market; * Youthful Products for a Youthful Membership; * The Top 12 Technology Trends; and * A tour of Mad City Money, a financial simulation game for teenagers from the Credit Union National Association.
Speakers included:
* Matt Davis, who was a member of Filene’s inaugural 30 Under 30 group, and author of “The Credit Union Warrior” blog; * Brent Dixon, an adviser for the Filene Research Institute; * Ron Galloway, who directed the noted documentary film "Why Wal-Mart Works & Why That Makes Some People Crazy"; * James Robert Lay, founder of PTP NEW MEDIA; * Kym Moore, education specialist and student program administrator at High Plains FCU in Clovis, N.M.; * Claudine Oriani, chief creative officer of As If Productions; and * Felicia Pope, director of marketing and business development for ArrowPointe FCU, Catawba, S.C.
The conference took place at the Renaissance Grand Hotel in St. Louis.

Census data American Dream hit by recession

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WASHINGTON (7/28/10)--The American Dream of homeownership got a good dose of reality during the recession and housing crisis, with many consumers forced to change their locations--not necessarily for the better, according to new Census data from the 2009 American Housing Survey. The findings, if prolonged through what some say may be a double dip recession, could change spending and savings habits and affect the types of loans consumers seek. Evictions have soared, many people are in a worse home or neighborhood, and households shared their homes with more people than in 2007, said the study, which sampled 60,000 housing units, 45,000 of them occupied (USA Today July 27). The findings:
* The number of households that moved in the past year because they were evicted rose 127% to 191,000. * Roughly 3.1 million households--18% of those who moved in the past year--said their new home is worse. That's an increase of 10% from 2007. About 2.3 million or 13% of households said they are in a worse neighborhood, a 12% increase. * In 2009, only 10% of those surveyed moved to upgrade their home; 5% moved to reduce costs of rent or maintenance. That compares to 12% that moved did so for a better home in 2007, and 4% moved to cut costs. * More households contained five or more people than in 2007. This group rose to 11.3 million or 10% of occupied houses in 2009. Homes shared by two families rose to 2.6 million. The number of homes that are co-owned or co-rented also went up--26% to 3.4 million. * Six million households, or 10%, saw more people move in. Analysts attributed the increases to immigration and kids who boomeranged back home because of high unemployment and the economy. * House sizes were smaller, with the number homes having 4,000 or more square feet dropping 14% during 2009.
How do credit unions adapt their products and services to these trends? A number of credit unions have foreclosure prevention programs and offer low-rate mortgages for eligible members. The Filene Research Institute picked up on the trend in 2009, with a report, "Reimagining the Dream: The Future of Home Ownership," by Denise R. Gabel, Filene chief innovation officer, who challenged readers to identify potential treatments by developing ideas that can reshape the residential lending marketplace while benefiting both borrowers and lenders. The report challenged credit unions to make home loans more flexible, blend the best of renting and owning in rent-to-own models, find ways to lower or remove the down payment, and preserve the borrower's relationship with the credit union when the loan is sold to another lender. Credit unions, said Gabel, should look to members' needs first when they create new products, not the bottom line. According to the Credit Union National Association's Monthly Credit Union Estimates for May, credit unions saw fixed-rate mortgages leading their loan growth with a 0.9% increase over the previous month. Adjustable-rate mortgages grew 0.2% as did home equity loans. Of the $583.4 billion in loans credit unions made in May, fixed-rate, first mortgage rates accounted for 26.6%, while adjustable rate first mortgages accounted for 12.1%, second mortgages, 8.2% and home equity lines of credit, 5.6%.

CU System briefs (07/27/2010)

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* GARLAND, Texas (7/28/10)--Three suspects were arrested after they allegedly picked the wrong spot to try to steal an ATM from Garland, Texas-based America's CU early Tuesday. The ATM is down the street from the Garland Police Station. An off-duty police officer watched them get out of a pickup and wrap a chain around the machine at about 3 a.m. He called for backup. When backup arrived, the four suspects took off in a stolen pickup truck without the ATM. Police chased them into Dallas, where the suspects turned into an alley and abandoned the truck. After a brief foot chase, officers arrested Victor Guajardo, 19; Jose Hernandez, 23, both of Dallas, and Michael Bernal, 22. They will be charged with engaging in organized criminal activity, a second-degree felony. A fourth suspect is still at large. Police said this was the second time since May that the ATM was targeted. (KDAF and The Dallas Morning News July 27) ... * RENO, Nev. (7/28/10)--Vaughn James McCarty, who faced eviction and needed money for bills and his drug and gambling addiction, is in jail on charges of robbing the Reno, Nev.-based Great Basin CU on June 21 and a US Bank branch two days later. McCarty allegedly told tellers at each location that "I need the money," said court records. In the credit union robbery, a man with a pellet gun fled with $775. The bank robbery yielded $1,500. McCarty was arrested after an employee at a casino recognized him from a surveillance photo. While the FBI reviewed his gambling profiles at the casino, McCarty entered the casino and played the slot machines. One of the bills he used was matched to money stolen at the bank, said authorities. He goes on trial Aug. 30 (Reno Gazette-Journal July 27) ... * CHARLESTON, W.Va. (7/28/10)-- Star USA FCU has warned members of an extra-polite phishing scam claiming to come from the Charleston, W.Va.-based credit union. The fake e-mail is addressed to "the cardholder of Star USA FCU" and informs recipients they have one new confidential message. The e-mail instructs recipients to follow an attached link to resolve the trouble. It apologizes for any problem and thanks the recipients for their kind attention to the matter. The credit union issued a press release explaining that authentic financial institutions and credit card processors will never ask for such private details. It warned consumers not to reveal their private data through telephone or e-mail (SPAMfighter News July 27) ... * MADISON, Wis. (7/28/10)--A Lyndon Station, Wis., man was sentenced to 14 months in prison for making false statements to a credit union on loan documents. Trever J. Stefan, 37, was sentenced July 20 after pleading guilty to the charge on April 22. Stefan operated Stefan Homes, a company that sold manufactured and modular homes. To secure a $64,615 loan from the Community CU, La Crosse, Wis., he falsely stated that the purpose of the loan was to purchase a modular home, which would be collateral for the loan. Instead, he sold the home to a customer, who financed the home through another credit union, according to the U.S. Attorney's office for the Western District of Wisconsin (Targeted News Service July 21) ... * YORK, Pa. (7/28/10)--Ruth M. Reisinger-Topley, of Spring Garden Township, Pa., died on July 24 at her home. She was the former general manager of Allis Chalmers York CU and led its transition to become First Capital FCU, in York, Pa. She was the first full-time employee of the York, Pa.-based credit union. Reisinger-Topley retired in 1986 after 26 years of service (York Daily Record July 26) ...

Ireland CU sector to get independent review

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DUBLIN, Ireland (7/28/10)--Ireland’s Central Bank and Financial Regulator have announced plans for an independent review of the credit union sector. Finance Minister Brian Lenihan requested the review, which will be conducted by Grant Thornton. The first phase will look at the financial position of credit unions and what types of risk they have ( July 27). The rules for supervising credit unions had to be adapted to ensure that they remained viable in a new financial environment, according to a statement from the bank and regulator. Grant Thornton will consult with credit unions directly, conducting surveys, interviews and site reviews to collect information. The review will assess how credit unions are run, how they operate and whether the rules and legislation governing them are appropriate. Ireland’s Central Bank had proposed conducting stress tests on some credit unions with loans in arrears and revising the Irish League of Credit Unions’ Credit Unions Savings Protection Fund, which the registrar of credit unions said is inadequate for a widespread economic downturn. The league opposes the stress tests and recent legislative measures related to the condition of credit unions (News Now June 25).

Michigan CUs support hardest-hit fund

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PLYMOUTH, Mich. (7/28/10)--Michigan credit unions continue to support the Help for the Hardest Hit program, a $154 million state program launched by the Michigan State Housing Development Authority (MSHDA) that aims to help eligible homeowners avoid foreclosure, according to the Michigan Credit Union League (MCUL). Of the participants signed up for the program, nine are individual credit unions. Others include Mortgage Center, a credit union service organization, and Member First Mortgage, a credit union-owned mortgage company that represents 89 credit unions. About 24 participants on the lender list are banks. More lenders are added every day to the list, according to Mary Townley, MSHDA director of homeownership (Michigan Monitor July 26). “We appreciate the high level of participation by credit unions so far and their outreach to members,” Townley said. She added that MSHDA has been in touch with several credit unions that are proactively evaluating mortgages they identify as showing signs of delinquency or that have an unemployed member on the loan. “This is a good way to help use get these funds out to homeowners quickly and start saving homes,” she said. Credit unions can sign up for training offered by MSHDA. MCUL is encouraging MSHDA for more information or to discuss individual cases, said the Michigan Credit Union League. For more information, use the link.

Cheney to IFox Biz NewsI CUs have history of biz loans

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MADISON, Wis. (7/28/10)--Credit unions are seeing signs of improvement for members as they strive to come out of the recession, and credit unions want to do more to help by providing more small-business loans, Bill Cheney, president/CEO of the Credit Union National Association (CUNA), told Fox Business News Monday. “We’re seeing a lot of signs of improvement actually,” Cheney said, when asked how he thought consumers were faring. “We’ve seen delinquency rates at credit unions decline and loan losses decline--a lot of good signs.” An accompanying graphic on the show indicated how credit unions nationwide have significantly lower delinquency and net charge-off rates than banks. Credit unions are the only lenders that are aggressively lending wherever they can--to small businesses in particular, Cheney said. When asked about the obstacles to passing a pending amendment to an economic stimulus bill in Congress that would lift credit unions’ small business lending cap to 27.5% of total assets from the current 12.25%, Cheney pointed to banks. “The only real hang-up is banks’ opposition,” he said. “Bankers aren’t lending and they don’t want credit unions to lend, either.” If the amendment passes, CUNA estimates that, in the first year, credit unions could lend $10 billion and create 108,000 jobs to help the country come out of the recession, Cheney added. He also pointed out that the earliest credit unions were making business loans 100 years ago, and that today---in some markets--credit unions are the No. 1 small-business lenders. “It’s common-sense legislation,” Cheney said. “There is no good policy argument not to do it, and we think it ought to happen soon.” To see the video, click on the button.

Retained earnings absorb Southeast Corporates OTTI

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TALLAHASSEE, Fla. (7/28/10)--Southeast Corporate FCU recorded a $795,662 other than temporary impairment (OTTI) charge in its financials for June. However, the corporate's retained earnings were sufficient enough to absorb the loss, with no impact to member capital, the corporate said. Southeast Corporate Executive Vice President Rob Schleiter made the announcement Monday in a press release, which notedthat the corporate has steadily built retained earnings after several rounds of belt-tightening. Before posting the OTTI, Southeast reported June earnings totaling $173,794. After posting OTTI, it closed June with a net loss for the month of $621,868. Despite the additional OTTI recorded, the corporate said its year-to-date earnings total $767,164. "This serves as first loss protection for membership capital, which currently totals $59.9 million at June 30, 2010" the press release said.

CU 24 re-elects Guerry for third term as chairman

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TALLAHASSEE, Fla. (7/28/10)--Credit Union 24 (CU 24) announced that its board has elected Mansel Guerry for a third consecutive year as chairman, a first in CU 24 history. It also elected two new board members, Dan Wollin and Becky Hulett. Guerry is president of Mississippi Employees FCU, Ridgeland, Miss. He began his tenure on the board in 1998. Wollin is CEO of PCM Employees CU, Green Bay, Wis. Hulett, chief financial officer, Florida Telco CU, Jacksonville, was elected as secretary/treasurer of the board. Bradley Blake, president/CEO, Florida State FCU, Tallahassee, Fla., will be vice chairman. Bradley previously served as secretary/treasurer. Shareholders also re-elected two board incumbents: Adrian “Casey” Duplantier Jr., CEO of 1st Advantage FCU, Newport News, Va., and Joan Nolan, vice president of operations support for IBM Southeast Employees FCU, Boca Raton, Fla. CU 24 is a credit union-owned ATM and point-of-sale network.

Members drop suit vs. CU related to mortgage tax

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NEW YORK (7/27/10)--The dismissal in May of Hudson Valley CU's lawsuit contesting New York's mortgage recording tax (MRT) has also resulted in the end of a class action suit against the credit union for charging the tax to its mortgage borrowers. Three credit union members who paid the tax required under New York law have dropped their suit in the U.S. District Court for the Southern District of New York against the credit union and title insurance companies (Times Herald-Record July 24). Their suit claimed that the taxes were unlawful under the Federal Credit Union Act and should not have been charged because the credit union knew the taxes were illegal (News Now June 4). The members filed a voluntary dismissal on Thursday. Their lawyer, Mark Kindall of Izard Nobel, a Hartford, Conn., law firm, told the Times Herald-Record that the judge's ruling in May to dismiss the credit union's case against the state made proceeding with the class action suit substantially more difficult. They had sought the refunding of three times the tax paid to have their mortgages recorded with their counties. The central argument of their case maintained the Federal Credit Union Act prohibits such taxes on them. The Poughkeepsie, N.Y.-based credit union filed suit in May 2009 against the New York State Department of Taxation and Finance saying the credit union is exempt from the MRT. However, State Supreme Court Justice Judith Gische dismissed the credit union's challenge on May 20, thus killing the central argument in the borrowers' suit. The credit union has appealed the ruling ( May 24).

Suit claims defunct CUs embezzlement required accomplice

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BRIDGEPORT, Conn. (7/27/10)--More charges and countercharges have been filed in a U.S. District Court in Bridgeport, Conn., related to a decades-long, $12 million embezzlement of funds that prompted the collapse of New London (Conn.) Security FCU in July 2008. The latest countersuit, by Wells Fargo Advisors, alleges that the credit union's long-time investment adviser, Edwin F. Rachleff, had help from inside the credit union. Rachleff , an employee of investment firm A.G. Edwards & Sons, had an office at the credit union and allegedly funneled the investments of members into Elmore Shoe Co., a business owned and operated by Rachleff as part of the fraud, said the complaint. The embezzlements occurred from 1988 until July 2008, when the fraud was discovered. Rachleff committed suicide the day the credit union was shuttered. Wells Fargo Advisors is the company succeeding in interest to Wachovia Securities, which bought the A.G. Edwards investment firm. Wells Fargo's third party complaint, filed in the U.S. District Court for the District of Connecticut on March 29, faulted the credit union's board and manager for not discovering the fraud and providing safeguards and its external auditors, Ed Lorah & Associates and Beller Shepatin & Co., for allowing the fraud to go undetected. The countersuit noted that "Rachleff's misconduct was amateurish, even obvious, but it went undeterred for years, even decades, due to the third party defendants' lack of care." "Rachleff's eyesight was seriously compromised, and ... he was legally blind," the complaint said. "The vision issue created a need for Rachleff to have an accomplice to effect the fraud," it added, saying he "looked no further than New London's management to find 'eyes' to perpetrate his plan." The document alleges that Mary Richards, New London's manager at the time, "manually typed the statements bearing the indicated, but fraudulent and fabricated, investment entries and investment returns ... every month, month to month, year to year." On July 6 one of several memorandums in support of a motion to dismiss the countersuit was filed by board members of the credit union. It noted that if the fraud was that obvious, "Wells Fargo was in a much better position to monitor Mr. Rachleff's conduct. In essence, the employer of the thief has now sued the victims, claiming that the victims owed a duty to the thief's employer to prevent the thief from stealing from them." The countersuit responds to a suit brought by the National Credit Union Administration, which said the National Credit Union Share Insurance Fund lost $10 million from the credit union's failure.

Arrowhead Central lays off 27 employees

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SAN BERNARDINO, Calif. (7/27/10)--Regulators laid off 27 employees of Arrowhead Central CU Friday at its main office in San Bernardino, Calif., and at some of its 19 branches. The layoffs were made to “maintain service while protecting member assets,” John McKechnie, director of congressional and public affairs for the National Credit Union Administration (NCUA), confirmed with News Now Monday. As conservator of Arrowhead, NCUA posted its corrected version Friday of the $876 million asset credit union’s second quarter Call Report. NCUA says it showed a continued decline in Arrowhead Central’s financial condition from loan portfolio losses (News Now July 26). NCUA placed the credit union into conservatorship on June 25 due to its declining financial condition. The credit union has continued serving its members as NCUA has worked to stabilize the institution’s operations. Earlier this month, the agency fired four former Arrowhead Central CU employees, including CEO Larry Sharp, who had been placed on temporary administrative leave when NCUA assumed control of the credit union (News Now July 16). “Arrowhead Central CU is open for business and has continued uninterrupted service to members since the June 25 conservatorship,” McKechnie told News Now last week. “The credit union is operating normally, and member funds are federally insured up to $250,000. NCUA’s principal goal in conserving Arrowhead CU is to protect the members and preserve their assets. “Given that losses at Arrowhead were continuing, and the credit union was not reversing negative trends and was not on a trajectory to return to profitability, the most prudent course of action was for NCUA to assume control of Arrowhead,” he added. “NCUA is conducting a thorough review of Arrowhead’s operations, and will make a determination about the future of the institution when that review is completed.”

Economic Forum speaker had key role in Census improvements

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PLANO, Texas (7/27/10)--Kathleen Cooper, an economist and senior fellow at Southern Methodist University in Dallas, will speak at Southwest Corporate FCU’s 33rd Annual Economic Forum, Oct. 26. Online registration begins today. In addition to providing a forecast on U.S. economic trends for credit unions, Cooper also will discuss the impact of innovation on the economy. She has served on the Commerce Department’s advisory committee for Measuring Innovation in the 21st Century Economy. Cooper was under secretary for Economic Affairs of the U.S. Department of Commerce from 2001 to 2005, where she oversaw the activities of the Census Bureau and the Bureau of Economic Analysis. She helped to advocate changes that netted a 72% “mail-back rate”--up from 69% in 2000 and 65% in 1990. Even though the once-a-decade census is constitutionally mandated, it helps to determine seats in the House of Representatives and serves as a guide as the federal government divvies up some $400 billion to support local infrastructures, the process is often viewed with public skepticism, Cooper said. In the past, most households received a short census form that took only minutes to complete. About one-sixth of households now receive the “long form,” which contained nearly 50 questions and asked about mortgage payments, what time residents leave to go to work and indoor plumbing. The “long form” questions are necessary to help understand the condition and character of America’s population, but the process still seems intrusive to some, Cooper said. Cooper recommended "de-linking" the long form from the head counting process more commonly associated with the census. The long form process, now known as the American Community Survey, was implemented several years ago. The survey takes a more statistical approach to building the national portrait. This year, all households received only the shorter, 10-question census form. Between the shorter form and an advertising campaign to promote awareness, participation continued to climb. The more people who returned the forms, the fewer door-to-door census workers were needed to complete the mandated count, Cooper said. For more information, use the link.

Growth of CUs topic of three newspaper reports

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MADISON, Wis. (7/27/10)--The growth of individual credit unions across the nation was the topic of the three recent newspaper reports. Summit CU, Madison, Wis., through a series of mergers and by growing its existing business, has become the largest credit union in Wisconsin, with assets of roughly $1.5 billion, according to the Milwaukee Journal Sentinel (July 24). In June, Summit finalized a merger with State Central CU in West Allis, Wis., acquiring nearly $69 million in assets and adding four branches in the metropolitan Milwaukee area. Summit can keep new potential markets in sight because its state charter allows it to add any person in the state who wants to become a member, the newspaper said. Despite the recession, some Ohio credit unions still are seeing growth, according to the News Herald (July 26). Geauga CU, a $27.6 million asset, Burton, Ohio-based credit union, has seen an upsurge in loan requests during the past year, although it hasn’t been able to grant them all. Eaton Family CU, a $39.6 million asset, Euclid, Ohio-based credit union, is continuing to see an increase in demand for personal loans and its credit card line, the Herald said. Some Maryland credit unions are giving banks more competition for deposits and loans, according to The Capital (July 25). U.S. Coast Guard Community CU, a $33.3 million asset, Baltimore-based credit union, told the newspaper its low interest rates on loans, higher rates on savings accounts, and return of all profits to members are features that “make credit unions a great deal in turbulent times for banks.” Rod Staatz, CEO of State Employees CU in Linthicum, Md.--the state’s largest credit union--told the paper that although credit unions tend to be more conservative than banks, his credit union is growing. To read the articles, use the links.

City-County FCU to be absorbed by Wings Financial

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MINNEAPOLIS (7/27/10)--City-County FCU, Minneapolis, will be acquired by Wings Financial CU, Apple Valley, Minn., according to local media reports. City-County has seven branches in Hennepin County, Minn., and $466 million in assets. The credit union has been enduring some financial hardships, said The Star Tribune (July 21). City-County’s net worth was 2.98% at the end of March, according to National Credit Union Administration call reports the newspaper cited. Wings Financial has $2.5 billion in assets and 19 branches, with eight in Minneapolis and St. Paul, Minn. The credit union anticipates it will keep about two-thirds of City-County’s 145 employees, Wings CEO Paul Parish told the newspaper. At the end of June, Wings also announced it was merging with Highgrove CU, a $37-million-asset credit union in St. Paul. The two mergers give Wings Financial a larger presence in the Minneapolis-St. Paul areas, the Tribune added.

N.Y. Foundation holds statewide fin ed conference

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The New York Credit Union Foundation offered a free one-day financial education training program using interactive distance learning. More than 210 individuals participated. (Photo provided by the New York Credit Union Foundation)
ALBANY, N.Y. (7/27/10)--The New York Credit Union Foundation offered a one-day financial education training program using interactive distance learning for credit unions. More than 210 individuals participated in the teleconference, which was broadcast from Cornell University in Ithaca, N.Y. The event was broadcast to 19 satellite locations. Most of the locations were Cornell Cooperative Extension offices. The program offered train-the-trainer sessions for the National Endowment for Financial Education (NEFE) High School Financial Planning Program, and presentations on four financial topics. The topics included investing in today’s economy, new credit card regulations, lessons on avoiding debt and an online Internal Revenue Service program, Understanding Taxes. The sessions were offered to credit union staff, volunteers, educators and representatives from community-based organizations. NEFE New York sponsors included Liverpool (N.Y.) Central Schools FCU; Mid-Hudson Valley FCU, Kingston; MONEY FCU, Syracuse; and Municipal CU, New York City.

U.K. s Unity Trust Bank launches CU awards

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Marlene Shiels, World Council of Credit Unions director, explains the importance of the global credit union movement to dignitaries in the United Kingdom's House of Lords, as Damian Hinds, chair of the Parliamentary All Party Group on Credit Unions looks on. (Photo provided by the World Council of Credit Unions)
LONDON (7/27/10)--To help publicize the positive role credit unions play, particularly in light of the recent global economic crisis, the United Kingdom’s (U.K.'s) Unity Trust Bank last week launched the country’s first National Credit Union Awards for Excellence program. World Council of Credit Unions (WOCCU) Director Marlene Shiels, chief executive of Capital CU in Edinburgh, Scotland, participated in the launch of the program, which will recognize its first round of honorees in February 2011. "Every day, more than 49,000 credit unions worldwide provide products and services to their members, especially those demonstrating the greatest financial need," said Shiels to assembled dignitaries of the U.K.’s House of Lords Thursday. "These awards are a tribute to those credit unions and individuals who have gone above and beyond on behalf of their members.” The National Credit Union Awards for Excellence, which Unity Trust organizers say have been modeled after similar programs in Canada and the U.S., will recognize top performers in the areas of marketing, community mobilization, credit union education, fundraising and active partnerships, as well as provide an award to a single benefactor of the U.K.’s credit union movement. The top honor, as drawn from all six categories, is named after Edward A. Filene, the Boston merchant who helped pioneer the U.S. credit union movement. Winners in each category will receive trophies and cash awards. “These awards emphasize that our historic support for credit unions remains a long-term commitment and a fundamental building block in our strategy of promoting key social initiatives such as tackling financial and social exclusion,” said Kevin Turmore, managing director of Unity Trust, which provides banking services to more than 48% of the U.K.’s credit unions. Although not formally a part of the awards judging panel, WOCCU representatives have been invited to participate in next year's ceremony recognizing award winners.

CU System briefs (07/26/2010)

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* MESA, Ariz. (7/27/10)--A former employee of Phoenix-based Arizona FCU employee was arrested Wednesday and charged with identity theft by Mesa police after allegedly applying for credit with the personal information of four members. Esther J. Hulse, 46, allegedly used a member's identity and her own address to apply for credit cards. The thefts were discovered when a credit union member received a call June 22 from Bank of America, thanking her for applying for a credit card online. The call prompted her to review her credit report, where she discovered someone had used her name, birthdate and Social Security number for credit cards from Capital One and Bank of America. Hulse owns the residence at the address given to the card issuers. The victim recognized Hulse's name as the credit union employee who helped her refinance her home. (The Arizona Republic July 22) ... * FORT WAYNE, Ind. (7/27/10)--An e-mail scam is using the name of Fort Financial CU, a $180 million asset credit union in Fort Wayne, Ind., said Indiana State Police in a press release last week. The e-mail informs recipients that unusual or potentially high risk activity has been observed in their account and instructs them to download a form attached to the e-mail and open it in a Web browser. The form asks for full name, credit/debit card number, card expiration date, card verification number and its PIN. The credit union doesn't solicit its members to verify their account information by e-mail and phone ... * HARRISBURG, Pa. (7/27/10)--LANCO FCU, based in Lancaster, Pa., is reporting that fraudulent checks using the credit union's routing number have surfaced in the Cincinnati, Ohio area, according to the Pennsylvania Credit Union Association (PCUA). Fraudsters are using the fake information to purchase goods at department and grocery stores, said PCUA (Life is a Highway July 26) ... * HARRISBURG, Pa. (7/27/10)--Erie (Pa.) FCU CEO Norb Kaczmarek was honored Saturday with a retirement dinner attended by nearly 200 people, according to the Pennsylvania Credit Union Association (PCUA). Among those speaking at the event were the credit union's incoming CEO, Mary Beth Wilcher; PCUA Board Chairman Ray Brunner; and PCUA President/CEO Jim McCormack. Kaczmarek's career began with Erie FCU in 1969. He has served on PCUA's Board of Directors since 1997 and was chairman 2005-2007. He continues to serve as a PCUA board member, ex-officio member of the Pennsylvania Credit Union Foundation board, and treasurer of PaCUSC board (Life is a Highway July 26) ...

Filene welcomes five research council members

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MADISON, Wis. (7/27/10)--The Filene Research Institute welcomed five new credit union CEOs to its research council. The council helps decide which topics Filene should research and which volunteers will pilot Filene innovations. It also works with Filene’s outside researchers to provide access and insight to the credit union system. The new members are:
* Gerry Agnes, Elevations CU, Boulder, Colo. Agnes previously was with Altura CU, Riverside, Calif., where he worked as president/chief operating officer, chief financial officer, and president of its subsidiary holding company. * Mary Madden, Hudson Valley FCU, Poughkeepsie, N.Y. She has worked more than 20 years to educate people on the value of belonging to nonprofit financial cooperatives. She has led Hudson Valley’s operations, marketing, lending and human resources departments during her tenure. * Lily Newfarmer, Tarrant County CU, Fort Worth, Texas. She has served in the credit union industry for 25 years and chairs the Texas Credit Union Foundation--where she has served as a board trustee since 2001. * Eugene Scymczak, Educators CU, Racine, Wis. He has served as loan officer, vice president of consumer lending and senior vice president of operations before becoming president in 1994. He started as a teller in 1972. * Launi Skinner, First West CU, Surrey, B.C. She has more than 20 years of business experience in the U.S. and Canada, including a term as president/CEO of 1-800-GOT-JUNK? Skinner served as president of the Starbucks U.S. stores division. She also was included as one of “Four Women to Watch” in Fortune Magazine’s 50 Most Powerful Women feature.
They join 27 members on the council from credit unions across North America. For more information, use the link.

CU System briefs (07/23/2010)

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* ORLANDO, Fla. (7/26/10)--A retired Florida police officer was sentenced Wednesday to 20 years in prison on two money laundering charges related to the theft of $200,000 in Federal Emergency Management Agency (FEMA) funds that she deposited into accounts at Orlando FCU. Amy Bretches, 49, was found not guilty in a federal court of a third money laundering charge. Bretches opened savings and checking accounts at the credit union for herself and the Orlando Police Department Gang Resistance Education and Training. She used the police department's address and the city's taxpayer identification number, listed the city as a grant recipient and herself as the key contact. The accounts were opened in 2000 and a FEMA voucher for $200,000 was transferred into one of the accounts in 2004 (Orlando Sentinel July 22) ... * ONTARIO, Calif. (7/26/10)--Three directors have been elected to Financial Service Centers Cooperative’s board. Ron Westad, president/CEO of Arizona FCU, Phoenix, will serve a second term on the board. New additions are Bob Schumacher, MountainCrest CU, Arlington, Wash., and Ken Burns, Patelco, San Francisco. Board officers include Chairman Steven Stapp, president/CEO of San Francisco FCU; Vice Chairman John Fiore, president/CEO of Motorola Employees CU, Schaumburg, Ill.; Treasurer Patricia Smith, president/CEO of Unitus Community CU, Portland, Ore.; and Secretary Roger Michaelis, president/CEO of iQ CU, Vancouver, Wash. Other members of the board include Kevin Foster-Keddie, president/CEO of Washington State Employees CU, Olympia, Wash., and Norman Okimoto of Hawaiian Tel FCU, Honolulu ... * PITTSFIELD, Mass. (7/26/10)--Greylock FCU's Board of Directors has appointed Marilyn Sperling as president/CEO of the $1.2 billion institution, effective immediately ( July 23). Sperling, who formerly was senior vice president of the $1.2 billion asset credit union, had been appointed as interim president/CEO in June ... * RICHMOND, Va. (7/26/10)--Richmond-based Virginia CU last week offered 18 teens financial education in a five-day money camp at the Tuckahoe library branch in Henrico County. The credit union's financial education director, Cherry Hedges, taught the five one-hour sessions and noted that the students had to come up with a budget for $100 that included an expense for savings. "When I looked at everyone's budget, no one had taken out for savings," she told the Richmond Times-Dispatch (July 22). "Saving money is hard; it is a discipline. You have to train and make a conscious effort. You need to rewire your brain to think: 'When I get money, I'm going to save it,'" she said ...

CU creates Sharia-compliant products for Muslim members

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TOTOWA, N.J. (7/26/10)--North Jersey FCU said it is the first U.S. credit union to offer mortgages for the underserved Islamic population that are compliant with Islamic Sharia law, which prohibits the payment or acceptance of interest fees for the lending and accepting of money. The mortgage loans are offered through Reston, Va.-based Guidance Residential and are approved by an independent board of Sharia scholars. The loans also comply with the federal truth-in-lending law, but are different from conventional mortgage loans (The [Hackensack, N.J.] Record via June 29). Although sharia-compliant mortgages can be structured in several ways, Guidance Residential uses a method in which the buyer and the lender create a partnership to purchase a house. Over time, the borrower buys out the lender’s share--with the lender obtaining a previously agreed-upon profit, the newspaper said. An estimated 600,000 Islamic residents live in New Jersey’s Bergen, Passaic and Hudson counties. Islamic law, known as Sharia, is the framework of ethical guidance that Muslims follow. It rules over many aspects of life, but has specific principles governing finances, said the New Jersey Credit Union League (The Weekly Exchange July 19). One way the $183 million asset, Totowa, N.J.-based credit union is fulfilling its mission is through establishing an Islamic finance division. The division also offers mutual funds that preclude investments in alcohol, gambling, pork or pornography, James Giffin, North Jersey vice president of sales and marketing, told the paper. “Our job is to serve the underserved,” Giffin told the New Jersey league. “And after nine months of study and research, we found out how to do it.” The credit union is awaiting regulators’ approval of its plans to offer deposit accounts for Islamic members so they could be paid in dividends instead of interest, the paper said. North Jersey FCU has to respond to the National Credit Union Administration’s questions by Sept. 30. Giffin who expects a decision by year-end, told the paper he doesn’t anticipate any problems. “I haven’t had one member call to complain about the program, and it’s been on our website now for some time,” Giffin told the league. “I don’t think we will have any reputational risk within our field of membership. After all, everyone lives here together in the same community.” With information on credit union regulations and Sharia law gathered, and in collaboration with local religious leaders and those of the local Muslim community, the credit union developed products and services that remain Sharia-compliant, the league said. They include mortgages in partnership with Guidance Residential, no-interest checking accounts with a debit card, and mutual funds in partnership with New England Financial. However, Sharia-compliant auto loans are not on the horizon at this time. “The compliance people haven’t figured out how to do car loans,” Giffin told the paper. To read the articles, use the link.

2011 Youth Week savings theme is Music

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MADISON, Wis. (7/26/10)--“Music” is the theme for the 2011 National Credit Union Youth Week and Saving Challenge, and the Credit Union National Association (CUNA) is asking credit unions to come up with a “musical” slogan. Some slogan ideas include:
* Sing a song of saving; * Be a saving rock star; and * Credit unions sing and dance to your tune.
CUNA is asking credit unions to send their feedback about slogan ideas and suggestions by Aug. 4. Suggestions can be sent to The credit union with the winning suggestion will receive a $50 gift certificate toward 2011 Youth Week products. Youth Week will be held April 17-23. During the 2010 Saving Challenge, about 350 credit unions reported receiving deposits from 168,438 young members, including 10,385 who opened new accounts for 2010. This year’s results average out to $147 deposited per child. In 2009, more than $26 million savings total averaged $190 deposited per child, up from $87 per child in the 2004 inaugural year. “Get in the Savings Game” was the theme for the 2010 Youth Week held April 18-24.

Southwest Corporate asks SandP to pull rating

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PLANO, Texas (7/26/10)--At the request of the Plano, Texas-based Southwest Corporate FCU, Standard & Poor's (S&P) Wednesday pulled out its BBB-/A-3 counterparty credit rating on the corporate. "As part of ongoing efforts to reduce operating expenses, Southwest Corporate requested that Standard & Poor's withdraw the counterparty rating," confirmed Melissa Wardell, senior vice president and chief financial officer at the corporate. "Southwest Corporate does not anticipate needing the rating," she told News Now, adding that the corporate "previously eliminated other external ratings to also reduce operating expenses." S&P, a credit rating agency based in New York, said a counterparty credit rating evaluates the creditworthiness of both public and private financial institutions and financial service entities. The rating demonstrates financial strength, improves leverage in financial transactions, creates a standard that allows for peer comparisons, and enhances debit issuance in the credit markets, giving borrowers a range of placements of their debt instruments, according to S&P.

Arrowhead Centrals corrected 2Q results posted by NCUA

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ALEXANDRIA, Va. (7/26/10)--The National Credit Union Administration (NCUA), as conservator of Arrowhead Central CU, posted its corrected version Friday of the $876 million asset credit union's second quarter Call Report. NCUA says it showed a continued decline in Arrowhead Central's financial condition from loan portfolio losses. The call report corrects earlier errors by the San Bernardino, Calif.-based credit union's previous management, and reveals a loss of $1.4 million year to date due to loan loss expenses, NCUA said in a press release. Arrowhead Central’s net worth ratio declined to 3% on June 30, from the reported level of 3.36% on March 31. Under standards set forth in the Federal Credit Union Act, Arrowhead Central is "significantly undercapitalized" for a fourth consecutive quarter, NCUA said. Assets decreased about $67 million since March 31, and loans dropped about $40 million in the same time period. NCUA placed Arrowhead Central into conservatorship on June 25 due to its declining financial condition, NCUA said. The credit union has continued serving its members as NCUA has worked to stabilize the institution's operations. Arrowhead Central previously "posted inaccurate information that distorted the true financial condition of the institution," said NCUA in the press release. The agency noted the loan loss reserve account was not adequately funded in the first quarter 2010 financial report. The corrected statement indicates Arrowhead Central’s loan loss reserve increased from $49.5 million on March 31, to nearly $53.6 million as of June 30. The related loss reserve expense has risen from more than $6 million on March 31 to nearly $19 million year-to-date, NCUA explained. The $12 million increase in expense is the result of funding the loan loss reserve account in accordance with methodology approved by the credit union’s external CPA review in October 2009. In March, prior management did not comply with the accounting method, thus understating its expenses and misstating income. The corrected funding has eliminated all earnings incorrectly previously shown by the former management team, revealing the $1.4 million loss year-to-date, NCUA said. NCUA reviewed Arrowhead Central's records, the agency determined the credit union's former management team did not charge off loan losses in a timely or consistent manner, and that historical ratios did not consistently reflect actual losses experienced. The team also chose to revise loan loss reserve methodology less than six months after it was reviewed by an external auditor, which reduced the funds needed for known and potential losses. "Had Arrowhead Central's management acted in accordance with approved and validated methodology, losses would have increased and earnings would not have shown a positive trend as of March 31," NCUA said. Since mid-2009, NCUA has required Arrowhead Central to submit an acceptable net worth restoration plan. The credit union's management team tried four times and was "unable to submit a plan based on reasonable assumptions and showed positive earnings that would restore net worth, despite specific guidance from both federal and state regulators about deficiencies in their submitted plans." NCUA said it and the state regulator, the California Department of Financial Institutions provided instructions, information and guidance but the credit union's team did not properly identify and monitor loan modifications to ensure they complied with generally accepted accounting principles (GAAP) and provided relief or assistance to the members." The financial results are available on NCUA's website, Financial Performance Report section. Use the resource link and insert the credit union’s name in the field, then click on "Financial Report" and follow the instructions.

Altura CU offers budget-impasse emergency loans

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RIVERSIDE, Calif. (7/26/10)--Altura CU Thursday announced an Emergency Loan Program to provide assistance to Riverside County workers who may have their pay temporarily reduced or delayed due to California’s budget stalemate. The state legislature did not pass a budget by the start of the new fiscal year on July 1. As a result, about 1,100 state workers stopped receiving pay on July 1, and Gov. Arnold Schwarzenegger ordered wages for about 200,000 other state workers cut to $7.25 per hour, the federal minimum wage, until a budget is passed. So far, state Controller John Chiang has not complied with that order, despite a state appellate court decision on July 2 ordering him to do so, the credit union said. “State workers get caught in the crunch when a budget isn’t passed on time. As a credit union, we are focused on helping people, particularly our members,” said Jennifer Binkley, Altura chief operating officer. “We developed the Emergency Loan Program to provide state workers with the cash they will need to pay their own bills if their pay is delayed or reduced. The program is open to state government employees who are current Altura members as well as nonmembers eligible for membership.” The Emergency Loan Program offers:
* 0% annual percentage rate (APR) for 90 days on an emergency loan; * No payments for 90 days; * A 12.99% APR after 90 days; * No prepayment penalties; and * No loan application fee.
The requirements and terms for the Emergency Loan Program include:
* The borrower must be an existing or new Altura member with payroll direct deposit; * The member must provide proof of delayed or reduced pay, and a copy of the last payroll stub; * Maximum loan is limited to three-month payroll advance based on current pay; * Maximum loan term is 18 months; and * Limited loan funding is available.
Several other credit unions have announced emergency loans to help state workers caught in state budget impasses. These include The Golden 1 CU, Sacramento; Virginia CU, Richmond, Va.; North Carolina State Employees’ CU, Raleigh, N.C.; Honolulu State FCU and more than 20 Pennsylvania credit unions.

Former president of Wis. Federation of Cooperatives drowns

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MARQUETTE, Mich. (7/23/10)--Rod Nilsestuen, secretary of Wisconsin's Department of Agriculture, Trade and Consumer Protection and a long-time former president/CEO of the Wisconsin Federation of Cooperatives, drowned Wednesday evening while swimming in Lake Superior off Michigan's Upper Peninsula (Wisconsin State Journal and July 22). He had been on vacation, working for Habitat for Humanity in northern Michigan, an activity he had performed every summer. Nilsestuen, 62, had been secretary of the state agency since 2003. He served as president of the cooperatives organization from 1978 to September 2002. He helped establish the Wisconsin Milk Marketing Board, the Wisconsin Corn Promotion Board and the Wisconsin Soybean Marketing Board, and was a founding chairman of the National Rural Cooperative Development Task Force. He is survived by his wife and three sons. Funeral services will be Tuesday at Bethel Lutheran, 312 Wisconsin Ave., Madison, Wis., with visitation at 10 a.m.-1 p.m. and a memorial service at 1 p.m.

CUAC selects search firm for new CEO

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DENVER (7/23/10)--The board of directors of the Credit Union Association of Colorado (CUAC) has selected executive recruitment firm O’Rourke & Associates to conduct the search for a new president/CEO of the organization. Interim CEO Pete Kirchhof, former CUAC senior vice president of government affairs, is leading the association during the transition. “O’Rourke & Associates has a reputation for finding the most committed and talented people for credit union management, and we are confident it will identify and recruit the most capable person to lead the association,” said Mike Williams, chair of the CUAC board and president/CEO of Colorado CU, Littleton. Based in San Francisco, O’Rourke & Associates specializes in executive searches for credit unions backed by the resources of RSM McGladrey Inc. and the California Credit Union League. The CEO search committee is chaired by Dave Maus, president/CEO of Public Service CU, Denver; and comprised of committee members: Gerry Agnes, Elevations CU, Boulder, president/CEO; Steve Pearson, Fellowship CU, Lamar, president/CEO; Sundie Seefried, Eagle Legacy CU, Arvada, president/CEO; and John Uchida, Space Age FCU, Aurora, president/CEO. Committee members will work with the search firm to identify potential and with the CUAC board to determine who will be contacted and interviewed. “The search for a CEO is expected to take several months,” Williams said.

PCUA board to realign governance

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HARRISBURG, Pa. (7/23/10)--The Pennsylvania Credit Union Association (PCUA) board unanimously approved a recommendation of its Dues and Governance Task Force to realign association board seats to ensure representation from all asset-size credit unions. Beginning with the May 2012 election cycle, directors will be elected by asset category instead of district. The number of directors will remain at nine with three elected from credit unions with less than $30 million in assets, three from $30 million to $100 million in assets and three from credit unions with more than $100 million in assets, said PCUA (Life is a Highway July 22). “Moving from a geographic to an asset-based board of directors completes the process of the restructured board governance that began in 2005 when the board was downsized to nine from 21,” said Bill Lavage, chairman of PCUA’s Dues and Governance Task Force. “It was a feeling of the task force that credit unions of a similar asset size have more in common with each other than those that are in a particular district. This new structure will ensure that all sized credit unions are represented on the association board now and in the future,” Lavage added. Details of the new model are being finalized. The association will need to change its bylaws to implement it.

Clearview FCU to drop trademark suit

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MOON TOWNSHIP, Pa. (7/23/10)--Clearview FCU (CFCU) officially withdrew its trademark infringement lawsuit against a Florida debt settlement company this week after the company agreed to change its name from Clearview Credit Inc. (CCI) back to its previous name of Debt Reduction America Inc. “They [Debt Reduction America Inc.] have filed all the paperwork with the state of Florida to do that [change the name back],” Ralph Canterbury, Clearview vice president of marketing, told News Now Thursday. “We have just withdrawn our complaint against them.” “They satisfied our complaint, so we agreed to drop it,” he added. “They did everything we asked them to do.” CFCU, based in Moon Township, Pa. has $619 million in assets. The credit union had alleged that the debt settlement company was targeting the credit union's 79,000 members via phone and mail solicitations “in an apparent attempt to trade on the goodwill established by CFCU in connection with the Clearview marks,” and causing confusion in the market place, according to the suit filed in May in U.S. District Court in Pittsburgh (News Now May 25). CCI’s solicitation of CFCU’s members “has, in fact, caused several instances actual confusion in the marketplace as to the source and/or sponsorship of CCI’s services,” the complaint added. Solicited credit union members “learned that CCI’s solicitations did not originate from CFCU only upon being reassured by CFCU representatives that the solicitations were not authorized or provided by CFCU and that CCI is in no way associated or affiliated with CFCU.”

Southwest CUNA Management School graduates 41 execs

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DALLAS (7/23/10)--Forty-one credit union executives--33 of them from Texas--graduated yesterday from Southwest CUNA Management School (SCMS) in Fort Worth, Texas. Graduates also represented Oklahoma, Missouri, Louisiana, Kansas and Arkansas. CMS is a three-year course of study accredited by the Credit Union National Association and recognized or innovative, intense, hands-on professional development, said the Texas Credit Union League. The program offers courses designed to challenge, broaden financial industry knowledge, and sharpen management skills. Tim Reibe, collections supervisor with Citizens FCU in Big Spring, Texas, said the opportunity to learn from and share experiences with an elite team of instructors and peers has expanded his level of awareness and knowledge of the credit union industry. “SCMS has made me a well-rounded manager and exposed me to a collective group of dedicated and resourceful professionals whom I consider to be experts in their field,” Reibe added. Dick Ensweiler, SCMS oversight committee member and president/CEO of the Texas league, noted that "the class of 2010 has shown tremendous discipline and dedication. During their three years in the program, they’ve demonstrated their ability to face challenges and overcome obstacles." SCMS is held at Texas Christian University in Fort Worth. Classes are led by university/college faculty, credit union industry leaders, and professional consultants. To graduate, students must develop a real-world strategic business plan for their own credit union.

IBankrateI study Consumers look to debit card rewards

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NEW YORK (7/23/10)--Consumers nationwide can obtain good rewards from using their debit cards from financial institutions, including credit unions, as long as they choose wisely, according to’s 2010 Debit Card Rewards Study (PR Newswire July 19). Some of the findings include:
* Sixty-five percent of the programs surveyed offer rewards only on debit purchases that require a signature; * Thirty percent of the programs offer rewards on both signature and personal identification number (PIN) debit transactions; * The range for rewards on signature purchases was between 0.2% and 3%; * The range for rewards on PIN purchases was significantly lower, between 0.1% and 0.5%; * Ten percent of the programs surveyed had higher payouts for specific categories of purchases such as groceries, gasoline, dining and travel; * Half of the cards surveyed had no annual fee. Of those that did cost money annually, the most common fee was $25.
“As many Americans face mounting credit card debt, consumers may want to look into their options with debit rewards programs,” said Greg McBride, senior financial analyst for “Though the debit rewards card programs don't often offer as much as their credit card competitors, they can offer a nice boost without the fear of getting in over your head with debt.” Bankrate looked at programs offered by the largest banks and thrifts in large markets nationwide and those offered by the biggest credit unions. Forty different offerings were evaluated.

Phishing alert E-mail claims to be from NACHA

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WASHINGTON (7/23/10)--A phishing e-mail scam claiming to be from NACHA, the electronic payments association, has prompted an alert to key players, including financial institutions, in the electronic auto clearinghouse (ACH) payments system. NACHA received reports that individuals and/or companies received the e-mail. The subject line of the e-mail states, "Unauthorized ACH transaction," however, recipients should be alert for different variations of fraudulent e-mailes. The message contains a link that directs recipients to a fake Web page sporting a link with an executable virus with malware. NACHA warns recipients not to click on the link. "Both the e-mail and the related website are fraudulent," it said in the alert. "Do not follow Web links in unsolicited e-mails from unknown parties or from parties with whom you do not normally communicate, or that appear to be known but are suspicious or otherwise unusual," NACHA said. NACHA does not process or touch the ACH transactions that flow to and from organizations and financial institutions. It does not send out communications to individuals or organizations about individual ACH transactions that they originate or receive.

Low-income CDCUs growing despite economy

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NEW YORK (7/23/10)--A new study released by the National Federation of Community Development Credit Unions examines the impact of the financial crisis on credit unions that specialize in serving low-income populations. The nonprofit community development credit unions (CDCUs) suffered significant stress but also demonstrated resilience and growth in 2009, according to the study. “Despite the enormous pain inflicted by the crisis, CDCUs remain a viable and vital resource for the recovery of low-income communities,” said Clifford N. Rosenthal, federation president/CEO and co-author of the study. The study, entitled “Low-Income Communities and the Great Recession: Financial Trends in CDCUs, 2009,” presents data on trends in lending, savings, operations and balance sheets of 208 CDCUs nationwide. In 2009, these institutions with aggregate assets exceeding $5 billion served more than one million members. The study compares CDCU performance to that of all federally insured credit unions, and also includes analyses by region and asset size. Among the findings:
* CDCU membership grew by 41,000 during 2009; * Deposits in CDCUs grew by 16.2%, substantially exceeding the robust growth of all federally insured credit unions; * The CDCU loan portfolio grew by 4.83% to $3.69 million; * Loan originations totaled $1.51 billion in 2009, a decline of 3% over the pace in 2008; * Return on Average Assets was slightly negative (-9 basis points) for the typical (median) CDCU, reflecting charges to replenish the National Credit Union Share Insurance Fund; * Most CDCUs remained “well-capitalized” by regulatory standards, with a median net-worth ratio of 9.53%; * Net loan charge-offs totaled 1.43%; and * CDCUs provided services to help low- and moderate-income consumers preserve and build assets, ranging from Individual Development Accounts, to no-cost checking, to alternatives to payday lending.

18 arrested in bad-check scam

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WATERLOO, Iowa (7/23/10)--Eighteen individuals have been arrested for involvement in a bad check scam that affected two credit unions in Iowa. Veridian CU and Iowa Community CU, both of Waterloo, Iowa were hit with a check scam that cost the credit unions and several other financial institutions a total of $125,000, according to local media reports (Waterloo Cedar Falls Courier July 22). Police arrested 10 individuals Monday and another group Tuesday and charged them in the scam. According to authorities, the individuals opened accounts at several institutions to get starter checks and debit cards. Then, they swapped checks and made false deposits, inflating the value of the accounts. They also are accused of using debit cards and checks to get cash and purchase items. The money was laundered through U.S. Postal money orders. Veridian CU has $1.6 billion in assets. Iowa Community CU has $74 million in assets.

WOCCU auction raises record amount

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LAS VEGAS (7/23/10)--Frenzied bidders--both online and in person--helped the World Council of Credit Unions (WOCCU) raise a record
Click to view larger image Crissy Cheney, wife of Credit Union National Association President/CEO Bill Cheney, bids on an item during the World Council of Credit Unions’ charity auction at The 1 Credit Union Conference in Las Vegas last week. Crissy Cheney co-chaired the auction.
amount during its annual silent and live auctions held at the close of The 1 Credit Union Conference, the joint meeting of the Credit Union National Association (CUNA) and WOCCU last week in Las Vegas. Bidders in the silent auction, which for the first time allowed online bids, pledged more than $28,800 compared to $8,261 raised during WOCCU’s 2009 World Credit Union Conference in Barcelona, Spain. Bidders in the live auction pledged more than $45,000 compared to $9,410 in 2009. Total funds pledged were roughly $74,000--more than four times the amount raised last year. The money will be used to support global credit union development. The move to an online format with higher-value items that contributed directly to the auction’s success was largely the work of auction co-chairs Judy Ensweiler, wife of Texas Credit Union
Click to view larger image Scott Kennedy of Mississauga, Ontario, waves a Canadian flag to catch the attention of auctioneer Dick Ensweiler, president/CEO of the Texas Credit Union League. Kennedy’s wife, Sandy, pledged to support the Busia Compasionate Centre, a Kenyan orphanage supported by the World Council of Credit Unions. (Photos provided by the World Council of Credit Unions)
League President/CEO Dick Ensweiler, and Crissy Cheney, wife of CUNA President/CEO Bill Cheney. The highest bids came during the live auction for items that included a week in a Las Vegas condo; a Chicago shopping spree; lunch and a private U.S. Capitol tour in Washington, D.C., hosted by former CUNA President/CEO Dan Mica; and a New York hotel night, dinner and tickets for the Broadway production of Jersey Boys. Conference registrations were auctioned and also awarded to two winners in a drawing held at the conference. The auction concluded with an open call for participants to fund Busia Compassionate Centre, an orphanage that WOCCU supports in rural Kenya. More than 70 bidders responded with an additional $28,000 in pledges for the orphanage.

Cheney Sweeney Fryzel to headline NJCUL convention

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HIGHTSTOWN, N.J. (7/23/10)--The New Jersey Credit Union League’s 76th annual meeting and convention Oct. 3-5 in Atlantic City, N.J., will feature Credit Union National Association (CUNA) President/CEO Bill Cheney, National Credit Union Administration (NCUA) board member Michael Fryzel and New Jersey Senate President Stephen Sweeney.
Cheney will talk about how Congress perceives credit unions, Fryzel will offer insight on NCUA’s approach to the corporate network and regulatory issues, and Sweeney will present an insider’s look at the latest in the state capital. Sweeney is a credit union supporter and helped pass legislation in the state Senate that would allow New Jersey credit unions to accept public deposits. The theme of this year’s meeting is “Banking You Can Trust,” the tagline for the New Jersey league’s statewide advertising program aimed at spreading the credit union message to consumers. Bill Rancic of the TV show “The Apprentice” will give the keynote speech and share his strategies for successful organizations in today’s tough economic climate.

NCUA granted stay in HeritageWest lawsuit

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SALT LAKE CITY (7/22/10)--A U.S. District judge in Utah has granted a 90-day stay to the National Credit Union Administration (NCUA) in a lawsuit filed last year by 32 investors in a Castle Stone Homes real estate development project for which the now defunct HeritageWest FCU, Toole, Utah, provided financing. In his ruling Monday, U.S. District Judge Ted Stewart for the District of Utah (Central) said, "The court finds that there is no time limit for the liquidating agent to request such a stay and that upon such a request a court shall grant it as to all parties." As liquidating agent of the credit union, NCUA earlier had received permission to become a substitute for the defunct credit union in the case on March 19, a year after the suit was filed against HeritageWest. Plaintiffs opposed the stay because the request had been brought six months after NCUA assumed control of the credit union on Dec. 31, and because "it is inappropriate" because NCUA "is pursuing litigation." NCUA argued that it has not pursued litigation although a party who purchased assets has, that the Federal Credit Union Act does not provide a time limit for invoking the stay provision, and that the stay should apply to all parties although it would not object to the ruling on pending motions before the stay is imposed. Several suits have been filed over the troubled Castle Stone Homes development in the Salt Lake City area. Plaintiffs allege the development was a get-rich-quick investment scheme financed by the HeritageWest. According to the complaint filed by the investors on March 19, 2009, Castle Stone solicited investors between 2005 and 2007, promising low risk investments secured by tangible property. Castle Stone partnered with the credit union to extend a financial package for constructing houses built, marketed and sold by Castle Stone. However, 14 to 24 months after construction began, the scheme unraveled, said the complaint document. Castle Stone exhausted the construction loans on most of the homes that were only 50% to 75% completed. The credit union and Castle Home negotiated a deal to offer additional loans to investors to finish the homes without reliable appraisals showing the value of the homes supported the loan amounts. The suit claims that the developers and the credit union pressured investors into additional losses of $100,000 to $150,000 per home. The credit union foreclosed on some homes, with some borrowers repurchasing the homes at significant discounts during the short sales. NCUA has challenged the short sales in court. The credit union lost more than $29.3 million during the two years before its liquidation.

CU System briefs (07/21/2010)

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* SPRINGFIELD, Ill. (7/22/10)--Sangamon Schools CU, based in Springfield, Ill., will close its branch at the University of Illinois Springfield on July 30. The closure stems from a problem with the building's septic system. The area has a high water table, and during heavy rains the septic system would back up, Gene Taylor, president of the $45 million asset credit union, told The State Journal-Register (July 20). Members will be directed to two other branches. About 75% to 80% of members using the branch also occasionally visit two other sites ... * BEAVERTON, Ore. (7/22/10)--The Credit Union Association of Oregon (CUAO) has retained Parakletos Strategic Public Affairs and its principal, Rick Metsger, to assist its public relations services to member credit unions. Metsger is a credit union advocate who has served CUAO on two previous occasions, said CUAO. He will assist the association in conveying the credit union difference to credit union members throughout Oregon and collaborate with senior management on strategic issues. He will help member credit unions on their public relations outreach and assist association staff with weekly and monthly communications publications. Metsger is a former director of Portland Teachers CU (now OnPoint Community CU) and is a member of Mt. Hood FCU ...

Calif. newspaper MBL bill would increase CU loans to small biz

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VENTURA, Calif. (7/22/10)--Several California business associations said passage of an amendment to a bill in the U.S. Senate proposing to increase credit unions’ member business lending (MBL) would be beneficial to the state’s stressed economy, the Ventura County Star said Wednesday. The amendment would increase business lending by $638 million in Ventura County, $1.8 billion in California and $10 billion nationwide, Bob Arnould, senior vice president of government affairs for the California Credit Union League, told the newspaper. “Anything that loosens up credit and funds for a business is beneficial,” Greater Conejo Valley Chamber CEO Jill Lederer, told the paper. “It’s one of the most frequent requests for help that we get from our members.” The current lending environment is not conducive to start-up businesses, Michael Scotto, chairman of the local SCORE chapter, which offers free counseling to small businesses, told the paper. Borrowers often can’t get a bank loan unless they have substantial capital, he added. “Under-financed small businesses is the No. 1 reason for small-business failure,” Scotto told the paper. Although Ventura (Calif.) County CU is listed as a “preferred lender” by the Small Business Administration, it hasn’t done small-business lending to date. However, new CEO Joe Schroeder wants to begin offering small-business lending and accounts once the credit union has the right system and expertise available to support it, the paper said. “All you and I ever hear is how banks aren’t lending to small businesses,” he said. “If credit unions smartly get into this business and start lending to small businesses in Ventura County, it will help the businesses [and] create jobs.” Credit union business lending has grown 15% in the past year, compared with an 11% decrease in bank business lending, according to the Credit Union National Association. The bill’s amendment would raise credit union’s MBL cap to 27.5% from 12.25%.

CU CEOs stumped for predicting economys direction

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PLANO, Texas (7/22/10)--Credit union CEOs are at a standstill when it comes to registering their confidence in a national economic recovery, according to a study by Southwest Corporate FCU in Plano, Texas. Southwest Corporate’s second quarter 2010 CEO Confidence Index was nearly identical to first quarter results, indicating that credit unions may be hearing that the economy is improving, but not yet feeling it, the corporate said. The index registered 20.73, down 0.22 points from last quarter, but down 3.81 points from first-quarter 2009. Marks have ranged from a high of 47.4 during second quarter in 2004 to a low of 7.9 during first quarter of last year over the 6 1/2 years covered by the survey. “Most credit unions don’t know what to expect from the economy,” said Helen Delin, CEO at $36 million asset NAS JRB CU in New Orleans, told the corporate. “This is one year we can’t predict. Low interest rates, the corporate stabilization program, and new regulations coming out all will affect overall earnings.” “Credit unions were told that 2010 would be the most difficult year, so we’re just holding our breath, hoping to get through 2010 and see conditions improve,” she added. The quarterly Confidence Index measures economic expectations in six areas on a five-point scale, from negative to positive. Three of the six gauges in the most recent survey-- those measuring expectations six months from now for member financial condition, credit union financial condition and loan demand--also held steady, varying less than one point from last quarter. The largest movement was seen in CEOs’ expectations for share deposit growth, which fell more than seven points over last quarter. Two other gauges--those measuring the current financial conditions of members and credit unions--increased slightly by 1.48 points and 3.34 points, respectively. “The consumer continues to be wary of the weak employment climate and lost household wealth, to the point that many are deferring large ticket purchases, such as homes, cars and appliances,” said Brian Turner, director of Southwest Corporate Investment Services’ advisory service. “Unfortunately, credit unions are in the business of extending credit. So there’s little surprise that loans outstanding are down about 2% for the year- following a modest 1.2% increase in 2009.” Historically, credit unions generate most of their operating cash flow during the first quarter and loan two-thirds of that cash flow during the next three quarters, Turner said. The lack of overall loan demand could result in positive operating cash flows for the remainder of the year, he added. This would put greater pressure on investment portfolio income to recover the credit union’s revenue stream and make it necessary to manage cost of funds more tightly to retain net-interest margins. “Still, pent up loan demand could spark a short-term burst of activity later this fall-- particularly in vehicle lending,” Turner said. “This burst would not be enough, however, to create sustainable growth. The depth of the recession has had a greater impact on members than most realize, which may require credit unions to rethink their business models--perhaps over the next decade.” Turner said consumers have continued to reduce their overall debt burdens, which had reached historical highs. “Consumers learned a lesson the hard way and will be less prone to take on that level of debt again, at least for the immediate future,” he added. “This behavioral change could alter balance sheet allocation over the next few years.” Credit unions have felt some of the impact already. During the past decade, credit union vehicle loan allocation fell from 40% to 29% of loans outstanding, while first-lien mortgages increased from 25% to 39% of total loans. At the same time, gross margins tightened by about 60 basis points, and core profitability decreased more than 40%. Modest growth in consumer loans going forward would keep mortgage allocation higher and potentially alter the credit union earnings and risk profiles for some time, Turner said. “By no means do these figures portend that major difficulties lie ahead,” said Turner, who characterized his outlook as “cautiously optimistic.” “Instead, they emphasize that credit unions must position themselves for potentially dynamic changes in the future.”

Consumers buying cars feel impact of economy

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MADISON, Wis. (7/22/10)--In-market car shoppers indicate they are feeling the economy’s strong influence regarding their attitudes about financing and purchasing vehicles, according to new market research. Since auto loans--both new and used--are credit unions’ bread and butter business, credit unions can expect changes in consumers’ behavior and may have to adapt accordingly. Most in-market shoppers are planning to spend a relatively small amount of money on their next vehicle purchase and are more likely to buy used versus new, said the latest Market Intelligence survey data, by Kelley Blue Book’s Market Intelligence Group. Also, more than one-third of in-market car shoppers say they plan to pay the entire cost of their next vehicle purchase in cash and that they are not influenced by incentive offers (PR Newswire July 20). Nearly three-quarters (74%) of those surveyed said they plan to purchase a vehicle in the next six months. More consumers said they are in the market for a used car (67%) than a new car (33%). In addition, 42% of used-car shoppers and 20% of new-car shoppers said they plan to pay the entire cost of their next vehicle in cash. Most used-car shoppers (62%) plan to spend less than $15,000 on their next vehicle purchase, while half of new-car shoppers plan to spend $25,000, the survey found. The majority (82%) of used-car shoppers and more than half (51%) of new-car shoppers said that incentive offers have no effect on the timing of their next vehicle purchase. In addition, 81% of used-car shoppers and 48% of new-car shoppers said that the availability of incentives have no effect on their specific vehicle choice (make/model). “In-market car shoppers are taking a decidedly conservative approach to car buying right now, which we think can be directly attributed to low consumer confidence in the current economy,” said James Bell, executive market analyst for Kelley Blue Book’s “It seems people are re-assessing their financial situations and deciding to spend less, buy used and pay more often with cash,” he added. “Incentives have loosened their tight grip on the American consumer, with more people deciding to purchase what they can truly afford versus what they can get with over-extended credit lines and incentive offers on the hood from manufacturers.” Of those who intend to finance their next vehicle purchase, 0% financing was listed as the most appealing incentive offer by 30%, followed by low monthly payments at 21%. Also, women were twice as likely as men (32% of women versus 16% of men) to find low monthly payments the most appealing incentive offer. The most popular loan term was 60 months, with 42% of respondents indicating they prefer to finance over five years. Second-most popular was 36 months (21%), followed by 48 months (20%). Eleven percent preferred 72 months, and 5% cited 24 months. More than half (57%) of consumers surveyed intend to research vehicle financing options online, and 50% plan to obtain pre-approval through a bank/credit union. Only 34% said they would obtain financing at the dealership. Shoppers cited control in negotiations as the top motivator (44%) behind financing through a bank/credit union, followed by low interest rates (34%). Shoppers cited convenience (54%) as the primary motivator for financing at the dealership, followed by a low interest rate (32%). The average shopper has three vehicles in his/her consideration set, with 83% of survey respondents say they still are undecided on the make and model of their next vehicle. Younger car shoppers (age 34 and under) are more open to buying either a domestic or import brand (45%), compared with shoppers age 55-plus, who are more likely to decide either a domestic brand (39%) or an import brand (32%). Among both new- and used-car shoppers, price and durability/reliability/quality tied at 33% as the top two deciding factors when considering a vehicle to purchase. The next-highest deciding factor was past experience with the brand (12%). Shoppers said negotiating is a key part of the car-buying process, with 62% indicating they prefer negotiating to having a single set price. That number increases more among younger car buyers, as 73% of respondents age 34 and under say negotiating is a crucial part of the process, compared with 59% in the 35-54 and 55-plus age categories. Forty percent of respondents use the average transaction price (New Car Blue Book Value) as the starting point for vehicle negotiations, while 32% begin negotiating with the dealer invoice price. Only 9% of shoppers indicated they began negotiations with the manufacturer's suggested retail price. Also, consumers (38%) said that if they pay the average transaction price, they have a good deal. The data are based on a survey of 338 in-market car shoppers on Kelley Blue Book's from June 18 through June 21.

Police say CEO threatened officer before shooting

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NEWARK, N.J. (7/22/10)--The CEO of an Atlanta, Ga., credit union threatened a police officer before being fatally shot in a New Jersey park Friday, according to a statement from the prosecutor’s office of Essex County. DeFarra “Dean” Gaymon, 48, was shot by police Friday. Gaymon had been visiting Newark, N.J., for a class reunion. He was president/CEO of Credit Union of Atlanta. The plainclothes officer had just made an unrelated arrest in the area and had responded to a complaint in the park known for illicit sex acts (The Atlanta-Journal Constitution July 21). The officer said he shot Gaymon after Gaymon tried to assault him. The officer had tried to arrest Gaymon for unlawful activity. The 29-year-old officer, who has been with the Essex County police department eight years, was placed on medical leave. The investigation is ongoing. Gaymon was married and had four children. His family wrote in a statement that Gaymon was “a peaceful, caring, friendly and law-abiding man.” Cassandra Brown, assistant vice president of marketing and business development for the $56-million-asset Credit Union of Atlanta, told the Constitution that Gaymon was “the ultimate professional.”

CU on IGood Morning AmericaI helping family save big

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NEW YORK (7/22/10)--Good Morning America Wednesday featured a segment about a savings makeover for a New Jersey family, the Shoblocks. The family received refinancing on their car loan and mortgages from a New Jersey credit union. Good Morning America correspondent Elisabeth Leamy, author of “Save Big,” took the Shoblocks to the East Windsor branch of McGraw-Hill FCU, which is based in Hightstown, N.J., so they could refinance their auto loan and their mortgage. The family will save $1,995 on their car loan over the next four years.
The family opened a low-interest credit card at the credit union and transferred their existing credit card balances. The Shoblocks will garner savings of about $16,000 with the new credit card, and their credit card debt is expected to be paid off in less than one year. The new mortgage also would save the family $55,000 over the next 10 years. Robin Shoblock had written to Leamy for help with the couple’s debts. The Shoblocks have seven children, and were struggling after Gary Shoblock lost his job and Robin had returned to school to earn a teaching degree. With Leamy’s help, the family saved a total of $108,602. “I’m speechless,” Robin Shoblock said when she learned how much McGraw-Hill could help her. “It’s just so hard to come up with ways to thank you guys for your help.” Leamy got the idea to reach out to a credit union after appearing as a guest on the Credit Union National Association’s (CUNA) Home and Family Finance radio show. CUNA provided background and put her in contact with the New Jersey Credit Union league, which worked with Leamy to find a credit union the couple could join--McGraw Hill FCU. To see the Shoblocks’ full savings makeover, use the link.

Ponzi scheme involves employee with CU ties

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LANSING, Mich. (7/21/10)--A group of University of Michigan Health System employees has filed a complaint with the state's Financial Industry Regulatory Authority about an alleged Ponzi scheme involving a broker representing a credit union service organization (CUSO). The filing comes four months after Michigan's Office of Financial and Insurance Regulation (OFIR) issued a cease-and-desist order against Mark Carpenter and revoked his securities and insurance licenses. Carpenter sold investment products through his company TGBG Financial, while employed with CUSO Financial Services from June 2007 through October 2008 (News Now March 9). CUSO Financial, a stock brokerage firm in San Diego, maintained a securities branch office inside MidWest Financial CU, a $185 million asset credit union based in Ann Arbor. The credit union and CUSO were not involved in the scheme (News Now March 3). The credit union has applied for a merger with DFCU Financial CU, Dearborn (News Now June 16). An attorney representing five clients--all physicians and administrators in the health system--said the group lost nearly $1 million by investing with Carpenter. Through securities arbitration, they are seeking recompensation from him and from CUSO Financial as his employer. Arbitration is similar to a lawsuit but offers an ability to recover money without going through the court system, the attorney, John Chapman, told Heritage Newspapers July 18). Carpenter has not been charged with any criminal activity but is under investigation by the Michigan Division of Securities. Carpenter himself was scammed in a larger Ponzi operation involving Michael Winans Jr. of the family gospel group, The Winans (News Now March 9) .

Tanker truck crashes into Sun FCU no one injured

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SOUTH PHILADELPHIA, Pa. (7/21/10)--The South Philadelphia branch of Sun FCU was scheduled to reopen today. It had been closed since Friday night, when an empty tanker truck crashed into the building. The credit union's website Tuesday said the branch would reopen today. No one was injured, according to the Pennsylvania Credit Union Association (PCUA) (Life is a Highway July 20). The crash was attributed to a medical related incident involving the truck driver, who was not identified in reports. Local news reports said the accident happened before 8 p.m. Friday, and that the truck contained 10 gallons of diesel fuel, which leaked after the crash (WPVI-TV July 17). While the branch was closed, members and shared branch guests were directed to nearby Sun FCU branches and shared branches, said PCUA.

Canadian Australian CUs succeed with alternative capital

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LAS VEGAS (7/21/10)--Credit unions worldwide are struggling to generate sufficient capital from retained earnings. During The 1 Credit Union Conference in Las Vegas last week, an international panel discussed how credit unions in Canada and Australia successfully raised alternative capital without impinging on their mutual structures. In British Columbia, equity shares were introduced in 1982, said Philip Moore, general manager, Greater Vancouver Community CU, British Columbia. Patronage shares and investment shares are treated as Tier 1 capital as long as the credit unions' rules limit encashment in any one year to less than 10% of the aggregate amount. System capital in British Columbia is allowed to include 50% of pro-rata shares of retained earnings at their central, and credit unions can use equity shares to supplement retained earnings. "This has led to some aggressiveness and prompted the regulator to require at least one-third of regular capital to be retained earnings," Moore said. In Australia, credit unions raised alternative capital as subordinated debt from institutional investors, while ensuring protection of their mutual status, according to Dave Taylor, CEO of SGE CU Ltd., Australia. Taylor described the first aggregated mutual capital issuance by 21 Australian credit unions in 2006. By working jointly, they accessed A$100 million (US$86.9 million) in capital through special vehicles in two tiers. Investors have no say in credit union governance. The Australian credit unions achieved a higher credit rating due to their collective strength and built market credibility. Implementation challenges included satisfying regulators, legal and tax structures of the special vehicles, ongoing licensing and management of the vehicles, and rating by Standard & Poor's. "These require strong trust and cooperation," and high levels of management and board expertise, Taylor said. Alternative capital can help maintain sustainable business, but is not a solution for underperformers, inadequate profitability and poor business models. Jim Updike, CEO, Honda FCU, Torrance, Calif., noted that he is "chagrined that the U.S. is so far behind in addressing capital." Credit unions' capital requirements at 7% to be well-capitalized are 200 basis points above banks' 5%. He noted three policy principles for alternative capital:
* Preserve the cooperative mutual credit union model; * Have robust investor safeguards; and * Maintain prudential safety and soundness.
"Alternative capital has proved its utility in other highly developed credit union movements," said Ralph Swoboda, moderator and principal, The ProCon Group. Done properly, they could constitute a viable capital source in the U.S., too. Swoboda pointed out that a change in federal law will be required whether capital is raised from members or from institutional investors. He also noted two other sets of issues:
* Compliance and distribution costs need to be considered, and * Rates paid on alternative capital should relate to risk.
"Setting up a facility to collectively raise capital from individual members is one alternative, while paying patronage dividends as equity share is another. But raising alternative capital requires a disciplined business and financial approach," he said. Earlier in the week, Credit Union National Association (CUNA) President/CEO Bill Cheney also addressed the subject of credit union alternative capital during the opening general session of The 1 Credit Union Conference. Cheney noted capital reform as one of the big challenges facing credit unions today. "We've seen very little growth in market share during the past 20 years and capital is a major constraint," Cheney said. "To remedy that, capital reform will have to be one of our top priorities. We have to be able to define our own future." The conference was presented by CUNA and the World Council of Credit Unions.

Court action could make NCUA plaintiff for WesCorp claims CUNA

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WASHINGTON (7/21/10)--A U.S. District judge's tentative ruling, which granted the National Credit Union Administration's (NCUA) motion to substitute itself for plaintiffs claiming certain losses in a lawsuit stemming from Western Corporate FCU's (WesCorp's) conservatorship, leaves open the possibility the agency could be named substitute plaintiff for all claims, says the Credit Union National Association (CUNA). In the ruling Thursday, U.S. District Judge George H. Wu in the U.S. District Court Central District of California, Los Angeles, wrote that he is inclined to grant NCUA's motion to take over the derivative claims in the case "at the very least." He also stated that the plain language of the Federal Credit Union Act indicates that NCUA seems to be able to take over the "direct claims" as well, but that NCUA's brief seemed to concede that the plaintiff credit unions could make the "direct" claims. "If indeed NCUA is prepared to concede that point, the motion would be resolved in that fashion--permitting the NCUA (or its Board) to substitute in as plaintiff on any derivative claim(s) and allowing plaintiffs to continue as plaintiffs on any direct claims," said Judge Wu. CUNA reviewed the ruling. "This tentative ruling leaves open the possibility of NCUA being named the substitute plaintiff for all claims," explained Eric Richard, CUNA general counsel. "It will be interesting to see how the court rules going forward, especially considering that the plaintiff credit unions have attempted to make NCUA's performance as regulator a central issue," he told News Now. NCUA, as conservator of WesCorp, succeeded in transferring the lawsuit from state to federal court and sought to intervene as a plaintiff in a case brought by seven natural person credit unions against individuals who were former and current directors, officers and supervisory committee members at WesCorp when it went into conservatorship and against RiskSpan Inc., WesCorp's third-party risk management company. The plaintiffs--lst Valley CU, Cascade FCU, Glendale Area Schools FCU, Kaiperm Northwest FCU, Northwest Plus CU, Stamford FCU, and Tulare County FCU-- filed the suit on Nov. 24 in Los Angeles County Superior Court. They claim the defendants were negligent and breached their fiduciary duties in connection with WesCorp's investments in residential mortgage-backed securities and collateralized debt obligations. In opposing NCUA's substitution as plaintiff, they alleged the agency "is hopelessly conflicted regarding the failure of WesCorp and cannot be expected to diligently prosecute all claims that may belong to WesCorp." (News Now June 28). A status conference on the amended complaint is set for Aug. 5. A scheduling conference previously set for July 26 has been continued to Sept. 9.

Brazilian CU execs learn about modern farms in Texas

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DALLAS (7/21/10)--Credit union executives from SICREDI, one of Brazil’s leading credit union organizations, now have a better understanding of milk production and the important role credit unions can play in solving farm issues, said the Texas Credit Union League. Twenty high-ranking staff and board members from SICREDI joined league officials on a tour Friday of two dairy farms in Stephenville and a credit union that is actively meeting the needs of area farmers, said the league. Marcos Fritzen, manager of resources administration with SICREDI, said the group was extremely impressed with the level of care the dairy farmers provide their animals, and the commitment of the farmers to producing a quality milk product. They also were impressed with the broad range of products and services Members Trust of the Southwest FCU in Stephenville offers to support agricultural growth in their community. “The goal of this tour was to provide our credit union partners in Brazil with greater insight into modern farming; the issues and concerns they face in daily operations, and to connect them with Texas credit unions like Members Trust of the Southwest FCU, who are meeting their unique needs,” said Bob Gallman, the league’s chief operating officer. Last week, the league and SICREDI, a trade association for 128 Brazilian credit unions, signed a “People to People” partnership at The 1 Credit Union Conference in Las Vegas, opening the door for the exchanges of ideas and best practices between the two organizations. Agricultural cooperatives are strong in Brazil, and many credit unions in Brazil started out serving farmers. Brian Gilbert, president/CEO of Members Trust of the Southwest FCU, said he appreciated the opportunity to engage in dialogue with SICREDI, noting that there are few agriculture credit unions in Texas. Collaboration between the league and SICREDI will continue in September, with a four-week visit by 11 SICREDI staff to the league and its member credit unions to get a better sense of how U.S. credit unions approach operational, marketing and member service issues. “SICREDI has had business relationships before, but never with another credit union organization,” said Manfred Dasenbrock, chair of SICREDI. “There is always room for learning from others, and we expect there to be a lot of idea-sharing and exchanges that will make all of our credit unions even better.” “We are enthusiastic about this new partnership with SICREDI,” said league President/CEO Dick Ensweiler “While they are a relatively young movement, they are quite sophisticated. I’m extremely impressed with the level of cooperation that exists between SICREDI’s member credit unions, and I’m confident that this will be a mutually beneficial relationship.”

3 CUs at forefront of Smartphone apps notes IChicago TribI

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CHICAGO (7/21/10)--Three credit unions are at the forefront of iPhone applications that allow members to deposit checks with a camera-enabled smart device introduced by Chase, said Monday. The article noted that credit unions offering remote-deposit services are:
* Sharon (Mass.) CU, which offers “VIP Deposit,” or virtual item processing. Consumers can deposit checks from home using their personal computer, a scanning device and software provided by the bank. It’s free for eligible consumers. Sharon is evaluating remote deposit for Smartphones, a spokeswoman told the Tribune. * Digital FCU, Marlborough, Mass., which allows members to deposit checks through a home-based scanner system and through Apple iPhones or Android-powered smart phones with cameras. Roughly $300 million has been deposited remotely in the credit union since it began its home scanner program in 2008. In April, it began offering remote deposit capabilities through the smart phones, Digital Public Relations Manager John Lahair told the Tribune. * Randolph Brooks FCU, Live Oak, Texas, which also offers an “eDeposit” service through a home-scanning system and through iPhone and Android devices.
“The great thing in all of this is that we actually launched our smart phone applications … three months before Chase,” Digital FCU’s Lahair told New Now. To read the article, use the link.

New Hampshire CU makes case vs. states BET

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MANCHESTER, N.H. (7/21/10)--A New Hampshire credit union believes the state’s Department of Revenue Administration should not ask credit unions to pay back business enterprise taxes (BET), according to a Tuesday editorial in Foster’s Daily Democrat. The New Hampshire Credit Union League concurs. “Two recent cases make the point of just how far the state is willing to stretch common sense and credulity in its quest to close a multimillion dollar budget gap,” said Foster’s Daily Democrat. “Last month the Department of Revenue Administration notified several credit unions they may need to pay back business enterprise taxes. The state argues that the dividends credit unions pay to members are really interest payments and therefore subject to taxation under the BET.” The paper mentioned how Michael L’Ecuyer, president/CEO of Bellwether Community CU in Manchester, highlighted the weakness of the state’s BET position. “L’Ecuyer noted that the BET has been in place since 1993 without the state trying to collect the tax,” the paper wrote. “That’s nearly two decades late to the dinner table for anyone from [the Department of Revenue Administration] who has trouble with math. In addition, L’Ecuyer's credit union has used three different audit firms that never interpreted the law in this manner.” The New Hampshire league agreed. “The Business Enterprise Tax was never applied to credit union dividends because the legislature specifically excluded credit union dividends from this tax in 1993 when the legislation was written,” Dan Egan, president of the New Hampshire and Massachusetts credit union leagues and the Credit Union Association of Rhode Island, told News Now. “We are working with legal counsel to make this clear to the Department of Revenue Administration.” To read the editorial, use the link.

NASCUS changes CU leadership advisory group

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ARLINGTON, Va. (7/21/10)--The National Association of State Credit Union Supervisors (NASCUS) has announced changes to the Credit Union Executive Council, the governing group of NASCUS’ CU Advisory Council. The council comprises 12 directors that advise the NASCUS Board of Directors on issues impacting the state credit union system. Dan Kester, president/CEO of Sooper CU, Lakewood, Colo., for the past 14 years, has been appointed as a director on the council. Kester also has served on several national and state credit union committees and groups. Kester succeeds Ed Bigby of Norbel CU, which recently merged with Security Service FCU, San Antonio. Kester's term runs through September 2012. Steve Behler, executive council director and president of Kemba CU, Cincinnati, was elected secretary in place of Bigby, who held the office for the past year.

LSCU discusses what fed overhaul means on local IABCI

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TALLAHASSEE, Fla., and BIRMINGHAM, Ala. (7/21/10)--The League of Southeastern Credit Unions (LSCU) was featured on a local ABC news station for a story about regulatory reform and interchange fees. LSCU’s vice president of communications, Mike Bridges, discussed what the fed overhaul means on the news station WTXL four times--three times on Friday and once on Monday, the league said. The 2,300-page federal regulatory reform bill, passed Thursday, allows the government to set interchange fees. The Credit Union National Association and credit unions have opposed the language in the reform bill that allows this because they argue that it would be more difficult for credit unions to offer card products and services to members. Bridges told ABC that because of the new interchange rules, there’s fear that while retailers may see reduced rates in their fees, it doesn’t mean that the savings will be passed on to consumers. Also, there’s a cost to credit unions and banks if lower transaction fees would mean fees for consumers, he added. “[The bill] could cause credit unions who issue those cards to put a small fee back onto their members,” he said.

Midwest Corporate members move correspondent services to CUSO

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BISMARCK, N.D. (7/21/10)--Some credit union members of Midwest Corporate FCU, Bismarck, N.D., have moved their correspondent services from the corporate to its credit union service organization, ProDraft Services, as part of the corporate's liquidation plan. ProDraft provides services such as depositing, check imaging and remote branch to credit unions. ProDraft will use Fifth Third Bank of Cincinnati, Ohio, to offer the services that the corporate provided, said Trudy Wise, Midwest Corporate CEO. Some credit unions have already switched to ProDraft, while others are using Bank of North Dakota, Bismarck, N.D. Many credit unions already have a relationship with the state-owned Bank of North Dakota through agricultural loans and other services. “The [member credit unions] have never looked at Bank of North Dakota as a competitor,” Wise added. She also noted that the bank was interested in working with the credit unions. Midwest Corporate’s board has a liquidation plan and will meet Thursday to accept the plan. Credit unions are aware of the liquidation plan, which will take about a year to finalize. Midwest Corporate has roughly $1 million in member capital, Wise said. Former Midwest Corporate CEO Doug Wolf is now a consultant for Midwest Corporate and ProDraft. “It is always difficult when a credit union, including a corporate credit union, has to consider liquidation,” said Mary Dunn, Credit Union National Association (CUNA) senior vice president and deputy general counsel. “CUNA’s Corporate Credit Union Next Steps Working Group is focusing on ensuring natural person credit unions will continue to have access to the payment, settlement, and investment advisory services they need as the corporate credit union system continues to adjust to the economy and later to the National Credit Union Administration (NCUA) upcoming corporate CU rule.” The report of the Task Force is expected before NCUA issues its final corporate CU rule, anticipated in mid-September.

CU System briefs (07/19/2010)

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* CHICO, Calif. (7/20/10)--Chico, Calif., police have issued a health caution about a suspect in a robbery Tuesday at the Oroville branch of Yuba City-based Sierra Central CU who may present a health risk to law enforcement and the public. Laura Jane Murray, 48, has MRSA, an infectious disease resistant to medication, has open sores on her arms and is suspected of having a heroin addiction, said a police bulletin ( July 16). Murray reportedly told a friend she had robbed the credit union. She was picked up by police and the money returned to the credit union, but the county jail refused to incarcerate her because of the medical condition. She was taken to Oroville Hospital, but against medical advice left the hospital and allegedly robbed a bank, police said. She was still at large at press time ... * WASHINGTON (7/20/10)--Government Printing Office (GPO) FCU, based in Washington, D.C., announced that William Lewis, president/CEO, has left the $33 million asset credit union. The board named Marcia Dixon, a 16-year credit union veteran, as interim president/CEO. She served as loan manager for six years, a position she will continue to hold during the interim period. The board also engaged the services of Lindsay A. Alexander, management consultant and former CEO of NIH FCU, to assist staff and the board until a new CEO is named. She will focus on evaluating systems and processes for efficiency and best practices; managing investments and the asset liability management program; ensuring the credit union's compliance program is maintained in line with industry requirements, and ensuring the credit union remains aligned with its strategy of building trust while meeting diverse needs of its members ... * GRAND RAPIDS, Mich. (7/20/10)--Don Mills, CEO of Alpena Alcona Area CU, Alpena, Mich., has been elected to the board of directors of CU*Answers, the Grand Rapids-based credit union service organization (CUSO). Alpena Alcona Area CU joined the CU*Answers network in 2005. He joins incumbents Vickie Schmitzer, Frankenmuth (Mich.) CU; Scott McFarland of Honor CU (formerly BTCU), St. Joseph, Mich.; Dave Wright, Services Center FCU, Lankton, S.D.; Jeff Jorgensen, Sioux Empire FCU, Sioux Falls, S.D.; Chris Butler, Community CU, Lacrosse, Wis.; and Dean Wilson, Focus CU, Wauwatosa, Wis. ...

Investors sue for losses in New London closure

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NEW LONDON and BRIDGEPORT, Conn. (7/20/10)--Five individuals who lost investments when the New London (Conn.) Security FCU (NLSFCU) was shut down in July 2008 have filed a $4 million lawsuit against the credit union's board and longtime manager, auditors, legal advisers, brokerage firm and the widow of the credit union's longtime investment adviser. The suit was filed in U.S. District Court for the District of Connecticut in Bridgeport on June 14, by member investors Melvin Goldblatt, Joan Lazerow, and Douglas C. Antupit, all of Connecticut; Mark D. Fetcher of Florida, and Gloria Johnston of California, according to the court documents filed. They seek a jury trial and more than $4 million with punitive damages. Defendants include Wells Fargo Advisors, a subsidiary of Wells Fargo & Co., which is a successor in interest to Wachovia Securities and A.G. Edwards and Sons. The credit union's long-time investment adviser and former A.G. Edwards branch manager Edwin F. Rachleff committed suicide the same day that the National Credit Union Administration (NCUA) closed the credit union. NCUA later accused Rachleff of carrying out a long term fraud that led to the credit union's collapse. Other defendants include the credit union's former auditing firm Beller, Shepatin & Co., and former legal counsel, Suisman, Shapiro, Wool, Brennan, Gray & Greenberg, and Rachleff's widow, who is executor of his estate. Attorney Robert Reardon represents the plaintiffs. The lawsuit claims violation of the Unfair Trade Act. It alleges that the law firm engaged in legal malpractice, Wells Fargo was negligent in supervising Rachleff, the credit union board breached its fiduciary duties in overseeing the investments, and the auditors were negligent and careless in failing to discover the discrepancies of the embezzlement. The suit claims that Rachleff embezzled more than $12 million from 1988 until July 2008, when the fraud or imprudent investments was discovered. The suit alleges the credit union's board failed to maintain a system of internal controls such as establishing a credit or supervisory committee, failed to establish adequate lending policies, and failed to separate the investment adviser's and investment safekeeper's roles. The "lax internal control environment," said the document, "created an environment susceptible to fraud, misappropriation or imprudent investment. The board accepted "highly suspicious statements from" A.G. Edwards typewritten on black brokerage-firm forms and failed to conduct regular meetings or keep minutes. The law firm, the suit alleges, failed to recognize problems including the need for "periodic rotation of external auditors." Other lawsuits have been filed stemming from the fraud and the subsequent collapse of the credit union. In separate suits, NCUA--whose share insurance fund lost $10 million from the credit union's failure--has sued Wells Fargo Investment Advisors and former credit union auditors Ed Lorah & Associates LLC seeking to recoup the loss (News Now March 24). Credit union investors lost about $570,000 in accounts that exceeded the $100,000 insurance limit that was in effect when the credit union was shuttered (The Day July 17).

Personal Care America FCU Fairfield University EFCU merge

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TRUMBULL, Conn. (7/20/10)--Personal Care America (PCA) FCU has merged the struggling Fairfield University Employees FCU (FUE FCU), a $2.2 million asset credit union, into its membership, according to a press release from Personal Care America. The merger, approved by the National Credit Union Administration June 30, was effective Friday. Both credit unions are based in Trumbull, Conn., although PCA FCU also has offices in Fairfield, Conn., and Jefferson City, Mo. PCA FCU has assets totaling $18 million and will serve more than 3,600 members in Connecticut and Missouri. NCUA noted it approved the merger because Fairfield was in "poor financial condition." according to its monthly insurance report. PCA FCU also has added students of Fairfield University and Fairfield Preparatory High School to its field of membership. The addition brings about 6,000 potential new members to the credit union. John E. Keet Jr., president/CEO of PCA FCU, said the merger brings an expanded suite of services including electronic services and on campus ATMs. He also welcomed two FUE FCU board members--Vice-Chairman Michael Tortora and Treasurer Philip Lane to PCA's board. "The decision to merge was not an easy one, but in light of the economic downturn, several loan defaults and investment losses, we had to do what was best for our membership, so they could continue to access credit union services locally," said Tortora.

CEO of CU Atlanta killed by police

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ATLANTA (7/20/10)--The CEO of CU of Atlanta was shot and killed by New Jersey police over the weekend, according to local media reports. Defarra Ivan Gaymon, 48, was shot and killed in a park Friday by an Essex County, N.J., sheriff’s detective. Gaymon, a former Montclair, N.J., resident, was visiting the area from Atlanta for a high school class reunion ( July 19). Gaymon was shot once in the chest by the detective at about 6 p.m. He died at the hospital later that evening. Police have not yet said what caused the shooting. Gaymon did not appear to be armed, the newspaper added. The detective also was taken to the hospital. CU of Atlanta has placed a memoriam of Gaymon on the homepage of its website with the message: “CU of Atlanta extends condolences to the family of DeFarra ‘Dean’ Gaymon who passed away suddenly July 16, 2010. We are deeply saddened at the loss of Mr. Gaymon and offer our most sincere sympathy to the Gaymon family.” Gaymon had been CEO of CU of Atlanta since March 2004. Previously, he served as vice president of operations at South Carolina State CU, Columbia, S.C. CU of Atlanta has $55 million in assets.

NCUA OKs Rutgers studentalumni CU acquisition by Affinity

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ARLINGTON, Va. (7/20/10)--The National Credit Union Administration (NCUA) has confirmed it approved a merger of Rutgers University Student and Alumni FCU (RUSA FCU), based in New Brunswick, N.J., into Affinity FCU of Basking Ridge, N.J. According to the agency's insurance report of activity, the merger was approved June 30 in Region II. The reason stated for the merger was that the nearly $3.5 million Rutgers was struggling and in "poor financial condition." Affinity FCU has nearly $2 billion in assets and nearly 135,000 members. RUSA FCU had 2,385 members. In November 2009, another credit union serving the Rutgers community, Rutgers FCU, said it and RUSA were considering a merger proposal to provide economies of scale. . Rutgers FCU serves faculty, while RUSA serves students and alumni of the Rutgers University system (News Now Nov. 16).

N.C. league secures CUs spot in foreclosure prevention bills

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GREENSBORO, N.C. (7/20/10)--The North Carolina General Assembly adjourned July 10 ending its 2009-2010 session, and Gov. Beverly Perdue signed the budget. Many of the pieces of legislation that were passed will impact credit unions, according to the North Carolina Credit Union League. Reducing the number of foreclosures in North Carolina was a priority for legislators in the session and several measures aimed to help borrowers stay in their homes were passed (Weekly Update July 16). Bills affecting North Carolina credit unions include:
* Senate Bill 1216--Will extend the State Home Foreclosure Prevention Program--set to end this fall--until May 2013 and expand the program to all borrowers at risk--not just those with subprime loans. Proceeds from the $75 fee assessed prior to filing the notice of hearing will fund the expansion and support counseling and nonprofit legal services. The league secured changes to the legislation making the Credit Union Division an active participant in the foreclosure prevention program. * Senate Bill 1015--Will limit foreclosure rescue scams by tightening North Carolina laws, including significant restrictions on two types of real estate transactions: lease-purchase contracts and contracts for deed/land installment sales. The league said it closely monitored the bill to ensure that credit union transactions remained exempt. * Senate Bill 1400--Will prohibit a power of sale foreclosure while the mortgagor is on active military duty or within 90 days after a period of military service. A judicial foreclosure would still be permitted. The bill works in conjunction with the federal Service Members Civil Relief Act and will take effect in January.

NCUA fires Arrowhead management member demands explanation

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WASHINGTON (7/20/10)--The National Credit Union Administration (NCUA) fired four former Arrowhead Central CU employees who were placed on temporary administrative leave when NCUA assumed control of the credit union June 25. In a related development, a credit union member who is an economist has criticized NCUA’s actions in the matter. Arrowhead Central CU, an $876 million asset credit union based in San Bernardino, Calif., had been placed into conservatorship “due to declining financial condition,” NCUA announced June 25. Arrowhead, a full-service credit union, has provided financial service to people residing in the counties of San Bernardino and Riverside, Calif. The decision to conserve a credit union enables the credit union to continue normal operations with expert management in place correcting previous service and operational weaknesses, NCUA said (News Now June 28). The employees were Arrowhead CEO Larry Sharp; Daniel Marciante, chief financial officer; Gene Shabinaw, senior vice president of lending; and Ray Messler, senior vice president of strategic development (Fontana Herald News July 16). “Arrowhead Central CU is open for business and has continued uninterrupted service to members since the June 25 conservatorship,” John McKechnie, NCUA director of public and congressional affairs, told News Now. “The credit union is operating normally, and member funds are federally insured up to $250,000. NCUA’s principal goal in conserving Arrowhead CU is to protect the members and preserve their assets. “Given that losses at Arrowhead were continuing, and the credit union was not reversing negative trends and was not on a trajectory to return to profitability, the most prudent course of action was for NCUA to assume control of Arrowhead,” he added. “NCUA is conducting a thorough review of Arrowhead’s operations, and will make a determination about the future of the institution when that review is completed.” In a related development, Redlands, Calif.-based economist John Husing, a member of Arrowhead for 22 years, drafted a letter to Deborah Matz, NCUA chair, demanding an explanation for the agency’s decision to take over Arrowhead. He is also seeking community input on the credit union’s future (The Press Enterprise July 16). He has started circulating the letter among businesses and political leaders in the credit union’s service area, in attempts to add signatures of support, the newspaper added. Husing wants NCUA to provide members proof of why it needed to seize Arrowhead, and also have an independent auditor look at the condition of the credit union as of June 25, the paper said. Husing and others have posited that Arrowhead was healing financially. Husing told the newspaper a few business leaders have already agreed to sign the letter, the paper added.

Let CUs help create jobs says IScranton Times-TribuneI

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SCRANTON, Pa. (7/20/10)--The consumer benefits that could be derived from an increase in credit unions’ member business lending continue to receive positive media attention. The Obama administration and Federal Reserve Chairman Ben Bernanke have been pushing to loosen credit for small businesses, according to an editorial in the Friday Scranton (Pa.) Times-Tribune. A bill in Congress would allocate $30 billion through community banks to small businesses to help them expand or increase their payrolls, the newspaper added. “An amendment to the bill could produce more capital for small businesses without additional federal spending,” the paper said. “It would create a regulatory change, authorizing credit unions to increase small business lending from 12.25% of an institution's total assets to 27.5%. According to the National Credit Union Administration, which cited Credit Union National Association Statistics, “the change could make available about $10 billion in additional credit for small businesses, enough to help those businesses create up to 100,000 jobs,” the paper added. The $10 billion infusion to small-business lending can be accomplished quickly without any cost to taxpayers, and therefore Congress should pass the amendment, the paper concluded. To read the editorial, use the link. SEE RELATED STORY (“MBLs could be front and center in Senate”).

Most MasterCard issuers OK Heartland branch settlement

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PURCHASE, N.Y. (7/20/10)--More than 99% of MasterCard's issuers eligible for compensation from a data breach settlement with Heartland Payment Systems Inc. have approved the settlement agreement, said the card company Thursday. The $41.1 million settlement announced in May was related to a breach, disclosed in January 2009 but occurring the previous year, that exposed 130 million credit and debit cards. It was the largest breach in history and affected thousands of credit union members as well as consumers. (News Now May 21). The companies needed 80% of eligible MasterCard issuers to agree to accept an alternative recovery offer as part of the approval of the settlement. In January, Heartland agreed to pay up to $60 million to issuers of Visa-branded credit and debit cards (News Now Jan. 11). Earlier it entered settlements of $3.6 million with American Express and $2.4 million in a consumer cardholder class action suit (News Now Dec. 21 and Dec. 29). The MasterCard and Visa settlements require card issuers to waive rights to any other recovery for claims of losses related to the breach and its sponsoring bank acquirers through litigation and other remedies. When the settlement terms were announced in both the Visa and MasterCard cases, attorneys for a small group of credit unions and banks had indicated the settlement amounted to pennies on the dollar.

Missouri governor vetoes GAP ATM fee bills

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JEFFERSON CITY, Mo. (7/20/10)--Missouri Gov. Jay Nixon has vetoed a bill that affects credit unions in two ways--in regards to guaranteed asset protection (GAP) and ATM fees--said the Missouri Credit Union Association. The bill, S.B. 777, said financial institutions may offer GAP products. Also included in the bill was a provision that allows the owner or operator of an ATM to charge an access fee or surcharge to an individual conducting a transaction with a foreign bank account. Foreign banks can charge Americans a fee when they travel overseas, the association said (The Missouri difference July 16). Nixon indicated in a letter that the state attorney general continues to receive complaints about GAP products, said Peggy Nalls, association senior vice president of Public/Legislative Affairs. “We maintain, and have communicated, that the complaints are not generated by credit union GAP products,” Nalls said. “Credit unions may continue offering these products, but we will be monitoring bills closely next session for any GAP-related legislation. We expect to support legislation regarding the collection of ATM fees from international travelers in the 2011 session.” To read Nixon’s veto letter, use the link.

CUNA calls for entries for Community CU of Year award

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MADISON, Wis. (7/20/10)--The Credit Union National Association (CUNA) is accepting credit union entries for the 2010 Community Credit Union of the Year Award, which recognizes the outstanding work being done by community credit unions nationwide. Awarded annually, this year’s competition will recognize four award-winning credit unions that excel in the advancement of the ideals of the credit union movement, are active in their communities, and provide services that meet the needs of their diverse communities, CUNA said. Winners will be announced at the 2010 CUNA Community Credit Union and Growth Conference in Boston, Oct. 6-9. The entry deadline is Aug. 20. To submit an entry, use the link below or e-mail For more information, use the link.

Delawares first biz loan from a CU not a bank

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NEWARK, Del. (7/20/10)--The very first small business loan in Delaware by way of the American Recovery and Reinvestment Act has been financed by a credit union. Gladys and Eustace Kamanja received a loan from American Spirit FCU, Newark, for a new business in Smyrna. The couple is taking over Excel Beauty Supply and is renaming the store "Queen Bee" (WDEL Talk Radio July 17). Gladys Kamanja had dreamed of owning a beauty supply, according to her husband Eustace. A certified public accountant, he had written a few business plans for others--but doing one for himself was challenging, said WDEL. American Spirit approved a $250,000 loan for their business. The loan is a “win-win” for both the Kamanjas and the credit union, according to Maurice Dawkins, president/CEO of American Spirit. He told WDEL that the credit union researched the business, talked to the owners, and decided that the business could be a “gold mine” because of the traffic in the area. The credit union anticipates the Kamanjas will be as successful as the previous owner, Dawkins added. The Credit Union National Association (CUNA) and credit unions are lobbying for an increase on credit unions’ member business lending caps--currently at 12.25%. An amendment introduced by Sen. Mark Udall (D-Colo.) to a budget stimulus bill would raise the caps to 27.5%. CUNA supports the amendment. American Spirit has $41 million in assets. To see the video, use the link.

CUNA board elects new executive committee members

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MADISON, Wis. (7/19/10)--The Credit Union National Association (CUNA) Board Friday elected its executive committee members. Members include:
* Vice Chair Mike Mercer--president/CEO of Georgia Credit Union Affiliates; * Secretary--Pat Wesenberg, president/CEO of Central City CU, Marshfield, Wis.; * Treasurer--Dennis Pierce, president/CEO of CommunityAmerica CU, Lenexa, Kan.; * At-Large--Susan Streifel, president/CEO, Woodstone CU, Federal Way, Wash.
Chair Harriet May already ascended to her position June 1 after the resignation of Kris Mecham, but the board voted unanimously to ratify her move to chairman as a demonstration of its faith and confidence. The executive committee will serve through the Annual General Meeting at the Governmental Affairs Conference in February.

CU System briefs (07/16/2010)

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* SACRAMENTO, Calif. (7/19/10)--Teresa Halleck, president/CEO of The Golden 1 CU in Sacramento, Calif., will leave the credit union Aug. 12 to begin a new opportunity with a San Diego-based credit union, The Golden 1 said in a release. Under her direction, the credit union increased its assets to more than $7 billion from $4.2 billion. It also added 19 branches through market expansion and mergers. Halleck has been with The Golden 1 for eight years. The credit union’s board will announce their plans to select Halleck’s successor in a few weeks, the credit union said (Photo provided by The Golden 1 CU) ... * DUBLIN, Ohio (7/19/10)--Nueva Esperanza Community CU, Toledo, Ohio, is nearing the final stages of completion to open its doors to members of the Hispanic community. The credit union was approved by the National Credit Union Administration for its federal share insurance application and low-income designation last month. The Department of Commerce also recently signed its official certificate of authority to commence business in Ohio, said the Ohio Credit Union League (eLumination July 14). Nueva Esperanza (New Hope) Community CU will be the first new state-chartered credit union in Ohio in more than 20 years that serves an area in which more than half of area households are low-income ...

Fraudulent checks with CUs name circulating

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BELLEVUE, Wash. (7/19/10)--The Federal Deposit Insurance Corp. (FDIC) has issued an alert that counterfeit checks are circulating with a credit union’s name on them. The checks bear the name of Qualstar CU, Bellevue, Wash. The counterfeit items display routing number 325081966, which is assigned to Qualstar CU. The items are similar to authentic official checks, but authentic checks are light brown with darkened top and bottom borders, said FDIC. Information about counterfeit items, cyber-fraud incidents and other fraudulent activity can be reported to FDIC’s Cyber-Fraud and Financial Crimes Section. They can be submitted electronically at

Louisiana regulators assessing oil spill impact on CUs

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BATON ROUGE, La. (7/19/10)--Louisiana regulators are preparing to conduct a formal survey of financial conditions impacting credit unions as a result of the British Petroleum (BP) oil spill, said the state’s top financial examiner, Sidney Seymour. “So far, the biggest concern we've been hearing is the domino effect from the moratorium [on off shore oil drilling],” said Seymour in detailing the watch-and-wait stance of the Louisiana Office of Financial Institutions in measuring the fallout on banks and credit unions, according to the Louisiana Credit Union league (eNews July 15). As with the aftermath of hurricanes Katrina, Rita and others and now with the BP spill, the agency joined with the National Credit Union Administration (NCUA) and the banking agencies to urge the regulated institutions to provide prudent financial assistance to customers and members impacted by the catastrophe, Seymour said. On Wednesday, NCUA joined with the Federal Reserve, the Federal Deposit Insurance Corp. and the Comptroller of the Currency in a statement stressing that financial institutions “are encouraged to work with their customers and consider measures to assist creditworthy borrowers affected by the Gulf oil spill. Such measures can help customers recover financially and be better positioned to honor their obligations.” The league is asking Louisiana credit unions to contact the league and notify it if a credit union and/or members are being affected by the disaster. The league said it has resources available to help credit unions such as compliance information, strategic planning and others.

Filene Research Institute raises funds for NCUF

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WASHINGTON (7/19/10)--There is a way for credit unions to help their members, the National Credit Union Foundation (NCUF) and the Filene Research Institute all at the same time. During July, the Filene Research Institute will make a $200 donation to NCUF’s general fund for every purchase of Filene’s Debt in Focus program. The program is an online financial assessment tool that encourages people who are intimidated by traditional financial counseling programs to get the help they need. So far, through beta testing by 200 credit unions and the addition of 150 licenses sold in June, more than 250,000 consumers have used the program to understand what they need to do to control their debt. A one-year license for the Debt in Focus is $1,199, while Filene members pay only half that amount ($599). Filene will put the funds raised from sales toward future innovative work that will benefit credit unions. For NCUF to receive a $200 donation from Filene with the purchase of each Debt in Focus license in July, the orders must come from the resource link below.

Minnesota league presidents column dispels CU myths

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ST. PAUL, Minn. (7/19/10)--Mark D. Cummins, Minnesota Credit Union Network (MnCUN) president/CEO, and regular columnist in Finance & Commerce newspaper, recently wrote off common misconceptions about credit unions. In a column titled, “Busting the ‘myths’ about credit unions,” Cummins took issue with the “inaccessible” and “inconvenient” labels that are often placed on credit unions. “For years, credit unions have been considered a ‘best kept secret’ of the financial services industry--it’s time for that to change.” Cummins said. “As credit unions emerge from the financial crisis safe and sound, we need to tout our strength and educate consumers on the credit union difference.” Cummins thwarted three myths in his July column:
* Myth No. 1: Credit unions are not convenient; * Myth No. 2: You must be part of a workers’ union to become a member; and * Myth No. 3: Credit unions are not sophisticated.
On the issue of convenience, Cummins discussed the widespread availability of Internet banking, which includes online account access, bill-pay, e-statements and other services. He also touted Shared Branching, which provides credit union members with a nationwide branch network of more than 4,000 locations. Channeling “credit union 101,” Cummins explained various types of credit union fields of membership when tackling the myth about accessibility and eligibility. “While no credit union can serve every member of the general public, I am confident that every consumer in Minnesota can find a credit union that they are eligible to join … without having to jump through hoops,” he wrote. “And no secret handshake, I promise.” Cummins also refuted the stigma that credit unions are not sophisticated by listing many of the products and services offered by today’s financial cooperatives. “Aw shucks--folks looking for a down-home, inexperienced credit union will have to keep searching,” Cummins said, noting that most credit unions are “full-service, robust financial institutions that have a broad range of product offerings--including investment services, small-business loans and retirement planning.” He concluded by encouraging consumers to consider credit unions for car loans, mortgages or high-yield savings options. To read the column, use the link. During the financial crisis, credit unions have been the subject of positive media attention from several national media outlets such as The Huffington Post, The Wall Street JournalI and The New York Times, according to the Credit Union National Association.

Four directors re-elected at NY CU association

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ALBANY, N.Y. (7/19/10)--Four directors were re-elected to positions on the Credit Union Association of New York’s board of directors at its recent annual meeting.
Click to view larger imageThe Credit Union Association of New York recently elected its board of directors. Pictured are, from left, (seated) Secretary Laurie Baker, The Summit FCU; Ann Hynes, St. Pius X Church FCU; Marie Betti, Western New York FCU; and Vicky Matteson, Jamestown Area Community FCU. Standing from left are John Prumo, GPO FCU; Michael Tobler, Albany Firemen’s FCU; John Gibardi, Entertainment Industries FCU; Chair Alfred Frosolone, Niagara’s Choice FCU; Vice-Chair Louis Jimenez, Montauk CU; Treasurer William Spearman, Mid-Hudson Valley FCU; Mark Pfisterer, AmeriCU CU. (Photo provided by the Credit Union Association of New York)
Re-elected to three-year terms were:
* Laurie Baker, senior vice president/chief operating officer, The Summit FCU, Rochester; * Alfred Frosolone, CEO, Niagara’s Choice FCU, Niagara Falls; * Ann Hynes, president/CEO, St. Pius X Church FCU, Rochester; and * Michael Tobler, president/CEO, Albany (N.Y.) Firemen’s FCU.
The board’s current slate of officers were re-elected for one-year terms:
* Board Chair Frosolone; * Vice-Chair Louis Jimenez, CEO, Montauk CU, New York City; * Secretary Baker; and * Treasurer Bill Spearman, president/CEO, Mid-Hudson Valley FCU, Kingston.
Other board members include:
* Marie Betti, treasurer/CEO, Western New York FCU, West Seneca; * John Gibardi, president/CEO, Entertainment Industries FCU, New York City; * Vicky Matteson, manager/CEO, Jamestown (N.Y.) Area Community FCU; * Mark Pfisterer, president/CEO, AmeriCU CU, Rome; and * John Prumo, president/CEO, GPO FCU, New Hartford.

Virginia CUs add a half-million members in 15 months

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LYNCHBURG, Va. (7/16/10)--Virginia’s credit unions are adding members at a record pace, while helping rebuild the state’s economy by sharply increasing their lending to members with small businesses, according to data from the National Credit Union Administration (NCUA), said the Virginia Credit Union League. Virginia's 191 credit unions added almost a half-million new members between December 2008 and March 2010, according to information from NCUA. Total membership for Virginia-based credit unions reached 6.7 million in March of this year; with an estimated 3.25 million of those members residing in the state. Many of Virginia’s credit unions--especially military and government-affiliated credit unions--have multi-state operations, so their fields-of-membership include residents of other states. Membership growth for Virginia's credit unions consistently outpaces the national average of 1% to 1.5%, said the league. For the year ended March 2010, credit unions in Virginia experienced membership growth of 6.4%; following growth rates of 4.8% for calendar year 2008 and 4.9% in calendar years 2007 and 2006. “Consumers are looking for a better deal for financial services, and they’re finding it at Virginia's credit unions,” said league President Rick Pillow. “Consumers are heeding the advice of the major media outlets and consumer advice columnists that have been urging consumers to move their money to credit unions to take advantage of free checking, lower fees, better rates and more personalized service.” Another area in which Virginia-based credit unions continue to grow is in lending to members with small businesses. As banks reined in business lending, Virginia’s credit unions posted double-digit growth rates for member business loans, including 31.9% growth for the year ended March 2010. Virginia's credit unions have $621 million in member business loans, more than triple the amount of member business loans they held at year-end 2006. NCUA data shows 43 of Virginia's credit unions offer member business loans, though others may enter this line of business if credit unions are successful in getting a U.S. Treasury Department-supported measure through Congress that would raise the current cap on member business lending. Since 1998, credit unions have faced a restriction that limits the total amount of member business loans they can hold to 12.25% of their total assets. Legislation in Congress would more than double this cap, allowing Virginia's credit unions to provide desperately needed credit to Virginia's small businesses, perhaps as much as $275 million in the first year. Increased member business loans from Virginia’s credit unions could also help small businesses add as many as 3,000 new jobs in the state in the first year following a cap increase, according to estimates from the Credit Union National Association. Conservative lending, strong management and a deep capital cushion have also helped Virginia's credit unions weather the worst effects of the financial meltdown and the ensuing recession. As of March 2010, Virginia's credit unions had an aggregate net worth of 9.4%, meaning they are on exceptionally strong financial footing. Regulators consider a credit union well-capitalized--the highest measure--at a 7% net worth ratio. Members are also finding their credit unions to be a savings haven, with savings balances at Virginia-based credit unions having increased 10% to more than $60 billion for the year ended March 2010, led by strong increases in money market account balances and Individual Retirement Accounts (IRAs). “Virginia's 191 credit unions are strong and well-positioned to serve their member-owners,” Pillow noted. “They entered this crisis with strong balance sheets, and have money to lend despite current economic conditions.”

Texas Dow Employees CU upgrades fraud security

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LAKE JACKSON, Texas (7/16/10)--Texas Dow Employees CU (TDECU) in Lake Jackson, Texas, Tuesday unveiled an upgraded fraud system called “managed real time.” The system operates with existing fraud technology and searches for suspicious spending behavior based on debit card use, Ron Wright, TDECU vice president of payment systems, told the Victoria (Texas) Advocate (July 14). The transaction gets blocked and a call is placed to the accountholder to verify a purchase if it gets flagged by the system, Wright told the newspaper. The transaction will go through once the member’s permission is granted. The new system operates in concert with existing security measures, which are akin to a putting up a set of transaction hurdles--monitoring and blocking charges that differ from typical activity regarding the amount spent, the type of merchant and geographic location, Wright added. The upgrade follows two weeks of unauthorized charges showing up on a handful of accounts of TDECU debit card holders, Luke Billeri, TDECU regional vice president of payment systems, told the paper. Since the additional security has been implemented by the credit union’s credit card department, no additional security issues have arisen, Ron Wright, TDECU vice president of payment systems, told the paper.

CU System briefs (07/15/2010)

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* COLORADO SPRINGS, Colo. (7/16/10)--Ent FCU, Colorado Springs, Colo., has surpassed 200,000 in membership. Ent has added more than 4,100 members in the past year, and 43,000 members since 2005. “I believe this membership milestone shows not only our employees’ dedication to member service, but also that the communities we serve continue to see us as a sound source of financial products, services and education,” said Randy Bernstein, Ent executive vice president and chief operating officer. Ent has $3 billion in assets ... * VANDALIA, Ohio (7/16/10)--A man was recently sentenced to 15 years and one month in prison for a December robbery at Abbey CU, Vandalia, Ohio. Chukwuemeka O. Eziolisa, 25, pleaded guilty in March to one count of armed credit union robbery and one count of brandishing a firearm during and in relation to a violent crime (States News Service June 18). The newspaper cited court documents that state Eziolisa entered the credit union on Dec. 19, brandished a handgun, and demanded money from an employee. He fled with cash, and police later recovered the firearm from his house. Eziolisa admitted committing other crimes, including attempted robbery of a credit union on Dec. 4 and a related abduction attempt. He had followed the manager of DayMet CU, Dayton, to her car and to a restaurant. While at the restaurant, Eziolisa pulled up next to her car, pointed a firearm at her and told her to get into his car so he could take her back to the credit union to rob it. The manager escaped the abduction attempt. He was arrested Dec. 29 ...

Coopera offers Reg E Spanish opt-in forms

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DES MOINES, Iowa (7/16/10)--Coopera Consulting, a strategic partner of the Credit Union National Association (CUNA), is offering a package of Spanish Reg E opt-in forms to help credit unions reach their Spanish-speaking members. Under Regulation E, credit union members must opt-in for overdraft protection by Aug. 15. Coopera’s package includes the English and Spanish version of the opt-in form, the English and Spanish version of a member letter about the opt-in update, and a member opt-in confirmation notice in English and Spanish. All Spanish versions of the documents have compliance-reviewed language that states that the English version prevails for legal purposes. All documents are provided in a customizable Word format. Regulation E states that credit unions must get their members’ consent before enrolling them into overdraft protection services. “This turnkey solution will help credit unions reach out to their Spanish-speaking members to ensure they understand this change,” said Warren Morrow, CEO of Coopera Consulting. “It will save them money versus having to translate these forms and obtaining a legal review themselves.” For more information, use the link.

Filene New payment mix about market share

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MADISON, Wis. (7/16/10)--The new payment mix, or the different ways consumers choose to pay for goods, is more about market share than about which payment dominates or will dominate, according to the Filene Research Institute. Credit unions need to recognize that a complex mix of payments--from debit cards to credit cards, each attuned to the context and convenience of the purchase--is here to stay, Filene said. Debit cards have been used by more than half of U.S. households for barely a decade, and there is no evidence that a peak in debit use is imminent--although changes to interchange rules could affect those trends, Filene said. Filene also noted:
* Intensive credit card users have higher incomes and higher debt levels than those with neither card and those with only debit cards. Intensive users also have higher household net worth and a higher net worth to income ratio; * Intensive debit card users are generally younger. Debit-only users decrease by age, from 29% of 18- to 29-year-olds to just 7% of those over 70. Conversely, credit-only users increase by age, from 29% of 18- to 29-year-olds to 49% of those over 70; and * The fraction of households using electronic billing has grown much faster than those for earlier technological innovations.

Kaczynski May received distinguished service award

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LAS VEGAS (7/16/10)--Lech Kaczyñski, the recently deceased president of Poland who was central in helping establish the country’s credit union movement, and Harriet May, the newly named chair of Credit Union National Association (CUNA), were among honorees of the World Council of Credit Unions’ (WOCCU) Distinguished Service Award (DSA). Credit Union Executive Society (CUES), a Madison, Wis.-based professional development organization for credit union executives, also received the award, which is WOCCU’s highest honor. The awards were presented during The 1 Credit Union Conference this week in Las Vegas, which was jointly sponsored by CUNA and WOCCU. Kaczyñski’s relationship with credit unions began in 1989 when he was a direct report to Lech Walesa, the former leader of Poland’s Solidarity movement that helped secure the country’s freedom from Soviet rule. In 1991, WOCCU officials met with members of Solidarity, including Walesa and Kaczyñski, the Ministry of Finance and the Catholic Church to examine the role that credit unions could play in helping Poland’s financial services development. He served as supervisory board president of the Foundation for Polish Cooperative Savings and Credit Unions created by WOCCU at the request of the Solidarity movement. May is president/CEO of GECU of El Paso, Texas. In the 1990s, she helped WOCCU develop and launch IRnet, an international remittance program that helps U.S. workers send money through a network of credit unions. She also initiated the Texas Credit Union League’s formal Texas/Mexico CU Relationship Committee in 1999. CUES, the 2010 institutional honoree, has supported WOCCU’s development and relief initiatives for two decades. In 1990 it pledged $10,000 to support credit union development in Eastern Europe, became an inaugural WOCCU Supporter in 2000 and continues to support WOCCU’s goals and objectives on an annual basis. In 2005, CUES donated $100,000 to help rebuild credit unions in Sri Lanka that were devastated by the tsunami. It also donated $15,000 to WOCCU’s Haiti Relief Efforts. Other awards presented include Credit Union Magazine’s Hero of the Year Award, which was presented to Vic Thate, executive vice president of FAA CU, Oklahoma City, Okla. Thate earned the nickname of “godfather” of Oklahoma’s Credit Unions for Kids program. WOCCU also presented three Ambassador Awards, which given for outstanding service either to the global trade association or the global credit union movement. Recipients included Mark Sievewright, senior vice president of Fiserv; Sue Albrecht, vice president of CUNA Mutual Group; and Sue Mitchell, CEO of Mitchell, Stankovic & Associates. Also honored were 57 participants from 15 countries in the WOCCU Young Credit Union People (WYCUP) program. Of the honorees, the five received scholarships: Scott Daukas, Carol Karugu, Melia Keller, Orla O’Shea, and Christie-Anne Scott. Each recipient will receive an all-expenses-paid trip to attend the WYCUP 2011 program and WOCCU’s World Credit Union Conference in Glasgow, Scotland, next July. In a special presentation, WOCCU also recognized the following donors to WOCCU’s Haiti Relief Fund: the Caribbean Confederation of Credit Unions; CUNA; CUNA Mutual Group; the Irish League of Credit Unions Foundation; Melrose CU, Briarwood, N.Y.; Municipal CU, New York City; the National Credit Union Foundation (NCUF); and Schools First FCU, Santa Ana, Calif. Members of NCUF’s Development Educator program who had earned their International Credit Union Development Educator designation were also recognized during the ceremony. Recipients included: Carlos Calderone, Jaime Chase, Mike Delker, Ken Halkett, Nancy Johns, Bill Myers, Michael Ray, Helen Godfrey Smith, Joe Thomas, Joanne Todd, Donald Urquhart, Linda Webb-Manon and Debbie Wege.

New corporate structure proposal shifts business model

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LAS VEGAS (7/15/10)--The National Credit Union Administration’s (NCUA) proposal to change the corporate system structure will affect corporates’ business model and its expectations of credit unions, according to a panel at The 1 Credit Union Conference, which ended Wednesday in Las Vegas. Corporates can thrive in the future under a different model. The system will need acceptable business models, and the issue of how legacy assets will be treated needs to be resolved before credit unions will contribute more capital, said Bill Hampel, chief economist at the Credit Union National Association (CUNA). “Corporates will require both net interest income and fees to cover expenses,” he said, adding the move to a small balance sheet will require more efficient processing and higher fees. Mike Mercer, president/CEO of the Georgia Credit Union Affiliates, gave a history of the corporate system, saying this past year’s crisis is the third encountered by the corporate system. “NCUA will require corporates to have a smaller default rate, confine interest rate risk, and will tolerate very little liquidity risk,” he said. Everything will be off the balance sheet, but risk will transfer from the corporates to credit union balance sheets. “Examiners will be more focused on how you invest and balance your risk,” Mercer said. Brad Miller, CEO of Southeast Corporate FCU and former CEO of the Association for Corporate Credit Unions, said the challenge for corporate credit unions is that they haven’t been able to quantify their value to credit unions. Corporates will need to focus on effectiveness and efficiency. Miller would favor a collaborative business model but said the system is “so dyamic it would be hard to collaborate.” However, centralizing some back office functions would improve efficiency. If U.S. Central survives, it wouldn’t be as a wholesale credit union but as a retail. “The big issue with the business model is that we moved a lot of risk to USC but we didn’t move enough capital,” Miller said. And even bigger issue is legacy or “toxic” assets. “We’re still seeing losses,” he said. Frank Mitchell, president of Allied CU, Calif., said he would like to see a credit union-owned solution to the problem. “For most , having the Fed settle is not an alternative. You cannot separate settlement from short-term investments and short-term liquidity.” The proposal, he said, “takes out U.S. Central. Those credit unions that depend on U.S. Central “would have the capital but no infrastructure to provide settlement and processing.” The ramifications, said the panel, are:
* The expectation of increased internal investment expertise; * Concentration of risk required will flow to natural person credit unions, especially to those with high concentrations of investments through corporates; * Corporates will be treated as a third party, requiring vendor due diligence.
CUNA Associate General Counsel Mary Dunn moderated the panel.

Ordinary wont change the world--says keynoter Carroll

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LAS VEGAS (7/15/10)--Kevin Carroll has been beating the odds all his life. He briefly gave an account of his childhood to attendees at a general session Wednesday at the 1 Credit Union Conference in Las Vegas. He was abandoned by his father when he was an infant. His mother abandoned him and his two brothers when he was 6 years old. Carroll
Click to view larger image Kevin Carroll challenged attendees at the 1 CU Conference on Wednesday to turn their dreams and ideas into reality. His company--Kevin Carroll Katalyst--is committed to elevating the power of sport and play around the world. (Photo provided by the World Council of Credit Unions)
and his brothers then went to live with their grandparents in Philadelphia. When Carroll says, “Your circumstances do not dictate your destiny,” he knows whereof he speaks. Carroll went on to graduate from college, get a master’s degree, serve in the Air Force as a translator, work as a trainer for the National Basketball Association’s Philadelphia 76ers, write three successful books, work for Nike as its “creative change agent,” and he now runs his own company, Kevin Carroll Katalyst. Carroll has been a credit union member since 1980, when he joined 1st Community FCU in San Angelo, Texas. He said he always felt an affinity for the credit union mission. When Carroll was working for Nike in Beaverton, Ore., he met the staff of First Tech CU, also located in Beaverton. “The staff of First Tech believed in me and my vision for elevating the power of sport and play around the world,” said Carroll. “They gave me a line a credit so I could be spontaneous, like building soccer fields and basketball courts in countries around the world. They helped me be extraordinary and do extraordinary things, because they understood that ordinary won’t change the world. “I’ve leant my voice to a lot of causes that I feel passionate about, most recently an organization called Alliance for a Healthier Generation,” said Carroll. “What are you lending your voice to? What are you being a catalyst for?” He challenged attendees to never lose their sense of wonder. “Adults often lose their sense of wonder,” he said. “Have you ever noticed how an adult walks down the street—hunched over with eyes downcast. Compare that with how kids walk down the street—upright with eyes looking all around. “Your job is to look around and see opportunities in financial services,” he said. “Be extraordinary, because ordinary won’t change the world.” The conference, which ended Wednesday, was presented jointly by the Credit Union National Association and the World Council of Credit Unions.

U.S. could become fraudsters paradise by 2012

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LAS VEGAS (7/15/10--“In an effort to combat fraud, chip-card technology is becoming the standard in every country but the U.S.,” Mark Sievewright, corporate senior vice president for Fiserv, told attendees Wednesday morning at the 1 CU Conference in Las Vegas. “But the U.S. has been reluctant to make the conversion to chip cards,” says Sievewright. “So, by 2012, the U.S. will stand alone as
The U.S. is reluctant to make the conversion to chip cards, which will make the U.S. a “fraudsters’ paradise,” said Mark Sievewright , corporate senior vice president for Fiserv, Wednesday morning at the 1 CU Conference in Las Vegas. He conducted a breakout session on “Positioning Credit Unions for Fast-Growth Economies.” (Photo provided by CUNA)
the only major country without this technology, which will make it a fraudsters’ paradise.” Another challenge credit unions will face in the future is having an inverted business model, according to Sievewright. “During recent history, loan growth has always exceeded savings growth,” he said. “Now and for the foreseeable future, however, savings growth will exceed loan growth. Credit unions need to figure out how to succeed in that environment.” Shifting demographics will present another challenge. “Different age groups want different financial products, services and delivery channels,” he said. “Credit unions will have to provide a wide variety of products and services--and they’ll have to provide them through a variety of delivery channels. “The Apple iPad--or something like it--could become the branch of the future,” said Sievewright. “Your members will expect to be able to access your credit union from their offices, briefcases, or homes through these remote devices. “In the U.S., people over age 80 represent the fastest growth demographic group,” he said. “It’s obvious these people will be interested in income generation, but they’ll also have loan demands. Your credit union needs to be in a position to serve these octogenarians,” says Sievewright.

Census Bureau Minority-owned businesses on the rise

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WASHINGTON (7/15/10)--The number of minority-owned businesses increased by 45.6% to 5.8 million between 2002 and 2007, more than twice the national rate of all U.S. businesses, according to the U.S. Census Bureau. This could have implications for credit unions’ member business lending (MBL). Also, the number of women-owned businesses increased 20.1% during the same period. The total number of U.S. businesses increased between 2002 and 2007 by 18% to 27.1 million (LoneStar Leaguer July 14). The new data come from the Preliminary Estimates of Business Ownership by Gender, Ethnicity, Race and Veteran Status: 2007, from the U.S. Census Bureau's 2007 Survey of Business Owners. The preliminary report released is the first of 10 reports on the characteristics of minority-, women-, and veteran-owned businesses and their owners scheduled for release over the next year. Increases in the number of minority-owned businesses ranged from 60.5% for black-owned businesses to 17.9% for American Indian- and Alaska Native-owned businesses. Hispanic-owned businesses increased by 43.6%. Receipts of minority-owned businesses rose 55.6% to $1 trillion between 2002 and 2007. Increases ranged from a high of 62.9% for Native Hawaiian- and Other Pacific Islander-owned businesses to 28.3% for American Indian- and Alaska Native-owned businesses. Over the same period, receipts of Hispanic-owned and women-owned businesses increased by 55.5% and 27% respectively. Receipts of all U.S. businesses increased by 33.5% to $30.2 trillion. Respondents to the 2007 Survey of Business Owners were asked to report the percent of ownership by gender, ethnicity, race and veteran status for up to four primary owners (Hispanics may be of any race). Business ownership is defined as having 51% or more of the equity, interest or stock in the business. The Credit Union National Association is supporting current legislation being considered in Congress to lift the cap on credit unions’ MBL to 27.5% of total assets from the current level of 12.25%. For more information, use the link.

CMG MI issues white papers for CU mortgage lenders

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SAN FRANCISCO (7/15/10)--CMG Mortgage Insurance Company (CMG MI) has developed three new white papers, including one that offers guidance to credit union mortgage lenders feeling overwhelmed by current volume levels and seeking practical advice on how to improve their efficiencies. “Managing Production Challenges Resulting from Unexpected Increases in Volume,” was created by the Mortgage Insight Panel, an advisory group of credit union executives sponsored by CMG MI that focuses on ways to support credit unions seeking to begin providing mortgage lending services to members. Mortgage volume for credit unions has increased significantly in recent years, especially as credit unions moved to fill the space vacated by banks and other originators. Many have experienced considerable stress on their operations and staff as a result of the unprecedented demand. “The solutions proposed in this paper to the challenges of processing, pipeline management, communication plans, technology and simply transitioning from a refinance market to a purchase market are the result of shared best practices and success stories from around the country,” said panel member Denine Messersmith, vice president for real estate lending with NRL FCU, Oxon Hill, Md. “By implementing them, credit unions can take control of their mortgage lending operations and maximize their opportunities.” The white paper is available on the CMG MI Web site. Use the link. The Mortgage Insight Panel has also completed two more white papers on the topic of loss mitigation, “Loan Modification vs. Loan Refinance” and “Success Stories on Loss Mitigation.” “Even as the housing market continues to improve, loss mitigation remains an important focus for credit unions,” said panel member Deborah Atherton, vice president of real estate lending at Anheuser-Busch Employees CU, St. Louis. “One of the white papers we have developed around this topic offers success stories that can serve as models for credit unions seeking advice on best practices. The other paper assists them in reviewing various scenarios and determining whether a refinance or a loan modification would be the best option for the member and the credit union.” “The Mortgage Insight Panel exemplifies the values of the credit union movement--education, shared knowledge, and a community focus,” said Joe Dillon, senior vice president and general manager of CMG MI. “As part of our commitment to that movement, we support the panel and the work they do to equip credit unions with the understanding and tools to successfully embrace mortgage lending. This newest white paper is a great example of how credit unions work collaboratively to benefit the broader goal.”

CUNA makes MBL case on IFox BusinessI

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LAS VEGAS (7/15/10)--Credit unions have a “long and storied” history of making loans to small businesses since their inception 100 years ago, and could help businesses even more if their member business lending caps were raised, a Credit Union National Association (CUNA) economist told Fox Business Wednesday. “We have continued to lend through the economic downturn,” Mike Schenk, CUNA vice president of research and statistics, told Fox. “Member business lending (MBL) portfolios are growing faster than any other segment, and credit unions have reported double digit gains [in MBLs] in each of the past 12 years.”
Credit unions have increased their business loan portfolios by 10% in the past year, while commercial banks have seen a contraction of 10%. March 2010 data also indicates that loan loss rates at credit unions are “one-third of what we see in the commercial banking sector,” he said. Many small businesses cannot get loans, Schenk continued. “We have data from the [Federal Reserve Board] that shows commercial banks have changed their underwriting criteria, making it more difficult for those loans to be made.” CUNA and credit unions are lobbying to raise their lending cap--currently at 12.25%. Sen. Mark Udall (D-Colo.) has introduced an amendment that is before Congress that would lift the cap to 27.5%. “We believe that [raising the cap] would help credit unions inject another $10 billion into the economy and create another 100,000 new jobs,” Schenk said.

Ten tips aim to make technology more efficient for CUs

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Rudy Pereira, senior vice president operations and technology at Alliant CU, Chicago, during a Wednesday morning breakout session at The 1 Credit Union Conference in Las Vegas. (Photo provided by CUNA)
LAS VEGAS (7/15/10)—“Information technology is the third top expense—behind staffing and facilities—for credit unions. With nearly half of credit unions having negative earnings last year, 2010 should be a year of automating tasks and work processes to drive efficiency.” So says Rudy Pereira, senior vice president operations and technology at Alliant CU, Chicago, who addressed 10 tips for increasing technology and operational efficiency--best practices from the CUNA Technology Council--during a Wednesday morning breakout session at The 1 Credit Union Conference in Las Vegas. The conference was presented by the Credit Union National Association and the World Council of Credit Unions Sunday through Wednesday. The 10 tips are:
* Automated work flow. Enterprise content management will drive making processes more efficient, Pereira said, noting that often a member’s phone call request is forwarded on and not followed through with a single call; * Integration. Integration of platforms and information from departments “lets you go from technology victim to leader,” he said. An integrated platform can handle 90% of calls from members. * Virtualization. By consolidating and lowering the number of servers, Pereira’s credit union saved 60% in costs—and reduced energy used. * Cloud computing. Linking a large group of servers via high speed networks to create a massive data storage system is in the future. By 2012, nearly 80% of Fortune 1,000 companies will engage in cloud computing. It will bring these benefits, Pereira said: scalability, skilled vendors, reduced cost, flexibility, quality of service, security and privacy. Small companies and start ups are at the front of the trend because they haven’t invested in legacy systems that would need replaced. * Task automation. This would include job scheduling, lock box, log reviews and allows the tech staff to work on meaningful projects. * Member self-service. Members making transactions themselves will increase. At Pereira’s credit union, 32% of members were online in 2005 and 60% in 2009. Among the hot new self-service options: ATMs with check image catchers and phones that take photos of a check and can deposit its image instead of the check. * Continuous process improvement. By breaking through patterns of “the way it’s always been done,” credit unions can improve service, ensure quality and reduce expenses. * Fraud analysis tools for online banking ATM and self-service phones. In 2005, credit unions saw significant budget losses beyond their insurance deductibles, with Pereira’s credit union losing $700,000 on its $208,000 deductible. Insurers have put more responsibility on credit unions to manage their fraud losses. * Single sign-ons. Having a single password to log into all the credit union’s systems will reduce help desk calls, save employees time waiting to reset passwords, reduce risk of the password being written down, add layered security, and engage employees. * Collaboration. More credit unions are beginning to consider partnering with other credit unions to use the same core system and staff. “The key is standardization (among vendors). It can drive up efficiency,” Pereira concluded.

Security Service FCU to acquire Colorado-based CU

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SAN ANTONIO, Texas (7/15/10)--Security Service FCU, San Antonio, Texas, has entered into a management agreement to acquire a Colorado-based credit union. The board of Norbel CU, Fort Collins, Colo., decided that the credit union should be acquired by another credit union. “They talked with several credit unions and selected Security Service,” John Worthington, Security Service vice president, told News Now. The two entered into a management agreement June 18 for the acquisition, which is subject to regulatory approval. Security Service has several staff members currently overseeing operations at Norbel. Security Service will have 19 locations in Colorado with Norbel’s five branches. Security Service has 36 service centers in Texas. “We’re already in Denver, Colorado Springs, and Pueblo,” Worthington said. The acquisition will expand Security Service’s presence in its “mountain region,” he added. Security Service has $5.6 billion in assets. Norbel has assets of $129 million.

Filene adds 19 i3 innovators

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MADISON, Wis. (7/15/100)--The Filene Research Institute has selected 19 credit union executives to join the institute’s i3 (Ideas, Innovation, Implementation) program, which fosters the development of new ideas and innovations for credit unions. Each member will serve a two-year term and participate in semi-annual meetings arranged by Filene. The next meeting will be held October 12-15 in Berkeley, Calif. Currently i3 members are partnering with other non-profit organizations and several cooperatives to develop new ideas around housing, retirement savings, and tapping synergies between credit unions and other cooperatives. i3’s most recent pilot is a successful loan feature that rewards members for making loan payments on-time by reducing their interest rate. Filene received more than 60 applications from qualified credit union executives. The selection process evaluated innovative aptitude, experience, and other key factors including present position, leadership abilities, motivation, geography, and type of credit union. “Innovation is a people business,” says Denise Gabel, Filene’s chief innovation officer. “Having such a rich talent pool in these challenging economic times illustrates the industry’s strong commitment to building a better tomorrow.” The new members are:
* Douglas Adams, president/CEO, Muna CU, Meridian, Miss.; * David Birky, director, strategic development, Interra CU, Goshen, Ind.; * Robert Chavez, executive vice president and chief operating officer, Sandia Laboratory FCU, Albuquerque, N.M; * Chris Chippindale, vice president, enterprise initiatives, Ent FCU, Colorado Springs, Colo.; * Paul Farmer, innovation officer, Veridian CU, Cedar Falls, Iowa; * Carlene Frimer, corporate trainer, United Communities CU, Ontario, Canada; * Sharon Gaugler, vice president, lending, A+ FCU, Austin, Texas; * Michael Hostetler, E-Commerce and market research manager, Finance Center FCU, Indianapolis; * Shannon Huot, marketing manager, Educators CU, Racine, Wis.; * Kathy Martin, senior vice president, development and support, Directions CU, Sylvania, Ohio; * Lisa Palma, vice president, member services, TruStone Financial FCU, Plymouth, Minn.; * Betsy Sommers, vice president, staff development, Seasons FCU, Wethersfield, Conn.; * Nick Talley, assistant vice president, branch lending, Chetco FCU, Brookings, Ore.; * Lauren Vance, vice president, strategic development and product delivery, Christian Financial CU, Roseville, Mich. * Joni Walker, senior vice president, Missoula (Mont.) FCU; * Michael Warrell, senior vice president, member service, Smart Financial CU, Kingwood, Texas; * Corina Watts, senior manager, marketing, University FCU, Austin, Texas; * Derrik Wynkoop, vice president, retail delivery, Hudson Valley FCU, Poughkeepsie, N.Y.; and * Stacie Wyss-Schoenborn, vice president, member solutions, Boeing Employees CU, Seattle.
For more information, use the link.

CU System briefs (07/14/2010)

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* ROCKVILLE, Md. (7/15/10)--MCT FCU has awarded four student members $1,500 each in college scholarships. The Bill Teel Memorial Scholarship was created to honor a former employee who helped bring innovative technology to the credit union in the 1970s and 1980s. Teel is remembered as a model employee with a strong work ethic. The four members receiving scholarships include Tiara Cobbin, University of Maryland College Park; Deborah Cooke, Montgomery College; Kara Karpman, Duke University; and Josiane Tossa, University of Maryland College Park ... * ALBANY, N.Y. (7/15/10)--Sperry Associates FCU, New Hyde Park, N.Y., received the 2010 Ralph W. Hillman Marketing Award from Universal Sharing Network (UsNet). The award recognizes a participating credit union for exemplifying the spirit and enthusiasm consistently exhibited by the late Hillman in his support and marketing of the shared branching network. Sperry Associates FCU has $372 million in assets. UsNet is a credit union service organization owned by New York credit unions. Pictured is Andrew Kernan, Sperry director of business services and corporate development. (Photo provided by the Credit Union Association of New York) ...

Coping with a growing compliance burden

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LAS VEGAS (7/14/10)--Every financial crisis in the past has led to more regulation, but “this one’s a doozy,” with 61 regulatory pronouncements made in 2009 and more expected in 2010, said Alan Cameron, president/CEO of the Idaho Credit Union League, and chairman of the Credit Union National Association’s (CUNA) Consumer Protection subcommittee.
At The 1 Credit Union Conference, a Monday breakout session on coping with the increasing burden of compliance told credit unions that 61 regulatory changes were promulgated during 2009. Speakers at the breakout were, from left, Alan Cameron, president/CEO of the Idaho Credit Union League and chairman of the Credit Union National Association’s (CUNA) Consumer Protection subcommittee; Donna Chardeen, director of compliance and fraud mitigation at SEFCU, Albany, N.Y., and Kathy Thompson, CUNA senior vice president for compliance and legislative analysis. (Photo provided by CUNA)
Cameron was one of three panelists who spoke about coping with a growing compliance burden in a breakout session Monday at The 1 Credit Union Conference in Las Vegas. Others were Donna Chardeen, director of compliance and fraud mitigation at SEFCU, Albany, N.Y., and Kathy Thompson, CUNA senior vice president for compliance and legislative analysis. Regulations help avoid crisis, help organizations follow the straight and narrow, protect consumers, help them shop for services and ensure fair competition, Cameron said. However, they bring an immense burden in learning and costs. Regulations mean credit unions are looking at new compliance software, forms, and training, and all these cost money that would go to the members. “It takes the focus away from service,” he said. The complexity of regulations can create a chilling effect on attracting new board members. “It puts a premium on hiring a senior manager with compliance knowledge” who survives day to day, instead of a visionary, Cameron said. The credit union needs to create a culture of compliance. “Get the big picture,” he said. “Understand the effect of laws and the fiduciary duty to comply. Make time for compliance in every board meeting. Make compliance part of the job description and ensure staff is fully trained.” Those sentiments were echoed by Chardeen, who said, “Compliance is 100% of my job. I have staff, expertise and training, and attend conferences. The credit union board supports this. Knowing the credit union understands the importance of compliance means I don’t have to sell it. Actual resolution (getting staff to follow new regulations) is more challenging. We have compliance requirements for all individuals on staff. Compliance is built into their job descriptions.” She also noted that the board agenda often covers compliance. “The topics are built in over 12 months so the board’s not tackling all the new rules all at once.” Thompson agreed that a best practice is to get in a regular review cycle. “The examiner wants to see the credit union is on top in compliance.” She advised credit unions to monitor the National Credit Union Administration’s (NCUA) letters to credit unions. The letters indicate what NCUA is thinking about and examiners will often monitor the issues discussed. She also recommended reviewing annual reports and “Compliance Matters” section of Credit Union Magazine. “Boards should ask really great questions,” Thompson said. “The piercing question is the best service you can give, showing you were on top of the compliance issues.” The panel also discussed Regulations E and DD, ATM and one-time debit card rule changes, Reg Z on disclosures under the credit card act, opting in rules for overdrafts, and interchange fee changes.

Interchange governance and more focus of global leaders panel

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LAS VEGAS (7/14/10)—What lies ahead for credit unions in different parts of the world? The second of twin general session panels Tuesday addressed that issue at The 1 Credit Union Conference, the joint Credit Union National Association (CUNA) and World Council of Credit Unions (WOCCU) in Las Vegas this week.
Bill Hampel, senior vice president and chief economist at the Credit Union National Association, describes the U.S. credit unions’ governance structure in a panel discussion during Tuesday’s general session at The 1 Credit Union Conference, meeting this week in Las Vegas.
Like the earlier panel, panelists Louise Petschler, CEO of Abacus-Australian Mutuals and a WOCCU director; Bill Hampel, CUNA’s senior vice president of research and chief economist; and Hervé Guider, general manager of the European Association of Cooperative Banks, tackled the topic of board performance at the prompting of moderator and WOCCU director Daniel Burns, chair of Central 1 CU in Canada. “Australian credit unions are regulated to the same degree as banks and all financial institutions,” said Petschler. “Directors must pass a skills test to serve. If there aren’t sufficiently qualified directors on a board, the board may appoint other directors rather than wait for them to be elected by the members.” Guider agreed that directors must be able demonstrate both independence and qualifications before accepting a board position. While Australian directors are paid, European cooperative bank directors and U.S. credit union directors are unpaid. The U.S. also has no regulated standards for directors, said CUNA’s Hampel, who supported the importance of qualified candidates, but also offered a caution to the audience. “Having expertise on the board does not necessarily guarantee success,” he said.
Click to view larger imageTuesday’s general session of The 1 Credit Union Conference featured an international group discussing what lies next for credit unions around the globe. From left are panel moderator, Daniel Burns, World Council of Credit Unions (WOCCU) director and chair of Central 1 CU in Canada, with Louise Petschler, CEO of Abacus-Australian Mutuals and a WOCCU director; Bill Hampel, Credit Union National Association senior vice president of research and chief economist; and Hervé Guider, general manager of the European Association of Cooperative Banks. (Photos by World Council of Credit Unions)
The panel also touched on the impact that new interchange fees will have on credit unions. “Australia is the most regulated credit union system. We’ve dealt with the interchange issues for three years,” said Petschler. Credit unions lost $22 million in revenue but made $19 million in revenue from other reforms. For the system, it was not a major shock, but for some credit unions, it was.” The net net result has been less flexibility and higher fees for consumers, Petschler said. “It is an anti-consumer reform,” she added. Lack of member growth also became the topic of debate. Ironically, field-of-member qualifications that once helped U.S. credit unions grow have proven to be an impediment, according to Hampel. “Field of membership requirements used to be a severe restriction on credit union growth, but its legacy has proved to be just a severe nuisance,” said Hampel. “It retards growth and that growth would be greater if we could get rid of the restriction.” The group also discussed the recession’s impact on credit unions. The biggest challenge for U.S. credit unions, said Hampel, is “recovering from the recession. Credit unions themselves will be fine, but our members will be undergoing a long process of deleveraging. Credit unions must find new ways to respond to members,” he said.

CU governance challenges tops Tuesday conference panel topics

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LAS VEGAS (7/14/10)--The question of performance standards, capabilities and remuneration for credit union directors worldwide dominated discussion among regulators and economists who served as panelists during twin general session discussions Tuesday at The 1 Credit Union Conference.
Click to view larger imageThe financial crisis brought the topic of regulation and supervision to the forefront, said a global panel of regulators during The 1 Credit Union Conference, which ends today in Las Vegas. From left are the discussion’s moderator, Daniel Burns, a director of the World Council of Credit Unions and first vice chair of Credit Union Central of Canada; Andy Poprawa, president/CEO of the Deposit Insurance Corp. of Ontario, Canada; Gigi Hyland, National Credit Union Administration Board member; and Brandon Khoo, executive general manager of the Australian Prudential Regulatory Authority.
The conference is the joint meeting co-sponsored by Credit Union National Association (CUNA) and World Council of Credit Unions (WOCCU). Situations differ for directors in Australia, Canada, Europe and the U.S., but performance requirements are the same--meaning greater levels of both responsibility and risk for volunteer and paid directors at credit unions worldwide. Participants in a panel focused on recent regulatory development agreed that clearer definitions of board terms and responsibilities would make governance easier to regulate. Gigi Hyland, a board member at the National Credit Union Administration in the U.S.; Brandon Khoo, executive general manager for the Australian Prudential Regulatory Authority; and Andy Poprawa, president/CEO of the Deposit Insurance Corporation of Ontario, Canada, offered insights into conditions in each of their own countries in a panel moderated by Daniel Burns, WOCCU director and first vice chair of Credit Union Central Canada. “Currently, there are no board term limits in the U.S.,” said Hyland. “That means some directors can serve 30, 40, 50 and even 60 years. While that’s not necessarily a bad thing, it may mean that directors don’t always have the fresh set of eyes needed to see changes in their credit union and the market.”
“Many credit unions lost capital in corporates. Are the credit unions ready to step up to the plate again?” asked National Credit Union Administration Board member Gigi Hyland, appearing with an international panel of credit union regulators at The 1 Credit Union Conference Tuesday. “We have to find a way to deal with toxic assets,” she added. (Photos provided by the World Council of Credit Unions)
A larger issue in many countries is the absence of board performance standards, which has the potential to pose significant risk for some credit unions, according to Poprawa, who also chairs WOCCU’s International Regulators Roundtable, an annual meeting that will take place Thursday after the close of the conference. “We have to be satisfied that people on boards have the right set of skills, that they can read a balance sheet and financial statements. This is more challenging in small credit unions,” Poprawa added. “Governance is an area of interest and also one of primary risk for global credit unions,” said Poprawa. “The Regulators Roundtable sees this and will be addressing the possible creation of global governance standards at its meeting.” Other topics addressed by the panel included the future of corporate credit unions and access to supplemental capital. “Credit unions have been able to issue capital instruments since 1992 in Australia,” said Khoo. “They are limited in Tier 1 instruments because they’re mutuals, but there are a small number and it’s a challenge to find Tier 1 instruments,” he said. For a report on the second panel, see the related story inNews Now, “Interchange, board governance and more focus of global leaders panel.

Session highlights CU business successes at The 1

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LAS VEGAS (7/14/10)--“As our business lending department continues to grow, we continue to work closely with our marketing and business development department,” said Sandi Carangi, vice president of marketing and business development at Erie (Pa.) FCU. The marketing folks have access to all the competitive intelligence the business lenders need.
Click to view larger imageSandi Carangi, at podium, vice president of marketing and business development at Erie (Pa.) FCU, discusses how her credit union handles member business loans, while Scot Hadden, vice president of business banking for Servus CU in Alberta, Canada, looks on. They were presenters at the Monday afternoon business-lending session at The 1 CU Conference in Las Vegas. The conference, presented by the Credit Union National Association and the World Council of Credit Unions, ends today. (Photo provided by the World Council of Credit Unions)
Carangi, along with Scot Hadden, vice president of business banking for Servus CU in Alberta, Canada, were presenters at the Monday afternoon business-lending at The 1 CU Conference in Las Vegas. The conference, presented jointly by the Credit Union National Association (CUNA) and the World Council of Credit Unions, ends Wednesday. Carangi said her credit union’s business-loan portfolio should be about $10 million by the end of this month. About half of Erie FCU’s business loan volume comes through its credit union service organization. Her credit union has opened 217 business accounts during the past year with an average balance of over $2 million in deposits, she said. “It’s not clear yet how legislation will affect interchange fee income, but right now interest income on business debit and credit cards is very strong,” she said, referring to the interchange provision in the regulatory reform bill before Congress. The provision would allow the Federal Reserve Board to set interchange fees, a provision credit unions and CUNA strongly oppose. Hadden said his credit union has offered business services for many years. It has a mature business services department, with a $3 billion business loan portfolio and 200 employees dedicated to business services. He offered these keys to business-services success:
* Fast--Most small-business owners aren’t blessed with patience, so don’t be bureaucratic. * Competitive--The market is smart, but you don’t have to have the lowest fees and rates. * Flexible--If a deal is strong, your terms should be flexible. * Advisory--Make it your business to know their business. * Relationship-based--This is the most important one and is the key to success in business banking. Visit your businesses and take interest in them and their business. Smile, relax, and have fun. Go the extra mile for your businesses and over a full package of services. * The employer of great people--There are a lot of people out there who have the tech skills to do business lending, but you need sales and relationship skills. * Involved in your community—Be visible and support other small, nonprofits.

CU takes fin ed to prison inmates

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OKLAHOMA CITY (7/14/10)--Tinker FCU (TFCU), Oklahoma City, is teaching financial education to prison inmates to help them become financially sound when they are released. Cynthia Campbell, TFCU assistant vice president and manager of the credit union’s Financial Empowerment Program, has conducted workshops at two minimum-security prisons in Oklahoma for prisoners who are within one year of being released. “I’m not sure I would ever have thought to pursue these channels, but after conducting workshops at two minimum-security prisons at the request of the Department of Corrections, I can’t think of any group who needs it more,” Campbell said. At Clara Waters Community Corrections Center, a men’s facility, she presented “Building a Better Budget” and “Understanding Credit” to 30 inmates. At Hillside Community Corrections, a women’s facility, she presented the same topics to 37 inmates. “They are making plans for how to reintegrate into their family life and society,” Campbell said. “They have all the same concerns everyone else has, like how they’re going to pay their bills and make a living.” She said that the inmates were “a gracious audience” and several were TFCU members. Since being incarcerated, their only means of conducting financial business is by phone. Inmates said member service representatives at TFCU always treat them respectfully. “I learned that incarceration is hard on the soul,” Campbell added. “Many of these people were depressed. Just the fact that TFCU cared enough to show up and take an interest in them, teach them and give them a free pen made their entire week.” TFCU has presented financial education workshops to teens in a drop-out recovery program, the Supporting Kids in Independent Living program, and those in the Department of Human Services system who are about to “age out” of the system when they turn 18. “They need advice on how to get a job, maintain a budget and manage checking account,” Campbell said. “Our goal in providing free financial education is to help people, and we love to bring that sort of knowledge to teens who probably won’t get it anywhere else.” The credit union has presented roughly 443 financial education workshops to more than 10,000 children and adults in 2009, and is on track to exceed those numbers this year. TFCU has more than $2 billion in assets.

CUNA signs licensing agreement with NCBA

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MADISON, Wis. (7/14/10)--The Credit Union National Association (CUNA) has signed a formal licensing agreement with the National Cooperative Business Association (NCBA), the national U.S. membership association representing cooperatives, to provide customized professional development training to its members. “This partnership gives CUNA and the NCBA the opportunity, through education, to demonstrate the power of the cooperative community working together,” said Bill Cheney, CUNA president/CEO. “Together,
The Credit Union National Association (CUNA) signed a licensing agreement with the National Cooperative Business Association (NCBA). Pictured are, left, Bill Cheney, CUNA president/CEO and Paul Hazen, NCBA president/CEO. (Photo provided by CUNA)
we are making key components available to a wider swath of the leadership of the cooperative community--which strengthens both of our organizations and the cooperative movement generally.” Through its comprehensive education, co-op development, communications, public policy, and member services programs, NCBA helps co-ops strengthen their businesses so they can better serve their members, and provides a unified voice on Capitol Hill. Dedicated to both domestic and international cooperative development, NCBA works to develop co-ops in the U.S. and abroad. NCBA’s membership includes all types of cooperatives across all industries--consumer, producer, shared services and worker-owned co-ops, NCBA and CUNA said in a joint release. “This agreement allows cooperatives without access to professional educational content to further educate their volunteers with the programs CUNA has developed,” said Paul Hazen, president/CEO of NCBA. “This joint effort will reinforce the service value the NCBA brings to our membership.”

Texas CU league Brazil sign international partnership

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FARMERS BRANCH, Texas (7/14/10)--About 100 representatives from the Texas and Brazil credit union movements Sunday witnessed the official signing of a “People to People” partnership agreement between the Texas Credit Union League (TCUL) and the Confederação Interestadual das Cooperativas Ligadas ao SICREDI (SICREDI), a trade association for 128 Brazilian credit unions, and one of Brazil’s leading credit union organizations. The signing took place at The 1 Credit Union Conference in Las Vegas, and brings the number of World Council of Credit Unions (WOCCU) partnership programs to 26 (LoneStar Leaguer July 13). The partnership allows dialogue and the exchange of ideas and best practices between Texas credit unions and counterparts in Brazil, Ensweiler added. “We are enthusiastic about solidifying a partnership with SICREDI,” said TCUL President/CEO Dick Ensweiler. “While they are a relatively young movement, they are quite sophisticated. I’m extremely impressed with the level of cooperation that exists between SICREDI’s member credit unions, and I’m confident that this will be a mutually beneficial relationship.” The partnership will kick off tomorrow, when about 25 SICREDI staff will visit Members Trust of the Southwest FCU in Stephenville, followed by a tour of a 3,300-plus head dairy farm. Agricultural cooperatives are very strong in Brazil, and many credit unions in Brazil started out serving farmers, TCUL said. Collaboration will continue in September, with a four-week visit by 11 SICREDI staff to TCUL and its member credit unions, to get a better sense of how U.S. credit unions approach operational, marketing and member service issues. The visits will be reciprocated at some point in the future with a visit by TCUL staff and members to SICREDI’s office and operations in Brazil. "There is always room for learning from others, and we expect there to be a lot of idea-sharing and exchanges that will make all of our credit unions even better,” said Manfred Dasenbrock, chair of SICREDI and a member of WOCCU’s board of directors who participated in the agreement signing. “We look forward to working with the league and Texas credit unions.” TCUL also maintains a partnership with the Jamaica Credit Union League.

CDCU opens green branch in San Francisco

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SAN FRANCISCO (7/14/10)--Residents of San Francisco's South of Market (SOMA) neighborhood, have a new financial institution to assist them now that Northeast Community FCU (NECFCU), a $10 million-asset community development credit union (CDCU) serving more than 1,650 members, has opened its fourth retail location.
Northeast Community FCU (NECFCU), San Francisco, a $10 million-asset community development credit union (CDCU) serving more than 1,650 members, has recently opened its fourth retail location. (Photo provided by the National Association of Community Development CUs)
Located in a “green” building on the corner of Howard Street and Sixth Street, the SOMA branch is NECFCU’s latest endeavor to expand service to a community in desperate need of accessible and reliable financial services. San Francisco’s Sixth Street corridor is a mixed-use community. The area is characterized by high rates of homelessness and drug use, which has led to large numbers of vacant ground-floor commercial spaces; a prevalence of older residential and commercial buildings, including many single-room occupancy hotels; and a dearth in regulated financial service providers, with check cashers, payday lenders, pawn shops and loan brokers among the most widely available financial institutions in the community. Over the years, residents, developers and local businesses approached NECFCU encouraging the credit union to open a SOMA branch, but none of the commercial street-front locations available were suitable for a credit union. “We had many members and SOMA residents who requested that we open a convenient branch in the area to offer basic financial services,” explained Lily Lo, CEO/manager of NECFCU. “Before the opening of the SOMA branch, the neighborhood had no banking facilities in the area, and members in the community were forced to use check-cashing and loan services that charged exorbitant fees.” It wasn't until 2006 that Northeast Community FCU would find its SOMA home, with the completion of Plaza Apartments, the city’s first totally “green” low-income housing project for SOMA residents. Despite identifying a suitable location, it would take another four years before the credit union's SOMA branch would open for business. “After years of effort, and with extensive assistance from our partners and colleagues, there is now a responsible alternative to meet the community's financial needs,” Lo said. Special recognition was made to Patelco CU, a San Francisco-based $4-billion-asset credit union that has been one of Northeast Community FCU’s strongest supporters over the years, assisting with the development of the CDCU's branches in the Tenderloin, Visitacion Valley, and now SOMA; and providing each of those locations with Patelco ATMs, which the CDCU members can use for free. “As a community development credit union, Northeast Community is on the front lines in serving the low-income and underserved residents of San Francisco,” said Barry Kane, Patelco senior vice president of operations. “It continues to be an honor for Patelco to support the efforts of Northeast Community FCU in reaching out to these populations.” Representatives from several San Francisco credit unions also attended, including Patelco CU; Spectrum CU; SF Fire CU; SF Police CU; and Mission SF FCU--the only other CDCU in San Francisco--serving the predominantly Latino Mission neighborhood.

Convention panel outlines how interchange provision will affect CUs

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LAS VEGAS (7/13/10)--The interchange provision of the federal regulatory reform bill in Congress exempts small credit unions, but they would still be impacted directly by how the Federal Reserve Board would proceed in setting rates in the next nine months, said a panel in a breakout session at The 1 Credit Union Conference Monday in Las Vegas. The joint conference presented by the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) ends Wednesday.
Click to view larger imageCO-OP Financial Services CEO Stan Hollen (at podium) outlines how the interchange provision of the regulatory reform bill would impact credit unions at a breakout session Monday morning at The 1 Credit Union Conference in Las Vegas. Other members of the panel are, from left, Mary Dunn, Credit Union National Association (CUNA) associate general counsel, and Ryan Donovan, CUNA vice president of legislative affairs. (Photo provided by the World Council of Credit Unions)
In the session, “How Interchange Will Affect Your Credit Union,” the panel included Stan Hollen, president/CEO of the CO-OP Financial Services; Mary Dunn, CUNA associate general counsel; and Ryan Donovan, CUNA vice president of legislative affairs. Donovan described the grassroots efforts credit unions conducted against the provision, which would allow the Federal Reserve Board to set rates for interchange transactions. The combined grassroots power of credit unions and community banks caught legislators off guard, he said. “The provision was not envisioned as part of the regulatory reform bill, as initially envisioned by the Obama administration. It would be a shame if Wall Street’s actions would result in legislation aimed at protecting the consumer but instead resulting in the end of free checking and transaction fees,” he said.
The grassroots operation delivers three messages, he added:
* Congress has not thoroughly studied the provision; * The interchange provision will have a disproportionate effect on small issuers; and * Consumers lose if the measure is enacted.
Hollen praised CUNA for its role in negotiations on the provision. “The positive changes that occurred in the negotiations were not made by the banks or payments network associations,” he said, noting that “CUNA made the right decision” in opposing the bill. Credit unions will need to manage their interchange income by increasing the penetration of accounts, by offering free analytics to encourage more members to use debit cards, and reviewing the value of point of sale networks. “If you use multiple channels, the merchant will pick the lowest-cost channel,” Hollen told the group, Dunn noted the provision would change the way interchange is dealt with for the first time. “It exempts small issuers (such as credit unions) but it doesn’t exempt small issuers from the impact of regulation,” she told session attendees. Areas to be regulated include interchange rates; rules to prevent the evasion of the amendment, which could “hurt or help us”; fraud-related standards; network fees; and exclusive arrangements, Dunn said. The Fed would set the rates for large issuers and is not required to write rates for small issuers, but the deadline facing the Fed will make sure the Fed looks only to large issuers. But, Dunn said, the Fed doesn’t have to set the fees but must make sure rates set by the networks are reasonable and proportionate. CUNA and the leagues are addressing the issues, encouraging supportive statements from key lawmakers, meeting with the Fed, studying possible litigation, expanding CUNA’s Working Group on the matter, and working with partners, Dunn said. CUNA will ensure exemption is meaningful and that it avoids unintentional consequences and preserve interchange income to the extent possible, Dunn concluded.

Adhering to core values makes good organizations greatCollins

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LAS VEGAS (7/13/10)--Adhering to unshakeable core values is the only thing that keeps even great companies remaining great, author Jim Collins told attendees at The 1 Credit Union in Las Vegas Monday.
Jim Collins, author of Good to Great and other books, told credit unions at The One Credit Union Conference in Las Vegas Monday that great leaders of great organizations show certain traits, including having humility not arrogance, and they are driven and passionate about a cause that matters, rather than themselves or the business's bottom line. (Photo provided by the World Council of Credit Unions)
Monday’s general session keynoter at the joint conference of the Credit Union National Association (CUNA) and the World Council of Credit Unions is the author of Good to Great and other books. Collins carried on the theme of credit unions’ advantage by pointing to the fact that great companies remain great only when they adhere to unshakeable core principles. Thanks to their member-focus philosophy, credit unions have a natural advantage over many for-profit companies, but they can’t afford to think that their philosophy will make them successful in the absence of excellent management. Faith in the facts characterizes the climb to success, and failure to deal with the facts breeds a fall, he said. “Credit unions face brutal facts. They are smaller than large financial institutions which can deal with the increasing burden of regulation and take opportunities,” he added. For credit unions, a “brutal fact is that the average age of members is going up. I challenge you to confront that fact. Ask how are we going to get this next generation a part of the movement? They distrust institutions, and they require different mechanisms…but it must be done, he said. “There is one towering, giant truth,” Collins observed. “Credit unions can be trusted and they are run well. Who on earth could promise a better deal to members? But it will be up to us to communicate to the next generation if we want to survive.” Collins also outlined his five stages of decline that affect many companies and the role that leadership plays in facilitating that decline. Leaders who succeed are those passionately committed to success, but that commitment must focus on the organization and its ideals. Leaders who focus on success for their own gains quickly lose ground, he explained. The credit union philosophy helps mitigate that self interest, but requires even higher levels of commitment in order to achieve its goals. “What we stand for should never change, but how we do things should always be open to change,” Collins said. “When credit unions first came into existence, it was the realization of a BHAG--a big hairy ostentatious goal. Now, what is the credit union movement’s next BHAG?”

CU leaders note unity in One WorldOne Event

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LAS VEGAS (7/12/10)—The theme was One World/One Event, and credit union leaders who opened The 1 Credit Union Conference’s general session Monday morning in Las Vegas marked the efforts of credit unions and the unity of the credit union movement worldwide.
Credit Union National Association (CUNA), William "Bill" Cheney told attendees at the CUNA and World Council of Credit Unions (WOCCU) The 1 Credit Union Conference, that credit unions made 700,000 contacts with Congress with 1,000 persons visiting the Hill on the interchange provision in the federal regulatory reform bill. "Those are strong numbers... but we can improve on that by engaging credit union members in credit union issues that matter to them."
“Bear in mind we are a global movement,” said new Credit Union National Association (CUNA) President/CEO William “Bill” Cheney at the historic joint conference of CUNA and the World Council of Credit Unions (WOCCU). “The U.S .credit union movement is just one part, but an important one. Through our WOCCU membership, CUNA will continue a robust, important role in the world movement,” he added. The conference theme “rightly conveys the unity of the credit union movement, worldwide. In fact, CUNA and the U.S. credit union movement stand in unison with the world-wide movement’s vision--as articulated in WOCCU’s vision statement: ‘to improve people’s lives through credit unions,’” Cheney said. Earlier, Dan Mica, CUNA’s outgoing president/CEO, passed the reins to successor Cheney, who promised to pursue U.S. credit unions’ regulatory challenges with renewed vigor. “Isn’t it great to be part of the world credit union movement?” asked Mica in a now-familiar greeting, passing an oversize “key to CUNA” to Cheney. In recognition of Mica’s 14 years of service at the helm of CUNA, the National Credit Union Roundtable’s Bill Raker, president/CEO of U.S. FCU in Burnsville, Minn., read a proclamation lauding Mica’s contributions. He also presented CUNA’s former CEO with an oversize check representing a $222,650 contribution on Mica’s behalf to Credit Union House in Washington, D.C. The donation was made up of contributions from the 100 largest U.S. credit unions that make up the CU Roundtable. Cheney spoke to the challenges still facing U.S. credit unions, including the recently passed interchange regulations, member business loan restrictions, and the need for capital reform and alternative sources of capital for credit unions. He acknowledged the hard work done by credit unions to date, but stressed the need for increased grassroots efforts in terms of both lobbying and education to oppose current and future legislation that could harm credit unions’ abilities to serve members. “We’ve seen very little growth in market share during the past 20 years,” Cheney said. “To remedy that, capital reform will have to be one of our top priorities. We have to be able to define our own future.”
World Council of Credit Unions (WOCCU) President/CEO Pete Crear welcomed "2,800 of my close friends" to the conference, noting that in 97 countries, 49,000 CUs served 184 million people worldwidein 2009. Credit unions have aggregated savings totaling US$1.1 trillion, their loans increased by $65 billion over 2008, and they are "helping a lot of members in a lot of places." (Photos provided by the World Council of Credit Unions).
The theme was carried through by Crear, who talked about the “one credit union movement” that WOCCU serves, illustrating the great need credit unions fill in many of the countries in which WOCCU operates. “It’s a movement that crosses boundaries and borders, has no language barriers and operates in as many different ways as there are members to serve,” Crear said. “The one movement is something of which you all are part.” Crear’s tour through Mexico, Kenya and Afghanistan culminated in a seven-minute video that looked in greater depth at WOCCU’s program in Haiti. “Our efforts in Haiti demonstrate clearly the need for strength, for unity, for hope and for commitment to the credit union ideal,” Crear added. “As long as we continue working together toward this goal, we will be the single best answer to the financial needs of all our members.” Nearly 2,800 participants from 60 countries are gathered at the conference, which ends Wednesday.

News Now Get live updates from conference

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LAS VEGAS (7/13/10)--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, And WOCCU's website, the official conference website, will feature daily stories on its website. The conference will end Wednesday.

Editorial Let CUs help fill lending void with more MBLs

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DALLAS (7/13/10)--Congress should “give credit unions broader authority to make the small-business loans that banks aren’t making,” according to a Saturday editorial in the Dallas Morning News, which noted it would be a way to increase capital to small businesses at no cost to taxpayers. The editorial mentioned that bankers predictably are against credit unions’ goal to have Congress raise the small-business lending cap to 27.5% of assets from the current 12.25% limit. U.S. Sen. Mark Udall (D-Colo.) has drafted an amendment that could be added to a pending small-business lending bill that would raise the cap to that level. (SEE RELATED STORY, “MBL amendment could be offered for possible Senate jobs bill today.”) “The higher cap would free the institutions to generate $10 billion in new loans in the first year and add more than 100,000 jobs nationally,” the editorial said. “And, best of all, taxpayers would not be on the hook for any of this.” Credit unions are not a threat to banks, despite bankers’ claims, the editorial said. “Even if most credit unions reached the [27.5%] cap, banks would still have more than 90% of the small-business market. “If bankers aren’t willing to be a bigger part of the solution, Congress must allow credit unions to fill the void,” the News concluded.

Federation program helps 40 CUs with CDFI certifications

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NEW YORK (7/13/10)--The National Federation of Community Development Credit Unions’ CU Breakthrough consulting service announced that in less than six weeks, between March 15 and April 30, it assisted nearly 40 credit unions with certification applications to the U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund. The record demand for certification came from credit unions looking to tap into Treasury’s new Community Development Capital Initiative (CDCI), which makes low-interest, long-term secondary capital available to CDFI-certified community development credit unions (CDCUs). The federation met the increased demand by developing a methodology based on random sampling, which allowed it to determine target market eligibility much more accurately and efficiently than ever before. Only seven months into the current year, this is already the largest number of credit union CDFI certification applications ever submitted to the CDFI Fund in any given year, the federation said. If all credit union applications are approved, the total number of CDFI-certified credit unions will increase by 25%, the federation added. The most recent announcement from the CDFI Fund listed seven new CDFI-certified CDCUs:
* Cooperative Center FCU, Berkeley, Calif.; * CoVantage CU, Antigo, Wis.; * Foss Avenue Baptist Church FCU, Flint, Mich.; * Liberty County Teachers FCU, Liberty, Texas; * Northland Area FCU, Oscada, Mich.; * Potlatch No. 1 FCU, Lewiston, Idaho; and * SunTide FCU, Corpus Christi, Texas.
Six credit unions also were certified in May:
* Birmingham (Ala.) Financial FCU; * Credit Union of Atlanta; * Fidelis FCU, New York; * Old West FCU, Portland, Ore.; * Pacific Crest FCU, Klamath Falls, Ore.; and * UNO FCU, New Orleans.
The new certifications bring the total number of CDFI-certified credit unions to an all-time high of 186, and all but two of the 11 newly certified CDCUs are members of the federation, and took advantage of its CU Breakthrough consulting service to apply for certification. “We now have a system that allows us to prepare CDFI certification applications much more rapidly, and with a nearly 100% success rate,” said Pablo DeFilippi, director of membership services at the federation. “With this new technique, we were able to assist a large number of credit unions that otherwise would not have been able to meet Treasury's April 30 deadline to qualify for the CDCI program.” Last week, the CDFI Fund announced that CDFIs whose certification had expired and had been automatically extended, would be required to submit recertification applications by July 30 for CDFIs that applied to the CDCI program, and by Aug. 30 for all others. To help CDCUs with the recertification process, the federation is offering fee-based technical assistance to all credit unions through its CU Breakthrough consulting service, and limited free telephone consultations to member CDCUs. The federation also helped many credit unions apply for low-income designation, another prerequisite for participation in the CDCI program. “Many credit unions don't realize they qualify for low-income designation,” said DeFilippi. “But having the designation gives them the power to accept secondary capital and it also lifts the 12.25% member business lending cap. The designation provides credit unions serving some of our nation's poorest communities with the tools to grow more rapidly, while providing affordable financing to communities in serious need of investment.” “The federation is committed to helping credit unions of all sizes realize their potential in serving the underserved,” DeFilippi added. “The CDFI Fund is the single largest source of capital for CDFIs in the U.S., having awarded more than $80 million to CDCUs since 1995. We are proud to report that 98% of those awards went to federation-member CDCUs.” “With a projected budget of $250 million for 2011, plus the new Community Development Capital Initiative, which could provide another $200 million in secondary capital investments to CDFI-certified credit unions, there has never been a better time for credit unions to take advantage of this opportunity,” he continued. “It doesn't matter whether you’ve never thought of yourself as a CDCU,” DeFilippi added. “If your field of membership encompasses significant pockets of low- and moderate-income people, then you too can do more to serve them ... and the federation’s CU Breakthrough is here to show you how.” For more information, use the link.

CU System briefs (07/12/2010)

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* SAN RAFAEL, Calif. (7/13/10)--Marin County FCU (MCFCU), San Rafael, Calif., has launched a “Good Plastic” campaign in which 1% of the credit union’s Visa credit card net income will be donated to three local nonprofit organizations. The three beneficiaries are Marin Community Food Bank, Marin Advocates for Children and the Marin Humane Society. “We’ve guaranteed each organization a minimum of $1,000, and we hope it will be even more,” said Elesja Ingwersen, MCFCU president/CEO. MCFCU has $48 million in assets ... * VERNON, Conn. (7/13/10)--It only took a jury an hour to convict a man accused of robbing Workers FCU, Stafford, Conn., according to The Hartford Courant (July 10). Kendall O. “Mad Max” Smith Sr. was convicted of first-degree robbery and conspiracy for a Jan. 23, 2008, robbery of the credit union. Smith and Antwan Byrd, 34, crashed into a utility pole after a police chase, and then ran from the vehicle. Smith escaped police, but Byrd was caught after trying to jump a fence. He had been carrying $128,000 in a duffle bag. Smith was arrested this year. Workers FCU as $24 million in assets ...

N.H. league working to resolve BET tax issue

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CONCORD, N.H. (7/13/10)--The New Hampshire Department of Revenue Administration (DRA) has notified several credit unions in the state that they may owe back business enterprise taxes (BET) on dividends they pay to members. The New Hampshire Credit Union League disagrees and is working with legal counsel to resolve the issue. Credit unions were never meant to be subject to such a tax on member dividends, according to Rob Kimmet, senior vice president of marketing and public relations at the Massachusetts and New Hampshire leagues and the Credit Union Association of Rhode Island. “The league disagrees with DRA’s decision to attempt to begin collecting BET taxes on member dividends from credit unions now,” Kimmet said. The department sent credit unions a letter last month noting that although credit unions describe such payments as dividends, the payments are interest and are subject to BET taxes.

Wash. league elects new secretary

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FEDERAL WAY, Wash. (7/13/10)--Mina Worthington, president/CEO of Yakima (Wash.) Valley CU, was elected to fill the Washington Credit Union League’s board of director’s secretary position, the league said. Phil Jones, Harborstone CU president/CEO, was elected interim director on the board’s District 5 position following the retirement of TAPCO CU President/CEO John Bechtolt. Harborstone and TAPCO are based in Tacoma, Wash. Worthington, representing District 7 since 2007, will be secretary until the league’s reorganization meeting in September. Jones will fill the remainder of Bechtolt’s term, which expires in 2013.

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 "," 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, 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.

Texas CU Dept. seeks expenses for extraordinary exams

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FARMERS BRANCH, Texas (7/9/10)--The Texas Credit Union League has expressed concerns about the Texas Credit Union Department's (TCUD) proposed rule 97.116, which would require credit unions to reimburse the department for examinations that are unusual or extraordinary. The proposed rule was adopted June 18 by the Texas Credit Union Commission and is in its 30-day comment period. It will be considered for a final rule at the commission's October meeting. "The rule allows the regulator to charge state-chartered credit unions individually when the agency decides to send examiners into a credit union for anything other than the regular examination," according to Jeff Huffman, league vice president for government relations. "This has traditionally been covered as part of the TCUD budget through the regular assessment made on credit unions for operations at the TCUD. The system of funding the agency that has been in place for many years has served Texas credit unions well, in good times and bad," Huffman said in an e-mail to News Now. "This proposed rule further expands the power of the regulator, giving great discretion to the commissioner. It takes away predictability of regulatory costs for state chartered credit unions," he added. "If these types of rules are implemented, state charters in Texas will not only have to pay their regular assessments, but will also be faced with individual assessments from the TCUD when they are least able to afford additional unanticipated and unlimited regulatory costs," Huffman said. Thomas Butler, chair of the Rules Committee, told the Credit Union Commission in its June 18 meeting that the department needs a mechanism to more equitably allocate certain expenses among credit unions based on special circumstances that may arise. The proposed rule requires a credit union to reimburse the department for actual costs incurred if Commissioner Harold Feeney determines that the credit union requires more than its proportionate share of the department's resources, Butler told the commission. The rule would require the credit union to pay the examiner's expenses such as meals, lodging and incidentals as well as the examiner's time spent with the credit union's special circumstances as deemed by the commissioner. The department would be required to provide advance notice to the credit union of its intention to recoup expenses.

Global CU savingsloans surge says WOCCU report

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MADISON, Wis. (7/9/10)--Credit unions in nearly all regions worldwide saw an increase in member savings and loan activity during 2009, according to World Council of Credit Unions' (WOCCU) newly released 2009 Statistical Report.
Click to view larger image Click for larger view
The trend illustrates the increasingly more important roles that credit unions and other financial cooperatives worldwide played in their members' lives during last year's global recession, said WOCCU. Total savings for all responding credit unions reached more than $1.1 trillion, the most recorded since WOCCU began the annual survey in 1972. The rate of growth represents nearly a 15% increase compared with the $995 billion in savings reported in 2008. (All amounts are in U.S. dollars.) Loans were another indicator demonstrating strong growth over the previous year, climbing to nearly $912 billion from $847 billion in 2008. The increase is further accentuated in contrast to a slight decrease in loans globally between 2007 and 2008. Annual survey respondents from 97 countries reported that 49,330 credit unions served nearly 184 million members. In recent years, credit unions worldwide have seen notable growth in assets, membership, savings and other indicators. Cumulative assets reached nearly $1.4 trillion in 2009, up from $1.2 trillion in 2008, and reserves reached nearly $120 billion in 2009, up from slightly more than $115 billion in 2008. Strong financial performance demonstrates members' renewed faith in credit unions' resiliency during difficult economic times, said WOCCU. WOCCU has collected annual statistics on the international credit union movement for the past 37 years to produce its annual Statistical Report, and data are based solely on the number of countries responding to the survey. The only source for such comprehensive data on the global credit union movement, WOCCU's Statistical Report is widely cited by governments, international institutions and analysts. To download a free copy of the report, use the link.

Huffington touts Move Your Money on ICNNI John King show

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WASHINGTON (7/9/10)--Huffington Post publisher Arianna Huffington touted the Move Your Money campaign in an interview on CNN's John King show Wednesday, saying the campaign provides an opportunity for consumers to move money from big banks to community banks and credit unions. The Post originated the campaign over consumers' anger at banks for the financial crisis and economic turmoil. "We've been waiting for government to end too big to fail banks. It's not going to happen, even with a new financial regulation bill. So here's an opportunity for people to just move their money from the big banks into community banks, credit unions," she said. She noted "deposits up to $250,000 [in the local institutions] are guaranteed so there's no risk. And that way they're able to support institutions, which are supporting their communities [and] are more likely to lend so small businesses can create jobs." The campaign matters to individuals "who feel empowered just because they feel like they can do something," she said. Huffington said the campaign is not about revenge for big banks but is "more about making sure that families understand what is in their interest. We need great financial literacy. We need to understand what is at stake with our credit cards, with our accounts, and we need also to recognize that we have tremendous power."

CUNA and WOCCUs The 1 CU Conference kicks off Sunday

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LAS VEGAS (7/9/10)--The historic, one-time only, joint conference of the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) will get underway Sunday at the MGM Grand in Las Vegas, with more than 2,800 people from 60 countries attending and 500 representatives of more than 206 vendors manning the exhibit hall. "The 1 Credit Union Conference--One World, One Event" will officially begin at 5 p.m PT with the Opening Ceremony and International Flag Parade as attendees parade in their national dress with their flags. This year, the event substitutes for CUNA's annual America's Credit Union Conference and WOCCU's annual World Credit Union Conference. "This will be the best of WOCCU and the best of CUNA, combined into one event," said Todd Spiczenski, vice president of the center for professional development at CUNA. CUNA's News Now will cover the event daily in its regular coverage, and send updates on "Live at The 1," in real time. Readers can also follow the events via News Now's Twitter account, LiveWire. CUNA*verse--CUNA's official blog site--will be blogging from the event also. CUNA's Credit Union Magazine's online site will also cover each day's events with its Daily on And WOCCU will feature daily press releases on its website. The conference will end with a closing session Wednesday followed by an awards ceremony and reception. The largest delegations are from the U.S., followed by Canada and the Caribbean. Eighty-five to 90% of attendees from other countries needed visas to enter the U.S. for the conference, said WOCCU. Of those attending, 275 are Spanish speakers. Those speaking Spanish and Russian will have access to interpreters for the sessions. WOCCU said the conference has attracted its largest numbers ever from the Caribbean and New Zealand. Even before the official event gets started, the Global Women's Leadership Network Forum and the WOCCU Young Credit Union Person's (WYCUP) Networking session will be meeting Sunday. The largest sponsors of the event are CO-OP Financial Services, CUNA Mutual Group, CUNA Strategic Services, the National Credit Union Foundation, and the PSCU Financial Services.

CU System briefs (07/08/2010)

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* HARRISBURG, Pa. (7/9/10)--Erie (Pa.) FCU President/CEO Mary Beth Wilcher, left, met Saturday with U.S. Rep. Kathy Dahlkemper (D-3) during an Erie District meeting, said the Pennsylvania Credit Union Association. They discussed the impact of interchange fees, as well as member business loans. Dahlkemper is a co-sponsor of the member business lending (MBL) bill and supports increasing credit unions' MBL cap from the current 12.25% to 12.75%. Congress is expected to return to Washington, D.C., from its holiday district sessionson Monday (Life is a Highway July 8). (Photo provided by the Pennsylvania Credit Union Association) ... * ONTARIO, Calif. (7/9/10)--
The California and Nevada Credit Union Leagues have named Andrea Svoboda as director of political affairs and have hired Patty Salazar as state legislative and regulatory lobbyist. Svoboda joined the leagues in 2008 as government affairs specialist. She will oversee fundraising programs for state and federal political action committees (PAC) and coordinate campaign involvement on behalf of league-supported candidates. She has been filling the position since it became vacant in May. Salazar will represent the leagues to legislative and regulatory decision makers in both states, effective July 26. They will join the leagues' government affairs team based in Sacramento. Previously, Svoboda coordinated grassroots outreach for Cerrell Associates Inc. Salazar was a senior account executive, local government, for Cerrell Associates Inc., and previously served as a case worker for Los Angeles Councilman Alex Padilla's office and as assistant to the chief of staff for Los Angeles Councilman Jose Huizar ... * CHARLOTTE, N.C. (7/9/10)--Two North Carolina "career offenders" and a woman were sentenced by a U.S. District Court judge Tuesday for their roles in bank and credit union robberies in Mecklenburg County, N.C. Terry Bernard Blackmon, 54, Charlotte, was sentenced to more than 14 years in prison for a December 2008 robbery of Bank of America. Alfred Louis Logan Jr., 30, and his sister, Crystal Chevon Logan, 26, both of Asheville, were sentenced to prison for an attempted robbery in January 2009 of Charlotte Metro CU's branch in Matthews. Alfred Logan received a 14-year sentence; Crystal Logan received more than five years. The sentences of Blackmon and Alfred Logan were lengthy because they were considered career offenders. During the credit union robbery, Crystal Logan nearly ran over a sheriff's deputy during the getaway. They were arrested the same day as the robbery (Charlotte Observer July 7) ...

Mich. CUs to help hardest-hit avoid foreclosures

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LANSING, Mich. (7/9/10)--Michigan Gov. Jennifer Granholm said Thursday that the Michigan State Housing Development Authority (MSHDA), along with credit unions, banks and nonprofit counseling agencies, would launch a state program to help eligible homeowners avoid foreclosure through the state’s $154.4 million Helping Hardest-Hit Homeowners Fund. Eligible homeowners include those who are receiving unemployment, who have fallen behind in mortgage payments due to a layoff or medical emergency, and who can’t afford their mortgage payments because of reduced income. The Michigan Credit Union League is among several trade associations supporting the initiative. Michigan credit unions serve 4.4 million members, and 235,000 homeowners in the state have a home loan through a credit union. With so many citizens facing tough economic times in Michigan, the Hardest Hit fund offers much-needed relief to help people stay in their homes, according to Michigan league President/CEO David Adams. “As Michigan rebuilds for a new future, one of the biggest challenges we face is keeping families in their homes while the job market recovers,” said Adams. “This partnership between the state, credit unions and banks provides a crucial resource that helps bridge the financial gap for unemployed and underemployed borrowers.” The fund aims to help up to 17,000 homeowners, including 11,000 who are unemployed and struggling to pay their mortgages. MSHDA will accept applications beginning Monday from mortgage loan servicers. Approval of an application is expected to take up to 48 hours upon receipt. MSHDA estimated it could take 12 to 18 months for all the funds to be distributed. The department also will add staff to review and process the completed application packages.

CU president U. employee indicted in grant funds theft

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TALLAHASSEE, Fla. (7/9/10)--A credit union president and a college program director were indicted Wednesday in Tallahassee, Fla., on federal charges in connection with the theft of federal grant money. Eugene Telfair, president of Florida A&M University (FAMU) FCU, Tallahassee, and Robert Nixon, director of the Institute on Policy and Commerce at FAMU, were each charged with conspiracy, theft from an organization receiving federal funds, and embezzlement of funds entrusted to a federally insured credit union (The Tallahassee Democrat July 7). FAMU does not use the credit union for financial services, Sharon Saunders, university spokeswoman, told the newspaper. Telfair and Nixon “conspired to steal approximately $134,253 in funds,” Karen Rhew-Miller, spokeswoman for the U.S. Attorney’s Office, said. The indictment alleges the two men “wrote one another checks to make their taking of the funds appear legitimate.” The U.S. Department of Housing and Urban Development’s Historically Black Colleges and Universities program awarded the funds to FAMU, the paper said. FAMU FCU has $20 million in assets.

17000 new members in 12 months for Ohio CUs

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COLUMBUS, Ohio (7/9/10)--More than 17,000 Ohio residents joined credit unions for their financial needs between March 31, 2009 and March 31, 2010, according to the first quarter 2010 results of the Ohio Credit Union Quarterly Performance Summary. The results mark a record fifth straight quarter in which membership in Ohio credit unions grew, said the Ohio Credit Union League. Credit unions grew by 10,000 new members in the first quarter of 2010. Consumers’ anti-bank sentiment and a “flight to safety” drove the numbers, the league said. “This should not come as a surprise anymore,” said Paul Mercer, league president. “Membership growth at credit unions has moved beyond just a trend and is now a regulr occurrence.” It also noted the positive effects of “Move Your Money,” a national campaign geared at encouraging consumers to switch to credit unions and community banks from big banks. Its growing popularity likely contributed on a micro level to credit union growth in Ohio and nationally, said Pat Keefe, vice president of communications for the Credit Union National Association (CUNA). Member business lending at Ohio credit unions also is booming. About 90 of Ohio’s 392 credit unions reported outstanding business loan balances totaling of $357 million statewide, a 12.7% increase from the previous March. The delinquency rates at credit unions remain far below that of Ohio banks and thrifts, the league said. CUNA and its member credit unions are encouraging lawmakers to raise the current 12.25% cap on member business lending at credit unions. An amendment by Sen. Mark Udall (D-Colo.) to a budget stimulus bill would raise the cap to 27.5%. Allowing credit unions to make more business loans would inject more capital into the economy and create jobs, CUNA has said.

Atlantic City Press outlines CUs muni-deposit plusses

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ATLANTIC CITY, N.J. (7/8/10)--The New Jersey Credit Union League outlined the benefits of allowing credit unions in the state to accept municipal deposits as proposed in state legislature, in an article in the Press of Atlantic City (July 4) . Paul Gentile, league president/CEO, said diversifying deposits to credit unions from banks along would reduce risk. "If we've learned anything from the economic meltdown, it's that you don't want to have all of your eggs in one basket," he told the publication. Allowing credit unions to accept the deposits would benefit local government entities in these ways, he said:
* Credit unions receiving the deposits would be more likely to make deposited funds available to local businesses and consumers. While banks reduced business lending by 15% in 2009, credit unions increased their small business lending by 11% last year. * Depositors get better interest rates from credit unions, which will benefit the taxpayer, he said.
Liberalizing the deposit act would help the public realize that credit unions are full-functioned financial institutions that almost anyone can join, Gentile said. At least 20 states allow credit unions to be governmental depositories, the article said. About $16 billion is on deposit from various government entities and would be subject to the act. The Senate has passed a bill allowing municipal deposits in credit unions, and a companion bill has been introduced in the state Assembly. It is in the Financial Institutions and Insurance Committee.

Cadillac departs Invest in America

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DETROIT (7/8/10)--Cadillac, as part of its overall brand strategy, no longer will offer discounts on vehicle purchases to credit union members through the Invest in America program. Cadillac has decided to eliminate all incentive programs, the Michigan Credit Union League told News Now. Invest in America provides access to affordable financing options and special discounts for credit union members nationwide. General Motors brands Chevrolet, Buick and GMC will continue to offer discounts to credit union members through the program (The Missouri difference July 2). For more information, use the link.

Pa. CUs 1Q results outpace national CU stats

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HARRISBURG, Pa. (7/8/10)--Pennsylvania credit unions reported good financial performance in first quarter 2010, according to the Pennsylvania Credit Union Association (PCUA). The Pennsylvania Profile, First Quarter 2010 shows Pennsylvania growth rates outpaced national rates for the first quarter and for the 12-month period ending March 31 (Life is a Highway July 7). In the quarter, Pennsylvania credit union membership edged up 0.7%, greater than the national rate of 0.5%, and more than the fourth quarter 2009 increase of 0.4%. The 12-month member growth rate in the state was 2.5%, compared with 1% nationally. “The association’s iBelong campaign is definitely building awareness and strengthening the perception of credit unions,” said Jim McCormack, PCUA president/CEO, in the newsletter. “The ongoing economic challenges and consumer dissatisfaction with big banks are also positioning credit unions with opportunities to build favorable relationships with new members, existing members, and their communities.” Total savings grew 3.6% for the quarter 2010, bringing the rate for the 12-month period ending March 31 to 11%, compared with 6.6% nationally. Regular share accounts grew 7%, with money market shares growth at 6.6%. During the first quarter, Pennsylvania credit unions faced some of the weakest loan demand in more than 60 years, and recorded only 0.1% growth, better than the -1.1% change in national loan totals. Member business loans led loan growth with a 6.6% increase in the first quarter, followed by first mortgages at 3% growth. For the 12-month period, Pennsylvania credit unions outpaced national rates in member business loan growth, 24.9% to 9.1% nationally, and first mortgages, 22.2% to 3.3%. Used-auto loans were strong for the same period, 8.9% growth to 2.8% nationally. First-quarter loan delinquencies stayed at slightly more than 1%. More than 9,000 bankruptcies were recorded during the period in Pennsylvania, up from 6,537 from 2009. The state’s credit union assets grew by 10.6% in the 12-month period, compared to national growth of 4.7%. “Credit unions are prospering through the great recession, but they are also facing a new normal--regulations upon regulations, competition, changes in service delivery and technology, and income challenges--so it’s necessary to reassess and readjust to this new environment in order to successfully survive,” McCormack said.

CUAnswers premiers winning contest video

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GRAND RAPIDS, Mich. (7/8/10)--CU*Answers, a Michigan-based core data processor for credit unions, has unveiled the winner of its third annual video contest. “Your Credit Union is Everywhere” was provided by Farrah Star of Service 1 FCU, Muskegon, Mich. It promotes the convenience of credit union self-service products such as online and mobile banking. Service 1 received $1,500 for the winning entry. The video features an actor wearing a bright green shirt with the words “CREDIT UNION” on the front. The “credit union” accompanies a family through its daily routine and is ready to assist in everything from using a debit card to pay for purchases, showing account balance inquiries on a mobile phone over breakfast, and even sitting in bed with the mother and father, who discuss finances and ask, “I wonder if we can afford this?” CU*Answers premiered the video during its 19th Annual Leadership Event in Grand Rapids. To view the video, use the link.

Filene to study effects of interchange shifts

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MADISON, Wis. (7/8/10)--The Filene Research Institute is launching a survey intended to define the full effects shifting interchange rules will have on credit union operations, and credit unions have until July 16 to participate in the study. The online-only survey is available now for all credit unions. Adam Levitin, professor at Georgetown University Law Center, seeks to understand interchange practices and revenue at credit unions to project how changes in the law could affect non-interest income and profitability at credit unions. Any data provided will be published only in aggregate and will not identify individual credit unions, Filene said. The final financial regulatory reform package, worked out last month by the House-Senate conference committee, includes language that would allow the government to set interchange fees. Credit unions and the Credit Union National Association (CUNA) oppose the regulatory reform bill because of the interchange provisions. Allowing the government to set the fees would have detrimental effects on credit unions’ ability to offer card products and services to members, CUNA has said. The House already has approved the regulatory reform bill, and the Senate is expected to do so when the Congress returns to session after the July 4 District Work Period. Interchange provisions would not only affect how credit unions provide access to members’ accounts, they also would increase costs to credit union members. CUNA and its affiliated credit unions continue to urge legislators to vote no on the current regulatory reform package. To take the survey, use the link.

Madison newspaper CUNA leading voice on interchange

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MADISON, Wis. (7/8/10)--The Credit Union National Association (CUNA) has “emerged as a leading voice of opposition to the financial services reform package, saying the swipe fee provision is onerous enough that the entire bill should be scrapped,” according to Sunday’s The Capital Times, a Madison, Wis.-based paper. In a letter to Congress, CUNA said that imposing a debit card fee limit “upsets the carefully constructed balance that the bill has achieved,” and would significantly harm credit unions and their members, the newspaper reported. The House version of the bill passed late last month excludes some credit unions and community banks with assets of less than $10 billion from the debit card fee limit, the paper said. However, the exclusion is rendered meaningless because of the complex ways interchange fees are calculated, and because there is no mechanism to make sure there will be a separate fee system for large and small users, the CUNA letter said. Therefore, the system eventually would include all cards and hurt the income stream for credit unions, CUNA added. To read the article, use the link.

Death-penalty trial jurors selected trial opens Monday

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DETROIT (7/8/10)--The jury has been selected and the opening statements will begin Monday in a rare trial involving the federal death penalty for the killing of an armored truck guard who was loading cash into an ATM at Dearborn FCU eight and a half years ago. Timothy Dennis O'Reilly, 36, is charged with murdering Norman "Anthony" Stephens during a Dec. 14, 2001, robbery at the credit union's ATM (The Detroit News June 29). O'Reilly and two co-defendants, Norman Herbert Duncan and Kevin C. Watson, will face the death penalty. A fourth defendant, Earl L. Johnson, was sentenced to life in prison after a jury convicted him of conspiracy, bank robbery and aiding and abetting a murder (News Now June 9). The robbery at the credit union's ATM was the first of three similar robberies involving armored trucks. In the last robbery in February 2004, a guard fired back and one robber, Eddie Cromer, died. The credit union robbery netted more than $200,000 and remained unsolved until mid-2004. Michigan banned capital punishment in 1847, the first state to do so, but the death penalty can be imposed for federal capital crimes such as a murder during a bank robbery. The last of the 66 potential jurors in the O'Reilly trial, was seated Wednesday after nearly three weeks of selection. The trial in U.S. District Court in Detroit is expected to take all of July and August.

IMSN.MoneyI spotlights CUs unbanked programs

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NEW YORK (7/8/10)--Credit unions are a good option for unbanked consumers, according to MSN.Money. In an article titled, “Think a bank won’t take you? What Now,” author Donna Freedman said that “some … credit unions are willing to work with people who have less-than-spotless financial histories.” The article mentions San Francisco-based Mission SF FCU member Mark Laws, who received a “payday alternative” loan from the credit union four years ago to clear up money problems he encountered after taking out payday loans elsewhere to cover overdrafts he incurred at Bank of America. Today, Laws has learned how to better manage his money and has improved his credit. “My credit union showed me there’s hope,” he told MSN.Money. In regard to helping consumers with troubled finances, credit unions are likely to be more flexible than banks, Mike Schenk, senior economist with the Credit Union National Association, told MSN.Money. The article directed readers to CUNA’s credit union locator. It also mentioned a woman who saw an ad on a bus for “Bank on Seattle-King County,” a program that helped get her into a credit union. To read the article, use the link.

Newspaper Ann Arbor CUs benefit from anti-bank surge

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ANN ARBOR, Mich. (7/8/10)--Credit unions based in Ann Arbor, Mich., are benefiting from the backlash against banks, according to a local newspaper. Consumers are upset with banks for their involvement in subprime mortgages and derivatives, which triggered the financial crisis. The anger has caused consumers in Ann Arbor to join credit unions, said (July 4). Ypsilanti FCU, now Washtenaw FCU, saw its deposits jump to $30.5 million from $25 million at the end of 2008. CEO Gregory Gurka noted in the article that consumers are trying to keep their money local and feel more secure when the institution is based in their community. Overall, Michigan credit unions’ assets rose 17.5% to $38.2 billion in December 2009 from December 2007. Michigan Credit Union League CEO David Adams told the newspaper that credit unions are benefiting from dissatisfied consumers taking their business to credit unions. Credit unions have proved that banking is about service, not profit, he added. Other credit union items the newspaper noted:
* U-M CU in June purchased the former Ann Arbor News building to serve as its corporate headquarters for its expanding staff; * DFCU Financial, Dearborn, last month agreed to acquire MidWest Financial CU of Ann Arbor, which had $185 million in assets at the end of 2009. DFCU’s assets are $3 billion; * Washtenaw FCU changed its name after opening its membership to anyone who works, lives or worships in the county; and * Community Driven CU, Ypsilanti, is focusing more on auto loans as banks pull back on lending. Last year, the credit union offered $10 million in auto loans, compared with the usual $3 million.

Evergreen DIRECT CUSO singled out in fraudulent calls

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OLYMPIA, Wash. (7/8/10)--Two weeks after automated phone messages surfaced in a phishing scam that targeted Olympia, Wash.-based Evergreen DIRECT CU, the credit union still receives calls from members and nonmembers inquiring about the messages, the credit union told The Olympian (July 7). The messages claimed to be from the credit union and told recipients that their debit card had been deactivated for a variety of reasons--including billing errors and questionable activity. Most people are being contacted on their cell phones. To protect consumers, the credit union lowered the combined daily limit on ATM withdrawals and PIN-based point-of-sale (POS) transactions to $500 until further notice. To avoid the limit, members can swipe their card and "sign in" for transactions at the POS terminals. The automated message ends with an 800-toll free phone number. The calls have gone to one elderly woman, and when the newspaper tried the number, it was answered by a credit union services organization, United Solutions, which said someone else is using the telephone line and the phone carrier is working to solve the problem. Thurston County Sheriff's Office said it receives two or three reports a week from residents who received the calls, provided information, and experienced money taken from their account. The scam originates in Spain, said the sheriff's office.

TNB Card Services sold to Fifth Third Processing Solutions

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CINCINNATI (7/8/10)--Fifth Third Processing Solutions (FTPS) has acquired the assets of TNB Card Services from Town North Bank. The acquisition will expand FTPS’ commitment to provide electronic payment solutions to credit unions and their members, the companies said in a release. TNB Card Services will become part of FTPS, which is headquartered in Cincinnati. Town North Bank, Dallas, has about 1.4 million credit and debit accounts. FTPS provides transaction processing and acceptances solutions for financial institutions worldwide. TNB Card Services provides credit, debit and prepaid cards; loyalty services; consulting; and ATM driving with a suite of back-office services to more than 370 credit unions in 27 states and the District of Columbia.

CU System briefs (07/07/2010)

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* COMPTON, Calif. (7/8/10)--Mid-Cities Financial CU marked a major
Click to view larger image Click for larger view
milestone when it welcomed its 5,000th member, Mary Jones, last month. Jones was awarded a travel certificate in a small recognition ceremony at the credit union's Compton, Calif., headquarters. Mid-Cities Financial President/CEO Melia Keller noted that the credit union's increase in membership numbers "reflects the value we try to bring to the community we serve." Pictured, from left, are Keller, Branch Manager Maricela Jauregui and Jones. The credit union has more than $26 million in assets. (Photo provided by Mid-Cities Financial CU) ... * SALT LAKE CITY (7/8/10)--Mountain America CU has added a new banking application for Android smart phones. With the free app, members can access their accounts while on the go by using their Android phones. Members can check account balances, review transaction history, transfer funds between accounts and view balance graphs. They can download the app for free from the Android Market located at Mountain America, a $2.8 billion asset credit union based in West Jordan, Utah, also offers apps for iPhone, Blackberry, Palm and Windows Mobile devices. They provide SMS (short message service)/text banking and a browser-based tool, which can be found at ...

Three indicted in 1.24T extortion plot vs. CU others

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KINGSTON, N.Y. 97/7/10)--Three members of an anti-government group in New York state were indicted by a federal jury for allegedly trying to extort more than $1.24 trillion from Ulster County, three towns, several public employees and executives of a credit union that began foreclosure proceedings on one of the men's property. In April, Ulster County and public workers brought a racketeering case against six people accused of intimidating government employees by sending them fraudulent invoices and filing $143 billion worth of liens against their personal property. The extortion plot allegedly aimed to collect $1.24 trillion, said federal officials. The liens affected the credit ratings of those targeted, said the court documents (Times Herald-Record July 2). Three of the six were indicted: Richard Enrique Ulloa, 41, Stone Ridge; Ed George Parenteau, 53, Chenango County; and Jeffrey Charles Burfeindt, 47, Highland. Ulloa and Parenteau were arrested June 22. Burfeindt is still at large. Ulloa faces four counts of mail fraud. Parenteau and Burfeindt face mail fraud and conspiracy to commit mail fraud charges. The other three people named in the court documents have not been charged, said the article. The newspaper said the phony invoices and fraudulent liens began in 2009 after Ulloa and Parenteau received tickets in separate incidents for driving without licenses. Ulloa later said he had an international driving permit. But instead of taking their cases to court, the men and their alleged accomplices produced a flood of fake paperwork. Ulloa sent phony criminal invoices totaling $700 million to Rosendale Town Justice Robert Vosper, the court papers said. Parenteau filed a $62 billion federal lien against the Town of Lloyd and its police chief. Ulloa also allegedly filed a $2.82 billion lien against a top executive at Mid-Hudson Valley FCU, Kingston, which had begun foreclosure proceedings on his property. Court documents list 23 fake documents and liens sent by the men, who allegedly belong to a group called Restore America Plan, said the Times Herald-Record. The group doesn't believe in the legitimacy of documents such as drivers' licenses or birth certificates, doesn't believe in banks, and asks members to become guardians of free republics. In the invoices sent, local governments were called "fictions" of "private corporations." Ulloa, who is defending himself in the racketeering case signed each paper with: "I pray to our Heavenly Father and not this court that justice be done."

Mid-Atlantic Corporate reaches 115M in capital conversions

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MIDDLETOWN, Pa. (7/7/10)--Mid-Atlantic Corporate FCU announced that as of June 30, it had received capital conversion agreements from 626 credit unions, totaling about $115.5 million in capital. Of that amount, about $107.7 million is in Perpetual Contributed Capital (PCC) and another $7.8 million is in Nonperpetual Capital Accounts (NCA), the corporate said in an update on its website. Of the agreements, 583 are platinum level memberships. The conversions are part of the corporate's plan to create a new membership structure that would convert its existing membership capital into Tier-1 capital. The PCC will be considered Tier-1 capital under the National Credit Union Administration's (NCUA) proposed Regulation Part 704, according to Pennsylvania Credit Union Association's Life is a Highway and New Jersey Credit Union League's The Daily Exchange (July 6). The return of the agreements means Mid-Atlantic Corporate will have more capital holding members than under its previous membership structure, they said. "Mid-Atlantic has been a very conservative, well-run corporate, which provides critical financial services to smaller credit unions," said Bob Marquette, president/CEO of Members 1st FCU, a $1.7 billion asset credit union based in Mechanicsburg, Pa. "We also obtain some financial services from Mid-Atlantic--some of which are difficult to obtain elsewhere. "The losses we experienced at Mid-Atlantic were the result of the structure of the corporate system and the fact that all of the corporates were encouraged to use the expertise and services of U.S. Central FCU to achieve economies of scale. We believe Mid-Atlantic has been a good, solid, dependable business partner and deserves our support," Marquette added. The new membership levels and capital plans will take effect after the publication of NCUA's revised Regulation Part 704, according to Life is a Highway.

Iowa foundation launches its own website

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DES MOINES, Iowa (7/7/10)--The Iowa Credit Union Foundation (ICUF) announced the launch of its first stand-alone website, which will provide financial education resources, information on scholarships and grants, and individual development account resources. “We wanted to create an easy-to-navigate site that highlights ICUF’s core initiatives and puts greater emphasis on supporting our credit unions and their members,” said Marybeth Foster, ICUF executive director. The site design with straightforward navigation showcases ICUF’s credit union involvement, support and events. Features include:
* Information about scholarships and grants; * Information about donation opportunities; * Financial education resources; * ICUF news and announcements; * Resources for learning about credit unions; and * Stories of individual development account savers.
For more information, use the link.

Dallas editorial Free CUs from low MBL cap

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DALLAS (7/7/10)--The Dallas Morning News called for lifting the 12.25% of assets cap on credit union member business lending (MBL), saying, “Congress would be wiser to give credit unions broader authority to make the small-business loans that banks aren’t making.” Raising the cap is a solution that doesn’t involve taxpayer funds, the newspaper said in a Friday editorial, adding that Congress must let credit unions fill the lending void left by banks. The editorial addressed the typical argument coming from banks: “Predictably, bankers oppose the change, which they contend would encourage ill-advised loans and give the tax-advantaged, member-based credit unions an unfair advantage,” said the newspaper. “Not only is this argument disingenuous, coming from an industry still reeling from its own bad lending decisions, but it also threatens to stymie a valuable alternative for cash-starved small businesses.” The editorial then counters the bankers’ argument: “Despite bankers’ claims, credit unions aren’t a threat to their prosperity. Last year, credit unions held $36 billion in small-business loans, less than 5% of all such loans. Even if most credit unions reach the 25% cap, banks would still have more than 90% of the small-business market. And the only reason there is a cap today is that credit unions lost a lobbying battle with bankers 12 year ago.” The Credit Union National Association (CUNA) has asked credit unions and their small-business members to contact their legislators and ask them to support raising the cap. NOTE: Credit unions and CUNA are lobbying to increase the cap to 27.5% of total assets. Sen. Mark Udall (D-Colo.) last week introduced an amendment to a small-business stimulus bill that would raise the cap. See related Washington News item in News Now, "CUNA's Cheney to CUs: Keep the volume upon interchange, MBLs." To read the editorial, use the link.

MarylandDC conference elects officers honors Hash

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COLUMBIA, Md. (7/7/10)--The Maryland and District of Columbia Credit Union Association (MDDCCUA) elected new officers and honored Bert Hash, MDDCCUA outgoing chairman, at its annual meeting and convention June 23-25 in Baltimore.
Click to view larger image Bert Hash, second from left, outgoing chairman of the Maryland and District of Columbia Credit Union Association (MDDCCUA), received the Wright Patman Hall of Fame award from MDCCCUA. Pictured are Rick Stoll, Jr., president/CEO of Anne Arundel Co. Employees FCU; Hash; Theresa Mann, president/CEO of The Partnership FCU; and Mike Beall, MDDCCUA president/CEO. Stoll and Mann received the Wright Patman award in 2006. (Photo provided by the Maryland and District of Columbia Credit Union Association)
The meeting, now called Connections Conference, drew 300 attendees. Officers elected to the board include:
* Chairman--Miguel Boluda, president/CEO, PAHO-WHO FCU, Washington, D.C.; * Vice chairman--Rod Staatz, president/CEO, SECU of Maryland, Linthicum, Md.; * Secretary--Theresa Mann, president/CEO, The Partnership FCU, Washington, D.C.; and * Treasurer--Chris Conway, president/CEO, Educational Systems FCU, Greenbelt, Md.
Also inducted to the board for three-year terms were:
* David Gilbert, chairman of Aberdeen Proving Ground FCU, Aberdeen, Md.; * Joe Sparacino, treasurer of Montgomery County Employees FCU, Germantown, Md.; and * Rick Wieczorek Jr., president/CEO of Mid-Atlantic FCU, Germantown.
Stepping down from the board were Joan Moran of Department of Labor FCU, Merrifield, Va., and Margaret Burdette, St. Agnes Employees FCU, Baltimore. Hash also received the Wright Patman Hall of Fame award. The award is named after John William Wright Patman, who served 12 years as chairman of the House Committee on Banking and Currency--now the House Financial Services Committee--and co-sponsored the original Federal Credit Union Act in 1934. During his 13 years in credit unions, Hash served on the Credit Union National Association Governmental Affairs Committee and CUNA Mutual Board of Directors, and served as chairman of the MDDCCUA and the African-American Credit Union Coalition. Herman Williams Jr., chairman of MECU, Baltimore, received the Volunteer of the Year Award. District Government Employees FCU, Washington, D.C., received the Christine DeWitt Memorial Award for Excellence in Marketing, Best of Show. MDDCCUA also presented 47 other awards to 23 credit unions.

Maine league announces Herring Maxwell Desjardins awards

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WESTBROOK, Maine (7/7/10)--Thirteen Maine credit unions were recognized as the 2010 state honorees for the Dora Maxwell Awards for Social Responsibility and the Louise Herring Philosophy in Action Awards and, for the first time, the Desjardins Award for Youth Financial Education.
Click to view larger image Chanel Coloumbe, (left), board chair at Atlantic Regional FCU, Brunswick, Maine, accepts the first-place Dora Maxwell Award for Social Responsibility for credit unions with assets of $200 million to $500 million from Richard Dupuis, board chair of the Maine Credit Union League. (Photo provided by the Maine Credit Union League)
Professionals from the Maine Public Relations Council judged the awards, which honor credit unions for community and/or member service efforts during the past year, which again saw the Maine credit unions accomplish achievements in community service and special initiatives for members, the league said. Credit Unions raised nearly $1.2 million for causes, including $375,923 for the Maine Credit Unions’ Campaign for Ending Hunger; $60,000 for Maine Special Olympics; $55,000 for the Children's Miracle Network; $50,000 for the Maine Children's Cancer Program; $30,000 for Haiti relief efforts and more. Maine credit unions also volunteered nearly 24,000 hours for community organizations and activities statewide. Credit unions provided special low or no-interest loans for fuel assistance, programs for financial education and other initiatives to help members in difficult times. The 2010 first-place recipients of the Dora Maxwell Award are:
* Community CU, Lewiston, $20 million to $50 million in assets; * Central Maine FCU, Lewiston, $50 million to $100 million; * Oxford FCU, Mexico, $100 to $200 million; and * Atlantic Regional FCU, Brunswick, $200 million to $500 million.
The 2010 first-place recipients of the Louise Herring Award are:
* Community CU, $50 million or less in assets; and * Central Maine FCU, $50 million to $250 million.
The 2010 first place recipient of Maine’s Desjardins Youth Financial Education Award is Community CU, $50 million or less in assets.

New Mexico CUs make more MBLs banks fewer

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ALBUQUERQUE, N.M. (7/7/10)--Credit unions in New Mexico and nationwide are making more member business loans while banks are making fewer, according to New Mexico Business Weekly. Friday’s article, “U.S., New Mexico credit unions woo small business borrowers,” tells the story of Andrew Mossman, who tried for four years to get a bank to refinance a loan on a small strip mall he built five years ago. After being turned down by banks, Mossman saw a direct mail flier for New Mexico Educators FCU and went to the credit union for help. Within a few months, the Albuquerque, N.M.-based credit union helped him refinance the loan. Ralph-David Raby, president of Raby Cos., shared a similar story with the newspaper. He tried to secure loans to renovate 54,000 square feet in two commercial buildings his firm owns. Although Raby had commitments from two banks, he got a loan from New Mexico Educators FCU after seeing the same direct mail flier Mossman saw because the credit union offered a better loan rate than the banks. New Mexico Educators FCU, which has $1 billion in assets, tripled its business loan portfolio to $15 million within the past year. It added two new business loan officers to its staff, the newspaper said. Business loans at New Mexico credit unions grew by 54% in the past year, while the loans decreased by 14% at commercial banks. This means businesses trying to borrow are finding that their financing is drying up, Bill Hampel, Credit Union National Association (CUNA) chief economist, told the newspaper. Of New Mexico’s 50 credit unions, 11 make business loans. Those credit unions have $200 million in outstanding business loans--about 4% of total assets. The average loan size is $240,000, and there is room to grow, Hampel said. Credit unions want to make member business loans, but are capped at making no more than 12.25% of their assets in such loans, Hampel added. Credit unions and CUNA are lobbying to increase the cap to 27.5% of total assets. Sen. Mark Udall (D-Colo.) last week introduced an amendment to a small-business stimulus bill that would raise the cap. Raising the cap will keep money flowing to small businesses, Hampel said. The problem for credit unions is that many slow down their lending when their loan portfolio hits 7% or 8% of assets. When credit unions hit that level, they are a year or two away from hitting the 12.25% cap, and must start rationing loans, Hampel noted.

CUs experienced with budget-impasse loans CUNA to IBloombergI

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MADISON, Wis. (7/7/10)--Credit unions are experienced with helping state workers caught in budget impasses, the Credit Union National Association (CUNA) told Bloomberg News Monday. California credit unions in particular have a lot of experience with helping state workers, said Pat Keefe, CUNA senior vice president of communications. Keefe spoke with Bloomberg after a state appellate court decision Friday upheld an order to reduce state employees’ pay to minimum wage--$7.25 an hour--until the state budget is passed. The decision affects about 200,000 state employees (News Now July 6). News Now reported Tuesday that The Golden 1 CU, Sacramento, will offer 0% interest loans to affected members. About 55,000 of its members may participate in the loan program, the credit union told Bloomberg. Schools Financial CU, Sacramento, also announced it will make 0% interest loans available to affected members whose pay is directly deposited into their accounts. Credit unions outside of California are also experienced in helping state workers affected by budget cuts. Pennsylvania State Employees CU, Harrisburg, offered state workers loans at 0% interest last year. This year, the state legislature passed its budget on time--a first in eight years, Bloomberg noted. To read the article, use the link.

Utah league CU short-term loans provide needed service

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SALT LAKE CITY (7/6/10)--Rates for short-term loans offered at Utah's credit unions are much lower than those assessed by payday lenders there, and credit unions' alternative loans come with features to assist members in managing their credit. Scott Simpson, president/CEO of the Utah League of Credit Unions, made those points to media last week, saying that credit unions' short-term loans offer rates that are half those of payday lenders. Credit unions' loans also come with credit counseling and a savings plan, and are given only to people whose credit is so poor they don't qualify for other kinds of credit, he said. Credit unions must as a necessity charge a higher interest rate because of the risk involved because short-term loans often have a high rate of default. "When you extend credit, it comes at some cost," he said. "This is not a product of first resort; it's a product of last resort," he told News Now, adding that few members use it. One credit union told him less than one-tenth of 1% of its members use that product. "But when they have no where else to go and they need cash, they can work with an institution that offers traditional products and can help them transition into a better savings structure or environment," he said. The comments were made after a group calling itself the Coalition of Religious Communities held a press conference criticizing eight credit unions in the state for offering short-term loans, which the group said was predatory (Salt Lake Tribune, Deseret News and Associated Press June 30). "It's frustrating, because we were responding to clamor in the environment, where people wanted someone to displace payday lenders," Simpson told News Now. "But credit unions are lending other peoples' (members') money and they need to mitigate the risk," he said. Credit unions' rates are half of what the marketplace is bearing. If credit unions stop making these loans, consumers who want or need fast access to cash will be driven back to payday lenders, said Simpson "If credit unions stopped offering those products, I guarantee that those people that need them would be using payday lenders and they would be paying a lot more," he told the Tribune. The typical rate charged by payday lenders is 521% annual percentage rate (Deseret News June 30). Associated Press reported the story and it has been picked up nationally in media such as The New York Times, The Washington Post, ABC News, CBS News the Huffington Post and more.

Golden 1 to help state workers cut to minimum wage

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SACRAMENTO, Calif. (7/6/10)--As an appeals court Friday upheld a ruling allowing California Gov. Arnold Schwarzenegger to cut state workers' salaries to minimum wage in the absence of a budget, a credit union announced its preparations to help workers faced with a lower or no salary until the state passes a budget. Sacramento-based The Golden 1 CU announced its "readiness to assist active state worker members who may be impacted" in a press release Friday. "In the event active Golden 1 members who work for the state receive minimum wage or zero pay related to the budget impasse, the credit union plans to offer State Budget Payroll Loans to help affected members with checking and Direct Deposit," said the credit union. Eligible members with a Golden 1 checking account and Direct Deposit of their state payroll checks will be offered the loans with rates as low as 0% annual percentage rate. "Golden 1 has a legacy of giving back to its communities during tiems of need," said President/CEO Teresa A. Halleck. The $7.3 billion asset credit union has more than 680,000 members. Schwarzenegger issued an order Thursday that put 200,000 state workers on minimum wage--$7.25 an hour--next month. July pay for most hourly state employees will be withheld to minimum allowed by law. Regular salaries would be restored when the budget is final (Sacramento Bee July 2). State Controller John Chiang had said he wouldn't follow the order unless ordered to do so by a court. On Friday the 3rd District Court of Appeal upheld a two-year ruling allowing the governor to cut the wages to minimum wage. The court agreed with the Sacramento Superior Court ruling, saying Chiang overstepped his authority by refusing to issue minimum wage paychecks to state workers during California's budget impasse in 2008. Chiang's office has not indicated whether he will appeal to the state Supreme Court. The governor's order was triggered by lawmakers' failure to enact a budget by Thursday, the start of the fiscal year. It exempts about 37,000 state workers in six bargaining units that have tentatively agreed to labor deals, said the newspaper.

CU loans savings and asset trends see reversals in May

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MADISON, Wis. (7/6/10)--The Credit Union National Association’s (CUNA) monthly review of credit unions for May reflected three reversals in recent trends--in loans, savings balances and asset quality, according to a CUNA economist’s analysis.
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Credit union loans outstanding increased less than 0.1% during May, compared with a decrease of less than 0.1% during April. Credit union loans in May totaled $580.4 billion, compared with $583.4 billion in May 2009. Fixed-rate mortgages led loan growth. They increased 0.9%, followed by credit card loans and used-auto loans, which rose 0.8% and 0.6%, respectively. Unsecured personal loans climbed 0.4%, while both adjustable-rate mortgages and home equity loans increased 0.2%. New-auto loans decreased 1.5%. “Loans grew in the month, on the heels of six consecutive months of declines,” Mike Schenk, CUNA senior economist, told News Now. “While balances are still down on a year-to-date (-1.3%) and year-over-year (-0.5%) basis, the recent increase gives some hope that seasonal patterns will emerge with stronger buying and borrowing during the summer months. “Most loan-types we track saw increases, with fixed-rate mortgages and credit cards, showing the largest percentage increases in the month,” he said. “New-auto loan balances and fixed-rate second mortgage balances continued their respective declines.” Credit union savings balances decreased less than 0.1% in May, down from a 1.1% increase during April. Credit union savings in May totaled $798.2 billion, compared with $753.1 billion in May 2009. Individual retirement accounts grew 1.7%, followed by money market accounts (0.9%) and regular shares (0.2%). One-year certificates and share drafts decreased 0.8% and 2.3%, respectively.
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“Savings balances declined in May after three successive months of fairly strong increases,” Schenk said. “Balances are still up on a year-to-date (3.7%) and year-over-year (6.0%) basis, but seasonal patterns are likely to cause tepid growth or contraction in the coming months. Consumers continue to reflect a preference for short-term, liquid savings. Money market deposit accounts reflected the strongest percentage increase in the month.” Credit unions’ 60-plus-day delinquencies remained constant at 1.8% during May. “A third notable change was seen on the asset quality front,” Schenk said. “Delinquencies, inched up in May after trending down for three consecutive months. Our expectation is that marginally improving labor markets and loan growth related to normal seasonal trends will both help to return delinquencies to their recent downward trend in the coming months.” The loan-to-savings ratio remained constant at 73% in May. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities-- remained at 19%. The movement’s overall capital-to-asset ratio remained at 10% in May 2010. The total dollar amount of capital is $91 billion. “Of course, the double whammy of the Euro debt crisis and Gulf oil spill, combined with a ‘de-stimulated’ housing market and weak labor market gains, have bruised consumer confidence and underlined the fragility of the current recovery,” Schenk said. “In this environment, spending and borrowing will be constrained, but with the Fed on the sidelines and big differences between long-term and short-term interest rates, any loan growth at all will help to boost credit union bottom lines,” he added.

Missouri governor shows interest in credit union outreach

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ST. LOUIS (7/6/10)--Missouri Governor Jay Nixon met June 25 with representatives of the Missouri Credit Union Association (MCUA) to discuss issues of interest to credit unions. Nixon met with MCUA President/CEO Rosie Holub and Senior Vice President Peggy Nalls, according to MCUA's newsletter, The Missouri difference (July 2). They discussed the Missouri Department of Transportation's decision last session to sever ties with 10 Highway Department credit unions. They also discussed the influx of funds into credit unions as consumers search for safe, local institutions as their primary financial institutions. MCUA said Nixon and his staff also were interested in: the Real Deal program and how credit unions across the state are reaching out to those affected by a troubled economy; payday loan alternatives, Get Checking, Volunteer Income Tax Assistance, free financial education, community outreach programs and Homes for Our Troops. MCUA will supply additional information to the governor's staff and work with Travis Ford, director of communications, in the Department of Insurance, Financial Institutions and Professional Registration, the newsletter said. "We were fortunate to be able to meet with the governor at a time when he and his staff were not involved with the legislative session," Holub said. "Governor Nixon was familiar with credit unions as financial cooperatives and was very receptive to hearing more about credit union involvement in the communities they serve," she said in the newsletter.

Russias president signs CU microfinance bill

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MOSCOW (7/6/10)--Russian President Dmitry Medvedev has signed a bill into law that aims to create a legal framework for microfinance institutions, including credit unions. The law comprises government regulation of the microfinance industry and terms of microloans (Prime-TASS News July 2). Under the law’s provisions, credit unions--and banks, pawnbrokers, savings and loan associations and other entities--can provide microloans. Microfinance institutions will not be allowed to do microloan business with a borrower if, as a result, the borrower’s microloan debt to the institution would exceed one million rubles, or $34,770.

Illinois REAL Solutions partners discuss successes

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NAPERVILLE, Ill. (7/6/10)--IIlinois REAL Solutions partner credit unions met in Naperville, Ill., last month to discuss the Volunteer Income Tax Assistance (VITA) program and other initiatives, including a unique homeowner counseling program, according to the Illinois Credit Union League (ICUL). During the 2010 tax season, 10 Illinois credit unions worked with the Center for Economic Progress (CEP) to serve as the on-site financial institution partner for VITA sites statewide. This year, the total number of new accounts opened at all VITA sites in Illinois is 1,397, compared with 1,332 accounts in 2009. CEFCU, Peoria; Community Plus FCU, Rantoul; Consumers Cooperative CU, Waukegan; Kane County Teachers CU, Elgin; RIA FCU, Moline; and SIU CU, Carbondale, were first-year participants. Continuing partners are Generations CU, Rockford; North Side Community FCU, Chicago; NuMark CU, Joliet; and Sherwin Williams CU, South Holland. Cornerstone CU, Freeport, presented information about a community partnership program that helps to teach individuals and families homeowner basics, such as advantages and disadvantages of homeownership, the loan process, understanding credit, budgeting and shopping for a home. The mayor of Freeport recommended during a city council meeting that the city discontinue its own homeownership counseling workshops and instead refer people to Cornerstone, especially because the credit union’s sessions are free. The credit union also plans to host home improvement workshops to educate people on how to fix up their homes as an option to selling, given the continuing downturn in the real estate market. The first session will be late summer or early fall. Other projects discussed included:
* Matrimoney, a savings vehicle to help young couples save for their wedding and other life events; * Alternative checking programs; * Efforts to incorporate National Endowment for Financial Education materials into Lincoln’s Challenge, a National Guard program that assists high school dropouts, and Jesus is the Way, a local prison ministry; * High school branches; * Matriculas, individual tax identification numbers, and other outreach efforts to Hispanics; * Bank on Illinois, the Illinois State Treasurer’s Office program in Rockford, Aurora and Carbondale to help the unbanked and underserved; * Chapter-initiated financial literacy activities and events; and * Credit unions’ involvement with Money Smart Week, designated by the Federal Reserve in April in which community groups, including financial institutions such as credit unions, have events to promote personal financial literacy.
The next meeting for Illinois REAL Solutions partner credit unions will be Sept. 15. ICUL and the Illinois Credit Union Foundation have teamed up with the National Credit Union Foundation to offer the REAL Solutions for Low Wealth Households program in Illinois. Currently 48 credit unions are participating. REAL stands for Relevant, Effective, Asset-building, Loyalty-producing. It operates in 27 states nationwide.

Maine CU poll reports top three trends for May

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WESTBROOK, Maine (7/6/10)--Continued increase in deposits, more members using core services and more members getting rid of credit cards were the top three trends credit unions identified for May in an online poll conducted by the Maine Credit Union League. The focus was on delinquencies within the past year. About 37% of credit unions responding said delinquencies had stayed the same in May 2009, 33% reported an increase and 30% said they had decreased, the league said in its Weekly Update (July 2). For those that reported a change in delinquencies, 100% said the change was due to an increase in loan charge offs and 18% attributed it to an increase in collections staff. Other results:
* About 16% of credit unions surveyed said delinquencies increased in May over the previous month, while 52% said they stayed the same and 32% said they decreased. * About 50% of the credit unions said lending increased, 30% said lending stayed the same, and about 20% said lending decreased; and * Of those experiencing an increase in lending, 64% reported a hike in mortgages and auto loans, 50% reported increases in home equity lines of credit and 7% saw increases in member business loans--7%.

Growth strategies focus of Community CU Growth Conference

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MADISON, Wis. (7/6/10)--This year’s Credit Union National Association (CUNA) Community Credit Union and Growth Conference will focus on ways credit unions can grow their membership and revenue through innovative strategies. The conference, in Boston Oct. 6-9, is themed “Putting the Pieces Together for Growth.” Credit unions attending the conference will learn:
* How to launch growth initiatives, including ones that reach out to the rapidly expanding youth and underserved populations; * Strategic ways to use traditional and non-traditional marketing strategies, like social media, to build relationships in the community. * How to grow revenue and stay strong through recessionary times.
Keynoters will be Dr. Kevin Freiberg, author of “BOOM! 7 Choices for Blowing the Doors Off Business-As-Usual” and president of San Diego Consulting Group, and Ty Warren, author of “White Hat Leadership: How to Maximize Personal and Employee Productivity.” General sessions include:
* Economic Outlook for Credit Unions, featuring CUNA Senior Economist Steve Rick; * Best Practices in Community Credit Union Performance; and * Compliance Issues Impacting Credit Unions.
Also, CUNA will present the 2010 Community Credit Union of the Year Award during the conference. The award recognizes outstanding work by community credit unions. For more information, use the link.

Redesigned CUNA website debuts

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MADISON, Wis. (7/6/10)--The Credit Union National Association’s (CUNA) website goes live today with a major redesign to enhance the site’s appearance, navigation and organization. Together the changes make comprehensive improvements to, the most widely read website in the credit union system. The redesign has been in development for the past six months. “We have used survey feedback from our readers to guide a series of design improvements that will make our site easier to use, quicker to navigate, and more visually appealing,” said Kevin Knope, CUNA director of Web-based systems and support, who spearheaded the redesign effort. The redesigned features these major changes:
* Better navigation. CUNA reconsidered how the site was laid out from the perspective of its visitors, choosing labels and groupings that are most natural for them. Content is now grouped under four major categories: “Issues & Advocacy,” “Regulation & Compliance,” “Education & Training,” and “Products & Services,” with drop down menus delineating the specific content in each area for faster navigation. The new site also takes greater account of the different audiences that it attracts, using tabs to more clearly identify specific destinations of interest to different groups, such as consumers, press, and state credit union league staff. And it more prominently features links to the social networking sites CUNA has established--such as the recently launched CUNA*verse blog. * Improved integration. The site has added more links from informational pages to product and services pages, and vice versa, making it easier for visitors to find what they are looking for, regardless of where within CUNA the content is produced and where it resides on the site. * Increased automation. System generated lists highlighting recent additions and popular pages keep the site fresh and help visitors stay on top of what's new and what's of current interest. * Faster performance. Enhancements to the underlying technology of the site enable pages to offer more interactive features and still display faster than in prior versions of the site. * Streamlined appearance. A more attractive and contemporary design presents a stronger initial impression of CUNA and the credit union movement.
CUNA’s website is the most visited in the credit union movement, attracting more than 100,000 visitors a month to its more than 80,000 pages of information. The site receives about 45,000 page views per day. For many, the starting point is News Now, CUNA’s online daily news service, whose headlines will continue to be prominently featured on the home page along with a listing of CUNA's top initiatives.

McGee named LSCU board chair

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BIRMINGHAM, Ala. and TALLAHASSEE, Fla. (7/6/10)--Joe McGee, president/CEO of Legacy Community FCU in Birmingham, Ala., was elected chairman of the League of Southeastern Credit Unions (LSCU) and Affiliates on June 17. Outgoing Chairman Rich Helber turned the gavel over to McGee during the annual meeting held in conjunction with the LSCU’s First Annual Convention and Exposition in Orlando. The current LSCU executive committee is:
* Chairman-- McGee; * Chairman-elect--Mary Ott Wood, Florida West Coast CU, Brandon, Fla.; * Vice Chairman--Steve Swofford, Alabama CU, Tuscaloosa, Ala.; * Secretary--Tina Williams, Mobile Educators CU, Mobile, Ala.; and * Treasurer--Brent Lister, First Florida CU, Jacksonville, Fla.
The league also announced changes to senior management staff at LSCU. Carol Lucas, chief financial officer, will retire at the end of this year. She has served the Alabama Credit Union League and LSCU for 22 years. Scott Morgan was promoted to senior vice president of finance and administration. Morgan, who is based in the Tallahassee, Fla., office, will oversee accounting, human resources, information technology, and facility services for LSCU and Affiliates. Will McCarty has been promoted to senior vice president of governmental affairs. McCarty, who is based in Birmingham, has been with the league for 10 years, most recently as vice president, legislative affairs/staff counsel. Liz Aperauch was promoted to director of human resources. She previously served as human resources manager.

Cheney on board outlines priorities as CUNAs new CEO

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WASHINGTON (7/6/10)--William “Bill” Cheney, who officially became president/CEO of the Credit Union National Association (CUNA) over the long holiday weekend--on July 5--says his first priority upon taking the helm at CUNA is to assure a smooth transition of power during this volatile time for credit unions. “We can’t miss a beat, either in Washington or Madison (Wis.), as we represent and serve credit unions,” he said, referring to the CUNA operations based in each of those cities. “Credit unions are facing serious legislative, regulatory and financial challenges. So, now more than ever, credit unions need a strong, responsive national trade association--and they have one in CUNA.” Cheney comes aboard CUNA at a time when hot-button issues abound. CUNA and credit unions have fought a tough battle against government controls on interchange fees, and now work for further improvements in the pending legislation. If enacted, CUNA stands ready to work for credit union interests as the Federal Reserve implements the controls. Also on the front burner is the long-term credit union goal to increase the statutory cap on member business lending (MBL). Last week, Sen. Mark Udall (D-Colo.) offered an amendment to include legislative language in a small business-stimulus bill that would increase the MBL cap to 27.5% of a credit union’s total assets. The Senate is expected to take up that bill this summer. And on the daily operational side, Cheney notes, credit unions--like almost all businesses--are working to deal with tough economic conditions caused by the meltdown in the housing and mortgage markets. Under his leadership, Cheney says, advocacy will remain CUNA’s top priority. “That doesn’t mean it’s our only priority, but it’s our first priority.” The new CUNA chief is confident that his deep background in the credit union movement gives him the skills for a successful tenure at CUNA. Cheney has more than 20 years experience working in credit unions—nine of which were spent as CEO. He has also spent the last four years heading the California and Nevada Credit Union Leagues. “CUNA has successfully been representing credit unions for 75 years. That will continue, and my experience brings a slightly different perspective to the table,” he said. Cheney congratulates his predecessor--exiting CEO Dan Mica--on a great leadership during his 14 years at the CUNA reins. Mica announced his intended departure last August and has helped guide CUNA through the search process for a strong successor. When announcing his plan to move on, Mica noted his personal philosophy that “change is a good thing” and should occur in one’s life every 10 years or so. He said it was his love of the credit union movement that drew him to stay as CUNA president/CEO for 14 years. Reflecting Mica’s positive attitude regarding change, Cheney says, “Anytime there’s change, especially when you’ve had such a great leader as Dan Mica…for 14 years, it's an opportunity to step back and look at what we’re doing as an organization and see how we want to improve for the benefit of credit unions going forward.” For more on Cheney, the July issue of CUNA’s Credit Union Magazine features an in-depth Q-and-A with the new CUNA president/CEO.

CU System briefs (07/05/2010)

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* CINCINNATI (7/6/10)--A former manager of the now-defunct Good Samaritan Employees CU based in Cincinnati, has been sentenced to 33 months in prison, followed by three years of supervised release, for defrauding the credit union. Ann Bryson, 63, of Cincinnati, also was ordered in U.S. District Court to pay restitution of more than $245,432, the amount embezzled (US Fed News July 2). Bryson pleaded guilty on March 11 to one count of bank embezzlement, which occurred while she was manager between 1998 and 2005. Court documents said she wrote credit union checks and money orders to pay personal expenses and manipulated records to evade detection. The credit union was liquidated in November 2005 ... * BROOKLYN, N.Y. (7/6/10)--Polish & Slavic FCU (PSFCU) recently awarded $300,000 in scholarships to 298 students to help defray
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their education costs. The credit union, with more than $1.3 million in assets, has offered an annual scholarship program for 10 years. This year's scholarships bring the total the credit union has handed out in scholarships to more than $2 million, which went to more than 1,4000 students in the past decade. Most recipients are in New York and New Jersey. The program recently expanded to Chicago, where PSFCU opened two branches earlier this year. In addition to its annual scholarship program, PSFCU donated more than $500,000 to endow the Chair of Polish Studies at Columbia University and has donated to the Institute of World Politics in Washington, D.C. "In these incredibly challenging times, it would be easy to step back our efforts and blame the economy, but that's not what we're about, and that's not what our members expect from us," said Dr. Thomas Bortnik, chairman. Some of the scholarship recipients are pictured here. (Photo provided by Polish & Slavic FCU) ...

CUNA closed Monday for holiday no INews NowI (07/01/2010)

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WASHINGTON and MADISON, Wis. (7/2/10)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association (CUNA) will be closed Monday in observance of the Independence Day holiday. News Now will not post a Monday issue but will resume regular production on Tuesday.

Irish league opposes Central Bank bill

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DUBLIN, Ire. (7/2/10)--The Irish League of Credit Unions (ILCU) has issued a statement expressing credit unions' opposition to Ireland's Central Bank Reform Bill, which was being debated in its legislature Thursday. The bill contains proposals that would change the day-to-day operations of credit unions, include too much red tape and result in extra costs that would hinder credit unions in helping their members reschedule loans, said ILCU (Business and Finance Daily News Service July 1). "We do not feel that our concerns and the concerns of our member credit unions have been taken into consideration either in the original bill or the subsequent suggested amendments to it," said the league. "Credit unions exist to help their members. New regulations designed for banks will prevent us from helping ordinary members with any financial difficulties." ILCU said it objects to sections that refer to the long-term micromanagement of credit unions by the regulator. Ireland's Central Bank has proposed conducting stress tests on some credit unions with loans in arrears and revising ILCU's Credit Unions Savings Protection Fund, which the registrar of credit unions said is inadequate for a widespread economic downturn (News Now June 25).

CU van on 8000-mile road trip

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ONTARIO, Calif. (7/2/10)--The California and Nevada Credit Union Leagues received a visit from a man embarking on a 100-day road trip to spread the word about credit unions. Mark DeBellis, president of California-based PSB Integrated Marketing, stopped at the leagues’ offices about 50 days into his trip. His journey is focused on visiting credit unions and promoting the credit union difference. “Throughout this journey, I’m constantly being reminded of how special the people that serve this industry really are,” he told the league. DeBellis now will drive to Arizona, New Mexico, Texas and Colorado. He has completed more than 8,000 miles in his trip through California and expects to double his mileage. His road trip kicked off in mid-April during the leagues’ 2010 Government Relations Rally in Sacramento, Calif. DeBellis’ van reads: “100 days, 8,000 miles and one man driving for a cause.” The van has soft chairs for DeBellis’ guests, a microwave, refrigerator, cabinets, table, a built-in bed and electric generator. He also has money saving tips, budget worksheets, press releases and educational materials. DeBellis has met credit union supporters at the credit unions he has visited and also has talked to passersby to tell them about credit unions. He is visiting as many credit unions and leagues as possible, according to the California league. For more information about DeBellis’ trip, use the link.

Hurricane Alex good reminder for CUs to be prepared

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FARMERS BRANCH, Texas (7/2/10)--Texas credit unions were spared from Hurricane Alex, which weakened to a tropical storm early Thursday while moving across northern Mexico after making landfall in Soto La Marina, Mexico, Wednesday at 9 p.m. CT. CUNA Mutual reported that none of its insured credit unions in Brownsville, Texas, suffered damages, Phil Tschudy, CUNA Mutual media relations manager, told News Now. Brownsville is 110 miles north of the landfall. Though the storm did not harm credit unions, Alex is a good reminder for them to be prepared, according to Dick Ensweiler, Texas Credit Union League president/CEO. The Texas league, the National Credit Union Administration, and CUNA Mutual Group took measures Wednesday to ensure credit unions were prepared for the storm. The league actively monitored Alex’s progress and encouraged credit unions in the area to review their contingency plans. Alex caused about 11 inches of rain to fall in Brownsville. It was the earliest Category 2 hurricane to hit Texas in more than 40 years (Associated Press July 1). No injuries or major damage was reported. Fewer than 2% of customers were without power, according to American Electrical Power.

CU System briefs (07/01/2010)

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* HARRISBURG, Pa. (7/2/10)--Alan Musselman of First Commonwealth FCU, Lehigh Valley, and a Pennsylvania Credit Union Association (PCUA) Governmental Affairs Committee member, and Christine Seitz of PCUA were among the community and business representatives on a team that interviewed two candidates for the 131st District state House seat at the Greater Lehigh Valley Chamber of Commerce in Allentown (Life is a Highway June 30). Justin Simmons (Rep.) and Mike Horton (Dem.) will face off in November's general election to fill the seat held by Rep. Karen Beyer, who was defeated in the primaries by Simmons. Topics discussed included financial regulatory reform; business taxes and expansion of the sales tax; transportation funding; and the candidates' priorities. Simmons said he is opposed to increasing financial regulations and business taxes; Horton was noncommittal, said PCUA ... * AUBURN, Mass. (7/2/10)--Police are seeking an aggressive suspect in a string of robberies in Auburn, Mass., including a robbery Monday morning of Central One FCU, based in Shrewsbury. The masked man, claiming to have a bomb, entered the credit union and pointed a gun at two employees, threatened their lives, demanded cash and ordered them to lie face down on the floor before fleeing with the money into the woods. They were the only people in the credit union at that time. In an earlier robbery of a bank June 6 the suspect threatened personnel with a gun and claimed to have a grenade. Police believe he is also responsible for two other robberies in Auburn and several banks in Worcester since 2007 (Telegram & Gazette Staff June 29 and June 30) ... * ST. PAUL, Minn. (7/2/10)--A South St. Paul, Minn., man was sentenced to 60 months in prison for robbing the Wakota Federal CU, South St. Paul, on Oct. 30, said the U.S. Attorney's Office for the District of Minnesota. Steven Lee Olson, pleaded guilty on March 9 to one count of credit union robbery in a plea agreement. Olson also admitted he had committed five other bank robberies and one attempted bank robbery from Sept. 25 to Oct 20, said prosecutors. (Targeted News Service June28) ... * SACRAMENTO, Calif. (7/2/10)--Employees and business partners of The Golden 1 CU contributed 15,989 rolls of toilet paper to benefit
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local nonprofits, the Sacramento-based credit union announced. The second annual United Way Toilet Paper Drive was on June 18. The credit union said toilet paper costs each agency thousands of dollars each year that could be spent on other forms of assistance. Sponsored by Golden 1, FOX40, AT&T, Foodlink, The Sacramento Bee and Hot 103.5 radio, the combined effort brought in 46,766 rolls of toilet paper, just short of the 50,000 goal. Last year the effort raised 35,000 rolls. Golden 1's contributions represented 35.5% of the total collected. Employees contributed 10,205 of those, with 5,784 from its supportive business partners. Pictured are, from left, front row: Bob Garrison and Scott Ingram, and back row, Lennie Gzesh, Ed Marr, CEO Teresa A. Halleck, Donna Bland, Tammy DAvis and Bill Thorla. (Photo provided by The Golden 1 CU) ... * GREELEY, Colo. (7/2/10)--Geraldine "Jeri" Clara Cranwell, 85, died in Greeley, Colo., on Sunday. She served as president/manager of School District 6 CU (now Weld Schools CU) from 1963 until her retirement in 1990. She was active in the Credit Union National Association and spoke at many conventions, according to the Greeley Tribune (June 30) ...

Merged CUs members get 9 dividend

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MADISON, Wis. (7/2/10)--As part of the merger of State Central CU, West Allis, Wis., with Summit CU, Madison, Wis., members of State Central are being paid a minimum 9% dividend--totaling $5.2 million--on balances they had as of Oct. 31. The amount of the dividend will depend on the size of the member’s account. State Central had 8,600 members (Milwaukee Journal-Sentinel June 30). The merger became effective at the close of business on Wednesday. State Central and Summit announced earlier this year that they intended to merge (News Now Feb. 25). “As a member-owner, you have helped build State Central CU and are the reason for its success,” the credit unions said in a statement to members when the merger was announced. “To recognize your contribution and thank you for your commitment, a special dividend will be paid to all open-deposit accounts.” State Central, which reopened as Summit on Thursday, has assets of about $68.8 million. Summit’s assets will grow to nearly $1.5 billion with the merger, the newspaper said. Both credit unions were profitable in 2009, said the newspaper.

Southwest Corporate reports record investment activity

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PLANO, Texas (7/2/10)--A large increase in deposits has sparked record-setting investment activity through Southwest Corporate FCU’s advisory and investment services, as credit unions seek to find alternatives to cash for their investment dollars, the corporate said. Nationally, credit union member deposits increased by more than $20 billion in first quarter 2010, according to National Credit Union Administration (NCUA) 5300 Call Report data. Credit unions have been able to lend about $1 billion of the “new money” to their members, leaving credit unions in a quandary about what to do with the remaining $19 billion, the Plano, Texas-based corporate said. The flood of cash into credit unions came despite many credit unions’ continued efforts to tighten deposit pricing, the corporate said. A further challenge occurred when investment yields continued to decline. Weak loan demand, the flood of cash, and incredibly low investment yields had an impact on portfolio decisions. Of the $19 billion in added liquidity, credit unions kept $11 billion in cash, increasing their cash positions to 8.79% of assets--the highest level in two years. The remaining $8 billion was placed predominantly in agency bonds. U.S. credit unions increased agency bond holdings by 12% in the first quarter, according to NCUA statistics. Agency bonds totaled $120 billion, or 38% of all credit union investments. The same trends played out at Southwest Corporate, said Mike McGinnis, Southwest Corporate Investment Services (SCIS) director of investment sales. Certificate balances remained constant through the first quarter, while overnight deposits increased by $1.5 billion, he said. Bond investments soared over the same period. McGinnis also noted that many new credit unions have been adding securities to their policies and portfolios, both through the SCIS advisory service--which has more than $10 billion in investments under advisement--and through Southwest Corporate's brokerage department, which is on track to place more than $1 billion in bonds this year through a partnership with CU Investment Solutions, Inc. “We saw a significant increase in credit unions placing bond investments through our advisors and investment officers,” McGinnis said. “In fact, total bond holdings purchased through our advisory service increased to $3.53 billion, the highest level in our 22-year history.” Southwest Corporate also experienced an increase in holdings with optionality and with maturities of between one and five years, he added. “When positioned properly, these securities can positively impact the portfolio and the overall balance sheet,” McGinnis said. “It is critical, however, that credit unions monitor cash flows and interest rate risk, as we anticipate a rising rate environment in early 2011. Because many credit unions are focusing on yield, we are ardently counseling investment managers to closely evaluate the impact of callable instruments and the prepayment/extension risk of mortgage-backed securities.”

Corporates interchange in top 10 INews NowI stories for June

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MADISON, Wis. (7/2/10)--Interchange accounted for six of the top 10 stories in News Now for June, but the month’s most-read story is about a charge the National Credit Union Administration (NCUA) plans to assess to repay corporate insurance coverage. Other top stories include Regulation DD, Regulation E, Bank Secrecy Act violations and corrective actions by NCUA. The stories are: 10. NCUA orders corrective actions ALEXANDRIA, Va. (6/14/10)--Sperry Associates FCU, of Garden City Park, N.Y., has been ordered by the National Credit Union Administration to take a series of corrective actions. 9. New interchange language, same concerns, says CUNA WASHINGTON (6/22/10)--The Credit Union National Association (CUNA) said Monday that credit unions “would almost certainly” have to oppose a final financial regulatory reform bill unless lawmakers remove or significantly change even the modified debit interchange provisions put forward yesterday by House conferees. 8. Financial institution assessed $1M penalty for BSA violations VIENNA, Va. (6/4/10)--The Financial Crimes Enforcement Network revealed Thursday that it assessed a $1 million civil money penalty against a savings bank in New Jersey for violating a number of Bank Secrecy Act requirements. 7. Interchange amendment report: Negative impact in five areas MAYNARD, Mass. (6/11/10)--The interchange amendment in the Senate version of the regulatory reform bill would have negative consequences in five areas, according to an independent industry study. 6. White House official, CUNA meet on interchange WASHINGTON (6/7/10)--A key White House official met with the Credit Union National Association Friday to hear the credit union position on pending legislation that would allow the government to set interchange fees. 5. CUNA ‘disappointed’ by reg reform bill’s interchange treatment WASHINGTON (6/28/10)--Credit Union National Association President/CEO Dan Mica on Friday said that he was “disappointed” that House and Senate regulatory reform conferees allowed legislation that would enable government intervention in interchange fee negotiations to remain in the final version of financial regulatory reform. 4. Frank underscores CU exemption from new interchange rules WASHINGTON (6/30/10)--House Financial Services Committee Chairman Barney Frank (D-Mass.), a central figure in the recently completed House-Senate financial regulatory reform conference report, assured his colleagues that the Federal Reserve's new rules governing interchange fees would not apply to credit unions or other small institutions with under $10 billion in assets. 3. Fed releases Reg DD, E clarifications WASHINGTON (6/1/10)--The Federal Reserve last week clarified some aspects of its Regulation E, Electronic Fund Transfers, and Regulation DD, Truth in Savings, that address overdraft services. 2. Senate conferees accept House option on interchange WASHINGTON (6/23/10)--The Credit Union National Association on Tuesday repeated its call for credit unions to oppose Congress’s final financial regulatory reform bill, as the House Senate lawmakers voted to accept a House proposal that retained portions of that bill that would modify current interchange practices. 1. NCUA assesses 13-bp charge to repay corporate CU coverage ALEXANDRIA, Va. (6/18/10)--Credit unions will soon be charged an assessment of 0.134% of insured shares as the National Credit Union Administration collects a portion of the funds necessary to pay for the costs of the corporate stabilization.

Ghana Louisiana CUs partner in WOCCU program

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NEW ORLEANS (7/2/10)--Louisiana credit unions will gain insights into their counterparts in the African nation of Ghana because of a new credit union-to-credit union partnership that’s part of World Council of Credit Unions (WOCCU) International Partnerships Program.
Click to view larger image Kusi Boachie, CEO of GESRO Co-operative CU in Ghana (left) and Mark Rosa, president/CEO of Jefferson Financial CU, Metairie, La., hold a banner commemorating their credit unions’ new partnership. The relationship is part of the World Council of Credit Unions’ International Partnerships Program. (Photo provided by World Council of Credit Unions)
Jefferson Financial CU in Metairie, La., and GESRO Co-operative CU in Sekondi-Takoradi, Ghana, signed an agreement of mutual support last week in New Orleans. This is the third WOCCU partnership for Louisiana. They include the partnerships between the Louisiana Credit Union League (LCUL) and the Russian Credit Union League, and between Barksdale FCU in Bossier City, La., and Russia’s Altai Credit Union Association. “These partnerships give us an opportunity to explore new solutions to old problems that we may have not yet thought of, but which others already have put into practice,” said Anne Cochran, LCUL president/CEO. Kusi Boachie, GESRO CEO, visited its New Orleans partner credit union for the first time last week. Boachie spent the week with Jefferson Financial President/ CEO Mark Rosa and his staff to learn about the credit union’s operations and discuss areas of cooperation for the partnership. Boachie took special interest in credit and risk management, and marketing and information technology. Rosa and his team also learned about GESRO during Boachie’s presentation. “This week has been important for Jefferson Financial because the partnership will allow us to not only benefit our members in Jefferson Parish here in Louisiana, but also members of GESRO Co-operative CU in Ghana,” Rosa said. Boachie also visited New Orleans Firemen’s FCU and the league offices, and attended a league chapter meeting. The two credit unions held a partnership planning session with WOCCU to map out activities and determine the partnership’s focus. Helping GESRO create a marketing strategy to increase awareness about its products and services and streamline its loan and collections process are high on the list of preferred accomplishments. The assistance will be accomplished through on-site training in Louisiana and in Ghana, as well as peer-to-peer communication among the credit unions’ staff members. “I have learned so much from Jefferson Financial CU and am convinced that this partnership will result in real growth, efficiency and sustainability for the benefit of our members and the African continent as a whole,” Boachie said. “This is not just a partnership, but a strategic alliance for mutual benefit.” Boachie also participated in the Louisiana/Mississippi Supervisory Committee Conference, where he attended a workshop on financial statements for cooperatives.