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CU System briefs (08/01/2012)

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  • GREENVILLE, S.C. (8/2/12)--The "Credit Union Alert" text scam making its way across the country is in South Carolina. Carolina Foothills FCU, Spartanburg, S.C., told local media it was flooded with calls from members who received an alert on their cell phones saying their debit and credit cards had been deactivated (WSPA.com July 31). Recipients are told to call a number and provide their card information. The number has since been deactivated. Among those receiving the text was Melissa Weaver, daughter of Carolina Foothills CEO Richard Weaver. Although her father routinely tells her not to respond to email phishing, she told media she believed the alert. However, instead of calling back, she stopped by the credit union because she needed cash. The credit union reiterated that no financial institution would ask for account information in a text, e-mail, or phone call …
  • PEARL RIVER, N.Y. (8/2/12)--Pearl River, N.Y.-based Palisades FCU (PFCU) announced that its members have received more than $4 million in direct financial benefits in 2011, according to the "Benefits of Membership Report" from the Credit Union National Association. The benefits are equal to $370 per member or $452 per member household. The report compared the credit union's interest rates, loan rates and fees to those of other banks in the state and combines the statistics with PFCU's call report data to estimate the annual benefits …

CU delinquency rates fall in June ROA up in first half

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MADISON, Wis. (8/2/12)--Credit unions saw improvements in their delinquency rates and  return on assets (ROA) in June, according to a Credit Union National Association (CUNA) economist's  analysis  of  CUNA's Monthly Credit Union Estimates.

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"Credit unions reported another significant drop in their loan delinquency rates in June as consumers repaired their balance sheets," Steve Rick, CUNA senior economist, told News Now about credit union asset quality.

"Delinquency rates [60-day-plus] fell to 1.32% in June from 1.38% in May. The delinquent-loan- to total-loan ratio stood at 1.6% in December. The significant drop in the ratio over the past six months was caused by the dollar amount of delinquent loans falling 16.5%, while total loans rose 1.4%," he said.

"We expect delinquency rates to fall below 1.2% by year end as the unemployment rate continues to fall," Rick added.

Credit union loans outstanding grew 0.4% in June, compared with 0.5% growth during May. Unsecured personal loans led loan growth with a 1.8% increase, followed by home equity loans (1.6%) and fixed-rate mortgages (1.4%). Used-auto loans rose 0.9%; new-auto loans, 0.8%; and credit card loans, 0.5%. Adjustable-rate mortgages decreased 0.7%. Credit union loans totaled $595.3 billion, compared with $577.8 billion in June 2011.

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Credit union savings balances rose 0.8%, compared with a 0.2% gain in May. Share drafts led savings growth with a 3.7% increase, followed by individual retirement accounts and regular shares, which each rose 1%. Money market accounts grew 0.5%, and one-year certificates declined 0.5%. Credit union savings totaled $888.1 billion--or $58.3 billion more than the $829.8 billion in June 2011.

Credit unions' loan-to-savings ratio remained at 67%. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained constant at 10%.

The movement's overall capital-to-asset ratio is 10%. The total dollar amount of capital is $104 billion.

"For the first half of 2012, credit unions reported 74 basis points of return on assets, slightly above the 68 basis points reported for all of 2011," Rick said. "Most of the rise in earnings was due to falling loan loss provisions because of falling loan charge-offs and the aforementioned falling loan-delinquency rates. We expect earnings to reach 80 basis points of average assets for all of 2012 and 90 basis points next year."

CUs computer-checkup services mean cross-sales

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TAMPA, Fla. (8/2/12)--Tampa-based GTE FCU's "Techs on Tour" events are proving not only popular but also present an opportunity for the credit union to cross-sell its electronic services.

The Techs on Tour events help resolve members' problems with their computers, according to Deposit Growth Strategies (July 1). The events are once a month--on a Saturday--from noon until 4 p.m. and are held at different branches of the $1.9 billion asset credit union.

The goal of the service is to ensure that members' computers are adequately equipped to use the credit union's virtual services.

During the events, the credit union's "community engagers" are also present. They interact with members who are waiting for their computer checkup by answering questions and giving demonstrations showcasing the credit union's online channels and electronic services.

GTE FCU's Techs on Tour for May serviced 25 computers and its June event serviced 13, said the article.

PCUA board approves two fin lit projects

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HARRISBURG, Pa. (8/2/12)--The Pennsylvania Credit Union Association (PCUA) board of directors Monday approved two major financial literacy projects.

The board OK'd sponsorship of four financial literacy town meetings to be broadcast live statewide on the Pennsylvania Cable Network beginning this fall (Life is a Highway Aug. 1).

Also, the Pennsylvania Credit Union Foundation gave the go ahead for half of the funding for the financial literacy program.

Regarding another matter, the Pacul Services building, which was built 22 years ago to expand PCUA headquarters, has sustained substantial water damage.

To fix the damage, the PCUA board authorized repairs to the exterior and interior of the building. The repairs will be extensive and will require the relocation of groups of employees during the next several months, said PCUA.

Filene More MBLs needed to boost economy

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MADISON, Wis. (8/2/12)--Without an increase to the member business lending (MBL) cap, credit unions could be hindered in contributing to the next economic recovery, according to a new study from the Filene Research Institute.

The study, "Commercial Lending During the Crisis: Credit Unions vs. Banks," showed that commercial loan growth rates for banks turn negative in the periods immediately following the last two recessions, while credit union growth rates remain positive during both periods.

However, in December 2010, six quarters removed from the most recent recession, bank commercial loans were still contracting. Credit union commercial loan growth rates, while still robust, declined, suggesting that some credit unions may be reaching their MBL cap.

"If that is the case, it has implications for the ability of credit unions to contribute to economic recovery in future recessions, if the regulatory cap is to remain in place," the study said.

The study also suggests that credit unions boast delinquency and charge-off rates that compare favorably to those at commercial banks.

The report, authored by David Smith, an economist at Pepperdine University's Graziadio School of Business and Management, seeks to quantify the performance of credit union commercial lending at a time when credit unions seek to widen their access to the business lending market.

Credit union commercial loan growth has been steady during the 15 years examined in the report. It has been resilient during the past two recessions, suggesting that credit unions can buoy both lending growth and, as a consequence, overall business activity.

While banks tend to contract commercial lending during economic stress, the opposite is true for credit unions. Commercial loan growth rates for banks turned negative following the recessions beginning in 2001 and 2007, but credit union growth rates remained positive during both periods, the report said.

Results also suggest that credit unions may have better information regarding the underlying risk of commercial loans than banks. That may be related to the member relationship inherent in the credit union business model. Banks are more likely to take greater risks as a result of a governance structure that incentivizes risk-taking behavior.

The Credit Union National Association (CUNA) and credit unions have been urging the Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

To download the report, use the link.

Alive CU to buy two Space Coast CU branches

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JACKSONVILLE, Fla. (8/2/12)--Alive CU, based in Jacksonville, Fla., has signed an agreement to purchase two Jacksonville branches of Space Coast CU, which is based in Melbourne.

The $112 million asset Alive CU's purchase is pending regulatory approval. The deal will increase Alive CU's number of total branches to 11 (Jacksonville Business Journal Aug. 1).

The $3.2 billion asset Space Coast CU operates about 24 branches, mostly in the coastal area of South Florida.  Last December it entered into an agreement with MidFlorida CU, Lakeland, which assumed six Space Coast's branches in Pinellas and Hillsborough Counties (News Now Dec. 13). At the time, Space Coast noted the credit union was evaluating how best to serve the Tampa area members.  In 2009, Space Coast acquired the ailing Eastern Financial Florida CU in Miramar.

Alive is the former Healthcare's Cooperative CU. Many of its branches are inside health care facilities. Its purchase is pending regulatory approval.

Britains CU shared business model gathers steam

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MANCHESTER, England (8/2/12)--A new shared business model project for British credit unions to help strengthen the credit union movement already has 60 credit unions signed up, said the Association of British Credit Unions Ltd. (ABCUL) Monday.

ABCUL is developing the project with Cornerstone Mutual Services and credit unions to increase collaboration in the sector (ENP Newswire July 31).

"The more than 60 credit unions that have signed up so far have shown great leadership in coming together to realize the sector's long-held vision for British credit union development," said ABCUL Chief Executive Mark Lyonette.

"This project is a great opportunity for credit unions in Britain to come together and develop the shared business model and services which could significantly grow our movement and bring the benefits of credit union membership to many more people across the country," he said. "Across the world, the most successful credit union movements have reaped the benefits of greater collaboration bringing about significant growth for their sectors."

ABCUL had asked credit unions for expressions of interest in the proposed project by July 31. It plans to build a team of credit union leaders to steer the development of the shared business model.

Top 10 INews NowI stories for July (08/01/2012)

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MADISON, Wis. (8/2/12)--An article about the potential cost of reduced credit card interchange rate fees--mandated as a result of an historic lawsuit settlement between merchants and credit card companies--was the most read News Now article in July.

The top ten articles in July included:

10. Credit reporting agencies to come under CFPB scrutiny

WASHINGTON (7/17/12)--The Consumer Financial Protection Bureau this fall will begin supervision and examination of consumer credit reporting agencies with more than $7 million in annual receipts, the agency announced on Monday.

9. Visa shares conversion: CUs won't see major impact

SAN FRANCISCO (7/26/12)--Visa is adding $150 million to a litigation escrow by converting some of its Class B shares held by credit unions and banks to help fund its share of liabilities in the aftermath of a proposed $6.05 billion settlement announced earlier this month. The move will affect credit unions, but should not have a major impact.

8. NCUA to shift exam focus to largest CUs

ALEXANDRIA, Va. (7/27/12)--Noting that one-size-fits-all supervision is "no longer appropriate in a credit union industry with nearly 100 million members and more than $1 trillion in assets," National Credit Union Administration Chairman Debbie Matz on Thursday announced a new office that will focus on regulating corporate and high-asset credit unions.

7. Top 10 payment trends to watch

CINCINNATI (7/23/12)--Vying for share of wallet is the No. 1 payment processing trend shaping up for 2012 in an industry undergoing a number of changes, according to a report from a payment processor.

6. Vermont CU says it's targeted in bank battle

MONTPELIER, Vt. (7/18/12)--Vermont State Employees CU has filed an appeal with the Vermont Department of Financial Regulation (DFR)  after DFR issued a cease-and-desist order notice to prevent VSECU from using the word "banking" in its marketing, communications, and ads to describe its services.

5. Exam issues remain high priority: CUs to NCUA

SAN DIEGO, Calif. (7/13/12)--Examination issues again loomed large as the National Credit Union Administration this week held its fifth credit union listening session in San Diego, Calif.

4. Capital One fines prompt CFPB card guidance

WASHINGTON (7/19/12)--Credit unions should be aware of compliance guidance posted yesterday by the Consumer Financial Protection Bureau that addresses marketing practices associated with certain "add-on" features related to credit cards.

3. Trust in big banks collapses, CUs see largest gain

CHICAGO (7/25/12)--Only 21% of Americans surveyed trust the financial system, the lowest point on record since March 2009, according to the most recent Chicago Booth/Kellogg School Financial Trust Index. However, trust in credit unions increased, rising to 63% from 58%.

2. Gov. signs Calif. homeowner bill of rights

LOS ANGELES (7/13/12)--California Gov. Jerry Brown Wednesday signed the "Homeowner Bill of Rights" into law in Los Angeles. The bill will go into effect Jan. 1. Credit unions will be impacted by the legislation, which is the first of its kind in the U.S.

1. Settlement could bring a $50 million cost for CUs

WASHINGTON (7/16/12)--Reduced credit card interchange rate fees--mandated as a result of an historic lawsuit settlement between merchants and credit card companies--could cost credit unions with credit card programs up to a total of $50 million, according to estimates by the Credit Union National Association.

USNet re-elects officers two board members

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ALBANY, N.Y. (8/2/12)--Universal Sharing Network (UsNet),  a New York state-based provider of financial network services, announced the re-election of its board officers and the results of its board elections.

 

Board members re-elected to serve another one-year term include:

  • Chairman--Mark Pfisterer, president/CEO of AmeriCU, Albany, N.Y.;
  • Vice chairman--Mark Welshoff, president/CEO of Palisades FCU, Pearl River;
  • Treasurer--Christine Peters, CEO of Family First of NY FCU, Rochester; and
  • Secretary--Alfred Frosolone, manager/CEO of Niagara's Choice FCU, Niagara Falls.
Two directors were re-elected to serve new three-year terms: Peters and John Tucker, chief financial officer/president of FASNY FCU, Albany. 

Newly elected to UsNet's board of directors are Eileen Nolan, senior vice president/chief branding officer of Nassau Educators FCU, Westbury; and Thomas Fallon, chief operating officer/executive vice president of Teachers FCU, Hauppage. 

Nolan and Fallon will replace outgoing board members Edward Paternostro, CEO/president of Nassau Educators FCU, and Robert Allen, president/CEO of Teachers FCU, whose terms on the board have expired.

UsNet is part of a national network of credit unions that expands services to their members through CU Service Centers.