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CU System briefs (08/10/2012)

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  • COLLINSVILLE, Ill. (8/13/12)--A couple accused of robbing Collinsville, Ill.-based Scott CU on April 12 and immediately turning themselves into authorities received one-year probation sentences on July 17.  Rita Bell, 58, and Jeffery Bell, 56, each pleaded guilty to felony theft in St. Clair County Circuit Court. The original robbery charges were dismissed. The theft charge carries the same penalty as robbery but allows defendants to participate in a probationary program requiring mental health treatment. Both Bells have mental and diminished-capacity issues and had experienced mounting financial and other problems in the months preceding the incident, said the state attorney's office.  Neither had a prior criminal record, neither used a weapon and the stolen money was returned immediately, the office added (Belleville News-Democrat July 23) …
  • YPSILANTI, Mich. (8/13/12)--Renee DeMarco has been named president/CEO of Ypsilanti, Mich.-based Community Driven CU, the credit union's board announced in a press releaseThursday. DeMarco, who has 33 years of experience in the credit union industry, previously served as president/CEO of CapCom CU, based in Lansing.   Community Drive CU, which has offices in Ypsilanti and Romeo, was founded in 1965. Today it serves members in Washtenaw, Macomb and Lapeer counties. It has more than 9,000 members and assets totaling $63 million …
  • LOUISVILLE, Ky. (8/13/12)--Jefferson County FCU, based in Louisville, Ky., has selected Heather D. Clunie as president, succeeding president/CEO Carl Hicks, who plans to retire in October (Business First Aug. 9). Clunie previously worked for LG&E CU for more than 13 years, most recently as CEO. At Jefferson County FCU, Clunie will oversee operations of the $112 million asset credit union, which serves people who live, work, worship, volunteer or attend school in seven Kentucky counties or in Floyd or Clark counties in Indiana …

Maine league letter responds to banks inaccuracies

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PORTLAND, Maine (8/13/12)--The Maine Credit Union League has published a letter to the editor of a statewide bi-weekly business publication to counter inaccuracies about credit unions in an article based on an interview with the chairman of a state banking association.

In a letter published Aug. 6 in Mainebiz, league President John Murphy responded to a July 23rd article, in which Christopher Emmons, CEO of Gorham Savings Bank and the new chairman of the Maine Bankers Association, "emphasized two points that I believe are inaccurate and deserve correction," said Murphy.

Emmons had said credit unions don't pay taxes. "This assertion is wrong," Murphy wrote. "Credit unions do pay taxes--payroll taxes, sales taxes and property taxes. Credit unions are exempt from federal taxation because they are not-for-profit financial cooperatives that exist to serve credit union members, not make a profit."

The second inaccuracy is that credit unions don't have the same kind of oversight as banks, he said. "Maine has 12 state-chartered credit unions that are regulated by the State Bureau of Financial Institutions, the same regulator that oversees all state-chartered financial institutions, including Mr. Emmons' bank," Murphy wrote in the letter.

"In addition, there are 50 credit unions that are federally chartered. All federally chartered credit unions are regulated by the National Credit Union Administration, a U.S. government agency that is responsible for examining and regulating credit unions, and enforcing many of the same federal laws in the same manner that the [Federal Deposit Insurance Corp.] regulates banks," Murphy added.

The letter also pointed out that that the Community Reinvestment Act was passed to reduce redlining credit practices by banks against low-income neighborhood, while credit unions "have no such requirement because, by their nature and mission, credit unions already meet the financial needs of a broad spectrum of people who fall within their fields of membership, and play an active role in community development and growth." Murphy noted research that finds "the performance of credit unions' lending to low- and moderate-income borrowers has been superior to other lenders."

The story also noted  The $38 million in economic benefit  to consumers credit unions provide through better rates and lower and fewer fees.

"We will not allow inaccurate statements and assertions by the banking community to go unchecked," Murphy said. "We have a responsibility to respond and correct those misstatements and, at the same time, reinforce the differences between credit unions and banks, by highlighting the strength and benefits that Maine's credit unions bring to the state's 620,000 members," Murphy said.

To read the entire letter, use the link.

Senate candidate praises CUs at league endorsement

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LYNCHBURG, Va. (8/13/12)--Former Virginia Gov. Tim Kaine--now a candidate for the U.S. Senate--praised credit unions and their philosophy as he accepted the endorsement of his candidacy from the Virginia Credit Union League.

"I have great respect for credit unions and their 'people helping people' philosophy," said Kaine in accepting the league's endorsement.

"The economy and the creation of jobs is the central focus of my campaign, and credit unions and other community-based financial institutions will help drive the economic recovery," he said. 'Washington needs to ensure the nation's 'Main Street' financial institutions can remain strong, innovative and vibrant for the good of working Americans and our communities."

The league announced its endorsement Friday.

"Decisions made in Washington have a direct impact on credit unions' ability to provide affordable financial services to their member-owners," said Rick Pillow, league president.  "Gov. Kaine will be an effective partner and understands the difficulty of the legislative and regulatory environment."

Kaine, who was governor from 2006 to 2010, "is a proven leader and credit unions respect his balanced approach in crafting policy," said Pillow.

Although credit unions played no role in the financial crisis that shook America's financial system, they have been saddled with regulations meant to rein in the excesses of the nation's largest banks, said the league.

Kaine supports credit unions and community banks in the call for fair and balanced regulation that maintains the safety and soundness of the nation's financial system, without unduly burdening the nation's small community-based financial institutions, the league added.

CUNA posts new collaboration materials

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MADISON, Wis. (8/13/12)--The Credit Union National Association's (CUNA) new collaboration website features materials detailing the work of international cooperative efforts. 

The examples include overviews of Brazil's Sicredi model, the Polish credit union/SKOKS model and Canada's Desjardins Group. The new postings detail each initiative's historical roots, operating principles and practices and recent financial and operational successes. 

The initiatives, along with domestic examples on the site, are intended to provide U.S. credit unions with the insight, direction and motivation to explore similar initiatives in their own communities, said Mike Schenk, CUNA vice president of economics and statistics.

The need to reduce back-office redundancy through more cooperation and collaboration is one of the top strategic issues facing credit unions, Schenk said. "Credit union professionals repeatedly tell us this but, when asked, indicate that they don't cooperate or collaborate more because they aren't aware of successful efforts," Schenk added. 

Last year, CUNA's Small Credit Union Committee affirmed previous feedback identifying back-office redundancy and lack of collaboration as one of the top issues facing credit unions and asked that CUNA develop a way to help member credit unions of all asset sizes find out more about collaborative efforts. The website was introduced in June at CUNA's 2012 America's Credit Union Conference in San Diego.

The CUNA collaboration is a repository for such examples, and also serves as a vehicle for credit unions, leagues and credit union service organizations to share their stories, Schenk said. 

"Our goal with the site is to improve the cross-pollination of good ideas, enable credit unions to replicate successful initiatives and ultimately to produce substantial financial and operational benefits that help credit unions thrive," he added.

Visitors to the site can also subscribe to a collaboration listserv. 

The site also includes links to Credit Union Magazine articles and Filene Research Institute studies. In the future, the site will include an overview of the Louisiana Credit Union League's new business-lending collaborative and the objectives of the Credit Union Bay Area Executive Coalition..

To visit the site, use the link.

Wis. CUs net income up 83 in first half 2012

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MADISON, Wis. (8/13/12)--Wisconsin state-chartered credit unions grew net income by 83% in the first six months of 2012, compared with same period last year, according to data compiled by the Wisconsin Department of Financial Institutions (DFI).

Net income totaled $101.8 million, an increase from $55.6 million in 2011. The rise was fueled in primarily by a 28% increase in "other income" and an 11% drop in provisions for loan loss expense.

"Wisconsin credit unions continue to perform well in terms of revenue growth and improved loan quality," DFI Secretary Peter Bildsten said. "Those trends are having a positive impact on return on assets and net worth. The industry's solid performance should mean good things for the state's economy."

Through June 30, Wisconsin's 194 state-chartered credit unions posted a return on investment (ROA) of 0.90%, up from 0.59% as of Dec. 31. Credit unions' ROA has not topped 0.90% since calendar year 2005, according to the DFI. Net worth remained at 9.83%.

Total assets rose to $23.1 billion, up $1.2 billion compared with year-end 2011. Total savings also grew during the same period, increasing by $1.1 billion to $20.2 billion.

"Key indicators of credit unions' financial performance are definitely headed in the right direction," said Ginger Larson, director of the Office of Credit Unions--the DFI division that oversees state-chartered credit unions. "Especially noteworthy is the fact that the loan delinquency ratio has been showing consistent improvement and is nearing pre-recession levels."

CUNA Mutual Change education focus on text scams

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MADISON, Wis. (8/13/12)--New types of scams--particularly the texting scams that are challenging consumers and financial institutions across the country--mean credit unions should change their focus slightly when educating their members and staff about fraud, says CUNA Mutual Group.

The text scams occur when a criminal sends a text message to a consumer's cell phone under  false pretenses to trick the consumer into entering personal information with a bogus phone line or website so the criminal can use the information to raid the victim's account. They have occurred mostly in Georgia, West Virginia, Wisconsin, Florida and California, said Ann Davidson, CUNA Mutual's senior consultant, risk management.

News Now also has picked up media reports on text scams hitting credit unions in Pennsylvania, Arkansas, Georgia, Ohio and Michigan since early May.

A new education tactic is in order because consumers and media are asking how the criminals could have obtained their cell phone numbers and the fraudsters themselves have changed their focus on the type of information they are after.

Some consumers even perceive that their credit union's data were breached. Many believe they got the text through their e-mail address. Still others believe that only members of the specific credit union named in the bogus text were targeted. None of these beliefs are correct.

In text scams, "the credit union would not have been breached," Davidson told News Now. The cyber criminals "get the prefix of the phone carrier. For example, 354 may be a prefix number. They use phone dialers that automatically pick up numbers." Also, it is not just members targeted as victims. The predialers capture nonmembers' numbers within the prefix, too. "The text message comes through your phone number--not your e-mail address," Davidson said, adding that credit unions need to educate their members about that.

With cyber criminals shifting their focus to consumers' mobile devices such as cellphone, iphone or smartphone, major telecommunications carriers such as AT&T, T-Mobile and Verizon are offering a new service for consumers who receiving text spams that may involve scams.

"When consumers get a text they think is a scam, they can forward it to the number 7726. All three carriers use the same number " in an attempt to establish a communications industry standard for dealing with spam, Davidson told News Now.

When CUNA Mutual Group receives a report from a credit union about a text scam, it collects the number that the consumer was given to enter the account information and reports it to the carrier, working hand-in-hand to mitigate the losses. Sometimes the company will be told the number is used by a specific group being monitored. Other times, the phone number will be disconnected to prevent future losses.

CUNA Mutual Policyholders can report a risk alert and any losses to its Protection Resource Center on its website. Use the link. A sign-in is required.

Cyber criminals also may shift their focus from obtaining credit and debit card numbers to obtaining the consumer's banking account numbers, said Davidson. If they get the account number at the credit union, and the credit union's routing number, "they can make an ACH (automated clearinghouse) transaction." While this isn't happening yet, she cautioned credit unions to avoid publishing their routing number widely.

In preventing thefts due to text scams, "education is huge," Davidson said. Not only should credit unions educate members and consumers, they also should educate their call center staff. "Many times someone at the call center in an effort to help (members) provides excellent service--to the bad guys," she said. The latest trend in wire fraud is to call the call center to capture numbers and information.

Tell members/consumers to set up security systems on their mobile devices and to add their cell phone number to the Do Not Call registry, she said.

"To commit fraud, the criminal needs to break into your credit union. That's the key. Credit unions should ask, 'How are they getting in?' Is it through the Internet on the website, through calling the call center, or through the members? Once you determine that, you can minimize the losses."

Criminals' "fraud alerts" are beginning to blend in with legitimate alerts. "The majority of credit unions have at least one victim who responds to the scam," Davidson said. "Credit unions have done a tremendous job in educating consumers about e-mail fraud. Now they need to do it for text fraud, too."

First Carolina Corporate in new quarters

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GREENSBORO, N.C. (8/13/12)--First Carolina Corporate CU in Greensboro, N.C., relocated Thursday to new offices roughly a mile from its previous headquarters. First Carolina said it made the move primarily because of a focus on enhancing security.

The $1.7 billion asset corporate determined that its former office space was no longer ideal and that heightened security requirements could be more efficiently addressed at a new location.

"After the North Carolina [Credit Union] League moved out of our shared facilities last year, we decided it was a good opportunity for First Carolina to reconsider our own building design," said David Brehmer, the corporate's president/CEO. "Moving to our new building allows us to fulfill our mission of providing efficient, personalized service to meet our members' needs."

Operations staff moved from the previous location June 23 and has functioned out of First Carolina's business recovery center (BRC) in a seamless transition. The move to the new headquarters was completed Thursday.

"Although our new facility wasn't ready for occupation as quickly as we had hoped, operating out of our BRC was actually a good contingency test," Brehmer said. "The move was very straightforward, and we've had no service disruptions for members."

First Carolina's new offices are at 7900 Triad Center Drive, Suite 410, Greensboro, N.C. 27409. All staff phone numbers remain the same.

Florida issues instructions for new ELT Program

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TALLAHASSEE, Fla. (8/13/12)--All individuals and businesses that finance vehicles to be titled in Florida must be electronically connected by Jan. 1 to Florida's Department of Highway Safety and Motor Vehicles (DHSMV) to perfect their liens and receive titles electronically through the state's Electronic Lien and Title (ELT) program.

Florida House Bill 1223, passed during the 2012 legislative session, requires lienholders to electronically transmit liens and lien satisfactions to the department. The law requires mandatory participation by lenders, with the exception of individual lienholders and businesses that are not normally involved in financing vehicles. Credit unions are included.

Lenders must contract with a Florida DHMSV-approved service provider to make the ELT connection with DHMSV.

The list of providers includes:

  • American Security Insurance Co., Duluth, Ga.;
  • Auto Data Direct Inc., Tallahassee, Fla.;
  • Decision Dynamics Inc., Lexington, S.C.;
  • FDI, Sacramento, Calif.;
  • PDP Group Inc., Hunt Valley, Md.;
  • VinTek, Philadelphia;
  • Title Technologies Inc., Dallas (pending approval); and
  • Florida ELT, Miami Springs, Fla. (pending approval).
Last week it was announced that VINtek would provide ELT services in Wisconsin. To see the News Now story, use the link.

Minnesota Foundation elects officers board

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ST. PAUL, Minn. (8/13/12)--The Minnesota Credit Union Foundation (MNCUF) Thursday named its table officers and welcomed new board members.

At a MNCUF board meeting, the board elected Pat Brekken, president of Richfield/Bloomington CU in Richfield, as chair; Dave Larson, senior vice president of Affinity Plus FCU in St. Paul and executive director of the Affinity Plus Foundation, as vice chair; and Brian Sherrick, executive vice president of lending and member services at Postal CU in Woodbury, as secretary/treasurer.

Brekken and Larson are entering into their third consecutive years in those roles. This is the first year that Sherrick will serve in the position. Table officers are elected for one-year terms.

Brekken and Larson joined the MNCUF Board in October 2009. Sherrick was electedto the board last year.

At the MNCUF annual meeting in July, Kristi Mukomela of Novation CU in Oakdale, Larry Champeaux of Northern Communities CU in Duluth, and Kathy Harrington of Heartland CU in Inver Grove were elected to three-year terms on the board.

Mukomela has been on the board for more than eight years, serving as MNCUF chair from 2004-2010 and secretary/treasurer from 2011-2012.

Champeaux has served the credit union movement for more than 25 years. Since 2008, he has worked as the president/CEO of Northern Communities CU.

Harrington has more than 25 years of experience in the credit union industry, working at a credit union in Spain before moving to Minnesota. She has been the president of Heartland CU since 2010.

The board also includes Mary Hansen of Mayo Employees FCU in Rochester. Hansen has been on the MNCUF board since 2004.

Filene report summarizes CUDE program

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MADISON, Wis. (8/13/12)--Participants in the weeklong Credit Union Development Education (DE) Program leave with a stronger sense of purpose in addition to more credit union-specific knowledge, according to a Filene Research Institute paper.

The program, presented twice each year by the National Credit Union Foundation, consistently draws rave reviews from participants and a waiting list for those who wish to attend. But the curriculum remains a bit of a mystery within the industry, Filene said.

That sense of mystery is helpful in taking participants out of their comfort zone, said Bob Schumacher, a senior consultant for the Paragon Group and one of the facilitators at the April DE session.

The weeklong training includes classroom sessions, hands-on activities, and a wrap-up project that requires each small group to solve a case study that draws from recent happenings in the financial services space.

For their case studies, work groups are given 18 hours to research a complex financial topic, develop a recommendation, and present their ideas to an auditorium of credit union peers. While the case studies are fictional, they reflect true challenges from the credit union world.

The Filene report offers overviews of five case studies delivered during the Spring 2012 session. Topics addressed include national branding, members business lending, mergers, emerging markets and the international credit union system.

In addition to the credit union-oriented takeaways the program provides, students who go through the DE training also talk about "discovery" and "bonding" and the infusion of energy they receive through team building, according to the report.

"I loved the fact that you checked your title at the door: You didn't know that the person you'd been working with all week was a CEO until the end," said Teresa Shively of GESA CU in Richland, Wash.

A critical message of the DE program is that the roles participants play in their everyday jobs are important, said Lois Kitsch, national program manager of the REAL Solutions program at the National Credit Union Foundation and a DE facilitator, said.

"That they can be a catalyst for change or a reaffirmation of core credit union values," is another key message, Kitsch said. "I love the fact that these sessions create a group dynamic that drives powerful individual outcomes."

Those outcomes can be life changing, Schumacher said. "One participant told me that after she went through DE it became the filter through which she tried to make all of her decisions," he added. "It's a revelation for many."