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Ex-CEO of largest British CU under embezzlement probe

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YORKSHIRE, England (8/17/09)--The former CEO of the United Kingdom's largest credit union has declared bankruptcy, and an internal investigation for embezzlement has been turned over to the West Yorkshire police. Sue Davenport, former CEO of Leeds City CU (LCCU), was granted bankruptcy at Leeds County Court (Yorkshire Post Aug. 14). Among the creditors owed was the credit union. Police are investigating allegations that she used the credit union's company card for personal expenses, made loans without following approval procedures, and changed balances in credit union members' accounts before she was forced to resign last year by regulators (News Now April 8, 2008, and Nov. 6, 2007). LCCU has 24,000 members and manages about US$49.6 million in assets. The credit union received a $6.6 million bailout from public funds earlier this year.

iConsumer Affairsi Firing the bank Try CUs

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NEW YORK (8/17/09)--Consumers who've had rates raised, accounts closed and fees imposed may want to fire their banks, and one practical option is credit unions, says a columnist with Consumer Affairs (Aug. 12). Mark Huffman. writing on Consumer Affairs' website, says the site has received a "cascade of complaints" about major banks. He asks the question: Is it possible to exist in the 21st century without doing business with a bank? His answer: Maybe, because there do appear to be some alternatives. "Credit unions may provide a more practical alternative to banks, providing many of the same services but without the policies that seem to drive consumers up the wall," wrote Huffman. "They tend to charge…members lower rates when they borrow money and often higher rates on their savings. Like banks, most are federally insured." He discusses the history of credit unions and notes they "tend to be more stable. Since they are membership organizations, they aren't sold and rarely merge with other financial institutions. Some members find that gives them a feeling of safety and security they don't get with a bank." He discusses how to join a credit union, says credit unions have expanded membership so it's easier to join, and notes the Credit Union National Association's website to help consumers searching for a credit union to join.

CU teller picked to vie for Montana legislative seat

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ANACONDA, Mont. (8/17/09)--A head teller at Southwest Montana Community FCU, Anaconda, Mont., is one of three finalists chosen by Democrats to campaign for the seat of state Rep. Dan Villa in District 86. Kathy Keenan-Swanson, who works in the Anaconda branch of the $71 million asset credit union, will run against former state legislator Red Menahan of Anaconda and Jim Jenner, a video production company owner from Philipsburg (The Montana Standard Aug. 12). Others vying for the position are John Collins, Jim Flynn and Kelly Richards. Precinct members from Anaconda-Deer Lodge and Granite counties at a Tuesday meeting in Philipsburg asked questions and listened to the biographies of six candidates. The most votes went to Jenner, Kennan-Swanson and Menahan. They will have to wait for the counties to choose one to represent the district. Once chosen, the term will be open for election in November, said the newspaper. Keenan-Swanson, who has served on the county's tax appeal, zoning and planning boards, is the daughter of former state Sen. P.J. "Squeek" Keenan. Her daughter, Dayna works for U.S. Sen. Jon Tester. Her sister, Nancy Keegan, is a former Montana legislator and former school superintendent, and ran unsuccessfully for Montana's lone seat in the U.S. House of Representatives. The seat is open because Villa was appointed in June by Gov. Brian Schweitzer as his education policy adviser.

California to redeem IOUs early

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SACRAMENTO, Calif. (8/17/09)--California will stop issuing IOUs on Sept. 4, well before the planned redemption date of Oct. 2, state Controller John Chiang announced Thursday. That's good news for more than 80 credit unions and their state-employee members who were impacted by this summer's state budget stalemate. Chiang said the IOUs--called registered warrants--will be redeemed early because the state's revised budget will replenish its coffers (The Wall Street Journal Aug. 14). The state started issuing the warrants as payments to creditors--instead of using cash--to avoid running out of money by the end of July. It said it would repay the IOUs with interest when it had a budget. The warrants pay a 3.75% annualized interest rate. A $1,000 IOU would pay about $6.70 in interest at most. To assist their members who were state employees working without pay, more than 80 credit unions in the state agreed to accept the IOUs indefinitely. Credit unions were applauded by regulators and others for their assistance, and they became the topic of a number of positive media reports for their efforts. Several large banks, on the other hand, generated themselves a barrage of negative publicity for announcing they would not accept the warrants or for putting a mid-July deadline on acceptance. On July 20, state lawmakers and Gov. Arnold Schwarzenegger reached an agreement that closed a $24 billion deficit (News Now July 27). The state issued 327,000 IOUs, worth $1.95 billion. Chiang said it was possible that officials could issue IOUs again later this year if the state's economy worsens. The IOUs can be redeemed at the Treasurer's office beginning Sept. 4.

Maine CUs thriving says public broadcaster

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AUGUSTA, Maine (8/17/09)--Maine credit unions are thriving as evidenced by reported increases in membership, deposits and loan approvals, said the Maine Public Broadcasting Network (MPBN) in a radio segment originally aired Thursday. Membership in Maine’s 67 credit unions has grown slightly more than 1% in the past six months. In the past year, there has been a 4% increase in loans issued and an 8% rise in deposits, MPBN said. The statistics indicate that consumers in the state like the fact that credit unions are member owned and don’t get involved with risky investments, John Murphy, president of the Maine Credit Union League, told MPBN. “If you think back to last fall, people were concerned about the safety and soundness of their funds and their financial institution, and credit unions provide the latest financial service for consumers--there are many locations through the shared branch network,” Murphy said. “So credit unions become a real viable, good option.” In many cases, credit unions offer the best interest rates, Gerard Cassidy, a director at RBC Capital Markets in Portland, Maine, told MPBN. “Credit unions tend to pay a little better interest rate than a commercial bank or a savings bank because most credit unions are not-for-profit and they’re able to offer a more attractive deposit yield than a commercial bank that may be publicly traded or owned by a publicly traded company,” he added. Also, credit unions now are easier to join than in the past when they were exclusively for smaller groups of employees of companies, universities and other organizations, Cassidy told MPBN.

Amended Ill. CU Act changes accounting mortgages marketing

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NAPERVILLE, Ill. (8/17/09)--An amendment to the Illinois Credit Union Act that affects credit unions’ accounting, mortgages and marketing was signed into law by Gov. Patrick Quinn Aug. 7. It was initiated by the Illinois Credit Union League. The bill--Illinois House Bill 348--addresses issues regarding loan loss accounting, U.S. Department of Agriculture (USDA) Rural Development Housing and Community Facilities Program (HCFP) guaranteed residential mortgage loans, and marketing of services to persons eligible for membership. “This is the second bill that the governor signed this year in support of credit unions,” Keith Sias, league director of state government affairs, told News Now. “This bill has three important amendments to the Illinois Credit Union Act. I think it shows the good year we had in the legislature and in terms of support from the governor. “A previous bill that passed in January implemented a settlement of regulatory-fee litigation and immediately gave $4.5 million back to Illinois credit unions,” he continued. “So it’s been a great year for Illinois credit unions.” H.B. 348 also provides state-chartered credit unions parity with federal credit unions doing business in Illinois. H.B. 348 authorizes state-chartered credit unions to use generally accepted accounting principles (GAAP) methodology for loan loss accounting, subject to an external auditor’s determination that the period is in accordance with GAAP. The credit union must establish that a time period of fewer than five years is appropriate given the credit union’s size, business strategy, loan portfolio characteristics, and the economic environment of the areas and employers its serves. Currently, all Illinois credit unions are required to determine their historical loss rate using a period of five years. For some, this requirement distorts the forecast of current losses. Except for state-chartered credit unions, all other financial institutions, including federal credit unions, determine the appropriate balance in the allowance for loan losses in accordance with GAAP principles, as set forth in Financial Accounting Standard 5 (FAS 5). FAS 5 authorizes setting a period that may be shorter than five years. Particularly in this time of volatile market conditions, this provision is critical so that Illinois-chartered credit unions can accurately reflect the amount of losses they are likely to incur, the league said. The amended law also authorizes Illinois credit unions to provide limited services for persons eligible for membership in but not currently members of the credit union. They include (1) the issuance of negotiable checks (including travelers checks), money orders, and similar money transfer instruments (including electronic fund transfers) and (2) the ability to cash checks and money orders and receive electronic fund transfers for a fee. Illinois credit unions can now better promote membership by demonstrating a limited sampling of selected services to potential members in their existing field of membership. They also can serve unbanked persons residing in economically disadvantaged areas of Illinois. H.B. 348 also authorizes Illinois credit unions to participate in the no-down-payment HCFP programs. Prior to the amended law, Illinois credit unions were previously prohibited from making a residential real estate first mortgage loan that exceeds the estimated market value or appraised value of real estate securing the loan. As a result, Illinois credit unions could not fully participate in USDA HCFP. The purpose of HCFP is to bring home ownership opportunities to rural Americans. A common barrier to home ownership is a lack of funds for a down payment. The USDA program underwriting criteria ensure that prudent loans are generated to families that may not have a large enough down payment to avoid private mortgage insurance, but who otherwise have the credit histories and income ratios to support monthly debt service expenses.

Birmingham CUs top banks on ratings

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BIRMINGHAM, Ala. (8/17/09)--Birmingham, Ala.-area credit unions were rated higher than their banking counterparts, according to recent reports from two Florida-based rating agencies. Fourteen of 39 metro Birmingham, Ala.-area credit unions received five stars, the highest rating. Thirteen credit unions received four stars, which indicates excellent or sound financial performance (The Birmingham News Aug. 14). Of the 27 area banks, two received five-star ratings and four received four-star ratings. Of the 39 credit unions, four received one or zero stars, while 11 of the 27 area banks received zero or one star. The ratings were issued by Bankrate.com and Bauer Financial. Credit unions are faring better than banks because they are avoiding risky residential loans, John Kottmeyer, Samford University economics professor, told the newspaper. Greg McBride, Bankrate.com senior research analyst, said Birmingham credit unions are performing better than others nationally. However, Birmingham credit unions are not immune to the nation’s economic troubles. Many credit unions are being hurt by loan defaults triggered by job loss. The jobless rate in Birmingham has doubled to 10.1% as of June, McBride added. Credit card, personal loan and small-business loan defaults also could hurt the nation’s financial institutions, and even credit unions won’t be immune, Kottmeyer added.

GTE FCU youth account features social networking

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TAMPA, Fla. (8/17/09)--GTE FCU in Tampa, Fla., is integrating social networking with its U22 savings account on MySpace, Facebook and Twitter to reach 12- to 22-year-olds. U22 is a youth savings account that offers accountholders educational materials, online articles about personal finance, a debit card with rewards points, online and mobile account access, free bill pay, and one overdraft fee forgiveness per month. GTE is encouraging youth to sign up as a friend of U22 on MySpace and Facebook by Aug. 31. Those who do will be entered into drawings for prizes, including tickets to a Blink 182 rock concert. All U22 accountholders who sign up by Sept. 5 will receive two Tampa Bay Rays minor league baseball tickets and a chance to meet third baseman Evan Longoria. Longoria is one of three spokespeople for the U22 account. Caroline Kudelko, a local singer and songwriter, and aspiring actor Alex Perez, who was chosen by GTE through a casting call to represent the credit union, are the other two spokespeople. They will update U22 accountholders and the public on their activities and the pursuit of their financial goals through blogs and videos on the U22 website. Ads featuring Perez began running Thursday on Tampa Bay-area radio, TV stations, and billboards, GTE said. The $1.8 billion-asset credit union also created a character, “Kathy,” who will appear on the website to provide tips on money management.

CU System briefs (08/14/2009)

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*ALBANY, N.Y. (8/17/09)--The Credit Union Association of New York's annual auction has raised nearly $7,000 for political advocacy. More than 300 credit union people surveyed more than 70 items up for bid, including iPods, jewelry, elaborate baskets and tickets to sporting events. Hot items at the event were orchestra tickets to see "West Side Story" on Broadway and a painting of a lighthouse on the Hudson River. "Charitable events like this auction are a great way to raise political awareness among credit unions," said Cheryl Frantzen, the association's political action coordinator. In the photo, Mario Shortino, board member from Teachers FCU, Farmingville, takes time out from the evening's festivities to bid on one of the items.(Photo provided by the Credit Union Association of New York) … * RIVERTON, Utah (8/17/09)--Even robbers can be impressed with a credit union's services. A man with manners and a semi-automatic handgun in the waistband of his pants robbed a Riverton branch of Sandy, Utah-based Jordan FCU Wednesday, thanking tellers as he took their money. The robbery occurred at about 3:30 p.m. Wednesday. He walked into the $194 million asset credit union, told everyone not to panic and approached two tellers. After he took the money, he thanked the tellers for "doing a good job." The Salt Lake County Sheriff's Office believes he fled on foot (Deseret News Aug. 13) … * REDWOOD CITY, Calif. (8/17/09)--A San Mateo, Calif. bride-to-be spent what would have been her wedding night in jail after being charged with stealing $35,000 from San Mateo CU to finance her wedding. Briana Nicole Balancier, 26, pleaded no contest Tuesday to forgery, grand theft and commercial burglary in exchange for avoiding a state prison sentence, said a prosecutor. She faces up to nine months in county jail, but may get a reduced sentence if she pays back the money before her Oct. 9 sentencing. In March she deposited a check for $35,000 drawn from her day care business into her credit union account. A few days later she tried to withdraw some funds, and the credit union told her there was an 11-day hold while the check cleared. That same day, Balancier wrote a phony letter from a bank, saying the check was good. and faxed it to the credit union. During the next two days she withdrew $20,000 to cover wedding expenses. When the check bounced, officials called the police. She was arrested March 19, two days before the wedding date (InsideBayArea.com Aug. 12 and CBS News Aug. 13) … * WILLISTON, Vt. (8/17/09)--New England FCU (NEFCU) CEO David T Bard will retire, effective
. in January, announced Geoff Akiki, board chair of the $740 million asset credit union based in Williston, Vt. Bard will be succeeded by NEFCU President/Chief Operating Officer (COO) John J. Dwyer Jr. Bard has been CEO since 1986, when the credit union employed 30 people in a single branch, had $48 million in assets and less than $10 million in serviced first mortgages. Today NEFCU has 170 employees in six counties with seven branches, has surpassed $740 million in assets, and has more than $1 billion in serviced mortgages, making it one of the . It is one of the top 50 credit unions in the U.S. for first mortgage balances. At the end of 2008 NEFCU enjoyed a capital-to-assets ratio in excess of 10%. As part of a carefully planned transition, Dwyer, who has been with NEFCU since 1987, became president/COO in 2006. He has held a variety of positions of increasing responsibility at NEFCU. Prior to that he was a certified public accountant with KPMG in Boston …

Missouri CUs targeting REAL Solutions to youth

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ST. LOUIS (8/17/09)--Missouri credit unions heard from college students on how to better reach and retain youth members during a REAL Solutions workshop in Jefferson City Aug. 11, according to the Missouri Credit Union Association.
REAL Solutions participants discussed ways to gain and retain young members, with the help of Columbia, Mo.-based Tigers CU volunteers and staff, during a workshop Aug. 11 in Missouri. (Photo provided by the Missouri Credit Union Association)
Volunteers and staff from Tigers CU, a student-run credit union on the University of Missouri Columbia campus, shared their perspectives (The Missouri difference Aug. 14). "People our age like to get involved in a cause," said Jesse Bunse, a Tigers CU intern. "If credit unions could make that connection with young people on how credit unions are different and how they help people, students would be more likely to become a credit union member." Other Tigers representatives included Kelley Winfrey, Mandi Moutray, Kent Higginbotham and Program Director Laura Royse. According to a survey of potential credit union members conducted by the Credit Union National Association, the highest percentage of potential members is in the 18- to 34-year-old range. Much of the borrowing done by young adults starts before they are 21 years old. By age 25, young members are unlikely to change their existing financial institution. "As soon as I got a job at 16, I was opening a checking account," said Winfrey. "You need to catch students before they get to that point, and make sure they think of the credit union as an option." Workshop participants also learned about youth target programs taking place across the nation from Nancy Pierce of Tipton Research Group, who works on REAL Solutions projects nationwide. REAL stands for Relevant, Effective, Asset-building, and Loyalty-producing. REAL Solutions is a program of the National Credit Union Foundation. "While I am still at a loss at the best media to reach them [youth], because I don't think there is one great answer, I now feel like I am more equipped to know what products interest them and what drives their expectations," said Heather DeMint, marketing manager for United CU, Mexico, Mo. In addition to United CU, other credit unions attending were Anheuser-Busch Employees' CU, Electro Savings CU and Neighbors CU, all of St. Louis, and United Consumers CU, Independence.