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CU System Archive

CU System

Idaho League Notes Growth of State's CUs

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BOISE, Idaho (8/14/13)--A better economy and more new loans have helped improve Idaho credit union performance in 2013, according to the Idaho Credit Union League.
 
The economic and business climate in the state provides a fertile environment for credit unions, Chris Johnson, league president/CEO, told the Idaho Business Review (Aug. 2). Johnson said he is "exceedingly optimistic" about the future of credit unions in the state.
 
Loan demand, which was weak during the recession, has increased, said Gavin Gee, director of the Idaho Department of Finance, which oversees state-chartered credit unions.
 
Idaho Central CU, Chubbuck, was ranked the best-performing credit union in the U.S. in 2012 by SNL Financial, a financial information firm in Charlottesville, Va., said ICCU CEO Kent Oram in the article.
 
An improved housing market is driving credit union performance, both Oram and Gee said. Mortgage refinancing initiated the recovery, but has slowed recently, Oram added.
 
A balanced state budget and lucrative state bond market also helped, Johnson said.
 
One worry for Idaho credit unions is the increasing burden of regulations. Rules related to the Dodd-Frank Act and Consumer Financial Protection Bureau (CFPB) are chief concerns, Oram noted.
 
The Credit Union National Association continues to work with the U.S. Congress, the CFPB and the National Credit Union Administration to minimize regulatory burdens on credit unions. Recently, CUNA reiterated that CFPB and NCUA should conduct detailed cost-benefit analyses on proposed and final regulations to curb the "creeping complexity" of burdensome regulations on credit unions--especially small credit unions.

CU System Briefs (08/14/2013)

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  • HARRISBURG, Pa. (8/14/13)--Joseph Dunn,  who served as treasurer and was the former CEO of Pittsburgh Firefighter's CU, died on Aug. 9, according to the Pennsylvania Credit Union Association (Life is a Highway Aug. 13). He was 84. A long-time credit union professional and volunteer, Dunn was a retired veteran of the 101st Airborne and was a Pittsburgh firefighter for 28 years. Survivors include his wife, Marie; five children including daughter Marie O'Brien, the current CEO of Pittsburgh Firefighter's FCU; and 14 grandchildren (Post-Gazette.com  and Legacy.com). Services were Tuesday ...

CUs' 'Don't Tax' Message Resonates

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MADISON, Wis. (8/14/13)--State credit union leagues and associations continue carrying the "Don't Tax My Credit Union" message to the media and representatives of their congressional districts. This week saw an opinion-editorial on the credit union tax exemption, two leagues reporting congressional contacts by credit unions in their states, and more visits to congressional district offices.
 
In an opinion-editorial in the Duluth News Tribune (Aug. 9), Minnesota Credit Union Network President/CEO Mark D. Cummins made readers aware that credit unions' tax-exempt status is in danger during federal tax reform.
 
"Eliminating this exemption represents the most serious threat to credit unions--and our communities--that we've ever faced," Cummins wrote, noting that the exemption should be kept because "credit unions support and strengthen communities."
 
As local institutions, credit unions "make their communities their No. 1 priority--above making a profit," Cummins wrote. "Any benefits credit unions receive from their tax-exempt status are passed on to their members and their communities. Credit unions also strengthen their communities by paying millions of dollars in property, sales and payroll taxes each year."
 
He cited a Discover U.S. Spending Monitor survey that found members are more confident in the economy and their personal finances than non-members. "What this means is that credit unions help build consumer confidence, leading to stronger communities," he said.
 
Their not-for-profit cooperative structure also provides an alternative to for-profit banks and provides benefits and financial balance, while maximizing their member/owners' financial gain with better rates, reduced fees and customized products. Credit unions "put money back into Minnesotans' pockets," he said, noting that all savings from the tax exemption "are passed on to members, who are owners of their credit unions.  He also pointed out for every $1 of tax exemption, $10 goes back to members and the communities.
 
Click to view larger image Pennsylvania credit unions met Thursday to support credit unions' tax exemption and discuss regulatory burdens with Char MacDonald, legislative director for U.S. Rep. Allyson Schwartz (D-Pa.) at Schwartz's Jenkintown, Pa., office. Schwartz  is a member of the House Ways and Means Committee overseeing tax code reform. From left are:  John King, Freedom CU; MacDonald; Ceil and Joe Grady of American Heritage FCU; and Nate Muniz of PSECU. (Photo provided by the Pennsylvania Credit Union Association)
Several leagues reported visits with legislative staff in congressional representatives' district offices.  For example, the Pennsylvania Credit Union Association, reported visits with two representatives.  See related News Now story: Ways & Means Chair: I Will Look To Relieve CU Burden for a summary of PCUA's visit with House Committee on Financial Services member U.S. Rep. Keith Rothfus (R-Pa.) 
 
Several Pennsylvania credit union leaders met Thursday with Char MacDonald, legislative director for U.S. Rep. Allyson Schwartz (D-Pa.) at her Jenkintown office. Discussion primarily focused on the tax code reform and regulatory burdens, said PCUA (Life is a Highway Aug. 9). Schwartz is a member of the House Ways and Means Committee, which has authority over the tax code reform discussions and drafting.  Participating were John King of Freedom CU in Warminster, Ceil and Joe Grady of American Heritage FCU in Philadelphia, Nate Muniz of PSECU in Harrisburg and Christina Mihalik, PCUA association vice president of governmental affairs.
 
Two leagues provided updates on the number of contacts made with congressional representatives by credit unions in their states. 
 
In Maine, credit union staff and volunteers generated more than 2,000 contacts with members of Congress, urging them to keep the credit union tax exemption in place, said the Maine Credit Union League. It "has determined that the time is now for credit unions to engage the state's 630,000 credit union members in the effort.  Maine is one of the strongest cooperative states in the country, and credit unions are the largest co-op so this is an opportunity to demonstrate that strength," said league President John Murphy (Weekly Update Aug. 9).  He noted the league has posters, brochures, sample letters and newsletter articles to assist, as does the Credit Union National Association's microsite, donttaxmycreditunion.org.
 
The Northwest Credit Union Association reported in its Anthem Recap (Aug. 9) that as of Aug. 5, credit union advocates in Washington and Oregon had made 28,000 congressional contacts. "These contacts are making a difference," said NWCUA Vice President of Advocacy Jennifer Wagner, with 14,416 of the messages from Washington and 13,700 filed by Oregon credit union contacts.  Most were made directly through CUNA's donttaxmycreditunion.org site, although many posted in-branch petitions signed by thousands of members.
 
NWCUA advised credit unions to connect with members of Congress during the August congressional recess at community events.  NWCUA also scheduled a "Tweet Tuesday" yesterday calling on members to tweet their Don't Tax My Credit Union message to their representatives in Congress.

Study Reveals Best Practices To Improve CU Member Support

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SCOTTSDALE, Ariz. (8/14/13)--Significant opportunities remain for credit unions to improve their member support channels--especially because of the big gap between high and low performers, according to results of a new benchmarking study from Cornerstone Advisors.
 
Cornerstone is a management consulting firm focused on large, progressive credit unions and mid-size banks.
 
"Credit unions for the most part are reporting improved bottom lines," said Scott Sommer, Cornerstone Advisors president/CEO. "The general theme we're seeing from these numbers, however, is that with a bit more focused effort, they could be experiencing even better returns as a result of more satisfied members.

"With vast gaps between high and low performers in lending productivity, delivery channels and other measures, there is so much room for improvement," Sommer added. "If credit unions continue to gain high-value market share while scaling their efficiencies, adopting industry best practices and reinventing their delivery, they will be financial services contenders in the years ahead."

The benchmarking study of 62 credit unions with assets of more than $250 million provided these key findings:
  • Combined Internet and mobile log-ins have surpassed in-person teller transactions, revealing a clear shift in member service delivery channels to "click" from "brick."
  • Active mobile users at median (the exact middle--above and below it there is an equal number) credit unions hold nearly 7% of all checking accounts. Credit unions that are high performance level (75th percentile) saw nearly 20% held by mobile users.
  • While median credit unions earned roughly $150 per year in fee income from checking accounts, there remains an $85 gap between high and low performers, illustrating room for improvement at the lesser-performing credit unions.
  • Only 16% of consumer loan applications are originated through the Internet at the median credit union.
  • Median mortgage loans per-mortgage origination full-time equivalent per month were 4.4. While this is a slight increase since 2008, it trails the high-performing credit unions, which reported 6.4.
  • Technology spending as a function of size has decreased slightly from 2008 to .0354% of assets. The only technology spending showing any growth was strategic systems, which consists of specialized applications in loan origination, branch automation, analytics, document imaging and investment management.
The median credit union opened 1.8 new accounts for each one that it closed--up 20% from 2008, according to survey results, published in July as "The Cornerstone Report: Benchmarks and Best Practices for Credit Unions." Yet, even with the new member focus, median products-per-household dropped 28%, to 2.52.

Experian: Auto Repos Are Lowest On Record

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SCHAUMBURG, Ill. (8/14/13)--Vehicle repossessions dropped during second quarter 2013 by 14.8% to the lowest rate since Experian Automotive began tracking the data seven years ago, announced Experian Tuesday.
 
Roughly 0.36% of all vehicle loans ended in a repossession, down from 0.43% in second quarter 2012.  The change represented a 10.4% decrease from the previous low of 0.41% in second quarter of 2006.
 
The total balance of outstanding automotive loans grew to nearly $751 billion, compared with $682 billion in second quarter of 2012.  Banks increased their total dollar volume by $24 billion, while credit unions increased $18 billion, finance companies $16 billion and captive finance companies $11 billion, said Experian.
 
Of credit unions' $627.6 billion loans outstanding for June, the most recent figure available, 10.8% are in new-auto loans and 19.6% are in used-auto loans, according to the Credit Union Monthly Estimates from the Credit Union National Association.  CUNA does not track repossession statistics.
 
Thirty-day delinquencies dropped 5.6% in second quarter to 2.38%, from 2.52% in second quarter 2012, said Experian. The total is two basis points higher than first quarter 2013 delinquencies and is the lowest for a second quarter since 2006.
 
Sixty-day delinquencies remained flat at a low 0.58% as the auto lending market stayed strong, said Experian. For second quarter 2006, these totaled less than 0.53%. The 2013 figure is at the next-lowest second-quarter point.
 
The repossession and delinquency rates for the quarter were "lower than expected," said Melinda Zabritski, Experian's senior director of Automotive Credit. "The seasonality of the market usually has the first quarter showing the lowest 30-day delinquency rates, but even with the total automotive loan portfolio growing, consumers in the second quarter have done an exceptional job of meeting their financial obligations to keep the market strong," Zabritski said.
 
Other findings:
  • Balances of 30-day delinquencies balance rose by $761 million in second quarter but represent 1.96% of the total loan balance, down from 2.05% in the same quarter last year.
  • Sixty-day delinquencies were 0.42% of the total loan portfolio value, the same as in second quarter 2012.
  • Nonprime, subprime and deep-subprime loans account for 35.2% of all open vehicle loans in second quarter, up from 34.9% in second quarter 2012.
  • Average charge-off amounts for defaulted loans were $7,218 for second quarter, a $450 increase from $6,768 in second quarter of 2012, said Experian.

North Carolina To Implement ELT Program

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PHILADELPHIA (8/14/13)--The North Carolina Division of Motor Vehicles (DMV) will implement an electronic lien and title (ELT) program by July 1, 2014, as required by Senate Bill 407, signed by Gov. Pat McCrory.
 
Within a year of implementation, credit unions, banks and other automotive lenders in the state will begin to replace their paper based liens with an electronic exchange of data with the DMV.
 
Rather than using internal resources to fund the design, development and ongoing operation of ELT, the DMV retains the option to select third-party suppliers to develop and manage the system at no cost to the state, said VINTek, which assisted with passage of the ELT law in the state.
 
As the 10th largest state in terms of new annual vehicle/truck registration, the state can reduce operating costs, increase customer satisfaction and reduce fraud by eliminating paper vehicle titles with liens, said the Philadelphia-based provider of automotive collateral management, ELT services and direct finance processing.

"As North Carolina positions itself to become the 20th state to initiate ELT, we see confirmation of the growing interest in ELT at DMVs across the country," said Larry Highbloom, president of VINtek. "The North Carolina DMV and automotive lenders in the state can anticipate operational improvements and efficiencies, as well as reduced stress resulting from the reduction in paper titles."

 

Consumers Typically Put CUs On Top For Satisfaction

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CHICAGO (8/14/13)--Research about financial institutions'  (FIs) call center hold times has provided an opportunity for the Credit Union National Association to tell the Chicago Tribune  how credit unions continually beat banks in overall member/customer satisfaction.
 
Paul Gentile, CUNA executive vice president of strategic communications and engagement, told the publication Tuesday that more than two million consumers joined a credit union in 2012, with another 700,000 doing so in first quarter of 2013.  
 
Credit unions provide great rates, low fees and excellent member service, and also win on trust. Gentile pointed out results from the Chicago Booth /Kellogg School Financial Trust Index that shows credit unions beat banks on trust, with 62% of people surveyed trusting credit unions--compared with 56% for local banks and 28% for national banks.
 
The latest study, by Lake Bluff, Ill.-based Moebs Services, found that call centers at FIs--including credit unions--are more efficient than at most retailers at answering their phones, with 53.1% of call centers answering on the first ring. "If you wait when you call a FI, you don't wait long," said Michael Moebs, CEO and economist at the economic research firm.
 
The study found that asset size matters, with smaller asset FIs having substantially fewer callers with hold time--44.1%--compared with larger depositories. It noted that FIs with $25 billion to $50 billion have 64.3% of their callers with wait time, with a minute and a half difference between large assets FIs and smaller ones.
 
"The study is a strong response to those in Congress, financial institution regulators and consumer advocates because it shows FIs--even the largest--really do try to respond to their consumers," said Moebs in a press release. "These are results banks and credit unions should be proud to have."
 
Raising awareness about the value of credit unions to members and the community is one of three components to CUNA's and the state leagues' Unite for Good campaign, which strives toward the strategic vision in which Americans choose credit unions as their best financial partner.

Alabama Regulator: CUs 'Doing Well'

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MONTGOMERY, Ala. (8/14/13)--Alabama credit unions overall performed well last year, according to the Alabama Credit Union Administration.
 
For the state's 68 state-chartered credit unions, there was growth in 2012 and "in general, everybody's doing well," said Larry Morgan, head of ACUA (Montgomery Advertiser Aug. 4).

Credit union shares and deposits jumped 10.6% in 2012, while membership in credit unions increased 10%, said the agency's annual statewide report.   
 
Although growth at Alabama state-chartered credit unions cannot be labeled as "anything spectacular," it has been healthy and steady, Morgan told the publication.
 
Also, in first quarter 2013, credit unions nationwide tallied 95.7 million members--nearly a 2% gain from first quarter 2012, according to financial information and analysis firm SNL Financials' recent report. The numbers are consistent with statistics from the Credit Union National Association.
 
Credit unions added 2.7 million members nationwide in the past five quarters--which is more than the combined total of gains in the prior 11 quarters, said the SNL report.

LSCU Announces State CUNA Award Winners

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BIRMINGHAM, Ala., and TALLAHASSEE, Fla., (8/14/13)--The League of Southeastern Credit Unions & Affiliates awarded eight credit unions from Alabama and Florida with 12 Dora Maxwell, Louise Herring and Alphonse Desjardins awards.
 
Army Aviation Center FCU, Daleville, Ala.; First Commerce CU, Tallahassee, Fla.; and CFE FCU, Lake Mary, Fla., each received multiple awards. Army Aviation Center won a first-place Dora Maxwell Social Responsibility award, a first-place Desjardins Financial Education Youth award and a second-place Louise Herring Philosophy in Action award.
 
Winning the awards "affirms our dedication to the credit union philosophy of 'people helping people' and giving back to the communities we serve," said Lisa Hales, Army Aviation Center FCU vice president of marketing. "Giving back to our communities is a big part of who we are and what we do at AACFCU."
 
CFE FCU won a first-place Herring award and a second-place Maxwell award. First Commerce CU, based in Tallahassee, won a first-place Maxwell award and a first-place Herring award.
 
"Commitment to community is one of our core values," said Cecilia Homison, CEO of First Commerce CU. "Through the Champions for Charity initiative, we reach out to our
community and call on their passion for Seminole sports programs to support charitable
organizations in their quest for funding."
 
Also taking home first-place honors in the Dora Maxwell category were two Tallahassee credit unions, Florida State University CU and Tallahassee-Leon FCU. Alabama CU, Tuscaloosa, also received a first-place Dora Maxwell award.
 
Each first-place winner's entry progresses to the Credit Union National Association's national award consideration. The winners are honored at the 2014 CUNA Government Affairs Conference in Washington, D.C.

Temkin Survey: CUs Continue High Scores In All Areas

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WABAN, Mass. (8/14/13)--Credit unions continue to be held in high regard by their members, according to a new Temkin Ratings survey. This time credit unions are the only financial institutions that made it into the top 20 of all five consumer feedback categories.
 
Credit unions did well in the areas of experience, loyalty, forgiveness, trust, customer service and Web experience. Their main competition was a financial non-profit cooperative bank, USAA.
 
The Waban, Mass.-based Temkin Group asks consumers to rate their experiences with more than 100 companies, including individual banks.  Credit unions are included as a combined group, with no particular credit union being rated.
 
Here are the ratings:
  • Customer service--how satisfied consumers were with recent customer service experience. Credit unions beat all the banks. Credit unions, Publix grocery and Hy-Vee grocery all received the 71%--the highest score. The nearest banks were USAA (position No. 16) and PNC Bank (No. 19), each with 64% scores.
  • Trust--how much consumers trust the firms. Credit unions went head to head with USAA insurance and USAA bank and attained the No. 3 spot with 77%, with only two points separating them from No. 1 and No. 2. The second highest bank ranked 91st, with 56%.
  • Experience-- functional, accessible and emotional. Three grocery stores led the category, with Publix scoring the highest at 84%. Credit unions were in position 19, with a score of 79%, much higher than the banks. The first mention of a bank, USAA, was in position 28 with a score of 78%; the second mention of a bank  in the 61st spot, with a 74% score.
  • Loyalty--willingness to buy more, reluctance to switch business away and likelihood to recommend the institution.  Sam's Club and Aldi beat the competition with USAA scoring 63% for third place. Credit unions were sixth, with 61%  The second highest bank was in the 30th spot, with  54%.
  • Forgiveness--how likely consumers would be to forgive a company for a mistake. Advantage Rental Car and USAA topped the group with 61% and 60% scores, respectively, while credit unions were ninth with 47%. The second highest bank was in the 150th position, with 28%.
  • Web experience--how satisfied with the company's website experience. No surprise here: Amazon.com scored highest, with 77%. Credit unions were in the eighth slot, with 69%, behind USAA and Regions.
Earlier this year, credit unions took first place in the industry for the second straight year in a customer experience survey by Temkin Group. Their  rating was 79%, compared with the banking sector's average score of 68.6% (News Now March 29).