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CU System briefs (08/18/2011)

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* PONTIAC, Mich. (8/19/11)--Thomas Pruente, 75, has been a loyal member for 52 years of St. Joseph Mercy Hospital Pontiac FCU, Pontiac, Mich. As a hospital employee he joined because the credit union was on campus and convenient. "When we would get our paychecks every two weeks, we could just go straight over there and deposit our checks, and they wouldn't charge you to cash them either," he said. "I've felt very comfortable with them all these years, so even when I retired I've stayed with them. They've now gotten to the point where they can pay my utilities bills for me automatically [through online bill pay], which is nice." He added, "I've got credit cards, cash and checks with them. I usually go into the credit union every six to eight weeks to take out cash. I like that every time I call them I'm talking to a person and not talking to a voice on the phone. I can't say enough for how convenient and dependable they are." He was one of six people interviewed about their long-time loyalty by CNN Money.com Wednesday … * HARRISBURG, Pa. (8/19/11)--"Mystery shopper" bogus checks are circulating again, according to the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Aug. 18). PCUA received a report from Service Center for Credit Unions in Bensalem, which received a phone call about a $1,300 check issued in its name with a Mystery Shopper letter. Other credit unions in the Philadelphia area have also reported this fraud. The checks included in the letter are counterfeit … * KNOXVILLE, Tenn. (8/19/11)--Three people were sentenced Monday for their roles in the armed robbery of Greenville, Tenn.-based Consumer CU's Morristown branch on April 9, 2010. Joseph and Jennifer Smallwood, both 31 and of Speedwell, Texas, and Vanessa Patridge, 26, of Gatlinburg pleaded guilty on May 25. Joseph Smallwood, who admitted helping Dale Walker Johnson plan and commit the robbery and using a firearm, was sentenced to more than seven years in prison. Jennifer Smallwood received 30 months and Patridge 21 months in prison for being accessories after the robbery. Each defendant was ordered to pay $15,122 in restitution, pay a $100 fine, and serve three years of supervised release after prison. Johnson will be sentenced on Nov. 14 (US Fed News Aug. 16) …

Catalyst Membership would reflect CU demographics

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DULUTH, Ga. (8/19/11)--If the National Credit Union Administration (NCUA) approves the proposed merger of Southwest Bridge Corporate FCU and Georgia Corporate FCU and Southwest Bridge members vote to approve the merger, the resulting Catalyst Corporate FCU will have 869 member institutions, including 850 credit unions--representing more than $87 billion in assets. The NCUA board is scheduled to meet Aug. 29 to consider the proposed merger. On Aug. 30, Southwest Bridge members will participate in an in-person meeting to finalize a vote on the proposed merger. Upon receiving a go-ahead from the regulator and from Southwest members, Catalyst Corporate will begin business on Sept. 6. The composition of the 850 credit unions that would join Catalyst Corporate provides an accurate reflection of the credit union industry nationwide, in terms of asset size and it would serve both large and small credit union, according to Greg Moore, CEO of Georgia Corporate FCU: “When you look at the demographics of credit unions nationwide, particularly the disposition of asset sizes, you find a remarkable parallel with the membership of the future Catalyst Corporate.” A review of Catalyst membership debunks the notion from chatter and press accounts that the new corporate will serve a disproportionate number of smaller-sized credit unions, the corporate said. About 18% of the nation’s 7,442 credit unions have $100 million or more in assets. Just over 15% of Catalyst’s member credit unions are in that asset range. Thirty-seven percent of the nation’s credit unions are smaller than $10 million in assets, while about 33% of Catalyst’s membership fit that category. Half of Catalyst’s member credit union will fall in the asset range of $10 million to $100 million. The percentage of credit unions nationwide in that range is 43%. “The data tell us that the Catalyst membership will be representative of the credit union movement in the U.S.,” Moore said. “As such, Catalyst will continue to meet the needs of credit unions--from small to large--with a full suite of innovative, efficiency-centered products and services,” he added. Roughly 74% of the previous capital shareholders of the two corporates have come on board as capitalizing members of Catalyst Corporate. Collectively, they contributed more than $91 million in capital to launch Catalyst. Mostly serving credit unions in South Central, Southeast and Northwest regions of the country, Catalyst will start with a membership that stretches from coast-to-coast and includes 17 states. “The fact that so many credit unions, after completing months of due diligence, chose to partner with Catalyst Corporate through capitalization speaks volumes about the value we can achieve,” said Dianne Addington, president/CEO of Southwest Bridge Corporate. Moore agrees.“Credit unions have confirmed that they believe in a cooperative model, and that they appreciate the importance of scale when choosing a corporate,” he said. “The Catalyst strategic plan demonstrates that the operating efficiencies presented by this model make a difference that goes beyond better pricing. It means that we won’t have to rely on our balance sheet, and that means less risk.” In Southwest Bridge Corporate’s conversations with its membership, credit unions indicated they wanted to continue to use the services of a corporate, but with reduced exposure to risk. “Catalyst Corporate reflects this low-risk value proposition by minimizing the amount of capital a credit union puts at risk, and by minimizing the risk taken with those assets,” Addington said. She indicated that Catalyst Corporate’s model balance sheet is more conservative than the new regulation 704 requires. “With the help of credit union input over recent months, we are poised to move forward,” Moore said. “The countdown is on.”

Kansas regulator takes over Enterprise CU

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TOPEKA, Kan. (8/19/11)--The Kansas Department of Credit Unions (KDCU) has taken control of $1.8 million asset Enterprise (Kan.) CU and ordered a fraud audit, the agency reported. The credit union's board of directors transferred control voluntarily on Aug. 12 to KDCU after a routine, annual examination that began Aug. 8, the agency told the Wichita Eagle (Aug. 17). It is uncertain how long the audit will take, KDCU Administrator John Smith said, adding that a decision on the credit union's future will be made after the audit report. Depending on the report, the credit union's future could include either liquidation or a merger, he said. The community credit union has 592 members. Members' deposits are insured up to $250,000 per account, and members can conduct transaction as usual, the agency said.

Lending Council charts evolution of private student loans

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MADISON, Wis. (8/19/11)--CUNA’s Lending Council has released a white paper that charts the evolution of the private student loan market. A change in the student loan business model occurred after the credit crisis of 2008, according to the paper, “Should Credit Unions Offer Private Student Loans?” written by Mike Long, executive vice president and chief credit officer of $1.3 billion asset UW CU, Madison, Wis., and an executive committee member of CUNA’s Lending Council. After the credit crisis, many lenders left the student loan business, while those that remained employed conservative underwriting. UW CU is second in the U.S. with almost $50 million in outstanding private student loans. The credit union’s average interest rate on student loans, 4.8%, is the lowest of the top 10 lenders in the private student loan market, the paper said. The most frequently asked questions about UW CU’s private student lending portfolio concern loan performance, said Long. About 32% of the loans are currently in active repayment, he said. “As of June 2011, our delinquency ratio--calculated on loans in repayment--is less than 1.2% and charge-offs are 0.01%,” he said. “The average loan is $6,200, and 86% of the loans have co-signers and credit scores average 732. We processed more than 18,000 applications and approve roughly 50% of the applications.” For more information about the paper, use the link.

Large Wisconsin CUs post gains in 1st half 2011

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MADISON, Wis. (8/19/11)--Most big Wisconsin credit unions posted large gains in net income in the first half of 2011 because of solid loan growth despite a challenging economy, according to the Wisconsin Department of Financial Institutions (DFI). Four credit unions saw triple-digit percentage increases in earnings, led by Pioneer CU in Green Bay, which recorded a 176% gain in the January through June period (The Milwaukee Journal Sentinel Aug. 18). Summit CU in Madison, the largest Wisconsin credit union by assets, saw a 17% net income gain--driven primarily by an increase in loans, CEO Kim Sponem told the newspaper. Total loans at Summit increased roughly $64 million--to more than $1.1 billion for the first half of 2011, compared with the same period last year. Summit saw a substantial increase in car buying--especially for used cars--in the first half of the year, Sponem told the paper. The credit union also was bolstered by an increase in mortgage lending because it is a major home finance lender in its area, she added. Total assets at the state’s more than 200 credit unions increased 4.9% in the first half of the year to $21.6 billion, said the DFI. At the same time, savings rose 5.7% to $18.9 billion, and delinquent loans declined to 1.8% of total loans from 2% in June 2010.

Texas league honors winners of service awards

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FARMERS BRANCH, Texas (8/19/11)--The Texas Credit Union League honored credit unions in the state-level Dora Maxwell Social Responsibility Community Service Award, Louise Herring Philosophy in Action Member Service Award and the Desjardins Youth and Adult Financial Education Award programs. The state awards pave the way for the first-place winners to compete for the Credit Union National Association awards. First-place winners of the Desjardins Youth Awards include:
* Generations Community FCU, San Antonio, $150 million to $500 million asset category; and * A+ FCU, Austin, more than $500 million;
A+ FCU captured first place of the Desjardins Adult award in the more than $500 million in assets category. Financial Fitness Austin CU Facilitators, a group of credit unions that includes A+ FCU, Greater Texas FCU, University FCU and Velocity CU, all of Austin, won the Desjardins Adult award in the group category. First-place winners of the Dora Maxwell Social Responsibility Community Service Award include:
* Communities of Abilene (Texas) FCU, $100 million to $200 million; * FivePoint CU, Nederland, $200 million to $500 million; * InTouch CU, Plano, $500 million to $1 billion; and * Security Service FCU, San Antonio, more than $1 billion.
Red River CU, Texarkana, was recognized as a Louis Herring Award honorable mention winner in the $250 million to $1 billion asset category.

Missouri association wants Gen Y crashers at event

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ST. LOUIS (8/19/11)--The Missouri Credit Union Association is hosting the first Crash Missouri “outside but alongside” the 2011 Missouri and Oklahoma Credit Union Convention & Exposition, Sept. 20-22 in Branson, Mo. The crash event will be hosted by Brandon Michaels, chief financial officer of Mazuma FCU, Kansas City, and Laura Eblen, branch manager of Central Missouri Community CU, Warrensburg, (The Missouri Difference Aug. 16). Crash Missouri is looking for young credit union professionals from Missouri and Oklahoma to attend the event. Applications are due Aug. 26. The Crash Network is a grassroots organization of more than 150 young credit union professionals that seeks to catalyze the industry through meet-ups, mentorships, online collaboration and development projects.

Mo. Minn. spotlight MBL benefits in meetings with lawmakers

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ST. LOUIS, Mo., and ST. PAUL, Minn. (8/19/11)--Credit unions from two Midwestern states--Missouri and Minnesota--recently held in-district meetings with their congressmen during which member business lending (MBL) was the key focus.
Click to view larger image Member business lending was the focus of a recent meeting with Missouri credit unions and U.S. Rep. Blaine Luetkemeyer (R-Mo.). From left are Rick Nichols, River Region CU; Louie Delk, Conservation Employees CU; Peggy Nalls, Missouri Credit Union Association (MCUA); Luetkemeyer; Joanne Nelson, United CU; Bill Mustain, Employment Security CU; and Mike Beall, MCUA president/CEO. (Photo provided by the Missouri Credit Union Association)
In a meeting with Missouri credit union representatives in Jefferson City Aug. 11, U.S. Rep. Blaine Luetkemeyer (R-Mo.) was urged to consider supporting the Small Business Lending Enhancement Act (H.R. 1418 and S. 509), said the Missouri Credit Union Association (MCUA) (The Missouri Difference Aug. 16). The measure would increase credit unions' MBL cap to 27.5% of assets from 12.25%. Credit unions, their leagues and the Credit Union National Association (CUNA) are urging Congress to pass the bills, which would inject $13 billion in new small business loans and help create 140,000 new jobs without cost to the taxpayer. "I have members who come up to me looking for a loan on a tractor [or] to run a side business, and each time I do that, I get closer to the MBL cap," Louie Delk, president/CEO of Conservation Employees CU, Jefferson City, told Luetkemeyer during the meeting. "By raising the limit just a moderate amount, Congress will enable credit unions like mine to help more people and stimulate the economy." The bill would create 1,676 new jobs and generate more than $154 million in business loans in Missouri, the group told the legislator. "Please consider this bill on its merits," said MCUA President/CEO Mike Beall. "It will help with job creation at a time when our country really needs it, and it is a zero-dollar stimulus. It doesn't cost taxpayers a dime."
Click to view larger image U.S. Rep. Erik Paulsen (R-Minn.) gets a tour of Richfield/Bloomington CU, Bloomington, Minn., during a meeting with Minnesota credit unions to discuss member business lending. Credit unions also recently met with an official from U.S. Rep. Tim Walz's (D-Minn.) office. (Photo provided by the Minnesota Credit Union Network)
Also taking advantage of Congress' August recess were Minnesota credit unions, who met with U.S. Rep. Erik Paulsen (R-Mo.) and an official from the office of U.S. Rep. Tim Walz (D-Mo.) in separate meetings, said the Minnesota Credit Union Network (MnCUN) in a press release. On Aug. 16, credit unions provided Paulsen with an insider's look into credit union operations during a tour of Richfield/Bloomington CU in Bloomington. The tour showcased credit union philosophy and introduced Paulsen to the credit union's security features. Afterward, they discussed the importance of MBL and provided perspectives from credit union representatives, a small business owner and Bloomington's mayor. Pointing to small business as the future to a better economy, the mayor said credit union loans are necessary to keep the city's "main street" alive. On Aug. 9, another credit union group in southern Minnesota stressed raising the MBL cap during a meeting with Marcus Schmit, district director of Walz's office. Representatives asked for Walz's support of the bills raising the cap, and said it would inject $181 million into the Minnesota economy and help create 2,000 jobs there. The group also discussed future legislation on supplemental capital, which would provide credit unions an avenue for raising capital outside annual earnings. "Through our meetings with congressmen Paulsen and Walz, we were able to highlight how Minnesota credit unions can help strengthen the economy," said Mara Humphrey, MnCUN vice president, governmental affairs. "These relationships and those with other state and federal elected officials help to ensure that credit unions have friends at the state and national capitols who will advocate for them and their members." CUNA has urged credit unions to reach out to their legislative representatives while lawmakers are in their home districts during the August congressional recess. For more information, see CUNA's Action Alert link.