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CU System

Action vs. PMI Mortgage wont affect CMG MIs business

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SAN FRANCISCO (8/22/11)--The decision by Arizona's Department of Insurance to place PMI Mortgage Insurance Co. (MIC) under supervision will not impact CMG Mortgage Insurance Co.'s. (CMG MI) new business originations or serving of existing policies with credit unions, CMG MI said Friday. There will be no interruption in daily operations, with CMG MI continuing to write business in all 50 states. "In addition to the company's solid operating performance and strong financial footing, CMG MI continues to enjoy the strong support of its joint venture partner CUNA Mutual Group," said CUNA Mutual Group Vice President Sean Dilweg. "CMG MI will continue to benefit tremendously from CUNA Mutual's management and financial strength as well as PMI's ongoing operational services." He pointed out that CMG MI is a stand-alone, incorporated entity with its own capital and has dedicated staffing from its shareholders. "CMG MI is strong and committed to the credit unions it serves," Dilweg added. Key factors in CMG MI's solid financial position:
* CUNA Mutual Group's statutory capital grew to $1.45 billion through June, up $30 million from year-end 2010. Its financial strength rating from A.M. Best rating agency is "A" (excellent) with a Stable outlook. * As of June 30, CMG MI had among the industry's strongest financial and operating ratios. * As a separate legal entity, CMG MI's investment grade ratings--BBB from both Standard & Poor's and Fitch--are based primarily on CMG MI's own capital, operations performance and loss mitigation, independent of its shareholders. The Fitch rating was affirmed in July and S&P's has been stable since February 2010. *CMG MI has the industry's lowest portfolio delinquency ratio at 5.3% as of June 30, an improvement from 5.6% on March 31. This compares with an industry average in the 16% range. * As of June 30, the company held a strong liquidity position with claims-paying resources, backed by cash and readily marketable securities of $328 million. * The liquidity compares favorably with its $171 million in loss reserves for claims as of the end of second quarter 2011. * The 2-to-1 ratio of liquidity to reserves is one of the highest in the mortgage insurance industry. CMG MI's delinquency inventory improved in second quarter, resulting in a favorable release of more than $8 million in previously established loss reserves.
PMI Group said Friday the regulator also placed PMI Insurance Co. (PIC) under supervision and had appointed a supervisor. The order requires the PIC and MIC to cease issuing new mortgage insurance commitments, effective at the end of the business day Friday, unless otherwise approved by the director of the department or the supervisor. They may issue mortgage insurance policies under pending commitments through Sept. 16, at which time the regulators will determine whether they would go into conservatorship. Government-sponsored enterprises (GSEs)Fannie Mae and Freddie Mac previously approved the use of PMI Mortgage Assurance Company (PMAC), a subsidiary of MIC, as a limited, direct issuer of mortgage guaranty insurance in certain states where MIC is unable to continue to write new business. As a result of the order, pursuant to restrictions contained in Fannie Mae's approval, PMAC is no longer eligible to offer mortgage insurance in any states. It is exploring opportunities to further capitalize PMAC to get the GSEs' approval back.

N.Y. Fed CEO discusses economy hears CUs challenges

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NEWARK, N.J. (8/22/11)--Credit union leaders from New Jersey got a chance to provide Federal Reserve Bank of New York CEO William Dudley with information about the economic challenges they face during a private luncheon Thursday in Newark. The luncheon was attended by 150 business and credit union leaders, including New Jersey Credit Union League President/CEO Paul Gentile. Speaking to the group, Dudley said it's unlikely that the nation will fall back into a recession (The Daily Exchange Aug. 19). "This was a great opportunity to hear directly from Mr. Dudley on what the Fed sees happening with the economy going forward and what role it is playing," said Gentile. "He was clear that the Fed believes the economy will perform better in the second half. It was also an opportunity for him to hear directly from New Jersey credit union leaders on the challenges they are facing. Our credit unions in attendance did an excellent job in providing Dudley with real-world, hands-on insight into their current challenges," Gentile added. Some of those challenges included difficulties with the appraisal process given the loss in value to homes, the need to raise the cap on credit unions' member business lending, a lack of lending opportunities, and others. Dudley and his team encouraged credit union leaders to remain in contact with the Fed on these and other issues, said the league. Dudley discussed several topics related to growth and recovery from the economic crisis, including the role of bank examiners, who scrutinize bank lending practices. The examiners, he said, try not to "let the needle swing too far over to conservative in terms of lending practices." "We have been very clear that we do not want to impede the ability of banks to make good solid loans to businesses," he added. Dudley reported that in a survey in May of small businesses, more than two-thirds reported stable or increased sales in first quarter, up from 50% last year. When asked about their future outlook, while the majority of business owners--56%--were neutral. Many more said they were optimistic--27%--rather than pessimistic--7%. Reluctance by businesses to expand was a hindrance to growth, Dudley said, noting he believes a double-dip recession is not in the future. "Major sectors of the economy that normally pull the economy down into a recession are already down," he said, adding, "it's much harder for them to go down further." He noted that New Jersey has a highly diverse economy, with more than 40% of those over age 25 in the state having a college degree. New Jersey is "well-positioned for growth," Dudley added. Credit unions, the leagues and the Credit Union National Association (CUNA) are pressing Congress to raise credit unions' member business lending cap to 27.5% of assets from 12.25% by supporting the Small Business Lending Enhancement Act (H.R. 1418 and S. 509). Doing so would add $13 billion in new small business loans and create 140,000 jobs with no cost to taxpayers, CUNA says. CUNA has urged credit unions to reach out to their legislators while lawmakers are in their home districts during the August congressional recess. For more information, see CUNA's Action Alert link.

Three mergers announced in Pa. N.Y. and N.J.

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MADISON, Wis. (8/22/11)--Three pairs of credit unions in Pennsylvania, New York and New Jersey announced plans for mergers late last week. Paragon FCU, a $330 million asset credit union in Montvale, N.J., will merge into Visions FCU, a $2.6 billion asset credit union based in Endicott, N.Y., effective within 90 days, the credit unions said Friday after receiving approval from the National Credit Union Administration. The combined credit union will have 29 branches in parts of New York, New Jersey and Pennsylvania, more than $2.9 billion in assets and more than 166,000 members. Visions President/CEO Frank E. Barrish noted the merger will expand the credit union's presence into northern New Jersey and that Paragon's branches complement Visions' current locations. He said Visions has been "an exceptional performing credit union. Despite challenging economic conditions, Visions has been able to perform at the highest levels." Paragon President/CEO John S. Fiore said the merger will provide members "with access to a significantly broader menu of products and services" as well as Visions' "robust delivery systems." In the second merger, $10.5 million St. Vincent's Employees FCU, New York City, will merge with $241.7 million asset McGraw-Hill FCU, based in East Windsor, N.J. The credit unions made the announcement Friday after St. Vincent's members approved the merger, which will be effective Sept. 1. The smaller credit union serves employees of St. Vincent's Hospital, which gained prominence as the primary admitting hospital to those injured in the Sept. 11 terrorist attacks. The credit union's employees worked round the clock to ensure money was available to members and worked side-by-side with hospital employees volunteering in many capacities. The hospital's closure in 2010 impacted the credit union's ability to grow, said a press release. The resulting combined credit union will have 18,500 members and $267 million in assets, said Shawn Gilfedder, McGraw-Hill FCU president/CEO. Arlene Bernard and Norma Carrasquillo, longstanding employees of St. Vincent's, will become McGraw-Hill's business development executive and branch administrator, respectively, to provide continuity to existing members. Franklin Mint FCU (FMFCU), Broomall, Pa., and Sentry FCU, Brookhaven, Pa., will officially merge during fourth quarter of 2011 and will keep Franklin Mint FCU as the name of the combined credit union, they announced Thursday. Members of Sentry FCU voted Wednesday to approve the merger. FMFCU currently has 32 branch locations and serves Crozer-Keystone Health System employees and families and more than 1,500 partnering organizations and communities. It has more than 70,000 members. After the merger is complete, it will have 33 locations and combined assets of more than $720 million.

CUs gear up back-to-school programs

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MADISON, Wis. (8/22/11)--Several credit unions nationwide have geared up back-to-school programs to help students smoothly transition from summer vacation into the start of the school year. When Wisconsin students from the elementary grades through high school go back to school this fall, they’ll learn money management by operating 95 credit union branches inside Wisconsin schools. Youth-run branches now account for around 18% of the offices operated by the state’s 212 credit unions. Their more than 5,500 young savers have stashed close to $3 million in deposit accounts. That’s up from $2 million just a year ago. “Teachers know that credit unions’ motivation is in people, not profits, and the trust in credit unions has provided a best practice for teaching hands-on financial skills in schools statewide,” said Brett Thompson, president/CEO of the Wisconsin Credit Union League. The state Department of Public Instruction has defined competencies for personal finance that students should acquire by grades 4, 8 and 12. Schools with limited resources have used credit union support to advance their own financial education efforts at no additional costs to taxpayers, the Wisconsin league said. Other examples are:
* United Labor CU (ULCU), Kansas City, saw the back-to-school season as the perfect time to launch its Financial U for Apprenticeship Programs (FinU), a turnkey financial planning program that reaches new workers in union trades (The Missouri difference Aug. 16) . As students are learning how to become the best in the business in union construction trades, they can learn how to be a more informed and intelligent consumer in the same classroom setting. FinU has seven modules that address creating short-term and long-term financial plans, basic budgeting, investing for the future, managing credit, protecting assets using financial services, personal insurance and understanding employment and retirement benefits. Each module has an accompanying audio-visual presentation, workbook, CD and certificate of completion for each student, and is taught by competent financial professionals led by ULCU President Tim Vogler. * The July Monthly Media Talking Points, created by the Ohio Credit Union League, focuses on the timely topic of managing back-to-school expenses (eLumination Newsletter Aug. 10). The monthly talking points can be used to help start conversations with local media. A template press release of the tips is available for credit unions to customize and send to local newspapers and radio and television stations. The month’s Media Watch shares seven public relations rules in today’s minute-to-minute information-gathering society that a credit union should apply to its communications (The Missouri difference Aug. 9) . * Vantage CU, St. Louis, collected “Tools For Learning” for hundreds of area children, who will head back to school with new school supplies. In an effort to help those less fortunate, Vantage will collect school supplies through Aug. 31 to benefit KidSmart, an educational supply store providing teachers with free school supplies for students in area classrooms (The Missouri difference Aug. 9). * Kansas City CU recently held a school supply drive to Support Della Lamb Community Services. Each year, the drive begins in conjunction with the credit union’s KidsFest. Members and employees donate supplies and funds to support the back-to-school needs of local students (The Missouri difference Aug. 9). * Educational Community Credit Union (ECCU), Kalamazoo, Mich., is participating in “Operation School Supplies,” a program to benefit students in each ECCU office’s school district. The success of Operation School Supplies depends on the generosity of community residents to drop off school supplies at any ECCU branch through Aug. 31 for students who cannot purchase what they need. The local business partners of Operation School Supplies are asking the community to donate or purchase supplies such as backpacks, pencils, rulers and paper, but the credit union will collect any school supplies. Supplies will be distributed to kids in each ECCU branch’s school district.

CU in Galveston reports Money Mission success

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GALVESTON, Texas (8/22/11)--Coastal Community FCU in Galveston, Texas, has been offering Money Mission for just three weeks and said it already is impressed with the response it has garnered. Money Mission is an interactive Web-based simulation designed to educate users (mainly targeted to 16- to 19-year-olds) in the fundamentals of financial literacy. It is made available to credit unions through a partnership between the Credit Union National Association and the Wisconsin Credit Union League. Money Mission includes inputs from external data such as stock market prices and cost of living changes; user choices in the area of life-event choices; money management; a user configurable experience including customizable characters (“avatars”) and selectable vehicles; and animated lessons teaching users critical financial principles. “It’s been three weeks and we already have 218 gamers coming from all over Texas,” Carol Gaylord, president/CEO of the $40.6 million asset credit union, told News Now. “We haven’t done a lot of advertising yet, so I’m amazed at the response. Kids are in a hurry to learn, so I’m thrilled. “When I heard the statistic that more college students file for bankruptcy than graduate, I knew we had to reach and teach our high school students financial literacy,” Gaylord added. The key reason Gaylord said she’s excited about Money Mission is because the main avenue to reach kids nowadays is through multi-media--what she calls “an online playing field.” She has big plans for Money Mission in the credit union’s future. “We had a back-to-school week event [Aug. 13] and 325 kids were there,” Gaylord said. “We gave out free school supplies and immunizations, and advertised Money Mission. We had a video game truck there called ‘Road Gamers,’ and hopefully next year we can tie that into Money Mission.” Coastal Community FCU also plans to show Money Mission videos on TVs in the lobbies of its branches; to ask area high school teachers to incorporate Money Mission into their school’s curriculum; and to incorporate Money Mission through the local Rotary “Interact Club” for high school students. “My favorite part of the program is that it offers national scholarships to seniors who submit an essay about what they learned playing Money Mission,” Gaylord said. “The participating credit unions fund the scholarships. The more credit unions participate, the more scholarships are awarded.”

CUs get advice from federation on mortgage loans

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NEW YORK (8/22/11)--While the economic downturn continues to challenge financial institutions nationwide, Louisiana credit unions should be prepared to take advantage of the current opportunities to expand their mortgage lending portfolios, particularly among low- and moderate-income populations, said a representative of the National Federation of Community Development Credit Unions.
Community Development Credit Union CEOs pose with Anne Cochran, CEO of the Louisiana Credit Union League, and Terri J. Fowlkes director of community development investments for the National Federation of Community Development Credit Unions at the Louisiana Credit Union League’s recent Annual Meeting and Convention, Aug. 3-6 in New Orleans. Pictured, from left, are: Helen Godfrey-Smith, CEO, Shreveport (La.) FCU; Cochran; Bill Bynum, CEO, Hope FCU, Jackson, Miss.; Mignhon Tourné, CEO, ASI FCU, Harahan; and Fowkles. (Photo provided by the National Federation of Community Development Credit Unions)
Credit unions also should consider obtaining secondary capital and nonmember deposits to satisfy the regulatory demands of a growing balance sheet and a potential increase in membership, said Terri J. Fowlkes, director of community development investments at the federation. She made the comments at the Louisiana Credit Union League's recent Annual Meeting and Convention, held Aug. 3-6 in New Orleans. “With interest rates holding steady at rock-bottom levels, credit unions need to diversify their portfolios by continuing to make mortgages and increase their operating income,” Fowlkes said. “Responsible loans made to qualified members provide credit unions with a much better yield than they’ll get from most other investment vehicles, and help members build wealth through home ownership.” Fowlkes acknowledged the difficulty many credit unions have in making loans where no secondary markets exist, particularly for non-traditional loans such as Individual Tax Payer Identification Number loans, manufactured housing loans. and co-op loans. Through its CDCU Mortgage Center LLC, the federation purchases conforming and non-conforming affordable mortgage loans from member CDCUs. The CDCUs may maintain the servicing relationship on the loan, but the federation purchases that asset and provides the credit unions with capital to make more loans. Since 2005, the federation has purchased about $10 million in loans from CDCUs nationwide, and looks to expand its portfolio by several million dollars this year. The program is for credit unions that want to expand their lending activities and may not have enough capital to do so. “We conduct a rigorous due diligence on all the loans we purchase,” Fowlkes explained. “We have been growing our portfolio very slowly to ensure we buy performing assets from CDCUs. Given the economic distress across Louisiana, the federation and the Louisiana league are exploring ways to increase credit union mortgage lending--through the CDCU Mortgage Center Secondary Market and by providing financial resources in the form of deposits and secondary capital to Louisiana's low-income designated credit unions. The product was created in the late 1980s, and the federation was invested in dozens of credit unions nationwide for over 20 years. “Secondary capital is vital for CDCUs serving low-income communities, because it allows a credit union to grow without diluting its net worth,” she said. It allows credit unions to take calculated risk to help members, without incurring problems with regulators. Only low-income designated credit unions can accept secondary capital, according to National Credit Union Administration regulations, and only member CDCUs are eligible for secondary capital loans from the federation. A reception hosted by the federation was open to all conference attendees, and was sponsored by two member CDCUs, Shreveport (La.) FCU and ASI FCU, Harahan.

Pa. CU aids striking Verizon workers with loans

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HARRISBURG, Pa. (8/22/11)--Norristown Bell CU, Blue Bell, Pa., is offering a short-term, interest-only loan to help some of the 45,000 Verizon employees who went on strike earlier this month. The employees on strike are members of the Communications Workers of America and International Brotherhood of Electrical Works, according to the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Aug. 19). The loan term is three months. A borrower would be responsible only for interest payments the first two months--about $0.84 on a $1,000 loan--with the balance due the third month. Although $50 million asset Norristown Bell obtained a community charter in 2010, about one-third of its membership is employed by Verizon. Verizon is one of the Pennsylvania’s largest employers, with more than 13,300 employees in the state, PCUA said.

CU System brief (08/19/2011)

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* RALEIGH, N.C. (8/22/11)--The Piedmont Chapter of the North Carolina Credit Union League Thursday elected Joy Watts, president/CEO of Charlotte-based Carolina Postal CU, to the league board of directors, announced the league (Weekly Update Aug. 18). Watts succeeds Bill Flowers of Carolinas Telco FCU, Charlotte, who retired in June. Watts is a 35-year veteran of the credit union movement and has been president of Carolina Postal CU since 1997. She was selected as the league's Ronald J. Hutchins Credit Union Person of the Year in 2010. She served as secretary from 1999 to 2003 of the North Carolina Credit Union Executives Society, on the credit committee of First Carolina Corporate CU, and on the board of Carolina Credit Union Services and at the Piedmont chapter …

NASCUS summit to discuss reg legislative exam issues

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ARLINGTON, Va. (8/22/11)--The National Association of State Credit Union Supervisors (NASCUS) will host its annual gathering of the state credit union system, the State System Summit, in Chicago Sept. 14-16. This year’s event is a forum for collaboration on economic, regulatory, legislative and examination issues facing the state credit union system. The agenda features state and federal regulators, policymakers, credit union leaders and other system experts discussing how state credit unions can thrive in the challenging regulatory and legislative climate. Some of the topics and presenters summit include:
* “Issues and Priorities of the Consumer Financial Protection Bureau (CFPB),” former Massachusetts banking commissioner Steve Antonakes; * “National View of Systemic Risk,” Bill Haraf, commissioner of the California Department of Financial Institutions; * “Two Points of View: Supervising State Banks and CUs, Dual Regulators Share Perspectives on Economic Recovery,” a panel including state regulators Gavin Gee (Idaho), Ed Leary (Utah) and Janet Powell (Oregon); * “The State of the Credit Union Examination,” an interactive discussion featuring state regulators, league executives and credit union CEO, including Roger Little, past NASCUS chairman and retired Michigan regulator; Stacy Augustine, Northwest Credit Union Association; and others to be announced; * “National Credit Union Administration (NCUA) Outlook for 2012,” NCUA Chairman Debbie Matz; * “How Credit Unions are Performing in Today’s Challenging Economy,” Jeff Post, CUNA Mutual Group; * “Report from the NCUA Inspector General,” Bill DeSarno, inspector general, NCUA; * “Prompt Corrective Action Implications for Credit Union Capital,” Clifford Rossi, Tyser Teaching Fellow and executive-in-residence, Center for Financial Policy, University of Maryland; and * “Critical Compliance Update, Compliance,” Bill Klewin, associate general counsel, CUNA Mutual.
Also, NCUA national and regional staff will join NASCUS regulators for the NASCUS/NCUA Interagency Dialogue on Sept 16. For credit union attendees, the annual “State Credit Union Issues Briefing” on Sept. 16 will provide a forum for discussion on the latest credit union challenges. NASCUS’ Directors College also will take place Sept. 16. Registration is on the NASCUS website.

Marketing ICU Day through the recession

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MADISON, Wis. (8/22/11)--With an economy that is hard on both consumers and businesses, emphasizing the credit union difference on International Credit Union (ICU) Day, Oct. 20, is more important than ever according to some within the credit union movement. Two credit unions--one on a shoestring budget and one with slightly higher budget--shared how they market their credit unions on ICU Day. In Las Vegas, Colleen Hermann, member service representative at $14.5 million Stage Employees FCU, knows how to celebrate the credit union difference on a tight budget. “We celebrate ICU Day because it makes our members more aware of what a credit union is,” Hermann said. “Some of them think of us as a bank and don’t know we’re member-owned. Our budget is tight, but this year we’re putting up signs and giving a little gift of Post-Its and pens.” East River FCU, with $20 million in assets, of Madison, S.D., actually received some benefit when the recession hit in 2008, according to President/CEO Mechelle Johnson. “Our community has embraced the credit union,” Johnson said. “With great employees and good rates in place, and banks getting bad press, East River grabbed the opportunity to promote the credit union difference.” As a result, Johnson decided to invest more heavily in marketing this year, spotlighting the credit unions on billboards, in radio and newspaper ads and a digital billboard. The strategy has achieved results. Johnson says loans and membership have increased. Since some construction projects in front of the credit union are finishing up this fall, East River is using ICU Day to thank members for their loyalty and patience during construction. Among the ICU Day initiatives the East River FCU has planned:
* Community shred-it day with the first 100 attendees receiving grocery totes with goodies and ID theft information); * World coloring pages for kids; * ICU Day T-shirts for employees, with shirt give-aways for members; * A canned-goods drive; * A “Going green” campaign, promoting online transactions, e-statements and mobile access; and * An open house with punch and cookies.
To promote ICU Day, East River FCU will send a press release to local papers and hang a banner.