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Kansas CUs describe CUs role reg burdens to subcommittee

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OVERLAND PARK, Kan. (8/24/10)--The Kansas Credit Union Association and Lenexa, Kan.-based Mainstreet CU testified Monday about how credit unions have stayed strong through the recession, helping members while facing increased regulatory burdens, during one of two hearings held in Kansas this week before a U.S. House Committee on Financial Services' subcommittee. Marla Marsh, president of the Kansas Credit Union Association (KCUA), and John D. Beverlin Sr., president/CEO of Mainstreet CU, testified during Monday's hearing before the subcommittee on oversight and investigations, which is conducting a series of "End of Excess" hearings. Chairman of the subcommittee is Dennis Moore(D-Kan.). Both noted that credit unions have a strong role to play in the financial services marketplace, urging Congress to recognize the challenges faced by credit unions as they address increasing compliance burdens and to allow flexibility and increase options for credit unions to continue to serve members and put capital back into the economy. They encouraged Congress to increase credit unions' member business lending cap to 27.5% of assets from the current 12.25% limit--at no cost to taxpayers. Marsh noted that Kansas credit unions are generally healthy and well capitalized, but "they have not been immune from the effects of the downturn." She cited statistics on how Kansas credit unions stand out when compared with their credit union peers and banks. "We hope the committee will be mindful of and will monitor how the new Dodd/Frank law is implemented, including the overall impact new and current regulations will have on the operations" of credit unions, she said, citing two risks. "The greatest risk for credit unions comes from the collateral damage caused by the 'too big to fail' institutions," she said. The second "is the rise in regulatory burden and examiner 'one size fits all' approach that stifles our efforts to do what we do best--provide solutions to meet the financial needs of our members and help grow local economies," Marsh told the subcommittee. A number of lessons can be learned from the state's credit unions, she said. The key lesson: "relationships matter. The biggest difference between the Wall Street business model and the credit union business model is the member ownership component," Marsh said. She also noted credit unions' focus on making decisions that are in the mutual best interest of both parties and their solid underwriting processes. In his testimony, Beverlin discussed how his credit union's auto loans increased 195% and mortgages rose 75% last year. "It was not because more members felt confident in their future; it was a result of larger lenders exiting the lending market." Mainstreet CU survived 2009 because of its conservative approach to business and diversified loan portfolio and because the nature of a member-owned credit union is to "work with members when they are faced with financial difficulty," Beverlin said. "What was unique for us this past year and what will pose additional concerns for us in the future are legislative and regulatory burdens," he told the subcommittee. While there is agreement that Midwest banks and credit unions did not cause the financial crisis, "we all seem to be grouped together when any attempt is made to look for solutions to the crisis." Legislated changes impacted the credit union's credit card portfolio. "While not one of the abusers of fees on overdraft protection, we spent almost $50,000 educating our members because of the imposed regulatory change. The recent passing of financial reform legislation with an amendment on debit/credit card interchange will result in additional lost revenue," he said. "We are concerned with where it will all stop." He noted one area credit unions can help in the future: member business lending. Because of the arbitrary business lending cap of 12.25%, Mainstreet CU, which doesn't do business loans, finds it "hard to justify putting everything needed in place with the cap at the current level." "The impact of these regulatory changes will ultimately fall on the shoulders of our members and Kansas consumers." Yesterday's hearing was in Overland Park. Today's hearing, which is in nearby Lawrence, will feature testimony from Chris Wolgamott, Meritrust CU community development liaison.

Hannaford Associates FCU to merge with Alliance of Maine FCU

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SCARBOROUGH, Maine (8/24/10)--Two Maine credit unions--Hannaford Associates FCU, a $31 million asset credit union in Scarborough, and Alliance of Maine FCU, a $30 million asset credit union based in Augusta--plan to merge on Oct. 1 and take on a new name--Trademark FCU. Alliance of Maine members voted in late June in favor of the merger proposal. "Unlike the typical merger, this proposal represents a very rare opportunity to form a true partnership with one of the few remaining organizations solely dedicated to serving employee groups and their families," said Alliance of Maine earlier this summer when it announced the vote results on its website. "Our relationship with our members is the single most important aspect of our business and it's the principle that guides our every decision. We were fortunate to find a group of people who are similarly committed to the same principle," the credit union said. Hannaford serves employees and families of the Hannaford Bros. grocery store chain. Alliance of Maine formerly was Central Maine Power Employees FCU. Trademark FCU's headquarters will be in Augusta, with branches in Scarborough, New Gloucester, and Portland.

Prairie Trail CU acquired by Argonne CU

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ROMEOVILLE, Ill. (8/24/10--Members of Prairie Trails CU, Joliet, Ill., voted to merge with Argonne CU, Romeoville, Ill., effective Sept. 1. The combined credit union will be one of the largest in the state with more than $260 million in assets and more than 25,000 members. Headquarters for the new organization will be in Romeoville with no reduction in employees (Joliet Herald News Aug. 22). The combined credit union will have branches in six area cities and two area high schools, and limited-access branches for employees of two local companies. Brian Cedergren, Argonne CEO, will be the president/CEO of the combined credit union, and Matt Thraen, Prairie Trail CEO, will be the president of the Joliet Division, the paper said.

Kern Schools FCU cuts seven positions

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BAKERSFIELD, Calif. (8/24/10)--Kern Schools FCU, based in Bakersfield, Calif., cut seven employees Aug. 16 in a cost-cutting move that leaves the credit union with 460 employees. Each of the layoffs, ranging from financial services officers and branch operations staff to the vice president of real estate and business lending--a position that was eliminated-- received a severance package, said Steve Renock, Kern Schools FCU president/CEO (The Bakersfield Californian Aug. 20). The layoffs came about because the credit union is dealing with the recession’s aftermath in the form of defaulted loans and a decline in loan demand from its members. In the first half of 2010, the credit union lost $16 million, following a $40.6 million loss in 2009, the newspaper said. “We’re expecting to have a better year this year than last year, but the financial conditions in [the area] still are troubling,” Renock told News Now. If Kern Schools’ lending volume declines again, the $1.58 billion-asset credit union will need to make more layoffs, Renock told the paper.

25 companies including two CUs sued for patent infringement

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MARSHALL, Texas (8/24/10)--A Longview, Texas, company that has a patent for the "method and apparatus for creating and ordering customized branded merchandise over a computer network" has sued 25 major companies--including two credit unions--for alleged infringement of its eight-year-old patent for the process. The case--filed Aug. 12 in the U.S. District Court for East Texas in Marshall, Texas-- would have ramifications for retailers, banks and credit unions, credit card companies, and others offering customized branded merchandise on their websites. For credit unions, the process relates to customized debit and credit cards. Quark Images LLC, the company that filed the suit, has named as defendants some major entities such as Adidas, Capital One Financial Corp., Discover Financial Services, Hallmark Cards Inc., Mars Inc., Nike Inc., Zions Bancorporation, Reebok, and Ralph Lauren, among others. The two credit unions named are America First FCU, Riverdale, Utah, and Pasadena, Calif.-based Wescom CU. Quark Images is also suing Serverside Group Ltd., an British company with stateside headquarters in New York. Serverside provides card customization technology allowing credit unions, banks and card companies through its website, according to the complaint filed. Also named as a defendant is PAYjr, which provides customized stored-value cards, and Shoreline Business Solutions, a Connecticut-based partner of Serverside. The suit, which asks for a jury trial, seeks permanent injunctions to stop the use of the method and is seeking damages, costs, expenses and prejudgment and post-judgment interest.

SECU Foundation 5M gift largest by CU

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RALEIGH, N.C. (8/24/10)--State Employees’ CU (SECU) says the SECU Foundation, Raleigh, N.C., will contribute $5 million--the largest donation it is has ever made--toward construction of a cancer center at a local hospital. SECU will contribute the money to help build the 120,000-square-foot center--which will feature the credit union’s name--at Mission Hospital (Asheville Citizen-Times Aug. 21). The center will be completed in early 2012, the newspaper said. “We are trying to do projects across the state that can be duplicated in other areas,” Shirley Bell, chairwoman of the SECU Foundation board, told the paper. “We are helping all citizens by this center being here.” The five-level building and a 300-space parking deck will provide one location for all the hospital’s outpatient cancer services. Then, patients won’t need to travel to different locations for chemotherapy treatments, CT scans and office visits, the paper said. About 800,000 SECU members statewide contribute $1 to the foundation each month, the paper said. The foundation gives grants to projects statewide.

IWall St. JournalI Fire your banker CUs among options

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NEW YORK (8/24/10)--Consumers looking for ways to make their money work better for them should fire their bankers and look to credit unions and other local institutions, according to an article in The Wall Street Journal Sunday. In “Ten Money Moves That Will Always Pay Off,” author Brett Arends wrote that credit unions will do more for less. “Fire your banker,” Arends writes for Money Move No. 5. “This isn't just good financial sense--it’s fun, too. If you’re like most people, you're probably paying hundreds of dollars a year in account service fees, ATM charges for access to your own money and the like. “Banks need to sock you with these fees to pay for all their overpriced and useless overhead, like the expensive marketing campaigns and the executives,’ he added. “Fire them all. Chances are you have a local community bank, savings and loan, or credit union that will do the job of looking after your cash for a lot less. It’s Uncle Sam, not the institution, that guarantees your money anyway.” To read the article, use the link.

CU System briefs (08/23/2010)

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* ST. LOUIS, Mo. (8/24/10)--Vicki Sanville and Tom Brown from the office of U.S. Rep. Sam Graves (R-Mo.) met with Kansas City credit
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unions Aug. 18 and touted the importance of communication. "We get about 250 pieces of correspondence every day, and if I see a letter from someone I know, I put it high on my priority list because I know you," said Sanville. "Your communication during good times and bad keeps us informed and keeps your issues at the forefront." They told attendees their effort to meet in-district helps credit union initiatives, but also suggested visiting Washington, D.C., because "it does help you get the attention of Congress," Sanville said. Credit union leaders communicated concerns about member business lending, the interchange fee provision in Congress' regulatory reform bill, and overdraft protection. "Member business lending is one of the few issues that comes without a price tag," said Rob Givens, Mazuma CU. "Our member business lending has injected $50 million into Kansas City businesses in the past five years," he said. From left are: first row: Chris McCreary, United Consumers CU; Brown; Sanville; and Dennis Pierce, CommunityAmerica CU. Second row: Sean Yokley; Lisa Ginter, CommunityAmerica; Givens; Ron Miller, Edison CU; and Pat Yokley, Dick Baumgartner, Serri Helm, Rod Gruenberg and Jean Hughes of CommunityAmerica. (Photo provided by the Missouri Credit Union Association) ... * MENTOR, Ohio (8/24/10)--Christine Blake, has been named president/CEO of Cardinal Community CU, Lake County, Ohio's, largest credit union. Blake, a certified public accountant, previously served as a business adviser and consultant specializing in financial institutions. Her experience included audit services, mortgage banking, merger and acquisition assistance, reengineering services, project management and compliance. . She previously was a senior manager with KPMG Peat Marwick LLP in Washington D.C., and Cleveland, Ohio, where she specialized in financial services. She also was an adjunct professor at Lakeland Community College for several years. Blake also is president/CEO of the Samantha Blake and Michael DeGennaro Family Foundation, which provides support to children with hydrocephalus and Wilm's tumor, and their families ... * CEDAR RAPIDS, Iowa (8/24/10)--Cedar Rapids, Iowa-based Linn Area
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CU Executive Vice President Jenny Lorenz is a recipient of the 2010 Governor's Volunteer Award (GVA) for her involvement and leadership with the Iowa Credit Union Foundation (ICUF) board of directors. The GVA program recognizes volunteers for their commitment, service and time. It goes to volunteers demonstrating exceptional commitment to volunteerism, exemplary leadership, creativity, cooperation and hard work in service to others; and who made an outstanding contribution to state or community through volunteer service. Lorenz, shown accepting the award from Iowa Gov. Chet Culver, has served as a volunteer board member of ICUF for more than 10 years and is currently president of the board. (Photo provided by the Iowa Credit Union Foundation) ...