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CU System

Participation loans spark lawsuit

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ORLANDO, Fla. (8/25/10)--A lawsuit that focuses on what happens to participation loans when the credit union that sold them is absorbed by another credit union has been filed in a U.S. District Court for the Middle District of Florida. Sperry Associates FCU, a $372.3 million asset credit union based in New Hyde Park, N.Y., filed the lawsuit Friday in Orlando. It alleges that it had bought nearly $4.5 million in participation loans from the now defunct Miami-based Eastern Florida Financial CU. It also alleges that the credit union that assumed Eastern Financial last year--the $3.2 billion asset Space Coast CU, Melbourne, Fla.--is responsible for the loans. Also named in the lawsuit are Eastern Financial's credit union service organization, CU Business Capital (CUBC) of Miramar, Fla., and its successor, Small Business America of Linthicum, Md. The complaint filed in court alleges that Eastern Financial FCU and South Florida Properties entered into a loan agreement on Oct. 18, 2006 for $22.4 million in a speculative land deal involving 120.7 acres appraised at $40 million in St. Lucie, Fla. in 2007. Sperry Associates FCU was sold an undivided participation totaling nearly $3 million in the SFP loan. Sperry also entered into a participation loan with Eastern Financial involving a $15 million credit agreement with King Credit Facility, the court documents said. Sperry paid $1.5 million for the King participation loan. The loans were underwritten by CU Business Capital. In early 2009, regulators placed Eastern Financial into conservatorship, and on June 23, 2009, Eastern Financial was merged into the Space Coast CU. The participation agreements "were in full force and effect as of the merger," said the complaint filed. "As a result of the merger, Space Coast succeeded to the rights, interests, obligations, duties, responsibilities, representations, warranties and liabilities of Eastern Financial under" the participation agreements, the suit alleged. The complaint also alleged that the National Credit Union Administration, as conservator of the failed credit union, made a payment to Space Coast on the participation loans, which were in default at the time of the merger. Sperry contends that Space Coast is required to turn over the portion of the participation loan allocations to the plaintiff.

A FCU shares savings tips for dorm life on FOX station

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AUSTIN, Texas (8/25/10)--Austin, Texas-based A+ FCU was a guest Tuesday morning on a well-timed show airing on My Fox Austin television about setting up a dorm room on a budget. Kelsey Balcaitis, community education specialist at the $764 million asset credit union provided eight tips for college students to save money while decorating their dorm room. Among the tips:
* Set a budget and stick to it. * Know the room's size and layout before moving in. * Make a list of everything you think you'll need. * Contact and coordinate with your roommate so there aren't duplicate TVs and microwaves. * Decorate your dorm on the cheap. * Know the dorm rules. "Some have no nails and no tape rules[for hanging things on walls]," said Balcaitis. * Shop for deals at rummage sales and thrift stores. * Become familiar with shops close to campus.
Balcaitis is a former intern at the Credit Union National Association (CUNA) and a CUNA Governmental Affairs Conference "crasher." She also blogs for CUNA's Gen Y publication, Money Mix. She and the show's host also briefly discussed the credit union's student-run branches unions in area high schools, prompting the host to say, "Good idea." To view the broadcast, use the link.

Op-ed CUs can help ease businesses in credit squeeze

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SAN JOSE, Calif. (8/25/10)--Today's small-business owners and entrepreneurs are facing an unprecedented credit squeeze, but credit unions could help ease the crisis at no cost to taxpayers if credit unions' member business lending cap were raised, said a credit union CEO in an op-ed published in the Silicon Valley/San Jose Business Journal (Aug. 13). In "Higher business lending cap is a win-win," Barbara Kamm, president/CEO of San Jose, Calif.-based Technology CU, wrote small businesses and startups need access to capital so they can invest in infrastructure, equipment and supplies, or hire the personnel they need to grow their businesses. The article cites Credit Union National Association estimates that raising the cap could extend up to $10 billion in additional business loans to small businesses and help create as many as 108,000 jobs. "Here in California, raising the cap would infuse an estimated $1.9 billion in capital into small businesses and startups--potentially producing 20,000 new jobs," wrote Kamm. "Credit unions offer an alternative source of financing. During the same 12-month period that business loan growth among banks decreased by 15%, credit union business lending grew 11%, but that growth has started to slow as more and more credit unions approach their caps," she wrote. "Raising the cap poses no harm to community, regional or national banks, considering that credit unions hold just 4.5% of all small-business loans at depository institutions. Even if credit unions doubled their share of business loans, banks would still hold 91% of the market," she said. "The simple truth is small businesses need access to financing so they can survive, prosper and create more jobs, but banks are not currently lending to businesses at a rate that satisfies the needs of the market. Credit unions have untapped, critical resources they could provide at no cost to taxpayers. Raising the business-lending cap is a win-win all around," Kamm concluded. For the full article, use the link.

CU in Kansas tells House hearing of need for fin ed

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LAWRENCE, Kan. (8/25/10)--Credit unions are creating positive solutions to the problems caused by financial illiteracy in today's economy, but there are two areas where financial literacy can improve, a Wichita, Kan.-based credit union told a House subcommittee hearing Tuesday. Chris Wolgamott, community development liaison at Wichita-based Meritrust CU, appeared before the House Financial Services Committee's subcommittee on oversight and investigations, in a hearing in Lawrence, Kan., on "Empowering Consumers: Can Financial Literacy Education Prevent Another Financial Crisis?" Subcommittee chairman is Rep. Dennis Moore (D-Kan.)
Click to view larger image Kansas Credit Union Association President Marla Marsh and Lenexa, Kan.-based Mainstreet CU President/CEO John D. Beverlin Sr. testified on credit unions' strength during the recession and how credit unions have helped members while facing rising regulatory burdens during Monday's hearing in Overland Park, Kan., of the House Financial Services Committee's subcommittee on oversight and investigations. (Photo provided by Kansas Credit Union Association)
The hearing is the third in an "End of Excess" series and the second one to meet in Kansas. Monday, Kansas Credit Union Association (KCUA) President Marla Marsh and Lenexa, Kan.-based Mainstreet CU President/CEO John D. Beverlin Sr. testified about how credit unions have weathered the recession and helped members while facing increasing regulatory burdens. Noting that financial literacy encompasses a broad range of topics and spans a lifetime of learning, Wolgamott outlined the need for financial literacy programs, citing statistics from studies about Americans' problems with budgeting and saving and debt. Credit unions' principle of "People Helping People" is evident at both the state and national level in financial literacy, he said, adding that in the past year, credit unions reported to the National Youth Involvement Board they conducted 13,577 presentations nationwide to more than 413,000 youth, a 6.3% increase in the number of students reached. Credit unions in Kansas instructed more than 6,000 students. He highlighted KCUA's partnership with the former state treasurer to create a Money Smart Financial Camp, Meritrust CU's involvement with a Communities in School Reality U program, and the credit union's partnerships with local social organizations. "We are the only credit union in the state with a full-time paid position dedicated specifically to financial literacy, which shows our organizational commitment to improve the financial lives of those we serve," Wolgamott said. Providing financial literacy for adults remains a struggle. "It is easier to reach adults at their place of employment or by partnering with an organization they are currently affiliated with than offering classes at retail branches," he said. It also is difficult for some schools to find time to allow guests to present topics that may or may not teach exactly to a education standard. "Building a connection between schools and financial institutions is a tremendous benefit to both organizations," he said. The credit union industry is currently providing many opportunities, both locally and nationally, to strengthen the financial position of many, using their cooperative and member-centric ideology, he added.

Patelco to move headquarters out of San Francisco

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SAN FRANCISCO (8/25/10)--Patelco CU, San Francisco, has decided to move its headquarters to Pleasanton, Calif. The $3.65 billion-asset credit union expects to complete its move to Pleasanton in February, said Ken Burns, Patelco CEO (The Contra Costa Times and Oakland Tribune Aug. 24). About 150 employees will move to then new site, the article said. Patelco looked at 75 to 100 office buildings before it settled on its new building. Patelco will establish a long-term presence in Pleasanton once the lease is finalized and signed, Burns said. The credit union intends to rent the offices for 15 years, he added. “This is very compelling for us financially, in terms of signage, growth potential, parking, visibility, all of the things you would look for in a long-term facility for a corporate presence,” Burns told the paper. Access to public transit also is a big factor, Burns added. A branch that is part of the credit union’s San Francisco headquarters will move to a nearby location. “That branch presence in San Francisco will remain,” Burns told the paper.

Texas foundation takes financial literacy to Belize

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FARMERS BRANCH, Texas (8/25/10)--Courtney Nickles, executive director of the Texas Credit Union Foundation, traveled to Belize last week to lead two all-day workshops organized by several mission-driven organizations to help provide financial literacy and empower young people by teaching better decision-making skills. The workshops were geared to providing teachers and credit union educators with tools and information to institute financial education training in schools and communities, the foundation said. Nearly 50 teachers and participants discovered supplementary ideas and methods to bolster their financial literacy programs, said Carol Babb, deputy chief educations officer with the Belize Ministry of Education and Youth. “We are hoping that with this training, our teachers will develop some new ideas and strategies that will improve that aspect of the curriculum,” Baab said. “They were given a module, and we are hoping that they will take back that module along with the knowledge and skills that they have learned and do training with their staff, and then that information will be passed on to our students.” Using the National Endowment for Financial Education High School Financial Planning Program (NEFE HSFPP), a seven-part training curriculum, Nickles provided an approach detailing every aspect of money management--from saving early to writing checks. Educators and presenters from NEFE, the Belize Credit Union League, and Holy Redeemer CU in Belize City, Belize, also participated in the workshop held at the Institute for Technical and Vocational Education and Training in Belize City. The workshops, held Aug. 17 and 18 educated teachers in southern Belize districts about the necessities surrounding financial comprehension and management.

IDetroit Free PressI New bank fees near expect flight to CUs

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DETROIT (8/25/10)--New government financial regulations to protect consumers are causing many U.S. banks to institute new fees to offset losses in overdraft, credit card and other fees. The increase in fees will cause a consumer flight to credit unions, the Detroit Free Press said Tuesday. To date, roughly 20% of U.S. banks, including TCF Bank and Fifth Third, are no longer providing free checking accounts, according to Michael Moebs, who heads up a Lake Bluff, Ill.-based financial services firm. “The initial thrust to all this is it’s going to be costly to the consumer,” Moebs told the newspaper. Meanwhile, that increase in fees will drive people to nonprofit credit unions, analysts predicted. “That has already happened with Vanessa Daniel, a commodities buyer at the MGM Grand Detroit,” the paper said. “The 53-year-old Detroiter said she had been a customer of Chase Bank since 1995 but closed her account six months ago, fed up with high overdraft fees and other charges. “Daniel switched to Communicating Arts CU in downtown Detroit, where she no longer has to worry about overdraft fees,” the paper added. “Becoming a credit union member is ‘the best thing I've ever done,’” she told the paper. To read the article, use the link.

Volunteer Corporate elects new board members

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NASHVILLE, Tenn. (8/25/10)--Volunteer Corporate CU, Nashville, Tenn., announced the Aug. 19th election of three members to serve three-year terms on its board of directors. The three elected are:
* John Jacoway, executive vice president/chief financial officer, Southeast Financial CU, Franklin, Tenn.; * Gary W. Land, CEO, Chattanooga (Tenn.) Area Schools FCU, and * Bonnie Sensing, CEO, Nashville Firemen’s CU.
The election of officers for the coming year was held immediately after the annual meeting. Officers for the coming year are:
* Chairman--Hank Flury, CEO, Cornerstone Financial CU, Nashville; * Vice-chairman--Ken Swann, CEO, City of Memphis (Tenn.) CU; * Secretary--Karen Jordan, CEO, P&G CU, Jackson, Tenn., and * Treasurer--Jacoway.
Other board members include Mike Haggard, HealthNet FCU, Cordova, Tenn.; Wade Stapleton, Lifeway CU, Nashville, and Rose Melton, Altra FCU, Onalaska, Wis.

Dykstra named CaliforniaNevada league presidentCEO

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ONTARIO, Calif. (8/25/10)--Diana Dykstra has been named the new president/CEO of the California and Nevada Credit Union Leagues, effective Oct. 18. Dykstra, who has more than 30 years' experience in the financial services industry, has served as president/CEO of San Francisco Fire CU since August 2004. She succeeds Bill Cheney, who is now president/CEO of the Credit Union National Association. Former league president/CEO Dave Chatfield returned to the league in an interim role on July 6. "The league conducted an extensive search for candidates whose breadth of credit union experience is best suited to lead the leagues in moving forward as we address the current and future challenges in our two states," said California league board Chairman Jeff York, CEO of CoastHills FCU, Lompoc, Calif. "Diana was highly recommended by the search committee and unanimously approved by the league Executive Committee and Board of Directors," York added. Wally Murray, chairman of the Nevada league and CEO of Greater Nevada CU, Carson City, Nev., noted Dykstra's "passion and strong leadership skills will be welcome additions to the Nevada credit union family as we continue seeking creative ways to meet consumer needs during this challenging period." Under her leadership, San Francisco Fire CU, which serves 27,000 members with assets of more than $670 million, achieved wide recognition for innovative products and services, and for consumer satisfaction. She previously was president/CEO of CoastHills FCU, and led its team through a name and branding change. Dykstra also previously served as senior vice president of San Francisco-based Patelco CU, where she was responsible for developing market education programs, and CEO of its credit union service organization operations. Previously she worked for The Golden 1 CU, Sacramento, and was responsible for consumer lending, statewide services, real estate, collections and marketing. There she helped develop a prototype for funding loans with auto dealers, which is now the Credit Union Direct Lending (CUDL) program. A 1992 graduate and a current instructor at Western CUNA Management School, Dykstra was recipient of the James D. Likens Alumni Recognition Award. She received the California league's Distinguished Service Award in 2002. A past chairman of CUDL and the California league, Dykstra currently serves on the league's board of directors. She also is vice chair of Prime Alliance Solutions and is board chairman of O'Rourke and Associates.