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CU System Archive

CU System

Filene research Whos joining CUs What do they want

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MADISON, Wis. (8/27/08)--"Who's joining credit unions?" is the key question addressed in new research from the Filene Research Institute that delves into how new members are different from legacy members. For years, credit unions knew the needs of their members because the members shared a common experience based on employment, affinity groups and close-knit communities, says the study's author, George A. Hofheimer, chief research officer at Filene. "A shift to community credit unions allows more consumers to enjoy the benefits of credit union membership, but it also leaves credit unions with a complexity of a much more heterogenous membership," he said in the report, "Who's Joining Credit Unions?" The study examines data from more than 90 credit unions and divides members according to their length of membership at the credit union. New members, for example, are those who have been with the credit union two years or less. The study also asks:
* Do new members look different than legacy members? * Do they use different products? * Do they behave differently? * Do they want different things?
New credit union members, says the report, tend to be:
* Younger; * Lower-income; * Driven to credit unions by recommendations from friends and family; * Influenced heavily by the perception of convenience, but they are not necessarily heavy users of convenience access points such as branches and ATM networks; * Low-deposit and low-loan volume consumers; and * Less aware of complex product offerings and delivery channels.
The research report will be available via Filene's website soon.

San Diego area CUs delinquencies minimal

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SAN DIEGO (8/27/08)--Credit unions in San Diego have the capital to weather the economic storm, according to Daniel Penrod, California Credit Union League analyst. Delinquencies at San Diego credit unions increased to 0.83% in 2008 from 0.48% in 2007. “Even though that number seems like a large jump, banks would kill for that number,” Penrod told News Now. “Below 1% is phenomenal.” In March, San Diego credit unions had capital levels of 10.30%. Six percent is the minimum that the National Credit Union Administration requires to be capitalized, and 7% is considered well-capitalized, he added. “I doubt you’ll see a fallout from San Diego credit unions,” Mary Cunningham, CEO, USA FCU, San Diego, told News Now. “It’s been tough, but we have good capital levels.” San Diego is one of the “hot pocket” boom areas, along with other areas in California, Florida, Arizona and Las Vegas that are being hurt by the tremendous devaluing of homes, she said. The San Diego Union-Tribune recently featured credit unions in an article about the local impact of the housing meltdown. In the beginning of the market turmoil, San Diego struggled more than other areas in the state. But San Diego credit unions might actually be leaders in becoming financially strong again. “They peaked earlier, and will come out earlier and stronger,” Penrod told News Now. USA FCU posted a $5.7 million loss last year and decided to “get ahead of the freight train” by dealing with the loss head-on. USA beefed up its reserves--taking the loss immediately would position itself to do better this year, the credit union reasoned. “Not all credit unions in San Diego did that,” Cunningham acknowledged. Credit unions who beef up their reserves aren’t interested in having losses trickle in, Penrod said. “They’re looking two to four quarters ahead. They have the money now and are putting it away now.” The challenge for credit unions is not to have a knee-jerk reaction to losses by pulling loan programs that members need. Some financial institutions are risk-averse and tighten belts when the going gets tough, Cunningham said. “You have to make sure you know what the risks are,” she said. It’s also important for a credit union’s board to be comfortable dealing with losses. “Posting losses every month will rattle even the most steady board. We don’t want a board to overreact and tighten credit and do a disservice to members. That played a lot into our decision [to beef up reserves],” she said. Credit unions are affected by the subprime housing market troubles, though credit unions didn’t offer the “liar loans” many consumers are trapped by. “Members were still enticed to go elsewhere and get [subprime loans],” Penrod said. Wall Street expects another large bank to fail, and if it does, credit unions will have an opportunity to tout their strength. Potential members will see the wisdom of credit unions and their conservative lending practices, he added. “The key is that, even with the economy, they’re still lending money, and their loans are very strong,” he said.

Strike ends at Cornerstone Community

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LOCKPORT, N.Y. (8/27/08)--A strike at Cornerstone Community FCU, Lockport, N.Y., has ended. The Office of Professional Employees International Union (OPEIU) Local 212 voted Monday to ratify a negotiated agreement on a new collective bargaining agreement (BusinessFirst Aug. 26). Union members will return to work on Wednesday, according to the credit union. On Aug. 15, more than 70 union employees went on strike, which shut down two branches. At issue was the cost of health insurance premiums the credit union provides for staff. The employees were asked to contribute 5% of the monthly health insurance premium starting November 2009 (News Now Aug. 18). Terms of the new contract were not disclosed.

CU System briefs (08/26/2008)

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* KANSAS CITY (8/27/08)--Free State CU, a $9 million asset credit union in Lawrence, Kan., has agreed to merge into Credit Union of Johnson County, a $196.6 million asset based in Lenexa, Kan. Free State emerged from a regulatory conservatorship in May 2007. It operates a branch inside the larger credit union's Lenexa headquarters and has two Lawrence locations. Members of both credit unions will vote on the proposal next week. If they approve, the merger could be completed Sept. 15. Credit Union of Johnson County said the merger will allow its outlet in Douglas County and provide a new group of members seeking additional services (Kansas City Daily Star Aug. 26) … * KAHULUI, Hawaii (8/27/08)--Two credit unions in Hawaii expect to close a merger in October (Financial Deals Tracker Aug. 19). Lahaina (Hawaii) FCU, with $6.1 million in assets, would merge into the $80 million asset Valley Isle Community FCU based in Kahului. They expect to close the merger on Oct. 1. The merged credit union would retain the Valley Isle Community FCU name. The National Credit Union Administration approved the merger earlier, said the publication … * SAN FRANCISCO (8/27/08)--Arthur Eli Cheney, 65, of Napa, Calif., pleaded guilty Monday to robbing 20 banks and credit unions from June 18, 2007, through Dec. 12, 2007, along the Highway 101 corridor in California and in Utah (States News Service Aug. 25). According to an announcement by U.S. Attorney's Office for the Northern District of California, Cheney admitted he took a total of $46,040 from the institutions and threatened to use a pistol in at least seven incidents although he displayed no weapon. The heists earned him the nickname, the "Highway 101 Bandit." In addition to the highway corridor robberies, he robbed banks and credit unions in Vacaville, Fairfield, West Lake Village, San Diego, Carlsbad, Palm Desert and Sandy City, Utah. Sentencing is scheduled for Oct. 20. Maximum penalty on each charge is 20 years, plus a $250,000 fine and restitution …

Visterra CU SoCal discontinue proposed merger plans

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MORENO VALLEY and BREA, Calif. (8/27/08)--Two California based credit unions that had announced a proposed merger in April have discontinued the plans, saying the merger would not meet the economies of scale they had sought. Visterra CU, based in Moreno Valley, and Brea-based Credit Union of Southern California (CU SoCal) told a local newspaper the plans had been discontinued several weeks ago. They did not rule out the possibility of approaching a merger in the future (The Press-Enterprise Aug. 22). Visterra President/CEO Robert Cameron said the economy-of-scale issue was one of the upfront additions the two credit unions wanted. He left open the possibility that the credit unions may revisit the issue in a year or two, but a merger now would not make sense, he told the newspaper. CU SoCal Chief Operating Officer Edward Fox said the original merger goal had been to bring value to its members and employees, but the credit unions "mutually recognized the value to our members wouldn't be as significant or as immediate as when we first entered into the agreement." The credit unions had announced in April that the merger would be completed 45 to 90 days after the initial agreement. The proposed combined credit union would have taken the Visterra name and remained headquartered at Moreno Valley. It would have had more than $1 billion in assets, 86,000 members, 11 branches and 260 employees. Visterra serves Riverside County while CU SoCal serves Orange County, the San Gabriel Valley and nearby cities.

NASCUS Advisory Council leaders announced

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SEATTLE (8/27/08)--The National Association of Credit Union Supervisors (NASCUS) Credit Union Advisory Council announced new council directors to the membership during its annual meeting Aug. 22. Linda Childs, CEO, Knoxville (Tenn.) Post Office CU, was re-elected to a three-year term representing Advisory Council District II. Jason Boesch, CEO, Oklahoma RE&T CU, Oklahoma City, Okla., was elected to his first three-year term, representing District III. Council Chairman Mendell Thompson appointed Steven Behler, CEO, Kemba CU, West Chester, Ohio, to the at-large council director position for three years. Thompson, CEO, America’s Christian CU, Glendora, Calif., will continue as chairman for one year. Parker Cann, Columbia CU, Vancouver, Wash., was elected to serve as chairman-elect, and Cathie Tierney, Community First CU, Appleton, Wis., was elected as secretary. The council also recognized several credit union CEOs for their service as council directors:
* Lori Rush, Universal 1 CU, Dayton, Ohio; * Gary Peterson, Financial Plus CU, Ottawa, Ill.; and * Rick Schmidkte, Harborstone CU, Tacoma, Wash.

CUs mark new milestones at in-school-branches

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MADISON, Wis. (8/27/08)--The credit union movement broke two barriers in August, with 200 credit unions reporting that they are operating student-run branches in more than 700 K-12 schools nationwide. The 27% increase in schools represents the year-to-date growth spurt in reported in-school credit union branches since the Credit Union National Association (CUNA) began tracking the phenomenon in 2001. CUNA’s new Model Youth Program Guide reveals that--depending on setup and hours--a single in-school branch can cost between $700 and $25,000 per year to operate. In most cases, then, the primary motive for setting up a student-run branch is educational. “There are many ways to teach children about smart money management,” said Jim Hanson, vice president of CUNA’s center for personal finance, “but making it as easy as possible for them to save is one of the best.” Hanson noted that the No. 1 factor influencing how adults choose a financial institution is convenience “Why would youth be any different?" he said. "Kids and teenagers spend a fourth of their lives in school. Having a credit union as close as the cafeteria makes money management as convenient as choosing pizza versus mac and cheese.” But financial education is not the only reason to open a branch in a local school. The branch also represents a potential competitive edge. “As far as we can tell, the credit union movement has a much greater presence in schools that the banking industry. We expect that to change, however, once banks calculate the lifelong advantage that comes from being a third-grader’s primary financial institution,” Hanson said. According to CUNA’s online directory, credit unions have set up shop in elementary, middle, and high schools in 32 states and the District of Columbia. Credit unions can report their in-school branches or update their record on CUNA’s website. Use the resource links for more information.

How do CUs collect members e-mail addresses

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PORTSMOUTH, N.H. (8/27/08)--Credit unions collect members’ e-mail addresses primarily through teller incentives, according to a recent survey. About 17% of respondents said they used teller incentives to collect e-mail addresses, compared with account opening practices at 13% and through the credit union’s website at 13%. “The optimal time to gather the e-mail address is right at the beginning of the relationship,” said Rick Blaisdell, co-founder of MailMethods, the company that conducted the survey. “A best practice is to capture the e-mail address as early as possible in the relationship, even if the credit union does not have any current plans to use it.” Credit unions also obtain the addresses through signage in the credit union, direct mail and telemarketing, the survey said. MailMethods, based in Portsmouth, N.H., develops e-mail appliances for financial and retail markets.