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Fort Knox FCU Helps Members During Furloughs

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RADCLIFF, Ky. (8/5/13)--Fort Knox FCU in Radcliff, Ky., is offering furlough assistance options to members who are federal employees or federal contractors. Nearly 100 members have been helped so far.
The options include reduced payments on existing loans, interest-free loans for 30 days, and no penalty for early withdrawal from share certificates of deposit, said the Kentucky Credit Union League (By The Way Newsletter July 31).
The $1.06 billion asset credit union introduced the options to help Department of the Army civilian employees and contractors who are dealing with furloughs or loss of pay due to sequestration.
"There are as many as 5,000 civilian federal workers and contractors in our service area and many of them could face up to 176 non-contiguous hours of furlough from work without pay," said Bill Rissell, president/CEO of Fort Knox FCU.
"That could mean as many as 22 eight-hour work days between now and the end of the fiscal year in September," he added. "Missing that many days of pay will likely be a hardship for these families."
So far, participating members have reduced payments on roughly 200 loans, totaling $2.45 million in balances, the credit union said. Also, it allows early withdrawal up to $10,000 from share certificates of deposit, with no penalty.

CU System Briefs (08/05/2013)

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  • CLEVELAND, Ohio (8/5/13)--Federal prosecutors in Cleveland are seeking to seize the $1 million home of the former CEO of the Taupa Lithuanian CU, which was placed into conservatorship July 12 and liquidated (The Plain Dealer Aug. 2). CEO Alex Spirikaitis, who disappeared, is still at large, wanted on charges of falsely reporting more than $16 million in assets allegedly deposited with other credit unions in 2011 and 2012, said Assistant U.S. Attorney James Morford. Prosecutors said Spirikaitis allegedly used a computer program called Phantom Font to download documents and alter them on his computer, and alleged he paid a builder $1.7 million to build the house with checks drawn on the credit union ...
  • FAIRBORN, Ohio (8/5/13)--Wright-Patt CU has teamed up with Kettering Health Network, Dayton Children's Hospital and the Ronald McDonald House of the Miami Valley to sponsor a competition to help area residents reduce their medical debt by getting both financially and physically fit. In Savings Race 6--Health and Financial Fitness Edition, coaches and advisers work with five teams to create a plan to improve their financial and health outlook. Teams receive free education and coaching and participate in special challenges to learn how to save better, borrow smarter and create a healthier lifestyle. Cash prizes are awarded, including a $10,000 grand prize. "There is a direct correlation between health and finances," said Tracy A. Fors, Wright-Patt's vice president of marketing and business development. Applications will be due Aug. 24 and the teams will be announced at a kickoff in October ...
  • FARGO, N.D. (8/5/13)--MemberTree Consultancy, a Fargo, N.D.-based credit union-focused marketing company, will conduct a 15-minute webinar Thursday at noon CT to introduce its Community Challenge Program. In the program, credit unions encourage their community to save a designated amount in loan interest within a certain period. Community members save money when they refinance a loan with the participating credit union. After the savings goal is reached, the credit union donates a predetermined amount to selected local charities. The webinar will review how to get a  challenge running as well as tactics and tools. Presenters are Dan Altenbernd, chief operating officer at MemberTree and Northfield, N.J.-based Jersey Shore FCU business development staffers Erna Laielli and Kyle Jaremko. For more information use the link or call 866-551-0177 ...
  • LENEXA, Kan. (8/5/13)--Margaret J. Blankers Public Relations Group is marking the conclusion of its 10th year of serving credit unions, corporates, credit union service organizations and other service providers by redesigning its website and incorporating a new blog with perspectives about cooperation, media relations and crisis communications. Founded  in 2002 by Margaret Blankers, MJB PR Group has worked with clients to navigate mergers, rebranding efforts, natural disasters and business issues, as well as media and promotional activities to build awareness. The firm counts among its clients e-marketing firm DigitalMailer Inc. and ALM First Financial Advisors LLC ...

CUNA: CU Loans Up, Savings Down In June

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MADISON, Wis. (8/5/13)--Credit union loans outstanding increased in June, while savings balances dropped, according to the June monthly sample of credit unions by the Credit Union National Association.
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"Credit loan balances rose 2% in the first of 2013, faster than the 1.8% pace set in the first half of 2012," Steve Rick, CUNA senior economist, said Friday. "New-auto loans continue to outpace other categories, growing 5% over the last six months, compared with 2.8% for the similar period last year. Fixed-rate first mortgage loan balances grew a strong 1.7% in June as low rates in April and May encouraged many fence-sitting homeowners to jump off and buy a home."

Credit union loans outstanding grew 0.8% to $627.6 billion in June and 2% during the first half of 2013. Fixed-rate first mortgages led loan growth, rising 1.7%. Used-auto loans grew 1.6%, while new-auto loans grew 1.5%. Unsecured personal loans rose 1.2%, and credit card loans increased 1%. Adjustable-rate mortgages, home-equity loans and other mortgages declined 1.4%, 1.1% and 0.7%, respectively.

"With the recent jump in mortgage rates we expect slower mortgage balance growth in the second half of the year," Rick said.

Credit union savings balances dropped 0.4% in June to $930 billion, compared with a 0.8% increase in June 2012. Individual retirement accounts increased 0.8%, regular shares 0.4%, and money market accounts 0.1%.  Share drafts declined 3.9% and one-year certificates dropped 1%.

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"Savings balance growth has tapered off considerably over the past year," Rick explained. "Savings balances rose only 3.7% during the first half of 2013, down from 5% in the first half of last year. Certificates of deposit (CDs) continue to decline as members roll over maturing CDs into regular savings balances while they wait for the Federal Reserve to raise interest rates sometime over the next two years."

Regarding asset quality, credit unions' 60-plus-day delinquency rate remained at 1% the past five months.

"Credit quality has leveled off in the second quarter," Rick said. "The delinquency rate plateaued at 0.98% in the second quarter, down from 1.2% last year but still above the 0.75% long-run average."

With loan growth outpacing savings growth during June, the loan-to-savings ratio increased from to 67.5% from 66.7% in May. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--was 19%.

Total credit union membership grew 0.2% to 97.6 million, said CUNA's monthly estimates.

The movement's overall capital-to-asset ratio remained at 10%, with $110 billion in total capital.

CUs Must Improve Among Non-members

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MADISON, Wis. (8/5/13)--To expand their membership ranks, credit unions must improve awareness--especially among Generation Y and Hispanics--about the advantage of using their products and services, according to the Credit Union National Association's 2013-2014 National Member and Nonmember Survey Results.
The August edition of Credit Union Magazine provides an in-depth look at the survey findings.
Although credit unions generally have lower loan rates, higher savings rates and more consumer-friendly fees, 64% of nonmembers say they are "not at all familiar" or "not very familiar" with credit unions.
That figure rises to 71% among nonmembers ages 18 to 24. Notably, only 22% of that segment belongs to credit unions, while one-third of all U.S. adults--97 million--are credit union members.
Credit unions will benefit tremendously if they can mobilize quickly to educate and attract young adults, according to Jon Haller, CUNA's director of corporate and market research.
"You want to be with these members when they start buying homes and cars, opening individual retirement accounts, taking out student loans, and purchasing other financial products and services," Haller said.
Likewise, half of Hispanics surveyed have never heard of credit unions or aren't familiar with them. Only about 22% of Hispanics are credit union members, compared with 35% of blacks and 36% of whites. Only 14% of Hispanics claim a credit union as their primary financial institution.
In contrast to Gen Y, however, many Hispanics are unbanked or underbanked--with 54% having accounts at financial institutions.
When surveying nonmembers about what it would take for them to join a credit union, three prerequisites stand out. In addition to creating better awareness of their products and services, credit unions should provide more convenient branch locations and offer higher interest rates on savings. Each response was favored by 17% of respondents.
Nonmembers also asked that credit unions lower rates on loans (15%) and have lower service charges or fees (13%).
The most difficult nonmembers to attract will be the 23% of respondents who say there's nothing credit unions could do to persuade them to join.
See related News Now article, CU Member Loyalty Rises At Banks' Expense, by using the link.

Wisconsin CUs 'Thriving' In First Half 2013

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PEWAUKEE, Wis. (8/5/13)--Earnings increased at large Wisconsin credit unions in the first half of the year, boosted by a strong lending environment and a slowly improving economy, said the Wisconsin Credit Union League in the Milwaukee Journal Sentinel (July 30).
Delinquency rates and loan losses have trended down, while the cost of funds remains low at state credit unions, Brett Thompson, league CEO, told the Journal Sentinel.
Auto and a residential real estate lending have improved much faster than the rest of the economy, the Journal Sentinel said.
Income at Royal CU, Eau Claire increased almost 91%, thanks to fewer loan losses and reduced expenses, according to new data from the National Credit Union Administration.
Consolidation among Wisconsin credit unions is likely to continue, Thompson told the Journal Sentinel. Last year, 13 Wisconsin credit unions merged into other credit unions, according to the state Department of Financial Institutions.
The two main forces driving consolidation are increasing and more-complex financial regulations, and the difficulty of attracting financial professionals interested in running a small credit union, Thompson said.
Credit unions also continue to see strong demand for member business loans, Thompson said. Credit unions maintain they can do more for small businesses if the cap on their member business loans were lifted to 27.5% of total assets from 12.25%. The Credit Union National Association has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers.

CUNA To AARP Magazine On Online Banking: Convenience Rules

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WASHINGTON (8/5/13)--Convenience rules, when it comes to embracing online banking, the Credit Union National Association advised readers of AARP magazine (July 31).

"You can conduct your financial business wherever you are, rather than at your desk or kitchen table at home," said Paul Gentile, CUNA's executive vice president of strategic communications and engagement, in the article. Gentile was one of five experts to answer questions about online banking for older readers who may not be quite convinced online banking is for them.

"Many institutions offer free mobile phone apps you can download that allow you to check your balances, deposit checks, transfer money and pay bills," he said.

Although ATMs are "quite popular for making deposits," Gentile said, "some experts predict they have seen their best days, particularly with the popularity of remote deposit capture--a service many institutions have adopted. With a scanner or fax and a computer, members scan their check for deposit and send it electronically from anywhere."  He noted consumers also can use the camera on their mobile phone to electronically send deposits.

Gentile explained it takes only a short form to register for an online banking account and that readers would need certain information to verify their identity. He also noted that "the biggest drawback may be your own level of personal comfort with obtaining and using financial services in this manner, and perhaps face-to-face customer service, if that is important to you."

The article discussed ways online banking customers can keep their information secure and other questions the uninitiated may have. For the full article, use the link.

Minnesotans Continue Shift To CUs

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ST. PAUL, Minn. (8/5/13)--Minnesota credit unions continued a trend of steady growth in the first half of 2013, maintaining gains in membership and loans, according to the Minnesota Credit Union Network.
"Minnesotans trust member-owned credit unions and have always been strong advocates for them," Mark Cummins, MnCUN president/CEO. He said many consumers feel that credit unions--rather than for-profit financial institutions-- are "more aligned with their values."
Overall, Minnesota's credit unions experienced mixed results in key financial performance indicators for the second quarter. However, modest economic growth is expected to improve credit union operating results during the remainder of the year, MnCUN said.
Minnesota consumers and businesses also continue to choose credit unions as their primary financial institution.
State results in key areas include:
  • Membership. Membership grew by 6,000 in the first quarter to reach 1,579,000-- a 0.7% growth rate. That number, although slightly behind the pace of the 0.9% growth reported in the first quarter 2012, illustrates state consumers' continued interest in the credit union business model, MnCUN said.
  • Assets. Assets declined by just four-tenths of a percent between the first and second quarter, with 6.2% growth between second quarter 2012 and second quarter 2013. Despite a drop from 9.4% in 2012 to 7.6% in the first quarter, total assets are well above the national average of 5.3%, said MnCUN. In the first quarter, Minnesota credit unions asset-quality measures improved. Overall, the 60-plus-day dollar delinquency rate fell to 0.90%, a 0.19% decline from fourth quarter 2012. The Minnesota credit union delinquency rate is less than half of that reported by Minnesota banks (1.82%).
  • Deposits. Deposits decreased 0.4% in the second quarter from the first quarter, but increased 6.9% from second quarter 2012. Core deposits grew to 41.6% in the first quarter from 40.1% in 2012, continuing a long-term positive trend.
  • Total loans. Loan balances increased 2.7% in second quarter, up from a 0.5% decrease in the first quarter. Year-over-year loan growth was 4.4% from second quarter 2012. Also, despite a first-quarter decrease in overall lending (0.5%), credit unions' member business lending grew at a rate of 1.6% during the same time.
  • Net income. Minnesota credit unions are rated as "well-capitalized" by the National Credit Union Administration, with a net worth of 9.99%. The NCUA considers a credit union as well-capitalized if its net worth is above 7%.
The summary and analysis was compiled by MnCUN from NCUA's quarterly report.

Study: Card Payments Foretell Delinquencies On Other Loans

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CHICAGO (8/5/13)--Consumers who pay more than the minimum amount each month on their credit card bills are more likely to have lower delinquency rates not only on their card accounts but also on their mortgages and auto loans, according to a new study from TransUnion. Those who paid close to the minimum amount had higher delinquency rates.
The study gives lenders, including credit unions, another tool in evaluating consumer risk that may not show up through traditional credit scores, said the Chicago-based credit reporting agency.  In the past, TransUnion has conducted several similar studies that concluded those who revolve or pay partial card payments are riskier. Last year's study found them to be three times riskier on new bank cards and five times riskier on existing bankcards than transactors who pay off the full amount each month.
The new study confirms conventional wisdom that transactors are better risks and "has quantified just how big an increase in risk revolvers present," said Ezra Becker, co-author of "Minimum Payments vs. Actual Payments: A Look at Debt Service Behaviors and Credit Capacity."
Just as important, he said, "the study revealed that not all revolvers are equal; those who pay more than the minimum on their credit cards, even if they don't pay off the full balance, present less risk across product types."
Each month, of consumers who make payments on their credit cards, about four in 10 will pay off their entire card balance. Six in 10 will pay only part of their remaining balance, and of those six, two will pay the minimum only.
The study also found that in some cases, individuals with lower credit scores and higher Total Payment Ratios (TPR)--a consumer's total monthly credit card payments divided by total minimum due on all the cards--actually outperformed those with higher credit scores but lower TPR levels.
"The only anomaly we found was that higher TPR levels actually resulted in higher auto and mortgage delinquencies for subprime and near-prime mortgage borrowers, but we attribute this performance to the mortgage crisis and its impact on the payment hierarchy--many consumers facing foreclosure placed a higher emphasis on paying off their credit cards," said Becker.
The study included performance on samples from 12 million mortgage consumers, 17 million credit card consumers and 22 million auto loans worldwide. To access the free report, use the link.

League Creates Internship For People With Disabilities

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MERIDEN, Conn. (8/5/13)--The Credit Union League of Connecticut has partnered with The Arc Connecticut to create an internship program for people with disabilities.
Through the program, called Workability, Connecticut credit unions will be able to hire a high school intern living with disabilities for this fall. The internship is ten weeks long. The program is based on an existing program at Hartford (Conn.) Healthcare FCU, designed by CEO Carol Bayreuther.
"I can't imagine a more exciting, productive, and beneficial program for credit unions to continue their involvement in their community," said Barbara Bass, league vice president of education of human resource development. "Credit unions will be providing an opportunity for interns to use the skills they have learned, thrive in an active, professional environment, and assist in the credit union's day-to-day functions--a positive experience for all concerned."
The Arc Connecticut is an association initiative of The Arc, a national, proactive advocacy organization for people with intellectual and developmental disabilities.
Students have been trained to work in a business environment, and the Workability program will provide practical hands-on experience that will benefit both the intern and the credit union, the league said.

Filene Seeks Input On CU Reg Burden

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MADISON, Wis. (8/5/13)--Filene Research Institute is seeking North American credit unions to complete a survey on increasing regulation on credit unions in Canada and the U.S.
Responses are due August 13. The responses will form the basis of a study seeking to quantify regulatory burden for credit unions, especially its differing effects across asset sizes.
The survey will form the basis of a report by Professors Panu Kalmi, University of Vaasa, Finland, and Giovanni Ferri, LUMSA University of Rome, Italy.
The survey will also ask respondents to calculate their time spent complying with specific regulations in an attempt to identify the most burdensome regulations.
The Credit Union National Association continues to work with the U.S. Congress, the Consumer Financial Protection Bureau (CFPB) and the National Credit Union Administration (NCUA) to minimize regulatory burdens on credit unions. Recently, CUNA reiterated that CFPB and NCUA should conduct detailed cost-benefit analyses on proposed and final regulations to curb the "creeping complexity" of burdensome regulations on credit unions--especially small credit unions.