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How will auto leasing cutbacks affect CUs

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MADISON, Wis. (8/8/08)--Credit unions should step up marketing their auto loan programs because several factors are working in their favor. Cutbanks in the auto leasing market, home equity woes and big banks pulling back on lending are opening up more opportunities for credit unions. Last month, Chrysler and Wells Fargo announced that they are pulling out of the leasing market. U.S. Bank announced that it would no longer accept leases for used cars. Chrysler and Wells Fargo are leaving the market because securitization is dying, and used- car values are dropping, said Greg Gandolfo, Credit Union Leasing of America (CULA) vice president of business development, CULA is a provider of new- and used- auto leasing for credit unions. With big lenders pulling out of the market, auto dealers are looking to smaller lenders for leasing. Leasing volume at CULA is up, Gandolfo told News Now. CULA doesn’t have a heavy portfolio concentration of any make or model, according to Gandolfo. The company’s highest concentration is with Honda, Toyota and Nissan--though each one equals less than 5% of its total portfolio. “With this kind of diversification, it is much easier for our remarketing team to sell off our lease vehicles in 15- to 25- vehicle packages directly to auto dealerships for their used-vehicle inventory, instead of sending them to auction,” he said. CU Direct Corp. (CUDL), which does indirect auto lending for credit unions, saw a spike in the number of auto loans it made last month--55,000--“the best month of the year,” Tony Boutelle, CUDL president/CEO, told News Now. The top vehicle funded by CUDL from January 2008 to June 2008 was the Nissan Altima, followed by the Chevrolet Silverado, according to CUDL data. Besides leasing, home equity woes and banks pulling back on lending are increasing opportunities for credit unions to make auto loans, Boutelle said. “It’s an opportunity [for credit unions] to let members and dealers know they’re there to make loans,” Boutelle said. “Members need options.” The 72-month and 84-month auto loan programs were created to compete with leases, and now is the time to market them, he added. About 60% of CUDL’s loans are for new credit union members, while 40% are for existing members. As credit unions focus more on existing members, those numbers may shift, Boutelle said. In general, auto leasing at credit unions is minimal--about 179 credit unions in the U.S. do auto leasing, Boutelle said, citing National Credit Union Administration data. “Credit union leases represented less than 1% of all credit union auto originations in the first six months of 2008,” Bill Meyers, CUDL communications coordinator, told News Now. CUDL has looked into auto leasing for the past 10-12 years, holding study groups on the subject, but hasn’t “gone down that path,” Boutelle said. The corporation may choose to get into leasing if its credit unions want it, but will need to figure out how to mitigate the risk involved. Leasing isn’t for everyone, Michael Foti, vice president of lending, Prime Financial CU, Cudahy, Wis., told News Now. “It depends on the person’s situation,” he said. Leasing can help make pricier cars, such as BMWs, more attainable. If consumers don’t drive over the specified mileage, they can return the car at the end of the lease and receive a new one, he said. Leasing isn’t a good option for drivers who frequently travel long distances. Prime Financial leases through Donald Driver Motors, formerly known as CU Fleet Auto. The credit union receives about 15 to 25 new leases each month.

Two phish sites spoofing CSS no longer in play

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MADISON, Wis. (8/8/08)--The Credit Union National Association (CUNA) has shut down two websites that purported to offer a new service through CUNA Strategic Services. The sites were promoted in a phishing e-mail that aimed to gather information for possible identity theft. Both sites were closed Thursday morning, said Kevin Knope, director of Web Services. More than 100 recipients received the e-mail phishing message and the response rate was high, he said. CUNA has issued a fraud alert. "This phish has a new twist in that it's the first phish to use the look of CUNA Strategic Services' website," Knope told News Now. The phishing e-mail targeted AOL users and came from domestic internet service providers in Texas and Georgia, said Knope. The phish noted that "Credit Union National Association is one of the largest credit union groups in America. In partnership with state credit union leagues, CUNA provides many services to credit unions, including representation, information, public relations, continuing professional education, and business development." It claimed the newest service added at CUNA on Aug. 1 is "Your Credit Union Rewards You," for credit union members. "Daily 10 random credit union account holders are e-mailed to take the 300$ reward. Completing the application forms on our website takes only 5 minutes," the fake site says. Neither CUNA nor CUNA Strategic Services offers such a program. CUNA warned recipients not to respond to the sites. CUNA does not maintain any type of customer/member financial information. No financial institution would request personal identification information over the phone via an e-mail solicitation. "If you did respond to this e-mail, you should contact your financial institution directly using the phone number provided by that institution," said CUNA.

CU acts to mitigate accidental posting of data online

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ORLANDO, Fla. (8/8/08)--A Florida credit union is taking steps to mitigate the effect on members after their personal information was accidentally posted online. Information from an internal auditing document at Central Florida Healthcare FCU, a $57.5 million asset, Orlando, Fla.-based credit union, showed up online when some members conducted Google searches on their names. In all, a maximum of 187 accounts were exposed on the Web, but preliminary indications show that only two or three were looked at, Trudy Prince, Central Florida Healthcare CEO, told News Now. “Contrary to some media accounts, our entire database is not at risk; it is secure,” Prince emphasized. The credit union has hired forensic experts trained by the FBI to determine the number of hits on the compromised data and where the hits came from. The investigation is ongoing, and there is no data available yet, but it looks like there is a limited amount of activity, Prince said. “We have another team of specialists checking to see if human error or a glitch with the computer program caused the problem,” Prince added. “We’re making sure it doesn’t happen again.” The problem began on July 10 when a glitch occurred during a switch between Web-hosting companies for the credit union’s website. In the process of setting up passwords, an internal audit report used to review closed accounts, delinquencies and charge-offs was exposed on the Web, Prince explained. Last month, a credit union member entered her name into Google, and when it came up, she clicked on a link with information from the credit union. The member and her spouse then called an attorney on July 28. When the attorney called the credit union on July 30 to inform it of the situation, the credit union immediately shut down the site. “This couple is filing a lawsuit against us, and their attorney is looking to make it a class-action suit,” Prince said. The credit union talked to 400-500 members Thursday about the situation, and all are comfortable that their accounts are secure, Prince said. “It’s been time-consuming for us, but worth the effort,” she added. “All our members have been sent letters about the incident. We’ve given them information on how to get a free credit report, and we’ve provided a toll-free number for them to call and get free ID theft protection, which we are offering for up to a year.” Most members have been extremely positive and supportive of the efforts the credit union has undertaken to deal with the situation, Prince said. “Eight people on our credit union staff, including myself, have talked to members,” Prince said. “I talked to about 50 people today and all were positive. I also took the opportunity to talk to them about other credit union issues, and made the conversations educational and informative as well.”

ID theft ring leader--a fed informant--could get life

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NEW YORK (8/8/08)--A key figure in data breach theft indictments earlier this week was an informant working with the U.S. Secret Service while he allegedly led an international ring that stole millions of dollars through data breaches against nine retailers, including TJX Cos. If convicted of all charges, Albert "Segvec" Gonzalez of Miami faces a life term in prison, said U.S. Attorney General Michael B. Mukasey at a news conference in Boston (OrlandoSentinel.com Aug. 6 and Miami Herald Aug. 6). Gonzalez is in custody in New York. He is accused of masterminding the series of data breaches that cost credit unions and other card issuers and their insurance companies millions of dollars. The indictment said as an informant for the Secret Service, Gonzalez "used sensitive law enforcement information…to warn off conspirators." The series of breaches took place over four years, beginning in 2004 with the restaurant chain Boston Market. The largest breach, announced in January of 2007 by TJX Cos., compromised at least 45 million cards. Some estimates doubled that figure. Two other Miami men, Christopher Scott and Damon Patrick Toey, were charged with "wardriving," or driving around commercial areas and using wireless networks to hack into computers. Other indictments were against Maksym "Maksik" Yastremskiy of Ukraine; Aleksandr "Jonny Hell" Suvorov of Estonia; Hung-Ming Chiu and Zhi Zhi Wang, both of China; Sergey Pavlovich of Belarus; and Dzmitry Burak and Sergey Storchak of Ukraine. A final indictment is known only by an online moniker, "Delpiero." Yastremiskiy allegedly received more than $11 million from operating the ring. The arrests were the result of a three-year undercover investigation.

Sound decisions helped CU stay the course

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PEMBROKE PINES, Fla. (8/8/08)--With financial turmoil taking place in South Florida and across the U.S., Power Financial CU is weathering the storm by following a conservative business model that is exceptionally well capitalized, says CEO Allan M. Prindle. Power Financial is a $480 million asset, Pembroke Pines, Fla.-based credit union with 10 branches and more than 55,000 members. Recent news has chronicled financial troubles for Fannie Mae, Freddie Mac, IndyMac and Wachovia Corp. Several other large U.S. banks posted weak second-quarter results, and losses have soared from mortgages and other debt. “Nobody can deny there are challenges facing the financial markets, and as a financial institution, we are highly correlated to those markets,” Prindle said. “Our members are our primary focus, and we manage the credit union accordingly. We are not immune from economic downturns, but we ‘stayed the course’ for the first half of the year while many others made decisions which now prove to be decisions that were not sound nor prudent,” he said. “Power Financial CU will continue on that course because we think our members deserve financial peace of mind in addition to outstanding service, competitive products and unsurpassed convenience,” he added. Power Financial CU holds no securities with underlying sub-prime backed securities, no commercial mortgage-backed securities or collateralized debt obligations, Prindle said. “This is the culprit for the majority of the stress that this sector of the financial markets is under, and we are not impacted by those announcements, thanks to our conservative investment strategies,” added Prindle. “In fact, we have maintained a more than ample level of liquidity, and as of June 30, had nearly 40% of total assets in available funds that can be accessed immediately. We are certain that this level is far superior to our peers.” In terms of its loan portfolio, Power Financial CU not only has no subprime mortgages in the collection, but also avoided Option Adjustable Rate Mortgage products, no Income Verification products, Negative Amortization products and others that make up the current mortgage financing debacle, Prindle said. “For unexpected losses, we have always relied on our strong capital, which as of June 30, 2008, is exceptionally well-capitalized with a superior capital ratio in excess of 13%,” noted Prindle. “This is what gives us the ability to deal with an economic slowdown, and for our members, [provide] the comfort in our financial soundness. After all, for the last 50-plus years, we have received outstanding satisfaction ratings from our members.”

Federation to open Frisco field office

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NEW YORK (8/8/08)--The National Federation of Community Development Credit Unions will open a regional office in San Francisco. Rafael O. Morales, public affairs officer for the federation, will relocate from New York City to open the new office. He will to continue to focus on federation communications as a primary duty. However, he also will provide leadership and support to regional initiatives and events, including: working with the California Low Income Credit Union Network; acting as a liaison to the California and Nevada Credit Union Leagues, the Federal Reserve Bank of San Francisco, state and local government agencies and officials, and working on other special projects as required. “We are extremely pleased to be able to have a physical presence in California where a larger percentage of the federation’s western region members are located,” said Cliff Rosenthal, federation president/CEO. “Rafael has been with federation for five years and is very familiar with the organization and our work. I’m confident that he will be able to hit the ground running to promote new partnerships and initiatives that leverage the capacity of community development credit unions, credit unions in general and other institutions across the [San Francisco] area and statewide,” he continued. The federation’s San Francisco office will be operational in early September. Specific information will be made available on the federation’s website.

CEOs op-ed CUs an option for consumers

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WICHITA, Kan. (8/8/08)--Because they can make a difference in peoples’ lives, credit unions are an important financial alternative for about 90 million Americans, said a credit union CEO in a Thursday op-ed piece in The Wichita Eagle. Jim Holt, president/CEO of Mid-American CU, a $121.5 million asset, Wichita, Kan.-based credit union, said credit unions save members about $10.9 billion per year due to lower fees and better rates, according to data provided by the Credit Union National Association. “Perhaps the best reason people belong to credit unions is because we exist to help people--not to make a profit,” Holt said in the op-ed. “A voluntary and member-elected board of directors from the membership governs each credit union. This keeps us focused on meeting the financial needs and satisfaction of our members.” Members of credit unions share a common bond--usually through an employer group--but also through a church or community, Holt said. Credit unions have become important partners in facilitating the financial well-being of members by offering free seminars on topics such as planning for retirement or purchasing a new home, Holt added. Having a credit union also benefits consumers in other ways, Holt added. “Studies have shown that when there is a credit union in the community, savings rates tend to be higher, and loan rates and fees tend to be lower at other financial institutions,” he explained.

NCUF to present two Wegner Awards for Individual Achievement

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WASHINGTON (8/8/08)--For only the third time in 21 years, the National Credit Union Foundation (NCUF) Awards & Recognition Committee has seen fit to name two winners in a single category for the Herb Wegner Memorial Awards. Winners of the 21st Annual Herb Wegner Memorial Awards for Individual Achievement will be:
* Rita Haynes, manager and CEO of Faith Community United CU in Cleveland, Ohio; and * Tom Sargent, president/CEO of First Tech CU in Beaverton, Ore.
“Rita and Tom’s achievements are both extraordinary and unique,” said NCUF Awards & Recognition Committee Chairman and Wegner Awards Dinner Emcee Bob Schumacher, CEO of MountainCrest CU, Arlington, Wash. “Rita’s achievements in payday loan alternatives, second chance auto loans and foreclosure preventions are shining examples of how credit unions can change lives by providing affordable financial services in low-income communities,” Schumacher said. “And her achievements are especially amazing coming from a credit union with only $10 million in assets and four full-time staff.” “Tom’s achievements in fundraising for ‘Credit Unions for Kids’ transcend even the largest individual credit unions,” Schumacher said. “Inspired by a personal commitment, Tom has achieved what only the most effective national credit union leaders have done throughout our history--uniting credit unions across the country around a single cause. Tom has motivated credit unions of all sizes to do life-changing charity work in communities supporting Children’s Hospitals,” he added. Haynes and Sargent will be honored at the 21st Annual Wegner Awards Dinner presented by NCUF on Feb. 23 at the Grand Hyatt Washington on the opening night of the Credit Union National Association’s (CUNA's) 2009 Governmental Affairs Conference. Online registration will be available this fall. The Wegner Awards are named in honor of the late CUNA CEO Herb Wegner For more on innovations by Haynes and Sargent, use the Resource Link.

Nearly two-thirds of Maine CUs offer fuel assistance loans

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WESTBROOK, Maine (8/8/08)--Nearly two-thirds of Maine's credit unions are offering fuel assistance loans with low rates, says the Maine Credit Union League. Some of the loans have rates as low as 0%, and the average loan rate is 4.97%, the league told Bangor Daily News (Aug. 6). Many credit unions are offering special weatherization loans to help members make their homes more energy-efficient or to help them buy alternative energy sources, such as pellet stoves, said the league. "Hopefully, these special rates and other initiatives to help with energy costs being offered by Maine credit unions will provide consumers some relief next winter," said John Murphy, league president. University of Maine Prof. Habib Dagher told the U.S. Senate's Homeland Security Committee recently that "Maine will likely be the first state to experience a heating state of emergency" (The Ellsworth American Aug. 7). Eight of every 10 families in the state rely on heating oil to fuel their furnaces. With next winter's heating oil costs predicted to be at least $5 a gallon, the average Maine family will pay $5,000 to heat their home next winter. Ten years ago Maine families spent less than 5% of their household budgets on energy; today energy accounts for almost 25% of household budgets.

CU System briefs (08/07/2008)

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* NEW YORK (8/8/08)--Credit unions interested in cloak-and-dagger stories need go no further than a data breach investigation conducted after someone hacked into Citigroup ATMs at 7-Eleven stores and stole millions of dollars earlier this year. Wired.com (June 24) has a riveting account of how a single high-value breach can reverberate through the international carding community of bank-card fraudsters. It describes stakeouts, attempted muggings and chases, undercover work, and a lucky break at a routine traffic stop. Six months after personal identification numbers (PINs) and account numbers were stolen from Citi ATMs, customers were still discovering unauthorized withdrawals. To read the story, use the link … * DENVER, Colo. (8/8/08)--The Credit Union Foundation of Colorado and Wyoming partnered with the Denver Chapter of Credit Unions to host its 20th annual golf tournament and fundraiser at The Ranch Country Club, Westminster, Colo., on July 22. Participating were 96 golfers, who competed on the 18-hole, 6,600-yard course designed by Dick Phelps. From left are: Greg Hill, senior vice president, Premier Members FCU; Mark Lau, president/CEO, Denver Fire Department FCU; John Dill, president/CEO of the Credit Union Associations of Colorado and Wyoming; and Tom Graham, president/CEO, SunCorp. (Photo provided by the Credit Union Associations of Colorado and Wyoming) … * HARRISBURG, Pa. (8/8/08)--PA HealthCare CU's Crazy 8's promo kicks off today--08/08/08--at 08:08:08 a.m. (Life is a Highway Aug. 7). For eight hours, eight minutes and eight seconds, members can apply for a $1,000 six-month certificate of deposit (CD) at 8% annual percentage yield (APY). Also, for eight days, the Sewickley, Pa.-based credit union is offering a three-month CD at 2.88% APY and a 12-month CD at 3.88% APY. On the lending side, for the next 88 days, members can apply for a five-year auto loan for 2008 or new model years at 3.88% annual percentage rate (APR) and a five-year home equity loan, also at 3.88% APR. CEO Paul Fero told the Pennsylvania Credit Union Association that more than 10% of the credit union's membership pre-ordered the 8% CD. The $22 million asset credit union also experienced a 1% increase in new members within a month of the announcement of the promo … * GURNEE, Ill. (8/8/08)--Community Trust CU recently gave away a $750 gas card in a member appreciation drawing to celebrate the credit union's 75th anniversary. Member James Jorgenson won the drawing. More than 5,000 entries were received by the credit union. "For the first time in a long time, I'm going to enjoy filling up at the pump," Jorgenson said. "Like everyone, I'm still going to try and keep my driving to a minimum." The credit union also has encouraged members to save fuel by logging onto the credit union's website to sign up for its eBranch, which allows members to conduct transactions online. "There are lots of ways we can all save gas money and reduce our impact on the environment, like conducting financial transactions via a secure online portal or banking by phone," said Michelle Fairbanks, Community Trust community relations coordinator. "Of course we still love to see our members in person, but we want to provide as many convenient service options as possible." From left are Fairbanks, Jorgenson and Community Trust President/CEO Madeline Lipka. (Photo provided by Community Trust CU) ... * HARRISBURG, Pa. (8/8/08)--The Pennsylvania Credit Union Association announced that this week's Pennsylvania Newsmakers programming schedule has been adjusted because of the Summer Olympics (Life is a Highway Aug. 7). The segment will run on: WGAL Channel 8 Saturday at 7 a.m. and Sunday at 1:30 a.m.; WBPH, Sunday, 8:30 p.m., WKBS 47, Aug. 16, 11:30 a.m.; and CATV Channel 8, Aug. 12, 7 p.m. and Aug. 13, 1 p.m. ...