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CU attempts to block liquidation order

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WASHINGTON and ALEXANDRIA, Va. (8/10/10)--A hearing today in a U.S. District Court for the District of Columbia will determine whether a Texas-based virtual credit union that was placed into liquidation last week will get an injunction to prevent the National Credit Union Administration (NCUA) from carrying out the liquidation. Contrary to rumors yesterday, the judge had not issued a temporary restraining order (TRO) Monday on behalf of Kappa Alpha Psi FCU (KAPFCU) against NCUA. "The court did not issue a TRO. That is inaccurate," John McKechnie, director of public and congressional affairs at NCUA, told News Now Monday evening. Today's hearing before U.S. District Judge Emmet G. Sullivan will determine whether the Henderson, Texas-based credit union succeeds in blocking the liquidation. NCUA liquidated the $836,638 asset credit union on Aug. 3. Three days later, the credit union filed its action in the U.S. District Court, seeking the injunction, according to court documents. The community development credit union is affiliated with the African-American fraternity, Kappa Alpha Psi and was established on Nov. 4, 2004 to serve fraternity members and affiliated organizations. On Dec. 31, said the credit union, its net worth ratio was 0.58% . NCUA requires a newer credit union to be "adequately capitalized" (at 6%) within 10 years of its charter, according to the complaint documents filed. The credit union said it saw a "significant drop" in its net worth ratio between 2007 and 2009 that "was attributable to 'full accrual' accounting and NCUA Corporate Stabilization assessments," referring to NCUA's plan for the corporate credit union system. NCUA told News Now that isn't what led to the liquidation action. "Kappa Alpha Psi FCU was never able to generate consistent operational profits; build its net worth position; maintain its records in a sound manner; grant quality loans; or adequately collect on delinquent loans," said McKechnie. "Those factors led to the involuntary liquidation action that the NCUA Board took" on Aug. 3. "Newly founded credit unions have 10 years to reach an adequate capital level, which is a 6% net worth ratio; however, Kappa Alpha Psi FCU has never been able to show it can reach that level of capitalization," he told News Now. "Pertinent regulations state that if a credit union does not have reasonable prospects for becoming adequately capitalized, the credit union is subject to a variety of possible administrative remedies, including involuntary liquidation," he added. At the time of liquidation, the credit union "was operating under a Published Letter of Understanding and Agreement. NCUA has spent considerable time and resources in an attempt to help the credit union to achieve adequate capitalization; unfortunately, the effort was not successful," McKechnie said, noting that "involuntary liquidation was deemed the most appropriate course of action."

Constitution Corporate OTTI charges at 2.8 M

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WALLINGFORD, Conn. (8/10/10)--Constitution Corporate FCU recorded other-than-temporary-impairment (OTTI) charges totaling $2.8 million for the first six months of 2010, according to its unaudited financial statements for June 30. Year-to-date net income for the Wallingford, Conn.-based corporate credit union was $639,000, including the OTTI charges. This compares with a net loss of $63.2 million recorded for the first six months of 2009. The corporate attributed the improvement in earnings to a $61.5 million decline in OTTI charges from $64.4 million in 2009. The National Credit Union Administration authorized Constitution Corporate to operate with special regulatory assistance under a "Prior Undivided Earnings Deficit" (PUED), which segregates the retained earnings deficit to capture permissible accumulated deficit position. The PUED is guaranteed by the National Credit Union Share Insurance Fund. Constitution ended 2009 with a PUED of $25.1 million, which was reduced to $24.5 million as of June 30, as a result of the net income recorded for 2010. Its portfolio ended 2009 with realized and unrealized losses totaling $337.3 million. That amount was reduced by 11.6% to $298.3 million as of June 30. The corporate said that market conditions had firmed, resulting in improved market prices from its independent third-party pricing service. Through June 30, OTTI charges on investments of $122 million on 48 investment positions and $33.9 million of depleted U.S. Central capital were recognized in earnings. Beginning in March, Constitution began experiencing actual losses of principal, totaling $3.7 million, on its residential mortgage related securities. These losses were experienced on two bonds deemed impaired by Constitution and on which OTTI already has been recorded. It is estimated that five bonds may incur actual credit losses during 2010, aggregating about $14 million. For the full report, use the link.

Teller shot escaping burglar injuries minor

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BATTLE CREEK, Mich. (8/10/10)--An American 1 CU teller was shot in the arm, and another employee was carjacked at gunpoint Saturday by a robber who broke into the building overnight and waited for employees to show up for work. When a teller arrived at the Battle Creek, Mich., branch of the $172.5 million-asset, Jackson, Mich-based credit union, he was accosted by a suspect who had a handgun (www.woodtv.com and The Enquirer Aug. 8). The teller then fled the credit union, but was shot in the arm by the suspect, the local media said. He was taken to a Battle Creek Hospital. His injuries were considered minor, said the local media. The burglar forced another employee arriving for work at the credit union out of her vehicle at gunpoint. The suspect then fled in her vehicle. Police later found it nearby, the local media said. The FBI and local authorities are investigating.

Palisades FCU offers summer skip payment program

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PEARL RIVER, N.Y. (8/10/10)--Palisades FCU (PFCU) announced it is again offering its “Skip-A-Pay” program, in which members can skip their summer loan payments. The program debuted in 2008. Members who have PFCU loans and are in good standing can “opt-in” to skip up to two months of their loan payments. The designated months are August and September. Members have the choice to skip both months, one month or none (PR Newswire Aug. 4). “Not only are we helping our members, but we also are helping to stimulate the still- unstable economy,” said Palisades Chief Operating Officer Sean Jelen. “By allowing members to skip loan payments, we give them the ability to spend money during a time when they might not have been able to.” The program does not charge a fee. “We wouldn’t want to reduce the impact by adding a fee in order to skip,” Jelen said. “We enjoy being able to give our members a break on their payments. They deserve it.”

NYIB Network honors volunteer delegate of year

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MADISON, Wis. (8/10/10)--Professionals, including two chosen for exemplary work in youth marketing, youth education and leadership development, were recognized at the National Youth Involvement Board’s (NYIB) 2010 Annual Conference in late July in St. Louis. NYIB named Cynthia Campbell as the 2009 Delegate of the Year. Campbell, associate vice president of financial empowerment at Tinker FCU, Tinker AFB, Okla., serves on the Oklahoma Jump$tart Coalition Personal Finance Board, Council on Economic Education Board, and the Family and Consumer Science Curriculum Committee. She also is chair and co-founder of the Credit Union Association of Oklahoma Financial Literacy Council. “We put in our five-year plan what we thought was an audacious goal of reaching 500 to 600 students per month … Cynthia came on board and had almost doubled that,” said Tinker FCU President/CEO Michael Kloiber. Last year, Campbell reached more than 10,000 students and fulfilled numerous speaker requests at credit unions and financial education conferences. NYIB’s Outstanding Volunteer of the Year is Elda Olvera, financial supervisor at Randolph-Brooks FCU, Universal City, Texas, and a member of the NYIB network. In addition to averaging more than 260 presentations to over 4,100 students each of the past two years, she facilitates peer exchange through the NYIB list serve and uses social media. Olvera is credited with helping Randolph-Brooks FCU win its second Texas Credit Union Foundation FOCUS Award in 2010. She played a major role in designing, preparing and facilitating the credit union’s community “fiscal fitness day” for high school students and their parents. She also serves on a Judson Adult and Community Education Advisory Council, helping to improve the quality of life in the community through education. NYIB is accepting nominees for its 2010 recognition including the Delegate and Volunteer of the Year, and for scholarships to attend its NYIB Annual Conference, National Credit Union Foundation Development Education Training, and the World Council of Credit Unions Young Credit Union People Program. For more information, use the link.

Keesler to open Mississippis first student-run branch

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BILOXI, Miss. (8/10/10)--Keesler FCU is establishing a student-run branch at Biloxi (Miss.) High School, the first in-school branch in Mississippi, said the credit union. The branch, named Biloxi Indian CU, will be operated by five student tellers and supervised by a full-time Keesler FCU employee. The ribbon cutting ceremony was Monday (TheSunHerald.com Aug. 8 and WLOX Aug. 9). The $1.8 billion asset Keesler has worked with several high schools across the Mississippi coast the past decade, teaching students about finances. It developed its Money Talks program at Biloxi High. Money Talks is a four-week after-school program offered one or two times a semester, Sharon Keller, vice president of marketing, told The Sun Herald. The student-run branch, located in a converted classroom, will be open during students' lunch hour, 10:45 a.m. to 11:45 a.m., on school days. The tellers are seniors enrolled in Keesler's MoneyTalks Program. They also attended orientation and teller training. In lieu of wages, they earn course credit and community service hours.

Conn. CUs meet with Rep. Himes on MBLs

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MERIDEN, Conn. (8/10/10)--The Credit Union League of Connecticut and representatives from a dozen Connecticut credit unions met with U.S. Rep. Jim Himes (D-Conn.), who provided an insider’s update on congressional bills of importance to credit unions, including member business loans, job creation and the interchange fee issue.
Click to view larger image Tony Emerson (right), president/CEO of the Credit Union League of Connecticut, shares a point Thursday with U.S. Rep. Jim Himes (D-Conn.), who spoke in Bridgeport, Conn., about legislative issues important to credit unions. (Photo provided by The Credit Union League of Connecticut)
The league met Thursday with Himes, a member of the House Financial Services Committee, at a luncheon in Bridgeport, Conn. “Creating jobs rates high importance today,” Himes said. “Most jobs will come from small businesses, not the large corporations. We need to focus on enhancing the small business loan, particularly from credit unions, and raise the percentage cap. This is what will help create jobs and work toward improving the economy.” The luncheon was part of the league’s providing “year-round opportunities to build on relationships with legislators at periodic forums,” said Kelly Fuhlbrigge, Connecticut league vice president-government relations. “These exchanges also provide legislators with the credit union perspective on important issues.”

CU System briefs (08/09/2010)

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* SACRAMENTO, Calif. (8/10/10)--The California Department of Financial Institutions (DFI) has approved two mergers of credit unions, according to its Monthly Bulletin for July. Palo Alto Community FCU, a $12.8 million asset credit union in Palo Alto, will merge with and into San Mateo CU, a $585 million asset credit union based in Redwood City. Postal Credit Union of Northern California, a $6.8 million asset credit union based in Castro Valley, will merge with and into San Jose-based Pacific Postal CU, a $243 million asset credit union ... * GREENSBORO, N.C. (8/10/10)--The North Carolina Credit Union League has cancelled its credit unions' Hike the Hill scheduled for next month in Washington, D.C., so credit unions can focus on the upcoming elections. Congress has few working days left in its current session and is reluctant to tackle contentious issues before an election, the league said in its Weekly Update Friday. "It is unlikely that issues of major importance to credit unions will be considered, the league said. However, it will continue to monitor events in the nation's capital closely and keep its credit unions informed, the league said. The Credit Union National Association (CUNA) is urging credit unions to keep pushing their position on raising the member business lending cap to 27.5% from 12.25% of assets with their representatives in their districts. CUNA backs adding MBL language to a small business jobs bill currently pending in the U.S. Senate. The Senate returns to session Sept. 13 ...