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Business checking survey says CUs have lower costs

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CHICAGO (9/11/09)--Small businesses will find lower checking account costs at credit unions and community banks, according to a national survey conducted by Moebs Services, an economic research firm, based in Lake Forest, Ill. “… Large banks try to protect loss of business, especially small business, and community banks and credit unions try to take as much market share as they can get,” Moebs said (Business Wire via Reuters Sept. 9). Evidence of a potential market move is reflected in the minimum balance to avoid a fee, with the large banks almost doubling from $1,250 in 2008 to $2,250 in 2009, while credit unions and community banks stayed the same at $500 and $1,000 respectively, the Moebs survey indicated. “Main Street institutions definitely offer a better pricing deal than the big Wall Street banks,” Moebs said. “In these hard economic times, businesses should seek the better deal.” For more information, use the link.

CUNA says NCRC report on CU lending flawed

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MADISON, Wis. (9/11/09)--The Credit Union National Association (CUNA) says a National Community Reinvestment Coalition (NCRC) report unfavorably comparing credit union lending practices to that of banks is flawed and should be dismissed by policymakers. The NCRC analyzed Home Mortgage Disclosure Act (HMDA) data for credit unions and banks. The report claims that credit unions lag behind banks on 64% of the fair lending indicators examined and concludes that credit unions should therefore be placed under Community Reinvestment Act (CRA) rules. “While we haven’t concluded our evaluation, it’s clear that the NCRC report isn’t worth the paper it’s printed on,” Mike Schenk, CUNA vice president of economics and statistics, told News Now. There are a handful of obvious fatal flaws in the NCRC analysis, Schenk said. First, NCRC acknowledges but makes no attempt to statistically adjust for the fact that credit unions and banks--from a legal standpoint--cannot serve the same groups of people. “Banks and thrifts can serve anyone. But one-third of credit unions serving 20% of all credit union members have single-group occupational charters,” Schenk explained. “By definition, credit union membership fields cannot and will not perfectly reflect the income or racial make-up of the geographic community in which they are located,” he added. “While it’s true that about one-quarter of credit unions have community charters, many of these institutions have just recently converted to the wider charter. What does the NCRC analysis do to account for these fundamental differences? Nothing.” A second flaw in the NCRC analysis is that it focuses only on “prime” loans--a glaring oversight for a study that presumes to gauge the effectiveness of lending to lower-income individuals, Schenk said. A third flaw is that the NCRC study uses “disparity ratios” to measure lender effectiveness, he said. Disparity ratios are esentially statistics that are attained by dividing a denial (or approval) rate for a target group (e.g., low-income people) by the denial (or approval) rate for all other applicants. “But disparity ratios are a horrible metric--they simply do not measure lender effectiveness,” Schenk added. “For example, using disparity ratios, NCRC’s 2007 analysis finds that banks outperform credit unions in 23 of 42 disparity metrics they published,” he said. “But, the underlying data NCRC used to produce these disparity ratios clearly shows that credit unions outperform banks: it shows that credit unions approve mortgage loan applications at higher rates--usually much higher rates--and they deny applications at lower rates-- usually much lower rates--compared to banks. “This is true in almost every single demographic group analyzed, among every loan type analyzed and across each of the three years of data it analyzed,” Schenk added. Specifically, looking at 2007 approval and denial rates, NCRC data shows that credit unions outperform banks in 64 out of 72 of these metrics--89% of the total, Schenk said. “Of course, NCRC benefits directly and indirectly when it increases the number of institutions that are subject to CRA,” Schenk explained. “Many of its member organizations receive significant funding from banks as part of the banks’ CRA investment obligations. In addition, the NCRC has formed a strategic partnership with the nation’s ‘top banks.’ “It would not surprise me if these considerations influenced the study’s methods and conclusions,” he added.

MACUA CEO resigns

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BISMARCK, N.D. (9/11/09)--Tony Richards, president/CEO of Mid-America Credit Union Association (MACUA), has resigned, effective immediately. The MACUA board plans to explore a full range of options in searching for a successor. In the interim, Stephanie Merrill, vice president of human resources and administration; Karla Clark, chief financial officer; and Jeff Olson, political affairs and public relations director; will assist in overseeing the operations of the association. Headquartered in Bismarck, N.D., MACUA serves 86 credit unions in North and South Dakota, with 422,000 members and assets of more than $3.8 billion.

Federation graduates 13 students at CDCU Institute

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MADISON, Wis. (9/11/09)--The National Federation of Community Development Credit Unions recently celebrated the 10th anniversary of its Community Development Credit Union (CDCU) Institute with the graduation of 13 students in the Institute's ninth graduating class Aug. 14, in Madison, Wis. Developed in partnership with Southern New Hampshire University's School of Community Economic Development and with support from the Credit Union National Association (CUNA), the CDCU Institute is a training program for the board and staff of CDCUs and other credit unions interested in serving low-income and underserved communities more effectively. "The current economic environment has been especially challenging for credit unions serving low- and moderate-income people,” said Pamela Owens, Federation director of education and training. “With credit union resources stretched to the limit, it will be the best trained credit unions that are able to take advantage of the growth opportunities around them.” This year’s graduates include:
* Cecil Anderson, Central Oklahoma FCU, Davenport, Okla.; * Kathie Black, Inspire Community Development FCU, Battle Creek, Mich.; * Winston Brumfield, AME Church FCU, Baton Rouge, La.; * Thom Dellwo, Cooperative Federal CU, Syracuse, N.Y.; * Nathan Farrior, Generations Community CU, Durham, N.C.; * Cindy Harrison, Straits Area FCU, Cheboygan, Mich.; * Brenda Kyser, Triumph Baptist FCU, Philadelphia, Pa.; * Vanessa Lowe, National Credit Union Administration, Alexandria, Va.; * Regina Martin, AME Church FCU, New Orleans, La.; * Frances Morris, Citizens Choice FCU, Natchez, Miss.; * Permelia Murphy, Citizens Choice FCU, Natchez, Miss.; * Stacey Woiderski, Straits Area FCU, Cheboygan, Mich.; and * DeAndre L. Zachery, Shreveport FCU, Shreveport, La.

Michigan CU loan business fueled by autos

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LANSING, Mich. (9/11/09)--Michigan credit unions experienced growth in the auto-lending market with an 8.5% increase in new loans in the second quarter, which equates to $2.2 billion in auto-loan balances as of June 30, according to the Michigan Credit Union League (MCUL). This represents a record 32% increase in new-vehicle loans from June 2008 to June 2009. The growth coincides with the launch of the “Invest in America” program in December, which offers credit union members discounts on select General Motors (GM) and Chrysler products, and low-cost financing. The “Invest in America” member discounts are helping the domestic automakers during a critical time when credit is tight. It’s also helping to promote “buy American” which is on the minds of most Americans right now, MCUL said. “More than 200 credit unions statewide have stepped in to fill the void in auto lending,” said David Adams, MCUL CEO. “Credit unions are financially stable, increasing members’ savings deposits, and supporting their members and Michigan’s auto companies by making the loans that put new and used cars on the road. “The ‘Invest in America’ program has strengthened credit union relationships with auto dealers and shown the importance of buying American,” he added. “This is not just about market share; it’s about credit unions helping the auto industry, jobs and our economy.” “Invest in America” has facilitated more than 190,000 new-vehicle purchases for GM and Chrysler nationwide since January. The program has resonated with Michigan car buyers as the Detroit automakers work to reestablish market share, the league said. By offering a discount on a new GM or Chrysler vehicle, the program encourages Michigan’s 4.4 million credit union members to buy American-made products and support local jobs. By offering lower rates than competing lenders, the program prompts members to finance their purchase through their credit union. The average new-car loan rate from a credit union is lower--at 5.8%--than bank rates at 7%, according to Datatrac July 2009 data. Used-car loans increased 14% from June 2008 to June 2009, and small-business loans grew 17% over the same time period. The momentum continued into the third quarter of 2009, as Michigan credit unions increased their market share of new- and used-car loans to 36% on July 31 from 23% on July 31, 2008. This is the highest market-share increase of the 20 most populous states, the league said. Reflecting the trend in the broader economy, credit union savings deposits grew by 2.5% in the second quarter. This represents the strongest growth rate in six years. Overall credit union loans also are on the rise with an increase of 1.6% in the second quarter. This represents a 12-month growth rate of 5.8%--the highest since 2005.

SECU gives 250000 challenge grant to library

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RALEIGH, N.C. (9/11/09)--State Employees’ Credit Union (SECU) members via the SECU Foundation have given a $250,000 challenge grant to a library in Jackson County, N.C. The grant will allow the Friends of the Library to complete the fundraising goal needed for the construction of the 20,000-square-foot library, which will be located next to the recently restored, historical Jackson County Courthouse. The SECU Foundation partnered with the non-profit Friends of the Jackson County Main Library to provide services to citizens in Macon, Swain and Haywood counties. The complex also will benefit the local university and community college and other regional libraries. “The $250,000 challenge grant is a strong incentive for our community to reach the $1.6 million we need to complete the new library complex,” said June Smith, Friends president. “For every dollar given to the New Library Fund, the SECU Foundation will match it up to $250,000.” SECU, located in Raleigh, N.C., has $18 billion in assets.

Today is the last day for early-bird ICU Day pricing

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MADISON, Wis. (9/11/09)--Today is the last day for credit unions to receive early-bird pricing on International Credit Union (ICU) Day materials. ICU Day, which will take place Oct. 15, was established by the Credit Union National Association (CUNA) in 1948 to celebrate the international credit union movement. This year’s theme is “Your Money, Your Choice, Your Credit Union.” Credit unions can order materials such as posters, balloons, pens, buttons and shirts to celebrate ICU Day. Several credit unions have shared their ICU Day plans:
* Ever-Green CU in Liberia, West Africa, will celebrate ICU Day with a membership drive, clean-up stress campaign, and a lecture on what makes credit unions different from other financial institutions at local schools; * Seattle Metropolitan CU in Washington will hand out “Intentionally Left Bank” shirts for its “Intentionally Left Bank” marketing campaign; * Wichita FCU, Kan., will have its annual picnic. Employees will wear ICU Day buttons and give away Skittles candy; and * Good Shepherd Parish CU in Ghana, Africa, will host an educational campaign to attract more members. The credit union also will have clean-up activities in conjunction with the youth of Good Shepherd Catholic Church in Ghana.