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Wis. CU receives 1.6M to help struggling families

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MILWAUKEE (9/10/10)--Brewery CU in Milwaukee found out this month that it will be receiving more than $1.6 million in federal funds--a $600,000 grant and $1 million in secondary capital at a 2% interest rate--for eight years to help struggling families, according to the Wisconsin Credit Union League. The $32.4 million-asset Brewery CU was among 180 community development financial institutions (CDFIs) nationwide-- 20 were credit unions--which received financial assistance in August as part of the U.S. Department of the Treasury’s CDFI Fund. The fund was created in the 1980s to administer federal help to financial institutions tackling the challenging work of community development (The League News Sept. 8). “It was just the help we needed to continue doing what most other financial institutions don’t even attempt, and that is to help families that have nowhere else to go during challenging financial times,” Brewery CU president/CEO Jim Schrimpf, told the league. A large number of the credit union’s members--about 55% of whom come from low-income designated zip codes--lost their jobs during the past two years and were struggling to make payments on their loans and mortgages with Brewery and other lenders, he added. The credit union had been doing all it could to help them by modifying loan terms, for example. However, the credit union felt it was hitting the wall in terms of how much help it could extend or for how long. The infusion of $500,000 to the loan loss reserve will allow Brewery CU to continue to lend to its target market at competitive terms and rates. Part of the CDFI grant will be put toward Individual Development Accounts--matched savings accounts that he says will help as many as 40 families achieve homeownership, Schrimpf said. All of these funds, Schrimpf added, are just the latest his credit union has qualified for and received after becoming a low-income credit union, as designated by the National Credit Union Administration, and a CDFI, as designated by the U.S. Treasury. Brewery’s Finance Manager, Mikal Gilliat, completed Brewery’s CDFI grant application with the help of fellow graduates of the National Credit Union Foundation’s Development Education (DE) program, which he describes as a credit union philosophy immersion program. “DEs from around the country really supported us. I can’t thank them enough,” Gilliat told the league. “The entire DE experience focuses on the need for credit unions to challenge themselves to do what for-profit lenders won’t in how they serve individuals, families and communities. So going after these grants was just an extension of the commitment our credit union has always had for how we serve our members.” While credit unions hold only a 10% market share for financial services in Wisconsin, they operate 40% of all financial branches in low-income areas. About 94% of banks have no branches in these areas, according to the Credit Union National Association. The National Federation of Community Development Credit Unions, representative to the majority of the 192 CDFI certified credit unions, reports that since its inception in 1986, the CDFI Fund has provided more than $100 million in grants to credit unions serving economically distressed communities.

Mich. Ohio league presidents keep MBL drive in media

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MADISON, Wis. (9/13/10)--The presidents of the Michigan and Ohio credit union leagues recently wrote in support of credit unions’ member business lending (MBL) in letters to newspapers. “Small businesses, the lifeblood of job growth in Michigan and across the country, are being squeezed from all directions,” David Adams, president/CEO of the Michigan Credit Union League, wrote in a Wednesday letter to the Detroit Free Press. “It has been particularly tough to get loans. But credit unions are in a unique position to make loans to help small businesses turn things around.” Pending legislation in Congress would allow credit unions to “lend more than $10 billion, and could create more than 100,000 jobs,” Adams added. “The bill would allow credit unions to lend as much as 27.5% of its assets, compared with a current cap of 12.25%. Further, there is no cost to taxpayers if this authority is granted. “Building a new, vibrant Michigan will take cooperation from public and private sectors, but the most important factor is small-business growth,” Adams wrote. “Credit unions can't meet all the business borrowing needs of our economy, but we can be an important resource, especially for the small-business community.” Increasing credit unions’ MBL can boost job growth in Ohio, wrote Paul L. Mercer, president of the Ohio Credit Union League, in a Friday letter to the Chillicothe Gazette. “The opportunity to pump $225 million into Ohio small businesses and create more than 2,400 new Ohio jobs--with no cost to taxpayers--rests in the hands of the U.S. Senate,” Mercer wrote. “The ability to increase lending during turbulent economic times is thanks to excellent stewardship and vigilance by Ohio credit union leaders,” he added. “The average delinquency ratio at an Ohio credit union is 1.36%, far below that of Ohio banks. “Let's give small businesses a leg-up and spur job growth in our state.” he concluded. “… It is a small-business stimulus package that doesn’t cost Ohio taxpayers a cent.” To read the letters, use the links.

CU System briefs (09/10/2010)

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* BATON ROUGE, La. (9/13/10)--Neighbors FCU, Baton Rouge, La., opened an in-school branch last week at a local high school. The credit union will train a new group of students each semester to run the credit union, said The Baton Rouge Advocate (Sept. 9). Students will receive certification that they have taken a banking curriculum, the newspaper said. Six students are operating the credit union. The office has two teller stations, with computers and security cameras. A Neighbors FCU employee will be on-site to overview the operation. Neighbors has $445 million in assets ... * TUCSON, Ariz. (9/13/10)--A woman between the ages of 60 and 70 robbed Tucson (Ariz.) FCU Aug. 28, according to The Arizona Daily Star (Aug. 29). A woman walked into the credit union and handed the teller a robbery note. She left with an unknown amount of money and was seen getting into a white 2000 Hyundai Tiburon. She used a handgun during the robbery, which is being investigated by a local sheriff’s department. Tucson FCU has $291 million in assets ... * CLEVELAND, Ohio (9/13/10)--Peter Corrigan Sr., former treasurer and manager of Firefighters Community CU, Cleveland, Ohio, died Sept. 6. Corrigan, 84, was a retired firefighter for the city of Cleveland. Firefighters Community CU has $176 million in assets ...

HELOC wire fraud increases significant

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MADISON, Wis. (9/13/10)--Credit unions nationwide are reporting another round of wire/Home Equity Line of Credit (HELOC) fraud, according to a July 29 Risk Alert from CUNA Mutual Group. There are several steps credit unions can take to mitigate risk. CUNA Mutual said that in most cases, the fraudster “hijacked” member home phone numbers by impersonating the member and requesting that the member’s telephone carrier forward all calls to the fraudster’s untraceable cell phone. In a recent case, the fraudster cited flooding problems as the reason for requesting the home phone to be forwarded. In other cases, fraudsters were successful in having the member’s phone number on the account changed on the credit union’s system. Both methods resulted in a positive confirmation of the wire during the callback verification, CUNA Mutual said. Perpetrators have targeted members with large lines of credit via HELOC loans, said Gary Pate, CUNA Mutual director of insurance compliance and risk management. The perpetrator sends a fax or email requesting the credit union process a funds/wire transfer. Usually, the transfer requests are received at credit unions with call centers. “What’s making these scams even more insidious is that the credit union's caller ID indicates the call is going to the member's number of record,” Pate said. “Additionally, the fraudsters have detailed member information, which is enabling them to answer additional challenge questions from credit union staff.” Credit unions should consider requiring members to request large dollar wire transfers in-person at a branch office, which is a common practice in the financial services industry. CUNA Mutual Group said it supports this position. Some risk mitigation recommendations:
* Establish a monetary threshold for requiring wire transfer requests to be made in-person; * Encourage members to add a password to their account; * Review member account details to determine if large dollar wire transfers are “reasonable” for the member. If not, require the member to make the wire transfer request in-person; * For large dollar wire transfer requests, check the member’s account to determine if there was a recent advance against the member’s HELOC to fund the wire. If a HELOC advance was made to fund the wire, require the member to make the request in-person; * Employees who perform callback verifications should always check the member’s account to ensure the phone number has not been changed in the past 30 days prior to performing the callback. This step should be added to the callback verification section of the credit union’s wire transfer form, or other form used to document callbacks made; * Adopt a series of strong out-of-wallet questions to be used during the callback verification; * Adopt a written wire transfer agreement with both consumer-members and business members in which both the credit union and member agree to a commercially reasonable security procedure that verifies payment orders submitted by the member. The written wire transfer agreement with business members should identify the business’ employees authorized to submit payment orders to the credit union on behalf of the business; and * Consider adding a fraud monitoring tool that is capable of monitoring transactions in real-time across all payment channels like checks, automated clearinghouse, wires, payment cards, as well as transactions initiated through the online banking system.

SECU signs statement of support for military employees

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RALEIGH, N.C. (9/13/10)--Roughly 300 managers of State Employees’ CU (SECU) branches and operations departments participated in a Statement of Support signing for the Employer Support of the Guard and Reserve (ESGR) program. The signing showed SECU’s continuing commitment to their employees serving in the military. Framed Statements of Support will hang in each SECU branch and department throughout North Carolina. The Statement of Support Program is ESGR’s national effort to gain and maintain employer support for reservists, by developing employers into advocates for employee participation in the military. For its employee-reservists, SECU offers one-week paid military leave annually, provides a pay differential when an employee is deployed and keeps the benefits of the soldiers active when they are mobilized. SECU personnel support their deployed co-workers by sending care packages and letters and assisting family members left behind during deployment. “SECU was very helpful and positive while preparing me for my 15-month tour to Iraq,” said Cathy Baker, a National Guard reservist and financial services officer. “They went over and beyond what they were required to do by law. “Months before I arrived home, Elizabeth [Fair, branch manager] took it upon herself to make sure that the two most important people in my life, my sons, were taken care of and ready for me to come home,” she added. She unselfishly supported me through the entire deployment. It was important to her to have my boys there, along with herself, to surprise me when I returned home. I arrived to posters, flowers, flags, warm faces and big hugs. I felt truly missed and an important member of the team here at the Benson branch.” SECU waives ATM fees for deployed soldiers, and has undertaken many National Guard initiatives, said Jim Barber, SECU board chair. “This landmark ESGR Statement of Support signing really brings home the magnitude of SECU’s commitment to our own employee-reservists, our appreciation for their sacrifice, and our commitment to all our member-soldiers overseas,” Barber added. SECU, Raleigh, N.C., has $21 billion in assets.

WOCCU loans bolster Sri Lanka farmers revenues

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COLOMBO, Sri Lanka (9/13/10)—The World Council of Credit Unions (WOCCU) has helped small-scale farmers in Sri Lanka increase their revenues by up to 71% by developing an agricultural lending program that combines lending with technical assistance and market relationships, and introduces higher-yield, higher-profit rice varieties for farmers.
Shirani Somalatha, pictured above with her husband, joined Women’s Co-op's agricultural lending program in Sri Lanka--established by the World Council of Credit Unions, after a drought drastically reduced her family’s rice harvest. The following year, the family increased its yield by 86%, Shirani repaid her loan in full and was able to deposit about US$1,000 into savings. (Photo provided by the World Council of Credit Unions)
WOCCU established the agricultural lending program in Sri Lanka’s north-central region with 10 branches of Women’s Development Services Co-operative Society Limited (Women's Co-op), a credit union owned and operated entirely by and for women. With funding from the U.S. Department of Agriculture, WOCCU worked with Women’s Co-op to develop the robust agricultural lending program and disburse the first batch of loans totaling US$36,000 to 192 member farmers in November 2009. After a successful season, Women’s Co-op lent an additional US$105,000 to 309 farmers in May 2010. Suresh Wijesinghe, deputy director of WOCCU’s program in Sri Lanka, stressed the value and positive economic impact of the agricultural lending program in the lives of Women's Co-op members during a session at a U.S. Overseas Cooperative Development Council conference in May. Women’s Co-op members have improved agricultural production technology and found new market relationships and financing through value chains, a series of entities that take a crop from field to market, Wijesinghe said. “Women's Co-op members are improving their lives through the credit union's services, from group lending to insurance to health and education services,” Wijesinghe added. “The agricultural lending program is being rolled out on a pilot basis in four [now 10] of the branches, with the plan to expand to all branches so that all members can benefit.” WOCCU’s Sri Lanka program has contracted CIC Agribusinesses, a national agribusiness company, to provide technical training and farm inputs to farmer groups before the seed is sown. The company offers premium prices for several rice varieties, particularly for a proprietary variety of red basmati. With the program coming to a close next year, WOCCU is working with Women's Co-op to appropriately factor the cost of the farmers’ long-term technical assistance into the price of their loans and develop purchase agreements with CIC Agribusinesses for farmers in the north-central region. “Many of the rural poor continue to face economic challenges not only because they lack access to finance but because they are isolated from markets,” said Brian Branch, WOCCU executive vice president and chief operating officer. “They do not have information about crop demand and product prices, and they do not have established relationships with input suppliers or end buyers. The Sri Lanka program bridges those gaps by connecting producers with market opportunities, as well as financing, so that they can increase their income and assets.” Shirani Somalatha, a rice farmer and Women’s Co-op member in the Polonnaruwa region of Sri Lanka, is one of many who have reaped benefits from the program. In early 2009, the region was hit by a drought, substantially reducing her family’s harvest. Later that year, Somalatha was elected as a member of the credit union’s branch agricultural committee and received training from WOCCU and CIC Agribusinesses on farming techniques and technologies, fertilization, pest control and farm planning. She then joined the agricultural lending program to receive financing and begin implementing new farming practices on her fields. Somalatha took out a seasonal loan of 50,000 rupees (US$435) to purchase seeds for new high-yield rice varieties and pesticides and to prepare the land, harvest and process the rice from her family's two-hectare (five-acre) farm. At harvest, her new crop yielded 13,000 kilos, and with an established buyer, she received about 50% higher than the average market price. With the earnings from just one season, Somalatha was able to pay back her loan and deposit 123,000 rupees (US$1,075) into a savings account at the Women’s Co-op.

Nueva Esperanza to open in several weeks

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TOLEDO (9/13/10)--Nueva Esperanza, or New Hope Community CU, is slated to open within the next several weeks as the state’s first Latino credit union. The credit union could be in its own building by the end of the year, said The Toledo Blade (Sept. 10). The state-chartered credit union is first credit union chartered in Ohio since 2001. The credit union is expected to have $1.3 million in deposits and $180,000 in start-up capital. It will serve members in Toledo’s Old South End. Besides Charter Bank, there is no financial institution in the neighborhood, Jessica Hernandez, vice president, told the newspaper. There are a lot of unbanked Latinos in the area, and they are not familiar with the services a credit union can offer them, she added. The credit union has received funding from several local and community foundations, and the Ohio Credit Union Foundation and the National Credit Union Foundation. Credit union leaders have raised funds to open the credit union for several years.