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CU System

Iowa Lottery CEO, BIG Dream Organizer To Keynote Iowa CU Convention

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DES MOINES, Iowa (9/16/13)--The annual Iowa Credit Union Convention will take place Wednesday through Friday in Des Moines at the Community Choice Credit Union Convention Center, according to the Iowa Credit Union League.
 
More than 500 credit union CEOs, directors, executive staff, guests and vendors are expected to attend the conference, which is themed "New Thinking, New Possibilities" and will focus on sparking innovative change in the industry.
 
Gov. Terry Branstad and Lt. Gov. Kim Reynolds will welcome attendees on Thursday. Entrepreneur Mitch Matthews, opening keynoter, will share the story behind BIG Dream Gathering and teach attendees to dream bigger and achieve more for the benefit of the credit union industry.
 
Terry Rich, CEO/president of the Iowa Lottery and Friday's closing keynote speaker, will discuss taking risks, the formula for successful innovation and the practical applications for success.
 
The convention will offer 14 breakout educational sessions covering topics such as healthcare reform, proactive lending strategies for growth, cooperative marketing, the economic outlook and more.
 
Proceeds from the Iowa Credit Union Foundation's Benefit Night trivia competition Thursday will be used to fulfill the foundation's mission of helping Iowans build wealth, responsibility and independence.  For real-time updates, follow the convention hashtag at #IACUConv.

CU System Briefs (09/16/2013)

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  • DAVENPORT, Iowa (9/16/13)--Kelly Taylor, 52, of Davenport, Iowa, was sentenced Thursday in a U.S. District Court there to one year plus one day in prison on fraud charges stemming from a $500,000 check-kiting scheme. Taylor had pleaded guilty to bank fraud, which occurred at Scott Schools CU between Aug. 28, 2012 and January (Houston Chronicle via chron.com and Quad City Times Sept. 13). As a result of the theft, Scott Schools, a small credit union that served school districts in eight counties of Iowa and Illinois, merged into Bettendorf, Iowa-based Ascentra CU on July 1, said the Times. Taylor allegedly wrote checks on a business account she and her husband had at the credit union and deposited them into their personal account at the credit union, without sufficient funds in the business account. She then wrote checks from the personal account and deposited them in the business account, also without sufficient funds ...
  • RALEIGH, N.C. (9/16/13)--State Employees' CU, based in Raleigh, N.C., today will kick off its fourth annual SECU Supports the Troops campaign, which will run through Oct. 31. All of SECU's 250 branches in the state will collect "wish list" items to provide holiday care packages for North Carolina deployed soldiers. As with its previous campaigns, SECU's goal is to pack 5,000 gift boxes with toiletries, first aid items and snacks, as well as thank you cards and letters from local school children expressing words of encouragement. The cards and letters are a big hit with the soldiers. "What a lift it was to a very tired group of girls and guys when all of the care packages came in after a hard day's work," wrote William Crouch, master sergeant in the U.S. Air Force, in a note of appreciation for packages received by his unit last year. "I've never seen so many grown-ups so excited to read the letters included in the boxes. Everyone was on cloud nine--the gift boxes were a great lift to everyone's spirits." SECU also will accept monetary donations to assist with shipping costs ...

Kansas Court Rejects RBS Arguments In NCUA RMBS Lawsuit

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KANSAS CITY, Kan. (9/16/13)--A U.S. District Judge in Kansas has rejected three arguments made by RBS Securities in a motion to dismiss the National Credit Union Administration's lawsuit over losses from residential mortgage-backed securities (RMBS) sold to U.S. Central FCU.
 
The suit centers on losses related to 20 offerings involving 29 RMBS or certificates sold by RBS to U.S. Central, which no longer exists. The agency filed the lawsuit--one of nine similar lawsuits against RMBS brokers who sold securities to U.S. Central and four other corporate credit unions prior to 2008--as the corporate credit union's liquidating agent.
 
A previous judge had dismissed NCUA's claims in part but also allowed NCUA to file an amended complaint. NCUA amended its complaint and the matter is now before U.S. District Judge John W. Lungstrum, who filed the ruling Thursday.
 
In ruling not to dismiss the lawsuit, the judge denied three RBS arguments:
 
1.  NCUA lacked detailed, originator-specific information in its allegations that the originators of the loans underlying the RMBS "systematically abandoned underwriting guidelines" and misrepresented the certificates.  NCUA's amended complaint is based on a "forensic analysis of 13,708 loans from the six dismissed offerings, average loan-to-value (LTV) and owner-occupancy ratios" and allege they were "significantly understated and thus misrepresented."
 
Thursday's ruling noted that NCUA's "forensic analysis, based on the particular loans underlying the six dismissed offerings, support a plausible claim of misrepresentations involving the LTV and owner-occupancy ratios. Not only are those alleged misrepresentations independently actionable, they provide a connection to the particular certificates at issue and thus support a plausible claim based on the abandonment of underwriting guidelines. That is true for claims based on these six offerings, even without originator-specific allegations." 
 
2. RBS couldn't be held liable for merely repeating misrepresentations by borrowers on the underlying loans. NCUA had alleged that owner-occupancy ratios were misrepresented. The court rejected RBS's argument, saying it was adopting an analysis made in a similar lawsuit that  NCUA brought against another securities broker, Credit Suisse.
 
3.  NCUA's allegations of actual losses exceeding expected losses were "implausible." Lungstrum ruled that "although (NCUA) has not changed its figures and graphs, the amended complaint now makes clear that the 'actual loss' and 'expected loss' used for comparison for each certificate actually represent 'actual gross loss' and 'expected gross loss,' in the sense that they refer to the amount of principal remaining on the defaulted loans prior to any recovery through a foreclosure sale."  The clarification shows NCUA "has actually compared gross, pre-recovery default figures, and not post-recovery figures as indicated in the original complaint."
 
The court went on to say that NCUA's use of "loss" in the context may be misleading, but "nevertheless, the court agrees with (NCUA) that the fact that actual defaults exceeded expected defaults within a short time after issuance has relevance. Although such evidence may not be as strong as a surge in actual over expected losses, it nevertheless does support the inference that the loans were not underwritten properly."
 
The court also did not buy RBS's allegations that changing the comparison of losses to a comparison of defaults weakened NCUA's allegations.

CUNA's Social Media Continue To Attract New Visitors

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WASHINGTON (9/16/13)--A Smarter Choice, the website launched by the Credit Union National Association and leagues to help consumers find a credit union to join, racked up 167,105 visitors during the first eight months of 2013 and continued to attract new visitors to asmarterchoice.org.
 
That total involved 135,270 "unique" visitors, 80.1% of whom are new visitors to the site. Nearly one in five visitors is a repeat visitor, said CUNA.
 
The site benefitted from credit unions' increasing visibility in the press. Mentions of A Smarter Choice in the media influenced some viewers to visit the site. For example, on June 10th, a mention of A Smarter Choice on "Good Morning America" resulted in 3,019 visits alone.
 
A Smarter Choice, which does not pay others to promote  its content in tweets or as likes on Facebook, also is seeing success from these two social media outlets.  As of Aug. 31, A Smarter Choice had 7,122 likes on Facebook and it currently has 1,476 Twitter followers. Its Facebook fans are predominantly women (61%) and in the 35-to-54 age range (30%).
 
States generating the most visitors to the site were California, with 19,339 visits; New York, with 13,473, and Texas, with 10,158.  Eight other states--Washington, Florida, Illinois, Georgia, New Jersey, Pennsylvania and Oregon--brought between 5,000 and 10,000 visitors to A Smarter Choice.
 
To help prompt more visitors to return to the site more than once, CUNA is planning to update A Smarter Choice's content regularly through a blog that will highlight the credit union difference, encourage visitors to become credit union members, offer financial education, and spotlight credit unions' efforts and activities in their local communities.
 
"The updated content will give the press more opportunity to mention A Smarter Choice, which will drive more consumer traffic to the site and  help make more people aware of the great things that credit unions do for the community and their members," said Paul Gentile, CUNA's executive vice president of strategic communications and engagement.
 
"Making more people aware of the value of credit unions is a key goal of CUNA and the leagues' Unite for Good campaign," he added.
 
The Unite for Good campaign aims to rally credit unions to remove barriers, create awareness and foster service excellence so that Americans will choose credit unions as their best financial partner.

League Takes CU View To Maine Roundtable On Aging Population

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PORTLAND, Maine (9/16/13)--The Maine Credit Union League is presenting credit unions' viewpoint in a series of roundtables examining the challenges and opportunities Maine faces with its aging population. Speaker of the House Mark Eves  (D)  is conducting the roundtable discussions to address the issue.
 
"I am reaching out to leading voices in our state to invite them to join me at a series of roundtable meetings to focus and engage on the important topic of Maine's aging population," Eves said. "We have the opportunity to manage that change or let it manage us. The goal of these meetings is to create a shared understanding of the opportunities and challenges and move from awareness to action," he said (Weekly Update Sept. 13).
 
The Maine league was part of a group of organizations asked to appoint a representative to attend and participate in these discussions. Kyle Casburn, president/CEO of Seaboard FCU in Bucksport and a member of the league's board of directors, was selected to represent Maine's credit unions at the sessions. The first session was Tuesday in Augusta.
 
Charles Colgan, an economist at the University of Southern Maine's Muskie School, addressed the group and warned attendees that "labor costs will skyrocket if the state's leaders fail to entice more young people to move here."
 
"Speaker Eves assembled a diverse group from the business community, education, governmental agencies, law enforcement, healthcare and service providers," Casburn told the league. "Each group brought a unique perspective on issues, such as how to plan for a shrinking work force, recruiting younger people to move to Maine, and aging's impact on transportation, housing and caregiving.
 
"For credit unions, we have a particular interest in helping prevent elder abuse and financial fraud," Casburn added. "I shared the challenge of our members transitioning from net borrowers to net savers and how it will impact our income, and how the reduction in our pool of borrowers will make competition for loans even more severe in the coming years."
 
The remaining sessions will be held Oct. 1, 15 and 29, said the league.

CUs' Short-term Loan Program Saves Consumers $25M+

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HARRISBURG, Pa. (9/16/13)--Nearly 71,000 short-term loans have been issued in Pennsylvania though the Credit Union Better Choice since the program was launched in 2006, the Pennsylvania Credit Union Association reported.
 
Roughly, 67 participating credit unions issued 70,877 loans totaling more than $34 million since the program's inception, PCUA said. The program has saved borrowers about $25 million over using a traditional payday lending product.
 
"The ongoing growth in the number of loans issued is indicative that consumers still need an alternative to payday loans to meet their financial needs," said PCUA President/CEO Jim McCormack.
 
The Credit Union Better Choice loan is a payday lending alternative product through which credit unions offer borrowers a 90-day loan with a $500 limit.
 
Members use the loans for Christmas gifts, taxes, car repairs, heating fuel, and funeral expenses.
 
The program was developed through a collaboration of PCUA, the Pennsylvania Treasury Department and the Pennsylvania Department of Banking and Securities.
 
A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or about $450 over 90 days. A $500 Credit Union Better Choice. What's more, at the end of the loan term, the consumer has $50 in a savings account. The program builds the wealth-building component by providing financial education to help members make better informed financial decisions.
 
Pennsylvania consumers saved an average of 80 cents in loan fees and costs for every dollar borrowed through a Credit Union Better Choice loan rather than through a typical loan from a payday lender. That translates into more than $25 million consumers kept in their pockets by using the loans.

Several Colorado CUs Closed In Flash Floods

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BOULDER, Colo. (9/16/13)--Days of heavy rain and torrential flooding forced the closing Friday of several Boulder, Colo.-area credit unions.
 
Elevations CU and Boulder Municipal Employees FCU said they closed Friday and Premier Members FCU temporarily shut down three of its six branches. Boulder Valley CU closed two of its five branches.
 
The record-setting rainfall came from a storm system that soaked much of the West last week. Up to 10 inches fell in an area from the Wyoming border southward to the foothills west of Denver. Much of eastern and northern Colorado remained under a flash flood warning, meaning flooding was imminent or already reported, the National Weather Service said (USA TODAY Sept. 13).
 
"This is by and large a pretty dry climate, so managing that volume of rain is challenging," Dennis Paul, assistant vice president for business and community development at Elevations CU, told News Now. "What really put us through the ringer was the inability to navigate."
 
Most roads and intersections in the Boulder area were impassable by Wednesday, and the Boulder Office of Emergency Management advised local businesses to close.
 
"Our decision (to close) was driven by what professional and emergency response personnel were recommending," Paul said of Elevations' closing. "There is just a minimal amount of mobility right now in terms of roadways and intersections."
 
Above Boulder, mountain communities that experienced wildfires the past few years don't have vegetation to absorb the rain, a situation that exacerbates the flooding and adds debris to the mess, Paul said.
 
At least one Elevations employee's home experienced flood damage, he noted.

"We don't have a tally [of damages], but we spent Thursday afternoon bailing water out of her basement until they could get the sump pumps in place," Paul said.
 
The flooding, though more sporadic, has also affected areas around Denver and Boulder, Dan Finerty, director of marketing and communications at the Mountain West Credit Union Association, told News Now.
 
"It's really affected a lot of people," Finerty said. "Although the news reports focus on what happening in Boulder and Longmont, it's really hit the Denver metro area as well. Our staff has been affected and I'm sure credit union employees throughout the area have been affected."
 
Finerty said credit unions' representatives at a chapter meeting Thursday night in Denver were largely upbeat. "People said they were affected, but they were working to keep everything operational," Finerty said.

See News Now's related story, NCUA: Disaster Policy Now Active For Colo. Flooding, in today's issue.

Illinois In Top 10 States For Financial Ed Presentations

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NAPERVILLE, Ill. (9/16/13)--Illinois credit unions placed in the top 10 for the number of financial education presentations conducted and students reached during the 2012-13 school year, said the Illinois Credit Union League.

The results are based on data from the National Youth Involvement Board (NYIB).
 
In Illinois, 480 presentations were conducted with more than 18,500 students learning to manage their finances.
 
The top three Illinois credit unions that contributed in terms of presentations conducted were:
  • RIA FCU, Rock Island--88;
  • Alliant CU, Chicago--64; and
  • Abri CU, Romeoville--52.                                           
The top three Illinois credit unions in terms of students reached were:
  • Great Lakes CU, North Chicago--2,286;
  • Abri CU--2,231; and
  • First Illinois CU, Danville--1,951.
Overall, credit union financial educators reached nearly as many students as the previous year.  NYIB's data underscore credit unions' commitment to youth during the school year, when nearly 400,100 students were reached through more than 12,200 classroom presentations.
 
The NYIB is the only organization that collects classroom presentation data from credit unions nationwide each year. It tallies the number of financial education presentations conducted, specific topics discussed, and the number of students reached at each event--which helps provide regulators, legislators and others a valuable example of credit unions' philosophy at work.
 
Financial education is part of credit unions' efforts to raise awareness about credit unions. Fostering service excellence, removing barriers and raising awareness about the value credit unions provide their members and communities are the foundation for the Credit Union National Association's, state credit union leagues' and credit unions' Unite For Good campaign toward a vision in which Americans choose credit unions as their best financial provider.

How CUs Are Preparing For EMV

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DES MOINES, Iowa (9/16/13)--Credit unions and other clients of payments processor The Members Group (TMG) are readying their portfolios for the U.S. migration to the Europay, MasterCard and Visa (EMV) standard.

That development was broadcast live Wednesday in a podcast by Dan Lozier, TMG director of client relations.

EMV is a global standard for inter-operation of integrated circuit cards (IC cards) and IC card- capable point-of-sale terminals and ATMs, for authenticating credit and debit card transactions.

There are essentially three EMV implementation strategies TMG's clients are pursuing, said Lozier:
  1. Rolling out new EMV cards at the time of a natural reissue of the cards;
  2. Segmenting the portfolio, issuing EMV cards to select cardholders; and
  3. Continuing to monitor the EMV landscape before setting a defined plan.
Each of the three EMV implementation strategies is supported by TMG, said Georgann Smith, TMG vice president of marketing, and the podcast's host. The processor is consulting with clients individually to determine the best course of action for their portfolios.

Clients' EMV roadmaps are largely determined by the number of cardholders in a given portfolio who travel, Lozier said. Limiting fraud, however, is another motivating factor as the October 2015 liability shift nears.

The podcast, titled "How Your Colleagues are Preparing for EMV," is available for on-demand listening. Use the link.

TMG podcast topics currently in the library include:
  • A look at the future of compliance;
  • Trends in the prepaid cards market;
  • Data analytics for credit and debit card portfolios;
  • Where to place your bets in the digital-wallet space; and
  • How photo cards work to boost walletshare.
Financial institution leaders can access the free episodes anytime. They can also sign up for alerts on upcoming episodes by subscribing to TMG's channel at BlogTalkRadio. Use the link.

TMG creates customized, technology-driven card processing and payment solutions for credit unions and community-based financial institutions across North America.

Grassroots At Work: N.J., W.Va. Lawmakers Speak Out For Tax Status

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WASHINGTON (9/16/13)--Grassroots efforts by credit unions have resulted in members of Congress from New Jersey and West Virginia adding their voices to the growing chorus singing: Don't Tax My Credit Union.
 
For an example of how one credit union representative attending a Town Hall meeting brought up the issue of preserving credit unions' tax status--and U.S. Rep. Bill Pascrell's (D-N.J.) pro-credit union response--use the link to the C-span video.
 
In the video, XCEL FCU Director of Marketing Tom Quigley during a question-and-answer period at Pascrell's meeting told the congressman that "XCEL has 18,000 members and there are about are 1.3 million credit union members in New Jersey." He noted credit unions are trying to preserve their status, "and we're looking for your support" to maintain their exempt status "or we are literally out of business."
 
"Not every tax exemption is a loophole; some have to fight for it," said Pascrell, who is a member of the House Ways and Means Committee, which is drafting the tax reform law. "If you do away with certain deductions, that is like a having a tax increase," he said, comparing credit unions' tax deduction to deductions for charity contributions, mortgage interest deductions and more.
 
"These are all under attack right now. What we should be attacking is the loopholes that exist in the law so people can put their money offshore and you and I have to pay more taxes...I want to do as much as I can to stop that immediately and will do everything in my power to do so," said Pascrell.

"Credit unions do a terrific job; they're not competition with the banks; they're the competition that we need so that people can make good choices," adding that he favors reducing corporate taxes. "You have my word on that. In fact I'm on that legislation that will keep that deduction."
 
The West Virginia Credit Union League, which was hiking the Hill in Washington, D.C., last week, garnered the support of two members of Congress: U.S. Sen. Joe Manchin III (D-W.Va.) and U.S. Rep. Nick Rahall (D-W.Va.).
 
In a letter to the league Friday, Manchin wrote, "I have heard from many credit unions in West Virginia that share your concerns about potential changes to the federal corporate income tax exemption for credit unions. A repeal or scaling back of this exemption, which has been in place for nearly 100 years, has been mentioned as one of the countless proposals to address our unsustainable federal deficit. As our national debt approaches $17 trillion, I believe that we must cut spending, fix our broken tax system, and reform entitlement programs in order to reduce our debt and provide the economy with certainty and stability.
 
"However," Manchin continued, "it's essential that we remember that credit unions have always operated on a not-for-profit basis, and they serve as the backbone of communities throughout West Virginia and the United States. As a credit union member myself, I know that credit unions already pay a number of taxes, including payroll and property taxes, and that repealing this exemption could have a significant impact on credit unions and their communities."

He added that a common sense environment is needed, and that he would be "very mindful of your concerns should I have the opportunity to vote on this proposal in the future."
 
League President Ken Watts also noted that during a luncheon with Rep. Rahall that the congressman "expressed his strong support for credit unions and stated his interest in allowing the credit union tax exemption to remain intact."
 
For more on grassroots activity, go to a related story, Hike the Hill Visits Backed Online Advocacy Efforts Last Week, in today's News Now.