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Nevada CUs serve members despite tough economy

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RANCHO CUCAMONGA, Calif. (9/21/09)--Credit unions in Nevada--a state hit harder by the economy than most--are still managing to serve their members. "Despite the economy, credit unions there are seeing an improvement in some areas," said Daniel Penrod, senior industry analyst for the California and Nevada Credit Union Leagues. For example, members are saving more and deposits have grown 3.75% through the first two quarters, mostly in basic savings and money market savings. "Credit unions are doing their best under very difficult circumstances. The state has been hit by the local economy and the local housing crisis. Most of the state lives off tourism. And the global economy has exacerbated problems for financial institutions," Penrod told News Now. "Still, credit unions are finding ways of making mortgages. Their primary fixed rate was 1.5% for second quarter. That's not a large number, but any positive number for that area is huge," Penrod said. Historically the number is 4% or 5%. Credit union members, like credit unions, are conservative. "They're not out seeking exotic mortgages and aren't racking up more debt than income." Being conservative means that during the good times, the numbers might not be as high as others. But when the economy drops, they don't drop as low as other financial institutions' numbers, he said. Nevada is dealing with a struggling job market--unemployment was greater than 13.2% in August, according to the Bureau of Labor Statistics. But struggling members can get help from credit unions. "Credit unions are very different than other lenders. They are able to lend, willing to lend, and they have the means to do so," Penrod said. In areas where they can, credit unions have always been big on modifications and being proactive with members in terms of offering deferment options, modifying principal or rate, or offering to delay a payment two months and tack the missed payment onto the end of the loan term, he said. "They help as much as they can. Of course, with an upside down mortgage situation, help is limited." According to Henry Kerman, league spokesman, credit unions can provide member assistance through Credit Union Home Loan Payment Relief (HLPR) loans and personal loans. The nation's auto industry struggles have bled over into financial institutions, and Nevada's auto loan programs are no exception--both new- and used-auto loans are down. "Members are more wary of large purchases, and manufacturers are taking market share with 0% and 1% loans. Credit unions can't match that. Manufacturers make money on the sale and therefore can decrease the rate on the loan. Credit unions don't have that," said Penrod. Kertman noted that credit unions perform loan modifications on auto loans (as well as on mortgage loans). Of the 27 credit unions in Nevada, 12 work with CU Direct Lending (CUDL) on auto loans, according to Bill Meyer, communications coordinator for the auto lending service provider. Nationwide, CUDL works with 700 credit unions' programs, he told News Now. CUDL doesn't have data specific to Nevada, but provided a look at second-quarter auto trends in 60+ day delinquency rates, noting that credit unions' delinquencies are the lowest of all lender categories--at 1.18%--compared with banks at 1.62%, captives at 1.34%, finance companies at 4.47%, and others at 4.88%. "CUDL is telling credit unions across the board that they should make sure their underwriting criteria and risk lending and risk management practices are current," Meyer told News Now. "It's imperative that they take a close look at these and make the necessary adjustments to correspond with economic conditions. They must take proactive steps toward reviewing their practices and review them on a regular basis." Indirect lending in Nevada is especially under heat. "It's important for credit unions not to abandon the point-of-purchase lending as a way to generate loans," Meyer said. "Ninety percent of car buyers are getting their loans at the point of sale--at the dealership. Credit unions must work closely with members, and they need indirect lending with the dealership so they can be there for the members. Members will buy cars. Credit unions need to be there to capture that loan." Credit unions have been able to maintain a high level of market share in auto lending. "In the past 18 months, they have increased their markets share to 22%-23% from 20%--share even with the current conditions," he said. Credit unions had 22.8% of the market share in second quarter. That compares with 30.7% for banks, 29% for finance companies, and 17.5% for captives. Credit unions are consistent in their lending practices and in who they loan to, he added. "Dealers look to credit unions as a stable, true resource for auto loans. Other financial institutions can't say that." The bottom line is Nevada credit unions are well capitalized at 7.84% for second quarter, said Penrod. "That's above the 7% standard NCUA (National Credit Union Administration) has set for well-capitalized credit unions. "Despite the struggles and issues Nevada credit unions face, they are maintaining their capital level and do the best to have as much leverage as possible to serve their members," he said. Kertman noted that the league's annual convention Nov. 16-18 in Las Vegas will help out the Nevada's largest city, and it will address credit unions' financial condition for California and Nevada credit unions. "It will be one of the key topics." But holding a meeting there means that Nevada's credit unions are also conducting "business as usual," he said.

CU System briefs (09/18/2009)

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* ANCHORAGE, Alaska, and APPLE VALLEY, Calif. (9/21/09)--High Desert FCU, Apple Valley, Calif., is now part of Anchorage-based Alaska USA FCU, officials said Thursday. NCUA put High Desert FCU, which had been hit by home-construction losses, into conservatorship in October. Alaska USA FCU completed a purchase and assumption of High Desert FCU on July 1. No employees have been laid off, and the takeover has added services such as consumer loan options for recreational vehicles. Commercial loans won't be offered, spokesman Dan McCue told Daily Press (Sept. 18). The combined credit union is focusing on High Desert members and working to continue business as usual … * GREENSBORO, N.C. (9/21/09)--Team Little Guy, a group of credit union cyclists in North Carolina, will mount their bikes this weekend for a 170-mile Tour to Tanglewood to raise funds for the Warriors Hope and Care Center. The rehabilitative center is a project of Hope for the Warriors, which assists Iraq and Afghanistan veterans who have lost limbs. The group will participate in biking and running events throughout the year to raise $100,000 by June 30. The final ride will be the Ride for the Warriors, which begins June 17 at Ft. Bragg, according to the North Carolina Credit Union League's Weekly Update Sept. 18. During the past two years, the team ran 208 miles and raised more than $145,000 for the Carolinas Credit Union Foundation's Micro Community Grant program … * NEW ORLEANS (9/21/09)--Phishing attacks are being reported by Homeland FCU and Parish Employees FCU, both located in the New Orleans area, according to the Louisiana Credit Union League (LCUL). Members and nonmembers report receiving text messages that inform them that their accounts are experiencing suspicious activity, have negative balances, or have been closed. The text-message recipients are told to call a toll free number or visit a website to check the status of their accounts. The calls are not from a legitimate source, and individuals should never provide their personal private information on the phone or the Internet, LCUL said. Those receiving the text messages should contact the Federal Trade Commission, the league added (LCUL’s eNews Sept. 16) … * NEWPORT NEWS, Va. (9/21/09)--Charges have been dismissed against a man accused of robbing Virginia Educators’ CU, Newport News, Va., in May. A second look at the case by a police detective resulted in Perez Perado Thomas Jr. 25, being “totally exonerated” in late August, said Thomas’ attorney, Robert W. Lawrence. Thomas looks nearly identical to the man who robbed the credit union. Also, calls were made from Thomas’ cell phone near the vicinity of the bank at the time of the robbery, Lawrence said. However, a more detailed examination of surveillance photos by Detective A.J. Matthews determined that Thomas was not the robber because Thomas’ hairline and eyebrows did not match the robber’s, and Thomas is shorter than the robber, Lawrence said (Daily Press Sept. 18) … * MACON, Ga. (9/21/09)--A Macon, Ga., man was convicted Thursday for helping rob a credit union of roughly $200,000. Merkuri Stanback and two others allegedly walked into a Macon branch of Park Community FCU, based in Louisville, Ky., on Dec. 28, 2007, with firearms (Macon Telegraph Sept. 18). They restrained employees, ransacked the teller area, and took $198,439--but dropped $49,000 when leaving. Stanback was found guilty of armed robbery and weapons charges. He could face a life sentence for one charge, 25 years for the robbery and 10 years for possession of a firearm by a convicted felon ... * BEAVERTON, Ore. (9/21/09)--The Credit Union Association of Oregon’s (CUAO) primary Twitter feed will go live as the Oregon delegation hikes Capitol Hill Tuesday through Thursday, said CUAO. The username is CUAOregon. The delegates will “tweet” as they meet with legislators and network with other credit union delegations in Washington, D.C. ...

Fed overhaul wont affect private student loans

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WASHINGTON (9/21/09)--A bill passed Thursday by the House of Representatives to eliminate the Federal Family Education Loan Program (FFELP) has no impact on private student lending opportunities for credit unions, says Credit Union Student Choice, a student lending credit union service organization. The Student Aid and Fiscal Responsibility Act of 2009 (H.R. 3221) cuts out private lending institutions from originating the FFELP loans. While this measure would have grave ramifications for all lenders who originate federal student loans, the opportunity for credit unions in private student lending remains strong, according to Jon Jeffreys, president of Credit Union Student Choice. "The bill obviously has a huge impact on lenders who participated in …FFELP, whereby they were able to originate federal student loans," said Jeffreys. "However, it's important to note the distinction between federal and private student loans. "While they do share the same bankruptcy exemption as federal student loans, private loans are completely separate from the federal government and are meant to help students fill the funding gap after federal loans have been exhausted," he said. "The demand for these loans remains very strong--to the tune of nearly $15 billion this year alone." With ongoing economic challenges and ever-increasing college costs, Jeffreys said demand surely will remain strong for years to come, giving credit unions an "incredible" opportunity. "Credit unions involved in the Student Choice program experienced tremendous loan volume this summer," he said. "There is a critical need for lenders who can offer fair-value private student loans, and our credit unions are filling that need. We certainly look forward to helping credit unions who've been active in FFELP, as they look for new business solutions in replacing those federal student loans." The Credit Union National Association (CUNA), which lobbied against the bill, sent a letter Wednesday to House speaker Nancy Pelosi and other members of Congress expressing concern that the elimination of FFELP would remove a "valuable option" for students. CUNA President/CEO Dan Mica's letter noted that more than 1,000 credit unions--particularly those with membership bases related to a university--provide student loans. Many provide individualized service and support to loan holders. Jeffreys said that credit unions' not-for-profit, cooperative business model give them the ability to lend from their own balance sheet and makes them uniquely suited to deliver superior economic value in private student lending. This summer, its client credit unions approved more than $100 million in loans, helping more than 5,000 students attend college this fall. The average loan rate was below 6%, nearly 400 basis points below the average private student loan rate being charged by the nation's largest student lending companies. "It's very apparent that credit unions are providing superior economic value to consumers," Jeffreys said. Credit Union Student Choice is a credit unions service organization that provides turnkey private student lending services to 83 credit unions, which offer private student loans to more than five million members.

Illinois league iPod giveaway promotes iBelong CU awareness

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NAPERVILLE, Ill. (9/21/09)--The Illinois Credit Union League (ICUL) is giving away 30 iPods at CUs in 30 days to promote International Credit Union Day Oct. 15 and the iBelong awareness campaign in the state. This campaign, which runs through Sept. 30, provides residents with 30 opportunities to win an Apple iPod Shuffle by visiting www.ibelongillinoissurvey.org and filling out a brief survey describing their banking patterns and preferences. Every day this month, one participant will win an Apple iPod Shuffle, regardless of whether the winner is a member of one of Illinois’ participating credit unions. ICUL officials hope Illinois residents will hear their message detailing the perks of credit union membership, including lower rates on loans and higher yields on savings. There is no obligation for residents who fill out the survey to become credit union members. “Credit unions are not-for-profit financial cooperatives that work hard to give you better service, a safe place to save money, and access to affordable loans,” said Dan Plauda, ICUL president/chief executive officer. “No wonder 90 million people across the country, including 2.7 million in Illinois, belong to a credit union.” ICUL is in its second year running its “iBelong” campaign, licensed last year from the Pennsylvania Credit Union Association (PCUA), with Chicago-based advertising agency HGadgroup. The awareness campaign has been partially responsible for increasing credit union membership in the state by more than 39,000 in 2008. The 2009 campaign is ongoing.

Know demographics Gen Y tech savvy harder to please

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MADISON, Wis. (9/21/09)--Credit unions may be interested in some new survey results outlining traits Generation Y members possess to more effectively serve this growing demographic of 75 million members. Gen Y is new to banking, but has high expectations. A survey by Maritz indicated that Gen Y can be less patient, tolerant and harder to please than their older counterparts (Teller Vision Oct. 1). According to Deloitte, members of Gen Y also are:
* Self-directed and resourceful in researching financial services, but seek recommendations from family and friends. They often are skeptical of traditional advertising; * Motivated and concerned with receiving products and services at a competitive price; * Tech-savvy and view technology as an extension of themselves. They use smartphones, blogs, Facebook, Twitter, Second Life, YouTube and Flickr.
Fraud protection is important to Gen Y, Deloitte said. They want to be notified of fraud immediately on their cell phones, and are most likely to leave a financial institution if a fraud occurs. Financial institutions may have unstable relationships with younger consumers because they haven’t settled into a financial pattern yet, said Thad Peterson, Maritz division vice president of sector strategy and solutions. He suggested financial institutions focus on three concepts when attracting Gen Y:
* Locational convenience to include online and mobile banking; * Appropriate customer experience; and * Products and services that give young people roots--such as providing incentives for online bill pay and debit rewards programs.
“It’s critical for [financial institutions] to stay ahead of the curve and build good relations with younger customers,” Peterson said. “After all, they’re the future.”

Little man with umbrella inspires Herring winner

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BURNSVILLE, Minn. (9/21/09)--US FCU captured the Minnesota state-level Louise Herring Award for Philosophy in Action this past month by highlighting a demonstration of credit union philosophy in action through its Umbrella Project. The Umbrella Project is a widespread initiative that re-emphasized resources already in place at US FCU and initiated new ones to respond to challenges brought on by the change in the economy.
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The project was inspired by “The Little Man” cartoon created in the 1920s--ironically around the same time US FCU was established--by cartoonist Joe Stearn. He depicted The Little Man being protected from hard times and financial distress by the credit union umbrella he carried, illustrating how credit unions would help people during the difficult times of the Great Depression. The imagery reflected the nation’s economic condition at that time, and the ability of credit unions to protect and serve their members. The resources offered by US FCU through the Umbrella Project included borrower resources, fraud and security resources, and budgeting resources. This compilation of resources offers access to tools, from free budgeting programs and educational seminars, to credit card management and financial counseling. The goal of the resources was to help those needing immediate financial education or guidance and to promote proactive measures so all members can take control of their finances in the future. The state-level award was presented by the Minnesota Credit Union Network. US FCU now enters national competition, sponsored by the Credit Union National Association (CUNA). National honors will be conferred in March 2010 at CUNA’s Governmental Affairs Conference in Washington, D.C. US FCU, based in Burnsville, Minn., has $802.4 million in assets.

TV station offers CU perspective on interchange

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MANKATO, Minn. (9/21/09)--Minnesota Valley FCU, Mankato, Minn., recently shared its perspective on interchange fees with a Minnesota Fox TV station. The U.S. House and Senate have bills in committee that could reduce the interchange fees charged to merchants. Getting rid of the credit fees would increase profit margins for businesses, said Nick Meyer, Minnesota Valley FCU president (Fox TV Sept. 17). “There have really been a number of years of history where merchants were trying to legislatively limit Visa, MasterCard, American Express and Discover as to how much interchange income they could get because that reduces their profits a little bit,” he told the station. “But abolishing fees for retailers could prompt the processing companies to look elsewhere to make up the difference, including consumers,” Meyer added. Consumer may not see the effects of the fees at the point of sale, but the costs will show up later at their financial institutions. For instance, free checking may not be as accessible at credit unions, Meyer said. Credit unions and small banks won’t want to make the changes, but since debit and credit cards barely break even right now, it may be necessary, he said. The Credit Union National Association has indicated it favors the current interchange fee structure. It said regulating the fees would adversely affect consumers, competition and innovation. The fees also help credit unions cover expenses and losses while giving merchants a guaranteed source of payment when the transaction occurs (News Now Aug. 10). To see the news story, use the link.