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CU System briefs (09/22/2009)

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* SAN DIEGO (9/23/09)--A former employee of San Diego-based USA FCU's branch at the Yokota (Japan) Air Base has been sentenced to three years in federal prison for bank fraud stemming from the theft of about $1.5 million. Leticia Figuracion, 56, who was in charge of reporting the daily balance at the branch's vault, pleaded guilty to stealing roughly $10,000 a month for years from the vault and lying about the balance. She used the account of a credit union member to wire money to an account in the U.S. and changed the mailing address on the member's account to hide her action. She used some of the money to open a restaurant in Los Angeles and sent money to relatives in the Philippines and the U.S. The incidents occurred from 1992 until September 2008. Figuracion eventually came forward and admitted the crime. She also was ordered to repay $1.5 million to the credit union (The San Diego Union-Tribune Sept. 21) … * WEST ALLIS, Wis. (9/23/09)--Senister Smith, 21, has been charged with the Tuesday armed robbery of Guardian CU in West Allis. Smith was apprehended at the credit union after a member tackled him after he allegedly took $8,000 from the tellers during the robbery. The charge says that Smith admitted to robbing the credit union, saying he was having financial problems, was a former member and knew the location well. If convicted, Smith could face up to 40 years in prison. (620WTMJ.com Sept. 22) … * SPRINGFIELD, Ill. (9/23/09)--Norma L. Lynn, 74, of Springfield, Ill. died Aug. 21. She was the former president/manager of Sangamo Chapter CU, Springfield. Lynn is survived by a companion, one daughter, one son, two grandchildren and two great-grandchildren (News-Leader Aug. 23) …

Ohio CUs reverse trend in mortgage auto loans

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COLUMBUS, Ohio (9/23/09)--The "flight to safety" trend continues in Ohio with 30,000 more Ohioans joining credit unions to take advantage of lower loan rates, better savings rates and fewer fees, reported the Ohio Credit Union League. The 1.28% increase in members through the first six months of 2009--to 2.66 million--represents the first annual growth in five years for the state's credit unions, said the league Tuesday. As of June, total shares deposited in Ohio credit unions stood at $16.9 billion--or 18.4% over the previous year. Total assets grew nearly 18.5% during that same period. "We are seeing growth in membership that we have not seen in some time," said league President Paul Mercer. "Credit unions have done an outstanding job positioning themselves for growth by staying true to their philosophy, offering financial solutions to existing members, and helping new members understand the value of the credit union difference." Despite a weak housing market and slow auto sales in the second quarter, Ohio credit unions are reversing this trend, showing growth in both lending categories--a 50.2% increase for mortgage originations and an eight-percentage point increase to 8.94% for auto loans over a year earlier. Year-to-date vehicle sales through June were down 35.1% nationally, while total outstanding auto loans at Ohio credit unions increased by 12%. First mortgage originations for the period totaled $960.5 million at Ohio's credit unions, vs. $639.5 million during the same period in 2008. Overall loan growth from June 2008 to June 2009 in the state was up nearly 7.5%--almost double credit unions nationwide. Capital growth for Ohio credit unions more than doubled the national credit union average of 0.74%. The average Ohio credit union has 6,605 members, $49.04 million in assets and $30.25 million in loans. Credit unions employ more than 6,800 Ohioans and contribute nearly $140 million in compensation to employees annually, according to the most recent quarterly financial report.

Texas citys CUs have strong presence

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SAN ANGELO, Texas (9/23/09)--Despite being outnumbered by banks by a three-to-one margin, credit unions in the San Angelo, Texas, area have established and maintained a solid presence in the community despite tough economic times. Membership in six San Angelo credit unions with open membership totaled 59,542 members as of March, according to National Credit Union Administration figures (San Angelo Standard-Times Sept. 19). After peaking at 64,570 members in 2003, the number dipped to a recent low of 57,583 in 2007 before rebounding, the newspaper said. “A credit union is a co-op, like a farmers’ co-op,” Brett Nikolauk, president of Qualtrust CU, Irving, Texas, told the paper. “A credit union serves people who are like-minded.” Credit unions have weathered the economic turbulence better than banks mostly because they are financially conservative organizations, Dwight Johnston, vice president for economic and market research for Western Corporate FCU, in San Dimas, Calif., told the paper. Kaye Edwards, president of San Angelo FCU, observed a trend toward more saving among her credit union’s members. While the credit union’s assets are growing, loans remain flat, she told the paper. Although the credit union’s outlook is positive, she has some concerns about the long-term future, she added. “Our membership is growing older; the boomers are aging,” Edwards told the paper. “A lot of young people are ‘unbanked,’ you know, like people are ‘unchurched’--they don’t have a financial institution. What we really want to do is show people how financial institutions can help them. We’d like to draw in more young people.” For the full story, use the link.

Expect card issuers to cut paper statements

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NEW YORK (9/23/09)--Credit card issuers likely will take steps to eliminate paper statements within the next several years, say several analysts studying the paperless trend. But for now, the issuers are wary of consumer backlash and the card issuers are waiting to see what happens in the telecommunications industry's efforts to go paperless. Initial steps in eliminating statements could include offering new card products with online-only bill payment and/or charging customers who demand paper statements a fee, according to card advisory firm RK Hammer. It said that mailing paper statements could be seen as an add-on benefit that could be offered free at first, then move into a fee (American Banker Sept. 22). Aite Group told the publication that card issuers probably wouldn't call the fee a statement fee. Instead, the issuers could bundle it with other customer service fees and features consumers used to get for free. American Express Co. is testing the idea with corporate credit card customers. In June it began eliminating their monthly paper billing statements. However, it still mails statements to employees of businesses with extenuating circumstances, upon request and with no fee. United Kingdom-based HSBC Holding PLC's Hong Kong unit announced in August that beginning on Jan. 1, 2011, it would charge its customers $2.60 a year to continue receiving paper statements. However, customers can apply for a fee waiver. Several major U.S. card issuers said they have no plans to charge customers for paper statements, according to the article. However, many urge customers through mailings and bill-payment websites to switch to paperless. Wells Fargo & Co. and JPMorgan Chase & Co. have offered in the past incentives to credit card customers to opt out of paper statements.

IT budgets lower but payment systems spending up

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NEW YORK (9/23/09)--Many financial institutions have cut their technology budgets, but some are increasing the amount they spend on payment systems, according to a recent study. About 73% of credit unions and banks are keeping their technology budgets at or below last year’s levels, and 72% of their budgets will be lower than this year’s, according to an Aite Group study (American Banker Sept. 21). However, payment system spending is increasing. A study released last week by a community banking trade group indicates 52% of community banks upped their payment system spending projects from 2007 to 2009. About 11% cut back on payment systems spending. Merchant remote deposit capture, which allows merchants to scan checks for deposit themselves, will increase to 78% by 2011, the study said. It also found that online bill payment has become “ubiquitous.” About 99% of the institutions surveyed said they offer online bill pay. Of those surveyed, 82% said they receive cash letters electronically, and 9% plan to do so next year. Eight percent have no plans to send image cash letters, and 9% have no plans to begin adoption of image receipt by 2011.

Kennebec bank conversion vote concludes

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AUGUSTA, Maine (9/23/09)--The vote on a proposed merger between Kennebec Valley (KV) FCU and Kennebec Savings Bank in Augusta, Maine, has concluded, but official results have not been released. Last year, KV FCU proposed converting to a bank and then merging with Kennebec Savings Bank. The proposal was approved by KV FCU's board last fall (News Now Aug. 11). The results of Monday’s vote will be known within 10 days, Beverly Beaucage, KV FCU president/CEO told the Morning Sentinel (Sept. 22). Julie Brawn, leader of KV Members Voting Yes for the Merger, told the Sentinel Tuesday that nobody could tell how members voted. Lucille Cloutier, a leader of the group KV Members Matter, which opposes the conversion, agreed. “A lot of people have been very passionate about this,” she told the paper. If the merger is approved, it would be the first combination of its kind in Maine. Only 20 similar combinations have taken place nationally, the Sentinel said, citing research from CU Financial Services.

Hampel to IL.A. TimesI CUs lending to small biz

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LOS ANGELES (9/23/09)--Credit unions are lending to small businesses, Bill Hampel, Credit Union National Association chief economist, told The Los Angeles Times. “About one-quarter of the nation’s 8,000 credit unions also do business lending,” Hampel said. “There is a legal cap on how much credit unions can lend, but loans under $50,000 do not count toward that cap.” Hampel was quoted in a column, “In Box,” by Karen Klein on Tuesday. Klein’s column was based on a question from a reader: “Are my chances for getting a small business loan improving?” Klein said large banking institutions are reluctant to lend to small companies, but smaller institutions haven’t been affected. If the business is profitable and creditworthy, and “you have a good reason for wanting a loan, your chances are good,” Klein added.

L.A. journal notes consumers flight to quality

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LOS ANGELES (9/23/09)--Consumers are flocking to non-profit financial institutions, including credit unions because they perceive them as safer than commercial banks. The Los Angeles Business Journal reported Sept. 14 that Los Angeles County credit unions experienced a jump in their deposits of 4%, or $1.2 billion, in the first half of the year. The data the paper cited were from the California Credit Union League. Consumers are trying to save more in the tough economy, Daniel Penrod, California league analyst, told the Journal. When the boom first hit, savings wasn’t a priority. However, “as the economy turned, people have realized that they can’t use their home as an ATM anymore,” Penrod added. Flocking to credit unions is a “flight to quality,” he said. Credit unions’ capital ratio has risen to 9.25% in the second quarter, which outpaces the state average of 9.08%. Anything above 7% is considered well-capitalized for credit unions, the paper said.

Bayh named league Outstanding Hoosier Legislator

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INDIANAPOLIS (9/23/09)--U.S. Sen. Evan Bayh has been named as the Indiana Credit Union League's Oustanding Hoosier Legislator for 2009. The award is presented each year during the league's convention to honor a legislator who has gone the extra mile to support Indiana's credit unions and their 2.2 million members. With Congress in session, Bayh was unable to attend a special luncheon Sept. 11, but his regional director, Andrew Homan, read his letter to the group of more than 150 attending. "Indiana's credit unions have remained strong and stable institutions even through this difficult economic time," Bayh wrote. "Moreover, credit unions have shown that the most successful financial institutions are those who seek to serve their customers and lend fairly. Indiana's 202 credit unions have proven that they are a reliable source of credit to Hoosier businesses and consumers," he added. "Evan Bayh has been a longtime credit union friend supporting key legislation like bankruptcy reform and regulatory relief, and voicing his support for credit unions' federal tax exemption," said league President John McKenzie. "In early 2009, credit unions faced a significant threat as Congress considered changes to bankruptcy law that would have harmed credit unions' ability to make mortgage loans. Sen. Bayh stepped strongly into the debate to lead the efforts in the Senate to try to reach a more targeted approach that would have a significantly less severe impact on credit unions," McKenzie said.

Rosenthal named to N.Y. Fed advisory council

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NEW YORK (9/23/09)--The Federal Reserve Bank of New York has named 11 individuals to serve on its Community Affairs Advisory Council. Among them is Clifford Rosenthal, president/CEO of the National Federation of Community Development Credit Unions. Rosenthal is the council's only representative currently working directly with credit unions. The council is an information-sharing group to elicit "ground-level intelligence on conditions and challenges for low- and moderate-income communities," said the New York Fed in a press release. The Fed will use the feedback and information from the council for the Fed's knowledge building and outreach efforts relating to those communities. "The council is an effective way for us to hear a broad range of perspectives about our communities in a regular and consistent way from local experts," said Kausar Hamdani, vice president and head of the Community Affairs Office at the New York Fed. Rosenthal noted that the appointment is "an honor," adding, "The creation of this council shows a real commitment by the Federal Reserve Bank of New York to promote mainstream financial services in underserved constituencies. I look forward to working with the rest of the council to assist the bank in developing programs that benefit low- and moderate-income people and communities." Rosenthal previously served on the Consumer Advisory Council of the Federal Reserve Board from 1989 through 1991. Other appointees to the community affairs council include Cathie Mahon, executive director of the New York City Department of Consumer Affairs, Office of Financial Empowerrment. She is a former community development credit union practitioner and senior federation staff member.

BuffaloNiagara CUs receive kudos from lawmakers

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ALBANY, N.Y. (9/23/09)--More than 40 representatives from 11 credit unions in the Buffalo and Niagara chapters of the Credit Union Association of New York welcomed county, state and federal
New York State Sen. George D. Maziarz (R-Niagara) recognized credit unions' 100 years of service at a legislative event in Amherst, N.Y.
representatives at a reception and heard lawmakers say positive things about credit unions. Association Board Chair Alfred Frosolone, CEO of Niagara's Choice FCU, and Board Member Marie Betti, CEO, Western New York FCU, introduced the legislative guests. State Sen. George D. Maziarz (R-Niagara) talked about how credit unions serve their members well and said there is an essential need for credit unions during difficult economic times. A member of two credit unions, Maziarz presented a proclamation honoring credit unions for 100 years of service to their members and communities. The proclamation also honored Western New York credit unions. Erie County Comptroller Mark Poloncarz spoke about his four years cleaning up Erie County's finances, creating additional revenue and steadily moving the county toward recovery. He commended credit unions for the important role they play in their communities and the county's overall economy. Assemblyman Mark Schroeder's (D-Buffalo) office presented proclamations recognizing every credit union in his district. Staff
New York Assemblywoman Francine DelMonte (D-Niagara) praised credit unions for helping those in need of financial services, especially in the inner city. Looking on was Alfred Frosolone, CEO of Niagara's Choice FCU and board chair of Credit Union Association of New York. (Photos provided by the Credit Union Association of New York)
read a letter of appreciation from U.S. Rep. Louise Slaughter (D-Buffalo/Niagara). Staff from Assemblyman William B. Hoyt III's office also attended. Other legislators attending from the Buffalo/Niagrara districts included: Sen. Michael Ranzenhofer (R), Sen. William T. Stachowski (D), Sen. Dale M. Volker (R), Assemblywoman Jane Corwin (R), Assemblywoman Francine DelMonte (D), Assemblyman Dennis Gabryszak (D), Assemblyman James P. Hayes (R) and Assemblyman Jack Quinn (R). Credit unions talked with the lawmakers about pro-credit union legislation, specifically, pending legislation addressing municipal depository choice, said the New York association.