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Manager of defunct CU sentenced in 242K theft

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CLINTON, Tenn. (9/27/12)--The former manager of the now-defunct Anderson County Employees FCU in Clinton, Tenn., has been sentenced for allegedly stealing $242,000 from the credit union.

Shirley McKinney, 53, of Harriman, Tenn., pleaded guilty to theft of more than $60,000, two counts of forgery involving more than $10,000 and two counts of forgery over $1,000 (Knoxnews.com Sept. 20). In a plea bargain, her 15-year prison sentence will be reduced and she will be placed on supervised probation after serving nine and a half months in Anderson County Jail. She also was ordered to repay more than $242,511.

A routine audit on Jan. 19, 2010, discovered funds missing. The credit union, which at the time had more than 600 members, about $1.8 million in assets and more than $1.3 million in outstanding loans, was merged into Knoxville Teachers CU in September 2010 (News Now Aug. 15, 2011). Anderson County Employees FCU's board sought the merger.

McKinney was indicted in August 2011 after an investigation by the Tennessee Bureau of Investigation. She allegedly made unauthorized withdrawals from members' accounts, forged two members' names on loan agreements for more than $10,000, and forged a third member's name on two loans of more than $1,000.

Her husband has agreed to name the Knoxville Teachers CU as beneficiary of his 401(k) plan and life insurance policy, and the couple pledged to try to sell farmland they own and use the proceeds to make restitution, said Knoxnews.com.

Generations FCU releases small biz lending guide

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SAN ANTONIO (9/27/12)--San Antonio-based Generations FCU has released its Small Business Lending Guide designed to assist small-business owners through the process of applying for financing for their companies.

The guide is a 30-page brochure that covers topics such as the business plan, types of financing, document samples and understanding corporate credit.

"Generations has been conducting small-business lending for more than 30 years," said Andrew Wilson, vice president of lending at the $394 million asset credit union.  "During that time we have seen again and again that small-business owners who are quite savvy in the day-to-day operations of their business, can sometimes struggle when it comes to compiling all the documentation that is required to gain funding."

The guide is meant to be "a step-by-step instruction manual for them in an effort to eliminate many of the hurdles, but also a lot of the mystique that comes with applying for business lending," he said.

In a recent infographic entitled "5 Essential Steps to Financing Your Small Business," the credit union highlights the need for small-business owners to review their credit reports, formulate an effective business plan, gather all necessary supporting documents and apply for the loan that best fits their needs. Ninety percent of small-business owners indicated in a national study recently that access to capital has been a problem for their business.

"This has been a rough couple of years for small-business owners," Wilson said.  "They were hit not only with the same recession that consumers faced, but then they also had to deal with many of their traditional lines of financing going away. So credit unions across the country, including Generations, are working very hard to let those small-business owners know that we are here, we have always been here, and we are ready to meet their needs."

The Credit Union National Association and credit unions are urging Congress to enable more credit unions to help small businesses by passing legislation that would raise credit unions' member business lending cap to 27.5% of total assets, from the current 12.25%. Doing so would help inject $13 billion into the economy in small-business loans and help create 140,000 new jobs the first year. Raising the cap would not cost a dime for taxpayers.

S. Dakota CUs report text scam

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SIOUX FALLS, S.D. (9/27/12)--Several credit unions in the Sioux Falls, S.D., region are receiving calls from members who have received a text message scam.

Sioux Falls FCU in a press release said the message indicates the member's debit card has been deactivated and urges the recipient to call a telephone number with a 605 area code.  If the victim calls the number, an automated voice prompts the caller to enter the debit card number and PIN.

This is a common tactic used by scammers to obtain information from unsuspecting consumers, said Fran Sommerfeld, president/CEO of Sioux Falls FCU.  Sommerfeld reassured consumers that the credit union does not send out text messages or e-mails or make phone calls asking for account information. "If you get a text, e-mail or call like this, you can be assured that it is not legitimate," said Sommerfeld.

The credit union told consumers that if they responded to such a text message and provided information to call their credit union immediately "so that appropriate action can be taken to prevent or reduce your potential losses."

Throughout the year, cyber criminals have blanketed various areas with text messaging scams that have targeted credit unions and other financial institutions.

Widely reported bank fee hikes an opportunity for CUs

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MADISON, Wis. (9/27/12)--Credit unions got another dose of positive press--and more opportunity to tout their lower fees--while media throughout the nation reported Bankrate.com's newest study indicating that banks' fees are rising on checking accounts, ATM use and overdrafts. Many media surveyed by News Now reported that plenty of credit unions still offer free checking accounts.

And that could be an opportunity for credit unions to capitalize on the publicity, by letting their local media know that they continue to provide the best deals for consumers.

Reports were carried in a Who's Who list of media that included The Today Show, The Wall Street JournalNBC News, CNBC, ABC News, CBS News, Fox Business, Businessweek, Business Insider, Chicago Tribune, The Washington Post, The Street.com, Fortune, The Huffington PostSt. Louis Post-Dispatch, The Fiscal Times, The Atlanta Journal ConstitutionWCVB Boston, Sacramento Bee,  Los Angeles Times, Crain's Cleveland Business, SmartMoney.com, Biz Journals.com in a number of major cities, GoBankingRates.com,  among others.

They sported headlines like "Banks' fee increases go into overdrive" (St. Louis Post Dispatch Sept. 25), "Bank fees soar, free-checking offers decline" (NBC News Sept. 25), "It's More Expensive Than Ever to Bank in America" (Business Insider Sept. 25 ), "Checking Fees Soar Despite 2011 Consumer Backlash" (Nonprofit Quarterly Sept. 25),  and "Is the era of free checking accounts over?' (The Week Sept. 25).

All of them noted that Bankrate found significant hikes in banks' fees in its analysis of 477 checking accounts at 247 banks and thrifts. No credit unions were in the study, which  determined that the minimum balance required to avoid fees on checking accounts had risen 23% to $723 and that banks have added fees.

Many media featured a quote from Greg McBride, Bankrate.com's senior financial analyst, who said, "There are plenty of smaller community banks and credit unions that still offer free checking." Some noted that he also pointed a recent Bankrate survey that "showed that 72% of the largest credit unions still offered free checking."

NBC News in its coverage told consumers how they can avoid fees. "There is another option: move your money. Look for a financial institution--a credit union, community bank or online bank--that offers totally free checking with no requirements to qualify. Bankrate found that 72% of the largest credit unions still offer free checking."

"Checking accounts that are free on a standalone basis continue to diminish," said McBride in Bankrate's press release. "But a free checking account is still within reach of the majority of Americans, whether by getting the fee waived through direct deposit or moving to a bank or credit union that still offers free checking."

Bankrate also reported that 72% of Americans say they would consider switching checking account providers if their financial institution raised its fees. That's up from 64% in March 2011.

Texas Trust survey Renters want to buy homes

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MANSFIELD, Texas (9/27/12)--People who are renting apartments or houses have a high interest in buying a home, although one-in-eight North Texas homeowners is interested in selling a house and buying another, according to a survey by Texas Trust CU in Mansfield, Texas.

The $754 million asset Texas Trust conducted its first online survey of the region's homeowners and renters in mid-August to gauge attitudes about home ownership. While the survey reflects a slowly recovering housing market in the region, it also highlights a more pragmatic and less-idealized vision of home ownership, said the credit union.

For example, 83% of non-homeowners surveyed say they are interested in buying a house, either this year or within the next five years. Of those, three out of four indicate their main motivations are financial, not emotional. Thirty-four percent see home ownership as a better investment than renting, and 28% see it as an investment in their family's financial future. Seven percent want to build equity, and another 7% are motivated by the mortgage-interest tax deduction.

Twenty-two percent are motivated by the "emotional" attractions of the personal pride of home ownership or having something to pass along to their children when they retire, said the credit union.

Among the current homeowners interested in buying another house at this time, financial motivations also dominated. Among the group, 50% are attracted by current low interest rates, 18% want a bigger house for less money, and 16% see another house as a good investment.

Among other survey findings:

  • Of the renters interested in buying a home, 77% define an "affordable" down payment as 5% or less of the price of the home. Among current homeowners, 48% define affordable that way, 26% of respondents would pay 10% down, and 23% of them would agree to 20% or higher down payment.
  • Sixty percent of renters interested in buying a home say they would prefer to buy an existing home, while 40% prefer a new or custom-built home.
  • Thirty-one percent of all current homeowners are considering refinancing (41% for those interested in another house and 28% for those not interested in moving). Also, 24% have refinanced within the last two years, and 19% say their mortgage is paid off.
  • Seventy-four percent of current homeowners say they are not under water on their home--that they do have equity; 9% say they don't have equity, and 17% are unsure.
  • Eighty-four percent of homeowners say they have never missed a mortgage payment; 13% admit to missing five payments or fewer during the life of their mortgage.
  • Of the renters interested in buying a home, 24% expressed confidence in their ability to get a home loan. More than 50% said obtaining a loan would be challenging or difficult, and the others weren't sure.
"What motivated most people to buy houses in the past isn't necessarily the same as what motivates them today," said Richard Whitman, Texas Trust vice president of mortgage lending. "According to our survey, Dallas-Fort Worth area residents no longer see home ownership as the American dream. Instead, they're coming to see it more as a financial investment designed to grow their net worth." 

Texas Trust surveyed 1,719 respondents, 86% of them members of the credit union.

New CU trend Highlighting local businesses

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MADISON, Wis. (9/27/12)--An increasing number of credit unions are taking part in an emerging industry trend: finding innovative ways to help highlight and assist local small businesses.

Going beyond providing member business loans (MBL), credit unions are zeroing in on the essence of boosting local businesses.   

St. Mary's CU, a $600 million asset credit union based in Marlborough, Mass., is running a We Love Local Contest that highlights a different local business each month on the credit union's Facebook page. Anyone who visits the page can enter a contest with a daily chance to win a $25 gift certificate to use at that month's highlighted business (communityadvocate.com Sept. 26).

Michigan credit unions are initiating a statewide credit union-led effort called "CU Lunch Local"--with a statewide cash mob created to show support for small businesses (Michigan Monitor Sept. 17 and Sept. 10). Similar to flash mobs, cash mobs--instead of staging some type of performance--participate by spending money at a chosen local business to support it and to encourage others to do the same, said the Michigan Credit Union League. 

Participants in CU Lunch Local will commit to buying local on Oct. 16--through something as simple as buying a cup of coffee at a neighborhood shop, to ordering lunch for a whole department at work from a deli, to purchasing furniture, the league said. Participants join the event through Facebook.

The Central Ohio Chapter of the Ohio Credit Union League began organizing cash mobs earlier this year. Each month, Central Ohio credit unions encourage their members and employees to descend upon a local business at a chosen date and time to buy products and services from that business, said the Ohio Credit Union League (eLumination May 17).

The chapter held three cash mob events through August. A cash mob helped Gallo's Pit BBQ in Linworth, Ohio, increase its Aug. 16 sales by 66% over the previous Thursday (News Now Aug. 29).

Also, North Coast CU, with $164 million assets in Bellingham, Wash., and Members 1st CU, based in Redding, Calif., with $101 million in assets, are holding monthly cash mob events to benefit specific local businesses, according to their websites.  

In Totowa, N.J., more than 100 local owners of small- to- medium-size businesses attended a small business summit hosted by North Jersey FCU to network and learn about the credit union's products and services, as well as network with other businesses that attended (News Now Sept. 26).

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25% so that more loans could be made to small businesses. CUNA and credit unions say that increasing credit unions' MBL cap would provide more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers.

Dust off those HELOCs Home improvement sales up

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MADISON, Wis. (9/27/12)--Consumers are making more purchases of home goods, according to a study released Tuesday by IBM Smarter Commerce. Credit unions can take advantage of this trend by promoting home equity lines of credit (HELOC) for home improvements.

The biggest retail gains during the back-to-school shopping season were home goods purchases which increased 30% in July and more than 25% in August over their respective months in 2012, according to IBM. Home goods include anything from house paint to appliances or furniture.

"The focus on buying items for the home isn't surprising--with home affordability near all-time highs home sales have been clipping along at a fast pace over the past few months," said Mike Schenk, Credit Union National Association (CUNA) vice president of economics and statistics. "Both July and August new home sales increased at a nearly 30% year-over-year pace and both July and August existing home sales increasing at roughly 10% year-over-year," he told News Now.

The home improvement industry is a $200 billion a year business, according the Do-It-Herself.com. About 85% of the nation's homes were built before 1980 and will need frequent maintenance, according to the website.

Almost 70% of homeowners had home improvement plans for 2012 and were planning on spending an average of $3,500, which is an increase of $100 from 2011, according to the American Express 2012 Home Decision Report. A low percentage of people buying, an increased percentage of people remodeling, and an increase in spending means homeowners are trying to add value to their homes because they are planning on staying in them longer, according to the report.

Home equity lines of credit accounted for 6.9% of credit union loans in July 2011, compared with 7.6% in August, according to CUNA statistics.

The purchase of homes and home goods should help to boost credit union loan growth, but will not necessarily translate to significant increases in HELOC and second mortgage balances, Schenk said.

"While home prices are increasing, the increases overall have been modest," he said. "For example, while the Case-Shiller home price index has increased in each of the past six months, prices are up only 1.3% year-over-year and they remain 23% lower than at the beginning of the economic downturn.  Thus, for many, tapping home equity remains difficult. More generally, having just lived through a crash caused by over-borrowing on home equity, it seems unlikely that many have the appetite to return to those behaviors any time soon."

Some credit unions are running HELOC promotions.

IBM Southeast Employees FCU, Boca Raton, Fla., is offering annual percentage rates (APR) as low as 4% on HELOCs with no closing costs, and no or application or annual fees. HELOC holders can make interest-only monthly payments. Approved applicants can enter a drawing to win a $100 Home Depot gift card.

MC FCU, Danville, Pa., is offering a $50 gas card to approved HELOC applicants and waiving the $99 application fee. The credit union offers an APR as low as 4.5% on HELOCs.

Cyprus CU, West Jordan, Utah, is offering a promotion rate of 2.99% for the first since months on its HELOC product, with rates increasing to as low as 4% after six months. No fees are required during the promotion.

Harvard U ECU wins bid for alumni credit card

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CAMBRIDGE, Mass. (9/27/12)--Harvard University Employees CU competed with several national card issuers to earn the right to develop a MasterCard rewards card fo
Harvard University Employees CU is offering a new MasterCard rewards card designed for the Harvard Alumni Association. Gene Foley, Harvard Employees CU president, announced the rollout during a gala at the Charles Hotel in Cambridge. (Photo provided by Harvard University Employees CU)
r the Harvard Alumni Association.

The $409 million credit union will purchase the Harvard alumni portfolio from Barclay's Ban and develop a new alumni program.

The Harvard Alumni MasterCard includes no annual fee, no foreign transaction fees and no balance transfer fees. It provides unrestricted travel benefits and allows holders to select any flight, cruise or car rental without blackout dates.

PSCU has been chosen as the card processor for the new Harvard card.

"Our new partnership with the HAA has been a model of collaboration, with all parties working together flawlessly to achieve a common goal--to design a credit card program that combines unparalleled benefits and rewards, exceptional security and fraud protection, and sound financial principles," said Gene Foley, Harvard Employees CU president.

Cardholders under the current Barclay's program will be converted to the new credit union program in February.

CU System briefs (09/26/2012)

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  • MASHANTUCKET, Conn. (9/27/12)--A Norwich, Conn., woman has been arrested in connection with  an embezzlement of more than $10,000 from Pawcatuck-based Connecticut Community CU's branch in Mashanatucket. Yolanda T. O'Keefe, 62, was charged Tuesday with first-degree larceny in New London Superior Court.  The credit union discovered money was missing after an audit showed suspicious activity and an undisclosed amount of cash missing from the credit union's vault  (Norwich Bulletin Sept. 26) …
  • MERIDEN, Conn. (9/27/12)--The Credit Union League of Connecticut's recently formed Young Professionals group gathered for its second outing, this time at Gouveia Vineyards in Wallingford for wine tasting and discussing the future of the credit union movement in the state. More than 20 credit union representatives explored upcoming events in government relations, leadership, collaboration  and cost-savings analysis.  The event "was a great opportunity to bring people together and talk about credit unions and what sort of challenges we face as young professionals," said David Hinchey, marketing manager at Wepawaug-Flagg FCU and a member of the group's executive committee.  The group, which will build on the strengths of its members, plans to network every month and meet around the state to allow more credit union employees to participate.  Possible future gatherings include an event pairing a CEO and young professional, topic-specific meetings for examination, education sessions, exploring what works and what doesn't, and strategies for attracting more young people into the movement as members.  (Photo provided by the Credit Union League of Connecticut) …