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CU System Archive

CU System

Merger mortgage stories get CUNA input

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WASHINGTON and MADISON, Wis. (9/28/10)--Credit unions as an option for mortgages and credit union merger trends are topics addressed this past weekend in The New York Times and a weekly publication from the Washington Post. Both newspapers turned to Credit Union National Association (CUNA) economists for analyses. Home buyers have turned to credit unions for years as a less expensive alternative for mortgages, said the Times (Sept. 24). CUNA Chief Economist Bill Hampel told how easy it is to find a credit union. "Most people don't know this, but if you're walking down the street, you'll probably be able to find within one to two miles a credit union you can join," Hampel said. He noted that the nation's nearly 7,500 credit unions rarely offer subprime products to their 90 million members. Because of their not-for-profit status, credit unions "have no incentive to talk the member into some wild mortgage," he said. Credit unions in 2007 granted $60 billion in first-time loans, which include first mortgages and refinancings. Last year the total was $94 billion--up 50%. So far this year, credit unions have granted $31 billion in mortgage loans. Hampel also pointed out that credit unions are "just as sophisticated as a community bank but not crazy like Wall Street." The article also referred to mortgage programs of Sidorsky Financial CU, Stratford, Conn.; Affinity FCU, Basking Ridge, N.J., and Municipal CU, New York. Capital Business, a weekly local business publication launched by the Washington Post, discussed the merger plans of Navy FCU, Vienna, Va., and USA FCU, San Diego (Sept. 27). CUNA Senior Economist Mike Schenk talked with the Post reporter for the story, providing background on merger trends. The article cites CUNA statistics: the number of credit unions in the U.S. dropped to 7,445 this year from 10,316 in 2000, largely because of mergers.

New study Michigan CUs lead in trust

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LANSING, Mich. (9/28/10)--More than twice as many Michigan credit union members have an outstanding relationship with their financial institution than do bank customers, according to a Michigan Credit Union League-commissioned Harris Interactive study. The league announced results of its first statewide consumer study Monday. The study concluded that 76% of credit union members are "absolutely confident" that their institution is the best place for their financial needs, while 31% of bank customers felt that way. “Credit unions’ not-for-profit structure means that the institution is always working in the best interests of the members,” says David Adams, league president/CEO. “This study shows that bank customers are moving their money to credit unions, including 15,000 people in Michigan through the first half of 2010, because of higher savings rates and lower loan rates and fees.” Harris Interactive found clear differences between Michigan banks and credit unions in member/customers’ satisfaction, loyalty and willingness to recommend the institution:
* Of credit union members surveyed, 67% believe their financial institution operates with their best interests in mind, compared to 21% of bank customers. * Of bank customers, 31% said they would “definitely” recommend their financial institution to a friend, family member or co-worker--less than half the 64% of credit union members who would do so. * Seven out of 10 Michigan credit union members will “definitely not” switch their primary financial institution in the next year. Three out of 10 bank customers agreed. * Credit union members gave their financial institution more positive ratings than bank customers for quality of service, overall value, problem resolution, transparency, trust and community involvement.
“Consumers are looking for alternatives, seeing this as a good time to switch to a financial institution they trust,” says Adams. “Credit unions are dedicated to helping people lead more secure financial lives as well as being safe, secure, federally-insured institutions.” A total of 419 bank customers and 409 credit union members--Michigan residents at least 18 years old--were surveyed online between Aug. 20 and Aug. 30.

States form corporate CU task forces

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ALBANY, N.Y. and ONTARIO, Calif. (9/28/10)--Credit union leagues and associations from several states have formed separate corporate task forces following the National Credit Union Administration’s (NCUA) announcement Friday of corporate rule changes and conservatorship of three corporate credit unions. The board of directors of the Credit Union Association of New York authorized the formation of a task force Monday to assist the New York credit union community in assessing future needs and options regarding corporate credit union services. The move was made after NCUA’s recent conservatorship of Members United, Southwest and Constitution Corporate FCUs and dramatic changes to the corporate credit union system. Corporate credit union services include: settlement, receipt and exception processing, brokerage and advisory services, lending and investments. The task force comprises credit union leaders representing various credit union asset sizes statewide. Staff support for the task force will be provided by the association. “The task force will seek options and solutions that best harness the power of cooperation and unity that continue to be the cornerstone of the credit union movement,” said William J. Mellin, association president/CEO. Also, a group of Western-state credit unions have formed the Corporate Realignment Task Force, a volunteer group dedicated to determining what related services credit unions need and will support, and creating a sound, cooperative system to provide those essential continuing services. The task force defines the services as including: item processing, payment system and settlement services, short-term liquidity associated with the settlement process, and possibly investment advice and other related permissible services. “It’s clear that credit unions need and will support continuing item processing and payment system/settlement services, and a cost-effective, collaborative system to do that would be best--aggregation and economies of scale are essential,” said Task Force Chairman Jeff York, CEO of CoastHills FCU, Lompoc, Calif. “Credit union leaders need a system they will have confidence in, and that's what the task force intends to create, with involvement and input from the credit union community,” York added. “The good news is that there is no need to rush to judgment--changes in the corporate system will occur over the next couple of years, so there is time to plan this out and transition to a new system in a timely and logical way. We intend to keep credit unions involved and informed, and expect to have a detailed plan outlined by year-end.” Initial staff support for the Western states’ task force is provided by California and Nevada Credit Union Leagues’ staff. Richard M. Johnson, retired CEO of WesCorp, San Dimas, Calif., is a consultant. The task force also intends to make use of professional staff currently at WesCorp as organizational efforts proceed.

NASCUS state summit in Texas this week

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SAN ANTONIO, Texas (9/28/10)--Texas credit union system leaders, state and federal regulators and dual chartering supporters will join the National Association of State Credit Union Supervisors (NASCUS) Thursday through Saturday in San Antonio, Texas for the State System Summit. The events begin today with NASCUS’ business meetings and committee meetings Wednesday. Also on Wednesday, NASCUS will offer a Directors College for Texas credit union directors. The week will culminate with the State System Summit Thursday through Saturday. “This year’s NASCUS State System Summit agenda spotlights innovation in regulation and credit union operations in this time of economic uncertainty,” said NASCUS President/CEO Mary Martha Fortney. “NASCUS expects this meeting to be rich with dialogue and ideas on how state credit unions can continue to thrive while operating in a safe and sound manner.” At the summit, Debbie Matz, National Credit Union Administration chairman, and Bill Cheney, Credit Union National Association president/CEO, will share their outlooks for 2011. John Annaloro, president/CEO of the Washington Credit Union League, plans to discuss what’s next for credit union share insurance. CUNA Mutual Group President/CEO Jeff Post will talk about emerging risks facing credit unions. Summit sessions also will feature discussions on the search for credit union income, how regulatory reform impacts the state credit union system, and a presentation on “State Innovation Across the Nation,” featuring examples of innovation in state credit union operations. During the “State Innovation Across the Nation” session, former Georgia state regulator George Reynolds will discuss innovations at credit unions in his state and innovative solutions to interstate branching issues. Charlie Grossklaus, president/CEO, Royal CU, Eau Claire, Wis., will share insights from his credit union’s purchase of 11 branches of a troubled Madison bank. Wisconsin credit union regulator Sue Cowan also will participate with Grossklaus to discuss the acquisition.

CUNA Board seat nomination received

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MADISON, Wis. (9/28/10)--Another nomination has been received for a position on the Credit Union National Association (CUNA) board of directors. The deadline for nominations is Oct. 22. Voting will take place from Oct. 27 through Dec. 17. The latest nomination has been received for Ed Williams, president/CEO, Discovery FCU, Wyomissing, Pa. A nomination has already been received for Patricia A. Wesenberg, governmental affairs liaison, Marshfield (Wis.) Medical Center CU, for District 4, Class A; Wendell Lyons, president/CEO of the Kentucky Credit Union League, District 2, Class D; and Maurice Smith, CEO, Local Government FCU, Raleigh, N.C., District 3, Class C. Positions up for election are:
* District 1, Class A; * District 1, Class D; * District 2, Class B; * District 2, Class D; * District 3, Class C; * District 4, Class A; * District 5, Class C; and * District 6, Class B.
Successful candidates will take office Feb. 28 and serve a three-year term that will expire at the adjournment of the 2014 CUNA Annual General Meeting. There is one special election: CUNA’s current District 6, Class C director will step down from the board at the end of this year. The successful candidate in that election will be seated Jan. 1 and serve through the 2012 CUNA Annual General Meeting.

Obamas Wis. visit compared with Trumans CUNA visit

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MADISON, Wis. (9/28/10)--President Barack Obama is visiting Madison, Wis., today in an event that is being compared by local media to President Harry S. Truman’s 1950 visit to the city when he dedicated the Credit Union National Association (CUNA) headquarters. President Truman was on a 6,400 mile whistle stop-train tour through 16 states when he spoke May 14, 1950, before a crowd of more than 10,000 people on the University of Wisconsin-Madison campus during a midterm election year (Wisconsin State Journal Sept. 27). The article carried a photo of Truman laying the cornerstone of CUNA’s building. Today, President Obama will speak at the university’s Library Mall to begin a four-stop tour to help elect Democrats in key states during a midterm election year, the newspaper said. Some of Truman’s remarks in Madison 60 years ago sound like they could have been written for today’s occasion, the paper noted. “This world is constantly being drawn close to us by improved communications and improved transportation,” he said. “It is also being drawn close--dreadfully close--by weapons of destruction which become ever more terrible.” To read the article, use the link.

CU movement reacts to NCUAs actions on corporates

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MADISON, Wis. (9/28/10)--The credit union movement responded over the weekend to the National Credit Union Administration's (NCUA's) announcements about its final corporate rule, the conservatorship of three corporate credit unions, and its plan to isolate and securitize the corporates' "legacy assets." The news of the conservatorships brought the most reaction. The three corporates--Southwest Corporate FCU of Plano, Texas (9.5 billion assets); Members United Corporate FCU, Warrenville, Ill. ($7.4 billion assets); and Constitution Corporate FCU, Wallingford, Conn. ($1.2 billion assets)--will join U.S. Central FCU and Western Corporate FCU under conservatorship. "While this news is disheartening, it wasn't wholly unexpected," said Dick Ensweiler, president/CEO of the Texas Credit Union League, noting, "The lasting legacy of toxic assets reached far and wide and has impacted many, many seasoned investment professionals." "Fortunately the NCUA's action does not directly impact the day-to-day operations of natural person credit unions...NCUA will operate Southwest Corporate for the time being, to ensure no loss in services to credit unions and their credit union members," he said. Ensweiler's statement Friday noted members' deposits "continue to be fully insured to at least $250,000 and credit unions in Texas remain on the whole well-capitalized. Average delinquency and charge-off rates are falling as the economy has strengthened, and are still much better than those of banks. "The main thing for credit union members and consumers to know is their money is safe in their credit union and not affected," Ensweiler said. Credit Union League of Connecticut President/CEO Tony Emerson said Friday, "NCUA has made assurances that current ongoing operations at Constitution Corporate are not affected and will continue as usual." He noted the league "will be working with the NCUA and Constitution Corporate to ensure that member credit unions are not adversely affected by this conservatorship action, and to let them as well as their members know that their deposits are fully insured and safe." "At Southeast Corporate we are generally pleased with the changes to the new corporate rule, the legacy assets plan and the path that NCUA has laid out for ensuring the safety and soundness of the corporate system into the future," said Brad Miller, CEO of Southeast Corporate FCU, Tallahassee, Fla. NCUA referred to Southeast Corporate and other non-conserved corporates as "viable corporates," he said. "Thus we are further encouraged and will continue to move forward with our plans for a new business model that continues to provide value to our members." Although there is still significant work to be done in analyzing the details of the new rule, "the final rule appears more workable than the proposed rule," Miller said. The system must evolve, he said, adding, "this transformation process has started, and while we have difficult work still ahead of us, we are making steady progress thanks to the support of our members." Another corporate, Mid-Atlantic Corporate FCU, Middletown, Pa., issued a statement about NCUA's final corporate rule and reassured its members it is solid and safe. "While in some places the regulation may be more restrictive than beneficial, overall, we believe it creates a framework within which Mid-Atlantic Corporate can continue to successfully serve our member credit unions," said Mid-Atlantic Corporate President/CEO Jay Murray (Life is a Highway Sept. 27). "While some corporate credit unions are still suffering the lingering effects of the economic crisis, Mid-Atlantic Corporate is stable and fiscally sound," Murray added. "Thanks to our member credit unions' capital commitments and a great deal of planning, we are well-positioned for the future." Pennsylvania Credit Union Association agreed that "the final rule is what we anticipated," said Rick Wargo, association executive vice president/general counsel. "From an advocacy perspective, we're pleased to see that NCUA was receptive to phasing in the capital requirements. Though we did not have unanimous input from our GAC (governmental affairs committee) or ad hoc committees, the NCUA granted some leeway on asset-liability management, which should be a positive." He also noted that PCUA is studying the legacy assets plan. "Time will tell if a good bank/bad bank approach is going to work," he added. Earlier Credit Union National Association President/CEO Bill Cheney said the new corporate rule reflected many recommendations of CUNA's Corporate CU Task Force. "We believe it offers a solid model for corporate credit unions going forward," he said (News Now Sept. 24 and 27). "There are some positive aspects for credit unions in the actions that NCUA has taken, the biggest being that credit unions will only have to cover the actual, eventual credit losses--and nothing else, including market losses." CUNA advocated for that and is "gratified the agency listened to us." However, he added that the credit losses will be "substantial"--in the estimated $8 billion to $10 billion range. CUNA is culling through everything NCUA has done "in order to have a clear picture of its impact on credit unions," Cheney said. NCUA's actions "have the potential to move us past this chapter and better position the credit union system for the future--while being invisible to consumers who rely on credit unions for affordable financial services."

Macias CO-OP Fin. Services honored by Calif. league

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ONTARIO, Calif. (9/28/10)--Anita Macias, of San Francisco-based Patelco CU, and CO-OP Financial Services in Rancho Cucamonga, Calif., are the 2010 recipients of the Kim Bannan Eternal Flame Awards. The awards, presented by the California Credit Union League, recognize efforts that contribute to the success and future of Shapiro Group credit unions. The California-Nevada Credit Union league’s Shapiro Group is dedicated to assisting small credit unions under $23 million in assets. About 270 credit unions in the two states fall under that definition. This year’s recipient in the individual category, Macias, former Patelco senior vice president and now assistant to the president, was recognized as a long-standing champion of small credit unions. Through Patelco’s Adopt-a-Credit Union program, she helped small credit unions, including Mission SF FCU, Northeast Community FCU, Peoples Community Partnership FCU and East Palo Alto FCU over the years. The program offered sponsorship opportunities, strategic planning facilitation, funds to open branches, operating grants and zero-interest-rate share certificates to credit unions. The award recipient in the company category, CO-OP Financial Services, was honored for the assistance it provided this year to help small credit unions get involved in league advocacy efforts. For the past four years, the firm has donated $10,000 annually so CEOs and board members from small credit unions can attend the Credit Union National Association’s Government Affairs Conference in Washington, D.C. This year, CO-OP helped five credit unions attend the conference. Macias and CO-OP will be honored during the league’s Annual Meeting and Convention Nov. 15-17 in Anaheim, Calif. The awards were named after the late Kim Bannan, the league’s former vice president of credit union development and research and information.

Dupaco Community Alliant receive Iowa awards

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DES MOINES, Iowa (9/28/10)--Dupaco Community CU and Alliant CU,
Jean Hoeger, president/CEO of Alliant CU, was presented with the 2010 Professional Cooperative Spirit Award at the Iowa Credit Union Annual Convention. From left are: Patrick S. Jury, president/CEO, Iowa league; Hoeger; and Pat Drennen, Iowa Credit Union League board chairman.
Dupaco Community CU received the Heritage Award for lifetime achievement at the Iowa Credit Union Convention. From left are Patrick Jury, Iowa league president/CEO; David Klavitter, Dupaco senior vice president of marketing and public relations; Joe Hearn, Dupaco chief operating officer; Ron Mussehl, Dupaco board member; Bob Hoefer, Dupaco president/CEO; and Pat Drennen, Iowa league board chairman. (Photos provided by the Iowa Credit Union League)
both in Dubuque, Iowa, won awards during the Iowa Credit Union Annual Convention Sept. 22-24 in Bettendorf, Iowa. The Iowa Credit Union League awarded Dupaco with the Heritage Award, with recognizes lifetime achievement in the credit union industry. Dupaco was the first credit union in the state to convert to a community charter from a single-sponsor organization in 1985 and was the first credit union in the state to approve direct solicitation of its employees to make political action committee contributions through payroll deducation. The league also awarded Jean Hoeger, president/CEO of Alliant CU, with the 2010 Professional Cooperative Spirit Award. Hoeger has increased Alliant’s field of membership from 1,300 members in 1982 to nearly 10,000 members today. She also has been involved with the Iowa league’s Growth Commission, Hike the Hill campaigns, and the Serving the Underserved Task Force. Hoeger also worked to implement an Individual Development Account program at her credit union and creating a relationship with Operation: New View, which offers free financial education classes to the local community. Next year’s convention will be Sept. 14-16 in Des Moines.