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Whats around the bend in biometrics for CUs

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MADISON, Wis. (9/28/12)--What kinds of measures will credit unions use to protect their members' identity and information--especially in mobile world?  Biometrics has seen some major developments this year that could render passwords, PINs, log-ins and even employee ID access cards obsolete. According to a number of sources, these are already considered passé.

Instead, credit unions should be thinking physically: fingerprints, palms, eyes, heartbeats and even one's feet will be the devices of future access. No longer will it be what one knows (such as those intricate passwords), but rather what or who one is, that will gain access.

Something as simple as getting off on the right foot may mean the difference between access to information or a facility at the credit union. Carnegie Mellon University has teamed with Ottawa, Canada-based Autonomous ID to transform biometrics monitoring into a new field--pedo-biometrics. They hope to create physical "passwords" that require the physical presence of a specific person to unlock access by testing shoe insole sensory system prototypes for a variety of identification uses. BioSoles are special insoles that can recognize individuals based on their unique walk.

Pedo-biometrics could potentially apply in medical diagnosis, forensic science, privacy, security and automation, said Vijayakumar Bhagavatula, professor of electrical and computer engineering, in a university press release in July. Researchers expect the benefits to go beyond security, to earlier detection of medical conditions such as diabetes or Parkinson's disease.

"The continuing threats to military personnel and critical infrastructure and the growing national cybersecurity vulnerabilities demand a new breed of credentialing technology, and what our group has achieved certainly puts a whole new spin on things," said Todd Gray, chairman and president of Autonomous ID.

The new lab will complement work in the use of the iris of the human eye as a "fingerprint" to trap cybercriminals.

Another group, the Biometric Research Group, indicates that the market for residential and commercial security products will reach $25 billion by 2017, with biometrics accounting for $3.5 billion of the market, according to Biometricupdate.com. (Sept. 26). Although the U.S. military and government sector dominate in the current market, the group said it expects commercial space to grow in the field.

Fingerprint technology, which has already got a thumbs' up from some credit unions, is the most established and widespread form of biometrics. It will represent $3 billion of the market in 2017. According to Biometricupdate.com, fingerprint technology is the most economical--a fingerprint lock can cost from $120 to $200 per unit. This technology also has small storage space, reduced power requirements and resists changes in temperature and background lighting. Biometric Research Group anticipates this technology will experience exponential growth.

One credit union using fingerprint technology is $2.15 billion assetService CU, based in Portsmouth, N.H., with 164,000 members worldwide and more than 600 employees. It uses DigitalPersona's U.are.U Fingerprint Readers to secure access to applications and member information. It needed an authentication solution that could simplify and secure access to more than 100 applications and websites employees use each day. The fingerprint allows employees to log in to the network once and acts as a password vault. It has resulted in the near elimination of password-related network and application lockouts and increased productivity, said the credit union in a July press release.

Voice biometrics is another area that is attracting an increasing number of financial institutions worried about data breaches. They turn to voice biometrics to improve security, lower costs and reduce consumers' frustration with the authentication process, says Opus Research Advisory  (Sept. 26).  Five million individuals are enrolled in systems or services that recognize their voiceprints as unique, personal identifiers. By 2015, this number of "protected" individuals is expected to reach 90 million. Opus noted some companies are turning to voice authentication in the cloud to make it easier to adopt, more scalable and enables pay-per-use pricing.

Last year, Phoenix-based Desert Schools FCU deployed voice biometrics using Finivation Software technology for password re-sets and high-risk transactions (Homeland Security News Wire Dec. 6). It planned to allow members to call its call center and leave a voice mail. The voice biometric software uses a mathematical algorithm to identify and record the member's unique voice characteristics for future reference. After that, the member's voice serves as a password to verify their identity.

The Federal Bureau of Investigation's Biometric Center of Excellence has noted that voice recognition systems are popular for remote authentication because of the availability of devices for collecting speech samples via telephone networks and computer microphones. Employing voice recognition requires no special equipment other than a good microphone, such as the one on a mobile phone, reports Computerworld (Sept. 25).

Waving the  palm of one's hand is also being studied as a biometric solution for security. Intel recently demonstrated a palm vein detector in which a researcher waved his hand to log into Windows 7 and view his bank account. When he moved from the computer, it locked Windows and went into sleeping mode. Once the device recognizes the user, that identity tag can be forwarded to any number of accounts securely, from banks to social networks, -mail or business networks (zdnet.com Sept. 27).

And then, there's the heart beat. Intel acquired Israel-based Idesia Biometrics in July. Idesia provides technology through which heart beats can be used to recognize users on computers and mobile devices. Intel is hoping to create a sensor that could go into a smartphone or tablet that could monitor a heart beat.

Mich.s tax rate changes affects IRA calculations

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LANSING, Mich. (9/28/12)--Two new state laws that become effective Oct. 1 will affect the way Michigan's credit unions handle individual retirement accounts (IRA), said the Michigan Credit Union League.

Gov. Rick Snyder decreased the income tax rate from 4.35% to 4.25% when he signed Public Act 223 of 2012 on June 26, said the league on its website. At that time, Snyder also signed Public Act 224 of 2012, a bill that increases the personal and dependency exemption for personal income tax payers up to $3,950 per exemption.

As a result of the changes, credit unions in the state will be affected when calculating the withholding tax for IRA withdrawals and distributions. In January, the state mandated income tax on retirement income, which includes pension and IRA distributions.

When the new tax on retirement earnings was implemented, taxes were based on a tax rate of 4.35% and a personal exemption option of $3,700. The reduction in the income tax rate and the increased exemption amount will benefit Michigan taxpayers and reduce their tax burden, the league said.

California league to recognize CU leaders

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RANCHO CUCAMONGA, Calif. (9/28/12)--Six California credit union leaders and volunteers--including 2012 Leo H. Shapiro Lifetime Achievement Award recipient Bruce Barnett, retired CEO of Fresno-based Educational Employees CU--will be honored at this year's California and Nevada Credit Union Leagues' Annual Meeting and Convention.

During his 32-year career, Barnett was involved with credit unions in California's Central Valley and at the state level beginning in 1976 when he became CEO of Electrical Workers CU. In 1982, he became assistant general manager of Educational Employees CU and became president/CEO in 1988. Under his leadership from 1982 through 2008, the credit union grew to a $1.5 billion asset credit union with 12 branches.

Award recipients, in addition to Barnett, include:

  • Distinguished Service Award: Linda White, CEO of United Health CU (UHCU), Burlingame;
  • Outstanding Volunteer Awards:  Roy Brooks, board treasurer of Mid-Cities CU, Compton, and Hugh Rafferty, board chairman, CoastHills FCU, Lompoc; and
  • Tomorrow's Star Awards:  Courtney Derby, membership development manager of San Francisco FCU, and Jennifer Kato, accounting manager, Nikkei CU, Gardena.
White has served the past 14 years as CEO of UHCU. She serves on the California Department of Financial Institutions' Advisory Committee and as president of the leagues' El Camino Chapter.  She is a founding member and secretary of the Healthcare Credit Unions of America, and a founding member of the Credit Union Bay Area Executive Coalition.

Brooks became a volunteer at Mid-Cities CU in 1969. He served as chairman of the credit union's personnel and finance committees and is currently board treasurer. He also served as interim CEO, on the California Credit Union League's Audit Committee and on the board of governors of the leagues' Long Beach (now Beach Cities) Chapter.

Rafferty has been on the board of CoastHills FCU for eight and a half years and board chairman since 2008.  He has been involved in a CEO transition, a branch expansion of three facilities and a merger with Atascadero FCU, and supported the addition of business services and development of a 5019(c)(3) organization to increase community support and better serve the underserved. He is vice chairman of the National Association of Credit Union Chairmen and worked in 2011 with leagues to establish a Chairman's Circle network for credit union chairmen in California and Nevada.

Derby, who joined San Francisco FCU in 2009, chaired the credit union's Community/Share community giving and outreach committee; promoted credit union services in the community; and developed a youth program that provides youth-specific accounts, financial education and financial resources for members age 6-17. Derby also led the credit union's efforts to give back to the community through donations, volunteerism and fundraising.

Kato has been in the movement seven years and is the first employee from Nikkei CU to have graduated from Western CUNA Management School. She was an honors graduate in 2009.  She has held various positions in the leagues' Beach Cities Chapter, including secretary, education chair, and treasurer, and she assists a number of credit unions with accounting functions.  Kato helped organize the 2012 spring training, "Inspire Me," for the Southern California Credit Union Alliance.

First Carolina Financial Conference featured AL experts

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GREENSBORO, N.C. (9/28/12)--More than 70 attendees gathered in earlier this month for First Carolina Corporate CU's 11th Financial Conference, in Greensboro, N.C., which featured insight on new regulations, balance sheet strategies and asset-liability management (ALM).

Nine attendees were recipients of grants from the Carolinas CU Foundation.

"Credit union CEOs, chief financial officers and other managers responsible for the balance sheet need up-to-date economic and financial information to make informed decisions," said Kecia Brooks, First Carolina Corporate CU vice president of member communications. "The aim of First Carolina's Financial Conference is to provide a comprehensive learning experience, as well as opportunities for discussion, and interaction with top experts in the field and each other." 

Roy Hartley, managing director of Protective Securities, First Carolina's brokerage services partner, shared insights about municipal securities. "Although munis are not common investment holdings on many credit union balance sheets, it's one area investment officers need to explore as an alternative to provide a nice complement to their existing portfolio," Hartley said.

John Worth, chief economist at the National Credit Union Administration (NCUA), gave an economic update, while other NCUA staff provided information on regulatory changes.

Of special interest was a talk on the NCUA's new interest rate risk (IRR) regulation, which becomes effective Sunday. Lisa Boylen, First Carolina's senior ALM analyst, led a session on the rule, which requires most federally insured credit unions to have a written policy on managing IRR and a program for implementation. Boylen also discussed ALM reporting.

The conference also included a discussion on the future movement of the London Interbank Offered Rate, or LIBOR, by Ira Jersey, director of interest rate strategy at Credit Suisse. Mark Beasley, the Deloitte Professor of Enterprise Risk Management at North Carolina State University, spoke on ways to strengthen enterprise risk management procedures and practices.

Study Savings accounts better option than CDs

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MADISON, Wis. (9/28/12)--Savings accounts may be a better option than certificates of deposit (CDs) in 42% of U.S. states, according to the most recent study by Go Banking Rates.

CDs--long regarded as the high-yield alternative to traditional savings accounts--no longer provide a sure bet in economic conditions that have essentially leveled the playing field, the study said.

Go Banking Rates collected the average savings account rates and average six-month CD rates offered by credit unions and community banks in each state, and in Washington, D.C., as well as national and online banks. It then compared the difference in return between both deposit products. While CD interest rates were higher than savings account rates in nearly every instance, the interest-rate gap between the two products may not always be wide enough to warrant locking in funds for a six-month commitment, said Go Banking Rates.

The difference between savings and average CD rates is 0.1% or less in 42% of the states. In Delaware, for example, average savings account rates are higher than that of six-month CD rates. It's not until depositors reach two-year CD terms that they stand to earn about one percentage point higher in interest than a traditional savings account offers.

Most consumers will find that the liquidity offered by a savings account is worth the slightly reduced interest rate in these states, and should opt for a savings account over a short-term CD if immediate access to funds is a concern, the study indicated.

However, in states such as West Virginia, Minnesota and Maine, where average six-month CD rates are closer to 0.2% higher than average savings account rates, it may be worth it to agree to limited accessibility in order to give savings that extra boost, the study said.

Four CU leaders presented awards by Iowa league

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CORALVILLE, Iowa (9/28/12)--The Iowa Credit Union League honored four credit union leaders at the Iowa Credit Union Convention in Coralville, Sept. 19-21.

Click to view larger image From left: Joe Hearn, chairman, Iowa Credit Union League; Paul Becker (Heritage Award winner), retired CEO, Citizens Community CU; and Patrick S. Jury, league CEO/President.
Click to view larger image From left: Joe Hearn, chairman, Iowa Credit Union League; Paul Lensmeyer (Professional Cooperative Spirit Award winner), CEO, Ascentra CU; and Patrick S. Jury, league president/CEO.
Click to view larger image From left: Joe Hearn, chairman, Iowa Credit Union League; Sally Miller and Art Miller (Volunteer Cooperative Spirit Award winners), Dubuque Teachers CU; and Patrick S. Jury, league CEO/President.
Click to view larger image Murray Williams (left), chief operating officer, Iowa Credit Union League, and Kathryn Johnson (Young Professional of the Year Award winner), director of operations, Sioux Valley Community CU. (Photos provided by the Iowa Credit Union League)
Paul Becker, Citizens Community CU, Fort Dodge, received the 2012 Heritage Award for demonstrating extraordinary commitment, service and leadership in the credit union movement. Becker has gone beyond the expectations of a credit union leader, said the league. His dedication to moving the credit union world forward is visible at not only the local level, but also Becker has held many roles at the regional and national level.

With more than 36 years of leading Citizens Community CU, Becker has improved the financial lives of thousands, not only within his community, but also statewide and nationwide, the league noted.

Paul Lensmeyer, Ascentra CU, Bettendorf, was presented with the 2012 Professional Cooperative Spirit Award in recognition of this outstanding service, commitment and leadership in the credit union movement. Lensmeyer's commitment to diversity and change within the credit union industry has set him apart as a relentless credit union champion, said the league's announcement.

Lensmeyer believes in the power of reaching out to the Hispanic market and has worked closely with Coopera, a partner of the Credit Union National Association, to build a program so credit unions can reach that market and make a difference in his community. Lensmeyer is committed to the "people helping people" philosophy and is an example of the cooperative spirit, the league said.

Art and Sandy Miller of Dubuque Teachers CU are the 2012 recipients of the Volunteer Cooperative Spirit Award for exemplifying the spirit of the credit union industry and the community they serve. Through their credit union leadership and engagement, they have helped their credit union increase its membership by nearly 400%.

The Millers are commended for their dedication to their work, but it's especially noteworthy when done on a volunteer basis, said the league, adding that they go above and beyond the call of duty to be there for their credit union, their members and their staff.

The league's 2012 Young Professional of the Year Award was created this year to honor outstanding professionals under the age of 35. Kathryn Johnson, Sioux Valley Community CU, Sioux City, is the recipient of this year's award for demonstrating the credit union philosophy of "people helping people" every day through hard work and dedication.

For the past 16 years, Johnson has given her time to ensure the success of not only her credit union, but the credit union movement. When her credit union CEO tragically died this year, Johnson went above and beyond to keep the credit union moving. In doing so, she earned the respect of her board and staff for putting her knowledge and experience to work.

Louisiana CUs grew several hit milestones in 2Q

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HARAHAN, La. (9/28/12)--Louisiana's 212 credit unions ended the second quarter with $9.29 billion in total assets, and several Louisiana credit unions hit asset milestones this quarter as well, according to the Louisiana Credit Union League.

Assets milestones reached by the state's credit unions include:

  • Exceeded $10 million--New Orleans Clerks & Checkers FCU ($10.08 million) and Morton Weeks FCU in Lydia ($10.10 million);
  • Exceeded $50 million--First Castle FCU in Covington ($50.97 million).
Louisiana credit unions experienced 6.2% asset growth, compared with 6.9% nationally; 6.4% savings growth, compared with 7% nationally; and 3.7% loan growth, compared with 3.5% nationally.

Membership growth for the second quarter in the state was 0.9%, compared with 2.4% nationally. The state's credit union membership growth is lower than the nation for the second quarter of 2012, but it is higher than the -0.2% growth the state's credit unions had at the end of 2011. 

At the end of June, the nation's 7,103 credit unions had $1.02 trillion in total assets.

The league works with the Credit Union National Association's Economics and Statistics Department to analyze quarterly data submitted by credit unions to the National Credit Union Administration. It then provides a quarterly report showing trends in various areas including loan and savings growth, risk trends, membership trends and other areas.

The Louisiana league also provides a "milestones" report that looks at top credit unions in the areas of loan penetration, share draft penetration and average savings balances. The report highlights credit unions that reached and exceeded certain asset amounts, members and loans.

CU goes extra mile to approve student loan

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WALL TOWNSHIP, N.J. (9/28/12)--Matthew Durst, a member of First Financial FCU, Wall, N.J., was determined to attend Rutgers University this fall. First Financial FCU helped Durst turn that dream into a reality with some personal assistance when other financial institutions denied him credit.

First Financial was among the financial institutions that had denied Durst's loan application but members of the credit union's loan department were touched by his story. They recommended that he send an e-mail formally requesting a re-evaluation of his application.

First Financial President/CEO Issa Stephan and Chief Operating Office Alice Stevens personally reviewed Durst's file and took note of his good relationship with the credit union, according to the New Jersey Credit Union League (The Daily Exchange Sept. 27).

"After we received Matthew's e-mail, we decided to invite Matthew and his mother to our office to hear their story in person and see how we could help this family," Stevens told the New Jersey league.

After meeting Durst face-to-face, the credit union's leadership decided to approve the loan application. "Matthew's maturity and commitment to his future were very impressive--and that couldn't be overlooked," said Stevens.

"Everyone deserves a second chance and sometimes that second chance can change an individual's life," said Stephan.

Filene report Debt either solid tool or slippery pit

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MADISON, Wis. (9/28/12)--A new report on lending from the Filene Research Institute "traffics in human insights" rather than the percentages and statistics that are the focus of many financial-oriented studies.

The lending process creates an intense relationship between emotional and financial factors, researchers found in "The Culture of Borrowing and Debt: An Ethnographic Approach," based on interviews with more than 100 members involved in the lending process at 11 credit unions nationwide.

"Like a tugboat pushing a ship in the harbor, they are linked," Filene Research Director Ben Rogers wrote in the report's executive summary. "For some, emotion is the tugboat; for others it's the ship."

Among the implications for credit uniond offered in the report:

  • Many members perceive credit unions as social institutions first and financial institutions second. The implications are that high-touch and education-based interactions are expected, as are underwriting criteria that are more flexible.
  • Convenience is (still) king. Interviews confirmed separate research that even loyal credit union member will default to the path of least resistance in obtaining a loan, even if the deal isn't as good.
  • Members often appreciate tough love. Many members expressed respect and even appreciation when the credit union couldn't make the loan. Credit unions were advised to communicate this message in a friendly way.
  • Positive experience helps bind members to their loans and to the credit union. Personal loans, mortgages, and using credit cards (but paying them off monthly) are all loans that members see as healthy borrowing. Helping members see the value of other types such as auto and student loans will help them be more responsible, the report said.
  • Even members with excellent finances and low debt don't always report personal satisfaction. Instead members who applied emotional and financial criteria to their borrowing decisions in what the report called a "golden mean" were most likely to report being happy.

CU System briefs (09/27/2012)

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  • HARRISBURG, Pa. (9/28/12)--U.S. Rep. Tom Marino (R-Pa.) visited the Susquehanna Valley Chapter of Pennsylvania Credit Unions during its monthly meeting Tuesday, says the Pennsylvania Credit Union Association (Life is a Highway Sept. 27). Marino expressed concerns about the climbing national debt, the probability for the future of the U.S. currency, and his support of term limits. From left are: Paul Nyman, chapter president and director, Horizon FCU; Traci Donahue, CEO of Horizon FCU; Marino; Barb Vitolo, chapter treasurer and CEO, Wyrope FCU; Tom Rachael,chapter vice president and CEO of PALCO FCU; and Robert Horner, CEO, West Branch Valley FCU. (Photo provided by the Pennsylvania Credit Union Association) …
  • HARRISBURG, Pa. (9/28/12)--Beaver, Pa.-based WEST-AIRCOMM FCU hosted a meet and greet with State Senate candidate Rep. Matt Smith Wednesday at its Moon Township branch, according to the Pennsylvania Credit Union Association (Life is a Highway Sept. 27). Smith is the Democratic nominee for the 37th District. The credit union hosted his opponent, Republican D. Raja, on Aug. 28. Smith has served in the State House since 2007 and is currently vice chair of the House Finance Committee. Smith said his first job out of college was working as a collector for Omega FCU. (Photo provided by the Pennsylvania Credit Union Association)…
  • LEOMINSTER, Mass. (9/28/12)--The board of directors at Leominster (Mass.) CU has appointed Paul D. Gilbody as president/CEO. Gilbody succeeds Gordon R. Edmonds who has served in the position since 2007 and who will retire on Sept. 30.  Gilboy has 25 years of diversified banking experience, most recently as executive vice president, chief operating officer and senior lender at Bay State Savings Bank in Worcester, where we worked for the past 15 years. He previously served as vice president at Fleet Bank …
  • NORTHAMPTON, Pa.(9/28/12)--Charles V. Pizzo, 82, of Whitehall, Pa., died Tuesday at home. He was former president of St. Elizabeth CU, Northampton,, Pa. He was a retired supervisor at Essroc Cement Co. in Coplay and Nazareth for 35 years before retiring in 1992. He is survived by his wife Irene, a son, a daughter, and two grandchildren. Viewing is today from 8:30 a.m. to 10 a.m. at Robert A. Hauke Funeral Home in Coplay, followed by services at St. Peter R.C. Church …