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In the media CUs as shrewd choice more growth stats

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TULSA, Okla., DENVER, and DES MOINES, Iowa (9/7/12)--Newspapers in Oklahoma, Colorado and Iowa this week reinforced what credit unions and their members already know--that credit unions are a shrewd choice for today's consumer and that's why they have grown in assets, members, deposits and loans.

A reader of the Tulsa World asked "why do some people leave banks to join credit unions?"

"Rising fees and scandals have fueled consumer misgivings about banks, driving them to the alternative: credit unions," said the World in "Credit unions can be a shrewd choice."  It turned to the Credit Union National Association (CUNA), which explained credit unions gained 1.3 million members last year. "Their mission is to provide members with affordable financial services," said CUNA spokesman Pat Keefe in the article.

It noted recent customer satisfaction surveys have indicated credit unions provide superior service, leading to satisfied members and a customer satisfaction rating of 89%--seven points better than the banking industry average.

Bankrate.com explained in the article that credit unions' expanding fields of membership makes them more accessible and they have better "very competitive" interest rates and fewer strings attached to their accounts, with 72% of credit unions in Bankrate's checking survey requiring no minimum balances to avoid fees.

Two other articles, like several the week before, have picked up state statistics based on the National Credit Union Administration's recently released analysis of how well credit unions are doing state by state. 

The Denver Post and Denver Business Journal Online reported Colorado credit unions are near the top of the list for both year-to-year growth and for deposit growth, noting that the state has 9.2% in asset growth during first quarter and an 8.8% increase in deposit growth for that period.

An article in the Gazette.com (Sept. 5) also pointed out that Iowa's credit unions recorded a 9.7% year-over-year increase in lending during second quarter, with the state ranking No. 3 in loan growth nationally and No. 2 nationally with a 12.2% deposit growth increase. Iowa credit unions saw a 12.5% jump in asset growth for the quarter, over second quarter in 2011.

The Iowa article also noted national credit union statistics, including a 1.2% increase in business lending to $40.2 billion, according to NCUA statistics.

To read the articles, use the links.

CUs winning dismissals on overdraft suits

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MADISON, Wis. (9/7/12)--Credit unions have begun winning court dismissals on a variety of grounds in multiple, duplicative lawsuits that have been filed against financial institutions over overdraft policies and processes.

However, new cases continue to be filed in the cookie-cutter, class-action lawsuits, which claim financial institutions manipulate the posting order to beef up overdraft fees. The Credit Union National Association is monitoring the trend and urging credit unions to make sure they are in compliance with regulations related to their overdraft policies and disclosures of any fees.

Out of nine lawsuits brought this year against credit unions, three suits have been dismissed by the courts.  The U.S. District Court for the Northern District of California dismissed two cases on Tuesday against credit unions because they had not been served with the complaints.  In such cases, the judge rules that plaintiffs "voluntarily dismiss, without prejudice, their claims against all defendants" in the matter. Although the plaintiffs were different in these two cases, they were represented by the same attorney.

A third lawsuit was dismissed last spring after a credit union argued that the complaint should be arbitrated instead of litigated under the terms of the credit union's membership agreement, which the member had signed.

In a case before the U.S. District Court in Alabama, a credit union on Aug. 31 filed a motion seeking dismissal of a lawsuit. In its motion, the credit union made several arguments for dismissal that may be of interest to credit unions, even though part of the case is based on state law and would not apply to other jurisdictions.

Among the arguments the credit union presented:

  • The lawsuit is misdirected since it is the merchant, not the credit union, who places a hold on a transaction that can delay access to funds. Transactions are not received by the credit union for settlement in any particular order, and often are received days after the transaction.
  • Plaintiffs have authorized the credit union to post debits in any order in their member account agreement, which authorizes overdraft charges.
  • The standard posting practices "are not new--either to the banking industry or to the laws that regulate it. Indeed, the discretion of financial institutions to post transactions in the manner they do has been explicitly recognized for years under both federal and state laws," according to the court document.
  • Plaintiffs fail to cite regulations that criticize the hold processes, and the Uniform Commercial Code "explicitly provides credit unions wide discretion in determining the order in which they will post transactions" to members' accounts.
  • Agencies that oversee credit unions, including the Alabama Credit Union Administration, National Credit Union Administration and the Federal Reserve Board," have issued regulations and guidance relating to overdraft charges, but have not dictated any particular transaction processing order."
The motion seeking dismissal also argued that the plaintiffs have failed to state a claim upon which relief can be granted, that some of the claims for breach of contract are not recognized under Alabama law, and plaintiffs admit they can avoid overdrafts with minimal self-diligence.

Dozens of lawsuits have been filed across the country against banks, resulting in a number of multimillion-dollar settlements. It was only recently that credit unions became targets of lawsuits that used templates that were worded identically. Most of the lawsuits claim financial institutions charge excessive overdraft fees as a result of manipulative posting and transaction holding practices.

Survey Why consumers use small-dollar credit

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MADISON, Wis. (9/7/12)--A new study by the Center for Financial Services Innovation (CSFI) tries to find the reasons that so many consumers use small-dollar credit (SDC) products for quick access to cash.

In "A Complex Portrait: An Examination of Small-Dollar Credit Consumers," CSFI looks at who SDC consumers are, how they decide to use an SDC product, how they fare once they use product, and what they think about the product they use.

Credit unions that offer short-term loans as an alternative to payday lenders' high-interest loans can keep in mind that that the top three loan attributes that mattered most to SDC consumers surveyed were: having quick access to money, the ability to qualify for the loans, and clear terms that aren't obscured by contract jargon.

In addition to providing these three needs, credit unions also can provide financial counseling and savings plans that are related to loans that attract SDC consumers.

Some other key findings from the research:

  • An estimated 15 million consumers used at least one SDC product in the past year.
  • The average household income for an SDC consumer was $32,000, compared with $40,000 for non-SDC consumers. However, 20% of SDC consumers had an average household income between $50,000 and $75,000.
  • Twenty-seven percent of SDC consumers had a credit card, compared with 61% of non-SDC consumers.
  • The top three reasons for funds shortage included: living expenses consistently more than income, payment due before paycheck, and unexpected events such as emergency expenses or income decreases.
  • While 66% of SDC consumers had no savings, more than half of those that had savings chose not to use it all and relied on credit instead.
To download the full paper, use the link.

Prize-linked savings CUs at forefront

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MADISON, Wis. (9/7/12)--Credit unions in the U.S. have been at the forefront of creating prize-linked savings accounts for members, but now banks are looking to catch up with the product offering.

In February 2009, the Michigan Credit Union League launched the Save to Win program that focuses on how much money people save, in contrast to most reward-type programs based on how much people spend (News Now Feb. 11, 2009).

The pilot program in Michigan was supported by a partnership with the Filene Research Institute, the Doorways to Dreams (D2D) Fund, and the Michigan league. Save to Win has been championed by Harvard Business School Professor Peter Tufano, founder of the D2D Fund. The program is underwritten by a grant from the Center for Financial Services Innovation (CFSI).

For every $25 that goes into a certificate of deposit, a credit union member gets one chance at winning a weekly lottery and one entry for an annual grand prize of $100,000.

Credit unions in other states such as Nebraska and Washington have adopted the program.

The North Carolina Credit Union League intends to launch a Save to Win program in January in North Carolina (Triangle Business Journal Online Aug. 28).

Until now, banks have mostly been kept out of prize-linked savings offerings by federal and state gambling laws. However, legislation passed this spring in Maryland could be a template for expanding specialty savings accounts to banks nationwide (American Banker Sept. 5).

Two years ago, Maryland passed a law that would change state rules to allow savings account raffles. However, that law had an amendment that required federal law to be changed to allow banks to participate in such a program, the Banker said.

The attempts to alter federal law stalled, so Maryland legislators passed a new bill this spring that permits credit unions and banks to participate in prize-linked savings programs as long as the contests are designed as sweepstakes and not lotteries, the Banker said.

The Maryland law took effect June 1, and if the state's program is a success, it could pave the way for more banks to begin offering savings raffles more broadly under the sweepstakes model, said the Banker.

Brazils Sicredi CU execs in Texas

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SAN ANTONIO (9/7/12)--Eleven credit union executives from Sicredi, a financial cooperative group in Brazil, arrived in San Antonio this week to learn about U.S. credit unions, said the Texas Credit Union League (TCUL).

Eleven credit union executives from Sicredi, a financial cooperative group in Brazil, arrived in San Antonio this week to learn about U.S. credit unions in a key initiative of the World Council of Credit Unions' International Partnerships program between the Texas Credit Union League and Sicredi. (Photo provided by the Texas Credit Union League)
The group of mid- and upper-management staff participated in the experience--a key initiative of the World Council of Credit Unions' International Partnerships program between TCUL and Sicredi (LoneStar Leaguer Sept. 6).

In addition to attending TCUL's two San Antonio conferences, Marketing & Business Development Conference and Leadership Conference and Expo, the group on Tuesday visited with Security Service FCU and Generations FCU, both in San Antonio.

The Sicredi group will be divided into three groups on Monday, with one group going to Houston, another group to Dallas and a third to El Paso. During a two-week period, the group will shadow credit union staff to learn how credit unions operate in the U.S.

The SICREDI executives will focus learning in the areas of:

  • Savings products and services, including how the credit union attracts savings and what products are most popular;
  • Loan products and services, including discussion on department structure, manuals, policies and regulations;
  • Marketing, including the structure of the credit union's marketing department; the use of technology and delivery channels; and the use of social media, and its challenges, strengths, opportunities and threats;
  • Social responsibility and how the credit union demonstrates the credit union difference;
  • Political advocacy;
  • Technology; and
  • Risk management.
The Texas credit unions hosting the Sicredi delegates are:

  • Energy Capital CU, Houston;
  • Houston Police FCU;
  • PrimeWay FCU, Houston;
  • Texas Trust CU,  Mansfield;
  • Resource One CU, Dallas;
  • InTouch CU, Plano;
  • GECU, El Paso;
  • FirstLight FCU, El Paso; and
  • OneSource FCU, El Paso.
Sicredi is one the major cooperative systems in Latin America, serving members in 10 Brazilian states.

Chicago CU offers RxSavings card

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CHICAGO (9/7/12)--North Side Community FCU, Chicago, is partnering with CVS-CareMark to offer a prescription discount card to members.

The North Side Community FCU RxSavingsPlus Discount Card requires no forms and or enrollment fee. North Side Community FCU members can print the cards from the credit union's website.

Average savings are 22% of the prescription filled, and 99% of prescriptions filled by CVS are covered by the card, North Side Community FCU said (North Side Community News and Events for September Sept. 5).

The card is accepted by more than 60,000 participating pharmacies nationwide, including CVS, Walgreens, Walmart and Costco.

CU System briefs (09/06/2012)

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  • ST. HELENS, Ore. (9/7/12)--Members of St. Helens (Ore.) Community FCU voted down an effort to recall five of its seven board members during a special meeting Tuesday. More than 175 members attended the meeting. In all 1,431 ballots were received and none of the board was recalled. The initiative occurred after the board had proposed a merger with another credit union. The proposal was later withdrawn. "The membership showed strong support of the board and voted against the recall initiative. In accordance with our bylaws, we gave a fair hearing to a small group of members who launched this petition," said President/CEO Brooke Van Vleet in the credit union's press release. "We are thankful that the majority chose to show appreciation for this dedicated group of volunteer board members who were elected to serve the membership. The board and senior management team are looking forward to advancing the strategic priorities of the credit union and developing a clear roadmap for 2013 and beyond." …
  • JERSEY CITY, N.J. (9/7/12)--Stanley Powell of Jersey City, N.J., has been sentenced to 12.5 years in prison and three years of supervised release after pleading guilty to one count of bank robbery. Powell allegedly robbed Liberty Savings FCU, Jersey City, N.J., $69 million in assets, in November 2010 (Nj.com and The Jersey Journal Sept. 5).  Powell reportedly left the credit union with $20,000 in cash, and was arrested near a relative's home in Jersey City …
  • LANSING, Mich.  (9/7/12)--Wyandotte (Mich.) FCU plans to change its name to Nu Path Community CU, effective on Jan. 2, according to the Michigan Credit Union League (Michigan Monitor Sept. 4). At that time, the $90 million asset credit union also will convert from a federal charter to a state charter. The credit union chose the name so it will stand apart from other local credit unions and to illustrate its dedication to guiding members on a path to financial success. It realized that certain sectors of its communities were underserved and it could not reach its full potential with a federal charter. The credit union said. Its expanded charter will allow it to serve anyone living, working, worshipping or attending school in Wayne, Monroe, Allegan, Ottawa and Kent counties, or anyone in its more than 100 select employee groups, churches and business associations …
  • HARRISBURG, Pa. (9/7/12)--U.S. Rep. Lou Barletta (R-Pa.) stopped by the headquarters of the Pennsylvania Credit Union Association (PCUA) Wednesday morning to meet with credit unions leaders from PCUA, Hershey FCU and Pennsylvania State Employees CU (PSECU). He was greeted by PCUA President/CEO Jim McCormack, who said PCUA will be following up with the congressman on the association's initiatives. Pictured from left are PCUA staffers Corinne Sherman and John Kilduff; Nate Muniz and Greg Smith of PSECU; Barletta; PCUA's Rick Wargo; and Paul Wagner of Hershey FCU. Barletta told the group he is sensitive to the impact small businesses make in their communities and has a desire to help them grow and succeed.  Credit unions play a very important role in providing financial services to their members, Barletta said.  He and his staff also toured PSECU. (Photo provided by the Pennsylvania Credit Union Association) …
  • LANSING, Mich. (9/7/12)--The Michigan Credit Union League (MCUL) & Affiliates has endorsed incumbent U.S. House member Gary Peters (D) and candidate Kerry Bentivolio (R) ahead of this November's general elections. Bentivolio will face David Curson (D) for the right to replace former congressman Thaddeus McCotter, who left office earlier this year. MCUL CEO David Adams said the league is "proud to support candidates committed to working with local credit unions and who support our priority of serving local communities and helping small businesses get access to much-needed credit and capital that can help them grow and create jobs." …

Lansing CUs league host Hondurans

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LANSING, Mich. (9/7/12)--Four Lansing, Mich.-area credit unions last week hosted representatives from a Honduran credit union as part of an exchange program sponsored by the World Council of Credit Unions (WOCCU) and the Michigan Credit Union League (MCUL).

A group from Educators CU of Honduras recently visited four Michigan credit unions as part of a cultural and industry exchange program sponsored by the World Council of Credit Unions and the Michigan Credit Union League. Here, the visitors are at the Michigan State Capitol.
Representatives from the Educators CU of Honduras met with Lansing Automakers FCU, CASE CU, Lake Trust CU, and Michigan State University FCU (Michigan Monitor Sept. 4).

Educators CU of Honduras was founded in 1971 by a group of teachers seeking access to financial services. The credit union now serves roughly 63,000 educators across Honduras, including members in 10 of the country's 18 states, with 12 points of service and one mobile branch.

With the help of an interpreter, the Michigan hosts explained the roles of technology, board governance and culture in daily U.S. operations. The Michigan credit unions also described the features and benefits of their products and services, and discussed how they work to retain and attract members.

Representatives from Educators CU of Honduras learn about board governance at Lansing (Mich.) Automakers FCU. (Photos provided by the Michigan Credit Union League).
The group also spent a day in the Lansing office of MCUL, meeting with staff to learn about the state trade association's role in advocacy, communication and education.

Lansing Automakers FCU hosted a reception in honor of the Honduran group at Lansing's R.E. Olds Transportation Museum. There, Lansing Mayor Virg Bernero presented the visitors with an official proclamation naming Aug. 27 "Educators Credit Union of Honduras Day" in Lansing.

The group also toured the State Capitol and General Motors' Grand River plant in Lansing.

Minn. Maxwell Herring Desjardins winners named

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ST. PAUL, Minn. (9/712)--The Minnesota Credit Union Network recently announced the winners of the 2012 Dora Maxwell, Louise Herring and Desjardins statewide competitions.

The Dora Maxwell Social Responsibility Recognition Award Program honors credit unions for their involvement in community projects and activities. Dora Maxwell Award first-place winners include:

  • Minnesota Valley FCU, Mankato, $50 million to $100 million in assets;                 
  • Greater Minnesota CU, Mora, $100 million to $200 million;            
  • City & County CU, St. Paul, $200 million to $500 million; and                   
  • Hiway FCU, St. Paul, $500 million to $1 billion.      
The Louise Herring Philosophy-in-Action Member Service Award honors credit unions for their practical application of the people-helping-people philosophy. The Louise Herring Award first-place winners include:

  • Star Choice CU, Minneapolis, less than $50 million;                        
  • First Alliance CU, Rochester, $50 million to $250 million; and        
  • TopLine FCU, Maple Grove, $250 million to $1 billion.
The Desjardins Youth/Adult Financial Education Award recognizes leadership within the credit union movement on behalf of youth/adult financial literacy. The Desjardins Youth Financial Education Award first-place winners include:

  • United Educators CU, Apple Valley, $50 million to $150 million; and
  • TopLine FCU, $150 million to $500 million.
The Desjardins Adult Financial Education Award first-place winners include:

  • Greater Minnesota CU, $50 million to $150 million; and                 
  • TopLine FCU, $150 million to $500 million.
Honorees will compete with other credit unions for national-level awards presented by the Credit Union National Association.