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CU System briefs (09/08/2011)

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* BALTIMORE (9/9/11)--A Maryland woman was sentenced to six years in prison for bank fraud conspiracy and aggravated identity theft related to a scheme to obtain fraudulent loans from credit unions where she worked. Latesha Brown, 33, of Edgewood, Md., also was sentenced to seven years' supervised release after the prison term and ordered to pay restitution of $124,000. From September 2004 through August 2010, a group of family and friends allegedly sought fraudulent loans which Brown allegedly facilitated or processed. From March 2007 to Aug. 5, 2010, Brown allegedly applied for jobs at 33 credit unions and for membership in 29 credit unions, often reapplying to the same institution on multiple occasions with new false identities. In some, she applied for loans in her name and other names, using stolen ID information, said the plea agreement. Christopher Houston, 34, of Edgewood and Donald Brown, 31, Elkton, pleaded guilty to related charges of bank fraud conspiracy and are to be sentenced Sept. 22 (US Fed News Sept. 7) … * BARTONVILLE, Ill. (9/9/11)--David E. Morris, 48, East Bluff, Ill., faces up to 60 years in prison on two charges of holding up the Redbrand CU twice last month. The Bartonville, Ill.-based credit union was robbed Aug. 17 and again Aug. 29. Each time the robber implied he had a weapon. Police traced a cell phone number to Morris, said the Peoria Journal Star (Sept. 8) … * SACRAMENTO, Calif. (9/9/11)--California's Credit Union Program in the state's Department of Financial Institutions has appointed Janet Nozaki as financial institutions manager in the Los Angeles area. Nozaki was formerly chief examiner of the Financial Service Division and supervising examiner for the Division of Financial Oversight (DFI Monthly Bulletin August) … * LANSING, Mich. (9/9/11)--William Taylor, president/CEO of Motor City Co-op CU, Clinton Township, Mich., has retired, effective Thursday, after more than 40 years in the credit union industry. He had served as president/CEO of the $116 million asset credit union since 2009. He also served as president/CEO of First Financial CU. Motor City Co-op CU's Board of Directors has appointed Steven Andrews as its new president/CEO. Andrews has worked in the credit union industry for more than 12 years as an auditor. He has been executive vice president/chief financial officers of the credit union since 2006 (Michigan Monitor Sept. 6) …

California DFI to implement efficiency ratio for CUs

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SACRAMENTO, Calif. (9/9/11)--The Credit Union Program in California's Division of Financial Institutions (DFI) has implemented an efficiency ratio to quantify the efficiency of a credit union's operations. "Despite the current fact that the efficiency ratio is not considered a 'key ratio' by the National Credit Union Administration (NCUA) in the review of a credit union's earnings, the efficiency ratio has been a commonly used measure of efficiency in the financial industry for some time," said DFI in its Monthly Bulletin for August, released Thursday. More credit unions have begun to incorporate efficiency ratio targets or limits in formal policy as a means to better evaluate their own performance and to provide for better planning, said DFI. The ratio will also help examiners better identify and communicate the earnings performance of credit unions, the agency added. The efficiency ratio is basically overhead costs (without including the provision for loan loss expense) divided by operating income. It provides in cents how much it costs to produce each dollar of revenue, said DFI, which added that the lower the ratio, the better the credit union's performance. DFI said it is not required that credit unions use the ratio nor that examiners always include it in examination reports. "We recognize that, although the efficiency ratio is an important measure of a credit union's performance, examiners understand that the efficiency ratio is only a part of the picture … however, the efficiency ratio is a valuable tool and the Credit Union Program encourages its use in the examination of its credit union licensees."

CUs remember lessons of terrorist attack

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MADISON, Wis. (9/9/11)--As the nation marks the 10th year since the Sept. 11, 2001, terrorist attacks on American soil, credit unions--some directly affected, others indirectly--will be among those reflecting on the impact that day made on American history as well as how they operate. For one credit union--Xcel CU--the events of that day literally transformed the way it does business, according to Xcel President/CEO Linda McFadden. After its main branch in the World Trade Center's Tower One in New York City was destroyed in the terrorist attack, Xcel decided not to open another facility in the city. Instead, it moved its headquarters to Bloomfield, N.J. Before its office in the World Trade Center was destroyed, Xcel’s member service was driven primarily by in-branch transactions, McFadden told News Now. Today, she estimates members do 90% of their transactions electronically. Because the events also forced the Xcel to temporarily close its branch at 26 Federal Plaza, the credit union had to get creative in how it served its members, McFadden said. “First, we let members know we were alive and well through our website,” she said. “We let them know they could reach us and conduct transactions over the telephone, online or through ATMs.” The credit union had already moved its phone and information technology systems to New Jersey after the 1993 World Trade Center bombing. “We were able to make payroll that Friday (after Sept. 11), which most financial institutions weren’t able to do,” McFadden said. In the weeks following the credit union operated out of two crowded offices and joined New York State Shared Service Centers. McFadden recalled how one member service representative met a member at a subway station to personally deliver a cash withdrawal. The 10th anniversary of the Sept. 11 terrorist attacks has not created a noticeable emotional response from employees, McFadden said “Most of our staff we had at that time either moved on or relocated,” she said. The events also forced Municipal CU out of its 22 Cortlandt St. headquarters, across the street from Ground Zero. The credit union’s employees operated from temporary spaces in lower Manhattan, Brooklyn and, in some cases, their homes, until the credit union returned to its Cortlandt St. site in May 2002 (News Now May 24, 2002). The credit union, which serves firefighters, police officers, and other municipal and governmental employees, lost 129 members in the attacks. CUNA Mutual Group estimated damage costs to credit unions at about $6 million--$4 million in life insurance and $2 million in property and casualty claims (News Now Oct. 12, 2001). Despite the events, credit unions rebounded and proved that the cooperative experience can get people through the worst of events. They learned the nation's financial system could survive when institutions take measures to back up their data and processes. Credit unions met members' needs because they had business continuity plans in place. Defense credit unions assisted members in preparing for deployment to war. The attacks also turned the Web and cell phones into significant, instantaneous channels of communication that eventually changed the way credit unions get their news and communicate with each other. Credit unions learned that communications were important and vulnerable, and they beefed up their computer security. Credit unions saw more laws--such as passage of the Bank Secrecy Act's anti-money-laundering and other provisions--and became familiar with compliance requirements over a range of laws such as the Soldiers and Sailors Relief Act. For a full range of lessons credit unions learned, use the resource link. Credit unions across the nation are conducting observances and ceremonies to honor the victims of the terrorist attacks. A few examples of the kinds of activities that are taking place are:
* Andrews FCU, Clinton, Md., began events Friday and Saturday with a display of flags, and employees wearing remembrance pins. Donations are being made to several organizations to provide supplies to service members in transition from Iraq and Afghanistan back to hospitals close to their home or duty stations. Also, the credit union is sponsoring commemorative races, including The New Jersey Run for the Fallen and the Beast of the East McGuire Mud Run (credit unionsonline Sept. 6). * Bay Area CU, Oregon, Ohio, remembered the anniversary by raising money and awareness for Honor Flight Northwest Ohio. Along with accepting donations at one of its branches, the credit union will offer members and the community a chance to purchase commemorative coins, stamps and memorabilia. One hundred percent of the profits from the sales will go to Honor Flight Northwest Ohio, so local veterans can travel to Washington, D.C., to see the monuments dedicated to their honor. The “Always Remember September 11” event will run through Sept. 23 and precedes this year’s final fly day of Honor Flight Northwest Ohio, Sept. 28. * Global CU, Spokane, Wash., began its 2011 fundraising drive Sunday for Operation Spokane Heroes--an outreach program to support members of the uniformed services and their families--to sell “Hero Cards.” The cards were sold at the entrance gate to the Spokane Interstate Fair on Military Appreciation Day, kicking off a six-week long initiative going into October. The cards are displayed with a hero’s name, helping to raise money and awareness for the program. Last year’s program raised $976. * First Northern CU, Chicago, and a local auto dealer held a live radio broadcast at Lou Bachrodt Auto Mall to support the troops. They asked the community to bring a decorated hand and a dollar to benefit Operation Homefront Illinois. They displayed two steel beams from the World Trade Center that were part of the Winnebago County 9/11 Emergency Responders Memorial being built in Rockford, Ill. The donation drive was held Aug. 6 (credit unionsonline Sept. 6). * LGE Community CU, Marietta, Ga., joined the local Kiwanis Club for a “Field of Flags" to show solidary with the community. A flag will be placed in Kennesaw Mountain National Battlefield Park for each life lost in the attacks. The flags will fly through Sept. 16. Citizens can sponsor and carry a flag. The credit union has helped promote the event by sending an e-mail to its membership and placing information on its website and Facebook page (creditunionsonline Sept. 6).

Two Michigan CUs set to merge

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JACKSON, Mich. (9/9/11)--American 1 FCU, Jackson, Mich., and Michigan Services CU, Southfield, Mich., are merging this fall, with the $177.4 million asset American 1 being the continuing credit union. After months of research and negotiation, American 1’s board voted to adopt a resolution to merge with Michigan Services. By adopting the merger, American 1 will become a state- chartered credit union, making its name American 1 CU. The vote was put to the American 1 membership and finalized at a special meeting on Sept. 7. The board of directors for Michigan Services CU, with assets of $10.9 million, said that a consolidation with American 1 offers the ability to better serve its current 1,300 members.

Southeastern CUs launch 1.3M co-op ad campaign

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BIRMINGHAM, Ala. and TALLAHASSEE, Fla. (9/9/11)--The League of Southeastern Credit Unions (LSCU) launched a $1.3 million cooperative advertising campaign this week throughout Alabama and Florida to educate consumers about how credit unions are different.
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One hundred credit unions in Alabama and Florida are participating in the campaign, which uses TV, radio, billboards, online ads, and the tagline, “Credit unions: we’re giving banking a better name.” The campaign concept, which was developed by Scout Branding Co. of Birmingham, Ala., is based on research that indicates 60% of consumers don’t know what a credit union is. The campaign, geared toward Gen X, is designed to educate consumers about how credit unions are different than other financial institutions and save their members millions of dollars each year. The media buys in each of the 14 markets in the two states include a heavy online buy and television buys during shows watched by Gen X. Consumers who surf local and national websites will see banner ads and pre-rolls before online videos. Facebook’s 8.6 million users in Alabama and Florida also will see the image campaign ads. “Since the economic meltdown in 2008, credit unions have focused on providing for their membership,” said LSCU President/CEO Patrick La Pine. “Credit unions are unique, in that any profit made is returned to members in the form of lower fees and better rates on loans and savings.” The ads direct consumers to the website, It has three interactive buttons where consumers can see what they would save if they had their mortgage loan, auto loan, and a credit card with a credit union. Consumers may compare the average rates between a credit union and a bank by viewing the “what’s better?” page. Real-time rate data from Datatrac provide the comparison information, which shows the credit union rate is better in almost every category. A search function on the website to makes it easy to find a credit union nearby. The radio ads, outdoor ads, and the website have a shared-branching component. Credit unions are unique in that many share services. Members only need to look for the shared branching “swirl” to know their credit union is nearby. “Our website shows how much consumers can save if they had their loans or credit cards with a credit union,” La Pine said. “For most, it will be eye-opening the amount they would save with a credit union.”

Congressman meets with Greater Alliance FCU

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HIGHTSTOWN, N.J. (9/9/11)--U.S. Rep. Scott Garrett (R-N.J.) met with senior management from $156 million asset Greater Alliance FCU, Paramus, N.J., on Aug. 9 to discuss recent events in Washington and the needs of his constituents.
U.S. Rep. Scott Garrett, left, (R-N.J.) met with senior management from Greater Alliance FCU on Aug. 9. Garrett is shown with Joe Pedone, vice president of new business development for Greater Alliance FCU. (Photo provided by the New Jersey Credit Union League)
Greater Alliance senior managers briefed Garrett on the credit union’s efforts to help provide value for the average family, individual or business during the sluggish economy New Jersey Credit Union League (The Daily Exchange). “Given today’s economic turmoil, Greater Alliance is better equipped and has positioned itself to help everyone in Bergen and Passaic Counties save money and pay less for any loans they may need,” said Joe Pedone, Greater Alliance vice president of new business development. Garrett provided the credit union’s senior management with a brief overview on his position regarding the nation’s debt issues and what he believes should be done to help the economy going forward.

Filene Idea Idol contest seeks next CU innovation

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MADISON, Wis. (9/9/11)--That latest group of proposed innovations from the Filene Research Institute’s i3 think tank will take the stage--American Idol style--during the first Idea Idol, at 2 p.m. (CT) Sept. 14. Representatives from the i3 program will present four product or service ideas in three-minute pitches, followed by a brief question-and-answer period. The online audience will be asked to provide feedback and vote for their favorite idea, based on the impact on consumers, on the credit union, and their willingness to pilot and implement the idea. The four ideas include:
* Flex.One--a first mortgage combined into a Home Equity Line of Credit with all the capabilities of a checking account; * Heartfelt Hands--a tool that uses the “angel tree” concept of recognizing an emergency financial need and matching that financial need with members who are willing to help; * HomeTrak--a program that allows homeowners to keep track of the remaining life and replacement cost of all appliances, mechanicals, and big-ticket items in their homes; and * The Signal--a website that helps consumers navigate through the questions and complexities of disability benefits and asset building.

PCUA CUs closed today due to floods

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HARRISBURG, Pa. (9/9/11)--The Pennsylvania Credit Union Association (PCUA) is closed today due to flooding in Harrisburg, PCUA announced Thursday. The Susquehanna River flows in front of the association's headquarters and was projected to rise to more than 28 feet by today. Flood stage is at 17 feet. Thursday morning the water level had reached nearly 20 feet, said PCUA (Life is a Highway Sept. 8). The association also closed early on Wednesday and Thursday due to the flooding. "Even though we closed the office early Wednesday afternoon, some employees were unable to make it home due to flooded roads," said PCUA President/CEO Jim McCormack Thursday. "With conditions worsening overnight, more than half of the employees could not make it in to work [Thursday]. Employee safety is our main concern," he added. McCormack said credit unions are also impacted by the flooded conditions, "and we've had reports that some people are having difficulty getting to the turnpike to head for Seven Springs and the Fall Leadership Conference." Rain has fallen throughout central Pennsylvania since Monday as remnants of Tropical Storm Lee caused flooding in the eastern U.S. Pennsylvania and New York have evacuated thousands of people. Rivers and creeks were already swollen from Hurricane Irene's move through the region in late August (Reuters Sept. 8) . In Pennsylvania, major flooding was expected this weekend from York and Lancaster to Williamsport