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Filed on March 2, 2004, published the first business day after.
- Inside Washington
- Thomas targets tax status of not-for-profits
- Customers share Greenspan GSE growth concerns
- NCUA Issues Advisory Bulletin on ALLL
- PALS workshop helps CUs make more mortgages
- FTC says more broker fee info confuses lenders
- CU System briefs
- Judge: Columbia has 'legal duty' to hold meeting
- Vermont parity in limbo, gives grassroots chance
- Southern California CUs launch second ad campaign
- Missouri CUs meet with lawmakers
- Louisiana Hill hikers focus on CU issues
- Largest mortgage, real estate portfolios listed
- CUNA selects Harland’s predictive marketing tool
- Share your compelling CU story at Future Forum
- RESPA changes topic of audio conference
- Latest scams, other topics highlight CUNA webinars
- Market News
- News of the Competition
- Tax tip: Know rules of miscellaneous deductions
- Diebold launches ATM, processing products
- Polish CUs pass banks as largest financial network
Inside Washington
- WASHINGTON (3/3/04)--The Office of the Comptroller of the Currency is telling national banks to be responsive to inquiries from state regulators. The agency said national banks should resolve consumer complaints fairly and expeditiously regardless of the source of the complaint. In most cases when a national bank receives a consumer complaint from a state official, the bank should deal with the complaining consumer directly and need not involve the OCC. There is no need to notify the OCC about routine consumer complaints referred by the state. State attorneys general and bank regulators have claimed that the OCC's recent rules on preemption and visitorial rights have gutted their ability to make sure national banks obey state consumer protection requirements--and to punish banks when necessary (American Banker March 2)...
Thomas targets tax status of not-for-profits
WASHINGTON (3/3/04)--House Ways and Means Committee Chairman Bill Thomas (R-Calif.) cited credit unions among the groups whose tax-preferred status should be examined to "determine if the ‘societal good' that they provide warrants their special treatment," according to a report in yesterday's edition of Congress Daily.
During a speech Tuesday to the Federation of American Hospitals, Thomas said "many organizations had strayed from the original purposes for which they were given preferential tax treatment, citing not-for-profit hospitals and credit unions as businesses that have come to resemble their for-profit peers," according to Congress Daily.
CUNA has heard rumblings of Thomas' position, but nothing was publicly stated until yesterday, said CUNA's John McKechnie, senior vice president of governmental affairs. "We've held quiet discussions with members of the committee prior to the chairman's comments," he said. "We've explained the basis for credit unions' tax treatment and will continue to argue against the need for any hearing."
"While hearings are not assured, if they are called, we will be ready to take the opportunity to explain how the credit union tax exemption remains just as relevant for today as it has ever been," McKechnie added.
Thomas' apparent interest in the credit union tax status is at odds with the Bush Administration's stand against levying more taxes on credit unions, McKechnie pointed out. Secretary of the Treasury John Snow said last week in a speech at the CUNA Governmental Affairs Conference, "We oppose this talk of taxation of you and your industry."
Thomas said he had long considered looking into tax-preferred groups, but indicated that his committee's "broad-ranging investigation" was "fueled in part by a recent exchange between the American Hospital Association and the Dept. of Health and Human Services over hospital charges to uninsured patients," according to Congress Daily.
The Congress Daily report indicated Thomas may conduct hearings on the matter, however none have been scheduled.
Customers share Greenspan GSE growth concerns
WASHINGTON (3/3/04)--Federal Reserve Board Chairman Alan Greenspan's publicly expressed desire to limit the growth of Fannie Mae and Freddie Mac dovetails with the interests of some of the Federal Reserve's big-bank constituents, according to American Banker (March 2).
Most observers agree that reining in Fannie and Freddie would leave the mortgage market more dominated by banks. Take the two biggest buyers of mortgages away, or even constrain them, and yields would climb, analysts, investors and industry executives said. That would make mortgages a more attractive investment for banks with big balance sheets.
Privatizing or curbing the government-sponsored enterprises would also help banks by shifting the market toward adjustable-rate loans, they said.
At last week's Senate Banking Committee hearing, Greenspan said he would not serve on a proposed advisory board for a new GSE regulator because as a bank regulator he saw a conflict of interest. But even those who disagree with the Fed chairman stop well short of suggesting that his Feb. 24 testimony was motivated by anything other than his beliefs about economics.
NCUA Issues Advisory Bulletin on ALLL
WASHINGTON (3/3/04)--NCUA, along with the four other federal financial institution regulatory agencies, has issued an advisory addressing recent developments in accounting for loan and lease losses (ALL).
According to Ron Parker, partner in charge of the CU Group of the CPA firm Clifton Gunderson, and member of CUNA's Accounting Task Force, "While the Bulletin does not set forth any new guidance on loss recognition or measurement criteria pertaining to ALLL that credit unions need to comply with, it does state that the regulators anticipate issuing supplemental guidance in the future."
Credit unions and other financial institutions are reminded of their responsibility for ensuring that controls are in place to consistently determine the ALLL in accordance with generally accepted accounting principles (GAAP), the institution's stated policies and procedures, and relevant supervisory guidance.
Credit unions should develop, maintain, and document a comprehensive, systematic and consistently applied process to determine the amounts of the ALLL and provisions for loan and lease losses. According to the Joint Interagency Advisory, "...prudent, conservative, but not excessive, loan allowances that represent management's best estimate from within an acceptable range of estimated losses are appropriate."
The Joint Interagency Advisory lists the existing ALLL guidance that financial institutions should continue to apply.
For credit unions, this includes:
- AICPA Audit and Accounting Guides -- Audits of Credit Unions, Chapter 6, "Allowance for Credit Losses" (May 2000). In 2004, the new Audit and Accounting Guide for Depository and Lending Institutions will be issued to replace Banks and Savings Institutions Guide (BSI Guide), Audits of Credit Unions (CU Guide), and Audits of Finance Companies (FC Guide).
- NCUA Interpretive Ruling and Policy Statement 02-3 Allowance for Loan and Lease Losses Methodologies and Documentation for Federally Insured Credit Unions (May 2002).
In addition, the Joint Interagency Advisory provides an update on the status of the American Institute of Certified Public Accountants' (AICPA's) Proposed Statement of Position (SOP)--Accounting for Credit Losses.
As a result of the comments received during the public comment period last summer, the AICPA's Accounting Standards Executive Committee (AcSEC) decided in January to proceed only with guidance to improve disclosures relating to ALLL.
At the April 2004 AcSEC meeting, the Committee plans to discuss ALLL disclosure enhancements. AcSEC has also decided to recommend to the Financial Accounting Standards Board, through which all AICPA proposal must receive "final clearance" in order to become effective, that the SOP be reconsidered.
"FASB taking up the matter soon would probably be a more long-range agenda item. The current agenda is quite heavy," said Scott Waite, chairman of CUNA's CFO Council and Accounting Task Force, and senior vice president and CFO of Patelco CU in San Francisco, as well as CUNA's representative on the FASB advisory Council. "Through other continued guidance efforts, I believe that we can reach an accord on this issue sooner than that. If it does surface at the FASB soon, I'll be there to represent our views."
"The Task Force will continue to monitor and inform credit unions of any new ALLL guidance issued by NCUA individually or in conjunction with the other regulators," said Catherine Orr, CUNA's senior regulatory counsel and staff liaison to the CUNA Accounting Task Force.
PALS workshop helps CUs make more mortgages
BOSTON (3/3/04)--NCUA Board Member Debbie Matz will host a free Partnering and Leadership Success (PALS) workshop to help credit unions make more mortgages on June 2.
"Although 67% of all credit unions make mortgages, only 2% of all mortgages are made by credit unions," Matz points out. "That means the vast majority of credit union members are going elsewhere for their mortgages. At this workshop, credit union officials will learn from peers who have excelled at keeping more members' mortgages at their credit unions, and who have enabled more first-time homebuyers to achieve the American dream." The June 2 workshop, entitled "How to Make More Mortgages," will feature three unique panels:
- "Helping More Members Realize the American Dream"--Credit union leaders will share innovative programs that have opened the door of homeownership to members from all walks of life.
- "Managing Mortgage Lending Risks" – Secondary market and asset/liability management specialists will present strategies to manage interest rate risks while freeing up liquidity to make more mortgages.
- "Resources, Support and Partnering Opportunities" – Participants in different types of partnerships will highlight opportunities for credit unions of all sizes to build economies of scale and compete in the high-volume mortgage market.
FTC says more broker fee info confuses lenders
WASHINGTON (3/3/04)--The Federal Trade Commission may have thrown another wrench in the works of the Department of Housing and Urban Development's controversial plan to reform the mortgage process.
In a report issued Friday, the FTC said that telling consumers how much a lender pays a broker for delivering a higher-rate loan confuses them more than it helps them shop for loans.
Disclosure of so-called yield-spread premiums is one of the reforms included in HUD's proposed overhaul of Real Estate Settlement Procedures Act enforcement. The Office of Management and Budget is now reviewing HUD's proposal.
The disclosure requirement is intended to let lenders continue paying brokers yield-spread premiums -- a practice that has come under attack in the courts -- while making it easier for consumers to compare loan offers.
The FTC's report, "The Effect of Mortgage Broker Compensation Disclosures on Consumers and Competition: A Controlled Experiment," describes a study in which 500 people were given a choice of two loan offers.
About 300, in three groups, were shown disclosures of yield- spread premiums, while the other 200, in two groups, were not.
According to the FTC, in both of the groups that were not shown the broker disclosures, 90% chose the cheaper loans. But in the three groups that were shown the disclosures, the share that were able to figure out which of the two offers was the less expensive one ranged from 63% to 72%.
CU System briefs
- WASHINGTON (3/3/04)--Jordan FCU in Sandy, Utah, won first place for the best credit union website using a .coop address during voting held at CUNA's Governmental Affairs Conference last week. dotCoop LLC, a subsidiary of the National Cooperative Business Association, sponsored the contest. Jordan FCU captured 25% of the ballots, with State Employees CU, Raleigh, N.C., in second with 16%. Three credit unions--Cincinnati Central CU, San Antonio FCU and the Golden 1 CU in Sacramento, Calif.--tied for third ...
- HARRISBURG, Pa. (3/3/04)--The Pennsylvania CU Association will honor two credit union professionals for lifetime achievement during its annual convention May 22, according to Life is a Highway (March 2). Sandra Lazzara, CEO of Greater Pittsburgh Police FCU, has been named the William W. Pratt Professional of the Year. She has spent 25 years in the credit union movement, serving as manager/CEO of TriValley Service FCU, Pittsburgh, and the Pittsburgh Chapter of CUs. Robert Muzslay, treasurer and board member of Merck Sharp & Dohme FCU, North Wales, is the winner of the Joseph A. Moore Volunteer of the Year Award. Muzslay, who has been involved with credit unions for 29 years, helped small credit unions establish lending departments by offering training and writing policies ...
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ALBANY, N.Y. (3/3/04)--Kristina Moran has been hired as the new portfolio manager for MemberTrade Advisory Services, a wholly owned credit union service organization of Empire Corporate FCU, Albany, N.Y. She previously was a trust investment officer for Troy Savings Bank ...
- BISMARCK, N.D. (3/3/04)--Yvonne Dolan has been promoted to chief financial officer of Railway CU in Mandan, N.D. (The Bismarck Tribune Feb. 29). She will be responsible for all accounting functions and financial aspects of the $27 million asset credit union ...
- WALNUT CREEK, Calif. (3/3/04)--The California Community Partnership for the Prevention of Financial Abuse recognized Pacific Service CU of Walnut Creek, Calif., for its support of efforts to prevent financial abuse of the elderly. The group launched its "Call to Action" campaign that partners law enforcement agencies, senior social services and financial institutions in identifying and preventing financial exploitation of California's elderly and dependent adults ..
- COLUMBUS, Ohio (3/3/04)--Joseph S. Faloon of Worthington, Ohio, died Feb. 28. He was 83. Faloon was a retired manager with League Litho/Ohio CU League (The Columbus Dispatch March 1). He is survived by his wife, Catarina; two sons; a daughter; grandchildren and great-grandchildren ...
Judge: Columbia has 'legal duty' to hold meeting
VANCOUVER, Wash. (3/3/04)--Superior Court Judge Roger Bennett has granted a writ of mandamus for Save CCU that requires the Vancouver, Wash.-based Columbia CU to hold a special membership meeting to determine the fate of its board.
However, Bennett did not grant Save CCU's request to revoke a previous membership vote on converting the credit union to a mutual savings bank because the issue is moot.
"My conclusion, therefore, is that the defendants have a clear legal duty to honor the request, and grant a special membership meeting," Bennett wrote in his ruling.
Because the credit union has ceased to pursue a conversion, the request for the revocation of the conversion vote is moot. The court will not force the credit union to act on that issue.
However, Bennett also wrote that the credit union is "compelled to give notice and schedule a special membership meeting, consistent with statutory requirements, at which special membership meeting a vote will be held on whether or not to remove the designated members of the Board of Directors still holding office."
The meeting also will accommodate and permit voting by mail, he added. Bennett concluded that "in general" members have a right to vote by mail, especially considering the difficulty of having up to 59,000 members appear at a special meeting to cast votes in person.
The meeting notice also will advise members that if they attend, they will be permitted to vote on replacing deposed directors with interim directors or to vote to allow the remaining board members to appoint interim directors.
Save CCU is a group of members who opposed converting the credit union to a bank. They had petitioned the credit union for a special meeting, but the credit union refused.
A hearing is set for Monday, March 8, to determine the arrangements for the special meeting.
Vermont parity in limbo, gives grassroots chance
SOUTH BURLINGTON, Vt. (3/3/04)--Vermont credit unions can use this week's legislative break to contact their delegates about the proposed credit union parity bill.
According to the Vermont CU League's NewsLines Express (March 1), it's a critical time for credit union representatives to contact legislators on the House Commerce and House Ways & Means committees. Because the legislators will be in their home districts, they will be easier to contact by phone or in person.
The bill, from the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA), is a 150-page rewrite of the Vermont's 40-year-old credit union statutes.
The banking industry was supposed to testify Feb. 24 before the House Commerce Committee on the bill, but it was postponed by other issues. Testimony from the Vermont Bankers Association is now expected Tuesday, March 9.
The bill would improve parity between state-chartered and federally chartered credit unions by allowing credit unions to offer member business lending, allowing interstate branching for credit unions along the state's borders, and providing for maintenance of credit unions' tax-exempt status.
Southern California CUs launch second ad campaign
RANCHO CUCAMONGA, Calif. (3/3/04)--An ad campaign promoting awareness of credit unions and their services is targeting five counties in Southern California through July.
The radio advertising campaign, backed by more than 40 credit unions and affiliated organizations, will inform consumers about the benefits of being a credit union member in Los Angeles, Orange, San Bernardino, Riverside and Ventura counties.
"The primary focus of the campaign is to build image and awareness among consumers who know too little about credit unions," said Teresa Freeborn, senior vice president marketing and communications of Kinecta FCU, Manhattan Beach. Freeborn also is chair of the Southern California Cooperative Advertising Task Force.
This is the second year for the awareness campaign. Research conducted during the past six months tracked the success of last year's campaign and found that credit union members and nonmembers recalled key messages about the accessibility and benefits of credit union membership.
The study found that recall of credit union radio ads among nonmembers had increased significantly, from 34% prior to the campaign to 45% with high recognition of the message that "anyone can join a credit union."
Like the 2003 campaign, this year's campaign seeks to address the lack of knowledge about and increase awareness of credit unions.
"Too many consumers don't know they can join a credit union, that there is a credit union network of more than 18,000 ATMs available to them, and that credit unions offer a full line of products and services--many better than banks," said Henry Kertman, director of public relations for the California CU League. "The ads have been designed to dispel these credit union myths, and the results of our research clearly demonstrate the success of this cooperative effort."
Working with the Southern California office of national advertising agency Foote, Cone & Belding, the campaign has developed a series of humorous 60-second radio spots that feature mythical creatures such as Bigfoot, a leprechaun, an alien and the Loch Ness monster. The radio ads will be broadcast between March and July.
Missouri CUs meet with lawmakers
WASHINGTON (3/3/04)--Twenty credit union representatives from Missouri met with federal lawmakers at a Missouri CU Association-sponsored breakfast Feb. 25 during CUNA's Governmental Affairs Conference in Washington, D.C.
Rep. Roy Blunt (R-Mo.), Rep. Karen McCarthy (D-Mo.) and Sen. Jim Talent (R-Mo.) attended. Also attending were eight staffers from Blunt and Talent's offices and from the offices of Sen. Kit Bond (R-Mo.) and Reps. William Lacy Clay (D-Mo.), Sam Graves (R-Mo.), and Kenny Hulshof (R-Mo.).
Much of the talk concerned bankruptcy reform and the CU Regulatory Improvements Act (CURIA), H.R. 3579. Attendees explained the differences between CURIA and the other regulatory relief act, H.R. 1375, to lawmakers. Staffers and lawmakers indicated that neither bill seems to be moving.
"When we see that something like bankruptcy seems to be stuck, what can we do to help move it along?" asked Rolla FCU President Janet Honse.
"Unfortunately, there's not a lot we can do on the House side," said Rep. Blunt. The bankruptcy bill, S1920, is a Senate bill. "We know we have the support of Jim [Talent] and Kit [Bond]. The only thing you can do is to contact [minority leader] Sen. Tom Daschle and [majority leader] Sen. Bill Frist and ask for a floor vote."
Missouri credit union supporters will travel back to Washington, D.C. on April 27-28 for their annual Hike the Hill visit with lawmakers.
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| Among the Missouri credit unions and federal lawmakers meeting are, from left: Front row--Sandy Branson, Missouri State CU; Rep. Roy Blunt; Rosie Holub, Missouri CU Association (MCUA); Steve Pierson, Postal Federal Community CU; Peggy Nalls, MCUA; Sen. Jim Talent; and Janet Honse, Rolla FCU. Back row--Ray Kline, United Consumers CU, and Hal James, Mizzou CU. |
Louisiana Hill hikers focus on CU issues
HARAHAN, La. (3/3/04)--More than 100 credit union supporters from Louisiana visited Capitol Hill last week during CUNA's Governmental Affairs Conference (GAC) in Washington, D.C., to remind their legislators of issues important to credit unions.
According to the Louisiana CU League (eNews March 1), the group met with Louisiana's congressional delegation, including Sens. John Breaux and Mary Landrieu, and Reps. Chris John, David Vitter, William Jefferson, Jim McCrery and Richard Baker. The group also met with members of the staff of Reps. Billy Tauzin and Rodney Alexander.
"Focusing on issues that are important to credit unions such as regulatory relief, bankruptcy abuse and credit union taxation, the group was able to have an impact on those who represent us in Washington," said Connie Major, league vice president of governmental affairs. "The opportunity to meet face-to-face with our representatives is invaluable."
Also, Louisiana State Sen. Paulette Irons was honored during the GAC with the National Desjardins Youth Financial Education Award for her work to pass legislation that requires every Louisiana high school student to receive personal finance education as a prerequisite to graduation.
Use the resource link to the GAC Photo Gallery to view Louisiana credit unions and other states' credit unions in action.
Largest mortgage, real estate portfolios listed
NEW YORK (3/3/04)--State Employees CU in Raleigh, N.C., ranked first in a list of credit unions with the largest portfolios of first mortgage loans for the period ending Sept. 30.
State Employees CU had a 16.92% increase in first mortgage loans to $5.27 billion from $4.51 billion in September 2003, according to a report from Sheshunoff Information Services (American Banker March 1).
Rounding out the top five first-mortgage lenders were: Navy FCU, Merrifield, Va., up 48.73% to $3.93 billion from $2.64 billion; Boeing Employees CU, Tukwila, Wash., up 19.82% to $1.38 billion from $1.15 billion; Pentagon FCU, Alexandria, Va., an increase of 29.88% to $1.25 billion from $967 million; and United Airlines Employees' FCU, Chicago, up 15.49% to $1.15 billion from $1 billion.
Credit unions ranked six through 10 were: Suncoast Schools FCU, Tampa, Fla., an increase of 10.87% to $1.064 billion from $960 million; Citizens Equity First CU, Peoria, Ill., up 11.14% to $1.062 billion from $955 million; American Airlines FCU, Dallas, 18.62% growth to $1.041 billion from $877 million; The Golden 1 CU, Sacramento, up 16.68% to $985 million from $844 million; and Orange County Teachers FCU, Santa Ana, Calif., a 12.84% increase to $908 million from $805 million.
Navy Federal topped the list of 10 credit unions with the largest portfolios of other residential real estate loans with a drop of 13.85% to $1.21 billion from $1.40 billion. The other top five credit unions were: State Employees CU, up 34.51% to $835 million from $620 million; Pentagon FCU, 17.04% growth to $831 million from $710 million; The Golden 1 CU, up 0.04% to $613.6 million from $613.3 million ; and Boeing Employees CU, a drop of 8.23% to $542.8 million from $591.5 million.
The remaining credit unions in the top 10 for other real estate loans were: Police and Fire FCU, Philadelphia, 69.22% growth to $439 million from $259 million; Portland (Ore.) Teachers CU, up 11.53% to $400 million from $359 million; ESL FCU, Rochester, N.Y., up 22.39% to $380 million from $310 million; Suncoast Schools FCU, growth of 14.68% to $284 million from $247 million; and Bethpage (N.Y.) FCU, up 16.72% to $269 million from $230 million.
CUNA selects Harland’s predictive marketing tool
MADISON, Wis. (3/3/04)--Credit unions now can access a powerful marketing tool offered by the strategic alliance of CUNA and John H. Harland Co.
The Harland Analytical Services' Stratics suite of credit union predictive models means credit unions can more effectively target their members and make marketing campaigns more cost-effective.
Stratics was developed from actual credit union member financial behaviors and allows credit unions to generate stronger marketing programs, increase new account openings and balances, and decrease balance attrition and account closures.
These marketing analysis tools help credit unions meet member needs by predicting the next most likely product a household will acquire. The tools also can predict which households are most likely to diminish balances up to six months in advance.
CUNA's Vice President of Strategic Alliances Wes Millar said, "Stratics can improve and maintain credit unions' membership base through prediction of needed products and services without resorting to costly and time-consuming custom models."
Stratics adds to the previous alliances of share draft printing services and Harland Financial Solutions' compliant business lending and customer relationship management technology.
"Stratics will provide new and effective solutions to CUNA, with minimal cost and resources, while enhancing performance of their marketing programs," said Paul J. Citarella, general manager of Harland Analytical Services.
Share your compelling CU story at Future Forum
MADISON, Wis. (3/3/04)--Every day your credit union goes above and beyond the call of duty in delivering financial services to your members. Now it's time to share the compelling stories of your credit union with others.
CUNA's 2004 Future Forum, which will be in Hawaii in October, will share credit unions' inspirational stories about how a member's life was affected by the credit union or how a member changed the credit union.
At last year's CUNA Future Forum in Reno, Nev., many attendees were moved by the stories told by David Landis as he portrayed U.S. Sen. George Norris, who was instrumental in signing the Federal CU Act in 1934. Seventy years later, credit unions are still encouraging and motivating members to fulfill their dreams.
The most interesting, inspiring, or even funny credit union stories will be featured at the Future Forum. You can write your credit union's story, e-mail it, or even videotape it. Stories are due May 15. Send them to:
Attention: Lynne Bjorgo
CUNA Future Forum
P.O. Box 431
Madison, WI 53701-0431
For more information, use the resource link.
RESPA changes topic of audio conference
MADISON, Wis. (3/3/04)--A March 16 audio conference from CUNA addresses proposed changes in the Real Estate Settlement Procedures Act (RESPA).
Credit unions that handle mortgages face many changes if the Department of Housing and Urban Development (HUD) accepts a proposed rule change. HUD's proposal would allow lenders to roll mortgage and settlement services into one package, offering a guaranteed price at a guaranteed interest rate.
The implications of the rule, which may favor large lenders, will be reviewed during the audio conference. Daniel P. Rotert, senior vice president and chief operating officer of CUNA Mutual Mortgage Corp., will lead the session.
"RESPA Reform: The Impact on CUs" will be 1-2:30 p.m. CST March 16. The cost is $79. For more information, use the resource link.
Latest scams, other topics highlight CUNA webinars
MADISON, Wis. (3/3/04)--Criminals dream up more elaborate ways to steal money every day. To help credit unions get a handle on the "latest and greatest" scams, CUNA's center for professional development will offer its Current Scams, Schemes, & Fraud Webinar on May 25.
Webinar participants will discuss the latest scams, learn how to protect their credit union, review current data on major areas of loss within credit unions and receive an update on recent events in the international marketplace. The class also will help staff understand potential security and fraud issues, become aware of recent developments, and anticipate future security problems.
The webinar is one of more than 30 offered by CUNA during the second quarter. Other highlighted webinars taking place include:
- Trust Accounts Webinar on April 14 and 28. This will review trust terminology, how to convert an account, share insurance rules for trusts, and what type of trust to set up. The class is for front-line staff, tellers, member service representatives and operational staff.
- Business lending webinars will include How to Get Started in Business Lending (April 27)--which covers the basics of business lending to help participants determine if starting a business lending program is a good idea for their credit union and tips to get started. Also, The Benefits of SBA Lending (May 25)will discuss the pros and cons of Small Business Administration lending, how these loans differ, and how to get started.
Other webinars will be conducted on topics such as Finance and Economics, Mortgage Lending, Investments, Marketing and Sales, Operations, and Regulatory Compliance.
In a webinar, students use a phone and a computer to hear and see a presentation, ask questions of the instructor, and refer to handouts. If online learning is new to your credit union, CUNA offers free 45-minute demonstrations.
For more information, use the resource link or call 800-356-9655, ext. 4249.
Market News
MADISON, Wis. (3/3/04)
- U.S. firms' downsizing mode won't end any time soon, despite a drop in layoffs during February. U.S. companies announced 77,250 job cuts last month--down 34% from January and the lowest level in five months, according to the outplacement firm Challenger, Gray & Christmas. However, Challenger noted that consumer product firms and industrial goods makers together have already announced plans to cut another 51,606 jobs this year, about 156% higher than a year ago, suggesting they aren't yet confident about future business strength. Total job-cut announcements have averaged more than 100,000 per month over the past six months--almost double the average rate from 1998 to 2000, said John Challenger, head of the Chicago-based firm. He said this suggests firms "are still in a heavy downsizing mode that is not likely to let up soon." More than 2.3 million jobs have been lost since the job market's peak in February 2001, according to Labor Department data. Almost 800,000 of those jobs were lost after the official end of the recession in November 2001. That makes this economic recovery period the most "jobless" one since World War II (Reuters and CNN/Money March 2) ...
- The Medicare prescription-drug law passed late last year is having a positive impact on corporate finances (The Wall Street Journal Online March 2). Thanks to the new government subsidy for employers offering prescription-drug benefits to retirees, a few big companies during the past few weeks have reported they expect to collectively save more than $2.5 billion. These firms include BellSouth Corp., which estimates savings at $572 million; AMR Corp.'s American Airlines ($415 million); Deere & Co. ($300 million to $400 million): Alcoa Inc. ($190 million); U.S. Steel Corp. ($450 million); and Delphi Corp. ($500 million). Although firms won't receive government cash until 2006, accounting rules allow them to estimate the value of the cash flow over the lives of their current and future retirees to lower their liabilities. The government subsidy is controversial because although it was designed to encourage firms to continue providing retiree health coverage, it doesn't discourage them from cutting benefits and shifting more costs onto retirees. And the language of the legislation suggests companies can be reimbursed even for the amounts paid by retirees ...
- Former WorldCom co-founder and CEO Bernard Ebbers was charged in an indictment with directing one of the largest accounting frauds in U.S. history--misstating $11 billion in revenue and expenses at the firm. Meanwhile, former WorldCom chief financial officer Scott D. Sullivan agreed to plead guilty to the crime and related charges and to testify against Ebbers. The indictment, filed Tuesday in U.S. District Court in Manhattan, charges Ebbers with conspiracy to commit securities fraud, securities fraud, and falsely filing with the Securities and Exchange Commission. The indictment alleges that Ebbers and Sullivan instructed subordinates "to falsely and fraudulently book certain entries in WorldCom's general ledger" that misclassified expenses to reduce their impact on profits. The indictment said the plan was designed to "satisfy analysts' expectations, even though Ebbers and Sullivan knew that WorldCom's true results in fact failed to meet those expectations." (Associated Press and Bloomberg.com March 2) ...
- Deficits under President Bush's budget proposal would total an estimated $2.75 trillion over the next 10 years, according to the Congressional Budget Office (Dow Jones Newswires March 1). The CBO said the deficit estimate is $737 billion higher than if Congress were to make no changes to tax laws and were to continue spending at current levels. Office of Management and Budget spokesman Chad Kolton dismissed the significance of the 10-year estimate because he said they are typically inaccurate. Kolton said the White House was encouraged that the CBO projects the deficit would decline to 1.8% of the nation's gross domestic product by 2009, from 4.2% of GDP this year. The CBO estimates that Bush will cut taxes by another $1.3 trillion during the next decade ...
- Historically low mortgage rates and strong demand helped boost the average single-family home price by 7.97% in 2003 from 2002, according to the Office of Federal Housing Enterprise Oversight. The OFHEO said it was the fourth consecutive year in which average home prices rose more than 7.5% nationwide. During the fourth quarter of 2003, all but two states saw price gains and even states that had lagged the national average saw a large pickup in home appreciation. The largest price gains during the past year occurred in Rhode Island, California and the District of Columbia, while the smallest increases occurred in Utah, Texas and Colorado (Dow Jones Newswires and Reuters March 1) ...
- Stock mutual funds saw a $43.76 billion inflow during January--more than triple the $14.18 inflow in December and the largest since the spring of 2000, according to the Investment Company Institute (ICI) (Dow Jones Newswires March 1). The January inflow was the third-largest on record. "It appears that equities are becoming an area that investors are now beginning to take seriously," said Robert Adler, president of fund-research firm AMG Data Services. "They are becoming less averse to risk as the recovery continues." Total assets in U.S. mutual funds rose to a record $7.54 trillion at the end of January, said the ICI. Bond funds saw a net $496 million inflow in January, compared with a $3.25 billion outflow in December, while money-market funds saw a net outflow of $19.77 billion, less than the $22.62 billion in net redemptions in December ...
News of the Competition
MADISON, Wis. (3/3/04)
- E-Loan Inc. said Monday that it is now giving customers a choice of whether their home-equity loan applications will be handled in the U.S. or in India, where they can typically be closed in 10 days rather than 12 (American Banker Online March 2). In a telephone interview Monday, E-Loan Chairman and CEO Chris Larsen said it's not than Indian employees work faster but rather an issue of time zones. "It's almost a perfect 12-hour offset," said Larsen. The Indian workday begins after the workday ends in the U.S. Eighty-six percent of applicants have opted for the quicker processing since the company began testing the choice Feb. 2. However, not all customers actually received a faster processing time because E-Loan doesn't have enough employees in India to handle the volume. Still, the program dovetails with Larsen's view that financial services firms should disclose to consumers which operations are outsourced and where. Larsen predicts that acceptance of outsourcing will grow. But he said E-Loan is maintaining its domestic presence for those customers who prefer to buy American ...
- An Orange County, Calif., group has applied for a California charter to open First Vietnamese American Bank, which would be the only bank focused on Vietnamese-Americans (American Banker Online March 2). The few Vietnamese-American banks created during the last 30 years have closed or quickly been sold to bigger banks, said Hieu Nguyen, a former banker who would become First Vietnamese American's president and chief executive officer. Banks focusing on other Asian-Americans--especially Chinese- and Korean-Americans, have thrived for decades. Nguyen said many Vietnamese-American business owners remain cautious about the U.S. banking system. This spring Nguyen and other future officers of the planned bank plan to start teaching financial literacy classes to members of the Vietnamese community in cooperation with the local nonprofit Vietnamese Community of Orange County Inc. They will use the Federal Deposit Insurance Corp.'s Money Smart curriculum, which the FDIC just translated into Vietnamese ...
- Visa USA said Monday that it will offer auto rental insurance, also called collision damage waiver coverage, to all Visa consumer credit cardholders (American Banker Online March 2). The benefit was previously reserved for select cardholders. Visa-issuing financial institutions will receive more flexibility to define other benefits that distinguish their Visa Classic Gold, and Platinum cards, or other self-defined products. "Auto rental insurance is one of the most popular credit card benefits among cardholders today," said Al Banisch, a senior vice president of consumer credit card products at Visa USA, in a press release. "As a result of these changes, an additional 75 million Visa cardholders, and more than 185 million in total, will now benefit...when paying for a car rental with their Visa credit card." The company estimates that cardholders using the benefit will save an average $10 a day compared with the cost of auto rental agencies' coverage ...
- FleetBoston will pay $59.4 million to settle charges that its Fleet Specialists unit engaged in improper trading at the New York Stock Exchange (NYSE), the firm said in a regulatory filing Tuesday (CBS.MarketWatch.com March 2). FleetBoston, which has agreed to be acquired by Charlotte, N.C.-based Bank of America, said the Feb. 17 agreement with NYSE and the Securities and Exchange Commission includes restitution and penalties for the alleged improper trading between 1998 and 2003. The company said it will neither deny or admit any wrongdoing but many face censure and a cease-and-desist order. The disclosure is the fourth in what is expected to be a $240 million settlement. The settlement also includes Van der Moolen, LaBranche, Goldman Sachs' Spear, Leads & Kellogg specialist unit, and Bear Wagner Specialists, a unit of Bear Stearns ...
- An interest rate increase will benefit credit card firms more than banks, say analysts (American Banker Online March 1). Card firms' earnings and shares both would probably increase, while banks would probably see higher earnings but a decline in their stock prices. Investors worry about how banks manage their bond portfolios, some of which are quite large and sensitive to swings in interest rates, said Steven Wharton, a buy-side analyst with Loomis, Sayles & Co. He said card companies don't have securities portfolios and therefore don't have these worries. And other analysts note that card firms' earnings will probably improve because the interest rates consumers pay for their card debt are tied to the federal funds rate. In addition, higher rates would probably let card lenders charge more for their receivables. In general, card lenders can pass on rate increases to customers much faster than banks, and investors believe bank stocks, especially regionals, have become too expensive. Wharton notes that a stronger economy and thus higher rates also mean a stronger job market and fewer card defaults ...
- Credit-card profits in 2003 rose to the highest level in 15 years, driven by lower funds costs, according to R.K. Hammer Investment Bankers (February 2004 Issue of CardTrak). Credit card portfolios' average pre-tax, return-on-assets for 2003 is projected to reach 4.4%--compared with 4.2% in 2002 and 4.5% in 1988. The data show that charge-offs continued to rise last year, but the impact was reduced by lower cost-of-funds, said Hammer. The firm said total income yield will come in at 17.6% for 2003, the lowest since 1998. Operating expenses edged up to 5% in 2003 from 4.9% in 2002, while charge-offs rose to 5.8% from 5.4% ...
- LaSalle Bank of Boca Raton, Fla., has launched a floating rate CD (American Banker Online March 1). The new inflation-floater CD (IFCD) pays a monthly coupon that changes periodically based on the year-over-year change in the consumer price index. Instead of adding the inflation component of the return to the principal balance, as LaSalle does on its inflation-protected CDs, the IFCD pays it out as part of each coupon payment. The principal is returned to the investor without any inflation adjustment at maturity. "By providing a periodic payment stream equal to the inflation rate plus a traditional stated interest rate, the total return of this inflation-linked investment option will generally keep the investor ahead of inflation," said Patrick J. Kelly, a managing director at LaSalle Broker Dealer Services. IFCDs, which can be purchased via financial advisers and are issued by LaSalle Bank and its Standard Federal Bank affiliate, are available in $1,000 denominations and with maturities of five to 10 years ...
Tax tip: Know rules of miscellaneous deductions
NEW YORK (3/3/04)--With tax season in full swing, consumers are trying to squeeze every allowable deduction they can from Uncle Sam. Miscellaneous itemized deductions can be confusing, so it's important to understand the rules (SmartMoney.com Feb. 23).
You're only allowed to deduct miscellaneous items if they total more than 2% of your adjusted gross income (AGI), and then you can deduct anything in excess of that 2% floor. For example, if your AGI is $50,000, 2% of that is $1,000, so your total miscellaneous itemized deductions must exceed $1,000 before you can claim a penny. In this case, if expenses are $1,500, you only can deduct $500.
What qualifies for a miscellaneous deduction? Examples include unreimbursed business expenses such as dues paid to a union or other professional society, uniforms if they're not appropriate for wear outside the workplace, courses taken to improve job skills, or the expense of looking for a new job. Other examples are home-office deductions, investment and legal fees if they helped produce taxable income, or the expense of hiring an accountant to help with your 1040 tax return.
Experts suggest bunching expenses; if you're close to meeting the 2% floor one year, pay property taxes in December of that year. Bunching expenses allows some tax savings from your miscellaneous deductions at least every other year.
Diebold launches ATM, processing products
NORTH CANTON, Ohio (3/3/04)--Diebold Inc. has launched new ATM-related products from a new surround or ATM shell to processing software.
The Lumera surround features convenient writing shelves as well as translucent panels that can be used for logos or marketing messages. It also increases privacy and gives an added sense of security for users. It can be used for Opteva 520 and 720 ATMs.
Diebold's ImageWay is an electronic check-imaging software for ATMs. It allows financial institutions to capture check images and transaction data at the ATM, and seamlessly process and route them throughout the entire processing system.
Additionally, Diebold and Toshiba have joined to offer the Single Pass 7560 Currency Processing System, which can count, sort and strap up to 40,000 notes per hour. The system can process 750 notes per minute with two independent count verifications on a single pass.
Polish CUs pass banks as largest financial network
SOPOT, Poland, and MADISON, Wis. (3/3/04)--Poland's credit union movement, SKOK, became the nation's largest financial network, ahead of PKO BP, the largest state retail bank at the beginning of the year, reports Rzeczpospolita, a daily newspaper (Feb. 12).
SKOK had 1,285 outlets as of Dec. 31, 2003. Total credit union membership grew more than 31%, to more than 924,000 members. Total assets rose more than 36%--to US$895 million.
Deposits totaled almost US$832 million, an increase of 38% from year-end 2002. Loans grew 33%, to more than US$590 million.
World Council of CUs Inc. President/CEO Arthur Arnold congratulated Poland's movement, saying that Poland's credit unions began more than 10 years ago "and today they serve almost one million members. SKOK's success shows once more that the concept of credit unions is very much alive and thriving."
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