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Engaged members fuel CU loan growth: MCUE survey

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MADISON, Wis. (9/2/14)--Credit union lending numbers continue to come in strong, with July's monthly and year-over-year increases notching levels not seen in years, according to the monthly survey of credit unions from the Credit Union National Association.
Click to view larger image (Source: CUNA Economics and Statistics)
"The monthly credit union estimates report first and foremost makes it clear that members remain engaged--reflected in a continuation of strong results in the lending arena," said Mike Schenk, CUNA interim chief economist.
"Overall, the 1.4% monthly increase in loans (16.7% annualized) is the fastest monthly advance since August 2005, and the 10.2% year-over-year increase is the highest seen in nearly a decade," he told News Now .
Year-to-date loan growth has increased 6.2% compared with 3.4% for the same period last year.
"Importantly the increases are broad-based with four of the key portfolios we track reflecting double-digit increases: new autos are up 19.7% over the past 12 months, followed by adjustable-rate mortgages (14.1%), used autos (13.4%) and personal unsecured loans (11.7%)," Schenk noted.
"Beyond this, we see solid increases in credit cards, which increased 7% in the past year and a decent 12-month jump in fixed-rate first mortgages (6.7%). Even home equity loans reflect a healthy increase--with a 5% increase compared with July 2013 levels," he said.
Only second-mortgage portfolios showed some weakness, with a 2% decline over the past year.
Schenk said, "Look for strong loan growth to continue, fueled by improving labor markets, higher incomes and an abundance of pent-up demand.
"Of course, those conditions will help to buoy credit union bottom-line results and are certain to push both delinquency and net charge-off rates lower in the coming months."
Click to view larger image (Source: CUNA Economics and Statistics)
Savings balances declined less in July (0.1%) compared with June's drop of 0.6%. One-year certificates experienced gains of 0.8%, while declines were seen in individual retirement accounts, share drafts, regular shares and money market accounts.
In June, the milestone of 100 million credit union memberships was reached. July's numbers show continued growth--0.4%--bringing the number to 100.5 million.
Credit unions' overall capital-to-asset ratio remained at 10.7%. The loan-to-savings ratio ticked up to 73% in July from 71.9% in June, and the liquidity ratio fell to 16.2% from 16.4% in June.

Even 1 step makes a difference in preparing for disasters

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MADISON, Wis. (9/2/14)--This year's theme for National Preparedness Month is "Take Action to Prepare," and taking just one step can make a difference in getting your credit union ready.
Click to view larger image These eight steps are only part of an infographic that can help credit unions kick start their disaster preparedness plans. (Agility Recovery Graphic)
"Take a single step forward," said Scott Teel, marketing director at Agility Recovery Services, a CUNA Strategic Services alliance provider. "When it comes to disasters, any step a credit union takes will benefit its employees, members, community and business." And many of those steps don't take a lot of time, effort or money.
One action is creating a crisis communication plan. No matter how large or small the crisis, you must be able to communicate your status to your employees and your members, Teel told News Now .
"If it's a power outage that's affecting one branch, or only certain transactions can be completed on mobile banking, if you have the ability to remotely update a website with an alert, it will make it so much easier for members," he said.
Don't make assumptions that the cell-phone or Internet service provider will be dependable during an emergency. Think about texting people instead of calling them when cell service is down.
"Depending on one certain device is a gap in a preparedness plan," Teel said.
In order to contact them, though, you must have collected that contact information. Teel suggests updating the company's contact list. "Include personal contacts--a parent, a spouse, a friend. Have a means to communicate with them," he said.
Credit unions can provide something as simple as a contact card for their members. "As kids go back to school, have the parents fill out one of your cards and give it to the kids to keep in their backpacks or lockers," Teel advised. "It shows that you care for your members beyond transactions, and it keeps preparedness at the top of their mind, too."
National Preparedness Month is a one-month focused campaign of the Federal Emergency Management Agency's (FEMA) awareness program.
As part of its goal to "spread the gospel of preparedness," Agility provides resources year-round for individual and businesses of all types.
Agility, in conjunction with the U.S. Small Business Administration and FEMA, will hold four free, half-hour webinars, starting Wednesday, for National Preparedness Month:
  • "Crisis Communications for any Organization," 2-2:30 p.m. (ET) Wednesday;
  • "How to Plan for a Power Interruption ... and Recover Fast," 2-2:30 p.m. (ET) Sept. 10;
  • "The Top 5 Steps for Preparedness This Year," 2-2:30 p.m. (ET) Sept. 17; and
  • "If You Do Nothing Else This Year ...," 2-2:30 p.m. (ET) Sept. 24.

S.F. paper notes Bay Area CUs' growth, 100M milestone

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SAN FRANCISCO (9/2/14)--The San Francisco Business Times last week heralded the strength of California's Bay Area credit unions in an article that highlighted the national 100 million membership milestone.
"In the banking world, 100 million isn't a big number," the article's lead paragraph read. "After all, $100 million will pay a year's compensation for a handful of big-name CEOs. But 100 million is plenty big for credit unions. Membership nationally crossed the 100 million-member mark in June for the first time ever, according to the Credit Union National Association. Bay Area credit unions are tapping into this surge, adding loan products and services as well as expanding their branch networks."
The article included CUNA statistics that indicate credit union membership rose 2.9% over the past year as 1.7 million additional members were added, marking the fastest growth since 2000.
"There is clearly growing recognition about credit unions among consumers," Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, told the Times . "They understand credit unions place their interests above all else, particularly in returning financial benefits to consumer members in the form of lower rates on loans, higher returns on savings, and lower and fewer fees."

The article described how credit union growth has occurred in step with publicity surrounding bank fee hikes and account balance requirements. Those actions aren't the case at most credit unions.

Patelco CU, Pleasanton, with $4 billion in assets, recently reduced 39 different fees, a strategic decision that is expected to save members $800,000 annually. Patelco also saw loan growth of almost 18% over the first seven months of 2014, compared with less than 18% gain in 2013. The credit union's product-per-member rate is 4.04, CEO Erin Mendez told the Times .

Credit unions built their reputation on auto loans, and San Francisco FCU, with $884 million in assets, continues to build relationships with that product, President/CEO Steven Stapp told the paper. When they finance their vehicles, members often switch other accounts to the credit union, and banks have created more opportunities for the credit union to market its free checking, Stapp said.

Bay Area credit unions also offer business loans. Santa Rosa-based Redwood CU expanded into member business lending in 2005 to meet member needs because members couldn't find credit elsewhere. Now member business loans account for $221 million in the credit union's lending portfolio.

Network complexity challenges CUs: Tech council

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MADISON, Wis. (9/2/14)--A new white paper from the CUNA Technology Council, "Network Monitoring and Management: The Challenges and Complexity of Your Credit Union's Command Center," offers a thorough look at the practice of network management today, including best practices for keeping it secure.
The white paper is the second in a series of four council white papers devoted to security issues this year.
Network security, as defined by Cisco Systems Inc., refers to any activities designed to protect network--its usability, reliability, integrity and safety. Effective network security targets a variety of threats and stops them from entering or spreading on the network.
"How do you keep your network secure but fast and reliable at the same time? With electronic crime being an international, multibillion dollar enterprise, security is becoming more and more critical," said Ron Dinwiddie, chief information officer at $850 million-asset Texas Trust CU, Mansfield, Texas, in the white paper.
Dinwiddie uses a castle analogy. "If you think of ancient castles, they don't have just a tall wall surrounding the castle; they have a moat, a drawbridge, the wall and, perhaps, even an inner wall. They then have guards on the walls 'monitoring,' with other protection possibly in place: arrows, kettles of hot tar, and so on. This is a 'layered security approach' that security experts highly recommend."
Credit unions, he says, must have the outer protection, such as a firewall (some organizations even have multiple firewalls) and then the extra layers of intrusion detection and intrusion prevention systems, web filtering, email filtering, internal anti-virus, end-point protection on the servers, and someone monitoring the network 24/7/365. Texas Trust uses a managed security service provider (MSSP).
Security requires a combination of prevention and detection, agrees Justin Store, director of information technology services at $60 million-asset Michigan Tech Employees FCU, Houghton, Mich. "We can prevent a vast amount of security attacks by mitigating the risks associated with given vulnerabilities," he said.
"These vulnerabilities include exploitable software bugs, configurations that don't follow best practices, as well as vulnerabilities that are inherent by design," Store added. "We need to prioritize the risks we can mitigate, and eliminate as much risk as possible. But we also must prioritize the risks we can't mitigate and try to develop detection mechanisms accordingly.

"We need detective measures to alert us when our preventive measures fail. This is the whole point of IDs," Store said. "If we can't prevent intrusions completely (which we can't), then we need to try to detect them as best we can."
There's no silver bullet to security, he said. Neither detection nor prevention will ever be 100% secure. "The key is to use both types of controls and prioritize them according to the value of each IT system or asset," he added.

No special assessment for 2014, ASI announces

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DUBLIN, Ohio (9/2/14)--American Mutual Share Insurance Corp. (ASI) announced to its member credit unions that the private share insurer would not have a special premium assessment (SPA) this year.
ASI President/CEO Dennis Adams said the board determined at its Aug. 20 meeting that there was no need to collect a special assessment.
"After reviewing the company's favorable results to date--and as forecasted for the balance of the year--the board concluded that the SPA collected in 2009 through 2013 would not be necessary in 2014," Adams said, adding, "The company's partial recoveries this year from its $26.4 million in capital assistance afforded Silver State Schools CU, Las Vegas, will contribute greatly to the company's bottom line in 2014."
The now-$655 million-asset credit union received a capital infusion from ASI in February 2010 ( News Now 2/22/10).

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Newly merged VolCorp elects board

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NASHVILLE, Tenn. (9/2/14)--Volunteer Corporate CU (VolCorp) announced the results of its board elections following its annual meeting Aug. 21 in Nashville, Tenn.  
The board elections were the first since VolCorp merged with Kentucky Corporate CU in June.
Newly elected to the board were Gayle Hamilton, president/CEO, Brown-Forman ECU, Louisville, Ky., with $11 million in assets, and Sandy Lingerfelt, president/CEO, Clinchfield FCU, Erwin, Tenn., with $76 million in assets.
Todd Swims, president/CEO, Leaders CU, Jackson, Tenn., with $226 million in assets, was re-elected to the board. Board members are elected to serve a three-year term.
Board officers include:
  • Chair: John Jacoway, president/CEO, Southeast Financial CU, Franklin, Tenn., with $458 million in assets;
  • Vice chair: Chris Johnson, president/CEO, ORNL FCU, Oak Ridge, Tenn., with $1.5 billion in assets;
  • Secretary: Bonnie Sensing, president/CEO, Nashville Firemen's CU, with $19 million in assets; and
  • Treasurer: Ken Swann, president/CEO, Memphis (Tenn.) City Employees CU, with $241 million in assets.
Other board members include Sandra Yocum, president/CEO, Strip Steel Community FCU, Weirton, W. Va., with $44 million in assets, and Rick Mikels, president/CEO, ETMA FCU, Louisville, Tenn., with $15 million in assets.

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CU System briefs (09/02/2014)

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  • HERNDON, Va. (9/2/14)-- Northwest FCU and its foundation blew past their goal of 12,000 pounds of food for their first summertime food drive.The $2.6 billion-asset credit union announced it exceeded its goal by 62%, hauling in 19,388 pounds--nearly 10 tons--of donations for LINK Inc. , which provides emergency food relief to people in northern Virginia. "That's a lot of spaghetti sauce, peanut butter, canned juice and cereal," said Chris McDonald, president/CEO of the Herndon, Va.-based credit union. "We knew 12,000 pounds was a substantial goal--much larger than any we've set before." Employees load a truck with food items to deliver to LINK (Northwest FCU Photo) ...
  • ATLANTA (9/2/14)-- Two Florida credit union executives are on the ballot for the board of directors for the Federal Home Loan Bank of Atlanta ( eSignal Aug. 29). Dennis B. Holthaus, senior vice president/chief financial officer, Achieva CU, Dunedin, with $1 billion in assets, and George Joseph, president/CEO, Dade County FCU, Doral, with $597 million in assets, are up against three bank executives to fill three member directorships and one independent directorship. Eligible institutions in Florida, Georgia, and Maryland will elect one member director in each of those states. The voting deadline is 5 p.m. (ET)  Sept. 26 ...
  • REDWOOD CITY, Calif. (9/2/14)-- The board of San Mateo CU announced the retirement of President/CEO Barry Jolette. Jolette has been with the Redwood City, Calif., since 1987, and under his guidance, the credit union increased its membership to 77,000 from 18,000 and its assets to $767 million from $7 million. Jolette has served on the boards of the Credit Union National Association and the California and Nevada Credit Union Leagues, including stints as chair at both organizations. He also was a director for the World Council of Credit Unions, which bestowed its Distinguished Service Award on Jolette in 2012. Jolette also received the Herb Wegner Memorial Award for lifetime achievement from the National Credit Union Foundation. He began his credit union career as an examiner for the National Credit Union Administration in 1965.  No successor has been announced ...
  • BOULDER, Colo. (9/2/14)--During a special meeting, members of Boulder (Colo.) Municipal Employees FCU, with $65 million in assets, approved the proposed merger with $150 million-asset Community Financial CU, Broomfield . The vote followed regulatory approval by the State of Colorado Division of Financial Services and the National Credit Union Administration (NCUA). After the merger goes into effect this fall, the credit union will operate under the Community Financial name ...

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Even 1 step makes a difference in preparing for disasters #creditunions #NewsNow
4 hours ago
From today's @USATODAY front page, a shout out to #CreditUnions courtesy of @CUNA
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Happy anniversary to the ATM! 45 years of self-service cash HT @GOBankingRates
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.@USATODAY print edition features #creditunion membership march to #100mm. Zoom in on lower left hand corner #NewsNow
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No special assessment for ASI member #creditunions in 2014. See #NewsNow
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