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Southeast Texas in good shape but feels credit pinch

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FARMERS BRANCH, Texas (1/13/09)--Banks and consumers are feeling a growing financial pinch from credit card debt in Southeast Texas, an area hit with losses from Hurricane Gustav and Hurricane Ike, says the Texas Credit Union Foundation in an article in the Beaumont Enterprise (Jan. 10). The average American has 11 credit cards and about $11,000 in debt, Jill Pharr, executive director of the foundation, told the newspaper. Many larger banks, she said, face the effects of dealing with larger loans and facing bigger financial losses. Most residents are paying their debts over a year now--instead of the standard six months, said the article. While concern is growing, others interviewed maintain that Southeast Texas is weathering the credit crisis better than other areas. Financial institutions take proactive measures to ensure consumers keep up with their payments. Because its membership base is smaller, DuPont Goodrich FCU, based in Nederland, Texas, is able to provide one-on-one financial counseling to ensure the debt doesn’t affect the area as much, said Clint Wilson in the article. Wilson is marketing manager of the $157.4 million asset credit union. He noted the credit unions has to maintain a “really aggressive stance” to make sure it can provide what members need, but members must be active in financially responsible measures as well. Other credit unions are granting extensions of up to 60% forgiveness for some credit card debts and offers of consolidation loans abound, Pharr said. Credit counseling services are seeing an uptick in client activity, also. Credit cards represent about 4% of the entire loan portfolio of credit unions, according to the article, citing statistics from the Texas Credit Union Profile. As of September, the state’s credit unions reported a 1.61% credit card delinquency 60 days or more, up from 1.32% a year earlier. Credit unions have an 8.7% market share of all credit cards issued.

SandP completes review of seven corporates

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NEW YORK (1/13/09)--Standard & Poor’s (S&P) Ratings Services has taken ratings actions on seven corporate credit unions while emphasizing that the corporate credit union industry remains healthy, has a low risk profile and solid liquidity, and exhibits adequate financial profiles. Ratings were lowered for:
* Constitution Corporate FCU, * Corporate Central CU; * Corporate One FCU; * Members United Corporate FCU; * Southeast Corporate FCU; * Southwest Corporate FCU; and * Western Corporate FCU.
In a press release, WesCorp noted that the announcement indicated that its rating action was based “primarily on our re-evaluation of the industry as well as our concern about the potential for material write-downs in WesCorp’s securities portfolio, particularly, but not limited to, its collateralized debt obligation book.” However, S&P did remove WesCorp from negative watch, citing “its strong franchise within the heavily regulated cooperative credit union industry and its adequate financial profile, which is highlighted by good liquidity but low risk-adjusted capital.” WesCorp Senior Vice President/ Chief Financial Officer Jim Hayes said Friday that 100% of the securities in its portfolio at the time of purchase were either government-backed or were rated by both S&P and Moody’s as AAA or AA—the two highest rating categories. The action “not only demonstrates how the market devaluation we’re experiencing is impacting our portfolio, it also points to the trend we see occurring among rating agencies of becoming more conservative in the way they are evaluating the portfolios of all financial institutions,” Hayes said. S&P began its announcement saying its review of corporate credit unions was undertaken in light of its recent lowering of the U.S. Banking Industry Country Risk Assessment. The agency also reported its key rating factors are largely the same as the considerations that drove its recent decision to lower the ratings on 11 major U.S. and European financial institutions. It reported that it is concerned about “the potential for further deterioration in the operating environment, including intensifying pressure on the valuation of mortgage-related structured securities the corporates hold. The rating actions also take account of our increased emphasis on capital and confidence sensitivity as key rating factors. “Overall, we believe the corporate credit union sector/industry remains healthy. These institutions have a comparatively low risk profile, solid liquidi6y and exhibit adequate financial profiles,” S&P said. “A testament to the overall and individual health of the corporates is that despite the unprecedented challenges of the prolonged credit crisis, the rated corporates have been able to hold their structured securities portfolios without compromising their ability to perform their key roles as investment vehicles and liquidity providers to their members.” S&P said that its review of U.S. Central FCU is not completed and will be finished within the next few weeks.

Brokerage CUSO COO charged in 2.5 million embezzlement

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RYE, N.Y. (1/13/09)--The former chief operating officer of Affina Brokerage Services has been charged with first-degree larceny. Affina Brokerage Services is a subsidiary of Rye, N.Y.-based USAlliance FCU. John Walsh, 53, is accused of embezzling $2.5 million from Affina. Police say he transferred stock from Affina into his own accounts and sold it for profit. He also used fake stock positions as loan collateral ( Jan. 8). Walsh surrendered to police Jan. 7. He will go to court Jan. 27. USAlliance FCU has $680 million in assets.

CU System briefs (01/12/2009)

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* LOGAN, Utah (1/13/09)--An ATM at the Logan, Utah, branch of Deseret First CU gave out free cash to anyone making a “deposit” with an empty slip for several months. As a result, three sisters in their 30s collectively obtained $25,000 in supposed deposits credited to their accounts from April 22 through July 7. The three didn’t conduct transactions. Instead, they hit a cancel button after inserting an empty deposit envelope, but the machine credited their accounts anyway, said North Park Police Sgt. John Itlasasno. He added the situation was a result of a computer glitch. Court records indicated that one sister pleaded guilty Tuesday to three counts of theft. Deseret First is a $449.8 million asset, Salt Lake City-based credit union (The Associated Press Jan. 10) … * CHARLOTTE, N.C. (1/13/09)--Golfers representing credit unions from North Carolina and South Carolina will tee up against each other in the Fifth Annual Carolinas Cup charity golf event March 15-17. All proceeds will benefit the Victory Junction Gang Camp. The three-day event, which will be the Mid Pines Inn & Golf Club in Southern Pines, N.C., is being hosted by the Carolinas Credit Union Foundation, the North Carolina and South Carolina credit union leagues and CUNA Mutual Group. All proceeds will go to The Carolinas Credit Union Foundation for the Victory Junction Gang Camp, a year-round NASCAR-themed facility in Randleman, N.C. Founded by Kyle and Pattie Petty in memory of their son, Adam, a NASCAR driver killed in a racing accident in 2000, Victory Junction is designed to creates camping experiences for children with chronic illnesses … * RICHARDSON, Texas (1/13/09)--Texans CU’s 2008 fundraising campaign
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resulted in $194,000 raised for United Way. More than 250 employees at the $1.839 billion asset, Richardson-based credit union participated in the one-week campaign, with 23 individuals investing at the Leadership Society level with a minimum $1,000 donation. All employee contributions were matched dollar for dollar by the credit union. Also, Texans matched member gifts fifty cents to each dollar. This year Texans introduced a Day of Caring opportunity with employees volunteering at a local United Way agency. United Way contributors were invited to an exclusive breakfast with Dallas Stars hockey player and credit union spokesman, Mike Modano, who posed with Texans CU employees at a recent thank you event for United Way campaign donors (Photo provided by Texans CU)… * HIGHTSTOWN, N.J. (1/13/09)—The Essex West Hudson Chapter of credit unions will meet Wednesday with Newark Mayor Cory Booker as guest speaker in an event open to all affiliated New Jersey Credit Union League credit union professionals, volunteers, members and vendors in the state. Booker is often mentioned as a likely Democrat successor to Gov. Jon Corzine. His unconventional approach to politics was the subject of a documentary entitled “Street Fight,” which was nominated for the 2005 Academy Award for Best Documentary. As a Newark City Councilman, he went on a 10-day hunger strike, living in a tent in front of one of Newark’s worst housing projects to protest open-air drug dealing. His initiatives to improve housing, youth, law and order, and the efficiency of City Hall were often outvoted, 8 to 1. After his term ended, he became director of Newark Now, a grassroots nonprofit group, and partner of a West Orange law firm. In 2006, on his second try, he was elected mayor with 72% of the vote and initatied a 100-day plan to implement reforms including expanding the police force, opening city jobs to former offenders, improving services and expanding summer youth programs … * HARRISBURG, Pa. (1/13/09)--Blue Chip FCU, Harrisburg, Pa., issued a 2% bonus dividend and 0.75% loan refund to its members in appreciation for their trust and loyalty, the credit union told the Pennsylvania Credit Union Association (Life is a Highway Jan. 9). The credit union also is renovating its site and will add an 800-square-foot lobby, teller station and drive-thru window ... * HARRISBURG, Pa. (1/13/09)--Norb Kaczmarek, CEO, Erie (Pa.) FCU, and board chair of the Pennsylvania Credit Union Foundation, was featured in the Erie Times-News. The article focused on how the credit union helps students and the community become more financially responsible (Life is a Highway Jan. 9). Use the link to view the article ... * PHOENIX (1/13/09)--MaryPat Garry, a former board chairman of Desert Schools FCU, Phoenix, died Jan. 3 at the age of 70 (The Arizona Republic Jan. 9). Garry served on the board, filling numerous positions, from 1989 to 2009. Desert Schools FCU has $3.1 billion in assets ...

Invest in America picks up steam

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MADISON, Wis. (1/13/09)--More state credit union leagues are supporting the “Invest in America” credit union loan partnerships between America's Credit Unions and automakers General Motors (GM) and Chrysler Corporation LLC. The partnerships were expanded to all 50 states, it was announced Wednesday. The Invest in America programs will provide 90 million credit union members nationwide with access to GM's “Credit Union Member Discount Program” at participating GM dealers, and Chrysler's "Credit Union Members Cash" rebates at Chrysler dealers. They also will provide access to affordable financing on new vehicle purchases (News Now Jan. 8). Leagues adding their support include:
* The Credit Union Association of New Mexico, which said credit unions statewide are supporting the programs, according to Sylvia Lyon, association CEO (The Associated Press Jan. 12). There is great need for car-buying assistance in New Mexico, and credit unions have money to lend because they did not participate in subprime lending, Lyon told the newspaper. Any credit union in New Mexico can participate in the program for the next three months. * The Minnesota Credit Union Network (MnCUN), which said Minnesota credit unions’ involvement in Invest in America demonstrates how the cooperative nature of credit unions benefits the local, state and national economies. “Minnesota credit unions have tremendous potential to help stimulate the state’s economy through car loans to their members,” said Mark D. Cummins, MnCUN president/CEO. “In these tough economic times, our state’s credit unions have remained, and will continue to be, healthy and strong. Participation in Invest in America is one of the many ways Minnesota credit unions are helping their members deal with the current challenges presented by the economy.” * The Association of Vermont Credit Unions (AVCU), which also said the programs are an example of how credit unions’ cooperativeness benefits local, state and national economies (Newslines Express Jan. 9). “This program provides credit union members exclusive discounts on new 2008 and 2009 GM and Chrysler vehicles. It further demonstrates that local, member-owned, and financially sound credit unions offer tremendous value and support to consumers struggling with tightened credit availability and a challenging economy,” AVCU President Joe Bergeron said in a press release sent to Vermont media outlets Thursday. * The Maryland & DC Credit Union Association (MDCCUA), which said credit unions have always been embedded in their communities (FOCUS newsletter Jan. 12).“This program is a win-win for the 2.5 million credit union members in Maryland and DC and the U.S. automakers,” said Mike Beall, MDDCUA president. “We are proud to be a part of this vital initiative to stimulate our local economy.”

Four MCUL-backed bills see success in 08

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PLYMOUTH, Mich. (1/13/09)--Four pieces of Michigan state legislation deemed beneficial to credit unions and supported by the Michigan Credit Union League (MCUL) saw successful passage during 2008. The year was a successful one for credit union legislative advocacy, MCUL said (Michigan Monitor Jan. 12). “We were able to help push some key bills through the legislature this year, which is not always easy when lawmakers are dealing with sizable issues such as a looming state budget deficit,” said MCUL Executive Vice President Patrick La Pine. “Between credit union legislative breakfasts back in the district and the efforts of MCUL governmental affairs staff in Lansing, the credit union voice is consistently heard regarding issues important to the industry,” he added. Gov. Jennifer Granholm signed HB 5085--now Public Act 145 as of 2008 June 2. It requires that all lien holders of a financed snowmobile be listed on the vehicle's registration--the same structure that applies to motor vehicles and boats. The law will help credit unions by creating consistency across different types of vehicle registration systems, La Pine said. The bill was introduced by State Rep. Jeff Mayes (D-Bay City). Three other MCUL-backed bills were sent to the governor’s desk during the lame duck session in December, including SB 834--a bill to permit a financial literacy course to satisfy a part of high school math curriculum requirements. It was signed into law Dec. 19, the final day of session. “To see the financial education bill become law is encouraging and serves as a significant step toward teaching students the money management skills that will serve them their whole lives,” La Pine told Michigan Monitor. The bill was introduced by State Sen. Michael Switalkski, D-Roseville, in October 2007 with support by MCUL. Also on the final day of session, the House passed SB 786, which will raise the small claims court monetary ceiling to $4,000 beginning July 1; $4,500 on July 1, 2010; and $5,000 on July 1, 2011. The higher monetary ceiling will allow credit unions to more frequently use the lower-cost, small claims alternative to pursuing matters in district courts, La Pine said. Once the bill passed the House, the Senate immediately concurred with its latest form. It is expected to be signed by Granholm shortly, MCUL said. The bill was introduced by Sen. Wayne Kuipers (R-Holland). On the same closing day of session, the House passed and the Senate concurred with SB 1020, which permits businesses that make contributions to individual development accounts held by financial institutions to take a credit against their Michigan Business Tax liability. The bill is also expected to be signed by Granholm soon. It was introduced by State Sen. Tupac Hunter (D-Detroit). One area of legislation that stalled throughout 2008 was related to the foreclosure crisis and assistance to homeowners. Bills designed to mimic North Carolina laws that provided help to homeowners with subprime loans who forced foreclosure were introduced, but disagreement between the House and Senate on specific language caused the bills to ultimately fail as the year came to a close, MCUL said. “One of the MCUL's priorities in 2009 will be backing credit union-friendly legislation that helps homeowners coping with the housing crisis,” La Pine said. “The credit union industry has done quite a bit to help people facing foreclosure, but state government has struggled with passing laws in this area.”

Municipal officials back N.J. deposits measure

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HIGHTSTOWN, N.J. (1/13/09)--New Jersey state municipal officers and mayors have contacted the New Jersey League of Municipalities to support legislation that would allow credit unions to become municipal depositories, said the New Jersey Credit Union League. The league has met with the League of Municipalities and the New Jersey Association of Counties. If the legislation is approved, credit unions could take deposits for the state’s 21 counties, 566 municipalities and 611 school districts (The Weekly Exchange Jan. 5). On Jan. 7, league President Paul Gentile and Director of Government Affairs Chris Abeel met with the New Jersey Community Affairs and its Division of Local Government Services to brief them on pending legislation that would allow credit unions to be depositories for municipalities and school boards under the state Government Unit Depository Protection Act (GUDPA). The league also is scheduling meetings with the New Jersey School Boards Association. The legislation, which would amend GUDPA, was introduced by State Senate Majority Leader Steve Sweeney (D) and State Reps. Fred Scalera (D) and Doug Fisher (D). “Support from such groups is essential to making the case that while credit unions will benefit from the legislation, it is good public policy and in the best interest of New Jersey taxpayers, who will be the true beneficiaries,” the league said.

CUs TV series reaching 93 of U.S.

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ROCHESTER, N.Y. (1/13/09)--PBS stations in 50 states are broadcasting new episodes of the Biz Kid$ TV series underwritten by America’s Credit Unions. All episodes begin and end with a narrator reminding viewers that “Production funding for Biz Kid$ is provided by America’s Credit Unions, where people are worth more than money.” Last year, the first 26 episodes of Biz Kid$ aired on more than 320 PBS stations, reaching 91% of the U.S. During the first quarter, 13 new episodes of Biz Kid$ are scheduled to air on nearly 330 PBS stations, reaching 93% of the country. Each episode includes at least four stories from successful young entrepreneurs reinforcing the importance of budgeting, saving and giving back to the community. “I liked it when they interviewed kids from all over the U.S.,” said Tommy Webster, 11, who watches Biz Kid$ regularly on the series’ flagship station, WXXI in Rochester, N.Y. “I learned how I could save money and spend it the right way without blowing it.” “My oldest son, who is 13, is saving money for the first time,” reported Cynthia Carrasco, a Biz Kid$ viewer in Tulsa, Okla. “I believe my son is going to grow up to be a better man because of Biz Kid$…. You have been an inspiration to us all.” Biz Kid$ shows also provide teaching materials for credit union educators. Using national financial literacy standards, episode-specific curricula will be developed by Outreach Extensions, the creator of educational materials for Bill Nye the Science Guy, Liberty’s Kids, Kratts’ Creatures, and other public television series. Free curriculum and family activities for every episode will be available on the Biz Kid$ website. The Washington Credit Union Foundation manages the Biz Kid$ project and a coalition of more than 130 credit unions, leagues, foundations, affiliates, and service providers contribute to the national production. “National underwriting dollars are needed now to pay for the next 13 episodes delivered to PBS stations,” explains RoxAnne Kruger, Biz Kid$ project manager at the foundation. “We are asking credit union supporters to please consider a contribution to Biz Kid$ in 2009 to help cover the television production, website and curriculum development costs.”