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Scotland launches new CU fund

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EDINBURGH, Scotland (1/15/09)--Scotland has launched a new fund designated specifically for credit unions, to help them grow and withstand the global economic downturn. The new Third Sector Enterprise Fund of US$366,800 will offer grants of up to $36,680 to help credit unions build capacity and become more sustainable organizations, according to Finance Secretary John Swinney, a member of the Scottish Cabinet. He noted that third sector organizations, including credit unions, face challenges in the economy. “The Scottish Government highly values the contribution the sector can make to creating a wealthier and fairer country--which is why we increased funding by 37% and recently launched the Third Sector Enterprise Fund,” Swinney said. “In these unstable economic times, with other sources of borrowing harder than ever to obtain, the credit union movement offers a refreshing, human scale alternative source of finance, “ said Patrick Harvie, a member of the Scottish Parliament. “This new funding will be a very welcome boost for Scotland’s credit unions, which could be a key part of a truly diverse and sustainable banking system, instead of the UK Government’s vision of a world dominated by a handful of megabanks.” Scotland has about 120 credit unions serving about 200,000 members. They are eligible to apply for government support from the fund or from the Scottish Investment Fund. However, the government decided to dedicate a $366,800 Third Sector Credit Union Fund to help them reach their potential. The fund expects to make about 20 grants over the 2008-2011 period.

Overdrawn accounts net 37 billion in fees

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ST. SIMON’S ISLAND, Ga. (1/15/09)--As their earnings undergo more pressure due to the economy, financial institutions are becoming more reliant on fees from non-sufficient funds (NSF) and overdrawn checking accounts, according to new research. Financial institutions collected $37 billion in NSF and overdraft protection (ODP) fees in 2008, a significant increase since 2004, according to Bretton Woods, a Georgia-based bank strategy consulting firm. The study cites Bankrate.com data showing a 7% increase of the fees from 2005 to 2008. Nationally, the average household has more than 12 overdraft transactions per year and pays $368 per year in fees, said the study. The average NSF fee is $28.95. Roughly 20.2 million households with banking accounts account for most (1.02 billion) of the non-sufficient funds. These more “active” households paid $1,472 in annual NSF fees. Not only did the fees increase, but the number of debits presented against insufficient funds soared to 1.28 billion, an increase of 16.3% in the past three years, according to the study. The average U.S. household with a banking account incurs 12.7 NSF fees per year, according to the study, which counted 1.28 billion separate check and electronic NSF item last year. For banks, 74% of reported service fee income comes from NSF/ODP. Bretton Woods estimated that 80% of what little fee income credit unions do charge comes from NSF fees. Banks’ fees, however, are more diverse and cover a range of other types of fees. Credit unions, because of policies such as not charging for ATM transactions, limit fee income to a narrower field, which includes recouping costs of bounced checks. According to the data in the report, banks’ fees in 2008--based on data from the Federal Deposit Insurance Corp.—were more than six times that of credit unions’ fees—based on data from the National Credit Union Administration.

Homes for Our Troops withdraws home offer

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ST. LOUIS (1/15/09)--Homes for Our Troops (HFOT) has withdrawn support for building a home for Army Specialist Scott West in Branson, Mo., because West had pleaded guilty to a felony involving a controlled substance. John Gonsalves, HFOT president and founder, informed the Missouri Credit Union Association (MCUA) about the issue Monday, said MCUA (The Missouri difference Jan. 14). “Upon reviewing their documented response, the Missouri Credit Union Association respects and supports Homes for Our Troops’ actions,” said Rosie Holub, MCUA president/CEO. HFOT provided copies of the initial application to receive support and the partnership agreement West signed. At the time of the initial application in February 2007, West did not have charges filed against him. However, when he signed the partnership agreement in July 2008, he did not disclose that charges were pending at that time. The partnership agreement indicates that HFOT can withdraw support for cause and one cause specifically stated is a felony criminal act by a veteran, said MCUA. “We take very seriously our obligations to our donors and volunteers,” said HFOT in a statement. “That is why our agreements with servicemen and women include a provision that allows us to end a project if it is clear the veteran has committed a felony criminal act.” HFOT said it will move formally to end the West project and the next step will be to make a recommendation to its board. West was arrested Oct. 1 during a traffic stop. He pleaded guilty Dec. 11 to a Class B felony for possession of a controlled substance with intent to distribute. The felony carries a minimum of five years and a maximum of 15 years in prison (News-Leader and St. Louis Post Dispatch Jan. 13). “As you can imagine, this decision and notification was not easy for HFOT,” said Holub, who added it has built 35 homes and plans to complete more than 30 this year. “MCUA continues its support for this organization that builds specially adapted homes for servicemen and women who have been so severely injured fighting for our country,” she added. “We want to assure member credit unions that all funds collected and pledged by Missouri credit unions will go to fund a future home for a severely injured veteran in Missouri and that Missouri credit unions remain firmly committed to Homes for Our Troops,” Holub said.

CUs invited to Canadian working group on credit

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TORONTO, Canada (1/15/09)--Canadian Finance Minster Jim Flaherty is inviting Credit Union Central of Canada--the Canadian national trade association for credit unions--to be part of Canada’s new national working group on credit. Desjardins, Canada’s largest co-operative financial group, also is invited. Executives from individual Canadian banks and the Canadian Bankers Association reportedly met Tuesday in Toronto with Canadian Central and Desjardins (The Toronto Star Jan. 14). It is not clear if the financial cooperatives would become permanent members of the group or take a role only as observers, the newspaper said. A key issue for the group is credit availability for consumers and businesses. The invitation indicates that the federal government--when it reveals its budget Jan. 27--could implement further action to augment credit, the paper said. Flaherty created the group last week in response to growing complaints about access to credit, the paper said. Government officials and bank executives were instructed to look for ways to make loans more accessible.

Pa. foundation grant for small CUs marketing

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HARRISBURG, Pa. (1/15/09)--The Pennsylvania Credit Union Foundation awarded a $29,850 grant to 11 small credit unions to develop an Erie-area marketing website for underserved, select employee group (SEG)-based consumers. The grant approval was the foundation’s first in 2009 (Life is a Highway Jan. 14). Foundation Chairman Norb Kaczmarek, CEO, Erie FCU, promised that his credit union’s marketing department will advise and work closely with the following SEG-based credit unions to enhance their marketing capacities:
* EC & EE Employees FCU, Erie; * Erie (Pa.) Firefighters FCU; * Erie (Pa.) Police FCU; * Erie (Pa.)Times FCU; * Greenleaf Employees FCU, Saegertown; * I.B.E.W. Local 56 FCU, Erie; * Loco & Cont Empl. FCU, Erie; * North East (Pa.) Welch FCU; * PHB Employees FCU, Fairview; * Saint Vincent Erie (Pa.) FCU; and * Tri State Rail FCU, Erie.
Ed Williams, grants committee chairman, and CEO, Discovery FCU, Reading, praised the project’s potential as a prime example of promoting cooperation among small credit unions, and the participating credit unions for combining their financial resources to form a credit union marketing system in Erie.

Massachusetts governor signs three CU bills

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MARLBOROUGH, Mass. (1/15/09)--Massachusetts Gov. Deval Patrick (D) signed three bills that are important to credit unions, according to the Massachusetts Credit Union League. House Bill 1068, an Act Relative to the Operation and Corporate Governance of Credit Unions, permits telephone conference calls for meetings of boards of directors and standardizes member voting procedures by requiring a majority voting standard (E-Weekly Jan. 14). The bill eliminates advance regulatory approval for offering credit cards and safe deposits boxes and provides for the ability to accept utility payments. An outdated 6% per year interest rate cap on deposits was removed, the league said. House Bill 1006, an Act Relative to the Conversion of a Massachusetts Chartered Credit Union to a Federal Charter; establishes legal authority for a state-to-federal conversion, said the league. Senate Bill 2854, an Act Relative to Credit Union Mortgages, changes mortgage lending guidelines for state-chartered credit unions. It eliminates some categories of loan-to-value ratios and uses safety and soundness standards as the primary criteria for mortgage lending. The bill requires that any credit union mortgage written must be eligible for sale into the secondary market and requires written loan policies that incorporate prudent underwriting standards.

Coastal FCU changes teller system

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RALEIGH, N.C. (1/15/09)--Coastal FCU has changed its teller system to allow tellers to help members at multiple locations-even if they are not in the same building. Coastal FCU, Raleigh, N.C., launched Express Teller at two of its branches--St. Albans Drive and Wakefield Commons. The credit union plans to convert its other eight branches by the end of the year. The service will keep the Wakefield Commons branch open later--from 7 a.m. to 7 p.m.--with the potential to extend hours even more in the future. “We can instantly allocate teller resources to match branch traffic,” said Coastal President/CEO Larry Wilson. “That means the system will allow us to serve members faster, handling peaks in branch activity more effectively. It will also make it easier for us to extend our hours of operation and lower the cost of adding new branches.” Tellers on the system will work at the Express Teller Center at the St. Albans Drive headquarters. Coastal has been exploring remote teller service since 2003. Previous services required the teller and member to be in the same building. Coastal has $2.1 billion in assets.

Illinois league kicks off tax-help effort

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NAPERVILLE, Ill. (1/15/09)--Millions of working Americans are eligible for various income tax credits every year, including the Earned Income Tax Credit (EITC), but miss out because they either don't know about them or how to file for them. In response, the Illinois Credit Union League (ICUL) has committed to helping credit unions build a stronger community with its latest initiative--http://www.ipaytaxes.org/-- a free Web resource. The consumer-geared website was designed by ICUL for use by its member credit unions to educate consumers and help them make the most of their tax situation. The site includes a “Maximize Your Refund” section with information on the various tax credits that are available, Volunteer Income Tax Assistance (VITA) details, and other free online tax filing services, and information about credit unions, including how to join. A “Quick Connect” section links to the Illinois State Treasurer's Office, the Federal Trade Commission, and resources available via the Internal Revenue Service. ICUL also has created an outreach action kit to assist with the development of a campaign to market and organize the service. Credit unions will find information--from free marketing material, to detailed information on organizing a community-wide EITC/VITA event. “It is our hope credit unions will support this initiative, and join the nationwide effort in spreading the word,” said Joni Senkpeil, ICUL director of small credit union development.

Ohio CUs pushing small-business loans

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AKRON, Ohio (1/15/09)--Several Ohio credit unions are increasing their small business lending, while other others are exploring the possibility of entering commercial lending. Some credit unions are attempting to fill the void left by banks in the state when many cut back on small business loans (crainscleveland.com Jan. 12). Banks’ pricing on the loans is getting quite high, making it difficult for some small businesses to acquire the loans, Mike Baughman, assistant CEO, Buckeye State CU, Akron, told the newspaper. In June, the $79 million asset Buckeye joined a credit union service organization--Cooperative Business Services--that spreads out the commercial loans among it members so no one credit union has to fund a large loan. Thirty-one Ohio credit unions have joined the cooperative. Others plan to do so. The cooperative is owned by nine Ohio credit unions, according to its website. Here’s what some credit unions are doing:
* TeleCommunity CU, Akron, has been involved in commercial lending for the past two years. Efforts in the commercial arena have gone extremely well, and Jack Sarver, TeleCommunity CEO, said he wants to hire a full-time commercial loan officer so the $143.6 million asset credit union can issue more small-business loans, he told the paper. * Vacationland FCU, a $109.8 million asset credit union based in Sandusky, has increased small business loans to $4 million from $700,000 during the past year, Bryan Myers, executive vice president for business services, told the paper. Vacationland has another $3 million of loans ready to be processed, including many equipment loans and real estate loans, he added. * Eaton Family CU makes unofficial commercial loans at present, Fred Siegel, business development manager at the $37.2 million asset, Euclid-based credit union, told the paper. While the credit union issues business loans, it does not use a business application because Eaton does not have the wherewithal to evaluate companies. However, the credit union can issue personal loans to members for business uses, he added. * Cardinal Community CU’s board of directors has been contemplating business lending for awhile and it intends to begin in the second quarter, CEO Jim Hartman told the paper. Although the $142.9 million asset, Mentor-based credit union has some commercial checking and deposit accounts, it has not made loans to businesses, he said. However, he knows there is demand for business loans because he gets frequent calls about them, Hartmann added.

CU System briefs (01/14/2009)

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* SEATTLE (1/15/09)--Seattle Metropolitan CU’s new ad campaign, “Intentionally Left Bank,” is up and running on billboards, buses, and print ads this month. Billboards feature a blank billboard, with the credit union’s logo in the corner and the words, “Intentionally Left Bank.” The credit union says more and more people are intentionally leaving their banks and joining the credit union, “where we are guided by the seven cooperative principles.” For more information, use the link … * CONCORD, N.H. (1/15/09)--A nighttime shooting of a police officer by his supervisor at a credit union building under construction has been ruled an accident, said the New Hampshire Attorney General’s Office (New Hampshire Union Leader Jan. 13). The May 1 incident occurred during a makeshift training session inside the Granite State CU building. After the training session was over, attendees and the instructor, Sgt. Steven Smagula, reloaded their guns. He stayed to answer questions and was demonstrating footwork to use in a quick search, when his gun went off. Officer Joshua Levasseur wore a protective vest that prevented the bullet from entering his chest. No charges will be filed against Smagula … * DENVER, Colo. (1/15/09)--Jeffco CU and Westerra CU--the credit unions serving the two largest school districts in the state, Jeffco Public Schools and Denver Public Schools--announced plans to merge. Through Westerra, members will have access to 11 branches, 150 service center locations and 800 surcharge-free ATMs. Both credit unions share a commitment to financial education, said $162 million asset Jeffco CU’s chairman, Connie Ephland. C. Alan Peppers, president/CEO of $912 million asset Westerra, will continue in that position. The merger is expected to be final on July 1. The full integration of Jeffco’s operations will occur throughout the second half of 2009. The merged credit union will have more than $1 billion in assets and serve 88,000 members … * SIMI VALLEY, Calif. (1/15/09)--Members of Ventura County CU in the Simi Valley area will have no trouble finding their new local office: it’s next door to the old one. “We only moved a few yards,” said Amy Ginnever, branch manager. “But in terms of new features and being able to better serve our members, we’re miles ahead.” Ginnever also noted that one of the first thing new members ask about are auto and home loans. “We let them know that yes indeed, we have money to lend to our members along with some of the lowest rates in town.” Ventura County CU has more than $465 million in assets … * BOSTON (1/15/09)--A New Hampshire woman has pleaded not guilty to stealing more than $200,000 from an unnamed credit union in Massachusetts while she was employed there. Kelly Curley of Nashua, N.H., directed the credit union’s loan department. The charges allege she secured five loans for herself between June 2006 and February 2008 by using a co-worker’s computer to make loan transactions using the names and information of a relative and two friends (Associated Press Newswires Jan. 14) … * JEFFERSONTON, Va. (1/15/09)--Vice Admiral Thomas Hughes, former CEO of Vienna, Va.-based Navy FCU, died Tuesday night after a short illness, according to the $34.7 billion asset credit union. He was CEO of the Navy Federal from 1987 to 1996. Funeral arrangements are pending …