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CU System Archive

CU System

Financial resolutions include advice from SAFE CU

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NORTH HIGHLANDS, Calif. (1/3/08)--A credit union CEO was featured in a Tuesday Sacramento Bee article about financial resolutions. The article encouraged readers to “get into financial shape,” noting a number of ways that consumers can improve their finances and save money. The article also featured advice from Henry Wirz, president/CEO of SAFE CU in North Highlands. Wirz suggested several ways that consumers can boost their credit scores, such as: signing up for payroll direct deposits and then setting aside a fixed amount for savings. “Doing this, I saved for the down payment on my first home,” he told the newspaper. Converting to online payments can help members avoid late fees and save money on postage, Wirz said. He also suggested that consumers ladder certificates of deposit, and stagger maturity dates so they don’t roll over at the same time. Check credit unions’ interest rates, and buy certificates in April or October, when many credit unions offer special rates or discounts. “There’s usually a generous spread between six-month CDs and longer-held CDs that can offer better rates,” he wrote. Reviewing credit reports annually and cancelling unused credit cards will help to raise FICO scores, Wirz added. For readers looking to purchase a car, he suggested they study car prices and then check loan rates at their credit unions.

Sale of CU mortgage company PHH Corp. is off

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MT. LAUREL, N.J. (1/3/08)--PHH Corp. announced Tuesday that it has terminated plans for its purchase by General Electric Capital Corp. (GECC), a unit of General Electric Company, and The Blackstone Group. The merger was called off because Blackstone could not finance the deal. PHH has requested a repayment of $50 million as a termination fee. The merger was to be completed Dec. 31. Under the agreement, a wholly-owned subsidiary of GECC would have merged with and into PHH. Following the merger’s closing, GECC was to sell the company’s mortgage business to Pearl Mortgage Acquisition 2 LLC. Pearl is an affiliate of The Blackstone Group. "I am disappointed that we could not conclude the transactions contemplated by the merger agreement,” said A.B. Krongard, PHH non executive chairman of the board. “The board will determine in due course whether to continue to explore the company's strategic alternatives. The board remains focused and committed to delivering value for our stockholders regardless of the decision." PHH is a provider of mortgage and vehicle fleet management services. PHH purchased CUNA Mutual Mortgage in 2005, and 18 former employees of CUNA Mutual have since founded Greystone Residential Funding Inc. (News Now Aug. 8, 2007).

CU System briefs (01/02/2008)

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* HARRISBURG, Pa. (1/3/08)--The Pennsylvania Credit Union Foundation raised more than $255,000 in unrestricted funds in 2007 during its fundraising and grants campaigns, according to foundation board Chairman Norb Kaczmarek (Life is a Highway Jan. 2). The amount is an increase of $60,000 or 30% over the record total raised in 2006. More than $175,000 in grants went to projects ranging from financial literacy to strategic planning and small credit union development, reflecting an increase of $79,000 or 82% over its 2006 grants. Since the foundation was formed, it has raised nearly $2.1 million and awarded 296 grants for more than $1.27 million … * HANSCOM AFB, Mass. (1/3/08)--Hanscom FCU rang in the new year by giving members more than $1 million in loyalty dividends Monday. The total represents a 3% bonus on dividends earned and consumer loan finance charges paid in 2007. "This year brought an extraordinarily challenging financial climate. I am proud of our team for continuing to grow our assets and also thrilled to be sharing that success with our members," said Paul Marotta, board chairman. "I can think of no better way of telling them all, 'Thank you.'" Hanscom serves 42,000 members and has $578 million in assets … * HARRISBURG, Pa. (1/3/08)--Mid-Atlantic Corporate FCU has hired ALM expert Bruce Six to lead its new Asset and Liability Management (ALM) department. He brings more than 17 years' experience in the credit union movement, with various roles, including most recently administrator of ALM and investments at Pennsylvania State Employees CU. Six will work with credit union members and current ALM business partners to grow the corporate's ALM function. He also will be a member of its Investment and Asset and Liability Management committees (Life is a Highway Jan. 2) …

Thief empties Hawaii ATMs snags IDs of 900 people

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HONOLULU (1/3/08)--Police in several states are looking for a man responsible for an identity theft scheme with more than 900 victims nationwide and $88,000 stolen from ATMs in Oahu, Hawaii, including that of a credit union. All the victims have accounts with Washington Mutual Bank. Police suspect he acquires victims' personal information, uses a cell phone to call the bank and change their personal identification numbers (PINs), and requests duplicate cards (KGMB9.com Dec. 27 and MSNBC.com Jan. 2). The thief used an ATM at Hawaii Central CU 27 times in three minutes to drain the machine of its cash, police said. He used a different ATM card for each transaction. The man was in Hawaii from Oct. 8 through Oct. 29. He repeated the thefts in Las Vegas and New York, said police. Police believe he is part of a larger network.

CU helps members with heating bills

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FALL RIVER, Mass. (1/3/08)--Fall River Municipal CU is helping its members pay their oil heating bills with a new loan program. The credit union is offering up to $1,000 in loan assistance for heating bills. The loan period is for 10 months at a rate of 5.5%. The program seeks to help members spread their heating bills into smaller payments (Standard-Times Jan. 2). Lisa Reid, consumer lending manager, told the Standard-Times a few members have taken out the loans. She expects the number of loans will increase. Though the program is scheduled to finish at the end of January, it could be extended if heating costs remain high, Reid said. Bruce Morell, executive director of People Acting in Community Endeavors, told the newspaper that Fall River’s program is a “godsend” for low-income residents. Many low-income residents can’t afford $800 monthly payments for oil, and have stopped paying rent or buying food and medicine, he said. Estimated winter heating costs for houses in the Northeast will be $1,879, a 25% increase from last year, the newspaper stated. Fall River Municipal CU has $24.7 million in assets.

Filene report Allow CUs access to alternative capital

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MADISON, Wis. (1/3/08)--It is in the public interest to permit U.S credit unions greater access to alternative capital sources, says a recent Filene Research Institute report. In “Alternative Capital for U.S. Credit Unions? A Review and Extension of Evidence Regarding Public Policy Reform” author Robert F. Hoel explores the reasons why credit unions need alternative sources of capital, even though many credit union executives and economists believe credit unions are “overcapitalized.” Currently credit unions have only one source of capital--or sustenance--Hoel explains, and that is retained earnings. So credit unions tend to hoard retained earnings out of fear of a shortage. With alternative sources of capital, credit unions may be more efficient with their capital, Hoel said. After reviewing existing literature in the fields of credit unions, capital formation and public policy, Hoel provides other key research conclusions:
* Though many credit unions may not seek alternative capital now, having the power to do so would allow them to conduct business with confidence that they could build capital in a variety of ways beyond the slow retained-earnings approach, if necessary. * Federal and state laws and regulations should be amended to permit credit unions to obtain alternative capital. * Credit unions can expand their capital bases by using alternative capital in ways that will not dilute their cooperative ownership, value and governance structure. * Several different mechanisms for raising alternative capital are appropriate and feasible. Among them are obtaining capital from outside investors and acquiring special long-term deposits from credit union members. * A broad menu of alternative capital options would best serve credit unions, their members and the general public. There is no single method that is best for all credit unions seeking alternative capital. * It would be appropriate for credit union regulators to review and approve a credit union’s alternative capital plans and mechanisms prior to its issuance of alternative capital instruments. * Steps should be taken promptly to repeal or reform statutes and regulations that prohibit credit unions from obtaining alternative capital. There are no compelling reasons to delay.

Latino Community CU rolls out online banking

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DURHAM, N.C. (1/3/08)--Latino DirectNet, a new online service provided by Latino Community CU, was introduced to members Tuesday. Latino DirectNet allows members to access most of the $50.8 million asset, Durham-based credit union’s products and services. “With this service, available in English and Spanish, members will be able to manage their accounts and carry out many types of transactions from home,” said Angel Romero, Latino Community marketing director. “Members will no longer need to go to branches, use the phone or go to an ATM. They will be able to do it all from their computers--from any place that has an Internet connection.” Transactions at Latino DirectNet are protected by physical, electronic and procedural measures, the credit union said. A highlight of the new bilingual system is the possibility of making investments online. “For example, members will be able to open share term certificates to enjoy Latino Community’s dividend rates,” Romero explained. “Another feature of Latino DirectNet is that it allows users to transfer money between accounts. Users can pay credit cards and loans as well. “Also, members will be able to pay utility bills and other services with BillPay. Through the BillPay system, credit union members will be able to schedule one-time or recurrent payments,” he added.

WOCCU No CUs affected in Kenyan turmoil

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MADISON, Wis. (1/3/08)--Recent deadly riots over a disputed presidential election in Kenya have not affected credit unions in that country, according to the World Council of Credit Unions (WOCCU). Violence in Kenya has resulted in more than 300 people killed since President Mwai Kibaki was re-elected and sworn in for another term as the country’s president Sunday. The opposition candidate claimed the election was rigged (USA Today Jan. 2). Most of the violence has occurred in the city of Nairobi. Only 3% of the country’s 34 million people have been affected by the violence, according to a Kenyan government spokesman. The violence is costing the country $31 million per day, said Kenyan Vice President Moody Awori (The Associated Press Jan. 2). WOCCU has three projects in Kenya related to SACCOs or credit unions. “All three projects are on hold for at least another week before they get back underway,” Brian Branch, WOCCU chief operating officer and executive vice president, told News Now. “There was no known damage to credit unions because most everything was shut down due to the holidays and the election. So most businesses were not operating [when the riots broke out].” The SACCO Growth Project, which is funded by the Gates Foundation, is directed by Jesus Chavez. The project, which is designed to provide technical assistance to consultants who work with credit unions, is in Kibera, a slum inside Nairobi. Another project in Nairobi, funded by the British, is the SACCO Capacity Building Program, managed by Erick Sile. It is designed to improve the product pricing and financial efficiency of about 20 SACCOs. The third project is Mitigating the Impact of HIV/AIDS on Economic Growth through Credit Union Modernization; Institutional Restructuring; Agricultural Business Development and Services and Education. The project is run by Sam Dunlap in the city of Kisumu, and is funded by the U.S. Department of Agriculture. Sile is currently in Kenya, while Chavez and Dunlap are in the U.S. waiting to return to Kenya when tensions ease, Branch said. Kenya has 2,993 credit unions nationwide with more than 3.26 million members, totaling $2.147 billion in assets, according to WOCCU statistics.

WesCorp OKd to restate 2005 financial statements

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SAN DIMAS, Calif. (1/3/08)--WesCorp has received approval from KPMG LLP, its auditing firm, to release its delayed 2006 audited financial statements, after 10 months of discussions and review, the corporate credit union announced Wednesday afternoon. The statements will be posted on WesCorp's website and also will be distributed to its more than 1,100 member credit unions. The delay in publishing the 2006 audited financials was due to a difference in interpretation of the Statement of Financial Accounting Standards (SFAS) 133 for certain derivative transactions used in WesCorp's hedging strategies to manage interest-rate risk. The resolution means WesCorp will restate its earnings for the year 2005, make adjustments for 2006, and revise its hedge accounting practices for 2007. In aggregate, the restatement will result in an increase to WesCorp's income and retained earnings. The restatement has no adverse impact on the financial strength and safety of WesCorp, the corporate said. Under the adjustments, WesCorp will report earnings that are $16.1 million more than previously reported during the period 2005 to September 2007. Year 2005 will show a negative adjustment of $22.9 million. However, financials for year 2006 and up to September 2007 will more than compensate for the adjustment with positive net income increases of $16.9 million and $22.1 million, respectively. "As we were working closely with KPMG on the 2006 audit, we arrived at the conclusion that some of our documentation for certain hedge transactions did not meet the qualifications for hedge accounting under the 'short cut' methodology," said Todd Lane, executive vice president and chief financial officer of the $33 billion corporate credit union. "Interpretations of SFAS 133 in 2005 differ from those of today," he said. The restated financials "adhere to the most recent guidance for accounting treatment of hedge transactions under SFAS 133." WesCorp management believes that most of the hedges during the period under review would have qualified for hedge accounting under a "long haul" method. However, long haul accounting can't be applied retroactively, so the restatement assumes hedge accounting was not applicable to the derivatives and the related hedged item. The short cut methodology--a practice now abandoned by WesCorp and many other financial institutions--permits the user to assume no ineffectiveness if the company meets certain strict criteria, which means ongoing effectiveness testing is not required. However, if the criteria are not met in their entirety, the company must use the long haul methodology, which requires extensive documentation, analysis and testing at the creation of the hedge and during its lifespan. Standard & Poor's and Moody's recently reaffirmed their high ratings of WesCorp's portfolio and noted the corporate's outlook is "stable."