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CUs rev engines on Invest in America

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LANSING, Mich. (1/26/09)--Although the hard numbers won't be available until February, the Michigan Credit Union League reports "a ton of action" on the website created for "Invest in America," credit unions' auto loan discount program with auto manufacturers General Motors Corp. and Chrysler Corp. "There are two ways to look at it," said Michael Bridges, director of public affairs. "Since the program went national, we have seen more than 350,000 unique page views. Another way to look at it is the website has seen 2.2 million hits in the first two weeks of the program, or 3.6 million since the program was rolled out in December." CUDL is reporting that 8,000 GM and Chrysler vehicles have been sold to credit union members. And GM reports it is seeing a 30% conversion rate on the number of people asking for a "Credit Union Member Discount" certificate to those actually buying a car, Bridges told News Now. To generate further interest in the program, two 15-second ads ran last week on the Jumbotron at the North American International Auto Show in Detroit. "We are in the process of putting a tracking component together" to monitor the progress in sales, Bridges said. "We hope to have some hard numbers in February." Meanwhile, in Indiana, one of the four original Midwestern states in the program's pilot with GM, about 2,500 individuals registered for the program during the first week, said Kay Neidlinger, spokeswoman for the Indiana Credit Union League in Jan. 23). Of that number, about 1,500 obtained a discount code certificate and more than 150 bought vehicles. The discounts are so attractive, they could end up increasing credit union membership, but the purpose of credit union participation is to offer existing members a good deal on one of credit unions' cornerstone products, auto loans, said Neidlinger. The Louisiana Credit Union League reported it's receiving "positive feedback from members" regarding the Invest in America program and a "high volume of calls from credit unions concerning participation in the program," reported its newsletter, eNews (Jan. 14). Several credit unions in New Jersey are participating in the program, according to Paul Gentile, CEO of the New Jersey Credit Union League in an article in (Jan. 16). ADP FCU in Roseland, Riegal FCU in Milford, and Paragon FCU in Montvale will soon offer the program's incentives. Richard Rays, CEO at Paragon FCU plans to promote the program in the February edition of its member newsletter. "We have our staff calling dealers to let them know we are participating," he said. "The trick is to make those loans to people who will have the income to repay those loans." Paragon plans to cut its interest rate to as low as 4.99% , from its current rate of as low as 6.5% for qualified borrowers. The national credit union loan average is 5.4% , according to Datatrac, a firm that tracks auto loan rates. The average bank rate is 6.9%. In New Jersey, many credit unions already have marketing alliances with auto dealers through Credit Union Auto Group, which includes 50 dealers. Kensington Valley Community CU (KVCCU), Highland, Mich., has tied the program to its 50-year-anniversary celebration. "In addition to our already great rates, our members could qualify for up to 2.75% discount on a 24- to 50-month auto loan," Linda McCoy, KVCCU lending manager, told (Jan. 15). According to Mike Long, vice president of lending at UW CU in Madison, Wis., the credit union is participating in the program because is "presents a great opportunity for our members. Not only do they have a chance to save money on most GM and Chrysler vehicles, but they can also feel the satisfaction of helping support the U.S. auto industry." For Northeast CU, Portsmouth, N.H., the program is a no-brainer. "The new program comes during a challenged economy and that is why NECU is pleased to extend this to our members," said Peter Kavalauskas, president/CEO. Giving back to members while helping the domestic auto industry also is the reason Citadel FCU, Thorndale, Pa., is encouraging its members to use the loan deals. Citadel has no trouble generating auto loans. During the last few months of 2008, it originated more than $100 million in auto loans to the local community.

More CUs report Heartland breach impact

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MADISON, Wis. (1/26/09)--Throughout the day Friday, media were reporting about credit unions whose members were among those whose accounts are impacted by the far-reaching data breach at Heartland Payment Systems. The Association of Vermont Credit Unions (AVCU) said that the breach has already affected 6,000 cards at credit unions on the association's ATM/debit card program, as well as thousands more at other Vermont credit unions (Newslines Express Jan. 23). AVCU said it learned of the developing breach from its processor on Jan. 9, more than a week before Heartland issued its press release on Inauguration Day. AVCU "immediately began passing along what we learned of the developing situation to credit unions. We also began working with CU CheckCard credit unions, our processor Fifth/Third Processing Solutions, and MasterCard to deactivate and reissue compromised cards. To date, the number of compromised CU CheckCards already stands at approximately 6,000," AVCU said. That compares with 6,500 CU CheckCards that were cancelled or reissued last year in the wake of a data breach at Hannaford Bros. groceries. In Dayton, Ohio, Wright-Patt CU was contacted Thursday by Heartland with names of affected cardholders at the $1.380 billion asset credit union. About 15% of the credit union's cardholders were affected, Wright-Patt Vice President Jeff Carpenter told Dayton Daily News (Jan. 23). Members who receive a new card will have two weeks to activate it before the old card is deactivated. Two weeks allows the credit union to balance reducing the financial risk to the credit union with giving cardholders who are out of town a chance to activate their cards, he said. Several Maine credit unions, who were hit hard by both the Hannaford Bros. and TJX Cos. breaches the past two years, were told by Visa and MasterCard that fraudulent charges were placed on members' cards between mid-May and mid-August last year, Jon Paradise, spokesman for the Maine Credit Union League, told (Jan. 22). About 500 Visa credit and debit cards issued by PeoplesChoice CU, Saco, Maine, might have been compromised, said Luke Labbe, president/CEO, in the same article. He estimated that 50 to 60 members had fraudulent charges on their cards. The credit union had noticed a pattern of small charges at gas stations in the South followed by a larger charge of about $500 at a nearby Wal-Mart. Labbe said the credit union had been experiencing losses since October but didn't know where they were coming from. CU Community CU, Springfield, Mo., told local media the breach may have affected 350 members. So far, thieves have charged $11,000 through 16 cards, but the credit union prefers to play it safe and cancel and reissue new cards to avoid fraud risks ( Jan. 22). In Washington State, Boeing Employees' CU (BECU) had no spike in suspicious activity and it doesn't know yet if members are affected. However, another credit union, Washington State Employees CU confirmed some of its members are affected, but it doesn't know yet the extent and how many (Seattle Post-Intelligencer Jan. 23). And in Olympia, Wash., Thursday, lawmakers were discussing a bill to protect financial institutions from bearing the cost of such breaches. If a security breach involves 5,000 or more accounts, the third-party company that was breached would be required to reimburse the organization whose customers are affected. The bill also proposes that businesses not retain credit/debit card information on customers once the transaction is authorization.

Scam alerts flooding several states

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MADISON, Wis. (1/26/09)--Credit unions nationwide are reporting that their members have been targeted by scams--including scams that have origins overseas. Achieve FCU, Berlin, Conn. said that two dozen of its members lost money after sending debit card passwords to scammers that requested personal financial information (The Hartford Courant Jan. 23). The scammers had contacted members saying their accounts had been frozen. One member lost $2.76--all she had in her account--while others lost $400, which is the maximum amount a member can withdraw in one day, Mary Budnick, Achieve vice president of operations, told the newspaper. The scammers that targeted Achieve members were located in Romania and in Spain (Journal Register News Service Jan. 22). The Federal Deposit Insurance Corp. (FDIC) warned its consumers, businesses and financial institutions Jan. 15 about fraudulent e-mails purporting to be from the Federal Reserve Bank. The e-mails state that a phishing attack has hit the Fedwire system and recipients are asked to click on links for more information. The links redirect recipients to Web pages that attempt to load malware, the FDIC said. The agency urged e-mail recipients to delete the messages. Other scams:
* Duke University FCU, Durham, N.C., was targeted by a phishing scam. E-mails purporting to be from the credit union asked recipients to submit their personal financial information. The e-mail included links to a website with a replica of the credit union’s logo (Targeted News Service Jan. 15); * Langley FCU, Hampton, Va., reported that texts were sent to members’ cell phones in Hampton roads asking for personal information ( Jan. 21); * Empower FCU, Syracuse, N.Y., said fraudulent text messages were sent to members asking for personal financial information to reactivate their ATM cards (The Post-Standard/Herald Journal Jan. 14); and * The Michigan Credit Union League’s Michigan Monitor noted Dec. 22 that the latest fraud trends it has seen include fraudulent charges made at gas stations and discount stores nationwide.

Jury awards 5 million on CUs insurance claim

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SOUTHFIELD, Mich., and MADISON, Wis. (1/26/09)--A jury has awarded a Michigan credit union more than $5 million against its insurance company in a claim that involved losses stemming from hundreds of defaulted indirect auto loans. The jury awarded to Michigan First CU--a $490.7 million asset credit union based in Lathrup Village, Mich.,--the $5 million in damages against CUNA Mutual Insurance Society (CUMIS). The jury decided the company breached its insurance bond with the credit union when it refused to pay for losses resulting from the defaulted loans, which had been granted under the supervision of Michigan First's former vice president of lending. "We respect the jury's decision, but still believe the losses incurred by the credit union are not covered under the terms of our Bond policy," Phil Tschudy, media relations manager, CUNA Mutual Group, told News Now Friday. "We are also gratified the court issued a ruling agreeing with our interpretation of our Faithful Performance coverage as requiring intentional misconduct," he added. CUMIS maintained that the credit union's losses were the result of its own reckless behavior and lack of oversight. The company had denied the insurance claim under a faithful performance provision of the bond, saying the loans resulted from intentional violations of the credit union's lending policies. However, the jury unanimously determined the insurance claim was wrongfully denied. Michigan First's claim was first made in May 2004. If the ruling stands, the credit union could recover 12% penalty interest on the claim. That, added to the prejudgment interest, which would bring the total recovery closer to $9 million. CUNA Mutual is considering an appeal. "Our legal team will be reviewing information from the trial and assessing our appellate options," Tschudy said.

International student loans yanked CUs step in

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NEW YORK (1/26/09)--A loan program that many international students depended on to finance their education in the U.S. has been pulled, with business schools scrambling to fill the void. So far only two schools have found replacement lenders--and both are credit unions, reports (Jan. 23). The CitiAssist and Sallie Mae programs typically allowed international applicants studying in the U.S. to obtain up to $150,000 without a U.S. co-signer. The programs were pulled because of the credit crisis, leaving not only students in the lurch, but also business schools and graduate programs trying to attract top students. Among those who haven't found lenders yet, although some are in negotiations, are the Harvard Business School, the Wharton School, University of Michigan's Ross School of Business, the Chicago Booth School of Business, Columbia Business School and others. Credit unions are filling the void at two schools. One is a new program, the other is a continuation of a long-running program. MIT's Sloan School of Management announced its replacement lender will be MIT FCU, located in Cambridge, Mass., and Stanford Business School has run a similar program with Stanford FCU, Palo Alto, Calif., for decades. MIT FCU signed an agreement with the Sloan school in December. MIT FCU's program was developed with Credit Union Student Choice, a credit-union-owned organization that offers turnkey, school-certified, private student lending solutions to credit unions across the nation. The agreement doesn't require students to have a domestic co-signer, offers a competitive interest rate and allows students to take out a line of credit with the $235 million asset credit union. It also features zero origination or pre-payment fees, low interest rates, and can provide financing for the full cost of attendance. MIT Sloan Director of Student Financial Aid Daniel Barkowitz told that the most attractive aspect of the loan is that students don't have to reapply for the loan program every academic year. "While we may not have the brand name or asset size of mega bank lenders, we have a business model that makes us perfectly suited to meet the private loan needs of MIT students," said Brian Ducharme, MIT FCU's president/CEO, in a press release (PRNewswire Jan. 23). "We've always maintained a singular focus on serving our community with cost-effective products and services. This clarity of purpose has allowed us to grow and thrive at a time when many publicly traded lenders are struggling for mere survival," Ducharme added. Stanford FCU's program will continue to be available to international students without a U.S. co-signer, said Jack Edwards, director of financial aid at Stanford University. For the full story, use the link.

Grant to charter first Latino CU in Ohio

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SOUTH TOLEDO, Ohio (1/26/09)--The Ohio Credit Union Foundation (OCUF) is leveraging a $69,500 Innovation Grant from the National Credit Union Foundation (NCUF) to charter a community development credit union for Latinos in northwest Ohio.
With its startup partially funded by an Innovation Grant from the National Credit Union Foundation (NCUF), Nueva Esperanza (New Hope) Community CU plans to open for business in this building in June. (Photo provided by Ohio Credit Union Foundation)
Nueva Esperanza (New Hope) Community CU has applied to the Ohio Division of Financial Institutions for a state charter. If the charter is granted, it would be the first new state-chartered credit union in Ohio in more than 20 years. The credit union could open in June. Nueva Esperanza would reach a Latino population that has more than doubled since the 2000 Census. More than 50% of area households are classified as “low-income” or “extremely low-income,” which points out the need within the community for basic financial services and affordable credit, said OCUF Executive Director Becky Hart. This is the 12th of 14 NCUF Innovation Grants implemented this year. Innovation Grants are supported by NCUF and members of corporate credit unions who invest in the Community Investment Fund (CIF). Nueva Esperanza will focus on financial education, budgeting, basic savings, simple lending, credit counseling and money transfers. It would open with two bilingual employees, then staff up to four bilingual employees the next year. “The Latino community is currently using a branch bank that offers no specific programs for small depositors and charges fees for basic services such as money orders,” according to Barry Shaner, CEO of Directions CU. Based in nearby Sylvania, Ohio, Directions CU is helping organizers of the new credit union. “It is our understanding that area residents do not trust a financial institution that they don’t perceive to be an integral participant in the community.” Nueva Esperanza’s mission will be “empowering the Latino community by promoting savings, increasing financial literacy among low-wealth and often unbanked Latino households, making loan capital available, and promoting community resources.” OCUF is partnering with Toledo-area credit unions and community representatives who have laid the building blocks for the new credit union during the past several years. They include:
* Viva South Toledo Community Development Corp., which purchased the building where the new credit union will operate. Viva South Toledo will relocate its headquarters into the same facility. It will provide members with housing assistance and other social services to complement the new credit union’s financial services; * Directions CU, which will provide operational staff and all data processing services, terminals, software, recordkeeping and accounting support; * Area Financial Services, a technology credit union service organization owned by five Toledo-area credit unions, will oversee Nueva Esperanza’s back-office operations; and * Latino Alliance of Greater Toledo, which will help grow and sustain membership in the new credit union.
The Ohio Credit Union League and its Northwest Chapter will continue to serve as planning advisors and provide additional resources including education and training for the new credit union’s board and staff. “Access to basic financial services is a necessity in every community,” said Jennifer Ferguson, president of the Northwest Chapter and CEO of Bay Area CU in Oregon, Ohio. “The credit union presence in South Toledo will help residents achieve financial literacy, establish credit, grow savings, and possibly even realize the dream of homeownership. All of this will go a long way toward stabilizing families and building community pride. We know from working together on this project that the strengthening of South Toledo and its residents must come from within.”

Coastal FCU to close four branches add others

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GREENSBORO, N.C. (1/26/09)--Coastal FCU announced Thursday that it will close four underperforming branches in the first quarter, reducing its branch count to 18, said the North Carolina Credit Union League. However, the credit union plans to open up to five new branches early next year (Weekly Update Jan. 22). The branches could go in Brier Creek, Eastern Wake, Chapel Hill, Holly Springs or downtown Raleigh and Durham. “The majority of our newest locations are doing well, and overall, we’re coming off of a successful year,” said Coastal President/CEO Larry Wilson. “We added 18,000 members and grew our assets by $261 million, or 14%, in 2008.” The branches closing are located in Sanford, Southern Pines, Clayton and the North Pointe Shopping Center in Durham. Employees at closing locations can apply for other open positions within the credit union. “We have a number of positions available, particularly in branch operations and in our growing business services department,” Wilson said. “Also, as we look to open new branches within the Triangle, we’ll need experienced employees to staff them.” Coastal plans to keep full-service ATMs at each of its branch locations. The credit union will dedicate more resources to develop its Express Branch format by converting existing branches and opening new ones with Express Teller technology. The Express Teller system, which debuted at two branches at the end of last year, will allow Coastal to increase branches and hours of operation. Up to eight locations could have the technology in place by the end of the year, the credit union said. Coastal FCU has $2.019 billion in assets.

CU System briefs (01/23/2009)

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* DECATUR, Ala. (1/26/09)--A U.S. District Court judge has dismissed bank fraud and conspiracy to commit bank fraud charges in the case of a former credit union manager and former businessman accused of stealing more than $6 million over three years. Judge U.W. Clemon Thursday granted acquittal in the case of Timothy David Shelton, 53, and Melissa Killeen, 39, a former manager of Lauderdale County Teachers CU. "There's no reasonable doubt that a jury could conclude that she participated in any conspiracy," said Clemon ( Jan. 22). Shelton's trial will continue on four counts of making false statements to a federally insured institution. He had a number of loans at the credit union, which he used for his business. Shelton was accused of avoiding loan limits by recruiting friends and relatives to apply for loans at the credit union … * HARRISBURG, Pa. (1/26/09)--Hidden River CU, Pottsville, Pa., hosted separate interviews Thursday with candidates for the State Senate District 29 special election, reported the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Jan. 23). The candidates, State Rep. Dave Argall (R) and County Clerk of Courts Steve Lukach (D), answered questions from Hidden River CEO John Murga and Board Chairman Charles Lantz. Both Argall and Lukach said they were opposed to implementing heavy regulations and supported credit unions' tax-exempt status. Also interviewing were: Eric Kratz, Pennsylvania Business Council; Gwenn Dando, NFIB; John Callahan, Pennsylvania Chamber of Commerce; Judy Eschelberger, Novak Strategies; and Christine Seitz, PCUA government affairs specialist. Pictured here are Argall, right, and Murga, fourth from right. (Photo provided by the Pennsylvania Credit Union Association) … * HARRISBURG, Pa.(1/26/09)--Pennsylvania Office of Financial Education Director Hilary Hunt has resigned, effective at the end of January (Life is a Highway Jan. 23). Hunt worked with Gov. Edward Rendell and the state Department of Banking to develop a financial education program recognized throughout the nation. Pennsylvania is one of two states with such a program. Mary Rosenkrans, financial education specialist, will assume the duties of acting director, announced Secretary of Banking Steve Kaplan. Pennsylvania Credit Union Association President/CEO Jim McCormack said PCUA has worked with Hunt on several occasions and is looking forward to working with Rosenkrans and her colleagues "as credit unions continue their community outreach to improve the financial health for Pennsylvanians." … * MADISON, Wis. (1/26/09)--Shannon Griswold has joined Summit CU as president of STAR CU, the nation's only youth-chartered credit union, which is located in the Boys & Girls Club in Madison. Griswold's background is in banking and social work. She previously was a social worker at Central Wisconsin Center and a program assistant at Girl Power, both based in Madison. She also has served as a teller and personal banker at a local bank. STAR (Saving to Achieve Results) CU is open to members of the Boys & Girls Club of Dane County and is supported by Madison-based Summit CU, a $1 billion asset credit union ( Jan. 23) …

World CU Conference pre- and post-tours announced

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MADISON, Wis. (1/26/09)--The World Council of Credit Unions (WOCCU) has selected Lisbon, Portugal, and France’s Bordeaux wine region as the locations for its pre- and post-conference tours for attendees of the 2009 World Credit Union Conference. The conference takes place July 26-29 in Barcelona, Spain. The pre-conference tour will be in Lisbon July 22-25 and the Bordeaux post-tour is slated for July 30-Aug. 2.
Click to view larger image Lisbon, Portugal. Click for larger view.
Each tour requires a separate fee from the conference registration, said WOCCU. Lisbon is Portugal's capital and largest city. The pre-tour itinerary includes a sightseeing tour, dinner and a Fado performance of traditional Portuguese music at a local restaurant plus day trips to nearby towns including Sintra, Óbidos and the beach villages of Cascais and Estoril. Post-tour participants will stay at the Hôtel du Médoc Golf & Spa, a resort just outside of Bordeaux, and can sample some of the region's best wines on two winery tours. Bordeaux's historic city center is a UNESCO World Heritage site in recognition of the municipality's architecture. The tour itinerary also includes visits to the nearby medieval city St. Émilion and local villages.
Click to view larger image Bordeaux, France. Click for larger view. (Photos provided by the World Council of Credit Unions)
During the World Credit Union Conference, five day-tour options are available for attendees in Barcelona. Three tours feature the city's Gothic Quarter and its most famous street, La Rambla; a tour of Montjuic Mountain, the large hill where the National Art Museum and Olympic Stadium are located; and Gaudí and Modernism art and architecture. Attendees also can participate in two tours outside of Barcelona, including a trip to Montserrat Mountain, located in one of Spain's national parks less than an hour from Barcelona, and a tour of Tarragon, a seaside town known for its Roman Amphitheatre. For more information, use the links.