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Large CU helps smaller one offer microenterprise loans

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ST. LOUIS (1/30/12)--A partnership between two St. Louis-based credit unions--one large, one small--means the smaller one now can officer microenterprise loans.

A local foundation had asked Choices FCU, which has less than $400,000 in assets, if it could offer microenterprise loans.  The credit union was interested, but its staff struggled to structure a product that would be large enough in scale while acceptable to regulators, said a press release from the Missouri Credit Union Association (MCUA).

The solution emerged when leaders from Choices met with leaders of  long-term industry mentor St. Louis Community CU, a $207 million asset credit union. They developed a program that would introduce a microenterprise product to Choices Federal's borrowers, with St. Louis Community agreeing to purchase a 90% participation in each loan closed under the program.

Choices Federal also received a $15,000 grant from the foundation that initially approached the credit union about offering the loans.  The grant allows Choices Federal to close up to $100,000 in microenterprise loans, which will be targeted at $35,000 or less.

"These loans will assist aspiring entrepreneurs and small business owners to finance the start-up or expansion of their businesses," said Phil Minden, senior business manager at Choices FCU. He noted that the small loan sizes "will target a segment of the market that is largely underserved by traditional financial institutions."

The partnership also will "bring more resources to the small business community," said Mike O'Brien, St. Louis Community senior vice president and chief marketing officer. "Most financial institutions don't want to offer micro loans, but it's a natural for both of our credit unions.  Working together makes a lot of sense--practically and philosophically."

The joint structure means Choices Federal can offer members a new product while mitigating potential risks. It plans to offer the loans for the next two years and expand its portfolio to $250,000, before moving forward independently.

"The collaboration is an excellent example of how larger, more established credit unions can work with small, emerging  credit unions to expand their product base and grow their balance sheet," Minden concluded.

Catalyst analyst Guard against concentration risk

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FARMERS BRANCH, Texas (1/30/12)--The Federal Reserve's statement last week that it will keep interest rates at near-zero levels through 2014 could cause concentration risk, which could have consequences for credit unions, an industry expert warns.

Concentration risk is the overall spread of a financial institution's outstanding accounts over the number or variety of debtors to whom the institution has lent money.

The Fed's statement appears to be a "polite way of saying, 'If you liked 2011, you're going to love 2012'," Brian Turner, director and chief strategist with Catalyst Strategic Solutions, told the Texas Credit Union League (LoneStar Leaguer Jan. 27).

Catalyst Strategic Solutions is merger of the former Southwest Corporate Investment Services credit union service organization and Georgia Corporate's asset/liability management service.

The Fed has been able to create a no-growth, low-inflation environment, which softens the impact on the consumer, he added. However, it had to inject too much money into the system to achieve that goal. "This could cause interest rates to skyrocket when true economic growth kicks into gear," Turner said.

For credit unions, the timeframe during which growth leads to increased loan demand could be short-lived, Turner said.  This would be followed by another round of falling interest rates.

"Institutions should stick to the proper balance sheet allocation to manage against concentration risk, maintain a stable liquidity profile by not seeking long-term assets to invest and proactively position their interest-rate profiles within certain risk-tolerance limits that still permit stable short-term earnings," Turner concluded.

Maine CUs offset fed cuts on Keep ME Warm project

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PORTLAND, Maine (1/30/12)--Maine's credit unions have collectively contributed $30,000 to the "Keep ME Warm" program in response to an urgent need to help offset cuts to the federal low-income Home Energy Assistance Program (LIHEAP), said the Maine Credit Union League.

The program is a collaboration of the 20 United Way and Community Action Programs in Maine.

The contribution will purchase nearly 9,000 gallons of fuel for families statewide. John Murphy, league president, who pre­sented the check on behalf of Maine's credit unions, praised the willingness of Maine's credit unions to come together in a cooperative effort (Weekly Update Jan. 27).

"Credit unions are located across Maine and have members in every community," Murphy said. "To credit unions, helping members goes far beyond just providing financial services, it means so much more. The op­portunity to help families in communities throughout Maine heat their homes speaks directly to what credit unions are all about."

Murphy said credit unions suggested contributing because they wanted to do something as a group. "The contribution came together in less than 72 hours," he added.

IRS forms for HSAs updated

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MADISON, Wis.  (1/30/12)--The Internal Revenue Service (IRS) has released updated model Health Savings Account (HSA) documents.  

Form 5305-B, Health Savings Trust Account, and Form 5305-C, Health Savings Custodial Account are the IRS versions of HSA plan agreements, which are used to establish HSAs. These updated model documents, with a revision date of December 2011, replace the November 2007 versions. Most credit unions that offer HSAs use the IRS model HSA agreements as the basis for their opening documents, according to Ascensus HSA programs, based in Madison, Wis.

The new IRS model agreements incorporate a number of HSA-related changes that have occurred since the IRS last updated its model HSA agreements.

These changes include updated cost-of-living adjustments to reflect the 2011 and 2012 annual HSA contribution limits, as well as the penalty increase from 10% to 20% for distributions not used for qualified medical expenses.

The IRS did not remove the qualified HSA funding distribution language from the forms, even though provisions allowing trustee-to-trustee transfers from health flexible spending accounts (FSAs) and health reimbursement accounts (HRAs) to HSAs expired on Dec. 31.

The IRS has not announced whether HSA trustees or custodians must begin using the new model or if existing HSA agreements must be amended for these changes.

"We anticipate that credit unions will want to begin using the new documents because the November 2007 model HSA agreements are outdated due to the law changes," said Dennis Zuehlke, compliance manager for the Ascensus HSA programs. Ascensus is a provider of HSA and IRA compliance solutions to the credit union marketplace.

Providing up-to-date HSA documents is critical to HSA program compliance, and by adopting the latest model HSAs and amending existing HSA agreements, credit unions can provide their members with accurate HSA documents that reflect the current state of the law, Zuehlke said.

Vermont regulator issues revised biz lending reg

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SOUTH BURLINGTON, Vt. (1/30/12)--The Vermont credit union regulator entered its rewrite of the state's credit union business lending regulation into the final procedural steps toward adoption.

Regulation B-2012-01 will update Vermont's 11-year-old business lending regulation, which sets guidelines for credit unions to make member business loans (MBL). Changes make the new rule compatible with federal provisions of the National Credit Union Administration and create a more definition of construction and development loans.

The new regulations also increase the limits for qualification of business loans to $50,000 from $15,000, set requirements for the credit unions policy and qualification requirements of underwriters, and update credit union loan limits and accounting limitations.

A public hearing on the revised regulation is scheduled for 10 a.m. ET March in the Vermont Department of Banking, Insurance, Securities and Health Care Administration (BISCHA) office. Public comments will be accepted by BISCHA until March 16.

The Credit Union National Association and credit unions have been pressing for Congress to raise the member business lending limit to 27.5% of assets from the current 12.25% of assets. Doing so would provide $13 billion to lend to small business owners. Injecting that amount into the economy would create roughly 140,000  new jobs at no cost to the taxpayer.

2012 World CU Conference opens online registration

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MADISON, Wis. (1/20/12)--World Council of Credit Unions (WOCCU) has opened online registration for its annual World Credit Union Conference, July 15-18 in Gdańsk, Poland.

More than 1,500 credit union executives and volunteers from more than 50 countries are expected to attend this year's conference.

Host city Gdańsk is home to the historic Solidarity movement, which freed Poland from communism--as well as the country's credit union system, considered to be one of the fastest-growing and most advanced in the world, said WOCCU. Tradition combines with progress to create an educational environment for charting the credit union movement's course in facing a challenging future, WOCCU said.

Among speakers on the agenda are:

  • Professor Youngme Moon, senior associate dean and chair of the Harvard Business School's Master's in Business Administration program, whose new book, Different: Escaping the Competitive Herd, chronicles the intersection of business, branding and culture in ways that help enterprises such as credit unions stand out from the crowd of competitors.
  • Financial services technology expert Brett King, author of the bestselling book Bank 2.0 and founder of Movenbank, the first widespread mobile bank in the U.S. and the United Kingdom. King will discuss ideas from his new book, Bank 2.1, to be released later this year.
Breakout sessions featuring international speakers will focus on topics in four educational tracks:

  • Leadership and strategy;
  • Credit unions on the frontier;
  • Compliance, regulation and political affairs; and
  • Technology and innovation.
Other activities featured at the conference include:

  • Global Women's Leadership Forum. The annual networking and educational gathering of the Global Women's Leadership Network, the world's only peer-to-peer credit union women's leadership organization, will meet July 14–15, prior to the conference. For more information, use the link. (Separate fee applies.)
  • WOCCU Young Credit Union People (WYCUP) program. The annual educational and networking event for credit union professionals age 35 and under will award educational scholarships to five participants for the 2013 conference. The WYCUP program begins July 15 and runs concurrently with the conference. For more information, use the link.
  • Worldwide Foundation for Credit Unions Golf Tournament. Both men and women can play 18 holes on one of Poland's golf courses while raising money for global credit union development. The event is July 14. For more information, use the link. (Separate fee applies.)
For more information about the educational and networking credit union event this year, use the link.

Corporate One expands hours

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COLUMBUS, Ohio (1/30/12)--Corporate One FCU, Columbus, Ohio, has expanded its Member Services hours, check collection and vault ordering deadlines.

"As more credit unions realize the strength and opportunity at Corporate One, we have seen consistent interest and growth in our membership from credit unions around the nation," said Robert Coyan, Corporate One marketing and operations senior vice president.

"To ensure that all of our members, regardless of where they are in the U.S., receive the quality member service for which Corporate One is known, and have access to solutions that help them serve their members well, we have expanded our hours and deadlines in all key areas."

In the latter half of 2011, Corporate One added a second shift and expanded its Member Services department hours to 8 p.m. ET to accommodate all members throughout their entire business day.

Corporate One also added several hours to its daily Check 21 collection services deadline. Members now have until 9:30 p.m. ET to submit related files, and Check 21 aggregators that partner with Corporate One, such as Bluepoint, VSoft, Jack Henry, Diebold and eDoc, have until 10 p.m.

Most recently, Corporate One worked with its preferred partner for vault services to push back the daily ordering deadline to 1 p.m. local time for its member credit unions in the continental U.S.

Corporate One's membership profile breakdown as of Jan. 26 is: 571 credit union members in the Great Lakes region; 78 credit unions in the Western region; 52 credit union members in the Southeastern region; 47 credit union members in the Northeastern region; and, 22 credit union members in the Plains.

LSCU State GAC attracts 23 lawmakers

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TALLAHASSEE, Fla. (1/30/12)--The League of Southeastern Credit Unions hosted its annual State Governmental Affairs Conference (GAC) in Tallahassee, Fla., Tuesday and Wednesday.

Attendees of the League of Southeastern Credit Unions' annual State Governmental Affairs Conference in Tallahassee, Fla., gained insight from state lawmakers and regulators. Pictured, from left, are: Art Wood, CEO of Railroad and Industrial FCU, Tampa, Fla.; Mary Wood, CEO of Florida West Coast CU, Hillsborough, Fla.; Sen. John Thrasher (R-8) and State Rep. Rachel Burgin (R-56).
Attendees explored federal and state regulatory and legislative issues, underscored by recurring themes: The credit union message to lawmakers must clear and focused on the members, and bankers will no longer define the credit unions.

Twenty-three lawmakers attended the Lawmaker Reception at the Governor's Club. Credit union representatives spent two hours talking about issues and building new relationships with their local policy makers, said the league.

The visits to the statehouse the next day were fast and furious, because lawmakers were also meeting in session and committees, the league said. Credit unions carved out small chunks of time with lawmakers in offices, meeting rooms and sometimes in the hall.

"The most important part of these events is the meeting with lawmakers," said LSCU President/CEO Patrick La Pine. "We had a great legislative reception the night before with 23 legislators stopping by to visit with our credit unions and then the final day we spent time in many of our lawmakers' offices talking about public deposits, foreclosure legislation and our tax-exempt status."

The LSCU State GAC featured speaker John McKechnie, who has more than 25 years of experience with credit unions through his work at the Credit Union National Association and the National Credit Union Administration (NCUA).

Also, credit union representatives met with federal and state regulators during the Regulatory Roundtable, which included NCUA Region III Director Herb Yolles, Florida Office of Financial Regulation (OFR) Director Linda Charity and OFR Bureau Chief Bruce Ricca.

New for 2012 was the league's Florida Lawmaker of the Year award, which was presented to Speaker Designate of the Florida House of Representatives Will Weatherford (R-61). Weatherford worked closely with the LSCU Governmental Affairs team on the public deposits legislation.

The league will hold a State GAC for its Alabama member credit unions on April 4-5 in Montgomery, Ala.

From left: D.W. Smith, chairman of Tyndall FCU, Panama City, Fla.; Sen. Don Gaetz (R-4); and Jim Warren, CEO of Tyndall FCU. Rep. Jim Frishe (R-54) talks with League of Southeastern Credit Unions President/CEO Patrick La Pine. (Photos provided by League of Southeastern Credit Unions)

CU System briefs (01/27/2012)

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CU System briefs

  • DENVER (1/30/12)--Credit Union of Colorado, based in Denver, has launched a new foundation, the Credit Union of Colorado Foundation, to build on the credit union's history of philanthropic commitment to members and their communities. The foundation will focus on two areas: human services and education. "Our board of directors established this foundation to honor the legacy of service that began with the people who founded our credit union in 1934," said Terry Leis, president/CEO. "With these first steps, we hope our foundation will start a new legacy of making our communities a better place to live." One can become a member of the foundation by donating a minimum of $10. Foundation members are eligible to become members of the credit union …
  • HIGHTSTOWN, N.J. (1/30/12)--The New Jersey Credit Union League has promoted Marissa Anema to marketing and communications coordinator, the league said in its newsletter, The Daily Exchange (Jan. 27). Anema has been with the league since January 2010 as marketing and communications assistant.  Since that time, she has coordinated the league's newsletters, maintained its website, and played other key roles in the department. The league's newsletters include: The Daily Exchange, The Weekly Exchange, Quarterly Membership Update, NJ Credit Union Digest (for lawmakers), NJ DNA Network Connect (for directors), NJ/CU Foundation and the PSG Newsletter. It's newest newsletter, Shared Insight, will be published for shared-branching credit unions to keep them informed on Network news …
  • PORTLAND, Maine (1/30/12)--Edwin Currier, former manager of Thomas Laughlin CU, Portland, Maine, died Jan. 18, the Maine Credit Union League has learned. He was 88.  The credit union served employees of the Thomas Laughlin Co. in Portland (Weekly Update Jan.27) …
  • FORT BRAGG, N.C. (1/30/12)--Rudy Ford, longtime board member of Fort Bragg (N.C.)  FCU, died Dec. 28 at the age of 65, according to the North Carolina Credit Union League (Weekly Update Jan. 27). Ford, who retired as a command sergeant major in the U.S. Army, was on the $385 million asset credit union's board nearly 20 years, beginning in 1993 and serving continuously until his death. He served on several committees, including the nominating, investment, policy and planning, annual meeting and building committees, and most recently served as treasurer. The credit union has created a scholarship fund in his honor …