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CU System Archive

CU System

What's in store for CUs in 2013

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MADISON, Wis. (1/3/13)--Credit unions enjoyed a wave of positive publicity, popularity with consumers, record growth and a strengthening of political clout during 2012. That doesn't mean they can sit back in 2013 and ride on the coattails of last year's successes.

News Now checked a variety of resources to find out what they are predicting for this year and picked the predictions that seemed to have the most consensus.

This year likely will bring renewed challenges to credit unions' tax status, more credit unions edging closer to their member business lending caps, and the challenges of complying with more extensive regulations. But they also face operational challenges--and opportunities--regarding operating in a near-zero interest-rate environment during a make-or-break year for the economy; technological issues related to mobile banking and the threats to the security of members' data; and marketing challenges in a diverse world.

Here's what to watch for in 2013:

  • Operations adapt to today's economic environment. Credit unions will be challenged to maintain narrow net margins while providing expanding services to members who are demanding game-changing innovations, such as mobile banking, all in a slowly improving but still-volatile economy. Financial institutions will pay more attention to operational risks, adjusting strategic plans as needed, and, and will introduce or modify products to reflect the interest-rate realities, especially in mortgages. Some credit unions are already looking for collaboration opportunities and partnerships to provide economies of scale for service.
  • Technological and security issues continue. While natural disasters the past few years have prompted credit unions to pay attention to disaster recovery and business continuity measures so members' money is more secure during an event, they also need to protect members' information and accounts from unauthorized transactions. Cyberthieves are beefing up their efforts to illegally gain consumers' information and steal funds from accounts. In fact, some are calling 2013 "the year of the cyberthreat." While criminals have announced they have targeted big banks, they also look for the weakest link in any authentication process. In the past, they targeted credit unions and smaller financial institutions. Credit unions can expect more sophisticated  scams to come out of the woodworks, and they will need to beef up their verification/authentication measures on members' accounts.
  • Mobile banking isn't going away. In the next two years, mobile banking use will nearly double to about 64 million, according to research by the Aite Group (American Banker Dec. 19). The number of smartphone users in the U.S. is estimated to increase from 105 million last year to 174 million in 2016. Tablet users are expected to increase to 100 million by next year and 112 million by 2016, up from today's 65 million. Credit unions that didn't get on the mobile banking bandwagon when it soared last year,will have no choice this year as mobile devices proliferate. Financial institutions already are scrambling to accommodate banking on iPads and other tablets, and they will get increased pressure from consumers who want their transactions made easy, no matter which device they use. Credit unions will see more people depositing checks remotely and fewer consumers will carry cash. One trend to watch for: security developments to make these new mobile transactions are more secure. Security is still the No. 1 reason why people hesitate to use their tablets and smartphones during transactions.
  • Marketing will continue to morph toward social media.  While credit unions will continue using traditional marketing channels to deliver the credit union differentiation message, more credit unions will encounter potential members who don't use traditional sources to get their information. Expect to earmark more marketing dollars to fine-tuning use of social media channels  and exploring nontraditional ways to market. Marketers will also see a push to get a broader membership that may include nontraditional members. For example, Central Wisconsin FCU, Plover, Wis., is using untraditional data to widen its membership base. When approving a loan, it looks at the traditional bill payments history, but it is also examining data with payday lending history (American Banker Dec. 28).
  • Credit unions may offer deeper services for members who own small businesses. A member business loan may not be enough today to keep the member's business at the credit union. Small businesses want more help with analyzing their financial performance data. For example, Sun Trust Banks, has begun offering businesses services that a business's chief financial officer would typically perform (American Banker Dec. 28).  Credit unions serving member businesses may want to ante up more services to this segment.

CUs' rates get nod from CBS News, other media

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MADISON, Wis. (1/3/13)--Credit unions' rates on saving, checking and auto financing got nods from several media reports, including CBS News'  MoneyWatch,an article on checking accounts in The Gainesville Sun that featured Credit Union National Association (CUNA) President/CEO Bill Cheney, and The Cincinnati Enquirer.

CBS News' article, "13 money tips for 2013," featured credit unions in Tip No. 3. "Earn more on your safe money" (Dec. 31).

"Sure, interest rates are low, but with a little work you can squeeze out some extra money," the article said. It advised, among other things, to "shop around at credit unions that offer better interest rates than most banks."

The Gainesville Sun article, "Need a new checking account?" (Jan. 2) noted statistics from financial data publisher Bankrate, stating the average monthly service fee on checking accounts that don't pay interest is a record $5.48--a 25% increase over last year's average fee.

Among the tips: "Consider credit unions."  CUNA's Cheney explained in the article that "Most people qualify to join a credit union; you just have to find one you qualify for." The article pointed readers to ASmarterChoice.org to locate a credit union, and cited a report from CUNA in March than showed credit unions "also have more favorable interest rates on their savings accounts and loans. Interest on a savings account at a credit union averages 0.20% and 0.15% at regular banks." It also noted credit unions' large ATM networks are comparable to big banks' networks.

In addition, the Gainesville article quoted financial planner Kevin Kautzmann of EBNY Financial in New York, who said that all his clients who switched to credit unions had nothing but good things to say about them. 

Most credit unions offer truly free checking accounts, meaning you won't have to maintain a balance or sign up for direct deposits to avoid a monthly fee, the article said.

The third article, "Be careful when looking into auto financing," was published Wednesday in The Cincinnati Enquirer and written by Howard Ain, a consumer complaints ombudsman on WKRC-TV. Ain told of  a woman who received a letter from a company claiming it could refinance her vehicle with a rate as low as 3.99%. However, the interest rate quoted her after she applied was higher.

"While the deal would still save her money, I suggested she first check with her local credit union. She found a nearby credit union and was told if she joins, for just a few dollars, she could get a loan with an even lower interest rate."

"Bottom line, if you've got an auto loan with a high interest rate, it could pay you to contact a credit union and see if you qualify for a lower rate. These are very unusual times with record low interest rates and, if you qualify, you could save yourself a lot of money," Ain advised.

To read the full articles, use the link.

CU System briefs (01/03/2013)

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  • LONGVIEW, Wash. (1/3/13)--Police arrested Ryan C. Fancher, 31, of Longview, Wash., on a warrant violation Friday and now say he is suspect in a Dec.27 robbery of Red Canoe CU, a $588 asset credit union based in Longview. The credit union was robbed at about 5:30 p.m. The robber fled the scene and could not be located. Police say tellers have identified Fancher as the alleged bank robber (koinlocal6.com Jan. 1) …
  • ST. LOUIS (1/3/13)--After a brief car chase, a man was charged Monday with robbing the First Community CU, Chesterfield, Mo., earlier that day. The robbery occurred at 12:30 p.m., and the robber fled in a silver Dodge Magnum. Cameron Harral, 31, of St. Louis was arrested after police cornered his car at a dead end (St. Louis Post Dispatch and stltoday.com Jan. 1) …
  • ATLANTA (1/3/13)--Hank Halter, a board member of Atlanta-based Delta Community CU, has been named interim president/CEO of the credit union. He will fill the position while Delta Community's board continues to search for a permanent successor to Rick Foley, who retired Dec. 31, as previously announced. Halter has been on the board for the past seven years and is a former chief financial officer of Delta Air Lines. His appointment was effective Jan. 1. Foley worked at Delta Community, Georgia's largest credit union, for 26 years. He has been president/CEO since 2004 …
  • LAUREL, Md. (1/3/13)--Laurel, Md.-based Tower FCU is helping members recover from Hurricane Sandy's impact with a special low-rate personal loan, dubbed an Emergency Assistance Loan. The hurricane devastated parts of the East Coast in late October and left many without power for weeks. Tower's loan offers a 7% fixed-rate annual percentage rate with terms up to 60 months. Members can borrow up to $10,000 for a single applicant or $20,000 for joint applicants. Since posting loan information on its website Nov. 2, Tower FCU has provided more than $145,000 in loans that average $6,324. Martin Breland, Tower's president/CEO, said Tower mobilized to help members with loss of income, property damage and other storm expenses immediately. "Thanks to the hard work and joint effort of Tower's real estate lending, marketing and information technology departments, we were able to make the Emergency Assistance Loan operational and available to members within a week of the hurricane," Breland said …
  • BOULDER, Colo. (1/3/13)--Elevations Foundation, the charitable giving arm of Boulder-based Elevations CU, finished 2012 delivering more than $240,000 in financial aid to local communities in less than three years. Grants totaling $69,000 were presented at this year's 2012 Community Grants reception on Nov. 28 to 16 local organizations. The foundation also presented more than $135,000 in needs-based scholarships for higher education. The foundation focuses on three giving areas each year. Current areas of focus include mental health, environmental education and early childhood development …

Top 10 News Now stories for December

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MADISON, Wis. (1/3/13)--An article advising users that no sensitive personal information from cuna.org was accessed or compromised in a hacking attack was the most read News Now story in December.

The top 10 articles in December included:

10. Passage of CUNA-backed ATM bill means relief for CUs

WASHINGTON (12/12/12)--Tuesday's unanimous consent passage of a bill removing duplicative ATM disclosure requirements "represents a substantial realization of regulatory relief that will have an impact on every credit union that owns an ATM--while having no adverse effect on consumers," Credit Union National Association (CUNA) President/CEO Bill Cheney said. CUNA strongly backed the bill.

9. CUNA action call urges CUs to oppose TAG bill

WASHINGTON (12/6/12)--In a new call to action, CUNA is encouraging its member credit unions and leagues across the country to contact and urge their senators to oppose legislation that would extend for banks the Transaction Account Guarantee program.

8. Appeals court issues ruling in Wells Fargo overdraft case

SAN FRANCISCO (12/28/12)--The U.S. Court of Appeals for the Ninth Circuit has reversed in part a lower court's order requiring Wells Fargo Bank to cease charging overdraft fees based on its posting debit-card transactions in high-to-low order.

7. Beware of hotel room security threat

NEW YORK (12/18/12)--Thieves have developed a simple device that can unlock room doors at some of the most popular hotel chains, potentially putting you and your belongings at risk (NBC Today: Rossen Report Dec. 6).

6. Arkansas, Oklahoma, Texas leagues intend to consolidate

FARMERS BRANCH, Texas (12/17/12)--The boards of the Arkansas Credit Union League, the Credit Union Association of Oklahoma and the Texas Credit Union League announced today they intend to pursue consolidation into a single regional league operating as Cornerstone Credit Union League.

5. CFPB proposes remittance changes, delayed effective date

WASHINGTON (12/21/12)--The Consumer Financial Protection Bureau on Friday released proposed revisions to its pending international remittance regulations that agency director Richard Cordray said "will ensure consumers have continued access to remittance transfer services while making compliance easier for remittance transfer providers."

4. CUs do it right (again) in satisfaction survey

BOSTON (12/19/12)--U.S. credit unions continue to achieve much higher satisfaction and advocacy rates compared to large regional and national banks, according to results announced Tuesday of the 2012 ath Power Ideal Banking Study, which assesses the retail member/customer experience at credit unions and banks nationwide.

3. TAG bill defeated in Senate

WASHINGTON (12/13/12)--Today's defeat of a Transaction Account Guarantee (TAG) extension on a budget point of order is a "death blow" to the legislation and a significant victory for the Credit Union National Association (CUNA), credit unions and state leagues across the country that aggressively opposed this bank bailout program, CUNA President/CEO Bill Cheney said.

2. President signs ATM signage bill, CFPB privacy

WASHINGTON (12/20/12)--President Barack Obama Thursday afternoon signed a bill (H.R. 4367) into law that revises Regulation E to require ATM fee disclosures only need to be presented on an ATM's screen. The new law eliminates a duplicative provision that required a physical notice also be posted on the ATM, a requirement that has created legal and financial issues for some credit unions and other financial institutions.

1. CUNA notifies website users of broad hacking attack

WASHINGTON and MADISON, Wis. (12/11/12)--CUNA is advising thousands of users of its website that no sensitive personal information from cuna.org was accessed or otherwise compromised in a hacking attack that--in addition to CUNA--also affected 30 or more additional organizations, U.S. government agencies, industry and other trade associations.

Pa foundation: A record year in grants, fundraising

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HARRISBURG, Pa. (12/3/13)--The Pennsylvania Credit Union Foundation enjoyed a record year of unrestricted fundraising and providing grants awards during 2012.

Foundation Chairman Ray Brunner and Vice Chairman Dave Ackerman reported that grant awards in 2012 totaled $151,620, a 20% hike over the $126,358 in awards granted in 2011. Unrestricted funds, or funds that are not earmarked for a specific project, raised totaled $266,062, or 23% more than 2011's $216,404 raised, reported the Pennsylvania Credit Union Association newsletter, Life is a Highway (Jan. 2).

In addition, a restricted Project Haiti program, which will be implemented this year, attracted $23,575 in pledges from 25 credit unions in the state.

"Favorable publicity generated from a joint association/foundation flood relief program in 2011 attracted large support from credit unions in affected areas of eastern Pennsylvania," said Brunner.

Ackerman credited "successful reality fairs in Philadelphia and western Pennsylvania as factors behind the impressive fundraising totals from credit unions and vendors, who not only contributed financial support but also shared in the implementation of these types of projects in schools."

The foundation said that during 2013, it would continue to implement projects that benefit small credit unions and provide financial literacy to schools throughout Pennsylvania.

Maryland CU focuses on credit card growth

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GERMANTOWN, Md. (1/3/12)--When it expanded its membership in 2011 to include more local employee groups, Montgomery County Employees FCU identified credit cards as the best opportunity for membership growth, according to James Norris, the credit union's CEO.

In a survey of its membership, the $90 million-asset credit union, of Germantown, Md., found that many members held cards with larger issuers.

"Credit cards are closely tied to member relationships," Norris said. "If you get the credit card relationship, you are more likely garner more accounts."

To spur growth, Montgomery County Employees FCU ran a 0%, 12-month introductory rate on balance transfers. The credit union used Georgetown Cupcakes, a popular in the Washington D.C-area sweets shop with its own TV show, to promote the initiative.

The credit union handed out cupcakes at the Montgomery County government cafeteria, and the county sent out e-mails to its 9,000 employees promoting the event. A promotional flyer included a cupcake with a "0" candle.

"Around here if you say Georgetown Cupcakes, you are going to get a lot of attention," Norris said.

The attention helped the credit union increase its credit card portfolio 53% from June 2011 to June 2012 and 19% from June 2010 to June 2011. That ranked it seventh nationally in percentage of growth according to Callahan's Research.

The credit card growth also helped the credit union grow in other areas, said Norris. The credit unions increased its mortgage portfolio 119% from 2011 to 2012, ranking 20th nationally in percentage of growth, the research found.

The credit union also increased its overall membership roughly 3% from 2011 to 2012, which was more than it had projected.

The credit union has plans to add a rewards component to its credit cards program.

"Looking at the survey, our members have rewards with other institutions, so it's very important for us to get a rewards program out there," Norris said.

The program will include travel, cash back and merchandise," Norris said

"We want to make it valuable for our members and allow us to compete with the larger issuers," he added.