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Ten events that changed CUs in the past decade

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MADISON, Wis., and WASHINGTON (1/5/10)--A decade has ended and in the tradition of newshounds everywhere, the Credit Union National Association's News Now staff took time out to mull the impact the first decade of the 21st century presented credit unions. Staff sniffed out 10 events of the decade that changed the way credit unions operated and their strategies. The list, not ranked according to importance, includes:
* Y2K. The year 2000 was supposed to bring computer glitches that would bring computers to their knees. 1999 had credit unions scrambling with data processing service providers to shore up and protect their computer systems when the data hit. What turned out to be a nonevent--perhaps due to good preparation--also served notice to credit unions that their strategies should include preventive measures to ensure business continuity and safekeeping of the sensitive records they keep. Y2K helped usher in a new computer era with more sophisticated data processing. * Sept. 11, 2001. The attacks on the World Trade Center proved that the nation's financial system could survive when institutions take measures to back up their data and processes. Credit unions directly involved in the tragedies met members' needs because they had business continuity plans in place. 911 turned the Web and cell phones into significant instantaneous channels of communication that changed the way credit unions get their news and communicate with each other. And, years after the attacks, credit unions still are dealing with the new, more demanding regulations. In 2009, the Bank Secrecy Act's anti money laundering and other provisions remained the single most challenging compliance issue. * Bankers' attacks. Bankers stepped up their rhetoric against credit unions in state after state, in the courts, state legislatures, and Congress. They also took the battle public, often attacking credit unions' tax exemption in the media. These resulted in credit unions taking aggressive steps to educate the public and lawmakers about the credit union difference. The attacks changed the way credit unions promote their issues and brought forth a decade of advocacy that, combined with other issues, has significantly increased the visibility of credit unions in the media and in Congress. As a result, CUNA's and the leagues have become one of the most respected lobbying groups in the U.S. * Hurricane Katrina. A series of hurricanes in 2005 brought business continuity challenges of nightmare proportions to credit unions along the Gulf Coast, testing their very existence. But credit unions shone in their service. Hurricane Katrina especially gave a huge boost to the unique credit union cooperative concept of shared branching, which enabled credit unions to step in and serve others' members in trouble. Katrina directly affected more than 600 credit unions and millions of members. The disaster changed the way credit unions and their members gave to charity and helped each other, via online resources. And the Web showed what it could do as a communications medium in keeping members informed. And credit unions saw new, improved backup systems such as mobile units dispatched to help keep branches' business open. * The Web, the Internet, and online banking. These were just gathering speed when the decade began but look at them now. They have changed the way credit unions communicate with each other and their members. They have changed how transactions are made and how products and services are delivered. Today members can get a loan application approved online. Today most credit unions have integrated these into their strategic plans as well as their communications and marketing plans. * Data breaches. In the past 10 years, hackers and cybercriminals have become a fact of life. A series of sophisticated breaches in 2007, 2008 and early 2009 compromised thousands of members' credit and debit cards and hit home the message that one's system is only as good as its weakest link--which could be a merchant's computer or a third-party providers' processes. Through no fault of their own, credit unions have had to spend time and expense reissuing cards and beefing up security of their networks, dealing with fraudulent transactions and assisting upset members. Many credit unions have turned these into educational opportunities to provide education to members about protecting their data. * Electronic funds transfers (EFT). EFT has come a long way, so much so that paper checks are dwindling in favor of debit cards. EFT has changed the way basic financial services are delivered and how they are paid for. With these have brought an array of compliance rules, disclosure proposals and more regulatory burden for credit unions. * Younger members. Generation X and Y's infatuation with their iPods and cell phones and blackberries has prompted credit unions to consider innovative marketing strategies via social networking. Credit unions are tweeting on Twitter, blogging, and making friends via LinkedIn and FaceBook. Right now, many credit unions and leagues are trying to figure how best to use the new devices. * Changes in credit union leadership. Credit unions have been warned that Baby Boomer CEOs will be leaving about a third of credit unions as they reach retirement age, and it's already happening. A new wave of younger successors are taking their place and are testing the traditions taken for granted by most credit unions. *The global economic crisis. Last, but not least, the crisis triggered by banks in 2008 and the ensuing recession have tested the very nature of the credit union system with regulatory reform and corporate stabilization making significant changes that will alter the business. The impact on credit unions has been severe. Some will take years to earn back the funds they lost in shoring up the corporates and their insurance fund or through member delinquencies. But the backlash against huge banks instrumental in bringing on the credit crisis also has provided credit unions a huge opportunity to strut their stuff. Credit unions are being heralded throughout the nation for their conservative lending, and their willingness to take on more loans. As a result, they've seen strides in membership that can position them well for the next 10 years.

DuPont Fibers FCU gets community charter

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CHESTERFIELD, Va. (1/5/10)--DuPont Fibers FCU, Chesterfield, Va., has received a charter expansion approval from the National Credit Union Administration (NCUA), DuPont Fibers President/CEO Rose Gilliam announced Monday. The new community charter enables the $180 million asset credit union to serve members who live, work, attend school, worship or volunteer in Chesterfield, Henrico and Hanover Counties and the city of Richmond. "Because of our new community charter, we will be able to offer more members of our community an alternative banking relationship by providing them with affordable credit union products and services," Gilliam said in a press release. NCUA in December had approved a proposed rule that would revise the agency's community chartering policies and more clearly outline the parameters of a community chartered credit union (News Now Dec. 18). Federal credit unions applying for a community charter in the past had to provide hundreds of pages of information to demonstrate the evidence of a community. The new standards provide a defined set of objective, quantifiable criteria to determine the existence of a well-defined local community. Credit unions also would no longer have to provide a narrative statement with their application, and they would have a shorter wait for approval. In the past some applications took 18 months before approval was granted. The new proposed rule defines "community" as a single political jurisdiction or multiple political jurisdictions within a single Metropolitan Division, so long as the total population does not exceed 2.5 million. Credit unions can also apply for the new "rural district" standard. In rural districts, the area served must be a contiguous area with more than 50% of its population in "rural" census blocks. The area's population cannot exceed 100,000.

CU System briefs (01/04/2010)

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* MILWAUKEE (1/5/10)--First Service CU, a $36.6 million asset credit union based in Milwaukee, has merged into the $405 million asset Marine CU, based in Fond du Lac, Wis. First Service's two offices in Milwaukee and Wauwatosa are now operating under the Marine CU name. The combined credit union has more than 300 employees and servcs 59,000 members in Wisconsin, Iowa and Minnesota (Milwaukee Journal Sentinel Jan. 4) ... * HARRISBURG, Pa. (1/5/10)--Fire destroyed the home of Pennsylvania state Sen. Stewart Greenleaf (R-12), who was the recipient of the Pennsylvania Credit Union Association's (PCUA) 2003 Keystone Award. The award recognized his sponsorship and efforts in the passage of the State Credit Union Parity bill. According to PCUA, Greenleaf and his family lost their Montgomery County home and all its contents. Family members were awakened by smoke detectors at 3 a.m. Sunday and fled the house in sub-freezing temperatures. More than 100 firefighters fought winds and ice to battle the blaze. The cause of the fire is being investigated (Life is a Highway Jan. 4) ... * WHEELING, W. Va. (1/5/10)--The former CEO of the now defunct Center Valley CU in Wheeling, W. Va., pleaded guilty in a federal court Monday to embezzling more than $8 million from the credit union. As part of a plea agreement, Bernie D. Metz, 56, of Valley Grove, pleaded guilty to embezzlement from a credit union and money laundering. In return, her husband and children will not be prosecuted. If the plea agreement is approved, Metz could serve 87 months in prison and forfeit property--including a restaurant and several vehicles--obtained with the embezzled funds. ( and The Associated Press via Jan. 4) ... * NASHVILLE, Tenn. (1/5/10)--Susan Tant, CEO of Healthcare Services CU, Chattanooga, Tenn., has been appointed to the Volunteer Corporate CU's (VolCorp) Supervisory Committee to complete an unexpired term, VolCorp announced Monday. She has 27 years in the credit union industry. Since 2001, Tant has been a member of the Jack Henry's Symitar/Cruise Advisory Board. She previously served on the board of the Memphis and Chattanooga Chapter of Credit Unions, and participated in VolCorp's Ambassador Program. She is a recipient of Credit Union National Association's Edward A. Filene and Friedrich W. Raiffeisen Awards and other awards. VolCorp, with $1.6 billion in assets, serves 266 credit unions ...

Deputy kills teen in robbery at ATM

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GREENVILLE, N.C. (1/5/10)--An off-duty sheriff’s deputy shot and killed a teen at a State Employees’ CU (SECU) ATM in Greenville, N.C., during a robbery Wednesday. Deputy Zackary J. Odom, said he was in his car at the ATM around 10:30 p.m. when a man approached him with a handgun. The man demanded money, and Odom shot him ( Dec. 31). The man, Antonio Zurante Lacy, 19, was taken to Pitt County Memorial Hospital where he died. Sheriff Mac Manning said at a news conference that Odom acted appropriately under the circumstances. Odom has not been placed on leave. SECU members at the Greenville branch told The Reflector that they supported Odom’s reaction to shoot Lacy as a matter of self-defense. Manning advised consumers to hide their valuables and be aware of their surroundings anytime they are in public. State Employees’ CU, Raleigh, N.C., has $18 billion in assets.

Low consumer demand CU lending in 09 slowest in the post-WWII era

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MADISON, Wis. (1/5/10)--Credit union lending activity in 2009 will be the slowest in the post-World War II era, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly sample of credit unions. Credit union loans outstanding decreased 0.1% during November, but rose 1.5% during the first 11 months of 2009. That’s down from a 6.8% increase during the same period of 2008. During November, adjustable-rate mortgages led loan growth, increasing 3.6%, followed by credit card loans (1%) and unsecured personal loans (0.4%). Other loans and home equity loans each increased 0.2%. Used-auto loans decreased 0.5% followed by fixed-rate mortgages, which declined 0.6%. New-auto loans and other mortgages also dropped--1.3% and 2.5%, respectively. “For the first 11 months of this year credit union loan balances
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rose only 1.5%, below the previous nadir of 2% set in 1982,” Steve Rick, CUNA senior economist told News Now. “Loan balances actually fell 0.11% in November as compared to a 0.22% rise in November 2008. The November loan seasonal factor of -0.22% historically weighs on overall actual growth. “So the difference between the actual growth rate and seasonal growth rate determines the underlying trend loan growth rate of 0.11%, which is a 1.3% annual rate,” he continued. Falling auto loan and fixed-rate first mortgage balances pulled the overall growth number into negative territory, Rick added. Auto-loan balances fell as loan amortization exceeded originations. Fixed-rate first mortgage balances declined due to a large amount of refinance activity and sales of low-rate fixed-rate first-mortgage loans into the secondary market, he explained. “It takes two to tango and it takes two parties to originate a loan,” Rick said. “The demand for consumer loans remains weak because households are still worried about jobs, home prices and future taxes. The supply of credit union loans remains ample due to the large influx of savings funds over the past 11 months.” Credit union savings balances decreased 0.2% in November and 10.4%
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during the first 11 months of 2009. During November, money market accounts increased 1.1%, followed by individual retirement accounts, which increased 0.7%. Regular shares decreased 0.3%, followed by one-year certificates (0.7%) and share drafts (1.2%). “So far this year savings balances are up 9.8%, the fastest pace since 2002,” Rick said. Concerning asset quality, credit union 60-plus-day delinquencies remained at 1.8% in November. The loan-to-savings ratio remained constant at 76.9% for the month. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased to 19%. “This combination of rapid savings growth and slow loan growth pushed down the credit union loan-to-savings ratio to 76.9% in November, down from 83.3% in November 2008,” Rick said. The movement’s overall capital-to-asset ratio remained at 10% in November. The total dollar amount of capital is $90 billion.

League responds to Mass. bankers op-ed on tax exemption

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MARLBOROUGH, Mass. (1/5/10)--A Monday opinion-editorial by the Massachusetts Bankers Association claiming that the national credit union tax exemptions needs rethinking was rebutted by the Massachusetts Credit Union League. “The Massachusetts Bankers Association’s predictable and self-serving response to the news that credit unions are growing is full of the usual inaccuracies and mischaracterizations that they always employ,” Rob Kimmett, Massachusetts league senior vice president of publications and marketing, told News Now. “We are in the process of finalizing our media outreach plans for 2010, which will incorporate a comprehensive approach for the ongoing banker misinformation campaign,” he added. Daniel J. Forte, president/CEO of the Massachusetts Bankers Association, was writing in Monday’s Worcester Business Journal in response to a Nov. 23 opinion piece in the Journal written by Southbridge CU CEO Jeffery Davenport titled “Credit Unions as Important as Ever” that advocated for credit union’s practices and principles. “While we too applaud the 100th anniversary of credit unions, Davenport failed to mention that so many credit unions have moved so far beyond their original membership ‘common bond’ that they resemble banks in every way, including doing commercial lending. Yet they are not required to pay taxes,” Forte wrote. To read the Massachusetts Bankers Association editorial, use the link.

Belarus Singapore new members of WOCCU

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MADISON, Wis. (1/5/10)--Belarus and Singapore are the World Council of Credit Unions' (WOCCU) newest members as of Friday. WOCCU’s board of directors approved the organizations’ applications in November. The Singapore National Co-operative Federation (SNCF) is the first national-level organization from Southeast Asia to become a direct member of WOCCU. The Belarus Republic National Credit Union Association (RACCSMFA) has grown and is eligible for membership because of efforts by the Polish Credit Union Foundation, which is part of the National Association of Cooperatives Savings and Credit Unions, Poland’s credit union trade association and WOCCU member. “The Polish movement has provided critical leadership and technical assistance to support the emergence of credit unions in Belarus,” said Brian Branch, WOCCU executive vice president and chief operating officer. RACCSMFA and SNCF will be introduced and given the opportunity to speak with delegates at WOCCU’s next annual general meeting, to be held with The 1 Credit Union Conference, July 11-14 in Las Vegas. RACCSMFA, which will join the Azerbaijan Credit Union Association and the Estonian Union of Credit Cooperatives, represents more than half of the country’s credit unions, serving about 75% of its membership. SNCF, founded in 1980, will be granted full-member status. It represents all but two of Singapore’s 38 credit unions and is the only financial cooperative organization in the country.

Readers choice Top 20 stories of 2009

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MADISON, Wis. and WASHINGTON (1/5/10)--Stories about the corporate credit union system overwhelmed News Now's top 20 story list for 2009, largely because of a corporate stabilization program that garnered many of the year’s headlines. The list is based on the number of readers accessing the stories on the Credit Union National Association's website. During 2009, President Barack Obama signed S. 896--the Helping Families Save Their Homes Act--into law, which included a stabilization program for credit unions. The program was created after several corporate credit unions and U.S. Central experienced losses that impacted the rest of the credit union system. S. 896 extended the share and deposit insurance coverage ceiling to $250,000 from $10,000 through 2013. Credit unions also were allowed to spread the cost of National Credit Union Share Insurance Fund replenishment over eight years to deal with the cost of a premium assessment resulting from losses at wholesale corporate credit unions. Any impairment related to the replenishment can be booked over a seven-year period. The top 20 stories of 2009 are: 20. House, Senate pass corporate stabilization bill WASHINGTON (5/20/09)--The House and Senate on May 19 approved S. 896, the Helping Families Save Their Homes Act, which would extend $250,000 share and deposit insurance coverage and help credit unions manage the impact of the financial crisis on the credit union system through a corporate stabilization program. 19. Longer compliance time needed on CARD Act provision: CUNA WASHINGTON (7/8/09)--The Federal Reserve Board must give credit unions more time to comply with a provision of its expected rules to implement new credit card statutes if that provision is going to apply beyond credit cards, the Credit Union National Association urged the federal regulator Tuesday. 18. Credit CARD Act: CUNA addresses CUs’ FAQs WASHINGTON (8/18/09)--The Credit Union National Association has prepared a document to assist state leagues and credit unions with credit unions' questions regarding their compliance obligations under the Credit Card Accountability, Responsibility and Disclosure Act provisions--especially on the 21-day periodic statements provision. 17. NCUSIF shows preliminary accounting decisions ALEXANDRIA, Va. (3/2/09)--The most recent monthly National Credit Union Share Insurance Fund report showed the fund booked both the expenses and the income associated with the corporate credit union stabilization plan in January. 16. Details to Obama loan mod plan released WASHINGTON (3/5/09)--The Obama administration released details Wednesday of its mortgage loan modification program first announced Feb. 18. 15. New Dodd bill would set overdraft rules WASHINGTON (10/20/09)--Sen. Christopher Dodd (D-Conn.), who heads the Senate Banking Committee, unveiled his new bill Monday that would limit the fees financial institutions can charge on overdraft protection services. 14. New NCUA bill would spread out replenishment ALEXANDRIA, Va. (3/27/09)--The National Credit Union Administration (NCUA) announced Thursday that it has drafted legislation allowing credit unions to spread the cost of the National Credit Union Share Insurance Fund replenishment over as many as seven years. 13. Top 10 News Now stories during December MADISON, Wis. (1/8/09)--Here are the Top 10 News Now stories most requested by readers during December. Use the link to review the entire story online. 12. NEW: CUNA concerned about costs of NCUA corporate plan WASHINGTON (1/30/09, UPDATED 10:30 a.m. ET)--The Credit Union National Association said that is does not welcome federal regulators' action to support corporate credit union liquidity by extracting a high price from credit unions, but does understand the need for the agency to act. 11. New info required in March 2009 call report WASHINGTON (2/4/09)--Credit unions will be required to supply more information on delinquencies, foreclosures, and repossessions on the quarterly form 5300 “call report”-- which is no surprise given the current market pressures. 10. President’s pen turns corporate stabilization bill into law WASHINGTON (5/21/09)--In a ceremony held at the White House on May 20, President Barack Obama signed S. 896, the Helping Families Save Their Homes Act, into law. 9. New corp stabilization plan implemented by NCUA ALEXANDRIA, Va. (6/19/09)--The National Credit Union Administration will immediately borrow $1 billion of the total $6 billion offered by the U.S. Treasury to shore up the corporate credit union system after the board at its monthly meeting voted to implement the temporary corporate credit union stabilization fund. 8. NCUA bans 12 from financial institution work ALEXANDRIA, Va. (9/24/09)--Twelve former credit union employees have been banned by the National Credit Union Administration from participating in the business of any federally insured financial institution. 7. CUs get accounting guidance for corporate plan costs WASHINGTON (3/11/09)--The American Institute of Certified Public Accountants yesterday issued guidance on how credit unions may account for costs associated with the National Credit Union Administration’s Corporate Stabilization Plan. 6. More accounting guidance sent to NCUA examiners WASHINGTON (4/10/09)--National Credit Union Administration examiners received additional clarification today regarding credit unions’ flexibility in booking the National Credit Union Share Insurance Fund deposit impairment, according to NCUA 5. Card processor’s breach may be the largest yet PRINCETON, N.J. (1/21/09)--Card payments processor Heartland Payment Systems announced Tuesday that its processing system was breached last year by a malicious software program in what could be the largest data breach to date, with possibly more than 100 million credit cards compromised. 4. CUNA compiles NCUA stabilization program info WASHINGTON (2/6/09)--The Credit Union National Association has compiled information that may be useful to credit unions regarding the National Credit Union Administration's Corporate Stabilization Program. 3. NCUA approves stabilization efforts for corporates ALEXANDRIA, Va. (1/29/09)--The National Credit Union Administration (NCUA) Wednesday took steps to “enhance and support” the corporate credit union system. 2. NEW: CORPORATE CUs: Corporate costs must be spread out, Mica says WASHINGTON (3/23/09, UPDATED 11:30 a.m. ET)--The Credit Union National Association called on the federal credit union regulator and lawmakers to mitigate the costs of its decision to place two corporate credit unions into conservatorship. 1. CUs urged: Contact NCUA before corporate action today WASHINGTON (3/26/09)--Credit unions are asked to urge each National Credit Union Administration board member to provide greater transparency regarding a report by Pacific Investment Management Company LLC on corporate credit unions.

In-school branches expand to six more states reports CUNA

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MADISON, Wis. (1/5/10)--Last year saw the expansion of credit union branches in schools to six more states, bringing the total to 39 states and the District of Columbia, announced the Credit Union National Association (CUNA). As of Thursday, 232 credit unions nationwide maintained branch offices in 824 schools, CUNA said. These numbers reflect increases from 2008 of 14% (for states), 7% (for credit unions), and 10% (branches). “Legislators take notice when we present numbers like these,” said CUNA President/CEO Dan Mica. “We talk about the credit union difference all the time, but in-school branches are one way to show that we’re not merely bragging. They’re proof of a real difference--that credit unions go to extraordinary lengths to prepare youth to be productive adults who will contribute significantly to the U.S. economy in the 21st century.” Mica noted that these numbers are self-reported from participating credit unions and leagues, and therefore likely to be understated. He urged credit unions everywhere--especially in the 11 states with no reported in-school branches--to report this activity and update their records at least annually, using CUNA’s online report form (see resource link). Here’s how the in-school branches break down by venue for 2009:
* Elementary school, 344 branches; * Middle school, 92; * High school, 348; and * Otherr (K-12 school, youth center, college, special needs) , 40.
The top states for in-school branches are:
* Michigan, with 341 branches; * Wisconsin, 86; * Virginia, 69; * Texas, 48; and * New York, 33
The top credit unions for in-school branches are:
* CP FCU, Jackson, Mich., with 48 branches; * Apple FCU, Fairfax, Va., 34; * Community Financial FCU, Plymouth, Mich., 30; * Education First CU, Southgate, Mich., 28; and * Extra CU, Warren, Mich., 22.
For a full state-by-state in-school branch summary, visit and look under the Research & Policy heading.