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Broker convicted for phony appraisals a suicide

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DECATUR, Ill. (10/19/10)--A real estate broker who was convicted Oct. 1 of defrauding a credit union and property buyers in Decatur, Ill., with a real estate flipping scheme was found dead Friday, an apparent suicide (wandtv.com Oct. 15). Terry Hart, 58, the owner of Hart Realty, had been convicted of nine counts of fraud for the scheme, which centered on phony appraisals that defrauded the $104 million asset Staley CU and real estate buyers (7thspace.com Oct. 5). Hart and two others conspired to use fraudulent appraisals that prompted buyers to purchase real estate with financing from the credit union. The amounts financed were much greater than the worth of the properties, which were owned by Hart. The frauds allegedly occurred from 2002 to July 2005 and involved 40 real estate sales and financing transactions totaling more than $3 million. The frauds generated a $1 million potential loss for the credit union. Two others entered guilty pleas, also on nine counts of fraud. They are Diane Shelton, 62, former loan officer at the credit union, and Mark Brown, a former licensed real estate appraiser. Shelton and Brown are scheduled to be sentenced next month.

First Techs next step Members to vote on merger

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PALO ALTO, Calif., and BEAVERTON, Ore. (10/19/10)--Members of First Tech CU, based in Beaverton, Ore., will be voting soon on its proposed merger with Palo Alto, Calif.-based Addison Avenue FCU. The two credit unions recently received approval for the merger from the National Credit Union Administration and the State of Oregon. “This is an important milestone in the merger approval process,” said Benson Porter, Addison Avenue president/CEO, “and we look forward to finalizing the merger.” During the last week of October, First Tech members will receive a voter’s guide and information about the proposed merger. A week later, they will receive an Official Ballot Packet, and will have 30 days to cast their vote. The results of the vote will be announced in early December. First Tech members are voting because First Tech would change from a state charter to a federal charter. Brooke Van Vleet, First Tech’s interim president/CEO, noted that the combined credit union will offer “more value for our combined membership, greater efficiencies and the strength to grow and prosper in the 21st century.” Both credit unions are strong, well-capitalized credit unions and share a culture of serving members from 21st century companies such as Hewlett Packard, Microsoft, Agilent, Intel, CH2M HILL and Nike. The combined credit union will have assets of $4.6 billion, 38 branches and more than 327,000 members.

140 CU execs sign up for Southwests Advisory Council

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PLANO, Texas (10/19/10)—Roughly 140 credit union executives and volunteers from 11 states have signed up for the Southwest Corporate Advisory Council, according to the Southwest Bridge Corporate FCU’s website. The Plano, Texas-based corporate announced it was forming the council, with the help of the Texas Credit Union League, to advise it on its future and that it would develop a process to receive input from its member credit unions. The deadline to sign up was Oct. 13, and the initial meeting of the council was Friday. The timetable for appointments has not yet been established. Dianne Addington, CEO of Southwest Bridge Corporate, said the goal is to “work quickly” to present a business plan to the full membership regarding the corporate’s future (eFacts Oct. 12). In her most recent “Corporate Update” letter Oct. 12, Addington urged credit unions to maintain services with Southwest during the interim and give consideration to a new plan that will be presented by the council in the next few months. The corporate was among three placed into conservatorship on Sept. 24 by the National Credit Union Administration. The council members are mostly from Texas, but other states represented include: Arkansas, Florida, Georgia, Louisiana, New Mexico, Michigan, Missouri, Okahoma, Oregon and Washington.

Colloquium focuses on sustainability of CUs

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MADISON, Wis. (10/19/10)--How sustainable is the credit union business model? Sustainable, but with caveats, according to four experts who recently spoke at Filene Research Institute’s Credit Union Sustainability Colloquium: Evidence and Actions at Harvard University. The colloquium was made possible through collaboration among the Massachusetts, New Hampshire, and Rhode Island Credit Union Leagues, Harvard University CU in Cambridge, Mass., and Filene. Participants included 85 credit union CEOs, directors and executives from New England and from Filene’s research and innovation partner credit unions. Filene will publish a full review of the day’s proceedings and findings in early 2011. Peter Tufano, a Harvard Business School professor and a Filene Research Fellow, introduced a Harvard business case to show that growing profits and growing sales do not always make a viable business. The case study’s Butler Lumber Co. had to decide--just as credit unions do--on how to use four levers for the right mix of profit margin (lowering costs, raising revenues or both), asset turnover, leverage (using as much capital as possible), and payout (distributing funds to shareholders). If Butler Lumber gets it wrong, the company will grow its way into default. The credit union corollary: Credit unions with excess capital can manage with low profits for a long time; but without access to outside capital, the only way to grow sustainably in the long run is to pull one of those four levers. Building on Tufano’s sustainable growth theme, John Lass, senior vice president of strategy and business development at CUNA Mutual Group, led a discussion of what those levers look like at credit unions. An excellent way to do that, he said, is to look at National Credit Union Administration reports to see what a few big credit unions are doing to optimize growth. State Employees’ CU in Raleigh, N.C, wins a high return on assets (1.07%) and a better return of equity (16.37%) with a 2% (of assets) operating expense ratio and a high leverage factor-- a capital level that hovers around 7% of assets. You can fail even though nobody dislikes you, said Frances Frei, a Harvard Business School professor. Credit unions particularly must be careful about trying to be all things to all members, because a drive for across-the-board excellence is much more likely to lead to mediocre performance in all areas. Instead, it takes strategic courage to decide what your credit union will not do well--and make sure you don’t do it. If you try to be good at everything, you will run out of money long before you’ve succeeded. Not a recipe for success, Frei said. Dorian Stone, a partner at McKinsey and Co. and a Filene Research Fellow, said outsized operating expense ratios are the bane of most U.S. credit unions. A straightforward comparison of operating expenses shows U.S. credit unions lagging similarly sized banks by 20% and more. Moreover, competitors aren’t likely to get less efficient, so it’s time for credit unions to do better. Key elements for credit unions to assess include whether they are using scaled operational models, prioritizing the right performance improvements to deliver value to the member, and having the right accountability in place at each level to ensure high levels of performance, Stone added.

Maine league developing new ad campaign

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WESTBROOK, Maine (10/19/10)--The Maine Credit Union League’s Statewide Awareness Committee at a Sept. 30 meeting approved the development of new television ads for 2011. Designed to attract a younger demographic, the ads will feature an animated, three-dimensional look and will invite viewers to “Look into Maine’s Credit Unions. You’ll like what you see.” The committee also discussed new initiatives underway in the 2010 statewide campaign. As part of Maine’s Credit Unions’ financial literacy efforts, FOX ran quarterly public service announcements, featuring useful financial tips, and directed viewers to Mainecreditunions.org. (Maine Credit Union League’s Weekly Update Oct. 15). Also, begun in August, the campaign underwrote a series of broadcasts on Maine Public Broadcasting Network (MPBN) that features films produced by independent filmmakers and producers sharing their portrayals of Maine life. The campaign will run two 15-second commercials, one at the open and close of each film. Maine’s Credit Unions were mentioned in MPBN’s EXPERIENCE Program Guide, and the league’s logo ran on promotions for the program.

ICrainsI pubs Rock solid CUs haven for small biz

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MADISON, Wis. (10/19/10)--Credit unions remain financially rock solid and well-capitalized--offering lower mortgage rates, higher interest on savings accounts and an increasing number of small-business loans, according to articles in three publications. Credit unions have been long-known as a source of consumer lending, but now have become a haven for small businesses, according to an article, titled “Business loans make up large share of credit union portfolios,” in Crain’s in Cleveland (Oct. 18). “Amid tighter bank lending standards in the wake of the subprime mortgage fiasco, credit unions are accelerating their issuance of small business loans,” the article said. “As a result, an area of business that was a specialty line for credit unions has become more mainstream,” said John Kutchey, deputy director of the examination and insurance office of the National Credit Union Administration, the industry’s federal supervisor,” the article reported. Credit unions offering business loans total 2,300 this year--30% of all U.S. credit unions, Mike Schenk, senior economist for the Credit Union National Association (CUNA), told Crain’s. In 2008, the percentage of credit unions that offered business loans was 24%, he said. The volume of business lending at Ohio credit unions grew 13.3% over the past year, Patrick Harris, director of media relations for the Ohio Credit Union League, told Crain’s. The article also mentioned Buckeye State CU, Akron; Taleris CU, Cleveland; and Vacationland FCU, with branches in Sandusky and Vermilion. In California, credit unions remain solid and well-capitalized in a state that has seen substantial areas rocked by the recession, said the Central Valley Business Journal Oct. 18. “Credit unions in … California and across the nation are strong, stable and sound,” Daniel Penrod, industry analyst with the California Credit Union League, told the Journal. “Overall loan growth remains normal in the 3% loan range.” Credit unions overall will begin to see a distinct influx of share deposits by 2011 “because consumers won’t be spending as much and will be trying to build up their savings,” Bill Hampel, CUNA chief economist, told the Journal. The publication also featured Patrick Keefe, CUNA vice president of communications and media outreach, talking about the safety and soundness of credit unions, and National Credit Union Administration Chairman Michael Fryzel, who said credit unions have been largely unaffected by economic turmoil and that they have been included in recent legislative changes that will ensure access to liquidity and asset programs. According to an article in Mortgageloan.com (Oct. 18), San Francisco consumers looking for a community alternative to a large bank should check out local credit unions. “If you’d like to see what a community alternative to big banks might be like, visit your local credit union. Northern California residents are getting mortgage and banking services at their very own San Francisco FCU,” Mortgageloan.com said. “Because of their independent nature, credit unions typically offer lower mortgage rates, higher interest on savings accounts, and lower service fees,” the article said.

Excellence in Lending awards announced

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LAS VEGAS (10/19/10)--CUNA Mutual Group’s Excellence in Lending Awards were presented to three credit unions at the CUNA Lending Council conference in Las Vegas. The 11th annual awards recognized:
Click to view larger image Winners of CUNA Mutual’s Excellence in Lending Awards were recognized Monday at the 16th Annual CUNA Lending Council conference in Las Vegas. Front row, from left: Jeff Lewis and Jim Craft, Oregon Community CU, Eugene, Ore., Consumer Lending, more than $250 million in assets; Carol Brinchi and Denise Kaczmareck of Erie (Pa.) FCU, Consumer Lending, more than $250 million in assets; Robert Morgan, NorthCountry FCU, South Burlington, Vt., Low/Modest Means credit unions. Back row: Dan Kaiser, vice president, CUNA Mutual Group; and Aaron Bresko, vice president, BECU, Seattle, Lending Council chairman. (Photo provided by CUNA Mutual)
* Oregon Community CU (OCCU), Eugene, Ore., for consumer lending among credit unions with more than $250 million in assets. OCCU developed “360” Training to remove “fear of sales” and teach employees to align members’ needs with products and services. The credit union also established a loan-phone branch to channel member calls to experts. By mid-2010, the loan-phone branch had achieved 137% of its annualized goal. * Erie (Pa.) FCU, for consumer lending among credit unions with more than $250 million in assets. Erie FCU followed its strategic planning blueprint for expense management, building business relationships with car dealers and growing lending and member service programs. Erie made 3,400 car loans in 2009 to become Erie County’s top vehicle lender. The credit union also expanded a Merchant Direct Loan program for small businesses to increase the program’s loan portfolio by 22.7%. * NorthCountry FCU, South Burlington, Vt., for credit unions with low/modest means. NorthCountry created the Employer Sponsored Income Advance Program so members can apply for emergency loans of up to $1,500 through their employer’s human resources department. Participating companies pay an annual fee that is usually less than $500. The credit union has made 389 emergency loans totaling $400,000 since July 2007 while writing off $8,500. More than one-third of borrowers continue payroll deductions to savings after the loan is repaid.
Excellence in Lending Awards recognize credit unions that have implemented outstanding lending programs while demonstrating sound financial performance.

Michigan governor thanks CUs for fostering entrepreneurship

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LANSING, Mich. (10/19/10)--Gov. Jennifer Granholm thanked Michigan
Greg Main, left, president/CEO of the Michigan Economic Development Corp., and Andy Levin, right, acting director of the Department of Energy, Labor and Economic Growth, listen as Michigan Gov. Jennifer Granholm discusses the state's and credit unions' efforts to improve entrepreneurship in the state. (Photo provided by the Michigan Credit Union League)
credit unions for their role in fostering small businesses and offering small business loans during a press conference that highlighted the state’s efforts to promote entrepreneurship (Michigan Monitor Oct. 18). Earlier this year, the Michigan Credit Union League worked with the Michigan Economic Development Corp. and the state’s Small Business Technology and Development Center to launch the Credit Union Business Financing Alliance. The alliance offers information on training and lenders to entrepreneurs. Press conference participants included Benjamin Cummings, who relied on credit union alliance services to get a business loan from ELGA CU in Flint, where he was already a member. The loan helped Cummings co-found Cummings Chiropractic in Lapeer, Mich., with his wife, Teresa. Cummings reported that business has been so good that the firm plans to repay its loan early.

CU System briefs (10/18/2010)

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* HIGHTSTOWN, N.J. (10/19/10)--New Jersey Credit Union League President/CEO Paul Gentile, left, had a chance to share messages about credit unions with former vice president and 2000 Democratic presidential nominee Al Gore, right, during a campaign event for U.S. Rep. Rush Holt, back center, Sunday in Rumson, N.J. Holt, a friend to credit unions, is facing a close race in the 12th Congressional District (The Daily Exchange Oct. 18). He is one of the state’s six co-sponsors of legislation to increase the credit union member business lending cap. Earlier this year, he joined two other delegation members to sign a letter to leadership encouraging the inclusion of MBL reform language in any jobs-creation legislation. (Photo provided by the New Jersey Credit Union League) … * FARMERS BRANCH, Texas (10/19/10)—Kevin Venable, business development manager of the Texas City, Texas-based AMOCO FCU, was named the Marketing and Business Development Professional of the Year, the highest honor at the Texas Credit Union League’s 2010 Marketing & Business Development Conference in San Antonio earlier this month. In his five years with AMOCO FCU, Venable assisted in the growth of tens of thousands of members and hundreds of millions of dollars in both loans and assets, said the league … * FARGO, N.D. (10/19/10)—A Fargo man was sentenced to five years and three months in prison for robbing the West Fargo branch of Minot, N.D.-based Town & Country CU on Aug. 3, 2009. Matthew C. Becker, 20, pleaded guilty in June in the U.S. District Court of North Dakota. The robber, wearing a hooded sweatshirt, sunglasses and red bandana as a mask, brandished a weapon and demanded the employees empty the cash drawers. He fled with $9,314 in cash. Becker was arrested the next day after a detective viewed surveillance camera footage of the robbery and recognized him. He also was sentenced to three years’ supervised release and ordered to pay restitution of $9,314 and a $100 special assessment to the Crime Victim’s Fund (Targeted News Service Oct. 15) …