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Michigan DIFS Issues Deferred Compensation Bulletin

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LANSING, Mich. (10/24/13)--The Michigan Department of Insurance and Financial Services (DIFS) last week issued a bulletin for state-chartered credit unions to clarify permissible employee deferred compensation arrangements and investment limitations under the Michigan Credit Union Act.
 
The Michigan Credit Union League met with DIFS staff prior to issuance of the bulletin (Michigan Monitor Oct. 22).
 
Currently, the MCUA permits domestic credit unions to "purchase insurance policies and other investment products to fund deferred compensation arrangements for its employees," as long as the arrangement does not present a risk to the safety and soundness of the credit union. In the past, these types of arrangements were typically structured as bank-owned life insurance (BOLI) policies.
 
However, the Michigan DIFS determined that some credit unions were using different deferred compensation arrangements not owned by the credit union, such as collateral assignment split dollar (CASD) plans. The CASD arrangements typically use a series of loans to an executive to fund the CASD over a period of time, with the proceeds from the whole life insurance policy serving as collateral for the loan.
 
The Michigan DIFS bulletin outlines minimum initial due diligence requirements and ongoing monitoring for boards of directors to perform and document. The requirements are intended to ensure that a deferred compensation arrangement does not raise safety and soundness concerns. The bulletin also focuses on the investment relationship (investment funding and obligation related to the deferred compensation arrangement) and accounting and reporting requirements.
 
After working with DIFS on the issue, MCUL hosted two conference calls for state credit unions to discuss the bulletin, its implications and next steps for compliance. The league conference calls featured presentations by John Kolhoff, DIFS Office of Credit Unions deputy director, and commentary and analysis by Holzman Corkery, Doeren Mayhew and CUNA Mutual Group.
 
Participating credit unions were guided through key parts of the bulletin and learned about due diligence and ongoing monitoring expectations, exam issues and important legal, accounting and call report implications associated with the new guidance.
 
Michigan credit unions were advised to review their existing deferred-compensation arrangements for compliance with the bulletin, and where necessary, work with their legal, accounting and insurance professionals to ensure that their plans are in compliance with this guidance.

CU System Briefs (10/24/2013)

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  • AUSTIN, Texas (10/24/13)--Suzy Brinkman-Doughty, CEO of NAFT CU in Pharr, Texas for 28 years and a Credit Union National Association board member from 1997 until 2002, died on Oct. 21. Brinkman-Doughty was also helped lead the Magic Valley Chapter of Credit Unions, the Texas Credit Union League, and served on the Credit Union National Association Board from 1997 until 2002. She is remembered within the credit union system and her community for her passion and dedication. Brinkman-Doughty was preceded in death by her husband, AC Doughty who died in 2004. He was also a credit union CEO in the valley area. (Cornerstone Credit Union Leaguer Oct. 23)...
  • GOSHEN, Ind. (10/24/13)--Interra CU named Amy Sink as its new CEO on Tuesday. She starts on Nov. 4. Sink was formerly a senior vice president and chief financial officer for Teachers CU, based in South Bend, Ind., where she directed the finance, accounting, treasury, information systems, electronic funds transfer and human resources departments. She is also chair of the board for Alloya Corporate CU. Sink replaces former CEO Jack Sheets. (The Goshen News Oct. 23) Interra is based in Goshen, Ind., has 11 offices, and more than 52,000 members and $644 million in assets...
  • MIDLAND, Texas (10/24/13)--A west Texas car dealer has pleaded guilty to a scheme that cheated a credit union out of $3.9 million on more than 300 loans. (Abilene Reporter-News Oct. 22) After admitting to the conspiracy to commit bank fraud, Raymond Holguin Jr. faces a maximum of 30 years in prison. A sales manager and a former loan officer at the victimized credit union, My Community FCU, earlier pleaded to being accomplices, and also await sentencing. Prosecutors say the three plotted to get loans to customers who failed to meet My Community's lending standards. The loan officer received kickbacks from Holguin...

Illinois REAL Solutions Network Partners Share Ideas

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NAPERVILLE, Ill. (10/24/13)--Partner credit unions of the Illinois REAL Solutions met at the end of September to discuss innovations and ongoing efforts in classroom presentations, reality fairs, emergency loans and other topics, said the Illinois Credit Union League. The topics ranged from youth financial literacy, serving underserved areas, small-dollar emergency loans, and more.
 
Credit unions that participated in the meeting included:
  • Alliant CU, Chicago, which partners with Operation Hope to present the "Banking on Our Future" financial education program to local middle school students as part of life skills classes the school offers.  There is no cost for this program and no financial support is required.
  • Great Lakes CU, North Chicago, which created a version of the popular "Mad City Money" reality fair that is designed to work in a middle school or junior high setting.
  • Community Plus FCU, Rantoul, which shared information about several products that it implemented based on presentations at past Illinois REAL Solutions meetings. Among the ideas it shared were a small-dollar emergency loan, a share-secured loan program and a non-prime auto loan program.
  • Mid-Illini CU, Bloomington, which hopes to reach 1,000 students through the Banzai financial literacy program and classroom presentations. The credit union also highlighted the opening of its first branch in a church located in the local area where no other traditional financial institutions have offices. Mid-Illini CU has also introduced a payday loan alternative program called "Catch a Break Cash" that offers loans of up to $1,000, which can be paid back over a period of one year.
  • RIA FCU, Rock Island, which created an educational program for elementary school students called Kids Are Rewarded for Saving, for second through sixth grade students.  At the end of the year, the credit union hosts and helps prepare the students for a lemonade stand fundraiser.
  • Earthmover CU, Aurora, which opened its Panther CU branch at Oswego High School nearly 20 years ago.  Students handle basic transactions at the branch and develop promotional campaigns to encourage other students to join the credit union and to use its products and services. 
 REAL Solutions is the signature program of the National Credit Union Foundation, which works through state credit union leagues to help credit unions make the difference for members, families and communities. REAL Solutions builds member and consumer financial capability by offering tools such as an online resource center, product development, Credit Union Financial Counseling Certification Program, experiential learning programs—like reality fairs, retirement fairs, and life simulations, and more.

Minn. CU Foundation Awards $10K In Fin. Ed Grants

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ST. PAUL, Minn. (10/24/13)--The Minnesota Credit Union Foundation recently awarded $10,000 in financial education grants to three credit unions.
 
All grant funds will be used to further the credit unions' diverse financial education programs or initiatives that benefit members and communities.
Recipients were chosen by the Foundation board of directors based on credit union value, community impact, collaboration and creativity.
 
"The Foundation board was very impressed with the applications we received this fall," said Foundation Chair Pat Brekken. "It's impressive to get a closer look at some of the amazing initiatives being coordinated by Minnesota credit unions, and I'm proud that the Foundation can be a resource to provide financial support to these important programs."
 
Fall 2014 Financial Education Grant recipients include:
  • Minnesota Power Employees CU, Duluth, which has partnered Duluth Children's Museum to enhance its "Moneyville" financial education exhibit. The display features interactive, hands-on tours through a mock city to learn economic concepts and experience real-life decision-making scenarios. Moneyville can be toured by the general public or coordinated as a school classroom field trip program.
  • Postal CU, St. Paul, which has developed a peer-to-peer financial education seminar series to deliver to students at Tartan High School, where PCU opened a student-run credit union in early 2013. The education series will provide an in-depth look at four key pillars of financial literacy, including budgeting, saving, credit and money management.
  • St. Paul (Minn.) Federal CU, which will open a student-run credit union at Harding Senior High School in St. Paul. Student branches teach students the basic principles and practices of business, marketing and financial institution operations.

Mix Young CU Professionals With ICU Day, Get Cash Mob

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PEWAUKEE, Wis. (10/24/13)--International Credit Union Day had a Gen Y flavor in Wisconsin, thanks to the efforts of the Wisconsin Credit Union League's Young Professionals Network, who coordinated cash mobs throughout the state to support local businesses and cooperatives.

Cash Mobs are like flash mobs but instead of singing and dancing, a group will visit and spend money at a local, small business.  Cash Mobs are organized by groups of people who are trying to make a positive impact and show appreciation for the businesses in their communities.
The Wisconsin Credit Union League's Young Professionals Network coordinated Cash Mobs throughout the state on International Credit Union Day.  Central Cities CU, with staff shown here in front of the hot 96.7 fm vehicle, made the news.

Cash Mobs were coordinated in Madison, Janesville, Stevens Point, Appleton, Oshkosh and Fond Du Lac to raise nearly $3500 ($3473) for local businesses and cooperatives.
 
There were a total of 186 participants, which included credit unions staff, volunteers, family and friends.
 
The goal of the events were to support small, local businesses and reinforce credit unions' mission to serve members and local communities; raise awareness of credit unions through a collaborative effort;  and build rapport with business and community leaders.
 
The Stevens Point cash mob garnered local news coverage. Use the link to view a video.

CUs Told To Observe 'As Members Do, Not Just Say,' At Mo. CU Meeting Kickoff

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BRANSON, Mo. (10/24/13)--Credit unions can learn about their members by focusing more on their actions and less on their words, according to a speaker at the Missouri Credit Union Association's (MCUA) 2013 Convention and Expo.
 
Brent Dixon, a designer and consultant, told the credit union audience that by
Brent Dixon, a designer and consultant, told his credit union audience that by focusing on how members behave and react, credit unions can better map out what consumers want from financial institutions. (MCUA Photo)
employing "design thinking" and by focusing on how members behave and react, credit unions can better map out what consumers want from financial institutions.
 
"Observe actual behavior," he said. "Ask open-ended questions. You really need to be intuitive and read between the lines in these instances."

Dixon suggested, as an example, that credit unions be wary of extreme answers when analyzing member surveys, and told attendees to look at averages when answers deviate significantly.

Also during the session, meeting attendees indicated they did not think a majority of consumers really understood credit unions.
 
In an on-the-spot poll answered through their smartphones, almost three-quarters of attendees (73%) said they believe that most consumers "don't understand credit unions and need to understand basics." Another 23% said that they believe most consumers "understand credit unions somewhat and need more education."


To remedy this perceived knowledge gap, Mike O'Brien, vice president of marketing for St. Louis Community CU, suggested that credit union staffers advocate on behalf of their industry whenever given the chance--even among family and friends. Michelle Rosner, vice president of sales and marketing for 1st Financial FCU, urged her colleagues to invite members to attend chapter meetings with them.
 

The MCUA convention was held on Oct. 22 in Branson, Mo. Roughly 250 credit union professionals from Missouri, Oklahoma and Mississippi participated.
 

Patelco Auto Refinance Program Saves Members $1M

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PLEASANTON, Calif. (10/24/13)--Patelco CU, Pleasanton, Calif., announced this week that its "Switch to Save" auto refinance program has saved members more than $1 million.
 
"The success of this program shows that Patelco is truly in a position to improve the financial lives of a great number of people," said Ryan Misasi, Patelco's Chief Retail Officer.
 
"Switch to Save" offers to pay someone $25 if refinancing auto loans or switching credit cards to Patelco doesn't save them money. Most people who have gone through the program have been able to save a significant amount of money, thus totaling more than $1 million dollars for the close to 1,000 participants who've been eligible to save through the program so far.
 
The program was initially rolled out a just a few branches before it was recently expanded to all Patelco locations. It is available to members of the community as well as current credit union members.