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More media coverage after sixth week of record growth

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MADISON, Wis. (11/15/11)--At the risk of sounding like a broken record, credit unions began their sixth week since Sept. 29 of drawing in new members fed up with bank fees, educating new members, and basking in the positive press that continued through this past weekend.

National media such as Fox Business, Bloomberg,  CBS Radio and Huffington Post continued to seek analysis from the Credit Union National Association. See related News Now story, "CUNA's Hampel tells Fox: 'Bank Transfer Season' has begun," in today's Washington section.

Georgia Credit Unions published this full page ad to thank members for joining credit unions. (Photo provided by the Georgia Credit Union Affiliates)
Meanwhile, leagues and local credit unions noted credit unions' success in regional and local media and continued to gather stacks of media clips of positive stories in their states. Some local media declared the Bank Transfer Day event a success.

"The numbers [of new credit union members] suggest that the movement worked," reported The Trenton Times. "Credit unions in Mercer County  reported significant jumps in both consumer interest in their products and in new accounts coming in."  New Jersey Credit Union League President/CEO Paul Genile told the publication that "this is just the beginning of what we're going to see. There's such a learning curve as to what is a credit union, and the whole Bank Transfer Day kind of cut that learning curve."

Georgia Credit Union Affiliates (GCUA) said Georgia's credit unions received "good coverage,"especially in The Atlanta Journal-Constitution, which published several stories last week and during Bank Transfer Day. On Monday, Georgia credit unions published a full page ad in thanking consumers for joining credit unions. (See ad.) For the articles, use the links.

The Wall Street Journal ran a column about the benefits of switching to smaller banks or credit unions while U.S. News & World Report (Nov. 14) wrote on "Seven ways credit unions are better than banks." (See related article,"U.S. News & World Report: Seven ways CUs better than banks" in theSystem section of today's News Now.)

Weekend coverage continued to focus on "wrap ups" of the impact of Bank Transfer Day, which was Saturday Nov. 5.  Some outlets, including American Banker, reported skepticism about credit unions' growth numbers, but most agreed that a customer shift did occur, reported the Electronic Payments Coalition, which tracks media reports on the issue. "Opinion coverage continued to characterize Bank Transfer Day and the general consumer shift as a positive for consumers and the free market," said the coalition's newsletter.

CUMIS sues former CU manager on embezzlement losses

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BELLE VERNON, Pa. (11/15/11)--CUMIS Insurance Society Inc. of Madison, Wis., has filed a lawsuit against a Pennsylvania man for allegedly using a credit union's credit cards and money to make personal purchases.

The suit was filed in U.S. District Court in Pittsburgh against Gerald W. Jackson, 51, for actions while serving as CEO of BVA FCU in Belle Vernon, Pa. (Pittsburgh Tribune-Review Nov. 14).

Jackson allegedly made $67,493 in purchases using BVA's corporate credit card, and also used BVA's Lowe's card to make $36,425 in purchases, including five $500 gift cards, the lawsuit alleges.

CUMIS also alleges Jackson used credit union funds to pay for labor done at his personal residence, to buy construction materials and equipment for another business, to rent a boat for personal use, and to pay dues at a country club for himself and an acquaintance.

In the four-count lawsuit filing, CUMIS alleges fraud, breach of fiduciary duty, conversion and unjust enrichment. BVA FCU saw losses totaling $261,436. CUMIS is seeking $223,436 plus fees and expenses.

CUMIS recently has sued several individuals who have caused losses to credit unions that it insured.

CUMIS is a property and casualty insurance company that provides fidelity insurance solutions to credit unions in the U.S. It offers credit unions packages of protection, business auto, and workers' compensation liability programs.

IU.S. News and World ReportI Seven Ways CUs better than banks

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MADISON, Wis. (11/15/11)--In the aftermath of the Occupy Wall Street movement,  U.S.  News & World Report Monday noted that many Americans are looking to do business more with local businesses and financial institutions, as opposed to large corporations and banks.

The publication listed "seven ways credit unions are better than banks." Credit unions:

1. Make consumers a top priority. Credit unions work in the best interest of members, not stockholders. Therefore, they offer better customer service. Credit unions are more focused on ensuring they provide members with a high level of service and competitive rates.

2. Have low or no minimum-balance requirements. Credit unions lower balance requirements so maintaining an account is less stressful, while corporate banks continue charging high fees for dropping below a minimum balance on savings and checking products.

3. Offer lower fees on financial products. When they shop around for a loan or a checking account, consumers will find that credit unions usually offer lower fees on basic transactions. A local credit union can probably offer the best financial products and packages. Most credit unions still offer free checking with no strings attached

4. Have lower interest rates. Credit unions usually offer lower interest rates on mortgages and credit cards. Many offer the most competitive rates for mortgages, personal loans and credit cards. Nonprofit credit unions also are less prone to add on fees for different loan products.

5. Secure the member's funds. Deposits at a credit union are insured up to $250,000 by the National Credit Union Shared Insurance Fund. Members have the same level of risk as customers at a regular bank.

6. Offer bonus checks. Profits can be divided up into bonus checks for members rather than shared with a few stockholders. Members should check with their local credit unions to find out what types of bonus programs are provided to members annually.

7. Are less restrictive in credit eligibility requirements. Consumers should consider applying for a loan through a credit union if they've been denied a loan from a large bank. Many credit unions are willing to work with consumers who have a low credit score. Credit unions also can make exceptions for unique circumstances--such as going through a bankruptcy or being self-employed.

In another article published last week, U.S. News & World Report advised consumers who are looking to credit unions to check out membership requirements, fees, availability of services and interest rates. The article also urged consumers to check that a credit union they are interested in is insured by the National Credit Union Administration.

Delaware CUs governor meet on fin empowerment programs

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DOVER, Del. (11/15/11)--The Delaware Credit Union League and six credit unions attended a meeting at Delaware Gov. Jack Markell's office in  Dover, Oct. 31, to find ways for the state and credit unions to collaborate in creating financial products and services for consumers.

Attending a meeting at Delaware Gov. Jack Markell's office in Dover, Oct. 31, to collaborate in creating financial products and services for consumers, were, from left: Dion Williams, Del-One FCU, Dover; Henry Smith and Mary Dupont, Division of Health and Social Services; Patrick Mahaney, Delaware Credit Union League; Markell; Sharon Schaeffer, Delaware First FCU, Wilmington; Meredith Jeffries, New Castle (Del.) County Delaware Employees FCU; David Clendaniel, Dover FCU; Maurice Dawkins, American Spirit FCU, Newark; and Joel Romaine, Community Powered FCU, Newark. (Photo provided by the Delaware Credit Union League)
Mary Dupont, Delaware director of financial empowerment, arranged the meeting. Henry Smith, deputy director of the Delaware Department of Health and Social Services, also attended, said the league (Together Nov. 15).

Markell said he is a fan of financial empowerment programs. He encouraged the state to forge a relationship with credit unions in this area.

Delaware credit unions urged state agencies to include credit unions as a viable partner in empowerment programs.

It was pointed out that the Limited Investment for Financial Traction (LIFT) program currently only applies to banks.

The LIFT initiative, championed by Markell, is a program that uses $5 million from the state's Strategic Fund to subsidize the interests on small-business loans.

Credit union activists who attended the meeting were:

  • Patrick Mahaney and Alice Smith--Delaware league;
  • Maurice Dawkins--American Spirit FCU, Newark;
  • Joel Romaine--Community Powered FCU, Newark;
  • Dion Williams-- Del-One FCU, Dover;
  • Sharon Schaeffer--Delaware First FCU, Wilmington;
  • David Clendaniel--Dover FCU; and
  • Meredith Jeffries--New Castle (Del.) County Delaware Employees FCU.
 

Attendees shared information on consumer friendly products to help those who struggle financially.

Family FCU Fed Mexican consulate test remittance program

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WILMINGTON, Calif. (11/15/11)--The Federal Reserve Bank, the Mexican Consulate and Family FCU, Wilmington, Calif., have launched, "Financial Corridors to Mexico: Los Angeles to Mexico," a collaborative effort to provide safe and affordable financial services to immigrants and their families on both sides of the border.

The Directo a México program offered by the Central Bank of Mexico and the Federal Reserve will link any U.S. financial institution to any other in Mexico, including Mexican Cajas Populares (credit unions) through La Red de la Gente and Banco del Ahorro Nacional y Servicios Financieros, and to unbanked individuals in Mexico through Telecomm-Telegrafos.

Financial Corridors to Mexico seeks to increase the speed and safety transactions, lower the cost of sending remittances to Mexico and reduce the number of unbanked in the U.S. and Mexico by encouraging individuals and families to work with regulated financial institutions on the receiving end of the transactions. This, in turn, allows U.S. financial institutions a means to provide international payment services and a better service to their clients, according to the National Federation of Community Development Credit Unions.

Family FCU is a low-income designated community development credit union serving nearly 2,000 low- and moderate-income predominantly Latino residents of Wilmington and surrounding areas. The credit union has assets of nearly $10 million.

The Mexican Consulate's "consulate on wheels" will spend up to a month at the credit union to help undocumented immigrants qualify for Individual Tax Identification Numbers, consular identification and other documents that legally allow immigrants to be served by U.S. financial institutions.

CUs post-BTD challenge Building deep relationships

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MADISON, Wis. (11/15/11)--Bank Transfer Day and the weeks leading up it brought credit unions about 700,000 new members. Now credit unions face the challenge of converting dissatisfied bank customers to long-term, productive members.

At many credit unions  the relationship building begins during the account opening process. For example, $1 billion asset Elevations CU, Boulder, Colo., uses what Assistant Vice President Dennis Paul calls the "human switch kit," whereby the credit union member representative drives the migration of direct deposits and electronic fund transfers between financial institutions.

"We've found that the perception from new members is that it's a very complicated process," Paul told News Now. "We take the burden off the consumer and put it on the credit union. I can tell you that new members are amazed, and much more willing to bring us their business."

During the account opening process Elevations also conducts a free "Reality Check," a thorough review of the new member's credit history.

"We've found that free credit reports and monitoring services really aren't what they claim to be," Paul said. "For example, they might show consumers their credit report but not their credit scores, or they might charge an additional fee for more information. Reality Check is a top-to-bottom look at the members' credit history. We also look at every loan they have and compare them with our products side by side. Our goal is not to put products in the member's hands unless it is going to benefit them."

Elevations did not run any special promotions leading up to Bank Transfer Day, mainly because it is not in a primary Bank of America market, Paul said. Still, the credit union added 732 new members in October, a 75% increase over a typical month.

BECU, in Tukwila, Wash., reported that 659 people opened accounts on Bank Transfer Day in one branch alone.

The $9 billion asset BECU faces an additional challenge in engaging new members: Because the credit union operates primarily out of tellerless branches, much of its account-opening process is geared toward member education.

The credit union has 45 branches, of which only two have tellers. The remaining are what are what the credit unions terms "Neighborhood Financial Centers," equipped with ATMs. BECU also has two contact centers, one in the Seattle area and another in Spokane, Wash.

"It's not just about educating new members that we don't have tellers; it's educating them about why we don't have them," said Toby Travis, BECU senior marketing strategist. "It's about operating more efficiently, creating a better return for the members in offering better rates."

Next, new members must learn about BECU's remote delivery options. Travis calls the BECU's online banking platform the "Rosetta Stone" of its retail delivery strategy. The credit union also employs remote deposit capture.

"For us, it's not about product wrapping until new members are comfortable with who we are and how they can gain access to their accounts," Travis told News Now.

"We know we are not the right financial institution for every consumer," added Todd Pietzsch, BECU public relations manager.

But BECU's operating model does allow it to provide very competitive products, Pietzsch added. During the account opening process, new members are apprised of the Member Advantage account, which offers better rates on savings and loans if members receive e-statements and use specific electronic services.

"We also have strong confidence in our staff that they can save members money by transferring a credit card balance or a loan from another financial institution," Pietzsch told News Now. "We know our rates are competitive, and that helps in leveraging that first point of contact."

Texas Trust CU, with $695 million assets, Mansfield, Texas, which added 1,248 new members during the month leading up to Bank Transfer Day, employs a process known as onboarding to more fully engage new members.

Onboarding is a systematic process of reaching out to new members using a combination of phone calls, e-mails and direct mail during the initial months they join the credit  union.

"During the first 90 days you either lose a member or gain their trust," said Amber Danforth, Texas Trust FCU vice president of marketing and public relations. That's why we want to make sure we capitalize on it."

Texas Trust begins its onboarding process, called "Embrace the Connection," by sending new members a hand-written thank you note and an owner's guide to the products and services the credit union offers.

During the next 12 weeks, the credit union's member customer information file system generates e-mails and direct mail offerings about product and services that fit the member's financial needs, including loan offers based on the member's credit score.

"The cool thing is that every communication is from the member representative that opened the account," Danforth said. "So, members do feel like they have a direct connection with someone at the credit union."

While credit unions vow to earn their new members' trust for the long haul, more than one credit union representative sensed that Bank Transfer Day was about much more than consumers making a one-time statement against big banks.

"The people that are moving from big banks are very excited, not just to open an account at a credit union, but to bring their relationships with them," said Anne Benjamin, executive vice president/chief operating officer at Redwood CU, with $1.9 billion assets, Santa Rosa, Calif. "I've worked in credit unions for 30 years and have never seen anything this unique. People are so engaged."

Redwood CU opened more than 600 new accounts on Nov. 4 and 5, more than six times the number it normally would. During October, the credit union also experienced an 83% increase in new accounts from October 2010.

"We're not seeing people joining the credit union to just to say, 'I did it,'" said BECU's Pietzsch. "They are joining because it's best for them and they're going to use it. We see them bringing their relationships with them."

CUNA Lending Council exec committee announced

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MADISON, Wis. (11/15/11)--The CUNA Lending Council announced its executive committee and officers during its 17th annual conference, Nov. 6-9 in New Orleans.

Aaron Bresko, vice president of lending, BECU, Tukwila, Wash. remains as council chair, and Bill Vogeney, senior vice president/chief lending officer, Ent FCU, Colorado Springs, Colo. will continue as vice chair.

Jason Osterhage, senior vice president/chief lending officer, Delta Employees CU, Atlanta, was elected secretary treasurer.

Two new members were elected to three year terms:

  • Stacy Fifield, vice president, consumer lending and operations support, Travis CU, Vacaville, Calif., replacing Charles Anderson, executive vice president of commercial banking, Arizona State CU, Phoenix, who did not seek re-election; and
  • Chris Oldag, executive vice President/chief operating officer, City County CU, Margate, Fla., replacing Vicki Lovett, senior vice president/chief lending officer, Suncoast Schools FCU, Tampa, Fla., who did not seek re-election.
The CUNA Lending Council executive committee also includes:

  • Michael Long, executive vice president/chief credit officer, UW CU, Madison, Wis.;
  • Bonnie Doolin, senior vice president, business development, Massachusetts Credit Union League, Marlborough, Mass.;
  • Gayle Rust Gustafson, vice president, finance services, Rivermark Community CU, Beaverton, Ore.;
  • Keith Reynolds, vice president, lending/business services, Citizens Equity First CU, San Jose, Calif.;
  • Jennifer Cowles, vice president, real estate lending, American Eagle CU, East Hartford, Conn.; and
  • Dale Frankhouse, director of business services and mortgage lending, Sun FCU, Maumee, Ohio.

CU sets loan growth record at branch opening

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BELOIT, Wis. (11/15/11)--First Community CU, with $74 million in assets, Beloit, Wis., approved more than $1.2 million in loans on Saturday during a branch opening.

First Community CU, based in Beloit, Wis., approved more than 70 loans totaling $1.2 million during a branch opening on Saturday. By 8 a.m. (CT) there were more than 50 members were lined up waiting for the loan sale to begin. (Photo provided by First Community CU)
The credit union held a $2 million loan sale to celebrate the grand opening of its new Janesville office.

The promotion featured loan rates as low as 0.99% for the first $500,000 in loans, 1.99% for the next $500,000 in loans and 2.99% for the remainder.

The first members lined up at 4 a.m. (CT) to guarantee them the lowest promotional rate.  By 8 a.m. more than 50 people were in the queue.

The loan sale ran from 9 a.m. to 12 a.m. with more than 70 loans approved. That is a loan approval almost every 2.5 minutes.

"This is by far the most successful one-day loan sale we have ever had," said Jack Gill, First Community CU president.

CUs more efficient than banks says Celent study

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BOSTON (11/15/11)--A new study comparing efficiency ratios of similarly sized banks and credit unions says that credit unions are about 10 points more efficient than banks.

Boston research group Celent noted in its study, "EfficienCU: An Examination of Bank and Credit Union Efficiency Ratios by Asset Tier,"  that "credit unions are consistently more efficient than banks of the same asset tier."  In its comparison of efficiency ratios from 2004, 2206, 2008 and 2010, it noted "a noticeable disparity between relative efficiency" of the two groups.

Celent obtained bank efficiency ratios from Federal Deposit Insurance Corp. reports and calculated credit union efficiency ratios based upon the FDIC formula: noninterest expense less the amortization expense of intangible assets, as a percentage of the sum of net interest income and noninterest income, said Celent.

The minimum viable size for a bank is between $100 million and $300 million in assets, while the limit is roughly half that for credit unions, said Celent.  "Reasons for this disparity can be seen in the way each type of institutions handles product lines, customer centricity, commercial banking, resource sharing, and technological investment," said the report's abstract.

"Celent sees no reason why this disparity in relative efficiency will not continue into the future," it added.

"Credit unions don't participate in commercial lending, which is an 'inefficient' part of banking.  They also have shared service centers, which enable more scale and greater efficiency," said Bart Narter, senior vice president of Celent's Banking Group and author of the report.

For more information, use the link.

CU System briefs (11/14/2011)

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  • LANCASTER, S.C. (11/15/11)--Founders FCU, based in Lancaster, S.C., announced last week it will return $10 million to its members in dividends.  Members will receive an average $100 in their savings account on Nov. 30, with the amount depending on the members' account balances as of Oct. 31 (Associated Press Newswires Nov. 11).  The dividend is to thank members who have struggled during the economic downturn, said President/CEO Bruce Brumfield, saying that members need the money more than the credit union does now (Charlotte  Observer Nov. 11).  The credit union is paying the dividend because its financials are $6 million better than budgeted.  Also, the credit union's board decided to give its 490 full-time employees a $1,300 one-time bonus. Part-time employees received $650.  The member dividend marks the fifth time in 11 years that members have received a dividend. This year's was the largest …
  • TRENTON, N.J.  (11/15/11)--City of Trenton Employees CU President David G. Tallone, who is also president of AFSCME Local 2286, was charged Thursday with fraudulently obtaining $51,000 in city contracts by using impersonation and forgery (NJ.com Nov. 11). He allegedly used his sister's name on contracts to provide food for city and election campaigning events on at least five occasions between April 2007 and May 2011, according to the charges. The Faulkner Act prohibits city employees from contracting with the city to provide goods and services. He faces up to five years in prison and a $15,000 fine for each charge …
  • NAPERVILLE, Ill. (11/15/11)--The Illinois Real Solutions program conducted its secondin-person meeting for the year for its credit union partners to update credit unions on a number of products and services it offers in the realm of youth financial education, credit counseling and other areas. Attendees heard about and tried out a smaller-scale version of a reality fair that can be conducted in a classroom in about 45 minutes.  They also learned about free tools on website for financial counseling through AssetPlatform.org and learned about FamilyMint.com, a budgeting program for kids ages five through 16 and MyJiibe.com, an online budgeting tool. Shown here discussing the student loan programs they offer are, from left: Greg Anderson, senior vice president/chief operating officer of University of Illinois Employees CU, Champaign; Lisa Anderson, Great Lakes CU, North Chicago; and Matt Hancock, consumer and business lending manager, Motorola Employees CU, Schaumburg.  (Photo provided by the Illinois Credit Union League) …
  • ALBANY, N.Y.  (11/15/11)--The Credit Union Association of New York's CEO/Manager Roundtable in Syracuse, N.Y., for credit unions with assets up to $50 million, attracted 40 credit unions. The event focused on compliance, social media strategies and lending. George Towle, partner with The Rochdale Group Inc., spoke about issues important to CEOs and the future of their credit unions.  John Bricker, sales executive with CUNA Mutual Group, discussed  CUNA Mutual's strategic direction and initiatives to help smaller credit unions grow and thrive. Other updates included were provided by New York Credit Union Foundation Executive Director Diane LaVigna-Wixted; Jessica Herishko from Columbia Greene FCU about the association's Young Professional Commission;  Jackie Carlson of Alloya Corporate FCU; and CUANY's director of compliance, Michael Carter, who discussed vendor due diligence and online member authentication rules.  (Photo provided by the Credit Union Association of New York) …