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CU System Briefs (11/07/2013)

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  • GRAND RAPIDS, Mich. (11/7/13)--A 41-year old man who asked a plainclothes police officer for a ride has been arrested in connection with the earlier robbery of Kent County CU. Court records show that the detective declined the request and called for backup. The suspect, Marcus Ewing, allegedly admitted to robbing the credit union, saying a back injury and post-traumatic stress disorder have left him unable to work, and that he needed money for child support and a drug habit (The Grand Rapids Press Nov. 5). His cousin, Dontray Jones, 36, also was arrested as an accomplice. Both were arrested shortly after the robbery, when an anonymous tipster called 911 and followed the suspects' vehicle. Police found the car several blocks from the Kent County branch with a bag full of money, a black handgun, a costume beard, and Ewing's Indiana driver's license inside. Kent County CU, based in Grand Rapids, Mich., has $40 million in assets ...
  • KERNERSVILLE, N.C. (11/7/13)--Amazon shoppers will be able to give money to the Carolinas Credit Union Foundation this holiday season. The foundation will be listed as a "charity of choice" through the online retailer's AmazonSmile program. The set-up allows customers to direct 0.5% of purchases to a listed charity. The Carolinas Credit Union Foundation is the charitable arm of the North Carolina Credit Union League and the South Carolina Credit Union League ...
  • FORT WORTH, Texas (11/7/13)--
    Click to view larger image Click for larger view
    American Airlines FCU raised $55,000 in a charity golf tournament for Children's Miracle Network Hospitals. The gift will be divided among Cook Children's Medical Center Foundation and Children's Medical Center Foundation. American Airlines FCU has held its Annual Credit Union Golf Tournament for 17 consecutive years. The event was co-sponsored by credit union vendors and partners CO-OP Financial Services Network, Global Vision Systems Inc., Symitar and PSCU. The gift was presented by American Airlines FCU President/CEO Angie Owens and its golf tournament director Tish Pruitt to Children's Medical Center of Dallas and Cook Children's Health Foundation Annual Giving at AAFCU's Fort Worth, Texas, headquarters.  Since 1996, credit unions have raised over $100 million for Children's Miracle Network Hospitals. CO-OP Financial Services matched American Airlines FCU's gift with a $10,000 donation. Pictured are, from left: Cook Children's Health Foundation Annual Giving Specialist Natalie Houghton, Pruitt, Owens and Children's Medical Center of Dallas Sponsor Relations Representative Angela Bynum. (Photo provided by American Airlines FCU) ...
  • ST. LOUIS, Mo. (11/7/13)--Former Missouri Credit Union Association Board member Evelyn Mae Schuerman died at the age of 93 on Oct. 24, according to MCUA  (Missouri Difference Nov. 6). She had served on the MCUA board from 1966 until 1988, and was chair of the board from 1983 until 1985. Schuerman had worked for Conservation Employees CU, Jefferson City, for 20 years before retiring in 1986 as manager. She then worked as a treasurer for the Association of Retired Missouri State Employees until 2008 ...

Schenk To Council: Expect 'Slow and Unsteady' Recovery

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PHOENIX (11/7/13)--Credit Union National Association Senior Economist Mike Schenk joked that each time he addresses the CUNA Lending Council's annual conference, he has better and better news.
Click to view larger image Lenders will feel added pressure to boost interest margins in 2014, and new-auto loans will be a sweet spot for credit unions next year, said Mike Schenk, vice president of economics and statistics at the Credit Union National Association, Tuesday at the 19th Annual CUNA Lending Council Conference in Phoenix. (Photo provided by CUNA)
It was no different Tuesday at the 19th annual CUNA Lending Council Conference in Phoenix, although there's still room for improvement.
Most business leaders believe the economy is improving, he said. But a recent Gallup survey found that only 33% of consumers believe that's the case--and 62% believe the economy is worsening.
"That's a shocking statistic 52 months into economic recovery," said Schenk, CUNA's vice president of economics and statistics.
This consumer pessimism and other indicators, namely slow economic growth and stubborn unemployment, point to a "slow and unsteady recovery," Schenk said.
He cited three key issues affecting the economy:
1. We haven't reached our key economic goals. The economy is limping along at a 2.5% growth rate versus historical growth of 3.25%, and growth is likely to decline during the third quarter.

The unemployment rate remains at 7.2%, lagging the traditional long-term average of 6.5%. While there have been job gains, they're relatively weak: 148,000 new jobs were created in September, not enough to lower the unemployment rate. Schenk estimated there are two million fewer jobs today than in 2007. He says the labor market should be at normal employment by the third quarter of 2014.
2. Persistent weakness. Gross domestic product (GDP) growth normally would be 4.3% three years after a recession, but it lingers at 2.4%, Schenk said. That's largely because the economy is entering the third phase of deleveraging since the Great Recession. This first phase was businesses deleveraging, followed by consumer deleveraging. "Consumers represent 70% of our economic activity, which is a huge drag," Schenk said. The good news: Consumer deleveraging is ending. The bad news: Federal government deleveraging is just beginning--and will take 1.5% of the nation's economic growth with it.
Other potential land economic landmines include the possible scaling back of the Federal Reserve's quantitative easing program, and the prospect of continued debt ceiling fights, which could have serious consequences, Schenk said. "These multiple hits are having a dramatic effect on peoples' outlook and willingness to spend money," he said.
3. There are positive economic signs. The economy continues grow, albeit slowly, and "there's no inflation in sight," which is good for short- and long-term interest rates, he noted.
Consumers are holding steady on employment and income, and there's pent-up consumer demand, especially in auto sales. "That should be a sweet spot for credit unions," said Schenk. "The average age of cars on the road is almost 11 years."
Plus, housing prices are on the rebound, having risen 4.4% year-to-date, and many consumers have benefitted from large stock market gains. "This improves consumer spending," as does consumer deleveraging, he said.
There also are positives for credit union lenders, such as vastly improved asset quality, high earnings despite low net-interest margins, and strong membership growth (2.1%).
"It's clear that consumers are discovering and appreciating the credit union difference," Schenk said.
Despite tepid overall loan growth, Schenk said there will be dramatic improvements in new- and used-auto lending.
But credit union lenders will feel the pressure to improve net-interest margins as noninterest income declines. "The pressures put on you will become more dramatic," he warned. "Going forward, the return on assets of 84 basis points in 2012 will be a high watermark.
"Overall, it's good news," Schenk continued. "We're almost there. The future looks brighter now than it did a year ago."

San Diego CU-sponsored Poinsettia Bowl Game Set For Dec. 26

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SAN DIEGO, Calif.  (11/7/13)--A college football bowl game sponsored by San Diego County CU is set to take place the day after Christmas.

The San Diego County CU Poinsettia Bowl, which has been sponsored by San Diego's largest locally owned credit union since it was first held in 2005, will be broadcast both on ESPN television and radio networks.

"We're looking forward to the big game," said San Diego County CU President/CEO Teresa Halleck. "SDCCU's support of this bowl game benefits the entire credit union industry through increased awareness. Credit union customers across the country also are reminded that credit unions contribute to our lives and communities in tangible ways."
Also, the game will feature new teams over the next six years. In a separate announcement, the Mid-American Conference said Wednesday it has entered a partnership with game organizers.

The conference will act as a primary partner in 2017 and 2019, and as a secondary partner for the 2014, 2015, 2016, and 2018, said the Miami University Athletics website. A team from the MAC will play a team from the Mountain West Conference in the 2017 and 2019 seasons.
The Poinsettia Bowl is the only game among the 35 college football bowl games to have a credit union as a title sponsor.

Innovation Happens At the 'Click Moment'

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DENVER (11/7/13)--
Click to view larger image Frans Johansson--author of "The Medici Effect" and "The Click Moment"--was the keynote speaker Tuesday at BAI's 2013 Retail Delivery Conference in Denver.
"When trying to achieve success, we tend to rely on logic," said Frans Johansson, author and CEO of The Medici Group. "But logic doesn't give you a competitive advantage. If you rely on logic, you and all your competitors will end up in the same place."

Johansson--author of "The Medici Effect" and "The Click Moment"--was the keynote speaker Tuesday at BAI's 2013 Retail Delivery Conference in Denver.

Through his study of innovation and transformative ideas, Johansson concludes that "success is often random and serendipitous--it happens at 'the click moment.' If success is so unpredictable, can we really plan for success?"

"The purpose of strategy is not to figure out the right answer," Johansson said. "The purpose of strategy is to convince ourselves to act."

Johansson gave conference attendees, including credit unions and other financial institutions, this to-do list:
  • Borrow an idea from another industry. "All new ideas are combinations of existing ideas," he said.
  • People who change the world try far more ideas than others. "Your job is to bring down the cost of those trials."
  • Make sure you're adequately staffed for innovation.
  • Rethink risk management around innovation.
Click to view larger image As you engage in the process of radical collaboration "you have to be comfortable with being a little uncomfortable," said Matt Krogstad (left), vice president and head of mobile at Bank of the West in Denver, describing how the bank rolled out its full suite of mobile banking services. Others on the panel at the BAI's 2013 Retail Delivery Conference in Denver included Bank of the West executives Gina Wolley, executive vice president of regional banking, and Michael Manowski, senior vice president of solution delivery. (Photos provided by CUNA).
The conference also addressed the use of "radical collateralization" in introducing new products.
As you engage in the process of radical collaboration "you have to be comfortable with being a little uncomfortable," said Matt Krogstad, vice president and head of mobile at Bank of the West in Denver. The bank created a process it calls "radical collaboration" to roll out its full suite of mobile banking services a few years ago.

Its four-step, radical-collaboration process involves:
  1. Maximizing the partnership between technology and the business;
  1. Truly engaging the compliance, legal, and operational-risk teams as your partners in avoiding 'innovation prevention';
  1. Earning and maintaining the support of your executive team; and
  1. Squeezing every ounce of value out of the innovation, which sets the stage for the next round.

Growing Business Loans After the Recession

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DENVER (11/7/13)--
Click to view larger image Charles Wendel, president of Financial Institution Consulting, addressed lending to small businesses Tuesday at the BAI's 2013 Retail Delivery Conference in Denver.
"Bankers are spending too much time at their desks and not enough time out with their small-business accounts," said Charles Wendel, president of Financial Institution Consulting. Wendel spoke Tuesday at the BAI's 2013 Retail Delivery Conference in Denver.

"Following the recession, banks have created a very narrow box within which they'll lend," said Wendel. "That has created an opportunity for other lenders to come in and make those loans."

He gave this five-step approach for making more small-business loans:
  • Click to view larger image Debbie Bianucci, president/CEO of the Bank Administration Institute (BAI), welcomed attendees to the second day of BAI's Retail Delivery Conference in Denver Wednesday. "We are so 'heads-down' on regulatory compliance that we need to lift our heads up and look around for opportunities to be innovative," she said. (Photos provided by CUNA)
    Define your focus through differentiation (but not on price). "Your institution can differentiate itself on its relationships with its clients, its industry specialization, or its product expertise," said Wendel.
  • Organize for success. Can your branches recognize quality loan opportunities? Is branch staff adequately trained? Do branches operate with loan liaison contacts?
  • Develop an efficient infrastructure. Reduce and simplify your products, evaluate all internal processes, outsource when possible, establish a consistent brand.
  • Determine key metrics. Identify internal and market needs. Who needs to be involved in setting metrics? What are the right metrics and who enforces them? When should you change metrics? What does the scorecard look like?
  • Create guiding principles for lending execution. Involve senior management. Agree on consistent job definitions. Implement a rigorous sales-management system. Don't place current staff in business lending positions.
Credit unions are urging Congress to raise their member business lending cap to 27.5% of assets from the current 12.25%. Doing so would inject $13 billion into the economy through small business loans and help create 140,000 jobs, at no cost to the taxpayer, says the Credit Union National Association.

Gladwell At BAI: Innovation Rewards Patience, Not Haste

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DENVER (11/7/13)--
Click to view larger image "The median amount of time required for a product idea to go from conception to widespread adoption is 45 years," said Malcolm Gladwell, staff writer for The New Yorker and author of  "The Tipping Point" and "Blink." He spoke about innovation at the BAI Retail Delivery Conference Wednesday in Denver. (Photo provided by CUNA)
"The key issue with innovation is not haste; it's patience," Malcolm Gladwell told attendees at the BAI's Retail Delivery Conference in Denver on Wednesday. "The innovation race is not to the swift; the innovation race is to the patient," he said.
Gladwell is a staff writer for The New Yorker and author of such best-sellers as "The Tipping Point" and "Blink."  He also was a keynoter at the Credit Union National Association's America's Credit Union Conference in June.
Gladwell traced the history of the rock band Fleetwood Mac as an example of perseverance and success within a very competitive market. "Few people know that the band struggled through 10 years of trial and error before their album "Rumors" sold 19 million copies and remains the fifth or sixth best-selling album of all time," Gladwell said.
"The median amount of time required for a product idea to go from conception to widespread adoption is 45 years," he said. Gladwell believes in the 10,000-hour rule, which he said is like an apprenticeship period where a certain level of mastery is required to be creative and innovative. "The process of producing something significant is a good deal more protracted than we think," he said.
He described two types of innovators: conceptual innovators who have an immediate impact with their radical ideas and experimental innovators who move through a much longer period of trial and error. "Conceptual innovators are relatively rare," Gladwell said. "Your financial institution should promote an environment where experimental innovation can take place," he said.

MY CU Services Issues Transaction Challenge: Free Bill Pay For Year

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MIDDLETOWN, Pa. (11/7/13)--MY CU Services, a credit union service organization of Mid-Atlantic Corporate FCU, Middletown, Pa., is giving away free bill payment for a year to the credit union that grows its electronic bill payment transactions by the largest percentage from 2013 to 2014. 
The winner of The Great Transaction Challenge will receive free bill payment up to $5,000   during 2015.
"In today's world, consumers expect technology solutions from their financial institutions, which includes electronic bill payment," said Jaime Agostino, MY CU Services marketing manager. "This competition is designed to make sure members and potential members know that their credit union is a place where current technology meets great service."
The contest challenges credit unions to highlight the different features of MY CU Services' bill payment system, such as person-to-person (P2P) payments, eBills, donations and gift checks to help grow transaction volume.  Participating credit unions have access to a resource site containing marketing templates to help promote electronic bill payment to members.
All of MY CU Services' clients taking part in the electronic bill payment program since Oct. 1, 2012, are eligible to participate.

Minnesota CUs Provide Financial Counseling, Education To Members

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ST. PAUL, Minn. (11/7/13)--Credit unions in Minnesota formed a statewide partnership with a charity's financial counseling arm to offer additional financial advice and education.
The Minnesota Credit Union Network announced the deal with Lutheran Social Service on Tuesday, hailing its potential benefit to the state's credit union members.
"Credit unions are flocking to provide counseling services to their members because they understand the needs of today's consumers," said MnCUN President/CEO Mark D. Cummins. "Through counseling and personal finance education, credit unions are committed to improving the lives of their members."
The LSS "Financial Choice" program offers debt management advice over the phone and in person. Its certified financial and housing counselors specialize in credit card debt, student loan debt and foreclosure prevention.
LSS services are currently offered at 15 credit unions throughout the state:
  • Anoka Hennepin CU, Coon Rapids;
  • City & County CU, St. Paul;
  • Cook Area CU, Cook;
  • Embarrass Vermillion FCU, Aurora;
  • Hermantown FCU, Hermantown;
  • Hiway FCU, St. Paul;
  • Mid-Minnesota FCU, Baxter;
  • Northern Communities CU, Duluth;
  • NSP St. Paul CU, St. Paul;
  • Richfield Bloomington CU, Richfield;
  • SouthPoint FCU, Sleepy Eye;
  • TopLine FCU, Maple Grove;
  • TruStar FCU, International Falls;
  • United Educators CU, Apple Valley; and
  • US FCU, Burnsville.

In Auto Lending, Get In Front Of Members Early And Often

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PHOENIX (11/7/13)--People consider buying a vehicle and borrowing money to do so as one event, making it crucial for credit unions to engage members early and often in the car-buying process.
Click to view larger image Loan preapprovals are key for both borrowers and dealers, Bob Child, chief of staff at  lending solutions provider CU Direct Corp., told attendees at CUNA Lending Council's 19th annual conference in Phoenix this week.  He also noted it is important to have good working relationships with auto dealers. (Photo provided by CUNA)
So says Bob Child, chief of staff at CU Direct Corp., citing a study the company conducted earlier this year that examined consumers' most recent car-buying experiences. He addressed the 19th annual CUNA Lending Council Conference in Phoenix.
"We need to get to consumers early and have better relationships with auto dealers to be successful in influencing their loan decisions," Child said.
This will require providing information that helps consumers as they shop for vehicles, and making it easy to get loans on the spot.
Preapprovals are the key, for both the buyer's and dealer's convenience, Child said.
He noted auto sales growth rates have returned to normal: 9% for new vehicles and 4% for used vehicles in 2013.
And while some industry experts say auto sales growth will fall to 4% for new vehicles and 1% for used vehicles, he cited a dealer group that believes auto sales growth in 2014 will mirror this year's growth.
"We're excited about that," Child said, adding the nation's aging fleet of vehicles is fueling sales growth. The average age of vehicles on the road is 10.9 years, he said. "There are a lot of car buyers in this group," he says.
Other factors affecting auto lending in the coming months:
  • More rationality in lending. Approval rates for subprime loans has dropped substantially, "which bodes well for the industry," Child said.
  • Longer loan terms, driven by rising car prices. The average purchase price for vehicles financed through CU Direct is $30,500. "Even with low rates, the payment for that amount is still high," he says. That will make auto loan terms of 72 months and longer more common.
  • Higher rates for subprime borrowers to compensate for thin margins on loans to prime borrowers.