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CU System briefs (12/13/2012)

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  • SAN ANTONIO (12/14/12)--San Antonio-based Security Service FCU has named Jim Laffoon as president (LoneStar Leaguer Dec. 11).  Laffoon will responsible for the credit union's day-to-day operations and provide leadership and strategic direction to the $6.7 billion credit union's more than 1,600 employees. Laffoon began his career at SSFCU in 1989, serving as primary strategist, corporate planner, technologist and operations manager. He was named executive vice president and chief operating officer in 2002. He previously served as a senior consultant at Arthur Anderson and Co. David E. Reynolds will continue to serve in the role of CEO. Reynolds has led the credit union since 1997 and will continue to represent the credit union in industry, trade and community matters as well as member events …
  • PITTSBURGH and MECHANICSBURG, Pa. (12/14/12)--AmeriChoice FCU, Mechanicsburg, Pa., is the newest member of the Federal Home Loan Bank (FHLB)  of Pittsburgh (India Insurance News Dec. 11). AmeriChoice, a $165.8 million asset credit union, becomes the 27th credit union member at the FHLBank Pittsburgh, a privately funded cooperative of commercial banks, thrifts, credit unions and insurance companies in Delaware, Pennsylvania and West Virginia.  The FHLB will provide low-cost loans for community lending, general asset/liability management and financing. "As a fellow cooperative, FHLBank is aware of the needs of all our credit union members who each day work diligently to provide value to their own community membership," said Winthrop Watson, president/CEO of FHLBank Pittsburgh …

NCUFs national financial capability report now online

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MADISON, Wis. and WASHINGTON (12/14/12)--The National Credit Union Foundation (NCUF) has made available a free financial capability report and a resource guide online. 

NCUF believes that credit unions do outstanding work around building the financial capability of American families, but that they don't do a great job of telling that story. For that reason, NCUF compiled a financial capability report that outlines the financial education and capability building efforts by the U.S. credit union system, said Lois Kitsch, NCUF national program manager.

The report includes an executive summary, 12 credit union system case studies, key findings and one page from every state sharing its financial education efforts. The report, along with a companion resource guide, is available for free download from the REAL Solutions Impact Center. The site also includes a one-sheet success story from each state. 

The report, "Credit Unions: Focused on Financial Capability Across the Nation," is the result of an almost year-long data collection effort by NCUF and state credit union leagues.

NCUF and REAL Solutions conducted the national study of credit-union-provided member and consumer financial education and counseling. The data will be useful to state leagues/associations and the broader credit union industry because it quantifies the extent to which credit unions are providing opportunities for members/consumers to advance their financial knowledge and decision-making skills, said NCUF.

The report describes 10 financial education/counseling interventions offered to members/consumers by credit unions. It provides cumulative data about member use of and access to credit-union provided financial education/counseling products, tools and courses, and it reveals probable keys to program success. National data are supplemented by case studies of credit unions and state leagues that illustrate each type of educational intervention.

The accompanying resource guide assists credit unions and others with accessing resources, information and curriculum already created to help them offer even more financial literacy programs. Each method of financial counseling/education provides examples, additional resources and information, and tips to help credit unions expand their current education programs or introduce new ones.

To view the report and resource guide, use the links. 

Early next year, NCUF will begin working on its 2012 report, Kitsch told News Now.

Trend CUs name changes slowing

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MADISON, Wis. (12/14/12)--U.S. credit union name changes have slowed down this year, according to The Financial Brand, an online industry trade publication focused on branding, marketing, advertising, promotions and branch design in retail banking, including credit unions.

In the past seven years, there have been 234 credit union name changes, said the company, which studied every name change in the credit union industry since 2006. That represents 3.27% of all credit unions, which collectively hold 5.52% of all credit union assets, The Financial Brand said.

This year saw the fewest credit union name changes in the past seven years--24, the company said. The high was 42 in 2009 and 2011.

One trend is that smaller credit unions are changing their names. In 2006, about 79% of all credit unions changing their monikers had assets in excess of $100 million. However, by 2012, that percentage had plunged to 33%, with the other 67% having assets under $100 million, said The Financial Brand.

Other trends: nine percent of new names included the word "First" while 6.8% added the word "Financial."

Although alphanumeric constructions are rare--Plus 4, Med 5, Coast 360 and Latitude 32 being the most unique--48 credit unions nationwide (20.5%) that changed their name since 2006 have included a geographic emphasis or reference in their new name, the company said.    

To read the article, use the link.

CUs call center collaboration to cut costs improve service

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MADISON, Wis. (12/14/12)--Shared Service Solutions (S3), a groundbreaking collaboration among three credit unions, has initiated a process of combining each entity's call center operations into a single point of contact, according to the Credit Union National Association (CUNA). 

Bellco CU in Greenwood Village, Colo.; Bethpage FCU in Long Island, N.Y.; and State Employees CU in Linthicum, Md., are the collaborators.

Plans call for the S3 collaboration to transition the partners to joint operations for processing residential mortgages, consumer loans, credit and debit cards and deposits. The initiative is expected to deliver savings of millions of dollars annually and to improve the membership's overall experience.

The credit unions have a long history of cooperation and collaboration that is paying big dividends for members, CUNA said. Their Open Technology Solutions (OTS) alliance--formed in 2003--created value for the partners by adding scale and efficiency to the process of providing information services. By sharing the expense of operating computer systems and other technologies, the partners increased skill sets and service and reduced costs.

The need to reduce back-office redundancy through more cooperation and collaboration is one of the top strategic issues facing credit unions, CUNA said. Credit union professionals repeatedly tell CUNA this but, when asked, also say they don't cooperate or collaborate more because they aren't aware of successful efforts. With this in mind, CUNA recently created a repository to collect examples of successful efforts and to find ways to encourage credit unions, leagues and credit union service organizations (CUSOs) to share their stories. 

The site presents users with the opportunity to join a collaboration listserv, to share information about initiatives and to read about examples of interesting cooperative efforts that seem to make a difference. It also includes links to additional resources such as Credit Union Magazine articles and several Filene Research Institute studies. CUNA's goal is for the website to be used by credit unions of all sizes--not just small credit unions.  

To visit the site, use the link. 

"Visitors to the site also can sign up for the listserv and suggest a resource or add an anecdote," said Mike Schenk, CUNA vice president of economics and statistics. "They also can use the provided link to add an example (or two or three) of an interesting collaboration initiative in their state. Finally, and most important, visitors should share this information with all credit unions in their state--large and small.  

"The benefits of cross-pollination and the potential to replicate successful initiatives can be great,' Schenk added. "The site is clearly not 'the' solution to the collaboration issue, but CUNA hopes visitors will that it is one small step in the right direction."

Rekindling SEG relationships explored in CUNA council paper

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MADISON (12/14/12)--A new whitepaper from the CUNA Marketing & Business Development Council discusses how credit unions can rekindle select-employee group (SEG) relationships in  a marketing environment that has shifted to community charters in recent years.

"The business development pendulum is coming back after a swing to community charters," said the paper, titled "Developing Strategies for SEG-Based Credit Unions." "Increasingly, credit unions large and small, rural and urban, see and act on the promise of increased business through SEG-based efforts."

Trends examined in the paper include:

  • Business development at the branch level. As the business development model evolves, credit unions face the challenge of how to best involve branch managers in the process. In more and more credit unions, business development is performed by the branch manager.
  • Business development as a strategic function. To optimize success, many credit unions work to integrate business development as a core strategic function on the same level as operations, lending and marketing.
  • Business development for executives. Credit unions should make business development skills an important part of executive team job requirements and deploy them as community-brand ambassadors, the paper said.
  • Business development to business services. Credit unions should try to provide to their SEGs a comprehensive array of business products and services, including corporate checking accounts, loans and credit cards, the paper said.
  • Leveraging business development for small businesses. As credit unions re-establish old SEG relationships and develop new ones, many seek ways to connect with small businesses as part of the plan. A comprehensive business-development plan will include a complete suite of services for small businesses.
To download the white paper, use the link.

CUAid update Donations still needed for Sandy relief

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MADISON, Wis. (12/14/12)--The National Credit Union Foundation (NCUF) is seeking additional support from the credit union community to continue to assist credit union people affected by Hurricane Sandy.

Since Oct. 31, NCUF has raised and distributed more than $260,000 to credit union employees, volunteers and members, but there still are applications for assistance outstanding. 

This week, the New Jersey Credit Union League (NJCUL) began to deliver CUAid grant checks to credit union people across the state. Angel Santos, left, NJCUL business consultant, and  Ann South, right, president/CEO of Novartis FCU, East Hanover, and New Jersey Credit Union Foundation chairman, presents a check to Novartis FCU Member Service Representative Althea Rankins, whose home was flooded during Hurricane Sandy.

"The response from the credit union system thus far has been absolutely outstanding," said Tom Candell, NCUF deputy executive director/chief operations officer/chief financial officer. "It's not typical for NCUF to continue to fundraise this long after disaster strikes, but it's also rare for us to have so many credit union people that can still benefit from assistance. We'd like to help as many people as possible get back on their feet, so any and all additional support is appreciated."

To date, $121,000 in CUAid funds has been distributed in aid to 94 credit union employees, volunteers and members in New York. Another $141,000 has been disbursed to 161 credit union people in New Jersey.

The New Jersey Credit Union League (NJCUL) has begun to deliver CUAid grant checks to credit union credit unions across the state.

Paul Gentile, left, New Jersey Credit Union League president/CEO, offers a check to Tom O'Shea, president/CEO Aspire FCU, Clark, N.J., to present to a member. (Photos provided by News Jersey Credit Union League)
Angel Santos, NJCUL business consultant, and Ann South, president/CEO of Novartis FCU, East Hanover, and New Jersey Credit Union Foundation chairman, presented Althea Rankins, member service Representative at Novartis FCU, a check for $1,500 from CUAid.

Rankins' home was flooded during Hurricane Sandy. The Novartis FCU board of directors also presented Rankins with a $500 gift card from Home Depot.

NJCUL President/CEO Paul Gentile presented a $1,500 check to Tom O'Shea, president/CEO of Aspire FCU, Clark, N.J., to present to an Aspire member.

Santos and Ron Behrens, president/CEO of Raritan Bay FCU, Sayreville, N.J., presented a $1,500 check to Shannon Gonzalez, the credit union's collection coordinator. Gonzalez lost her home during the hurricane.

Santos along with Bryan McMillen, board chair, and Jonathan Kaufman, president/CEO at IFF Employees FCU, Hazlet, N.J., presented $1,500 checks to Beverly Weston, senior teller, and Laura Larsen, operations manager. Both Weston and Larsen lost their homes during the storm.

NCUA seeks expedited hearing on St Paul Croatian FCU payments

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CLEVELAND (12/14/12)--The National Credit Union Administration (NCUA)--seeking to receive restitution of funds lost in the collapse of St. Paul Croatian FCU from Cleveland businessman A. Eddy Zai--has asked a federal court in Ohio to grant a motion for prejudgment attachment or schedule an expedited hearing on that motion to avoid impeding its recovery of the losses.

Zai pleaded guilty Nov. 5 to bank fraud that contributed to one of the largest credit union failures in U.S. history. He is to be sentenced in the U.S. District Court in Cleveland on Feb. 5.  

He owes $21.895 million, according to an affidavit filed May 21 by one of the individuals working on the liquidation of the credit union.  As part of his plea bargain, he is to forfeit $16.7 million, according to the preliminary order of forfeiture filed Nov. 30. It is the largest restitution in Northeast Ohio's history ( Nov. 5).

NCUA, the credit union's liquidating agent, noted that it does not have an executed settlement agreement with defendants Zai, Tina Zai, Ted Vanelli and Cleveland Group of Companies defined in a prejudgment document as holding a promissory note outlining the money flow for any restitution.

NCUA is concerned the parties "may take certain actions with respect to the note that could hinder or delay the liquidating agent or otherwise impede its ability to recover the losses," it said in its motion, filed Dec. 10 with the U.S. District Court Northern District of Ohio Eastern Division in Cleveland.

A prejudgment attachment would place the note under the control of the court and require Cleveland International Fund Ltd. (CIF), whose president is Zai, to make all required payments to the court in accordance with a settlement agreement executed between NCUA, CIF and International Regional Center in late July.

CIF had recently filed a motion to vacate the orders, and NCUA said it is concerned the note remains under the control of the Cleveland Group LTD or the Zais.

Also on Dec. 10, the U.S. Attorney's Office (USAO) withdrew its seizure warrants in the case as part of an agreement with CIF, IRC and other companies affiliated with Zai.  The agreement specifies forfeiture or restitution for the collapse--up to $16.7 million-- from CIF, Cleveland International Fund-Flats Ltd., CIF-Hospital; Flats East Hotel LLC, Flats East Office LLC, Flats East Retail LLC and University Hospitals Health System Inc.

The collapse of St. Paul Croatian FCU cost the National Credit Union Share Insurance Fund about $170 million (News Now Nov. 8). 

Zai admitted to conspiring with others, including Anthony Raguz, former CEO of the defunct credit union, to submit false loan documents. Raguz pleaded guilty to issuing more than 1,000 fraudulent loans totaling $70 million to about 300 accountholders. He received kickbacks, gifts, and bribes totaling more than $500,000.  Raguz was sentenced in November to 14 years in prison and ordered to pay $71.5 million in restitution.

Nineteen people were charged in the scheme. Alleged ringleader Koljo Nikolovski of Eastlake and Skopje, Macedonia, was sentenced in May to 18 years in prison for his role in the fraud.

CMG Watterson sign agreement on RMBS due diligence documents

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SEATTLE (12/14/12)--CUNA Mutual Group and Bellevue, Wash.-based Watterson Prime LLC have reached an agreement on CUNA Mutual's motion to compel Watterson to produce documents related to residential mortgage backed securities (RMBS) sold to the insurance company by RBS Securities before the nation's financial crisis hit.

The companies filed a notice Wednesday in the U.S. District Court for the Western District of Washington (Seattle) of voluntary dismissal, without prejudice to the defendant, of the motion to compel the documents.

The agreement came as the federal court in Seattle was preparing a proposed rulingfiled Nov. 30 that would have ordered Watterson Prime to turn over due diligence documents subpoenaed by CUNA Mutual for its lawsuit against RBS Securities.

The company's Sept. 17 subpoena had sought documents related to 15 RMBS at the center of CUNA Mutual's $72 million lawsuit against RBS, specifically nine types of documents related to the RMBS' underwriting, appraisal of, due diligence and more..

CUNA Mutual filed its lawsuit against RBS in a U.S. District Court in the Western District of Wisconsin (Madison) on Jan. 17. It seeks a rescission of its purchases, which it bought in 10 separate offerings. The purchases were based on representations made by RBS about the credit quality of the mortgage pools that collateralize the securities, CUNA Mutual said in its complaint. 

CUNA Mutual maintains that RBS falsely represented the products it sold between 2004 and 2007.

A key issue in the Wisconsin case is whether RBS engaged in proper due diligence regarding the mortgage loans underlying the certificates it sold, CUNA Mutual said in its motion to compel Watterson Prime to produce the documents. RBS identified several third party companies--such as Watterson Prime, the Clayton Group, and the Bohan Group--to perform due diligence review in the form of loan-level re-underwriting, it said.