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NEW: CUs Score Victory In South Dakota

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VERMILLION, S.D.  (12/4/13, UPDATED: 11 A.M. CT)-- South Dakota credit unions scored another victory as the Clay County Commission this morning voted unanimously (5-0) to indefinitely table the South Dakota Bankers Association's "Equalization in Taxation" resolution. 
 
Also, late Monday afternoon, South Dakota banks asked the Vermillion City Commission to consider its "Equalization in Taxation" resolution proposal. Following debate and a response from the Credit Union Association of Dakotas (CUAD) and credit union advocates, the city commission took no action on the request.  Official action could come at a later date.  Representing the credit unions were Janet Mount, president/CEO Vermillion FCU and Amy Klienschmit, CUAD director of compliance.   
 
South Dakota banks continue their push today with a planned presentation before the Campbell County Commissioners in Mount, S.D.
 
Over the last several months, a select group of South Dakota banks, has been promoting a state-wide effort to implore local lawmakers to impose taxes (local, franchises, or federal) on not-for-profit credit unions. Banks' core argument is that credit unions have grown "beyond their intended purposes in both size and scope," and changing the credit union tax status will solve local, state, and federal budget shortfalls. 
 
The objective with the resolution proposal is to gain support from local taxing authorities to echo their calls for repeal of the exemption. More importantly state/federal policymakers would be receptive to the voices of local governments, CUAD said.
 
The South Dakota Bankers Association on Nov. 25 presented a resolution proposal to the Yankton (S.D.) City Commission in support of taxing federal credit unions and farm credit system institutions. Credit union advocates attended the meeting and successfully defended against the banks' claims, the Credit Union Association of the Dakotas (CUAD) reported (News Now Nov. 27). The city commission tabled the resolution and will consider it at a later date.
 
On a state-wide conference call for South Dakota credit union leaders last week, CUAD requested its membership to be vigilant in scanning local school board, city and county commission agendas for more bank attempts to their "taxation" resolution proposals and requests.

CUNA Monthly Estimate Show Loan, Savings Increases

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MADISON, Wis. (12/3/13)--Growth was the word of the month in October as credit union loans outstanding and savings balances both increased, according to CUNA's monthly sample of credit unions. Credit unions reported strong loan increases in October, with balances rising 0.6%, compared to 0.5% in October 2012. Adjustable-rate, first-mortgage loan balances posted the biggest increase, rising 4.5%, and are up 8.3% over the same period last year. New and used auto loan balances also grew rapidly in October, increasing 1.2% and 0.9%, respectively.  New auto loan balances posted the fastest year-over-year loan growth, rising 12%, followed closely by a 10.8% increase in used auto loans. 
 
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"Both supply and demand factors are driving the accelerated pace of lending: credit unions are lowering interest rates and loosening credit standards to increase the supply of loanable funds while stronger consumers' balance sheets are increasing the demand for loanable funds," Steve Rick, CUNA senior economist, said Monday. "Rapidly rising home and stock prices are creating what economists call a strong 'wealth effect,' whereby consumers feel wealthier and therefore borrow and spend more out of current income."
 
Credit union savings balances increased 0.3% to $929 billion in October, compared to a 0.6% decrease in September. Share drafts increased 1.8% while regular shares and one-year certificates grew 0.6% and 0.5%, respectively. On the decline were money market accounts (-0.4%) and individual retirement accounts (-0.6%).
 
Credit union assets rose 5.4% during the period ending October 2013, a decrease from the 6.2% pace set for all of 2012. "Weaker deposit growth of 4.8% was the main factor slowing balance sheet growth, while borrowing, which typically makes up only 3.1% of a credit union balance sheet, grew 24% over the last 12 months," Rick said. "Only the asset side of the balance sheet, credit union loan balances rose 6.8% over the last 12 months, the fastest pace since 2008." 
 
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Regarding asset quality, credit unions' 60-day-plus delinquency rate has remained at 1% for the past eight months. "A 7.6% fall in the dollar amount of delinquent loans combined with a 6.8% rise in loans outstanding created the significant drop in the delinquency ratio," Rick said. "The delinquency rate should fall to 0.8% in 2014, back to the level reported before the onset of the Great Recession."
 
With loan growth outpacing savings growth during October, credit unions' loan-to-savings ratio increased to 70.2% in October from 70% in September. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--is 16.9%.
 
Total credit union membership grew 0.2% during October to 98.8 million.
 
The movement's overall capital-to-asset ratio remained at 10.4%.  The total dollar amount of capital is $113 billion.

National Credit Union Administration data released Monday showed similarly positive results. (See NCUA: CU Loans, Members, Net Worth All Up in 2013 3Q)

Majority of Maine CUs Help Members with Winter Energy Loans

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PORTLAND, Maine (12/3/13)--The arrival of cold weather has brought Maine credit unions another opportunity to serve the needs of their members. A survey of the state's 61 credit unions conducted by the Maine Credit Union League found that more than two-thirds of the state's credit unions are offering low- or no-interest fuel loans to help members meet the high costs of heating their homes during the winter months.
 
More than half of the state's credit unions offering fuel loans lend on average $2,000 to $4,000 per borrower at an average rate of 3.9% according to the survey (Weekly Update Nov. 29).
 
"The cost of fuel is high, and winter and the heating season in long in Maine," John Paradise, the Maine Credit Union League's assistant vice president governmental and public affairs, told News Now. "It can run anywhere from the beginning or the end of October to the end of May. During the last five years fuel prices have also increased, which creates even more of a burden for consumers."
 
Sebasticook Valley FCU, Pittsfield, is offering 12-month fuel loans at 0%. "We really offer it as a service to our members," Jim Lemieux, president/CEO of the $78 million asset credit union, told News Now. "Members have told us how much they appreciate it. It really makes a difference in spreading the costs out over 12 months."
 
Sebasticook Valley FCU has been offering the loans for about seven years, Lemieux said. He expects the credit union to make more than 100 loans this year, as it did last year.
 
"Maine's credit unions continue to work with consumers to offer creative and low-cost ways to help people stay warm during challenging times," said John Murphy, Maine Credit Union League president.

Chapter Promotes Public Deposits Bill to Ohio Legislators

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COLUMBUS, Ohio (12/3/13)-Ohio credit union leaders continue to make their case for a state bill that would enable credit unions to serve as depositories for local and state funds.

On Nov. 18, the Miami Valley Chapter of the Ohio Credit Union League (OCUL) met with seven members of the Ohio General Assembly to discuss the Community Access and Local Government Choice Act (House Bill 221). Committee Chairman Terry Blair (R-Washington Township) attended the lunch in Dayton that included OCUL staff and representatives from local government agencies (eLumination Newsletter Nov. 26).

The next day, the Ohio House of Representatives' State and Local Government Committee held the first hearing on the bill, with testimony provided by co-sponsors Reps. Louis Terhar (R-Cincinnati) and Tracy Maxwell Heard (D-Columbus).

The bill supports credit unions' eligibility to participate in linked-deposit programs such as consumer-based savings (SaveNOW), small business loans (GrowNOW) and agricultural growth (Ag-Link).

House Bill 221 provides a choice for local governments and allows three million Ohio residents access to important deposit programs, said Patrick Harris, director of public affairs for the Ohio league.

For some rural Ohio counties, credit unions are the only financial institutions in their area, Harris told News Now. These counties want to deposit their funds in credit unions, he added.

The league is preparing proponent testimony, and Harris told News Now that "we have a better shot than ever to get it out of committee and out to the House floor."

News Now Top 10 Headlines for Nov.

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MADISON (12/3/13)--An article announcing that the National Credit Union Administration will not charge a Temporary Corporate Credit Union Stabilization Fund assessment in 2014 was the most-read News Now story in November. The corporate assessment was a hot topic much of the month, and the Credit Union National Association even produced an "Inside Exchange" video segment on the impact of the NCUA's decision to hold the assessment range at zero for 2014 (See resource link).
 
The Top 10 articles for the month:
 
10. NCUA Bans Four From CU Work
 
ALEXANDRIA, Va. (11/1/13)--The National Credit Union Administration has banned four former credit union employees from participating in the affairs of any federally insured financial institution.
 
9. Comprehensive CUNA Letter Urges NCUA To Cut Burdens

WASHINGTON (11/19/13)--The Credit Union National Association is urging the National Credit Union Administration to do all it can to cut credit union regulatory burdens and build a regulatory environment and examination culture that enhances the ability of credit unions to serve their members. 
 
8. NCUA 2014 Budget Contains 6.7% Increase

ALEXANDRIA, Va. (11/21/13)--The National Credit Union Administration today approved a 2014 budget of $268.2 million. This spending plan represents an increase of 6.7% from the 2013 NCUA budget and is the sixth straight year that the agency's planned expenditures have grown.
 
7. NCUA: TCCUSF Estimates Down $2.3B

WASHINGTON (11/25/13)--The upper end of remaining Temporary Corporate Credit Union Stabilization Fund assessment estimates declined by $2.3 billion between December 2012 and July 2013, thanks to a $1.6 billion decrease in expected costs and a $700 million assessment that was collected in October 2013, the National Credit Union Administration announced Friday.
 
6. Gentile Named President/CEO of the Massachusetts CU League

MARLBOROUGH, Mass. (11/22/13)--The Massachusetts Credit Union League (MCUL) Board of Directors has named Paul Gentile as President/CEO effective Jan. 6th.
 
5. NCUA Approves Final CUSO Rule

ALEXANDRIA, Va. (11/21/13)--The National Credit Union Administration's final rule addressing credit union service organization (CUSO) supervision, adopted today, is revised from the agency's proposal but concerns remain about the authority of the agency to exercise direct authority over CUSOs.
 
4. CUs Told What Examiners Look For On Risk Management

ALEXANDRIA, Va. (11/13/13/)--The National Credit Union Administration took action Tuesday to clarify its supervisory expectations regarding credit unions' risk management systems.
 
3. CUNA Sets Record Straight On CU vs. Bank Exec Compensation

WASHINGTON (11/18/13)--The Credit National Association is setting the record straight on the issue of credit union CEO vs. bank CEO compensation after the <em> American Banker</em> cited a statistic that is "misleading," said CUNA.
 
2. JP Morgan To Pay $13B Settlement

ALEXANDRIA, Va. (11/19/13)--The National Credit Union Administration has added another settlement to its victory pile related to lawsuits to regain costs associated with losses to the corporate credit unions brought by residential mortgage-backed securities of alleged questionable quality. The U.S. Department of Justice has just announced that JP Morgan Securities would pay $13 billion in total.
 
1. No TCCUSF Assessment In 2014

WASHINGTON (11/21/13)--The National Credit Union Administration will not charge a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment in 2014. The National Credit Union Share Insurance Fund assessment for 2014 will be between zero and five basis points, the agency added.
 

Mich. CUs Continue to Testify on Card-Skimming Bill

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LANSING, Mich. (12/3/13)--Representatives from Michigan credit unions and the Michigan Credit Union League testified before the state House Criminal Justice Committee regarding a package of five bills related to ATM card skimming last week (Michigan Monitor Dec. 2).
 
Credit union representatives who testified included:
  • Steve Dudene, compliance and regulatory affairs manager, Credit Union ONE, Ferndale;
  • Michelle Matson, electronic services manager, Genisys CU, Auburn Hills; and
  • Ashley Ligon, grassroots coordinator, Michigan Credit Union League.
Financial institutions have found that skimming devices are readily available for sale and take a minimal amount of time to install on ATMs, gas pumps and more. Within minutes, criminals can install a camera or other card-reading device and PIN-capturing device onto an ATM or other financial transaction device, and collect consumer personal information.

Currently, there are conflicting penalty provisions in state law that must be resolved, and jurisdictional adjustments are needed to facilitate easier prosecution, said the league.

Minn. League President Cummins Touts CU Difference In Business Pub

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MINNEAPOLIS (12/3/13)-In a publication filled with ideas from the movers and shakers in the Twin Cities area, Minnesota Credit Union League President/CEO Mark Cummins had the chance to reinforce the credit union difference.

Cummins challenged the misperception that credit unions are less sophisticated than others in the financial services industry. A credit union may not have a national bricks-and-mortar presence, as does an entity such as Wells Fargo, he said, but credit unions have the reach of a nationwide, surcharge-free ATM network and the unique services provided by shared branching (Twin Cities Business Nov. 22).

Additionally, credit unions have deposit insurance protection for members that is equivalent to the banks and the Federal Deposit Insurance Corporation. "We're very safe," he told the magazine. "We're conservatively managed, and we take good care of people."

Cummins called the "unfair tax advantage" claims, bandied about by banks, "inter-institutional propaganda," noting that the federal income tax exemption is the only one credit unions have and it's based on the not-for-profit, cooperative structure of credit unions.

He concurred with the interviewer's comment that 2012 was a "pivotal year" for credit union growth. Cummins said that consumers are choosing credit unions because they align with the values Americans are seeking. It's a fundamentally different way of treating people-you maximize the benefit to your membership instead of maximizing the benefit to the stockholder, he said.

According to the league, Minnesota credit union membership grew by 12,000 to 1,591,000 through the second quarter of 2013, which is a 0.8% growth rate.

The special Nov. 22 edition of Twin Cities Business included one-on-one interviews with 28 of the area's business and community leaders.

CU System Briefs (12/03/2013)

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  • MADISON, Wis. (12/3/13)--Effective Monday, Michelle Willits is director of online editorial for News Now, CUNA's online daily newsletter. She returns to News Now, where she began her CUNA career as a web associate editor in 2003. Her other CUNA experience includes advertising supervisor for Credit Union Magazine and, most recently, manager of new alliances for CUNA Strategic Services. Willits also supports CUNA's Creating Member Loyalty training for internal staff and was selected to be a graduate assistant for CUNA Management School in 2012. Before joining CUNA, she worked at newspapers in Illinois, Colorado, and Nevada. Willits earned a bachelor's degree in journalism from the University of Montana, Missoula. She reports to Lisa McCue, vice president of editorial communications, who is based in Washington, D.C.. Willits will succeed longtime director Leigh Gregg, who will retire in January.
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  • HARRISBURG, Pa. (12/3/13)--A Harrisburg, Pa. man was indicted last month on 399 charges of theft for allegedly defrauding Pennsylvania State Employees CU of more than $22,000 (Pennlive.com Nov. 21). Masharad Tunis Carter, 24, is accused of using the photo-sharing website Instagram to meet PESCU members and offer them money in exchange for their debit cards and account access. Dauphin County detectives and the district attorney's office alleged that Carter deposited more than $62,000 in stolen and fraudulent checks into 14 accounts, and subsequently withdrew $22,646 from them at ATM machines in Rite-Aids, Wal-Marts, Giant grocery stores and PSECU branches and at locations in New Jersey between December 2012 and November 2013. Police claim to have video evidence of Carter depositing the checks into the accounts. Some PSECU members whose accounts were involved told law enforcement officials that their cards were stolen, but couldn't explain how Carter allegedly knew their PINs. Police said that others admitted to meeting with Carter and giving him their cards in exchange for money--Yasim Khalif Carter, 22, faces 34 felony theft charges stemming from accusations that he defrauded PESCU of more than $800. PSECU officials and police in Harrisburg and Lower Paxton and Susquehanna townships provided information to Dauphin County police and prosecutors in the investigation that led to Carter's arrest and indictment. PSECU, headquartered in Harrisburg, has over $4 billion in assets …
  • SAN ANTONIO, Texas (12/3/13)--The charity arm of Security Service FCU announced last week that it gave $5,000 to Consumer Credit Counseling Services of Greater San Antonio. The Security Service Charitable Foundation said the funds will be used to help pay for financial education classes for low and moderate income families--to help them implement budgets, manage debt and resolve other financial problems. SSFCU President Jim Laffoon (right) and Letha Harrelson, manager of business development (left) presented the check to Gloria Delgado, President/CEO of CCCSSA (center). SSFCU, headquartered in San Antonio, Texas, has about $7 billion in assets …