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KansasTreasure State Corporates start year with merger

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BILLINGS, Mont. (1/3/12)--On Sunday, the Helena, Mont.-based Treasurer State Corporate CU started the year out by officially merging into the Wichita, Kan.-based Kansas Corporate CU. Credit unions in Eastern Montana told a local newspaper why they supported the merger.

Most Montana credit unions believe a merger will benefit them and increase their reach, while members will see no difference in the services provided, said (Dec. 28).  Of Treasure State's members, 100% voted for the merger. 

Kevin Mayer, president/CEO of Sidney, Mont.-based Richland FCU and a board member of Treasure State, noted the credit unions believed the Kansas business plan and its well-capitalized position add no real risk to member credit unions. Also, Montana will have representation on the Kansas Corporate board.

Kansas Corporate can provide all the services the Montana corporate offered plus "enhanced services, investment services, sound asset liability, and lines of credit. Our regulator requires us to have supplementary lines of credit and Kansas is able to do that for us," Mayer told the newspaper.  He cited three reasons why Richland chose to go with the Kansas Corporate: line of credit, asset liability assistance, and investment services.

At Glendive-based Glendive BN FCU, CEO Jenifer Knutson told the newspaper her credit union will gain three times the borrowing power and the merger transition will be seamless. Also in Glendive, Cindy Scheetz, CEO/manager of the $17 million asset Badlands FCU, noted her credit union has seen a surge in members, and although her members won't see a difference in services, the Kansas Corporate will provide an engine for the needs generated by the increasing capacity.

In eastern Montana, all the credit unions except $930,000 asset Froid (Mont.) FCU elected to go with the Kansas Corporate, said the article.  Instead of joining another large corporate credit union,  said Froid's manager, Elaine Clark,  its board chose to feed into a smaller Montana credit union. She told the newspaper that Kansas' mandatory agreements don't allow the credit union to reclaim shares if its status changes.

Audit your bank tops ITIMEsI New Years Resolutions

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NEW YORK (1/3/12)--Bank Transfer Day made a lot of year-end lists for 2011 and has helped insert credit unions into just about any financial conversation. What happened preceding Nov. 5 is also transferring to some New Year's Resolutions for 2012. Case in point: "Audit your bank" is the No. 1 New Year's Resolution touted by TIME's Moneyland column.

The Dec. 30 column, entitled "Banking New Year's Resolutions," notes that 2011 was a tumultuous one for banking, with nods to Americans' anger against the financial industry and widespread outrage against fees that culminated in Bank Transfer Day. 

"But whether your checking account is at a big national bank, small community bank, online bank or credit union, 2012 is a chance to begin afresh," wrote Martha C. White. For better banking, she advised five tips.

The first one:  Audit your bank. "The silver lining of the debit fee debacle is that it made many of us more aware of the fees our banks charge us and of what we're getting in return. Start the new year by tallying up the fees you're being charged for things like monthly account maintenance, overdraft protection transfers and out-of-network ATM use," she advised, noting that "If the math doesn't add up, consider another institution."

Credit unions also figured in tip No. 3: Set up text alerts.  Many credit unions and banks can send an automated text message when the consumer's balance drops below a certain amount or if a transaction seems too high and could be a fraudulent transaction.

Her other tips included: Using cash where possible, finding a better and safer personal identification number (PIN) to thwart criminals, and building an emergency fund or saving for a big purchase by making saving automatic.

For the article, use the link.

CUMIS sues former CU branch manager alleging embezzlement

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SALT LAKE CITY (1/3/12)--CUMIS Insurance Society Inc. has filed a civil lawsuit against a former branch manager of the now defunct Utah Central CU, Salt Lake City, seeking more than $219,630 allegedly embezzled from the credit union, according to court documents.

The suit was filed Dec. 23 in a Utah state Third Judicial District Court against Javier Herrera, who was manager at the credit union's West Valley Branch from May 2008 to May 2010, according to the complaint filed.

Utah Central was liquidated by the National Credit Union Administration in May and is now a division of Virginia Beach, Va.-based Chartway FCU.  Utah Central was insured by Madison, Wis.-based CUMIS with a fidelity bond that covers losses caused by employee dishonesty and failure to faithfully perform his trust, said the complaint.

The suit alleges that beginning in August 2008, Herrera underwrote and approved fraudulent auto loans in members' names without their knowledge or authorization. The credit union found out about the thefts when several members contacted it after they were notified of delinquencies on the fraudulent loans by an auto repossession department, said the complaint filed.

The credit union terminated Herrera's employment and filed an employee dishonesty and lack of faithful performance bond claim with CUMIS, who paid the claim, said the court document.

The insurance company is asking for repayment as well as punitive and exemplary damages and action to prevent Herrara from selling assets. It also asked the court to hold his accounts and property in a trust. Herrera has not been convicted in a criminal court of any crime. CUNA Mutual Group told News Now that it cannot comment on the case, since the litigation is pending.

Loans membership top priority for Pa. CUs in 2012

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HARRISBURG, Pa. (1/3/12)--More than half--52%--of Pennsylvania credit unions surveyed in an informal poll said their top "improvement" priority for 2012 would be lending promotions. The poll was taken by the Pennsylvania Credit Union Association (PCUA).

About 21% said membership growth would be a priority in the new year, said PCUA (Life is a Highway Dec. 22).

Other top priorities include member services, community involvement, staffing, employee education and employee benefits.

Study says switching banks may force choice Fees or convenience

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SAN FRANCISCO (1/3/12)--The movement to switch banks will force consumers to choose between fees and convenience, and it will be up to banking technologists to bridge the gap, according to Javelin Strategy & Research, in its latest report identifying trends for banking, payments, mobile and security in 2012.

"The movement to switch banks will force consumers to choose: fees or convenience?" said Phil Blank, managing director, security, risk and fraud at Javelin in the upcoming Jan. 7 Marketing Weekly News. "Occupy Wall Street protests, anger over banking fees, and the rhetoric of election-year politics will spur many Americans to consider dumping big banks in favor of community banks and credit unions," Blank added.

"Although smaller financial institutions charge lower fees and have higher levels of customer service, they typically cannot match giant banks in terms of convenient 24/7 multichannel banking that features extensive branch and ATM networks, online banking, bill pay and mobile banking," he added.

"The Occupier's Dilemma is that small financial institutions have the love and large banks have the technology, yet neither provide the level of empowerment and control that Javelin expects to see in the future," wrote Javelin President/CEO James Van Dyke in an op-ed piece for Bank Technology News (Jan. 1).

Javelin may be unaware that many credit unions already have made themselves more competitive as smaller institutions--primarily because they were at the forefront of some new technologies in online and mobile banking. Nor does Javelin mention credit unions' cooperative philosophy that allows them to enter shared-branching contracts so they can serve each other's members conveniently, or the extensive CO-OP Network of 28,000 surcharge-free ATMs and 4,400 shared-branch locations.

Meanwhile, certain technology companies are experiencing the backlash for tacking on fees to some of the conveniences consumers already use.  Last week, Verizon Wireless announced that as of Jan. 15, it will charge customers a "convenience fee" of $2 when they pay their bill online or by phone. However, Friday afternoon the company announced it would drop the plan because of complaints from consumers and a statement by the Federal Communications Commission that said it would look into the matter (The Wall Street Journal Dec. 29). The newspaper said the fee created a "protest movement on the Internet."

The company was trying to get customers to pay via autopay, but the fee drew comparisons to Bank of America's infamous $5 a month debit card fee that prompted the Bank Transfer Day movement on Nov. 5 ( and Dec. 29). BofA pulled its plans to charge the fee after significant consumer backlash that resulted in credit unions gaining 450,000 net new members (new members minus the attrition of those who move or closed accounts) in September and October.

Originally, Verizon had said the fee "will help allow us to continue to support these single bill-payment options in these channels and is designed to address costs incurred by us for only those customers who choose to make single bill payments in alternate channels (online, mobile, telephone)," reported

In 2012, consumers objecting to fees by banks and others will have to "put a personal price tag on convenience," said Javelin, suggesting that financial institutions upgrade with personal finance management tools to make it easier for consumers to monitor and manage their money. Javelin also suggested upgrading faulty account opening processes, installing and marketing bill pay switch kits and building out a compelling mobile banking solution.

What to expect in 2012 for credit cards arena

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MADISON, Wis. (1/3/12) recently offered advice from experts on what consumers can expect in 2012 from credit card issuers.

  1. While lenders and issuers maintain strict underwriting standards, they will not be as strict as in recent years, according to John Ulzheimer, president of consumer education at Credit scores have risen for many consumers, and one result is that banks have increased their offers of credit.
  1. Rewards cards will remain the most popular type of card. Banks want deeper, product-driven relationships--especially checking accounts--with customers, according to Dennis Moroney, research director at Tower Group. For that reason, the 0% balance transfer offer is making a comeback, he said.
  1. Card holders will be rewarded with cash. Capital One's Cash MasterCard set the standard with 1% cash back on every purchase for the first year. On the first anniversary of the card activation, the customer gets a 50% bonus on everything earned in the previous 12 months.
  1. Travel and airline perks will remain popular. High-fee cards will offset their costs by covering foreign transaction fees, baggage fees and offering priority boarding according to Curtis Arnold, founder of Banks lost many customers to credit unions in 2011, Ulzheimer added. These perks make banks look more attractive.
  1. Debit reward programs are likely a thing of the past. The negative publicity banks received over proposed debit card fees in 2011 have moved more people to credit cards, and debit reward programs are a casualty of that migration, said Arnold. Look for more debit-credit duo cards, Moroney said.
  1. Chip and pin cards are gaining momentum, Moroney said. Chips protect against card-present fraud, he added, and online security is not a concern--as it is with mobile banking. Ulzheimer told he doesn't think the mobile banking market will take off as some predict, but card issuers still must find a way to market their brands via mobile devices.

CU System briefs (12/30/2011)

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  • SAN JOSE, Calif.  (1/3/12)--Alliance CU got into the spirit of the season by randomly handing out $20 credit union Visa gift cards to 40 people on Dec. 20 and 22 during a Christmas in the Park event in downtown San Jose.  The credit union's Make a Difference  event is part of its mission to surprise people with random acts of kindness and spread generosity in the community. "We've held a $1 bill giveaway and treated people to lunch, but since it's the holidays, we thought it would be nice to make a bigger impact on a few families in  our community," said Emily Condon, senior vice president of marketing and retail delivery. Many recipients were pleasantly surprised to receive the card. One recipient later e-mailed the credit union to say she and her daughters "used the $20 (with some added from their piggy banks) at Toys R Us this morning to buy gifts for kids at the San Jose Family Shelter…Thank you for helping remind me and my girls about the true meaning of Christmas." Watch  a video of the event  on the credit union's Facebook page ...
  • TOTOWA, and PATERSON, N.J. (1/3/12)--A student-run branch in a partnership between North Jersey FCU, Totowa, N.J., and the John F. Kennedy High School Knights, Paterson, will celebrate its first year on Jan. 18.  "The Castle" is run by students from grades 10 to 12 who attend training and are supervised by a teacher and an employee at North Jersey Federal. As participants of JFK High School's Business, Technology and Marketing Academy, the students have developed marketing promotions and initiatives to increase membership. For example: from Nov. 1 through  Dec. 20, anyone opening an account at The Castle was eligible to enter an iPad2 sweepstakes. The winner is Christelle Vanderpool. From left are Sandra Martinez-Preyor, academy vice principal; Bradley Browne, marketing manager at North Jersey FCU; Vanderpool; Pamela Powell, business education and academy teacher; and Amod Fields, principal of operations, John F. Kennedy Educational Complex. (Photo provided by North Jersey FCU) …

Card data security vendors had busy 2011

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MADISON, Wis. (1/3/12)--The payment industry's emphasis on security appears to be paying off. Breached payments worldwide fell to less than four million in 2010--the latest figures available--from 361 million in 2008, according to Verizon Communications and U.S. Secret Service reports.

On the other hand, 760 data breaches, the largest number to date, were reported last year.

The reports found a significant decline in large scale breaches. Cybercriminals are engaging in small, opportunistic attacks rather than large scale, difficult attacks and are using relatively unsophisticated methods to penetrate organizations, according to Verizon.

The payments industry continued to take steps to bolster security in 2011.

In August, Visa started a program that combined fines with incentives to make its merchants compliant with Payment Card Industry Security Standards Council guidelines and requirements.

Also in August, the Payment Card Industry (PCI) Council issued new guidelines on tokenization.  Tokenization is a process that conceals the financial account number from a merchant by replacing it with a surrogate number referred to as a "token."  

In October, the PCI Council announced an update to its personal identification number (PIN) security program under which any card-acceptance device can be tested and approved for eligibility to use advanced encryption---even in those devices that do not accept PIN transactions (American Banker Oct. 17).

The PCI Council in November announced its special interest group initiative would set new security and compliance standards for cloud computing, e-commerce security and risk assessment.

NWCUA Joining a CU a good start for New Year

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FEDERAL WAY, Wash. and BEAVERTON, Ore. (12/30/11)--Thousands of consumers got an early start to a financial healthy 2012 by joining credit unions in the weeks leading up to Bank Transfer Day (BTD) Nov. 5.

BTD activities likely garnered 450,000 net new members (new members minus attrition--those who move or closed accounts) in September and October, according to estimates from the Credit Union National Association (News Now Dec. 13).

While joining a credit union is a good start, credit unions can advise their members about four additional ways to become more fiscally fit in 2012: managing their credit cards effectively, shopping for cars and better interest rates, taking advantage of historically low mortgage rates and being realistic when selling a home, according to the Northwest Credit Union Association (NWCUA).

Manage credit cards effectively. Everyone uses plastic. The key to effective credit card management is to create a monthly budget and stick to it. Members with cards high rates from other financial institutions may consider switching to a credit union that offers a card with a lower rate.

The influx of deposits at credit unions will prompt some to offer beginning-of-the-year balance-transfer promotions that allow members to reduce their interest rate, potentially saving the consumer hundreds or even thousands of dollars in interest payments.

Shop sales for the best auto rates and promos. Many consumers have been putting off swapping out their old cars for a newer model. The new year will be a great time to take advantage of better than reasonable auto financing at credit unions, said NWCUA. For the same reason many will offer great credit card balance transfer promotions, credit unions will roll out a number of new- and used-auto financing promotions.

Loan pre-approval can be an advantage for members who enjoy shopping for cars on their own. Credit unions can encourage their members to pre-qualify for loans before they begin car shopping to avoid unnecessary hassles.

Members with cars financed through other financial institutions might consider transferring remaining loan balances to lower rate loans with a credit union. According to the National Credit Union Administration (NCUA), as five-year new-car loans at banks were carrying an average interest rate of 5.1% in September, credit unions were quoting 3.73%.

Take advantage of historically low mortgage rates. Members who are homeowners and have not refinanced in the past two years may be able to save money by refinancing with a credit union.

Credit unions should offer two tips to homeowners who are considering refinancing:

  1. Refinance only to the amount of current indebtedness; and
  2. Consider reducing the loan term to 20 or 15 years for a more attractive rate.
Be realistic when selling a home. Home prices are dropping, which makes it easy to cling to a price from a previous appraisal. No one wants to admit they are losing money, but sellers will come out ahead if they price their homes to current market conditions, rather than continuing to pay expenses as their homes wither on the market for months, or even years.

Even if they do find a willing buyer sellers should be made aware that, the home must appraise at the sale price or the sale will fail. Reality should be the seller's guide.

Credit unions can stress there are always benefits to being a credit union member and help their members learn what benefits they are eligible for and how to take advantage of them.

CO-OP Wisconsin providers partner on network payment processing

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RANCHO CUCAMONGA, Calif. (12/30/11)--CO-OP Financial Services, W.C.U.L. Services Corp. and Wisconsin Credit Union Shared Service Centers Inc. (WCUSSC) have created a partnership to market CO-OP Network and Payment Processing services.

W.C.U.L. of Pewaukee, Wis., and WCUSSC of Greenfield, Wis., will market CO-OP products to more than 210 Wisconsin-based credit unions, with more than 2.2 million members.

WCUSSC already offers CO-OP Shared Branching, CO-OP Member Center and CO-OP E-Commerce Solutions. With the new agreement, W.C.U.L. and WCUSSC will also promote CO-OP Network and CO-OP Payment Processing services.

Member of participating credit unions can access 28,000 surcharge-free CO-OP Networks ATMs nationwide, 9,000 of which take deposits

Collections in post-recession topic of CUNA Council paper

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MADISON, Wis. (12/30/11)--The economic fallout from the Great Recession continues to impact credit union member households and add urgency to the work of credit union collections departments, according to a new CUNA Lending Council white paper.

"Collections in a Post-Recession Environment" is based on information gathered from lending and collections leaders at six credit unions as well as two experts from companies that provide outsourced collections services for financial institutions.

The white paper explores how credit unions can update procedures, use technology, engage members early in the collections process, design loan modifications and take other steps to refine collections.

Credit unions also report that a segment of members who have delinquent loans in the post-recession environment are from formerly affluent households and may still have relatively high credit scores. These households were able to use their assets to cope with financial demands as they adjusted to being unemployed or underemployed. But as assets are exhausted and members are unable to find jobs, they fall behind on payments, their loans enter collection and they may file for bankruptcy.

SchoolsFirst FCU, an $8.3 billion asset credit union in Santa Ana, Calif., takes advantage of technology and call center tools to increase productivity, the paper said. An automated dialer boosts the number of outbound calls made by collections specialists, while phone system metrics measure their productivity. Workflow management software guides staffing to ensure employees are available to handle members' inbound calls. Collections' ability to meet member needs is measured through member satisfaction surveys.

The challenging post-recession environment offers an opportunity for collections to prove its worth to the credit union, according to Jessica Anderson, collections manager at $400 million 121 Financial CU Jacksonville, Fla.

"Collections has always been on the back burner," Anderson added. "We know it makes a difference, but we've never seen the true impact of collections' successes or losses until we've reached these economic times."

LendingTools ViewPointe to offer corporate CU settlement

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WICHITA, Kan., and NEW YORK (12/30/11)--LendingTools and Viewpointe have signed an agreement to jointly provide a new settlement option for the corporate credit union industry.

The partnership will help fill the void created by last week's announcement that the National Credit Union Administration had not found a buyer for major portions of U.S. Central and will be shutting down the failed corporate.

The service will integrate the net settlement of wholesale payment service originators with corporate credit unions and their member natural person credit unions.

Lending Tools' payments technology and Viewpointe's aggregate net settlement will provide corporate credit unions and their service providers an alternative to legacy direct settlement options, the companies said.

They expect the new settlement option will be ready for testing in the first quarter of 2012.

CUNA closed Monday no INews NowI (12/29/2011)

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WASHINGTON and MADISON, Wis. (12/30/11)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association will be closed Monday in observance of the New Year's holiday.

News Now will not publish an issue Monday but will resume regular publication on Tuesday.

Ohio CUs among strongest in nation says 3Q report

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COLUMBUS, Ohio (12/30/11)--Ohio credit unions' financial performance during third quarter continued to stay among the strongest in the nation, said the Ohio Credit Union League in a recent newsletter.

The state's credit unions' performance--especially in annual growth for assets, shares and loans--exceeded national averages, according to the Ohio Credit Union Quarterly Performance Summary for third quarter (eLumination Newsletter Dec. 28).

Among the highlights:

  • Consumer loan originations were up more than 20% for the first nine months of 2011, with Ohio credit unions originating $2.6 billion in consumer loans for an 11% increase in the amount originated.
  • Share balances increased at a slightly faster growth rate than the national average.
  • Delinquencies declined by 11 basis points during the past 12 months to a delinquency rate of 1.23%, which is below the national average of 1.6%.
  • Capital levels at Ohio credit unions remained at 11.6% of assets--a higher level than the state's banks and thrifts, as well as credit unions and banks nationwide, said the report.

Catalyst Corporate sets town hall meeting schedule

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PLANO, Texas (12/30/11)--Catalyst Corporate FCU announced Thursday the schedule for  town hall meetings it will conduct in January and February to help credit unions transition from Western Bridge Corporate FCU during 2012.

Catalyst Corporate was selected by the National Credit Union Administration (NCUA) to acquire Western Bridge Corporate's operations earlier this month.  NCUA's decision put into place a plan for a non-disruptive, low-cost transition, said Catalyst in a press release. Interested credit unions can attend one of 20 free town hall sessions in six states.

"We are eager to meet credit union leaders one-on-one, and help put a face on Catalyst Corporate," said Dianne Addington, president/CEO of the corporate, who also noted Catalyst Corporate executives will present the session and respond to individual credit union concerns.

The meetings will:

  • Provide information about the Catalyst Corporate business model;
  • Explain the capital investment necessary to join;
  • Review products and services available;
  • Outline transition timeframes; and
  • Answer questions.
The meetings are open to credit union executives and board members.  In California, the corporate will conduct the meetings  in: San Diego, Long Beach, Anaheim,  Burbank, Pomona, Sacramento, Oakland, San Francisco, San Jose, Fresno and Bakersfield.

Other meetings will be in:

  • Portland, Ore.;
  • Tacoma, Seattle and Spokane, Wash.;
  • Las Vegas, Nev.;
  • Honolulu and Lahaina, Hawaii; and
  • Boise and Pocatello, Idaho.
For the complete schedule or to register, use the link. Additional updates on the transition are located on the special Western Bridge Member region of Catalyst Corporate's website. The updates include the 2012 Strategic Business and Capital Plan, a sample Perpetual Contributed Capital offering memorandum and Subscription Agreement; and upated Frequently Asked Questions.

CU System briefs (12/28/2011)

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  • BRANFORD, Conn. (12/29/11)--Branford, Conn., police are investigating a burglary that occurred over the holiday weekend at Branford-based United Shoreline FCU (New Haven Register and McClatchy-Tribune Business News Dec. 27). Employees discovered the break-in when they arrived at work after 7 a.m. Tuesday. No cash was reported missing. Police said the burglars entered through a rooftop vent and broke into a rear employee lobby shortly after 2:20 a.m. Saturday. A surveillance tape showed two persons in dark hoodies entering the credit union. Police officers had checked the building after an electronic alarm went off  at about that time. However, they  said the building was secured and couldn't see anyone inside, said the report …
  • LOUISVILLE, Ky. (12/29/11)--Autotruck FCU, an $84.4 million asset credit union based in Louisville, Ky., has converted to a state charter and is now called Autotruck Financial CU, according to local media reports (Business First and Bowling Green Daily News via Dec. 28). The credit union is now the 25th credit union to be regulated by Kentucky's Department of Financial Institutions. The credit union is federally insured. It serves 13,314 members at two locations--Louisville and Bowling Green. Its field of membership includes employees, retirees and family members of several companies--including Ford Motor Co. and General Motors Corp.--in the two cities …

Appstore QR codes among 2012 tech trends

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MADISON, Wis. (12/29/11)--Credit unions are at the forefront of two technology trends that bear close watching in 2012: application development and QR codes.

Financial institutions can leverage mobile technology's QR codes to interactively engage member/customers,Javelin Strategy & Research said in its 2012 Predictions for Banking, Payments, Mobile and Security.

This is the second in a two-part News Now series on technology trends for 2012.

QR codes are bar codes on steroids, according to a Huffington Post Tech blog. They encode information in the in magazine pages, advertisements, even on TV and websites. While barcodes typically identify products and objects, QR codes can trigger actions such as launching a website or downloading a file.

QR codes are most often used to link to content from smartphones. Simple uses include magazine advertisements that link to websites.

Minnesota Power Employees CU, Duluth, Minn., uses a QR code to link smart phone users to its website.

The credit union developed a QR reader application for free through the website, according to Nancy Hutchinson, Minnesota Power Employees CU senior vice president of marketing/business development.

Members can download a free QR reader and access the $79 million asset credit union's website through their smartphones.

"It was free, so it saved us a lot of money," Hutchinson said. "We couldn't have afforded to develop an application on our own. But most importantly, members love it. Any technology with mobile phones or iPads is hot right now."

And because these are hot, credit unions will be looking for more "apps."

With the opening of its DNAappstore in May, Open Solutions placed a $100 million bet that community financial institutions would collaborate to create an online marketplace for core system solutions.

The service enables participants to build and sell their own apps using DNAcreator and to buy those developed by others in the DNAappstore.

The concept is designed to save community financial instituions institutions time and money. With an active marketplace, credit unions won't have to wait months or years for core providers to provide upgrades. The cost of the typical app is a few thousand dollars, according to Lizette Nigro, Open Solutions product manager.

"Our market is credit unions and community banks," Nigro said. "Individually, the biggest financial institutions may be too big to fail, but collectively community financial institutions are too important to fail. They are the backbone of meeting consumer needs. We saw an opportunity to provide a means of collaboration so could better compete with the larger financial instituions in the world."

Credit unions are among the most active developers within the DNAappstore. As of the end of November more than 100 apps have been developed. Nigro estimates about 70% of the apps were developed by credit unions.

"Credit unions have a culture of being more progressive and nimble," Nigro said. "And collaboration is just more a part of their culture."

Elan acquires BofAs credit card portfolio

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MINNEAPOLIS (12/29/11)--The credit card portfolio being acquired by U.S. Bank's Elan Financial Services unit from Bank of America includes small business and consumer cards from 28 credit unions and other financial institutions, U.S. Bank said Tuesday.

U.S. Bank bought BofA's $700 million portfolio of credit cards through Elan after  BofA announced earlier this month it was exiting the business of handling cards for other financial institutions.

That meant credit unions are no longer able to sell card portfolios to FIA Card Services, the BofA unit that issues bank cards for other banks and credit unions under their names (News Now Dec. 7).

Although terms of the deal and the purchase price were not released, it is one of the largest credit card acquisitions Elan has made in its four decades of existence, according to the Minneapolis Star Tribune (Dec. 28).

Elan said it will continue branding and marketing the cards under the names of the 28 other financial institutions.

Scams to watch for in 2012

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NEW YORK, Wis. (12/29/11)--Credit unions can help their members avoid becoming victims scams and rip-off attempts with some simple but smart tips.

The American Association of Retired Persons (AARP) has compiled a list of the five most malicious scams consumers are likely to encounter in 2012.

The Nigerian letter. In this advance-fee scam, someone unknown to the consumer offers promises of great riches. Lonely people in financial distress are usually targeted by scammers trying to take advantage of kindness generosity or greed. While this scam is old, new variations make it more effective in trapping the vulnerable and unwary. The questionable plea promising millions of dollars has been replaced by more clever approaches: a foreign business person trying to set up a domestic bank account, a parent trying to raise money to help free a hostage child, or a U.S. soldier trying to ship home war booty to help his dying mother. Data mining now allows the scammers to appear more legitimate by personalizing the messages.

Credit unions should advise their members not to respond these types of inquiries. Instead, members should delete any e-mails of this type and throw away any paper mail.

Exploitation through education. With this type of scam, fraudsters offer a "secret" system, manipulating the consumer's emotions while promising riches or easy success. Middle-agers and seniors looking to change careers are usually targeted. Scammers entice the education-seeking unemployed with promises to get rich quick with the secret plan, win a high-paying job with the streamlined schooling, or pass a test for a chance at a nice government job. Victims often learn little they couldn't find in their local library, but become burdened with thousands of dollars in bogus tuition and fees.

Credit unions should caution members to avoid making same-day decisions. Any career or education decision merits research and referrals.

Trumped up diagnoses of problems.  Here, fraudsters exploit consumers' lack of expertise, their trust in authority and any critical need.  Most consumers are cautious when an auto mechanic discovers a previously undetected, but expensive, car repair. The mechanic has personal interest in pointing out the pricey problem. That same conflict of interest now appears in other industries. AARP cited hearing specialists who hawk hearing aids and financial planners pitching a brand of mutual funds as examples of scams exploiting consumers' trust.

Credit unions should advise their members to separate the diagnosis from the product or service deliverer.

Facebook scams. An organization or person who doesn't know the consumer may attempt to "friend" consumers via Facebook, exploiting the trust of the "safe" social-network environment. While Facebook keeps people connected, the walled-off environment of filtered contacts that consumers have learned to trust has also led them to a false sense of security that scammers take advantage of. Once "friended," they link out of the safe environment to an external site where they can attack consumers viruses or pitched scam offers.

Credit unions should advise their members not to respond to or "friend" any person or organization that they do not know.

Phishing. In "phishing," a false entity asks for information it should already have--if it were the legitimate entity--and targets anyone with a bank or credit card account. Armed with consumers' names, addresses and phone numbers, phishers call or e-mail consumers with requests to "verify" other personal information such as Social Security number, credit card information and banking data.

AARP advises that the best defense to these scams is to avoid making quick decisions and divulging any personal information. Discuss any financial decision over $500 with a friend or relative, and take at least 24 hours to mull it over.

iNPRi reports CUs boom from anti-bank outrage

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NEW YORK (12/29/11)--National Public Radio's (NPR) year-end review highlighting people, movements and ideas that had a good year featured a seven-minute look at credit unions Tuesday, in a segment entitled "Credit Unions Booming From Anti-Bank Outrage."

The program aired on "Tell Me More," anchored by Michel Martin and noted the Credit Union National Association's statistics, since revised, on the movement's membership growth  as well as credit unions' seven-point jump to a record high 87 in the most recent customer satisfaction index.

In the segment,  personal finance consultant Alvin Hall told how credit unions are different from banks:  the fact they are nonprofit cooperatives that can't issue shares and use their money for the benefit of members.

The interview turned to consumers' anger over bank fees. Hall noted that consumers were told by banks to stop writing checks and use a debit card, and reacted when banks suddenly added fees.  "They saw this as the banks using the small guy, the guy who may not be able to maintain that minimum balance, as the source of revenues. And people said, 'I've had enough.'"  The result was Bank Transfer Day, which urged big bank customers to switch to small banks and creditunions.

Hall also said credit unions may not be as accessible in some places and they don't have as many branches but they can be part of a broad network.  He also noted that people like credit unions because they are "much more personal. They're not there to exploit you."  He advised that before switching, do the research to make sure fees are lower and the services are convenient.

Tablet early adopters Asian-Americans Hispanics

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MADISON, Wis. (12/29/11)--The credit union wants to cash in on the popularity of mobile devices such as smartphones and e-tablets. Its marketing staff targets promotion of the credit union's  new, hip mobile service to the younger generation--and misses two key audiences: Asian-Americans and Hispanics.

Early adopters of the emerging mobile devices such as iPads and e-readers such as Nook and Kindle aren't necessarily the young folks, according to a study by eMarketer reported in (Dec. 9). Asian-Americans are avid users of the new devices and among the first to buy tablets and e-readers. They join U.S. Hispanics as among the early adopters on new technology, the publication said.

Roughly 14.4% of Asians used tablets monthly this year, compared with 12.6% of Hispanics and slightly over 10% of blacks and whites.  eMarketer predicts that in the U.S.,  whites won't reach the same tablet penetration as Asian-Americans until about 2014.

A study from the Center for Hispanic Marketing Communication at Florida State University also backs up the findings. In that study, 20% of English-speaking Hispanics use the mobile devices, followed by 15% of Spanish-speaking Hispanics and 14% of Asian-Americans.

Seventeen percent of both Asian-Americans and Hispanics reported owning the devices. They "are proportionately more likely to adopt these devices than non-Hispanic whites," said Felipe Korzenny, who led the Florida State study.

According to (Dec. 23), digital goods were the fastest-growing category for sales online during the holiday, with e-readers and tablets among the leaders. Sales of digital goods, which also include music and videos, were up 30% from the same period last year in the days before Christmas and were expected to increase after Christmas. estimated that earlier this month, customers bought more than one million Kindles a week.

In other words, mobile banking will be increasing  beyond cell phones, and credit unions will need to be on board early with their mobile banking as buyers look for applications for their new toys.

Scottish Labor leader praises CUs on loans

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GLASGOW, Scotland (12/29/11)--A Scottish Labor Party leader said an increase in credit unions would help consumers manage their debt and avoid payday loans.

Credit unions do "amazing work," said Johann Lamont, noting that they offer a lifeline to people who are ignored by the traditional banking sector, provide stability at a time of uncertainty and offer people "a fair deal" (The Press Association Dec. 26).

In addition to an increase in credit unions, Lamont said Scotland needs a change of attitude in how the poorest in society can borrow money. Some families are running into debt on payday loans with large interest payments of up to 2,000%.  Scotland's government estimated that 85,000 people in the country annually borrow from more than 150 illegal money lenders, the article said.

Lamont noted that many families see payday lenders as the only option to get through the holidays. She said she favored laws to cap interest rates on loans by payday lenders, and noted that credit unions in her constituency help people to borrow fairly.

CU System briefs (12/27/2011)

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  • SAN DIEGO (12/28/11)--San Diego County CU has retained the title sponsorship for college football's Poinsettia Bowl for 2012, the credit union announced Friday. The San Diego County CU Poinsettia Bowl--the nation's only game among the 35 post-season college football games to have a credit union as its title sponsor--was played Dec. 21, with TCU beating Louisiana Tech, 31 to 24.  The credit union has been title sponsor of the game since its inception in 2005.  The bowl is also the first college bowl game to establish a charity beneficiary. One dollar of every ticket sold goes directly to the San Diego Chapter of the Make-A-Wish Foundation, which grants wishes to children with life-threatening medical conditions. This year's game generated a $25,000 donation. More than 44 wishes have been granted to children in San Diego since the bowl began …
  • MADISON, Wis. (12/28/11)--UW CU, based in Madison, Wis., last week launched a fixed-rate, private student loan for college students, the first financial institution based in Wisconsin to offer such an option for student members. The loan is designed to help students afford college expenses after they've exhausted their federal financial aid allotment. Previously, UW CU had only a variable rate loan options.  "This fixed-rate term gives students the peace of mine in having the same rate for the life of the loan, while avoiding the upfront fees associated with alternative fixed-rate options," said Mike Long, executive vice president and chief credit officer at the more than $1 billion asset credit union …
  • MIDLAND, Mich. (12/28/11)--Members First CU, a $190 million asset credit union based in Midland, Mich., has reached the $1 million loan mark in its fourth year of offering its $1,000 Whatever Loan. The Whatever Loan is available to members for extra help, especially during the holiday season (Saginaw News Dec. 25).  Sandy Schaffer, lending manager , told the newspaper that many members count on the loan to fill their propane tanks, buy holiday gifts or pay bills …

Tongue-in-cheek CU at North Pole has good year

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TACOMA, Wash. (12/28/11)--The Tacoma (Wash.) News Tribune Sunday had a little fun with credit unions' growth, the economy, the Occupy movement, and the holidays with its account of a fictitious credit union, Red Sleigh CU, based at the North Pole, where its main branch is on Blitzen Street in its Sunday issue.

The newspaper claimed it interviewed the "credit union's" president/CEO, Ninneth Horklynsberg, about the credit unions growth, noting it had "been a good year for credit unions at the North Pole," with seven million kronar for deposits through third quarter and 16 billion for loans and a growth of 3,000 members.

The new depositors came from the big Candy Cane Lane banks--Bank of the Pole, Jingle Bells Fargo and Citi, and the credit union noted it has been "hiring elves and gnomes" to meet the demand.

The credit union was known as Santa's Workshop CU for more than 600 years, but to bring it into the 21st century, it hired consultants and did focus groups.  "We almost went with Gingerbread House, but then our attorneys found out it had already been trademarked by Exxon. I liked Tiny Reindeer, but we got some pushback from the elves over in wrapping," the article said.

When asked if the Occupy North Pole demonstrators had caused any problems in the way it does business, the CEO said, "I personally went down to the Occupy camp and handed out hot cocoa. Of course, that was before the police came in with the peppermint spray." The credit union explained it doesn't charge customers fees for using their debit cards and that it recycles ribbon.

As for the economy and the possibility of a double-dip recession, "the only thing we're going to double-dip up here is our cookies."

For the full tongue-in-cheek article, use the link.

CU partners with bank to tap D.C.s unbanked

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WASHINGTON (12/28/11)--District Government Employees FCU, with $47 million in assets, has formed a partnership with two Washington D.C. groups that are urging commuters to use bikes instead of cars to relieve traffic congestion.

District Government Employees FCU partnered with Capital Bikeshares, a bike-sharing network, and Bank on DC, a public-private partnership that helps unbanked consumers open checking accounts (American Banker Dec. 27).

Capital Bikeshares automated stations do not accept cash. To check out a bike from a Capital Bikeshares station, a borrower must use a debit or credit card.

Bank on DC offers a $25 discount on annual Capital Bikeshares memberships to unbanked consumers who open accounts with District Government Employees FCU or United Bankshares.

CUs prepare members for end of paper savings bonds

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PORTLAND, Maine (12/28/11)--As the Dec. 31 deadline looms, credit unions are preparing their members in several ways for the demise of paper savings bonds.  After Saturday, paper savings bonds no longer will be sold at financial institutions.

Maine credit unions are helping both members and employees prepare for the change, said the Maine Credit Union League (Weekly Update Dec. 23).

Capital Area FCU, a $22 million asset credit union in Augusta, Maine, said its staff personally contacted members that purchase savings bonds regularly from the credit union to let them know of the change, Diana Winkley, president/CEO of Capital Area told the league. The credit union also posted an announcement on its website, on its Facebook and home banking pages, in its lobby and on its receipt messages.

Five County CU, based in Bath, also said it is using several methods to ensure a smooth transition. The $188 million asset credit union posted a message on its website, and the information is on the home banking message for all users. It also created a flyer displayed at each teller line and is handing out a brochure to its members.

Consumers can purchase electronic savings bonds online through TreasuryDirect, a secure Web-based system operated by the Bureau of Public Debt (News Now Sept. 8). Existing paper bonds are still valid and will earn interest for 30 years from the issue date or until redeemed.  The Treasury Department estimated that going electronic would save $70 million in taxpayer funds over five years.

Because savings bonds are popular gifts, credit unions were expecting more inquiries than usual during the holiday season, said the Maine league.

In September, the National Credit Union Administration issued a Letter to Credit Unions (11-CU-15) that provided guidance in answering members' questions. It specifically asked credit unions to educate members about the upcoming changes, stop accepting applications for savings bonds after Dec. 31, and continue to redeem savings bonds.  The Treasury Department also has a toolkit to assist in communicating the changes.  For more information, use the links.

Banking trends point to more restrictions says iHuffPoi

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WASHINGTON (12/28/11)--The banking environment for consumers in 2012 will likely include more fees and restrictions, according to a Dec. 21 Huffington Post article.

The article, written by Richard Barrington, described how Bank of America, in the midst of a media frenzy, backed away from plans to charge a monthly debit card fee in 2012.  But banks still need to replace revenues lost to regulations and a sluggish market, he writes.

"Having learned their PR lesson, look for banks to introduce new fees more quietly, primarily by raising existing fees, cutting back on free checking accounts, or raising the minimums needed to qualify for free services," says the article. Some banks have already raised interchange fees on smaller debit card transactions to make up for revenues lost to the caps on larger transactions."

Another trend will be more restrictions on debit cards if banks can recover lost revenue from debit card interchange fees. "Look for banks to make those debit cards available to fewer customers, or to stop processing transactions from small retailers," the article says.

Other trends consumers will see include: fewer branches as banking becomes more mobile and consumers embrace online banking; more oversight as a result of increased electronic banking; and rising interest rates.

To read the article, use the link.

Credit unions will track what measures banks introduce to gain more profits and will be ready to assist consumers who find banks' actions less than consumer friendly.

Tablets RDC among the trends for CUs in 2012

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MADISON, Wis. (12/28/11)--What are the technology trends credit unions will mark during 2012? Experts say tablet technology, remote deposit capture, application development and QR codes will be at the forefront for credit unions.

This is the first in a two-part series on technology trends.

The first installment will explore tablet technology and remote deposit capture for member business services.

Apple tapped the consumer market's hunger for tablet technology with the iPad, but competitors are beginning to gain traction with more affordable models that provide comparable functionality. That trend appears as if it will continue.

A study by Oracle found that 57% of consumers already own a tablet device or plan to purchase a device in the next 12 months.

Tablet technology provides credit unions with the same primary benefit as it does consumers: portability. Unitus Community CU, Portland, Ore., has used iPads to support its business development program for more than a year.

"Any time you get your business development officers (BDOs) away from their desk and out in the field, they are going to be able to reach more people," explained Brett Wooden, business development manager at Unitus Community CU.

Unitus Community BDOs can open new accounts through their iPads, which also store the credit union's marketing materials. The iPads can't yet process transactions, but they can be used to fund accounts and take loan applications, Wooden said.

The credit union's BDOs used iPads to open 186 new accounts during a tent event in advance of a branch grand opening earlier this year. Each new account averaged more than four new products or services with the credit union.

Both paperless and portable, the iPad is also effective for taking surveys. "We paid $5,000 for a radio campaign announcing one of our branch grand openings, but when we asked 300 people how they heard about it, only two said radio. We brought that information back to our marketing team and said that $5,000 could be better used elsewhere," Wooden said.

Similarly, tablet data collection capabilities can be used to store member information, such as product interest or preferences, while credit union representatives are out in the field. "In the past, we had to write all that down and log it into a computer back at the office," Wooden said.

The same mobility that makes iPads convenient for consumers to tote around the home or office makes them easy to use in a branch environment as well, Wooden said. "A teller can flip around a screen (on a tablet) and show a member what he or she is looking at a lot easier," Wooden said. "Or if members are waiting in line, we can educate them on mobile services or other products."

For credit unions involved in member business services, remote  deposit capture offers an opportunity to build existing relationships, according to Christine Barry, a research director for Aite Group, a financial research company.

Research by Aite indicates that about 7% of credit unions that offer member business services also offer remote deposit capture, but 42% said it is likely or extremely like that they will offer RDC in the next year.

Just as important  only about 5% of small businesses are using RDC, according to Aite. But about 43% of businesses expressed a willingness to use it.

"I think credit unions recognize the opportunity, and our research shows the opportunity is there for credit unions," Barry told News Now.

RDC offers credit unions an opportunity for fee income and just as important, can help credit unions even the playing field with their larger competitors, she said.

"One thing credit unions are really known for is building relationships," Barry said. "I think RDC requires a bit of hand holding to get comfortable with. Credit unions have the advantage over banks in that they have the ability to do that hand holding."

The Credit Union National Association estimates that increasing the current 12.25% of assets members business lending cap to 27.5% of a credit union's total assets would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer.

PCUF grant helps open 43rd student branch

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HARRISBURG, Pa. (12/28/11)--Funding from the Pennsylvania Credit Union Foundation helped make possible the recent opening of the state's 43rd student credit union branch.

Funding from the Pennsylvania Credit Union Foundation helped make possible the recent opening of  a student branch at Wyoming Valley West Senior High School, Edwardsville, Pa.. Pictured from left are, Irv Dereemer, assistant. school superintendent; Ronald G. Jeffrey, president, Wyoming Valley West FCU; Erin Keating, principal, Wyoming Valley West Senior High School; David Tosh, secondary school adviser; Paul Appel, CEO, Wyoming Valley West FCU. (Photo provided by Pennsylvania Credit Union Association.)
The branch was opened by Wyoming Valley West FCU at Wyoming Valley West Senior High School, Edwardsville, Pa., said the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Dec. 16).

Joe Wambach, foundation executive director, and John P. Kebles, manager of the REAL Solutions program, represented the PCUA at the ceremonies.

Paul Appel, CEO, Wyoming Valley West FCU, thanked the foundation for its grant of $10,000 which made it possible to open the student branch in 2011, earlier than expected.

Erin Keating, principal of the high school, said the credit union would begin classroom education during the second semester, complementing an already active financial education program among business students and through Junior Achievement.

Wyoming Valley School District Assistant Superintendent Irv Dereemer spoke about the possibility of an additional student branch becoming a reality in the middle school so that students can receive practical instruction on financial education at an earlier age.

Troops get special treatment for holidays

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MADISON, Wis. (12/28/11)--Many men and women serving the country were not able to return home for the holidays. However, credit unions did their best to send them a little bit of home, be it words of encouragement on a video from loved ones, holiday gift packages donated by credit unions and their communities or even Christmas cards.

At State Employees' CU, Raleigh, N.C., 130 employees, family members and volunteers worked together on its "SECU Supports the Troops" campaign, which provided holiday gift boxes for North Carolina's deployed National Guard and Reservists.  On Dec. 3, the group packed up 5,000 gift boxes in just three hours, with Raleigh postmaster Cheryl Picard assisting. The boxes were loaded into a U.S. Postal Service 18-wheeler for delivery.

Click to view larger image About 130 employees, family members and volunteers at State Employees' CU, Raleigh, N.C., worked three hours on Dec. 3 to pack 5,000 holiday gift boxes for North Carolina's National Guard and Reservists deployed around the world. (Photo provided by the North Carolina Credit Union League)
SECU's 239 statewide branches became collection sites for the donated "wish list" items that poured in from SECU members and local community groups. Items included travel size items of dental supplies, first aid items, soap, shampoo, travel games, socks, writing supplies, and snacks, and were topped off with special hand-written letters from North Carolina school children thanking the troops for their service to the country.

"North Carolina National Guard soldiers and their families are within SECU's membership base, making this project even more significant for our cooperative. The excitement and success of last year's campaign, including the heartwarming thank you from soldiers who received gift packages, prompted the return of SECU Supports the Troops," said Leigh Brady, SECU senior vice president of education services."

"It's more than just the number of packages the credit union is delivering," said SECU board Chairman McKinley Wooten, "it is the demonstration of love that we have for our soldiers that makes this project special. We want them to feel the care that goes into putting these boxes together."

Many credit unions worked with Operation Best Wishes, a national program partnered with the Defense Credit Union Council and that credit unions bring to military installations during the holidays. Walter Laskos started the operation in 2004, when he was an employee at a credit union in California that worked with military families and invited families to use a new webcast video studio to send a video message to relatives deployed overseas. It proved so popular that he went on the road with it to other credit unions on military bases.

At Hanscom Air Force Base, Alison Murray used Operation Best Wishes to throw a virtual birthday party for her son, Phillip Kiy, who turned 21 earlier this month in Afghanistan.  She baked four cupcakes, packed a photo of her son in his uniform, and she and her two teenage daughters sang happy birthday to Kiy, fed his photo a cupcake, and performed a skit for him (Boston Globe Dec. 18). 

Click to view larger image Andrews FCU, Suitland, Md., was among the credit unions participating in the Defense Credit Union Council's partnership with Operation Best Wishes to sponsor free holiday video messages for service members and their families.  Eighty-nine people taped messages for loved ones overseas. (Photo provided by the Andrews FCU)
At Andrews FCU, Suitland, Md., 89 people taped messages, each recording a message up to 10 minutes long that included updates and words of encouragement. Participants received a CD containing the video message and service members accessed the archived recording via a link to the secured website. Deployed family members receive secure links through e-mail almost immediately after the video is recorded. They can log in for up to 90 days to watch the link throughout the holiday season ( Dec. 7).

At Fort Drum, N.Y.,  AmeriCU offered video messages via Operation Best Wishes.  Tiffany Dietter, whose husband, Sgt. William Dietter is deployed with the Third Brigade Special Troops Battalion, told local media that "We wanted to do something special." Even though the family uses Skype to talk to their father, her children were excited to send a video greeting to their dad.  Another spouse, Sara Cotleur, said sending a video greeting to her husband, Spc. Michael Cotleur, was a way for her to show him "I'm OK, so he doesn't have to worry about me." Like last year, the video production crew stayed well into the evening to accommodate family members (Army News Service Dec. 8)

Other credit unions remembering troops included:

  • Belvoir FCU, Woodbridge, Va., which attended Fort Belvoir's "Holiday Cookie Social & Goodie-Box Packing Party," to support families with deployed soldiers. Fifteen families took part in the specialized filing schedule during the packing party, hosted by Fort Belvoir's Army Community Services, which allowed a personalized video message to be sent in a care package. ACS packed 100 goodie bags for soldiers, representatives from the local Veterans of Foreign Wards cooked food for attendees, and the Belvoir Eagle newspaper captured the event.
  • Saginaw (Mich.) Medical FCU provided mailings for soldiers with "Send Santa to the Troops," a care package drive run by the Yellow Ribbon Guard. The staff of Medical FCU hosted a "Stuff a Bus" event at the credit union on Veterans Day. Some people drove more than 50 miles to each way to drop off donations. Elementary schools donated more than 610 pounds of candy, which was used as stuffing in the shipped care packages. The campaign filled three buses and collected $1,600 in cash donations (Michigan Monitor Nov. 28).
  • Mazuma CU, Kansas City, Mo., prepared holiday packages for team members' relatives serving in the U.S. Army. Jeannie Ray, a member service representative at the credit union's Gladstone branch, wanted to send Christmas cards to her brother's battalion in Afghanistan. She thought a battalion would be 100 to 150 people, but learned there are more than 800 men and women in the battalion. She approached the branch and her team members about collecting cards. They collected 1,048 holiday cards, 1,400 candy canes, 4,400 other candies, and $445.29 in cash donations in four weeks. The cash donations paid for the 15 boxes of cards and candy shipped overseas as well as the purchase of the candy. The remaining $%109.65 was donated to Homes for Our Troops, one of Mazuma's charities. Left over cards were donated to team member Ben Monroe's unite in Texas, to the American Legion to be used in Christmas packages sent to Iraq and Afghanistan, and to the Veteran's Administration. 

Bank tries CUs tactic Pays people to use debit cards

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MADISON, Wis. (12/27/11)--During the consumer backlash against debit card fees prior to Bank Transfer Day on Nov. 5, many credit unions promoted their fee-free services by taking one step more: paying members to use their debit cards.  Some banks took a lesson, and in their scramble to find new sources of revenue, some are promoting the use of debit cards and online channels.

For example, because it is in a highly competitive area and taking more desperate measures to attract consumers, North Shore Bank in Peabody, Mass., announced it would try something it has never done before: pay customers to increase their use of debit cards and automated channels.  The move is a way to increase fee income, attract younger consumers and comply with new interchange regulations, said  Bank Technology News (Dec. 20). 

Unlike many credit unions' anti-fee campaigns, the bank's rebate comes with restrictions. It will pay $3 per month to consumers who hit a certain account balance, who use a digital channel and who meet transaction targets.

It also would reimburse customers up to $25 per month in ATM fees from other banks. The cash back checking program, however, requires an average daily balance of $1,000 to avoid the $12 service fee. To get the rebate, customers must receive direct deposits into their account, sign up for electronic ATM statements and conduct at least 10 debit card point-of-sale transactions and a minimum of three bill payments through the bank's web portal.

Credit unions used rebates in their no-fee campaigns while the Bank Transfer Day events were heating up. They are still gaining attention for their anti-bank fee stance.

For example, in September, just as Bank Transfer Day was becoming a household word,  Pioneer West Virginia FCU, Charleston, W.Va.,  started running an advertisement, "Fee'd up with banks? Let's make change." It paid members five cents every time they used the credit union's debit card. The ad declared, "Finally, checking that makes cents!"

Pioneer CEO C. Dana Rawlings told the Charleston Daily Mail that the credit union has some members who swipe their cards 50 to 60 times a month. The campaign attracted about 75 new members who opened checking accounts and asked for debit cards during October and November. That's about twice what the credit unions would open in a normal two-month period and isn't bad in a state where there are no offices of Bank of America--the bank whose planned debit card fee prompted Bank Transfer Day and the wave of consumer backlash. Pioneer has budgeted $3,500 a month in payouts for 2012.

West Virginia Central CU, Parkersburg, ran a similar campaign in November and December that was well-received. Members like getting rewards instead of paying fees, Michael Tucker, president/CEO, told the Daily Mail.  The credit union had 180,000 debit card transactions in November and paid members about $9,000 in nickel rebates. The uptick in volume was "substantial," he said.

Wis. Fin. Literacy awards go to CU league CUNA projects

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MADISON, Wis. (12/27/11)--The Wisconsin Governor's Council on Financial Literacy announced recipients of its 2011 Wisconsin Financial Literacy Award Thursday. Credit unions and their programs were well-represented among the winners.

Three organizational winners involving credit unions are:

  • Investor Education in Your Workplace, a Wisconsin Credit Union League program;
  • Money Mission, a money management simulation game originated by the league and offered to credit unions across the country in a program administered by the Credit Union National Association; and
  • UW CU, Madison, Wis., which hosts free financial education seminars.
News Now reported last week on Money Mission's award.

The Investor Education in Your Workplace program is the first of its kind using credit unions as the springboard to engage thousands of citizens in voluntary, workplace-based investor education said the Wisconsin league. It encourages credit unions and ultimately other employers in their communities to offer 10 hours of voluntary online investment education to employees on basic investment concepts.

According to the council's announcement the program  has led to positive measureable changes in investment knowledge, attitudes and behavior.  In Wisconsin, 24 companies with 3,600 employees--in addition to more than 3,476 employees from 80 credit unions in the state and league staff--registered to complete at least 10 hours each of investor education. The participating credit union employees received a total educational value of $450,000.

In its initial phase, the league's program used pre- and post-tests to measure how well participants' knowledge improved. When calculated as a whole, participants averaged 62.15% on course pre-tests and 87.93% on post-tests--an improvement in knowledge of 25.79% across both sessions.

The program's second phase took graduates of the program and trained them to train others to expand the efforts, according to Chris Henzig, director of communications at the league.

Also, from fall of 2010 to spring of 2011, Pennsylvania and North Carolina credit unions joined the program, which expects to add another 10 states, an additional 100,000 hours of training for roughly 10,000 employees from credit unions and the employers they serve, Henzig told News Now. She also noted that changing investment behaviors through the program can stimulate a potential $1 billion in new investing.

The Investor Education in Your Workplace program was funded by the Investor Protection Trust, which granted $500,000 to pilot the program in Wisconsin and train the Certified Financial Educators (CFEs) to expand the program, and by the National Credit Union Foundation, which provided $30,000 in assistance to train the CFEs to exist in expanding the program to other states.

UW CU will receive its award for providing financial literacy seminars. In 2010, it provided 295 seminars, reaching more than 8,000 people. More than 90% of them were underserved individuals or college students, said the council's announcement. Through October of 2011, another 6,000 were educated in the program. UW CU has more than 40 financial mentors who have been certified and undergo ongoing training.

Credit unions were also mentioned in two other awards as working to improve financial literacy of the state's citizens. Recognized were CoVantage CU of Antigo and its student credit union, Bulldog CU, cited in the award to Laurel Scherer of Antigo Middle School; and Community First CU, Appleton, a partner with organizational winner Appleton Area School District.

In all, eight organizations and 14 individuals will receive the awards.

Ill. league wraps up community service giving for year

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NAPERVILLE, Ill. (12/27/11)--Illinois Credit Union League (ICUL) staff wrapped up their community service and giving for the year by providing toys for patients at Children's Memorial Hospital in Chicago.

ICUL helped to fulfill Children's Memorial's need for small gifts and toys, which are used in several ways, year round. For example, children often can pick a prize after a particularly hard day or on a special occasion, such as finishing a round of treatment. Also, the hospital's closed-circuit, interactive television station, Skylight TV, hosts several in-house television game shows each week, following the philosophy that "everybody's a winner," creating a daily demand for small prizes.

Children's Memorial, the region's top provider of pediatric specialty care, and Illinois' only freestanding hospital exclusively for kids, is celebrating nearly 130 years of serving children and their families.

The toy drive was one of several charitable actions by the league in 2011. Other activities included its annual food drive, where more than 620 pounds of food and $300 were donated to help the Northern Illinois Food Bank (NIFB) find people in need.  This was the third annual food drive held by ICUL employees.

Over the past year, the food bank has seen a 35% to 50% surge in demand throughout the 13 counties it serves in northeastern Illinois. It provides food for about 502,400 people annually, including 61,600 in a given week via more than 520 sites. About 48% of those helped are children under 18.

ICUL staff also has raised funds through monthly "Jeans Days," and raised more than $1,400 for local and national social service organizations, including the American Cancer Society (for breast cancer research), the American Diabetes Association and DuPage Public Action to Deliver Shelter, in addition to Children's Memorial Hospital.

The Illinois Credit Union System also provided 14 food pantries with $200 each, for a total  $2,800 donation.

"This continued to be a year of great need for many people," said Dan Plauda, ICUL president/ CEO. "Rather than sending out its traditional holiday greetings, the Illinois Credit Union System chose on behalf of its member credit unions to coordinate, organize and participate in these activities. We feel blessed to have been able to give back to our communities."

Corporate Central CU names exec committee

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MUSKEGO, Wis. (12/27/11)--At the Corporate Central CU Board meeting held

Dec.13, Greg Hilbert, president/CEO of Fox Communities CU, Appleton, Wis., was elected chairman of the board. Hilbert has served on the board since 2002.

Three other board members for the Muskego, Wis.-based corporate also were elected to the Executive Committee:

  • Kim Sponem, president/CEO of Summit CU, Madison, Wis., was elected vice chairman, and has served on the board since 2004.
  • Ronald Vogel, president/CEO of Fort Community CU, Fort Atkinson, Wis., was elected secretary, and has served on the board since 2007.
  • James Schrimpf, president/CEO of Brewery CU, Milwaukee, was elected treasurer, and has served on the board since 2009.

Quirky humor highlights Security Services new ad

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SAN ANTONIO (12/27/11)--Security Service FCU, San Antonio, has launched a new ad campaign that uses humor to emphasize the credit union's focus on member service.

The ad features two quirky "employees" named Jimmy and George who are determined to shorten the credit union's name to "Service." The duo yuks it up by breaking signage, painting a billboard and rearranging lobby furniture--all in the name of "service."

The multi-media ad campaign--designed by Austin-based Proof Advertising--includes TV, radio, outdoor, and the web complete with a Facebook page, an interactive online game and a landing page that features the two characters changing the credit union name.

The goal of the campaign is to build brand awareness and to attract the attention of a target audience ages 25 to 44, said Greg Stroud, Security Service vice president of sales and marketing of the $6.5 billion asset Security Service.

"Our target audience is inundated with more than 5,000 marketing messages a day so we decided to break from the traditional and move toward engaging them with humor that both surprises and entertains," Stroud said. "The overall campaign encompasses a variety of media using the same two misguided, but well-intentioned characters, to deliver our message about great service."

Radio and TV commercials are airing in San Antonio and will eventually expand into the credit union's other market areas in Texas, Colorado and Utah.

CUNA economist Top five predictions for CUs in 2012

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MADISON, Wis. (12/27/11)--This past year was a whirlwind for the U.S. economy and credit unions trying to rebound from a lingering recession, persistent unemployment, a depressed housing market, and worldwide economic trouble, especially in Europe.

So what does 2012 have in store for credit unions?

News Now asked Steve Rick, senior economist for the Credit Union National Association, for his top five economic predictions for what credit unions will experience next year.

They are:

Return of loan growth. After three years of basically no growth, credit unions in 2012 will see the return of loan growth. "Loan balances will grow 3% next year, which is good, because we are, after all, credit unions," Rick said. "Although 3% is not great, it's better than zero."

Why will there be loan growth? Essentially, low consumer spending during the past three years has created substantial pent-up demand for durable goods--by definition anything that lasts three years or longer, such as cars, appliances and furniture. "These are the types of items for which credit unions usually make loans," Rick said.

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A big improvement in loan quality. Loan quality will strengthen and improve as reflected by a drop in the loan delinquency rate. For 2011, the loan delinquency rate for credit unions was 1.6%--which means for every $100 in loans, $1.60 is not performing (paying interest), Rick explained. For 2012, the forecast is 1.35%.

Why the improvement? "Two reasons," Rick explained. "Strength of the economy and job growth. They will help people stay current on their loans, and those who are delinquent to get caught up on their payments."

A nice drop in credit unions' provision for loan losses. This is a ramification of significant improvement in loan quality. "We expect the provision to be down to 40 basis points of average assets in 2012 from 51 basis points in 2011," Rick said. "In 2007, it was 43 basis points. So in 2012, we predict it will be lower than--at 40 basis points--pre-recession levels."

The recession started in December 2007, Rick said.

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Credit unions' bottom lines should improve. In 2012, credit unions' return on assets (ROA)--which is net income divided by average assets--should be 85 basis points, or 0.85%, up from 70 basis points, or 0.70%, in 2011, Rick said. The 15-basis-point jump is forecast because of better provisions for loan losses engendered by better loan quality mentioned earlier. Also, the corporate stabilization assessment will be nine basis points of insured shares in 2012, according to National Credit Union Administration estimates. That compares with 25 basis points in 2011, Rick said.

"That drop will help boost credit unions' bottom lines," Rick said.

Credit unions will have turned the corner when it comes to allowance for loan losses. The allowance for loan-loss ratio is the allowance for loan losses account relative to total loans. In other words, out of all the loans that credit unions have on their balance sheet sheets, what percentage of them are bad loans?

"The allowance ratio was a little over 1.6% in 2011," Rick said (see Credit Union Credit Quality chart--bottom one). "It was 0.7% before the recession. For 2012, it will continue to trend downward. Because of the better credit-quality outlook for 2012, credit unions may have overfunded their allowance account and will let it run down next year.

"For the first time in five years, credit unions in 2012 will keep loan-loss provisions--because that allowance has been built up over the past few years--less than net loan charge-offs," he explained (See bathtub flow chart--top one). "That will bring down the allowance for loan-loss accounts in absolute (dollar amounts) and relative terms (percentage of total loans)."

Louisiana league offers Member Business Services Council

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HARAHAN, La. (12/27/11)--The Louisiana Credit Union League (LCUL) has introduced the Louisiana Member Business Services Council (MBSC) for credit union professionals who are engaged or interested in offering member business services.

The council will provide opportunities for members to network with peers, share best practices, address issues concerning credit unions, and learn from experts in their professional field, said the league.

The direction for the MBSC is provided by an advisory committee whose members will plan the curriculum for council meetings, develop website content and promote council activities at local chapter events.

The advisory committee held its first meeting earlier this month to discuss the goals of the council and plans for the first council-sponsored educational event, which will be held in Baton Rouge, La., on Feb. 16 and 17.

Committee members include:

  • Committee chairperson--Deanna Geisler, Barksdale FCU, Bossier City;
  • Cami Crochet, The New Orleans Firemen's FCU, Metairie;
  • Dawn Harris, Campus FCU, Baton Rouge; and
  • Eddie Vollenweider, Neighbors FCU, Baton Rouge.          
Council benefits include access to the members-only listserv and a password-protected website, which will include sample policies, job descriptions, articles, research and links. Members will also receive discounts to education and training programs.

"The league has been working with credit unions around the state to identify areas where we would benefit from collaboration," said Anne Cochran, LCUL president/CEO. "Member business services were among the top areas of interest. It is our hope that the council will help promote professional development and support the overall maturation of these services provided to credit union members."

The council will begin accepting applications on Jan. 2. Additional information will soon be posted on the league's website.

The Credit Union National Association estimates that increasing the current 12.25% of assets members business lending cap to 27.5% of a credit union's total assets would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer.

NCUA to wind down U.S. Central Bridge Corporates payment services

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ALEXANDRIA, Va. (12/27/11)--The National Credit Union Administration (NCUA) will move forward with plans to wind down various lines of payment services offered by U.S. Central Bridge Corporate FCU, the agency announced Thursday. The wind-down excludes the services of  Corporate Network eCom LLC that were purchased by CO-OP Financial Services and announced Dec. 15.

NCUA said the bidding process for the other services did not result in the selection of any additional acquirers. The agency initiated an open competitive bidding process in October to solicit acquirers for lines of business including international wires, automated settlement, and its automated clearinghouse product (APEX).

"Unfortunately, the solicitation did not result in a satisfactory proposal," NCUA said in a press release. As a result, NCUA determined that the "most effective course of action is to pursue an orderly wind-down of those services" from U.S. Central Bridge.

"Since members of U.S. Central Bridge made the business decision not to pursue a new charter to maintain payment services, we anticipated this outcome," said NCUA Board Chairman Debbie Matz. "The proposals we received from other bidders did not meet NCUA's responsibility to minimize service disruptions and impose the lowest possible cost."

Each corporate credit union, if it has not already done so, now needs to begin the process of transferring to a vendor that will replace the APEX system to continue uninterrupted payment services to member credit unions, said NCUA.

NCUA noted that another critical function of U.S. Central Bridge is serving as the agent group representative to facilitate credit union access to the Central Liquidity Facility (CLF). Due to U.S. Central Bridge's ownership of $1.9 billion of CLF stock, all credit union members of corporates can access the CLF for liquidity purposes.

As the Federal Credit Union Act bases the CLF's borrowing authority on its subscribed capital stock and surplus (retained earnings), U.S. Central Bridge's stock subscription plays a large part in the CLF reaching its current borrowing authority of $50 billion.

As a temporary entity, U.S. Central Bridge cannot hold the CLF stock indefinitely. Because credit unions must have long-term access to emergency liquidity--and that CLF stock will need to either be purchased directly by credit unions or by other corporates as agents for their members--the NCUA Board took two actions in December:

  • It approved a change to Part 704 permitting corporates to deduct CLF stock investments from their assets when calculating capital ratios.
  • It approved an advance notice of proposed rulemaking (ANPR) that would require federally insured credit unions to have access to a backup federal liquidity service for use in times of financial emergency and distressed economic circumstances.
The ANPR provides several options for how credit unions could meet this requirement, including membership in the CLF.

"Experience has shown that in times of financial crisis, federal sources of liquidity are often the only reliable sources," said Matz. "The ANPR is a critical step to maintain the safety and soundness of the credit union industry going forward."

Pa. CU flood victims face difficulty for holidays

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HARRISBURG, Pa. (12/27/11)--Flood victims of September's Tropical Storm Lee in West Pittston, Pa., have only just begun to recover, according to the Pennsylvania Credit Union Foundation.

Most victims of September's Tropical Storm Lee in West Pittston, Pa., have not returned to their homes. Road and home repair work continue on Parke Street.
Most of the victims have not returned to their homes and are either living with relatives or have relocated to other areas during the holidays, said foundation Executive Director Joe Wambach and REAL Solutions Manager John Kebles after visiting West Pittston (Life is a Highway Dec. 22).

Of the 32 homes of credit union members and employees who received assistance from the foundation in September and October, one was occupied, and several condemned.

A two-square-mile-area was busy with cleanup, road repair renovation activity.

The only occupied home in a two-square-mile area celebrates the spirit of the season. (Photos provided by Pennsylvania Credit Union Association)
"We had expected to be able to interview victims of the flooding, but unfortunately the area was completely deserted," Wambach told the Pennsylvania Credit Union Association. "The devastation was disheartening, on the one hand, while recovery activities were encouraging on the other. However, we are pleased to report to our donors that the aid received by the victims from the foundation and other entities is showing positive results but we will need to be as patient as the victims in helping to rebuild their lives."

Association President/CEO Jim McCormack urged credit unions, individuals, vendors and friends of the movement to "contribute generously to the Pennsylvania Credit Union Foundation in 2012, as there are clearly many other victims of this disaster who have not yet received aid."

McCormack also promised members that association and foundation staff will continue to visit other areas of the flood zone to ensure donor funds are used responsibly to help credit union victims.

NEW U.S. Central Bridge Corporate to unwind payment services

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ALEXANDRIA, Va. (FILED 4:30 p.m. 12/22/11)--The National Credit Union Administration (NCUA) announced today it will move forward with plans to wind down various lines of payment services offered by U.S. Central Bridge Corporate FCU. The wind-down excludes services of  Corporate Network eCom LLC that were purchased by CO-OP Financial Services and announced Dec. 15.

NCUA said the bidding process for the other services did not result in the selection of any additional acquirers.

NCUA initiated an open competitive bidding process in October to solicit acquirers for lines of business including international wires, automated settlement, and its automated clearinghouse product (APEX).  "Unfortunately, the solicitation did not result in a satisfactory proposal," NCUA said in a press release. As a result, NCUA has determined that the most effective course of action is to pursue an orderly wind-down of those services from U.S. Central Bridge.

"Since members of U.S. Central Bridge made the business decision not to pursue a new charter to maintain payment services, we anticipated this outcome," said NCUA Board Chairman Debbie Matz. "The proposals we received from other bidders did not meet NCUA's responsibility to minimize service disruptions and impose the lowest possible cost."

Each corporate credit union, if it has not already done so, now needs to begin the process of transferring to a vendor that will replace the APEX system to continue uninterrupted payment services to member credit unions, said NCUA.

NCUA noted that another critical function of U.S. Central Bridge is serving as the agent group representative to facilitate credit union access to the Central Liquidity Facility (CLF). Due to U.S. Central Bridge's ownership of $1.9 billion of CLF stock, all credit union members of corporates can access the CLF for liquidity purposes.

As the Federal Credit Union Act bases the CLF's borrowing authority on its subscribed capital stock and surplus (retained earnings), U.S. Central Bridge's stock subscription plays a large part in the CLF reaching its current borrowing authority of $50 billion.

As a temporary entity, U.S. Central Bridge cannot hold the CLF stock indefinitely. Because credit unions must have long-term access to emergency liquidity--and that CLF stock will need to either be purchased directly by credit unions or by other corporates as agents for their members--the NCUA Board took two actions in December:

  • It approved a change to Part 704 permitting corporates to deduct CLF stock investments from their assets when calculating capital ratios.
  • It approved an advance notice of proposed rulemaking (ANPR) that would require federally insured credit unions to have access to a backup federal liquidity service for use in times of financial emergency and distressed economic circumstances.
The ANPR provides several options for how credit unions could meet this requirement, including membership in the CLF.

"Experience has shown that in times of financial crisis, federal sources of liquidity are often the only reliable sources," said Matz. "The ANPR is a critical step to maintain the safety and soundness of the credit union industry going forward."

CU System briefs (12/21/2011)

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  • DENVER (12/22/11)--CU Direct Connect (CUDC) has hired Blair Korschun as president/CEO, according to David E. Maus, chairman of the CUDC Board of Managers and CEO of Public Service CU, Denver (Business Wire Dec. 21). Before joining CUDC on Dec. 1, Korschun was divisional president of Ascension Capital Group, a Dallas subsidiary of Encore Capital Group and a bankruptcy loan servicer for consumer auto and mortgage portfolios. He also has served four and a half years with Chase Auto Finance, five years with Capital One, and 10 years in finance and operation roles in the beverage industry, including PepsiCo. CUDC is a credit union service organization that provides lending support to credit unions and auto dealerships …
  • DES MOINES, Iowa (12/22/11)--Des Moines-based Financial Plus CU  (FPCU) is the first financial institution to use Dwolla, the online, mobile, social and location-based cash payments platform, for charitable donations to inspire a boost in community giving. FPCU's is aiming to raise $1,000 in a year-end effort for Children's Miracle Network Hospitals. By allowing consumers to donate from their homes, offices, or anywhere, FPCU said it believes donations will increase. This is the first time FPCU has incorporated a way to give online.  It has been a sponsor of the children's hospital network for many years, working with the Iowa Credit Union League and the national Credit Unions for Kids fundraising efforts …
  • RICHMOND, Va. (12/22/11)--Virginia CU President/CEO  Jane G. Watkins has been presented the J. Curtis Hall Award by the Virginia Council on Economic Education (VCEE). The annual award recognizes a community leader devoted to the cause of economic literacy in Virginia schools. It is named for a retired professor and former dean of the VCU School of Business, who founded the VCEE and devoted his life to enhancing the quality of economic education in the state.  Watkins was recognized at the organization's annual board meeting in December. She has been on the VCEE board since 2001. A financial supporter of the VCEE for many years, the credit union is a sponsor of VCEE's high school initiative and Governor's Challenge in Economics and Personal Finance …

California CUs gained assets shares in 3Q

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SACRAMENTO, Calif. (12/22/11)--California's credit unions made gains in assets and shares while loans were down during third quarter, according to statistics from the state's Department of Financial Institutions (DFI).

Assets rose 1.2% to $72.7 billion from $71.8 billion one year ago, said DFI's Quarterly Report. Shares, which were at $62.6 billion as of Sept. 30, rose 1.3% from $61.8 billion in third quarter 2010.

Loans dropped 7.1% for the period to $40.6 billion from $43.7 billion. Net worth was $7.1 billion, up 6.9% from $6.7 billion a year ago. As a result, California his caused the net worth to asset ratio to increase to 9.82% from 9.30% one year ago.

Allowance for loan losses totaled $1.2 billion, down 12.1% from $1.4 billion for third quarter 2010. Delinquent loans dropped 20.1% to $919.5 million, down from last year's $1.2 billion. Delinquent loans as a percentage of total loans were 2.26% as of Sept. 30, compared with 2.63% one year ago.  Other real estate owned was $147.1 million--an increase of roughly $16.7 million, or  12.8%, from last year's $130.4 million.

Other key statistics:

  • Net margin to average assets was 4.20%, down from 4.38% one year ago;
  • Provision for loan losses was down 46.8% to $315.3 million from $593.1 million;
  • Net income as of Sept. 30 was up 70.4% from $223.9 million for the first nine months of 2010 to $381.6 million for the same period in 2011.
  • The number of credit unions decreased  4.2%--to 158 from 165.

Year ends with more mergers in the works

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MADISON, Wis. (12/22/11)--As the year ends and a new one begins, several credit unions have mergers in the works, with some timed as a transition as long-time credit union leaders retire.

In Kalamazoo, Mich., the $85 million asset Allegis CU is completing a merger with St. Joseph, Mich.-based $316 million asset Honor CU, just as Allegis CEO John Sink retires after 12 years at the helm and 40 years in the financial services industry, said the Michigan Credit Union League (Michigan Monitor Dec. 19).

Allegis' members voted Dec. 8 to approve the merger, which awaits approval from  the National Credit Union Administration (NCUA). The merger is expected to be complete in early 2012.

Sink decided to retire after visiting his home in Florida, saying he is ready to relax. Honor CU President Scott McFarland said Sink will do some consulting work as Honor evaluates other expansion opportunities.

Other mergers in the works:

  • The $370 million asset Kellogg Community FCU, Battle Creek, Mich., will merge with the $9 million asset St. Joseph Valley, Three Rivers, Mich. Kellogg will be the surviving credit union.
  • Winthrop (Maine)  FCU, a $55.8 million asset credit union, will merge into $561 million asset Webster First FCU, Worcester, Mass. The merger will become final Dec. 31. NCUA approved the merger Oct. 26 and members approved the deal on Dec. 14 ( and Banker & Tradesman Dec. 15) .
  • Missoula, Mont.- based Montana First CU members were scheduled to vote this week on a merger with Spokane, Wash.-based Horizon CU ( Dec. 12). Montana First , which has two Missoula branches, would keep its name and employees, and a board member would join the Horizon CU board. If approved, the merger would be complete in early to mid-spring. Montana First has $66 million in assets, while Horizon has $421 million in assets.
  • Bluestone FCU,  Eagan, Minn., with assets of about $21 million, merged Dec. 1 into Associated Healthcare CU (AHCU),  a $55 million asset credit union in St. Paul, Minn. Jerry Ziegler is president/EO of the merged credit union, which will keep AHCU's name. Judy Root will continue coordinating merger activities until she determines her retirement date. The Eagan branch will still be identified as the Bluestone branch of AHCU, said the credit union's website. The credit union's website attributed the merger to a combination of slow growth, loan losses and added regulatory expenses that limited Bluestone's ability to provide a full range of financial services and resulted in lower dividends.

Texas league teams with network to spread co-op news

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FARMERS BRANCH, Texas (12/22/11)--The Texas Credit Union League (TCUL) will work with the Texas State Network (TSN) to create a radio commercial that tells the public about the strength of credit unions, in support of the International Year of Cooperatives.

The United Nations officially launched the International Year of Cooperatives on Oct. 31. In 2012, people worldwide will celebrate cooperatives--a business model that puts people first, innovates to meet member need and provides local service while being part of a global network (LoneStar Leaguer Dec. 21).

The commercial will air one day per week the weeks of Jan. 2 and Jan. 9, between the hours of 6 a.m. and 7 p.m. Also during this two-week period, TCUL will receive bonus fill in other TSN and CBS programming-- when available. The TSN News Network has 119 radio stations in 90 markets statewide. TSN's reach for its news network is more than three million people 18 years of age and older.

The 30-second commercial has an advertising value of $12,000. However, TCUL negotiated a price of $5,000. The radio commercial is just one element of TCUL's International Year of Cooperatives campaign. To listen to the commercial, use the link.

To learn more about the International Year of Cooperatives about the campaign, use the link.

CU Cooperative Branching pays 6 dividend

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HARAHAN, La. (12/22/11)--Member-owners of CU Cooperative Branching LLC (CUCB), Louisiana's shared-branching credit union service organization, will receive a 6% dividend, payable Dec. 31.

CUCB also will offer transaction-tiered volume discount pricing beginning Jan. 1 (Louisiana Credit Union League eNews Dec. 21).

Since its inception in August of 1992, CUCB has grown into a network with more than 120 statewide locations and more than 4,400 locations worldwide to service shared branching credit unions' members.

"Because of the cooperative spirit amongst credit unions, CUCB has become an efficient network that has achieved great financial success, offering an incomparable service to members," Rod Taylor, president/CEO of Barksdale FCU, Bossier City, La., and CUCB chairman.

CU helps members who lost jobs last week

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LIBERTY, S.C. (12/22/11)--Pickens (S.C.) FCU is helping workers who lost their jobs last week at the nearby Liberty Denim plant by offering them loans up to $1,200.

The loans are earmarked to cover living and holiday expenses, the credit union said ( Dec. 20).

When the plant was shuttered Friday, it left 185 employees without jobs days before the holidays. Employees were given a two-day notice before the plant closed.

The $17 million asset credit union participated in a local job fair Tuesday to provide free counseling about money and to help laid-off workers learn about loan-refinancing options.

CUNA closed Fri.-Mon. no iNews NowI

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WASHINGTON and MADISON, Wis. (12/22/11)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association (CUNA) will be closed in observance of the holiday on Friday and Monday.

News Now will not publish editions on Friday and Monday, but will resume regular editions on Tuesday.

Lakota reservation hopes to get first CU

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KYLE, S.D. (12/22/11)--A proposed credit union that will serve the Lakota tribe on the Pine Ridge Reservation in South Dakota has received preliminary approval.

The Pine Ridge Reservation covers about 3,500 square miles and is home to about 40,000 Lakota Indians, but lacks a traditional financial institution (Rapid City Journal Dec. 21).

The proposed Lakota FCU would offer secured and unsecured personal loans; savings accounts; ATM cards with access to no-fee ATMs in each of the reservation's nine reservation districts; direct deposit for paychecks; and low-fee check cashing and money order services.

If approved, Lakota FCU would be chartered and federally insured by the National Credit Union Administration.

The credit union's sponsor is Lakota Funds, a certified Native Community Development Financial Institution under the U.S. Treasury Department.  Since 1986, Lakota Funds has made small loans to help start and grow businesses. Its loan portfolio exceeds $4.4 million.

Earlier this year, Lakota Funds received a $149,560 technical assistance grant as part of the Treasury Department's Native American Community Development Financial Institution Assistance Program (News Now Aug. 25).

Tawney Brunsch, executive director of Lakota Funds, told the newspaper she has received commitments for $600,000 in deposits--including funds from local businesses--for the credit union, enough to ensure stable cash flow.

Brunsch said she is optimistic NCUA will approve the credit union in the first quarter of 2012.

Illinois state CUs get second 4Q reg fee credit

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NAPERVILLE, Ill. (12/22/11)--Illinois state-chartered credit unions will receive a credit of nearly $1.257 million toward state regulatory fees for the fourth quarter of 2011.

The credit is expected to be slightly less than the total 2011 fourth-quarter billing for credit union regulatory fees, said the Illinois Credit Union League (ICUL). 

Credit unions will receive the credit as a result of legislation to implement the court-approved settlement of a regulatory fee case filed by the league against then-Gov. Rod Blagojevich in 2004.

The settlement was signed into law by Gov. Patrick Quinn in 2009.

Under the terms of the settlement, Illinois state-chartered credit unions received a $6.2 million cash payment from the state in June 2009. The payment represented a credit for the overpayment in regulatory fees made under the Blagojevich administration's fee escalation and transfer ("sweep") budgetary arrangement adopted by the state in its fiscal years 2004 through 2006.

The 2009 legislation that implemented the settlement also accomplished two other goals, according to Stephen Olson, ICUL executive vice president and general counsel.  First, it codified a rate reduction in regulatory fees. Second, the 2009 legislation reduced the Credit Union Fund margin that triggers a credit back to Illinois state-chartered credit unions.

Regulatory fees are deposited into the Credit Union Fund to offset the ordinary administrative and operational expenses of the Department of Financial Institutions' Credit Union Section in supervising state-chartered credit unions.

The fund is structured as an operating account, not a savings account, Olson said. To ensure that objective is met, the legislation reduced the margin level to 25% from 50%.  When the balance in the Credit Union Fund at the end of a state fiscal year exceeds 25% of the expenses incurred by the state in administering the Illinois Credit Union Act and related laws, the excess must be credited to credit unions that paid the fees. 

"As we stated in connection with last year's regulatory fee credit, we believe the prosecution and favorable settlement of the regulatory fee case is an excellent example of the value of league affiliation," said Dan Plauda, ICUL president/CEO. "We are particularly pleased the settlement terms we negotiated with the State in 2008 now provide Illinois state-chartered credit unions with an additional financial benefit.  We know it comes at a good time, given the continuing difficult economic and regulatory environment in which our credit unions are operating."

First Tech CEO to lead BECU on Oaklands retirement

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TUKWILA, Wash. (12/22/11)--BECU in Tukwila, Wash., announced Tuesday it had chosen Benson Porter to be its new president/CEO, beginning in April. Porter replaces retiring CEO Gary Oakland, who led BECU for 25 years.

Porter has worked for the Washington State Senate Banking Committee and the state's Division of Banking. He spent another 14 years in senior management roles at KeyBank and Washington Mutual in Seattle before joining the credit union movement as CEO of Addison Avenue FCU, Palo Alto, Calif., which later merged with First Tech FCU.

Oakland was instrumental in developing the National Association of State Credit Union Supervisors' Credit Union Advisory Council and later was its chairman and director for many years.

Oakland joined BECU in 1980 and was named CEO in 1986. Under his leadership, BECU has grown into one of five largest U.S. credit unions, with total assets of more than $9.8 billion. Oakland will remain at BECU through mid-2012 to ensure a smooth transition, the credit union said.

Michigan CUL Board cuts dues again

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LANSING, Mich. (12/21/11)--The Michigan Credit Union League (MCUL) & Affiliates' Board of Directors voted at its December meeting to cut membership dues again.

Its dues is already the lowest in the nation, the league said (Michigan Monitor Dec. 19). The league cut dues by 40% in 2001 and an additional 35% in 2010 and 2011.

The board voted to maintain the discounted dues levels for 2012 as a result of strong income from subsidiaries, high member capital at the league, and the desire to keep the cost low for member credit unions.

It also authorized an additional 50% rebate of 2011 dues, to be returned to member credit unions by year end. Credit unions paying dues by check will receive a rebate check in the affiliation package. Those paying by electronic funds transfer will see the rebate deposited into their account on Dec. 29.

"Our members' support is the reason for all of our success, and it's fitting that they should also benefit financially," said MCUL & Affiliates CEO David Adams.

CUNA Board election results announced

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MADISON, Wis., and WASHINGTON (12/21/11)--The Credit Union National Association (CUNA) Board of Directors will welcome six incumbents and two new directors, to take office March 19.

CUNA announced the election results Tuesday. There were no contested elections, which means all eight positions were elected by acclamation.

New directors are Paul Hughes, Greenville (S.C.) FCU, representing District 3, Class A, and Michael L'Ecuyer, Bellweather Community CU, Manchester, N.H., representing District 1, Class B.

Incumbents elected are:

  • Rod Staatz,  SECU, Linthicum, Md., District 2, Class C;
  • Mike Mercer, Georgia Credit Union Affiliates, Duluth, Ga., District 3, Class D;
  • Peter P. Dzuris,  Northland Area FCU, Oscoda, Mich., District 4, Class B;
  • Patrick S. Jury, Iowa Credit Union League, Des Moines, Iowa, District 4, Class D;
  • Winona Nava, Guadalupe CU, Santa Fe, N.M., District  5, Class A; and
  • Brett Martinez, Redwood CU, Santa Rosa, Calif., District 6, Class C.
They will take office in conjunction with CUNA's Governmental Affairs Conference in Washington, D.C.

Money Mission to receive Wis. Financial Literacy Award

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MADISON, Wis. (12/21/11)--Money Mission LLC, an interactive, Web-based simulation game designed to educate young adults about the fundamentals of personal finance, is being awarded the Wisconsin Financial Literacy Award for 2011 by the Wisconsin Governor's Council on Financial Literacy.

The Credit Union National Association (CUNA) and the Wisconsin Credit Union League were contacted Tuesday by the Wisconsin Department of Financial Institutions about the award. An awards ceremony is being planned in early 2012 in Madison, Wis.

The Wisconsin league rolled out the program in 2009, and in July 2010 CUNA and the league announced the launch of Money Mission nationwide, said Benjamin Schweder, vice president of W.C.U.L. Services Corp.

"Money Mission has been introduced to local schools, and teachers have embraced it as a tool to teach kids. Some have integrated the program into their classrooms," Schweder told News Now.

As players move through the video game and fictional city of Mission Heights, they make decisions on life events and financial choices such as managing a checking account, financing a car, buying stock or building a retirement nest egg.  They also participate in lessons that teach financial principles (News Now July 12, 2010)

Money Mission can be accessed by players only through participating credit unions' websites. The program is customized to the participating credit unions. When a member signs up for the game, they go to a weblink from the credit union site.  About 27-28 credit unions in Wisconsin participate, said Schweder. Nationally, credit unions participate from Hawaii, North Carolina, Texas, and Illinois as well as Wisconsin.

Earlier this year, Money Mission  was approved for inclusion in the Jump$tart Coalition for Personal Financial Literacy Clearinghouse (News Now July 12, 2011). Also, the program began offering scholarship opportunities to high school seniors and is included in the nation's most comprehensive collection of financial education resources for students.

Interested credit unions can contact Josh Jones, CUNA manager of young adult programs, at 608-231-4262. For more information, use the link.

CUs mortgage loans noted by media

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MADISON, Wis. (12/21/11)--Consumers know now--thanks to Bank Transfer Day--that credit unions are good deals on checking and savings accounts. Two recent media reports also touted the benefits of getting a mortgage at a credit union.

"Credit unions have become a banking alternative of choice for disgruntled debit card and checking account holders nickeled and dimed by fees, but credit unions also hold their own in the mortgage market," wrote Broderick Perkins in The (Dec. 12). 

While banks offer better fixed-rate mortgages for conforming and jumbo loans, "credit unions consistently offer better rates for adjustable- rate mortgages (ARMs) and home equity loans," the article said, citing the National Credit Union Administration and interest rate analyst Informa Research Services.

For consumers looking to use their wallets to make a political statement, "financing a home loan with a credit union can be more effective than bellowing through a bullhorn while occupying a city square," the article said.

It referred to statistics from the Credit Union National Association on credit unions' growth as a result of consumer backlash to bank fees. The article also noted that the lack of the profit motive kept credit unions out of harm's way during the mortgage meltdown, andit cited other advantages of credit unions including structure, federal insurance, and membership.

In, featured on the NASDAQ website (Dec. 9), the article, "Consider a Credit Union Home Loan," pointed out: "If you're shopping around for a mortgage, don't overlook credit unions--even if you don't belong to one."

The article noted that "credit union mortgage rates can be very competitive, on par with and even lower than major banks. And because credit unions typically don't pile on lots of  'junk fees' to their closing costs, the actual cost of borrowing is often lower than it would appear from just their posted mortgage rate."

Credit unions have doubled their market share of mortgage applications since 2007, said the article, which added that UW CU, based in Madison, Wis., was the first credit union to be listed as a major source of  home loans in a major U.S. metropolitan area. It was the No. 1 provider of mortgage loans in the area in 2010, according to statistics from the Federal Financial Institutions Examination Council, the article reported.

EU clears state aid to Irish CUs

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DUBLIN, Ireland (12/21/11)--The Irish government can bail out distressed credit unions in the country, said the European Commission Tuesday.

The commission said the resolution plan for distressed Irish credit unions was in compliance with European Union rules that provide aid to help remedy a serious economic disturbance in a member state ( Dec. 20).

However, the actions taken must provide safeguards to avoid harming competition, ensure proper burden-sharing, and be limited in time--the authorization is granted until June 2012--and scope.

The Irish plan fulfills those conditions, Joaquin Almunia, commission vice president in charge of competition policy, said in a statement.

The plan ensures that a failing credit union sufficiently contributes to its exit costs while all its assets and liabilities are transferred to the buyer, and that the aid provided the credit union is the minimum necessary to facilitate the process, Almunia said.

Also, the process will prevent a buyer from gaining an unfair economic advantage through acquisition of underpriced assets, Almunia added.

CU System briefs (12/20/2011)

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  • NEW CASTLE, Del. (12/21/11)--The state of Delaware now has a second student credit union branch. New Castle County School Employees FCU opened a branch in Christiana High School in September. The branch joins Louviers FCU, which opened a branch in 2009 at Newark High School. The new branch is located near the school cafeteria and provides services such as deposits and withdrawals. A credit union staffer supervises the operations. Five students serve as tellers. Shown are, from left, credit union staff member Colin MacArthur with student teller Da'Near'a Henry. (Photo provided by the Delaware Credit Union League) …
  • DENVER, Colo. (12/21/11)--Denver-based Westerra CU has awarded grants to 38 schools for a total of more than $23,000 during the 2011-2012 school year. The program, launched last year, provides teachers and schools with financial resources for programs and activities for students such as field trips, art supplies, sports fees and equipment, after-school programs, workbooks and other activities. The average grant ranged from $400 to $700. Since the program began in 2010, Westerra CU has awarded grants to 115 schools in Denver Public Schools and Jeffco Public Schools systems. Westerra has more than $1 billion in assets …
  • EL PASO, Texas (12/21/11)--El Paso (Texas) Employees FCU, which will change its name on Jan. 1 to Evolve FCU, will host its first annual film festival--the Evolve Film Festival--to celebrate the credit union's name change and to spotlight its support of local artists. The change is not the result of a merger but more to reflect a new direction for the $292.2 million asset credit union. Deadline for local artists to submit their DVD or CD entries is Jan. 9. Entries should be no more than 10 minutes long and should depict facts, concepts or questions on the videographers' take on evolution. The films will be shown at the credit union's main branch next month during an open house and press conference unveiling the new name. The winner will receive a GO PRO HD Hero Camera. Date and time will be announced later …

Kenyan orphans see early Christmas thanks to CUs

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Bruce Foulke, president/CEO of American Heritage FCU, Philadelphia, dressed as Santa Claus, delivers a book to a resident of Busia Compassionate Centre, an orphanage in Western Kenya supported by World Council of Credit Unions.
KISUMU, Kenya (12/21/11)--Because of the work of a Pennsylvania credit union and the Pennsylvania Credit Union Association, Christmas came early for the residents of Busia Compassionate Centre, an orphanage in Western Kenya supported by World Council of Credit Unions (WOCCU) and Kenya's savings and credit cooperatives.

Bruce Foulke, president/CEO of American Heritage FCU, Philadelphia, last week found himself donning a white beard and red suit and delivering a sack full of toys, games and books to 85 residents of the orphanage. Rick Myxter, director of small credit union development with the Pennsylvania Credit Union Association, acted as "head elf" and delivered a lighted four-foot Christmas tree.

"I don't know how many of the kids knew who I was, but you could tell they didn't know what a present was because they never had anything of their own before," Foulke said.

Bruce Foulke (right) and World Council of Credit Unions President/CEO Brian Branch construct a fence around a land parcel that will be home to a newer, more modern orphanage in Kenya.
Foulke and American Heritage have been feeding the orphanage, committing $12,000 annually to cover a year's worth of food for residents and staff. This was Foulke's second trip to Kenya but his first to the orphanage, which he described as a life-changing experience.

"It's so rewarding to help people who have so few things in life," Foulke said. "It makes me appreciate my life and the freedom we have so much more."

Delivering presents wasn't the only task that brought Foulke, Myxter and other volunteers to the orphanage, first introduced to WOCCU through its Kenya development program funded by the U.S. Department of Agriculture (USDA). During the weeklong trip, the volunteers also built a fence around a 3.5-acre parcel of land that will serve as home to a new orphanage, scheduled to break ground in 2012.

World Council of Credit Unions' (WOCCU) volunteer Busia (orphanage) delegation in Kenya this month included (from left) Bruce Foulke, president/CEO of American Heritage FCU, Philadelphia; Pennsylvania Credit Union Association Director of Small Credit Union Development Rick Myxter; WOCCU President/CEO Brian Branch; WOCCU Senior Vice President Mark Cifuentes; WOCCU Kenya staff member Julius Savala; and local contractor Joel Odongo.  (Photos provided by the World Council of Credit Unions)
The original orphanage was established in 2003 by Stella Achieng Egesa to house Kenya's growing number of homeless children, many of whom lost their parents to HIV/AIDS. Staff from WOCCU's development program assisted Egesa and her staff, introducing agricultural crops for greater food security. When the USDA project ended in April 2010, WOCCU stepped in and, with donor support, improved security and sanitary facilities, provided the orphanage's residents with nutritious food and medical care, and eventually secured the land to construct the new facility.

"It's always a draw for me to see how much progress Busia has made," said Myxter, who has traveled to Kenya six times, including three trips with WOCCU to the orphanage. "If it hadn't been for Stella and her staff, these children would literally be living on the street."

Dr. Bernard Micke, a Madison, Wis., physician, and his wife Linda, a nurse, also made their second trip to Busia, providing physical exams and first aid for many of the children. The couple created a medical records system for the orphanage and taught health education courses to older residents. WOCCU staff also reviewed the orphanage's business practices and carried out other tasks.

"Our goal ultimately is to make Busia financially self-sustaining," said Brian Branch, WOCCU president/CEO, who led the volunteer delegation. "In the meantime, the children are happier, healthier and more likely to succeed in life thanks to the financial and volunteer support contributed by American Heritage FCU, the Pennsylvania Credit Union Association and other generous individuals and organizations."

CU 24 board elects officers

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TALLAHASSEE, Fla. (12/21/11)--Bradley Blake, president/CEO of Florida State University CU in Tallahassee, Fla., has been elected as chairman of the board of Credit Union 24, the credit union-owned ATM and point-of-sale (POS) network.

Joan Nolan, vice president of operation support at IBM Southeast Employees FCU, Boca Raton, Fla., was elected vice chairman. Becky Hulett, chief financial officer of 121 Financial CU in Jacksonville, Fla., remains secretary/treasurer. 

A 17-year veteran of the credit union industry, Blake started his credit union career as a part-time teller at FSU CU and has since worked his way up to president/CEO, a position he has held for nearly a decade. 

Credit Union 24's remaining board members include:

  • Alvin Cowans, president/CEO of McCoy FCU, Orlando, Fla.;
  • Adrian "Casey" Duplantier Jr., president/CEO, of 1st Advantage FCU, Yorktown, Va.;
  • David Mooney, president/CEO of Alliant CU, Chicago;
  • David Southall, president/CEO of Innovations FCU, Panama City, Fla.; and
  • Dan Wollin, president/CEO of PCM Employees CU, Green Bay, Wis.

Elevations municipalities join on 25M grant

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BOULDER, Colo. (12/21/11)--Elevations CU, with $1.1 billion in assets, Boulder, Colo., has been selected to participate in a new EnergySmart loan program by Boulder County.

The credit union will provide energy efficiency loans in partnership with the EnergySmart service and the Denver Energy Challenge.

The loans, for energy efficiency upgrades, will help residents, businesses and commercial property owners in Boulder County and Denver make improvements that save energy and money.

EnergySmart is a suite of energy efficiency services available to all residents and businesses in each Boulder County community.

"The EnergySmart loan program is a perfect fit for Elevations, said Jay Champion, Elevations chief lending officer. "Our goal is to provide a seamless process for home owners and commercial building owners to secure financing for energy efficient upgrades. Given recent upgrades to our lending platforms and our footprint in the community, we are confident that this partnership can make a real impact on the program's goals."

CUNA employees play good Samaritan on layaways

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MADISON, Wis. (12/20/11)--Employees at the Madison, Wis., offices of the Credit Union National Association (CUNA) were so moved by a story Friday on Yahoo! about anonymous donors who paid off layaway plans at K-Mart for those in need--that they wanted to try it--and found out what a difference a few people can make.

After reading the article, Courtney Cantwell and Meghann Dawson, employees of CUNA's Center for Professional Development, called a nearby Wal-Mart that offered layaway services and learned it had 50 to 60 layaways that needed to be paid for and picked up by the end of the day Friday.

"Meghann and I decided we would go after work and pay our own good fortune forward. We didn't have a ton of money to contribute, but we wanted to do something. Then we thought about opening it up to the small group of folks who were at the office," said Cantwell.  Dawson e-mailed  some staffers on third floor. Other floors got wind of it. Between 10.35 a.m. and 3:30 p.m. Friday, the two collected $519 from co-workers. "We were once again astounded by the gratitude of our co-workers," said Cantwell.

They took the money after work and visited the layaway area, telling Mike, the manager on duty, that they wanted to pay off as many layaways as possible with the funds and that kids would get priority.  The manager pulled up a list of layaways and a box of receipts and set aside receipts for toys, bikes, and other kid-friendly items. Listed on each was the person's name and contact information.

Cantwell and Dawson took turns calling. They left messages on answering machines but continued to call until a person answered. "We introduced our selves--first names only--and told them we were calling to let them know their layaway had been paid off--they could come to Wal-Mart to pick up their purchases," they said.

Some were confused and thought Dawson and Cantwell were Wal-Mart employees with reminders to pick up their merchandise.  Some thought the calls were pranks. Many broke down in tears when informed. Some had under $50 left on their layaway bill, an amount many would consider small, but it made a huge difference to them.

One woman arrived at the store right after the call and asked if the callers were still in the store. She wanted to thank them personally and give them a hug. She said she had planned to leave the little pink bike at the store because she couldn't afford to pay the balance, but because of their generosity the bike will be under the tree.

One woman simply didn't believe them. But later, Cantwell received a voice mail from her. "God bless you for the rest of your life," the recipient said. "These toys are for my two great grandsons--they're four, they're twins. I've had them since April of this year. I got them out of foster care. This is going to be such a blessing for them. And I really, really can't say how much I appreciate this."

After the calls, Dawson and Cantwell had $30 left, so they walked around the store trying to figure out what to do next. They saw two women at a Subway, buying four subs. "We are buying your dinner," they told the women.

All in all, they paid off nine layaways and bought one family dinner. The article that they had read sparked others elsewhere to do the same. For a look at the article that started it,  use the link.

Judge directs NCUA RBS to negotiate settlement on WesCorp

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LOS ANGELES (12/20/11)--A U.S. District judge in Los Angeles has ordered the National Credit Union Administration (NCUA) and RBS Securities Inc. to start negotiating a settlement of NCUA's lawsuit against the firm over the losses incurred when Western Corporate FCU collapsed.

NCUA and the Royal Bank of Scotland "shall appear before a retired judicial officer or other private or non-profit dispute resolution body for mediation-type settlement proceedings," said the order, which was signed by U.S. District Judge George Wu on Dec. 7 in the U.S. District Court for the Central District of California.

NCUA is seeking $629 million in damages from RBS, alleging that the firm violated federal and state securities laws when it sold securities to WesCorp. The agency claimed that RBS sellers and underwriters made numerous material misrepresentations in the offerings documents that caused WesCorp to believe the risk of loss associated with the investment was minimal (News Now July 19).

The suit is one of several in which NCUA is seeking about $2 billion total for losses to the corporate system. NCUA also sued RBS  and J.P. Morgan Securities LLC in a U.S. District Court in Kansas related to securities purchased by the now defunct Lenexa, Kan.-based U.S. Central FCU.

NCUA has also filed suits against JP Morgan Chase in the U.S. District Court for the Central District of California, as well as separate suits against Goldman Sachs and Wells Fargo, which succeeded Wachovia Bank, for investments that led to losses for corporate credit unions.

In November it was announced that NCUA had reached settlements in its suits with Citigroup and Deutsche Bank Securities over their underwriting of residential mortgage backed securities to five failed corporates. Neither Citigroup nor Deutsche Bank admitted any fault in the settlements. Deutsche Bank has agreed to pay the agency $145 million, and Citigroup agreed it will pay $20.5 million (News Now Nov. 15).

Maine league hosts meeting with regulator

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PORTLAND, Maine (12/20/11)--The Maine Credit Union League hosted a meeting Dec. 13 of state-char­tered credit unions and the state Bureau of Financial Institutions. Representa­tives from the bureau and credit unions discussed topics including call report issues, recent rules, a foreclosure survey, troubled-debt restructuring and the upcoming legislative session.

Christian Van Dyck of the bureau outlined the effects of recent rule activity on credit unions. This includes a new rule that repeals and replaces the previous Tangible Net Benefit Rule so that it no longer applies to supervised financial organizations; and a repeal of the Truth-In-Lending, Regulation Z-2, rule (Weekly Update Dec. 16).

The Maine league worked closely with the bureau to help craft the final lan­guage of the new rule, which now follows Reg. Z. Both rules became ef­fective Sept. 28.

An issue with the call report and corpo­rate assessments also was covered. The bureau's Chris­tine Pearson said that credit unions cannot accrue corporate assessments. "This is not permissible, and the National Credit Union Administration (NCUA) has also been very clear on this issue," Pearson said. "These assessments can only be recorded after the NCUA board declares it."

Bob Studley of the bureau reviewed the definition of Trou­bled Debt Restructuring (TDR) as "a restructured or modified loan where the creditor, for economic or legal reasons related to the debtor's financial difficulties, grants a concession to the debtor that it would not oth­erwise consider."

He reiterated that a TDR loan remains so for the duration of the loan. Superintendent Lloyd LaFountain said the bureau expects to be involved in legislative activity in the upcoming session, but will have a clearer picture once the session begins.

The bureau has been reaccredited for another five years, is not looking to raise assessments, and will continue to hold the daily examination rate at the same rate it had for the past three years, LaFountain said.

"This meeting was a productive dialogue between the bureau and state-chartered credit unions, and an important meeting in continuing efforts to maintain a strong, dual-chartering system," concluded Maine league President John Murphy.

Catalyst Ask four questions to avoid risk

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HARAHAN, La. (12/20/11)--Credit union executives making investments should consider four questions for wise lending and investing:

  • What is the potential loss of principal?
  • What is the impact on liquidity?
  • What is the expected return?
  • What is the long-term impact on earnings?
The answers to these four questions are critical for balancing risk and return, said Brian Turner, director of the advisory service for Catalyst Strategic Solutions, the investment arm of Catalyst Corporate FCU in an article in the Louisiana Credit Union League's newsletter, eNews Dec. 14. Balance is an important financial principle and the impetus for credit union examiners' focus on concentration risk, Turner said.

In a recent letter to credit unions (11-CU-16 State of the Credit Union Industry October 2011), the National Credit Union Administration (NCUA) stressed the need for concentration risk mitigation strategies, said Turner. An elevated percentage of real estate loans to total loans, in combination with declining real estate values nationwide have made these strategies necessary.

Turner said he agreed with the underlying notion that credit unions need to be mindful of concentration risk, but he cautioned against an overly simplistic approach to identifying concentrated risk exposure.

Some credit union managers and examiners identify product concentration risk with basic allocation ratios, Turner said. This approach is reflected in an NCUA supervisory letter that identifies variables with broad labels, such as "real estate loans," "member business loans" and "investments in mortgage-related securities." These labels identify certain asset classes rather than aggregate risk, he said.

"Concentration risk assessment should go beyond simply evaluating whether a credit union has 'all their eggs in one basket," Turner said. "It should encompass all areas of risk--namely credit, liquidity, earnings and capital--to determine the true extent of risk associated with each principle product and how combined product risk affects the overall balance sheet."

Turner offered examples:

  • A credit union with a relatively low loan-to-asset ratio might be in a position to absorb a higher level of interest-rate risk because it retains a lower level of credit risk and a stronger liquidity profile.
  • In a case where two institutions might have the same percentage allocation of fixed-rate mortgages, one institution's portfolio could have an average loan-to-value (LTV) of 50%, an average Fair Isaac Co. (FICO) score of 760 and a demographic distribution across multiple regions. The other might have an average LTV of 90%, an average FICO of 680 and be demographically isolated within two counties. These two credit unions most likely do not have the same risk profile and should devise different risk strategies, Turner said.
Credit unions should establish a balance-sheet structure that produces a stable earnings stream through a variety of economic and interest rate cycles, Turner said. That stability depends entirely on the relationship between the credit union's earning assets and funding base, he added.

CUANY CUNA file amicus brief in mortgage recording tax case appeal

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ALBANY, N.Y. (12/20/11)--The Credit Union Association of New York  (CUANY) and the Credit Union National Association (CUNA) have filed an amicus brief with the state's highest appellate court, the New York State Court of Appeals, in support of the Hudson Valley FCU, which is appealing a  New York state mortgage recording tax  (MRT) charged to the federal credit union.

The brief supports the Poughkeepsie, N.Y.-based Hudson Valley's argument that New York state's MRT is an unconstitutional tax on the power given to federal credit unions, their property and their franchises to provide mortgages, and that federal credit unions are federal instrumentalities and are therefore exempt from this kind of state taxation.

The term "franchises" encompass those specific powers granted to a federal chartered corporation, and absent congressional authorization, states have no right to tax the franchises granted to federal instrumentalities, said CUNA and CUANY in the brief.  They also argue that contrary to the lower court's ruling, the power to write mortgage loans is a franchise granted to federal credit unions that cannot be taxed.

On the federal instrumentalities argument, the brief noted that federal credit unions advance an important government function by providing people of modest means an opportunity to obtain financial services in a not-for-profit member-owned cooperative.

"The federal instrumentality status of credit unions cannot seriously be questioned," said CUANY and CUNA. "Federal credit unions were created in 1934 to provide financial services at low cost and on liberal terms to their members, especially to persons of modest means. In so doing, they have carried out the intent of Congress to insure that more Americans can have access to credit and important financial products such as mortgage loans," the document filed said.

Federal credit unions meet the Supreme Court's test for finding a federal instrumentality to be immune from state taxation, the associations said. Section 1768 of Title 12 of the U.S. Code defines the limit to which credit unions can be taxed by immunizing federal credit unions from state taxation except where expressly permitted by statute. Also, statutes delineating the powers of federal instrumentalities are to be interpreted without deference to state court determinations.

In filing the brief, the associations "took these steps out of concern that in challenging the federal instrumentality status of credit unions, the department was in fact questioning the legal foundation of the dual charter system."

It also noted that "a proper reading of controlling U.S. Supreme Court precedent necessarily leads to the conclusion that New York State's MRT is an illegal tax on federal credit unions and their mortgage lending activity, both because of the fact that the tax is a tax on property and because it unduly burdens the franchise granted by Congress to federal credit unions to make mortgages."

Hudson Valley FCU, a $3.2 billion asset credit union,  filed the suit on May 12, 2009, against the New York State Department of Taxation and Finance, Commissioner Robert L. Megna and the State of New York, seeking a declaratory judgment that the state may not impose the MRT on mortgages granted to secure loans made by the credit union because as a federal credit union, it has a federal tax exemption.

Last year, the New York Supreme Court, which is a lower trial court, dismissed Hudson Valley's suit, declaring it was not actionable. Justice Judith Gische in the original ruling described the MRT as a tax on the "privilege" of filing the mortgage under state law. New York, unlike most states that charge only administrative fees for recording a mortgage, charges a tax that amounts to more than 2% of the mortgage's face value in some areas such as New York City.

The credit union appealed to the Appellate Division of the Supreme Court of New York and oral arguments were heard in May. CUNA and CUANY also filed an amicus brief with the Appellate Division. The Appellate Division upheld the Supreme Court's ruling. The credit union's appellate petition with New York's highest appellate court, the New York State Court of Appeals, was granted in October.

More ATM disclosure suits filed vs. CUs banks

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MADISON, Wis. (12/20/11)--A New York resident is one of the latest consumers to file multiple lawsuits against credit unions and banks claiming they are not complying with disclosure provisions of the Electronic Funds Transfer Act (EFTA), which requires posting fees for using ATMs.

Last week, consumer Don Anderson filed EFTA suits against FirstLight FCU, El Paso, Texas;  Firestone Community FCU, Bridge City, Texas; Centric FCU, West Monroe, La.; Monroe Telco FCU, West Monroe, La.; and Capital One Bank. In recent weeks, he has filed similar EFTA suits against eight other banks.

In his suits filed last week against Firestone Community FCU in U.S. District Court for the Eastern District of Texas--Beaumont Division, and First Light FCU in U.S. District Court for the Western District of Texas--El Paso Division, Anderson said he was charged $2 and $2.50 respectively as a nonmember surcharge for using their ATMs.

In both instances, he claims that "at the time of the ... transaction, there was no notice posted 'on or at' the ATM … apprising consumers that a fee would be charged for use of the ATM."

In both suits, Anderson is asking for class action status, as well as an award for statutory damages associated with the surcharges, payment of costs of the lawsuit, and payment of reasonable attorneys' fees.

In similar suits during the past year, a Michigan couple--Nancy Kinder and Ray Harrison of Fowlerville, Mich., who are both retirees--have driven around the country looking for ATMs without proper fee notification signs. The two then photograph ATMs that lack legal signage and file class actions against credit unions and banks that own the ATMs, saying that nondisclosure of fees for ATM transactions violates EFTA, according to court records (News Now May 24).

A rash of lawsuits last spring prompted CUNA Mutual Group to warn credit unions to develop and write procedures for regularly inspecting their ATMs to ensure their signs are posted, to photograph the ATMs at the time of inspection, and to maintain the inspection log for all ATMs and have credit union management review the log (News Now April 25).

Measuring social media marketing impact difficult

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MADISON, Wis. (12/20/11)--More than ever credit unions are using Twitter, Facebook and other forms of social media to reach consumers, as evidenced in part by the success of Bank Transfer Day. A new study indicates that while executives expect the success of every marketing campaign to be measured, it is more difficult to quantify electronic marketing.

About 82% of executives surveyed said they expect every campaign to be measured according to the "2011 State of Marketing Measurement Report," a survey professionals conducted by Ifbyphone (eMarketer Dec. 16).

Yet, in breaking down the different marketing types, only 47% of U.S. marketers believe they can effectively measure the return on investment (ROI) of e-mail marketing. Other types of marketing saw even smaller percentages. For social media marketing, only 26% of marketers think they can effectively measure ROI.

About 62% said they track an overall net increase in sales to measure the success of marketing programs. Also, 57% look at the number of new customers acquired, 39% track the number of new leads generated, 33% look for an increase in customer retention and 33% measure a quantified increase in awareness.

The tools they used to measure marketing campaigns include Web analytics, cited by 48% of respondents; e-mail marketing software analytics (47%); leads from contact forms (38%); and social media monitoring (30%).

Among the marketing types for which respondents believe they can effectively measure ROI:

  • E-mail marketing--47% of respondents;
  • Direct mail--41%;
  • Online ads--40%;
  • Print ads--34%;
  • Trade shows--28%;
  • Social media--26%;
  • Search engine optimization--24%; and
  • Public relations--18%.
Measuring which keywords drive either the most clicks (40%), the most online conversations (40%) and the most phone calls (37%) were cited by marketers as challenges.

CU gets naming rights to Des Moines auditorium

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JOHNSTON, Iowa (12/20/11)--Community Choice CU, Johnston, Iowa, has signed a 10-year, $2.5 million deal to acquire naming rights to Veterans Memorial Auditorium, Des Moines.

The auditorium, which is in the midst of a $43 million renovation, will include eight exhibits dedicated to Iowa servicemen and women and images, personal stories and statistics from every conflict since Iowa's statehood in 1846, according to a press release from the Polk County Board of Supervisors..

Veterans will also benefit from a $25,000 donation made to the Des Moines Vets Center on behalf of Polk County, Global Spectrum, and Community Choice CU.

"The community expansion project that"  will provide a much needed benefit to the Des Moines and Central Iowa community while increasing the awareness for the sacrifices of Iowa's veterans and creating a proper and robust place to honor their service and memory," said Roger Reiser, Community Choice CU CEO.

CU System briefs (12/19/2011)

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  • HIGHTSTOWN, N.J. (12/20/11)--The Enterprise Holdings Foundation, the charitable arm of Enterprise Car Sales, donated $4,000 to support the New Jersey Credit Union Foundation's (NJCUF) financial literacy efforts. During this academic year, the foundation continued to support its Financial Reality Fairs program and the Building Economic Strength Together internship program, and entered a partnership on behalf of the state's credit unions with the New Jersey Coalition for Financial Education. From left are: NJCUF Treasurer Paul Gentile, NJCUF Chairman Ann South; Enterprise Car Sales' Kaushika Kansara, NJCUF Board Member Tracy Sussmann, and Enterprise Car Sales' Michael Kopp. (Photo provided by the New Jersey Credit Union League) …

  • SAN ANTONIO (12/20/11)--Employees and their families of San Antonio-based SACU
    Click to view larger image Click for larger view
    participated in the nationwide program, 2012 Scarves of Special Olympics by knitting and crocheting scarves to be distributed to Special Olympics athletes who will compete in 2012. Thirty individuals signed on to design and create the scarves that had to meet dimension and materials criteria, including the color scheme of navy blue and red chosen for 2012 by the national organization. Texas had a goal of creating 3,000 scarves, and the credit union's team created nearly 80, said SACU employee Maureen Schneiderheinz. Her twin daughters, who knit, heard about the program and spread the word. (Photo provided by SACU) …

Study FIs make progress toward FFIEC online security expectations

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MOUNTAIN VIEW, Calif. (12/19/11)--Credit unions and banks are making progress in the initial phases of preparing for new Federal Financial Institutions Examination Council (FFIEC) expectations on online banking security that will be effective in 2012, according to a new survey. However, many will have to rush to meet the January 2012 deadline.

Fifty-seven percent of the credit unions and banks surveyed have completed their risk assessment, and 59% have formed a plan to fill online banking security gaps, according to a study by Guardian Analytics, a Mountain View, Calif.-based fraud prevention provider, who released the findings Thursday.

The company surveyed more than 300 executives responsible for online banking security decisions at more than 100 U.S.-based banks and credit unions of all sizes in November. Most respondents lack clarity on the minimum expectations for layered security outlined in the FFIEC Supplement to the Authentication in an Internet Banking Environment, the study found.

Of those surveyed, 84%  plan to invest in new technologies to address the enhanced expectations. However, most are not far along in technology implementation--43% said they have purchased new technology solutions, and 49% said they intend to in the future.  Many plan their investments for the next six to 12 months, in time for their 2012 exam, said the report.

"The FFIEC raised the bar on expectations for online security, and financial institutions are scrambling to evaluate and invest in preparation for their 2012 exams," said Terry Austin, CEO of Guardian Analytics. "In the last six months, we have seen exponential growth in investments in anomaly detection by those who are following the guidance diligently. As institutions work more closely with their examiners to fully understand the new requirements, we expect that growth to continue in the coming year."

The FFIEC supplement outlined two minimum expectations against which financial institutions would be examined: The ability to detect and respond to suspicious activity at login and initiation of transactions in all accounts, and enhanced controls of administrative functions for business accounts.

The survey indicated that despite the specific language in the supplement, nearly half the respondents did not fully understand the minimum expectations. Roughly 41% were unable to identify anomaly detection as an FFIEC minimum expectation for layered security, and 56% could not identify enhanced controls for business banking administrative functions.

Respondents also ranked the factors that determine their priorities for technology investments. "Level of protection" was ranked most important driver for choosing a technology solution, followed closely by "customer convenience." "Meeting minimum FFIEC requirements for layered security"  was ranked the lowest.

The FFIEC supplement, released in June, was in response to rapidly evolving banking attacks and ongoing growth in online fraud losses. Regulars have said they expect financial institutions to take significant steps toward conforming with updated expectations for ongoing risk assessments, enhanced layered security and customer education by January 2012.

More CUs report growth topic alive in media

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MADISON, Wis. (12/19/11)--The media continued serving up credit unions in a smorgasbord of positive stories on three fronts: credit unions' record growth related to Bank Transfer Day; credit unions' record-breaking high scores on a new customer satisfaction survey; and advice/comparisons of credit unions' services vs. those of banks.

Many articles had key input from state leagues and the Credit Union National Association (CUNA). Leagues were armed with state-level statistics reflecting growth in their states. Examples are five separate articles featuring credit unions in Florida, Pennsylvania, New York, Wisconsin and Minnesota discussing their membership and asset growth. Among them:

  • "Credit-union customers spiked as banks floated fees" in the Orlando Sentinel (Dec. 8) offered up the League of Southeastern Credit Unions' (LSCU) statistics.  "It's no secret that credit unions have had many more people calling, checking out their websites and stopping in branches," LSCU spokesman Mike Bridges told the Sentinel. It also cited CUNA's figures. Mark Wolff, CUNA senior vice president and chief communications officer, said in the article that the statistics demonstrated the "dissatisfaction many consumers felt about their banks."
  • An article in Daily Record/Sunday News (Dec. 10), entitled "Credit unions, banks seeing growth," featured the Pennsylvania Credit Union Association and three York and Mechanicsburg, Pa.-area credit unions--Members First FCU, Heritage Valley FCU, and First Capital FCU--discussing their growth.
  • "Credit union industry sees increase in business in 2011," an article in the Wisconsin State Journal (Dec. 13), noted  that "it is boom time for credit unions across the U.S. and Wisconsin's credit unions are enjoying some of that success." In it, CUNA Chief Economist Bill Hampel noted that the banking industry crisis that began in late 2008 didn't prompt many bank customers to switch. "But more recently when (increased fees) started to hit pocketbooks, you could say it's the straw that broke the camel's back,"  he said.
  • "Thousands of Minnesotans move money to credit unions," published in the Twin Cities Daily Planet (Dec. 11), was one of a three-part series on banks, credit unions and the unbanked in Minnesota.  The Minnesota Credit Union Network told the newspaper credit unions in the state gained 11,000 new members after the end of September and that members save on average about $76 a year.
  • A Dec. 15 article in the Jamestown (N.Y.) Post-Journal, "Credit Unions Gain New Accounts on 'Switch Day,'" outlined growth of New York credit unions, with the Credit Union Association of New York estimating the state's credit unions added at least 39,000 members and grew $270 million in deposits after Bank of America unveiled its now-rescinded $5 monthly fee on debit cards. In it Affinity One and Southern Chautauqua FCU noted their growth and the response to Bank Transfer Day.
For stories on credit unions achieving a record-breaking high score in the 2011 American Customer Satisfaction Index, the headlines tell it all:  "Credit Unions Blow Big Banks Away in Customer Satisfaction Survey" (Business Insider Dec. 13); "Credit unions trounce big banks in consumer survey" (TD Ameritrade Dec. 15) and "Credit unions soar in customer satisfaction survey (Winston-Salem Journal Dec. 14) are three examples.

"These results are consistent with survey results done through the years that show people really appreciate the value of credit union membership," North Carolina Credit Union League President/CEO John Radebaugh told the Winston-Salem newspaper. "Some people might argue that negative headlines about banks helped drive the credit union numbers up even further this year, but it's our view that credit unions are doing the right things to earn the loyalty and trust of their members."

And finally, there are still items circulating advice related to fees and comparing services. A columnist who wrote "Sick of Fees? Here Are Some Banking Options" ( Dec. 15), said that "For people who want a full-service bank, but don't want to pay huge fees, credit unions are a great choice." Also, "given the choice between high-cost banks and lower-cost credit unions, it's not surprising that many customers are moving their money."

And a segment on KSL Newsradio (Dec. 14), "Should you use a bank or a credit union," advises consumers to determine first how they want to access their money. A credit union focuses on "providing savings and service to their members, which, in most cases, results in higher interest rates on savings accounts and lower interest rates on credit cards and loans," Preston Cochrane, CEO of AAA Fair Credit Foundation, told the station.

WOCCU European CUs advocacy efforts a success

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BRUSSELS, Belgium (12/19/11)--European credit unions made headway last week as champions in providing basic services to the financially underserved because of efforts by the World Council of Credit Unions' (WOCCU) European Network of Credit Unions (ENCU), WOCCU said.

Meetings with European Union (EU) parliamentarians and the European Commission in Brussels, Belgium, as part of ENCU's annual lobbying efforts, resulted in credit unions being invited to participate in a commission hearing on financial inclusion in January.

Also, the topics of transparency of account fees and anti-money-laundering rules were discussed by credit union participants and lawmakers. In addition to WOCCU, participants represented credit union movements in Estonia, Ireland, Poland, Romania and the United Kingdom.

"The meetings with lawmakers were essential to ensuring that credit unions' unique structure and commitment to the social and economic well-being of their members is recognized within draft legislation, subsequently creating regulatory environments that enable, rather than inhibit credit unions from achieving the spirit of the law," said Brian Branch, WOCCU president/CEO.

In addressing financial inclusion, EU lawmakers have considered allowing member states to designate at least one financial provider within each jurisdiction in EU countries, which would be required to offer basic payment accounts to financially excluded citizens at a reasonable cost. In light of such considerations, the credit union representatives present highlighted histories of successfully providing affordable, tailored financial products and services to rural, low-income and financially excluded individuals, said WOCCU.

As a result, credit union participants were among the few financial industry representatives invited to participate in the parliament's Internal Market and Consumer Affairs Committee hearing on financial inclusion Jan. 25 in Brussels.

The credit union delegation also expressed support for legislation requiring account fees to be disclosed in transparent and meaningful ways to consumers.

Regarding anti-money-laundering rules, representatives asked for less burdensome reporting requirements and certain flexibility on identity verification of individuals in remote areas. Although credit union disclosure practices and adherence to anti-money-laundering efforts already align with commission requirements, participants agreed that ongoing advocacy efforts are critical to ensure that legislation and regulation avoid becoming so burdensome that they compromise the policy objectives of financial inclusion.

"While financial inclusion is a hot topic of debate amongst EU policymakers today, it is a topic that European credit unions have lived and breathed throughout their history," said WOCCU Director Brian McCrory, who also serves on the board of the Irish League of Credit Unions. He noted that the "cooperative advocacy efforts have been fruitful in gaining the opportunity to advocate on our members' and potential members' behalves at the EU policy level in January," and added he hopes "that such efforts will result in a more holistic approach to financial inclusion."

Study notes shift in traditional retirement income plans

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BOSTON (12/19/11)--The retirement income industry in the U.S. is still in its infancy, with the shift from accumulation to decumulation evolving slowly, notes a new report from Aite Group. With the demand generated by the retiring Baby Boomers, this can impact credit union operations, and products and services for employees and members.

Based on a July-to-September Aite Group survey of 22 senior financial services executives who serve the retirement income marketplace, the report considers the industry's progress and the issues it faces in moving from wealth accumulation to decumulation.

The report assesses the state of the U.S. retirement income marketplace, which includes retail-distribution financial advisers, asset managers, insurance firms, online brokerages and financial institutions.

"The shift from wealth accumulation to decumulation is where financial advisers and distribution firms must transform their practice-management skills," says Greg Cherry, senior analyst with Aite Group and author of the report.

"The accumulation practices of the past are simply not sustainable as consumers demand less market risk and an increased focus on one day replacing their paychecks with retirement paychecks," he added.

In the report, executives agree there is over-emphasis in the industry on building up a portfolio before retiring. Today's investing dynamics for accumulating assets are far different from those living off those assets. They agreed new compensation models are needed to encourage financial advisers to adapt to decumulation.

Investment outcomes and lessons from the 2008 financial crisis continue to weigh on investors' minds, and many consumers were unable to do the one thing necessary to enjoy a comfortable retirement: Save adequately, Aite said.

As a result, retirement-income firms across various areas of the industry are dealing with how to construct appropriate and suitable retirement income plans for clients with differing levels of wealth.

Aite Group is an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry.

San Francisco FCU offers free ATM use at Walgreens stores

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SAN FRANCISCO (12/19/11)--San Francisco (Calif.) FCU has entered an agreement with Welch ATM to allow its members surcharge-free access to ATMs in more than 500 Walgreens locations statwide.

Under the agreement, the ATMs will carry the credit union's brand at selected locations throughout San Francisco.

"People have already begun to notice our branding on the ATMs," says Steven Stapp, San Francisco FCU president/CEO. "The locations are in neighborhoods near San Francisco FCU branches. This agreement will not only help attract new members, but it will enhance the convenience of our services for existing members."

CUNA HRTD Council paper addresses retirement gap

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MADISON, Wis. (12/19/11)--The CUNA HR/TD Council addresses issues brought on by retirement of credit union employees in its newest white paper, "The Coming Retirement Gap."

Retirement has become a growing concern not only for pre-retirement employees, and the organization's human resources and senior management, but also for employees looking to rise in the ranks of the organization. Many organizations, including credit unions, are experiencing a gap when it comes to retirement.

The white paper, written by Lucy Harr, evaluates the factors contributing to the gap and the implications and opportunities that exist for addressing it. They include:

  • Succession plans. One succession plan strategy is to eliminate a position by either replacing it with technology or dividing the responsibilities among remaining employees. Another is to outsource functions when vacancies occur. For example, a credit union converts to an external data processing system from an in-house operation when a senior level information technology manager retires.
  • Preservation of credit union and cooperative philosophy. A key issue in losing long-time or senior employees is the effect it has on corporate culture, and for credit unions, the fading of the rich tapestry depicting their history and philosophy. Credit unions hold a unique position in the financial services industry. Are their shared values and shared vision in jeopardy when long-time leaders head out the door, the white paper asks.
  • Management of job functions. Two ways to balance the need for recruiting new talent with the benefits inherent in retaining the knowledge and experience of seasoned employees are to offer part-time positions and to hire retired employees as consultants or temps. These were cited as the most popular strategies among organizations for recruiting and retaining workers who are past traditional retirement age, according to a 2010 SHRM/AARP survey of human resources professionals.
  • Adequacy of benefit plans. Ultimately, the decision to retire is a personal one, but if workers haven't saved enough to do so comfortably they have three choices: work longer, save more, or reduce their standard of living in retirement. When workers on the verge of retirement who have lost money in the stock market were asked to choose, most said they would delay retirement and continue to save rather than cut costs, according to a 2009 study from the Center for Retirement Research at Boston College.
The paper offers several suggestions for bridging the gap and finding solutions that fit the credit union's staffing, knowledge, and expertise, and the employee's desire to maintain employment. One thing is certain: human resources, training, and development staff play a pivotal role in ensuring the credit union's needs are met and that senior management and the board of directors are informed of the options available, the council said.

For more information, use the link.

CU temporarily blocks 2000 cards to prevent fraud

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VENTURA, Calif. (12/19/11)--Ventura (Calif.) County CU, Ventura, Calif., temporarily blocked 2,000 of its members' 50,000 credit and debit cards late Wednesday and early Thursday as a fraud prevention measure.

The block was placed after Visa alerted Ventrua County CU about fraudulent activities early Wednesday evening (Ventura County Star Dec. 16).

The block was removed by noon Thursday.

The fraudulent activity involved debit cards, according to Tina Estes, director of marketing for the credit union, told the Ventura County Star.

About 15 people--an unusually high amount--were lined up when the credit union's Ventura branch opened at 9 a.m. Thursday.

The credit union typically calls members or sends letters when fraudulent activities are suspected, but it wanted to be proactive in protecting members and was unable to provide notification Wednesday evening, Estes said.

Biz lending up CUs outshine big small banks

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NEW YORK (12/19/11)--In addition to the membership gains they made related to Bank Transfer Day, credit unions also continued to make strides in small-business lending marketplace during November.

Credit unions--and community development financial institutions (CDFI), micro lenders, and others--approved 62% of small business funding requests in November, a rise from the 61.8% during October, according to the Biz2Credit Small Business Lending Index, an analysis of 1,000 loan applications on

Credit unions granted 57% of small business funding requests, up from 56.6% in October.

Loan approvals by small banks increased to 47% in November, their highest rate this year and an increase from 46.3% in October.

Approvals by large banks also rose, reaching 10% for the first time since April.

Small Business Funding Requests
  Big Bank ($10B+ assets)

Lending %
Small Bank

Lending %
Credit Union

Lending %
January 12.8 43.5 48.9
February 11.9 43.9 49.1
March 11.6 44.2 48.8
April 10.4 44.6 50.1
May 9.8 45 51.2
June 8.9 42.5 52.3
July 9.8 44.9 53.4
August 9.4 43.8 54.2
September 9.2 45.1 55.5
October 9.3 46.3 56.6
November 10 47 57

"Optimism seems to be returning," said Biz2Credit CEO Rohit Arora. "We have seen an increase in the sheer volume of loan applications, which is a good sign. The strong start of the holiday shopping season combined with the latest jobs report showing that the U.S. unemployment rate fell to 8.6% in November--its lowest level in two-and-a-half years--indicates that brighter days may be ahead."

Biz2Credit's analysis also found that loan request amounts ranged from $25,000 to $3 million; that the average credit score was above 680, and that average time in business was slightly more than two years.

The study indicates that demand for member business loans (MBL) is arising.

The Credit Union National Association estimates that increasing the current 12.25% of assets MBL cap to 27.5% of a credit union's total assets would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer.

Holiday surprise changes life for boy struck by lightning

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VIRGINIA BEACH, VA. (12/19/11)--A Virginia Beach, Va., credit union's holiday surprise for the
Noah Addesa's mother, Lisa Addesa, is overcome upon learning that Chartway FCU's charitable arm, the We Promise Foundation, has bought the family a specially designed wheelchair van to enable the home-bound family to transport Noah after a remarkable recovery after being struck by lightning in 2007.
family of 16-year-old Noah Addesa, whose heart stopped after lightning struck him on the left side of his head in 2007 in his backyard, gave an uplifting message about the generosity of credit unions.

The credit union's charitable arm, the We Promise  Foundation, presented the gift of freedom and mobility--a specially-designed, fully paid for, wheelchair van.

Noah's extraordinary recovery--he was dubbed the "Miracle Boy" by thousands of supporters--has left him wheelchair bound. He is unable to walk, talk, fully control movement and to enjoy everyday activities like visiting area family members during the holiday season.

The 6' tall Noah weighs 160 pounds. That and his 105-pound wheelchair make transferring Noah to a vehicle extremely difficult and dangerous for everyone involved, said the credit union.

The day after Noah Addesa's family received the wheelchair van, Noah was thrilled to be able to shop with his mom and enjoy ice cream at Rick's Frozen Custard.  (Photos provided by Chartway FCU)
The family struggled to take him to therapy treatments, doctor's appointments, church, and other off-site activities. Given the sheer strength and effort transportation required, the family was predominantly confined to its home.

The credit union and its foundation invited the Addesa family to its corporate center to surprise them with "Noah's wheels."

As the family arrived, more than 100 employees and supporters welcomed them with applause and signs stating, "We Promised. We Delivered!" and "Chartway's We Promise Foundation is proud to make your dream come true!" and "Honored to bring a smile to your face today."

To experience the heartwarming event, use the link to the video.

CU System briefs (12/15/2011)

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  • LITTLE ROCK, Ark. (12/16/11)--Joyce Judy, 57, a former credit union president who invested $500,000 of a member's money in a racetrack that turned out to be an international scam, was sentenced Wednesday to 26 months in prison for one count of fraud. Judy was president of Little Rock, Ark.-based Arkansas Employees FCU when the incident occurred in late 2009. She allegedly persuaded a member to invest in what she thought was a certificate of deposit, said prosecutors. Judy pooled the funds with $500,000 of her own funds. A business partner wired the money overseas without her permission, and the funds disappeared (The Associated Press via Dec. 14) …
  • ROCHESTER, N.H. (12/16/11)--Holy Rosary Regional CU (HRCU), based in Rochester, N.H., is commemorating its 50th anniversary next year by publishing a book, Comme D'Or (Good as Gold). Written by Michael Berhendt, a Rochester city planner, the 196-page historical memoir  explains how the credit union was established in 1962 by parishioners of the Holy Rosary Church to provide credit to French Canadian immigrants who had difficulty securing loans from local banks. It conducted business in the church's basement on Sundays after Mass, with funds reserved in a shoebox. Today, HRCU is  a full-service community institution with 17,000 members, more than $170 million in assets, and four branches …
  • MONT ALTO, Pa. (12/16/11)--Charles A. Recard of Mont Alto, Pa., died Tuesday in a Chambersburg, Pa., hospital.  He was 83.  Recard was past president, past secretary and one of the founders of the Cumberland Valley Chapter of Credit Unions (The Record Herald Dec. 14).  He worked for 33 years at Landis Machine Co., and served as past president and board member of the Lanmaco FCU, Waynesboro, Pa. He also was a plant manager at Beck manufacturing, Waynesboro, for 10 years, and was a member of the PA Central FCU in Harrisburg …

Making the holidays merrier--a CU tradition

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Oregon Community CU employees gathered in Springfield, Ore., Dec. 3, for the 59th Annual Springfield Christmas Parade, themed  "Through the Eyes of a Child." Springfield branches of the Eugene, Ore.-based credit union displayed their holiday spirit in a Dr. Seuss-inspired float for the parade, complete with Cindy Lou Who, The Grinch and The Cat in The Hat, winning them first place in the vehicles category. (Photo provided by Oregon Community CU)
MADISON, Wis. (12/16/11)--Many credit unions nationwide are taking part in an annual credit union tradition, making the holidays merrier through events such as charitable fundraisers and donations, parades and community outreach activities.

A poll taken earlier this month by the Pennsylvania Credit Union Association asked credit unions how they participate in holiday community events (Life is a Highway Dec. 8).

While the poll can't be generalized to credit unions across the nation, most credit unions will recognize the activities as events they participate in, too. The 48 individuals responding to the survey selected one or more charitable events of participation.

The results were:

  • Toys for Tots--43.8% (21 people);
  • Food donations--35.4% (17);
  • Angel/mitten tree--31.3% (15);
  • Gifts for local home/organization-- 8.3% (4);
  • Clothing drive--8.3% (4);
  • Party for Needy Children/Families--4.2% (2);
  • Other events--37.5% (18); and
  • No participation--10.4% (5).
Other credit union holiday activities include:

  • Employees and family members of Freedom CU in Warminster, Pa., along with Dollar Dog, march at the 51st Annual  Hatboro Holiday Parade in Hatboro, Pa. (Photo provided by Freedom CU)
    For a fourth consecutive year, Freedom CU in Warminster, Pa., took part in the Hatboro Holiday Parade, a tradition for the community of Hatboro, Pa., and its neighboring towns. Held on Nov. 20, the parade--now in its 51st year--drew nearly 50,000 spectators as it traveled a mile. When earlier this year it was announced that the parade faced funding challenges, the $498.7 million asset Freedom also became a Gold Sponsor of the parade, donating $500 to help with operational costs. The credit union serves the Hatboro community, with a branch location just minutes away in neighboring Warminster Township, and said it sought to help preserve the long-standing and treasured event.
  • Community Financial CU in Plymouth, Mich., announced Dec. 1 it would support local nonprofit organizations by surprising them with donations throughout December. During its "Season of Giving" conducted in the spirit of the holiday season, the $471.2 million asset credit union will donate more than $50,000 to groups in areas the credit union serves, which includes seven cities. One recipient will be announced through Community Financial's social media outlets on Facebook and Twitter each business day through Dec. 23.
  • For more than 20 years, employees of Aberdeen (Md.) Proving Ground FCU (APGFCU) have partnered with The Salvation Army and its Angel Tree program each December to provide assistance to local families in need during holidays. This year, APGFCU staff collected hundreds of new toys and gifts of clothing for area children. Through the Angel Tree program, local families in need register their children for holiday gifts through The Salvation Army. Gift-givers may choose to donate all of the items on a child's wish list or additional gifts. Once donations are collected, The Salvation Army sorts and then distributes the gifts to the families before Christmas Eve.
  • Great Lakes CU staff in Sylvania, Ohio, organize holiday presents purchased by employees throughout the credit union for delivery to One Hope United. (Photo provided by Great Lakes CU)
    Staff from Great Lakes CU (GLCU) in Sylvania, Ohio, used their personal time to shop for 75 young patrons of the charity One Hope United.  Throughout the year, the $28 million asset GLCU recycles aluminum cans and collects donations from staff for such things as "Jeans Days" and 50/50 raffles to fund the gifts. Shoppers received the child's first name, age, gender and wish list. Gifts were collected at the credit union and then delivered to One Hope United for its annual Christmas party for the kids.
  • For the sixth consecutive year, WEST-AIRCOMM FCU employees in Beaver, Pa., donated $700 for gifts to an underprivileged family. This year's record total was matched by the $179 million asset credit union for a grand total of $1,400. The employees did all the shopping and wrapping for the family of eight (Life is a Highway Dec. 13).
  • Employees of  Erie (Pa.) General Electric FCU held a holiday party for the YMCA Kids Club and presented area children with gifts that included a new entertainment center, flat screen TV, Xbox Kinect, and games purchased with the money raised this year. The Credit Union SuperFan, Bubba Luv, also joined in on the fun and presented a check for $500 to the YMCA program (Life is a Highway Dec.9).
  • Norristown Bell CU (NBCU) employees in Blue Bell, Pa., adopted a family through CADCOM's "Father's Initiative Program," helping a Dad and his children with food, clothing and gifts. Also, NBCU employees and members participated in the Lt. Patty Simmons Law Enforcement Food Drive sponsored by Norristown and other local police departments for the Salvation Army. The event stocks the pantry at local Salvation Army locations for their shelters and food assistance programs (Life is a Highway Dec. 9).
  • Texoma Community CU in Wichita Falls, Texas, received positive media attention recently for its "Tree of Life" initiative. The credit union, for the fifth consecutive year, has partnered with Adult Protection Services, to brighten the holidays for abused, neglected or underprivileged elderly people in the community. In the credit union's two lobbies, Texoma Community decorated a Christmas tree with ornaments that have cards attached. On the cards are the name of an elderly or disabled person, and a wish list (LoneStar Leaguer Dec. 8).
  • Thirty-eight employees at First Commonwealth FCU, Lehigh Valley, Pa., donated Christmas gifts for the kids at Camelot for Children. The kids, ranging in age from one to 18, will receive their gifts at Camelot's annual Christmas party. Camelot for Children is a non-profit organization where seriously, chronically and terminally ill children can meet and play (Life is a Highway Dec. 8).

Three CUs donate 1M to fund iBiz Kidi

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MADISON, Wis. (12/16/11)--Three credit unions have collectively donated $1 million to help nationally underwrite Biz Kid$, the Emmy Award-winning, credit union-funded public television series that teaches kids about money management and entrepreneurship.

"We've seen great success with the show and accompanying curriculum throughout middle schools in North Carolina, so it's an easy decision to continually support Biz Kid$," said Mark Twisdale, executive director of the SECU Foundation.

Many SECU employees are trained on the show's curriculum and the credit union works with the North Carolina Department of Public Instruction to train teachers on the program.

"Biz Kid$ has had a tremendous impact in advancing financial literacy, not only within the educational community, but in households across the world," said Rudy Hanley, SchoolsFirst FCU president/CEO. "At SchoolsFirst FCU we are honored to support a program that educates, inspires and motivates the next generation of credit union members."

CU Solutions Group (CUSG), through its Invest in America program, also donated $700,000 for the second year in a row. CUSG's gift, combined with its $700,000 contribution last year, makes it one of the largest independent sponsors of Biz Kid$.

During the past six years, more than 260 credit unions and affiliates have raised about $10.4 million to support the show's production, website and curriculum. Every Biz Kid$ episode begins and ends with a narrator reminding viewers that: "Production funding for Biz Kid$ is provided by America's Credit Unions, where people are worth more than money."

CUs active in holiday food drives

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MADISON, Wis. (12/16/11)--Credit unions nationwide are holding food drives to help feed their less fortunate neighbors during the holidays.

Twenty-nine Hawaiian credit participated in "Have a Rice Day," a fundraiser for the Hawaii Foodbank and its neighbor island food distribution partners. From left, Jon Takushi, sales manager, Starwood Hotels and Resorts (sponsor); Anabel Lindsey, vice president of operations, Hawaiian Tel FCU, Honolulu; Dick Grimm, president, and Polly Kauahi, director of development, both of the Hawaii Foodbank; Gohan Da Hawaii Rice Guy; Randall Okamoto, vice president of lending, Hawaiian Tel FCU; and Kim Bartenstein, food drive manager, Hawaii Foodbank. (Photo provided by the Hawaii Credit Union League)
It doesn't snow Hawaii, but many favorite dishes are made with another white staple--rice. Twenty-nine credit unions from Oahu, Big Island, Maui, and Kauai participated in "Have a Rice Day," a fundraiser for the Hawaii Foodbank and its neighbor island food distribution partners. More than $39,771 representing the equivalent of 66,286 pounds of rice, was donated.

The program ran from Sept. 9 to Nov. 10. Each credit union gave away plastic rice paddles, imprinted with the credit union's logo, to those who donated 20 pound bags of rice or cash equivalents.

Each credit union held rice-themed events throughout the "Have a Rice Day" program, including plate-lunch sales, rice dish samplings, and rice cooker give-aways to drive awareness and increase donations.

Gohan Da Hawaii Rice Guy, a life-sized mascot created for the program, made appearances at credit unions on Oahu. ("Gohan" is the Japanese word for "rice.")

A check presentation was held on Wednesday at the Hawaii Foodbank in Honolulu. The money received and the rice donations were distributed to Hawaii Foodbank, Maui Food Bank, The Food Basket (Big Island) and Hawaii Foodbank--Kauai.

Thirteen credit unions joined to support Long Island Credit Unions' annual October Food Drive to help feed Long Island's hungry adults and children. Pictured from participating credit unions are: From left: Robert G. Allen, Teachers FCU, Hauppauge, Joann Doyle, North Shore-LIJ Heath System FCU, Jericho; Ed Paternostro, Nassau Educators FCU, Westbury; Carol Allen, People's Alliance FCU, Hauppauge; Brian Clarke, Bethpage FCU; Frank Cordano, Nassau Financial FCU, Westbury; Stacy Carter, Winthrop University Hospital Employees FCU, Mineola; and Bret Sears, Island FCU, Hauppauge. (Photo provided by the Long Island Credit Unions)
Other efforts taking place nationwide:

  • Honor CU, St. Joseph, Mich., and Greater Niles (Mich.) Community CU have partnered to collect food for the Salvation Army in Niles. The two groups gathered more than 2,000 canned goods and packaged items (Niles Star Dec. 14).
  • Texas Trust CU, Mansfield, Texas, donated $28,715 and 11,417 pounds of food collected during the "Together We Can Feed More Campaign" to the North Texas food bank. YOUR Community CU, Irving, Texas, collected 746 pounds of non-perishable items for the North Texas Food Bank during the "Together We Can" Feed More" campaign (Texas Credit Union League LoneStar Leaguer Dec. 8).
  • During November, RCU, Eau Claire, Wis., collected more than 800 stuffed bears and over 920 pounds of food during its annual Holiday Food and Bear Drive. Donated food items were delivered to community food pantries. Stuffed bears were distributed to children in local communities.
  • Long Island Credit Unions, a group of 13 credit unions, joined to support the efforts of Long Island hunger relief organizations Island Harvest and Long Island Cares, Inc.--The Harry Chapin Food Bank. This year the campaign yielded 2,508 pounds of food and raised more than $38,642.
  • As part of the International Year of the Cooperatives, about a dozen Texas Credit Union League chapters joined to form "Collaborating to Fight Hunger" (LoneStar Leaguer Dec. 8).
  • First Commonwealth FCU, Bethlehem, Pa., is holding a holiday food drive to benefit Second Harvest of the Lehigh Valley and The Greater Berks Food Bank. First Commonwealth has also partnered with some of its select employee groups to serve as additional collection sites, said the Pennsylvania Credit Union Association (Life is a Highway Nov. 22).

NCUA OKs CO-OP to buy Corp. Network eCom onlinemobile bill pay

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ARLINGTON, Va., and RANCHO CUCAMONGA, Calif. (12/16/11)--The National Credit Union Administration (NCUA) has approved CO-OP Financial Services' plans to purchase the online and mobile bill pay services of Corporate Network eCom LLC, a subsidiary of U.S. Central Bridge Corporate FCU.

NCUA selected CO-OP as a result of a competitive bidding process for U.S. Central Bridge operations conducted in October. CO-OP, based in Rancho Cucamonga, Calif.,  is a cooperative of more than 3,000 credit unions across the country. eCom is based in Lenexa, Kan.

"Today's action is another important step toward the goal of winding down U.S. Central Bridge," said NCUA Board Chairman Debbie Matz. "In implementing the corporate resolution plan, NCUA has successfully continued payment services to consumer credit unions without interruption, and managed to the lowest possible long-term cost. The selection of CO-OP is also consistent with our preference, wherever feasible, to find solutions within the credit unions' system. This deal achieves all of these objectives."

Stan Hollen, president/CEO of CO-Op noted that "the bill pay services of eCom are a perfect extension of the e-commerce business line of CO-OP Financial Services, which already includes the online CO-OP Bill Pay and advanced CO-OP Mobile banking solution.  The transition of eCom services to CO-OP is so complementary that eCom clients will not need to change payment processing platforms as a result of the ownership change.

Hollen noted that  CO-OP will provide "the same high level of service eCom clients have always received for bill pay" which will help "all of our clients compete even more effectively in the future against banks in terms of access and convenience services they can offer their members."

All eCom employees will become employees of CO-OP Financial Services and continue to service eCom online and mobile bill pay clients.  eCom, located in Lenexa, Kan., was founded in 1999. Today more than 750,000 credit union members use at least one of its three electronic bill payment solutions. The flagship MemberPayPlus enables members to receive, view, manage and pay all of their bills from a credit union website.

U.S. Central was placed into conservatorship by NCUA in March 2009.

CO-OP expects to complete the purchase within 90 days. For more information, use the link. Going forward, CO-OP will communicate directly with eCom's clients about the transition process, said NCUA.  For more information, use the link.

CorporateOne CheckLog expand cutoff times for processing items

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COLUMBUS, Ohio, and MIDDLEBURY, Vt. (12/16/11)--Corporate One FCU, Columbus, Ohio, and its partner eDOC Innovations have expanded the cutoff time for processing forward collection items to 9:15 p.m. (ET).

Corporate One FCU, based in Columbus, Ohio, provides services to more than 750 credit unions nationally with more than $4 billion in assets.

The cutoff extension will benefit users of eDOC's CheckLogic, imaging suite for check processing. CheckLogic includes branch, merchant and member capture, with integrated in-clearing and automated return processing capability, said eDoc.

Dwolla feature avoids waiting period for funds transfers

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DES MOINES, Iowa (12/16/11)--Dwolla, the online, location-based, social and mobile payment platform, released a new feature Thursday called Instant, an opt-in feature that provides users instant access to cash, avoiding the two- to three-day waiting period for transfer of funds.

The feature is provided through a partnership with TMG Financial Services (TMGFS), a sister company of Dwolla partner and investor The Members Group (TMG).

"Instant puts the convenience of an ATM-like feature inside the pocket of our users," said Ben Milne, Dwolla founder.

Prior to the release of Instant, users could only initiate an immediate transfer of funds if they had money in their Dwolla account. If a user wanted to access money from a different source, such as a linked credit union or bank checking account, the transfer could take up to three days.

By opting in to Instant, users have a second option for transferring funds immediately. Those without enough funds in their Dwolla accounts or who want to bypass the two- to three-day waiting period to transfer funds from a linked account can choose Instant to pay for their purchase or transfer immediately, Dwolla said.

Instant is an opt-in feature available to all Dwolla users for $3 per month. When a user chooses Instant, Dwolla will extend a line of credit up to $500 to the user. No additional fees are charged for the first 30 days after the Instant transfer. If the Instant balance is not paid back in 30 days, the user will pay a $5 fee for every month the balance is carried.

"Consumers who have a frequent need for cash can pay large sums each month to access out-of-network ATMs," said Brian Day, Dwolla product leader for TMG. "Add in the convenience of mobility and social network integration, and it's easy to see why Dwolla and this new Instant feature will bring tremendous value to users."

TMG is owned by Iowa credit unions and their members.

CUNA Mutual announces 2012 CU protection webinar topics

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MADISON, Wis. (12/16/11)--CUNA Mutual Group fidelity bond policyholders can learn about risk trends and exposures they need to prepare for next year by participating in the insurer's free Credit Union Protection 2012 Webinar Series.

"Topics provide valuable insights and recommend effective tools to reduce losses and help protect against a wide variety of risks," said Brad Mundine, CUNA Mutual Group senior manager of Credit Union Protection Risk Management. The one-hour webinars are free.

Webinar topics and their key points of discussion include:

Online Banking Fraud & FFIEC Authentication Guidance, Jan. 11. Discussion will focus on how cyber thieves compromise online banking login credentials and introduce risk-mitigation strategies including multifactor authentication for high-risk transactions and layered security controls.

Cyber Risks & The Data Breach Hot Seat, Feb. 15. Topics address will include how potential data breaches at the credit union can present significant challenges and ways to ensure the credit union is prepared with action steps involved in managing and/or responding to an incident.

Disaster Preparedness, March 28. This will discuss:

  • An overview of insuring-to-value;
  • Tips for testing your disaster preparedness plan; and
  • Quick steps your credit union should take to get on the road to recovery.

Plastic Card Fraud, May 9. Presenters will address changes that shift liability and fraud related to payment cards and the impact of these changes on credit unions, and steps the credit union should take to stay aligned with changes.

Social Media Risks, June 27. Topics of discussion include social media risks at the credit union, including privacy, policies/procedures and employee usage; and potential policies and procedures to put in place regarding usage, monitoring and response.

Directors' Risk Oversight & Liability, Aug. 15. This will discuss the extent and nature of a board's responsibilities related to risk oversight, and key items to consider when adopting a risk oversight approach.

Staying In Compliance, Sept. 19. Attendees will learn about the risk of not staying in compliance with existing and new regulations, and focus on practical implementation of several federal regulatory compliance issues and importance of maintaining a comprehensive compliance program.

Payment & Deposit Fraud, Oct. 17. Topics under discussion include check deposit fraud-fighting tools and training needed to help protect  the credit union's assets, and traditional payment/deposit fraud risks in a changing environment.

Robbery & Burglary, Nov. 14. This webinar will address:

  • Tips for identifying robbery suspects;
  • Methods for discouraging robbery at the credit union; and
  • Ways to enhance and improve credit union policies and procedures connected to the risk of robbery.
In the past 10 years, CUNA Mutual Group has delivered in excess of 120 webinars to more than 25,000 credit union professionals.

For more information, go to the Credit Union Protection Resource Center  at the link.

For more information

CU System briefs (12/14/2011)

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  • FALL RIVER, Mass. (12/15/11)--Paul Dias, suspected of allegedly robbing St. Anne's CU in Fall River, Mass., Thursday and driving away from the $764 million asset credit union in a stolen car, was arrested Monday while allegedly attempting to rob a bank ( Dec. 14). A police officer working a paid security detail at the bank, Kevin Dolan, noticed a bright orange note being carried the robber after he entered Admirals Bank in Fall River. The robber had pulled into the bank parking lot in a maroon Chevy Impala that Dolan recognized as being reported stolen Dec. 5 in Traunton, Mass. When Dolan approached Dias at the bank, Dias tried to hide the orange note, so Dolan arrested him. The note Dolan seized instructed the teller to turn over cash, police allege …

  • ROANOKE, Va. (12/15/11)--A former Roanoke, Va.-credit union employee who pleaded guilty to embezzlement was sentenced to 10 days in prison Tuesday (The Roanoke Times and Dec. 14). Catherine Keith, 35, who was a branch manager at Freedom First CU, admitted that she modified the loans of family members to illegally withdraw money for her own use. She also diverted account notifications, which were sent to her rather than the relatives. Keith told Judge William Broadhurst she used to the money to help make ends meet after her husband went on disability. Keith has repaid $36,000, but still owes $10,000. Broadhurst sentenced Keith to three years in prison, suspended after she serves 10 days …

Court dismisses most of FIs complaints in Heartland breach

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HOUSTON (12/15/11)--A U.S. District Court judge in Houston has dismissed most financial institutions' complaints of negligence and breach of contract stemming from Heartland Payment Systems Inc.'s data breach, but left open the possibility that financial institutions in the case could file amended complaints.

Heartland revealed in January 2008 that its system had been breached and that roughly 130 million credit and debit card accounts, including thousands of credit union member accounts, had been compromised in one of the largest data breaches ever recorded. The breach spawned a variety of lawsuits by both consumers and financial institutions, which replaced the cards of the compromised accounts.

Financial institutions' suits against Heartland had been consolidated into a single case while consumers' lawsuits were consolidated into a separate case.

The ruling by U.S. District Judge Lee Rosenthal of the U.S. District Court for the Southern District of Texas, Houston division, in the financial institutions' suit found in favor of Heartland on all counts except on a claim brought under the Florida Deceptive and Unfair Trade Practices Act, but left open the ability to amend the complaints in several areas.

The court:

  • Dismissed with prejudice and without leave to amend the claims for negligence and for violation of the New Jersey Consumer Fraud Act, the New York consumer protection law, and the Washington Consumer Protection Act.
  • Dismissed without prejudice and with leave to amend on these claims: breach of contract, breach of implied contract, express misrepresentation, negligent misrepresentation based on nondisclosure, and violations of several state consumer laws in California, Colorado, Illinois and Texas.
  • Denied the motion to dismiss on a claim brought under the Florida Deceptive and Unfair Trade Practices Act. That act's purpose, said the court ruling, is "to protect the consuming public and legitimate business enterprises" from "unfair methods of competition, or unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce."
In the 62-page decision, Judge Rosenthal indicated that the financial institutions were not protected as "third-party beneficiaries" in contracts between Heartland and its two acquiring banks, KeyBank and Heartland Bank; were not protected under the contracts between Heartland and the major card brands, such as Visa, MasterCard and D; and Discover; and were not consumers who could claim misrepresentation  or negligence under various state consumer protection laws.

"Unlike the plaintiffs in Hannaford Brothers [another data breach case], and like those in Hammond, the financial institution plaintiffs do not allege a direct contract relationship with Heartland that would plausibly suggest the mutual assent necessary for an implied contract.  The financial institution plaintiffs' contracts are with Heartland clients, not Heartland. The pleadings allege that the financial institution plaintiffs have at most an indirect relationship with Heartland through Heartland's processing of transactions made with payment cards that they issued. The implied contract claim is dismissed," wrote the judge.

Several credit unions were among the financial institutions that filed original complaints related to the breach. They included GECU, a $1.146 billion asset credit union in El Paso, Texas; MidFlorida FCU, a $1.283 billion asset credit union in Lakeland Fla.; Matadors Community CU, a $123 million asset credit union in Chatsworth, Calif. They joined Amalgamated Bank of New York, N.Y., and Farmers State Bank, Marcus, Iowa, among others. (News Now May 27, 2009).

Other suits filed against Heartland involved PBC CU, West Palm Beach, Fla.; Gulf Winds FCU, Pensacola, Fla.; Alabama Rural Electric FCU, Montgomery, Ala., and First Castle FCU, New Orleans.

More than 560 financial institutions, including at least 178 credit unions, had to reissue credit and debit cards as a result of the breach. Heartland reached several settlements last year with Visa and MasterCard and Discover, which also had sued on behalf of their financial institution clients.

FDIC approves United FCUs purchase of thrift

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ST. JOSEPH, Mich., and WASHINGTON (12/15/11)--The Federal Deposit Insurance Corp. (FDIC) confirmed Wednesday that it has approved the acquisition of Griffith (Ind.) Savings Bank by United FCU, based in St. Joseph, Mich. It will be the first savings bank to be acquired by a credit union.

FDIC spokesman David Barr confirmed to News Now in an e-mail that FDIC approved the measure Tuesday. He noted the FDIC does not comment on such actions.

"The transaction was approved by the National Credit Union Administration a few weeks ago, subject to FDIC approval," Gary Easterling, CEO of the nearly $1.3 billion asset United FCU, told News Now. "We received a letter from our Region I director, and we're waiting for FDIC's letter to get to Griffith."

Easterling noted that  "we've been working with the team at Griffith and communicating with its customers and we will send an official notification by mail to them."

The credit union is not taking on the bank charter, but is acquiring assets and members. Under terms of the agreement, which was announced July 27, the credit union will purchase all loans, investments, real estate, accrued interest receivables, and other banking related assets of Griffith--valued at about $81 million after a discount on the loan portfolio.  Griffith will retain certain assets used to fund accrued liabilities related to its employee benefits plans. Griffith will  liquidate after the closing and distribute any remaining assets to its depositors.

The acquisition will be complete by Jan. 1, with the first business day of the Griffith branch as a branch of the credit union on Jan. 3, Easterling said. Griffith has one branch. Its addition will bring the credit union's branches to about 24. Griffith's board had already voted for the acquisition.

Easterling told News Now that the process likely would be more expedited now that the credit union has undergone the process for the first time. "We took a brand new pathway, and it took a while for us to work through it. I'm thankful for the patience of the regulators and all the parties involved."

The bank had first contacted the credit union in early first quarter, and the agreement was made in April, pending regulatory approval.  He noted it will be an opportunity to extend United FCU into downtown Griffith, Ind., and offer perpetual financial services in Northwest Indiana.

Catalyst Corporate successful bidder for Western Bridge assets

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PLANO, Texas, and ALEXANDRIA, Va. (12/15/11)--Catalyst Corporate FCU, Plano, Texas, has been awarded the exclusive right to acquire the assets of Western Bridge Corporate FCU, San Dimas, Calif.,  announced the National Credit Union Administration (NCUA) Wednesday.

"NCUA's Corporate System Resolution Plan took a huge step forward today," said NCUA Board Chairman Debbie Matz Wednesday. "Catalyst has a proven track record of integrating operations in prior acquisitions and employing sound business practices to maintain continuity of operations. We are confident that Catalyst will provide the same array of payments services presently provided by Western Bridge to its member consumer credit unions," she said.

As conservator of Western Bridge, NCUA sought an acquisition solution that would minimize service disruption to Western Bridge's member credit unions and ensure the best financial outcome for the Temporary Corporate Credit Union Stabilization Fund, the agency said.

NCUA conserved the former Western Corporate FCU in 2009 and created Western Bridge to ensure continuity of service and operations for member consumer credit unions. In 2011, Western Bridge members failed to capitalize a new corporate credit union, United Resources Corporate FCU. NCUA then conducted a competitive bidding process to identify a buyer for Western Bridge.

"We had partnered with Wescorp on a variety of projects over the years, and as a result we were already familiar with many of its systems and processes," said Brad Ganey, senior vice president/chief operating officer of Catalyst Corporate.  "After performing due diligence, we feel confident that Catalyst can provide a compatible, cost effective option for Western Bridge members."

Ganey noted the corporates have operational similarities, shared platforms, and many of the same products, which will smooth the migration for credit unions moving from Western Bridge. All in all, he said, credit unions will experience minimal changes to the way they do business with their corporate: "Wescorp, and its successor Western Bridge, have offered members high value products and services for many years. We want to assure these credit unions that Catalyst will continue to provide everything they have come to expect, and perhaps even offer some enhancements."

Dianne Addington, Catalyst president/CEO, noted that "Catalyst not only offers every product and service provided by Western Bridge--we offer about a dozen more, "Right out of the gate credit unions will experience an improved value proposition--not just a replacement of their services. Credit unions deserve that after the challenges of recent years.

"We are hopeful that many credit unions will be relieved as they learn more about our transition plans," she added.

Credit unions that committed to recapitalize Western Bridge as United Resources Corporate will face a capitalization requirement that is the same or lower.  Credit unions on the sidelines can join with a maximum capital investment of 25 basis points, said Addington. Catalyst's capitalization methodology has dollar amount caps and a proportional scale-back feature for credit unions with under $50 million in assets.

The same rules for capitalization will apply to future members as those established for Catalyst's charter members. "Perpetual contributed capital is essential for Catalyst to be well-capitalized," she said. "Because we incur a degree of risk by offering our on-balance sheet services, any credit union that uses them must make a capital commitment. It's what's fair to the membership as a whole."

So far, Catalyst has nearly 900 capitalizing members who contributed $96 million to capitalize Catalyst, the result of a 2011 merger of Southwest Bridge FCU and Georgia Corporate FCU.

Existing member-owners will also benefit with the transition. "With the increased efficiencies, we will be able to achieve our income targets more rapidly, which means we can invest more heavily in new services and product enhancements that help our credit unions remain relevant to their own members," said Ganey. 

In the coming weeks, Catalyst will contact prospective members as well as conduct a webinar this month and offer a special "Welcome Western Bridge Members" micro-site on the Catalyst website.  Town Hall meetings will begin in January. The transition will be in full swing through mid-2012.

"We had an extremely smooth consolidation just a few months ago when Southwest Bridge Corporate and Georgia Corporate merged to become Catalyst, and we are more than ready to do it again," Addington said.

Southeastern CUs note 3Q growth amid bank fee backlash

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BIRMINGHAM, Ala., and TALLAHASSEE, Fla. (12/15/11)--Credit unions in Alabama and Florida experienced higher than normal membership growth in the third quarter, following the League of Southeastern Credit Unions' (LSCU) Statewide Image Campaign in September and the backlash against banks for suggesting a $5 fee for debit card use.

Southeastern credit unions added 48,000 members in the third quarter--31,000 in Florida and 17,000 in Alabama. Florida credit unions averaged 12,000 new members in the first two quarters of 2011, while Alabama credit unions averaged 8,000. This equates to 76,000 new members year over year for Southeastern credit unions from 2010 to 2011with another quarter yet to report.

"The LSCU Statewide Image Campaign hit at the exact right time," said LSCU President/CEO Patrick La Pine. "The campaign debuted Sept. 7, which was two weeks before the bank fees were announced and before the Bank Transfer Day buzz. It set the stage for consumers to begin looking at a credit union. We can clearly see the jump in numbers. Consumers are moving to a financial institution that has their best interest in mind."

As credit unions saw new members opening accounts, they also experienced a jump in assets. Southeastern credit unions have added $1.4 billion in total assets year over year in 2011 with another quarter yet to report.

The largest jump came for Alabama credit unions, which saw $1.3 billion in assets added, while Florida saw $159 million in growth. Alabama's assets have grown $4.4 billion since 2007. For Florida credit unions, the 0.4% growth indicates that the economy is slowly showing signs of improvement, said LSCU. Asset growth was negative in 2010.

Florida credit unions reported 2.2% growth in member business loans (MBLs), which is almost double the growth rate for 2010. Alabama credit unions saw a 1.5% growth in MBLs. There is pending legislation in Congress to lift the MBL cap for credit unions to 27.5% of assets from 12.25%. The Credit Union National Association, leagues and credit unions have been urging Congress to adopt that legislation.

"We are seeing the need for member business loans and we're seeing where our credit unions want to make them," said La Pine. "However, this arbitrary cap is keeping many credit unions from actively pursuing them. The need is great right now and there is literally no reason why Congress would not pass H.R. 1418 or S. 509. By raising the cap, Congress would infuse $785 million into the Alabama and Florida marketplace. The best part is that it would not cost the taxpayers one penny."

For the third consecutive quarter, Alabama and Florida credit unions reported delinquent loans to loans and net charge-offs to loans as improving. Alabama credit unions had a 14 basis-point decline in delinquent loans to loans in 2011, compared with 2010. This is well below the national credit union average, said LSCU. Florida's delinquent loans improved by 30 basis points. This is still above the national credit union average, but a major drop from 2009 and 2010.

Net charge-offs in Alabama dropped 12 basis points in 2011, compared with 2010. It's also shaping up as the best year for net charge-offs since 2007. In Florida, net charge-offs show a 33 basis points improvement in 2011 from 2010. That is the best net charge-off improvement since 2008, LSCU said.

Credit union members continue to save at rapid rates. Alabama members' savings grew at a rate of 8%, twice the national credit union average, and 3% higher than in 2010. In Florida, members' savings grew 2%. That is below the national average, but reverses the 2010 numbers, which showed negative growth.

These all are signs that the economy is slowly improving in the Southeast, LSCU said.

LSCU represents 300 credit unions in Alabama and Florida with $59 billion in assets and more than 6.4 million members.

LaBalme to keynote CUNA council conference

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MADISON, Wis. (12/15/11)--The CUNA Marketing & Business Development Council (CMBDC) announced that the keynote speaker for its 19th Annual Conference, March 7-10 in New Orleans, is Victoria LaBalme.

LaBalme's keynote session, "Crazy, Busy, Nuts: Getting Off the Conveyor Belt of Life," takes the demands of society and work life, and examines them against life-changing experiences. She will offer attendees practical, applicable tools for managing the chaos and the inspiration to change.

LaBalme has spoken for organizations such as the New York Police Department, American Heart Association, and L'Oreal.

Other conference highlights include Dennis Dollar's session, "THE UGLY, BAD & GOOD: Impacting Credit Union Scenarios in a Decade of Change," and Mark Adams' business development sessions, "The Wolf Pack Strategy."

LaBalme, Dollar, and Adams will center their on the theme, "Get Inspired."

"With the ever-expanding role of the marketing and business development professional, it is critical to become more productive in work and home environments alike," said Michelle Hunter, co-chair of the CMBDC Conference Committee and senior vice president for Credit Union of Southern California in Brea, Calif.

Filene outlines CU innovations for the future

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MADISON, Wis. (12/15/11)--During its annual Think.DO session, the Filene Research Institute provided a glimpse of the services it offers the credit union industry--and also encouraged the credit union industry to use Filene resources.  

Think.DO is Filene's annual exploration of issues and innovations for the year ahead

George Hofheimer, Filene's chief research officer, described how Filene will soon introduce strategic opportunity reports, which will provide credit unions with peer comparisons based on strengths, weaknesses, opportunities and threats.

Filene also is exploring how to link member/customer loyalty with market share, based on a net promoter score metric, Hofheimer said.

Matt Davis, Filene's director of innovation, discussed Low Interest for Timeliness (LIFT), a loan program that targets the low‐to‐moderate income consumers with sub‐prime credit by rewarding consistent, timely loan payments on car loans. Participants earn annual percentage rate reductions for on-time payments. LIFT focuses borrowers on the goal of making on-time loan payments and backs up that focus with financial incentives.

Ben Rogers, director of research, described Filene's research with credit unions that experienced at least 5% growth in consumer loans during the economic downturn.

Among the traits the credit unions shared were:

  • Strong sales cultures;
  • Consistent underwriting standards;
  • Refinancing programs;
  • A strong market presence;
  • Symbiotic product lines; and
  • Both direct and indirect lending.
Denise Gabel, Filene's chief innovation officer, shared ideas from Finovate, a conference in which technology providers showcase innovative solutions in rapid seven-minute sessions.

Gabel said conferences such as Finovate--and sessions such as Think.Do--encourage participants to shift their focus from the "dashboard to the distance."

"There's never been a more exciting time in the history of personal finance to be a credit union," said Filene CEO Mark Meyer. "We're you're creative sandbox. Come play with us."

FIs move beyond basics in mobile banking says study

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BROOKFIELD, Wis. (12/15/11)--Financial institutions, including credit unions, are poised to ramp up their mobile banking capabilities, according a survey of the mobile banking and payment plans of 10 top-tier financial institutions, including credit unions.

The survey results were announced Tuesday by Fiserv Inc., a global provider of financial services technology solutions.

The survey, conducted by Forrester Consulting on behalf of Fiserv in September, evaluated the plans of 10 banks and credit unions that collectively hold more than one-third of all U.S. deposit accounts. These financial institutions are progressing beyond the basics to provide increasingly sophisticated mobile capabilities, the results indicated.

Nine out of 10 financial institutions surveyed already have a mobile-banking offering that provides basic account access, and almost all provide ATM branch locators, transfers between accounts and bill payment.

"Most banks and credit unions are committed to delivering more robust capabilities and a better consumer experience via the mobile channel," said Erich Litch, division president, digital channels, Fiserv. "Faced with a rapidly evolving market that is also being pursued by sophisticated, well-funded third-parties, it is essential that financial institutions that want to remain competitive push forward with their own mobile-banking and payment strategies in 2012."

Transactional services, such as remote deposit capture and mobile person-to-person payments, will account for the bulk of mobile investment in 2012. However, despite a nearly unanimous commitment to expand overall mobile functionality, institutions remain split on plans to support mobile point-of-sale payments.

For 2012, financial institutions plan to focus on delivering remote deposit capture; actionable alerts, which allow recipients to initiate an action such as a funds transfer in response to an alert about a low balance; and additional payment capabilities. Eight of ten surveyed institutions plan to invest in some type of mobile payments in the next 12 months, with person-to-person mobile payments cited as a priority by seven respondents.

Financial institutions are committed to providing mobile banking and payments capabilities for a range of devices, with a focus on smartphones, Fiserv said. While none of the surveyed institutions offered specialized support for tablets, this was cited as a priority for 2012 by multiple respondents.

While banks and credit unions are forging ahead in some areas, many have adopted a wait-and-see attitude with mobile point-of-sale payments. Although the surveyed financial institutions demonstrated an understanding of what it will take to make mobile point-of-sale payments a reality, many articulated a chicken-and-egg scenario in which concerns about consumer demand and merchant acceptance are hindering greater investment from their own institutions, Fiserv said.

While financial institutions surveyed view the progress of nontraditional competitors such as technology and telecommunications providers as a validation of mobile payments, and as a promotional tool to build consumer and merchant interest, most of them stated that such announcements have had no or minimal impact on their own mobile-payments strategy. This may put them at risk of delivering new capabilities too late, Fiserv said.

A white paper detailing the survey results can be downloaded. Use the link.

Community Choice unveils unbanking ads

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JOHNSTON, IOWA (12/15/11)--Community Choice CU, Johnston, Iowa, will soon roll out its "unbanking" advertising campaign, which takes a playful jab at for-profit financial institutions in a wave of anti-bank sentiment following Bank Transfer Day.

The credit union launched a microsite and a Facebook page, and will soon roll out print ads. Radio and TV ads will follow early next year.

Community Choice is trying to show consumers that  credit unions are different than banks, Josh Cook, vice president of operations and business development at Community Choice told the Des Moines Register (Dec. 13).

Branch lobbies feature walls where members can post graffiti. Branches also offer free popcorn and are filled with the scent of apple pie--provided by scent machines.

Nintendo DS3s and iPads also are available for members to use in the lobbies.

Community Choice CU's in-house marketing department distinguished itself six years ago with its "Fed Up with Bills" series of advertisements. The ads featured portly men wearing white tanktops emblazoned with the word "Bill." The men were kicked out of the house by a beautiful brunette who was sick of her debts.

Court dismisses fraud lawsuit vs. New London directors

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BRIDGEPORT, Conn. (12/14/11)--A U.S. District Court in Connecticut has dismissed a civil lawsuit by Wells Fargo Advisors LLC, which had sought contributions from the directors of the now-defunct New London Security FCU, whose investment broker committed suicide after the National Credit Union Administration (NCUA) discovered $12 million missing from the credit union in 2008.

Wells Fargo Advisors LLC is the successor of Wachovia Securities, a successor in interest to A.G. Edwards & Sons brokerage firm, which had employed Edwin F. Rachleff, the credit union's' investment manager. The firm is being sued by NCUA, which is trying to recoup $10 million in losses to the National Credit Union Share Insurance Fund when the credit union was shuttered on July 28, 2008.

Wells Fargo then sued the former board members--Herbert Linder, Martin Yavner, Reuben Levin and Martin Lazars--alleging the board was negligent and seeking contributions from them in the liability related to the case. In its complaint filed, it cited a loss review report issued by NCUA's Office of Inspector General in October 2009, which allegedly faulted the credit union board for allowing Rachleff  "run of the house" on investments, according to the court ruling document.

In granting the board members' motion to dismiss the suit, U.S. District Senior Judge Warren W. Eginton said that Wells Fargo failed to sufficiently demonstrate a right to indemnity or contribution under Connecticut law. The firm had cited a state statute on joint liability in third-party negligence, which the judge said did not apply because  "all alleged losses are purely commercial in nature."

Rachleff, who was 82 at the time he died, allegedly represented to the credit union that he was opening investment accounts with the credit union's funds. Instead, he allegedly used the funds for personal investments.

The collapse of the credit union has generated several lawsuits. In addition to Wells Fargo, NCUA has sued Rachleff's estate (News Now March 12, 2009) and the former credit union's auditors (News Now March 24, 2010),  and uninsured depositors of the credit union have sued NCUA seeking damages (News Now March 8).

Paper terrorist sentenced to five years in prison

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ALBANY, N.Y. (12/14/11)--An anti-government radical who bombarded a credit union and public officials in Ulster County, N.Y., with fake bills, phony property liens and inexplicable court papers, was sentenced Monday to five years in federal prison for his acts.

U.S. District Judge Thomas McAvoy told Richard Ulloa, 52, at his sentencing that he used "reckless regard and evil intention" in perpetrating the allegedly fraudulent acts ( Dec. 13).

Ulloa's actions began in late 2008, when Mid-Hudson Valley FCU in Kingston, N.Y., began foreclosure proceedings on his home after Ulloa fell behind on his mortgage payments.

In response, Ulloa sent a "criminal complaint" to the $729.2 million asset credit union and demanded that credit union executives pay him $46 million. He subsequently filed a $2.8 billion lien against Mid-Hudson Valley CEO Bill Spearman and other credit union officials, the newspaper said.

When police wrote Ulloa traffic tickets in the county, he allegedly responded with the same tactics, filing bogus bills and liens against police officers, judges--and later on--against county government officials, the paper said.

Ulloa was ordered to make $63,401 in restitution to the credit union and Ulster County.

PCUA introduces new marketing services

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HARRISBURG, Pa. (12/14/11)--The Pennsylvania Credit Union Association (PCUA) is introducing a pilot program through its subsidiary, Pacul Services Inc., to help credit unions reach their goals with their marketing efforts.

The pilot program--Credit Union Marketing Services--is a fee-based marketing consulting service developed to help western Pennsylvania credit unions implement and track marketing strategies--including planning, advertising, public relations, media strategies and budgeting (Life is a Highway Dec. 13).

The program is customized for each credit union and begins with a marketing plan that includes specific goals and objectives based on the credit union's strategic plan.

Sandi Carangi has been named director of Credit Union Marketing Services, and will provide customized marketing solutions for credit unions.

Marketing consulting services "helps credit unions that don't employ someone dedicated to working on marketing, or it can help free up existing staff time to work on specific marketing projects," said Corinne Sherman, PCUA vice president of fee services.

Several Pennsylvania credit unions have signed up for the pilot program, PCUA said.

Exec compensation related to assets performance

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MADISON, Wis., and COVINA, Calif. (12/14/11)--Recent compensation and staff studies indicate that credit union CEOs' compensation and salaries are related to both asset size of their credit union and their performance.

Historically, base salary represents the bulk of a credit union CEO's total compensation package, said the Credit Union National Association's (CUNA) 2011-2012 CEO Total Compensation Survey  report, which covers compensation data from 2010. On average, base salary accounts for 86% of CEO total compensation among credit unions with $100 million or more in assets, the report said.

"There's a strong correlation between CEO compensation, especially the base salary, and the size of the credit union," said the report. "As the size of the credit union increases, so does the complexity of the operations, and CEOs are compensated accordingly."

For example, the median salary for CEOs of credit unions with $1 billion or more in assets--$411,859--is nearly three times that of their counterparts in credit unions with assets totaling $100 million to $200 million, who average $139,808, according to CUNA's 2011-2012 Complete Credit Union Staff Salary Survey. See the chart for salaries in different asset size groups.

Another survey, from Executive Compensation Solutions (ECS) of Covina, Calif., noted that tying the overall compensation package to sustainable and relevant performance measures that are aligned with the interest of the credit union and its members is becoming an increasingly important practice to attract, reward and retain key value creators.

"Financial performance and performance ratios, as well as pay practices, indicate a slow and gradual easing of the tight economic environment of the past few years," said Adam Zelinsky, ECS director of operations. "While compensation increases are not dramatic, reported responses indicated a significant decrease in the number of salary and bonus freezes, as well as a significant drop in the number of credit unions that have suspended their employer match into their 401(k) plans."

ECS's Survey 2011: Employee and Executive Compensation and Benefits for the Credit Union Movement also found a higher percentage of women among credit unions than in other financial institutions and a disparity in pay levels between male and female credit union CEOs.  ECS tied participation in its survey to raising funds for Credit Unions for Kids and raised nearly $3,000 for Children's Miracle Network Hospitals.

CUNA report Staff turnover less than in prerecession

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MADISON, Wis. (12/14/11)--Credit union employees in all job classifications are more likely to stay in their positions than they were before the recession, says a new report from the Credit Union National Association (CUNA).

The overall credit union turnover rate in 2010 is 12%, according to CUNA's 2011-2012 Turnover and Staffing Survey. The figure is higher than the 2009 turnover rate of 9% and matches the 2008 rate. Prerecession turnover was about 15%.

"With heightened competition for skilled employees, it's important for credit unions to monitor turnover rates," said Beth Soltis, CUNA senior research analyst. "This is particularly important when it comes to key employees, but turnover in any department or at any level costs the organization time and money for employee training."

Hiring levels remain modest at credit unions, the report said. The creation of new positions at credit unions dipped at the onset of the recession and hasn't changed since. The percentage of employees hired to fill newly created credit union positions was roughly 5% from 2005 to 2007. In 2008, 2009 and 2010, 3% of credit union employees filled newly created positions.

"During the recession, most employers reduced staffing levels as low as they could possibly go," Soltis said. "This makes it more important than ever for credit unions to retain high-quality employees, especially those in positions critical to their credit union's success."

For more information about CUNA's 2011-2012 Turnover and Staffing Survey, use the link.

Bulldog is Illinois latest student CU

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STREATOR, Ill. (12/14/11)--Bulldog CU, Streator, Ill., is the newest student-run credit union in Illinois.

Ryan Neumann, Streator Onized CU Branch Manager (second from left), with other student workers at Bulldog CU's main location in the concession area of Streator, Ill., Township High School. (Photo provided by the Illinois Credit Union League)
Branch Manager Ryan Neumann says (BCU) was launched this school year in Streator Township High School. It will be open for an hour before classes begin and during all lunch hours--about three hours a day--for staff and students to conduct financial transactions without leaving the school.

BCU also gives Streator Onized CU (SOCU) the opportunity to employ three seniors every year through the high school work program.

BCU was opened with the intention of bringing financially literacy to students before they leave for college or start their own careers after high school. To date, about 190 students and staff either have an existing account at SOCU or opened a new one with BCU.

"If I didn't have the opportunity to start working at SOCU out of high school, I can't say I would have known much about money management, how important credit is, or just finances in general," Neumann said. "By putting a branch in the high school, we are giving the kids tools they will need to make wise financial decisions in the future."

Also, classroom seminars and presentations will be crucial in helping students better themselves and give them an understanding of the real world, Neumann said.

So far, teachers have responded well to the idea of the financial literacy classes. Topics will include: checking 101, saving for college, how to buy a vehicle, what credit is, and budgeting basics. To supplement the classroom presentations, Neumann also plans to use Mad City Money (a Credit Union National Association product) and ibudget, two interactive financial reality fair activity programs.

To help it start, BCU received an $8,000 Financial Independence and Revitalization (FIRE) grant through the Illinois Credit Union Foundation. The objective of FIRE grants is to provide assistance to credit unions to expand their ability to build and maintain viable communities by providing credit and financial services to residents and businesses in low-income and underserved areas of Illinois.

Black Friday sales among CU members soared

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RANCHO CUCAMONGA, Calif. and FRANKLIN, Mass. (12/14/11)--Credit union members spent 8.1% more and made 10.1% more transactions on Black Friday in 2011 than in 2010, according to a study by CO-OP Financial Services and Saylent Technologies, a provider of payment intelligence solutions.

"Some of the top credit unions in CO-OP Network experienced even stronger Black Friday sales growth of 30% and more," said Stan Hollen, CO-OP Financial Services president/CEO.

The analysis of Black Friday sales is not an estimate, but is based on more than 2.6 million transactions made between Thanksgiving midnight and midnight Nov. 25. Drawn from debit card transactions of 562 credit unions processed by CO-OP Financial Services, the year-over-year comparison was performed through an advanced analytics solution, CO-OP Total Revelation, powered by Saylent Technologies, and was conducted by Saylent's Insight360 consulting team.

The group's total Black Friday spending represented both brick-and-mortar establishments and Internet transactions.

Some of the key findings:

  • Credit union members rang up 13% more at restaurants and 14% more at fast food establishments on Black Friday 2011, compared with 2010.
  • Charitable and social-service organizations and fundraising chalked up 48% gains year over year.
  • Men's and women's clothing stores achieved 21% sales growth, while miscellaneous apparel and accessories were up 18%.
  • Consumer electronics captured 15% sales growth.
  • Books, periodicals and newspapers saw 95% gains.
  • Spending on used vehicles (up 70%); recreational campers, trailers and supplies (up 161%); and auto parts (up 16.5%) suggested a surge of automotive travel. Gas pumps saw a 26% gain, highway tolls rose 42%, and car washes increased 64%.
  • High-end commodities such as precious stones and metals dropped 26% in year-over-year sales.
"Credit union members are savvy consumers, and this analysis shows they are enthusiastically using debit cards to make responsible holiday purchases, using money in their accounts rather than taking on credit card debt," said Tyson Nargassans, Saylent Technologies president/CEO.

CU System briefs (12/12/2011)

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  • RYE, N.Y. (12/13/11)--USAlliance FCU, based in Rye, N.Y., announced the retirement of current President/CEO Michael F. Ambrose and the appointment of Kris P. VanBeek as his successor.  Ambrose served as CEO since May 2001. VanBeek was formerly senior vice president of information systems and risk management at Digital FCU, Marlborough, Mass. He has experience in several fields including e-commerce, real estate, commodity markets and financial services, and has founded and led two companies. He is a frequent contributor to industry magazines and serves on several advisory boards …

  • MADISON, Wis. (12/13/11)--Membership and staff growth has prompted UW CU to open a new retail branch near its corporate headquarters in Madison, Wis. The new location features branch and Investment Services offices that were relocated from its headquarters building. "Since 1995, our membership has grown from 69,000 to over 161,000, averaging about 13,000 new members per year," said Brad McClain, executive vice president and chief financial officer of the more than $1 billion in assets credit union. UW CU also has increased its work force to keep up with member needs.  "By relocating our retail branch services to the new building, we will accommodate space needs created by growth and make it possible for our corporate office to serve our needs for many more years," said Paul Kundert, president/CEO …

MidFlorida CU to acquire Space Coasts Tampa branches

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LAKELAND, Fla.  (12/13/11)--MidFlorida CU, based in Lakeland, Fla., announced it will assume the Tampa Bay-area branches, assets and membership of SpaceCoast CU (SCCU), Melbourne, Fla., pending approval from regulators and members.

The move represents a small portion of SCCU's branch network and is viewed as a spinoff rather than a merger, said (Dec. 12) and (Dec.9).

MidFlorida will take over six SCCU branches, three in Pinellas County and three in Hillsborough County. It already had expanded into the Tampa area last year with a merger withTampa-based Gulf CU, said The Ledger.

SCCU President/CEO Doug Samuels said the action is the result of the credit union's evaluation of how to serve its Tampa-area members. The options were to invest heavily in an expansion of the existing branch network or to seek a partner who would commit to developing this area, he told local media.

MidFlorida CU plans to retain existing staff. The membership vote is expected to be finalized March 31.  If approved, the spinoff would be completed on July 1.

Irish regulators change deposit insurance limit

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BELFAST, Northern Ireland (12/13/11)--Northern Ireland's credit union members will have their deposits protected up to 85,000 euros (roughly $112,000), said the country's Financial Services Authority (FSA) and Her Majesty's Treasury.

The change will go into effect March 31 when regulation of Northern Ireland's 177 credit unions is passed to FSA from the Northern Ireland Department of Enterprise and Investment ( Dec. 11 and Dec. 9).

With the move, credit union members will have the same protections as customers using banks, and will have access to the Financial Ombudsmen Service, Martin Stewart, FSA head of building societies and credit unions, told Banking Times.

FSA will help credit unions prepare for the transfer by hosting road shows in several Northern Ireland cities, Stewart added.

Pa. foundation ups number of CUs eligible for grants

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HARRISBURG, Pa. (12/13/11)--The Pennsylvania Credit Union Foundation (PCUF) Board of Directors has increased the number of small credit unions eligible for grants from the foundation.

The minimum assets for small credit union grantees will be $30 million in assets instead of $20 million, the board decided in a recent meeting.  That means 52 credit unions are now eligible for PCUF grants. 

The change was approved to bring small credit unions into line with the Pennsylvania Credit Union Association (PCUA) board governance changes recently approved by PCUA's board (Life is a Highway Dec. 12).

The PCUF board also approved its 2012 budget calling for $236,100 in revenues and $299,100 in expenses. Of total expenses, $130,000 is earmarked for grants and $99,100 for operations, leaving a net gain of $7,000 against revenues.

In other action, the board:

  • Approved 10 grants for a total of $130,050;
  • Decided to explore outside fundraising firms;
  • Heard presentations on a recent Reality Fair at the State Capitol, Pennsylvania Flood Relief Activities, new Community Investment Fund options available, and Haitian Task Force activities; and
  • Welcomed new board members Todd Cover, USSCO Johnstown FCU, Johnstown, and Carol Fastrich, AmeriChoice FCU, Mechanicsburg.

Mich. House OKs bill on 90-day foreclosure delay

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LANSING, Mich. (12/13/11)--Michigan's House of Representatives Thursday passed three bills that would reform the state's current 90-day foreclosure delay. Many of the reforms were sought by the Michigan Credit Union League (Michigan Monitor Dec. 12)

House Bills 4542, 4543 and 4544 included these provisions:

  • Establishes clearer timelines as to which actions must occur at points in the process for both lenders and borrowers to allow lenders to proceed immediately to foreclosure if a borrower is unresponsive to requests for certain documents. Borrowers would have 30 days, instead of the current 14, to contact their lender or housing counselor for a possible modification. Lenders with unresponsive borrowers have 60 days between sending a notice and proceeding to foreclosure. Previously there was no timeframe for lenders to send in the documents.
  • Holds borrowers responsible for damaging the property during the redemption period.  Every notice of foreclosure by advertisement must include language stating that if the property is sold at a foreclosure sale, the borrower will be held responsible to the buyer of the property or to the mortgage holder, for the damage.
  • Reduces the redemption period for properties larger than three acres from one year to six months, if the property is not deemed for agricultural use. This aligns the redemption periods for any residential property, regardless of size, to the six-month period.
  • Extends the sunset of the bill to Dec. 31, 2012. Originally the bill proposed a July 2015 sunset.
The league noted that the sunset date was shortened after opposition related to shortening the redemption period for portfolio loans by 90 days to make up for 90 days added onto the front end.  Although the bill, HB. 5176, was passed last week out of the House Banking Committee, groups such as the Michigan Association of Realtors argued that it would cut  the number of short sales completed.  The average short sale is about 179 days,  and realtors often need the entire redemption period to complete the sales, the league said.

The Michigan Foreclosure Taskforce, representing housing counselors and consumers in the foreclosure process, also opposed HB 5176, saying it was unfair to homeowners because it would create two different redemption periods based on whether they have a portfolio loan or a nonportfolio loan.

Lawmakers decided to continue looking into helping credit unions and community banks in the process and shortened the sunset date to ensure dialogue on the measure. The state Senate is expected to take up the bills next week  before it adjourns  Dec. 22, said the league.

What CUs should do with deposit influx from BTD

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MADISON, Wis. (12/13/11)--New members garnered from Bank Transfer Day (BTD) activities present a golden opportunity for credit unions to capture the attention of young people, according to a Credit Union National Association (CUNA) economist.

"What matters is what we do with them and to make them feel like they made a good decision," Mike Schenk, CUNA vice president of economics and statistics, told News Now.

Click to view larger image Click for larger view
BTD activities likely garnered 450,000 net new members (new members minus attrition--those who move or closed accounts) in September and October, according to CUNA estimates.  Despite the original CUNA estimate being revised, the bottom line is there were unusually high numbers of people joining credit unions, Schenk said.

"The numbers are large, but not overwhelming," he added. "For most credit unions, they are unlikely to cause significant bottom-line challenges. There are some credit unions, however, which will have to spend a lot more time thinking about the financial impacts."

That's because people are joining credit unions and bringing their deposits, which is causing relatively fast growth in the asset base. "Because these new members have brought over deposits and not loans, yet, and because overall loan demand is quite low, the money is going into low-earning, short-term investments and not loans," Schenk said.

That means earnings growth is not keeping up with asset growth and that places downward pressure on net-worth ratios for some credit unions. "Therefore, credit unions have to really focus on delivering high-quality service, to put their best foot forward and make it obvious to these members that they made the right decision," Schenk explained.

"When that becomes more obvious to new members, they will bring their entire book of business--including new loans--to credit unions," he added.

The overarching idea for credit unions is to provide good service, Schenk said. "And it would obviously be useful and important for credit unions to market to new members the idea of refinancing their existing loans at the credit union," he added. "Credit unions should make the credit union difference--the financial and nonfinancial benefits--obvious and cross-sell the products that the members haven't brought over."

Because social media were a driving force behind the BTD movement, it seems reasonable to conclude that a disproportionate number of the new members are young, Schenk said.

"This is good because our research shows young people generally don't know a lot about credit unions, and this [BTD] could help change that," he explained. According to a 2011 CUNA Survey of Potential Members, 67% of general consumers and 97% of those aged 18-24 are not familiar with credit unions, and that compares with 60% of the general public in 2006. See the chart.

"[The migration of new, young members to credit unions] also is a good situation because young people tend to want to borrow, and credit unions need to issue more loans," Schenk said.

"In the long run, a demographic shift toward young people as members would help credit unions financially because loans are the financial life-blood of depository institutions," Schenk concluded.

TrinidadTobago bill places CUs under central banks control

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PORT OF SPAIN, Trinidad (12/13/11)--The Central Bank of Trinidad and Tobago has posted on its website a draft of a bill that places all of the country's credit unions under its control.

The bill is based on a proposal approved by the Trinidad Cabinet  in 2009, Carl Hiralal, Trinidad and Tobago inspector of financial institutions, said in a statement to credit unions (The Trinidad Guardian Dec. 10).  

Credit unions have until March 28 to submit their comments on the draft to the Central Bank. Under the proposed legislation, the central bank will assume responsibility for determining the financial soundness of credit unions, supervising credit unions to ensure their compliance with the act, protecting members' deposits and shares from undue loss and ensuring compliance of credit unions with legislation to combat money laundering and terrorist financing.

The proposed legislation allows the central bank or the inspector of financial institutions to have "access to all books, records, accounts, vouchers, minutes of meetings, securities and any other documents, including documents stored in electronic form, of any credit union and the right to call upon any member of the board of a credit union, officer, external auditor or employee of the credit union for any information or explanation the bank considers necessary for the due performance of its duties."

ATM lets consumers choose Surcharge Or Ad

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NEW YORK (12/13/11)--A New York entrepreneur has introduced an ATM that offers users the option of viewing a third-party advertisement to opt out of surcharge fees.

Free ATMs NYC, founded by 25-year-old Brooklyn, N.Y., resident Clinton Townsend, uses targeted advertisements to cover the costs of an ATM surcharge outside of its network (ABC News Dec. 12).

The transactions do not take any longer because the commercials play during the time the transaction is processing, Townsend said.

The ATMs also give consumers the option of donating the surcharge to charity.

ATM receipts may include a coupon redeemable at a local business.  

There is one catch to Free ATMs NYC's strategy: The company can't remove fees that consumers' financial institutions charge them for using out-of-network ATMs (Digital Journal Dec. 12).

Free ATMs NYC placed its first ATM in a Brooklyn music venue and bar. Townsend plans to expand the concept throughout New York City.

Diebold, a CUNA Strategic Services provider, offers Campaign Office, a marketing tool that uses demographic and account information to present specific advertising relevant to the ATM user's interests and needs. For more information use the link.

Alabama shared-branch network to pay second dividend

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BIRMINGHAM, Ala.(12/13/11)--Credit Union Service Centers (CUSC) of Alabama, a shared-branching network, will pay a shareholder dividend for the second consecutive year.

The service centers board of directors also approved a patronage rebate program for participating credit unions. The program will rebate 40% of 2011 net income before taxes to participants based on the participating credit union's percentage of total transactions within the network during the year.

"The ability to institute this dividend and patronage rebate program validates the business model that CUSC of Alabama has put in place," said Patrick La Pine, CUSC chairman. "Credit unions see the value of shared branching and they have been a cornerstone of the success of the company. The board felt it was important to reward those credit unions that have contributed to the success of the organization. We also hope it spurs more credit unions to consider offering shared branching."

CUSC has 124 shared-service centers. In 2011, CUSC opened 10 new shared branching locations statewide.

MnCUN welcomes Paraguayan CU reps in exchange visit

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ST. PAUL, Minn. (12/13/11)--The Minnesota Credit Union Network (MnCUN) kicked off its celebration of the 2012 International Year of Cooperatives by welcoming six Paraguayan credit union representatives to Minnesota last week.

Click to view larger image During their visit to Minnesota last week, Paraguayan credit union representatives visited the State Capitol and met with Speaker of the House Kurt Zellers  (R-Maple Grove), left. (Photo provided by the Minnesota Credit Union Network)
The visit was part of an ongoing international exchange between the Paraguayan credit union association Central de Cooperativas del Area Nacional Ltda. (CENCOPAN) and MnCUN established in 2004 through the World Council of Credit Unions' (WOCCU) International Partnerships Program.  This year's exchange highlighted Minnesota credit unions' advocacy activities and focused on industry issues such as use of social media, branch design, policies and procedures, and uses of technology.

In a meeting with MnCUN, the Paraguayan visitors learned about the association's structure, activities and service to credit unions and received overviews in governmental affairs, education, compliance and communications. They also discussed  in depth MnCUN's for-profit activities and the role they play fulfilling credit unions' products and services needs.

On Dec. 7, they met with Speaker of the House Kurt Zellers (R-Maple Grove), who discussed the relationship between lobbyists and legislators and the importance of meeting with constituents and representatives from various industries.  Gov. Mark Dayton provided a written greeting, thanking the visitors for their "dedication to the credit unions of Paraguay and commitment to the credit union philosophy of 'people helping people.'"

The delegation also met with Minnesota Department of Commerce Deputy Commissioner of Administration Steve Carlson and Credit Union Program Director Carl Schwartz, who discussed the coordination and cooperation between the credit union regulatory and oversight organizations and provided insight into the proactive nature of U.S. regulators and the standard monitoring mechanisms used.

Credit unions the group visited included Hiway FCU and St. Paul FCU in St. Paul; SouthPoint FCU, New Ulm; and SPIRE FCU, Falcon Heights. These credit unions highlighted their approach to meeting members' needs and presented information about information technology infrastructure and security, internet banking, branch management, collections processes and business continuity.

While in the state, the delegation also explored Minnesota's culture, spent time in several credit unions' presidents' homes, visited the Mall of America, and experienced snow for the first time.

DFCU Financial dividend is largest in U.S. 21M

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DEARBORN, Mich. (12/12/11)--Michigan's largest credit union, DFCU Financial CU, has declared a special patronage dividend of $21 million in cash to be paid to eligible members on Jan. 4.

The $3.05 billion asset, Dearborn-based DFCU Financial says the dividend is the largest payout in the nation to credit union members. Nearly 7,000 members in Ann Arbor will receive the dividend, as well as 5,000 in Grand Rapids, 3,000 in Lansing, and 70,000 in Metro Detroit.

"People are still struggling in our area so instead of raising fees, we're putting more money in members' pockets," said Mark Shobe, president/CEO of the credit union. "The cash payout is our way to thank them for choosing DFCU Financial as their primary financial institution."

Payment is based on the member's total relationship with the credit union.  The greater the relationship, the larger the dividend.  Qualifying members will receive 0.5% dividend on their average loan and deposit balances, with each eligible member receiving at least $50.  The dividend includes all savings accounts and loan balances.

DFCU Financial says it is the only credit union in the nation to pay members an average $18 million to $20 million for the past six years--for a total of $110 million.

"The dividend can't be matched by banks," said Shobe. "As a credit union, we do our best to take care of members and provide them with outstanding benefits of membership like the special patronage dividend, discounted insurance programs and access to affordable health-care programs. We invest in our members, not shareholders."

Young and Free Maine reports double-digit growth

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PORTLAND, Maine (12/12/11)--The Young & Free Maine program reported double-digit growth from August through November, said the Maine Credit Union League.

In that time frame, credit unions reported a 40% growth in free4ME accounts, with nearly 600 new accounts added (Weekly Update Dec. 9). Young & Free Maine includes a financial headstart with an account called the free4ME Account, designed for 18- to-25 year-olds. The Maine program has proven successful in connecting with Gen Y in other regions throughout North America, the league said (News Now June 14).

Strong statewide advertising support through new TV and radio commercials, which specifically highlight the program, helped bolster its growth, the league said.

Other high­lights of the impact of the Young & Free Maine program are:

  • 13.4% member­ship growth in 18 to 25 year-old members since the Young & Free Maine program began in April;
  • The average age of credit union members at participating credit unions decreased a full year during that period, to 45 from age 46;
  • 13% of free4ME accounts have loans with an average loan balance of $6,649; and
  • The average age of free4ME account holders is 19.
October and November showed more positive results, with 60% of free4ME account openings being new relationships, a 20% increase over August and September.

With six months remaining on the first year of the Young & Free Maine Program, the Maine league said it continues to get closer to its goal of funding a second year of Young & Free.

Calif. league on supermarket breach Not necessary to close accounts

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SAN FRANCISCO (12/12/11)--A San Francisco-area Lucky supermarket stores card-reader scam that led to identity theft for some store employees and customers has others worried about their debit or credit card accounts. However, financial institutions are aware of the situation and those affected do not need to close their financial accounts, said the California Credit Union League.

The store chain announced Dec. 5 that thieves placed card skimmers into the readers of self-checkout terminals at 23 stores, capturing personal information from 23 customers and 80 employees. Money was stolen from some victims' checking accounts. Store officials had advised anyone who used the terminals in recent months to immediately close their accounts and seek advice from their financial institutions.

However, consumers "should not be inconvenienced by opening a new account, nor is that advisable," said Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues. "Financial institutions have been notified about cards that could have been compromised, so they can now monitor accounts for possible fraud and provide that information to consumers."

If needed, consumers can get a new credit card or debit card account number over the phone or online, rather than having to go to the trouble of visiting a financial institution, the league said.

The company first learned of the breach around Nov. 11 and sent out a consumer advisory on Nov. 23, according to a company spokesperson. It has no estimate on the number of victims and said reports keep coming in.

"Thousands more could be at risk," Dykstra said.

SaveMart, the parent company of Lucky, said it checked all its stores and its card readers now are safe. It operates 233 stores in Northern California and Northern Nevada under the Save Mart, S-Mart Foods, Lucky, and FoodMaxx banners.

"It is important for the sake of the consumer that merchants quickly respond when these types of breaches occur," Dykstra said. "It is just as imperative that merchants be more responsible for the effect these types of breaches can have on financial institutions that absorb the costs of re-establishing accounts and reissuing cards."

A card breach at a chain supermarket in 2008 resulted in a major compromise of a large number of customers' accounts, with significant losses to consumers and credit unions.

In the Hannaford Bros. supermarket credit and debit card breach, which occurred between Dec. 7, 2007 and March 10, 2008, it is estimated that the card numbers of more than four million people were stolen in the security breach. During the breach, cyber criminals hacked into Hannaford's system and accessed card numbers used at 165 Hannaford supermarkets in the Northeast and 106 Sweetbay stories in Florida (News Now Nov. 21).

At least 1,800 numbers were used for unauthorized fraud. Hannaford discovered the breach in February 2008 and made it public March 17, 2008. Many credit unions were among the financial institutions that reissued new cards to consumers.

IBizKidI films at two New York CUs

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MADISON, Wis. (12/12/11)--Biz Kid$, the Emmy award-winning and credit union-funded public televison series that teaches kids about money management and entrepreneurship, recently filmed a segment on understanding a line of credit and where they are available, at Actors FCU and Montauk CU in New York City.

A still shot from the upcoming BizKid$ TV show features Steve Sobotta, director of marketing at Actors FCU, New York, talking with Susie Leavitt and Katie Shea, owners of City Slips, about a line of credit for their business. (Photo provided by the National Credit Union Foundation)
The segment was filmed for an episode from season five. It featured Susie Levitt and Katie Shea, young entrepreneurs and owners of City Slips, a company that sells "ballet slipper" style shoes that fold up and fit in a small pack that then expands to a tote that holds the heels. As they grow their business, Levitt and Shea are looking to better control their cash flow with a business line of credit.

In the episode, Levitt and Shea visited Actors FCU and Montauk CU to compare what each offers with a line of credit. They compared interest rates, repayment terms, and whether minimum balances were required.

Aside from learning that a line of credit is just one of many services a credit union can offer, viewers also learned that not only does a line of credit help with cash flow, but it also helps a business establish good credit, which can help with future loans.

Fundraising is underway to garner full funding for the upcoming fifth season, which also will put Biz Kid$ into syndication. The National Credit Union Foundation oversees the fundraising, outreach and administrative responsibilities of Biz Kid$.

The program, which premiered in January 2008, has aired on more than 340 public television stations in all 50 states with a potential viewership reach of 271 million people. Biz Kid$ has the highest recorded carriage of any children's program released by American Public Television, with a viewing audience of more than 1.2 million per episode. Its website receives more than 100,000 unique visitors a month from about 140 countries.

During the past six years, more than 260 memerbs of the credit union system and affiliated organizations have raised more than $10.4 million to support the show's production, website and curriculum.

For more information, use the link.

FSCC shareholders OK combining with CO-OP Fin Services

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ONTARIO, Calif. (12/12/11)--Financial Service Centers Cooperative Inc.'s shareholders have unanimously approved combining the company's operations with CO-OP Financial Services.

The transaction plan was originally announced in September and  is expected to close in early 2012, unifying credit union shared-branch services of the two organizations.

"This is a milestone day in our work to blend the strengths of both companies, creating a more tightly integrated shared branching network," said Stan Hollen, CO-OP president/CEO. "The combination of services will result in efficiencies and economy of scale in branding, technology and administrative costs that will benefit all shared branching participants."

Between the two companies, more than 1,700 credit unions nationwide participate in shared branching, making more than 4,400 physical branch locations available to their members, plus 2,200 Vcom kiosk locations at 7-Eleven stores.

Dischler replaces retiring Forsythe on Corp. Central board

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MUSKEGO, Wis. (12/12/11)--Gerald Forsythe has retired from his position as chairman of the board of the Corporate Central CU, and Sally Dischler, president/CEO of Heartland CU, Madison, Wis. will  fill the vacant position, announced the Muskego, Wis.-based  corporate Thursday.

Dischler  has been with Heartland CU for 34 years. She became executive vice president in 1992 and president/CEO in 2001. She is current chairman of the CUES Wisconsin Council and is a member of the Wisconsin Credit Union League's Audit Committee. 

Dischler previously served as president of the Madison Chapter of Credit Unions, as board director of Badger Shared Service Centers, and on various league committees.

Paying down debt top New Years resolution--Georgia CUs poll

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DULUTH, Ga. (12/12/11)--About 49% of Georgia respondents to a recent poll from Georgia Credit Union Affiliates (GCUA) say their top financial goal for the next 12 months is to pay down debt. This mirrors nationwide sentiment among consumers.

In an annual survey by TD Ameritrade Holding Corp., 47% of respondents said they will resolve to reduce debt such as credit cards, mortgage or education loan.

The two most common resolutions among nationwide respondents were "have more fun" (66%), and "relax and reduce stress" (65%).

Among consumers with other financially related New Year's resolutions for 2012:

  • 51% plan to reduce spending;
  • 51% want to save for a financial emergency, such as a job loss or loss of a spouse; and
  • 30% plan to start or build up their retirement savings (401(k) or individual retirement account).
Just two years ago the TD Ameritrade survey found the opposite to be true. "Save more money" was the top resolution, followed by "spend more time with family" and "relax/reduce stress," respectively.

Cindy Owens, president of Piedmont Hospital FCU, Atlanta, said she believes more consumers are taking the initiative with their financial problems. "They are setting goals to help them get back on track," Owens told GCUA. "People who had a credit card with an astronomical rate and built up debt are coming to us for help in consolidating their debt and paying it down."

Piedmont Hospital FCU members look to reduce the amount they spend on financial services so they can focus on getting out of debt, Owens said. She added the best way for people to motivate themselves to stick to their financial resolutions is to keep the benefits of reaching the goal in view.

"When people come to us, we try to show them that there is some benefit to them in reaching their goal," Owens said. "If they have a goal of improving their credit, we help them see the benefit of each small step along the way. When they take out a small $500 loan and repay it on time, then their credit score improves. With a better credit score, they will be able to qualify for a low-interest car loan. Each step builds on the one before it."

New iYouTubei video promotes CU difference

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MADISON, Wis. (12/12/11)--A new, independently produced YouTube video provides a simple, understandable description of the difference between credit unions and banks.

The video has begun making the rounds virally.  In the 43-second animated video, a child narrator asks, "What is the difference between a credit union and a bank?

"A bank is in business to make a profit," the narrator explains. "It is owned by shareholders. They use your money to make more money. Then they charge you banking fees, so they can make a profit for their shareholders.

"A credit union, however, is owned by you, the account holder," the video continues. "It's a safe, insured place to bank, with no unnecessary fees. You share in any earnings and the money stays in your local community."

To see the video, use the link.

CU System briefs (12/09/2011)

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  • ALBANY, N.Y. (12/12/11)--CUC Mortgage Corp. announced Friday the appointment of Edward Kovalefsky as its chief operating officer. Kovalefsky will report to William J. Mellin, president/chairman of CUC Mortgage and president/CEO of the Credit Union Association of New York (CUANY). Kovalefsky joined the association in 1993, first as chief financial officer. For the past 10 years, he has overseen  CUANY's for-profit subsidiaries and managed its internal administrative and support services. He will succeed Richard Maxstadt, who is retiring.  Before joining CUANY, Kovalefsky served as vice president and controller at a publicly traded insurance company and spent 12 years with a regional public accounting firm, where he became vice president and shareholder …                                     

CU System briefs (12/08/2011)

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  • FORT WORTH, Texas (12/9/11)--American Airlines announced Thursday its restructuring plans and that it has named a board member of American Airlines FCU to an executive position on the struggling airline's management team. Credit union board member Denise Lynn will succeed the retiring Mark Burdette as the company's vice president of employee relations, which serves as liaison between the airline and the Allied Pilots Association. Burdette will retire Dec. 31. Lynn will move from her current position as vice president, flight service. American Airlines FCU is based in Dallas and has $5.4 billion in assets …

CU member rebates dividends another sign of holiday season

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MADISON, Wis. (12/9/11)--This holiday season, many members will get something extra from the credit union--in the form of a year-end rebate on loans or dividends on their deposits, one of the benefits of being a member/owner of a credit union.

Announcements by several credit unions recently have underscored that credit unions return excess proceeds to their member owners--something that for-profit financial institutions don't do.  With the economy still struggling, and consumers feeling pinched, credit unions know that this year, giving something back will mean even more.  Even credit unions that have tighter margins than usual this year make an effort to give back.

A good example is MECU of Baltimore (Md.) Inc. The more than $1.1 billion asset credit union, which has more than 99,000 members, paid its members a loan interest rebate of nearly $1.14 million--about 6% of the interest they paid on their loans between June 25 and Nov. 30.  It also will pay  members an extraordinary dividend on deposit accounts at the end of December. The rebate is in addition to more than $2 million cash bonus paid its members in June. By the end of year, the MECU will have paid members more than $4 million in cash bonuses.

MECU has a long tradition of the cash bonus, which began in 1981.  In 2008, at the high of the nation's financial crisis, MECU's board decided to pay half the cash bonus at the end of June and the remainder at the end of December to help members dealing with financial issues from the recession.  It expects to give the second half of the cash bonus in December.

Other recent examples include.

  • Guardian CU, a $208 million asset credit union in Montgomery, Ala., announced it will give members more than $750,000 in interest rebates and dividend bonuses. About 23,000 members received money back this week, with one individual receiving as much as $3,100. Guardian said the move is a way to say thank you for members' relationships and business over the past year; to give back to members who helped it have a prosperous year; and to help improve members' financial well-being throughout the year. "This 'give back' should also have a significant effect on the community and local businesses," said the credit union's press release, because people "have more than $100 extra to spend right here in the River Region this Christmas."
  • Wright-Patt CU, based in Fairborn, Ohio, will pay $5 million in special patronage dividends to more than 210,000 of its 215,000 members. The amount, which is $1 million more than last year, will be distributed Jan. 4, the $2 billion credit union said.  Since 2008, it has distributed $16 million in excess earnings to members.  "Paying a patronage dividend is great for our members, but our top priority has always been and will continue to be keeping our members' money safe," said Doug Fecher, CEO (Dayton Business Journal Dec. 1).
  • GCS FCU, a $298 million asset credit union based in Granite City, Ill., paid out a bonus dividend last month of 0.25% added to the current share rate to its members share savings accounts, according to its website. Dividends paid so far this year total more than $2.5 million.
  • Omni Community CU, a $270 million asset credit union based in Battle Creek, Mich., announced its Cashback Rebate program as a way to say "Thank you for making us your financial institution," according to its website.  It has paid $3.2 million to members since 2008.  This year members will receive 0.05% to 0.40% on all 2011 average yearly loan and account balances for 2011.  Members must be a member as of Nov. 15 and maintain an active account through Jan. 13, 2012. Members will receive their rebate in their savings account on Jan. 13.

Three nominations added to CUNA Board election

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MADISON, Wis. (12/9/11)--The Credit Union National Association (CUNA) has received three additional nominations for the CUNA Board election.

Nominations received include:

  • Patrick Jury, Iowa Credit Union League, Des Moines, Iowa, District 4, Class D;
  • Mike Mercer, Georgia Credit Union Affiliates, Duluth, Ga., District 3, Class D; and
  • Rod Staatz, SECU, Linthicum, Md.; for District 2, Class C.

Nominations were previously received from:

  • Pete Dzuris, Northland Area FCU, Oscoda, Mich., District 4, Class B;
  • Brett Martinez, Redwood CU, Santa Rosa, Calif., District 6, Class C; and
  • Winona Nava, Guadalupe CU, Santa Fe, N.M., District 5, Class A.

Other seats with openings in 2012 are:

  • District 1, Class B; and
  • District 3, Class A.
Deadline for nominations is Dec. 16.

An individual must be an employee or voting board member of the nominating credit union to be an eligible candidate elected by credit unions. 

To become an eligible candidate to be elected by leagues, an individual must be a league president and must be nominated in writing by the league, and the nomination must be seconded in writing by at least one other league from the district.

For contested elections, ballots will be sent Dec. 20, with voting continuing through Jan. 27.

Directors will take office upon the adjournment of CUNA's Annual General Meeting on March 18.

Nomination packets are available by calling 800-356-9655, ext. 4013; using the resource link; or e-mailing

For more information, use the resource link.

Pa. N.Y. CUs announce merger plans

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CORNING, N.Y. (12/9/11)--American Community FCU, with $6 million assets, Chambersburg, Pa. and $896 million asset Corning CU (CCU), headquartered in Corning, N.Y., will be merge on Jan. 1.

Corning CU will be the continuing credit union, the credit unions announced. They have collaborated the past several months, during which time American Community has also been without a CEO.

American Community members will gain increased product and service offerings through the merger, while Corning will take over American's branch in Chambersburg.

"While CCU has always been strongly committed to the Greencastle area, this merger will solidify us as a credit union leader in the area and will reinforce our commitment to growing our business in Franklin County," said Gary Grinnell, Corning CU president/CEO. "Our goal now is to make the transition smooth and successful for all American Community FCU members."

Grinnell said service to American FCU members will continue uninterrupted until Corning CU is ready to begin transitioning accounts.

IU.S. News and World ReportI IYahoo FinanceI cite benefits of CUs

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NEW YORK (12/9/11)--An article outlining "Why You Should Consider a Credit Union" in Thursday's issue of  U.S. News & World Report, which also featured comments from the Credit Union National Association (CUNA)  and the  National Credit Union Administration (NCUA), was among several positive press items about credit unions in national media this week.

The article joined others carried in Yahoo! Finance, MarketWatch, NASDAQ, and via Even a press release from a solar energy products company touted credit unions as one of "Top 4 Ways to Save Hundreds of Dollars in 20 Minutes or Less."

The U.S. News & World Report article noted the banks are having a tough year with new interchange rules and consumers are paying the price. "Credit unions, meanwhile, are offering some attractive deals," it said.  Bill Hampel, CUNA's chief economist, told the publication that credit unions have volunteer boards, have no stockholders to please, and  never took the risks that larger banks did by investing in derivatives markets. So the financial crisis was not nearly as hard on them, he said

It also pointed out CUNA's estimates that in the year ending March 2011, members saved $6.78 billion in interest and fees when compared with bank customers.

NCUA Chairman Debbie Matz told the publication that credit unions offer better rates than other financial providers and that she encourages consumers to comparison shop before opening accounts or signing for loans. She said the average interest rate of banks' five-year new-car loans is 5.1% while credit unions average 3.73%.  For the full article, use the link.

Other articles included:

  • "6 Benefits of Using a Credit Union," published by Investopedia and carried in Yahoo!Finance. In the article, Jenn Cloud, Young and Free spokesperson for Bridgeton, Mo.-based Vantage CU, and Seattle (Wash.) Metropolitan CU discuss misconceptions about and the benefits of credit unions. Use the link to access the article.
  • published an article, "Should You Switch to a Credit Union?" written by the Financial Planning Association (Dec. 7), which discussed Bank Transfer Day and cited CUNA information about traffic on its website. It noted that "credit unions offer some attractive features over a traditional commercial bank."  Use the link to access the article.
  • MarketWatch, in an article Thursday about the Occupy Wall Street movement, also wrote that "If you're a consumer who's had enough, it's only a matter of moving your accounts. The biggest bank-free option is the credit union."
  • picked up's article, "3 Ways to Avoid New Hidden Bank Fees," in which one of the three suggestions is to "switch banks." It recognized credit unions as an alternative for credit card fees and said that "many small, local banks and credit unions are in a position to offer you a better deal than goliaths like Bank of America or Citi."

WOCCU program helps Ethiopian agriculture CUs

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GANTA AFESHUM, Ethiopia (12/9/11)--Some Ethiopian farmers are members of Sasun RUSACCO--literally "rural savings and credit cooperative" or credit union--and are required to attend farming and financial training as part of their RUSACCO membership. Sasun is one of a growing number of RUSACCOs taking advantage of a World Council of Credit Unions (WOCCU) program funded by the U.S. Department of Agriculture (USDA) to improve the lives of its farmer-members.

Development agent Redai Halefom leads a class on fattening cattle for a group of Ethiopian farmers who are members of an Ethiopian "rural savings and credit cooperative," or credit union.
For example, Redai Halefom, a development agent assigned by Ethiopia's government to educate farmers in the northern region of Tigray, concluded an open-air presentation one day on ways to fatten the native cattle so they would sell at higher prices. Smiles and nods from his class of 20--both men and women--let Halefom know that another group of Ethiopia's subsistence farmers had taken a few more steps to ensure their food and financial security, said WOCCU.

"The Ethiopian model focuses on 'back to the basics' educational development," said Stanley Kuehn, WOCCU's program director in Ethiopia. "We're not introducing new crops, but instead providing greater access to credit so farmers have the resources they need to increase their yields, improve their finances and feed their communities."

WOCCU's program, funded by the monetization of 23,000 metric tons of wheat provided by USDA's Food for Progress program, already has taken root in the northern Tigray region where 89 RUSACCOs are participating. WOCCU is expanding to RUSACCOs in the Amhara and Oromia regions.

The program's goals are to provide technical training that will help turn subsistence farmers into commercial producers, expand agricultural finance products to meet growing farmer-member demand and improve community infrastructure to support agricultural production and marketing, according to Brian Branch, WOCCU president/CEO.

"Ethiopia has an extensive credit union system already in place that is able to serve members in remote rural areas," Branch said. "By strengthening that system through member education and increased resource availability, we hope to help raise the levels of credit union service to improve food security for communities and financial well-being for members."

Farmer Berihun Gebreyohannes (right) benefits from working with Redai Halefom, an Ethiopian development agent (left), to improve the health and marketability of his small herd of cattle. (Photos provided by the World Council of Credit Unions).
About 85% of Ethiopians rely on agriculture as their primary income source, which accounts for 46% of the country's gross national product and 80% of its exports, according to the U.S State Department. Frequent drought, unsustainable agricultural practices and poor infrastructure have hampered farmers' abilities to meet a growing demand, causing nearly 60% to fall below their own subsistence needs.

Ethiopia's nearly 8,000 credit unions, many of which serve fewer than 100 members, comprise a movement that is now more than 50 years old. The government mandates that each kebele, or community of roughly 2,000 households, has its own RUSACCO. However, since the credit unions' capital strength is based on member deposits, institutional growth has failed to keep up with loan demand among their farmer-members. Funding from WOCCU's program helps them provide greater loan access to members, while additional financial education and mandatory member participation in a RUSACCO savings program has strengthened the financial stability of the RUSACCOs.

Kuehn said the program conducted diagnostic studies on the RUSACCOs to determine areas where greater financial education and agricultural training are needed. "Our hope is to create an effective model that further involves the Ethiopian government in practical training and education of its people," he said.

Early results from the WOCCU program, aimed at providing finance and agricultural training to some 16,500 farmers, have been positive, said WOCCU. Berihun Gebreyohannes, a member of Sasun RUSACCO in Tigray, is one farmer who benefitted from the program.

Gebreyohannes works closely with Halefom, who advises him on his small herd of four livestock. The farmer recently borrowed 9,000 Ethiopian birr (about $525) to purchase a second ox, enabling him to plow and plant cabbage and potatoes. Proceeds from the sale of his vegetables and dairy products produced by his two cows will help support his family of five.

"I want my children to go to school and have a better life than I did," Gebreyohannes said. "I couldn't do that without a loan from my credit union."

N.J. CUs sponsor state coalitions fin lit symposium

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MERCERVILLE, N.J. (12/9/11)--New Jersey credit unions, through their partnership with the New Jersey Coalition for Financial Education (NJCFE) created earlier this year, sponsored NJCFE's fifth Annual Financial Literacy Symposium Wednesday in Mercerville.

The Financial Literacy Symposium is the main event of NJCFE's year. With the theme "Community Financial Survival Kit," the symposium provided information from financial and education experts (The Daily Exchange Dec. 8).

Maryanne Evanko, NJCFE chairwoman, and Michael Drulis, NJCFE executive staff, welcomed the group. And Drulis explained that N.J. credit unions became involved with the NJCFE "just in the nick of time," helping the organization expand its reach into New Jersey communities.

Keynote speaker Paul Gentile, president/CEO of the New Jersey Credit Union League, stressed the importance of financial literacy in the state and affirmed New Jersey credit unions' commitment to the cause. Financial literacy is a key component to helping consumers make better financial decisions, and through their offerings--including webinars, seminars, and Reality Fairs program--New Jersey credit unions are dedicated to spreading financial literacy, Gentile said.

"New Jersey credit unions want to partner with organizations to bring financial literacy to New Jersey consumers," Gentile said.

Credit unions' sponsorship of NJCFE is made possible by contributions from the New Jersey Credit Union Foundation and New Jersey credit unions that support the sponsorship, Gentile noted.

The New Jersey credit unions' work with NJCFE is just one example of how credit unions nationwide are supporting financial literacy programs by partnering with state and local community group and agencies to provide fundamental financial educations to help consumers wisely manage their money, credit, and accounts at financial institutions.

The Credit Union National Association has a financial literacy site that includes several programs, such as a Mad City Money hands-on simulation that appeals to youth and gives them a taste of the real world. The site also has a National Endowment for Financial Education High School Financial Planning program. For more information, use the links.

CUANY takes compliance conference to Puerto Rico

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Michael Lanotte, senior vice president/general counsel for the Credit Union Association of New York, talks to a group of 30 representatives from Puerto Rico and the U.S. Virgin Islands credit union movement about proposed regulation. (Photos provided by Credit Union Association of New York)
ALBANY, N.Y. (12/9/11)--The Credit Union Association of New York offered its second Compliance & Legal Conference Nov. 29 for Puerto Rico and U.S. Virgin Island credit unions in San Juan, Puerto Rico. The event attracted more than 30 attendees.

Michael Lanotte, association general counsel/senior vice president, and Michael Carter association director of compliance, led the conference.

"When credit unions gather together as they did for this conference, everyone wins--especially the credit union movement," Lanotte said. "It's representative of credit unions' 'people helping people' philosophy that is shared throughout the world."

Lanotte provided an update on debit interchange and the Consumer Financial Protection Bureau and discussed proposed regulations. Carter offered an update on recently passed regulations.

Participants of the Credit Union Association of New York's second annual Compliance/Legal conference for Puerto Rico and U.S. Virgin Island credit unions in San Juan, Puerto Rico, peruse handouts as they wait for the conference to begin. 
They engaged attendees in a compliance workshop, in which they posed several scenarios, worked through potential issues and came up with solutions as a group.

The conference was part of the association's ongoing partnership with credit unions in Puerto Rico and the Virgin Islands through the World Council of Credit Unions (WOCCU) international partnerships program.

The groups have been partners since 2005. The conference marked their fifth collaborative event.

"I admire the efforts of CUANY to ensure that credit unions in Puerto Rico and the U.S. Virgin Islands have relevant and accurate information on the ever-changing topic of compliance," said Victor Miguel Corro, vice president, foundation and international partnerships, WOCCU. "It's the top priority for those who participate in the partnership."

TransUnion Consumers shift payment priorities on bills

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CHICAGO (12/8/11)--Consumers are shifting their payment priorities from paying their mortgage first to paying other bills, according to TransUnion, a Chicago-based credit reporting agency. But the bureau expects the balance to shift again if housing prices go up.

In  its forecast released Wednesday for mortgage and card delinquencies for 2012, the bureau noted that before the recession, homeowners put their mortgages first in line for payment because of concern about their reputation and the emotional attachment to owning--and losing--a home (USA TODAY and MarketWatch Dec. 7).  They protected their home equity first and if money was scarce, they would default on their card payments.

But, when house prices dropped during the recession, many homeowners found they owed more on a mortgage than the home was worth. That and the tightening of credit turned the priority around, and paying off credit cards became first priority, said TransUnion.

The bureau said it expects the balance to shift again if housing prices go up and people begin rebuilding equity in their homes.

It also forecast that the mortgage delinquency rate (where borrowers are at least 60 days behind in payments) will go up to about 6% through the first quarter of 2012, and drop to 5% by the end of 2012. Typically the mortgage rate is around 1.5% to 2%, but it peaked at 6.89% during fourth quarter of 2009.

Banks, working through a backlog of foreclosures complicated by the robo-signing allegations in the industry,  will clear more foreclosures off the books next year, TransUnion said.

Card delinquencies, or payments that are 90 days or more overdue, increased slightly during third quarter and could inch up during fourth quarter 2011 and first quarter 2012. However, they still remain near historic lows.  TransUnion added that bank-issued cards will see fewer late payments.

Kansas CUs have strong 3Q delinquencies drop

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TOPEKA, Kan. (12/8/11)--Kansas credit unions saw gains in loans and assets, as well as a decline in delinquencies, during third quarter, according to a report released by the Kansas Department of Credit Unions.

The department regulates 80 state-chartered credit unions. It reported that assets in Kansas credit unions for the quarter totaled $4.28 billion,  up 7.8% from third quarter 2010 (The Wichita Eagle Dec. 7).  Loans totaled $2.84 billion, an increase of 5.7% over the same period last year.

The delinquency ratios for credit unions dropped to 0.98% from 1.36%, which regulators said was a significant drop in a year's time.  Michael Baugh, KDCU financial examiner administrator, told the newspaper paper that anything below 1% would be significant.

Two factors contributed to the lower delinquency ratio, said Baugh and KDCU Administrator John Smith: a decrease in the total amount of delinquency to $27.8 million from $36.7 million, and the increase in loans, which dilutes the delinquency total. Baugh also noted credit unions have worked hard to collect on overdue loans.

The department also reported membership increased  3.7% to 573,026 members during the quarter.  To access the report, use the link.

BTD organizer in CUNA webinar Every day is Bank Transfer Day

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MADISON, Wis. (12/8/11)--Bank Transfer Day organizer Kristen Christian, speaking Wednesday during the Credit Union National Association webinar, "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change," said she's passionate about credit unions, but BTD requires too much of a physical and time commitment to organize each year.

Calling BTD a labor of love, Christian said she spent about 20 hours a day meeting commitments related to the event in the days leading up to Nov. 5. Because of the time commitment she said she didn't think it was feasible for her to hold annually.

"Credit unions and the American public can take it from here," she said. "Credit unions have a powerful message to share within their communities. I believe the motto, 'Every day is Bank Transfer Day' really will come full circle. Every day can be bank transfer day."

Christian will continue helping credit unions and small businesses leverage their messages through social media.

"They make a difference in the lives of the people in their communities," she said.

Christian told the story of what she called "the first American movement organized solely through social media." She endured death threats in helping inspire about 441,000 bank customers to transfer their accounts to credit unions, she said.

She told how the member service representative at her credit union recognizes her by name, a far cry from the $5 monthly debit card fee that turned her from "discontent to disgust" as a Bank of America customer.

She then invited 500 of her Facebook friends to close their bank accounts "independently, with respect and without signage."

She was taken by surprise when a reporter from the Village Voice soon called for an interview, but the Bank Transfer Day movement--and the resulting frenzy--had been launched. ABC World News, National Public Radio,  Fox Business News, The Wall Street Journal and the Los Angeles Times were among the media outlets that interviewed Christian.

Christian said credit unions can leverage the positive feedback from BTD by using social media to build a word-of-mouth following about their lower interest rates on loans and higher rates on checking and savings.

Christian appeared on CUNA's webinar with credit union marketers who shared their experiences from Bank Transfer Day. See related News Now story, 'Marketers in CUNA webinar share BTD stories."

Marketers in CUNA webinar share BTD stories

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MADISON, Wis. (12/8/11)--Act fast and stay on message. Those were the two major lessons credit union marketers shared from their Bank Transfer Day experiences during a Wednesday Credit Union National Association webinar, "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change."

During the webinar, Amy McGraw, vice president of marketing at Tropical Financial CU, Miramar, Fla., shared how her marketing team came up with the idea to pay its members $5 a month to use the credit union's debit card--the exact opposite of the strategy Bank of America nearly employed when it announced it would charge its customers a $5 monthly debit card fee.

Team members agreed on the idea at 4:30 p.m. on a Thursday. By 7 p.m. on Friday, not only had the marketing team put up a microsite and created branding around the plan, it had placed the story with the Miami Herald and the Orlando Sun Sentinel.

Similarly, Pioneer West Virginia FCU, Charleston, W.Va., decided to pay its members five cents each time its members swiped their cards for signature-based transactions.

Both Tropical Financial and Pioneer West Virginia risked the loss of interchange income in hopes of gaining new, but long-term, members.

"We have confidence that our financial advocates can cross-sell new members once they walk in the door," said Lisa Moore, marketing manager of Pioneer West Virginia FCU.

Similarly, McGraw said Tropical Financial has a strong member onboarding process to introduce members to products that fit their demographic profile.

"We heard all these stories about how it was just going to be the unprofitable members leaving banks," McGraw said. "We didn't see those unprofitable members. We had one guy who took out a $1.3 million mortgage on a $2 million house. He knew about us because he saw us everywhere. Our credibility was going through the roof from seeing us in the media."

Anne Shivers, CEO of Carolina Collegiate FCU, Columbia, S.C., led a coalition of 33 North Carolina credit unions that signed a pledge to offer fee-free debit cards.

Among the keys--in addition to their strength in numbers--was the group's unified message. It sent out a single press release with one media contact. The entire organizational process took 48 hours, said Shivers.

The efforts resulted in seven television interviews, 14 newspapers stories, and two radio stories for credit union.

"As a mid-sized credit unions, we couldn't have afforded to buy that kind of advertising, but because there were so many of us it captured more attention," Shivers said. "Credit unions work well together anyway."

The campaign was more about telling the public what credit unions have always done, Shivers said. "But you have to be timely," she added. "You can't wait for someone else to do it."

McGraw, Moore and Shivers appeared on CUNA's webinar with Bank Transfer Day founder Kristen Christian. See related News Now story, "BTD organizer in CUNA webinar: 'Every day is Bank Transfer Day'

Balance Transfer Day linked to credit card promoter

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MADISON, Wis. (12/87/11)--Unlike Bank Transfer Day, which is a grassroots movement with no connection to credit unions, Balance Transfer Day has been linked to a company that promotes credit cards.

Michael Germanovsky, founder of Balance Transfer Day, set up a Facebook page in November urging consumers to switch their credit card debt balances by Monday to lower-rate cards. He designated Dec. 11 as Balance Transfer Day. According to several sources, including The Huffington Post (Dec. 6) and The Baltimore Sun (Dec.7), Germanovsky is editor-in-chief of Credit-Land and BestCreditOffers that push consumers to products, such as credit cards.

Lead generation sites are legal. However, some consumer advocates say the sites aren't concerned about consumers' best interests, The Huffington Post said.

Consumers may believe they are obtaining the best available offer through one of these sites, while in reality they may be getting pushed to a substandard deal, Ed Mierzwinski, director of consumer programs at U.S. PIRG, a nonprofit group that handles consumer issues for the public good, told The Huffington Post.

A wave of anti-bank sentiment, galvanized most recently with Bank Transfer Day Nov. 5-- which led to membership increases at credit unions nationwide--may be resulting in lead generator sites trying to capitalize on frustration and anger over banks' fees and policies, The Huffington Post said.

Survey CUs still at top in customer satisfaction

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DENVER (12/8/11)--Credit unions still score higher in member/customer satisfaction when compared with the banking industry overall average and with big U.S. bank customers, according to a national survey.

Members/customers said they are more satisfied with credit union and banks, and less likely to switch banks than in 2010, according to the 2011 Bank and Credit Union Satisfaction Survey released Tuesday by Prime Performance, which advises credit unions and banks on improving the client experience.

Credit union members rate their overall satisfaction with a net score of 89%, according to the survey. The comparable score for large banks (300 to 4,000 branches) is 80%, and for small banks (banks with less than 300 branches) is 88%. The industry average is 82%. Falling below that were: Bank of America, 73%; Wells Fargo, 75%; and Chase, 79%.

The survey was conducted in August and September 2011--well before big banks' plans to implement monthly debit card fees spawned Bank Transfer Day and consumer backlash. The survey asked questions of more than 8,000 members/customers who had recently been assisted by a representative at a credit union, small bank, large bank or one of the three mega-banks: Bank of America, Chase and Wells Fargo.

A net satisfaction score is the percentage of satisfied members/customers, minus the percentage of dissatisfied ones. A score of 100% is perfect.

The industry average net satisfaction score increased 5% from 2010. Chase and large banks increased faster than the industry rate, at 12% and 6%, respectively. Increasing slower than the industry rate were Bank of America at 3%. Credit unions, small banks and Wells Fargo, all increased 2%.

The survey also showed that some banks, particularly the mega-banks, have not completely won back the loyalty of their customers. Many consumers at big banks believe their bankers may put institutional interests ahead of customers, have concerns about fees, and are not ready to refer friends and family to do business with them, said the research firm.

Banks have made significant progress in creating a more satisfying experience, mainly with younger customers, said Jim S. Miller, president of Prime Performance. "Small banks have pulled even with credit unions among Gen Y and Gen X customers, while credit unions have increased satisfaction among older members.

"Customers [at large banks] told us they experience more problems or had more complaints with the big banks and are not sure the banks are acting in their customers' best interest particularly when it comes to fees," Miller said.

The survey also noted that some credit unions and banks are slipping in some key behaviors that make members/customers feel better about their banking experience, the survey said. Using the customer's name dropped by 5%, and thanking the customer fell by 3% from 2010.

"While credit unions and community banks enjoy high satisfaction and customer loyalty, their larger competitors are closing the gap, especially with younger customers," Miller said. "If small banks and credit unions don't live up to customer expectations and provide a more personalized service, they run the risk of losing their service advantage."

Other survey findings included:

  • Members/customers believe credit unions have the most competitive fees, and Bank of America the least competitive.
  • Credit union members and small bank customers are least likely to experience problems or complaints, while the most occur at Bank of America.
  • Members at credit unions and customers at small banks are more apt to believe employees enjoy their jobs than customers at big banks and mega-banks. Bank of America customers are the youngest, with an average age of 41.2 years (excluding minors). Small banks serve the oldest customer base, with an average age of 47.1 years.

Ohio Shared Branching network is fifth largest in state

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COLUMBUS, Ohio (12/8/11)--The Ohio Shared Branching network includes 289 locations, ranking it fifth in the state for convenience.

That means every Ohio credit union that participates in Shared Branching can say it has the fifth-largest branch network in the state, according to the Ohio Credit Union League (e-Lumination Newsletter Nov. 30).

Ironically, convenience is sometimes cited as a reason not to join credit unions because of claims that they have fewer branches and ATMs than banks.

In Ohio, PNC has 420 branches, Huntington--403, Fifth Third--375, U.S. Bank--334, Chase--292, and KeyBank--241, according to The Columbus Dispatch.

The Ohio Shared Branching network, by the first quarter 2012, will expand by 41, to 330 locations, surpassing the pace of 30 bank branches added in Ohio during the last 18 months, the Ohio league said.

Shared Branching is seeing a growth surge in Northeast and Southeast Ohio. The network connects its members with more than 4,440 locations nationwide.

CU System briefs (12/07/2011)

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  • GREENVILLE, Tenn. (12/8/11)--An Indiana man who was nabbed in Missouri in 2009 after his picture was plastered on electronic billboards across the South (Washington Post and Dec. 6) was sentenced to 26 life sentences for his role in 13 robberies in six states. Chad Schaffner, 39, of Indianapolis, was sentenced in a U.S. District Court in Tennessee for the robbery spree, which lasted four months and included 11 banks, one credit union and one retail store. The robberies occurred in Tennessee, North Carolina, Kentucky, South Carolina, Indiana and Illinois. Fourteen of the sentences are to run in a row. Schaffner's girlfriend, Linda Christina Davis, was sentenced in January to 27 months in prison as an accessory after the fact in two Tennessee robberies. She allegedly allowed Schaffner to use her car and rented motel rooms in various states to help hide him (PRNewswire Dec. 17, 2009) …
  • MADISON, Wis. (12/8/11)--A would-be robber who presented a note demanding money to a teller at Summit CU in Madison, Wis., Friday, fled without the money after the teller dropped the note. The incident occurred at 12:43 p.m.  According to a press release from Madison Police, the teller wasn't sure at first what he had been handed because he accidentally dropped the slip of paper. He bent over to pick it up and saw it was some sort of robbery note, said police spokesman Joel DeSpain ( Dec.5). When the teller straightened up, the suspect was walking out the door. No weapon was shown …

Bancography Branding index reflects CUs stability

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BIRMINGHAM, Ala. (12/8/11)--An index that ranks the brand strength of all U.S. banks, thrifts, and credit unions indicates this year's credit union rankings reflect more stability in that sector than the commercial bank sector's rankings.

"The stability in the credit union rankings versus 2010 differs sharply from the commercial bank rankings, which saw widespread change from the prior year," said Bancography, a Birmingham, Ala.-based marketing research company in its 2011 Bancography Brand Value Index (BBVI). The index, released Tuesday, notes that 19 of 2010's top-25 large credit unions kept their  top-25 status in the 2011 index.

"This performance also contrasts greatly from the 2010 credit union rankings, where only nine institutions repeated their top-25 positions from the previous year," said Bancography. Only two credit unions dropped out of the top 10 in 2011.

For the second consecutive year, Austin (Texas) Telco FCU leads the greater than $1 billion assets category, followed by Landmark CU, New Berlin, Wis., and Local Government FCU, Raleigh, N.C.  Two credit unions ranked in the top-10 during 2010--Mountain America FCU,  West Jordan, Utah, and University CU, Austin,Texas, dropped out of the top 10 in 2011.

Three credit unions--American Heritage FCU, Philadelphia, Pa.; Caltech Employees FCU, La Canada, Calif.; and Empower FCU, Syracuse, N.Y., moved up from the small credit union tier under $1 billion in assets, and now rank among the top 25 large credit unions in 2011.

Among small credit unions, with assets of $100 million to $1 billion, Complex Community FCU, Odessa,Texas; Freedom CU, Warminster, Pa.; and Gwinett FCU, Lawrenceville, Ga., led the list, with Freedom jumping from its 2010 rank of 28th place. White Sands FCU, Las Cruces, N.M., and America's CU, Lewis McChord, Wash., also returned to the top 25. Navy Army Community FCU, Corpus Christie, Texas, which ranked second in the category in 2010, now ranks ninth in the large credit union category.  2010's first- and third-ranking credit unions, InTouch CU, Plano, Texas, and First Community CU of Houston (Texas), dropped from the top-25 list.

The index ranks financial institution brands by the premium the brand adds to their underlying tangible value. It quantifies the proportion of each institution's long-term value that is attributable to the intangible factors that constitute an institution's brand. These factors include: reputation, service quality, image and market awareness. The brand value index identifies institutions that produce financial results beyond what their capital base, market conditions and competitive environments would predict.  The calculations reward institutions that display consistently strong earnings and a reasonable cost of funds, said Bancography.

For the full report with ranking lists of both credit unions and banks, use the links.

TCU Louisiana Tech to play in CUs Poinsettia Bowl

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SAN DIEGO (12/7/11)--Two college football teams from Texas and Louisiana will be the contenders in the San Diego County CU Poinsettia Bowl on Dec. 21.

The Texas Christian University (TCU) Horned Frogs, in the team's third appearance at the bowl, and Louisiana Tech's Bulldogs will vie for the bowl title, with kickoff set for 5 p.m. PST in San Diego's Qualcomm Stadium.

The game will air on ESPN, providing nationwide visibility for the credit union.

The $5.2 billion asset San Diego County CU has sponsored the Poinsettia Bowl since 2005, the first year the bowl game was held.  Its sponsorship of the bowl made a national comic syndicate in 2008 that appeared in newspapers across the country (News Now Jan. 5, 2009).

The Horned Frogs defeated Northern Illinois in 2006 and Boise State in 2008 during the team's prior two bowl appearances ( Dec. 6).

BofA cuts off issuing CU credit cards

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CHARLOTTE, N.C. (12/7/11)--Credit unions will no longer be able to sell credit card portfolios to FIA Card Services, the Bank of America (BofA) unit that issues bank cards for other banks and credit unions under their names.

FIA Card Services had about 50 agent-bank relationships, which included banks as well as credit unions, Betty Reiss, spokesperson for BofA's consumer products division, told News Now in an e-mail.

"We decided earlier this year that the agent-bank card relationship--where we issue cards on behalf of other financial institutions and credit unions--was not core to our goal of building deep relationships, and we began the process of exiting those relationships," Riess said.

"We're doing this through a combination of portfolio sales and contract expirations," she added. "In many cases, our agent-bank card business has served predominantly single-service card customers with limited opportunity for Bank of America to do more business with them," Riess said. "Again, this is a process that started earlier this year."

FIA Card Services, based in Wilmington, Del., is the name BofA gave to the former MBNA, a card issuing bank that BofA acquired in 2006, according to the FIA Card Services and BofA websites. The current MBNA name is widely used in bank card issuing in Europe and Canada.

CU System briefs (12/06/2011)

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  • TEMPLE, Texas (12/7/11)--Consumers including members of five credit unions in Temple and Waco, Texas, have been hit by a text-messaging scam that claims their card was deactivated and urges them to provide their account information to reactivate it ( and Dec. 5). A member of Scott and White Employees CU, Temple, told local media he knew he had a card coming and fell for the scam. The messages were sent Friday and Saturday, after the credit unions had closed for the weekend. In addition to Scott and White Employees CU, other credit unions targeted by the scam included: Texell CU, Temple, and three Waco-based credit unions: First Central CU, Genco FCU, and Educators CU. Credit unions and other financial institutions do not ask for account information in unsolicited calls, texts, or e-mails, and consumers should not click on the links or call numbers provided in these contacts …
  • EL PASO, Texas (12/7/11)--The El Paso Chapter of Credit Unions in El Paso, Texas, has
    Click to view larger image Click for larger view
    presented a check for $16,870 to the Lee & Beulah Moor Children's Home. The contribution was presented on Tuesday. Part of the proceeds will be used to purchase holiday gifts for children at the home, said a press release. The chapter raised the amount at its Annual Golf Classic on Nov. 4 (See the photo). So far, it has raised $19,270 in 2011 for the home. The home provides residential services, foster care, adoption services, tutoring, recreation, life-skills development, and individual and family counseling, said the chapter. (Photo provided by the El Paso Chapter of Credit Unions) …

CUs in Ohios in-state out-of-state parity bill

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COLUMBUS, Ohio (12/7/11)--Ohio-chartered credit unions, banks, savings banks, and savings and loan associations could assess the same interest, fees and other charges that out-of-state financial institutions assess Ohio consumers, if recently introduced legislation becomes state law.

Under the bill, Ohio-chartered financial institutions would not be subject to Ohio laws limiting interest, fees and other charges, said the Ohio Credit Union League (e-Lumination newsletter Nov. 30).

Senate Bill 218/House Bill 322, sponsored by State Sen. Bill Coley (R-Middletown), are pending in the Ohio General Assembly's Senate Financial Institutions Committee and House Financial Institutions, Housing and Urban Development Committee, respectively.

Similar legislation has been introduced in the past, most notably addressing credit card interest rates, the league added.

The league continues to monitor the process. It has emphasized the need for the legislation, and expressed concern that "Most Favored Lender" status only applies to each respective out-of-state institution, instead of an all-encompassing application for all lenders.

Ohio league urges choice on state bank bill

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COLUMBUS, Ohio (12/7/11)--The Ohio Credit Union League is calling for more options, including the use of credit unions, in legislation to expand depository authority for Ohio banks, approved by the state's Senate Financial Institutions Committee. The legislation awaits action on the Ohio Senate floor.

Banks and thrifts would be able to expand use of the Certificate Deposit Account Registry Service to place additional funds from public entities by participating in a short-term, Federal Deposit Insurance Corp.-insured sweep product, said the league (eLumination Newsletter Nov. 30).

Under the program, banks can fully insure large-dollar, short-term deposits and eliminate the need to collateralize uninsured amounts. Proponents say it creates a "win-win-win" for local governments, taxpayers and depositors, the Ohio league said.

In testimony before the committee, John Kozlowski, league general counsel, urged wider options for local governments, schools and political divisions. The bill should be part of a collection that uses other financial institutions, such as credit unions, to provide expanded choice for public entities, and small-business owners, Kozlowski said.

"Unfortunately, those that want to provide additional choice and resources in this bill, oppose other legislation that would also benefit local governments and small businesses," he added. "By giving our local officials and small businesses the best tools available, we can truly make this a 'win-win-win-win' for everyone."

CU4Kids efforts highlighted in iCEO Updatei

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MADISON, Wis. (12/7/11)--Credit union fundraising efforts for Credit Unions for Kids was recently highlighted in CEO Update, a newsletter for association executives.

Credit Unions for Kids is a nonprofit collaboration of credit unions, chapters, leagues/associations and business partners from across the country, engaged in fundraising activities to benefit 170 Children's Miracle Network Hospitals.

"Credit unions, their members and the associations and leagues that represent them are making a huge run at improving the health of children," begins the article. "Through Credit Unions for Kids, the industry and its partners have raised more than $100 million for Children's Miracle Network Hospitals since 1996--making credit unions the third-largest supporter of the charity behind Wal-Mart and Costco."

Through their unique ownership structure, credit unions are community oriented, Bill Cheney, president/CEO of the Credit Union National Association (CUNA), explained in the article.

"As financial cooperatives, our member credit unions aren't just in their communities, they are of their communities--owned by the very people they serve," said Cheney. "So our industry has been strongly drawn to a charitable organization like Children's Miracle Network Hospitals, which prides itself on keeping contributions local."

CUNA is also one of the sponsors of the Credit Union Cherry Blossom Ten Mile Run, the article said. The race, held every spring in Washington, D.C.,  is the largest single credit union fundraising event for children's hospitals.

Last year, 15,000 runners took part in the race, which raised $578,000, Sarah Turner, director of Credit Union Miracle Day, told the newsletter.

Credit Union Miracle Day is a partnership formed to sponsor the Credit Union Cherry Blossom Ten Mile Run.

Also see related article, "CUNA gives planning insight in advocacy article."

N.Y.s new banking department focusing on charters

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ALBANY, N.Y. (12/7/11)--The New York State Assembly Standing Committees on Insurance, Banks, and Oversight, Analysis and Investigations conducted a public hearing regarding the status of the state's new Department of Financial Services (DFS), which said it is focusing on strengthening the state charter for credit unions.

The department was created Oct. 3 from the merger of the New York State Banking Department and the New York State Insurance Department.

The hearing's chief witness, DFS Superintendent Benjamin Lawsky, presented an update on the merger and an overview of remaining steps necessary to complete the department's transition.

In his remarks, Lawsky referred to credit unions several times--most notably when discussing the DFS' goal of attracting more federal charters to convert to the state charter and its efforts to serve the "unbanked" and "underbanked."

"Superintendent Lawsky's comments align closely with the Credit Union Association of New York's legislative agenda, which is very encouraging," said Michael Lanotte, association senior vice president and general counsel, who attended the hearing. "We will continue to communicate with the superintendent and key members of the DFS staff to make sure that New York credit unions' interests are represented and protected."

Lawsky also noted the DFS' close involvement with hydraulic fracturing, including the potential impact on property values, mineral rights leases and title insurance. Slick water hydraulic fracturing, also known as hydrofracking, is a new development in natural gas extraction. The process makes mining for natural gas in dense shale more economically possible. A "slick water" mixture is pumped into the shale to fracture the rock and release the gas.

Postal service cuts will affect CUs

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FARMERS BRANCH, Texas (12/7/11)--Credit unions looking for ways to migrate members to e-statements and online banking may have received some help Monday from the U.S. Postal Service.

With the Postal Service's announcement that it wants to move quickly to close 252 of its nearly 500 mail processing centers and slow first-class delivery next Spring, "snail" mail will likely become less timely.

The estimated $3 billion in reductions are part efforts by the Postal Service to quickly cuts costs (Huffington Post Dec. 6).

The Postal Service has already announced a one-cent increase in first-class mail to 45 cents beginning Jan. 22.

"People just need to be aware of the changes because the reality is, mail is not going to be delivered in same way we've been accustomed to," said Willie Skeins, the Texas Credit Union League's business center manager (Lone Star Leaguer Dec. 6).

For example, in the past, an item sent priority mail would arrive at its destination within two to three business days, Skeins said.  Now it could take up to five days.

"If you are mailing time-sensitive materials, you just need to go ahead and pay extra for express mail because it is the only way you can guarantee next-day delivery," Skeins said.

About 42% of first-class mail is now delivered the following day, according to Huffington Post. About 27% arrives in two days, about 31% in three days and less than 1 % in four days to five days. Following the changes next Spring, about 51% of all first-class mail is expected to arrive in two days, with most of the remainder delivered in three days.

Some credit unions may no longer be able to expect one-day delivery of statements, newsletters and marketing materials to local communities.

Mountain West CUA presents four awards

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DENVER, Colo. (12/7/11)--The Mountain West Credit Union Association (MWCUA) presented four awards as part of its Colorado and Wyoming Credit Union Foundations' 2011 fourth Annual Gala Celebration this fall. 

Each year, the state foundations honor an individual Professional of the Year and Volunteer of the Year. 

This year's awards winners are:

  • Volunteer of the Year, Colorado: Christine McClatchey, College CU, Greeley;
  • Volunteer of the Year, Wyoming: Liz Luce, First Education FCU, Cheyenne;
  • Professional of the Year, Colorado: Mike Williams, Colorado CU, Littleton; and
  • Professional of the Year, Wyoming: Steve Higgenson, Reliant FCU, Casper.
The Volunteer of the Year Award is presented to a volunteer board member for distinguished volunteer service in the credit unions. 

McClatchy, has been an active volunteer board member with College CU and her community for more than 10 years.

Luce was originally recruited to serve on the credit union board and has continued to serve as a board member for 12 years, including the last three years as board chair. She is a small-business owner and volunteers for two community service organizations, five professional organizations, and two other nonprofit organizations.

The Professional of the Year Award is presented to a credit union executive who demonstrates the highest standard of professionalism, service that benefits the community, and exemplifies excellence in the credit union movement. 

Williams has served the credit union movement for 25 years and has worked at Colorado CU for 19 years. He serves on numerous industry boards and is chairman of MWCUA's board of directors.

Higgenson has served the credit union industry for more than 12 years, during which time he has continued to advance credit unions through volunteering on boards and committees both locally and nationally.

Scam targets unemployment benefits prepaid cards

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SAN FRANCISCO (12/6/12)--People receiving unemployment benefits in California through a prepaid Bank of America debit card reported last week they have received phone calls trying to trick them into revealing their personal information.

Credit unions that have members with unemployment benefits cards may need to educate their members about the scam in case similar instances pop up in other states.

The phone calls target jobless Californians whose benefits are automatically replenished on the BofA card. California's Employment Development Department (EDD) switched to the cards during last summer.

The caller tells recipients that their EDD card has been temporarily blocked and to press No. 1 to be transferred to a security department. Once the recipients do so, they are told to enter their personal account information to reactivate their card. 

EDD spokesman Dan Stephens told the San Francisco Chronicle (Dec. 2) that it's unlikely that the callers have specific information about recipients' records with the agency and added no evidence exists indicating hacking of EDD's records. He attributed the phone calls to random dialing. Some have received the calls on their cell phones.

More than 1.4 million people in California have been issued the cards, he said. It is one of 41 states that issue unemployment benefits through prepaid debit cards, said the article.

CUs still getting their day in the sun

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MADISON, Wis. (12/6/11)--Credit unions were still getting their day in the sun in media reports last weekend.  CNNMoney reported on their  member business lending (MBL) efforts, a league opinion in a state newspaper touted the benefits of credit unions, and consumers' continued movement to credit unions from banks garnered attention in several media.

In the Worcester (Mass.) Business Journal (Dec. 5), an opinion editorial written by Dan Egan, president of the Massachusetts Credit Union League, told about the influx of new members into credit unions as a result of the Bank Transfer Day events prompted by debit card fees introduced (but later rescinded) by mega-banks and how credit unions are structured differently than banks..

"I've traveled around the state for the last 30-plus years touting the benefits of joining a credit union. Thankfully, people have been fairly receptive to my message. But nothing can top the response we've seen over the last two months. And we've only just begun," Egan wrote.

He estimated that at least 20,000 consumers in Massachusetts have joined a credit union, adding more than $136 million in new deposits. He wrote that Digital FCU, the largest credit union in New England,  reported signing up 133 new members on Nov. 5. That's a 56% increase from the 85 account openings the $3.8 billion asset, Marlborough-based credit union averages on Saturday.

Another article, "Credit unions bank on consumer backlash," in Friday's Pacific Coast Business Times told about California credit unions that experienced increases in membership from the consumer backlash. It featured CoastHills FCU, a $632 million asset credit union in Lompoc;Ventura County CU, a $543 million asset credit union in Ventura.; and SESLOC FCU, with $530 million assets in San Luis Obispo.

CoastHills didn't see a dramatic increase in members as a result of Bank Transfer Day largely because it already has a strong foothold in its markets. Ventura County, however, added more than 1,100 members since the beginning of October. It typically averages about 420 new members a month.  In October, it added 750, with 315 of those on Nov. 5, Bank Transfer Day, the article said.  About 90% of people who came in on Bank Transfer Day opened new checking accounts and many brought along their other banking relationships, including lines of credit, savings accounts and direct deposits from employers.

SESLOC FCU said it noticed more people wanted to learn more about credit unions.  The article also featured membership statistics from the Credit Union National Association (CUNA).

Small business loans were also in the news.  In a Friday article entitled "Small biz loans: Credit unions to the rescue?" CNNMoney noted how credit unions, seeing an opening in the credit crunch for small businesses, expanded their offerings to entrepreneurs declined by banks. The article featured three credit unions' programs: Brooklyn (N.Y.) Cooperative FCU; Greenwood Village, Colo.-based Bellco CU; and Amplify CU, based in Austin, Texas.

CUNA and credit unions continue to urge Congress to raise credit unions' MBL limit to 27.5% of assets from 12.25%, which would produce $13 billion in new small-business loans to help boost the economy. Lifting the cap could generate about 140,000 new jobs created by small businesses through these loans.

CU System briefs (12/05/2011)

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  • ST. PAUL, Minn. (12/6/11)--Mary Cunningham, former board member with the Credit Union National Association, has joined the board of directors of FoolProof, a turnkey consumer advocacy initiative for credit unions.  Cunningham was instrumental last summer in setting up meetings with movement leaders nationwide to learn about FoolProof and as a volunteer attended meetings in Florida, Indiana, North Carolina, California and Wisconsin.  According to FoolProof founder/CEO Will deHoo, the initiative's mission is to "make credit unions the 'go to' source for true consumer advocacy in America's communities." Cunningham, during her 36-year career with credit unions, also has served as chairman of the National Credit Union Foundation (NCUF) and the Credit Union Executives Society. Other board members include Remar Sutton, nationally recognized credit union advocate; Pat Sterner, former executive director of NCUF; Malcolm Kirschenbaum, treasurer of the Newseum, Washington, D.C.; and Roberta Baskin, who served as director of the Center for Public Integrity …
  • ST. PAUL, Minn. (12/6/11)--In anticipation of the 2012 International Year of Cooperatives, the Minnesota Credit Union Network is welcoming six Paraguayan credit union representatives for a visit through this Saturday. The week-long event will immerse the international visitors into Minnesota and credit union culture through legislative meet-and-greets; visits at Hiway FCU, St. Paul; SouthPoint FCU, Sleepy Eye; SPIRE FCU, Falcon Heights; and St. Paul (Minn.) FCU; and tourist and social activities. The international visitors will gain insight into Minnesota politics and credit union advocacy activities during a visit to the State Capitol. The group will meet with Minnesota Speaker of the House Kurt Zellers (R-Maple Grove) and the state Commerce Department's Deputy Commissioner of Administration Steve Carlson. The visitors also will tour the State Capitol …
  • HERMISTON, Ore. (12/6/11)--HAPO Community CU, Richland, Wash., opened its 12th branch, and its first in Oregon on Friday. Mayor Robert E. Severson and members of the city Chamber of Commerce attended a ribbon-cutting ceremony in Hermiston, Ore. Members have asked for a branch in Hermiston because many work in the area, said Steve Anderson, HAPO executive vice president and the chief operating officer. "We have had so many people ask us, 'When are you coming to Hermiston? When are you coming to Hermiston?' It's been really unusual," Anderson said. "I've never seen this level of excitement." The new branch is full service and open from 9 a.m. to 6 p.m. (PT) Monday through Friday.  It will also include 24-hour drive up and walk-up ATMs. HAPO plans to open its 13th branch in Walla Walla, Wash., within the next year …

Poll 40 will spend zero on holiday purchases

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WASHINGTON (12/6/11)--Forty percent of consumers surveyed do not intend to spend any money on holiday purchases because they anticipate experiencing further financial distress in the future, said a November poll hosted by the National Foundation for Credit Counseling (NFCC) website.

The poll indicates that despite the increase in sales during Black Friday and Cyber Monday, a significant number of people lack enough confidence in their financial future to begin spending, even on traditional holiday expenses, NFCC said. 

"Historically, consumers have put aside their financial concerns during the holidays, even if to their detriment, and spent at some level," said Gail Cunningham, NFCC spokeswoman. "These figures provide a snapshot of the desperate situation in which consumers find themselves, and how seriously they are taking their situation."

Of note is the statistically significant increase reflected in the year-over-year trend in polls between November 2010 and November 2011, there was a six percentage point increase in the number of consumers who indicated they will spend zero dollars during the holiday season, evidence of the depth of the financial despair in the country, said NFCC.

Also, slightly more than half of all poll respondents indicated they would cut back on holiday spending, because their financial situation is worse this year than last. Combining those who will cut back on spending with those who will not spend at all, 91% of consumers are concerned enough about their financial circumstances to remain on the spending sidelines this holiday season.

For the two categories with the lowest responses, 7% revealed that they will spend as they did in 2010, and just 3% will spend more than they did last year.

For professional assistance with financial questions, consumers can contact a certified consumer credit counselor at an NFCC member agency.

Consumers answered these questions in the November poll, noting that this holiday they would:

  • "Spend as I did last year because my financial life is stable"--7% (2010--7%);
  • "Cut back on spending, since I am worse off financially this year"--51% (2010--57%);
  • "Spend more than last year because I am in a better financial position"--3% (2010--2%); and
  • "Not spend at all, because I anticipate further financial distress"--40% (2010--34%).
The NFCC's November Financial Literacy Opinion Index was conducted via the homepage of the NFCC website from Nov. 1 through Nov. 30, and was answered by 1,232 individuals.

Earlier this month, a Consumer Federation of America (CFA)/Credit Union National Association (CUNA) nationwide survey indicated 8% of respondents plan to spend more on gifts and holiday items, with 41% of respondents saying they would spend less this holiday season. The results, announced Nov. 21, are nearly identical to the two groups' 2010 consumer predictions, when the CFA/CUNA survey found that one in 10 consumers would increase their holiday spending, and 41% at that time said they would cut their holiday spending (News Now Nov. 22).

Occupy San Francisco plans to create a CU

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SAN FRANCISCO (12/6/11)--The Occupy San Francisco movement has announced plans to create a new credit union that will allow city residents, businesses, and nonprofit and city agencies to keep their money out of big banks and redistribute that money locally.

The credit union name--People's Reserve CU--was registered in California before Thanksgiving ( and Dec. 3).

The first charter meeting is slated for Saturday. People's Reserve is being created with assistance from San Francisco Supervisors Eric Mar and John Avalos, and Glide Church.

The organizational group said the credit union plans to cultivate community projects, offer microloans of $5,000 or less to the working poor and homeless, and subsidize student loans at low interest rates.

People's Reserve intends to start with 500 members and increase its size to 2,000 members in one year. By the end of 2012, it aims to accumulate $7 million in capital assets from members and organizations.

Organizers plan to open two branches in San Francisco, with each branch containing a cafe and a commercial kitchen available to rent. The credit union will employ students and homeless people, creating 60 part-time jobs.

Plans also are in the works to establish and finance a food co-op big enough to serve a local neighborhood.

Contest to win two Wegner Award dinner tickets

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MADISON, Wis. (12/6/11)--The National Credit Union Foundation (NCUF) and CUinsight have launched a two-week promotion to give away two tickets to NCUF's Herb Wegner Memorial Awards presentation dinner.

The awards dinner will take place March 19 at the Grand Hyatt, Washington, D.C., during the Credit Union National Association's 2012 Governmental Affairs Conference (GAC).

Individuals from credit union organizations can enter the contest at through Dec. 16. Contest rules are posted on the entry page. The winner of the two tickets will be chosen by a random drawing after Dec. 16.

"This is the first time that we've done a contest for dinner tickets," said Christopher Morris, NCUF director of communications. "It's such an inspiring event, and this gives a few more people a chance to attend."

Individual tickets for the three-course dinner are $275 each.

Michigan foreclosure extension bills move from committee

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LANSING, Mich. (12/6/11)--The Michigan Credit Union League (MCUL) is advocating for reforms to the state's foreclosure process. A package of Michigan bills that would extend the 90-day foreclosure law for an additional three years is moving on to the full state House after being voted out of the state's House Banking and Financial Services Committee.

The changes to the framework for the 90-day delay include clearer timelines on which actions must occur at certain points during the process for lenders and borrowers. That will allow a lender to proceed immediately to foreclosure if a borrower is unresponsive to requests for certain documents, MCUL said (Michigan Monitor Dec. 5)

Other changes include: holding borrowers responsible for damaging the property during the redemption period; and reducing the redemption period for properties larger than three acres to six months from one year, if the property is not for agricultural use. MCUL supports those changes in three House bills.

MCUL also is advocating in the package a shortened redemption period for loans held in portfolio. HB 5176, introduced by State Rep. Rick Olson (R-Saline), will help offset the burden of adding 90 days to the foreclosure process by reducing the redemption period on portfolio loans by 90 days. It's part of the four-bill package approved by the House committee Wednesday.

The Michigan Foreclosure Taskforce, representing housing counselors and consumers in the foreclosure process, is opposed to HB 5176. The taskforce claims the bill is unfair to homeowners because it will create two different redemption periods for homeowners based on whether they have a portfolio or non-portfolio loan, MCUL said.

The redemption periods differ for portfolio loans versus non-portfolio loans, but MCUL said that lenders who hold the loan in portfolio will engage in more communication early in the pre-foreclosure process to avoid foreclosure. Additional time is not necessary when a modification cannot be made and all avenues have been exhausted to try to keep a borrower in the home, MCUL said.

Also, the current foreclosure process has several different redemption periods depending on if a property is abandoned, and is or more or less than three acres. Having different timelines for people to redeem their property is not a new concept, MCUL said.

Filenes Crash Network builds momentum

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MADISON, Wis. (12/6/11)--In less than two years, Filene Research Institute's Crash Network has evolved from a gathering of 25 young credit union professionals at the Credit Union National Association's Governmental Affairs Conference (GAC) in 2010 to a group comprising more than 270 members and six league partners.

Filene Research Institute's Crash Network, a group of young credit union professionals, has grown to more than 270 members and six league partners. Kevin Kindschi, sales executive, CUNA Mutual Group, talks to the California-Nevada Credit Union League members of the Crash Network about how the economy affects credit unions in their states. (Photo provided by the Crash Network)
"Crash gives young credit union professionals a place to network," said Theresa Hilinski, Crash Network community manager. "We're helping the next generation of credit union professionals to learn, grow and develop, and we've really gained some momentum over the last year."

In 2011, the Crash Network partnered with the California-Nevada, Indiana, Iowa, Louisiana, Michigan and Pennsylvania credit union leagues to provide events at their annual meetings. After the events, Crash Network participants were encouraged to build upon what they learned at the event by keeping in touch via its online network.

"The Crash Network was developed to help young credit union professionals connect outside of events," Hilinski said. "It allows them to get involved where they typically wouldn't be invited."

The Crash Network was the brainchild of Brent Dixon, Filene's young adult adviser. The 25 young professionals who crashed CUNA's GAC in 2010 wanted to fight for the future of the credit union movement alongside industry veterans, Dixon said.

"Little did we know at the time that our initial 'Crash' would be only the start of things to come," Dixon said.

The Crash Network's 2011 activities are sponsored by CUNA Mutual Group, which has provided both support and the mentoring that the network was formed to promote.

Kristen Christian to discuss BTD success on CUNA webinar

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MADISON, Wis. (12/6/11)--Kristen Christian, the tactician behind the enormously successful National Bank Transfer Day (BTD), will be a featured panelist for a Credit Union National Association (CUNA) webinar, "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change," from 2 p.m. to  3 p.m. CT Wednesday.

The social engineer behind the Nov. 5 BTD, Christian will share her insight on how credit unions can continue to generate positive support moving forward.

Christian lives in Los Angeles where she works as a social media strategist and entrepreneur.

The "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change!" webinar is designed to address the widespread consumer frustration displayed in movements such as Occupy Wall Street and National Bank Transfer Day, and to discuss strategies on how to connect to the positive support generated by these events. The session will explore how credit unions can help potential members make the switch from banks and what consumers truly want from their financial institutions.  

Also speaking will be 2011 CUNA Marketing Professional of the Year Amy McGraw. An industry leader in social media marketing, McGraw will provide insight into effective ways credit unions can use social media to keep up the positive momentum from BTD and discuss how social media campaigns for credit unions differ from other organizations. McGraw, vice president of marketing at Tropical Financial CU, Miramar, Fla., is the Twitter voice for the CUNA Marketing and Business Development Council.

Moderating the panel will be Kelley Parks, a former CUNA Marketing Professional of the Year and a creative catalyst for gira{ph}, a company that helps small- to mid-sized credit unions differentiate themselves in the market. For nine years, Parks served as the vice president of marketing and business development for Call FCU in Richmond, Va. She is also a blogger for, and an editor for, two sites that offer advice for credit union marketers.

Catalyst Corp. hits well-capitalized status early

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PLANO, Texas (12/6/11)--Catalyst Corporate FCU, which has been in operations less than two months, has already hit the "well-capitalized" status,  earlier than the projected 2013 date.

In a letter to its membership, Catalyst President/CEO Dianne Addington said the corporate had reached a 5.01% leverage ratio and that its first two months of operations "far exceeded expectations."

During September, Catalyst's return on assets was 0.35%, compared with 0.04% forecast. Its coverage ratio, or net fee income divided by operating expense, was 102.9%, greater than the 82.9% the corporate had forecast. Addington attributed the numbers to "efficient operations and member support.

Catalyst was formed by the merger of two corporates--Georgia Corporate FCU, based in Duluth, Ga.,  and Southwest Bridge Corporate FCU, based in Plano, Texas. The combined corporate has 890 capitalized members with more than $95 million in perpetual contributed capital. It also has verbal commitments from seven credit unions in the process of completing paperwork that would provide an additional $986,000 in perpetual contributed capital, and 31 other credit unions are in the process of evaluating the corporate.

The corporate plans to roll out mobile banking, mobile capture and lockbox processing services early next year, Addington said. "The leadership team of Catalyst is working purposefully to execute the business plan that was presented during webinars and town hall meetings over the past year," she said. To continue its commitment to transparency, Catalyst will start posting soon on its website a special report comparing 28 target ratios that were listed in the business plan and Catalyst's actual performance.

The corporate also will include updates on non-statistical commitments that were made and were fulfilled, she said.

Catalyst opened its doors Sept. 6, with 880 member credit unions and $93 million capital---representing 74% of previous shareholders capital (News Now Oct. 3).  The merger made Southwest Bridge Corporate the first corporate to come out of bridge status--in advance of the two-year timeframe established by the National Credit Union Administration in fall 2010, , when the corporate was placed under conservatorship (News Now Aug. 31).

Credit card charge-off rates declined in October

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NEW YORK (12/6/11)--Credit card charge-offs in the U.S. in October fell six basis points to 5.21% from 5.27% in September and 8.79% in October 2010, according to Moody's Credit Card Indices.

October's charge-offs were at their lowest level since 2007. Moody's said it expects charge-offs to continue to decline well into next year and push the rate to below 4% by year-end 2012.

"Following the sizeable, 75-basis point decline in the charge-off rate in September, driven in part by seasonal trends, the continued improvement in October is notable," said Jeffrey Hibbs, assistant vice president at Moody's. "Earlier in the decade, sharp charge-off improvements in September were typically followed by increases in October, a pattern that has been broken now for the past three years," he added.

The charge-off rate measures credit card account balances written off as uncollectible as an annualized percentage of total outstanding principal balance, said Moody's Investor Service in a release late last month.

The delinquency rate--which measures the portion of account balances that a monthly payment is more than 30 days late as a percent of total outstanding principal balance--continued to hold steady at an all-time low of 3.04%, said Moody's.  Early stage delinquencies were one point lower at 0.86%, near where they have hovered the past seven months.

That means the pace of further improvement likely will be muted, said Hibb, who noted, "the calendar is moving into a period that suggests seasonal declines in the early-stage delinquency rate in the coming months."

The payment rate,  a measure of the average amount of principal that cardholders repay each month as a percentage of total outstanding principal balance,  slipped below 21%  for the first time since April. The October payment rate was 20.91%, or one percentage point below the all-time high reached in August.

"Historically, low delinquencies and high payment rates reflect the improved borrower mix in credit card trusts today as weak borrowers have charged off at record levels in the recent recession and originators have added few new accounts to the securitizations," Hibbs said.

In credit unions, loan delinquency also continued its year-long decline, with the rate in October at 1.57%. That is a decrease from 1.59% in September and 1.76% in October 2010, according to the Credit Union National Association's Monthly Credit Union Estimates for October, which was released Monday.

iPad tablets bring challenge to online banking

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NEW YORK (12/5/11)--Just as banks and credit unions have begun proudly touting their new mobile banking services for devices such as smartphones, the iPad and other tablets have arrived, presenting an entirely new challenge for online banking.

Credit unions will need to keep abreast of the new devices, which are a cross between smartphones and computers, because large banks are already moving in to offer tablet-specific applications, and the iPads are among the biggest selling items among holiday shoppers.

Eight percent of consumers had tablets before the holiday season began. Black Friday sales of Apple's iPads beat forecasts, with Apple selling 70% more units than last year. Research firm Jeffries predicted  that sales may nearly double in the fiscal year that began in September.  The firm estimated Apple could sell 65.4 million iPads, almost twice as many as it sold in the 2011 fiscal year (E-Commerce Nov. 30)..

That means there will be a whole lot of demand for banking services to fit the devices.

So far, about 30% of the nation's largest banks offer a tablet-specific application--and that's just for iPad users, Mary Monahan, head of mobile devices research at Javelin Research & Strategies, told Reuters (Nov. 23).  None of the banks surveyed have a specific app for iPad's Android-based competitors such as Kindle Fire--yet.

The lack of services for these devices can add up to frustration for the tech-savvy  consumer who wants to be cool while banking on the go. And that's the challenge for credit unions: How to serve this market while keeping personal financial information secure and while serving members engaged in all the other mobile and online channels of service delivery.

A designer of mobile banking programs, Clairmail, noted that the devices aren't smartphone banking and they aren't a shrunken version of online banking, said Reuters.

They will present some security challenges for sensitive information. Apple has provided device and data protection such as passcode policies, encryption, and remote wipe/local wipe functions to remove data and deactivate the iPad if its lost or stolen.  It also supports security technologies and protocols to enable a secure connection for remote users, but, according to an article in the March/April 2010 Colorado Banker and in November, training users never to connect to unknown or ad-hoc networks will be a challenge.

The biggest vulnerability, said the article, is the browser-based vulnerabilities. Financial institutions will need to consider the risks involved and adjust their policies, controls and user training.

Financial institutions need to serve this space because it's going to revolutionize banking the same way the smartphone did, said Monahan in the Reuters article. "The banks have to be ready for this."  She noted that software developers hired by financial institutions are under pressure to quickly get their clients into the tablet marketplace.

New Balance Transfer Day focuses on credit cards

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CHICAGO (12/5/11)--Bank Transfer Day proved so successful that it has spawned a number of other special dates devoted to moving money around in the nation's financial system. Among them: Balance Transfer Day, earmarked for Dec. 11 and targeting credit card accounts.

Balance Transfer Day calls for consumers to apply en masse for low-interest credit cards on Sunday to send another message capitalizing on anti-big bank sentiment. It aims to get credit card holders to transfer their outstanding debts from high-interest-rate credit cards to cards with 0% interest and zero-balance transfer fees issued by credit unions and small community banks, said The (Nov. 30) and Huffington Post (Dec. 2).

Balance Transfer Day is not associated with Bank Transfer Day or its founder, Kristen Christian, whose Facebook page became a major national social media event when it swelled with thousands of supporters after she designated Nov. 5 as Bank Transfer Day.  Although that event was not sponsored or run by credit unions, credit unions became the beneficiaries of the anti-bank sentiment when nearly 700,000 people switched accounts to credit unions in the weeks leading up to Nov. 5.  The article quoted the Credit Union National Association's statistics on the sudden growth about the impact.

The people behind the Dec. 11 event, Music for Change, worked on a financial literacy campaign with the Occupy movement last summer to educate people about how banks and credit card providers attract consumers with introductory 0% interest rates that end several months later and switch to much higher rates.

Balance Transfer Day, however, has a much larger hurdle than pulling deposits from an account: credit ratings. Zero-percent rates are used to attract consumers with high credit scores. Not every consumer has the credit rating to obtain a lower rate on their credit cards, said the Huffington Post. noted that consumers with a FICO score lower than 700 are unlikely to qualify for the promotional deals.

In addition, another campaign called "Move Our Money" is made up of churches, community organizations and labor unions that say they want to remove $1 billion from big banks and put them into local credit unions and banks, said

Compliance must be constant Klewin writes in iCU Magi

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MADISON, Wis. (12/5/11)--Regulatory compliance requires constant vigilance, and Equal Credit Opportunity Act (ECOA) laws provide a perfect example, Bill Klewin, CUNA Mutual Group's director of regulatory compliance, advises in an online Credit Union Magazine article .

ECOA prohibits financial institutions from discriminating against loan applicants based on race, color, religion, national origin, gender, marital status, age, income derived from any public assistance program, or their exercise of any right under the Consumer Credit Protection Act.

Klewin provides the example of a lawsuit filed by the U. S. Justice Department against Nixon (Texas) State Bank, which gave its loan officers broad discretion in making loan decisions.

"The bank did not require a written application or credit report, use a uniform pricing system such as a matrix or rate sheet, or document the reasons for loan denials," Klewin wrote.  

The Justice Department civil suit alleged a pattern of discrimination against Hispanic loan applicants that required them to pay consistently higher rates than other borrowers.

Nixon State Bank eventually settled the suit with the Justice Department. Although the bank doesn't acknowledge any wrongdoing, it agreed to train its loan officers on fair lending practices, revise its loan-pricing policies, create a fund to compensate victims of discrimination and submit regular compliance reports to the department for the next four years.

"Credit unions aren't immune to these kinds of action," Klewin wrote. "It's imperative that credit union executives review their processes, compensation plans, pricing matrices, loan officer pricing-discretion guidelines, and any other process that may result in a review and a referral to the Department of Justice."

IWSJI Banks try to convince customers not to leave

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NEW YORK (12/5/11)--Some consumers who are tired of rising fees and stringent lending requirements at big banks are running into obstacles as they try to pull out their funds and put their money into credit unions and smaller community banks, The Wall Street Journal said Friday.

Customers are encountering roadblocks that include stall tactics--such as having to talk to a personal banker before closing accounts; unexpected closing fees; and awkward conversations with bank personnel trying to convince them to stay, the Journal said.

The Journal also related the story of how Diana Starr, a resident of Lomita, Calif., who was leaving Chase Bank and moving her money to California CU, was charged an $8 fee for withdrawing $5,000 from her account because she wanted her funds in the form of a cashier's check. That's one of the reasons she left the bank, Starr said.

Even though large banks have retracted their plans to charge customers a monthly fee for using debit cards--the lightning rod of recent anger toward big banks this year--many customers still are upset. Now banks have to determine how to retain customers, while they are raising fees to mitigate increased costs of new federal regulations, the Journal said.

The article mentioned Bank Transfer Day Nov. 5, and that the Credit Union National Association estimates about 700,000 consumers joined credit unions between Sept. 29 and the first week of November.

To read the article, use the link.

YoungFree other programs tap into whats big with youth

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MADISON, Wis. (12/5/11)--Credit unions are using creativity and the power of the electronic media to capture the imagination of Gen Y.

Reaching out to the Gen Y market, Missouri's Vantage CU treated two young members and their guests to a midnight showing of the movie, "Breaking Dawn," the fourth in the Twilight series. From left are Vantage CU member and ticket winner Ashley Hancock, Vantage CU's Young & Free St. Louis spokester Jenn Cloud, Ashley's guest, and Vantage CU member and ticket winner Chelsea Robinson. (Photo provided by Vantage CU)
After about six months of operation, Young & Free Maine has begun to achieve results in the marketing of the free4ME checking, according to the Maine Credit Union League (Weekly Update Nov. 25).

Young & Free is a spokester recruitment program, launched in 2007 by Currency Marketing, a credit union marketing company in Chilliwack, Canada. Young & Free provides the tools to engage the youth market, using a combination of social media and contests to find a young, media-savvy credit union spokesperson. To connect with younger consumers, credit unions that participate in the campaign are also urged to create price-sensitive products, such as free checking accounts with low or no fees. Several state leagues are promoting the program as well.

Seth Poplaski, Maine's spokester, has made 45 spokesperson appearances and attended 30 media events, using a Young & Free-branded Chevy Cruz to travel the state.

Maine credit unions have seen an 8.2% increase in membership of 18-25 year olds from September 2010 to September 2011, with the majority joining between April and September of this year, the first six months of Young & Free in the state.

With 22 credit unions reporting--56% of which offer free4Me checking--the Maine league has tracked 1,707 new checking accounts as of Sept. 30.

The Maine Young & Free Website has attracted 30,000 visitors.

In Missouri, Vantage CU cashed in on the popularity of the Twilight series by treating two young members and their guests to a midnight showing of the movie, "Breaking Dawn," the fourth in the series, Nov. 18. For a chance to win the premiere tickets, Vantage CU's Young & Free St. Louis spokester, Jenn Cloud, encouraged fans to go to the Young & Free St. Louis website and answer Twilight trivia questions.

Cloud met the two winners and their guests at a local theater to take their places in line for the midnight showing. She treated other waiting moviegoers to Young & Free bracelets, lip balm and cell-phone screen cleaners.

The Association of Vermont Credit Unions employed its Economy of Me program to help students better understand and manage their money. Project Manager Colin Ryan presented back to back assemblies for students of Winookski High School in November.

Local CBS affiliate WCAX was on hand to film Ryan's presentation in preparation for an upcoming appearance on the station's late afternoon news show, "The: 30."  Ryan used the opportunity to raise awareness about Economy Of Me and highlight what Vermont credit unions are doing to educate young people.

New value in an old product Christmas club accounts

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MADISON, Wis. (12/5/11)--Some credit unions are finding new value in an old product idea--Christmas club accounts.

Several Jacksonville, Fla., credit unions, including Jax FCU, 121 Financial CU and First Florida CU, have had Christmas club accounts for the past several decades (Jacksonville Business Journal November).

Christmas club accounts are one of the key services of the credit union industry going back 60 years, Brent Lister, First Florida president/CEO, told the Journal.

"It's one of the best moves consumers can make when they think about budgeting for the holidays," Mike Schenk, vice president of economics and statistics with the Credit Union National Association (CUNA), told (Dec. 1). While CUNA doesn't have statistics on how many credit union members joined holiday clubs, more than 80% of credit union members nationwide have access to those accounts, he added.

However, to avoid overspending, consumers should think before they act and create a budget, sketching out how much they want to spend on each gift recipient before they open a Christmas Club account, Schenk added.

It also is important to be aware of the details on how Christmas club money can be disbursed, Schenk told the publication. As an example, Schenk said he failed to read the fine print on one of his Christmas club accounts, and didn't realize that the money earmarked for holiday gifts was deposited into his checking account in November. Therefore, he inadvertently used those funds to cover other expenses.

United Community CU in Galena Park, Texas, has offered a Christmas club account for years, said the Texas Credit Union League (LoneStar Leaguer Nov. 29).

The account features:

  • No minimum opening balance;
  • No minimum balance to maintain;
  • No monthly service charge; and
  • A favorable interest rate that allows members to earn the same rate of interest as the credit union's primary savings account.
In 2011, United Community opened nearly 100 Christmas club accounts with an average balance of $1,490 per account, said the Texas league.

Facial recognition tools fight fraud present privacy issues

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MECHANICSBURG, Pa. (12/5/11)--Facial recognition technology is gaining wider acceptance in the financial services industry. Members 1st CU, Mechanicsburg, Pa., is among the financial institutions using the technology to combat fraud.

Members 1st CU recently employed facial recognition to identify someone who entered a branch and used a fictitious driver's license, Chip McBreen, Members 1st's head of fraud and prevention security, told Reuters (Nov. 21).

Facial recognition technology has made strides across industries. It helps casinos identify cheaters and retailers to capture demographic information from shoppers. It's also used on Facebook to identify potential abuse.

In addition to asking members and customers for their facial images, financial institutions capture images from ATMs and teller windows to create searchable databases of recognition information. When a string of suspicious activities is reported, a financial institution can connect images to potentially fraudulent transactions.

However, there are privacy concerns about how facial recognition can be misused. Consumers who wish to minimize the data they offer publicly may be reluctant to provide facial images to their financial institutions that are connected to their name. Having a member/customer's picture is not essential to performing transactions at a financial institution, said Paul Stephens, director of policy and advocacy for the Policy Rights Clearinghouse.

To read the full article, use the link.

CU System briefs (12/02/2011)

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  • RALEIGH, N.C. (12/5/11)--The North Carolina Credit Union League announced Friday that Pam Melton has joined the league as director of political affairs (Weekly Update Dec. 2).  Melton joined the league from CenturyLink in Raleigh.  She brings more than 16 years of governmental affairs experience to her position, including experience in the key roles of political action committee (PAC) fundraising and grassroots advocacy, including management of a 32-state PAC. Part of her responsibilities will be to form strategy for engaging credit unions and their advocates in various aspects of the political process and in helping strengthen relationships with elected officials and candidates on the state and federal level …

Robin Hood hackers video threatens funds withdrawals

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AUSTIN, Texas (12/2/11)--Credit unions should be alert to a YouTube video deemed a manifesto by two groups of hackers that claims to steal credit card numbers from major banks for donations to charities, protest groups and people "cheated" by the financial system.

The video--a manifesto of Anonymous and TeaMp0isoN (Team Poison), two groups of hackers that have claimed responsibility for high profile cyberattacks--opens with scenes from a 1991 Kevin Costner movie, "Robin Hood: Princes of Thieves," in which Robin Hood vows to take from the rich and give to the poor. It then switches to a digitized voice that reads the manifesto set to ominous operatic music.

The video claims the groups have already breached Chase, Bank of America and Citibank, taken card numbers and donated thousands of dollars to protests, the homeless and charities. It adds banks will be forced to reimburse consumers whose cards were used.

However, according to (Nov. 30), the claims have not been substantiated by the banks and it is unclear whether the hackers succeeded or whether they are engaging in "bluster designed to frighten consumers away from big banks."

The video notes that people are taking their money out of big banks and urges viewers to "move their accounts to secure credit unions--before it's too late."

Editor's note: Credit unions receiving questions from consumers about the attacks should reassure them that credit unions believe it would be a bad idea to follow the hackers' instructions, that the attacks are unsubstantiated, and that they do not condone the actions urged by the groups. The Credit Union National Association and America's credit unions do not encourage or condone removing funds from financial institutions to bolster illegal activities by hackers.

Robin Hood hackers video touts CUs

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AUSTIN, Texas (12/2/11)--An eight-minute YouTube video deemed a manifesto by two groups of hackers claiming to "take back our money" by stealing credit card numbers from major banks for donations to charities, protest groups and people "cheated" by the financial system also urges people to move their money to safe and secure credit unions.

The video--a manifesto of Anonymous and TeaMp0isoN (Team Poison), two groups of hackers that have claimed responsibility for high profile cyberattacks--opens with scenes from a 1991 Kevin Costner movie, "Robin Hood: Princes of Thieves," in which Robin Hood vows to take from the rich and give to the poor. It then switches to a digitized voice that reads the manifesto set to ominous operatic music.

The voice says, "When the poor steal, it's considered violence. But when the banks steal from us, it is called 'business.'" The video claims the groups have breached Chase, Bank of America and Citibank, taken card numbers and donated thousands of dollars to protests, the homeless and charities. It adds banks will be forced to reimburse consumers whose cards were used.

The video notes that people are taking their money out of big banks and "put them into credit unions."  At the end of the video, the groups threaten to "take back our money" from the banks and urges viewers to "move their accounts to secure credit unions--before it's too late."

According to, the groups claim to have conducted cyberattacks on financial and political targets.  Team Poison claims a cyberattack against the United Nations, while Anonymous clams credit for attacks on police departments that cracked down on Occupy protestors and financial companies such as PayPal and MasterCard after they stopped funding WikiLeaks.

Hackers typically don't target consumers' personal information. In the past, they have been responsible for malicious denial-of-service attacks that overwhelm a website so it cannot work.   Use the link to see the video.

Nearly all Maines CUs benefitted from BTD traffic

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PORTLAND, Maine (12/2/11)--

Nearly all of Maine credit unions experienced an increase in new account openings and significant increases in inquiries from consumers interested in joining credit unions from Sept. 29 to Nov. 5, Bank Transfer Day, said the Maine Credit Union League.
Maine Credit Union League President John Murphy responds to a question about more consumers looking into credit unions from NewsCenter reporter Caroline Cornish. The story aired statewide on WCSH 6 and WLBZ  2.
"Thanks, in part, to the increased awareness of credit unions stemming from an online movement that went viral" and Bank of America's announcement of a monthly debit card fee, interest at Maine credit unions "took on a whole new meaning," the league said in News & Views (December issue).

The league said consumers' interest "had phones ringing off the hook, Web inquiries rising and lobbies bustling with traffic." Many CEOs told the league that the best part was that "awareness of credit unions has been raised significantly as a result of all the coverage."  News stories and interviews highlighted credit unions aired on nearly all of Maine's broadcast TV stations and more than 50 radio stations, while at least one article appeared in every Maine daily newspaper, said the league.

The league's survey indicated that nearly 85% of credit unions in the state experienced
Jessica Dorgai, a new member at Maine's Town & Country FCU, explains her decision to leave Bank of America because of its fees in a news story that aired statewide. (Photos provided by WCSH/WLBZ via the Maine Credit Union League).
growth in new member accounts above normal levels during October.

More than half the credit unions surveyed reported double-digit growth ranging from 12% to 55% during the period.  The state's credit unions added nearly 2,000 new member accounts, a 22% over normal account openings.

The league also reported that visits to its consumer-focused website at increased 54% during October; 94% of them were new visitors.

More than 80% of new members reported joining a credit union as a result of bank fees and/or an increased awareness of the value and benefits of credit unions.

Dwolla eliminates 25-cent fee for payments under 10

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DES MOINES, Iowa (12/2/11)--Dwolla, an online, location-based, social and mobile payment platform supported by The Members Group (TMG), Thursday announced it will no longer charge its 25-cent transaction fee for payments of $10 and below.

TMG is a wholly owned subsidiary of the Affiliates Management Co., which is owned by Iowa credit unions and their members.

Removal of the fee should be favorably received among merchants who conduct small-ticket transactions, and in in-app purchases found in many mobile applications, Dwolla said.

"To date, Dwolla merchants have been willing to pay the quarter, even on micropayments, because they recognized the unique value," said Brian Day, Dwolla product leader for TMG. "Not only are retailers attracted to the 'wow' factor of mobile payments acceptance, they see the buzz-generating potential of Dwolla's social media interaction. A customer buys a coffee with Dwolla and instantly 150 of his Facebook friends are exposed to the name of the coffee shop."

No changes in product or service accompany Dwolla's drop of the fee, so merchants will continue to receive the same benefits--now at no cost on small transactions.

CaliforniaNevada leagues Dykstra visits Guatemala

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ONTARIO, Calif. (12/1/11)--California and Nevada Credit Union Leagues President/CEO Diana Dykstra traveled to Guatemala Nov. 10-11 as part of World Council of Credit Unions' International Partnerships Program.

Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, traveled to Guatemala last month as part of World Council of Credit Unions' International Partnerships Program. Here Dykstra visits the country's MICOOPE system office. (Photo provided by the California and Nevada Credit Union Leagues)
During the trip Dykstra learned about Guatemala's credit union system, advocated for credit unions at the Central Bank and Superintendency of Banks, and conducted two learning sessions with the Guatemalan credit union trade association, Federación Nacional de Cooperativas de Ahorro y Crédito  (FENACOAC), and Guatemala credit union CEOs.

Victor Miguel Corro, vice president of WOCCU's Worldwide Foundation for Credit Unions, accompanied Dykstra.

Dykstra said California and Nevada credit unions and their counterparts in Guatemala face similar challenges as well as the same mission--to serve their members.

"The Guatemalan credit union system is very new and challenged by an ever-changing and volatile political environment, but credit unions never waiver from doing what is right and pursuing a path for continued success," she said. "Their ability to leave their egos behind and develop a true collaborative system is inspiring."

Guatemala's MICOOPE system--implemented in 2008--comprises 25 credit unions that adopted a unified brand to help with public awareness, ease of transactions throughout the country and growing credit union membership. Membership grew by 35% in about 14 months. The campaign included many forms of media, but most important, asked every employee in the system to bring in 10 new members.

On the first day of the trip, Dykstra met with FENACOAC's management staff, including CEO Oswaldo Oliva. She talked about planning, strategy and the global financial crisis and the outlook of the credit union industry in the U.S. She also met with the vice president of the Central Bank to discuss the importance of credit unions being regulated by the government.

The MICOOPE system is essentially self-regulated, with FENACOAC acting as the monitoring agent.  The Central Bank asked for help in getting case studies for countries in which credit unions are successfully regulated and where the risk is well managed.

On the second day, Dykstra addressed the CEOs of MICOOPE credit unions, speaking on innovation in financial services, staff development and retention, risk management, cooperative principles, and how to stay relevant in a rapidly changing world. She visited the Superintendency of Banks again to discuss the importance of regulating and examining credit unions.

The trip provided a plan on how the two groups will move forward to benefit both systems, according to Dykstra.

"The partnership is important to both parties as we learn and advance our causes," she said. "Hopefully we will see more partnerships around the world that will only cause the world credit union system to be more visible."

Four small CUs plan to merge into Landmark CU

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NEW BERLIN, Wis. (12/2/11)--Four smaller Wisconsin credit unions are merging into Landmark CU in New Berlin, Wis., it announced Thursday.

Merging into Landmark are: American CU, Milwaukee; People's CU, Cudahy; Co-operative CU, Racine; and Burlington and Horizon CU, Racine.

The target date for all the mergers is Dec. 31, with the integration of member accounts into Landmark's computer system in the first and second quarters of 2012.

All employees of the four credit unions will be offered jobs at Landmark.

Facts about the four credit unions merging into Landmark include:

  • American CU serves 3,986 members and has assets of more than $22.5 million.
  • People's CU has 1,963 members and $13.2 million in assets.
  • Co-operative CU, with a branch in Racine and one in Burlington, serves 4,450 members and has more than $22 million in assets.
  • Horizon CU serves 3,729 members and has assets of more than $26.2 million.
Approval by the Wisconsin Office of Credit Unions has been received for the Co-Operative and American mergers and is pending for the Horizon and People's mergers. Approval votes by their members have been completed at Co-Operative and American, and are pending at Horizon and People's credit unions.

Landmark has $1.7 billion in assets, with 449 employees who serve more than 173,000 members at 20 locations throughout Southeastern Wisconsin. The mergers will take Landmark to $1.8 billion in assets, with 25 branch locations.

Gulf Winds Wright-Patt announce member dividends

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FAIRBORN, Ohio, and PENSACOLA, Fla. (12/2/11)--Two credit unions announced this week they will be giving back to their members in the form of dividends.

Wright-Patt CU, with $2.2 billion in assets, in Fairborn, Ohio, will pay a $5 million "patronage dividend" to its 210,000 members on Jan. 4.

"Returning $5 million to members is unique in this industry because a for-profit institution would not likely give money back to the very customers who helped them make it, said Doug Fecher, Wright-Patt CU CEO.

The credit union has paid dividends to its members since 2008. This year's dividend, $1 million more than last year, brings the four-year total to more than $16 million.

Some members will receive $15 for having an active debit card, using home or mobile banking and receiving eStatements. Others will receive hundreds of dollars for having more products and services with the credit union.

Gulf Winds FCU, with $396 million in assets, Pensacola, Fla., paid a bonus dividend pool of more than $1,000,000 to its 46,000 members Nov. 30.

"Any way you look at it, putting this $1 million bonus dividend back into the community will have a very positive effect on our members and the local economy," said Chris Rutledge, Gulf Winds FCU president/CEO. "Most of this money will be spent right here and will impact the communities we serve."

Bank Transfer Day dominates iNews Nowi Top 10

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MADISON, Wis. (11/2/11)--Nine of the top ten most read News Now articles in October were related to Bank Transfer Day, the day designated for fed-up big bank customers to switch accounts to credit unions and small banks.

Here is a list of the top 10 most-visited stories for the month:

10. Two mergers announced

DEEPWATER, N.J. (11/28/11)--Two credit union mergers--one in New Jersey and one in Massachusetts--were recently announced.

9. HuffPost: Cheney says Bank Transfer Day is just a start

WASHINGTON (11/2/11)--The movement toward credit unions over the last several weeks has been nothing less than phenomenal and the oncoming Bank Transfer Day—Nov. 5--can be just the beginning for consumers who want to take steps toward financial freedom through credit union membership, Credit Union National Association President/CEO Bill Cheney underscores in a new Huffington Post article.

8. Banks adding in new fees to replace debit fee

MADISON, Wis. (11/23/11)--Thanks to Bank Transfer Day and other consumer backlash against bank fees, big banks have backed down from charging debit card usage fees.  Or have they? Some sources are reporting a boost in other types of fees to make up for lost revenue.

7. Social media added wow factor in movement to CUs

MADISON, Wis. (11/10/11)--While all the media coverage of consumers' exodus from banks to credit unions certainly helped get the word out about the benefits of credit unions, don't underestimate the power of social media' in what at least one media outlet called the "stampede" to credit unions.

6. CUNA's Hampel tells Fox: 'Bank Transfer Season' has begun

WASHINGTON (11/15/11)--The 700,000 in new members and $4.5 billion in new deposits that credit unions brought in the past month are "phenomenal," and this success, and the continued attention paid to credit unions, could signal a "Bank Transfer Season" that will last beyond Nov. 5's Bank Transfer Day, Credit Union National Association (CUNA) Chief Economist Bill Hampel said in a recent online interview.

5. CUNA's Cheney, Transfer Day Founder Christian interviewed on Fox Business

WASHINGTON (11/9/11)--Consumers and media members nationwide have continued to focus on credit unions' role before, during and after last Saturday's Bank Transfer Day, and Credit Union National Association President/CEO Bill Cheney appeared alongside Bank Transfer Day organizer Kristen Christian to discuss the movement toward credit unions, and the value they provide to their members, in a Fox Business Channel interview earlier this week.

4. Early reports show Bank Transfer Day success

MADISON, Wis. (11/8/11)--For many credit unions, Saturday's Bank Transfer Day was a huge deal. Although many had seen an influx of new members throughout October after the mega-banks announced their now-rescinded debit card fees, many made record single-day strides in new accounts opened Saturday. Some reported more than 600 new members.

3. CUNA survey: 40k members, $80M in savings on BTD

WASHINGTON (11/9/11)--Credit unions brought in 40,000 in new members, and added $80 million in new savings account funds, on last Saturday's Bank Transfer Day, capping a month that resulted in nearly 700,000 new credit union members joining the movement.

2. Bank Transfer Day momentum sure to continue, CUNA says

WASHINGTON (11/7/11)--The official Bank Transfer Day came and went on Saturday, and by now the dust has settled and tallies have been taken of how many consumers switched from being bank customers to credit union members on the day that was so much ballyhooed in advance.

1. 650,000 new members ahead of Bank Transfer Day

WASHINGTON (11/4/11)--At least 650,000 consumers across the nation have joined credit unions in the past four weeks, reflecting consumers' reactions to rising fees at banks, according to a survey by the Credit Union National Association.