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CU System briefs (02/11/2013)

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  • CONYERS, Ga. (2/11/13)--Three men, two of whom were specialists with the Georgia Army National Guard at the time, were sentenced to more than 30 years each in prison for the Dec. 23, 2010, robbery of Atlanta-based Georgia's Own CU's branch in Conyers. Sean Jamarko Foster of Stone Mountain was sentenced to 30 years, with the first 10 served in confinement. Menshack Jah Nyepah of Decatur received a 50 year sentence and will serve 25 years. Jamelle Lloyd Francis, Grayson, was sentenced to 40 years and ordered to serve 18. They were charged with armed robbery, aggravated assault and false imprisonment.  The incident occurred at about 12:30 p.m. when the credit union was full of members. The robbers pointed guns at members, including one child, and forced them to get face down on the floor. Foster, who allegedly was the getaway driver, was late picking up the other two after the robbery. A couple driving in the area noticed two men wearing black masks and carrying a trash bag get into the car. The couple called police and followed the car until police arrived. Francis later allegedly entered a home and called 911 to report his car had been hijacked. The three pleaded guilty (Rockdale Citizen Feb. 6) …
  • JACKSONVILLE, Ark. (2/11/13)--Arkansas FCU employees and members raised $70,560 for Arkansas Children's Hospital and combined it with a $10,000 matching donation from CO-OP Network. When the credit union presented a check this month, it brought its total of funds donated to the hospital since 1998 to more than $680,000. Arkansas Federal's contributions over the past four years alone helped fund the ENT Clinic Waiting Room. The year's fundraising events included the Seventh Annual Arkansas Federal Golf Classic; Painting with a Purpose, a sponsored painting class with a fundraising twist; candy and cardstock sales; and several Bunko Bash events, featuring games and a silent auction. Arkansas Children's Hospital is the only pediatric medical center in Arkansas and one of the largest in the U.S., serving children from birth to age 21. CO-OP, the nation's largest credit union-owned electronic funds transfer network and processor, has a Miracle Match program, which encourages credit unions across the U.S. to raise funds for their local Children's Miracle Network (CMN) hospitals, like the one in Arkansas. CMN Hospitals is a national organization dedicated to helping raise awareness and funds for its 70 member hospitals. In the photo, Arkansas Children's Hospital Foundation President Fred Scarborough (second from left) accepts Arkansas Federal's donation from (from left) AFCU President/CEO Larry Biernacki and board members Garold White and Phillip Boudreaux (Photo provided by Arkansas FCU) …
  • COLUMBUS, Ohio (2/11/13)--Dave Shoup, leader of the compliance and information team at the Ohio Credit Union League, will retire April 5 after 27 years of service to Ohio's credit unions, announced the league (eLumination Newsletter Feb. 6). He began as a field consultant for the Texas Credit Union League and served as director of services at the Colorado Credit Union League before returning to his native Ohio. As an architect of InfoSight in 2003, Shoup was responsible for the online tool used by credit unions throughout the country …
  • FARMERS BRANCH, Texas (2/11/13)--Chocolate Bayou Community FCU, a $92 million asset credit union based in Alvin, Texas, hosted a meet and greet with newly elected U.S. Rep. Randy Weber (R-Texas) on Jan. 31, according to the Texas Credit Union League (LoneStar Leaguer Feb. 7). Alvin residents packed the credit union's lobby to meet the congressman, who represents Congressional District 4. Shown at the event are, from left, Rep. Weber, and local residents and longtime Chocolate Bayou members Larry and Nancy Phillips. (Photo provided by the Texas Credit Union League)…

aSmarterChoiceorg records healthy start to 2013

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MADISON, Wis. (2/11/13)--Consumers continue to show a healthy interest in credit unions, as illustrated by the number of visitors last month to aSmarterChoice.org, which nearly matched the number of visitors the same month one year ago in the wake of Bank Transfer Day.

aSmarterChoice.org, established in 2011, is a website designed for consumers and media to learn more about credit unions and to help consumers find a credit union they are eligible to join. The website provides a comprehensive credit union locater that includes every credit union in the nation, and helps consumers find credit unions to join by answering a few simple questions about where they live, work or worship.

More than 20,200 total visits were made to the site last month. That's down about 5% from January 2012. But, one year ago, credit unions were still in the public eye following "Bank Transfer Day," the consumer-inspired movement to switch from big banks to credit unions after the imposition of new, high fees by the big banks. And aSmarterChoice.org reaped the benefit of high consumer interest in credit unions as a result--for up to six months following Bank Transfer Day.

"Frankly, we were pleasantly surprised by January 2013 numbers," said Paul Gentile, Credit Union National Association executive vice president of strategic engagement and communications. "The number of visitors each month during the latter part of 2012 had dropped off a bit, and then leveled off. But these latest numbers indicate that consumer interest in credit unions has picked up again."

Gentile pointed out that CUNA's analysis of credit union membership growth since September 2011 indicates a continuing interest in the benefits of credit unions.

He said CUNA estimates indicate memberships grew by 2.4 million (2.6%) in the year ending December 2012, and have grown 3.1 million (3.4%) in the period between the start of September 2011--the month when high bank fees were announced--and the end of December 2012. "Both in numbers and in percentage terms, the 12-month increase reported in 2012 is the fastest we've seen in about 15 years," Gentile said.

Also respectable, Gentile said, were the number of credit union searches conducted on aSmarterChoice.org in January 2013, compared with the same month last year. The total number of searches reached 17,021; in January 2012, the total searches were 15,800.

aSmarterChoice.org is a joint project of CUNA and the American Association of Credit Union Leagues. It is a prime example of credit unions, leagues and CUNA cooperating together to advance the credit union system and is aimed at helping create consumer awareness of and building membership in credit unions.

LAFCU switches to state charter, tweaks name

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LANSING, Mich. (2/11/13)--Lansing Automakers FCU will switch to a state charter and change its name as it makes plans to expand its service area.

The Lansing, Mich.-based credit union has received approval from the National Credit Union Administration for the change (Lansing State Journal Feb. 8). It has also received approval from the state regulator.

The credit union will also change its name to Lansing Automakers Financial CU, but will market itself by the acronym LAFCU, the credit union's CEO, Robin Frucci told News Now.

LAFCU will expand its service into several additional Michigan counties. There are no plans to open new branches in those counties.

The credit union pursued the charter change because of federal limits on how far geographically it could expand its service, the Journal said.

"We have had a strong indirect lending program since the 1970s," Frucci told News Now. "In the past we have had to turn down applications because they were out of our service area. We will probably gain new members through indirect lending as we look into other plans for expanding service."

LAFCU has about 50,000 members and roughly $530 million in assets.

More states introduce checkout surcharge bills

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MADISON, Wis. (2/11/13)--The Credit Union National Association continues to monitor bills introduced in various states to ban merchants from charging "checkout" surcharge fees on credit card transactions. The state bills now total 11, in addition to two other states said to be drafting similar legislation.

Last week Vermont, Kentucky, Missouri, South Carolina, Utah, and Tennessee introduced bills in their state legislatures to ban the surcharges, and an earlier measure banning surcharges made progress in the New Jersey legislature.

Six other states--Hawaii, Illinois, Mississippi, New Jersey and Rhode Island--had introduced similar bills earlier. Pennsylvania and West Virginia also are said to be drafting similar bills. Since 10 states already have laws on the books banning the fees, if these states' measures also became law, a total of 23 would have bans.

However, Maine--one of the original 10 states with a surcharge ban already enacted--is considering repealing that law. Last week legislators introduced a bill seeking to repeal its existing surcharge ban.

The flurry of bills are the result of a provision in a $7.2 billion industry court settlement that merchants negotiated with Visa and MasterCard and banks in an antitrust lawsuit. The settlement allows merchants to charge a checkout fee that must be equal to what the merchant pays to accept the card, which is typically 1.5% to 3% in the U.S. and not to exceed 4%. The surcharge provision of the settlement took effect Jan. 27. The surcharge does not affect debit cards.

CUNA is monitoring the developments because any surcharge on credit card transactions would affect all financial institutions, including credit unions, as well as credit union members. Here's a rundown on last week's activities:

  • Vermont S.B.  87 specifies "a Vermont merchant in any sales transaction shall not impose a surcharge on a person who elects to use a credit card in lieu of payment by cash, check, or similar means," said the Association of Vermont Credit Unions (Newslines Express Feb. 8). The ban would take effect in July. A bipartisan group introduced the bill: Judiciary Committee Chair Richard Sears (D), Economic Development Committee Chair Kevin Mullin (R), Committee Chair Timothy Ash (D) and Sen. Philip Baruth (D).
  • A New Jersey bill making it illegal to impose a surcharge on credit card transactions passed the full Senate Thursday and the Assembly Financial Institutions and Insurance Committee, said the New Jersey Credit Union League (Daily Exchange Feb. 8).
  • The new Missouri bill, H.B. 495, would amend state laws to ban surcharges "on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means." Its sponsor is Rep. Randy Dunn (D-Kansas City).
  • Utah S.B. 67, sponsored by Sen. Curtis S. Bramble (R-Provo), does not make the distinction between credit cards and debit cards but "prohibits sellers from imposing a surcharge on a transaction paid for with a financial transaction card."
  • Tennessee's H.B.0897, sponsored by Rep. Jason Powell (D), prohibits sellers and lessors, as well as "any entity issuing credit or charge cards" from imposing a surcharge on credit card payments.
  • News Now also verified state laws prohibiting credit card surcharges have been introduced in Kentucky (HB 256 and HB 259) and in South Carolina (H. 3477), but details  were not available.
The 10 states with laws already on the books are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

CUs in Northeast closed for blizzard

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BOSTON (2/11/13)--Northeast credit unions and leagues Friday were bracing for what turned out to be a record blizzard during the past weekend, as cold air traveling south from Canada combined with a storm moving northward from the Carolinas and brought more than three feet of snow to the region.

As of Saturday morning, five states--New York, Massachusetts, Connecticut, New Hampshire and Rhode Island--had declared state of emergencies and closed highways, with the Boston area at the center of the storm. Maine declared a partial emergency. The storm had dumped from 29.1 inches of snow in Commach, Long Island, N.Y., to 38 inches in Milford, Conn.  Portland, Maine, saw a record 29 inches. Credit unions and leagues in the states began closing Friday.

"We are getting quite a storm today," Rob Kimmett, senior vice president of marketing and public relations for the Massachusetts Credit Union League, New Hampshire Credit Union League and Credit Union Association of Rhode Island, told News Now Friday.

"We were closed Friday, but our staff has been continually monitoring e-mail and voice mail as they work from home. Most credit unions in the region closed around 12 noon," Kimmett said. He noted the storm was expected to intensify around 6 p.m. ET Friday in the Boston area.  "We expect that most, if not all, credit unions will be closed Saturday."

"Our credit unions knew this blizzard was coming and are prepared. It has been the top news item for the past three or four days. Although it has been a couple of years, anyone who has lived in New England for any length of time has seen a blizzard--2010, 2005, 2003 being the most recent storms that left more than 18 inches of snow," he said.

Parts of the area were still recovering from damage wreaked in October from another combination of storms, the huge Superstorm Sandy.

Last weekend's blizzard brought wind gusts up to 83 mph and had closed 6,333 flights at Boston's Logan Airport as of Saturday morning. It caused flooding along the Massachusetts coast as 15- to 20-foot waves pounded the coastal area. Roads were impassable due to snow, downed trees and stalled cars.

Six deaths were reported as of Saturday morning.  More  than 600,000 customers were without power in the region--with 400,000 in Massachusetts alone, according to the first reports (The Wall Street Journal and The New York Times Feb. 8).  Power outages hit entire towns and closed a nuclear power plant in Plymouth, Mass. The Times reported that snowflakes were as big as dollar bills.

Wash state legislature holds hearings on CU governance, investments

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OLYMPIA, Wash. (2/11/13)--Two bills that would make broad governance changes, including removing the prohibition for Washington state-chartered credit unions from paying board members and supervisory committee members, and increase credit union investment options had public hearings Thursday.

Both bills were promoted by the Northwest Credit Union Association.

"Many of the recommendations were nurtured in the association's Evolutions Task Force and became important policy positions of the Washington Government Affairs Committee which strives for a better operating environment for credit unions in the state as they work diligently to help the members they serve," Lynn Heider, NWCUA vice president of public relations and communications, told News Now. "They have been in the vetting process for several years."

Advancing the credit union charter and enhancing the operating environment for the credit unions in the northwest is a key priority for the Northwest Credit Union Association," said Troy Stang, NWCUA president/CEO.

"It was an honor to be joined by well over a hundred credit union advocates in Olympia on Thursday as these bills had hearings in both chambers. It truly demonstrates the active engagement of our community in amplifying the credit union voice to enhance our collective influence."

"There has been a really high level of engagement on these bills--a lot of study and a lot of collaboration in the NWCUA credit union community," Heider said. "Many credit union CEOs were involved and they provide input routinely. The association has been considering these issues for a while and everything in [the bills] is based on the requests and recommendations of our credit unions."

The reason the NWCUA supports pay for credit unions' board members is simple, Heider said.

"The option of being able to compensate board members may help some credit unions recruit and keep a more diverse board--young working professionals and highly trained professional people to recruit and retain," she explained.

Pennsylvania CU Assoc announces board

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HARRISBURG, Pa. (2/11/13)--The Pennsylvania Credit Union Association has announced the election of two board members--Richard Stipa and Christine Woods--and the re-election of one other--Cookie Yoder.

Stipa, CEO of TruMark Financial CU, will serve a three-year term and represent credit unions in the greater than $100 million assets category. Since 2001, he has served as the CEO of the Trevose-headquartered credit union. 

At the national level, he serves on the Federal Reserve Credit Union Advisory Council, Credit Union National Association state credit union subcommittee, and the PSCU Strategic Planning Committee. Also, Stipa serves on the Pennsylvania Credit Union Foundation Board of Directors, the PCUA State Credit Union Advisory Committee, and PCUA Governmental Affairs Committee/PAC Trustee. He also represented credit union interests on the Gov. Tom Corbett Transition Team.

Woods, president/CEO of Keystone FCU will serve a three-year term and represent credit unions in the greater than $30 million and up to $100 million assets category. Since 2008, Woods has served as the CEO of the West Chester-based credit union.

Yoder, president/CEO of City Co FCU, was re-elected and will serve a three-year term and represent credit unions in the up to $30 million assets category. With more than 35 years of credit union experience, Yoder was named president/CEO of the Pittsburgh-based credit union in 2011. Previously, she served as president/CEO of Pittsburgh FCU for 22 years.

CUNA Mutual to sell CMG Mortgage Insurance Co

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MADISON, Wis. (2/11/13)--CUNA Mutual Group and PMI Mortgage Insurance announced Friday they have agreed to sell CMG Mortgage Insurance Co. (CMB MI) to a U.S. subsidiary of Arch Capital Ltd., a Bermuda-based insurance and reinsurance company.

Arch U.S. MI will acquire all outstanding equity interests in the private mortgage insurance company from PMI and Madison, Wis.-based CUNA Mutual Group.

"This is a win-win for credit unions and CUNA Mutual. This ensures credit unions will continue to have a high-quality, low-cost PMI option, with no interruption of service," said CUNA Mutual CEO Jeff Post Friday.

CUNA Mutual will enter into distribution and reinsurance agreements with CMG MI.

Arch U.S. MI will also purchase PMI's information technology platform and systems and, as a result, CMG MI is expected to provide uninterrupted delivery of technology support for its operations. With the proposed distribution arrangement, CUNA Mutual Group mortgage insurance sales staff will continue to serve credit union customers on behalf of CMG MI.

Post stressed that the regulatory approval process, which spans about nine months, must happen first before the deal can be closed.

He also noted that due to the shrinking number of private mortgage insurance providers in the marketplace, for many credit unions it would not be easy to find a new provider. "We wanted to be sure that gap didn't develop and our credit unions continue to be served with PMI," Post said. "Our goal is for this to be seamless."

PMI was placed into receivership in 2011. PMI owns a 50% stake in CMG MI, with the other 50% owned by CUNA Mutual Group. CMG MI is a stand-alone, incorporated entity with its own capital and dedicated staffing from its shareholders.

Federal court stays Space Coast CU suit over CDOs

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FORT LAUDERDALE, Fla. (2/11/13)--A federal judge in Fort Lauderdale, Fla., has issued a stay in Space Coast CU's lawsuit against Wall Street big banks and ratings agencies Moody's and Standard & Poor's over losses from collateralized debt obligations (CDOs) sold to the now-defunct Eastern Financial Florida CU.

Eastern Financial Florida CU, Miramar, Fla., lost over $100 million from the CDOs, a type of  mortgage-backed securities it bought from the companies. Melbourne, Fla.-based Space Coast acquired Eastern Financial in 2009 and filed the lawsuit as its successor.

U.S. District Judge James I. Cohn Tuesday granted the motion for a stay of discovery on all written discovery, depositions and obligations to produce documents, pending a ruling on the defendants' motion to dismiss the case.

Space Coast's suit alleges the banks' process of "creating and selling CDOs revolved around shoe-horning residential mortgage securities into Moody's and S&P's credit rating models to generate 'investment grade' ratings" and that most investors rely on the credit ratings. It also alleges the banks made "material misrepresentations and/or omissions" to induce Eastern Financial to purchase the notes.

The stay was filed on the same day that the Justice Department announced it was bringing civil fraud charges against Standard & Poor's and its parent company, McGraw-Hill, for inflating ratings that misrepresented the true risks behind many investment products that caused the subprime mortgage meltdown that led to the Great Recession. In that lawsuit, Eastern Financial and the now defunct Western Corporate FCU were noted among the buyers of CDOs (News Now Feb. 6).

The Space Coast lawsuit names as defendants: Merrill Lynch, Pierce, Fenner & Smith Inc.; Merrill Lynch Credit Corp. (Merrill Lynch Home Loans); Wells Fargo Securities LLC (former Wachovia Capital Markets LLC); JP Morgan Securities Inc. (former Bear Stearns & Co. Inc.); UBS Securities LLC; Barclays Capital Inc.; Richard S. Fuld Jr.; Moody's Investors Service Inc.; and McGraw Hill Cos. Inc. (formerly Standard & Poor's Ratings Services).