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A.M. Best affirms CUNA Mutual Fin. Group life subsidies

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OLDWICK, N.J. (2/16/12)--A.M. Best Co. has affirmed the financial strength rating  of CUNA Mutual Financial Group (CMFG) Life Insurance Co.--the former CUNA Mutual Insurance Society--at A (excellent) and its issuer rating at "a."

The Oldwick, N.J., ratings company also affirmed  the company's debt rating of "bbb+" on its $85 million 8.50% 20-year surplus note issued by CMFG Life (Business Wire Feb. 13).

In addition A.M. Best affirmed CMFG Life subsidiary MEMBERS Life Insurance Co. with  B++ (Good) FSR and "bbb+"  ICR ratings. Both companies are based in Waverly, Iowa.

The outlook for all ratings is stable, said A.M. Best.

CMFG Life's rating acknowledged its "continued position as the leading provider of life/health insurance products to credit union members and employees, its more than adequate risk-adjusted capitalization, consistently positive net operating gains and improved balance sheet on a consolidated basis."  Its positive ratings are offset partly by a moderate exposure to structured securities, volatility in statutory earnings performance in some core and ancillary lines of business, the agency added.

MEMBERS Life Insurance Co. ratings acknowledge "its strong risk-adjusted capitalization and status as a wholly owned subsidiary of CMFG Life." Offsetting these  is MEMBERS Life's reduced operating profile and continued net operating losses related to the amortization of the interest maintenance reserve,  said A.M. Best.

Coopera founderCEO Warren Morrow dies

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DES MOINES, Iowa (2/16/12)--Credit unions have lost a key voice in their outreach efforts to serve Hispanics. Warren Morrow, CEO and founder of Coopera Consulting, died unexpectedly early Wednesday morning, according to the Iowa Credit Union League.

A native of Mexico City, Morrow worked 12 years in the non-profit and private sectors to build wealth for Hispanics in the financial community by promoting Hispanics throughout the credit union industry, according to the Des Moines, Iowa-based Coopera's website.

Coopera Consulting, a subsidiary of the Iowa league, has been the Credit Union National Association's (CUNA)  Hispanic outreach partner since 2009. It assisted in developing products that helped credit unions culturally translate their marketing messages, instead of literally translating them.

Morrow advocated that credit unions' outreach efforts to Hispanics should engage in more than just translations (News Now Aug. 6, 2009). Together, CUNA and Coopera launched a Spanish personal finance website for credit unions, El Poder es Tuyo--The Power is Yours.

"Warren was such a positive person, and he brought his enthusiasm and charisma to our office. He was a great leader and a wonderful employee for more than six years. Warren was a good friend to many of us and throughout the credit union industry, and he will be sorely missed," said Patrick Jury, president/CEO of the Iowa league.

MWCUA reinvents its service corporation

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PHOENIX, DENVER and CASPER, Wyo. (2/16/12)--The recently formed Mountain West Credit Union Association (MWCUA) has reinvented its service corporation, Strategic Partners Inc., a subsidiary of the MWCUA.

The MWCUA board of directors voted in favor of merging the three states' service corporations and elected a new board of directors for the organization in January.

"Together we are better equipped to leverage our strength, providing our member credit unions with increased value for years to come," said Scott Earl, MWCUA president/CEO.

Mike Williams, board chairman said: "Bringing our service corporations together as one unit was the appropriate next step in unifying our credit unions."

The MWCUA board includes a representative number of directors from each state it serves --Arizona, Colorado and Wyoming.

The chairman is Mike Williams, president/CEO, Colorado CU, Littleton, Colo.; and the vice-chair is Bob Ramirez, president/CEO, Vantage West CU, Tucson, Ariz.

Board members include:

  • Larry Knopp, president/CEO, UniWyo FCU, Laramie. Wyo.;
  • Nathanael Tarwasakono, president/CEO, Pima FCU, Tucson, Ariz.;
  • Horacio Peralta, president/CEO, B.C.S. Community CU, Wheat Ridge, Colo.;
  • Rainy Thoen, president/CEO, Community Choice CU, Commerce City, Colo.;
  • Sandy Neves, president/CEO, Fitzsimons FCU, Aurora, Colo.;
  • Jim Barber, president/CEO, Minnequa Works CU, Pueblo, Colo.; and
  • Jay Curtis, president/CEO, First CU, Chandler, Ariz.

CUNA Mutual retirees appeal ruling to Supreme Court

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WASHINGTON (2/16/12)--Several CUNA Mutual Group retirees contesting a company decision on healthcare costs have asked the Supreme Court of the United States to overturn an appeals court decision that favored the CUNA Mutual Insurance Society.

The group's attorney filed a petition for a writ of certiorari on Feb. 7, asking the higher court to review the case from the U.S. Court of Appeals for the Seventh Circuit Court in Madison, Wis. 

The lower court ruled last summer that the retirees had no legal right to prevent the company from eliminating its subsidy of health insurance premiums (News Now Aug. 12) and that the company had not violated provisions of the Employee Retirement and Income Security Act (ERISA).  The subsidy included accumulated sick pay the retirees believed would be put toward those premiums.  The appeals court upheld a decision by a lower court in favor of CUNA Mutual.

"We are pleased the federal courts in Madison and Chicago dismissed this case, and confirmed CUNA Mutual Group did not violate the law when it made the difficult decision to end subsidies for retiree health coverage," said Rick Uhlmann, senior manager, media relations for CUNA Mutual Group.  "This is not a case that merits review by the U.S. Supreme Court," he added.

Filene Research measures CUs social media success

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MADISON, Wis. (2/16/12)--Social media might help credit unions create some chatter among their followers, but that "buzz" does not always translate into more business. That was among the findings of a new survey, "Measuring Social Success in Credit Unions," from the Filene Research Institute.

The survey indicates that credit unions reflect overall social media trends: more emphasis on video, less on blogs, and more use of Facebook and Twitter.

Credit unions that called their programs "successful" or "very successful" saw rises in Web traffic and loan growth. But those gains did not extend in a measurable way to membership growth or to higher products per member, said Filene.

Several key success drivers emerged and solidified during the yearlong study. Credit unions that do all or most of these are much more likely to succeed:

  • Tie the social media program to the strategic plan and include metrics for tracking progress.
  • Conduct periodic member surveys. There continues to be a correlation between success and credit unions that conduct member surveys two to four times per year and have otherwise active marketing programs.
  • Post messages in varying media formats, with topics focusing on credit union events, helpful financial information, alerts/information, product information, and community events.
  • Target between one and three Facebook posts per day. This was an area with a clear point of diminished returns: Those making more than three posts per day were less successful.
  • Consider outside consultants, which may be a good alternative for smaller credit unions that do not have a large in-house staff. Nine in ten credit unions that consider their programs successful used outside consultants.
  • Promote the program through multiple channels and with credit union staff participation and buy-in. The qualitative interviews showed that staff engagement is a huge piece of generating interest in the program.

WOCCUs rural lending project aides Guatemala farmers

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JALAPA, Guatemala (2/16/12)--Guatemala's  farmers are experiencing greater financial stability with their credit unions' support through a pilot program implemented by World Council of Credit Unions (WOCCU) in partnership with its Guatemalan member association.

Brian Branch, president/CEO of World Council of Credit Unions (WOCCU) (left), talks with Cooperativa (credit union) Tonantel CEO Elio Armando (center), and Guatemalan WOCCU member Federación de Nacional de Cooperativas de Ahorro y Crédito CEO Oswaldo Oliva about the credit union's expansion into rural agricultural lending. 
Federación de Nacional de Cooperativas de Ahorro y Crédito (FENACOAC) is the WOCCU Guatemalan member association.

The five-year Cooperative Development Program (CDP), also operating in Mexico, is supported by US$4 million in funding from the U.S. Agency for International Development. The program, which runs through 2015, focuses on creating and testing agricultural and financial tools to improve rural economic and financial sector development, personal income and food security.

Program results will include a scalable methodology to increase small farmers' access to markets, inputs and technical assistance. Participating farmers are expected to increase production, improve their livelihoods and offer better financial support to their communities.

"The CDP program at work both here and in Mexico combines new methodologies and technological delivery of financial services to help small Latin American farmers succeed," said WOCCU President/CEO Brian Branch, who led a delegation to both countries last week to evaluate the pilot program's progress since it began in 2010. "With FENACOAC's assistance, we can more effectively help Guatemalan credit unions implement the program among their rural members."

Guatemalan farmer Ángel María Najera Vicente describes how the production of French beans (in background) provides a good return because he and other farmers in his group can use loans from Cooperativa (credit union) Tonantel to cover costs for inputs, labor and maintenance. (Photos provided by the World Council of Credit Unions)
WOCCU and FENACOAC are conducting the program through four credit unions. Cooperativa Tonantel, a credit union located in Guatemala's Jalapa region, is already realizing the benefits of investing in the rural economy, said WOCCU. Tonantel last year added agricultural lending to its portfolio and lowered its interest rates on loans. Membership has since grown by 30% to 70,000 members, and loan delinquency now stands at 1%.

Part of the growth has to do with Tonantel's mobile technology strategies, which involve equipping an on-staff agronomist with a laptop computer, wireless network card and mobile printer to provide financial services to the farmers in their homes and in the fields where they work.

The credit union also is piloting relationships with 18 agent-banking outlets located within local member businesses. The businesses effectively operate as credit union branches, offering member enrollment, deposit withdrawal, bill payment and other services through a designated laptop. Transactions through these remote sites total nearly 400 per month, or about 22 per location.

Low-interest credit union loans also allow farmers to comply with sound agricultural practices that assure greater integrity of the products produced and fewer detrimental environmental impacts from farming operations, WOCCU said. Farmers in Mexico who participate in the CDP program are learning to produce organic coffee in environmentally sustainable ways, which will likely earn higher market prices. Participating Guatemalan farmers are seeking similar results.

"The CDP program helps farmers operate more effectively and in ways that offer good economic outcomes and positive environmental impacts," Branch said. "We believe the success of this model can be put to effective use in other developing countries."

To learn more about the visit at Branch's blog, use the link. For more information about World Council's CDP program, use the link.

CUs prime targets for cyber fraud--CUNA Mutual webinar

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MADISON, Wis. (2/16/12)--Financial services account for about 35% of records compromised by data breaches, according to a 2011 Verizon study. Increasingly, cyber thieves are concentrating on financial service organizations with 10 to 100 employees, the size of many credit unions, the study said.

"Credit unions seem to fit the bill that cyber thieves are targeting" said Ken Otsuka during a CUNA Mutual Group webinar,"Cyber Risks and the Data Breach Hot Seat" on Wednesday. "They are looking for the path of least resistance, which often leads to credit unions."

Otsuka, senior consultant for credit union protection at CUNA Mutual, provided advice on how credit unions can manage cyber/data breach risk.

Encryption is the best starting point to mitigate risk, Otsuka said. "Confidential data at any point should be encrypted," he said.

Encryption should be used to secure communications and data storage, authentication credentials and the transmission of sensitive information. Encryption can be used not only when sending e-mails but also within operating systems, data servers and file systems, Otsuka said.

Credit unions should employ a data loss prevention (DLP) solution, Otsuka said. A DLP helps organizations determine where confidential information is located on file servers and networks. It helps control access and security and distinguishes between authorized and unauthorized users.

For example, a DLP can send notification if an employee is attempting to download confidential data on a flash drive, Otsuka said.

Management of mobile technology also is a risk management area for credit unions, especially as credit unions increasingly use their personal smartphones for business purposes.

Encryption can help mitigate the risk presented by mobile technology, Otsuka said. Also, software is available password protects business data on mobile devices. Smartphones can attract viruses that could compromise business data, he added.

Credit unions are also increasingly providing their board members with tablets, which can download reports with confidential member data, Otsuka said. Again, encryption is an essential preventative. Tablets should be equipped with antivirus software and directors should be prohibited from downloading nonessential applications.

"There should be a corporate policy for the acceptable use of any mobile device," Otsuka said.

Kansas young professionals meet with lawmakers

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CUnext, the Kansas Credit Union Association's Young Professionals Council, met with Kansas Gov. Sam Brownback (middle) during the annual Credit Union Day at the Capitol in Topeka, Kan., last week.
TOPEKA, Kan. (2/16/12)--CUnext, the Kansas Credit Union Association's (KCUA) Young Professional Council, met with Kansas legislators on Feb. 7, during KCUA's annual Credit Union Day at the state Capitol.

Thirteen CUnext members met with Kansas Department of Credit Unions Administrator John Smith and House Speaker Pro Tem Representative Jene Vickrey. Members also learned the importance of advocacy and about the International Year of the Cooperatives, and met Kansas Gov. Sam Brownback.

CUnext member Farron Lynch attended the event, and encouraged other young professionals to consider joining CUnext.

"Since joining, I have been given excellent opportunities that I would not have had otherwise to meet and exchange ideas with my colleagues in the credit union world, " said Lynch, member services representative and Gen Y representative at Central Star CU in Wichita. "I was introduced to a passion for the credit union movement that was evident in all the executives, association staff, and the lobbyists that work extremely hard to ensure the future of all Kansas credit unions."

From left, CUnexter Jaclyn Lawson, of Quest CU in Topeka, Kan., joins advocates and fellow Quest colleagues Vickie Hurt and Valerie Taylor, in meeting with Kansas State Rep. Kay Wolf (R-21), second from right, at the Kansas Credit Union Association legislative reception. (Photos provided by the Kansas Credit Union Association)
CUnexters represented seven Kansas credit unions including Central Star CU; Golden Plains CU, Garden City; Mainstreet CU, Lenexa; Meritrust CU, Wichita; Mid American CU, Wichita; Quest CU, Topeka; and Wichita (Kan.) FCU.

"To actually see the immediate empowerment that seemed to take hold with our group was encouraging," said Lee Williams, president/CEO of Central Star CU. "Currently more than 35% of our staff is under the age of 30, and the CUnext program offers us the opportunity to expose, teach and include our young professionals so they are better prepared and more committed to taking the credit union movement to the next level."

The CUnext Council joined more than 125 credit union representatives statewide for the evening legislative reception and the morning leadership panel. They were accompanied by veteran credit union representatives on their legislator visits.

This is the second year for such an event, and each young professional event seems to grow in numbers, KCUA said.

"Last year was the first year we prepared a specific agenda for our young professionals," said Haley DaVee, KCUA vice president of governmental and public affairs, and the CUnext coordinator. "It was very well received, and since then, we've had several meetups including a special event at our annual meeting and convention."

CU System briefs (02/15/2012)

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  • KALAMAZOO, Mich. (2/16/12)--Mysterious valentines appeared Tuesday at a number of branches of Kalamazoo, Mich.-based Consumers CU.  The spray-painted hearts were visible on the front lawns at several offices, including this one at the credit union's Cambridge office. The $358 million asset credit union says it has "no idea" where the hearts came from, but the hearts are "proof" that the credit union loves its members.  A member seen entering the building commented that Consumers CU is her "one true love." Another member said he would bring his Valentine's Day date back later.  In addition to the Cambridge branch, hearts were also found at its Stadium Drive office, Ninth Street office, West Main office and Member Service Center.  (Photo provided by Consumers CU) …
  • RALEIGH, N.C.  (2/16/12)--Coastal FCU announced Wednesday that President/CEO Larry Wilson will retire at the end of June, after 38 years at the helm of the Raleigh, N.C.-based credit union. Coastal's board has selected Executive Vice President/Chief Operating Officer Chuck Purvis to succeed Wilson, effective July 1. In 1974, Wilson joined what was then IBM Raleigh Employees FCU as general manager. At that time the credit union had three employees, $3.5 million in assets and served 3,900 local IBM employees. Today, Coastal has $2 billion in assets, 400 employees serving more than 190,000 members representing more than 1,200 organizations. During his 40 years with credit unions, Wilson has served on the Federal Home Loan Mortgage Corp. Advisory Committee, the Federal Reserve Thrift Advisory Council, and the Fannie Mae National Housing Advisory Council.  He has served director for the Credit Union National Association, the North Carolina Credit Union League and other national organizations including two corporates. Purvis, who has 30 years' experience in the industry, has been with Coastal's management since 2001. Wilson will continue to advise Purvis and Coastal's board through the rest of 2012 …
  • GROTON, Conn. (2/16/12)--Charter Oak FCU has been approved as a U.S. Small Business Administration  (SBA) lender, authorized to offer SBA 7a, 504 and Express loans to qualified business owners in New London and Windham Counties, Connecticut. The Groton, Conn.-based, $688.3 million asset credit union is also Eastern Connecticut's No. 1 mortgage lender and in November it received CUNA Mutual Group's Excellence in Lending Award.  The government-backed loans are designed to encourage growth and development of small businesses. They feature longer-term financing and lower down-payment requirements to help business owners finance new business, expand or modernize facilities, acquire commercial real estate, purchase business equipment, consolidate debt, increase working capital and more, said the credit union's website.  The Credit Union National Association and credit unions are urging Congress to raise the cap on credit unions' member business lending to 27.5% of assets from 12.25% . Doing so would mean $13 billion more available for new small business loans and the creation of 140,000 jobs, without cost to the taxpayer …