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CU System Briefs (02/20/2013)

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  • LIVE OAK, Texas (2/20/13)--Randolph Brooks FCU (RBFCU) has presented a check for $150,000 to create the Randy M. Smith Endowed Scholarship for Alamo Colleges, named for the former president/CEO of the Live Oak, Texas-based credit union. The presentation was made at a recent meeting of the Alamo Colleges Board of Trustees. It represented one of thelargest endowed scholarships at the Alamo Colleges Foundation. The first scholarships will be awarded for the Fall 2013 semester. Smith served as president/CEO from 1987 to Dec. 31, 2012, after a stint as vice president. He now serves as senior adviser to the RBFCU board of directors. He is also a committee chair and member of the college foundation board. He has been active in the Texas Credit Union League, the Credit Union National Association and other credit union industry groups. Smith was a charter member of the Federal Reserve Bank of Dallas' Community Depository Institutions advisory council and advised the Federal Reserve Board in Washington, D.C., on community institution issues. Smith, at left, is pictured with Alamo Colleges Foundation Director Jim Eskin.  (Photo provided by Randolph Brooks FCU) …

CUs Help As Study Says Nation Struggles To Save

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NORTHBROOK, Ill., and MADISON, Wis. (2/20/13)--While many credit unions are assisting a nation that still struggles to save, a new study points out why it is necessary to keep educating overly optimistic consumers about managing their finances and making saving a life-long habit.

Credit unions help consumers in many ways: with better savings rates, lower interest rates on loans, short-term loan alternatives to payday lending, special programs such as savings lotteries, contests, affordable mortgages, and providing business loans to new entrepreneurs, to name a few. But most of all, they stand out in member-centric financial education.

Americans are treading water and need financial management skills, according to the second Allstate Life Tracks Poll by Allstate Financial. Half of Americans surveyed have money left over after paying for essentials each month, but more than 41% live paycheck to paycheck. Another 8% don't earn enough to pay for essentials.

Consumers' debt is increasing, said the report. Sixty-five percent of Americans with credit card debt say their debt level has increased or remained the same in the past year. Of those surveyed, 49% pay credit card debt; 43% pay mortgage payments; 36%, car payments; 17%, student loans; and 15%, medical debts. Of the 51% who are expecting tax refunds this year, 45% intend to pay off debt with the refund.

Still, Americans remain optimistic about their finances. Roughly  91% of  respondents surveyed say they are confident they can manage their  personal finances, with 42% of parents very confident about paying for their children's educational opportunities, 41% believing they can afford a new car; 47% confident they can buy a new home; and 41% confident about retirement. Eighty-nine percent indicate they are doing the same or better financially than their friends, neighbors and co-workers. More than 52% say they are doing better financially than their family did when they were growing up.

But their optimism may be tempered with their savings habits, creating a disconnect that will be an opening for credit unions to tout their financial education services. Many Americans, the survey found, place other priorities higher than dealing with their personal finances.  Roughly 59% say they know what they are supposed to do and make the right decisions generally, but 34% don't always make the correct decisions and 6% are unsure what to do. Nearly half (47%) say they are saving less than they should be.

The good news: 91% believe personal financial management is a skill people can improve over their lifetime. Enter credit unions, with a slew of tools and programs aimed at members and consumers.  For some possible sources credit unions can use to assist their members, use the links.

LSCU Announces 10% Dues Rebate To Member CUs

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BIRMINGHAM, Ala., and TALLAHASSEE, Tenn. (2/20/13)--Member credit unions of the League of Southeastern Credit Unions & Affiliates will receive a 10% dues rebate in 2013--the first time credit unions in either state have received a dues rebate.

A strong financial 2012 recorded by the league and LEVERAGE, its League Service Corp., made the rebate possible, LSCU announced Tuesday.

"The LSCU & Affiliates works hard to be streamlined and efficient," said LSCU & Affiliates President/CEO Patrick La Pine. "When we have a great year, it only makes sense to share our successes with our member credit unions that helped us achieve this success."

The rebate is "a good example of how the league doesn't take affiliation for granted," said LSCU/LEVERAGE Board Chairman Mary Ott Wood, CEO of Brandon-based Florida West Coast CU.  She noted the rebate "is not a marketing ploy to drive up affiliation," but just "good business sense…We're working together to help all of our credit unions succeed."

The rebate will be in the form of a paper check at the end of first quarter. The league also noted several restrictions:

  • Credit unions must pay their dues in full by March 31;
  • Those that aren't affiliated in previous years are eligible to receive the rebate in 2013, but  must pay dues in full by March 31; and
  • Any credit union granted a dues waiver or reduction in 2013 is not eligible for the rebate.
LSCU closed the year with $150,000 in net income, which it attributed to running a streamlined operation and an increase in attendance at its education and training events.

LEVERAGE recorded more than $340,000 in net income. LEVERAGE provided part of its surplus to the league as a dividend to help fund the dues rebate.

Mich Members Start Week Of Winning With $43M Saved

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LANSING, Mich. (2/20/13)--Ten Michigan credit union members each will receive a $10,000 check this week as grand-prize winners in Michigan's Save to Win program.

The checks will be delivered by the group of the Prize Squad, a group of Michigan Credit Union League employees, during the "Week of Winning" statewide tour.

In 2012, members from 58 credit unions that participated in Michigan's Save to Win program saved $43.6 million, with an average account balance of more than $2,872--both up from the $37.3 million saved in 2011, when the average account balance was $2,235.

In February 2009, the league launched the Save to Win program, which focuses on how much money people save, in contrast to most reward-type programs based on how much people spend (News Now Feb. 11, 2009).

Credit unions in other states such as Nebraska, Washington and North Carolina have adopted the program.

For every $25 that goes into a certificate of deposit, a credit union member gets one chance at winning a weekly lottery and one entry for an annual grand prize of $100,000.

Most participating credit unions also individually award prizes to members who sign up for Save to Win, with prizes varying from credit union to credit union. All Save to Win deposits generate interest and build savings.

"Save to Win is the consummate example of Michigan credit unions doing what they do best: helping members to better their lives," said David Adams league president/CEO. "Through Save to Win, members are learning a critical life skill, growing their personal wealth, and having fun all at the same time."

Credit unions with grand-prize winners include:

  • Besser CU, Alpena;
  • ELGA CU, Fenton;
  • Community Alliance CU, Dearborn;
  • Peninsula FCU, Escanaba;
  • Grand Rapids (Mich.) Family CU;
  • Ishpeming (Mich.) Community FCU;
  • Lake Trust CU, Lansing;
  • U.P Catholic CU, Marquette;
  • Royal Oak, OUR CU, Royal Oak; and
  • Christian Financial CU, Roseville.

Oregon Op-Ed Cites The Many Benefits Of CUs

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SALEM, Ore. (2/20/13)--Credit unions' tax-exempt status results in many benefits for Oregon residents, says the head of an Oregon credit union in an opinion-editorial in a state newspaper.

Credit unions "continue to grow assets, increase membership and invest in their communities," wrote Jean Wheat-Palm, president/CEO of Valley CU in Salem, Ore., and vice chair of the Northwest Credit Union Association, in a Sunday op-ed in the StatesmanJournal.com

That trend validates that residents in the area find value by trusting their financial livelihoods "to a member-driven institution that helps families and local businesses," she added.

Wheat-Palm was writing in response to a board member of an area bank previously asking in a Guest Column on Feb. 13, what benefits are Oregonians receiving in exchange for credit unions tax-exempt status?

Preserving credit unions' tax status is the top priority in 2013 for the Credit Union National Association, according to CUNA President/CEO Bill Cheney.

Wheat-Palm noted CUNA "estimates Oregon credit unions provided $121,469,487 in direct financial benefits to the state's 1.4 million members during the 12 months ending September 2012."

Wheat-Palm concludes that "If banks (which still control 93% of all assets nationally) believe the state credit union charter gives credit unions an advantage over for-profit banks, they can solve their concerns by converting their bank into a not-for-profit credit union."

To read the op-ed, use the link.

League Study: Most Texans To Use Tax Refund To Pay Debt

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FARMERS BRANCH, Texas (2/20/13)--Roughly 65.6% of Texans surveyed by the Texas Credit Union League plan to use their tax refund to pay off debt, while another 45.9% plan to use the refund to jump start their savings.

About 7.3% of those surveyed plan to make large purchases with the refund, and 4.3% have designated the funds for a vacation, said the league (LoneStar Leaguer Feb. 19).

Consumers who don't already have investment options can make the most of their tax refund by using it to establish an "emergency fund," said Courtney Moran, executive director of the Texas Credit Union Foundation.

"While it's important to save for those short- and long-term financial goals, it's equally important to have a savings account that is used exclusively for those unexpected emergencies," she said. "Keeping these funds separate from a regular checking account will discourage spending."

Moran pointed out that the Internal Revenue Service has made it easier for consumers to save their tax refund for a rainy day by allowing recipients to have the refund deposited in up to three accounts. This provides an option for consumers to earmark their refund for spending and/or saving.

Her advice to consumers:  Save as much of the refund as possible. "If you don't need the money in the near future, consider putting it away for retirement or in an individual retirement account fund. For shorter-term savings, look into a certificate of deposit," she added.

For some consumers, however, paying off debt may be better. "Tax returns are a great way to get rid of high interest credit card debt or a short-term personal loan," Moran said. "Credit cards tend to carry a highest interest rate, so keeping this debt to a minimum is beneficial."

In a national study, by Northbrook, Ill.-based Allstate Financial,  of the 51% of respondents expecting a tax return, 45% said they intended to pay off debt with the refund. (See related News Now story, "CUs Help As Study Says Nation Struggles To Save.")

USA Women's Championship To Race At Cherry Blossom Run

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WASHINGTON (2/20/13)--This year's USA Women's 10 Mile Championship, presented by America's Credit Unions, will join in on the festivities at the 41st Runners Rite of Spring on April 7 in Washington D.C., announced the organizers of the Credit Union Cherry Blossom 10 Mile Run and USA Track & Field (USATF).

Credit Union Miracle Day, the sponsor group of a family of races, in cooperation with the Credit Union National Association and the National Association of Federal Credit Unions, secured the naming rights of the championship run. The championship name will say it is Presented by America's Credit Unions.

"This designation elevates not only this world-class running event, it also raises awareness of credit unions' commitment to serving their 95 million member-owners and communities," said Charlie Mallon, president/CEO of Congressional FCU and chairman of the race committee for the Credit Union Cherry Blossom 10 Mile Run.

The  run will provide an advance start for the elite women, so they can compete for times that will be recognized as coming from a women's-only race.

With the level of U.S.  talent expected for the championship, it is likely that the American record for a women's-only 10 mile race will be set at the event, said organizers. The current mark of 54:37 was set by the late Sally Meyerhioff in the 2009 Credit Union Cherry Blossom 10 Mile Run. USATF's rules distinguish between American record times set in women's-only races and mixed races.

"The addition of the USA Women's 10 Mile Championships to our slate of weekend activities complements and reinforces our mission, which is to be the only truly elite road race in our nation's capital," said Race Director Phil Stewart.

"We appreciate the support of America's Credit Unions, which made it possible for us to host the women's championship, and are excited to host the very best American women distance runners, and look forward to them taking aim at the single-sex U.S. record."

"The Credit Union Cherry Blossom 10 Mile Run has been a spring institution for road runners for more than four decades," Max Siegel, CEO of USATF said.

More than 26,000 runners submitted applications to participate in the 2013 Credit Union Cherry Blossom 10 Mile and 5K. With a field limit of 15,000 established by the National Park Service and selected by lottery in December, not everyone who hoped to run will be able to participate in this year's "Runners Rite of Spring." Runners include more than 900 Capitol Hill staffers

.

There are, however, a limited number of openings for Charity Race entrants, who must register by March 1. Charity Race entrants gain entry by raising a minimum of $500 for the Children's Miracle Network Hospitals. Use the link  for more information about becoming a Charity Race entry participant.

Since 2002, the Credit Union Cherry Blossom 10 Mile and 5K have raised over $5.5 million for the Children's Miracle Network Hospitals under the umbrella of Credit Unions for Kids. A significant part of that sum has been raised by Charity Race entrants. Charity Race entrants are required to raise a minimum of $500 by March 1, but lots of runners in the past have gone above and beyond the minimum; it's not at all unusual for a Charity Entrant to raise thousands of dollars.

The family of races also includes the Credit Union SacTown 10-Mile Run in Sacramento, Calif., and two runs for overseas troops: Camp Arifjan in Kuwait and Wiesbaden Army Garrison in Germany.

Credit Union Miracle Day is a collaboration of 86 credit unions and 59 business partners, including lead partner PSCU.

Global Women's Group Seeks Scholarship Applicants

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MADISON, Wis. (2/20/13)--The World Council of Credit Unions (WOCCU) is seeking eligible women leaders working in developing credit union movements worldwide to apply for a 2013 Global Women's Leadership Network scholarship.

The scholarship provides an annual network membership and access to the 2013 Global Women's Leadership Forum, July 13-14, in conjunction with WOCCU's  2013 World Credit Union Conference in Ottawa, Canada.

Click to view larger image Last year's Global Women's Leadership Network scholarship recipients were panelists at the 2012 Global Women's Leadership Forum in Gdańsk, Poland, in July. They included, from left: Jedidah Nyongesa Musamali, Goezraal Springs Empowerment Foundation (Kenya); Yamata Karki, Prakritinagar Women Independent Group and Nayapati SACCO Ltd. (Nepal); Lara Thomas, The MILLA Project (U.S.); and Gail Rajkumar, TATECO Credit Union Co-op. Society Ltd. (Trinidad). Not pictured is Arou Christine Tanyi, Cameroon Cooperative Credit Union League (Cameroon).
Click to view larger image Global Women's Leadership Network scholarship recipient Lara Thomas (right) poses with fellow network member and Credit Union Executives Society Senior Vice President and Chief Operating Officer Barb Kachelski at the 2012 Global Women's Leadership Network Reception in Gdańsk, Poland. (Photos provided by the World Council of Credit Unions)
"The purpose of the Global Women's Leadership Network is to provide peer network support to women growing into leadership roles in the global credit union community," said Brian Branch, World Council president/CEO. "We saw last year's scholarship winners go on to integrate credit unions into community development, women's outreach and human rights programs in places such as Trinidad, Kenya and Libya."

For Lara Thomas, founder of The MILLA Project and one of five scholarship recipients in 2012, the experience offered professional value for both her and the international human rights organization she established. Thomas collaborated with WOCCU to explore the development of democratic financial institutions in Libya. She also made global connections on a personal level.

Network scholarships cover the cost of the 2013 network membership, the World Credit Union Conference, forum registration fees and partial travel costs. The annual forum includes a networking reception and a full-day peer-advisory session.

Applicants must demonstrate financial need and contributions to their communities, credit unions and/or credit union systems. Preference will be given to recipients from diverse backgrounds who have the most to gain from the experience. Scholarships are funded by network membership dues, WOCCU and the Canadian Co-operative Association, which is financially supporting the program for the third year.

Scholarship applications and references must be sent by March 1. Use the link. Scholarship offers will be made to successful candidates by April 1.

For more information, use the link or contact Nicole Bice at nbice@woccu.org or 1-608-395-2027.

CUNA Mutual: Drought Draws 30,000 Claims So Far

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MADISON, Wis. (2/20/13)--The drought of 2012 was the worst in roughly a half century, pushing down corn yields in some states to their lowest level in nearly 30 years, with soybean yields also hard hit. That meant more claims filed by farmers insured by CUNA Mutual Group's crop insurance business.  

Click to view larger image Corn damaged by the drought this summer in Southern Illinois. (Photo provided by CUNA Mutual Group)
Through the Standard Reinsurance Agreement (SRA) with the U.S Department of Agriculture, ProAg--a crop insurance company that CUNA Mutual purchased in 2009--paid 30,000 claims in 2012. That amounts to $784 million so far and compares to a premium total for the program in 2012 of $608 million, Mike Connealy, president/CEO of ProAg, told News Now for this special report.

In 2011, the drought in the Southern Plains also resulted in significant crop losses--particularly with cotton--but it had less of an impact on ProAg's earnings. However, the loss numbers are similar year over year, Connealy said.

CUNA Mutual has been involved with ProAg since 2006, and the company diversified its insurance coverage to include a bigger role in crop insurance in 2009.  

Due to the complex nature of the SRA and private sector reinsurance, the actual year-to-date underwriting loss in 2012 so far for ProAg is in the 2% of premium range, Connealy explained.

"It's a cyclical business," Connealy added. "You'll have several good years, then one really bad year. Like any insurance business, financial results in crop insurance can be better in some years than others.

"For example, in 2010, ProAg accounted for almost half of CUNA Mutual Group's operating revenue growth, which offset challenges in our credit union business lines due to the down economy," he explained. "As a result of ProAg's performance that year, credit union leagues received $5 million more from CUNA Mutual than in previous years."

From CUNA Mutual's perspective, there are some lessons to be learned and conclusions drawn from a big event like the severe drought.

Preparation for a disaster year requires adequate staffing of field claims adjusters, Connealy explained. ProAg was well-prepared to handle the large number of claims due its staff levels and the ability to move employee adjusters from low-loss frequency areas such as Minnesota to drought states such as Nebraska, he added.

"We are in the weather business, and a drought such as 2012 provides us a chance to exhibit our ability to handle claims," Connealy said. "Any insurance provider can look good when the test is easy. Our record in 2012 is one of execution when the pressure was on due to the heavy claim volume. We will retain and grow our book going forward thanks to passing this test."

The 2012 drought means an upswing in future business for ProAg, with a caveat.

"Farmers will tend to buy higher levels of coverage than what they might have had in 2012," Connealy said. "This will tend to increase the premium volume for the industry. However, that increase may be a bit uneven, as states such as California or Florida--where ProAg has a decent footprint--were not affected by the 2012 drought."

So what is the outlook heading into this summer for crop insurance coverage?

"The only known effect is that farmers will still have coverage for 2013," Connealy concluded. "Whether they decide to plant corn, soybeans or another crop is up in the air until April or so, as world markets for commodity prices move up and down. The drought appears to have broken in the Eastern Corn Belt. The Western Corn Belt is still on the dry side. It is a good two to three months for the planting season in the Western Corn Belt, so there is plenty of time for the weather pattern to change."  

(See tomorrow's issue for another News Now special report on second-generation mobile banking.)