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SunCorp Moves Its Office

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WESTMINSTER, Colo. (2/22/13)--System United Corporate FCU (SunCorp) has relocated its operations to a new building in Westminster, Colo., to reduce operating expenses.

The move is expected to save its member credit unions and organizations roughly $350,000 a year, said SunCorp.

"SunCorp was able to secure a property that will bring value to our member owners for subsequent years, as well as saving the organization thousands of dollars in leasing costs," said Kim Withers, SunCorp Board chair and CEO of Meridian Trust FCU in Cheyenne, Wyo.

The move was completed during the Jan. 19-21 holiday weekend. The transition went smoothly, with few disruptions to normal operations, the corporate said.

During the weeks surrounding the transition, the corporate also tested and executed its business resumption plans. SunCorp provides payment services, lines-of-credit and investments to its member credit unions, credit union service organizations and credit union associations in the Western states.

CU System Briefs (02/22/2013)

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  • WACO, Texas (2/22/13)--A man convicted of an August robbery of $238 million asset Genco FCU CU in Lacy Lakeview, Texas, was sentenced to more than seven years in federal prison by a federal judge. U.S. District Judge Walter S. Smith in Waco, Texas, also ordered Bradley Kilmer, 33, of Fort Worth, Texas, to be placed on three years of supervised release following his prison term, and to pay $14,032.84 in restitution and a $100 special assessment to the court. Kilmer also was wanted for robbery in at least two states, including August robberies of a Fort Worth Community CU branch in Weatherford, Texas, and a bank in Alvarado, Texas …
  • PLATTSMOUTH, Neb. (2/22/13)--A Nebraska man faces up to 20 years in prison after pleading guilty Tuesday to being in possession of money allegedly taken during a Dec. 7 robbery of  Sac FCU, Plattsmouth, Neb. Caleb M. Searcy, 21, was charged in Cass County District Court with receiving stolen money greater than $1,500, a felony (Omaha World-Herald Feb. 21). An empty bank box was found in the woods near the credit union the day after the robbery. It was later discovered that Searcy had obtained a significant amount of money. He admitted he found the box in the woods. Also, Gabriel L. Coen, 29, and Brandi L. Coen, 31, both of Plattsmouth, were arrested by Plattsmouth police Tuesday in connection with the robbery. They were booked on suspicion of theft by receiving stolen property over $1,500 …
  • NEW BERLIN, Wis. (2/22/13)--Dodge Central CU, which is now part of New Berlin, Wis.-based Landmark CU, announced it has made a $100,000 commitment to a proposed community center, The Watermark  project, located in Beaver Dam.  The Watermark will be a 22,000-square-foot home to the Beaver Dam Community Activities and Services Department, including senior services. To honor the gift, The Watermark will name one of its premier rooms in recognition of the $1.98 billion asset credit union's support. The announcement was "one of our first acts as Landmark CU in Beaver Dam," said Barbara Campbell, Landmark regional president. "We want to continue to make a notable impact in helping our community achieve projects like The Watermark that will appeal to all ages and community members from all walks of life," she added (Beaver Dam Daily Citizen Feb. 21) …

Oregonians Would Side With CUs On Tax Issue, Says Poll

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BEAVERTON, Ore. (2/22/13)--Oregon voters have overwhelming loyalty to credit unions over banks and they largely support the credit union not-for-profit tax exemption, according to a new poll.

Seventy percent of those polled said they agree that because credit unions are not-for-profit, they should not have to pay business or occupation taxes. The telephone survey was conducted by Voter/Consumer Research in late January, with 300 registered Oregon voters, according to the Northwest Credit Union Association.

"Loyalty to credit unions is very high, and this doesn't surprise us given how much money consumers save by leaving their banks," said Troy Stang, president/CEO of NWCUA.

The poll was released as bank lobbyists again pressed the Oregon Legislature to begin imposing a corporate tax on the state's largest credit unions.  Credit unions pay property and payroll taxes but are exempt from state occupation tax. As not-for-profit cooperatives, their earnings are returned to members in the form of lower fees, lower loan rates and higher returns on deposits.

Protecting credit unions' tax exempt status is the top priority for credit unions, leagues and the Credit Union National Association, and will be among the topics discussed during CUNA's Governmental Affairs Conference next week in Washington. D.C. The conference begins Sunday and ends with visits to Capitol Hill by more than 4,200 attendees. Use the link for more information.

The results of the Oregon poll suggest that banks' attacks against credit unions won't be popular with the public, said NWCUA.

Other findings:

  • Roughly 90% of Oregonians surveyed have a positive impression of credit unions, with 56% having a favorable opinion of banks. Credit unions have a 96% approval rating among their members.
  • When asked which side they would take if a disagreement between banks and credit unions erupted in the legislature, 71%  of those polled said they would side with credit unions, and 18% said they would side with banks.
Oregon's tax officials estimate that the bank-supported legislation to tax credit unions could generate $1 million to $4 million a year in revenue. However, CUNA estimates that Oregon's working class credit union members saved much more--$121 million in direct benefits during the 12 months ending in September, 2012.

"That's $170 a year in real savings for the average credit union household," Stang said. "That is a benefit bank customers do not enjoy. Our members--teachers, truck drivers, working moms and dads--didn't pay those banking fees and instead invested their savings right back into Oregon's economy," he added.

Winter Storm Closes Dozens of CUs In Kansas

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WICHITA, Kan. (2/22/13)--A winter storm that swept through Kansas Thursday closed more than two dozen credit unions and two credit union service organizations, said the Kansas Credit Union Association.

By 11 a.m. Thursday, the storm had dropped 10 inches of snow, and an accumulation of 18 inches was expected in some parts of the state, KCUA Communications Director Susan Dyer told News Now. KCUA offices were open Thursday, with some staff working from home.

"We haven't had this big of a storm in several years," she said, noting at the time the storm front was pushing toward Kansas City. Most of the state was under a winter storm warning, with the storm moving eastward.

As of 10 a.m. CT, 22 credit unions and two CUSOs in Kansas had closed. Later in the day, more credit unions announced closings. Most had closed all their branch locations. Closed were:

  • Bell Government CU, Dodge City;
  • Bluestem Community CU, El Dorado;
  • Central Kansas CU, Hutchinson;
  • Credit Union of America, Wichita;
  • Credit Union of Emporia, Emporia;
  • Credit Union of Dodge City (Kan.);
  • Central Star CU, Wichita;
  • Educational CU, Topeka;
  • Emporia State FCU, Emporia;
  • Envista CU, Topeka;
  • EquiShare CU, Wichita;
  • Hutchinson (Kan.) CU;
  • Hutchinson Government Employees CU, Hutchinson;
  • Kansas State University FCU's West Branch, Manhattan;
  • KU CU's Lawrence branch;
  • Mainstreet CU, Lenexa;
  • McPherson (Kan.) CO-OP CU;
  • Medical Community CU, Wichita;
  • Meritrust CU, Wichita;
  • Midwest Regional CU, Kansas City;
  • New Century CU, Topeka;
  • Quest CU, Topeka;
  • River Cities Community CU, Atchinson;
  • TECU CU, Wichita;  and
  • USPLK Employees FCU, Leavenworth.
Two CUSOs also closed: Cap CUSO and Educational CUSO. Frontier Community CU closed early, and Medical Community CU was open but with limited staff.

The Missouri Credit Union Association was also bracing for the storm, according to its Facebook postings.

KCUA said it was posting information on its Facebook page. "We're trying to keep our Facebook page updated: facebook.com/KansasCreditUnion Association," said Dyer. KCUA's Twitter account is @TheKCUA.

ND CUs Make Progress On Fin Ed, Adult Abuse Bills

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BISMARCK, N.D. (2/22/13)--North Dakota credit unions are tracking 34 bills in the state legislature, and Credit Union Association of the Dakotas (CUAD) Thursday reported progress on a financial education bill and a bill relating to reporting adult abuse.

HB 1217, a bill relating to financial education at the middle school level, came out of committee, passing 12 to 0 and then passed in the House 90 to 2. The bill is now in front of the Senate Education Committee, said CUAD (the Memo Feb. 21). The bill would require that concepts of personal finance--such as checkbook mechanics, savings and credit card use--be included in the curriculum of grades seven and eight.

Also, CUAD is monitoring SB 2323, a bill relating to mandatory reporting of vulnerable adult abuse. While CUAD said it is not completely opposed to the premise of SB 2323, it is concerned as to how it will be applied to the role of financial institutions.

Passage of SB 2323 in its current language could leave North Dakota's financial institutions vulnerable to civil action or lawsuits, said Jeff Olson, vice president of advocacy and awareness at CUAD, in the article.

"A primary role of financial institutions is to protect assets, prevent losses and safeguard consumer information," said CUAD in testimony Monday before the North Dakota Senate Appropriations Committee on SB 2323.

"While regular customer contact puts financial institutions in a unique position to detect financial exploitation of vulnerable adult abuse, credit unions and other depository institutions are resistent to the enactment of statutes requiring reporting and participation in both voluntary and mandatory reporting programs, on the premise that disclosure of confidential information regarding a customer may result in liability. Specifically, civil and/or criminal penalties for violation of federal and state laws regulating the disclosure of personal financial information," said CUAD.

The testimony referred to "a number of court decisions in which credit union members and bank customers have sued their financial institution for damages allegedly resulting from the disclosure of damaging or embarrassing financial information. Specifically, theories under which a customer might sue a credit union or bank for disclosure of private information include: breach of a contractual duty of confidentiality, defamation and invasion of privacy."

CUAD said the solution is to not include financial institutions, and to exempt them from the bill based on an individual's right to financial privacy and the potential breach of that information. It also is based on violating federal and state laws regulating personal financial information disclosure.

Report: ID Fraud Victims, Amounts Stolen Up In 2012

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PLEASANTON, Calif. (2/2/13)--For the second consecutive year, identity fraud in 2012 increased in the U.S., affecting 12.6 million consumers, or 5.26% of adults--the highest level since 2009, according to the 2013 Identity Fraud Report issued by Javelin Research & Strategy.

Identity fraud affected one victim every three seconds, costing consumers an average $365 in 2012, up from $354 in 2011. Most fraud costs were borne by credit unions and other financial institutions, merchants and businesses. The average resolution time remains unchanged at 12 hours, Javelin said.

On the upside, consumers information is being misused for the shortest time--48 hours--and more cases are being resolved--a 92% resolution rate--than at any other time in the past seven years, the report indicated.

One of the major findings of the report is that new account fraud (NAF) increased nearly 50%--to 1.22% of all adults in 2012 from 0.82% in 2011. With total fraud loss doubling to $9.8 billion in 2012 from 2011, NAF is a growing threat to consumers and the bottom line of private industries, Javelin said.

Many fraud cases can be detected by monitoring credit reports, because 57% of NAF cases involved the establishment of general-use and store-branded credit cards, the report said.

Data breaches are the most prevalent way for fraudsters to pilfer huge amounts of consumer information with much less risk than prior methods, such as going through a victim's trash or stealing records from an individual's health-care provider's office. In fact, one in four persons who received a notification of a breach became a fraud victim.

So to combat identity fraud, it is necessary to protect against a data breach and to properly respond if one does occur, Javelin said.

To access a summary of the report, use the link.

The Credit Union National Association, through its CUNA Strategic Services provider alliances, offers several resources and services to combat identity fraud. To view CUNA's Identity Theft Resources, use the links.

Filene Features 'Black Belt' CUs on Online Mobile, Strategies

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MADISON, Wis. (2/22/13)--Credit unions are deploying online and mobile banking to enhance the member experience, rather than as a tool for cost reduction, as has been the case with many technological innovations, according to a new white paper from the Filene Research Institute.

The report, "Online and Mobile Channels: Strategies of High-Performing Credit Unions," was developed from a survey of 481 U.S. based credit union executives conducted by Filene in the third quarter of 2012.

Nearly 90% of credit unions surveyed cite enhancing the member experience as a major objective of their online channel efforts. Maintaining competitive parity is a major objective for three-quarters of credit unions, and seven in 10 consider building member trust a major objective.

The report identified the credit unions respondents as Black Belts, Blue Belts and Green Belts, based on the extent to which their information technology departments were committed as business enablers, how well they coordinated with other business functions within their organizations and the extent to which the credit union demonstrated a tolerance or aversion for technology-related risk.

Black Belts, which accounted for 36% of respondents, exhibited a strong commitment as business enablers, had excellent coordination with other business functions and were risk tolerant, said Filene.

Blue Belts (35%) demonstrated a strong commitment as business enablers, had moderate coordination with other business functions and were risk neutral.

Green Belts (30%) were moderately committed as business enablers, had inconsistent coordination with other business functions and were risk averse.

Black Belts and Blue Belts outperform Green Belts in driving adoption of their online and mobile banking offerings. About four in 10 members of Black and Blue Belt credit unions use their credit union's online banking site, in contrast to a third of Green Belt credit union members.

About twice as many Black and Blue Belt credit union members (9%) are banking with a mobile device, compared with Green Belt credit union members (5%). Black Belts also have higher online product application rates than other credit unions. Black Belt credit unions report that about one in five personal and auto loans came in through the online channel in 2011.

The report concluded that credit unions have different styles of technology management and that style predicts online channel strategy.

JP Morgan/Bear Stearns Files Motion To Dismiss NCUA Lawsuit

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KANSAS CITY, Kan. (2/22/13)--J.P. Morgan Securities, formerly known as Bear, Stearns & Co., Wednesday asked a federal judge in Kansas to dismiss a lawsuit by the National Credit Union Administration over $3.6 billion in residential mortgage-backed securities (RMBS) sold to four corporate credit unions that later failed, or stay any action until an appellate court decision on a similar lawsuit.

The motion was filed in the U.S. District Court in Kansas City, Kan.  It asks that if the court can't dismiss the case entirely, it should stay any action pending results of an appeal in similar RMBS lawsuit NCUA filed against RBS Securities Inc.  That case is on appeal before the Tenth Circuit Court of Appeals in Denver.

NCUA's lawsuit, filed Dec. 14, alleges that Bear Stearns violated federal and state securities laws when it sold the RMBS to U.S. Central FCU, Western Corporate FCU, Southwest Corporate FCU, and Members United Corporate FCU. It alleges that the company's underwriting guidelines had been systemically abandoned and the investments were presented as less risky than they really were.

The motion to dismiss or stay said that "despite warnings from the offering documents, the news media and even the board itself, the credit unions made the informed decision to plunge the majority of their assets into RMBS at the height of the housing bubble. That investment strategy--which even the board has condemned as 'aggressive,' 'excessive' and 'unreasonable'--backfired when the housing bubble burst. The credit unions lost their 'unreasonable' wager and subsequently collapsed."

Defendants base their motion on three arguments:

  • NCUA's claims are time-barred by the applicable statutes of limitation and repose;
  • It "fails to plead an actionable misrepresentation or omission"; and
  • It "cannot plausibly allege materiality" related to any purported misrepresentation because of the offering documents' "extensive disclosures and the information publicly available at the time of the credit unions' purchases."
J.P. Morgan bought Bear, Stearns and Co. in 2008, after the sales occurred. The credit unions were liquidated in 2010. NCUA's lawsuits are filed in its role as liquidating agent of the corporate credit unions.

So far, NCUA has sued Credit Suisse (USA), J.P. Morgan Securities, RBS Securities, Goldman Sachs Group Inc.,  Barclays Capital and Wachovia. Those cases are progressing through various courts. Other suits against Citigroup, Deutsche Bank Securities and HSBC were settled  for more than $170 million.

Buckley Named Deputy Commissioner Of Texas CU Department

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AUSTIN, Texas (2/22/13)--The Texas Credit Union Department announced that Daniel "Dan" Buckley will become the department's Deputy Commissioner, effective Monday, according to a newsletter posted on the department's website.    

Buckley has 27 years of experience in the credit union industry, most recently serving as senior vice president of risk management at Corporate America CU in Irondale, Ala.

He worked 25 years for the National Credit Union Administration, serving as an examiner, supervision analyst, problem case officer, loss/risk analysis officer, director of administration, and corporate field supervisor.

Buckley also completed NCUA's Management Development Program.

Look Outside Industry For Strategic Insight, Says TMG Paper

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DES MOINES, Iowa (2/22/13)--A new white paper from The Members Group (TMG) looks outside the financial services industry to help credit unions better determine their core competencies and get in touch with the value proposition they bring to the marketplace.

"Strategic Planning's Big Questions," written by Shazia Manus, TMG CEO, studies how companies such as FedEx, U.S. Cellular, Walgreens, Dell, the Mayo Clinic and National Geographic create unique value propositions. She recommended that credit union leaders "can and should look outside the industry for inspiration."

Media companies today are facing as many, if not more, challenges to their business model as financial institutions. To more fully "bring to life" the experience of reading a

National Geographic magazine or watching the brand's cable channel, the company took its content on tour, creating interactive content for mall-goers. Passersby saw themselves interacting with dolphins, dinosaurs, storms and spacemen on a theater-size screen.

"For me, it brought back all those memories of being a child, lying on the floor looking at all of the pictures in my grandpa's and dad's copies of National Geographic," said one person who experienced the tour. The same user concluded "that's exactly what marketing should do … make us smile and bring back those memories we hold close."

Value propositions fall into four basic categories: Best quality, best price, luxury or must-have, according to Anthony Tjan, CEO of the venture-capital firm Cue Ball. Credit unions must determine if and how their unique competencies can work to make consumers recognize them as the leader in one of the four categories, Tjan said.

"Figure out how to reposition your offering. Stop being stuck in the middle and aim to set a new standard," Tjan said.