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CU System briefs (02/28/2011)

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* ORLANDO, Fla. (3/1/11)--Insight CU, a $469 million asset credit union based in Orlando, was chosen by the Lake County Sheriff's Office to host 22 visiting Brazilian executives so they could tour an American financial institution. The international program was developed by the Sheriff's Office. The visit included a tour of Insight's Eustis branch, followed by a question and answer session (Orlando Sentinel Feb. 27) … * PHOENIX (3/1/11)--Arizona State CU has been named the No. 1 credit union in Arizona by Ranking Arizona: The Best of Arizona Business for the fifth time. The rankings are published annually by Arizona Business Magazine. Residents and business leaders throughout the state participated in the online opinion poll at the official Ranking Arizona website (Business Wire Feb. 22) …

Canadas Desjardins Group sees 34 surge in earnings

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MONTREAL, Quebec (3/1/11)--The Desjardins Group reported a 34% surge in earnings--to $1.44 billion--last year as its caisses populaires (credit unions) network stepped up its home mortgage and business lending activities and its' insurance and fund management units improved their performance. As a result, Desjardins--the largest financial cooperative in Quebec--has declared member dividends of $307 million for 2010, up from $282 million in 2009 and $186 million in 2008 (Montreal Gazette Feb. 26). The dividends will be credited to members after formal approval during the Desjardins Group's annual meetings in April. Desjardins CEO Monique Leroux said the organization is letting go some of its operating activities to focus more on longer-term strategies, governance, organization and expansion outside Quebec. She noted that the farming sector in Ontario is underserved by big banks and that Desjardins has a strong presence in eastern Ontario. Desjardins' $443 million acquisition of Western Financial Group should be in place next month, she said. Roughly half of Desjardins Group's total revenues now are accrued from outside Quebec.

CU loans and savings fall in January

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MADISON, Wis. (3/1/11)--January’s Monthly Credit Union Estimates report reflects little change in many of the key operating ratios the Credit Union National Association (CUNA) tracks: top-line results for asset quality, liquidity--measured both by the loan-to-share ratio and the liquidity ratio--and capital each are unchanged compared with year-end 2010 results, according to a CUNA economist’s analysis.
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Credit union loans in January totaled $575.4 billion, compared with 584.9 billion in January 2010. Credit union loans outstanding decreased 0.7% during January, compared with a 0.1% decrease in December 2010. Adjustable-rate mortgages led loan growth, declining less than 0.1%, followed by used-auto loans, unsecured personal loans, and fixed-rate mortgages, which decreased 0.3%, 0.7% and 1.2%, respectively. Home equity loans also dropped 0.1% while new auto loans fell 1.5% and credit card loans went down 2%. Loan portfolio contraction--a reflection of consumer debt reduction efforts--continued in January, though the pace of the reductions (-0.7%) accelerated slightly compared to December results (-0.1%), Mike Schenk, CUNA vice president of economics and statistics, told News Now. “This isn’t likely a harbinger of more dramatic declines: that’s because this looks like a typical pattern. On a seasonal basis, loan growth, especially credit card growth, tends to be relatively strong in December and then relatively weak in January as consumers concentrate on repaying holiday debts,” Schenk said. “So in the current economy, a slight decline followed by a slightly larger decline isn’t terribly surprising. “Having said this, we do expect loan demand to remain fairly weak in the first quarter and to increase weakly as the year progresses,” he added. “Labor markets will continue to have a big influence on confidence, spending and borrowing behavior. We expect labor markets to improve in 2011, though not substantially, so consumers will continue to exhibit this cautious behavior.”
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That also will mean that most savings growth is apt to be concentrated in short-term, liquid accounts. Few members will want to lock in longer-term low yields, Schenk said. Credit union savings in January totaled $802 billion--or $33.9 billion more than the $768.1 billion in January 2010. Credit union savings balances fell 0.2% in January, compared with a 0.5% increase during December 2010. Money market accounts led savings growth, rising 0.7%, followed by regular shares, which also went up 0.9%, and one-year certificates, which decreased 0.5%. Individual retirement accounts declined 0.9%, and share drafts dropped 2.4%. Credit unions’ 60-plus-day delinquencies remained constant at 1.7% during January. The loan-to-savings ratio stayed at 72% in January. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained constant at 19%. The movement’s overall capital-to-asset ratio stood at 10% in January. The total dollar amount of capital is $94 billion.

Mobile banking tops IT priorities in poll of 83 CUs

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BOSTON (3/1/11)--Basic mobile banking, online account opening, mobile payments and remote deposit capture (RDC) are the top information technology (IT) ventures shaping the future of credit unions trying to leverage technology to meet their objectives, according to a new report. The report, from Aite Group, a Boston-based research firm, is based on an online survey of 83 U.S. credit unions during December and January. The report details a demand for more than 25 different technologies among those credit unions surveyed. Credit unions rated the likelihood of whether they would invest in certain categories of technologies. Basic mobile banking (check balances/transfer funds) drew 57% citing it as "high priority," followed by online account opening (47%), mobile payments (45%), RDC (41%) , consumer online banking application (36%), e-statements (34%), personal financial management tools (31%); small-business online banking application (28%); mobile person-to-person and RDC for business members (24% each), and member analytics/business intelligence tools, 18%. Technologies receiving a "probably will invest" was mobile person-to-person payments, with 28% citing this. None of the other categories received more than 23%. Credit unions have seen far fewer failures than their bank counterparts over the past few years, but have had to alter their strategies and business models to operate in "the new normal," said the 38-page report. "These institutions continue to be challenged by stringent regulatory requirements, declining loan portfolio balances, and rising losses associated with fraud," said Aite. "The role technology plays in credit union strategies has grown more critical than ever before as a way to overcome these challenges." Technologies will be used to attract new members, compete against larger institutions, and ensure future growth and success. Christine Barry, research director at Aite and author of the report, noted that "several opportunities exist for credit unions in the current marketplace. By leveraging technology such as the online and mobile channels, and moving toward new strategies, to better target small-business customers, for example, credit unions will be better positioned to take advantage of these opportunities," Barry added.

Tips for establishing a social networking policy

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FARMERS BRANCH, Texas (3/1/11)--The opportunity to “connect” with more members and non-members than ever before make social networking an enticing platform for credit unions looking to extend their presence. An article from the Texas Credit Union League offers tips for crafting a social networking policy. “There’s no doubt that social media is a game-changing initiative that brings with it an unrivaled ability to provide timely information to literally hundreds of millions of users,” Steve Gibbs, assistant vice president of shared compliance resources with Credit Union Resources Inc., told the league (LoneStar Leaguer Feb. 25). “But all the technology and connections made possible in today’s landscape won’t matter tomorrow if your credit union is operating without establishing some guidelines and a social networking policy to protect your institution and, more importantly, your members,” he added. About 81% of respondents viewed social media as a prime learning tool for employees, according to a recent study from CARA® Consulting’s 2010 survey, “How Informal Learning is Transforming the Workplace: A Pulse Survey on Social Media’s Impact on Informal Workplace Learning.” And 98% confirmed that social media have changed how users learn and access information, the league said. “Ignoring the impact of social media can be a mistake, but joining Facebook or YouTube just to join them and start putting information out there for visitors is almost always a bigger one,” Gibbs added. “It should be a top priority for your institution to develop a social media policy if you are planning on bringing your organization into the online communities.” But where do you begin in establishing an effective policy? Gibbs advocates assessing the organization’s current status (size, time invested, etc.) and what risks may be involved (everything from the defaming reputational risks to legal and regulatory risks). After that, it is a matter of balancing a credit union’s social media output, along with employees’ use of social media and what content they share that may relate back to a credit union. “It’s not about ‘policing’ content your staff shares, but it is about designating an efficient social media contact for your team, someone who is active and proficient in utilizing social media and someone who is easy to get a hold of in the event your members or online community has questions,” Gibbs said. Other essential areas of concern for your policy should address technological safeguards, universal messages to be communicated in a significant development and other related functions. “The bottom line is that technology is changing the way we communicate and if we are not embracing these new platforms, we’re going to be missing out on educating our staff, members and communities,” Gibbs said. “But in doing so, we also need to be prepared to monitor and maintain our activities; otherwise our messages may end up doing more harm than good.”

Minn. CUs talk interchange MBL with new congressman

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CAMBRIDGE, Minn. (3/1/11)--Minnesota credit unions met with the state’s newest congressman to discuss interchange and member business lending (MBL) during a meet-and-greet with U.S. Rep. Chip Cravaack (R-8) on Friday at Minnco CU in Cambridge. Twenty-five professionals and volunteers from six credit unions attended the introductory meeting to discuss the current issues important to the movement.
Click to view larger image Welcoming the state’s newest congressman, Minnesota credit unions held a meet-and-greet with U.S. Rep. Chip Cravaack (R-8) (left) on Friday to discuss interchange, member business lending, and other credit union issues. (Photo provided by the Minnesota Credit Union Network)
Credit unions focused their discussion with Cravaack on the impact that interchange and MBL have on Minnesota consumers. Attendees stressed the inadequacy of the Federal Reserve Board’s proposed interchange rates and the effect a reduction in rates would have on credit unions’ ability to offer economical checking products. Cravaack recognized credit unions’ concerns and encouraged them to continuing working with elected officials on the issue. On the topic of MBL, credit unions shared how increasing the MBL cap would positively impact small businesses. Citing statistics compiled by the Credit Union National Association (CUNA), credit unions stated that an MBL increase would generate an additional $47 million in small business loans and more than 500 jobs in the eighth congressional district. Cravaack acknowledged the importance of small businesses in the district and stated that he is interested in looking at any avenue to strengthen them. “The Minnesota Credit Union Network (MnCUN) recognizes the importance of working together with the members of the state’s congressional delegation,” said Mara Humphrey, MnCUN vice president-governmental affairs. “Our meeting with Rep. Cravaack enabled us to establish an open line of communication with the state’s newest representative, and we look forward to working with him on issues in the future.” This week Minnesota credit unions will further develop their relationship with Rep. Cravaack during a hill visit scheduled as part of CUNA’s Governmental Affairs Conference. Minnesota credit union professionals and volunteers attending the conference will also visit the other members of Minnesota’s congressional delegation. CUNA and credit unions are trying to get Congress to increase credit unions’ MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $10 billion in loans into the economy and create as many as 100,000 new jobs, with no cost to taxpayers, CUNA said.

Ohio league educates state Senate committee on CUs

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COLUMBUS, Ohio (3/1/11)--The Ohio Credit Union League took the opportunity a couple of weeks ago to make sure members of the Ohio Senate Financial Institutions Committee are knowledgeable about credit unions, said the league. League General Counsel John Kozlowski testified before the committee and provided insight into the uniqueness of credit unions and how they make a difference in their communities (eLumination Newsletter Feb. 23). His testimony included examples of Ohio credit unions' member business lending initiatives, innovative and affordable financial products, financial education outreach, and student-run branches. The committee was also presented with data outlining credit unions' market share of assets, deposits and business lending.

Missouri CUs fed lawmakers talk about interchange

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ST. LOUIS (3/1/11)--Missouri credit unions shared their concern about the Federal Reserve's debit interchange proposal with federal lawmakers last week. U
Click to view larger image U.S. Rep. Blaine Luetkemeyer (R-Mo.), center, discusses interchange with Missouri credit unions Wednesday. (Photo provided by the Missouri Credit Union Association)
.S. Sen. Claire McCaskill (D-Mo.) hosted town meetings across the state ( The Missouri difference Feb. 25). At a meeting in Blue Springs Thursday, Mazuma CU President/CEO Rob Givens thanked McCaskill for voting against adding the debit interchange provision in the Dodd-Frank Act. McCaskill also wrote a letter to the Federal Reserve in December expressing concerns about the interchange proposal. Givens said he asked McCaskill to continue requesting that the Fed slow down the process of implementing the debit interchange provision. "She agreed that slowing down would be a very good thing," he told the Missouri Credit Union Association (MCUA). Interchange was also the main topic of conversation with U.S. Rep. Blaine Luetkemeyer (R-Mo.), who met with credit union representatives at the Missouri Credit Union House in Jefferson City on Feb. 23. Luetkemeyer took part in the House Financial Services subcommittee hearing on the Federal Reserve's debit interchange proposal on Feb. 17. He shared his perspectives on the hearing and both the interchange proposal and the overall Dodd-Frank Act, MCUA said. "Credit unions, along with community banks and insurance companies, weren't part of the problem, but you've been swept up in this," Leutkemeyer he said. "Credit unions weren't part of the problem, but you can be part of the solution if you are allowed to be." He noted many lawmakers are willing to slow down implementation of the debit interchange proposal to conduct a more thorough review of the impact and intent of the legislation, and encouraged Missouri credit unions to urge their congressional delegation to delay the debit interchange process during meetings on Capitol Hill Wednesday and Thursday. Nearly 40 people from Missouri credit unions are participating in the Credit Union National Association's Governmental Affairs Conference this week in Washington, D.C.