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CU System Archive

CU System

PCUA business community press for timely state budget

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HARRISBURG, Pa. (2/4/10)--The Pennsylvania Credit Union Association (PCUA) joined more than 30 business organizations assembled in the state Capitol Rotunda Tuesday to press for a timely state budget. The Groundhog Day assembly, representing nearly five million private sector jobs, gathered to say, "We don't want to wake up morning after morning to the same news in 2010," said PCUA (Life is a Highway Feb. 3). In 2009, the state experienced a protracted budget process that went 101 days beyond deadline. The gap between spending and expected revenues filled with new and additional taxes will cost the Pennsylvania business community about $2 billion for the next five years before tax reforms really take effect, said PCUA. The event was sponsored by the Pennsylvania Business Council, of which PCUA is a member. One of the biggest priorities for the group, and for PCUA, is to ensure that there are no new taxes or an increase to the existing tax base, said the association.

INY TimesI notes CUs reaction to small biz plan

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NEW YORK (2/4/10)--The objections of the Credit Union National Association (CUNA) to the Obama administration's plan to pump $30 billion into community banks for business lending while snubbing credit unions' efforts to assist with the recovery were noted in Wednesday's issue of The New York Times. The president's proposal would use $30 billion of repaid bailout loans to help community banks increase lending to small businesses as part of a broader effort to boost creation of jobs. It doesn't mention credit unions. The Times reported that the community bankers praised the plan. "But the Credit Union National Association declared itself 'outraged and baffled,' asserting the government could do more without cost ot taxpayers by allowing more business lending by credit unions," the report said. Indeed CUNA has spoken out on behalf of credit unions on the initiative (News Now Feb. 3). CUNA President/CEO Dan Mica said the proposal is entirely focused on small and community banks, and includes nothing for credit unions, ignoring the potential contribution that credit unions could make toward the national economic recovery.

Movement mobilizes to assist damaged CUs in Haiti

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PORT-AU-PRINCE, Haiti (2/4/10)--World Council of Credit Unions (WOCCU) and its program partners in Haiti, with assistance from the Dominican Republic's credit union movement, have mobilized to collect and deliver emergency supplies to Haiti's damaged and destroyed credit unions, known as caisse populaires.
Click to view larger image Credit union workers retrieve forms from the crumbled remains of KOTELAM's Magoire Ambrose branch office. (Photo by Christian Kober).
Click to view larger image The office of CLEF credit union in Leogane was completely destroyed by the Jan. 12 earthquake in Haiti. (Photo by Christian Kober. Photos provided by the World Council of Credit Unions).
Credit unions left standing have used their existing network to help displaced members of damaged institutions access their accounts with biometric identification cards and receive much-needed remittances. Federation Le Levier, a US$52 million asset network of 16 credit unions serving 300,000 Haitians nationwide, is helping frontline institutions that serve poor and low-income populations push crucial resources out to their members. Le Levier credit unions lost five staff members in the earthquake, and eight of the member institutions were damaged. Three of the credit unions--KOTELAM, CLEF and CPSA--lost key offices from which they serve an aggregate 50,000 members. KOTELAM, the largest credit union in Port-au-Prince, suffered severe damage to its headquarters, credit office and a branch office. In nearby Leogane, CLEF collapsed entirely, and looters took safes and equipment from both CLEF and Port-au-Prince-based CPSA. Le Levier and its member credit unions are key partners of the Haiti Integrated Finance for Value Chains and Enterprises (HIFIVE) program, which began in June. The program--designed to encourage a dynamic Haitian economy by increasing the availability of financial products and services--is now working to rapidly mobilize initiatives to support economic recovery following the earthquake. HIFIVE is implemented by WOCCU under the U.S. Agency for International Development's (USAID) FIELD-Support Leader with Associates (LWA) cooperative agreement managed by the Academy for Educational Development (AED) and funded by USAID. Haiti's credit unions also are being assisted by the Asociación de Instituciones Rurales de Ahorro y Crédito (AIRAC), which is the Dominican Republic's credit union association and a WOCCU member. AIRAC is securing tents and food supplies for Pétionville-based Le Levier staff members--some without homes--who are working around the clock with a damaged office building to rebuild the federation's network systems. Supported by USAID/Haiti, Le Levier's investment last year in biometric ID cards and inter-institutional connectivity among its members is helping facilitate recovery. At the time of the earthquake, members already had mobilized total savings of $35 million and had a credit portfolio of $30 million. The ID cards permit members from each of the 16 affiliated credit unions access to their accounts at any other member institution. Credit unions in the same geographic zone are also sharing facilities to accommodate member institutions that no longer have buildings. Though destroyed in the earthquake, KOTELAM is creating a special office to aid members who have lost their records and identification. Rural credit unions that were structurally unaffected are providing teller space and responding to the high demand for liquidity. WOCCU this week is coordinating a meeting with its microfinance partners, including Le Levier and other financial service providers in Haiti, to share information, review damage assessments, coordinate financial and technical assistance, discuss financial sector priorities for providing relief and rebuilding and consider longer term priorities in view of Haiti's situation. The coordination of these institutions through both formal and informal networks will be crucial for restoring much-needed financial services to the people of Haiti, WOCCU said. To support WOCCU's relief efforts on behalf of Haiti's credit unions and their members, make payments via check, credit card or wire to:

Worldwide Foundation for Credit Unions Inc.

5710 Mineral Point Road

Madison, WI 53705 USA

Donations may be made online with a credit card at www.woccu.org/give. For wire transfer information, contact: Valerie Breunig, Worldwide Foundation for Credit Unions, 608-395-2055 or vbreunig@woccu.org. Please indicate that the donation is for the Haiti Disaster Relief Fund. U.S. credit unions can also support WOCCU's relief efforts by donating through the National Credit Union Foundation's CUAid system at www.CUAid.coop.

Five CUs offer National Guard no-fee ATM access

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RALEIGH, N.C. (2/4/10)--Four credit unions with military ties have signed bilateral agreements with State Employees’ Credit Union (SECU), Raleigh, N.C., to help ensure North Carolina National Guard personnel have access to no-surcharge Automated Teller Machines (ATMs) worldwide. SECU signed agreements with Fort Bragg FCU, Fayetteville, N.C.; Marine FCU, Jacksonville, N.C; Navy FCU, Vienna, Va.; and Pentagon FCU, Alexandria, Va., that will allow guardsmen to use more than 1,600 no-surcharge ATMs. Whether serving in Guam, Japan, or stateside in locations such as Quantico, Va., or Fort Bragg, N.C., guardsmen will save as much as $3 per ATM transaction. The move is part of SECU’s effort to assist military personnel and thank them for their continuous efforts to serve the country. Military members at all five credit unions also will have surcharge-free access to all of SECU’s Cash Points ATM network, with more than 1,000 ATM locations in North Carolina. “It’s an excellent opportunity for the members of both credit unions to have increased access to surcharge-free ATMs in the state of North Carolina,” said David G. Elliott, president/CEO of Fort Bragg FCU. “This is a perfect example of the cooperative spirit of credit unions in North Carolina.” “Our credit union has always been impressed with the military-focused U.S. credit unions and the benefits they offer to their members,” said Jim Blaine, SECU president. “These partnerships expand what SECU can do as a credit union to also enhance the benefits afforded to the 12,000 North Carolina National Guard soldiers and airmen in North Carolina.”

Wis. CUs encourage direct deposit free filing

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PEWAUKEE, Wis. (2/4/10)--Wisconsin credit unions are encouraging direct deposit and free-filing options this tax season to steer consumers from costly “refund anticipation loans,” (RALS). RALS drain millions from state refunds--particularly the refunds of people with low and moderate-incomes, said the Wisconsin Credit Union League. Short-term, high-interest loans, RALS, are heavily marketed by paid tax preparation firms during tax time and can deplete hundreds of dollars from a typical refund. These loans cost Wisconsin tax filers $22.4 million in 2006--the most recent year for data--in exchange for the promise of a fast refund. Alternatively, when paired with state and federal electronic filing options, direct deposit can deliver tax refunds within days and at no cost. “People use products like RALs for the promise of quick cash, but are essentially paying to borrow their own money,” said Brett Thompson, league president/CEO. “But by using an existing savings account or opening one, anyone in Wisconsin can use direct deposit to get a speedy tax refund without hurting their wallet, and just as quickly as if they had used a RAL by using free electronic filing options.” Data also show that RAL usage increases considerably among Wisconsin taxpayers eligible for the Earned Income Tax Credit (EITC)--a tax credit for low to moderate-income filers. Eighteen percent of EITC filers in the state use RALs to receive their refunds, compared with 3% of all state tax filers. EITC-qualifying tax filers using RALs lost $14.4 million in 2006. Thompson noted that free help is available through volunteer tax preparation sites in Wisconsin to persons of low and moderate-income and others who qualify. Credit unions are assisting in the operation of these sites, which are coordinated with the Internal Revenue Service, Department of Revenue and AARP. In addition to free tax preparation, the sites promote tax education and asset-building strategies. Credit unions’ tax assistance efforts are part of their ongoing REAL Solutions initiative, which strives to help families improve their financial position by encouraging saving and investing, improved creditworthiness and long-term wealth building, the league said. The Wisconsin league said it is encouraging all credit unions to tell their members about free filing options by linking to www.freetaxrefund.org. Use the link for more information.

MAFCU leads 32M in biz loans first year

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BETHESDA, Md. (2/4/10)--Mid-Atlantic FCU (MAFCU) loaned $32 million to local businesses in 2009--its first year in an expanded business lending program. This year, the credit union is expecting to loan $45 million to 75 small businesses. MAFCU provided a loan to Hossain Mohebbi, a franchise operator for the Denny’s restaurant chain. He wanted to open another location, but could not find an institution with capital to lend until he visited MAFCU. Mohebbi’s story illustrates how MAFCU is positioning itself to be a small business lender and a top lender of Small Business Administration (SBA) loans, according to Steven Smits, MAFCU vice president of operations. One reason large national banks are no longer lending is they cannot rapidly churn out business loans. Offering the loans is only a sustainable business practice if the lending institution intimately understands the business it is lending to, or if the business has an ongoing relationship with the lender, MAFCU said. Credit unions like MAFCU can lend to small businesses because they have a substantial amount of market deposits and they don’t compete with each other for geographic turf. They often partner with each other to share investment risk, MAFCU added. “The SBA is trying to change the makeup of who its uses--and to make it more local,” Smits said. “Prior to 2009, in its entire history, MAFCU made only a handful of SBA loans. We’ve already had five SBA loans approved this year--and we’re only a month into 2010.” MAFCU has $243 million in assets.

CUs position to improve as labor housing stabilize

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MADISON, Wis. (2/4/10)--As labor and housing markets stabilize, credit unions’ financial position should improve, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly sample of credit unions. “Periods of great economic stress create significant dynamics for financial institutions,” Steve Rick, CUNA senior economist, told News Now. “The ‘great recession’ of 2009 led to significantly higher credit union loan delinquency rates, lower credit union loan-to-share ratios and a plummet in credit union loan growth. As the labor and housing markets stabilize in 2010, so too should credit union, loan growth, asset quality and liquidity position.” Credit union loans outstanding decreased 0.1% during December, but increased 1% during 2009. That’s down from a 6.9% increase during 2008. In December, credit card loans increased 2.5%, followed by unsecured personal loans (0.8%) and home equity loans (0.6%). Used-auto loans remained constant, while adjustable-rate mortgages declined 0.1% and other mortgages fell 1%. Fixed-rate mortgages dropped 1.5% and new-auto loans decreased 2.0%.
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Credit union loan balances rose less than 1% in 2009, the slowest pace since 1943 and down from the 6.7% growth rate reported in 2008, Rick said. “Job creation in the first half of the year should lead to self-sustaining economic recovery this year,” he added. “This will reduce the extraordinarily high level of household economic uncertainty and therefore lead to increased borrowing and spending. We expect credit union loan balances to rise 3% to 5% in 2010, lower than the 8% to 10% loan growth we usually see after a recession year. “The change is due to the fact that the ‘great recession’ was a balance sheet recession and not your typical inventory-correction recession,” Rick said. “Consumers will be focusing their financial efforts on saving more and reducing debt levels in an attempt to repair their battered balance sheets.” Credit union savings balances increased 0.6% in December, and rose 10.6% during 2009. During December, share drafts led savings growth, increasing 3.8%. They are followed by individual retirement accounts (2%), and money market accounts (1.1%). Meanwhile, regular shares and one-year certificates decreased 0.3% and 1.5%, respectively.
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Credit union 60-plus-day delinquencies remained at 1.8% in December 2009. “Credit union loan delinquency rates rose by a record amount in 2009,” Rick said. “Overall credit union loan delinquency rates finished the year at 1.84%, up 47 basis points in one year. Delinquency rates were at their nadir--0.6%--in the summer of 2006, right when home prices were peaking and the unemployment rate was 4.5%, less than half the current 10%. “With the unemployment rate expected to reach its apex in the second half of this year, credit unions should budget for rising loan charge-offs through the first half of the year and then leveling off by year-end,” Rick added. The loan-to-savings ratio decreased slightly to 76% in December from 76.9% in November. The liquidity ratio---the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 19%. The movement’s overall capital-to-asset ratio stayed steady at 10% in November 2009. The total dollar amount of capital for credit unions is $89 billion.

Filene Members loyal but growth challenges persist

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MADISON, Wis. (2/4/10)--Credit unions need to capitalize on consumer angst, update delivery channels and sharpen their value proposition for non-members, especially young members, according to a new report from the Filene Research Institute. The report is titled, “Customer Experience and Credit Union Opportunities: A Collaboration with McKinsey and Company.” Filene collaborated with McKinsey research to conduct qualitative interviews with 31 credit unions about why credit unions command stellar member loyalty and how they can leverage that loyalty. Making existing credit union members more satisfied is very difficult, and probably the wrong goal, says the McKinsey surveys. Consumers consistently identify credit unions as trusted financial providers, loyalty doesn’t translate automatically into increased wallet share or membership growth, Filene said. The report identifies several challenges credit unions face:
* While consumer perceptions of credit unions are demonstrably better than those of community and national banks, credit union loan market share is flat or has declined over the past five years; * Consumers age 18- to 34-years old trust banks more than credit unions; * Between 40% and 60% of employees in the banking sector are ill-suited for directly serving customers or members; and * Branch managers are the most important link in good or bad customer experience.
Filene also identifies themes for credit unions frustrated by high member satisfaction but low membership growth:
* Credit unions should invest in functional value, such as Web tools and convenient delivery, while building a friendly but assertive sales culture; * In addition to economizing, healthy credit unions should look to attract high-performing sales and management staff at a discount while the employment market is depressed; and * Credit unions will earn the biggest satisfaction gains by focusing on members during “moments of truth” fraught moments such account opening and problem resolution when perceptions are most likely to change.
The customer experience survey, on which most of the report is based, draws on 3,900 respondents who offered their views on retail banking. The survey measured satisfaction, asked what matters most for driving satisfaction, and sought to validate the relationship between satisfaction and value creation. For more information, use the link.

Super Bowl Haiti on CUs radars

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METAIRIE, La. (2/4/10)--Credit unions are using Super Bowl XLIV as a way to generate donations for Haiti earthquake victims. The New Orleans Saints will play the Indianapolis Colts on Sunday in Miami, Fla., in Super Bowl XLIV.
Employees at GNO FCU, Metairie, La., can donate $15 to help Haiti earthquake victims in return for the opportunity to wear black and gold clothing to work through Friday. Black and gold are the colors of the New Orleans Saints, which is GNO FCU’s home football team. The Saints will play in Sunday’s Super Bowl XLIV. (Photo provided by GNO FCU)
In a wager between the Indiana Credit Union League and the Louisiana Credit Union League, the state league whose team comes out on the short end of the scoreboard will make a donation in the other league’s name to the World Council of Credit Unions' (WOCCU) disaster relief fund. “We are keyed up for the big game and pulling for our Colts to bring home the Super Bowl title for the second time in four years,” said Indiana League President John McKenzie. “But, regardless of the outcome, it is nice to know that credit unions and their members in Haiti will benefit. We are proud to report that the fund has already received thousands of dollars from Indiana’s credit unions and state organizations.” Anne Cochran, Louisiana Credit Union League President, added: “We are thrilled to see our Saints make their first Super Bowl appearance in franchise history. This is an exciting time for us here in Louisiana, but we are still conscious of those who still need our help.” To date, the two credit union systems combined have contributed more than $16,000 to the fund. Credit unions worldwide have raised more than $530,308 for the Haiti disaster relief fund, according to WOCCU’s Worldwide Foundation for Credit Unions. Of that total, U.S. credit unions and organizations have raised $221,656 through the National Credit Union Foundation’s CUAid.coop (News Now Feb. 3). GNO FCU, Metairie, La., employees also devised a way to celebrate Super Bowl XLIV and help Haiti earthquake victims. Employees who donate $15 or more to the disaster relief fund can wear black and gold attire to work through Friday. Black and gold are the colors of the New Orleans Saints, which is the employees’ home football team. The credit union also has decorated its lobbies with Saints pendants, gold stars and balloons. GNO will be closed Monday morning after Super Bowl Sunday, and will re-open for business at 12:30 p.m. GNO FCU has $97 million in assets.

Rep. Michaud CUs should make business loans

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BANGOR, Maine (2/4/10)--Legislation that would enable credit unions to help the economy rebuild by offering member business loans received support in statements made by Rep. Mike Michaud (D-Maine) in an article in the Bangor Daily News. In Tuesday's article about the government's $154 billion stimulus bill, Michaud said it is unlikely the House stimulus bill will be accepted by the Senate and that it's important that the House and Senate work on a compromise that not only keeps safety net programs, but also helps further "jump-start" the economy. He noted that government should be looking at other steps to take to help the economy while not costing the Treasury. Legislation is under consideration that would allow greater business loans from credit unions, Michaud said. The banking lobby is opposing the legislation, even though they are not providing the credit needed by companies. Its passage would help the economy rebuild, he said. "If the banks are not going to give them access to capital, and the credit unions have that capital available to loan businesses, then they should be able to make those loans," Michaud told the publication. The legislation, supported by the Credit Union National Association, would increase credit unions' member business lending cap to 25% of assets from 12.25% and raise the minimum threshold for a loan to be considered a member business loan to $250,000 (News Now Dec. 22). For the full article, use the link.

CU System briefs (02/03/2010)

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* CENTRALIA, Wash. (2/4/10)--Police are investigating whether a man charged with the Jan. 25 attempted robbery, burglary and kidnapping at the Centralia branch of TwinStar CU is the same man who robbed another branch of the credit union in Ocean Shores a week earlier. In the Centralia branch, the robber held an employee at gunpoint until a police officer arrived, pulled the employee to safety and fired two shots at the robber. The robber escaped during a standoff with police. In the Ocean Shores robbery, the robber herded employees together, ordered them to open the vault and forced them out of the building as he fled (Associated Press via seattlepi.com Feb. 2). Michael Anthony Lar, who is recovering from two gunshot wounds, has been charged in the Centralia robbery and is scheduled to be arraigned today (The Daily News Jan. 30) ... * MADISON, Wis. (2/4/10)--UW CU based in Madison, Wis., has launched a Facebook page so it can "connect with the communities we serve," it announced Wednesday. "Online social networking services have become the norm to connect with colleagues, customers and friends," the $1 billion asset credit union said. It will use the new platform to post news and information about local events, educational articles related to personal finance, and urgent alerts ... * SUITLAND, Md. (2/4/10)--A delegation of Jordanian officials met
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with Andrews FCU executive management, Defense Credit Union Council President Arty Arteaga, and Dennis Savage, comptroller of the Joint Staff, at the credit union's headquarters in Suitland, Md. The delegation visited to learn more about the operation of American credit unions and how the credit union serves its military members at home and abroad. They toured Andrews' Member Care Center and its newly renovated Allentown Road branch. (Photo provided by Andrews FCU) ...