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Two NY CUs serving Ukrainians announce merger

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NEW YORK (2/4/13)--Two credit unions in New York state that serve Ukrainians have decided to merge.

Ukrainian FCU in Rochester, N.Y., with $149.5 million in assets, and Ukrainian Home Dnipro FCU (UHD FCU) in Buffalo, N.Y., with $8.9 million in assets, received regulatory and membership approval to merge, Ukrainian FCU announced on its website.

UHD FCU's single location became a branch of Ukrainian FCU on Jan.1, with the full merger culminating during the next three months.

With the merger, Ukrainian FCU will have seven branches in four states--New York, Massachusetts, California and Oregon.

CU System briefs (02/04/2013)

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  • SAN ANTONIO (2/4/13)--Generations FCU, San Antonio, will host a Small Business Boot Camp, an eight-week series of four classes to provide emerging entrepreneurs with critical information for building a successful business. Classes are from 6 p.m. to 7:30 p.m. on Feb. 7, 21, 28, and March 28. They cover: a Small Business Overview, The Business Plan, Financials and Projections, and Entity Formation. "Small business owners should never have to face the countless hurdles, stress and difficulties by themselves," said David Rodriguez, financial education advocate for Generations FCU. "Our goal is to be their financial advocate, to offer step-by-step assistance throughout the process, and to put them on the right path so they can grow and succeed and in turn our community can grow and succeed" …
  • MADISON, Wis. (2/4/13)--Summit CU, a $1.8 million asset credit union in Madison, Wis., opened a new branch in the city's Memorial High School on Jan. 26. (The Capital Times and Wisconsin State Journal Jan. 31). The student-staffed branch is open only to students and staff during lunch periods. School officials said they hope an on-site credit union will help students learn life skills such as using a checking account and developing financial responsibility. Summit also has an in-school branch at LaFollette High School, which was the first in-school branch in Dane County …
  • CHARLESTON, S.C. (2/4/13)--Latitude 32 CU Friday launched a search for "Lat 32 Crew," a group of community spokespeople in Charleston, S.C. "The goal is not to acquire paid spokespeople for the credit union but rather to give the influencers of our community a voice on the topics they are passionate about," said Latitude 32 President Brad Rustin. The Lat 32 Crew will share with friends and family ways that the credit union has "not only helped them personally, but made an impact in our local community," he said. Surveys indicate that most consumers don't necessarily believe traditional paid advertising any more, said Mark Dudley, vice president of branding and communication for Your Marketing Co., which will handle the project. "We want to encourage members to take ownership of the message of Latitude 32 CU and tell their personal stories on a level that their friends and family understand and relate to," he said. Applications close at 11:59 p.m. March 15 …
  • WICHITA, Kan. (2/4/13)--Catholic Family FCU, based in Wichita, Kan., has chosen Michael Taylor as president/CEO. He has been in the position for about three weeks. Taylor succeeds Marilyn Wells, who retired after 25 years' service with the $27 million asset credit union. Taylor previously was executive vice president and operations manager at Northwest United FCU, a Catholic credit union based in Arvada, Colo. He served there for 10 years. Taylor has 37 years of financial services experience, including 20 in credit unions (Wichita Business Journal Jan. 29) …

MCUE: CU asset, loan growth rates up in 2012 from 2011

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MADISON, Wis. (2/4/13)--Credit union assets and loans grew at a higher rate during 2012 than in 2011, according to a Credit Union National Association economist's analysis of December's monthly sample of credit unions.

"Credit union assets grew 6.5% in 2012, up from 5.1% in 2011, as members rebuilt their personal balance sheets," Steve Rick, CUNA senior economist, told News Now. Year-over-year, "most of the savings growth came in the form of liquid deposits like share-draft and regular-share accounts, which increased 13.2% and 12.5%, respectively.  Record-low interest rates kept share certificate balance growth in negative territory, falling 2.4% over the year."

Monthly increases saw credit union loans outstanding up 0.5% in December, over November. The growth was led by credit cards (2.4%), fixed-rate first mortgages (2%), home equity loans (1%), and new- and used-auto loans, which both grew 0.8%, according to CUNA's Monthly Credit Union Estimates (MCUE). Adjustable-rate mortgages declined 1.1%. Credit union loans totaled $613.1 billion, compared with $587 billion in December 2011.

"Loans staged a modest comeback in 2012, growing 4.5%, up from the 1.1% pace set in 2011," Rick said. "We expect loan growth to maintain this acceleration in 2013, with growth over 5%." 

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Credit union savings balances grew 0.1% in December from November, led by regular shares (0.8%), the MCUE said. Money market accounts and individual retirement accounts each rose 0.4%, while share drafts and one-year certificates declined 1.4% and 0.2%, respectively. Credit union savings tallied $899.5 billion in December--or $54.2 billion more than the $845.3 billion in December 2011.

Regarding asset quality, credit unions' 60-plus-day delinquency rate remained at 1.1% for the past three months.

"Credit quality showed dramatic improvement in 2012 as loan delinquency rates fell from 1.6% in December 2011, to 1.1% in December 2012," Rick said. "With expectations for an improving labor market in 2013, we expect delinquency rates to fall to 0.9%, slightly above the long-run average of 0.8%. Falling loan-loss provisions should keep credit union earnings around 0.9% in 2013." 

The loan-to-savings ratio remained at 68% during December.

The movement's overall capital-to-asset ratio is 10.4%. The total dollar amount of capital is $109 billion.

Maine league meets with state legislative leaders

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PORTLAND, Maine (2/4/13)--The Maine Credit Union League met last week with the president of the Maine Senate, and the speaker of the house in separate meetings at the State House in Augusta, as part of its ongoing efforts to build and strengthen relationships with legislative leaders.

Both meetings were "educational, informational and beneficial," said league President John Murphy (Weekly Update Feb. 1).

"Having an opportunity to sit down with both of the top legislative officers in the Maine House and Senate prior to hearings on any bills or issues we are working on allowed us to outline and communicate our legislative priorities and perspective," Murphy added. "Both leaders appreciated having a discussion on what bills we are working on and may be involved in during the session very early on before the pace of bills and hearings really picks up."

At the meeting with Senate President Justin Alfond, the league highlighted the strength of credit unions and the willingness and readiness of credit unions to lend money. Alfond learned that Maine's credit unions continued to lend throughout the economic crisis and challenges of the past few years.

Alfond recognized the important role that credit unions have in Maine's economy, saying he he would like credit union feedback included in the work of a new Joint Select Committee on Maine's Workforce and Economic Future recently formed by the legislature.

Speaker of the House Mark Eves said he noticed signs at credit unions in his district about having money to lend. That is a good development because it helps consumers and the economy, he added.

On the same day, the league also hosted its final Legislative Breakfast in Augusta. Many legislators from the county attended, and were supportive and spoke proudly of their credit union membership. Every attendee had at least one credit union account.

CO-OP's new venture expands cooperative model vision

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RANCHO CUCAMONGA, Calif. (2/4/13)--With the introduction of CO-OP Sprig last week, CO-OP Financial Services took what it believes is a major step toward creating the virtual credit union branch.

What was once a "pie-in-the-sky" idea--the ability to make transfers from any account to anyone from a mobile device--is fast becoming a reality, especially for consumers who are credit union members.

CO-OP Sprig, CO-OP's version of the virtual branch, is built around credit unions' shared branching model.

"Because of how shared branching is built, we have the ability to move funds between credit unions," said Stan Hollen, CO-OP Financial Service president/CEO. "If you have accounts at different credit unions and those credit unions are connected to the switch, you can move money. If you have the need to make a payment to a friend or neighbor or co-worker, you can make that transfer."

The model offers credit unions a strategic advantage over their banking counterparts in an area of financial services that is primed for growth, according to Hollen.

"There's a lot going on in the payments arena," he said. "It's accelerating. But this is unique. It is something that is special to the credit union industry and it's because of the movement building shared branching."

CO-OP Sprig is the first phase in CO-OP's multi-phase plan to expand the product's person-to-person features and network range into a true digital wallet and beyond, and to make it perform as a virtual credit union branch. In its initial phase, CO-OP Sprig is an in-network solution, allowing members to make transfers between, or payments to, any of their accounts.

Transactions can include savings, checking or loan accounts residing at any credit union participating in CO-OP Shared Branching or connected to CO-OP Connect, the switch that enables CO-OP Sprig. 

In-network "me-to-me" and "me-to-you" payments are supported in this release of CO-OP Sprig, and remote deposit capture via Apple iPhone.

Future phases of the service will include out-of-network "me-to-anyone" payments, a point-of-sale option and remote deposit via Android-enabled smartphones.

Me-to-anyone payments likely will be enabled with a cell phone number or an e-mail address, Hollen said.

Using CO-OP Sprig, credit union members transfer money from their deposit accounts based on real-time good-funds-availability model, rather than the delayed automated clearing house model. Members can make transfers between their accounts and immediately verify funds are available in the destination account.

"It's no different using your smart phone than using your PC at home," Hollen said. "Most credit unions have apps that will lead you straight that credit union's online banking system. While it's called mobile, it's really smart phone access to the Internet."

And the ability of smart phones to connect to the Internet will drive payments growth, including the development of such applications as CO-OP Sprig, Hollen said.

More states propose laws banning surcharges

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WASHINGTON (2/4/13)--Eight states are introducing or considering state legislation that would bar merchants from charging consumers "check out" fees or surcharges on credit card transactions. The surcharges are allowed by an antitrust class action settlement between Visa and MasterCard and a group of merchants.

The Credit Union National Association and the state leagues are monitoring these proposals to see how the rules would impact credit unions.

If the measures pass, the states would join 10 other states already exempt from the $7.2 billion July settlement's provision that, as of Jan. 27, allows merchants in the U.S. and U.S. territories to impose transaction surcharges of between 1.5% and 4% of the cost of the purchase on consumers who use a credit card. (The checkout fee must be equal to what the merchant pays to accept the card, which is typically 1.5% to 3% in the U.S.--not to exceed 4%.)

Bills have been introduced in Hawaii, Illinois, Mississippi, New Jersey and Rhode Island. Legislators in two other states, Pennsylvania and West Virginia, say they are drafting a bill, and there is interest in Vermont as well.

For example, in New Jersey, S-2533, sponsored by Democratic Sens. Jim Whelan, Bob Gordon and Nia H. Gill, would prohibit retailers from imposing a surcharge on those paying with a credit card. Retailers who do so would be subjected to penalties up to $10,000 for the first offense and up to $2,000 for each subsequent offense.  Calling the surcharges "an undue burden on New Jersey families," Whelan noted that nearly one-fourth of all purchases are made with credit cards and a surcharge could  "negatively affect New Jersey's growing consumer confidence" ( Feb. 1 and Jan. 30).

Last week saw a spike in national media reporting on the surcharges, which garnered negative attention from consumers on social media sites and comments to news stories.

Although not all merchants will choose to surcharge, the change affects credit union members and all other consumers using credit cards and could impact financial institutions as a result. The surcharge applies to Visa and MasterCard credit cards only.  Debit, prepaid cards and other company cards such as American Express are not included in the agreement.

The settlement is being opposed in court by other groups of merchants. (See related story in today's News Now, "Appeals court won't review antitrust deal until final lower court decision.")

The original 10 states with laws already on the books outlawing surcharges are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Appeals court won't review antitrust deal until final lower court decision

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NEW YORK (2/4/13)--A U.S. appellate court in New York Thursday denied a motion to reconsider a lower court's preliminary approval of the $7.5 billion interchange fee settlement that MasterCard and Visa signed in July in an antitrust lawsuit filed against them by merchants.

Instead, the U.S. Court of Appeals for the Second Circuit told the group filing the motion they must refile their objections to the settlement after the lower court has made a final decision on the matter.

Credit unions are not involved in the lawsuit, but the landmark settlement's terms would affect them and other financial institutions, said the Credit Union National Association.

The settlement would require a reduced interchange rate fee of 10 basis points for an eight month period, likely beginning mid-2013 and would apply to all card issuers. A few credit unions with active card programs would lose about $50 million in revenues or about 0.5 basis points on their total assets, CUNA said. The interchange revenue enables credit unions to provide card services to members; a temporary reduction in that revenue would not be passed on to consumers by merchants, CUNA said.

The motion to reconsider was brought by a group of merchants that oppose the settlement after the appellate court in December denied their earlier appeal of the preliminary approval by U.S. District Judge John Gleeson.  They include merchants such as Home Depot and organizations such as the National Association of Convenience Stores, National Cooperative Grocers Association, National Grocers Association, the National Restaurant Association, D'Agostino Supermarkets Inc., and more.

"We construe the motion for reconsideration as a motion to review a single-judge order," said the appellate court's order. "Upon due consideration, it is hereby ordered that the motion is denied. Any challenge to the final settlement agreement must be brought in a new notice of appeal. A new notice of appeal must be filed should any of the parties choose to appeal from the district court's final approval of the settlement agreement."

Top 10 News Now stories for January

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MADISON, Wis. (2/4/13)--Articles on the National Credit Union Administration's (NCUA) goals for 2013 and banks targeting credit union taxation were the two most-read News Now stories in January.

Here is the Top 10 stories for the month:

10. Senate student loan bill would allow private debt writeoffs

WASHINGTON (1/28/13)--Legislation that would treat privately issued student loans in bankruptcy the same as other types of private debt was introduced by a group of senators last week.

9. CUNA watches for credit card surcharge change impact

WASHINGTON (1/29/13)--New rules that allow retailers to assess "check out" fees or surcharges on credit card purchases took effect in many states on Jan. 27, and the Credit Union National Association is watching to assess how these rules could impact credit unions.

8. CUs poised to nab bigger share of improved housing market

MADISON, Wis. (1/24/13)--Credit unions are poised to capture an increased share of an improved housing market in 2013--and establish themselves as the primary financial institution of choice for American consumers.

7. Pinterest a flop in banking, but not at CUs

MADISON, Wis. (1/31/13)--Although Pinterest blew into the financial industry with much hype in early 2012, it has mostly been a flop for banks. Credit unions, however, have seen success with it, according to

6. Regulators look at what responsibilities social media use brings for FIs

WASHINGTON (1/23/13)--The National Credit Union Administration and bank regulators have asked for comment as they prepare guidelines for social media use by financial institutions.

5. Operating fee invoices will come out in March

ALEXANDRIA, Va. (1/29/13)--Federal credit union operating fees is the topic of the National Credit Union Administration's most recent Letter to Federal Credit Unions (13-FCU-01); the letter reminds of the agency's action in November that increased the fee for credit unions with more than $1 million by 0.24% and eliminated the fees for those with assets less than or equal to $1 million.

4. CUNA exam survey sees strong CU response

WASHINGTON (1/28/13)--Well over 1,000 credit unions sent in their federal and state examination stories to the Credit Union National Association in response to CUNA's recent survey request.

3. CFPB delays remittance rule effective date

WASHINGTON (1/22/13)--The Consumer Financial Protection Bureau is delaying the effective date of its remittance rule that was set to go into effect Feb. 7.

2. ABA targets tax exemption for 2013, CUNA primed to protect

WASHINGTON (1/25/13)--As if there were any doubts about what the banks are up to this year, an American Bankers Association  lobbyist was quoted today by Bloomberg BNA  that a "chief" goal for banks in 2013 is to push for legislation to change or eliminate the credit union federal tax status.

1. NCUA letter to CUs cites 2013 exam goals

ALEXANDRIA, Va. (1/31/13)--Increased clarity in its guidance to it examiners and more consistency in its examination practices is a key supervisory focus of the National Credit Union Administration this year, said NCUA Chairman Debbie Matz in a Letter to Federally Insured Credit Unions released today.

VolCorp's financials impacted by merger with WVa Corporate

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NASHVILLE, Tenn. (2/4/13)--The Volunteer Corporate CU Friday released its unaudited financial results for the year ended Dec. 31, noting that while strong, the results were impacted by last year's merger with West Virginia Corporate CU.

"VolCorp's financial condition remained strong. VolCorp continued to fulfill its mission by providing favorably priced services to its member credit unions while paying a competitive dividend to its member/owners," said the corporate in a press release. It experienced declines in net income, return on average assets, assets, and net unrealized losses.

Net income for 2012 totaled $2.1 million, with a return on average assets (ROA) of 0.15%. Both are down from 2011's $2.6 million and ROA of 0.22%.

"The most significant contributor to the decrease in net income for 2012 was non-recurring charges related to the merger with West Virginia Corporate CU," said VolCorp's press release.

The National Credit Union Administration approved the merger of the two corporates in a closed board meeting on Jan. 26, 2012 (News Now Feb. 2, 2012).

Other results from the report:

  • Member/owners were paid cash dividends totaling $597,526, representing a 28% payout of VolCorp's net income and a 1% return on their perpetual contributed capital.
  • Assets on Dec. 31 totaled $1.18 billion, a 3% or $33 million decrease from year-end 2011, said VolCorp. Total assets for the year averaged $1.32 billion, an increase of $103 million, or 8% from 2011.
  • Capital adequacy continued to significantly exceed all minimum regulatory requirements, VolCorp said. Total capital, which included $9.3 million in total retained earnings, stood on Dec. 31 at $70.4 million or 5.33% of total assets.
  • Net unrealized losses on securities totaled $183,348--a decline of  91% or $1.966 million from year-end 2011.

Restaurant owner sentenced in St Paul Croatian FCU fraud

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EAST LAKE, Ohio (2/4/13)--An Ohio restaurateur was sentenced  Tuesday to two years in prison and ordered to pay $1.6 million in restitution for his involvement with a loan fraud scheme that led to the failure of East Lake, Ohio-based St. Paul Croatian FCU in 2010.

Bujar "Benny" Sejdic, also known by Burjar Sejdui, 33, had pleaded guilty in October to financial institution fraud, giving gifts for procuring loans and three counts of money laundering ( Jan. 30).

Court documents said that from January 2004 to March 2010, Sejdic received 25 fraudulent loans totaling more than $1.6 million from the credit union. The loans were made under false pretenses, and many loans were made after he already had defaulted on previous loans from the credit union.

In 2009-2010, Sejdic allegedly wired $240,000 from his account at the credit union to an account in Belgrade, Serbia.

Sejdic allegedly gave the credit union's CEO, Anthony Raguz, one check and gifts totaling $40,000 to obtain the loans. 

Raguz is serving a 14-year prison term for accepting bribes, kickbacks and gifts in exchange for loans. He allegedly issued more than 1,000 fraudulent loans totaling more than $70 million to roughly 300 accountholders and accepted more than $1 million in bribes (News Now Nov. 27).

So far, 24 people have been indicted on charges related to the frauds.

The credit union was closed in spring 2010 by the National Credit Union Administration. The frauds cost the National Credit Union Share Insurance Fund more than $170 million.

Topline FCU effort prompts $800K+ in grants for community

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ST. PAUL, Minn. (2/4/13)--TopLine FCU in Maple Grove, Minn., was recognized as an important community partner when Brooklyn Park, Minn., received a $294,000 Affordable Housing Program grant for 2013 from the Federal Home Loan Bank (FHLB).

Click to view larger image TopLine FCU, based in Maple Gove, Minn., joined the city of Brooklyn Park, Minn., Jan. 28, in announcing the city's receipt of a $294,000 Affordable Housing Program 2013 grant. Pictured, from left: TopLine President/CEO Harry Carter, Brooklyn Park Mayor Jeff Lunde, U.S Rep. Erik Paulsen (R-Minn.) and a Federal Home Loan Bank representative. (Photo provided by the Minnesota Credit Union Network)

Topline's involvement was noted during a ceremony on Jan. 28 in Des Moines, Iowa. The new grant brings the total given to Brooklyn Park families through the FHLB-funded program to more than $800,000.

"As one of the city's small businesses, we are proud to be part of this strategy to help individuals fulfill their dreams of owning and maintaining a home," said TopLine President/Harry Carter.

The grant was made available to the city partly due to TopLine FCU's member/owner status with FHLB, and the $326 million asset TopLine's long-standing relationship with Brooklyn Park. The grant follows a 2011 grant of more than $500,000--with which TopLine also was involved.

By working with credit unions and other community institutions, the FHLB provides stable and secure funding to support individuals' dreams of homeownership, said a press releases from the Minnesota Credit Union Network.

The funds come directly from FHLB without using taxpayer dollars and represent 10% of the bank's net earnings. The money is distributed based on a competitive grant process involving communities nationwide. The grants help low-income homeowners maintain their homes, improve energy efficiency and make repairs.

During the ceremony, Carter joined Brooklyn Park Mayor Jeff Lunde and U.S. Rep. Erik Paulsen (R-Minn.) in praising the grant program and its impact on the community. Lunde--noting that this is the second time Brooklyn Park has succeeded with a competitive grant--emphasized that the grants provide crucial funding to support the city's housing strategy to help citizens obtain and retain home ownership.