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CU System briefs (02/05/2013)

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  • CHARLOTTE, N.C. (2/5/13)--The power outage that delayed Sunday night's Super
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    Bowl game between the Baltimore Ravens and the San Francisco 49ers in New Orleans presented an opportunity for business continuity providers. Within minutes of the outage, CUNA Strategic Services provider Agility Recovery Solutions  was reminding everyone on Facebook that disaster strikes "when you least expect it." "This short power outage was yet another reminder that a crisis or disaster can happen at any time, anywhere, and for many organizations those disasters can be quite serious," Scott Teel, Agility Recovery's marketing director, told News Now. He urged credit unions to "take steps to adequately plan for future utility, security, communications and technology failures, as well as the more serious widespread disasters like those caused by Mother Nature." He pointed out a multitude of free, easy-to-use resources available online at www.Ready.gov , www.SBA.gov  and www.PrepareMyBusiness.org. Agility, which provides disaster recovery solutions,  also provides free educational resources specifically for credit unions. It also has an upcoming free webinar on Business Continuity Plan Testing. (Photo provided by Agility Recovery Solutions) …
  • FRIONA, Texas (2/5/13)--John Michael Garibay, 22, of Friona, Texas, was sentenced by a federal judge in Amarillo to 57 months in prison in connection with a robbery of Friona FCU in August.  U.S. District Judge Mary Lou Robinson also ordered Garibay to pay $6,541 in restitution.  The incident occurred when a man wearing a gas mask walked into the credit union and drew a handgun from his waistband. Police trailed the suspect to a mobile home, where they allegedly found items connected with the robbery. Garibay also allegedly told them where to find a pistol used in the holdup (Lubbock Avalanche-Journal Feb. 1) …
  • ALBUQUERQUE, N.M. (2/5/13)--An Albuquerque man, James Charles Mollohan, 35,  was arrested in connection with a robbery Friday of New Mexico Educator's CU, based in Albuquerque. The incident began when a man leaned over the counter and demanded money from a teller. The teller gave him an undisclosed amount of cash and he fled. The teller called police when she thought she recognized a man from another robbery attempt, reported KOB.com (Feb. 1). Police reportedly Tasered the suspect in the credit union's parking lot when they made the arrest ...
  • SAN ANTONIO (2/5/13)--Security Service FCU employees have voted the $6.58 billion asset, San Antonio-based credit union  into a spot in the top 100 American workplaces. SSFCU was ranked 95th out of 872 organizations reviewed, in the category of companies with more than 1,000 employees. The National Top Workplaces list was determined solely by feedback gathered through an objective employee survey. The survey was conducted by WorkplaceDynamics, an on-demand employee survey provider, in conjunction with 30 regional newspapers. The survey uses a proprietary set of 22 questions to rank companies. The award comes after SSFCU was ranked in the top-10 large companies in the city for the second consecutive year in the San Antonio Express News' Top Workplaces 2012 program  (LoneStar Leaguer Feb. 4) ...
  • SCRANTON, Pa. (2/5/13)--Jerome J. "Jerry" McAllister, former CEO of Tobyhanna FCU, Scranton, Pa., died Thursday, said the Pennsylvania Credit Union Association (Life is a Highway Feb. 4). McAllister was born in Scranton. A graduate of Lackawanna College, he was the CEO of the Tobyhanna Army Depot FCU from 1967 to 1996. McAllister was a Navy veteran. Funeral services were held Monday …

Iowa op-ed: Taxes mean losing the only FIs driven by service

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DES MOINES, Iowa (2/5/13)--If credit unions lose their tax-exempt status, the U.S. economy would lose the only financial institutions that are motivated by a desire to serve people, according to an opinion-editorial by the head of the Iowa Credit Union League.

Better rates and lower fees saved Iowans more than $76 million in 2012, wrote Patrick Jury, president/CEO of the Iowa Credit Union league, in a Saturday op-ed in The Gazette.

Defending the credit union tax exemption is the Credit Union National Association's No. 1 priority this year, CUNA President/CEO Bill Cheney has said. Several credit union leagues such as those in Ohio and Oregon are monitoring tax reform proposals in their states.

"Consumers benefit by having credit unions in the financial marketplace," Jury wrote. "While Iowa credit unions make up only 10% of this market, this competition creates a better environment for consumers and keeps bank fees from getting even more outrageous. The bankers do not like this competition, and are attacking the credit union tax status, claiming that increasing taxes on credit unions would help solve America's fiscal woes. Bankers want to raise the taxes of Iowa's credit union member owners."

Banks are pointing to national economic challenges as the rationale to tax credit union members, which just makes their claims more outlandish, Jury added. The idea that the banks would advocate for an increase of taxes--after [the Troubled Asset Relief Program] and the taxpayer bailout--on any Iowan "is self-serving," he said.

"Increasing taxes on credit unions increases taxes on Iowa credit union members," Jury wrote. "Credit unions would have to pass along the increased expense to their members in the form of higher fees, higher loan rates and lower savings dividends. There would be no incentive for credit unions to remain not-for-profit and our economy would lose the only sector of the financial industry that is not driven by profit, but, instead, a dedication to serve its members."

To read the op-ed, use the link.

CU, AmeriCU Mortgage team to build lending

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ST. PAUL, Minn. (2/5/13)--A partnership between HomeTown CU in Owatonna, Minn., and AmeriCU Mortgage Co. is helping bolster new lending relationships in the credit union's community.

The two organizations recently organized an open house for realtors in the area to help the credit union build, strengthen and improve its loan portfolios, according to the Minnesota Credit Union Network.

At the event, representatives in the housing industry met and networked with the credit union's loan officers. The open house also allowed the $107 million asset credit union to educate realtors about available programs and to develop relationships with real estate organizations, MnCUN said.

"This open house event presented a unique opportunity for the credit union to begin to diversify its mortgage lending beyond refinancing, and demonstrate that building relationships with real estate agents and organizations is a key step in finding additional loan sources," said MnCUN Vice President-Network Service Corp. John Ferstl. "The hope is that, through this event, we can create awareness that our strategic alliance partners are willing to work with credit unions and customize ways to improve their bottom line."

AmeriCU Mortgage Co. is a strategic alliance partner of MnCUN. Through MnCUN's Network Service Corp., credit unions have access to products and services that AmeriCU and MnCUN's other strategic alliance partners offer, said MnCUN.

Computerworld features Mich league's CUBE TV

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EAST LANSING, Mich. (2/5/13)--The Michigan Credit Union League's video portal CUBE TV is prominently featured in a Computerworld article about four businesses' success in using videos as a key communications tool.

CUBE TV--CUBE stands for Credit Union Broadcast Experience--was launched in 2008 so the league could provide video content on its website, Dave Adams, MCUL's president/CEO, told the publication (Jan. 23).  It provided updates on the industry, information about league strategic plans and financial performance, and direction to staff and board of directors at about 300 credit unions," he said.

The concept stemmed from the popularity of videos on YouTube. Today, it includes a subsidiary that creates websites and Web content  for credit unions.

"As a trade association, one of our core functions is education and information for our industry," Adams said. The videos focus on the Michigan market but create content that can be shared with other leagues.

Two full-time staffers, a part-timer and one intern are dedicated to CUBE-TV. Two to three others provide regular content such as a monthly video.

The league's first streaming video was inspired by the annual Credit Union National Association Governmental Affairs Conference. The video crew broadcast live from the event  so credit unions could view it from back home and have done so for five years.

CUBE-TV's most popular channel is the Credit Union Compliance Connection, offering 100 vignettes on compliance issues. The site provides 128 videos-- up from 112 in 2011--and was on pace to reach 150 by the end of 2012. Adams said video views increased 200% to 18,000 in 2012 from just over 8,800 the previous year.

Eventually, Adams said, other leagues could plug the videos into their websites and potentially share advertising revenue. Currently, leagues in Georgia and Illinois provide CUBE TV on their websites.

For the full article, use the link.

Filene colloquium: Monopoly, apps, simulations teach fin lit

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ATLANTA (2/5/13)--Credit unions experimented with the board game Monopoly, mobile applications and simulations in pursuit of ways to improve members' financial literacy at the Filene Research Institute's Experiential Learning Colloquium Thursday in Atlanta. 

"Credit unions have always been committed to financial literacy and members' well-being, but traditional outreach, especially to large groups like students and select employee groups, often falls short," said Ben Rogers, Filene research director. 

Filene brought together five experts to explore the foundations of financial literacy and to help credit unions more effectively use the money they spend reaching out to teach members how to make better financial decisions. The emphasis was on experiential learning. Each speaker presented ideas credit unions can use to help their members learn through doing.

Presenters and topics included:

  • Lou Centini--Experiential Learning Foundations. Centini, professor at the University of Virginia's Darden School of Business, explored the theoretical foundations of experiential learning.
  • Tim Vandenberg--Young Tycoons: A Better Way to Teach Math. Vandenberg, an accomplished Monopoly player, star of the 2010 documentary Under the Boardwalk, and sixth-grade teacher, explained how he uses gamification to bring a record number of disadvantaged students past state standards and teaches them to love math along the way.
  • Jason Young and Ty Moore--Revolutionizing Financial Capability through Mobile Gaming. Mindblown Labs' Young, the founding partner, and Moore, director of business development, discussed how the app revolution makes it easier and more fun to learn financial life skills.
  • Lance Palmer--VITA Sites and Joint Learning. Palmer, associate professor of housing and consumer economics at the University of Georgia, demonstrated how helping credit union members during tax time can benefit volunteers who help, members who learn, and the credit union that serves both.
  • Lois Kitsch--Life Simulation. Kitsch, national program director, National Credit Union Foundation (NCUF), presented The Life Simulation experience, which is designed to help credit union employees, volunteers and leaders understand what it's like to live in a typical low-income family trying to survive from month to month.
The event was presented through support from CO-OP Financial Services and the NCUF.

CUNA Mutual: Six steps to prep for cyber attacks

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MADISON, Wis. (2/5/13)--Distributed denial of service (DDoS) attacks that hit 22 banks as well as two credit unions in California and Texas have prompted advice from CUNA Mutual Group on how to prepare for cyber attacks.

Ken Otsuka, risk management senior consultant for CUNA Mutual Group, noted that the scale and speed of the recent attacks were unprecedented. He defines DDoS attacks as attempts to disrupt or suspend online service by saturating the target's network with external communication requests to overload its server.

Although some hacktivists have called off them off  the attacks, other groups use DDoS attacks as smokescreens for diverting funds from consumers' accounts.

Otsuka advised credit unions to take six steps:

  1. Don't underestimate the threat of cyber attacks.  "It's true that most credit unions don't face the same risk as national banks from attacks by high profile cybercriminal groups. But the first thing to understand about cyber attacks is that we can't predict the next type of attack to come along," he said. "Don't bet on behalf of your members that your credit union isn't big enough to be a target."
  1. Mitigate the risk of service interruptions caused by DDoS.  Although credit unions can't prevent such attacks, they can establish a process to identify them. Monitor bandwidth usage, use firewall logs to determine what is under attack, and employ an intrusion detection system to identify the type of traffic.
  1. Perform due diligence on third-party service providers. Ensure that third parties  such as Internet service providers and Web hosts address website problems caused by the attacks-- and that they have a contingency plan for these.
  1. Be prepared to provide timely and accurate information to members. Have a plan to get the word out. The faster you do so, the better you can control the message and counter any rumors or misconceptions about what is happening.  Monitor social media to find out what is said in cyberspace about any interruption to online services. You may need extra staff or third-party help to work the phones and contact local media to make sure members get correct information.
  1. Check transfers initiated via online banking when an attack occurs. If staff are busy answering calls from members who can't access the website or initiating damange control, they may not notice fraudulent transactions initiated through online banking.  When a DDoS occurs, review online banking transactions. If necessary, delay executing the transfers until their legitimacy is verified.
  1. Have a strong multi-factor authentication method in place for online banking systems. The authentication process should comply with the Federal Financial Institution Examination Council's updated authentication guidance issued in 2011. It expects financial institutions to have a fraud monitoring system  to detect anomalies in initial logins and authentication of members requesting online banking access to system, and in  fund transfers  initiated to others.

Mergers announced in four states

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MADISON, Wis. (2/5/13)--Credit union mergers or intentions to merge have been announced in four states in a continuation of the consolidations trend. 

The mergers include:

  • Metro CU, based in Chelsea, Mass., with $1.036 billion in assets, plans to acquire Ashland, Mass.-based Fenwal CU, with $1.8 million in assets (SNL Bank and Thrift Daily Jan. 18). It is anticipated the merger will be finalized in March. Fenwal's one branch will close and its two employees will join Metro CU's staff.
  • Postal Employees CU in Brockton, Mass., with $10.5 million in assets, intends to merge into Crescent CU in Brockton, with $411 million in assets (Enterprisenews.com Feb. 1). Crescent CU has nearly 47,000 members and eight branches in the three Massachusetts cities. Postal Employees CU has one branch inside the Brockton post office and 1,890 members.
  • The $212 million asset Garden Savings FCU in Parsippany, N.J., and Denville, N.J.-based NWNJ FCU, with $2.2 million in assets, announced they have merged, effective last Friday. The credit unions will operate under the Garden Savings name. Garden Savings' 21,000 members will be joined by NWNJ FCU's 700-plus members, Garden Savings said in a press release Friday.
  • The $192.5 million asset Rio Grande CU based in Albuquerque, N.M., acquired Albuquerque-based New Mexico Central CU, with $25 million in assets, in a deal that finalized the account conversion on Dec. 15. The grand opening of the merged credit union occurred Jan. 19 (SNL Bank and Thrift Daily Jan. 16). The merger created an institution with 23,000 members and $228 million in assets.
  • San Francisco Fire CU, with $880.5 million in assets, completed its acquisition last month of the $12.8 million asset San Francisco-based Bay Media FCU (SNL Bank and Thrift Daily Jan. 16). With the merger, San Francisco Fire CU adds one branch for a total of four--three in San Francisco and one in Pacifica.
  • San Jose, Calif.-based Electric FCU, with $11.5 million in assets, has merged into the $352.3 million asset Alliance CU in San Jose (SNL Bank and Thrift Daily Jan. 16).

Securities industry claims NCUA suits vs Wall St banks too late

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DENVER (2/5/13)--An amicus brief filed Friday by The Securities Industry and Financial Markets Association (SIFMA) argues that the National Credit Union Administration's lawsuits against Wall Street banks over sales of residential mortgage-backed securities to corporate credit unions were not filed in time and should be reversed.

SIFMA's brief was filed in the U.S. Court of Appeals for the Tenth Circuit in Denver. The appellate court is reviewing whether NCUA filed its lawsuit against RBS Securities within the  proper statutes of repose and whether the agency should be permitted to extend the time limits  via statutes of repose and limitation. A July 25 decision by the lower U.S. District Court in Wichita, Kan., had ruled that NCUA could proceed with its case.

In its brief, SIFMA maintains that NCUA did not bring its claims against the banks within the three-year statute of repose period required to file a civil suit. Instead, NCUA used an Extender Statute that extends the time period it is allowed to file a case. However, the Extender Statute "clearly and unambiguously does not apply to statutes of repose because it does not even mention them," said SIFMA.

"This case has far-reaching significance not only for SIFMA's members but also for the securities industry as a whole," said the brief. "The NCUA, the [Federal Deposit Insurance Corp.] and the Federal Housing Finance Agency have commenced more than 20 actions against financial institutions concerning the sale of more than $200 billion of residential mortgage backed securities, and seek to apply the same or similar extender statutes to Securities Act claims based on the same incorrect construction" used by the lower court in Kansas.

SIFMA said the lower court failed to "follow the plain language of the Extender Statute, and to recognize that it modifies only 'the applicable statute of limitations' for the NCUA's claims" and not the statute of repose.

NCUA's suits--against RBS Securities, Wachovia Capital Markets LLOC and Wachovia Mortgage Loan and Goldman Sachs, JP Morgan Chase, UBS Securities, Barclay's Capital and Credit Suisse Securities and more--claim they misrepresented and omitted material facts in documents presented to five corporate credit unions in a "systemic disregard of underwriting guidelines." The corporates' investments led to their collapse in 2009.

SECU invests $25M in NCUF Charitable Trust

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RALEIGH, N.C. (2/5/13)--State Employees' CU invested $25 million in a Charitable Lead Trust to benefit the National Credit Union Foundation and the Carolinas Credit Union Foundation.

State Employees' CU, Raleigh, N.C., invested $25 million in a Charitable Lead Trust created by MEMBERS Trust Co. The investment will generate an annual contribution of about $125,000 each for the National Credit Union Foundation and Carolinas Credit Union Foundation. From left, are: Tom Walker, MEMBERS Trust Co. president/CEO; McKinley Wooten, SECU board chair; and Bucky Sebastian, NCUF executive director. (Photo provided by State Employees' CU)
The trust will generate an annual contribution of about $125,000 each for NCUF and CCUF. 

"Our credit union's $25 million investment provides members with an opportunity to address the financial needs of foundations serving the credit union industry at the national and local level," said McKinley Wooten, board chairman of Raleigh, N.C.-based SECU.

Charitable Lead Trusts are commonly used by donors to make charitable contributions. They are structured to allow donors to create customized charitable gifts and investment plans. 

Under the terms of the NCUF Charitable Trust, MEMBERS Trust Co. FSB will act as the trustee and asset manager. Since 1987, MEMBERS Trust Co. FSB has been cooperatively owned and managed by credit unions nationwide, including the $25 billion asset SECU. 

Two SECU senior executives serve as board members of Charitable Lead Trust partner organizations. Mark Twisdale, SECU Foundation executive director and SECU senior vice president of human resources, serves as an NCUF board member, and Bill Umphlett, SECU senior vice president of financial advisory services, serves on the MEMBERS Trust Co. board.