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Should CUs Offer Portable Account Numbers To Switch FIs?

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IRVING, Texas (3/1/13)--About 61% of U.S. consumers surveyed in a global study want a portable account number that would allow them to switch financial institutions without changing account details. The idea could be a boon--or a bust--for credit unions.

The percentage of U.S. consumers who favored a portable account was the lowest among the six countries, which ranged from 62% in the U.K. to 76% in Spain, according to the online YouGov study conducted by British Telecommunications (BT) Global Services. It surveyed 6,500 people in the U.S., United Kingdom, Germany, France, Hong Kong and Spain.

Switching from banks to credit unions helped prompt 2.2 million new members in a 12-month period surrounding Bank Transfer Day, according to Credit Union National Association statistics. Many credit unions that capitalized on consumers' dissatisfaction with bank fees in 2011 and 2012 helped make it easier for new members to transfer their accounts by offering Switch Banks tool kits.

But to offer a portable account number, credit unions will find that the devil is in the details. The study pointed out that many of those surveyed had mixed feelings about financial institutions sharing their infrastructure and having access to customers' personal information. Roughly 38% said banks sharing infrastructure would be a bad idea even though the idea had the potential to improve competition and make it easier to switch institutions. Roughly 28% were undecided.

"There is clearly an appetite for technology and services which help increase transparency and competition, such as number portability and richer online comparison tools," said Tom Regent, president, global banking and financial markets at BT Global Services. "But there is also a significant level of apprehension around the creation of a shared banking infrastructure."  Consumers, he added, will need "reassurance around security and protection of their data."

Other key findings in the survey:

  • Most respondents did not consider engaging in dialogue or sharing information with their financial institutions over social media channels as a priority. Instead, when asked which three tools they most would like their financial institution to provide, consumers said they wanted more sophisticated online tools such as peer review sections, 32%; webchat facilities, 23%; and "compare-my-bank" type services, 29%.
  • The three most important factors to consumers in considering moving financial institutions were: good online banking facilities, 39%; the presence of a local branch, 45%; and the ability to access banking services 24/7, 29%.
For more information, use the link.

CU System Briefs (03/01/2013)

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  • LAS VEGAS (3/1/13)--Brent Edward Lovett, 50, of Henderson, Nev., was convicted Wednesday in a jury trial of defrauding Lockheed FCU with a $7.5 million commmercial real estate loan (Fox5vegas.com Feb. 27). In 2006, Lovett's company, Bay Resorts International, leased two Las Vegas buildings that later were purchased for $6 million. Another company he allegedly controlled, Equity Resource Inc., then purchased the buildings for $10 million with a loan from the credit union. He was charged with providing false information to obtain a loan and skimming $1.3 million of the proceeds. Lovett faces up to 30 years in prison and a $1 million fine. Sentencing is set for May 29 …
  • LANSING, Mich. (3/1/13)--Leaders from Michigan's Grand River Chapter met Feb. 19 at Grand Rapids Family CU with Marliss McManus, legislative director to U.S. Rep. Bill Huizenga (R-Mich.) to discuss several of the Michigan Credit Union League's  legislative issues, said the league (Michigan Monitor Feb. 25).  Huizenga is a majority member on the U.S. House Financial Services Committee. McManus, shown third from left, handles all financial services industry issues for the congressman. The group discussed regulatory relief including several recent Consumer Financial Protection Bureau proposals; legislation to eliminate the annual mailing requirement for privacy notices, raising the member business lending cap to 27.5% of assets from 12.25%;  supplemental capital, examination fairness and preserving the credit union tax exempt status. The Credit Union National Association has named these issues among its priorities list for 2013, with preserving credit unions' tax exemption as the No. 1 priority.  McManus said government-sponsored enterprise reform is one of Huizenga's top priorities for the year. He is an original co-sponsor of the privacy notices legislation and continues to be a strong supporter of credit unions, the league said. MCUL Director of Government Affairs Jordan Kingdon attended the session …
  • RALEIGH, N.C. (3/1/13)--Tony Almeida, senior advisor to North Carolina Gov. Pat McCrory for jobs and the economy, visited Raleigh-based State Employees' CU to show his support of its participation in the North Carolina Business Committee for Education's Students @ Work Week.  Almeida is shown here speaking to students while Jo Anne Sanford,  SECU board member, and Tim Swinson, vice president of SECU's Centennial Parkway Branch, look on from the far left. Seventeen eighth graders from Daniels Middle School learned the importance of staying in school to further their education. Raleigh-NSCU branch staff coordinated the effort and provided a hands on real-world financial education exercise for the students.  (Photo provided by State Employees' CU) …
  • LEBANON, Conn. (3/1/13)--Edgar Roy Colville III of Lebanon, Conn., died Monday in New London at the age of 82. Colville was a member of the board of the Electric Boat CU (now Charter Oak FCU, Groton, Conn.) for 25 years. He served as board secretary for 22 of those years. A designer with Electric Boat, he revolutionized the communication of information from the field to the design department and from the department to the trades with isometric sketches instead of traditional ortho-graphic projection sketches. He also was active in the Marine Draftsmen's Association, the designers' union, where he served as president for 12 years. He is survived by his wife, one son, a grandson, a brother and a sister …

New CU To Combat Payday Lending With Education

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KALAMAZOO, Mich. (3/1/13)--The newly opened Community Promise FCU in Kalamazoo, Mich., is looking to be an agent of change by using education to combat payday lending abuses targeting the city's low- and middle-income populations.

The Michigan Credit Union League offered advice to the new credit union, as did other credit unions in the state and the Michigan Credit Union Foundation when the credit union was being established. The league will continue to offer advice and support as it does with all small-asset-size credit unions, Mona Shand, MCUL manager of public relations, told News Now.  

To help members obtain a better understanding of borrowing and lending, the community development credit union explains how borrowing money works, said Jim Houston, chairman of the board of directors for Community Promise (mlive.com Feb. 27).

The credit union's lending involves a large educational  component, Lee Kirk, Community Promise director of community relations, told the publication.

Community Promise will teach basic money management skills by working with two organizations--Kalamazoo Public Schools and Communities in Schools of Kalamazoo.

The credit union will help provide members with financial services that are not offered by bigger financial institutions, Kirk told mlive.com.

Those services include: credit-building loans up to $2,500 during a 12-month period; unsecured emergency loans of up to $2,500 for 12 to 24 months; short-terms loans for up to $1,000, to be repaid in six months; auto loans for up to $5,000, to be repaid in 24-, 30- or 36-month terms; and shared secured loans of up to $5,000 to be repaid in up to 60 months.

Community Promise also offers check-cashing services for $3 without a compensating balance, money orders, notary public service, and handling outgoing wire transfers.

A high volume of low-level loans is needed to make the credit union successful, Kirk told the publication. Community Promise is looking to attract 35 new members each month, issue at least 12 loans per month and eventually grow its ranks to 2,000 members, he added.

Other credit union organizations supporting the new credit union include: the National Federation of Community Development Credit Unions, Educational Community CU in Kalamazoo and  First Community FCU in Parchment, Mich., said mlive.com.

To read the article, use the link.

Several CU Mergers Announced

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MADISON, Wis. (3/1/13)--The credit union industry continues to consolidate, with mergers announced in the past week by credit unions in six states. They include:

New Mexico:  Members of Albuquerque-based New Mexico Energy FCU, with $50 million in assets, voted Wednesday night to merge with the $1.29 billion asset New Mexico Educators FCU, also based in Albuquerque. The credit unions' websites said 91% of voting members approved the merger. The merger was attributed to New Mexico Energy's small size, increased competition and economic pressures that affected its growth while expenses rose (Albuquerque Business First Online Feb. 21).

Connecticut:  Charter Oak FCU, a $750 million asset credit union in Groton, Conn., has filed an application with state and federal regulators to merge with Putnam, Conn.-based, $1.2 million asset Quiet Corner Community CU. If approved, Quiet Corner would become Charter Oak's 13th branch in the region. Audrey Lefevre, Quiet Corner manager and treasurer, would remain on staff to head Charter Oak's new operations in Putnam. Quiet Corner has 611 members; Charter Oak has nearly 65,000 members (The Day Feb. 27).

Texas-Kansas: Fort Worth, Texas-based Unity One CU has acquired Argentine CU of Kansas City, Kan. Adding the 1,900-member and $19 million assets of Argentine CU brings Unity One to 24,000 members and more than $212 million in assets (LoneStar Leaguer Feb. 27).

Texas:  Two Fort Worth, Texas-based credit unions will combine, effective May 31 (LoneStar Leaguer Feb. 27). Fort Worth Telco CU will merge with EECU in an effort to provide enhanced product and service offerings to Telco's 5,000 members. EECU serves more than 167,000 members and has nearly $1.5 billion in assets.

Michigan:  The merger of Charlotte, Mich.-based Eaton County Educational CU into East Lansing, Mich.-based Michigan State University FCU is set to take effect on April 1 (SNL Bank and Thrift Daily Feb. 22 and Lansing State Journal Feb. 21).  ECECU has $32.8 million in assets and nearly 4,000 members who work in the county's schools and businesses. Michigan State University has $2.3 billion in assets and about 169,000 members. The merger was approved by state and federal regulators. Earlier this month, about 95% of voting members at ECECU voted for the consolidation. Its leaders proposed the merger as a result of economic conditions that made it challenging to grow. ECECU staff will become MSUFCU employees.

Ohio:  Athena CU, a $14.2 million asset credit union in Springfield, Ohio, will merge into International Harvester Employee CU, a $255 million asset credit union, also located in Springfield.  Board members of both credit unions voted Feb. 20 to merge. The merger will be effective April 1. IHECU has more than 15,800 members and Athena has 1,933 members. Athena's staff will become employees of IHECU.

Young Adults Have Fewer Homes And Cars, Less Debt

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WASHINGTON, D.C. (3/1/13)--Since the Great Recession, young adults have bought fewer homes, purchased fewer cars, and accumulated less debt than they did before the recession, and they are shedding debt faster than older generations, says a Pew Research Center analysis of government data.

For credit unions, this may mean delayed gratification in lending to this group. It also means an opportunity to build relationships with young adults before they get to the end zone in taking out larger loans.

This shedding of debt is an about-face from pre-recession years, when adults younger than age 35 racked up record debt-to-income debt, according to the report, which the Washington, D.C.-based Pew released on Feb. 21. Since the recession, they have shed that debt at a faster rate than older adults-- not because they are paying off the debt, but because they aren't taking on any new debt, including houses and cars.

Pew analyzed Federal Reserve Board and other government data for the report.  It found:

  • The median debt in young adult households dropped 29%  from 2007 to 2010. That compares to an 8% drop among households headed by adults age 35 and older for those years. The share of younger households holding any kind of debt fell to 78%--the lowest level since the government began collecting that data in 1983.
  • Young adults' decline of debt during tough economic times is driven largely by the shrinking percentage of this group who own homes and cars. However, it also "reflects a significant decline in the share who are carrying credit card debt," said the report. This group's credit card debt was 39% in 2010--down from 48% in 2007.
  • Young adults carried more student loan debt after the recession. In 2010, 40% of young adults surveyed owed on a student loan, an increase from 34% in 2007 and 26% in 2001. However, the median owed was less in 2010--about $13,410--than the $14,102 owed three years earlier.
  • Younger households who owned their primary residence fell to 34% in 2011 from 40% in 2007.  The drop accompanied a decline in households with debt secured by residential property. In 2010, their median residential property debt totaled $128,000, compared with $150,000 in 2007.
  • In 2011, roughly 66% of adult households headed by an adult younger than 25 had either a leased or owned vehicle. That compares with 73% four years earlier. For households headed by adults younger than 35 years, 32% owed vehicle debt in 2010, compared with 44% owing that debt three years earlier. The vehicle debt amount also fell--to $10,000 in 2010 from $13,000 in 2007.
  • Younger households pared their credit card balances. In 2010, about 39% carried a balance, down from 48% in 2007 and 50% in 2001. The median owed fell to $1,700 in 2010 from $2,500 in 2001.

LendKey Raises $5K For CUAid With Goodwill Wall At GAC

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WASHINGTON (3/1/13)--
Click to view larger image CUNA Strategic Services provider LendKey donated $5,000 to the National Credit Union Foundation's CU Aid disaster relief program during the Credit Union National Association's Governmental Affairs Conference. From left: Wes Millar,  CSS senior vice president; Jim Merrill, LendKey senior vice president of client services; Vince Passione, LendKey CEO; Tom Candell, NCUF deputy executive director, chief operations officer and chief financial officer; and Christopher Morris, NCUF director of communications. (Photo provided by CUNA)
The small gesture of sharing an individual business card resulted in a large outpouring of support for victims of Hurricane Sandy at the Credit Union National Association's Governmental Affairs Conference in Washington, D.C.

LendKey Technologies, which is a CUNA Strategic Services provider, donated $5,000 to CUAid--the credit union disaster relief fund managed by the National Credit Union Foundation.

The company, formerly known as Fynanz, had pledged a $5 donation for every business card that GAC attendees pinned to the Goodwill Wall in its exhibit hall booth during the convention.

Vince Passione, LendKey CEO, thanked GAC attendees who took the time to visit the booth and support its efforts.

"Our employees, and many of our clients, were in areas hit the hardest by the storm," he said, noting that the contributions would go "toward helping the victims recover fully."

LendKey, based in New York and with offices in Ohio, provides a cloud-based lending platform for credit unions to make private student loans to their members.

Independent ATM Deployers' Top Concerns: Interchange, EMV

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BLOOMINGTON, Ill., and SIOUX FALLS, S.D. (3/1/13)--U.S.-based independent ATM deployers (IADs) say their top concerns are more reduction in interchange fees; network Europay, MasterCard and Visa (EMV) mandates; and further spikes in lawsuits against them about ATM surcharge notices, according to the most recent IAD survey.

However, despite challenges facing IADs, most deployers surveyed say their plans include growing their businesses during the next 12 months.

"I'm not surprised shrinking interchange is the No. 1 concern for ATM deployers," said Bryan Bauer, president of Kahuna ATM Solutions. "Between decreases in the published net interchange rates and the increased popularity in tiered interchange policies, ATM deployers on average have realized a 16% decline in interchange from one year ago, and a 33% decline in interchange over the past six years." 

Some of the survey's major findings were:

  • 63.8% of survey respondents chose 'Further Reduction in Interchange' as their biggest legislative/compliance/network fears, worries or concerns regarding the health of the ATM industry.
  • Complying with EMV migration deadlines was a major concern for IADs with 50% of respondents indicating it is one of their biggest legislative/compliance/network fears, worries or concerns.
  • 64.4% of respondents would like more information on the U.S. EMV requirements, 62.6% are interested in what the cost involved with EMV migration will be, and 40.1% would like to know what the implications of Visa/MasterCard's liability shift will be on the ATM industry.
Co-sponsored by the ATM Industry Association and Kahuna ATM Solutions, the third annual IAD survey covered topics of importance to ATM deployers, including: concerns about the health of the ATM industry; legislative and compliance issues; migration to EMV; mobile payments; deployers' products and services; and the future of U.S. IADs.

To download a copy of the full survey report, use the link.