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CU System briefs (03/14/2014)

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  • OKLAHOMA CITY (3/14/14)--An employee of Tinker FCU, Oklahoma City, was recognized during the credit union's annual employee celebration for her leadership during the May 20 tornado last year. For her service, branch manager Jan Davis received the Kitty Casey Service Champion trophy, named for the $3.1 billion-asset credit union's former senior vice president of operations. After the tornado destroyed the credit union's Moore branch, Davis stayed with the vault to ensure the safe deposit boxes were secure. More than 20 people took shelter in the vault of the Moore branch during the storm. Casey was on hand at the celebration to present the award...
  • MARLBOROUGH, Mass. (3/14/14)--To support a group of nurses who plan to run the Boston Marathon this year in honor of the victims of last year's infamous bombing--many of whom they treated themselves--Harvard University ECU, Cambridge, Mass., with $443 million assets, has donated $1,000 to their cause (Daily CU Scan March 13). The majority of the nurses, who work for the Blake 12 Intensive Care Unit, will run the marathon for the first time under the name "Team Blake." The nurses asked Paul Conners, branch manager for HUECU at Marlborough General Hospital, if they could open an account to begin their fundraising. When Conners relayed the effort on to CEO Gene Foley, the CEO was not only happy they were using the credit union, but he also decided to donate the first $1,000 to the fund...
  • ALBANY, N.Y. (3/14/14)--Larry Hitchcock, CEO of Rome (N.Y.) Teachers FCU, steps down today after 15 years at the $31 million-asset credit union (The Point March 13). Hitchcock has participated actively in statewide credit union events such as the Credit Union Association of New York's CEO Roundtable and Economic Forum during his time with the credit union. William J. Mellin, president/CEO of the state association, said, "Larry is a great example of the cooperative, 'people-helping-people' spirit that makes credit unions so inspiring" ...

Car loans surge at CUs as buyers reach for longer terms, leases

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MADISON, Wis. (3/14/14)--For new-car buyers conforming to the growing trend in auto sales, it might be six years--or 72 months of car payments--before they own their vehicles outright.

As USA Today reported Wednesday, consumers have been selecting lengthier lease terms at a higher clip lately, with six-year loans--or longer--jumping 19% in the fourth quarter, to about 20% of all new vehicle loans.

Just last month about one-third of all new vehicle sales fell into the long-term loan category of 72 months or longer.

"Longer-term loans, coupled with the current low-interest rate environment, increases the affordability of new vehicles for consumers," said J.D. Power in a statement to ABA Banking Journal. "This is resulting in strong demand for new vehicles and also record transaction prices."

Auto loans in general have surged at credit unions recently as well, according to Steve Rick, Credit Union National Association senior economist. While overall loans rose 6% last year, new car loans almost doubled that number at 11.4%.

Leasing also has ramped up, as 26.5% of new car transactions last month were leases, according to J.D. Power's Power Information Network.

One explanation for this new trend in buyer preference could be the rising costs of new cars. The average amount a customer actually paid for a new vehicle last month was $32,319--2% more than last year, according to numbers reported by Kelley Blue Book.

But while these longer-term loans repackage higher price tags into what seem like more affordable deals, in the end, the longer terms leave buyers paying much more for their new rides than they're worth.

Car dealers, meanwhile, are directing the attention of consumers to the monthly payments, rather than total cost, so they can sell the most expensive vehicles possible, Mike Sante, managing editor of Interest.com, told USA Today.

Sante recommends limiting loan terms to four years and saving enough cash to put 20% down on new vehicle purchases.

CO-OP reveals THINK 14 speakers

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RANCHO CUCAMONGA, Calif. (3/14/14)--CO-OP Financial Services has announced the initial slate of speakers for THINK 14, to be held May 19-22 in New Orleans with the theme "It Starts with You."
 
"Consumer expectations of credit unions are higher than ever, driven by innovations in service, technology and branding," said Stan Hollen, CO-OP Financial Services president/CEO. "THINK 14 will bring our industry's leadership new ways to evolve, helping credit unions remain the world's finest financial institutions."
 
THINK 14 speakers scheduled to-date include:
  • Kate Feather, executive vice president of customer experience transformation group at PeopleMetrics; and strategic consultant to Christie's auction house and Coca-Cola;
  • Debbie Millman, president of the design division at Sterling Brands and author of six books, including "Brand Thinking and Other Noble Pursuits;"
  • Mark Thompson, CEO/co-founder of Virgin Unite Mentors, Richard Branson's network for executive coaching and entrepreneurial innovation;
  • Gary Vaynerchuk, an investor and adviser to startups, and a Fortune 500 expert through his work as CEO of Vaynermedia, a social media marketing agency;
  • Tess Vigeland, THINK 14 Conference master of ceremonies, CEO of Tess Vigeland Productions, and former anchor for National Public Radio's "Marketplace" program; and
  • Randi Zuckerberg, former director of market development and spokeswoman for Facebook and CEO of Zuckerberg Media.
Each general session will include a speaker on one specific credit union issue. Presentations will be followed by a case study and a roundtable "THINK It Out" discussion.

Community Promise FCU declares 1st year a success

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KALAMAZOO, Mich. (3/14/14)--While 23 total loans over a 12-month stretch may not raise too many eyebrows, Community Promise FCU, Kalamazoo, Mich., still has labeled the past year a success.

Community Promise, a community development credit union striving to provide financial services to those typically not served by traditional financial institutions, celebrated its one-year anniversary last month.

The $520,000-asset organization will host its first annual meeting Saturday.

"I want the community to know we are here with a better financial alternative than people of low- and moderate-incomes have had," President/CEO Michael Ross told Second Wave (March 13).

The community-minded credit union was created to offer people in poor economic standing an alternative to check-cashing businesses, with a primary focus on promoting financial literacy.

Ross, who spends his evenings working at the credit union for $1 per year, will sit for hours with each loan applicant to assess his or her ability to repay a loan, work on developing a budget, and offer guidance to those who the credit union must turn down.

"If I can help one person improve her situation, I feel I have done something. And if that person pays off the loan from us, we have been successful," Ross told Second Wave.

For 23 people, so far, that success has been achieved.

Dr. James Houston, the first chair of the credit union's board, values adherence to the organization's mission and principles, and sees potential for growth as the organization rolls on. 

"I believe that Community Promise will be considered as a community treasure, as people in Kalamazoo realize the long term effect it is having, and will have, on the low-income citizens of our city," Houston told Second Wave.

Credit union organizations supporting Community Promise include: the National Federation of Community Development Credit Unions; Educational Community CU, Kalamazoo; and First Community FCU, Parchment, Mich.

How Target missed security warning signs: Businessweek

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NEW YORK (3/14/14)--A team of security specialists. A $1.6 million malware detection tool. Compliance with payment card industry (PCI) standards. With these tools in place, retail giant Target still suffered one of the biggest data security breaches late last year.
 
According to a report in Thursday's Bloomberg Businessweek, Target didn't react to the red flags that went up--resulting in the compromise of more than 40 million credit and debit card numbers and 70 million addresses, phone numbers and other personally identifiable information.
 
The hackers' activity was detected Nov. 30 not only by the malware detection tool from FireEye but by security specialists in Bangalore. "Had the company's security team responded when it was supposed to, the theft that has since engulfed Target, touched as many as one in three American consumers, and led to an international manhunt for the hackers never would have happed at all," Businessweek wrote.  
 
The Target data breach cost credit unions an estimated $30.6 million, according to a survey by the Credit Union National Association (CUNA), and future fraud could increase these costs. Credit unions are among the plaintiffs in more than 90 lawsuits that have been filed against Target.
 
In an email to Businessweek, Target Chairman/President/CEO Gregg Steinhafel stated, "Target was certified as meeting the standard for the payment card industry in September 2013. Nonetheless, we suffered a data breach ...  we have already taken significant steps, including beginning the overhaul of our information security structure and the acceleration of our transition to chip-enabled cards."
 
CUNA has asked Congress to address data security relative to merchants, who are not held to the same standards of security as financial institutions. In particular, CUNA suggests all payment system participants are held to comparable levels of federal data security requirements; those responsible for the data breach are responsible for the costs of helping consumers; and ensuring consumers know where their information was breached.
 
The stream of consumer data continues to flow from companies that hold the information of millions of people. Earlier this week, KrebsOnSecurity reported that 200 million consumer records held by Experian had been compromised (March 10).
 
The information was siphoned from Experian, one of the three major U.S. credit bureaus, through a company it had purchased in 2012. That company--Court Ventures--had an agreement to share consumer information with US Info Search and vice versa.
 
Through his connection with Court Ventures, Hieu Minh Ngo, a 24-year-old Vietnamese national, allegedly allowed customers of his identity-theft service to access the data.
 
In the transcript of Ngo's guilty plea in New Hampshire District Court, investigators found that his customers made about 3.1 million inquiries on American consumers over 18 months.
 
KrebsOnSecurity wrote, "At this point the government does not know how many U.S. citizens' [personally identifiable information] was compromised, although that information will be available in the near future," according to U.S. Attorney Arnold Huftalen.

Loan progress 'encouraging' for Ala., Fla. CUs, La Pine says

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BIRMINGHAM, Ala., and TALLAHASSEE, Fla. (3/14/14)--Alabama and Florida credit unions experienced "encouraging" loan growth in 2013, spurred by a $178 million increase in member business lending, the League of Southeastern Credit Unions (LSCU) reported.
 
"When you look at the year as a whole, Alabama and Florida credit unions are truly serving their members and their communities," said LSCU President/CEO Patrick La Pine. "For the first time in years, Alabama and Florida credit unions are at the national growth rates and, in some cases, exceeding the growth rate in key areas like total loans and member business loans. This is especially encouraging in Florida where the Great Recession hit hard."
 
The MBL growth rate in Florida was nearly double from 2012 and nearly twice the national credit union average. Loans as a whole were strong in Florida. The state's 158 credit unions added $1.9 billion in new loans in 2013, $154 million of which were new MBLs.
 
The Credit Union National Association is pressing the U.S. Congress to increase the member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level. CUNA estimates the MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 140,000 new jobs.
 
Rep. Ed Royce (R-Calif.) introduced H.R. 4226 Thursday--a bill that would exempt loans for one- to four-unit non-occupied dwellings from the credit union member business lending cap. (See related story in today's News Now.)
 
Florida had the eighth-highest median loan growth year over year in the U.S. MBL growth was more than 11%, year over year. Florida's net charge-off and delinquent loan rates continued to show improvement, LSCU said. Three years ago both were nearly triple the national credit union average, the league noted.
 
In Alabama, loan growth was steady but improved over 2012. Alabama's 120 credit unions added $385 million in new loans for the year, 24 million of which were new MBLs. Alabama's net charge-off rate and delinquent loan rates remain steady and continue the yearly trend of improving.
 
Collectively, Alabama and Florida's 278 credit unions added $2.2 billion in new assets, 161,000 new members and $2.28 billion in new loans last year.
 
Alabama credit unions welcomed 40,000 new members in 2013 for a record 1.878 million total members.
 
In Florida, credit unions welcomed 121,000 members for 4.716 million total members; just shy of a record. To put this trend into perspective, in three years Alabama and Florida credit unions have increased membership by 312,000 members.
 
To illustrate how credit unions are leaders in their communities, last year Alabama and Florida credit unions added more than 500 new jobs. In Florida, 468 new full-time positions were added at credit unions, while Alabama saw 74 new full-time employees added to payrolls.

Hidden River CEO asserts tax status 'warranted'

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POTTSVILLE, Pa. (3/14/14)--You won't find credit unions listed on any stock exchange. That was among the ways that John H. Murga, president/CEO of $109 million-asset Hidden River CU, Pottsville, Pa., distinguished credit unions from banks in an op-ed piece that appeared in the March 12 issue of the Republican Herald.
 
"Banks...have full access to the capital markets and may sell stock or debt (bonds) in order to raise the capital they need to fund growth," Murga wrote in his commentary, "Tax exemption status warranted."
 
Credit unions are democratically controlled, not-for-profit financial institutions, Murga explained. Unlike shareholders of corporations, member share equally in the credit union. "That's why you're called a member," Murga wrote. "You own it and have a voice in how things are run, no matter how much you have on deposit. There are no customers and certainly no stockholders. As an owner, your opinion matters every time you come through the front door."
 
Capital is returned to members as owners in the form of better rates on products and services, Murga wrote. At a bank, capital and profits are owned exclusively by stockholders.
 
A credit union's board of directors is made up entirely of volunteers elected by the membership. They are leaders who serve the interests of the members, help manage the credit union and are willing to commit hundreds of hours of sincere, dedicated service without pay, Murga noted.
 
It was also banks that asked Congress for taxpayer-funded bailouts during the 2008 financial crisis. "As a movement, we paid for any credit union losses from within the system and from amongst our fellow credit unions with not one cent of taxpayer funds," Murga wrote. "Banks believed then it was the taxpayers' turn to pay their 'fair share.'"

NJCUL wraps up Reality Check conference

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ATLANTIC CITY, N.J. (3/14/14)--The New Jersey Credit Union League wrapped up its three-day Credit Union Reality Check conference Wednesday.

The three-day program started by partnering three Creative You teams--Team Aspire, Greater Team Alliance and Team XCEL--with mentors from the Filene Research Institute to incubate their innovative ideas for New Jersey credit unions (The Daily Exchange March 11).

Bryan Eichenbaum, vice president, sales and lending, United Teletech Financial FCU (left); Beverly Zook, president/CEO, MoneyOne FCU; and Chris Chichester, president/CEO, Jersey Central FCU, took part in the lending panel moderated by Alex Sornoza, calling officer and vice president, sales and business development, Federal Home Loan Bank of New York, during the 2014 Credit Union Reality Check in Atlantic City, N.J. (New Jersey Credit Union League photo)
The three credit unions on the lending panel offered distinct takes on the environment. MoneyOne FCU, $104 million in assets, sticks to what it is good at and outsources what it needs to in order to provide options to its members, said Beverly Zook, president/CEO of the Largo, Md., credit union.

Jersey Central FCU, Cranford, has nearly 50% of its members borrowing from the $17 million-asset credit union, according to President/CEO Chris Chichester. Technological advancements are on the horizon for $317 million-asset United Teletech Financial FCU, Tinton Falls, N.J., said Bryan Eichenbaum, vice president of sales and lending.

All three agreed that there is a story behind every loan application, which highlighted the importance of the "people helping people" philosophy.

Other speakers and their topics included:
  • Author Mike Staver challenged credit unions to be courageous in their leadership and how to strike a balance between logic and "gut feelings."
     
  • Credit unions' priority should be how well they help members manage their financial lives, Aite Group analyst Ron Shevlin told Tuesday's audience. To do that, he said, credit unions must shift their data collection from demographics and attitudes to purchases and behaviors.
     
  • Howard Stoeckel, former president/CEO of the Pennsylvania-based Wawa convenience store chain, gave attendees a sneak peek at his new book, "The Wawa Way: How a Funny Name and Six Core Values Revolutionized Convenience."
     
  • Roger Tutterow, professor of economics at Mercer University, Macon, Ga., assured attendees that despite their doubts, the economy is improving. He tackled job growth, both statewide and nationally, oil prices and inflation trends.
     
  • The conference ended with this thought from executive coach Mike Neill: The service you provide your members will never be better than the service you provide to each other.

CUNA Mutual funds Women's Global Leadership scholarship

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MADISON, Wis. (3/14/14)--With a $20,000 grant, CUNA Mutual Group will fund a scholarship offered through the World Council of Credit Unions' (WOCCU) Women's Global Leadership Network.
 
The WOCCU Global Women's Leadership Network Scholarship aims to further the careers of emerging credit union leaders by supporting projects that solve a problem or meet a credit union and/or a community need.
 
Scholarship candidates who apply can submit their project description at www.CUwomen.org. Successful projects will address a credit union or community need and further the mission of the applicant's credit union. The application deadline is March 28.
 
Beyond the scholarship, CUNA Mutual Group has expanded its support of WOCCU initiatives and recently became the only diamond-level supporter of the organization.
 
"Our expanded support to a longtime partner like WOCCU is a natural extension of CUNA Mutual Group's commitment to credit unions worldwide," said Faye Patzner, CUNA Mutual Group executive vice president and chief administrative officer. 
 
Scholarship candidates will be selected to attend the 2014 Global Women's Leadership Forum and World Credit Union Conference in Australia, July 25-30.