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Kansas FOM bill substitute moves to full House

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TOPEKA, Kan. (3/26/08)--A Kansas House committee Tuesday approved a substitute for a banker-backed Senate bill that would limit the geographic area served by credit unions, and create new standards for branching, mergers and field-of-membership (FOM) changes. The Substitute for Senate Bill 535 now goes to the full state House of Representatives, which has until April 5 to debate and decide on the legislation. “Philosophically, it is my belief and the belief of our industry that credit unions in Kansas have not done anything wrong and that clarification of terms was all that was called for by the Interim Committee," Kansas Credit Union Association (KCUA) President Marla Marsh told the House Insurance and Financial Institutions Committee yesterday. "That being said, we have agreed to the language in Substitute for SB 535.” Marsh appeared at the hearing as a neutral conferee. The Kansas Bankers Association introduced the legislation, and the bill was heavily amended to reflect language agreed up on by KCUA before it passed the Kansas Senate, 35 to 2. Though the substitute is a compromise, strategic grassroots efforts by the Kansas credit union movement allowed KCUA to negotiate from a position of strength to secure in the statute FOM options that reflect Kansas’ unique situation, said KCUA. State- and federally chartered credit unions collected and distributed more than 21,000 petitions; held a rally attended by more than 300 members supporting the cause, and conducted an extensive legislator contact campaign. Though KCUA does not stand in support of or opposition to the legislation, it should remove any further legislative or legal threats and will provide a long-term standard for interpreting the Kansas FOM statute, KCUA said. The substitute bill would:
* Grandfather all existing credit union members and their immediate family members, all existing occupational and associational groups, current geographic fields of membership up to one million in population, and all current branch counties; * Outline geographic FOM limitations of up to 500,000 in population using multiple contiguous political jurisdictions for credit unions not headquartered in a metropolitan statistical area (MSA); * Limit credit unions headquartered in an MSA to that MSA plus the counties that share an immediate border until they hit one million in population; * Provide an escalator formula to allow for population growth in MSA areas; and * Continue to allow for multiple common bonds, given that the occupational and associational groups are located within the geographic field of membership.
Sub for SB 535 would immediately impact nine state-chartered credit unions, which must restrict their current geographic fields of membership because they currently extend beyond the one million in population limit. They are:.
* Boeing Wichita CU, Wichita; * Credit Union 1 of Kansas, Topeka; * Credit Unions United, Topeka; * Education CU, Topeka; * Golden Plains CU, Garden City; * Hutchinson CU, Hutchinson; * Kansas Super Chief CU, Topeka; * Medical Community CU, Wichita: and * Mid-American CU, Wichita.
“Moving forward, the credit union industry in Kansas will not be able to grow and expand as freely as they have in the past to serve their members and Kansas consumers,” Marsh said. If passed, the portions of the legislation addressing future FOM changes would go into effect July 1. The grandfathering portion of the legislation would go into effect on Jan. 1, 2009, to give Kansas state-chartered credit unions and the Kansas Department of Credit Unions time to comply with the changes. “With this legislative battle put behind us, Kansas credit unions can get back to doing what they do best--serving their members and Kansas consumers," Marsh said. "Our industry can now wholly focus on their mission of “people helping people,” a mission that is more important than ever as the economy continues to struggle.”

CU System briefs (03/25/2008)

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WINDSOR LOCKS, Conn. (3/26/08)--Windsor-based 360 FCU teamed up with Alcorn School Family Resource Center to offer a six-week financial literacy course for parents. The course covered financial issues such as creating a budget, accounts, improving credit, loans and credit cards. Karen Bauer, vice president of lending at the $165 million asset credit union, taught the course, with other staff attending to offer information. President/CEO Bob Aresti conducted a presentation on savings accounts. After they completed the course, these participants were awarded a voucher with $10 toward a new savings or checking account at the credit union. The Family Resource Center provided dinner and child care for participants. (Photo provided by 360 FCU) … * WALNUT CREEK, Calif. (3/26/08)--Pacific Service CU has funded the KING (Kids Incorporating Neighborhood Gardens) Leadership program at the Fresno (Calif.) Police Activities League (PAL). The program mentors children living in high-crime areas. It teaches them good behavior and positive choices, and provides a way to work together to clean up low-income neighborhoods. The program started as an after-school detention project. It evolved from a punishment focus to one of reward for good grades and good behavior. Pacific Service CU has more than $1 billion in assets and is headquartered in Walnut Creek, Calif. … * ANCHORAGE, Alaska (3/26/08)--A suspect in a robbery spree and carjacking in Anchorage committed suicide after being cornered in a motor home by police. Police said the man, Michael Ray Stith, 50, died of a self-inflicted gunshot wound (Associated Press Newswires (March 24). Stith was wanted in connection with a robbery Sunday of a credit union and a carjacking; a robbery of a retail store on Saturday; and a holdup at a hotel on Thursday. Stith was convicted of shooting and injuring a policeman 25 years ago and did time in prison for bank robbery and assault …

Iowa CUs working on student loan contingency plan

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DES MOINES, Iowa (3/26/08)--Iowa's credit unions are partnering with the Iowa Student Loan Liquidity Corp. (ISL) to create a contingency plan that would provide student loans even if the national credit crunch doesn't improve soon. Up to 20 companies throughout the nation that specialize in student loans have pulled out of the market because of the impact the subprime home mortgages had on other credit markets, including student loans. ISL had announced it would quit offering private student loans in April, which would affect the funding of 26,000 college students in Iowa, according to the Des Moines Register (March 13). According to the Iowa Credit Union League, credit unions will help to mitigate the impact of the potential shortage by holding federally guaranteed student loan assets on their books. ISL will continue to act as the origination and repayment servicer in a turnkey process for Iowa's credit unions. So far, about 10 credit unions are partnering with ISL. ISL is a private, nonprofit corporation whose mission since 1979 has been to help students and their parents obtain financing for post-secondary school education. The credit unions have made commitments to fund several million dollars in student loans from their portfolios and are committing to making and retaining ownership of future guaranteed student loans with the option to have ISL purchase these loans when funding becomes available, said the league. "We are very pleased that Iowa credit unions are stepping in to help us provide Iowa students with financial support," said Steve McCullough, president/CEO of ISL. Patrick Jury, league CEO, noted that Iowa's credit unions "are constantly working to serve Iowans, and we are pleased to be able to provide Iowa's students with the financial support they need to fulfill their dreams."

Power keynoters at Americas CU Conference and Expo

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MADISON, Wis. (3/26/08)--As credit unions look for strategies to grow their membership and models for business success, they might take a lesson from keynoters at the America’s Credit Union Conference & Expo (ACUC&E). HGTV co-founder Susan Packard’s will deliver the keynote address at the ACUC&E, which will be held June 29-July 2, in New York, N.Y. The conference is sponsored by the Credit Union National Association. Home and Garden Television thrived in a marketplace dominated by media giants and is now available in more than 90 million U.S. homes and distributed in 170 countries and nations. During “Now What? Innovating Ideas into Icons,” Packard will explain how she helped grow HGTV into a brand that changed the way people envision their homes. Attendees will also learn how HGTV evolved into a multi-billion dollar media division that now includes four additional lifestyle networks--The Food Network, DIY Network, Fine Living TV Network, and Great American Country--as well as books, DVDs, websites, and TV personalities. The lineup of power keynote speakers also includes:
* Richard Picciotto, retired fire chief of the New York Fire Department (FDNY), will offer an eyewitness account of the events of Sept. 11 and a tribute to the lives lost that day, during “Last Man Down: A Firefighter’s Story.” He also will illustrate how the department’s training strategies and tactics work to develop leadership, motivation, risk management, and decision making. Attendees will learn how the skills used by the FDNY to make life and death decisions can benefit their organizations. * Steve Farber, author of “The Radical Leap: A Personal Lesson in Extreme Leadership,” will explain why people respond to significant, meaningful, and dramatic action, and will show how to use the LEAP framework (Love, Energy, Audacity and Proof) to improve credit unions and lives. Attendees will learn to become an “extreme leader” with the ability to transform good into great during “The Radical Leap: Extreme Leadership at Work and Beyond.” * Author Dan Heath will present “Made to Stick: Why Some Ideas Survive and Others Die.” Heath will outline the principles of successful ideas at work, and explain how to apply these rules to make messages stick. He also will reveal his methods for making ideas stickier, by using the “Velcro Theory of Memory” and creating curiosity gaps.
For more information on the ACUC&E or to register, use the link.

N.J. league teams with Adopt-a-Soldier Platoon

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HIGHTSTOWN, N.J. (3/26/08)--The New Jersey Credit Union League (NJCUL) is partnering with Adopt-a-Soldier Platoon to help make sure that the New Jersey National Guard soldiers and their families have everything they need. About 3,000 state soldiers are deployed in Iraq. Adopt-a-Soldier Platoon was started in April 2003 and was incorporated into the state on May 19, 2007. The NJCUL’s partnership with the organization has the following goals, according to the league:
* To support the soldiers in Iraq with care cartons of personal items, snacks and other goodies to make then feel special and loved; and * To provide support to families at home who are having difficulties because the man or woman of the house is not around. This support could entail everything from raking leaves and cleaning the house to going shopping and picking up laundry--whatever a military family might need.
The league is encouraging all New Jersey credit unions to participate in the effort. The league will provide more information and marketing materials, and will serve as a drop-off for the care cartons.

Under 30 group starts Gen Y product development

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MADISON, Wis. (3/26/08)--The Filene “30 Under 30” group dubs itself an entrepreneurial SWAT team that undertakes the challenge of generating solutions for how credit unions can better connect with young consumers. The volunteer group comprises credit union professionals nationwide
Chad Warneke, left, of Oregonians FCU, Portland Ore., and Matt Davis of Members CU, Winston-Salem, N.C, competed over a fierce game of Wii bowling at a Filene 30 Under 30 meeting this month in Chicago. (Photo provided by Filene Research Institute)
who met this month in Chicago to discuss problems credit unions face and how to create solutions to them. Professionals divided into 10 small teams at the three-day event and chose research topics that address overall program goals for bringing younger members, professionals and volunteers to credit unions. Each sub-group will spend the next eight months developing a plan around a program or product. All the plans will be presented to the credit union market in November at a follow-up meeting and then published. Credit unions offer excellent products for young adults--they just need to deliver them better, said Peter Tufano, Sylvan C. Coleman professor of financial management at Harvard Business School and Filene fellow. Savings programs especially must be bundled for most young adults to take them seriously, he added. “It’s like telling kids that if they eat their vegetables, they can get dessert,” Tufano said. “It should be as easy to open an account as it is to buy a plasma screen at Best Buy.” Other finance, marketing, and Gen Y experts expanded on the challenges and traits of this demographic. They included:
* Anya Kamenetz, author, “Generation Debt”; * Jeremy Mullman, reporter, Advertising Age; * Trey Reeme, channel integrator, TDECU and former blogger, OpenSourceCU; * Chris Resto, author, “Recruit or Die” and MIT job placement specialist; * Susan Follick, director, Project New Age, PSCU Financial Services; * Bryan Sims, founder/CEO, brassMEDIA; and * Jeff Jordan, chief operating officer, Funding Universe.
“This generation doesn’t understand credit unions at all,” said Kamenetz. Credit unions should emulate the no-nonsense design of online players like Vanguard and Facebook if they want to capture young adults’ attention, she added. “We’re all used to being the youngest people in the group at credit union events,” said Ben Rogers, driver of Filene’s CU Tomorrow program and director of the 30 Under 30 leadership group. “It’s refreshing to see how much young talent the industry really has and to get both energy and new ideas in the same place at the same time.” 30 Under 30 members include:
* Alex Alexander, Municipal Employees CU of Baltimore; * Dustin Allen, Weber State CU; * Megan Armstrong, Sunmark CU; * Avery Cashman, Service 1st FCU; * Julie Cosgrove, Affinity Plus CU; * Christopher Danvers, Delta Community CU; * Matt Davis, Members CU; * Mike Escudero, Seattle Metropolitan CU; * Christina Gaglione, Affinity CU; * Erin Hamilton, NASA FCU; * Kia Herd, Alliant CU; * Robin Hickey, First Financial FCU; * Melissa Troiano, DOT FCU; * Brandon Kelly, E FCU; * Dustin Limburg, Wright-Patt CU; * Tanya Magnus, First South CU; * Brie McCarthy, Coors CU; * Brandi Melo, Rocky Mountain CU; * Brandon Michaels, San Francisco Fire CU; * Katherine Miller, Navy FCU; * Toni Montgomery, Americhoice CU; * Rachael Parrent, Vantage CU; * Carma Parrish, Perfect Circle CU; * Jansen Perdue, Hoosier Hills CU; * Jeremy Presta, Park Side FCU; * Megan Primeau, US FCU; * Matthew Prosneski, Travis CU; * Matthew Schewe, UW CU; * Amy Stanton, Connex CU; and * Chad Warneke, Oregonians FCU.
For more information about 30 Under 30 or CU Tomorrow, use the link.

Pennsylvania system reports strong fourth quarter

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HARRISBURG, Pa. (3/26/08)--The Pennsylvania credit union system had strong financial results during fourth quarter, reported the Pennsylvania Credit Union Association (PCUA). The Fourth Quarter 2007 Pennsylvania Profile showed that despite the turmoil in the nation's financial market, assets in Pennsylvania credit unions grew 7%--the fastest growth since 2003--to $25.8 billion. The median asset size of the state's 599 credit unions was $6.7 million (Life is a Highway March 25). Loan delinquencies, chargeoffs, and total bankrupcties were below the national average, said PCUA, indicating credit unions' asset quality held up to the challenge of the nation's housing crisis. Auto lending, especially for new autos, slowed, but the credit unions in the state increased their used-auto loans by 5%, compared with 1.7% growth nationwide. Member business loans (MBL) at Pennsylvania's credit unions grew nearly 25%--more than the overall 17% growth rate for credit unions nationwide. Credit unions with assets between $20 million and $100 million experienced the most growth in MBLs.

Southeast Corporate rating affirmed outlook stable

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TALLAHASSEE, Fla. (3/26/08)--Southeast Corporate FCU's ratings have been reaffirmed by Fitch Ratings with and outlook reaffirmed as "stable." Fitch Ratings announced a long-term rating of "AA-" and a short-term rating of "F1+," the same ratings as its ratings for the previous period. The ratings reflect the Tallahassee-based corporate's low-risk profile, highly liquid balance sheet and adequate earnings performance, Fitch said. "Southeast continues to fulfill its mission as a corporate credit union, maintaining a conservative investment philosophy and robust risk management practices," Fitch said in a press release. The corporate's investment portfolio is of very high quality, said Fitch, which also acknowledged some limited but "acceptable" subprime exposure. Bill Birdwell, president/CEO of Southeast Corporate said the rating "testifies to the vigorous analysis our staff performs and our ongoing attention to ensuring a strong, well-managed portfolio and ample liquidity." The corporate has no investments in collateralized debt obligations, commercial mortgage backed securities, extendable commercial paper or structured investment vehicles. It has 2.9% of investments in subprime mortgages, which are limited to highly rated securities, according to a portfolio snapshot on Southeast Corporate's website. Most of Southeast's securities portfolio is in structured securities. Southeast Corporate also released its financials for Feb. 29. Assets rose 25% to $4.907 billion from $3.932 billion on Dec. 31. Total revenue increased 48% to nearly $5.5 million at the end of February, compared with $3.692 million at the end of December. Net income rose 204% to $1.955 million from $644,000 in December. For more information, use the link.

Florida CUs team with NBC 6 to share CU difference

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PEMBROKE PINES, Fla. (3/26/08)--Eight credit unions in South Florida have teamed up with NBC 6, a television station in South Florida, to produce television commercials that began airing this month as part of the station's credit union awareness campaign related to the 100th anniversary of credit unions. The 30-second commercials, produced by NBC 6, focus on the benefits that using a credit union brings to consumers. Power Financial CU, based in Pembroke Pines, has unveiled a commercial that already has begun airing. The ads feature a 20-second message about the credit union difference, followed by a 10-second tag featuring Power Financial CU. For 21 consecutive years, credit unions nationwide have ranked No. 1 in consumer satisfaction. "It's time to let South Florida know about the secrets of our success," said Allan M. Prindle, president/CEO of The $455.3 million asset Power Financial CU. "Not only do we pride ourselves in outstanding customer service, but we also offer lower loan rates, higher dividend rates and fewer fees than our big bank neighbors," Prindle said. "In addition, South Florida is our roots. We have been locally owned and operated for our entire 56 years of business by our membership. The amount of time we have been in business and the fact that we are owned by our members and not shareholders makes us very unique." NBC 6 is offering a web page,, that offers information on credit unions, videos, links to area credit unions and a toll-free phone number for details. The web page also indicates that credit union members in Florida receive a direct benefit of $409 each year per household, adding up to more than $970 million in annual savings for consumers in the Sunshine State. The commercials will run through August. For a list of credit unions involved in the project, use the link.