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NY CU Loan Growth Up 50%, Says CUANY

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ALBANY, N.Y. (3/29/13)--Credit unions across New York State continued to post strong financial performance and exceed national averages in many key categories during fourth quarter 2012, said the Credit Union Association of New York.

Data show that New York credit unions are growing and lending at a pace that far exceeds national averages. Most notably, New York credit unions had annual outstanding loan growth of 6.5% in 2012, significantly higher than the national average of 4.5%. Loans to businesses were up by 14.6% over 2011 totals.

"This report clearly shows that credit unions are playing a significant role in helping grow the economy and provide critical funds to families and businesses in the communities they serve," said William Mellin, CUANY president/CEO. "Credit unions are truly about people helping people--and having New York outpace national trends demonstrates that New York consumers understand this philosophy more and more each year."

Other highlights:

  • Annual growth figures for assets, shares, members and loans in 2012 exceeded national averages, and the average member relationship increased.
  • Credit unions in New York saw share balances rise 7.8%, faster than the national average of 6.1%. Regular shares, money market accounts and share drafts grew at a double-digit annual pace.
  • Asset quality for the state's credit unions improved. The overall delinquency rate was 1.26%, which is below the local bank average.
  • Capital levels remained high at New York credit unions at 11.3% of assets. This is a higher level than New York banks and thrifts, as well as credit unions and banks nationwide.
  • Business loans at New York credit unions increased 14.6% from 2011, with member business loan originations totaling nearly $3 billion in 2012.
CUANY said the data are from a quarterly Credit Union Performance and Trends Report by Callahan & Associates.

Banks' Customer Service No Match For CUs--Tempkin Survey

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WABAN, Mass. (3/29/13)--Credit unions still lead the banking sector by a sizeable margin in customer experience, even though customer service has improved overall in the banking sector, according to the just-released 2013 Temkin Experience Ratings.

"Credit unions take first place in the industry for the second straight year with a rating of 79%," said Waban, Mass.-based Temkin Group. Credit unions are well above the banking sector's average score of 68.6%.

Credit unions led in two out of three evaluation areas: Functional (can member/customers do what they want to do) and Accessible (how easy it is to work with the company). USAA, which got the second highest banking sector score at 78%, led in the third area, Emotional (how consumers feel about their interactions).

"Credit unions and USAA continue to lead the banking industry in customer experience, but the entire sector is making great progress," said Bruce Temkin, managing partner at Temkin Group.

Tempkin noted that the banking industry has steadily improved the past three years, from an average rating of 62% in 2011 to this year's 68.6%.  HSBC (57% score)  and Capital One (62%) and Bank of America (63%) were the lowest-ranked banks.

Ratings for two of the banks declined since 2011. PNC lost six percentage points, while HSBC lost one point.

The banking industry earned the fifth highest average rating out of 19 industries served. Scoring higher than the banking sector were grocery chains, fast food chains, parcel delivery services and retailers.

The results are based on a study of 10,000 U.S. consumers. Credit unions already are getting positive headlines in media because of the survey. The Sacramento Bee, the Birmingham Business Journal, and The FinancialBrand.com reported on the study this week.

Last year, credit unions topped a number of customer service ranking studies.

Decision To Drop Exam Appeal Was For Good Of All, Says CEO

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OAK HARBOR, Ohio (3/29/13)--Commodore Perry FCU's decision to withdraw its appeal of a National Credit Union Administration examination "was based, in large part, on the belief that the needs of the industry were more important than the CAMEL scores were to us," said Commodore Perry FCU CEO Thomas Renz Thursday.

"Our hope is that by extending an olive branch, so to speak, the NCUA will allow us to work with them to share what we have learned in a positive way to strengthen a critical process," Renz told News Now Thursday in an e-mail.

The Oak Harbor, Ohio-based, $32 million asset credit union had contested the results of a 2011 examination in which it received its lowest CAMEL rating ever. It maintained the low rating was retribution after it reported the conduct of an examiner and that the final examination contained factually incorrect findings. However, NCUA received a letter from Renz on Tuesday withdrawing the appeal.

"It is our absolute desire to work with the NCUA to share what we have learned," he said, noting that CPFCU "has never considered this to be a personal fight, but we do have a moral obligation to protect our staff and members." He believes the credit union would have succeeded if it had taken the appeal further. Given that, "we hope that our willingness to withdraw demonstrates how serious we are about our desire to work positively to improve the process."

The credit union is "working with the Ohio Credit Union League and the Credit Union National Association now and over the course of this year" he said, noting NCUA Region III Director Herb Yolles "has been very professional and willing to listen. We hope to continue discussions with him and will be contacting the NCUA offices in Washington to set a meeting to discuss some of these issues in the near future."

Although NCU does its best to responsibly govern the credit union industry, Renz told News Now, "no organization is perfect and so we must strengthen due process protections to ensure that when something goes wrong there is a meaningful and reasonable path for a credit union to take to remedy that problem."

Credit unions in similar situations must consider two things, he said. "First, ask yourself if you are right. If the NCUA is telling you there is a problem with your credit union and you have a 5% capital ratio, they are probably right and you will simply waste your time trying to fight them."

"Second, look at the cost/benefit," he said. "The process as it stands is broken…. Until the process is strengthened, this is a fight that will almost always end up being cost prohibitive."

The withdrawal doesn't mean the credit union is done or dropping the issue. It "is actually a relatively risky demonstration of good faith meant to move the issues we are fighting for forward. You may think you have a good examiner and this issue is not that important to you, but remember due process rights are rarely important to good people or organizations until they need them," Renz said.

"I hope that what has occurred so far will act as a call to action for both credit unions and the NCUA to take a hard look at the examination and appellate process and ensure credit union rights are protected," he concluded.

Both CUNA and the Ohio league told News Now Wednesday they will work with the credit union to seek improvements in the examination appeals process (News Now March 28).

Tennessee, Washington CU Board Compensation Bills Advance

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NASHVILLE, Tenn., and FEDERAL WAY, Wash. (3/29/13)--Tennessee Gov. Bill Haslam this week signed into law legislation that would allow Tennessee state-chartered credit unions to compensate board members or reimburse them for any lost wages caused by time spent in the service of the credit union.

"Whether Tennessee credit unions will remain volunteer-governed is the choice of each credit union," Trish Patterson, vice president of education and information for the Tennessee Credit Union League, told News Now.

Tennessee is the second state--with Washington the other--to consider such legislation in 2013. The legislative battle in Nashville has been going on since 2009.

The original legislative proposal gave members of a credit union board the ability to compensate themselves and to set the amount of compensation, said the Tennessee Credit Union League (News Now March 4). There was broad, general opposition to the proposal from credit unions statewide, and the league board and management indicated that opposition in meetings with legislators on the committees that would hear the bill, said the league.

However, when it became apparent the bill would pass in some form this year, the league worked to negotiate conditions required for a credit union to compensate its board members, TCUL President/CEO Fred Robinson told News Nowearlier this month.

In Washington state, legislation that would make broad governance changes--including removing the prohibition for state-chartered credit unions from paying board members and supervisory committee members, and increase credit union investment options--passed through the state Senate this week.

The legislation now is in the Washington State House Rules Committee "awaiting to be pulled to the House floor for a full vote," Lynn Heider, Northwest Credit Union Association vice president of communications, told News Now. "We are not aware of any opposition," she added, noting that no timetable has been set.

The legislation is backed by NWCUA (Anthem March 7).

NWCUA supports the legislation because compensation may help in recruiting and keeping a more diverse board, Heider told News Now last month.

Lending, Membership Fuel Maine CUs' Milestone Growth

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PORTLAND, Maine (3/29/13)--The inclination of more Maine consumers to establish and strengthen a relationship with a credit union continues to push Maine's credit unions to new growth levels, according to year-end statistics for 2012.

"These figures reflect the significant changes in consumer attitudes and preferences over the past few years, with consumers turning to Maine's credit unions in growing numbers," said John Murphy, president of the Maine Credit Union League. "Consumers with existing credit union relationships are utilizing additional products and services, as well, which is solidifying the increasing number of consumers that use their credit union as their primary financial institution."  

For the 12-month period ending Dec. 31, Maine's 61 credit unions experienced solid growth in all categories including members, assets, savings and loans, the league said.

As of Dec. 31, combined assets at Maine's credit unions increased nearly $275 million to $5.88 billion, an increase of 4.9%.  Loan growth represents a key economic indicator, not only for Maine credit unions, but for the overall economy, the league said. For 2012, loans outstanding to members increased by $227 million, reflecting a 6.2% increase, over year-end 2011 figures.

Last year, savings at Maine's credit unions grew 5.4%, to $5.04 billion. Also, membership reflected a net gain of nearly 8,500 new members, a 1.4% rise. Total membership at Maine's credit unions is at 625,500 members--the highest year-end total ever.

Murphy noted that strong loan growth and membership growth "reinforces the many positives that credit unions are providing to members including value, trust and safety. As financial cooperatives, credit unions are focused on helping and serving their members and, clearly, Maine consumers appreciate the benefits and advantages that using a credit union offers."

Convenience and access is playing a key role in the growth of credit unions, said the league.

Alabama, Florida CUs End Year With $31B Assets

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BIRMINGHAM, Ala., and TALLAHASSEE, Fla. (3/29/13)--For a third consecutive year, credit unions in Alabama and Florida ended 2012 with a record number of assets. The 285 credit unions in both states added $3.1 billion in assets.

That equates to 6% growth for the year and a record $17.7 billion in total assets in Alabama. Alabama credit unions added slightly more than $1 billion in new assets. In Florida, the growth rate in 2012 was nearly 5%, for a record $45.5 billion in assets. Florida credit unions added $2.1 billion in new assets for the year.

"A trend we've noticed for the past three years now is that credit unions are gaining a greater share of wallet from existing members," said Patrick La Pine, president/CEO, League of Southeastern Credit Unions & Affiliates. "While membership is rising most quarters, there are more assets being added than members. This shows existing credit union members are seeing the value and moving more of their money to the credit union."

Alabama credit unions added 6,000 new members in fourth quarter to end the year with a record 1.83 million members. That constitutes a 3% membership growth rate--well above the national credit union average, LSCU said. It also places Alabama with the 17th highest credit union growth rate in the U.S., said the league. Florida credit unions' membership numbers dipped in the fourth quarter, when financial institutions typically purge dormant accounts, LSCU explained.

With lending, Alabama and Florida credit unions saw a positive growth rate for the first time in three years. Member business lending continues to gain in both states. Alabama credit unions saw nearly a 13 % gain, year over year, in member business loans. That is twice the national average and equates to $54 million in MBL growth. Florida credit unions outpaced the national average by showing a 6.8% growth rate. That equates to adding $81 million in new MBL loans. That also indicates credit unions are lending to small businesses in communities across both states, LSCU said.

Delinquencies and net charge offs continue to fall--a sign that the loans made in each state are better quality. Florida's delinquent loans to total loans and net charge-offs fell for a third consecutive year. In Alabama, delinquent loans to total loans remained consistently low, while net charge-offs fell for the fourth year.

TransUnion CU Survey: Auto Loans Are Biggest Opportunity

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CHICAGO (3/29/13)--Loan growth, with auto loans likely being the most promising area, is the critical business issue facing the credit union industry in 2013, roughly two-thirds of credit union executives told TransUnion in a new survey. More than half of credit union respondents said auto loans are their biggest opportunity.

TransUnion administered the survey to 104 credit union executives at the CUNA Governmental Affairs Conference in Washington, D.C. in late February. Nearly all respondents from across the U.S. were board members, executives or in managerial roles for their credit union.

"Many credit unions are finding that auto loans provide a great revenue opportunity as delinquencies continue to stay near historic lows," said David Dodson, credit union vice president in TransUnion's financial services business unit. "TransUnion projects auto loan delinquencies to continue to remain low with balances rising for the remainder of the year-- pointing to more new- and used-auto sales."

TransUnion's latest auto loan Trend Data report found that 60-day auto-loan delinquencies stand at 0.41% as of fourth quarter 2012, and will likely remain around 0.4% at the end of 2013. Bank auto debt per borrower has risen for seven consecutive quarters and is expected to rise from $13,747 in fourth quarter 2012 to above $14,000 by the end of 2013.

Some credit union executives surveyed said their best opportunities for loan growth are with mortgage (18%) and small business (13%) loans--an indication that the housing market may be improving, the company said. TransUnion data also support this. It expects 60-day mortgage-loan delinquencies to experience a double-digit percentage drop in 2013.

Regarding those small business loans, credit unions want to do more to help people start up or grow their small businesses. That's why the Credit Union National Association and credit unions supported legislation reintroduced in Congress last month to raise credit unions' MBL cap to 27.5% of total assets, up from 12.25%. Doing so would generate $14.5 billion available for MBLs--and increase jobs by 158,000 in the first year without costing the taxpayer, according to new statistics from CUNA.

While most credit union respondents (68%) said loan growth was the biggest critical issue they were facing this year, 11% indicated regulation was their main concern. Technology/operation efficiencies (7%) and membership growth (6%) also were cited as major issues this year.

The biggest challenges to meeting loan-growth goals are competition from large banks and captive finance companies (40%), regulation (27%) and a lack of prospects (17%), said credit union respondents.

"Loan growth is traditionally the biggest concern for credit unions, but it is interesting to see regulatory scrutiny and operational efficiencies called out as critical issues by some credit unions," said Dodson. "Credit unions realize that to effectively compete and grow in today's market, technology and analytics must be leveraged to help in acquisition efforts and to know how to best maximize members' wallets at the right time in the [member] lifecycle."

Fed On Mobile Banking: Use Is Up, Confidence In Security Down

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WASHINGTON (3/29/13)--The Credit Union National Association's Payments Subcommittee will review the Federal Reserve Board's  new mobile financial services survey results, which note significant increases in how consumers use mobile phones and smartphones for banking and payments.

The Fed released the report, "Consumers and Mobile Financial Services 2013," on Wednesday.  Among its key findings: In the past 12 months, more consumers used mobile phones to access banking and credit card accounts or make financial decisions while shopping. Mobile use spiked among the underbanked and unbanked. However, consumers had less confidence in the security of the devices than in 2011.

"CUNA's Payments Subcommittee is increasing its focus on efforts to ensure credit unions have the access they need to the latest developments in payments," said CUNA Deputy General Counsel Mary Dunn.

As of November, 28% of all mobile phone users and 48% of smartphone users had employed mobile banking in the previous 12 months--a significant hike from 21% and 42%, respectively, in December 2011, said the Fed.  Consumers who paid point-of-sale purchases with their mobile phone increased threefold, with 6% of smartphone users making the purchases.

Mobile financial services are particularly prevalent among the underbanked--those who have banking accounts but also use check cashers, payday lenders or payroll cards and who make up 10% of the population. Ninety percent of this group had mobile phones, and among them, 49% used mobile banking during the period, up from 29% in 2011.

The 10% of the population without a bank account also is using the mobile devices, with 59% of the unbanked having a mobile phone. Half of those are smartphones, said the Fed.

Although mobile banking use rose 33% between 2011 and 2012, more than half of mobile phone owners who don't use mobile banking services remained skeptical about the benefit of mobile banking and its level of security. They said they have no interest in it or believe another method of payment was easier. Making purchases via mobile phone at the point-of-sale drew less interest--under one-fourth expressed interest.

Credit unions will want to make sure their mobile banking has at least these features--they're the most common activities cited by consumers surveyed: Reviewing account balances, monitoring recent transactions, or transferring money between accounts.

They also will want to check out remote deposits: Using mobile phones to deposit checks doubled, with 21% of mobile banking users doing so during the period studied.