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CUs push on MBL interchange cited in NYT WSJ

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NEW YORK (3/9/11)--Credit unions' efforts on raising the member business lending (MBL) cap and urging a deeper review of the implications of the Federal Reserve rule on debit interchange received attention from The New York Times, The Wall Street Journal, Bloomberg Businessweek, MarketWatch and Politico, among others, this week. In Bloomberg Businessweek (March 9), Credit Union National Association (CUNA) Chief Economist Bill Hampel provided analysis related to the MBL bill, introduced Tuesday by Sen. Mark Udall (D-Colo.) and which would increase credit unions' MBL cap to 27.5% of assets from the current 12% of assets. CUNA and credit unions have urged Congress for some time to increase the cap so credit unions could help stimulate the economy by making small business loans. In the article, Hampel noted that credit unions had about $39 billion in outstanding loans to small businesses last year, an increase from $24 billion in 2006. Similar loans at banks peaked in 2008 at nearly $799 billion and declined to $626 billion in 2010, said the article. Roughly 350 credit unions are near the cap, meaning business loans constitute between 7.5% and 12.5% of their assets, Hampel told the publication. Even at 7.5%, a credit union would start tapping the brakes on MBLs and still reach the cap in three years. Credit unions' average MBL totals $200,000. Loans go to businesses owned by credit union members, he said. The Wall Street Journal and MarketWatch were among the publications that published an article "Credit Unions Push for Small-Business Lending," which outlined credit unions efforts. In the article, Udall said that the bill "is one of the few easy ways that we have to support credit unions, small businesses and help create jobs all at once." The article also featured statistics from CUNA citing the number of new small business jobs that raising the lending cap would create. It also featured St. Mary's Bank, the nation's oldest credit union, as one of the credit unions that is bumping up against the cap. On the debit interchange issue, Politico and The New York Times were among the publications that reported credit unions' lobbying to persuade lawmakers to delay the Federal Reserve's new rules until the implications are studied further. Under the rules, it will be more expensive for a merchant to use a credit union card than a Bank of America card, Pat Keefe, CUNA vice president of communications and media outreach, told Politico. The New York Times reported testimony by credit union CEOs John P. Buckley, president of Gerber FCU, Fremont, Mich., and CUNA witness Frank Michael, president of Allied CU, Stockton, Calif., during a hearing of a House of Representatives subcommittee last week on the issue. Use the links to view the articles.

4Q data Mich. CUs still growing

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LIVONIA, Mich. (3/10/11)--Michigan credit unions added more than 37,000 members in 2010 and continued growth in deposits and small-business loans, according to 2010 fourth-quarter National Credit Union Administration call report data. “Michigan’s credit unions are growing faster than the national average, which is impressive, considering the state’s loss in population,” Michigan Credit Union League CEO David Adams said. “Recent Harris Interactive research in Michigan shows credit union members are twice as likely as bank customers to trust, value and refer their financial institution to a friend or family member. In the aftermath of the recent national economic meltdown, households are looking for a financial institution they can trust to provide fair rates and low fees.” The year-end data also showed that while overall loan activity in the state was flat at -0.4%, credit unions continued to show strength in small-business loans with an annualized growth rate of 18.8% in 2010. “Small business capital is critical for Michigan’s economy,” Adams said. “Credit unions have consistently demonstrated the ability and willingness to lend to small businesses, even as the economy struggles to recover.” Credit union members continued to save more and borrow less in the fourth quarter. As overall deposits grew by 5.8% in 2010, the strongest category of savings growth was checking accounts. Credit unions’ checking-account balances increased 5% in 2010, to $4.4 billion from $4.2 billion. The 2010 data also revealed that credit unions continue to post strong capital-to-assets ratios, averaging 10.8%, and they have lower loan delinquency rates than competitors do. Due to challenges underwriting loans, credit unions built up liquidity, with liquid capital increasing to $11.7 billion from $10.1 billion during the past year. “Credit unions have lots of money to lend, and they’re strong enough to meet most lending needs of their members and small business clients,” Adams said. “Credit unions’ strength, growth and liquidity position are the rewards of prudent lending prior to the economic meltdown.”

Young Leaders Advisory Board added by CUs for Kids

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RANCHO CUCAMONGA, Calif. (3/10/11)--Credit Unions for Kids has created a Young Leaders for Kids Advisory Board to help credit unions expand participation in fundraising events and develop strategies to engage the next generation of credit union leadership. The board includes members from credit unions and credit union organizations throughout the U.S., said Samantha Paxson, committee chair, and vice president, marketing, CO-OP Financial Services, based in Rancho Cucamonga, Calif. "We are working to maximize fundraising results for the Children's Miracle Network Hospitals in 2011, and help create an even greater grassroots following for Credit Unions for Kids," she said. In addition to Paxson, committee members are:
* Nida Ajaz, PTP New Media (CU swag/CU Grow), Pasadena, Texas; * Jaime Crooks, Ohio HealthCare FCU, Dublin, Ohio; * Brent Dixon, Filene/Crash Network, Madison, Wis., and The Haberdashery, New York, N.Y.; * Brooke Gilchrist, Enterprise Car Sales, St. Louis, Mo.; * Tina Hall, Verity CU, Seattle, Wash.; * Ronaldo Hardy, La Capitol FCU, Baton Rouge, La.; * Theresa Hilinski, Filene/Crash Network.; * Jennifer Johnson, CO-OP Financial Services; * Jill Nowacki, MaPS CU, Salem, Ore.; * Jessica Perschon-Rhodes, Filene/Crash Network and Washington State Employees CU, Olympia, Wash.; * Lisa Stokman, iQ CU, Vancouver, Wash.; * Jenn Wade, PTP New Media (CU Swag/CU Grow).; and * Audrey Wiggins, PTP New Media (CU Swag; CU Grow).
Young Leaders for Kids will provide ideas and guidance for three 2011 fundraising events, which are eligible for matching funds from CO-OP Miracle Match:
* Change a Child's Life, a loose-coin collecting campaign that runs until April. 30. To order campaign materials use the link. * The Miracle Jeans Day campaign, Aug. 1 through Sept. 14, which includes two activities--donating so employees can wear jeans on Sept. 14 and purchasing a special Miracle Jeans Day paper icon. * Holiday Icons, will run Nov. 1 to Dec.30.
"With the support of our Young Leaders and the credit union community at large, we look forward to promoting and encourage credit union events in 2011 that help fund breakthrough research, services and new facilities for children's hospitals," said Joe Dearborn, senior director of development for Children's Miracle Network Hospitals and Credit Unions for Kids. For more information use the links.

Several mergers in the works

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MADISON, Wis. (3/10/11)--Mergers continue to alter the competitive landscape for credit unions nationwide. Among the mergers in the works:
* Como Northtown CU, St. Paul, Minn., with $34 million assets, plans to merge with $270 million TopLine FCU, Maple Grove, Minn. * Cal State CU, with $90 million in assets, Santa Rosa, Calif., has filed to merge into Redwood CU, $1.7 billion in assets, also of Santa Rosa (California Department of Financial Institutions Monthly Bulletin March 8); * Guadalupe FCU, with $1 million in assets, Mountain View, Calif., has applied to merge into National 1st CU, $186 million in assets, Sunnyvale, Calif; * Motion Picture FCU, with $3.6 million in assets, Valley Village, Calif., has merged into Musicians’ Interguild CU, $78 million in assets, Hollywood, Calif; * Star Energy CU, with $5 million in assets, Bakersfield, Calif., has merged into Chevron FCU, $1.5 billion in assets, Oakland; * Putnam County FCU, Palatka, Fla., with $16 million in assets, is merging with First Coast Community CU, $73 million in assets, also of Palatka (Florida Trend March 1); * Trippler FCU, with $12 million in assets, Honolulu, will merge with $15 billion-asset Pentagon FCU, Alexandria, Va., according to the National Credit Union Administration; * Media Hawaii FCU, with $15 million in assets, Honolulu, will merge with $720 million Aloha Pacific FCU, also of Honolulu; * St. Margaret FCU, with $415,000 in assets, St. Louis, will merge with Anheuser-Busch Employees FCU, with $1.2 billion assets, also of the St. Louis; * West Haven V.A. Employees FCU, with $7 million in assets, and West Haven Municipal FCU, with $14 million in assets, will merge into Greater West Haven FCU, $5 million in assets, All three are based in Conn.; and * A-B CU, with $49 million in assets, Milwaukee, will merge with $168 million-asset Heritage CU, Madison, Wis.

PCUA names Maxwell Herring Desjardins winners

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HARRISBURG, Pa. (3/10/11)--The Pennsylvania Credit Union Association (PCUA) has announced the winners of its state-level 2011 Credit Union Recognition Awards. Dora Maxwell Social Responsibility first-place award winners are (Life is a Highway March 8):
* Timberland FCU, Du Bois, $20 million to $50 million in assets; * Meadville (Pa.) Area FCU, $50 million to $100 million; * Cross Valley FCU, Wilkes-Barre, $100 million to $200 million; * Belco Community CU, Harrisburg, $200 million to $500 million; and * American Heritage FCU, Philadelphia, $500 million to $1 billion.
The Louise Herring Philosophy in Action Award first-place winner is SPE FCU, State College, $50 million to $250 million in assets. Desjardin Youth Financial Education first-place winners are:
* Keystone FCU, West Chester, $50 million to $150 million in assets; * Service 1st FCU, Danville, $150 million to $500 million; and * TruMark Financial CU, Trevose, more than $500 million.
The awards will be presented during PCUA’s Youth Ambassador Contest, May 12, in conjunction with the association’s Annual Convention & Expo in Hershey. Winners will go on to the Credit Union National Association’s national competitions.

Dont let guard down on ID fraud warns CUNA Mutual

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MADISON, Wis. (3/10/11)--Concerned about media reports of a recent study that said identity fraud had dropped in 2010, CUNA Mutual Group's risk managers are warning that the finding goes against their experience. Their message: Don't let your guard down on ID fraud. The Identity Theft Resource Center's (ITRC) 2010 Data Breach Stats indicate that ID theft is alive and well. During the year, 662 breaches compromised records of nearly 16.2 million potential victims. (ITRC defines "breach" as an event in which an individual's name plus Social Security number, driver's license number, medical record, or a financial record/credit/debit card is potentially put at risk, either in electronic or paper format.) Of those, financial institutions accounted for 54 breaches, or 8.2%, and nearly 4.9 million records compromised. That is 30% of all records compromised, the second highest percentage of potential victims in the five institutional categories studied. Eight credit unions--about 6.75% of financial institutions breached--experienced data breaches. The number of records exposed to fraud at the credit unions is unknown, said ITRC's report. Credit unions are also vulnerable through data breaches of other groups, some of them within select employee groups or doing business with credit union members' accounts. Total breaches, broken down by category of institution breach:
* Businesses accounted for 279 (or 42.1%) of the year's breaches, which affected more than 6.6 million records (41% of total records compromised). * Educational organizations--colleges, universities and public school systems--experienced 65 or 9.8% of breaches, compromising nearly 1.6 million or 9.9% of records. * Government/military institutions totaled 104 breaches (15.7%) with more than 1.2 million records (7.5%) compromised. * Medical/healthcare breaches totaled 160 or 24.2% and accounted for nearly 1.9 million (11.6%) of records.
CUNA Mutual took issue with another study, by Javelin, which reported last month that the number of ID fraud instances reported had decreased, although these thefts were costing consumers more. "ID theft is still a serious consumer issue with global fraud implications regardless of where the breach occurs, which is why reporting exposure in conjunction with actual thefts makes more sense to me," said Brad Mundine, senior manager, risk management at CUNA Mutual. "We should all take caution in interpreting the results and conclusions of any single survey. While a sample of telephone respondents may have reported a significant drop in ID thefts, millions of other American consumers might tell a slightly different story." In the ITRC survey, the four largest breaches involved Educational Credit Management Corp., with 3.3 million records compromised; JPMorganChase-Circuit City, with 2.6 million records; and AV Medical Health Plans and Lincoln National Financial Securities, with 1.2 million records each. Growth in the international nature of ID theft is a top concern in 2011, warns ITRC. "Victims may very well find credit/debit card charges emanating from global transactions in Europe, Africa and Asia." With the depth of identity theft, credit unions will continue to be challenged with providing solutions to protect their members, said Mundine and Ken Otsuka, senior consultant, risk management at CUNA Mutual. Another survey, Kroll Fraud Solutions' 2010 Global Fraud Survey, reported that information theft is now the most common form of fraud, with 27% of companies reporting incidents in the past year. Information theft surpassed the theft of physical property for the first time in the four-year history of the Kroll survey. "While credit unions have taken commendable measures and made progress to protect member information, identity theft remains a significant threat and should not be taken off their radar in 2011," said Mundine and Otsuka. "The techniques used by criminals today are constantly evolving," they said. "Identity theft is a major source of financing for organized crime rings, both domestically and abroad. Data theft scams can be deployed through a variety of channels including the installation of malicious malware, phishing, spoofing, skimming and database hacking, all of which are designed to compromise the repositories of consumer data," they said. "ID theft remains a significant problem that isn't going away anytime soon," said Phil Tschudy, CUNA Mutual manager of media relations. "And we recommend credit unions and their members remain vigilant over the threats this criminal act causes."

Texas league submits wild-card parity brief to state

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FARMERS BRANCH, Texas (3/10/11)--The Texas Credit Union League (TCUL) submitted a supporting brief this week to keep parity between state-chartered and federally chartered credit unions in the state on payday loan alternative rates. Earlier, the Texas Credit Union Department (TCUD) filed a request for an attorney general opinion on a matter that relates specifically to loan rates for alternatives to payday loans, and what is permitted under law. State credit unions have an 18% rate cap in the Texas Credit Union Act. However, under parity laws, they could charge up to 28%, according to a recent National Credit Union Administration allowance, and other parts of the state finance code allow higher rates for short-term loans. The attorney general opinion committee will look at the legality of the matter and likely will issue an opinion by the end of July. TCUL filed a brief in support of the status quo wild-card parity provision with the attorney general on Monday, which was the deadline to submit briefs. “We want to preserve the wild-card provision to ensure parity between state and federal charters,” Buddy Gill, TCUL chief advocacy officer, told News Now. “State-chartered credit unions should be able to invoke the parity provision for anything a federal credit union can do. "Our bottom line on this is that prices for products and services should be determined by the credit union management and board members,” he added. “If alternatives to payday loans are capped at 18%, some credit unions would not be able to make them work--and then members would have to go to payday lenders.”

CU System briefs (03/09/2011)

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* MADISON, Wis. (3/10/11)--The Credit Union National Association (CUNA) has made another list--this time a list of businesses and buildings in Wisconsin that are hard to pronounce, according to, a "pronunciation guide for everything Wisconsin." CUNA is the fifth entry on the list. The correct way to pronounce CUNA is: Q-nuh … * MADISON, Wis. (3/10/11)--New Jersey Credit Union League President/CEO Paul Gentile has joined the 13-member board of directors of the National Credit Union Foundation (NCUF) as one of three representatives with alternating terms from the Credit Union National Association (CUNA) board. Gentile will complete the unexpired term of Paul Mercer, president of the Ohio Credit Union League. Gentile's term will expire Dec. 31. The CUNA board will make an appointment for a full three-year term this fall. The other two CUNA Board representatives on the NCUF board include Vice Chairman Laida Garcia, president/CEO of Floridacentral CU, Tampa, and Sandy Lingerfelt, president/CEO of Clinchfield FCU, Erwin, Tenn. … * MINNEAPOLIS (3/10/11)--Phillip Webb, 46, of Brooklyn Park, Minn., a former network services manager for Woodbury, Minn.-based Postal CU (PCU), has been sentenced to 15 months in prison for mail fraud stemming from the theft of about $388,000 from a Cisco Systems of Bloomington, a computer parts manufacturer. In a plea agreement, Webb said that from June 2007 to October 2009, he falsely notified Cisco that parts in PCU's computer systems were faulty. He then sold the parts on the Internet and returned cheap secondhand units to Cisco as the allegedly defective parts (Associated Press Newswires and March 8) … * TAMPA, Fla. (3/10/11)--Tampa-based USF FCU's online video contest is no bull. The $368.7 million asset credit union is launching a national competition to discover how creative people have become at saving their money during the economic downturn. The "Are You the Best Bull?" competition runs from March 7 through April 18. The contest winner will receive a free trip for two to Pamplona, Spain, to witness the annual running of the bulls (Plus News Pakistan March 8) … * HARRISBURG, Pa. (3/10/11)--Dennis Hevel, emeritus director and former board chairman of Pennsylvania State Employees CU (PSECU), Harrisburg, died Saturday in Carlisle, Pa. He was 71. Hevel was active in PSECU and served as board chairman stretched from 1984 to 1994 (Life is a Highway March 9 and March 7) …