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CUs beat most investment firms on customer experience

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WABAN, Mass. (3/12/12)--Credit unions had the third-highest rating in the investments industry, beating out some of the top investment firms in a new study of customer experience in that industry.

The 2012 Temkin Experience Ratings rated experience at 206 large companies across 18 industries. In the investments arena, "a credit union" was rated 65%--in the third position and tied with Ameriprise Financial, Edward Jones and Vanguard firms.

Charles Schwab's rating at 70% and Fidelity Investments at 68% were the only investment firms with higher ratings.  Credit unions topped ING Direct, rated at 62%; E*Trade  and Merrill Lynch, both at  59%; Morgan Stanley Smith Barney and TD Ameritrade, both at 57%; and Wells Fargo Advisors at 54%.

Temkin Group also analyzed the changes between 2011 and 2012 and found that the investment industry has seen its sharpest decline in customer experience ratings in the past year.

The group bases its ratings on three dimensions of customer experience:

  • Functional--Does the company meet consumers' needs?
  • Accessible--How easy is it for consumers to do what they are trying to do?
  • Emotional: How do consumers feel about their interactions with companies?
Credit unions and Fidelity Investments received the highest Emotional ratings, while Wells Fargo Advisers received the lowest. 

Charles Schwab and Vanguard received the highest Functional ratings, with Wells Fargo the lowest.  In the Accessible ratings, Charles Schwab and Fidelity received the highest and Wells Fargo Advisors and Morgan Stanley Smith Barney received the lowest.

The report rated customer experience at 206 large companies across 18 industries.

Space Coast CU sues big banks over CDOs

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MIAMI (3/12/12)--Space Coast CU (SCCU), Melbourne, Fla., has sued a who's who list of Wall Street investment banks and ratings agencies over $100 million in losses from collateralized debt obligations (CDOs) sold to Eastern Financial Florida CU, a Miramar, Fla.-based credit union acquired by Space Coast in 2009.

The $3 billion asset Space Coast filed the suit as successor-in-interest to Eastern Financial, whose collapse was the largest natural-person credit union failure in history. Florida's Office of Financial Regulation issued an emergency order on June 30, 2009, authorizing the merger of Eastern Financial into Space Coast, according to the complaint filed Thursday in the Circuit Court of the 17th Judicial Circuit for Broward County, Florida.

The suit seeks to recover more than $100 million in investment capital paid by Eastern Financial for the CDOs and damages.

Named as defendants are: Merrill Lynch and its credit corporation, Merrill Lynch Home Loans; Wells Fargo Securities (formerly Wachovia Capital Markets); J.P. Morgan Securities (formerly Bear Stearns & Co. Inc.; UBS Securities; Barclay's Capital Inc.; Richard S. Fuld Jr., who ran Lehman Brothers at the time; Moody's Investors Service Inc. and The McGraw Hill Cos., Inc. (formerly Standard & Poor's Ratings Services).

"This suit was commenced on behalf of our members to seek reimbursement for losses sustained by Eastern Financial in the 2008 to 2010 timeframe," said Space Coast CU President/CEO Douglas Samuels. "It is our duty, on behalf of our members, to attempt to recover the loss and ultimate destruction of Eastern resulting from this sale of the mortgage-related securities. These mega-brokers knew at the time of sale that these securities were worth less than face value and took advantage of a less sophisticated buyer. The Eastern members had built a valued and respected credit union over the course of 70 years that was irrevocably damaged by this misrepresented investment.

"This may not be an easy battle. Space Coast is only a $3 billion financial institutions going up against the Wall Street giants," he noted. "However, we strongly believe that these large brokers should be held accountable when they take advantage of locally-owned, smaller financial institutions."

In the complaint filed, SCCU said the CDOs "generated phony demand for residential mortgage loans, fueling one of the worst economic catastrophes that Florida's investors and homeowners have ever faced." 

The complaint alleges that the process of  "creating and selling CDOs revolved around shoe-horning residential mortgage securities into Moody's and S&P's credit rating models to generate 'investment grade' ratings," and that  the "most sophisticated investors in the world rely on those credit ratings." The ratings agencies are gatekeepers to "structured' credit markets because Wall Street must satisfy their tests and financial models to sell rated CDO notes, said the court document.

The defendants violated the Florida Securities and Investor Protection Act and that they "knowingly, or in reckless disregard of the truth, made a number of material misrepresentations and/or omissions" to induce Eastern Financial to purchase the notes, they "employed devices, schemes, and artifices to defraud," according to the court document.

The suit also alleges common law fraud related to the credit quality of the CDOs; negligent misrepresentations of facts that induced the credit union to buy the CDOs; unjust enrichment by rating CDOs more highly that they should have been rated under the rating agencies' own criteria, to earn profits and fees from Wall Street banks at the expense of" Eastern Financial; and a claim for constructive trust because the banks "promised to deliver 'Investment Grade' Rated CDO Notes" and had a "superior access to confidential information about the quality of the collateral comprising the CDOs.

Representing Space Coast in the suit is Robbins Geller Rudman and Dowd LLP, a firm that represents U.S. and international investors and consumers in contingency-based complex litigation. With nearly 200 attorneys in nine offices, the firm represents more institutional investors and pension funds in securities and corporate litigation than any other law firm in the world, said Space Coast.

Get off conveyor belt find marketing idea from others

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NEW ORLEANS (3/12/12)--Life is one big, crazy, busy conveyor belt packed with commitments and to-do lists. And then we die. But it doesn't have to be that way for credit union marketers, performing artist Victoria LaBalme told CUNA Marketing & Business Development Council Conference attendees Thursday in New Orleans.

She suggests taking a page from singer Bob Dylan, who once said, "The purpose of art is to stop time."

Therefore, everyone should stop taking a perverse pride in being stretched thin. "Somehow this has become a status symbol," LaBalme says, "where people brag about how little sleep they get."  Instead we should turn our "busyness" into art, she added.

Doing so requires three actions:

1. Look. Reconsider how you view business and personal opportunities. "What you look for, you'll find," she says. "But you'll miss other possibilities along the way because you missed the full spectrum."

Likewise, focusing solely on typical credit union solutions to business problems will keep new ideas from springing up. "Look to other organizations for marketing ideas," LaBalme advised.

Looking also includes finding your "through line," the actress says. "Through line" is an acting term that refers to the forces behind a character's actions. People can find their through lines by considering three questions:

  • If you were on a desert island and could provide only one piece of advice to a loved one, what would it be? The answer is what's most important to you.
  • What's the nobility behind your work? Why does it matter to you?
  • What do you personally represent? What do you want to be known for?
2. Listen. President Calvin Cooledge once said, "no one ever listened himself out of a job," said LaBalme. Taking the time to listen carefully--and not interrupting or "pouncing after a moment of silence"--shows that you care about the person who's talking.

3. Love. LaBalme watched from her New York City apartment on Sept. 11, 2001, as the Twin Towers fell. Three months later, she lost her mother to cancer. That taught her there's no time to lose. "Life is short--don't waste time," she said. "What are you waiting for? When you love someone, time stops."

Central 1 CU Central Alberta call off merger

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VANCOUVER, B.C., and CALGARY, Alberta (3/12/12)--A merger among Canada's central financial facilities and trade associations for credit unions in British Columbia, Alberta, and Ontario has been called off.

Central 1 CU, based in Vancouver, B.C., and Credit Union Central Alberta Ltd. announced Thursday the merger discussions, begun in 2011, had ceased.  The discussions explored whether consolidation would achieve efficiencies, offer a stronger liquidity structure, provide greater diversification of funding sources and provide better capacity in finance, payments and trade services.

A combination of the associations would have affected 190 credit unions in the three provinces.

"Our preliminary discussions focused on whether or not a potential merger might enhance our capacity to better meet the needs of credit unions and support their continued expansion in the marketplace," said Alberta Central President/CEO Graham Wetter. "We have not been able to make the progress we had hoped to, and have concluded that we should focus on other priorities, at this time."

Don Rolfe, Central 1's president/CEO, said, "What is most important for both of our organizations is the effective support of our growing and vibrant credit union systems. Although we do not believe our combination is currently achievable, Central 1 and Alberta Central will continue to explore whether opportunities to collaborate exist that will bring greater benefits to credit unions in all three provinces."

Central 1, which has offices in Vancouver, Mississauga and Toronto, represents 45 credit unions in British Columbia and 112 credit unions in Ontario. It serves more than 2.9 million members and holds $15 billion in assets.

The $2 billion asset Alberta Central, headquartered in Calgary, represents 34 credit unions in the province that serve more than 646,000 members.

Council Seven steps to better biz development

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NEW ORLEANS (3/12/12)--Credit unions are redefining the art of business development, realizing the practice requires building strong relationships, reaching out to companies' key decision-makers, and moving beyond select employee groups (SEGs), said a speaker Thursday at the CUNA Marketing & Business Development Council Conference in New Orleans.

"Business development isn't just showing up at a charity event and it isn't pressure-selling," said Sean McDonald, director of business development for Mid-States FCU in Carteret, N.J., and council chair, during a breakout session. "And it isn't just for SEGs anymore. Business development is important for all credit unions."

There are seven steps to boost business development, McDonald said. 

1. Understand what business development is and what it isn't. That has to be is step one, McDonald said.

2. Perform a membership audit. This involves segmenting the membership, identifying trends, categorizing savers and borrowers, and determining which members are profitable or "on the cusp of profitability." Credit unions that can't afford a marketing customer information file (MCIF) system can turn to their core processor for help mining data.

"Identify which members are a drag on your profitability and those who help develop it," McDonald says. "Let's try to transfer savers into borrowers."

3. Be flexible and measure progress. If you don't measure your progress, you can't manage it, McDonald says. But business development goals should be flexible and achievable to reflect changing economic and other conditions.

"The marketplace is always changing so to have iron-clad, unchangeable business development goals is just silly," he says. "Be willing to re-assess and re-evaluate."

4. Train staff. Business development requires a specific skill set. Employees must have good communication skills, be personable, and have a passion for the job. Training and development programs will allow staff to expand these and other skills, which will help them succeed. McDonald has formed the Credit Union Business Development Academy [cubdacademy.com] to help business developers improve their skills.

5. Go out and prosper. Business development staff can't be successful staying in the office. They need to go out and meet with prospects.

"Hold them accountable, but give them the freedom to fly," McDonald said. "Don't chain them to their desks or hold them to a time clock. This isn't 'Field of Dreams.'"

McDonald acknowledged that some credit union staff resent this freedom, creating "gossip and rumblings" that can destroy morale. "Some people think if you're not in the credit union, you're not working. Get executive management on your side, and have them explain that your role requires you to be out of the office more than you're in it."

6. Don't be afraid to sell. When doing so, emphasize value above all else. "Put yourself in your members' shoes: Tell the member what your Visa card will do for them," McDonald advised. Also, explain the importance of cross-selling to the front-line staff. "Treat the tellers to lunch once in a while," he added.

7. Get in the game. "We need to be at the 'big person' table--part of the C-level discussion," McDonald said. "Business development touches every aspect of the credit union. It needs to be part of the strategic planning process. We need to show our value to the people who make the decisions."

Governor signs Wash. CU public funds act

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FEDERAL WAY, Wash. (3/12/12)--Washington Gov. Christine Gregoire signed Senate Bill 5913--known as the public funds bill--into law Wednesday. The bill allows public entities for the first time to deposit funds in any credit union in Washington up to the federal insurance maximum of $250,000, according to the Northwest Credit Union Association (NWCUA).  

Washington Gov. Christine Gregoire, seated, signed the state's credit union public funds bill, Senate Bill 5913, into law Thursday afternoon. The bill allows public entities for the first time to deposit funds, up to $250,000, into any credit union in the state. (Photo provided by the Northwest Credit Union Association)
The new law goes into effect on June 8--60 days after the end of the regular 2011 legislative session (Anthem March 8).

"With the signing of this legislation, all Washington credit unions are now eligible to hold public funds up to the level of insurance--if they so choose," said Mark Minickiello, NWCUA vice president of legislative affairs. "While some may not see this as having a large effect, it is one more step toward allowing not-for-profit credit unions to offer the products and services their members want."

State law previously allowed state-chartered credit unions to be depositaries up to a maximum of $100,000. The bill's passage now allows federally chartered credit unions to act as depositaries and raises the maximum to $250,000 for all credit unions.

Other states have recently pursued similar legislation, NWCUA said. New Jersey enacted a law in 2011 allowing 1,500 local government entities, including libraries and community colleges, to deposit funds in credit unions, while the Florida legislature rejected a credit union public funds bill this year after the measure was met with heavy bank opposition.

Ohio and Alabama have been the latest states to make a push, and hearings on the subject in the Ohio House are anticipated after legislators return this week from a recess. The Ohio Credit Union League has been instrumental in the legislation's introduction and education efforts and said the movement now finds itself "in a war" against banks on issues such as supplemental capital and public funds, NWCUA said.

In Alabama, the League of Southeastern Credit Unions has companion bills being reviewed by the House Financial Services Committee and the Senate Banking Committee, and continues working with its members to advocate for the bills' passage, the association said.

Alliance CU welcomes babies to offices

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SAN JOSE, Calif. (3/12/12)--A "Babies in the Workplace" program at $346 million asset Alliance CU will enable employees to bring their babies--up to the age of 6 months or until they begin crawling--with them to work.

Debbie Sallen, vice president of human resources, said babies will stay with the parents throughout the day at their office, cubicle or teller station (MercuryNews.com March 8).

Sallen earlier worked at another company where 70 babies were part of a similar program over 13 years. That experience persuaded her that bringing babies to the workplace eases new parents' return to work and improves productivity while reducing child care costs.

The program was introduced on March 1 at three sites. Sallen told the newspaper the launch is perfect timing for the credit union, since employees have five babies on the way.

N.C. co-ops meet to build more cooperative economy

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RALEIGH, N.C. (3/12/12)--About 60 cooperative leaders in the Southeast from food, housing and electric co-ops--as well as credit unions--attended a meeting Monday in Raleigh to discuss how cooperatives can capitalize on consumer trends toward using more local businesses and build a more cooperative economy, said the North Carolina Credit Union League.



He said the ICA is making three main points in communicating the strengths of cooperatives during the IYC:

  • Cooperatives are a serious business model;
  • Cooperatives are values-based entities built on the concept of mutual self-help; and
  • Members control the cooperative and have an equal voice.
IYC should only be the start of a larger conversation, and later this year, ICA will roll out a blueprint for a cooperative decade, Gould added.

"By 2020, it's our goal that cooperatives be the fastest-growing business model in terms of impact," he said. He also noted that if, at the end of the year, cooperatives had only marked the year through celebrations and had not raised awareness among consumers and built a blueprint for the future, that the IYC will not have been a success.

The group also strategized ways to build bridges to engage, leverage and grow the existing cooperative economy.

"Simply sitting down and talking about the challenges we face as cooperatives in America is enlightening," said Michael Spink, innovation strategist at Local Government FCU in Raleigh. "We each face many of the same issues: communication with members needs improvement. People don't understand cooperatives. Local leaders need to know about us. How can we collaborate and share resources? It all points to the collaboration piece. We can learn a lot from one another."

Cooperatives could benefit from uniting behind a clear, compelling message, Spink noted.

"Awareness, understanding and involvement are things we all need and things we can all have," Spink said. "We need to get up and take a look at the other guy. Take a look and have a visit with people that are similar. Discover ideas, discover solutions, discover something new. Then you have to work. Take some action and get out there."

To see a video of the meeting, click on the embedded link.

Vermont CU membership grew more than 4 in 2011

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SOUTH BURLINGTON, VT. (3/12/12)--Vermont credit unions added more than 12,000 members in 2011, an increase of 4.05% from the end of 2010, according to data from the National Credit Union Administration. 

Roughly 312,000 consumers are members of Vermont credit unions, which collectively hold $2.93 billion in assets, $1.9 billion in loans, and have more than $2.5 billion on deposit, said the Association of Vermont Credit Unions (Newslines Express March 9).

Assets grew by $248 million and deposits by $223 million in 2011--increases of 9.26% and 9.74% respectively.

Lending grew at a 7.15% rate, accounting for $130 million of new mortgages and loans. 

Six new credit union branches were opened in Vermont during 2011, bringing to 80 the total number of main office and branch locations statewide.

Former regulator Gene Metz killed in accident

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BEAVERTON, Ore. (3/12/12)--Gene Metz, a former credit union supervisory examiner primarily in the Pacific Northwest, died Wednesday as a result of an all-terrain vehicle accident.

Metz was 76 years old.

His work in the 1960s and 1970s was a factor in the creation of the National Credit Union Administration (NCUA), and the support he showed to credit unions throughout his career proved that it is possible to regulate for the best interests of the credit union mission, said the Northwest Credit Union Association (NWCUA) (Anthem March 9).

"Gene was a good friend to many in the credit union community," NWCUA CEO John Annaloro said. "His stewardship helped build the strong credit union system we have today. Even in retirement, he was considered a contemporary and colleague."

CU System briefs (03/09/2012)

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  • EAST WINDSOR, N.J. (3/12/12)--The Princeton, N.J., Chapter of APICS – the Association for Operations Management--has added $278 million asset McGraw-Hill FCU to its member benefits. APICS cited the value of providing its members with access to McGraw-Hill FCU's full suite of financial products, remote account access and low-fee financial environment. APICS said its members will also benefit from the credit union's customized financial consultations and educational seminars. APICS provides certification and training to professionals in supply chain management, operations, global procurement and financing …
  • SAN JOSE, Calif. (3/12/12)--Eighty prizes will be given away to celebrate the anniversary of 80-year-old San Jose (Calif.) CU. Members can visit the credit union's website to enter for prize drawings occurring every weekday in March and April. Every Monday through Thursday, two winners are selected to receive a package of two movie tickets and refreshments. Every Friday, one winner is selected to receive the movie package plus an $80 cash prize. San Jose CU has grown from four members when it opened in 1932 as Municipal Employees' CU of San Jose to more than 12,500 members and more than $130 million in assets today. Lawrence Campbell, a 104-year-old retired San Jose firefighter, helped charter the credit union and remains a member …
  • LONG ISLAND CITY, N.Y. (3/12/12)--A virtual thrift store is raising funds online to support the East River Development Alliance (ERDA). ERDA is a nonprofit organization that aims to improve public housing neighborhoods in New York City by helping residents gain the tools and opportunities for self-sufficiency and economic mobility. It works closely with East River Development Alliance FCU, a community development credit union with assets of $507,465. ERDA created its virtual store at WebThriftStore.com, which enables donors to list items for sale to benefit charitable organizations. ERDA employees and volunteers launched the store with personal donations but anyone may donate items for sale. When an item is sold, donors receive a tax receipt, shipping supplies and a prepaid shipping label that is used to send the package to the buyer via U.S. Postal Service …
  • WOODBRIDGE, Va. (3/12/12)--Kelli Jo Anthon, financial coach at $282 million asset Belvoir FCU based in Woodbridge, Va., has been elected to the Association for Financial Counseling and Planning Education (AFCPE) Board of Directors. The board guides professional development for financial educators and researchers through the non-profit AFCPE, which works to improve personal financial management education, training and certification …