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Breaches expose flaws in data privacy laws

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BOSTON (4/1/08)--Credit unions backing state privacy and data breach bills might want to check the bills they're supporting for loopholes such as one exposed in Massachusetts' new data privacy law when grocer chain Hannaford Bros. disclosed a sophisticated first-of-its-kind data breach. The Massachusetts statute, like many other similar statutes, requires companies to notify state officials and residents when they lose control of records that could lead to the theft of personal information such as a person's name and credit card number. State officials say the law applied in the case of the Hannaford breach, according to the Boston Globe (March 30). Even though it disclosed the breach, Hannaford says it was not required to make such a disclosure, even after it learned the information from the cards was sent overseas. Hannaford's General Counsel Emily D. Dickinson wrote in a letter to Massachusetts Attorney General Martha Coakley and the state Office of Consumer Affairs and Business Regulation that the loss of card numbers alone does not amount to loss of personal information, as defined by Massachusetts law. She added that Hannaford's notice to regulators was a form of voluntary cooperation. The company did not believe that notice of the breach was required. Thirty nine states have laws requiring some form of disclosure following a breach. Most say the companies involved must file reports when they lose card data with customers' names and other personal details. They don't address what happens when a company experiences the loss of just numbers, without the customers' names, as happened in the Hannaford breach. Most laws include names and data because together they constitute potential identity theft, said Chris Hoofnagle, a specialist in privacy law at the University of California. Hoofnagle told the Globe that losing only numbers is considered less threatening because there's less chance of abuse and because card issuers often forgive many fraudulent charges. Hannaford revealed on March 17 that 300 stores in its system were compromised by a first-of-its-kind data breach that illicitly placed software on the stores' servers and lifted credit and card numbers and expiration dates of 4.2 million customers. The breach was discovered on Feb. 27. It disclosed the details in stages, through a press release, a statement on its website, and the letter to the Massachusetts regulators.

Bill Sterner chairman of CU Association of Colorado dies

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ARVADA, Colo. (4/1/08)—Bill Sterner, president/CEO of Elevations CU in Boulder, Colo., died Monday following a heart attack on Friday. Sterner, 66, was board chairman of the Credit Union Association of Colorado (CUAC) and of Credit Union Strategic Partners, the service corporation for CUAC. He was attending CUAC’s annual Legislative Forum at the State Capitol in Denver when he was stricken. He had been CEO of Elevations CU since 2000 after joining the credit union as vice president of marketing in 1997. Under his leadership, Elevations grew from $340 million to more than $790 million in assets, with more than 75,000 members. During his 46-year career, Sterner held management positions with the Credit Union National Association, the California Credit Union League, the Kansas Credit Union Association, and the World Council of Credit Unions. John Dill, president/CEO of CUAC, said Sterner “embodies the credit union philosophy of ‘People Helping People’ in his chairmanship of CUAC, his service to our entire credit union movement in Colorado, and the national stature he brought to our state association.” He noted that “all of us at the association are saddened by his loss and will miss his friendship and leadership.” Doug Ferraro, president/CEO of Bellco CU and vice chairman of the CUAC Board, has been named acting CUAC chairman for the remainder of Sterner’s term. Sterner also served on the board of directors of SunCorp CU and the Credit Union Service Network. Elevations CU has named an acting CEO. The credit union’s board will meet Thursday to appoint an interim CEO.

White papers focus on branch design and salesservice

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MADISON, Wis. (4/1/08)--Atypical approaches to designing a credit union branch and strategies for building a sales and service culture are the topics of two new white papers from the CUNA Councils. “Rethinking Branch Design: Strategies for Non-Traditional Approaches to Branch Design and Operations” from the CUNA Operations, Sales, and Service Council offers a look into how and why credit unions are developing experimental approaches to designing their “right” branch. The paper identifies trends and marketplace pressures that lead to new approaches. It also explores why credit unions have created non-traditional designs--to improve member relations, to create a service culture, to improve operating efficiency, or to meet other strategic objectives--and offers case studies and photos. “Building a Sales and Service Culture,” sponsored by the CUNA Marketing and Business Development Council, identifies different approaches and considerations to implementing a sales and service environment. The paper addresses staffing, incentive plans, operations support, technology, and measuring success. It also offers advice from six credit unions on their approaches.

CU System briefs (03/31/2008)

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* NORTHVILLE TOWNSHIP, Mich. (4/1/08)--Eight lawmakers and 70 credit union people turned out for a legislative breakfast hosted by the Mid-Michigan chapter of credit unions, according to the Michigan Credit Union League (Michigan Monitor March 31). Attending were State Sens. Roger Kahn (R-Saginaw Township) and Tony Stamas (R-Midland) and state Reps. Terry Brown (D-Pigeon), Bill Caul (R-Mt. Pleasant), Ken Horn (shown here) (R-Frankenmuth), Jeff Mayes (D-Bay City), John Moolenaar (R-Midland), and Tim Moore (R-Farwell). Stamas told the group he appreciated "your activism, legislatively and in the community" and "your commitment to financial literacy, which is something we need to do more of." Rep. Caul, a long-time supporter of credit unions and regular participant in the league's Financial Literacy Legislative Challenge, noted, "My family and I have been members of Isabella Community CU for over 40 years. I know firsthand what you do--thank you for being responsible lenders and friends to your local community." (Photo provided by the Michigan Credit Union League) … * KANSAS CITY, Mo. (4/1/08)--Mazuma CU President Rob Givens met recently with U.S. Rep. Emanuel Cleaver (D-District 5) in Kansas City during the congressional recess, according to the Missouri Credit Union Association (Legislative Updates March 28). He also met with Cleaver's legislative staff, including his new Chief of Staff Leslie Woolley, based in Washington, D.C., at a reception and luncheon sponsored by the Kansas City Chamber of Commerce. Givens said he emphasized the importance of the Credit Union Regulatory Improvements Act (CURIA) and encouraged Cleaver's support. Cleaver is one of two Missouri congressmen serving on the House Financial Services Committee, which recently held a hearing on credit union regulatory relief … * MINNEAPOLIS (4/1/08)--Twin City Co-ops FCU, Minnesota's fifth-largest credit union, has changed its name to Spire FCU. The name was chosen because it means the top point or summit of something. "We chose a name that speaks to where we are going, not where we have been," said President/CEO John Gisler. "We wanted a name that was strong, had meaning behind it and did not narrowly define us geographically." Spire FCU has more than $574.8 million in assets … * KOKOMO, Ind. (4/1/08)--Transmission Builders FCU has changed its name to Financial Builders FCU, effective today. The change reflects the credit union's community charter and county-wide open membership eligibility. According to Judy Drinkard, Financial Builders vice president of marketing, a new ad campaign next week will focus "on reminding members and potential members that Financial Builders wants to be a financial partner, through thick and thin, and at every stage of life." Financial Builders FCU has more than $66.8 million in assets … * VINELAND, N.J. (4/1/08)--John E. Lisi, treasurer of Bay Atlantic FCU, died recently, according to the New Jersey Credit Union League (The Weekly Exchange March 28). He was 64. Lisi began volunteering with BAFCU in March 1975 as a member of its supervisory committee. He joined the board in 1976 and served as treasurer for several terms. He was employed for 37 years at Kimble Glass Co. More recently, he was a teacher and tax preparer for H&R Block. He is survived by his wife, Ellen; three children; and four grandchildren …

Vermont CUs have busy day with state officials

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MONTPELIER, Vt. (4/1/08)--More than 20 credit union employees and volunteers “hiked” into the Vermont statehouse in Montpelier Tuesday, drawing the attention of dozens of legislators and three prominent leaders of Vermont state government.
More than 20 credit union employees and volunteers “hiked” into the Vermont statehouse in Montpelier Tuesday, drawing the attention of dozens of legislators and three prominent leaders of Vermont state government. (Photo provided by the Credit Union Association of Vermont)
Although the legislators appreciation reception drew the most attention, a private, closed-door meeting of credit union leaders were addressed, in succession, by Republican Gov. Jim Douglas, Democratic Senate President Pro Tempore Peter Shumlin, and Democratic Speaker of the House Gaye Symington (Newslines Express March 28). The day began with testimony by Credit Union Association of Vermont President Joe Bergeron in the Vermont Senate Finance Committee. Bergeron provided the committee with information on the state of Vermont’s credit unions and touched on the costs that credit unions must bear as a result of the Hannaford card breach, the Maine-based grocery chain data breach announced March 17. He also provided testimony on two bills that the association was asked to testify on in the House Commerce Committee: H. 563 seeks to modernize a part of the Uniform Commercial Code, and H. 458 relate to digital corporate transactions. Bergeron also spoke before the House Commerce Committee, regarding the Hannaford breach. “Bottom line … no matter how [the Hannaford breach] is being handled, it’s unpleasant and unacceptable for consumers, and very costly for card-issuing institutions,” Bergeron said. “In all cases, cardholders are protected if fraudulent activity does occur, if they inform their financial institution … but it’s a huge inconvenience, creates distrust in cardholders’ minds, and costs all of us money directly or indirectly.”

Youth Week just around the corner

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MADISON, Wis. (4/1/08)--National Credit Union Youth Week is soon approaching, and credit unions who haven’t already registered for the National Youth Saving Challenge can do so on the Credit Union National Association (CUNA) website. This year’s Youth Week, with the theme of “Got Green? Grow it at Your Credit Union,” will take place April 20-26. “Each year National Credit Union Youth Week gives the movement the opportunity to get young members excited about saving money to reach personal financial goals,” said Phil Heckman, CUNA director of youth programs. “It's the perfect opportunity to kick start the next generation's savings habit.” Credit unions also can sign up for the National Youth Saving Challenge, which is an opportunity for credit unions to invite youth to open new accounts and deposit money. CUNA also will award 10 credit unions $100 each for their youth. Four hundred credit unions have registered, and the credit unions said they expect to see about 74,000 youth deposit $7.4 million during the event. “If kids and teenagers at participating credit unions can break last year's Saving Challenge record of $10 million during the week--well, that wouldn't hurt our argument that credit unions are different, would it?” Heckman added. Credit unions also can sign up for e-News, which will be sent throughout April. The messages provide tips for celebrating Youth Week and setting goals for the saving challenge, and share suggestions from credit unions. Some credit unions, such as Hawaii Community FCU, Kealakekua, have added Youth Week information to their home pages. 1st Financial FCU, St. Charles, Mo., is celebrating Youth Week with coloring and essay contests for youth club members 12 years and younger. The coloring contest winner will receive a $50 savings bond. The essay winner will receive a hand-held game system and have the essay published in the youth club newsletter (CourierNet March 19). Electro Savings CU, St. Louis, is partnering with the Maryland Heights Department of Parks and Recreation during Youth Week to encourage recycling. The credit union will add one cent to youth’s accounts for every two plastic grocery bags brought in. Postal Federal Community CU, Springfield, Mo., also is donating $1 for each youth deposit made during the week to Ozark Greenways, a nonprofit organization that works to preserve the Ozark Mountains. Youth Week promotional materials, such as posters, statement stuffers, clothing and drive-up envelopes, are available. For more information or to register, use the link.

Minnesota network hosts international visitors

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ST. PAUL, Minn. (4/1/08)--The Minnesota Credit Union Network (MnCUN) hosted participants of the International Visitor Leadership Program (IVLP) Thursday as part of the group’s three-week visit to the U.S.
International Visitor Leadership Program participants from Bosnia, Costa Rica, South Africa, Taiwan, Tanzania, Turkey and Zimbabwe met with the Minnesota Credit Union Network Thursday. (Photo provided by the Minnesota Credit Union Network)
Seven international professionals visited the Minnesota MnCUN in St. Paul to discuss the difference between cooperative financial institutions and for-profit financial institutions in the U.S. and to learn about credit unions’ involvement in their communities. IVLP participants were from Bosnia, Costa Rica, South Africa, Taiwan, Tanzania, Turkey and Zimbabwe. This is the third year MnCUN has participated in an IVLP visit. MnCUN staff provided an overview of the network, the history of the credit union movement, core characteristics of credit unions, and the main operational and philosophical ways credit unions differ from banks. Hiway FCU President Jeff Schwalen also spoke to the group about how credit unions are involved in their communities. He shared various ways the St. Paul-based, $705.2 million asset credit union serves the underserved areas in its field of membership. In particular, Schwalen discussed how the credit union has focused on reaching out to the Hmong community to earn their trust. “The unique thing about our credit union is that we are locally owned and chartered,” he said. “As a result, we are able to personalize our service and modify our services so that they meet the unique characteristics of our members.” Mark D. Cummins, MnCUN president/CEO, said: “I was impressed by their inquisitive nature and their desire to learn about credit unions. It was a privilege to hear about the financial institutions in their home countries and to aid in their understanding of the credit union movement in the U.S.”

National Financial Literacy Month begins today

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MADISON, Wis. (4/1/08)--April Fool's Day may start out National Financial Literacy Month but financial literacy is no joke. The national average financial literacy skills score for 12th graders in 305 high schools nationwide was 52.4%, with only 6.9% of students receiving a "C" grade or better, according to a 2006 survey by the national Jump$tart Coalition for Personal Financial Education These aren't the latest statistics. The results of the coalition's 2008 Survey of Personal Financial Literacy Among High School Students--conducted this past fall and winter--will be released at a press conference on April 9 as part of National Financial Literacy Month. As governors and legislatures polish their proclamations and resolutions, credit unions and other organizations already are working on the front lines to improve financial literacy skills. According to the Credit Union National Association's (CUNA) Financial Literacy Task Force, nearly 80% of credit unions with assets of $10 million or more offer financial education to adults or youth, while more than half provide financial education to both. Credit unions with $50 million or more in assets are more likely to offer financial literacy programs than they were in 2005. Credit unions in several states are working for state laws requiring a financial literacy component in state schools. For example, the North Carolina General Assembly has required personal financial literacy be provided all public high school students beginning next fall for 10th graders' civics and economics curriculum. In many states, credit unions are an integral part of the education programs in local schools, either providing materials for the curriculum through the National Endowment for Financial Education or training the teachers. Elsewhere, credit unions are partnering with lawmakers to hone financial skills of students of all ages. The Michigan Credit Union League's Sixth Annual Financial Literacy Legislative Challenge partners Michigan lawmakers with credit unions and schools to co-present the curriculum (Michigan Monitor March 31). Credit unions also will highlight financial literacy during National Credit Union Youth Week April 20-26. See "Youth Week just around the corner" in News Now's System News section. Meanwhile, credit unions will see a number of proclamations to raise awareness. California Gov. Arnold Schwarzenegger proclaimed April as "Financial Aid and Literacy Month" last week. North Carolina Gov. Michael Easley proclaimed the month as "Financial Literacy for Youth Month." Washington State Gov. Chris Gregoire also proclaimed the month "Financial Literacy Month."

Second teen arrested in Virginia interstate CU shootings

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CROZET, Va. (4/1/08)--A second teenager was arrested Friday in the police search for shooters who fired gunshots at passing cars on Interstate 64 between Waynesboro and Charlottesville, Va., and into a credit union while it was closed Thursday morning. Authorities arrested the 16-year-old teen whose name was not released, after storming a central Virginia farm (The Knoxville News Sentinel March 29). Earlier, another man, Slade A. Woodson, 19, of Afton, Va., was arrested, announced Virginia State Police Friday. He was charged with shooting at a residence in Waynesboro and at the DuPont Community CU, Waynesboro (News Now March 31). Because investigators said the shooters slightly injured two drivers, Woodson and the other teen were charged with two felony counts of malicious wounding, one count of attempted malicious wounding, two counts of the use of a firearm in felony, and five counts of a malicious shooting at an occupied vehicle. The credit union in Waynesboro, reported the vandalism at its Lucy Lane office Thursday morning. "During the night, while the office was closed, random shots were fired at the building and a vehicle on the premises," Jackie L. Cason, vice president of human resources, told News Now Friday. The incident was discovered Thursday morning when the credit union opened for business. Because it occurred overnight and not during business hours, DCCU conducted "business as usual" on Thursday. "No credit union employees or members were involved or affected by this event," Cason said. She said at least four bullets struck the building, a sign and an unoccupied van in the parking lot. One went through an exterior window into an office, she told News Now.

Arizona Antigua CU leagues sign partnership pact

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PHOENIX (4/1/08)--The Arizona Credit Union System (ACUS) signed a partnership agreement this week with the Antigua & Barbuda Cooperative Credit Union League to help the Caribbean island nation better serve its affiliated credit unions.
Elis Southwell (left), president, Antigua & Barbuda Cooperative Credit Union League, and Scott Earl, president/CEO, Arizona Credit Union System, sign an international partnership between the two organizations.
Delegates from the Antigua & Barbuda Cooperative Credit Union League visit the $1.108 billion asset Arizona State CU, Phoenix, one of the state’s largest credit unions. (Photos provided by World Council of Credit Unions)
The partnership agreement was arranged through the World Council of Credit Unions (WOCCU) International Partnership program. Representatives from ACUS visited Antigua in June as the first step toward the agreement. Last week, ACUS hosted a delegation of five representatives from the Antigua league. Ellis Southwell, president of the Antigua League, and Scott Earl, president/CEO of ACUS, signed the agreement during the visit. “Credit unions, no matter where they are, are not that different,” Earl said. “The bottom line is that it is all about the member. Our goal is to work with the Antigua & Barbuda Credit Union League to institutionalize the organization and allow it to serve its member credit unions more efficiently.” The partnership will focus on strengthening the Antigua league through the development of new revenue streams and new products and services to be offered to its affiliated credit unions. Currently, the league relies on its volunteer board of directors, its volunteer supervisory committee and a dues-based structure to operate and serve affiliates. The league said it also would like to incorporate more training programs--especially for compliance issues--into its member service program. “The Antigua league is a small league with potential, and we believe that this partnership with the ACUS will help us unleash the possibilities and help us to develop ourselves so that we can assist our affiliates,” Southwell said.

CU System brief (03/28/2008)

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* WAYCROSS, Ga. (3/31/08)--The holding company for Atlantic Coast Bank--formerly Atlantic Coast FCU--declared a quarterly cash dividend on common stock of 15 cents per share, to be paid on April 28 to all stockholders of record as of April 11. Atlantic Coast Federal MHC holds more than 8.7 million shares or 64% of the Atlantic Coast Federal Corp.'s stock and will waive receipt of the dividend on its shares, the board announced Friday (Business Wire March 28) …

TCUF starts Financial Literacy Month celebration early

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FARMERS BRANCH, Texas (3/31/08)--April is National Financial Literacy Month but the Texas Credit Union Foundation (TCUF) got a head start in observing the event with its Celebration of Financial Literacy dinner Thursday. The event, sponsored by Texas Jump$tart Coalition and TDECU, Lake Jackson, attracted 150 guests from across the state. Guest speaker was Jason Garrett, Dallas Cowboys assistant head coach and offensive coordinator, who addressed the importance of financial literacy, and motivating and inspiring young people. TCUF highlighted several programs, all involving credit unions in the state: the National Endowment for Financial Education (NEFE) High School Financial Planning Program (HSFPP; Junior Achievement; Bizkid$, a financial literacy PBS series airing throughout the nation; and a new program with GECU and the University of Texas at El Paso to develop a DVD aimed at college students. "TCUF has become the leading resource for financial education in our state, thanks to the support we receive from credit unions, our business and community partners and sponsors," said TCUF Executive Director Jill Pharr. "This is an accomplishment we can all be very proud of." Special guests included Steve Delfin, executive director of the National Credit Union Foundation, and recipients of the 2008 FOCUS Awards:
* Larry Heitzman, generations CU (formerly San Antonio City Employees CU); * Philip Crocker, Resource One FCU, Dallas; * Fort Worth Chapter of Credit Unions; and * A+ FCU, Austin.
Other organizations dedicated to financial education attending included: Junior Achievement, Texas Cooperative Extension Service, Texas Council on Economic Education, Office of Consumer Credit Commissioner; RAISE Texas, the Federal Reserve Bank of Dallas, Texas Saves, Financial Planning Association of Dallas, JROTC, and Texas Jump$tart Coalition. Texas Gov. Rick Perry issued a proclamation declaring April as Financial Literacy Month in Texas, and Dallas Mayor Tom Leppert proclaimed Thursday as TCUF Financial Literacy Day.

Malware was secretly installed on all stores servers

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SCARBOROUGH, Maine (3/31/08)--A data breach that compromised the credit and debit cards of more than 4.2 million grocery shoppers was caused by software that was secretly installed on servers of every grocery store in the chain, says Hannaford Bros. The "malware" intercepted card data at nearly 300 grocery stores as customers swiped their card at the checkout counter. It then sent the data overseas, said Hannaford General Counsel Emily D. Dickinson in a letter to Massachusetts Attorney General Martha Coakley and Gov. Devel Patrick's Office of Consumer Affairs and Business Regulation (The Boston Globe and Washington Post March 28). The letter said the malware was installed on the servers of each store the company operates and that uses the company's payment systems. The stores were in Maine, Vermont, New Hampshire, Massachusetts and New York, plus the Sweetbay chain in Florida. The malware intercepted "track 2" data stored on the cards' magnetic stripe. The data include the card's number and expiration date but not the name of the customer. The data were stolen while in transit for authorization from the point of sale, meaning that as it went from cash register to one of the institutions Hannaford uses to process transactions. These include the major card networks and a major card processor, First Data Corp. The malware on the store servers collected records of the purchases in batches, then transmitted them to an offshore Internet service provider. Malware can be installed remotely if the hacker can breach a company's firewall; if servers aren't running the latest security patches; or if they are running out-of-date antivirus programs. Hannaford has replaced the hardware on which the malware was installed, the company said.

Gov. Lynch praises New Hampshire CU for flood help

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PORTSMOUTH, N.H. (3/31/08)--New Hampshire Gov. John Lynch praised Service CU Thursday for making significant contributions to help state families affected by flooding during the past three years. He made his remarks at the 51st annual meeting of the Portsmouth-based credit union, which is the largest credit union in the state. Lynch had proclaimed March 26 as New Hampshire Credit Union Day. The governor noted that credit unions in the state have provided valuable financial service to residents for 100 years. And Service CU, with $1.2 billion in assets and more than 110,000 members, “continues to adhere to the values established by our founding members/owners,” he said in a press release. “I have enormous respect and appreciation for Service CU, what they’ve done and what they continue to do in New Hampshire,’ he said. The governor said the credit union “sets the standard for all other organizations” in the state because it has woven itself into the fabric of the community. “The reason New Hampshire is such a great state is because of organizations like Service CU,” Lynch said.

Damage at CU may be linked to Virginia I-64 shootings

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WAYNESBORO, Va. (3/31/08)--Virginia law enforcement officials are investigating whether gunshots fired into a credit union while it was closed early Thursday morning are linked to a series of sniper shots that injured two people and closed Interstate 64 between Waynesboro and Charlottesville, Va., for six hours. One man has been arrested in the incidents. DuPont Community CU (DCCU), Waynesboro, reported the vandalism at its Lucy Lane office Thursday morning. "During the night, while the office was closed, random shots were fired at the building and a vehicle on the premises," said Jackie L. Cason, vice president of human resources. The incident was discovered in the morning when the credit union opened for business. Because it occurred overnight and not during business hours, DCCU conducted "business as usual" on Thursday. "No credit union employees or members were involved or affected by this event," Cason said. She said at least four bullets struck the building, a sign and an unoccupied van in the parking lot. One went through an exterior window into an office, she told News Now. One man, Slade A. Woodson, 19, of Afton, Va., has been arrested, announced Virginia State Police Friday in a press release. He was charged with shooting at a residence in Waynesboro and at the credit union. At the time of the arrest, police were confronted by another man with a handgun. That man was shot and flown to a Charlottesville hospital for treatment. Woodson is considered a suspect in the string of shootings along the mountain highway that resulted in two injuries, neither of them serious. Police had sought at least two people suspected in the highway shootings, which hit two cars, a van, a tractor-trailer, another vehicle and an unoccupied state dump truck on I-64. A surveillance tape of the credit union's parking lot helped pinpoint a suspect vehicle, an AMC Gremlin. Woodson owns an orange 1974 Gremlin.

Gartner Will be hard to get grocer to pay breach costs

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FRAMINGHAM, Mass. (3/31/08)--Credit unions and banks will have a difficult time getting Hannaford Bros. to pay their breach-related costs if the grocery chain was compliant with the Payment Card Industry (PCI) Data Security Standard when the breach occurred. If that's the case, Hannaford has a safe harbor under PCI and will not be required to reimburse banks and credit unions for the costs they incur in replacing cards, notifying member/customers, and for fraud, Avivah Litan, an analyst for research firm Gartner Inc., told Computerworld (March 27). Hannaford says it was recertified as compliant with PCI in February and had been similarly certified last year. PCI refers to 12 security controls that merchants accepting payment-card transactions must follow. If they don't they are fined by Visa, MasterCard, and other major card companies. Litan said that under the rules, if a company is noncompliant and suffers a breach, it faces both potential fines and reimbursements to credit unions and banks of their breach-related costs, including actual fraud losses. The fines and reimbursement costs are not collected directly from the merchant but through that merchant's acquiring bank, which authorizes the merchant, such as Hannaford or TJX Cos., to accept the transactions. It is these banks that are directly responsible for ensuring that merchants are PCI-compliant, Litan said. Under PCI rules, the acquiring bank can't take the reimbursement problem back to the retailer. Computerworld noted that reimbursement is a sticky point for credit unions and banks. It mentioned that several credit union leagues lobbied state governments to pass laws that would make retailers responsible for the costs of a breach, and that only Minnesota has passed such a law. Although credit unions and banks--and consumers--may not have recourse under PCI rules, they still can file lawsuits, the article said. The Hannaford breach, which compromised 4.2 million cards in New England, New York and Florida, was discovered Feb. 27 and made public March 17. It affects transactions at grocery stores from Dec. 7 to March 10. So far about 2,000 actual incidents of fraud have been reported, said Hannaford.

CU sponsors bus tours of foreclosed homes

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MARLBOROUGH, Mass. (3/31/08)--In a sign of the times, foreclosed properties are the highlights of a series of Foreclosure Bus Tours offered by Marlborough, Mass.-based Digital FCU's real estate firm, DCU Realty. According to the credit union's website, the tours run on Saturdays through May 17, last three hours and hit different areas of the state each week. For example, it hit the Marlborough area on March 15, the Westboro area on March 22, and Nashua, N.H., this past Saturday. Next week, it'll be Waltham. The bus tour is open to anyone, but Digital members get a discount. "Tourists" can bring along a copy of their pre-approved letter from a lender in case they see a deal too good to pass up. They also are told to bring a camera, a flashlight and shoes they can slip off when entering a nice property. Some homes are in move-in condition while others have no electricity, heat or running water. Peter Bohush, the broker with the firm, told a local newspaper that the tour is an easy way for prospective buyers to see a lot of properties in a short time. The tourists include anyone from first-time homebuyers to investors looking for fixer uppers (The MetroWest Daily News March 27). He noted the firm isn't trying to cash in on the foreclosure problem but views the tours as the solution to the housing market crisis. The tours look at properties in several price ranges. The properties are posted on the credit union's website each Thursday. A real estate attorney accompanies the tour to answer questions and explain how to purchase a foreclosed property. Refreshments are provided at the start and conclusion of the tour.

Kansas FOM bill is on its way to governor

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TOPEKA, Kan. (3/31/08)--The Kansas House of Representatives passed a substitute bill for banker-backed Senate Bill 535 by a vote of 115 to 8 Friday morning, and the bill is on its way to the governor's office. The bill would limit the geographic area served by credit unions and create new standards for branching, mergers and field of membership (FOM) changes. It was not amended by either the House or the Senate, said the Kansas Credit Union Association (KCUA). KCUA anticipates that Gov. Kathleen Sebelius will sign the legislation into law. “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," said Marla Marsha, president/CEO of KCUA. "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,” she added. The legislation removes any further legislative or legal threats to credit unions and will provide a long-term standard for interpreting the Kansas FOM statute, the league said earlier last week. The league worked to amend the original bill, which was backed by the Kansas Bankers Association, with the substitute's language. 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.
After it is signed, the bill would affect nine state-chartered credit unions, which must immediately restrict their current geographic fields of membership because they currently extend beyond the one million in population limit. If signed, 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.

Illinois league kicks off REAL Solutions

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NAPERVILLE, Ill. (3/31/08)--The Illinois Credit Union League (ICUL) kicked off its participation in the REAL Solutions program with two meetings March 11-12.
Mark Lynch, REAL Solutions field coach, leads an introductory meeting about the program at the Illinois Credit Union League’s Naperville, Ill., offices earlier this month. (Photo provided by the Illinois Credit Union League)
Nearly 60 people representing more than 40 credit unions attended. Lois Kitsch, REAL Solutions program director, and Mark Lynch, field coach, facilitated the sessions. “The Illinois league is excited to be a partner in REAL Solutions,” said Dan Plauda, ICUL president/CEO. “Through this progressive program, we look forward to making a difference in people’s lives.” REAL Solutions is a signature program of the National Credit Union Foundation. "REAL" stands for "Relevant, Effective, Asset-building, Loyalty-producing" solutions. Through the program, credit unions can choose up to 20 products or services in education, transaction services, savings, credit, and home ownership to offer people of modest means, working families, and “low-wealth" households. Participation fees have been funded by ICUL and the Illinois Credit Union Foundation (ICU Foundation). Twenty-nine Illinois credit unions have signed a memo of understanding to participate in the program. Lynch is conducting diagnostics meetings with each participating credit union to determine the credit union’s interests and to pick the top three products of the program. The diagnostics will be completed in the next few weeks. ICUL also will conduct a series of partners meetings. Credit unions plan to roll out their REAL Solutions initiatives in about nine months.

CUNA taking care of bogus website phishing for info

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MADISON, Wis. (3/28/08)--The Credit Union National Association (CUNA) was taking measures Thursday to shut down another bogus web site that spoofed CUNA's website,, in an attempt to phish for consumers' personal financial data. Such attempts occur periodically and in waves. The latest attempt, with a subject line "Claim your 200 USD reward" was received by a daughter of a friend of a CUNA editor in an e-mail addressed to "Dear CUNA Member." It says the member has been successfully selected in a random contest to win $200 "as one of our Credit Union's member." The catch: To claim the prize, the recipient must complete an online form by clicking a link which boots the recipient to a bogus look-alike site. The form, entitled "CUNA Survey," asks for the recipient's full name, credit union name, ATM/debit card number, expiration date, the card's CVV security code and the card's personal identification number or PIN. A number of errors can help tip off recipients that this and similar messages are phishing attempts:
* CUNA is a trade association, not a financial institution. There is no "CUNA Credit Union" and CUNA is not called "CUNA Organization." Its members do not have card accounts with CUNA. CUNA members are institutions, not individuals. * The subject line refers to "200 USD" or U.S. dollars reward, which suggests the writer is from a foreign country, not from CUNA's offices in Washington D.C. or Madison, Wis. * The message has grammatical errors. * Most important, CUNA would never make an unsolicited attempt to collect personal financial information via e-mail or the telephone.
The best thing to do is ignore the link and delete the message.

CU System briefs (03/27/2008)

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* ST. LOUIS (3/28/08)--Sgt. Joshua Eckhoff, a former teller at Electro Savings CU in St. Louis, was wounded recently while serving in Iraq, says the Missouri Credit Union Association (CourierNet March 26). When the credit union staff learned that Eckhoff suffered a serious head injury during combat operations and fellow soldiers saved his life, employees Dana Casey and Julie Foulks organized a collection drive for his military unit. They sent a care package of food, toiletries and entertainment items on March 21 to the group. "We are so grateful for what the other soldiers did for Josh and wanted do so something to thank them," said Casey, an accountant at the $92 million asset credit union. Eckhoff's mother keeps the staff updated and reported he is recovering … * NAPERVILLE, Ill. (3/28/08)--The Illinois Credit Union League (ICUL) has launched a new communication tool--the "Dialogue with Dan" blog. It includes regular postings from ICUL President/CEO Dan Plauda about the Illinois system and credit union issues. Credit unions and other visitors to the site can comment, ask questions and share thoughts with Plauda and other credit unions via the postings. The blog includes links to "what's new/what's hot" on the league's website, news headlines from various publications and links to other credit union entities … * SALT LAKE CITY (3/28/08)--Mountain America CU was named one of the top 125 companies for employer-sponsored training and development by Training magazine. Mountain America was one of 37 newcomers to the list this year. The credit union was recognized for its corporate university and its CU Briefings program located on the credit union's intranet. The briefings give short lesson plans that discuss specific functions, products, services or topics such as Identity Theft. Training magazine has ranked companies for seven years based on factors such as training tied to business objectives, number of trainers, employee turnover, certification and more …

Shared Branching transactions in Ohio up 100

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DUBLIN, Ohio (3/28/08)--Shared Branching transactions in Ohio for 2007 were up 100% since 2003, with more than 80 credit unions in the state participating in the network. Branches participating in the network are added at a rate of 1.5 per day, said the Ohio Credit Union League. In 2003, the number of transactions at participating Ohio credit unions totaled more than 800,000. In 2007, more than 1.7 million transactions took place. The numbers include transactions at branches of Ohio credit unions located in West Virginia, Indiana, Kentucky, South Carolina and Pennsylvania. "While many financial institutions are moving from a less personalized way of doing business, credit unions see the need for personal service when conducting transactions, especially in an unfamiliar location," said league President Paul Mercer. "Many members travel leisurely or on business, are changing jobs, or are facing a permanent relocation. Shared Branching reduces the stresses related to these situations," he added. Shared Branching allows credit union members to conduct brick and mortar transactions in all 50 states and in six foreign destinations. More than 3,000 credit union branches nationwide serve as Shared Branching outlets. To locate a Shared Branching outlet call 800-919-CUSC (2872) or use the link.

Elevations CU sees unexpected hike in mortgages

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BOULDER, Colo. (3/28/08)--Gross first mortgage production at Elevations CU totaled $13.7 million during February--70% more than the $9.7 million it had projected. The credit union made 61 loans--75% refinances and 25% new purchases. The total dollar volume was 261% more than the total mortgage production in February 2007, said the credit union in a press release. Several factors influenced the change, said Linda Cooper, assistant vice president of residential lending at the Boulder, Colo.-based credit union. Interest rates remained low at a time when many adjustable rate mortgages are due for a rate readjustment, she said. At the same time, consumers are venturing back into purchases because the housing market is favorable for buyers. Nationwide, home prices have leveled off or declined while rates remained low, Cooper added. "Our experience seems to reflect a trend in the local market," Cooper said. Elevations was told by title companies and appraisers it works with that February was a busy month for refinances. The reality is that the mortgage industry is in a state of flux, she said. Consumers are seeking more traditional mortgage providers and more traditional mortgage products. Elevations has a 54-year track record and is a known and trusted provider in the area, Cooper said. So far, the volume of mortgage applications received remains strong in March, with the number of purchase applications outpacing refinance applications. If the historical spring surge in home sales holds true in 2008, Elevations expects another strong month of mortgage volume for March. Elevations has more than $760 million in assets.

Russian president-elects small-biz plans include CUs

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TOBOLSK (3/28/08)--Russia's President-elect Dmitry Medvedev Thursday outlined his strategies for promoting small businesses in the country. Among them: promoting credit unions. Promoting credit unions and microfinance can help solve small businesses' liquidity problems, Medvedev said (Prime-TASS News March 27). He had been discussing whether the government should help cut the cost of capital for small businesses during the liquidity crunch. Medevedev made the comments at a meeting of the State Council, a presidential advisory body. His proposals included promoting small businesses in a number of industries, reducing the time required for starting a small business, and cutting bureaucratic red tape to make it easier for small businesses to rent premises and connect utilities.

CU heavily damaged in explosion firefighter killed

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WESTCHESTER, Calif. (3/28/08)--An explosion Wednesday afternoon at an intersection near Los Angeles International Airport killed one firefighter and critically injured another, and caused significant damage to Water and Power Community CU. No credit union employees or members were hurt in the explosion. The cause of the explosion and the specific extent of the damages are yet to be determined, Linda Heidtke, marketing director at the Westchester-based credit union, told News Now. “We had had two credit union members and three staff members in the building at the time of the explosion,” Heidtke said. “No one was hurt. However, the branch will be closed for some time. “Our members are being directed to two of our nearby branches or to the shared branching system of the Credit Union Service Center system for their banking needs,” she added. Water and Power implemented its business continuity plan in the aftermath of the explosion and “it worked beautifully,” Heidtke said. “Our call center was flooded with phone calls, but we were able to get word out about the explosion to our members on our website and were able to e-blast a message to our members.” Water and Power CU and the Los Angeles Firemen’s CU have established a memorial fund through the Fire Family Foundation, a 501(c) 3 foundation, to honor Firefighter Brent A. Lovrien, the Los Angeles firefighter who lost his life. “Our deepest sympathy goes out to the Lovrien family and the Los Angeles firefighters of Station 95. Their heroism saved the lives of our Westchester branch employees,” Carl Stewart, Water and Power president/CEO, said in a press release issued by the credit union. “We are forever grateful to Brent Lovrien, to firefighter Anthony Guzman, who remains hospitalized, and to the rest of the L.A. firefighters and police who came to our aid,” he added.

Filene report connects the dots on collaboration

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MADISON, Wis. (3/28/07)--Credit unions must trust each other and collaborate to survive--especially now when they are faced with diminishing margins, increasing expenses, fierce competition and declining memberships, according to a new report by the Filene Research Institute. The report, “Connecting the Dots on Credit Union Collaboration: A Colloquium at the Wharton School of the University of Pennsylvania,” summarizes the key findings of a 2007 colloquium of academics, practitioners and consultants. The event was sponsored by Filene in conjunction with the Wharton School of the University of Pennsylvania. Collaboration theories and firsthand experiences were shared among attendees. Colloquium presenters included:
* Harbir Singh, Wharton School, University of Pennsylvania; * Kirk Kordelesk, Bethpage FCU, Bethpage, N.Y.; * Lucie Bouchard, Desjardins Group; * Randy Karnes, CU*Answers; * Steve Williams, Cornerstone Advisors; and * Steven Michaels, University of Illinois at Urbana-Champaign.
The report cites the challenges facing credit unions today as impetus for not only cooperation among credit unions, but for changes in the behaviors and mindsets of industry stakeholders, said Filene. Key findings at the colloquium included: * Information Technology and trust are critical to enabling collaboration; * Egos exist but have to be left at the door, as boards and executives consider large-scale collaboration; * Vendors need to create attractive price points to encourage collaborative efforts; * Collaboration occurs in phases--not leaps--so short-term, feasible goals are a good place to start; * Credit unions need to consider that risk-averse thinking among boards may be more detrimental than taking new calculated risks, including large-scale collaboration; * Credit unions need to share success stories; and * The industry challenges of the last five years--including rising expenses, shrinking margins, declining membership, and competition for market share--are reason enough to proactively seek change. The report also says that while collaboration is essential, it requires change, which isn’t easy, and then cites Harvard Business School Professor John Kotter’s sequential steps for making change stick. The steps are:
* Establish a sense of urgency; * Create a coalition; * Develop a clear vision and share it; * Empower people to clear obstacles; * Secure short-term wins; * Consolidate and keep moving; and * Anchor the change.

Michigan CUs free tax help saves families 5.7 million

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NORTHVILLE TOWNSHIP, Mich. (3/28/08)--Michigan credit unions have already put more than $5.7 million into the pockets of Michigan families in the form of tax credits and refunds, with a few weeks still remaining before the tax filing deadline. In January, about 100 credit unions began offering “Just file it! We’ll help. Free tax preparation for those who need it most”--a Web-based tax service. It is designed to help filers claim refunds that go overlooked, including the Earned Income Tax Credit (EITC), which can be as high as $4,500 for low-income, working households. In three months thus far in 2008, last year’s total of $2.7 million in returns has been exceeded, and the program has helped more than 2,500 filers. “With so many Michigan families facing uncertain financial times, there’s no question this program has been extremely valuable to lower-income households struggling in a tough economy, and we’re proud credit unions could be a part of it,” said David Adams, Michigan Credit Union League president/CEO. “Just File It has helped taxpayers claim refunds and returns they may not have known existed--and this money is going right back into our state economy and helping people stay in their homes and put food on the table,” he added. All that is needed to use the Just File It! program is a computer, Internet access, a Web browser and a printer. The program--offered in English and Spanish-- uses a free, Web-based software program, posing questions to users and offering assistance via tutorials.

SELCO to appeal dismissal of class action in TJX case

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EUGENE, Ore. (3/27/08)--SELCO Community CU has filed a notice of appeal on a federal court's dismissal of a class action lawsuit in the TJX Cos. data breach case. It also has filed a separate complaint in a state court against TJX and its bank, Fifth Third Bank. SELCO Community and AmeriFirst Bank, based in Alabama, are asking the U.S. Court of Appeals to overturn the U.S. District Court's dismissal of the class action lawsuit, according to Steven L. McIntire, general counsel of the Eugene, Ore.-based credit union. The class action case was dismissed after most of the multiple-party lawsuit settled with TJX Cos. on the costs of replacing the credit and debit cards compromised by the largest data breach in history. Although the notice of appeal has been filed, the actual appeal hasn't been filed yet, McIntire told News Now. The credit union and bank are appealing the court's dismissal of their claims of negligence and breach of contract, as well as the denial of certification as a class action lawsuit, McIntire said. The court also refused the credit union's attempts to amend on conversions and unlawful trade practices. TJX Cos. and Fifth Third have appealed the court's decision to remand the case back to lower court, and that likely will result in a "stay" of other pending cases, which could hold up the credit union's appeal. The credit union has retained a Boston law firm, Whatley, Drake and Kallas to handle the case. A separate lawsuit was filed with the Middlesex County Superior Court in Massachusetts repeating the same claims. "Essentially the state case is mirroring the federal case," McIntire said. SELCO had to replace more than 11,000 Visa and debit cards related to the TJX breach. When the class action case was dismissed in the settlement, "we didn't accept the settlement," McIntire said. "Our position is that we really need to bring national attention to the problem of data breaches and the industry not policing" their data. "Now we're seeing more breaches," he said, citing a Hannaford Bros. grocery chain breach that was disclosed last week. The matter "needs to be addressed through legislation--but that's very difficult--or through lawsuits," he said. In suing, the credit union is thinking "in terms of goals for the overall industry and the big picture, not just the dollars and cents," he added. "We're trying to prevent similar occurrences in the future."

Small biz owner CU is doing it right

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SALT LAKE CITY (3/27/08)--A credit union couldn't ask for a more glowing endorsement from a member on its philosophy of service. The $3.2 billion asset Mountain America CU in Salt Lake City was the topic of a column written by a member with a business loan. The title: "Doin' it right." Jim Ackerman, president of Ascend Marketing Inc., a two-person business run out of his home, recently attended Mountain America's Business Services Department's third open house. The event attracted 100 business members. "I have never run into a financial institution so committed to serving its business clientele in such a comprehensive way," he said. "It is so refreshing to see an organization that thinks customer service the way 'I' think it." Mountain America CU so impressed him he wrote a column in The Enterprise (March 10-16), a weekly business-focused newspaper. In it he tells how he had been "reasonably satisfied" with his bank. An earlier big bank "always made me work hard to do business with them," but the bank he settled with was "pretty decent. They never went out of their way to get to know me or my business, but they didn't actively hamper my efforts either," he wrote. He did most of his banking online, but he didn't like to run to the bank with his deposits. At a networking event, he met Annette Zimmerman, senior vice president for business services at Mountain America, who introduced Ackerman to Dan Summerhays of the credit union's business department. Ackerman mentioned the deposit dilemma and Summerhays said, "No problem. We can come pick those up for you." Ackerman became a business member, and the credit union is still picking up his deposits. Summerhays also asked for a meeting to get a better idea about Ackerman's business, offered a line of credit, and even referred a business to Ackerman. "I don't care how much the banks want to make the case that credit unions have become just like them, you won't convince me," Ackerman wrote. "Banks are all about them and their stockholders, and playing it safe and sound." Credit unions, he wrote, "understand the spirit of interdependence. I've never seen anybody exemplify that like Mountain America Credit Union." He suggested all businesses do as the credit union does: "Pro-actively work for the good of your clients. Take care of them first. When you do, they'll take care of you, and the sky is the limit."

Are you prepared for the next disaster

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MADISON, Wis. (3/27/08)--Disaster protection is important to credit unions because nobody’s immune from crises--there is always a potential threat that can impact your business. That was the key message from a “Disaster Preparedness--Prepare for the Unexpected” webinar broadcast Wednesday by CUNA Mutual Group. Glenn Engel, CUNA Mutual certified business continuity planner, and Mike Retelle, CUNA Mutual disaster team leader and credit union protection claims manager, presented an overview of disaster preparedness for credit unions during the hour-long webinar. “The impact of a disaster on your business depends on how well prepared you are,” Engle said. “The threats to businesses include acts of nature, man-made acts and infrastructure or technology.” There are more potential risks today for businesses, such as disasters, terrorism, acts of war, human error and outsourced service providers, he added. Over the years, the evolution of the industry has gone from disaster recovery planning to business continuity management--otherwise known as continuity of operations, Engel explained. Business continuity is made up of three components: prevention plans (before the crisis), emergency response plans (during the crisis) and business resumption plans (following the crisis). “The more recovery time, the more the recovery costs become,” Engel said. “The optimum solution for credit unions involves weighing the costs to be prepared versus the recovery costs.” The business continuity program drivers are risk analysis--determining and quantifying risk--and business impact analysis, which involves prioritizing business functions and determining the impact of a loss of a business function. “It is crucial to make sure that disaster recovery plans are easy to understand, specific, and have step-by step procedures,” Engel explained. “The plans must also be available. Can anyone recover and use them? You need to have them available off-site so they don’t get lost in a disaster.” It also is important for credit unions to develop a “how to recover” script, Engle said. This involves breaking processes into procedural steps, deciding what will be done differently during the recovery process, and then documenting it. To make sure the plan works, response team members need to maintain off-site inventory, perform periodic plan review and maintenance, conduct ongoing training, and have regular exercises or tests of the plan, Engle added. “A successful business continuity management program involves a strategy, an up-to-date plan, trained personnel, and testing,” he concluded. An untested plan is no plan at all, Retelle told participants. “Disaster planning for credit unions is similar to what you do for your home. You have to have a plan and then practice the plan. Credit unions need to involve management staff and regular staff. The recovery plan needs buy-in from all the people involved.” Credit unions must determine what is important, such as: lending, dealing with the membership, getting ATMs up and running, and so forth, Retelle said. The key information that CUNA Mutual needs from a credit union when a disaster strikes is:
* The nature of the loss/event; * Any special immediate credit union needs; * The identity of the main credit union contact person; and * The best way to reach the credit union’s main contact person.
CUNA Mutual Group’s Disaster Team can be reached 24/7/365 at 800-637-2676.

N. Hampshire CUs double outreach lending goals

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MANCHESTER, N.H. (3/27/08)--New Hampshire’s five-year Credit Union Community Outreach Initiative, designed to help underserved low- and moderate-income New Hampshire families, doubled the amount committed in its original lending goals. When the initiative was announced in October 2003, credit unions statewide--through the New Hampshire Credit Union League’s Community Outreach Committee--pledged to lend $35 million through programs designed to offer fair and reasonable loan alternatives, which centered on consumer education and affordable rates and fees. The program’s success resulted in New Hampshire credit unions lending $70 million--twice the amount committed--in four years rather than five. “When we first developed the Credit Union Community Outreach program in 2003, we held lengthy discussions concerning our ability to achieve a goal of this size,” said Peter Kavalauskas, president of Portsmouth, N.H.-based Northeast CU and chairman of the committee. “We went ahead anyway because we saw the need for consumer friendly financial products that focused squarely on the need of lower- and moderate-income people,” he continued. The committee credits the program’s success to ongoing brainstorming and product refinement. “We found that even the best ideas might not be applicable in every area of the state. Programs that were successful in helping people finance the purchase of multi-family, owner-occupied homes were effective in cities, but other solutions were needed in less densely populated areas of the state,” said Rob Kimmett, league senior vice president of public relations and marketing. The initiative had four main components. Home loans accounted for 85% of the total dollars. The two largest mortgage lending initiatives were the Homeownership Loan Program and the Home Loan Payment Relief (HLPR) Program. The Homeownership Loan Program concentrates on helping low-income individuals purchase a multi-family home after financial education efforts and classes in being a landlord. The loan offers attractive market rates and flexible qualification standards. Family emergency loans were another component of the program. These are small personal loans made to families or individuals for amounts up to $1,000 for 12 months or less. Ordinary credit standards are relaxed, because the borrowers using these loans would not typically qualify for a personal loan.

Wegner Awards nominations open through June 17

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MADISON, Wis. (3/27/08)--All individuals and organizations within the credit union system can make nominations for the credit union movement’s highest national honors: the 21st Annual Herb Wegner Memorial Awards presented by the National Credit Union Foundation (NCUF). “The foundation is calling for Wegner Awards nominations two months earlier than in previous years,” noted NCUF Executive Director Steve Delfin. “We anticipate attendance at the Wegner Awards Dinner will again reach the Grand Hyatt’s seating capacity--so we plan to announce the award recipients two months earlier as well. Our plan is to begin taking reservations for the 2009 dinner as early as September 2008.” Nominations are due by June 17 for:
* The Individual Achievement Award, honoring an unsung hero for innovative concepts and/or accomplishments that have made a significant impact on the national and/or international credit union movements within the past 10 years--or now have a significant potential impact. Nominations must cite a specific subject of achievement. Examples include financial literacy, service to the unserved or underserved, alternatives to predatory lending, and/or new products. * The Outstanding Organization/Outstanding Program Award, honoring an organization or business for innovative concepts and/or products/services that have made a significant impact with measured results on the national and/or international credit union movements. * The Lifetime Achievement Award, honoring an individual who has dedicated his/her life to promoting credit union philosophy. This person must have created innovative concepts and provided leadership that has made a significant and lasting impact on the national and/or international credit union movements.
There are four steps to make a nomination:
* Use the Resource link to print out the Wegner Awards brochure and nomination form; * Fill out the nomination form; * Gather at least five letters of recommendation citing examples of the nominee’s achievements relevant to the award criteria, and * Mail the nomination form and recommendation letters to NCUF by June 17.
Awards will be presented at the 21st Annual Herb Wegner Memorial Awards Dinner on Feb. 23. The dinner will take place at the Grand Hyatt Washington in conjunction with the Credit Union National Association’s 2009 Governmental Affairs Conference in Washington, D.C.

CUs learn mortgage expansion strategies

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DURHAM, N.C. (3/27/08)--"There is simply no other choice: Credit unions have to make more mortgage loans" is the message brought to credit unions attending a recent two-day mortgage lending expansion workshop.
At a workshop on Mortgage Lending Strategies in Uncertain Times are, from left: Martin Eakes, Self-Help CU president/CEO; Brenda Weaver, National Federation of Community Development Credit Unions CDCU Mortgage Center director; Rodney Hood, National Credit Union Administration vice chairman; and Randy Chambers, Self-Help CU chief financial officer and federation vice-chairman. (Photo provided by the National Federation of Community Development Credit Unions)
That message was delivered by Martin Eakes, CEO of Self Help CU, Durham, N.C. at Mortgage Lending Strategies in Uncertain Times, a workshop held in Durham and organized by the National Federation of Community Development Credit Unions. Eakes emphasized the need for credit unions to make mortgage loans by starting with existing members. Credit unions must make more of these loans to survive financially and fulfill the credit union mission, he said. Self-Help CU has provided low-income members more than $5 billion in affordable financing through direct lending and its own affordable loan secondary market. Phil Greer, vice president at Raleigh-based State Employees' CU, agreed with Eakes on how to treat the foreclosure problem. "What's most important is for credit unions to just do the right thing," he said. His credit union's affordable loan program recently won national recognition via the 2008 Herb Wegner Institutional Award. One of SECU's programs provides low-interest loans to teachers relocating to North Carolina; another promotes environmentally sustainable "green" construction. Rodney Hood, vice chairman of the National Credit Union Administration, encouraged attendees to do whatever they could to provide safe, affordable mortgages and emphasized partnerships, such as working with the Federal Home Loan Banks for assistance or groups such as NeighborWorks for housing counseling. Rita L. Haynes, CEO and Gloria McClendon, branch manager and loan officer, both of $10 million asset Faith Community United CU, Cleveland, Ohio, described their foreclosure prevention processes. "Faith Community has been inundated with people coming to us for assistance and working with local organizations allows us to help more," said Haynes. McClendon encouraged credit unions to be creative in pioneering new mortgage products. The credit union's "Wheels Loan," for example, helped members refinance their car payments, which freed up cash for mortgage payments and helped prevent foreclosures. Stephanie Struble of Opportunities CU, Burlington, Vt., spoke of the value of direct contact with members. "At Opportunities, we don't say 'no,' we say 'when,'" she said, adding, "the credit union works with members and the community to help move bad debt into good debt." Bob Dorsa of ACUMA focused on the future of mortgage markets and explaint mortgages are essential to the success of the credit union movement. "Helping people affected by this mortgage crisis may be one of the greatest opportunities for credit unions as a movement," Dorsa said. Brenda Weaver, director of the federation's CDCU Mortgage Center LLC, noted that community development credit unions and all credit unions "are uniquely positioned to help people through the mortgage crisis and the current economic turmoil." The workshop was made possible through assistance from the National Credit Union Foundation and the Center for Responsible Learning.

CU System briefs (03/26/2008)

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* JACKSONVILLE, Fla. (3/27/08)--Counterfeit cashier's checks bearing the name of Florida Telco CU are being circulated, says the Federal Deposit Insurance Corp. (FDIC). The counterfeits display the Jacksonville-based credit union's routing number but are otherwise dissimilar to authentic checks. The bogus items are green with dark green borders and rounded corners; authentic checks are light blue with thin double borders and red check numbers. The counterfeits display a security feature statement embedded in the top border and along the bottom border with two padlocks, while authentic checks display the credit union's phone number below its name and address in the top left corner. The counterfeit checks display "Cashier's Check Remitter:" in the lower left corner. They also misplace the statement "Over $20,000 must be countersigned" at below the second of two signature lines in the lower right corner, instead of below the first signature line. Authentic checks also include "Authorized Signature" below the second line … * PORTSMOUTH, N.H. (3/27/08)--New Hampshire Governor John Lynch is scheduled to deliver the keynote address tonight at the 51st Annual Meeting of Service CU, a $1 billion-plus asset credit union based in Portsmouth. Other speakers will include Portsmouth Mayor Thomas Ferrini, New Hampshire Banking Commissioner Peter Hildreth, Defense Credit Union Council President/CEO Ronald Arteaga, and New Hampshire Credit Union League President/CEO Daniel Egan. The credit union began in 1957 on Pease Air Force Base with eight founders each contributing $5. Since then it has expanded to serve civilian communities in the state and military members round the globe, said Gordon Simmons, president/CEO … * HARRISBURG, Pa. (3/27/08)--Louise Lingenfelser, CEO of UGI Employees FCU, Reading, Pa., has been elected to the board of directors of the Pennsylvania Credit Union Association, announced board Chair Diana Roberts (Life is a Highway March 26). Lingenfelser will fill the board seat from District 9 being vacated by Fran Muto, CEO, People First CU, Allentown, who has been a board member since May 2003 … * RANCHO CUCAMONGA, Calif. (3/27/08)--The California and Nevada Credit Union League has named Keri Bailey as director of state government affairs. Bailey joined the leagues in 2005 as state legislative and regulatory lobbyist after a 10-year career working with the California legislature. Prior to joining the league, she was chief of staff for Assemblyman Ed Chavez (D-Industry), a member of the Assembly Banking and Finance Committee. In her new position, she will oversee the state legislative and regulatory affairs for credit unions in both states. She succeeds Ron Fong, who earlier this month was hired as president/CEO of the California Grocers Association … * RANCHO CUCAMONGA, Calif. (3/27/08)--California and Nevada Credit Union Leagues President/CEO Bill Cheney has announced a realignment of league staff. Mark Klinkert, senior vice president of professional development, has added the responsibilities of chief operating officer. Lucy Ito has been named senior vice president of credit union growth and development. Sylvia Fath is now senior vice president of business services; Bob Arnould, senior vice president of governmental affairs, now oversees the Public Affairs Department as well as the league's governmental affairs team; Cindy Cavanaugh is vice president of accounting and finance; John Drago is vice president of information technology; Henry Kertman is vice president of public affairs; Carol Payne is vice president of communications and marketing; and Tracy Miller Olszowy is director of membership development …

NASCUS to hold summit in Seattle

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ARLINGTON, Va. (3/27/08)--The National Association of State Credit Union Supervisors (NASCUS) has announced the agenda for its annual NASCUS State System Summit Aug. 21-23 in Seattle. Joining the speaker lineup will be Idaho state regulator Gavin Gee and Bryan Sims, founder/CEO of brass/MEDIA Inc., Corvallis, Ore. Gee, director of the Idaho Department of Finance, will speak about the "State Regulatory Mortgage Project: A Step Toward a Solution to the Mortgage Crisis." State mortgage regulators have worked since 2004 to develop a nationwide licensing system for the residential mortgage industry. Gee will provide an update on the Nationwide Mortgage Licensing System (NMLS), a Web-based system. "Generation Y…and Why Your Credit Union Can't Afford to Miss Them" will be addressed by Sims. The session will discuss the ins and outs of how credit unions can reach young adult members by understanding the way they think. For the full agenda, visit the resource link.

Hannaford Card issuers responsible for breach costs

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SCARBOROUGH, Maine (3/27/08)--Banks, credit unions and other card issuers likely will bear the multi-million dollar costs of reissuing credit and debit cards compromised by the data breach at Hannaford Bros., said the Maine-based grocery chain. A spokesperson for Hannaford said the supermarket chain fulfilled its responsibility by identifying and fixing the breach, and by notifying its customers, credit card companies, and financial institutions (Associated Press via March 26). Carol Eleazor, vice president of marketing at the company, said the financial institutions and the card companies are the ones who "manage the card usage." Hannaford Bros. works with them but doesn't make any calls or participate in any other way in the decision on how to deal with the compromised card, she told media. According to a Tampa newspaper, two more class action lawsuits were filed in Tampa--bringing the total filed so far to four, including two filed earlier this month in Maine (Tampa Times March 25). The breach also has brought prompted more data protection bills in state legislatures. Town & Country FCU, based in South Portland, Maine, expects to issue about 14,000 new cards at a cost of $10 to $12 per card, which would total at least $140,000. The costs include staff administrative time, mailing notifications to members, and the reissuing the physical card ( March 26). The breach, which affected 4.2 million cards in New England, New York and Florida, was discovered Feb. 27 and made public March 17. The breach, which covers transactions at grocery stores from Dec. 7 to March 10, is unusual because it involved hacking encrypted data while it was in transmission after consumers swiped their cards at the stores' readers. Since 2005, more than 223 million consumers have seen their data exposed in unauthorized data breaches, reported the Privacy Rights Clearinghouse. So far about 2,000 actual incidents of fraud have been reported, said Hannaford.

California Assembly committee OKs new data protection bill

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SACRAMENTO, Calif. (3/27/08)--The California legislature moved a step closer Tuesday to adopting a landmark data security measure when the Assembly Judiciary Committee approved California Credit Union League-sponsored legislation. The unanimous, bipartisan support for Assembly Bill (AB) 1779 was introduced by Sacramento Assemblyman Dave Jones. It is the first step in renewed efforts to force California retailers and government agencies to protect consumers’ sensitive financial data, and to take responsibility for any unauthorized access of that information, said the league. The bill represents a framework for discussions that began in 2007 when the league and Jones joined forces to send AB 779 to the governor’s desk. “We got real close with AB 779 last year and it’s great to see the new data-security bill is off to a good start with a unanimous vote by the Judiciary Committee,” said league President/CEO Bill Cheney. “This is a vital measure for California consumers and the credit unions that serve them. “Data thefts are on the rise in the retail sector, and consumers increasingly find that information stolen at the retail level is used to commit identity theft and plastic card fraud. We must act quickly to close the loopholes in existing law that has allowed retailers to have a pass on this issue for far too long,” Cheney said. The legislation now moves to the Assembly Appropriations Committee, where it is slated for consideration before the fiscal deadline of Aug. 31.

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."

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.”

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.

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.

CU System briefs (03/25/2008)

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Click to view larger imageClick to enlarge image.
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 …

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.

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.

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.

Local newspapers include CUs weighing in on economy

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MADISON, Wis. (3/25/08)--Local newspapers are seeing credit unions as a source for comments on economic news, especially the credit crunch. A number of newspapers--both nationwide and local--have reported credit unions weighing in on the economy. They also have featured the programs credit unions offer to stave off foreclosures. Here are three examples. In Newark, Ohio, an article about the Federal Reserve's decision last week to cut the federal funds interest rate, featured Al Smith, president/CEO of Hopewell FCU, a $61 million asset credit union based in Heath, Ohio. Smaller commercial banks and credit unions will "survive fine" because they deal with people in their hometown, said Smith, who has been at Hopewell for 25 years and in the banking industry for 40 years. He told the Newark Advocate (March 19) that the subprime crisis is unprecedented--he had never seen such a financial situation, where mortgage companies were going out of business. In Sacramento, Calif., an article in the Sacramento Bee (March 21), discussed The Golden 1 CU's modest economic stimulus package for members caught in foreclosures. The $6.7 billion asset credit union has a $20 million fund to help members who lost their home to another lender within the past 18 months get back into their own home. The "mortgage repair loan" offers 30-year, fixed-rate mortgages to qualified members. Golden 1 CEO Teresa Halleck said the credit union had the funds to do this because it didn't engage in risky subprime loans. In Wisconsin, The Post-Crescent (March 16) surveyed 19 financial institutions--seven of them credit unions--about the events of 2007 and what's in store for 2008. Cheri VerVoot, executive vice president of Unison CU, a $135 million asset credit union in Kaukauna, told the newspaper that Unison has been insulated from the subprime mortgage fallout. The credit union is financially sound with a delinquency rate well below industry averages. "We don't engage in subprime lending, and [we] use conservative underwriting practices to protect our assets," she said. Fox Communities CU, Appleton, saw solid growth, to $645 million in assets, last year, Greg Hilbert, president/CEO, said. It has a strong mortgage program and has never been involved in subprime lending practices. FCCU promotes a first-time homebuyers program for qualified moderate incomers, with discounted rates and little or no money down. FCCU is also committed to financial education. Community First CU President/CEO Catherine Tierney told the newspaper that the Appleton-based credit union--the third-largest in the state with $816 million assets--had not experienced any delinquency or loss problems. It does not offer subprime loans. "We feel strongly that now is a wonderful time to invest in a home," she said, noting the credit union is dedicated to helping members embrace the dream of home ownership. Four other credit unions were also interviewed in the article.

IWall Street JournalI notes CUs low mortgage rates

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NEW YORK (3/25/08)--Credit unions and small banks are more likely to offer lower rates on jumbo mortgage loans because they usually hold the loans in their portfolio, says The Wall Street Journal (March 22). The article notes that the slowdown in the housing market is requiring Fannie Mae and Freddie Mac to buy mortgages up to $729,750--well above the traditional cutoff of $417,000 for a jumbo mortgage. Jumbo loans aren't guaranteed by Fannie and Freddie and they are paid off sooner, so they have higher rates. New rules since the housing crunch aim to reduce the growing rate gap between large loans and jumbo loans. The Wall Street Journal says shopping around can turn up better deals because smaller banks and credit unions keep their mortgages instead of selling them on Wall Street to Fannie and Freddie. That means they have lower rates and less onerous restrictions. The article notes that HarborOne CU, in Brockton, Mass., has rates at 5.75% with no points--the same rate it charges on conforming loans.

Maryland Senate passes fin-lit bill

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ANNAPOLIS, Md. (3/25/08)--A Maryland and District of Columbia Credit Union Association (MDDCCUA)-backed financial literacy bill was passed by the Maryland Senate last week by a 46-0 vote. The bill would create a statewide task force to develop a plan that would lead to financial literacy education as part of the state’s school curriculum (FOCUS Newsletter March 24). The task force would inlcude representatives from the Maryland General Assembly, credit unions, banks, teachers’ unions and the State Superintendent of Schools. The bill was introduced by State Sen. Anthony C. Muse (District 26). On March 4, Mike Beall, CEO of MDDCCUA; Suzanne Curren, director of member education for Andrews FCU; and Dorothea Stierhoff, senior public affairs specialist for MECU of Baltimore Inc., testified in favor of House Bill 1242 (FOCUS Newsletter March 10).

Diamond Award recipients announced

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MADISON, Wis. (3/25/08)--The CUNA Marketing and Business Development Council’s Diamond Awards competition winners were recognized during the council’s 15th annual conference held March 16-19 in Nashville, Tenn. The Diamond Awards, representing credit union marketing and business development achievement, feature 35 categories, ranging from annual reports to youth marketing and financial education. Judges evaluated entries, based on strategy, design and production, creative concept, copy and communication, and results. Premier FCU, Boulder, Colo., was awarded “Competition’s Best”--the highest “Best of Show” award. Entered in the Complete Campaign category, “Banking Grown Up” was designed to brand the credit union and attract younger members through a TV ad campaign that drove traffic to the credit union’s website. The $282 million asset credit union exceeded its marketing goal and attracted 2,401 new members over seven months. This year’s awards competition received 1,300 entries. Judges awarded three entries as Best of Show, along with 96 Diamond Awards and 198 Awards of Merit. Other Best of Show honorees included:
* Best Association Entry: Maine Credit Union League, Westbrook, Maine, for its “Holiday CDs” Community/PR program. The league’s objective was to sell 5,000 CDs through member credit unions to raise awareness and funds to benefit its Campaign for Ending Hunger. A total of 8,141 CDs were sold in two months. * Best Use of Art: Bellco CU, Greenwood Village, Colo., for “Refer a Friend Banner and Signs,” entered in the Point of Sale Category. The credit union sought to build its membership through a member referral campaign with a $25 incentive. The art featured unlikely friends making good in humorous drawings.
For a complete list of award winners, use the link.

SECU Foundations teachers housing effort takes root

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RALEIGH, N.C. (3/25/08)--SECU Foundation held a groundbreaking ceremony March 10 to celebrate its second new affordable teacher housing project.
Taking part in the groundbreaking ceremony for a new teacher housing project, sponsored in part by the SECU Foundation are, from left: David Oaksmith, chairman, Dare County Board of Education; Lynda Wood, chairman, Dare Education Foundation Board of Directors; Ray White, Board of Directors member, Dare Education Foundation; Warren Judge, chairman, Dare County Board of Commissioners; Tom King, immediate past chairman, SECU Foundation board of directors; and Steve Conrad, member, SECU Foundation board of directors. (Photo provided by SECU Foundation)
The project, done with Dare County Schools and Dare Education Foundation, marked the beginning of the second project of its kind, with the first located in nearby Hertford County. Each housing initiative assists the local public school system with teacher recruitment and retention. Because living costs in Dare County are high compared to many neighboring counties, new teachers struggle to find affordable housing and are discouraged when pursuing teaching positions within the area, according to the SECU Foundation. After hearing about the success of the Herftord County Initiative, Dare Education Foundation approached its local SECU office to discuss the possibility of SECU Foundation assistance. The grant request was approved by the SECU Foundation Board in 2007. “New teachers struggle to find affordable residences because of the exceptionally high cost of living,” said Tom King, immediate past chairman of the SECU Foundation board of directors. “Each SECU Foundation-approved teacher housing initiative reaffirms SECU members’ desire to make a positive impact in the areas of housing and education in North Carolina.” The new 24-unit apartment complex is slated to be available for new teachers by Aug. 1. The complex will be located within walking distance of three Dare County public schools. SECU Foundation is supplying $2.25 million to the project through a 0% interest loan for design and construction of the unit. As the funds are repaid through rental income, the SECU Foundation will recycle the funds to build additional units in other counties throughout North Carolina. The event was held at the building site with about 100 guests, including various school representatives, the SECU Foundation Board of Directors, SECU Advisory Board members, and local officials.

CU System briefs (03/24/2008)

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* RANCHO CUCAMONGA, Calif. (3/25/08)--Several credit unions nationwide joined to help Community Trust CU, Modesto, Calif., open a branch in East Palo Alto. The credit union held its grand opening March 15. The community of 40,000 residents is mostly low-income and Latino, and is served by one small bank and payday lenders. Bellco CU, Greenwood Village, Colo.; Bethpage CU, Bethpage, N.Y.; NuUnion CU, Lansing, Mich.; University FCU, Austin, Texas and PSCU Financial Services, St. Petersburg, Fla., have contributed $100,000 each in interest-free certificates of deposit. Contributing credit unions in California include LBS FCU, Long Beach; Orange County CU, Santa Ana; KeyPoint CU, Santa Clara; Meriwest CU, San Jose; and Star One CU, Sunnyvale. At the grand opening are: Stu Fisher, vice president of business development and retail sales for Addison Avenue FCU, Palo Alto; Joe Duran, Community Trust CU CEO; John Davis, CEO of Stanford CU, Palo Alto; and Andy Hunter, CEO of Patelco FCU, San Francisco. Addison Avenue, Stanford and Patelco also assisted with plans for Community Trust CU. (Photo provided by the California Credit Union League) ... * ALBANY, N.Y. (3/25/08)--Irondequoit High School students in Rochester, N.Y., won the 2008 New York State LifeSmarts title March 20. LifeSmarts. . . the Ultimate Consumer Challenge is coordinated by the New York Credit Union Foundation. The challenge aims to teach high school students about money. From left are: Foundation Executive Director Diane LaVigna-Wixted; Jesse Leonardo; Samantha Jebbett; Steve Ross; Tyler Condello; Renee Roth, team captain; Dirck Van Deusen, senior vice president of corporate relations at Members United Corporate FCU; and Louis DiCesare, team coach. (Photo provided by the New York Credit Union Foundation) ... * THORNDALE, Pa. (3/25/08)--Citadel FCU received national recognition for its customer service, Citadel Class Service, at the 13th Annual Best Practices in Retail Financial Services Symposium March 9-11 in Ponte Vedra, Fla. Jeff March, Citadel president, presented “Strive for Fives--The Quest for World Class Service” about the creation of Citadel Class Service, its delivery, measurement and effect on the company. The symposium was attended by CEOs from financial institutions nationwide and Sheila Bair, Federal Deposit Insurance Corp. chairman ... * WINDSOR LOCKS, Conn. (3/25/08)--360 FCU, Windsor Locks, was named as one of the best places to work in Connecticut. The third annual program was created by the Hartford Business Journal, the Connecticut Better Business Bureau and Best Companies Group. Companies were evaluated by workplace policies, practices, philosophies, systems and demographics, and an employee survey. 360 FCU has $164 million in assets ... * BALTIMORE (3/25/08)--Charles L. Benton Jr., a longtime finance adviser to Maryland Gov. William Donald Schaefer, died in Baltimore Saturday. Benton, 91, was a board member of Baltimore's Municipal Employees CU. One of its branches has been named in his honor, according to the Maryland and District of Columbia Credit Union Association (FOCUS Newsletter March 24). Benton oversaw Baltimore's finances for 30 years as budget director and head of the city finance department. He became state budget chief in 1987 when Schaefer was elected governor. He is survived by two sons, a daughter, four grandchildren and four great-grandchildren (The Baltimore Sun March 23) … * NORTHVILLE TOWNSHIP, Mich. (3/25/08)--Norbert "Bing" Emond, chairman of Iron Mountain Kingsford Community FCU, died March 15 in Kingsford, Mich., reported the Michigan Credit Union League (Michigan Monitor March 24). He was 79. Emond served as a volunteer at the credit union for 47 years, 43 of them as chairman. In 1981, he was named Michigan Credit Union Foundation Credit Union Person of the Year for his community service. He and his wife, Lucille, owned and operated the Twin Pines Lumber Co. from 1963 until his retirement in 1988. In addition to his wife, survivors include, a daughter, two brothers and a sister …

CUs reach younger members through MyMoney on Facebook

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BROOKFIELD, Wis. (3/25/08)--Credit unions can reach a younger audience through a new online banking application on Facebook. Fiserv’s MyMoney, which was built on the Facebook platform and went live in early February, allows credit union members to manage finances from their Facebook profile. Users can search for credit unions online, check account balances, review transaction history and transfer money between accounts. Fifty credit unions have signed up for MyMoney. Fourteen currently use it, Fiserv said. “I love the appearance of it,” Dan Veasey, director of marketing at Piedmont CU, Danville, Va., told News Now. “It has the ease of use like the rest of Facebook.” Like most credit unions, Piedmont is looking to draw younger members. Piedmont is located in a rural area of modest incomes and has an average member age of 48. It recently launched online banking, which about 500 to 600 members of the total 6,500 use. Veasey recently surveyed members about Facebook, and 40% said they’d heard of the social network, while about 10% were either using it or live with someone who is. Christian Financial CU, Roseville, Mich., also deployed the application. It’s been “really good” so far, Lauren Vance, marketing manager, told News Now. The credit union has not begun promoting the application externally. “We’re in the process of training our employees on it right now,” Vance said. The credit union has 30 “fans” on its Facebook page so far. Because Christian Financial has Fiserv’s iSwitchkit, Facebook users can join the credit union through Facebook and begin managing their accounts, she added. Christian Financial plans to promote MyMoney through Facebook ads and would like to have 500 members on it within the first year. Members have responded positively to MyMoney because it’s easy to use. Some were concerned about security, but “once they’re on it, they feel comfortable,” Vance said. Veasey also noted that he spoke with a younger member about MyMoney who expressed concerns about security. Veasey pointed out the application has multi-layered security. MyMoney is convenient for people who already use Facebook because they can do their banking without having to visit an external site, Vance added. Fiserv created MyMoney to leverage the growing popularity of Facebook, with the goal of helping credit unions attract new members from younger generations. About 94% of the 18 to 24-year-old audience does not belong to a credit union, Fiserv said. “Many credit unions we’ve spoken to are looking for ways to attract younger members,” said Jay Slavin, senior vice president of Fiserv’s Galaxy Business Line. “We researched and recognized the popularity of Facebook with this demographic, and proactively created the MyMoney application to fulfill this need.” Along with leveraging the viral marketing capabilities of Facebook, credit unions can create their own pages on Facebook by adding their logo and information about the credit union, such as recent news, rates, services, events and other details. MyMoney uses multiple layers of security to ensure that only members can access their account. In addition to the standard privacy features offered by Facebook, MyMoney uses a 128-bit encryption and a built-in two-way security system to let members know they’re connected to their credit union, and to let the credit union know a legitimate member is accessing the account. MyMoney can be used by any financial institution, regardless of its core processing system, Fiserv said. “With Facebook’s increasing popularity, viral marketing opportunities, and enhanced security measures, we felt the MyMoney application was the perfect avenue to help our clients connect with this generation,” Slavin said.

CUNA Mutual HELOC wire fraud alerts helped cut losses

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MADISON, Wis. (3/25/08)--Two e-mail RISK Alerts and nearly 2,700 phone calls from CUNA Mutual staff to at-risk credit unions have helped significantly reduce a sophisticated fraud scheme aimed at individual members with high home equity lines of credit (HELOCs). From early January to March 1, credit unions reported to CUNA Mutual 43 incidences of losses or fraud attempts totaling $8.8 million, said Gary Pate, director of insurance compliance and risk management. “The good news is we haven’t had a reported claim from this scam since Feb. 6,” Pate said. Sierra Central CU, Yuba City, Calif., thwarted an attempt to divert $584,000 after a fax arrived in the credit union’s call center from a purported member. At about the same time, an individual called to check the transfer’s status. The call center supervisor instructed the call-taker to glean as much information as possible from the caller, according to Terry Garcia, vice president of audit and compliance at the $548 million asset credit union. “The alert from CUNA Mutual was what made her so cautious,” Garcia said. “This transfer request fit the description of what we’d been told to watch out for.” CUNA Mutual launched the alert campaign, a service under its Credit Union Bond program, shortly after several credit unions fell victim to the scam. The scam involved fax or e-mail requests for wire transfers from HELOCs in amounts of $100,000 or more. CUNA Mutual immediately issued e-mail alerts to its credit union bondholders. It also--due to the sophistication of the criminals and the success of their scheme--convened a special employee task force of 27 field risk managers and home-office staff who telephoned about 2,650 credit unions to underscore the potential danger. “Part of the scam’s strategy was to confound common fraud-prevention procedures, such as callbacks to verify members’ identity,” Pate said. “Those calls appeared to be going to members’ phone numbers, but in fact were forwarded to the phones of the fraudsters. The perpetrators also had personal member information that enabled them to answer additional challenge questions used to verify identity.” Besides helping fend off a fraud attempt, CUNA Mutual’s alerts prompted Sierra Central CU to amend its wire-transfer procedures. For example, “we no longer rely solely on callbacks to members for verification,” Garcia said. Although specific instances of this type of fraud have curtailed, the perpetrators have not been identified and arrested and undoubtedly will continue to attempt this type of fraud, Pate said. “Credit unions need to continue to remain vigilant and follow specific security procedures to prevent this type of fraud,” he said. The procedures include:
* Initiating a call-back verification to a secure telephone number before the funds transfer instruction is executed. * Consulting with a CUNA Mutual sales executive to better understand their policies and coverage. * Continuing to use RISK Alerts to get just-in-time information on scams and loss control.
Policyholders can view the RISK Alerts, which include specific loss prevention recommendations at and logging into the Protection Resource Center. Access to the Protection Resource Center and RISK Alerts require a UserID and Password. Those without a UserID and Password can go to New User Registration and choose "Credit Union Protection Resource Center" from the list of services. Those with a UserID and Password, can click "Edit my Services" to add Credit Union Protection Resource Center to their personalized services. Credit unions experiencing a loss can contact CUNA Mutual’s Credit Union Protection Response Center at 800-637-2676.

New study Payday lenders in Ohio still growing

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COLUMBUS, Ohio (3/24/08)--The number of payday lenders in Ohio increased to 1,638 in 2007 from 107 in 1996, indicated a study released Wednesday. The study, conducted by Housing Research and Advocacy Center, and Policy Matters Ohio, also sent testers to visit 36 payday lenders in Cleveland and Columbus. They found that the lenders charged maximum interest rates and fees under Ohio law. Payday lending staffers also were not always able to explain percentage rates (Dayton Daily News March 19). On average, fees were $15 for each $100 borrowed--391% annually, the newspaper stated. The article noted that credit unions in the state continue to offer payday loan alternative StretchPay--including Wright-Patt CU, Fairborn; Day Air CU, Kettering; and First Day Financial FCU, Dayton. StretchPay charges 18% interest on 30-day loans of $250 or $500. The program started in Dayton in 2006. It now has 27 locations in Ohio and five in other states. The program saved has members $3 million in interest so far, Patrick Harris, director of media relations at the Ohio Credit Union League, told the Daily News. The article also cited hearings held by the Ohio House Financial Institutions and the Real Estate Securities Committee regarding three payday lending bills. Two of the bills would allow check-cashing lenders to charge 36% per year on loans, and the other would allow lenders to charge 25% annually (News Now Dec. 21).

Vermont No one size fits all answer in breach

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SOUTH BURLINGTON, Vt. (3/24/08)--There is no easy solution for dealing with the effects of a recent data breach involving Hannaford Bros. grocery stores, the Association of Vermont Credit Unions said Friday. About four million cards were compromised by the breach, which Scarborough, Maine-based Hannaford announced last week (News Now March 19). “Although dwarfed in size by last year’s massive TJX breach, this one hits closer to home because so many New England residents buy groceries with their debit and credit cards at Hannaford stores,” the association said (Newsline Express March 21). The association also said credit unions are handling the breach in various ways. Many credit unions are re-issuing credit cards to protect against fraud. Others are alerting members to the breach and asking them to monitor their accounts closely. Those re-issuing cards must weigh several considerations, including:
* Fees incurred for reissuing cards that may never be used fraudulently; * Potential for losses to members and the credit union if a compromised card is used for fraud; * The inconvenience to members if a card is deactivated before they receive a new card; and * Increased expenses for labor and public relations.
The association recognized that while technology is improving at a rapid pace, criminals continue to find ways to circumvent security. The only good thing to come out of the scenario is for those investigating the case to learn how to prevent future breaches.

Hannaford lists 24 other grocers affected in breach

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BOSTON and SCARSBOROUGH, Maine (3/24/08)--Hannaford Bros., the Maine-based grocery store chain that announced a data breach last week, has posted a list of 24 other, independent groceries affected by the breach. The grocers are located in Maine, New Hampshire and New York. They include several Shop 'N Save and Paradis stores and others. (For a full list, use the resource link.) They are in addition to the 165 Hannaford Bros. stores in several New England states and 106 Sweetbay stores in Florida affected when the company announced the breach last week. Maine's credit unions and banks will feel the brunt of the attack, which the Maine Credit Union League has called more significant to Maine's credit unions than last year's TJX Cos. discount store breach. Jon Paradise, governmental and public affairs manager at the league, told media that just about everyone in Maine probably bought groceries in the time period of the breach--from Dec. 7 to March 10, so the pool of users in the state affected would be much larger. "We're still trying to get our arms around it and figure out what the whole scope of it is," he told Associated Press (via Business Week March 21). Already, the 68 credit unions are reissuing more than 100,000 credit and debit cards to try to limit the amount of fraud. Hannaford says that about 4.2 million card numbers are compromised. Security specialists are calling the breach the first-of-its-kind crime, because the credit and debit card numbers were stolen while in transit when a consumer swiped their card at a purchase, rather than from a database with stored information. (Mainebiz March 21). The new information prompted the Massachusetts Attorney General's office Friday to "strongly urge" Hannaford customers to "take precautionary steps" and contact the fraud departments of their card issuers, review their account statements and cancel the card if they find evidence of fraud. "We now believe that any consumer who made any purchase with either a credit or debit card at a Hannaford Brothers Supermarket between Dec. 7, 2007, to March 10, 2008, should assume that their credit or debit card numbers have been compromised," said Attorney General Martha Coakley. Two lawsuits already have been filed in the breach (News Now 3/21/08).

Fire at host facility shuts down CUs website

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APPLETON, Wis. (3/24/08)--A fire at a web hosting site facility in Green Bay, Wis., Wednesday night temporarily shut down the website of Appleton-based Prospera CU, along with other clients, the credit union said Friday. Members could still make online transactions by visiting, calling or visiting branches, the credit union said, adding the outage won't affect the security of members' funds (Appleton Post-Crescent March 21. The fire was at Connecting Point, which is housed with Camera Corner in Green Bay. The business was open Thursday but was without telephone or Internet service, according to the Green Bay Fire Department (Press-Gazette March 20). The credit union's e-mail communications were also impacted, but were back up Friday. "We could get and send e-mail internally but not externally," said Kristi Van Schyndel, director of marketing. The credit union hoped to have its regular site back up and running within 72 hours of Wednesday night's fire, Van Schyndel told News Now. "Right now we're working on getting e-mail communication to our members, and we're trying to get a splash web site up as soon as the web host can redirect it." The credit union Friday was sending an e-mail communication to members informing them how to continue making transactions and accessing their funds. It also was trying to contact the web host so the host could redirect visitors to a "splash" website" until the regular site is live again. The cause of the fire, which was confined to the company's computer network room, has not been determined, said the fire department. Damage to the company is estimated in the "hundreds of thousands of dollars." It wasn't known how many websites were affected or whether other credit unions were among them.

Iowa CUs ready to hunker down for 2008 economy

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DES MOINES, Iowa (3/24/08)--Iowa's credit unions are preparing for how the 2008 economy will affect their members and the credit union. Iowa's credit unions and banks have mostly sidestepped the subprime loan crisis, but are now preparing for a falling-interest-rate environment, reported a survey by the Des Moines Sunday Register (March 16). Nearly 48% of credit unions and banks in the state surveyed expect lending conditions to become more challenging, while 27% of the 33 credit unions surveyed expect a "good to excellent 2008. Credit unions are offering programs to help their members and developing strategies to grow in a challenging economy. Ascentra CU, based in Bettendorf, has experienced members asking for help with home loans they took out elsewhere and were having trouble repaying. If a home still has equity, the loans can be remodified, the credit union told the newspaper. The Iowa Credit Union League has several initiatives to help credit unions have a good year in 2008, Pat Jury, league president/CEO, told News Now. "In 2007, the league formed its Credit Union Growth Commission, comprised of 23 Iowa credit union leaders, to review trends in the industry and market research related to credit union growth," he said. The commission will offer recommendations for credit union growth strategies. "Earlier this year, the commission identified five substantive issues critical to the discussion of credit union growth and vitality," Jury said. The prioritized concepts are:
* Back office support credit union service organization (CUSO); * Human resources support CUSO; * Marketing support CUSO; * Mobile banking; and * Virtual bank.
The league "will continue to research these five areas and develop business plans for these models. While the Growth Commission has accomplished a great deal over the past several months, this is just the first phase to achieving credit union growth in Iowa," Jury said. A second initiative is making financial education a top priority in the state. The league's governmental affairs team has worked with both the public and private sectors in support of Senate File 2216, which would require school districts to implement a core curriculum into current courses that include the teaching of financial literacy. This legislation has passed through the Senate and is expected to be debated in the House Education Committee this week, the league said. In a third initiative, the Iowa Credit Union Foundation, with Coopera Consulting, will soon launch the Credit Union Family Partnership Program, an individual development account (IDA) program in which credit unions offer a savings account to qualified new and existing members and match the amount saved, dollar for dollar. "The money saved can be used toward closing costs and down payment on a first home; to start or expand a small business; to pay for post-secondary education or job training, or to purchase a vehicle to get to work," Jury said. IDAs help low-income families build positive net worth and improve their financial stability. The program is available to those who receive Iowa's Family Investment Program, are eligible for the Earned Income Tax Credit, or whose income is at or below 200% of the federal poverty limit. The foundation program is possible thanks to a $250,000 anonymous donation and a $10,000 grant from Prairie Meadows in Central Iowa. The foundation's Executive Committee will announce credit union participants in the next few weeks, Jury said.

Bill limiting CUs growth passes Kansas Senate

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TOPEKA, Kan. (3/21/08)--The Kansas Senate Wednesday approved a bill that would limit state-chartered credit unions' field of membership by a vote of 35 to 2. The bill, Substitute for SB 535, would limit the geographic area served by credit unions and create new regulatory standards for branching, mergers and field-of-membership changes. "We'll have credit unions that will not be able to expand in a way they could have before," said Marla Marsh, Kansas Credit Union Association president/CEO. Credit unions immediately affected by the legislation include:
* 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.
The bill has been extensively amended and approved by the Senate Financial Institutions and Insurance Committee to reflect language agreed upon by the Kansas Credit Union Association. It was introduced by the Kansas Bankers Association. The association does not support or oppose the legislation, but said it will provide a long-term standard for interpreting the Kansas field-of-membership statute.

Big Game Hunter contest winners on website

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MADISON, Wis. (3/21/08)--The Credit Union National Association has announced the winners of its Big Game Hunter Photo/Video Contest. The contest theme was "Show Us Your Big Game Hunter Strategy to Capture Your Prey." Winners are:
* First place ($500): Velocity CU, Austin, Texas, for "Mythbusters Episode 114--'Credit Unions Aren't Sexy,'" submitted by Carol Cain. * Second place ($250): Denver Community CU, Denver, Colo., "Fishing fr' Credit Unions With Bubba," submitted by Brad Blue. * Third place ($100): Transportation CU, Washington, D.C., "From Diapers to Depends--lifetime membership, submitted by Sylvia Galo.
Winner of $50 in a random drawing among credit unions who voted was Regina Lynch of 360 FCU, Windsor Locks, Conn. Big Game Hunter is a CUNA marketing initiative aimed at membership growth by using tools appropriate for different life stages. For more information, or to view the winners' entries, use the link.

CU System briefs (03/20/2008)

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* MONTGOMERY, Ala. (3/21/08)--U.S. Rep. Mike Rogers (R-Ala.), right, visits with a member of MAX, Your Community CU Tuesday. MAX CEO Greg McClellan invited Rogers to stop by the credit union's Eastdale financial center to meet members and associates, and learn more about MAX's involvement with the community and the credit union difference. MAX has a strong commitment to serving individuals and communities that are often underserved by the bbanking industry. As of Feb. 29, more than 52% of MAX's households in the underserved areas of Autauga, Elmore and Montgomery counties had at least one type of personal checking account, and 22% had at least one type of loan with MAX. The credit union has a 45% penetration rate of all underserved households in the tri-county area. (Photo provided by MAX, Your Community CU) … * CHICAGO (3/21/08)--Three credit unions are among 41 companies from 18 states chosen for the 2008 Honor Roll of Companies That Care by the Center for Companies That Care. The Chicago-based nonprofit is dedicated to enhancing the well-being of employees and communities by encouraging employers to integrate 10 characteristics into their daily business practices. Named to the honor roll were: Baxter CU, $1.3 billion in assets, based in Vernon Hills, Ill.; Mountain America CU, $2.3 billion assets, West Jordan, Utah; and The Golden 1 CU, $6.5 billion assets, Sacramento, Calif. Recipients undergo a review by an independent panel of business professionals. A media search and a review of employee survey data round out the selection process …

CNN offers inflation fighter Join a CU

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NEW YORK (3/21/08) advises those looking to avoid the effects of inflation to join a credit union. “Beat inflation at home,” an article published yesterday, noted how the tough economy has contributed to the rise of banking fees--from overdraft fees to ATM surcharges. The article advised readers to join a credit union because they “generally have lower fees” than traditional financial institutions ( March 20). The article also advised consumers to link their checking and savings accounts, pay bills online, and contact credit card companies to try and waive late fees. Other major media outlets, such as the Washington Post and Dow Jones News Service have also advised consumers to join credit unions. Dow Jones and the Post noted that credit unions tend to offer better loan rates than banks (News Now Dec. 27.). For more information, use the link.

Two class action suits filed in Hannaford breach

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PORTLAND, Maine (3/21/08)--Two class action lawsuits have been filed against Hannaford Bros., a Maine-based grocery chain whose system was hacked in a data breach that might affect as many as 4.2 million credit and debit cards, many of them with members of credit unions. According to several reports, a Philadelphia law firm, Berger & Montague, filed suit Wednesday in U.S. District Court in Portland. The suit alleges the company was negligent and breached an implied contract in failing to provide adequate security for computer data (Associated Press via Boston Globe, Computerworld March 20). It seeks to recover damages that might be caused to consumers as a result of the breach. A second lawsuit, with similar allegations, was filed in the U.S. District Court in Bangor, Maine, by attorney Samuel Laham Jr. on behalf of Hannaford customers in all the states doing business with the grocer. That suit names Melinda Ryan as lead plaintiff. Hannaford said it has not been served with any court complaints (Computerworld,( and SouthCoastToday March 20). Hannaford has 165 stores in New England states plus 106 Sweetbay stores in Florida (News Now March 18, 19 and 20). Several credit unions in New England are already re-issuing cards to members whose accounts may have been compromised and some members have reported fraudulent activity on their accounts. Computerworld noted that credit unions and banks "are getting increasingly antsy about having to shell out tens of thousands of dollars" to pay the costs of notifying their members and customers. It reported on the Maine Credit Union League's warning that the Hannaford breach likely would have a significantly larger impact on the state's credit unions than the TJX Cos. breach (News Now March 19). It also several credit union associations around the U.S. have been pressuring state lawmakers to pass laws requiring retailers hit by data breaches to bear the costs associated with the breaches.

Filene Institute provides link to free reports

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MADISON, Wis. (3/21/08)--The Filene Research Institute has created a web page with a “guest pass” that provides all credit union executive boards access to free research and information about credit unions. The 24/7 page was created after several Filene members donated money this year to enhance Filene’s efforts to disseminate information to credit unions. “The financial services industry is clouded with competition, commoditization, and consumer inertia,” Filene says on its website. “Securing the future of credit unions as a relevant and viable choice for all consumers is a top Filene research and innovation priority.” For more information, use the link.

DFCU members waiting for hearing before proceeding

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DEARBORN, Mich. (3/21/08)--A group of members of DFCU Financial FCU (DFCU) are waiting to see what happens at the next hearing before proceeding after winning a lawsuit against the credit union. Leslie Herrick, public relations consultant on behalf of the members, told News Now that she could not comment further until she heard from members. A court hearing regarding the inspection of books and records at the credit union has been rescheduled for April 17 at 2:30 p.m. The meeting will establish the timeline for the records inspection. A Wayne County Circuit Court judge also ruled that the members have a right to call a special membership meeting. The meeting was requested by members to vote on the removal of directors from the DFCU board. Three DFCU members filed the lawsuit in the spring of 2006 during DFCU’s campaign to convince members to vote in favor of converting to a mutual savings bank. Although the vote was cancelled, members questioned the credit union board of directors’ due diligence and motives for proposing a charter change. The members sued after the credit union refused to let members review complete board meeting minutes and other materials considered by the board during the attempted conversion. The credit union later withdrew the conversion proposal and a board election was conducted. Eight of the nine directors named in the recall petition have either resigned or have been re-elected. The credit union expressed disappointment at the court decision and sat it will evaluate its options including appealing.

Is data breach insurance in the future

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MADISON, Wis. (3/21/08)--With the massive data breaches experienced in the U.S. the past year, service providers offering data breach insurance are making the rounds. But is data breach insurance right for a credit union? "Data breach insurance is more directed to the merchant" than the financial institution issuing the credit or debit card, said Chuck Cashman, director of product management with the Credit Union Protection division at CUNA Mutual Group. A merchant who is not Payment Card Industry (PCI)-compliant has a stronger case for getting that kind of insurance policy to cover fines and litigation. But if a merchant isn't PCI-compliant and has a data breach, the insurer can require the merchant to become PCI-compliant before reinsuring the merchant, Cashman told News Now. Data breach insurance would help a merchant who is PCI-complaint but still a victim of a breach--such as in the Hannaford Bros. breach that was announced this week, said Cashman. "Hannaford was PCI-compliant," he said. In that case, the insurance "might help stave off potential costs of the breach." Credit unions are covered against data breaches under CUNA Mutual's plastic cards policies, Cashman said. The policies differ according to what each credit union needs. "They are not a cookie-cutter service. A credit union can insure for losses in a range from the ground up to catastrophic losses," he said. When members' accounts are compromised in a data breach, there are hard costs and soft costs, he said. "There's the hard money of reissuing the plastic," he said. For example, at $15 per card, which is in the lower range of estimates for replacing cards, a credit union replacing 5,000 cards would spend a minimum of $75,000. "There's also the soft dollars related to making phone calls and reaching out to members," Cashman added. "Credit unions typically don't have the back-office infrastructure to do all that." Credit unions approached about breach insurance should contact their current provider, who can help them through the process so the credit union is making an apples-to-apples comparison of policy provisions. Because each policy has unique provisions to fit the individual credit union's need, it often takes a rigorous review to understand each provision in the policy, Cashman said.

Best Practices winners honored at council conference

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MADISON, Wis. (3/21/08)--Winners of the 2008 Best Practices Awards, sponsored by the CUNA Marketing and Business Development Council, were announced during the council’s 15th annual conference, Sunday through Wednesday, in Nashville, Tenn. Awards were presented in three categories:
* Business Development: Financial Partners CU, Downey, Calif., for its member contact strategy, which uses member activity triggers to create cross sales and prevent member attrition. The credit union launched the program, which sends out mailings to members who notify the credit union of address changes, closed accounts or new account openings, in August 2007; * Community Outreach and Political Advocacy: America’s Christian CU, Glendora, Calif., for its “snow much fun” event. The credit union gave its community snow, and treated attendees to a petting zoo, Santa and refreshments. About 1,500 attended the event. The credit union raised $770,000 in term share certificates through its snow day savings promotion; and * Best Practice Miscellaneous: Call FCU, Richmond, Va., for its rebranding plan. The credit union created a Be the Office Hero campaign, which used marketing tactics to recruit select employee group members. Staffers dressed as super heroes and looked through the city for the next office hero to bring credit union membership growth to an employer. The campaign’s efforts carried over into the rebrand when the credit union created its new mascot, iDude. The brand was included in advertising, community events, branch redesigns and the website. The credit union had a 30% increase in Web traffic, increases in vehicle loans and loan volume, and new member increases that doubled previous averages.
The conference also raised $9,500 in a silent auction for the National Credit Union Foundation’s Disaster Relief Fund. For more information, use the links.

Aging boomers pose challenges for CUs

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MONTEREY, Calif. (3/20/08)--Baby boomer business is worth attracting and retaining, according to statistics provided to the California-Nevada Credit Union League at its annual Big Valley Educational Conference Wednesday. Heather Thiltgen, vice president of Consumer Segment Programs at CUNA Mutual Group, told that baby boomers are:
* Influential--78.2 million strong as the largest generation in U.S. history; * Rich--$46 trillion in assets, $17 trillion in investable assets, $3 trillion in spending power, $750 billion in discretionary income and $489 billion in annual IRA rollover dollars; and * Profitable--boomers will continue to freely borrow and spend throughout retirement.
“To determine how to approach this consumer segment, it’s important to know how they think, what drives them to make decisions,” said Thiltgen. “Knowing their characteristics will help us develop a successful strategy.” Based on her research, Thiltgen reported that baby boomers:
* Favor simple, customized options; * Are interested in staying young, healthy and active; * List improving their community and the world as top concerns; * Believe experience and convenience are more important than price; * Remain focused on their families, especially grandchildren; and * Are optimistic about the future.
Thiltgen suggested several strategies to attract and retain the baby boomer business:
* Build simple financial products that can be customized to a variety of needs and circumstances; * Help them save for sickness, based on their anticipated higher life expectancy; * Provide ways for them to finance their desire to stay young, such as home gyms, plastic surgery, dental procedures and travel; * Partner with them to improve the planet through increased green messaging, more volunteer programs and working to emphasize collaborative roots and shared values; and * Help their families by providing education savings accounts, home equity loans and credit monitoring.
“There are dozens of ways to provide enhanced products and services to baby boomers,” said Thiltgen. “Customizing those products to meet their needs while respecting their active lifestyles will help attract their business.” Joining Thiltgen was Sherry Reams, vice president of Investment and Insurance Services at Financial Partners CU (FPCU), Downey, Calif. Reams emphasized her credit union’s mission of building lifetime financial partners. “We want to be trusted advisors for the long term, not just product pushers or single service providers,” said Reams, whose credit union serves people who live or work in Orange or Los Angeles counties. “Our aging membership, as well as the aging country, requires us to shift our program emphasis.” Reams said providing complementary retirement road tests, establishing retirement centers in branches and placing greater emphasis on retirement services in marketing materials are just some of the ways FPCU is addressing the baby boomer market.

DFCU Financial disappointed in court ruling

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DEARBORN, Mich. (3/20/08)--DFCU Financial FCU expressed disappointment Wednesday over a Michigan Circuit Court ruling that the credit union must hold a special meeting demanded in a petition members presented during the credit union's attempt in 2006 to convert to a mutual savings association. "DFCU Financial recently received a copy of the decision by Judge Cynthia Stephens of Wayne County Circuit Court in which she ruled in favor of a petition submitted April 26, 2006, to hold a special membership meeting to recall the board of directors at DFCU Financial," said the credit union in a statement Wednesday. The credit union "is disappointed by and disagrees with Judge Stephens' decision, which fails to take into account events that have occurred since the lawsuit was filed in 2006. In particular, eight of the nine directors named in the recall petition have either resigned or been re-elected by the membership since 2006," the statement said. "DFCU Financial will continue to evaluate the court's decision and the appellate and other options available to it," the credit union said. The court also ruled in the Feb. 25 decision that the members of the Dearborn, Mich.-based credit union had a right to inspect the credit union's books and records under state law. The court scheduled a hearing for March 25 to consider the reasonableness of the terms and conditions under which the inspection would occur and said the special membership meeting must take place within 60 days after the hearing. The Michigan Credit Union League said it hoped the matter would be resolved quickly and fairly. "We hope that this is resolved quickly and fairly in the interest of all the credit union's members who are being very well-served by their credit union," said David Adams, league president/CEO. He noted that DFCU Financial has had two years of strong, record patronage dividends to members. Last October, the credit union issued a dividend exceeding $17 million for the second consecutive year to nearly 134,000 members (News Now Oct. 25). "It serves no one's interest to have an extended battle," Adams said. "There is too much at stake in the Michigan economy for the state's largest credit union to be embattled for an extended time," he added. The league believes in the principles and rights of members and in observing the credit union's bylaws, Adams said, adding the credit union's "positive track record the past two years" should be considered and that the matter not be extended to "finish a crusade." Because the credit union dropped its attempt to convert to a mutual savings bank, it's not clear how the decision will play out. "We don't know what this means, but the members and the officials need to talk more and work things out," Adams said.

Members approve 3-way merger create Albertas largest CU

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EDMONTON, Alberta (3/20/08)--Community Savings CU members voted Tuesday night 99% in favor of merging with two other Alberta-based credit unions to create Canada’s first province-wide credit union. The credit union does not yet have a name, but will begin operating Nov. 1 as the third-largest credit union in the country. It will have $9 billion in assets and 92 branches ( March 19). Tuesday’s vote was the third and final membership vote needed to approve the proposed merger among Community Savings CU, Red Deer; Servus CU, Edmonton; and Common Wealth CU, Lloydminster.

MarketingBiz Development Council officers announced

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MADISON, Wis. (3/20/08)--The CUNA Marketing and Business Development Council announced its executive committee and officers during the council’s 15th annual conference, which wrapped up yesterday in Nashville, Tenn. Anne Legg, vice president of marketing for Cabrillo CU, San Diego, was named as the new council chair. She replaces Mike Weber, vice president of marketing and public relations for Dupaco Community CU, Dubuque, Iowa. Weber reached his term limit and will remain a committee member. Rich Hones, vice president of marketing for Elevations CU, Boulder, Colo., was appointed vice-chair. Executive committee members elected to a three-year term include:
* Lesley Carrell, vice president of marketing, Fibre FCU, Longview, Wash.; * Tyler Disburg, chief administrative officer, Montana First CU, Missoula, Mont.; * Michelle Hunter, senior vice president of marketing and development, Credit Union of Southern California, Whittier; Calif.; and * Kerry Goodliffe Parry, vice president of marketing, Premier Members FCU, Boulder, Colo.
Other members of the committee include:
* Sandi Carangi, vice president of marketing and business development, Erie FCU, Erie, Pa.; * Carol Payne, vice president of communications and marketing, California and Nevada Credit Union Leagues; * Susan Miller, business development representative, Delta Community CU, Atlanta; and * Rene McKee, vice president of marketing, California Coast CU, San Diego.

Three CU pros honored for marketing biz development

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MADISON, Wis. (3/20/08)--Rob Kimmett, Kelley Parks and Sean McDonald were honored for their credit union marketing and business development achievements during the CUNA Marketing and Business Development Council Conference held Sunday through Wednesday in Nashville, Tenn. Kimmett, senior vice president of marketing and public relations for the Massachusetts, New Hampshire and Rhode Island Credit Union Leagues was the 2008 Hall of Fame inductee. The award recognizes excellence in performance for marketing professionals throughout their professional career. For 22 years Kimmett has headed league communication efforts, which include print and electronic publications, media relations, brand strategy, advertising, community giving, and website development. He also assists individual credit unions with their public relations efforts and mentors young credit union marketing professionals. The 2008 Marketing Professional of the Year Award was presented to Parks, vice president of marketing and business development for Call FCU in Richmond, Va. Parks helped create The Office Hero Campaign--a free-spirited marketing campaign to recruit potential select employee groups. In this guerrilla-style campaign, credit union staff dressed as superheroes “flew” into area businesses and radio stations seeking out potential members. Prior to launching, the credit union went through a rebrand that involved defining the organization and creating an image to reflect this. The marketing department exceeded four rebranding goals tied to the business plan for new loans, community involvement, member education and survey ratings. Sean McDonald, director of business development and marketing for Liberty Savings FCU in Jersey City, N.J., was presented with the Business Development Professional of the Year Award. McDonald introduced new financial services and acquired 100 new employer groups for Liberty in two years. He also created an ambassador program and a formal marketing department, and he conducts training and community events to educate others about financial, personal, and professional growth issues.

CUs continue to watch for data breach effects

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MADISON, Wis. (3/20/08)--Credit unions continue to monitor potential effects from a data breach involving 165 Hannaford supermarkets in New England and New York, and 106 Sweetbay stores in Florida. Paula Stopera, Capital Communications CU CEO in Albany, told News Now that the credit union has about 13,000 members who shopped at Hannaford stores during the period in which card information was compromised--Dec. 7, 2007 to March 10. The credit union responded to news of the breach by sending letters to all members. The good news is that members are covered under the Visa zero liability protection, she said. If the credit union finds fraud on the accounts, it will block and re-issue cards. Replacing the cards could cost up to $100,000, Stopera said. She encouraged members to look at their statements online and check for suspicious activity--including small purchases. “(The hackers) are not making large purchases, like flat screen televisions,” she added, noting that she’d heard the average purchase amount was around $150. In addition to the New England leagues contacted by News Now Tuesday, the New York State Credit Union League (NYSCUL) is monitoring the situation and will make sure that any information about the investigation that is pertinent to credit unions is disseminated to them in a timely fashion, Bonnie Sklar, league public relations coordinator told News Now. No credit unions have reported fraud to the league. Sklar said that Covera, a card solutions provider operated by the league that works with credit unions in the state, will not be affected “at all.” The league heard about the breach through alerts from Visa and MasterCard Friday, but the companies did not confirm the retailers involved. Hannaford has 40 stores in New York, Sklar said. During a conference call yesterday, the Florida Credit Union League (FCUL) asked the Office of Financial Regulation in Florida if it had heard about any breach ramifications. The office had not heard of any losses from credit unions as a result of the breach, Amy Jowers, FCUL communications coordinator, told News Now. The question was also opened up to the audience of credit unions on the call and no one reported any problems, she noted. News Now also contacted several credit unions in Florida, including GTE FCU, Tampa, and Fairwinds CU, Orlando, who did not have any problems to report. The grocery’s credit union, Hannaford Associates FCU, Scarborough, Maine, placed a warning on its website about the breach. To date, none of the credit union’s cardholders have been affected, and cards are protected by MasterCard and Visa zero liability standards. The credit union encouraged cardholders to contact the credit union if they spot unauthorized activity on their accounts.

Hannaford says its hacked system was compliant

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PORTLAND, Maine (3/20/08)--A grocery retail chain that announced a major data breach earlier this week says its computer systems were compliant with the Payment Card Industry (PCI) data-security standard for encryption. The breach occurred in the system of Hannaford Bros. Co., based in Portland, and resulted in the theft of up to 4.2 million customer debit and credit card numbers from more than 200 stores in New England, New York State, and Florida. The data was accessed illegally from the company's computer systems during the card verification transmission process in transaction, said Hannaford President/CEO Ronald C. Hodge, in announcing the breach on the company's website (News Now 3/18/08). In an interview with Digital Transactions News (March 18), Hannaford Vice President of Marketing Carol Eleazer told the publication that Hannaford was certified as PCI-compliant last spring and it was recertified in February. PCI standards require encryption of data that are in transit. Older payment-processing technology can leave wireless data exposed to interception for a fraction of a second during authorizations. Eleazer said Hannaford used data encryption all of last year and had upgraded its wireless encryption in 2007. She would not comment about whether insiders or vendors may be involved in the theft.

CU System briefs (03/19/2008)

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* SAN ANTONIO, Texas (3/20/08)--Security Service FCU has exceeded the $4 billion mark in loans, the credit union announced. The $4.3 billion asset credit union began with eight members pooling $25 in deposits in 1956 and approved its first loan five months later. Today it offers an array that ranges from auto and mortgage loans to lines of credit and student loans. Security Service is the No. 1 auto lender and fifth-largest mortgage lender in San Antonio, as well as a Preferred Lender with the Small Business Administration. "We are proud of this milestone and look forward to continuing to provide our members the resources to help them realize their financial goals," said President/CEO David Reynolds … * SAN DIMAS, Calif. (3/20/08)--"OnDeck With Dwight Johnston," a weekly podcast produced by Overland Studios and presented by WesCorp FCU, is a bronze winner in the nonprofit and education categories during the 29th Annual Telly Awards. The podcast features WesCorp economic and market research analyst Dwight Johnston offering an eight- to 10-minute summary of the past week's market and financial events, and a look at events scheduled "on deck" for the next week. The series, launched last June, is distributed weekly through iTunes and WesCorp's Internet site. It can also be accessed via telephone (360-526-6307) through The podcasts complement Johnston's daily commentaries and quarterly and "Breaking News" webcasts. The Tellys showcase the best work of advertising agencies, production companies, television stations, cable operators and corporate video departments in the world. (Photo provided by WesCorp FCU) … * RANCHO CUCAMONGA, Calif. (3/20/08)--Ron Fong, vice president of state government affairs at the California and Nevada Credit Union Leagues, will become president/CEO of the California Grocers Association and its educational foundation, effective March 31. His final day with the leagues is March 28. Fong, a former stock broker and college business law instructor, joined the leagues in 1966 and helped build the leagues' advocacy program at the state legislative and regulatory level. As vice president, he oversaw the leagues' Sacramento office and its advocacy program. In his new position, Fong will serve as the association's chief legislative advocate and oversee its government relations, member services, convention and communications program … BURNSVILLE, Minn. (3/20/08)--USA FCU CEO Bill Raker was a speaker at an International Brown Bag Series at University of Minnesota Duluth, where he discussed a recent trip to Cambodia with the World Council of Credit Unions and the Credit Union Foundation of Australia. During the trip he assessed prospective credit unions while trying to foster credit union growth and visited credit unions in two villages near Phnom Penh. "The visit to Cambodia was an eye-opening, life-changing experience," Raker said, noting the trip "illustrated how the power of the credit union 'people helping people' philosophy can take root in even the most remote corners of the world." … *
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CAPITOLA, Calif. (3/20/08)--Bay FCU was recognized as one of California's Best Places to Work with an honorable mention in the medium-sized company category. The program was sponsored by Employers Group, a human resources firm serving California's employers. More than 400 companies were considered. President/CEO Carrie Birkhofer noted that "we focus first on taking good care of our employees, and creating a positive work environment." Pictured here are Bay FCU staffers, from left, front row: Doug Kuepfer, Alicia Flores, Jalene Gladstone and Tonee Picard; and back row, Dana Sales, Diane Lipska, Judy Coleman, President/CEO Carrie Birkhofer, Faye August and Cameron Haste. (Photo provided by Bay FCU) …

Michigan court rules in DFCU Financial case

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DEARBORN, Mich. (3/19/08--UPDATED 10:18 a.m. CDT)--A Circuit Court in Michigan has ruled that DFCU Financial FCU must hold a special meeting as demanded in a petition members presented during the credit union's earlier attempt to convert to a mutual savings association. "DFCU Financial recently received a copy of the decision by Judge Cynthia Stephens of Wayne County Circuit Court in which she ruled in favor of a petition submitted April 26, 2006, to hold a special membership meeting to recall the board of directors at DFCU Financial," said the credit union in a statement this morning. The credit union "is disappointed by and disagrees with Judge Stephens' decision, which fails to take into account events that have occurred since the lawsuit was filed in 2006. In particular, eight of the nine directors named in the recall petition have either resigned or been re-elected by the membership since 2006," the statement said. "DFCU Financial will continue to evaluate the court's decision and the appellate and other options available to it," the credit union said. The court also ruled in the Feb. 25 decision that the members of the Dearborn-based credit union had a right to inspect the credit union's books and records under state law. The court scheduled a hearing for March 25 to consider the reasonableness of the terms and conditions under which the inspection would occur and said the special membership meeting must take place within 60 days after the hearing. The Michigan Credit Union League said it hoped the matter would be resolved quickly and fairly. "We hope that this is resolved quickly and fairly in the interest of all the credit union's members who are being very well-served by their credit union," said David Adams, president/CEO of the Michigan Credit Union League. He noted that DFCU Financial has had two years of strong, record patronage dividends. Last October, the credit union issued a dividend exceeding $17 million for the second consecutive year to nearly 134,000 members (News Now Oct. 25). "It serves no one's interest to have an extended battle," Adams said. "There is too much at stake in the Michigan economy for the state's largest credit union to be embattled for an extended time," he added. The league believes in the principles and rights of members and in observing the credit union's bylaws, Adams said, adding the credit union's "positive track record the past two years" should be considered and that the matter not be extended to "finish a crusade." Since the credit union dropped its attempt to convert to a mutual savings bank, it's not clear how the decision will play out. "We don't know what this means, but the members and the officials need to talk more and work things out," Adams said.

Fitch assigns AA rating to U.S. Central

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LENEXA, Kan. (3/19/08)--Fitch Ratings has assigned U.S. Central a long-term debt rating of “AA+,” the credit union liquidity provider said in a press release Tuesday. Previously, U.S. Central had an “AAA” rating on long-term debt. U.S. Central’s short-term rating of “F-1+”, individual rating of “A” and support rating of “1” were affirmed at the highest levels given by Fitch. “U.S. Central is a strong, healthy financial institution with $2.4 billion in capital, access to more than $20 billion in available liquidity and a high-quality investment book,” said Francis Lee, U.S. Central president/CEO. “The ‘AA+’ rating is shared by only three other U.S. depository institutions.” Fitch’s report also stated that U.S. Central’s investment book is of high quality, with about 95% of the portfolio containing AAA-rated securities. “U.S. Central continues to exhibit sound credit fundamentals and its franchise remains solid. The company’s balance sheet has a low risk profile and its funding and liquidity positions remain quite strong,” Fitch said. U.S. Central is the nation’s only wholesale corporate credit union. U.S. Central and its 26 member corporate credit unions comprise the Corporate Network, which provides liquidity, lending and payment services to 8,400 credit unions.

Speedconvenience drive m-demand security an issue

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SAN FRANCISCO (3/19/08)--Speed and convenience drive the demand for mobile banking services, but only one in 10 consumers is willing to adopt mobile person-to-person (P2P) payment services, according to recent research. Security concerns remain the leading deterrent, with 63% of consumers surveyed saying enhanced security would encourage them to use the mobile P2P payments. The online survey was conducted by Javelin Strategy & Research, a financial services research firm based in San Francisco. "Perceived security threats are definitely the sticking point for mobile P2P payments right now," said Mary Monahan, partner and senior analyst with Javelin. "Once the safety and access hurdles are cleared, we expect this technology will become part of everyday life." Even tech-savvy consumers, while interested in mobile P2P payments, strongly fear the loss of personal information (62%) and fraudulent transfers (52%), said Javelin. Credit unions can use some of the findings to shed light on the interests of different member segments. Those most willing to employ mobile payment services were 25 to 44 years old and/or earning more than $100,000. Thirty-nine percent of 45- to 55- year-olds said that anytime, anywhere access to their money was important--but only 14% would use the mobile P2P payment. The 55- to 64-year-old group surveyed cared more about sending and receiving money quickly than any other age group (39%), but it was only 11% likely to use the mobile service. For consumers aged 18 to 23, about 23% said that avoiding cash and checks was the primary motivation to adopt the service. The report outlines two key consumer segments that remain largely untapped: unbanked consumers without checking or savings accounts, and consumers who send remittances to other countries. Other key findings:
* Consumers must have a strong sense of security in the mobile channel before they will adopt additional mobile banking services like mobile P2P. * Financial institutions, through consumer education, must provide convincing evidence of the safety and security of member/customer information across the mobile channel. * Mobile bankers and tech-savvy consumers will be early adopters of mobile P2P payments and will be critical in driving overall adoption because recipients of their transfers will also be pulled into the market. * These payments could lead to mobile merchant payments and mobile shopping, and with advances in mobile browser technology, mobile devices could eventually replace the use of credit or debit cards for purchases.

Maine league Retailers data breach significant

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WESTBROOK, Maine (3/19/08)--The magnitude of a Hannaford Bros. Co data breach could top previous retail data breaches, according to the Maine Credit Union League. “Because the compromise occurred at a major Maine retailer that so many Maine people use on a regular basis, the impact and cost of this compromise will be significantly higher than the TJX compromise last year,” said Rebekah Higgins, card services manager at Synergent, a service subsidiary of the league. The breach occurred at Maine-based Hannaford Bros. Co supermarket chain, which affected all 165 stores in New England and New York, and 106 Sweetbay stores in Florida. The breach also affected some independently owned retail locations in the Northeast that sell Hannaford products, Hannaford Bros. said. Maine credit unions expect to reissue 100,000 new credit and debit cards as a result of the compromise, the league said. Higgins urged cardholders to contact their financial institutions to report suspicious activity. “Consumers have zero liability in this compromise,” she said. In the case of Hannaford Bros., the affected financial institutions have “done everything right and it is the merchant who bears full responsibility of the compromise,” said John Murphy, league president, noting that financial institutions will bear most of the costs of reissuing cards, staff resources and communications with members. The league helped to draft legislation introduced this session that directs the Bureau of Financial Institutions in Maine to study the effect of data security breaches on Maine credit unions and banks and report its findings by Dec. 1, 2008. The legislation has passed the state’s House and Senate, and is almost ready for the governor’s approval. “Hopefully, this is the first step in helping to further understand the significance of this issue and begin to look for ways that will force the cause of the compromises and breaches to be held accountable and responsible for the cost, a solution we believe would lead to better security measures being put in place to prevent breaches and better protect consumers,” Murphy said. “We are strong advocates that the time has come to shift the financial burden from the financial institution to the source of the breach because, in the case of credit unions, every member-owner is affected by the breach,” he concluded.

New England Florida CUs brace for breach impact

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MADISON, Wis. (3/19/08)--Since news of a data breach involving Hannaford Bros. Co. retail stores broke, NorthCountry FCU’s contact center “has been taking calls left and right,” CEO John Benoit told News Now. NorthCountry, located in South Burlington, Vt., expects to re-issue about 3,000 debit cards and 500 credit cards for members as a result of the breach, which affected all 165 Hannaford stores in New England and New York State, and 106 Sweetbay stores in Florida. The credit union also prepared a letter. “Our first concern is to get the word out to the members,” Benoit said. The Association of Vermont Credit Unions (AVCU) has spoken with its affiliated credit unions and is identifying which cards were compromised. “We have limited reports,” AVCU president Joe Bergeron told News Now. “But it’s still early.” AVCU has a debit card program that it operates with 18 credit unions and is working with those institutions to catch fraudulent activity. Because credit unions in Vermont are “surrounded” by Hannaford stores, a substantial percentage of their card base was theoretically compromised, Bergeron added. Massachusetts credit unions are not overly panicked, but they are not happy, Rob Kimmett, Massachusetts Credit Union League senior vice president of public relations and marketing, told News Now. “It’s sad to say that they’ve gotten used to working through these things,” he said. Hannaford Bros. stores are more prominent in Central and Eastern Massachusetts, but Kimmett recognized that the breach could spread to other parts of the state. The breach’s impact on individual consumers could depend on shopper competition and consumer loyalty. It may not be as deep as a data breach involving discount retailer TJX Cos. last year because some consumers may choose to shop at other grocers, whereas with TJX, many consumers were likely to have visited one of the TJX stores at some point, Kimmett noted. However, “I’m comfortable in saying that pretty much every credit union could be affected,” he said. Stopping future breaches will require a legislative and regulatory answer, and the Massachusetts league has worked with U.S. Rep. Barney Frank (D-Mass.) on bills that impose restrictions on retailers, Kimmett said. “The problem needs to be solved.” Since receiving its Visa alert, St. Mary’s Bank has been in “‘investigative and research mode,’” said Carole Landry, director of deposit and lending operations. The Manchester, N.H.-based credit union is currently matching the Visa information it received against credit card records. Visa’s alert did not specify the name of the retailer involved with the breach, but members who saw news reports about Hannaford have contacted St. Mary’s Bank to get new credit cards. St. Mary’s Bank supplied staff with question-and-answer sheets about the breach, and has re-issued cards to members who have requested it, Landry said. “We’re putting members at the comfort level they want to be at,” she said. St. Mary’s Bank also is advising members to monitor their own banking activity, added Elizabeth Stodolski, St. Mary’s Bank director of marketing. Staff at Fulton County FCU, Gloversville, N.Y., stayed until about 9 p.m. Friday night to “hot-card” or stop members’ credit cards after receiving an alert from Visa regarding the security breach. “It was a decision we made, and in hindsight, it was a good one,” Gordon Beebe, Fulton County FCU president, told News Now. The credit union also called each member to let them know their cards were going to be re-issued. Of the 3,500 cardholders at the credit union, 1,100 have been re-issued. “It’s substantial for us,” Beebe said. “We’re just short of a $50 million asset credit union with a staff of 26, so it’s quite an impact in terms of staff time.” Fulton County FCU received some compensation for the cost of the TJX Cos. breach. “That one wasn’t too bad,” Beebe said. “But we’re wondering what the reimbursement will be with this.” Credit union members were worried when Fulton County FCU contacted them about the breach but were appreciative of their efforts. Some “think it’s an internal breach,” Beebe noted, and said the news reports have helped members understand what happened. In terms of issuing new cards, Beebe estimated that it would take about seven days. But a lot of other credit unions are re-issuing cards, which could lengthen the process and add frustration, he said. Members should have several cards, such as a Visa debit or credit card, so that when a problem occurs, they have a way to get money, he said. No credit unions in Florida have reported that they have been affected by the breach to the Florida Credit Union League, Amy Jowers, league communications coordinator, told News Now.

CUNA Mutual will send out risk alert today

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MADISON, Wis. (3/19/08)--CUNA Mutual policyholders will receive an alert today outlining steps they can take in the event of a card data breach. The alert comes after news of a data breach involving Hannaford Bros. grocery stores broke earlier this week. The breach affects 165 Hannaford Bros. stores in New England and New York, and 106 Sweetbay stores in Florida. Credit unions need to read carefully any alerts they receive from credit card companies--in the case of Hannaford Bros., the companies are Visa and MasterCard, Ann Davidson, CUNA Mutual risk manager, told News Now. The alerts will tell credit unions what data elements were compromised. For instance, the Hannaford breach put Track 1 or Track 2 card data at risk, which could lead to magnetic stripe fraud. “This is critical because if a thief got enough data for transactions, that is a high risk,” she said. Credit unions also should:
* Review authorization strategies for adjustments based on compromises; * Pay attention to the transaction types at risk (signature versus personal identification number); * Look at the list of cards that were affected and focus on the ones that are still live; * Consider blocking and re-issuing cards that are at high risk; and * Work with any third-party service providers to make sure they are aware of the situation.
If full track card data has been compromised, credit unions “can’t afford not to block and re-issue cards,” Davidson said. The Hannaford breach is comparable to last year’s TJX breach, but the window of time that the data was exposed is much shorter. The Hannaford breach exposed data from Dec. 2007 to March 2008, whereas TJX was “a number of years,” she said.

Summit Great Wisconsin CU merger OKd

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MADISON, Wis. (3/19/08)--A proposed merger between Summit CU and Great Wisconsin CU, both of Madison, Wis., has been approved by the Wisconsin Department of Financial Institutions and the National Credit Union Administration. The merger is scheduled to be completed this fall. The merged credit union will be known as Summit CU, the largest credit union in the state, with $1 billion assets (Milwaukee Business Journal March 17). The Wisconsin Bankers Association has criticized the merger because Summit CU “will be larger than 95% of the state’s taxpaying banks, will have 20 branch locations, and will be able to offer subsidized financial services, including commercial loans, to anyone,” the WBA stated on its website. The Wisconsin Credit Union League responded in a press release: “It’s still a member-owned cooperative,” said Brett Thompson, league president/CEO. “Like all credit unions, it will continue to return its earnings to its members and create more opportunities for Wisconsin families to access affordable financial services.”

CU System briefs (03/18/2008)

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* MADISON, Wis. (3/19/08)--UW CU announced that it is the first Wisconsin financial institution to go mobile. Members can use their cell phones or other mobile devices to check their account balances, make transfers and loan payments, use Web Pay and access Money Link, a serve that allows anyone to transfer money electronically to another UW CU member. UW CU’s mobile banking can be accessed by visiting The site is protected with security technologies and can be used on devices with small screens and iPhones with wireless access. UW CU has more than $1 billion in assets ... * WESTBROOK, Maine (3/19/08)--Maine’s credit unions donated $10,000 to the Good Shepherd Food Bank in memory of the bank’s founder, JoAnn Pike. The food bank is the primary source where 95% of hunger organizations in Maine purchase food. From left: Rick Small, executive director of Good Shepherd Food Bank, accepts a check from Jon Paradise, Maine Credit Union League governmental and public affairs manager. (Photo provided by the Maine Credit Union League) ... * BOULDER, Colo. (3/19/08)--Elevations CU, a $760 million asset credit union based in Boulder, announced that its branching strategy includes plans for three new branches within the next 12 months. It is considering branches in Erie/northeast Broomfield, northeast Longmont and Superior. The additions will help establish a more prominent presence in Boulder and Broomfield Counties and portions of Westminster. According to Dennis Paul, assistant vice president of business and community development, the credit union received a state charter last year allowing it to serve those communities. Elevations CU already has significant market penetration in the communities, he said. Opening dates are pending completion of each project … * FEDERAL WAY, Wash. (3/19/08)--Ascend United (Au), a broker of credit union charge-off debt, awarded Michael Luckin, senior vice president of San Jose, Calif.’s Technology CU, a 100-gram bar of solid gold valued at $3,500. Luckin won the “Au: Gold Standard” promotion contest on the credit union’s new website. Au Program Manager Phillip Slater displays the gold bar before it was given to Luckin. (Photo provided by Ascend United) ... * SAN DIMAS, Calif. (3/19/08)--Todd Lane, WesCorp FCU executive vice president and chief financial officer (CFO), will step down from his position to become CEO at Executive Compensation Solutions (ECS), succeeding Alec Berkman. ECS also announced that Heidi Pederson Donahe has joined the company as chief marketing officer. Lane has been CFO of WesCorp since 1998. Donahe was senior vice president of Octavus Group LLC, where she led the company’s marketing operations ...

Latest data breach hits supermarket chain

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PORTLAND, Maine (3/18/08)--A breach into the computer system of Maine-based Hannaford Bros. Co. supermarket chain resulted in the theft of up to 4.2 million customer credit and debit card numbers from more than 200 stores in several states, according to the company. The intrusion affected all 165 Hannaford stores in New England and New York State, and 106 Sweetbay stores in Florida. Also affected were certain independently owned retail locations in the Northeast that carry Hannaford products, the company said. Hannaford said in an announcement on its website the data was accessed illegally from the company's computer systems during the card verification transmission process in transactions. The stolen data were limited to credit and debit card numbers and expiration dates. "No personal information, such as names or addresses, was accessed," said President/CEO Ron Hodge. "Hannaford doesn't collect, know or keep any personally identifiable customer information from transactions." The company can't send letters directly to the potentially affected customers "because we do not have their names and addresses," it said on the website. Carol Eleazer, Hannaford's vice president of marketing in Scarborough, Mass., said the numbers potentially exposed to fraud are estimated at 4.23 million (Associated Press March 17). That would put the breach among one of the largest retail breaches experienced so far, but nowhere near the TJX Cos. breach of last year, which compromised up to 94 million cards and resulted in a number of lawsuits from financial institutions seeking to recoup expenses from reissuing cards. Hodges said the company became aware of unusual card activity on Feb. 27. Investigators discovered that the data breach began on Dec. 7 and it wasn't contained until March 10. "We would advise customers that have made purchases at our stores using credit or debit cards over the last three months, and who suspect that their accounts may have been compromised, should immediately notify their card issuer or bank," said the Hannaford website. The Massachusetts Bankers Association said that between 60 and 70 of its member banks were contacted by Visa and MasterCard but the retailer was not identified. An attorney with the Maine Credit Union League asked for help from the Credit Union National Association in alerting credit unions.

Utah governor signs CU business loan reform bill

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SALT LAKE CITY (3/18/08)--Utah Gov. Jon Huntsman Jr. has signed a bill that would result in fewer restrictions against Utah's state-chartered credit unions in the areas of business loans and loan caps. He signed Senate Bill 296, sponsored by Sen. Curtis S. Bramble (R-Provo), last week, according to the State Legislature website. "For nearly a decade Utah bankers have been telling our legislature that the world is flat," Scott Simpson, president/CEO of the Utah League of Credit Unions, told News Now. "The passing of this bill, though not perfect, is a sign that our legislative leaders are beginning to see through the hyperbole and hollow arguments. "Our House speaker and Senate majority leader have shown great leadership in the face of intense pressure on this issue." Simpson added. The new law:
* Increases the amount a credit union can loan to its members to 4% of assets from the current cap of 1%; * Eliminates a requirement that borrowers must be members at least six months before they can get a business loan and makes members eligible for a business loan immediately upon joining a credit union; and * Maintains the current $250,000 cap on business loans but allows the cap to increase with inflation, beginning May 5 with an increase each year on Jan. 1. The inflation figures are tied to the Consumer Price Index.
The bill was part of a compromise solution negotiated between the Utah League of Credit Unions and the Utah Bankers Association in which both groups promised not to seek changes in the law for at least five years (News Now Feb. 26).

First woman elected presidentCEO of Desjardins Group

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QUEBEC CITY (3/18/08)--The Desjardins Group Saturday elected the first woman to become president/CEO of the group--Monique F. Leroux. Leroux is senior vice president and chief financial officer of the group. She succeeds Alban D’Amours, who held the position since 2000. She will take office at the Annual General Meeting March 29 in Quebec City. Leroux has served as senior vice president of the group since August 2004. Prior to her position, she served as the president of the Desjardins Financial Corp. and CEO of its subsidiaries. She also has been named as one of Canada’s Top 100 Most Powerful Women by the Women’s Executive Network of Toronto, and one of Canada’s Top 25 Women to Watch in 2008 by the Women’s Post. Desjardins is the largest integrated cooperative financial group in Canada, with assets of more than $144 billion as of Dec. 31, 2007. It consists of a network of caisse populaires (credit union), their branches and financial centers.

ATM hack attack at former CU spreads

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BEDFORD, Texas (3/18/08)--An ATM hack attack at Omni-American Bank (formerly Omni-American CU) has spread, affecting members at other financial institutions, including credit unions. Fort Worth Community CU members who used their debit cards at ATMs owned by OmniAmerican Bank reported unusual activity on their accounts to the credit union, Diane Dorsey, vice president of operations at Fort Worth Community CU told News Now. When Fort Worth Community CU first received the reports of suspicious activity, it reissued members new cards. It also checked the unusual activity for common denominators and found that the affected members had used OmniAmerican ATMs. “It was not a breach of our system,” Dorsey emphasized. About 50 members of Forth Worth Community CU reported suspicious activity. “The effects were really quite limited,” Dorsey said. Omni-American Bank ATMs had stored card data “that they were not supposed to,” Dorsey said, so when the data system was hacked into, the hackers were able to use cardholders’ information to make purchases. OmniAmerican replaced about 40,000 cards, Dorsey added. The ATM hacking also spread to Naval Air Station Fort Worth--whose victims had accounts at Bank of America, USAA and Navy FCU in Vienna, Va. (Fort Worth Star-Telegram (March 15).

Maryland closing-costs bill goes to governor

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ANNAPOLIS, Md. (3/18/08)--A credit union-backed, closing-costs measure that reverses the Maryland Court of Appeals Bednar v. Provident decision passed the Maryland General Assembly last week and is on its way to the governor for signature. The reversal means that a financial institution can recapture closing costs from a borrower who repays a mortgage loan early, according to the Maryland and District of Columbia Credit Union Association (MDDCCUA) (FOCUS Newsletter March 17). In December, the Court of Appeals had ruled that a financial institution could not recapture closing costs because to recapture waived closing costs essentially created a prepayment penalty. However, no commissioner on financial regulation had ever guided state-chartered institutions this way, said MDDCCUA. Maryland would have been the only state required to comply with the decision. Senate Bill 347 and House Bill 852 allows state-chartered credit unions and banks to continue legally the practice of collecting the closing costs on both mortgage loans and lines of credit that are repaid early. MDDCCUA CEO Mike Beall and outside counsel Jim Brown testified in support of the legislation during legislative hearings last month.

CUNA releases new Desjardins rules forms for 2008

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MADISON, Wis.--The 2008 Desjardins Youth Financial Education Award recognition program will include changes to both the credit union and league judging criteria. “Based on input from the judges, we’ve refined the criteria to allow credit unions the choice of having their in-school branch programs evaluated. We’ll also be assessing league entries in terms of recordkeeping—compiling data to illustrate credit union leadership in financial literacy,” said Philip Heckman, director of youth and young adult programs for the Credit Union National Association (CUNA). “Both of these changes are meant to better reflect the movement’s wide-ranging innovation in personal finance education,” Heckman added. As in the past, raw scores will be compared as a percentage of maximum points, as determined by the decision to enter in optional categories or not. For 2008, credit union and chapter entries will be judged on three mandatory and two optional criteria:
* Awareness and teacher training; * Youth instruction; * Collaboration; * In-school branch programs (optional);and * Legislative and regulatory advocacy (optional).
League criteria for 2008—four mandatory and one optional—will be:
* Awareness and teacher training; * Youth instruction; * Collaboration; * Recordkeeping; and * Legislative & regulatory advocacy (optional).
Participating leagues will determine entry deadlines for their respective states. The deadline for leagues to submit state winners in one of six categories to CUNA for national judging is Oct. 1. Further details and all entry forms are available on CUNA’s website. The Desjardins Award is named in honor of Alphonse Desjardins, the founder of the North American credit union movement. It considers all activities supporting the personal finance education of young members and nonmembers, including, but not limited to, face-to-face teaching, publicity, lobbying for curriculum requirements, teacher and volunteer training, and promotion and use of the National Endowment for Financial Education High School Financial Planning Program. Each year, national Desjardins winning and honorable mention awards are presented at CUNA’s Governmental Affairs Conference in conjunction with the Dora Maxwell Social Responsibility and Louise Herring Philosophy in Action recognition programs.

Wisconsin lawmakers adjourn for year minus CRA-type bill

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PEWAUKEE, Wis. (3/18/08)--Wisconsin legislators Thursday adjourned for the year without acting on a bill introduced last month that would require state-chartered credit unions to prove they serve people of modest incomes. The bill, supported by the Wisconsin Bankers Association, would have placed requirements on state-chartered credit unions with more than $100 million in assets. The requirements would have been similar to those contained in the Community Reinvestment Act (CRA). The league has argued that the bill would burden credit unions with costly and unnecessary regulation. “Looking at the many REAL Solutions programs our credit unions are engaged in, it’s clear they meet this requirement every day, all across the state,” Tom Liebe, vice president of governmental affairs at the Wisconsin Credit Union League, told News Now. During a state Assembly Committee on Financial Institutions, league staff reminded committee members that a reading of Wisconsin law reveals that a credit union exists to “encourage thrift among its members, create a source of fair credit at a fair and reasonable cost, and provide an opportunity for its members to improve their economic and social conditions.” “Introduction of the bill certainly makes clear the need for credit unions to continue to stand up and tell decision makers their unique and meaningful stories of service to members and communities,” Liebe said.

Filene i3 seeking 12 new members

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MADISON, Wis. (3/18/08)--The Filene Research Institute is seeking 12 new members for its i3 (ideas, innovation and implementation) research group. The 39 members of i3 are credit union innovators from the U.S. and Canada who study factors affecting credit unions, and explore demographic changes, buying and investment patterns and needs of consumers to create sustainable growth for credit unions. Members reflect diversity in experiences, credit union positions, geography and credit union membership. They serve three-year terms, must be in a position of substantial responsibility (but not yet a CEO) and are required to attend two national meetings per year. Support from their credit union is essential. Candidates can apply online by May 27. For more information, use the link.

Herring notes power of cooperatives

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CINCINNATI (3/17/08)--Bill Herring, CEO of Cincinnati Central CU, spoke about the power of cooperatives when addressing attendees of the Credit Union National Association’s 2008 Governmental Affairs Conference in Washington, D.C., earlier this month. Herring discussed the need for credit unions to build stronger relationships with local cooperatives during a breakout session titled “All in the Family: Co-ops as Advocacy and Business Partners” (eLumination March 13). “It is important that credit unions are exposed to the opportunities provided by the cooperative movement in the U.S.,” Herring said. “As credit unions look to get more involved with small business, it is important to look to the future, and I believe that you will find many opportunities in your own communities by working with worker-owned cooperatives,” he continued. As an example, Cincinnati Central CU provides membership to employees of Co-op Janitorial Services in exchange for their services, Herring noted. For more information about cooperatives, use the link.

Study Tech vendors key in shaping future of mobile banking

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NEEDHAM, Mass. (3/17/08)--Mobile banking is growing at a feverish pace to emerge as a powerful “right here, right now” channel for financial institutions to connect with their retail and business customers, as well as reach new customer segments, according to new research from The Towergroup, a research and advisory firm focused exclusively on the financial services industry. Core banking vendors sit at the center of a significant portion of the bank technology market in U.S. When new technology becomes available, mid-tier and small financial institutions look to their core processing vendors for leadership and innovation. In light of the surging interest in mobile banking services, TowerGroup believes that these financial institutions should move ahead with the deployment of mobile banking solutions with confidence that their core banking vendors will provide the key to start the engine of mobile banking. Mobile banking already is a strategic business and technology priority for the top U.S. banks. While they have the financial and technical resources to make a strategic commitment to the mobile channel, most mid-tier and small financial institutions are innovation and/or cost-challenged on this front. TowerGroup finds that core banking technology vendors have a big role to play in helping mid-tier and small institutions take advantage of this emerging channel that will soon be a cost of doing business. “Demographic shifts and new customer expectations along with technology maturity are converging to create fertile ground for mobile banking,” said Virginia Garcia, TowerGroup research director in the emerging technologies practice. “Within a few years, the mobile device will be the primary access point for consumer banking, with 40 million U.S. consumers using mobile banking by 2012. “Core banking vendors will be important contributors to the widespread proliferation of integrated mobile banking services and will fundamentally reshape the vendor ecosystem for mobile banking solutions,” she added. “As the focus shifts from ‘technovation’ to return on investments, the core banking vendors are ideally positioned to enable proper business economics in support of mobile banking.” Highlights of the research include:
* Increasingly, U.S. banks are recognizing that offering mobile banking services can help them to reach new customer segments, such as the youth market and the unbanked, which have a strong affinity for mobility; * TowerGroup believes that in 2008, mobile banking will finally emerge as a basic, necessary service for U.S. banks and therefore a “must have” in the solutions arsenals of core banking vendors; * Recent mobile banking announcements from such technology vendors as Fidelity Information Services, Jack Henry & Associates, Metavante, and Open Solutions Inc. represent the first step in a multi-pronged, evolutionary strategy with regard to integrating mobile payments more deeply into the U.S. banking infrastructure; and * As the mobile banking and payments market evolves throughout 2008, the associated vendor ecosystem will change markedly. Core processors’ strategies may eventually call for internal development--or even acquisitions of boutique suppliers--that are struggling to win the confidence of financial institutions looking to push forward on the mobile delivery channel.

Development Education Scholarships extended to March 20

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MADISON, Wis. (3/17/08)--The National Credit Union Foundation (NCUF) has extended the deadline to March 20 for credit union staff and volunteers to apply for scholarships to Credit Union Development Education (DE) training. “These scholarships intend to make it easy as possible for credit unions to send representatives to DE Training despite the tough economy,” said NCUF Executive Director Steve Delfin. “In these challenging times, training on cooperative principles and credit union values is more important than ever.” DE Training is scheduled for April 3-9 at the University of Wisconsin in Madison. Scholarships are available through NCUF's DE Fund for credit unions that could not otherwise afford the registration fee of $1,600 (double room) or $1,700 (single room). The registration fee includes all training materials, meals and lodging. Credit unions interested in a scholarship can use the link. DE training is open to everyone, from new employees who need a credit union orientation, to seasoned executives who need to recharge (News Now March 3). NCUF is the primary sponsor of the DE program. Support is provided by the World Council of Credit Unions, the Credit Union National Association, CUNA Mutual Group, state credit union leagues and foundations. Questions can be directed to Program Director Tom Decker at 800-356-9655, ext. 4374 or

Orlando Magic co-founder to speak at CFO Council conference

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MADISON, Wis. (3/17/08)--Orlando Magic co-founder Pat Williams will offer credit unions his techniques for increasing productivity in a leadership capacity during the 15th annual CUNA Chief Financial Officers (CFO) Council Conference and Roundtable, May 18-21, in Fort Meyers, Fla. Williams, who spent 40 years in the NBA, will speak on “The Seven Keys to Leadership in the 21st Century.” He will discuss how credit unions can create a personal strategy, community effectively with employees and make profitable decisions. Additional conference topics include: loan and deposit pricing, merger accounting, conflict resolution, indirect lending, call reports, software innovations, community involvement and purchasing insurance coverage. For more information, use the link.

CUs on the Tube Community involvement as brand building

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GREENSBORO, N.C. (3/17/08)--Jim Blaine, president/CEO of State Employees CU (SECU), Raleigh, recently spoke about the importance of credit unions and their members giving back to the community in a video produced by the North Carolina Credit Union League. With money earned from $1 monthly checking account fees, SECU has donated funds to charitable organizations and has provided numerous scholarships for high school students. Giving back to the community provides a “renewed sense of ownership,” Blaine said. And, “the best way to advertise is to have other people tell your story,” he concluded.

One-third of cardholders open to decoupled cards

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BOSTON (3/17/08)--About one-third of cardholders would be open to decoupled debit cards, a recent survey indicated. The Aite Group, a Boston-based research firm, surveyed 500 U.S. consumers about trends in payment and loyalty. The survey found that although decoupled debit cards--cards issued by an entity other than the institution where a customer’s primary checking account resides--are relatively new, they have a large potential in the financial services market, the company said in a press release. Consumers interested in decoupled cards are “reward addicts,” or those who go out of their way to find rewards and participate in rewards programs regularly, the survey noted. But co-branded decoupled cards may not be the way to go, said Gwenn Bezard, research director at Aite and study co-author. “Program managers may want to focus on issuing decoupled debit cards on their own, or as part of a coalition marketing alliance with a large number of merchants,” she said.

CU System briefs (03/14/2008)

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* GREELEY, Colo. (3/17/08)--Prosecutors dropped charges against Ken Nelson, whose wife was convicted of murdering Heather Garraus, a former employee of Colorado State Employees CU on Jan. 23, 2007 (Fox 31 March 13). Nelson is a former Weld County Sheriff’s deputy and his wife, Shawna, had an affair with Garraus’ husband, Ignacio, a former Greeley police officer, according to reports ... * DUBLIN, Ohio (3/17/08)--The Ohio Credit Union League and 17 Ohio credit unions teamed up with local, state, and federal government agencies, and Ohio Attorney General Marc Dann to provide financial literacy information (eLumination March 12). The event was themed “Financial Literacy--Making a Sound Investment.” Consumers had the opportunity to learn how to make better financial decisions, avoid credit scams and protect their personal information. Financial fairs were held in six cities ... * WASHINGTON (3/17/08)--Florida Credit Union League Executive Vice President Aletta Shutes was honored with the Buck Levins Award for her political involvement in the credit union movement by the Credit Union National Association (CUNA) during the 2008 Governmental Affairs Conference (GAC). With Shutes’ efforts, the league raised more than $610,000 for its credit union political action committee. She also increased the number of GAC attendees from Florida. When she started in 1993, Florida's credit unions sent less than 25 people to the conference. At this year's GAC, more than 200 Florida credit union representatives attended. From left are: Kris Mecham, CUNA Government Affairs committee chair, and Shutes. (Photo provided by the Florida Credit Union League) ... * DUBLIN, Ohio (3/17/08)--The Ohio Credit Union Foundation has created a grantmaking cycle for credit unions (eLumination March 12). Grand applications will be accepted throughout the year, but award notifications will occur quarterly. Applications also have been revised for convenience and ease of use. The foundation, created 10 years ago, awarded $210,000 in 2007 ...

Oregon CUs keep consumer complaints down

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BEAVERTON, Ore. (3/17/08)--Oregon credit unions received few complaints within the broad financial institution category, according to an annual compilation of the top 10 consumer complaints released by the Oregon Attorney General’s office. The low number of complaints attributed to Oregon credit unions relates to the national trend of high member satisfaction with credit unions, said the Credit Union Association of Oregon (CUAO). In the compilation, personal attention by friendly tellers, and the fact that all credit unions are local were satisfaction indicators listed by members. Within the financial institution category of Oregon’s Consumer Complaint list, credit unions received the lowest number of complaints. The financial institution category’s complaints break down as follows:
* Financial institutions--overall (952); * Credit cards (411); * Mortgage brokers (147); * Commercial banking (104); * Real estate financing (99); * Sales financing (92); * Consumer lending (43); and * Credit unions (21).
In the National Member Survey published by Credit Union National Association in 2006, 66% of credit union members indicated they were very satisfied with their credit union, while bank customers who were very satisfied came in at 55%, CUAO said. High satisfaction with credit unions comes across in surveys completed by the banking industry as well, CUAO added. Although the percentage of "very satisfied" bank customers reached its highest mark in 14 years, credit unions again achieved the highest score in this category: 71%, according to the 2005 American Banker/Gallup Consumer Survey.

Kentucky bankers anti-CU bill still in committee

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FRANKFORT, Ky. (3/13/08)--A banker-backed bill that would result in burdensome restrictions and limits on Kentucky's credit unions' branching efforts is stalled in a state legislative committee. "We've been led to believe it's stalled, and the bill could be dead, but there are a couple more weeks left (in the legislative session). Call me in about two weeks," said Debbie Painter, director of the Kentucky Credit Union League's government affairs. The bill, SB 89, was introduced in the Senate Banking and Insurance Committee in mid-January and is backed by the Kentucky Bankers Association. Under current law, credit unions and banks wishing to add or change a branch, service center or ATM must give notice of their intent to their regulator. The bill would apply "a ton of regulations" to the application process for credit unions, but not banks. It also would make credit unions' budget process part of the Open Records Act, Painter told News Now. She credited grassroots efforts by credit unions in keeping the bill in the committee. "They've really came through for us," she said.

PCUA applauds Senates six predatory loan bills

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HARRISBURG, Pa. (3/13/08)--The Pennsylvania Credit Union Association applauded the state Senate's passage by unanimous vote of six bills targeting predatory and other questionable mortgage-lending practices. The bills, S.B. 484 through 488, were introduced by Sen. Pat Browne (R-Lehigh) (Life is a Highway March 14). PCUA took an active role in negotiations to ensure homeowners were better protected without adding more unduly burdensome regulations on credit unions. "We applaud the senator's efforts and thank him for giving us an opportunity to discuss our concerns on behalf of Pennsylvania's credit unions," said Jim McCormack, PCUA president/CEO. The bills would:
* Amend the Loan Interest and Protection Law of 1974 to increase a monetary cap to $200,000 from $50,000; * Permit the state Department of Banking to publicly release information on pending enforcement actions and fines against nondepository licensees; * Amend the Real Estate Appraisers Certification Act regarding board membership, disciplinary measures and penalties; * Amend the Housing Finance Agency Law to require lenders to send copies of foreclosure notices to the Pennsylvania Housing Finance Agency so mortgage foreclosures can be monitored statewide; * Amend the Mortgage Bankers and Brokers and Consumer Equity Protection Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting or offering to accept mortgage loan applications or negotiating mortgage loan terms; * Amend the Secondary Mortgage Loan Act to create a new licensing category for individual mortgage originators who deal directly with the consumer by soliciting, accepting, or offering to accept secondary mortgage loans (home equity) applications or negotiating secondary mortgage loan terms.
The package now heads to the Commerce Committee in the House of Representatives, said PCUA.

Former D. Edward Wells CEO convicted

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SPRINGFIELD, Mass. (3/14/08)--The former CEO of the defunct D. Edward Wells CU was convicted Thursday of multiple counts of embezzlement and other charges related to the embezzlement of $1.5 million from the credit union (Boston Herald March 13). Carol Aranjo, a nationally known advocate of community development credit unions, was convicted of multiple counts of embezzlement, filing false tax returns, bank fraud, filing false entries with a federal financial institution and obstruction of a federal examiner. Her husband, Alphonso Smith, was convicted of aiding and abetting, but was acquitted of some charges, said the news report. The thefts occurred between 1997 and 2003. D. Edward Wells, a community development credit union based in Springfield, Mass., was liquidated in 2003 by the National Credit Union Administration. The jury deliberated for four days after a five-week trial. Sentencing was set for June 19. Aranjo faces up to 14 years in prison (News Now Feb. 19).

CUs against junk driving program nets NCUF grant

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BATON ROUGE, La. (3/14/08)--Southern Teachers and Parents FCU in Baton Rouge has taken a stance against “junk driving.”
Southern Teachers and Parents FCU, Baton Rouge, used a grant from the National Credit Union Foundation to help members buy their first car under its "Credit unions against junk driving” program. From lef: Ronald F. Smith, program coordinator; Sheila Minor Caldwell, the first member to buy a vehicle in the program; and Richard Turnley Jr., treasurer and manager. (Photo provided by Southern Teachers and Parents FCU)
With the help of a $29,840 National Credit Union Foundation (NCUF) grant, the credit union’s members will no longer have to drive cars that are ready for the junkyard. Instead, members who meet criteria and who attend auto workshops at the credit union will be eligible to receive up to $1,000 on a down payment toward their first car purchase (eNews March 12). The program, which bears the motto: “Credit unions against junk driving. We won’t let our members drive junk,” began in February and will end February 2009. Nonmembers may attend the workshops, but must become a member for the down payment incentive. Workshop topics include: financial planning, preventive car care maintenance, tips for buying a pre-owned car and auto financing.

Political campaign ads bump iBelongs schedule

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HARRISBURG, Pa. (3/14/05)--While presidential candidates zoom in on the election in Pennsylvania, the Pennsylvania Credit Union Association's (PCUA) iBelong campaign has had to adjust its media plan for April. PCUA and its partner, Target Media, adjusted their plan for iBelong to make way for political advertising flooding radio and television air time before the Pennsylvania Primary Election on April 22, said PCUA (Life is a Highway March 13). iBelong's ad schedule will go off the air on April 13 and resume on May 5. "The Democratic candidates will spend nearly $50 million in media advertising between now and April 22 in Pennsylvania alone," said Jeff Wakeen, president/CEO of Target Media. He advised credit unions with ad programs to put their ad schedules on hold for the two weeks before the primary and resume advertising a week or two afterward. "Anyone trying to advertise during the week prior to the election will be lost in the 'noise' of the political arena," said Wakeen. The high demand for time for political messages means nonpolitical advertisers will pay exorbitant rates at that time, and still risk not getting on the air.

CU System briefs (03/13/2008)

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* DUBLIN, Ohio (3/14/08)--The Ohio Credit Union League announced these 2008 Leadership Recognition Program awards (eLumination Newsletter March 12): William Burns and Ronald Moss of Kent CU, Volunteers of the Year; Doug Fecher, CEO, Wright-Patt CU, Professional of the Year; Central Ohio Chapter, Spectacular Chapter Award in its category; L.C.E. FCU, AurGroup Financial CU and Ohio University CU, Desjardins Youth Financial Education Award; Bay Area CU, Credit Union of Ohio, CME FCU and Kemba CU, Dora Maxwell Social Responsibility Award; CSE FCU and Day Air CU, Louise Herring Award for Philosophy in Action; and Classic FCU, Fiberglas FCU and Ohio University CU, Cutting Edge Marketing Brilliance Award. They will be honored at the Ohio Credit Union System's ZENITH08 conference April 24-25 in Columbus … * BATON ROUGE, La. (3/14/08)--Neighbors FCU has named Kathi Gill as president/CEO, according to the Louisiana Credit Union League (eNews March 12). Gill has been executive vice president at the $328 million asset, Baton Rouge-based credit union for the past 15 years. She recently was honored as the 2007 Alumnus of the Year of the Southwest CUNA Management School. A Certified Credit Union Executive, Gill serves as vice president of the Baton Rouge Credit Union Chapter, is a member of the CUNA Mutual Group Market Research Panel and a member of the Baton Rouge Rotary, serving on the Literacy Committee … * VANCOUVER, B.C. (3/14/08)--Credit Union Central of British Columbia announced it has posted a record net income of $24.4 million during 2007, a 47% increase from $16.6 million in 2006. Financial margin of $31.1 million also turned in a record, with a 20.5% increase from a $25.8 million record in 2006. Assets grew 9.4% to $5.66 billion. The trade association for the province's credit unions paid a dividend of 8.34%. After taxes and dividends, $17.7 million was transferred to retained earnings (Marketwire March 12) … * MARGATE, Fla., and SAN BERNARDINO, Calif. (3/14/08)--MediaNet Group Technologies Inc., which offers an online mall and affinity program platform through its BSP Rewards subsidiary, has announced it will build a private branded rewards mall for $1 billion asset Arrowhead CU, San Bernardino, Calif. Arrowhead offers 24-hour access to accounts, loan approvals online in seconds, and online banking services. Larry Strong, Arrowhead's president/CEO, noted that BSP services more than 700 merchants and 8,500 restaurants. BSP builds, brands and customizes proprietary loyalty/rewards/mall programs …

Ohio CU bill passes state Senate unanimously

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COLUMBUS, Ohio (3/14/08)--Credit union modernization legislation--Senate Bill 247--was recently passed by the Ohio Senate with a unanimous 32-0 vote. The Senate is expected to refer the bill to the Ohio House Financial Institutions Real Estate and Securities Committee, said the Ohio Credit Union League (eLumination Newsletter March 13). “We expect the credit union legislation to continue making solid progress through the House as it did in the Senate,” said John Kozlowski, league general counsel. The legislation seeks to modernize the administration, operation and governance of Ohio's state-chartered credit unions (News Now Feb. 15). The Ohio Financial and Financial Institutions Committee adopted several amendments to the legislation that would:
* Require credit unions to retain Suspicious Activity Reports for five years; * Provide further clarification of nonpaper document storage requirements; and * Provide authority for the superintendent of the Ohio Division of Financial Institutions to conduct national background checks within limits.

Illinois league meets with new director of DFI

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NAPERVILLE, Ill. (3/14/08)--Robert Meza, new director of the Illinois Division of Financial Institutions (DFI), acknowledged the importance of state-chartered credit unions in Illinois during a recent meeting with Illinois Credit Union League (ICUL) staff. “Meza also understood ICUL’s long collaborative relationship with the DFI,” said Steve Olson, ICUL executive vice president. “We look forward to working with him.” During the meeting, league staff discussed the Illinois credit union movement and confirmed changes in the Illinois Department of Financial and Professional Regulation and the DFI organization structure, said Dan Plauda, league president/CEO. Prior to his position with the DFI, Meza worked as an attorney and as the vice president of legal affairs for Urban Investment Trust Inc. in Chicago. ICUL staff plans to meet with Meza again at the Capitol to discuss credit union issues.

South Africa passes landmark financial co-ops law

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MADISON, Wis. (3/14/08)--The South African government recently passed the Cooperatives Banks Act, marking the first financial cooperative-specific legislation to be passed in English-speaking Africa. The World Council of Credit Unions (WOCCU) assisted the Savings and Credit Cooperative League (SACCOL) of South Africa with drafting and reviewing the new legislation. Musa Mbingo, general manager of SACCOL, sees the formal recognition of financial cooperatives as a way to deepen and strengthen outreach to South Africa's poor. “In terms of poverty, South Africa's numbers are very high,” Mbingo explained. “There are many unbanked people who can't enter the mainstream banking system. Cooperatives are the solution to provide financial services. In the fight for poverty alleviation, [the legislation] is a big step.” Savings and credit cooperatives or SACCOs--credit unions--previously were regulated under an “exemption" to the Banking Act, which required deposit-taking cooperative financial institutions to join a self-regulatory organization. Most SACCOs and financial cooperatives affiliated with SACCOL, a WOCCU member. After unsuccessful attempts to address regulatory problems within the system, WOCCU was invited to make a legislative assessment in 2000. By October 2001, South Africans had launched a campaign to encourage banks to serve the poor. Due to the campaign's mass appeal, the Financial Sector Campaign Coalition (FSCC) was established. More than 50 community-based organizations rallied around FSCC to address mainstream financial exclusion of the poor. “SACCOL became pivotal within the FSCC and in addressing the exclusion of financial cooperatives operating under an ‘exemption’ rather than being brought into mainstream banking,” said David De Jong, former general manager of SACCOL and now regulator of cooperative banks for South African Microfinance Apex Fund, the new regulating authority for financial cooperatives. “One of the priority issues was a need to address the legislative and support environment for financial cooperatives,” he continued. Less than a year after FSCC's creation, government, business, labor and community constituencies organized and agreed to draft and enact legislation specifically for financial cooperatives. SACCOL and its affiliated SACCOs, South Africa's labor movement and WOCCU provided input for the Cooperatives Banks Act. SACCOs are now allowed to provide their members a full range of financial services, all covered by a deposit insurance plan. For the first time, this places financial cooperatives ahead of South Africa's mainstream banks, providing a unique window of opportunity for the movement, De Jong said. Dave Grace, WOCCU vice president of association services, who worked closely with SACCOL to draft the legislation, noted the importance of the law for African credit unions. “We hope this is the first in a sea of changes, enabling legislation for financial cooperatives in Africa.”

Auditor Most western Michigan CUs grew in 07

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ANN ARBOR, Mich. (3/13/08)--An audit by the St. Joseph, Mich., office of Plante & Moran indicates that Western Michigan credit unions experienced a strong 2007 and are not being hit hard by loan losses ( March 12). The reason credit unions in Western Michigan--and some in Southwestern Michigan--have experienced a strong fiscal year is because the economy is more diversified, David Adams, president/CEO of the Michigan Credit Union League, told News Now. And unlike banks, credit unions have less than 2% of their assets in commercial lending, whereas banks have 40% to 50%. Credit unions also make smaller loans than banks, Adams said. The article mentions that Lake Michigan CU, Grand Rapids; Educational Community CU, Kalamazoo; Option 1 CU, Grand Rapids; Consumers CU, Oshtemo Township; and Berrien Teachers CU, St. Joseph, increased their net income for 2007. DFCU, Dearborn--Michigan’s largest credit unions--has done well this year and has distributed a record patronage dividend of $17 million to its members for the second year in a row, Adams said. Dividends are a great way to differentiate credit unions from banks, Adams added. Though the league is aware that some credit unions and banks in Michigan are struggling due to the economy, other credit unions are growing and adding value. “It’s a testament to the credit union model,” he said. Despite some bad news related to the economy, there’s a lot of good news for credit unions, Adams said.

Michigan CUs grow through MBL

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PLYMOUTH, Mich. (3/14/08)--Though credit unions in general have room to expand in the area of member business lending (MBL), individual credit unions “more and more” are beginning to reach the credit union MBL cap of 12.25%, according to Michigan Credit Union League President/CEO David Adams. Two credit unions doing particularly well with MBL in Michigan are Christian Financial, Roseville, and Consumer CU, Oshtemo, he told News Now. Credit unions have always offered member business lending, but the types and sizes of member business loans they are making has changed. Credit unions want to expand to other lines of business and diversify their lending, Adams said. Small business owners are attracted to credit unions because credit unions already have a relationship with them as members. Commercial banks tend to “roll out the red carpet” for the largest, most profitable businesses, leaving many small businesses behind. Many people look to credit unions as trusted service providers, and because they like value and good service, they turn to them for business needs. “Small businesses are not able to get the same value at banks,” Adams said. Credit unions also channel their business lending through credit union service organizations (CUSOs), which allow them to share expertise, Adams said. Some bankers argue that if the Credit Union Regulatory Improvements Act (CURIA) passes, it would allow credit unions to have an unfair advantage over banks because it would raise the cap on MBL to 20% of assets. Adams disagrees. “If we did [have an advantage in MBL], banks would convert to credit unions,” he said. While credit unions’ tax-exempt status helps them provide better rates to their members, “it’s ludicrous that raising the cap [on MBL] would threaten banks,” Adams said.

First Basin members group disappointed in lawsuit plans

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ODESSA, Texas (3/13/08)--Members of a group that opposed the now-withdrawn attempt by First Basin CU to convert to a mutual savings bank expressed disappointment in learning the credit union may sue the group's founders. Members of the opposition group, Save First Basin, say the management of the Odessa, Texas-based credit union announced Tuesday it would sue three members, including Letty Moreno, a co-founder of the group. Moreno is a former vice president at the $114 million credit union. The group has "done nothing wrong. We have simply stood up for what is right and told the truth," said Moreno in a press release from the group. The group had been vocal in pressing for details about the election results on the proposed conversion. The credit union cancelled a scheduled membership vote on the proposal earlier this year. And on March 4 CEO Shem Culpepper announced the credit union was withdrawing the conversion proposal. Now Save First Basin is planning to field a slate of candidates in the next board election. Danny Armstrong, a member of the credit union for 17 years, said he was "disappointed" in hearing the news of a potential lawsuit. "They have spent at least half a million dollars of [the credit union's money] for something that would benefit themselves, not the members." Anna Vera, a member for 10 years, said the credit union "should not be attacking members because their bank plan was rejected."

Financial literacy program fun for youngsters

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RALEIGH, N.C. (3/11/08)--Local Government FCU (LGFCU) is debuting a financial literacy initiative aimed at engaging children eight years old and younger in basic financial concepts such as saving, interest and planning ahead. The $766 million asset credit union created a youth initiative that started with trading cards, which were mailed to its youngest members. The cards introduced five new mascots: twins Josh and Zoey, their wise dog Winston, mentor Sweet Pea and funny little fellow from the library, Seymour. After building familiarity with the mascots, LGFCU launched a website, The fictional online world, Penny Hollow, offers games and activities to slowly introduce children to basic financial concepts, adding new activities several times a year to grow with the child and keep interest piqued. The site's design was build to accommodate growth, fueled by use and the feedback of users and their parents. "The importance of literacy at an early age can't be emphasized enough, but the approach needs to be unique," said LGFCU President Maurice Smith. "We need to be thinking of fresh ways to make learning fun. Our efforts are already being well-received by our youngest members, so we feel confident we are on the right track. Hopefully, an increased awareness in this matter will encourage others to develop their own plan." LGFCU is working with a new Youth Advisory Council and its 19 other Advisory Councils to gain input and feedback on the children's initiatives to help ensure the public is getting material in a useful way. The credit union pointed out that only 48% of seventh-graders in North Carolina are financially literate. "There is obviously a trend here--and it's not a good one," said Smith. "We need to get children engaged in the idea of financial literacy from the very beginning, and then continue to support their education so they will grow into financially responsible adults."

CUNA Mutual working on land trade

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MADISON, Wis. (3/13/08)--CUNA Mutual Group is working on a land trade with the University of Wisconsin-Madison Research Park near its Madison, Wis., headquarters. The trade is contingent on CUNA Mutual creating a master plan for 52 undeveloped acres that it will own after the deal is completed. As part of the deal, CUNA Mutual would give 20 out of 60 acres of undeveloped land to the research park (Wisconsin State Journal March 6). The research park in turn would give CUNA Mutual 12.5 acres. CUNA Mutual’s mixed-use development plan would include multi-family housing, apartments for older adults, office space and limited retail operations, Dan Larson, CUNA Mutual director real estate and commercial property, told the newspaper. “The research park land investment will be good for the community and our policyholders, as the development is phased in over the next several years,” Rick Uhlmann, CUNA Mutual senior manager of media relations, told News Now. “We look forward to working with the UW Research Park, the city of Madison and neighbors in creating a development that will benefit all. “CUNA Mutual has a number of commercial real estate investments around the country. This one just happens to be across the street from our headquarters’ front door,” he added.

50000 grant from CUNA Mutual to train youth to build homes

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MADISON, Wis. (3/13/08)--Operation Fresh Start will use a $50,000 grant from CUNA Mutual Group to fund a new youth team devoted to housing issues in a Madison. Wis., neighborhood. The North Side neighborhood is considered a key in the city’s efforts to combat crime and gang activity while improving the lives of low-income families. In recent years, the number of families on public assistance in the area has increased 60%, and 70% of elementary school students in the area are eligible for free or reduced-price meals. CUNA Mutual’s grant will go to training a crew of 16- to 24-year-olds from disadvantaged backgrounds to perform housing rehabilitation and construction activities. The contribution from CUNA Mutual will “enable Operation Fresh Start to connect more at-risk youth with educational and community services while creating measurable benefits on the city’s North Side. The result will be more self-reliant, successful young people and a safer community,” Madison Police Chief Noble Wray said. Operation Fresh Start crews are composed of 10 to 15 participants in a year-long combination of classroom instruction, on-the-job training and ongoing mentoring. The team funded by CUNA Mutual will work to build an energy-efficient, affordable, single-family home. “This grant will add a new crew of young people and give them the opportunity to develop life-skills and vocational talents that will help them build positive relationships and a desirable employment history,’’ said Connie Ferris Bailey, Operation Fresh Start’s executive director. “We have a long waiting list of youth who could benefit from our program, so it’s great to be able to add another crew.” CUNA Mutual employees will play a role in mentoring and tutoring members of the crew, who will be working toward their high-school equivalency and vocational placement. “One of the reasons our employee philanthropy team selected Operation Fresh Start as a recipient of such a donation is the organization’s focus on helping youth to gain maturity and learn positive work habits such as thoroughness and personal initiative,” said Steve Goldberg, executive director of the CUNA Mutual Foundation. “The holistic approach to developing a young person’s potential and transforming negative behavior into positive results for the community really impressed our employee team,” he added. The company’s decision to contribute to Operation Fresh Start was a result of the company’s strong 2007 financial performance and its desire to support organizations that benefit the community, said CUNA Mutual President/CEO Jeff Post.

Iowa foundation receives grant from racetrackcasino

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DES MOINES, Iowa (3/13/08)--The Iowa Credit Union Foundation received a $10,000 grant in January from Prairie Meadows Racetrack and Casino through its 2007 Community Betterment Grant Program. The funds will be used to support the Credit Union Family Partnership Project, which will make individual development accounts (IDAs) available to qualified families through participating credit unions. An IDA is a matched savings account in which a participant saves for one of four specific purposes:
* Saving funds for a down payment or closing costs on a first home; * Creating an account for post-secondary education or job training; * Starting or expanding a small business; or * Purchasing a vehicle to commute to work.
The Prairie Meadows Grants Advisory Committee--comprising education, religious and business leaders from the greater Des Moines area--reviews grant requests and recommended funding levels. The Iowa foundation was one of more than 190 organizations to receive funding from Prairie Meadows. “Individual development accounts help working families leverage their savings toward the purchase of a long-term financial asset,” said Marybeth Foster, foundation executive director. “These funds will allow us to select our participating credit union partners and to provide financial education to families and individuals in the program. “Our goal is not only to help families save money, but to give them the tools they need to better manage their finances for the long term,” she continued.

League-supported card security bills stall in Wisconsin

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MADISON, Wis. (3/13/08)--Two plastic card data security bills backed by credit unions and the Wisconsin Credit Union League did not make it out of the State Assembly Tuesday. The bills--AB 745 and SB 439--would have prohibited merchants from retaining consumers' secret personal identification numbers or security codes after processing a credit or debit card transaction. The bills were killed Tuesday evening by a procedural motion during the Assembly's floor session, said the league. AB 745 was tabled, preventing the full body from taking an up or down vote on the measurer. Both bills had easily passed through both chambers' financial institutions committees and passed the full State Senate without objection. The popular measures had 44 legislators listed as sponsors, but lobbyists and individuals representing merchants, retailers and other special interests had launched a massive campaign against the measurers, the league had said earlier this week (News Now March 10). "We're disappointed that Wisconsin consumers won't be able to enjoy the protections this bill would have afforded them," said league President Brett Thompson. "But we're committed to standing up for consumers and working hard to see this legislation considered next session. "Had this bill been allowed to receive an up and down vote before the full Assembly, we feel it would have passed," Thompson said. "Clearly it had broad bipartisan support, momentum, and in a recent survey, approximately 75% of Wisconsin voters voiced approval for legislation such as this." The legislation was introduced by Rep. Brett Davis (R-Oregon) and Sen. Bob Wirch (D-Pleasant Prairie).

TCUF doles out 102773 in grants

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FARMERS BRANCH, Texas (3/13/08)--Credit union members will benefit from the $102,773 in grants the Texas Credit Union Foundation (TCUF) has given to credit unions and related programs. The awards include training calendar grants for four credit unions, scholarships for a TCUF Financial Literacy Celebration event and a National Endowment for Financial Education Train the Trainer Program March 27-28. Three scholarships for the National Youth Involvement Board conference in August also are included (LoneStar Leaguer March 12). Four credit union chapters each received $2,000 for educational programs; the Texas Credit Union Department received a grant to help its examiners attend training; and four FOCUS Award winners will receive $1,000 each to attend conferences. Junior Achievement partnerships with credit unions in Nacogdoches and Texarkana were funded by the TCUF. As a result, thousands of students will be taught by a trained credit union volunteer. Other grants included sponsorship of the Texas Council on Economic Education’s Teacher of the Year Award, which provided discounted registration for 90 credit union members and teachers at a state conference. Security One FCU, Arlington, received a grant to partner with the local Boys and Girls Club. TCUF also plans to partner with GECU, El Paso, and the University of Texas-El Paso using a $20,000 grant to create a financial literacy video for college students. The next grant cycle goes through April 29. Information and applications are available on TCUF’s website. The grants are supported by credit unions, chapter and individual donations, Community Investment Fund investments and sponsorships from golf tournaments.

CU System briefs (03/12/2008)

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* LATHAM, N.Y. (3/13/08)--U.S. Rep. Louise McIntosh Slaughter, right, (D-N.Y.) was presented with the New York State Credit Union League's 2007 Legislator of the Year award by Marie Betti, CEO of Western New York FCU and a league board member, at Slaughter's office last week in Washington, D.C. The award recognizes a legislator who has shown outstanding commitment to issues of importance to New York's credit unions. "Credit unions play an important role in promoting the economic well-being of New York's families, especially those of modest means," Slaughter said. "I will continue to work with these institutions as they strive to assist individuals with their financial needs while fostering community development." Slaughter has formed close relationships with credit union leaders in the 28th congressional district and is one of 14 New York co-sponsors of the Credit Union Regulatory Improvements Act (CURIA). (Photo provided by the New York State Credit Union League) … * SAN DIMAS, Calif. (3/13/08)--Financial Service Centers Cooperative Inc. (FSCC) CEO Sarah Canepa Bang will be featured on "21st Century Business," hosted by Gen. Alexander Haig on CNBC Sunday. She will discuss how the shared branch services at 7-Eleven stores are revolutionizing the way consumers and credit unions perform financial services. Bang also will address the importance of making credit unions the most convenient financial institutions through innovative delivery solutions and more access points for deposit. Air times are: 3 p.m. EDT; 2 p.m. CDT; 1 p.m. MDT; and noon PDT. For specific market dates and air times, use the link … * NEWARK, Ohio (3/13/08)--Fiberglas FCU was forced last weekend to cancel its 68th Annual Meeting due to blizzard conditions. More than 300 members had planned to attend Saturday. The credit union donated unused food from the convention's meals to the Salvation Army of Newark. The charity's representatives said the donation would provide enough food for more than a week. The $97 million asset credit union also donated more than 50 centerpieces to Flint Ridge and LPN, nearby nursing homes. Shown here during the deliveries are, from left: Shani Smith, vice president of marketing at the credit union; John Hughes, administrator at Flint Ridge Nursing Home and Rehabilitation Center; and Luke Kellett, Fiberglas FCU business development officer. (Photo provided by Fiberglas FCU) … * ST. PAUL, Minn. (3/13/08)--A former city employee pleaded guilty to stealing more than $34,000 in coins he collected from parking meters. Vincent C. Schettner, 63, pleaded guilty to one count of felony theft of public funds. He was arrested after a teller at City and County CU in downtown St. Paul told an off-duty police officer that a member regularly deposited large amounts of coins in the credit union, according to court records. He deposited between $1,000 and $1,500 each week and usually took $800 to $900 back in cash (Star-Tribune March 4) … * AUSTIN, Texas (3/13/08)--Austin City Council has authorized a contract with Velocity CU to offer low-interest loans to residential customers of Austin Energy for home energy improvements (Austin Business Journal March 7). Velocity is a $426 million asset credit union based in Austin. The initiative is part of Austin Energy's Power Saver Program. Improvements that would qualify for the loans include HVAC system upgrades, solar screens, attic insulation upgrades and other energy improvement plans …

CUs try to stem tide of homeowner walkaways

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SACRAMENTO, Calif. (3/12/08)--Credit unions may see an increase in the number of members whose mortgages are "upside down," meaning they owe more on the house than the house is worth. And some delinquent members may be tempted to give up on paying their mortgage. California is one of the states hit hardest by the crisis in financing homes, and it is starting to experience "walkaways," people who stop paying the mortgage and hand over the keys without being foreclosed (USA Today March 11). Credit unions are trying to help borrowers weather the downturn, according to The Sacramento Bee (March 10), despite the number of businesses cropping up that advise borrowers how to walk away from the mortgage. One such credit union is SAFE CU, based in North Highlands, Calif. Paul Rigdon, vice president, told the Bee the $1.345 billion asset credit union had no foreclosures by its members until 2007. Since the housing crisis began, it has had two borrowers walk from their mortgage payments and others have hinted they might do the same. Rigdon tries to persuade potential walkaways to hang on because giving up will affect their credit for some time. "We don't want to take their homes," he said. "With the market the way it is, foreclosures are in nobody's best interest," he said in the article. Another California credit union, The Golden 1 CU, based in Sacramento, is launching a $20 million program to help those who have lost their homes get into another one and to rebuild their credit, said the Bee. CEO Theresa Halleck told the newspaper the people who are victims and have lost their home in the past 18 months can apply for mortgage repair loans with fixed rates and a 30-year maximum term. Borrowers who use the loans cannot make a second mortgage for two years, to avoid accruing high debt loads, and they must enroll in debt counseling.

Hoel recognized for Wegner Lifetime Achievement Award

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WASHINGTON (3/12/08)--Bob Hoel, one of this year's recipients of the the National Credit Union Foundation's Herb Wegner Memorial Awards, was featured last week in the Fort Collins Coloradoan. Hoel, former executive director of the Filene Institute in Madison, Wis., and now a Filene Fellow, received the Wegner Lifetime Achievement Award for his research benefiting credit unions and consumers. The annual award honors risk-taking, innovating and transformational leadership, Steve Delfin, NCUF executive director, told the Coloradoan (March 6). Hoel is also a former business professor and chairman of the marketing department at Colorado State University. He recently was appointed as the Northern Colorado representative to the Public Service CU's board, representing members of the former Norlarco CU, which was acquired by Public Service CU. NCUF presented the award at an annual dinner in Washington D.C. last week. Other Herb Wegner Award recipients were Harriet May, president/CEO of Government Employees CU, El Paso, Texas, who received the Individual Achievement Award, and the State Employees' Credit Union Foundation in North Carolina, which was presented the Outstanding Organization Award.

AACUL honors Floridas Hood with Farley award

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From left: Dr. Richard M. Heins; Guy Hood; Gene Farley; and American Association of Credit Union Leagues Chairwoman Rosie Holub, president/CEO of the Missouri Credit Union Association. (Photo provided by the Florida Credit Union League)
WASHINGTON (3/12/08)--Florida Credit Union League President/CEO Guy M. Hood was honored by the American Association of Credit Union Leagues (AACUL) as recipient of the Eugene H. Farley League Leadership Award. Hood began his career 38 years ago as a field representative for the Alabama Credit Union League and moved up through the ranks to senior vice president of technical services before joining the Florida league in 1988. He credited much of his success to Alabama league President Gary Wolter. The award was created in 2000 to recognize outstanding efforts of league personnel. Sponsored by AACUL, it is endowed by a contribution from Dr. Richard M. Heins, former CEO of CUNA Mutual, university professor and businessman. Farley is the former president/CEO of the Virginia Credit Union League. Upon receiving the award, Hood donated the monetary portion to the Florida Credit Union Foundation to assist in the funding of the REAL Solutions program. The award was presented last week in Washington at a reception during the Credit Union National Association's Governmental Affairs Conference.

Financial group drops takeover bid for Canadian CU

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HIGH RIVER, Alberta (3/12/08)--Western Financial Group has dropped its $345 million takeover bid for Community Savings CU in the wake of the credit union’s board of directors decision not to forward the takeover offer to its members for a vote. Western Financial said Monday it was disappointed with the news that the proposal was not on Community Savings’ March 18 shareholder meeting agenda (The Canadian Press March 10). Included in the proposal was an offer by a subsidiary of Western Financial--Bank West--to acquire the credit union for roughly $345 million in cash, shares and payment to members. The credit union’s board instead unanimously supported a proposed three-way merger with two other Alberta credit unions ( March 8). The credit union had proposed merging with Servus Credit and Common Wealth CUs. The three--among the four largest credit unions in Alberta--announced Feb. 8 they were considering a merger because they faced competition from British Columbia-based credit union, Vancouver City Savings, Canada's largest credit union (News Now March 7). The driving force behind the credit union’s decision was that Western Financial wanted to turn the credit union into a bank, said Murray Haubrrich, Community Savings president/CEO.

D. Edward Wells CEO case goes to jury

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SPRINGFIELD, Mass. (3/12/08)--A trial of a former credit union chief executive and her husband accused of embezzling money from members has gone to a jury. Carol Aranjo, the former chief executive of now-defunct community development credit union D. Edward Wells CU, along with her husband, Alphonso Smith, allegedly stole $1.5 million from the credit union. Jurors began deliberating the case Monday afternoon. So far, 29 individuals have testified during the five-week trial (The Republican March 11). The couple’s defense lawyer stated that the amount they are accused of stealing is “preposterous.” He blamed the credit union’s board, who he said never questioned Aranjo about the money. He also said the missing funds were due to poor bookkeeping, the newspaper stated. Prosecutors said Aranjo used the funds to purchase a sauna and a timeshare in Mexico. Aranjo and Smith also are accused of using the money to pay personal debts. Aranjo and Smith face were charged with embezzlement, conspiracy and tax evasion. If convicted, Aranjo could face up to 14 years in prison (News Now Feb. 19). D. Edward Wells was liquidated in 2003 by the National Credit Union Administration after it suffered significant losses.

CU System briefs (03/11/2008)

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* HARRISBURG, Pa. (3/12/08)--Nominations have closed for two open poisitions on the Pennsylvania Credit Union Service Centers Inc. (PaCUSC) board of directors. Running unopposed were Ralph Canterbury of Clearview FCU and Karl Larson of AmeriChoice FCU. Canterbury currently is chairman of PaCUSC and has served on the board since 1994. Larson will be serving his first term. Their terms begin in May at the conclusion of PaCUSC's shareholders meeting (Life is a Highway March 10) … * RANCHO CUCAMONGA, Calif. (3/12/08)--Fawn Imboden, director of development at America's Christian CU in Glendora, Calif., was named HRD Network's Virginia Baldauf Human Resources Professional of the Year. The award, named after a former HRD Network president and retired San Mateo CU human resources executive, is presented to the HR professional who demonstrates achievement in leadership, vision/focus, teamwork, communication, risk-taking, interpersonal skills, innovation, development and ethics. Other HRD Network awards included: Trainer of the Year, Melissa Cleborne, training manager at Meriwest CU, San Jose, Calif.; and Patti Reed Scholarship, Leida Mateo, vice president of finance and chief financial officer at SONEPCO FCU, Reno, Nev. (Photo provided by the California Credit Union League) … * IOWA CITY, Iowa (3/12/08)--Fredrick Krause, former president/CEO of University of Iowa Community CU, Iowa City, died March 1 (Iowa City Press-Citizen March 6). He was 77. Krause was president/CEO of the credit union for 31 years, from 1968 to 1999. He started his career in financial services almost by accident when he was approached to start a credit union at his base while serving in the Air National Guard. He later became assistant manager of Collins CU in Cedar Rapids. Funeral services were March 7 …

CDCUs financial counseling service has good year

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NEW YORK (3/12/08)--During its first year, more than 40 credit unions offered BALANCE, the National Federation of Community Development Credit Unions’ free financial counseling and education service, helping more than 1,000 members. BALANCE also offers foreclosure prevention advice and debt consolidation. “BALANCE is such a valuable benefit to our members that we will make it one of our core services, without outside subsidy,” said federation CEO Cliff Rosenthal. This year’s program was offered at no cost to CDCUs under $35 million in assets, an increase from last year’s offer to CDCUs under $25 million in assets, Rosenthal said. Most of the federation’s 232 member credit unions qualify for the free service. Women’s Southwest FCU, Dallas, was one credit union helped by the program. “Some people don’t want to or can’t come into the credit union and talk to us about their finances, and this program allows members to discuss their financial issues with someone truly anonymous on their own time,” said Women’s Southwest CEO Teri Portillo. A group of credit unions funded the bulk of the cost of providing BALANCE to small credit unions. Credit unions that helped launch the program include:
* America First CU, Odgen, Utah; * Andrews FCU, Suitland, Md.; * Boeing Employees CU, Seattle; * GTE FCU, Tampa, Fla.; * Navy FCU, Vienna, Va.; * Orange County Teachers FCU, Santa Ana, Calif.; * Patelco CU, San Francisco; * Suncoast Schools FCU, Tampa, Fla.; and * Truliant CU, Winston-Salem, N.C.

Prolific robber advises Hire more security guards

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SOUTH BEND, Ind. (3/12/08)--Credit unions and financial institutions need to take one significant action to thwart robbers, according to an experienced thief: Hire more security guards. Rennell Baker, who is facing a possible 180 years in prison for committing seven banks heists, told the South Bend Tribune he always avoids financial institutions with security guards, and he doesn’t understand why more financial institutions don’t have them (Associated Press March 10). Baker, who stole more than $26,000 from financial institutions between December 2006 and October 2007, according to court documents, is set to be sentenced April 8. Baker is one of the most prolific bank robbers in the South Bend area in a long time, police said. Security guards, however, don’t necessarily mean a credit union won’t be robbed. And if a robber is brazen enough to commit a robbery with an armed guard present, safety may become an issue. In the past four years, seven incidents involving security guards and shootings at credit unions were reported in News Now. In the most recent, Devarence Damon Kimbrough, 22, of Elkhart, Ind., was shot during an attempted armed robbery of Berrien Teachers CU Jan. 18. He died later at a hospital (Niles Daily Star Jan. 21). Kimbrough was one of two men who entered the credit union and exchanged gunfire with a security guard (Tribune Jan. 18). Earlier this week, a second suspect in the shootout was arrested (WSBT-TV March 11). Glenn M. Dooley-Porter was apprehended Sunday at a motel in Elkhart, Ind., and charged with armed robbery.

Wisconsin league Bankers bill is a bait and switch

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PEWAUKEE, Wis. (3/12/08)--Testimony by banks for a banker-supported bill in the Wisconsin State Assembly is an example of “bait and switch”--just another attempt to eliminate credit union competition in the financial marketplace, according to the Wisconsin Credit Union League. AB 897 would require the largest (more than $100 million in assets) Wisconsin credit unions, at significant cost to all of the state’s taxpayers, to provide annual reports of how they serve their communities, the league said. “Banks control 91% of the assets held in Wisconsin financial institutions,” said Brett Thompson, president/CEO of the league. “But it seems they want more, and now they’ve set their sights on the largest credit unions. The bill would regulate them more heavily and make it easier for banks to take them over.” The Assembly Financial Institutions Committee heard testimony last week. Testimony by league representatives detailed how credit unions deliver $176 million to their members annually--chiefly through higher rates on saving, lower rates on loans, and lower and fewer fees. A variety of studies, including those cited by bankers, have proven that Wisconsin credit unions outperform banks in meeting the financial needs of their communities--essentially doing better on their own than banks do under regulation of the federal Community Reinvestment Act (CRA), the league said. Credit unions’ self-initiated REAL Solutions effort illustrates why the CRA is unnecessary for credit unions, the league said. REAL Solutions is an initiative by credit unions in several states to provide affordable services and wealth-building opportunities to their members and community, regardless of profit. Examples of the services include free checking with no minimum balance, free ATM access for members, loans as small as $50, alternatives to payday loans that cost less than storefront lenders, credit re-builder programs and free financial education. Wisconsin credit unions received the Governor’s Financial Literacy Awards in 2006 and 2008 for improving the financial health of Wisconsin citizens through REAL Solutions.

10 reasons to love CU blog shows a need to educate

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MADISON, Wis. (3/11/08)--An article by a freelance writer on the blog (March 9) touts "10 Reasons Why I Love Our Credit Union." The author's credit union isn't identified, but she says it is based in Washington State. And here's what her credit union does right:
* Offers high initial interest rate on checking and savings. * Offers interest on a checking account. * Has no monthly fees. * Provides automatic overdraft protection (even though she always has money to cover her transactions). * Offers a variety of other services: credit cards, auto loans, mortgages, certificates, money market accounts. * Makes it easy to transfer funds among accounts. * Has a co-op structure. * Profvides quality service. * Offers financial classes. * Provides scholarships and grants.
However, the author consistently calls her credit union a "bank." Her use of the term prompts comments from readers debating what a "bank" and a "credit union" are. Some comments are misinformed, while others try to correct the misinformation. The exercise brings home the point that while members love their credit union, credit unions still must do a better job of educating their members about the credit union difference. To review the entire article and the comments, use the resource link.

38 arrested in bogus cardsID theft ring

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QUEENS, N.Y. (3/11/08)--Several credit unions were among the financial institutions affected by an identity theft ring that was broken up by New York police last week. The ring, dubbed “House of Cards,” created fraudulent credit cards with stolen personal account information that were used to purchase high-end merchandise. The merchandise was later re-sold. Thirty-eight individuals were arrested by the New York Police Department in connection with the ring, according to Queens District Attorney Richard A Brown. Of those 38, seven are currently at large, according to Brown’s press office. The ring resulted in more than $1 million in losses for the affected financial institutions. According to the indictment, affected credit unions include: Navy FCU, Vienna, Va.; American Airlines FCU, Dallas; U.S. Senate FCU, Alexandria, Va.; Pentagon FCU, Alexandria, Va.; and another credit union in Texas that asked not to be identified. “Our losses were modest,” said John Tippets, CEO of American Airlines FCU. There are multiple identity thieves out there and “we would like them in jail,” he said. The cases can be difficult to investigate, so Tippets said he applauds the police and investigators. Other affected institutions include: First National Bank, Capitol One, Independent Bankers Bank, Franklin Templeton Bank, Iowa State Bank, First Mariners Bank, First Data Bank, BB & T Bank, Suntrust Bank, Washington Mutual, Wachovia, Banknorth, State Farm Insurance Bank, Bank of America, Wells Fargo, Citibank, Chase, US Bank and National City Bank. Credit card companies, including Visa, MasterCard, American Express and Discover, also were affected. The defendants obtained account holders’ checking and debit account numbers from a supplier in China. The numbers were used to make fraudulent credit and identification cards, which were then given to “shoppers” in New York, Texas, Arizona and other areas of the U.S. The shoppers purchased high-end electronics and merchandise, which were later were re-sold. Thirty-four defendants were charged in a second, 150-count identity theft indictment. A third, 13-count indictment charges five defendants with operating a separate and smaller identity theft and credit card operation. Kwok Chow has been listed as the “boss” of the ring. Chow allegedly obtained the account numbers and then distributed them to his Queens-based “production crew.” The “production crew” allegedly consisted of writers, embossers, and identification card makers. Once the cards were made, they were distributed to “shopping crews,” which consisted of a manager, leader and shoppers. Thirty-one of the indicted defendants were arraigned Wednesday in Queens Supreme Court. They face up to 25 years in prison ( March 7).

Canadian CU rejects banks takeover attempt

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EDMONTON, Alberta (3/11/08)--Albert-based Community Savings CU’s board of directors decided Friday not to forward a takeover offer from Western Financial Group to its members for a vote. The board instead unanimously supported a proposed three-way merger with two other Alberta credit unions ( March 8). The credit union had proposed merging with Servus Credit and Common Wealth CUs. The three--among the four largest credit unions in Alberta--announced Feb. 8 they were considering a merger because they faced competition from British Columbia-based credit union, Vancouver City Savings, Canada's largest credit union (News Now March 7). The driving force behind the decision was that Western Financial wanted to turn the credit union into a bank, said Murray Haubrrich, Community Savings president/CEO. Western Financial’s bid was a surprise to Community Savings. Its members were scheduled to meet March 18 to vote on the merger with two other credit unions. Western Financial President/CEO Scott Tannas said the company asked that its offer be included on the agenda at the credit union's membership meeting ( and Edmonton Journal March 6). The company offered an unspecified "cash windfall" for members, job security for employees and maintenance of the products, prices, service levels and branches that exist today, Tannas said.

Maryland CU reps testify on card security fin-lit bills

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ANNAPOLIS, Md. (3/11/08)--The Maryland and District of Columbia Credit Union Association (MDDCCUA) testified last week before two Maryland House Committees on legislation regarding financial literacy and plastic card security. On March 4, Mike Beall, MDDCCUA CEO; Suzanne Curren, director of member education for Andrews FCU; and Dorothea Stierhoff, senior public affairs specialist for MECU of Baltimore Inc., testified in favor of House Bill 1242. It would create a statewide task force to craft a plan resulting in including financial education in the public school curriculum (FOCUS Newsletter March 10). The task force would include representatives from the state General Assembly, credit unions, banks, teachers’ unions, and the State Superintendent of Schools. On March 6, the state’s House Economic Matters Committee heard testimony on the Plastic Card Security Act (HB 129), which would prohibit businesses that accept credit cards for transaction from keeping the data on the card’s magnetic stripe. For transactions in which the personal identification number is used--like a debit card--the strip information can be held for up to 48 hours after the transaction has been authorized. Testifying in support of the bill were: Beall; MDCCUA Advocacy Committee Chairman Rod Staatz, president of State Employees’ CU of Maryland; and Larry Blanchard, senior vice president of CUNA Mutual Group. Any business that holds data after the allowed period will be found in violation of the law. If a consumer’s private data is shared or divulged because of the violation, the business must reimburse these costs to the financial institution that issued the credit or debit card:
* Canceling or reissuing the card; * Closing any account, stopping payment, and blocking any transaction involved with the account linked to the card; * Refunding or crediting any fees that cardholders paid to cover the cost of an authorized transaction; * Notifying cardholders; and * Reimbursing any funds paid to cardholders whose private data is breached or divulged.

Judge considers ruling on Centrix bankruptcy

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DENVER (3/11/08)--A federal bankruptcy judge has suspended taking depositions, in order to rule on whether to dismiss a financial reorganization of subprime auto lender Centrix Financial LLC. More than two-thirds of Centrix's portfolio is owned by about 230 credit unions across the country (News Now Jan. 23). The court order signed March 6 by U. S. Bankruptcy Court Judge Elizabeth E. Brown for the District of Colorado is in response to a March 4 request by Centrix founder and former president Robert Sutton, plus two other individuals and a limited liability corporation to the terms of a financial reorganization. Sutton and the other parties seek to stop the Chapter 11 financial reorganization of the failed lender, and instead have the judge convert Centrix to Chapter 7 dissolution of the company, according to court records. The court also vacated a March 14 scheduled non-evidentiary hearing, and set a deadline of April 22 for Centrix’s responses to several other motions. The case has been going on since 2006. The reorganization plan is facing a six-week vote by creditors, many of them credit unions. The sale of Centrix’s assets for $30 million had been approved Jan. 17 by Brown in Denver (News Now Jan 23). Brown said the approval for the sale--to Kendrick CF Acquisition Inc., an investment group made up of Centrix's senior lender and CEO--is conditional on the resolution of minor credit union issues, said attorneys. ( Jan. 22). Once Centrix resolves the issues, the court will enter its official order (News Now Jan. 23). In the deal, Centrix's senior lender Falcon Investment Advisers would trade more than $30 million in secured debt for control of Centrix's portfolio, which has $1.9 billion in subprime auto loans, mostly from credit unions. Falcon would receive 70% of Centrix's new equity. Everest Reinsurance Holdings Inc. would receive 25%. Centrix CEO Robert Sutton would get 5%. No other companies bid on the company's assets at a recent auction.

Woman 80 and Harbor One thwart ID thieves

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RANDOLPH, Mass. (3/11/08)--An 80-year-old woman and Harbor One CU, Brockton, Mass., recently teamed up to stop an attempted identity theft on the woman’s accounts. Last month, Irene Romano received a phone call from an individual who claimed to work for her insurance company. The individual said the company would visit her home for an inspection Feb. 21 (The Patriot-Ledger March 7). Romano was suspicious of the visit, so she called her insurance company to verify the appointment. The company said no appointment had been scheduled. Romano called the police, the newspaper stated. At the same time, the $1.520 billion asset Harbor One CU began receiving requests about Romano’s financial accounts. Leo MacNeil, senior vice president of marketing at Harbor One, said the credit union received money transfer requests via a hearing-impaired phone connection. Because the connection was hearing-impaired, there was no caller identification, he told the newspaper. The credit union didn’t honor the requests for money, and it alerted local police. Romano also said she received other phone calls asking for personal information, but wouldn’t give out her information. In another unrelated scam, individuals are called and asked for the last four digits of their credit card number. After the four digits are given, the automated message says that the number is incorrect and a full credit card number must be provided, MacNeil told the Patriot-Ledger.

CU System briefs (03/10/2008)

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* TALLAHASSEE, Fla. (3/11/08)--The Florida Credit Union League (FCUL) and FCUL Service Group received six Fifth Annual Service Industry Advertising Awards (SIAA) for their communications and marketing efforts. Receiving gold awards were Florida Credit Union News, a quarterly magazine, and Survey Says!, a brochure with the 2007 member dues packet. Silver awards went to Telecom Recovery Webcast Promo, a postcard; and the Florida Credit Union Foundation logo. Bronze awards went to 2007 KNOWMORE Learning Opportunities and to the 2007 Annual Convention & Exposition (The Real Bond theme). SIAA is the only advertising award program recognizing achievements of the service industry. It received 2,000 entries. "Our communications and marketing teams are top notch," said Guy Hood, FCUL president/CEO. "With our members in mind, they have made winning awards for our communications and marketing efforts commonplace." … *
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TALLAHASSEE, Fla. (3/11/08)--Florida's Chief Financial Officer Alex Sink presented a resolution at a State Cabinet meeting designating the week of Feb. 24 as Florida Saves Week. The cabinet recognized Cassandra Grayson of the Florida Credit Union League as a representative of credit unions and her work as a member of Sink's Financial Literacy Council. From left are: Attorney General Bill McCollum; Gov. Charlie Crist; Sink; Charles Bronson, commissioner of agriculture; Elaine Courtney, University of Florida extension agent; Sherry Campbell, Okaloosa County commissioner; John Venable, Department of Financial Services bureau chief for consumer outreach; Grayson; and Cliff Long, Department of Financial Services consumer outreach coordinator. (Photo provided by the Florida Credit Union League) … * BALTIMORE (3/11/08)--Monday was the 100th birthday of Richard Rhinehart, a director with Destinations CU (formerly MTA CU). He has served the credit union for nearly 60 years, much of the time on the board of directors. When he decided to step aside several years ago, he was made an "honorary director." He still attends every meeting, and can be seen running up and down stairs all day to bring in supplies and set up the meeting room. A few months ago, he helped rebuild the $45 million asset credit union's storage room. Rhinehart, whose career was with Baltimore Transit Co., is the oldest person in Maryland (and quite possibly the country) with a commercial driver's license. He has many volunteer activities and says a positive attitude is the key to success and longevity … * PASADENA, Calif. (3/11/08)--Pasadena FCU has named Ron Berry as president/CEO (Pasadena Star News March 7). Berry was formerly production director for the San Gabriel Valley Newspaper Group and has been with that company for nearly 30 years. He will succeed Shruti Miyashiro, who left in late October to become president/CEO of Orange County's CU. Berry has been active with the $116.6 million asset Pasadena FCU's board of directors for 20 years. He served as board chairman from 1993 through 2007 …

Neighborhood CU featured on NBCs Today show

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DALLAS, Texas (3/11/08)--Dallas-based Neighborhood CU was featured on the national "Today" show on NBC Monday morning as one of the best financial institutions in the nation for Baby Boomers. The segment, in the 'Money' section of the program, was about financial institutions that have special deals for the over-50 set. Reporter Jean Chatzky named four institutions: Wachovia, SunTrust, Capital One and the $245 million asset Neighborhood CU. Chatzky noted, "A lot of credit unions are doing this." To view the segment, use the resource link.

Virginia State Assembly passes payday lending bill

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RICHMOND, Va. (3/11/08)--Virginia's state legislature passed a compromise package of payday lending reforms Thursday that place broad restrictions on short-term, high-interest lenders. The bill limits how many loans a borrower can get each year and extends the amount of time a borrower has to repay the loan. It would establish a database to track payday loans. Borrowers would be limited to one loan at a time and would have two pay cycles to repay it (Associated Press via Thomson Financial March 7). Borrowers taking out five loans during a six-month period would either be prohibited from receiving another loan for 60 days or be required to enter a 60-day extended payment plan. They would then be barred from taking out another loan for an additional 90 days. Borrowers can request the extended payment plan and its 150-day lockout at any time, but only once each year. The measures allow lenders to charge 20% of a loan, plus 36% interest and a $5 fee to cover the cost of the tracking database. The bill passed the House, 91-9, and the Senate 37-2, with one abstention. Gov. Timothy M. Kaine indicated he would sign the legislation. He has 30 days in which to do so. If he signs, the bill would become law effective Jan. 1, 2009.

Calif. league tells Senate of mortgage-proposal impact

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RANCHO CUCAMONGA, Calif. (3/10/08)--The California Credit Union League (CCUL) addressed a California Senate committee Wednesday about the impacts of proposed mortgage lending revisions. Chris Collver, CCUL regulatory and legislative analyst, presented facts about proposed Regulation Z revisions to members of the California Senate Banking, Finance and Insurance Committee during an informational hearing. The revisions are designed to promote responsible mortgage lending practices, the league said. Credit unions believe that loans should be prudently underwritten and should not be granted to the borrower’s detriment, Collver told the committee. Therefore credit unions support several of the proposal’s provisions. “We have concerns about some provisions, but we feel the general goal of the revisions is beneficial to consumers,” Collver said. The committee’s goal was to attain perspectives on the impact of, and reaction to, Regulation Z revisions from state regulators, consumer advocate groups, and members of the regulated community. Collver’s comments, as well as those made by representatives from other organizations, will be included in a letter the California Senate Banking, Finance and Insurance Committee plans to distribute to members of the state Senate for review.

Missouri CUs 2007 stats show markets challenges

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JEFFERSON CITY, Mo. (3/10/08)--State-chartered credit unions in Missouri grew in total investments, total loans, assets and shares in 2007, according to a state Division of Credit Unions report. Missouri's credit unions grew 2.2% in assets over 2006, to $7.964 billion in combined assets. That compares with a 1% growth the year before, said the division's "December 2007 Missouri State-Chartered Credit Union Consolidated Report." Total loans at year-end 2007 grew 1.8% to nearly $5.660 billion, compared with a 0.6% increase the year before. Total investments rose 9.3% to nearly $1.330 billion, compared with a 6.7% drop in investments during 2006. Net income for state-chartered credit unions totaled $26 million--down 47.6% over 2006. The drop is largely due to a 43.1% increase in non-operating income and expenses. "The net profit figures are a result of last year's volatile economy, year-end bonus dividends paid by credit unions, and a $6.5 million merger bonus dividend paid to members of Midwest United CU prior to the merger with Community/America CU," said Rosie Holub, president/CEO of the Missouri Credit Union Association. "Paying a merger dividend to Midwest United members is most appropriate in this type of transaction and reflects the cooperative structure of credit unions," Holub added. Also, a 22.7% increase in credit unions' provisions for loan/lease losses and a 20.6% increase in the cost of funds ate up some of the overall net income, as credit unions prepare for the aftermath of the subprime lending industry woes on other lending sectors.

CU System briefs (03/07/2008)

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* HARRISBURG, Pa. (3/10/08)--CLARIFICATION: An item in Friday's issue about the Pennsylvania Supreme Court hearing oral arguments last week confused two court cases. The court heard arguments Tuesday in a case that bankers filed against the Pennsylvania Department of Banking related to the department's community chartering process. It is not the same case that appeals a Nov. 13, 2006, lower court decision related to the department's granting a community charter application to Belco Community CU. In that case, the lower court ruled the banking department failed to follow procedural due process requirements related to hearings and making records available to banking groups. The appeal on that case will be heard by the Pennsylvania Supreme Court on April 16. News Now regrets the confusion … * BIDDEFORD, Maine (3/10/08)--PeoplesChoice CU's Biddeford branch was robbed at about 12:15 p.m. EST Friday. No staff or members were injured, said the credit union. The robber handed a teller a note but did not show a weapon. He left with an undisclosed amount of cash. "In our 45 years serving members, this is the first time we have experienced a robbery," said Luke Labbe, president CEO. "Because all of our procedures that are in place in case of a robbery were followed, no one was physically harmed," Labbe said. "This does, however, have an emotional impact on our staff, and their well-being remains our top priority at this time." The branch was closed the rest of the day but reopened for regular hours Saturday. The credit union is working with law enforcement agencies, Labbe said … * SAN ANTONIO (3/10/08)--San Antonio City Employees FCU is now named "generations federal credit union"--with all lowercase letters--effective today. "It was seeing how our credit union kept working with the members as their lives changed from generation to generation that gave us the inspiration for our new name, and our new tag line, 'what's next,'" said Tim Haegelin, president/CEO. The name reflects the credit union's history of serving San Antonio's city employees, who span many generations, as well as its expanded mission to serve the entire community. The $316 million asset credit union converted to a community charter in 2006 … * HARRISBURG, Pa. (3/10/08)--Credit unions and staff from the Pennsylvania Credit Union Association were among the 40 exhibitors present at a state Consumer Fair Thursday in Philadelphia in celebration of National Consumer Protection Week (Life is a Highway 3/7/08). PCUA Communications Director Diane Powell attended and promoted PCUA's Credit Union Better Choice and iBelong programs. Also attending: American Heritage FCU, Freedom CU, Philadelphia FCU and TruMark Financial CU …

Wisconsin Assembly set to vote on data security bill

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PEWAUKEE, Wis. (3/10/08)--Wisconsin data security legislation has passed the state Senate and is scheduled for a vote by the full Assembly tomorrow, says the Wisconsin Credit Union League. The Plastic Card Data Security Bills (AB 745/SB 439) prohibit merchants from retaining consumers’ secret personal identification numbers or security codes after processing a credit or debit card transaction. Lobbyists and individuals who represent merchants, retailers and other special interests have launched a massive campaign to kill this legislation it in the state Assembly, said the league. Losses to credit unions due to credit and debit card fraud were $177 million nationwide in 2006 and 2007, according to CUNA Mutual Group. "This legislation is just common sense," said Brett Thompson, league president/CEO. "It has no effect on the state budget, but enormous impact on every consumer in Wisconsin who uses plastic cards for purchases." (News Now Feb. 27). Sensitive authentication data from credit and debit cards often is retained without cardholders' knowledge and lost by companies who, by the credit industry's existing standards, shouldn't have collected and kept it in the first place, Thompson explained. The proposals would toughen industry standards dictating what information can be taken, transmitted and stored from a consumer's credit or debit card. The Community Bankers of Wisconsin, the Wisconsin Bankers Association, the Wisconsin Insurance Alliance, CUNA Mutual Group and the Wisconsin Federation of Co-ops also support the legislation.

PCUA assisting 90 CUs through student loan changes

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HARRISBURG, Pa. (3/10/08)--The 90 Pennsylvania credit unions affected by Pennsylvania Higher Education Assistance Agency's (PHEAA) suspension of funding of certain student loans can work with the Pennsylvania Credit Union Association (PCUA) to transfer their loan programs. PHEAA's suspension of funding all new student loans in the Federal Family Education Loan Program (FFELP) went into effect Friday. The credit unions affected participate in the SELECT referral program, where credit unions referred members to PHEAA for student loans and PHEAA handled the application process and funded the loan (Life is a Highway March 7). The Education Asset Management System (TEAMS) program is available for credit unions to offer members through the FFELP. TEAMS is a cooperative program developed for Pennsylvania credit unions by PCUA and AES/PHEAA. PCUA said 171 credit unions currently participate in the TEAMS program. Those credit unions won't be affected by the change, said Bob Hinchey, PCUA senior vice president, fee services. "The association will continue to work with those affected credit unions that want to transition to TEAMS." Although PHEAA will no longer participate as a federal STAFFORD Loan Lender in the FFELP, it still will provide the federal guarantee, origination and servicing for FFELP loans, essentially providing the system and process for loan delivery and repayment. Students and others with existing student loans are not affected by the suspension. PCUA said will schedule a webinar in early April to assist credit unions in transferring from SELECT to TEAMS. More details will be announced later.

CUNA Brokerage Services honors women of distinction

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MADISON, Wis. (3/10/08)--Twenty-eight credit union financial advisors, registered through CUNA Brokerage Services Inc., received “Woman of Distinction” awards at CUNA Brokerage Services Inc.’s national sales conference in Atlanta. The Brokerage company uses face-to-face financial advisors to help credit unions meet member retirement, investment and insurance needs. The 28 women were recognized for superior performance, value and overall contribution to the financial services industry. Each also demonstrated her commitment to the CUNA Brokerage mission by generating a minimum of $250,000 in revenue in 2007. The women will participate in a mentoring program offered through CUNA Brokerage Services Inc. and designed to foster the growth of women new to the financial services industry. The award debuted at FOCUS 2008, a national sales conference for credit union financial advisors. More than 450 members of the financial services industry throughout the U.S. gathered in Atlanta to participate in individual workshops designed to deliver knowledge, insight and new best practices. “CUNA Mutual is impressed with this group’s contributions and their willingness to mentor and help grow the ranks of women in the financial services sector,” said David Marks, chief investment officer and executive vice president of CUNA Mutual Group. Those recognized included: Helen Alexander, CLU, ChFC; Catherine Barnes; Emmor Boslet, CFP; Jane Brockway, CRPC; Monica Chandra; Kathy Chesney, ChFC, CLU; Linda City; Diana Clark; Linda Cohen, CRPC; Wendy Cundari; Theresa D’Amico, CRPC; Carol Diest, CRPC; Marcella Evans; Judy Evers, CFP; Gilda Gilbert; Leigh Glover, CRPC; Kelly Goreham; Breta Grumbois; Lori McNight; Wendy Miletich; Stephanie Morales; Marie Quinlan; Swan Shen, CFP; CRPC; Kathryn Snyder; Sophia Spencer, CRPC; Ernesta Tobin, CFP; Suzanne Williams; and Emily Windolph.

School board debates policy after VyStar names academy

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JACKSONVILLE, Fla. (3/10/08)--VyStar CU’s proposal to fund a $100,000 mini-branch and obtain naming rights for an academy at Fleming High School in Orange, Park, Fla., has caused a debate among Clay County school board members. The $3.337 billion asset, Jacksonville, Fla.-based credit union’s financial assistance would result in the name, “VyStar Credit Union Academy of Business, Finance and Information Technology at Fleming Island High” (The Florida Times-Union March 6). Board members are worried about potential hassles of naming schools within schools after businesses that fund new programs or improvements at the school. VyStar Credit Union Academy of Business, Finance and Information Technology at Fleming Island High will open in August, Rich Alfirevic, Vystar executive vice president and chief operations officer, told News Now. “The school board is looking to approve our donation and help in setting up the student- run and -managed credit union branch at Fleming Island High on March 20,” Alfirevic said. “The board will be setting policy regarding donations, in terms of what amount of donation merits naming rights, and what to do if an entity’s support is not wanted.” Vystar staff also would train academy students as tellers, helping them learn about the full range of financial services. The branch would provide limited service to faculty students and school staff, but would not be open to the public. There would be no outside credit union signage. In August, VyStar opened a similar branch at Bartram Trail High School in St. Johns, Fla. Vystar will be opening a third credit union branch in a school in August 2008, which will be called the “Vystar Academy of Finance at Pedro Menendez High School,” in southern St. Johns County, Fla., Alfirevic said. The school board took no action, tabling the issue until March 20, while it gathers information about policies regarding academy naming that other Florida school districts use.

Suncoast Schools advises consumers on avoiding foreclosure

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TAMPA (3/10/08)--More and more members are facing financial difficulty, and Suncoast Schools FCU, based in Tampa, advised them to keep in contact with their lender because early intervention is the key. The advice appeared in Naples News March 6. Don Charron, senior vice president of the $5.921 billion asset credit union, emphasized "how important it is to stay in touch with your lender," in the article. "The earlier you contact us, the better the outcome. Once a mortgage becomes three payments delinquent, we often can't do anything to help," he noted. He encouraged people to meet with a mortgage loan officer face-to-face, noting it may take a simple loan modification from one loan type to another, or combining a first and second mortgage to get payment relief. "Lots of folks in not-so-friendly adjustable-rate mortgages from other institutions are coming to us to refinance," he told the newspaper. Suncoast's new payment forbearance program allows members in temporary financial crisis to move a few payments to the end of their contract. Suncoast also has its asset-pledge program allows an individual to sponsor a member by putting up collateral, such as a certificate of deposit, for a loan. The certificate remains intact while the member uses the loan to pay off other debts. He noted no one likes to deal with foreclosures so the credit union tries to be creative with solutions. "It's not one-size-fits-all, though. We don't claim to be able to help every single member every time, but we have a very high success rate. Early intervention is key."

Washington State announces Top 10 investment scams

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OLYMPIA, Wash. (3/7/08)--Credit unions can help alert members to the top investment scams circulating in several states. The Washington State Department of Financial Institutions (DFI) Securities Division last week announced the Top 10 investment scams in that state. Most are perennial favorites of scam artists who dress them up with the latest investment angle or news, said DFI, the state credit union regulator. Credit unions can tell their members to understand what they are investing in. "Investors can protect themselves, and their financial futures, by investing a little more time before investing their money," said DFI Director Scott Jarvis, who noted that "if it sounds too good to be true, it probably is." The top scams in Washington State were:
* Ponzi schemes. A business supposedly earns money to pay high returns to investors. However, it actually earns little or no funds; instead, it relies on new investors to pay the early depositors' "profits." The scheme collapses when new investor money runs dry. * Fraud against seniors. Older investors with money are targeted by complex investment scams involving unregistered securities, promissory notes, charitable gift annuities, viatical settlements and Ponzi schemes promising inflated returns. * Promissory notes. Short-term debt instruments are issued by little-known or nonexistent companies promising high returns (such as 15% monthly) with little or no risk. When interest rates are low, these notes lure investors hoping for higher, fixed returns--which never arrive. * Unscrupulous brokers. While stockbrokers' assistance is often helpful for many investors, investors should educate themselves so they can detect any problems that signal an unscrupulous operation. * Affinity fraud. This fraud preys on human nature, where people trust people like themselves. Scammers use religious or ethnic identity to gain the victim's trust, and no group is immune from this type of fraud. * Unlicensed securities sellers. High-risk investments--such as promissory notes, oil and gas deals, gold or mining stock and viatical settlements--may be sold by unlicensed individuals. Scam artists entice independent sales agents into selling investments about which they know little. * Prime bank schemes. Con artists promise investors triple-digit returns through access to portfolios of elite or "prime" banks. Today, they it is common to avoid the term "prime bank" and underplay the banks' role by referring to "risk free guaranteed high yield instruments" or something similar. They often reference "treasury securities," "letters of credit," or similar methods. Scammers also push "tax free" money by using "offshore accounts" to entice investors. * Internet fraud. Spam e-mails, chat rooms and online investment "newsletters" often promote stocks with hype and false information, offering a "quick profit" to lure investors who buy and drive up the price of the stock, which the promoter then sells. Investors should ignore e-mail offers, especially those from individuals needing "help" to deposit large sums. * Free lunches and dinners. A yearlong study of free-meal investment seminars by state securities regulators across the nation found abusive tactics at "educational" free lunch and dinner seminars. All were actually sales presentations, and 13% were fraudulent. * Telemarketing fraud. Boiler rooms and high-pressure telephone sales operations peddle illegal or fraudulent investment products nationwide.
Each year, Washington residents alone lose between $50 million and $100 million in such scams. The amounts reported may be only a small fraction of actual losses, DFI said.

Company makes takeover bid on Canadian CU

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EDMONTON, Alberta (3/7/08)--An insurance company based in High River, Alberta, has made a surprise takeover bid for Community Savings and CU, an Edmonton-based credit union whose members will meet March 18 to vote on a merger with two other Alberta credit unions. Western Financial Group President/CEO Scott Tannas said the company asked that the offer be included on the agenda at the credit union's membership meeting ( and Edmonton Journal March 6). The company is offering an unspecified "cash windfall" for members, job security for employees and maintenance of the products, prices, service levels and branches that exist today, Tannas said. The credit union had proposed merging with Servus Credit and Common Wealth CUs. The three--among the four largest credit unions in Alberta--announced Feb. 8 they were considering a merger because they faced competition from British Columbia-based credit union, Vancouver City Savings, Canada's largest credit union. Tannas said the credit union and his organization--which provides insurance, financial services and banking services to more than 80 communities in Western Canada--have similarities. "We are in many of the same towns and cities, we have the same community-based values and culture, and we estimate that 20% of Community Savings members are already insurance customers of Western Financial Group," he said.

CU System briefs (03/06/2008)

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* KNOXVILLE, Tenn. (3/7/08)--A Knoxville man was charged with second-degree murder in the death of his wife, who was run over with a car Wednesday at an ATM outside the East Knoxville branch of ORNL FCU. Carlos Radal Cornwell, 35, was charged after Leoned Boulanger Cornwell, 42, was found dead in the credit union's parking lot. Police said the couple were in a car at the ATM and argued. Leoned Cornwell exited the car, and the car allegedly backed over her (The Knoxville News Sentinel March 6) … * HARRISBURG, Pa. (3/7/08)--Two staffers of Franklin Mint FCU, Broomall, Pa., were guests last week on Philadelphia's NBC 10 program, "All That and More," according to the Pennsylvania Credit Union Association (Life is a Highway March 5). Rick Durante, vice president of education, and Kelly Lynn, district manager of the credit union answered money management questions from fourth- and fifth-grade students. The program focused on youth financial education during Philly Saves Week … * PROVO, Utah (3/7/08)--Two men face charges of armed robbery after their arrest Tuesday 90 minutes after a robbery was reported by Utah First CU. Christopher Mollner and Ira Wakefield are being held on robbery charges. Police said Mollner allegedly entered the credit union with a pistol, handed a teller a note demanding money, and fled with cash in a white van. Ninety minutes later Utah Highway Patrol trooper pulled over the van, where he found the men, cash covered in red dye and a BB gun. Mollner's 11-month daughter, who was in the van, was taken into protective custody (Daily Herald and March 5) … * WASHINGTON (3/7/08)--Norman Mann, former CEO of Department of Commerce FCU, Washington, D.C., died Feb. 26, after suffering a stroke the day before, said the Maryland and District of Columbia Credit Union Association (FOCUS Newsletter March 3). He served the credit union for several decades. Funeral services took place March 1 in Bowie, Md. Contributions may be made to the American Heart Association, Memorials and Tributes Processing Center, P.O. Box 5216, Glen Allen, Va. 23058-5216 … * HOUSTON (3/7/08)--Carol J. Letz, chairman of Houston Highway CU, died Monday after an extended illness, according to the Texas Credit Union League (LoneStar Leaguer March 6). Letz served the credit union in several capacities for more than 35 years, the past six years as chairman. She also was a member of the State Employees CU Association since 1973 and served as president for several years. Funeral services will be at 1 p.m. today at Southpark Funeral Home …

NCUA is offering Cal State 9 for bidding

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CONCORD, Calif. (3/7/08)--The National Credit Union Administration (NCUA), the conservator for Cal State 9 CU, is offering the credit union up for bid to be combined with another credit union. The $339 million asset, Concord, Calif.-based credit union was placed under the management of the NCUA in conservatorship in November 2007. “This week, NCUA representatives came to a decision to pursue the combination of Cal State 9 with another credit union,” wrote Melinda Love, NCUA Region V director, in a Feb. 29 letter to Cal State 9 members. “This transaction, known as a ‘purchase and assumption,’ represents the most financially sound decision and is in the best interest of Cal State 9’s membership. It will ensure that you continue to have high-quality financial services into the future without interruption,” she added. All prospective purchase-and-assumption credit unions have sound financial management and are federally insured by the National Credit Union Share Insurance Fund (NCUSIF), Love noted. She reminded members that all their deposits are safe and secure--insured by NCUSIF. The process is expected to be finalized in early summer 2008, Love wrote. Cal Sate 9 was unavailable for comment. Almost 98% of delinquent loans that prompted regulators to put Cal State 9 CU into conservatorship were real estate loans that were in arrears (News Now Nov. 6). In June, Cal State 9 reported delinquent real estate loans totaling $25.8 million, more than five times the $4.6 million it reported the year before (The Oakland Tribune Nov. 3). In first-quarter 2007, Cal State 9 earned $1.6 million; at the end of second quarter--about the time the subprime mortgage market began to realize it was in a crisis--the credit union had lost $9.1 million, said the newspaper, which examined the credit union's public filings with NCUA. Cal State 9 CU lost $45.9 million during the first nine months of 2007 with the majority of the losses occurring in mortgage loans, many with adjustable rates (News Now Nov. 9).

Massachusetts CU assets rise 4.1

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MARLBOROUGH, Mass. (3/7/08)--Total assets for credit unions headquartered in Massachusetts tallied $24.6 billion during 2007, up 4.1% over year-end 2006. Credit union assets in the state constitute 9.4% of all financial institution assets in the state, the Massachusetts Credit Union League reported on its website. Credit union deposits increased by 1.87%, closing 2007 at $20.1 billion. Credit unions hold a 10% share of the market for insured deposits in Massachusetts. Loans rose 4.84%, finishing the year at $18.2 billion. There were 228 credit unions headquartered in Massachusetts at the end of 2007, with 58% holding federal charters and 42% state charters. Credit unions serve roughly 2.44 million citizens of Massachusetts or 38.2% of the population--a 1.67% increase over year-end 2006.

New NCUF chairman supports DE expansion

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WASHINGTON (3/7/08)--Allan Kemp McMorris, the new National Credit Union Foundation (NCUF) chairman, has pledged more financial and human resources to expand the Credit Union Development Education (DE) program in the U.S. and worldwide.
New National Credit Union Foundation Chairman Allan Kemp McMorris was cheered on by more than 75 Credit Union Development Educators at the Credit Union National Association’s Governmental Affairs Conference in Washington, D.C., this week. (Photo provided by the National Credit Union Foundation)
“Credit union philosophy is our most important asset,” McMorris said in his first address to Credit Union Development Educators (CUDEs) during the Credit Union National Association’s Governmental Affairs Conference in Washington, D.C. “I not only pledge the foundation’s support, I pledge my personal support. I promise you I will become a CUDE before the end of my term as foundation chair,” he added. DE Program Director Tom Decker highlighted several new initiatives planned for this year:
* 2008 DE Workshop. All DE training alumni are invited to a new learning event to be held May 21-24 in Seattle. The workshop will feature tours of the Biz Kid$ set while an episode is being filmed for PBS; tours of IslandWood, where a sustainable environmental is the classroom; and a course on micro-finance from international facilitator Carol Schillios; * International DE Council. DE program leaders from Australia, Canada, the Philippines, the United Kingdom and the U.S. plan to facilitate curriculum enhancements and training exchanges; and * International Development Certification. NCUF and the World Council of Credit Unions (WOCCU) are exploring ideas to recognize leaders who graduate both from DE training and from international programs offered by WOCCU.

CDCU to test self-service kiosks for unbanked

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MONTVALE, N.J., and NEW YORK, N.Y. (3/6/08)--A new Community Development Partner will team up with New York community development credit unions (CDCUs) for a pilot project that would test self-service kiosks in communities with high numbers of underserved and unbanked consumers. Tellagent LLC, a credit union service organization (CUSO) of the $374 million assets Paragon FCU, Montvale, N.J., has joined the National Federation of Community Development Credit Unions as a Community Development Partner, said the federation. The CUSO will deploy kiosks in a number of CDCUs in New York City. Lower East Side People's FCU will be the first credit union to participate. The federation's Community Development Partners program sees to engage a broader spectrum of credit unions in the work of CDCUs. "Larger, 'traditional' credit unions bring substantial resources and technical expertise in the delivery of financial services," said Pablo DeFilippi, director of membership services at the federation. "CDCUs bring their mission-driven focus and vast experience in serving underserved markets, which makes them ideal partners for larger credit unions looking to do more in low-income communities." To view a full list of the federation's Community Development Partners, use the resource link.

CUNA launches personal finance online resource center

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WASHINGTON (3/6/08)—The Credit Union National Association (CUNA) this week launched the Personal Finance Initiative (PFI), an online network for leaders of the credit union movement to share best practices and discuss financial education. The site’s launch coincided with the Governmental Affairs Conference (GAC) in Washington, D.C., and was noted by immediate past CUNA Board Chairman Allan Kemp McMorris during the annual general meeting Monday. “(PFI) is a one-stop shop for financial education,” McMorris said. The network is an accomplishment of the financial literacy task force, which McMorris appointed in 2007. The task force will hold the Personal Finance Institute, slated for Sept. 10-12 in Virginia, as a follow-up to the network. The institute will provide attendees with three days’ worth of hands-on sessions geared at teaching credit union professionals how to improve member financial literacy. The task force also is working to create an awards program that would recognize credit unions actively improving member financial literacy. In a GAC breakout session Tuesday, Juri Valdov, financial literacy task force chairman, noted the importance of credit unions teaching their members how to be more financially literate. Valdov is president/CEO of Northwest FCU in Herndon, Va. Research conducted by the task force indicated that parents are not capable of educating their children about financial literacy. They expect schools to teach their children about money, but “the schools don’t do it either,” he noted. “Credit unions are in the position to educate people about financial literacy,” Valdov said. He encouraged credit unions not to drop financial literacy from their programs. “If we pull back on those things we have become the problem instead of the solution,” he said. Financial literacy is “not a diversity, age, or geographic issue,” Valdov concluded. “It’s a universal issue. We as credit unions are best situated to do something about it and the programs we share (on PFI) will help us do that.”

First Basin hangs up bank-conversion bid

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ODESSA, Texas (3/6/08)--First Basin CU in Texas announced Wednesday it has terminated its plans to convert to a mutual savings bank. It "will remain a credit union," said a press release on the credit union's website. The Odessa, Texas-based credit union has "terminated its plan of Mutual Charter Conversion and voluntarily withdrawn its applications to convert from a credit union to a mutual savings bank," said President/CEO Shem Culpepper in the press release. He said the $125 million asset credit union's board "made this decision based upon concerns surrounding false and misleading information being disseminated which affected the fairness of the voting process." "The board had become concerned that the controversy surrounding the vote was having an adverse impact on the credit union and its ability to serve its members," he said. Last month the credit union suspended the Feb. 21 membership vote on the conversion proposal, saying that members had received calls telling them that if they don't vote against the conversion, they would lose some of their deposits and their accounts would be closed. Other false statements included information about rate and fee changes, said Culpepper (News Now Feb. 18 and 19). According to Annette Snowden, board chairman, "Our first priority is, and always will be, to First Basin and its members. We look forward to returning First Basin to its normal business operations, providing highly personalized service and the exceptional value our members have come to expect." Members who opposed the conversion attempt are planning to run candidates in the next board election, according to Letty Morales, who founded Save First Basin, the group opposing the conversion (News Now Feb. 29).

Pennsylvania Maxwell Herring Desjardins winners named

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HARRISBURG, Pa. (3/6/08)--The Pennsylvania Credit Union Association (PCUA) announced the winners of the state-level 2008 Credit Union Community Awards. The awards include the Dora Maxwell Award for Social Responsibility; the Louise Herring Award for Philosophy in Action; and the Desjardins Youth Financial Education Award. Recipients will be recognized at PCUA’s Annual Convention May 1-3 in Pittsburgh. Winners also will go on to the Credit Union National Association for the national competition later this year. First place recipients for Dora Maxwell Award for Social Responsibility are:
* $20 million-$50 million in assets, PALCO FCU, Muncy; * $50 milion-$100 million, Bellco FCU, Wyomissing; * $100 million-$200 million, Cross Valley FCU, Wilkes Barre; * $200 milion-$500 million, Belco Community CU, Harrisburg: and * $500+ million, American Heritage FCU, Philadelphia.
Louise A. Herring Award for Philosophy in Action first-place award winner for less than $50 million went to Horizon FCU, Williamsport. Desjardins Youth Financial Education Award first-place recipients:
* $35 million-$75 million, A-K Valley FCU, Lower Burrell; * $75 million-$250 million, Erie FCU, Erie; and * More than $250 million, Freedom CU, Warminster.

Latino CDC awarded 100000 for new branch

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DURHAM, N.C. (3/6/08)--The Winston-Salem Foundation has awarded a $100,000 grant to Latino Community Development Center (Latino CDC) to support the opening of a Latino Community CU (LCCU) branch. The new branch will be in Winston-Salem, N.C., which is in Forsyth County. Forsyth County has the third-largest Latino population in the state, but it has no financial institution and education program tailored to the needs of Latinos. LCCU’s members will be better served by the new branch, according to the credit union. The branch will offer bilingual, bicultural financial services and education to the rapidly growing underserved Latino community, LCCU said. “The opening of the Winston-Salem branch in these uncertain economic times is proof that we have confidence in this country,” said Roger Montes, regional manager for the Triad area. “Our members in Winston-Salem and nearby counties will appreciate the convenience of a new location closer to their homes.” The full-service branch in the Waughton section of Winston-Salem will provide all the transaction services, deposit products, consumer loans and mortgage products available at LCCU’s other five branches throughout North Carolina. The new location also will offer financial education workshops to members and the larger community. The Winston-Salem Branch of LCCU is tentatively scheduled to open in May 2008.

CU System briefs (03/05/2008)

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* WASHINGTON (3/6/08)--National Credit Union Foundation (NCUF) Executive Director Steve Delfin presents a check for $79,657 to African-American Credit Union Coalition (AACUC) Chairwoman Barbara Stephens, president/CEO of Houston Municipal Employees FCU. The check represents the most recent of four quarterly dividends from the Pete Crear Fund, a donor-designated fund within the Community Investment Fund named for the CEO of the World Council of Credit Unions. Credit unions that invest in the Crear Fund designate the dividends to benefit the AACUC. (Photo provided by the National Credit Union Foundation) … * DUBLIN, Ohio (3/6/08)--The Ohio Credit Union Foundation (OCUF) granted an additional $30,000 to the Biz Kid$ television series about financial literacy and entrepreneurship sponsored by America's Credit Unions. The gift brings OCUF's total gift to $60,000, making it the program's third-highest contributor, behind the Washington Credit Union Foundation and California's RMJ Foundation. All nine of Ohio's Public Broadcasting Service (PBS) stations are airing the show, which began broadcasting nationally in January. It runs for 26 weeks on 300 PBS stations nationwide. "Credit unions should be major players in taking Biz Kid$ into classrooms across Ohio and making educators aware of this tremendous resource," said Kathy Kanipe, chair of OCUF and CEO of Parish FCU, Toledo … * WASHINGTON (3/6/08)--Allen Chew is the recipient of the second Kelly J. Purcell Credit Union Memorial Scholarship, named for the former director of federal government affairs at the California and Nevada Credit Union Leagues. Chew is a legislative affairs graduate student at The George Washington University Graduate School for Political Management, where Purcell received her master's. He has worked with the Credit Union National Association in Washington, D.C., for four years. From left are: University Professor Dean Christopher Arterton; Dr. Steven Billet, director of the university's legislative affairs program; Chew; and Bill Cheney, president/CEO of the leagues (Photo provided by the California and Nevada Credit Union Leagues) … * BURNSVILLE, Minn. (3/6/08)--US FCU's new "Borrower Resources" services encourage members to get early access to financial education and loan restructuring, instead of waiting until a crisis. "Borrower Resources" has four components. Financial Counseling offers complimentary one-to-one financial counseling through Lutheran Social Service of Minnesota (LSS). Loan Consolidation provides opportunities to combine loan balances into a single monthly payment to reduce debt more quickly. Loan Restructuring includes custom-designed loan modifications and can include loans from other institutions. Referral Programs provide awareness of and access to resources offered through local civic groups or charities. "This is a very proactive approach," said Jeff Olson, assistant vice president of asset protection, "and one that encourages our members to take control of their financial situation. If they see difficult times ahead, we want to have those conversations with our members early, allowing us to work together to reduce or eliminate future financial hardship" … * HARRISBURG, Pa. (3/6/08)--Belco Community CU introduced three new above-market interest rate accounts. The Sizzling Savings account offers members 7% annual percentage yield (APY) on new money balances up to $500, with a minimum balance of $5 required. The new Savvy Senior checking account for members 50 and older offers 1.25% APY, with a minimum balance of $500 required. The account also offers free basic checks and a one-time certificate rate increase coupon on 0.25% for new or refinanced certificates. The new Cha-CHING! Checking account offers 3.25% APY with a $1,000 minimum-balance requirement, plus free basic checks …

Pennsylvania Supreme Court hears FOM case

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HARRISBURG, Pa. (3/6/08)--The Pennsylvania Supreme Court heard oral arguments in Pittsburgh Tuesday in a case bankers have filed against the Pennsylvania Department of Banking on its community-chartering application process. The case, filed by the Pennsylvania Bankers Association, involves field-of-membership (FOM) issues and focuses on the application process for community charter, said the Pennsylvania Credit Union Association (PCUA) (Life is a Highway March 5). The Supreme Court case is an appeal relating to a Nov. 13, 2006, decision by the Pennsylvania Commonwealth Court that the department did not follow procedural due process requirements when it did not conduct hearings or make records available to banking interest groups, who oppose field of membership expansions (News Now Feb. 25). Attending were: Lonny Maurer, Belco Community CU, Harrisburg ; Lee MacMinn and John King of Freedom CU,Warminster; Rick Stipa of TruMark Financial CU, Trevose; Laurie Kennedy of the Pennsylvania Credit Union Association; Linda Carroll of the banking department; and representatives of the credit unions' outside law firms: Blank Rome and Stradley Ronon. "We felt the credit unions and the Department of Banking put on our best case," said PCUA's Kennedy. "Now we will await a decision by the State Supreme Court."

Utah bill heads to governor

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SALT LAKE CITY (3/6/08)--A bill that would result in some legislative changes to ease restrictions on Utah's state-chartered credit unions unanimously passed the state House Tuesday, and now heads to the governor’s desk for approval to become law. The bill passed in the State Senate last week. “I think it is gratifying that several members of leadership stood up and helped move back some of the more punitive measures that credit unions have been subject to for several years,” Scott Simpson, president of the Utah League of Credit Unions, told News Now. Senate Bill 296, sponsored by State Sen. Curt Bramble (R-Provo), would create several changes to the state charter. It would:
* Increase the amount a credit union can loan to its members to 4% of assets from the current 1%; * Eliminate a requirement that borrowers must be members of a credit union for six months before receiving a business loan, and make them eligible immediately after joining; and * Maintain the current $250,000 cap on business loans, but allow the cap to increase with inflation--pegged to the Consumer Price Index--beginning May 5 with an increase each year on Jan. 1 (Deseret Morning News Feb. 22).
Although only a “handful of state-chartered credit unions do business lending” at present, this bill is very important to them, Simpson said. “No one is going to want to take out a business loan at a state-chartered credit union if they have to go through a six-month waiting period,” he added. Originally, credit unions wanted the business loan cap to be raised to 10% of a credit union's capital and surplus, and the $250,000 business lending cap to be lifted to 12.25% of a credit union's loan portfolio--similar to the cap for federally chartered credit unions. The league and the Utah Bankers Association (UBA) have promised Bramble and leaders of both houses of the state legislature not to return to the legislature seeking changes to the law for five years, the newspaper said. While not supporting the change for credit unions in the bill, the UBA pledged not to oppose the bill, as part of the compromise solution, Howard Headlee, UBA president, told the paper.

Study Top 50 retail banks fall short on e-support

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BELLEVUE, Wash. (3/6/08)--Add another one to the pile of reports that give banks less-than-stellar marks on their customer service. An audit of the online service provided to customers of the top 50 retail banks in North America pointed out significant service failures by the banks, according to Talisma Corp., a Bellevue, Wash.-based online customer service provider. A mystery shopper exercise queried the banks during November on "how to open an account" and "what kind of product and services are available for individual customers." The audit's findings:
* 36% of customers' e-mails went unanswered by the banks; * 96% of the banks audited did not offer live chat as a communication channel; * 94% of banks did not offer a "true" dynamic, flexible knowledge base. A majority offered little more than a list of static Frequently Asked Questions.
According to Steve Cox, vice president, Council of Better Business Bureaus, "Meeting expectations through customer service is a distinct trust issue with consumers in today's competitive marketplace. The Talisma report clearly highlights that our nation's leading banks need to examine, and then take action to improve, performance on customer service practices that build consumer confidence, loyalty and trust." While banks are examining their performance and trying to catch up with credit unions in the personal service arena, credit unions may be tempted to coast on their own success record in member trust and customer satisfaction surveys. But don't. "In an industry where products and services are rapidly commoditized and the cost of switching is low, member/customer service is now a primary competitive differentiator" among banks, said Talisma.

Wisconsin league Banks distort facts to deflect failures

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PEWAUKEE, Wis. (3/6/08)--"It's nothing but the same old broken record. What banks are doing is deflecting attention from their own failures by distorting facts about credit unions," said Brett Thompson, president/CEO of the Wisconsin Credit Union League. The Wisconsin Bankers Association's (WBA) support for an amended state bill that would subject large credit unions to the same type of Community Reinvestment Act (CRA) regulations banks must follow for their failure to meet financial needs in their communities, particularly those of low-income customers, said the league. The amended bill, AB 897, would require credit unions with more than $100 million in assets to document their efforts in serving lower-income populations (News Now March 5). "Not one valid study has ever cited locally owned credit unions--whose purpose is to serve their members, not make profits--for failure to fulfill their mission, and that includes the largest credit unions," Thompson said. "Banks want to heap costly regulations on credit unions at taxpayers' expense, with no documented need for doing so," said Thompson. "Credit unions are restricted to serving only eligible members, and they've done a great job doing just that." He noted WBA ignores the evidence, including the $176 million that Wisconsin credit unions return to their 2.1 million members annually in lower rates on loans, higher rates on deposits and lower or fewer fees. "Consumers already reap these benefits from credit unions without CRA," he added. Thompson added that WBA continues to point at studies that are statistically flawed or inconclusive to mislead lawmakers and deflect attention from banks' failure to satisfy the spirit of the CRA. For a more detailed look at Thompson's comments, use the resource link.

Consumer Protection Week CUs do their part

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MADISON, Wis. (3/5/08)--It's National Consumer Protection Week--a good time for credit unions to remind themselves, and others, about all they do to protect their members and consumers in general. Credit unions are at the forefront of the payday loan alternative movement to protect consumers from exorbitant lenders' fees, they've initiated laws to protect consumers from merchants' lax data storage that results in compromised data and identity theft, they've helped consumers avoid foreclosures on their homes, and they are a force in educating youth about financial management. Payday loan alternatives are springing up all over the country, and many are from credit unions. They include programs such as Better Choice in Pennsylvania and StretchPay in Ohio and several other states. Even one credit union can make a difference. North Carolina's State Employees' CU, for example, has a low-cost payday alternative program with a savings component that helped 100,000 members with no previous savings to accumulate more than $13.2 million in savings (News Now March 4). Credit unions have supported a number of bills in Congress and in the states that provide protection of consumer data or consumers' identity. In Minnesota, Gov. Tim Pawlenty signed into law the Plastic Card Security Act in May, which was the "No. 1 priority" of the Minnesota Credit Union Network (MnCUN) on behalf of the state's credit unions and their members. MnCUN helped draft the bill, which makes merchants who mishandle consumers' data responsible for data breach costs. Other states are advancing similar laws. Wisconsin and Washington credit unions are backing similar bills (News Now Feb. 27 and Feb. 19). The California Credit Union League has pledged to renew it efforts to pass a data protection bill after Gov. Arnold Schwarzenegger’s veto Oct. 13 of a league-backed bill to protect consumers from the effects of data breaches (News Now Oct. 16). Credit unions have helped members through the subprime mortgage crisis, by offering affordable mortgage loans, such as the Home Loan Payment Relief (HLPR), by offering first time homebuyers seminars and educational sessions, and by helping consumers who got into trouble with a loan elsewhere straighten out their debts. Credit unions are a prime partner in educating today's youth with the National Endowment for Financial Education's High School Financial Planning Program and providing youth the tools to protect themselves with better financial decisions in the future. The simple existence of credit unions keeps other financial institutions' fees and rates in line, protecting not only their own members but the customers of other financial institutions.

Colorado woman sentenced to life in CU employees murder

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FORT COLLINS, Colo. (3/5/08)--A Colorado jury found Shawna Nelson guilty of first-degree murder for shooting and killing a Colorado State Employees CU employee. Nelson was sentenced to life imprisonment without parole for the murder of Heather Garraus as Garraus left work at the credit union’s Greeley, Colo., branch Jan. 23, 2007 (Greeley Tribune March 4). Nelson shot Garraus “execution style” forcing Garraus onto her knees before shooting her in the head in credit union’s parking lot. Nelson had an affair with Garraus’ husband and was jealous, prosecutors said.

CU System briefs (03/04/2008)

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* MADISON, Wis. (3/5/08)--Early bird discounts have been extended through March 21 for CUNA Mutual Group's 2008 Discovery Conference, which will be held June 18-21 in Hollywood, Fla. at the Westin Diplomat Resort and Spa. The event will offer more than 45 learning sessions and keynote presentations by Marcus Buckingham and Peter Sheahan. Those registering by March 21 will receive a rate of $1,000--a $250 discount. Additional savings are available for three or more credit union attendees from a single organization … * HARRISBURG, Pa. (3/5/08)--The Pennsylvania Credit Union Association board of directors has agreed to adopt REAL Solutions, the National Credit Union Foundation's program to help credit unions provide products to help working families with real needs (Life is a Highway March 3) … * LATHAM, N.Y. (3/5/08)--The New York State Credit Union League, Sunmark FCU and Suffolk FCU have donated $3,000 to The Children's Hospital at Albany Medical Center. The proceeds are part of the league's "Credit Unions Care for Kids" 2007 campaign, a statewide community involvement program. From left are Brenna Griswold, certified child life specialist for The Children's Hospital, league President/CEO William J. Mellin, and Rich Meddaugh, public relations specialist from Sunmark FCU.(Photo provided by the New York State Credit Union League) … * ARVADA, Colo. (3/5/08)--The Credit Union Associations of Colorado and Wyoming are congratulating Chris Kemm, manager of grassroots advocacy, who was named to the Sixth Annual 2007 National All-Showalter Team, comprised of political involvement professionals from across the country. Kemm was honored in the "Passion" category, which showcases the best grassroots and political action committee leaders who love what they do and go to work with a sense of mission and belief in their cause. According to Amy Showalter, president of The Showalter Group, "A grassroots program without a passionate leader is simply a communications network. I have always believed that grassroots volunteers 'catch' the attitude conveyed by the grassroots leaders. Chris displays an attitude of possibility and excellence, which creates excitement and action among his volunteers" … * HARAHAN, La. (3/5/08)--Kimberly London-Plant has joined the Louisiana Credit Union League as senior support specialist in the Electronic Funds Transfer (EFT)/ATM department, effective March 1. London-Plant has more than 15 years' financial services experience. Prior to joining the league, she was branch manager for Neighbors FCU in Baton Rouge. She will assist credit unions with EFT/ATM implementations and issues as well as product support, said the league …

WOCCU sets co-op learning tours to Ecuador

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MADISON, Wis. (3/5/08)--World Council of Credit Unions has announced the dates for its 2008 Cooperative Learning Tours to Ecuador.
Steve Stapp (right), chief financial officer, Redwood CU, Santa Rosa, Calif., shares a light moment with a girl in Ecuador during last year’s Cooperative Learning Tour. (Photo provided by the World Council of Credit Unions)
Participants can experience the credit union difference during week-long guided tours of the South American country’s credit union movement April 6-13 and Oct. 12-19. The Sunday-to Sunday tours will give participants the opportunity to visit Latin American credit unions and discover the difference they make in the lives of their members. Ecuador’s credit unions are more technologically progressive than many of those in neighboring countries, using wireless messaging and mobile phones text messaging to conduct remote transaction, said WOCCU. At the same time, the credit unions serve members at the most basic levels. In addition to visiting multiple Ecuador credit unions, tour members will participate in “think tank” sessions focused on membership growth, micro-entrepreneurial activities, managing remittances, rural community development, reaching out to Hispanic members and other credit union topics. Cooperative Learning Tour participants pay $1,990 for a single room or $1,790 for a shared room, which includes seven nights’ accommodations in four- and five-star hotels, local transportation, most meals and admission to tourist venues scheduled as part of the tour. Participants are responsible for their own airfare to and from Quito--Ecuador’s capital. For more information, use the link.

CUNA Mutual financials strong in a volatile economy

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MADISON, Wis. (3/5/08)--The financial performance during 2007 for CUNA Mutual Group was strong with most major financials gaining, according to a report issued by the company. That is significant in today's volatile economy. Net income for the company during 2007 totaled $201 million, or 11.4% more than the $180.4 million in net income the year before. 2007 revenues rose 8.8% to $3.1 billion from 2006's $2.85 billion; and the company's operating gain totaled $221 million, up from $178.1 million in 2006, said CUNA Mutual. Assets declined slightly, to $15.1 billion from $15.3 billion in 2006, and the company's total surplus reached $1.79 billion, down from $1.87 billion the year before. That is largely due to a drop in the investments markets, Chief Financial Officer Jeff Holley told The Wisconsin State Journal" (March 3). The strong performance in 2007 was attributable to several factors, said Rick Uhlmann, senior manager, media relations at CUNA Mutual. "We had a potent performance across several business lines, including debt cancellation, credit insurance, international and crop insurance--as well as no significant catastrophe losses in 2007," Uhlmann said. The company is two-thirds of its way through its three-year restructuring transformation process. "CUNA Mutual is achieving the returns needed to continue our transformation so we can drive improvement in product development and ultimately bring more value to our policyholders," he added. "Also in 2007, CUNA Mutual paid a record $1.47 billion in benefits to credit unions (claims paid, dividends and interest credited) and individual member policyholders," said Uhlmann. "In addition, we paid $265 million in credit union reimbursements and experience refunds to credit unions in 2007." In comparison, benefits for 2006 totaled $1.41 billion. "Our return on equity was 12.6% in 2007 for a three-year average of 11%, which ranks among the top tier of mutual insurers nationwide," Uhlmann said. In 2006, the operating return on equity was 11.4%. In January, A.M. Best affirmed CUNA Mutual's financial strength by assigning an "A" (Excellent) rating and a "Stable" outlook. Fitch Ratings, in its most recent review in October, affirmed the company's financial strength at "AA-" (Very Strong), also with a "Stable" outlook.

Wisconsin amendment has CRA reports from large CUs

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MADISON, Wis. (3/5/08)--A banker-backed amendment singling out "large, nontraditional Wisconsin credit unions" as targets for requirements to document their efforts in serving lower-income populations has been introduced in the Wisconsin legislature. The Wisconsin Credit Union League was preparing a response at News Now's press time. The amendment exempts credit unions with $100 million or less in assets--roughly 85% of Wisconsin credit unions--from the community reinvestment requirements that were included in Assembly Bill (AB) 897, recently introduced by Rep. Mark Gottlieb (R-Port Washington). The remaining credit unions would be required to document their activities, the Wisconsin Bankers Association said in a press release. The rest of the press release was filled with the banker rhetoric against credit unions and their tax-exempt status as member-owned, democratically controlled cooperatives. For the full release and for more information on the original bill, use the resource links.

Louisiana banks stir up battle against CUs in article

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NEW ORLEANS (3/4/08)--Louisiana's banks are stirring up the taxation debate in an article in New Orleans City Business (March 3) about the battle between bankers and credit unions. In the article, "Battle Lines," Shell New Orleans FCU and the National Credit Union Administration (NCUA) explain that credit unions deserve their tax-exempt status, based on their not-for-profit, democratically elected structure. It cites statistics from The Credit Union National Association (CUNA): Of the nation's $13.5 trillion in assets, credit unions make up 5.6% of the market, with combined assets of $760 billion. CUNA also notes there are more banks than credit unions--8,561 vs. 8,334, respectively. Datatrac, a Milwaukee-based market research firm, reports credit unions offer more favorable interest rates than banks for deposit accounts and most consumer loans and mortgage loan products, says the article. The banks claim that the tax exemption allows credit unions to lower their rates and provide unfair competition and that credit unions have lost sight of their original mission. Shell New Orleans FCU, which originally was chartered to serve employees at Shell Oil Co., has widened its charter so "we're now allowed to service anyone living, working, worshipping or attending school in Orleans or Jefferson Parish (County)," Michelle Duhe, CEO, told the newspaper. She noted that "our tax-exempt status is fair because we don't have a paid board. Banks have stockholders who receive dividends and a paid board of directors." The article also quotes the Louisiana Bankers Association and the American Bankers Association. To access the full article, use the link.

CUs January loan-to-share ratio decreases

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MADISON, Wis. (3/4/08)--With savings growth outpacing loan growth, the loan-to-savings ratio decreased to 84.4% in January from 84.6% in December, according to the Credit Union National Association’s (CUNA) monthly sample of credit unions for January 2008.
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The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus liabilities) rose to 18% in January from 17% in December. “The loan-to-savings ratio fell from its recent high in January as savings growth outpaced loan growth,” said Steve Rick, CUNA senior economist. “This indicates there will be a slight easing of liquidity pressure on credit unions. We expect this trend to play out through 2008. It will be another factor pushing down credit union earnings this year.” Rick mentioned some yearly trends as well. Credit union savings balances increased 0.43% in January 2008, the fastest January savings growth since 2004. Share certificate balances increased quickly, rising 2.08%--the quickest pace since 2001. Members continue to shun regular share accounts, which declined 1.8% in January and 7.4% over the last year. “On the loan side, real estate lending was the only category with growing balances in January,” Rick said. “Lower market interest rates increased fixed-rate mortgage balances by 1.74% and adjustable rate mortgages by 0.48%. Year-over-year, fixed-rate balances are up 17.4%, while adjustable-rate balances are up 12.7%,” he added. Credit union loans outstanding rose 0.2% in January 2008, compared with a slight decline in January 2007. “Other loans” led growth, rising 4.2%, followed by fixed-rate first mortgages and home equity loans, increasing 1.7% and 1.5%, respectively. Following the holidays, credit card loans outstanding decreased 1%. Also declining were new auto loans (0.8%), other mortgages (0.6%), and unsecured personal loans (0.3%). “While declining slightly in January, credit card loan balances are up 15.5% over the last 12 months, the fastest pace since 1996,” Rick said.
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Credit union savings balances rose 0.4% in January 2008, compared with a decline of 0.6% in January 2007. Certificates, individual retirement accounts, and money market accounts grew 2.1%, 0.7%, and 0.1%, respectively. Regular shares declined 1.8%, followed by share drafts (0.9%). In terms of asset quality, credit union 60-plus day delinquencies increased to 0.99% in January from 0.95% in December. The credit union movement’s overall capital-to-asset ratio remained at 11.5% in January. The total dollar amount of capital ended the year at $89 billion, an increase of 6.7% from one year ago.

Iowa league CUs explore issues with CUs in Panama

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PANAMA CITY, Panama (3/4/08)--The Iowa Credit Union League (ICUL) and three credit unions traveled to Panama last week to discuss
Iowa Credit Union League CEO Pat Jury discusses the league's role in facilitating growth in Iowa credit unions during the Third International Seminar on Best Practices in Credit Union Operations last week in Panama City. (Photo provided by the Iowa Credit Union League)
issues facing Panamanian credit unions about growth and development, particularly regulation. The Third International Seminar on Best Practices and Credit Union Operations took place Feb. 23 in Panama City, with Iowa league staffers Pat Jury, CEO; Murray Williams, vice president; and Jim Niederhauser, director of credit union growth, addressing more than 70 people on league-related topics. The meeting was the latest in an ongoing relationship between the league and Corporacion Fondo de Estabilizacion y Garantia de Cooperativas de Ahorro y Credito de Panama, R.L. (COFEP). They have been partners in the World Council of Credit Unions' International Partnernships program for three years. WOCCU has assisted in the drive for credit union-specific legislation in Panama and shared branching since the partnership began. Attendees learned about ICUL's role in facilitating growth of Iowa credit unions, starting for-profit ventures and subsidiaries and using them to take advantage of economies of scale, and credit risk and its effect on loan portfolio value and quality related to international norms. New to the seminar this year was the CEO Panel, with ICUL Chairman Pat Drennan, CEO of First Gateway CU, Camanche, and ICUL board members Rick Benhart, EO of Collins Community CU, Cedar Rapids, and Mike Whittie, CEO of Federal Employees CU, Des Moines. Topics ranged from governance, marketing issues and growth strategies to daily CEO functions and the board/CEO relationship. The group also examined a key issue facing Panamanian credit unions: The regulatory landscape and the advantages strong regulations offer credit unions--an offshoot of previous efforts by the partnership's members, according to Victor Miguel Corro, WOCCU's International Partnerships manager. The delegates from Iowa also visited five smaller credit unions and learned of their challenges in evolving from closed-bond single-employer memberships to open-bond community-based ones. They took special note of credit unions' efforts to attract youth membership. They also visited two credit unions that may become involved in a direct credit union-to-credit union partnership.

CU System briefs (03/03/2008)

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* ESCANABA, Mich. (3/4/08)--U.S. Rep. Bart Stupak (D-Mich.) met with 225 members and guests at Great Lakes First FCU's annual meeting Feb. 9 and spoke about credit union taxation and other issues (Michigan Monitor March 3). Banks are increasing the pressure in Congress to tax credit unions, he said, adding he has received more visits from banking industry lobbyists pressing the issue than he did last year. He stated his long-standing support for the credit unions' tax exemption: "Credit unions have no unfair advantage over the banks and deserve their tax-exempt status," he told the group. He is one of 11 Michigan co-sponsors of the Credit Union Regulatory Improvements Act (CURIA), which he said would give credit unions more flexibility in many areas, particularly in member business lending. Stupak, left, is shown here with Great Lakes First FCU Chairman William Charon. (Photo provided by the Michigan Credit Union League) … * NORTHVILLE TOWNSHIP, Mich. (3/4/08)--The Michigan Credit Union League (MCUL) has named Rep. Joe Knollenberg (R-Mich.) as its 2007 Federal Legislator of the Year and State Rep. Andy Coulouris (D-Sagninaw) as State Legislator of the Year (Michigan Monitor March 3). The MCUL Board also named Matt Mika, legislative assistant to Rep. Tim Walberg (R-Mich.), as Federal Staffer of the Year, and Teri Ambs, legislative director to State Sen. Randy Richardville (R-Monroe), as State Staffer of the Year. Knollenberg, Michigan's 11th co-sponsor of the Credit Union Regulatory Improvements Act (CURIA), has been a staunch supporter of the credit union tax exemption and played a key role in helping the Credit Union National Association and the World Council of Credit Unions obtain funding for the Cooperative Development Program, said the league. Coulouris serves as chairman of the state House Banking and Financial Services Committee and has assisted credit unions with numerous measures … * BLOOMFIELD, Mich. (3/4/08)--Professionals, volunteers and members of T&C FCU are rallying to assist a branch teller whose home was destroyed by fire Feb. 26. The home of Keysha Griffin, a teller at the credit union's Ypsilanti branch, burned to the ground and she lost everything, said branch manager Christine Schulz, who added there's a question about how much insurance will cover on the home. A fund has been set up at the credit union. Checks should be made payable to Keysha Griffin Relief Fund, at T&C FCU, 2820 Tyler Rd., Ypsilanti, MI 48198 (Michigan Monitor March 3) … * METAIRIE, La. (3/4/08)--Jefferson Parish School Board Employees CU is changing its name to reflect its ability to serve the broader community, said Mark Rosa, president/CEO. The new name is Jefferson Financial CU. "We've got a new name, soon we'll have a new building, and most important, our membership is now open to all residents of Jefferson Parish (County)," he said. The credit union is the largest state-chartered credit union in Louisiana, with $140 million in assets. The credit union is the first in the state to receive a "residential group common bond" field of membership from the Louisiana Office of Financial Institutions, since OFI established new regulations last August, said the credit union …

SECU payday loan alternative passes 1 billion mark

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RALEIGH, N.C. (3/4/08)--North Carolina-based State Employees' CU (SECU) has surpassed the $1 billion mark for cumulative advances on its Salary Advance Loan (SALO) program, a payday loan alternative. SALO's savings component has helped members, who had no previous savings, accumulate more than $13.2 million in savings. The program originated in January 2001 as a low-cost alternative to payday lenders charging exorbitant fees. So far SECU has nearly 100,000 members with the program, which saved them $145 million when compared with the cost of typical payday loans. Typical payday lenders charge an average of $15 per $100 borrowed, which cost consumers more than $150 million for $1 billion in loan advances. In contrast, $1 billion in advances on the SALO program cost credit union members $5.9 million. SECU's SALO program is a no fee, low interest 12% loan that allows members to borrow up to $500 per month and repay the loan with funds from their next paycheck. The savings feature automatically deducts 5% of the borrowed amount and places it in a savings account for the member to cover future expenses. According to Phil Greer, senior vice president of SECU's loan administration department, the program has "provided a viable alternative to members who were being taken advantage of by payday lenders. Not only has the credit union been able to save members millions of dollars in interest, we have given them a unique way to accumulate substantial savings and make a positive financial difference in their lives."

Public Service CU to hire over 90 of Norlarco staff

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DENVER (3/4/08)--Public Service CU (PSCU) officials said that they have made formal offers of employment to more than 90% of Norlarco CU staff, after signing an agreement to purchase assets of Norlarco Friday. “Out of 104 employees, we identified 100 in good standing that will embrace and adapt to our business ethics and management principles,” said David Maus, PSCU president/CEO. “Of those employees, we were able to extend employment offers to 94%.” The purchase and assumption of Norlarco CU by Public Service CU, a $637 million asset, Denver-based credit union, closed Friday (News Now Feb. 28). Colorado state regulators placed Norlarco into conservatorship in May after a number of construction loans it issued in Lee County, Fla., became delinquent. In July, the National Credit Union Administration took control of the credit union and removed its board of directors (News Now Sept. 20). Norlarco's delinquent loans total more than $65 million, said a Colorado newspaper (The Coloradoan Nov. 27). Norlarco CEO Bob Hamer was among those not rehired. Only three employees, who were in good standing, and sought employment with PSCU, were not offered a position. Those individuals were provided with a severance package that included three months of salary and outplacement services, according to PSCU. “We feel fortunate to have such a large pool of local talent to help us move forward in a new direction,” Maus said. “We want to be the new, local, premier lender with the focus on our members, rather than Norlarco’s previous business model. We’re committed to serving our members and becoming an active partner in this community.” Employees will assume their new roles immediately, and there will be no interruption in service for the members, PSCU said. “With institutions of this size, combining operations and service will take a little bit of time,” Maus said. “However, there are some changes that members will notice immediately, such as more competitive rates, Saturday lobby hours and more favorable consumer lending options. We are committed to making this as easy and seamless as possible, and to keeping our members informed every step of the way.”

IKiplingerWash. PostI CUs have the best deals

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WASHINGTON (3/4/08)--Credit unions have the best deals, beating banks in every category--consumer loans, mortgages and savings accounts--according to a recent survey conducted by Datatrac, a financial services firm, and reported in and As an example, the credit card interest rate issued by credit unions was 12.04%--2.5 percentage points lower than the average bank card ( via The Washington March 2). Members of smaller credit unions can receive many of the amenities and services of larger organizations through shared branches and networks of surcharge-free ATMs, said Greg McBride of Membership in the country’s roughly 8,500 credit unions is generally less restrictive than it used to be, said. Eligibility in a credit union is available if a family member belongs, if one’s employer or spouse sponsors one, or if people live within the boundaries of a community-based credit union. Also if one works for the federal government or has a military affiliation, Kiplinger added.

Credit card issuers can take steps to mitigate risks losses

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NEEDHAM, Mass. (3/4/08)--Although the U.S. credit card industry faces a challenging environment in 2008, new research from TowerGroup points to steps issuers--including credit unions--can take to withstand the storm and recover more quickly when the economy normalizes. The TowerGroup research report, titled “Process and Data Risks in a Changing Economy: How Credit Card Issuers Can Protect Their Portfolios,” is authored by Brian Riley, a senior research analyst for the Bank Cards practice at TowerGroup, a research and advisory firm focused on the financial services industry. Existing models and metrics did not prepare issuers for the credit crisis that followed in the wake of the subprime mortgage collapse. To remain successful, card issuers must look deeply into each segment of their portfolios and react more quickly to the fast-changing environment, TowerGroup said. The most important message for card issuers in 2008 is that each segment of their member/customer base will behave differently. Tools that worked well before, such as linear regression models that follow the month-to-month aging of payment delinquency, have never been tested under the current extreme risk conditions, the report noted. In order to prevent systemic failure, credit unions and other card issuers must look at all functional processes to ensure that each business segment is tuned to the new environment. In the research, TowerGroup outlines five core challenges to the credit cycle:
* Changing Purchasing Habits--Diminished savings, lost home equity, increased debt, and higher unemployment means that U.S. card issuers must be ready for changes in card members' purchasing habits across every portfolio segment; * Changing Payment Patterns--Once industry darlings for their contributions to interest revenue, members/customers who carry a balance month to month must be scored more aggressively to assess risk; * Implementing New Tests for Risk Models--Revenue and risk models, along with the capacity plans that assess staffing requirements, are typically regression-based and volume-sensitive. Current business models have never been tested at higher delinquency rates; * Creating a Redefinition of a "Good" Customer--The definition of a profitable member/customer--traditionally, a card member who uses most of a credit line and revolves the balance, but with modest delinquency--can quickly change when that customer faces a stressed household budget. * Reacting to “Wild Card” Vulnerabilities--Traditional support mechanisms like domestic collection agencies and offshore call centers that work to collect overdue receivables will be subjected to stress as delinquency volumes rise. Issuers must try to anticipate where unexpected vulnerabilities might crop up.