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NBC affiliate discusses using CUs vs. banks

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EVANSVILLE, Ind. (4/15/09)--A local NBC affiliate, 14 WFIE, asks the question, "Should you use a bank or a credit union?" and credit unions received several positive comments. The article quotes Todd Mark with the Consumer Credit Counseling Service, who notes that it’s a fundamental financial decision. He points out that banks are for profit and credit unions are owned by their members. "They're not looking to turn that profit for shareholders. It's going back to you as a member," he said. The station also interviewed credit union members Chasity Crawley, who used her credit union to buy a car because it had a cheaper interest rates, and Birdie Reyes, who said she earns more on her savings accounts. The recent average rate on a bank savings account was 0.36%, while it was 0.54% at credit unions, the station said. The differences add up, especially with big purchases, Mark said. The only positive thing mentioned about banks was convenience in number of branches and ATMs, but the article also pointed out that credit unions are joining ATM networks. For more, use the link.

Former CEO seeks 3M after CUSO deal cancelled

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MILWAUKEE, Wis. (4/15/09)--The former president/CEO of Prime Financial CU, Cudahy, Wis., is seeking nearly $3 million from Guardian CU, West Allis, Wis., in a lawsuit alleging breach of contract stemming from the two credit unions' cancelled merger. Rich Koenig left Prime Financial CU in December. His suit alleges he signed a 10-year contract with Guardian to become its president of consulting service development, where he would run its credit union service organization (The Business Journal of Milwaukee April 10). The credit unions announced in October that they intended to merge (News Now Oct. 10). However, Koenig left Prime Financial in December to pursue other interests, the credit union announced in February. The proposed merger was cancelled in February (News Now Feb. 20). In March, citing management issues, the Wisconsin Office of Credit Unions took control of Prime Financial and dismissed its board of directors (BizTimes.com March 3). Koenig also resigned in December as chairman of Central States Mortgage Co., a mortgage company co-owned by 25 credit unions. Central States closed shop in March and filed for a conservatorship liquidation earlier this month.

Capital CU sets up 500000 endowment fund

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KIMBERLY, Wis. (4/15/09)--Capital CU has created the Capital CU Charitable Giving Fund that is being financed through a $500,000 endowment. The $324.3 million asset, Kimberly, Wis.-based credit union received a $437,000 settlement as part of a class action lawsuit over a contaminated supply and used the money along with another $63,000 that it donated to establish the endowment (The Post-Crescent April 11). The fund is designed as a perpetual endowment fund--which means each year about 5% of the fund will be available for eligible 501(c)3 nonprofit organizations applying for funds, Alan Zierler, Capital president/CEO, told the newspaper. “With the state of the economy, more and more of our friends, neighbors and relatives are facing difficult times,” Zierler told the paper. “The main objective of this fund is to provide for basic needs [food, shelter, clothing and medical care] making a positive impact on many lives.”

CEOs testify for inclusion in NY underserved areas

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ALBANY, N.Y. (4/15/09)--Credit union CEOs from throughout New York State provided testimony on behalf of the Credit Union Association of New York and state credit unions at a series of regional hearings recently held by the state Banking Department. The hearings are part of the department’s review of the Banking Development District Program (BDDP), a program created in 1998 to encourage banks to set up branches in under-banked and underserved areas. Credit unions currently are not included among the financial institutions authorized to participate in the program.
Click to view larger image Linda Levy, CEO, Lower East Side People’s FCU, New York, provides testimony at a public hearing in New York City on the Banking Development District Program.
Linda Levy, CEO, Lower East Side Peoples FCU (LESPFCU), New York, gave testimony last week in New York City at the first hearing. Levy provided an overview of why credit unions are experts in serving low-income and underserved areas, and as such, are uniquely positioned to help the state achieve the goals of the BDDP. LESPFCU was founded in 1986 as a result of the closing of the last commercial bank within a 100-square-block area. The credit union opened with $350,000 in assets. Today it has two branches and has grown to $22 million in assets. “We found a way to serve this underserved community against tremendous odds,” Levy said. “We have over $14 million out in loans for affordable, income- and resale-restricted cooperative apartments, maintaining affordable housing across the five boroughs of New York City. Imagine how much larger we could have been, how many more affordable housing loans we could have made, had we been part of the BBDP.” In the Capital Region and Central New York area, the banking department requested written testimony be submitted. Susan Commanda, CEO, Hudson River Community CU, Corinth, and Ron Ehrenreich, CEO, Cooperative FCU, Syracuse, provided written testimony.
Click to view larger image In Buffalo, the New York State Banking Department listens to testimony on the Banking Development District Program from Al Frosolone, CEO, Niagara’s Choice FCU, Niagara Falls. (Photos provided by the Credit Union Association of New York)
Al Frosolone, CEO of Niagara’s Choice FCU, Niagara Falls, gave his testimony at a hearing Monday in Buffalo. “Membership in state and federal credit unions in New York is limited by law,” Frosolone said. “It may be based upon a common employer, association, school, union, or community. This local-ownership component created another aspect to their mission--namely reinvesting in and the betterment of local communities they serve. “Credit unions can also provide benefits to the state’s municipalities,” he continued. “By enabling credit unions to participate in the BDDP, municipalities have the option to invest in not-for-profit financial institutions that keep investments local. In turn, the municipal deposits would be used to provide much-needed lending capital to potential borrowers in the community.” Each representative countered bank arguments that credit unions’ tax-exempt status should keep them out of the program. They testified how, like any other not-for-profit organization, credit unions do not pay income tax because they have no income to tax. Credit unions do pay income tax, and members pay tax on any dividends they receive. They also pointed out that since 2002, about 131 underserved (low-income) areas have been added to the charters of 60 credit unions in the state. Each one of the 131 areas now has a credit union branch where members can get low-cost financial services. Credit unions want to serve more underserved communities, which is why the Credit Union Association of New York supports current legislation sponsored by State Rep. Francine DelMonte (D-Niagara) and State Rep. Hakeem Jeffries (D-Metropolitan)--A.166 and A. 168, respectively. These measures would authorize credit unions to participate in the BDDP.

14 Iowa CUs participate in Money Smart Week

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DES MOINES, Iowa (4/15/09)--Credit unions are among the financial institutions, government agencies, not-for-profit organizations and community groups across Iowa who have banded together to present the second annual Money Smart Week. Money Smart Week is a week of events developed to help central Iowans of all ages better manage their finances, said the Iowa Credit Union League. The Federal Reserve Bank of Chicago and nearly 100 partners will offer more than 95 free financial seminars April 18-25 in Cedar Rapids/Iowa City, greater Des Moines and the Quad Cities. Topics range from financial literacy for youth to retirement planning and investment options for senior citizens. Fourteen events will be sponsored by credit unions:
* Personal Finance Class--Budgeting and Saving, Community lst CU; * CreditAbility: Build a Strong Credit History, Advantage CU; * Build a Basic Budget: The Five-Step Spending Plan, Village CU; * Educational Seminar--Build a Basic Budget, Midland CU; * Starting a Small Business, Community Business Lenders; * Get Your Savings Matched, Affinity CU and the Iowa Credit Union Foundation; * Build A Basic Budget: The Five-Step Spending Plan, Metco CU; * First Time Home Buying Made Easy, Linn Area CU; * Credit Union Basics, Dupaco Community CU; * Cookin' Up a Good Credit Score, Linn Area CU; * Financial Fun and the Family Museum with the Family CU, The Family CU; * Estableciendo Su Futuro Financiero…Establishing Your Financial Future, Ascentra CU; * Retirement Solutions Seminar, Ascentra CU; and * Planning for Retirement, IH Mississippi Valley CU.

CUNA Mutual annual report available online

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MADISON, Wis. (4/15/09)--CUNA Mutual Group’s 2008 Annual Report is available online. The report contains information about CUNA Mutual’s financial strength and how the company is navigating challenging economic times. This is the second consecutive year the report is available exclusively online, saving money and environmental resources. Interactivity is part of the report design, as videos and audio clips allow readers to hear directly from company leaders and customers. CUNA Mutual said it recorded strong revenue growth--6.8%--and overall operating results--a gain of about $151 million--in 2008. For example:
* The company recorded revenue growth of nearly 7% last year and an operating revenue gain of more than $150 million; * Investment losses offset operating earnings as the company recorded a net income loss in 2008; * However, even with investment losses, the company policyholder surplus remains at more than $1.2 billion.
The company’s total asset size was $13.2 billion in 2008. CUNA Mutual’s 2008 operating results remained strong during the current economic downturn, the company said. For example:
* Retention of credit union customers on CUNA Mutual’s core products was 98.2%; * Crop insurance--a new product--delivered $246 million of revenue; * Underwriting was strong across products, including mortgage insurance; and * Product diversification created product resilience.
CUNA Mutual is a provider of financial services to credit unions, their members and customers worldwide. To access the 2008 Annual Report, use the resource link. Readers also can access a printable PDF online.

Single mom gets help restoring burnt home

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SAN ANTONIO (4/15/09)--Security Service FCU helped a single mother qualify for a loan to restore her San Antonio house, which was nearly burned to the ground last June. After the fire, the city was ready to bulldoze the ruins. Elizabeth Llanas would not have qualified for a traditional loan to restore her historic home, built around 1905, said the credit union.
Click to view larger image Elizabeth Llanas points to where the fire that nearly burned her home to the ground started and what’s left of her son’s room. Security Service FCU was part of a community effort to help her rebuild the historic home. (Photo provided by Security Service FCU)
However, through an ongoing partnership between Security Service FCU and Neighborhood Housing Services (NHS) of San Antonio, the credit union was able to provide the first loan on the home, with NHS providing the second lien and construction management services. “Because Security Service FCU is a completely local institution with a membership and depositor base that is ‘puro San Antonio,’ they saw the whole picture of the proposed transaction clearly,” said Robert Jodon, NHS executive director. “Because Security Service’s lending is local, loan products are designed to match local market conditions and characteristics. “So instead of being frozen within the general malaise of the mortgage market place, Security Service was nimble and able to step to the fore when we needed them,” he added. At a groundbreaking ceremony held April 8, San Antonio Councilwoman Mary Alice Cisneros was joined by architect Jose Garcia de Lara, who provided pro bono services to Llanas. Also present was Keith Sultemeier, Security Service chief financial officer. “We are honored to be able to participate in this project with NHS,” Sultemeier said. “Liz is a truly remarkable woman, and this is a truly remarkable project. It’s a perfect and encouraging example of a community coming together to support one another.” Security Service FCU, based in San Antonio, has more than $5 billion in assets.

CUs maintain strong presence in auto lending

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ONTARIO, Calif. (4/15/09)--Credit unions continued to maintain a strong market presence in the auto lending arena in the first quarter of this year, with a 24.8% market share in February, according to CUDL. CUDL is a point-of-sale and indirect auto lender for credit unions. It became the third largest lender of auto loans in January, behind Chase Auto Financing and Toyota Financial Services. About 936 U.S. dealerships closed last year due to lack of financing. Lenders who relied on asset-backed securities to make auto loans have run out of funds because there are fewer financing sources, according to Joe James, CUDL market research analyst. Credit unions continue to lend, even though some major lenders do not. Auto loans make up one-third of credit unions’ portfolios, James said. General Motors (GM) and Chrysler were the top cars financed in the first quarter of 2009 on the CUDL platform, at 19% and 18%, respectively. This is because of the Invest in America program, James said. Invest in America is a credit union auto loan discount program that offers incentives to credit union members who buy qualifying GM and Chrysler vehicles. Credit unions have seen an increase in charge-offs and delinquencies, but it’s much lower than that of banks, he added. “Credit unions are still offering low [interest] rates to members,” James said. Loan terms also have shifted. Right now, 60-month loans are the most common for credit unions--a shift from 72 months last year. “Credit union members are seeking shorter terms,” James said.

Still accepting nominations for WYCUP

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MADISON, Wis. (4/15/09)--Alison Carr worked for Point West CU in Portland, Ore., when she was nominated for World Council of Credit Unions' (WOCCU) Young Credit Union People (WYCUP) Scholarship Program in 2006. Being named a winner at first was a surprise to Carr, but no more so than the benefits she realized from receiving one of WOCCU's top honors. “I wasn't listening when my name was first called, but the resulting experience has dramatically changed my life,” said Carr, who now serves as director of learning events for the Credit Union National Association’s Center for Professional Development. “Winning the award was highly emotional for me, and the advantages I've gained in career development have been enormously beneficial.”
Click to view larger image World Council of Credit Unions (WOCCU) Chairman Melvin Edwards (left) and President/CEO Pete Crear (third from left) congratulate 2008 WOCCU Young Credit Union People winners Joe Agro, Anna Corona, Rafal Sokolowski, Nicholas May and Rachel Milan at last year's World CU Conference in Hong Kong. (Photo provided by the World Council of Credit Unions)
WYCUP, open to credit union professionals age 35 and younger as of Jan. 1, is still accepting nominations for the 2009 program. Nominations will be accepted through June 15. Recipients will be recognized at WOCCU's World Credit Union Conference, July 26-29, in Barcelona, Spain. WYCUP is open to individuals who have already made significant contributions to the development of their own credit unions, regional or national credit union systems and have demonstrated the potential to employ their unique talents at the international level. “The WYCUP honor has provided confirmation of my beliefs in the cooperative movement and increased my commitment to my job and to the credit union system,” said 2008 winner Rachel Milan, director of marketing and community investment for Teachers CU, Hamilton, Ontario, Canada. “I have become more confident in my work, which fuels my desire to help our credit union grow during these difficult times.” Nominees also must be sponsored by their credit union or credit union organization to attend WOCCU’s 2009 World Credit Union Conference in Barcelona in July. WOCCU will award the WYCUP scholarship--an all-expense-paid trip to the 2010 World Credit Union Conference--to five recipients at the 2009 conference in Barcelona. All nominees, regardless of award status, will be formally recognized in Barcelona and invited to take part in events organized specifically for participants age 35 and younger, including a special networking session. Conference registrants in this age group also qualify for a discounted registration fee regardless of whether they compete for the scholarship. “If you're passionate about the contribution you make to the credit union movement, you'll find WYCUP a wonderful experience,” Carr said. “You quickly realize we're all unified in the challenges we face. I really appreciate WOCCU's commitment to continue making this opportunity possible.”

Huffington Guess whos a bright spot in banking

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MADISON, Wis. (4/15/09)--Credit unions are a “bright spot on the banking front,” Arianna Huffington wrote on her blog Monday in The Huffington Post (April 13). “They’re lending, their balance sheets are solid, and their capital levels are near record highs,” Huffington added. She also wrote that credit unions are owned by shareholders, put member service ahead of profits and have avoided the subprime loan fiasco. Huffington mentioned on her Facebook page and to her followers on Twitter that she was going to write about credit unions, and asked readers to send in their thoughts. Some reader responses posted on her blog:
* “My own experience suggests that if you are looking for a secure financial institution in these turbulent times, think small and think local ... look for banking and credit institutions that have ties to your community,” a reader wrote about his positive experience going to a credit union. * “A credit union saved me from Bank of America. Every day BoA had a way to take some amount of money from me--every day a fee ranging from 25 cents to 35 dollars. Once I went credit union, transparency came back into my life. I woke up with the same amount of money I went to bed with ... The robbery was over. I will never trust a large bank again.” * “All I can say is that nothing beats the personal attention a credit union offers. It’s the ‘Cheers’ bar where everybody knows your name.” * “My 19-year-old daughter, with no previous credit history, was unable to get a car loan even when she was putting 50% down. Our credit union came through for her.”

Mid-Atlantic CEO named to Primary Financial Co. board

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WESTERVILLE, Ohio (4/15/09)-- Primary Financial Co. LLC, a credit union service organization owned by 27 corporate credit unions, announced that Jay Murray, president/CEO of Mid-Atlantic Corporate FCU, is its newest board member. Murray fills an open seat. His term will expire in 2011. He has been with Mid-Atlantic since 1991, and has been president/CEO since July 2008. At Mid-Atlantic, he served previously as corporate account manager, vice president of member services, and senior vice president and chief operating officer. Murray also sits on the boards of Impel Consulting Group, a credit union consulting company; My CU Services, Mid-Atlantic's electronic bill payment company; and Sollievo Group, Mid-Atlantic's benefits and insurance company. Other directors include: Board Chairman, Lew Lambert, president, Minnesota operations, Members United FCU; Lee Butke, president/CEO of Corporate One FCU; Greg Moore, president/CEO, Georgia Central CU; and Kathy Garner, president, Northwest region, Southwest Corporate FCU. Primary Financial Co. has offices in Westerville, Ohio, and Columbus, Ind. It serves more than 4,000 credit unions throughout the U.S. with more than $9 billion in credit union investments outstanding.

CU System briefs (04/14/2009)

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* RICHARDSON, Texas (4/15/09)--Texans CU announced Tuesday that interim chief executive Mike Sauer has been named president/CEO, effective immediately (The Dallas Morning News April 14). Sauer, a former manufacturing executive, has served on the Richardson, Texas-based credit union's board since 1992. He was chairman of the board between 2002 and 2006. Sauer succeeds David Addison, who stepped down in January after five years. During that time, Texans increased its business lending significantly before the economy hit its slump. As of Dec. 31, Texans' delinquent loans and repossessed real estate amounted to 8.4% of total assets, up from 5.6% as of Sept. 30 … * HIGHTSTOWN, N.J. (4/15/09)--New Jersey credit unions were represented at the ribbon cutting/open house for the district office of U.S. Rep. Leonard Lance (R-N.J.) in Flemington. Lance, a freshman, was named to the House Financial Services Committee, said the league (The Weekly Exchange April 13). Attendees included, from left, Lance; Affinity FCU's Beth Degnan; and New Jersey Credit Union League Director of Government Affairs Chris Abeel.(Photo provided by the New Jersey Credit Union League) … * COLORADO SPRINGS, Colo. (4/15/09)--After Ent FCU relocated its Schriever AFB service center to a larger, more centrally located facility in January, its Schriever location experienced a 229% increase in new accounts and an 80% hike in consumer lending. The credit union opened 47 new accounts in 30 days as a result of its grand opening military appreciation promotion. Katherine Nester, the credit union's Schriever center manager, noted the larger, more convenient center and new drive up ATM offer greater convenience for members on base … * FORT WAYNE, Ind. (4/15/09)--David L. Thieme, 49,former CEO at General CU, Fort Wayne, was charged with one count of fraud against a financial institution for authorizing loans to members that were not paid back, said records filed Monday in Allen Superior Court (The Journal Gazette and News-Sentinel April 14). Thieme, who worked for the credit union for 20 years, became CEO in 2004. He was terminated in April 2008 after three employees reported irregularities in his loan transactions. Authorities say that between May 2004 and April 2008, Thieme allegedly engaged in schemes to conceal loan delinquencies, including modifying loan obligation dates and delaying payment dates. He also allegedly overpaid a member for contracted janitorial services and used the excess payments to reduce the member's loan balance, the records indicated. The credit union lost about $1.6 million, less than 2% of the credit union's assets; however, no member suffered losses because Thieme allegedly misapplied credit union funds, not members' account funds. Within a week of his termination, Thieme paid $800,000 on the loans he oversaw. … * HARRISBURG, Pa. (4/15/09)--TruMark Financial CU's Springfield shared branch scored a perfect 100% during a recent mystery shop. The score is based on branch appearance, signage, teller appearance, and procedures. It was the fourth Pennsylvania shared branch to receive a 100%, said the Pennsylvania Credit Union Association. Mystery shops are conducted at every shared branching location at least once a year (Life is a Highway April 14) … * TAMPA, Fla. (4/15/09)--Cornelius Bryant, 30, of Tampa was sentenced to 22 years in federal prison on charges of bank robbery and violation of a supervised release, according to the U.S. Department of Justice's Bureau of Alcohol, Tobacco, Firearms and Explosives. The robbery occurred June 23, 2008, at MidFlorida FCU, Lakeland, Fla. At the time of the robbery, Bryant was serving a term of federal supervised release for a prior bank robbery conviction in 2002 (US Fed News April 11). He was convicted by a jury on Dec. 11. Sentencing was by U.S. District Judge Richard A. Lazzara …