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DeltaNorthwest merger an opportunity for CUs

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ATLANTA, Ga., and APPLE VALLEY, Minn. (4/17/08)--It's too early to tell what effects--if any--the proposed merger of Delta Air Lines and Northwest Airlines will have on members of the credit unions that serve those airlines' employees. Delta Air Lines and Northwest Airlines Monday announced their intent to merge in a $3.1 billion deal that would create the world's biggest airline. Two credit unions serve the airlines' employees: Delta Community CU, based in Atlanta, and Wings Financial CU, based in Apple Valley, Minn. The merger--far from a done deal--is not a situation that will filter into the credit unions and their members anytime soon, according to the two credit unions. Nothing will change for their members soon. However, down the line, the merger could be an opportunity to provide services to their existing and new members. Even though the future's not clear, “We stand ready to meet the financial needs of Delta’s employees now and in the future regardless of the outcome of the current proposed merger with Northwest Airlines,” Mary Olson, vice president of marketing at Delta Community CU, told News Now. "This merger creates a tremendous opportunity for Wings Financial," CEO Paul Parish wrote in a message to its members. "We'll be exposed to thousands of potential new members, each with the opportunity to bring their financial services needs to Wings Financial." Wings earlier had diversified its membership beyond serving Northwest Airlines by adding family membership and expanding its charter to include the entire air transportation industry. In 2006, it opened an office in Atlanta, which "is well-located to serve the employees of the new combined carrier," Parish said. However, "we have no intention of changing any of our office operations at the present time. While that might change as the merger process progresses," the credit union will keep members informed of its plans as they develop, the notice said. If the merger goes through and layoffs ensue, Delta Community CU already has in place a strategy for such situations. “We have a program available to all of our members whose income and/or employment status has been adversely affected as a result of an involuntary furlough, job change, voluntary leave of absence, severance or early retirement program," according to Mary Olson "These members may be eligible for deferral of loan payments through our Member Assistance Program. Once they qualify, all consumer loan (excluding Visa, and first and second mortgage loans) payments may be deferred for a specified period of time,” she added. Should the merger occur, the two credit unions likely would be competing for the same membership. Olson indicated that wouldn't be a problem. "People have choices. Many credit unions overlap (membership) with others, and many people can join more than one credit union." Regardless of the outcome, Delta Community CU will be there.

Wash. state regulators letter interprets dividend

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OLYMPIA, Wash. (4/17/08)--Credit unions need to be clear in their advertising and avoid statements that may be misleading, inaccurate or untrue when using the terms “dividends” and “interest,” according to the state of Washington Division of Credit Unions. Linda Jekel, state director of credit unions, sent Interpretive Letter 1-08-03 to state-chartered credit union CEOs April 9. “Since both interest and dividends are allowed for state-chartered credit unions, and every credit union is responsible for handling its own consumer disclosure, it is important to verify that the terms are being used correctly,” she wrote. Many credit unions use the terms interchangeably when, in fact, they are two different things, Jekel wrote. “‘Interest’ is compensation, fixed by agreement, for the use of money, with rights generally enforceable by contract,” she explained. “‘Dividends’ are discretionary payments, distributed from authorized sources, upon approval by boards of directors. Both pay investors in an amount expressed as an ‘APY’--annual percentage yield.” Jekel advised the state’s credit unions to check all forms and advertising materials, including information posted on their websites. She also suggested checking all the fine print and footnotes on all consumer disclosures and advertising, making certain that the terms “interest” and “dividend” are used accurately and consistently, not interchangeably.

Merger rates up overall liquidation rates down in 07

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MADISON, Wis. (4/17/08)--Merger rates of credit unions overall rose during 2007, while liquidation rates overall dropped, according to year-end statistics from the Credit Union National Association. During the year, 15 credit unions were liquidated and 341 credit unions merged. The year also saw the formation of five new credit unions and the reactivation of a sixth credit union. Seventy-one credit unions started merger or liquidation processes during the year. Although merger rates were higher overall, despite asset size, except among two asset groups: credit unions with assets of less than $0.5 million or greater than $100 million. Liquidation rates rose or held steady among credit unions larger than $1 million in assets. Merger rates increased for both federal and state-chartered credit unions last year, with 0.1% of federal chartered credit unions merging, and 0.21% of state-chartered credit unions did so. Liquidation rates fell among state-chartered credit unions and stayed steady for federal charters.

Twelve CUs piloting IDA program in Iowa

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DES MOINES, Iowa (4/17/08)--Twelve Iowa credit unions will launch the Credit Union Family Partnership Program--the Iowa Credit Union Foundation’s Individual Development Account (IDA) initiative. Participating credit unions were selected by the foundation’s IDA Committee, composed of foundation executive committee members (ICUF April Foundation Newsletter April 2). The pilot group will include:
* ACE Community CU, Ames; * Affinity CU, Des Moines; * Ascentra CU, Bettendorf; * Cedar Falls Community CU, Cedar Falls: * Community 1st CU, Ottumwa; * Dupaco Community CU, Dubuque; * DuTrac Community CU, Dubuque; * Employees CU, Estherville; * Family Community CU, Charles City; * Linn Area CU, Cedar Rapids; * Marine CU, Decorah; and * Veridian CU, Waterloo.
The pilot credit unions will participate in a day-long training session today, led by Coopera Consulting, which is providing staff support to the foundation for the program.

Illinois league kicks off annual meeting today

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NAPERVILLE, Ill. (4/17/08)--Nearly 900 executives representing 150 credit unions are expected to attend the Illinois Credit Union League’s (ICUL) 78th Annual Convention, which starts today in Chicago. The convention, themed “Blazing New Trails,” begins with a delegates’ meeting. Barry Schmidt, who will represent the Greater Decatur Chapter of Credit Unions, will be sworn in as a new ICUL director. John Bratsakis, senior vice president of business development for Baxter CU, Vernon Hills, Ill., will be sworn in Friday morning as the league’s new chairman of the board. David Walker, CEO, Decatur (Ill.) Earthmover CU, will receive the league’s Hall of Fame award. The convention wraps up Saturday.

CU System briefs (04/16/2008)

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* BURNSVILLE, Minn. (4/17/08)--US FCU collected a total of 14,094.31 dollars/pounds for the Minnesota FoodShare program, donating nearly $10,000, plus 4,182 pounds in food, in its annual USFCU Olympic challenge. The $742 million asset credit union surpassed its goal of 8,000 dollars/pounds. Staff competed in the spirit of the upcoming 2008 Summer Olympics in department and branch teams. The Triathlon winners, accepting their gold, silver and bronze medals, are, from left, Doug Paulson, Ben Nikosch and Justin Dunn. (Photo provided by US FCU) … * SASKATOON, Saskatchewan (4/17/08)--The board of SaskCentral, the Saskatchewan provincial trade association for credit unions, has elected Don Blocka of Conexus CU, Prince Albert, as board president. Blocka has served on the SaskCentral board since 2002. At its annual meeting in Saskatoon, SaskCentral welcomed two new board members: Pieter McNair, CEO, Kelvington CU; and Ken Sherwin, board member of Cornerstone CU, Yorkton (Marketwire April 15) … * HARRISBURG, Pa. (4/17/08)--Clarion University FCU, Clarion, Pa., will merge with Harrisburg-based $2.958 billion asset Pennsylvania State Employees CU (PSECU) on July 1, said the Pennsylvania Credit Union Association (Life is a Highway April 14). Members of the $6.4 million asset Clarion credit union voted in favor of merging. The merger is a natural fit for PSECU because students, faculty and alumni of Clarion University are already within its field of membership, said PSECU President Greg Smith … * UPPER MARLBORO, Md. (4/17/08)--Two community CUs in Prince George's County, Md., have merged, according to the Maryland and District of Columbia Credit Union Association (MDDCCUA). Prince George's Community FCU, with $91.7 million in assets and 12,000 members, now serves members of the former First Combined Community FCU, with $2 million in assets and 2,300 members. The merger was effective March 31 (FOCUS Newsletter April 14) … * ALBUQUERQUE, N.M. (4/17/08)--The New Mexico Information Technology and Software Association honored seven women April 3 for outstanding contributions to the technology industry. Among them was Patricia Janney of New Mexico Energy FCU, Albuquerque. They were honored at the association's first annual Women in Technology Recognition Celebration, part of a new program to promote careers for women in technology ( April 15) … * RANCHO CUCAMONGA, Calif. (4/17/08)--Maria Angelova, administrative assistant, wealth management at Xceed Financial CU, El Segundo, Calif., will attend the World Council of Credit Unions' (WOCCU) 2008 World Credit Union Conference in Hong Kong with support from the California Credit Union League and the Richard Myles Johnson Foundation. Angelova, a recipient of the league's Tomorrow's Star Award, also is the league's nominee for a WOCCU Young Credit Union Professional (WYCUP) Scholarship. WYCUP awards five young professionals attending the world conference an all-expense paid trip to attend the next conference, WOCCU's 2009 conference in Barcelona, Spain. Last year's league nominee, Elizabeth Randall, vice president of member service at Pasadena FCU, received a WYCUP scholarship to attend this year's conference July 13-16 …

First Basin incumbents re-elected to board

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ODESSA, Texas (4/17/08)--Three incumbent board members of First Basin CU, Odessa, Texas, were re-elected to their positions during a meeting Tuesday night. Board Chairman Annette Snowden, Board Member Justin Beseril and CEO Shem Culpepper retained their spots on the board. About 400 people were present at the meeting (CBS 7 April 15). A large portion of attendees were First Basin CU employees, member Danny Armstrong, who ran for a position on the board, told News Now. Armstrong received 80 votes. “I felt that [First Basin] had 100% of their employees in attendance,” he said. “Most employees had someone in tow with them, such as a spouse.” Armstrong is a member of Save First Basin, a group formed by some members who opposed First Basin’s proposal to convert to a bank earlier this year. He noted that he wasn’t aware Culpepper was a board member. “I almost fell over,” he said. Culpepper also gave an hour-long speech criticizing the activities of Save First Basin, Armstrong said. Members of Save First Basin did not know the names of candidates running for re-election prior to the meeting, Armstrong said. Save First Basin had contacted the credit union for the names, but First Basin did not release the information. First Basin attempted to convert to a mutual savings bank last month but suspended its vote on the merger. At that time, Culpepper said that “numerous false statements” were circulated about the merger (News Now Feb. 18). Save First Basin also filed for a deposition this week from Culpepper and Snowdon regarding the proposed merger (News Now April 15). Earlier the credit union had filed a motion for depositions from Save First Basin members. A call to First Basin from News Now was not returned by press time.

Motion filed to consolidate nine Hannaford lawsuits

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BANGOR, Maine (4/17/08)--A motion seeking to consolidate about nine lawsuits into a single federal class-action lawsuit against grocery chain Hannaford Bros. has been filed in a U.S. District Court in Bangor, Maine. The motion to consolidate was filed on behalf of Greg Doherty and "all others similarly situated" against Hannaford. The Scarborough, Maine-based company announced earlier this year a breach of data in transit at its stores resulted in the exposure of 4.2 million credit and debit card numbers to potential fraud (Times Herald-Record April 16). Credit unions in New England, New York and Florida were among the financial institutions that re-issued cards for members whose accounts were compromised by the data breach. The newest motion alleges that Hannaford was negligent in not providing adequate data security and did not inform its customers quickly enough about the breach. The breach occurred between Dec. 7, 2007, and March 10. It was discovered Feb. 27, and the breach was made public March 17. The breach affected about 300 grocery stores in the Hannaford Bros. and Florida's Sweetbay chains, plus a number of independent grocers. Attorneys for the plaintiffs in the various cases are still trying to determine the scope of the damages. Hannaford Bros. said during the week of its breach announcements that less than 2,000 accounts had been victims of fraudulent activity from the breach. The breach was unusual in that the thieves captured the data while they were being transmitted after the cards were swiped to authorize the transaction at the point of purchase.

Pending IASB standards may hurt small CUs--WOCCU

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MADISON, Wis. (4/17/08)--Certain provisions in the International Accounting Standards Board’s (IASB) proposed accounting standards for small- and medium-sized enterprises (SMEs) could be detrimental to credit unions, according to the World Council of Credit Unions (WOCCU). WOCCU made its position known to IASB officials last week in a letter written by Dave Grace, vice president of WOCCU Association Services. WOCCU’s concerns focus on the draft’s failure to clearly identify to whom the standards apply and its failure to significantly simplify reporting requirements for smaller institutions, according to Grace. “Excluding credit unions from the scope of the SME standards and requiring adherence to the full International Financial Reporting Standards is both impractical and counter to the IASB's intention of making accounting requirements more accessible to smaller non-listed institutions,” Grace wrote in his letter to IASB board member Thomas E. Jones. Specific areas of concern include the draft's failure to clarify whether, as member-owned financial cooperatives, credit unions fall within the document's provisions. The draft articulates application to entities that hold public assets “for a broad group of outsiders such as a bank, insurance entity, securities broker/dealer, pension fund, mutual fund or investment banking entity.” Failure to include credit unions in the list may imply inclusion in full International Financial Reporting Standards, which could create insurmountable hurdles for many SMEs, Grace wrote. A second area of concern is IASB's required use of “fair-value accounting” methods and its usage in credit union mergers. The intent of a credit union merger is not an attempt “to bid up or receive any price beyond book value of its outstanding ownership shares,” Grace told IASB. The way mergers are accounted for on the newly combined entity's financial statement could be misleading and negatively impact the credit union's capital-to-asset ratios in some jurisdictions, Grace wrote. “We strongly recommend that the pooling-of-interest method, which does not require a fair valuation of both entities pre-combination, be allowed for SMEs or, at a minimum, for cooperatives and micro-entities with fewer than 10 employees,” Grace wrote. The average credit union worldwide to which these regulations would apply has 2,650 members, $19 million in assets and 7.5 employees. WOCCU also recommended a longer transition period for implementing the standards, given the often sluggish flow of information to small credit unions in some developing countries.