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Financial Literacy Month focuses on youth

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MADISON, Wis. (4/3/09)--Financial Literacy Month kicked off this week in a number of states, with gubernatorial proclamations, fitness fairs and educational workshops for youth, television shows to educate the public, and plans for motivating young members to save. Leagues reported that Maine Gov. John Baldacci, Washington state Gov. Chris Gregoire, and Pennsylvania Gov. Ed Rendell made special proclamations, observing the month as Financial Literacy for Youth Month, Financial Literacy Month or Financial Education Month, respectively.
Kerry Hayes, president/CEO of Lewiston (Maine) Municipal FCU, helps a student with her credit at the Credit Booth at a Financial Fitness-Money Management Experience, coordinated by Maine's credit unions, at Central Maine Community College in Auburn. (Photo provided by the Maine Credit Union League).
In Maine, the Norm Nolette Chapter of Credit Unions, with support from the Jeannette G. Morin Chapter of Credit Unions, held the Sixth Annual Financial Fitness Money Management Experience at Central Main Community College Wednesday. It was the 22nd fair in Maine since credit unions founded the event in 2004. Nearly 140 students from nine area high schools attended the half-day event, during which students checked in and received a scenario packet of their life at age 22. Jon Paradise, governmental and public affairs manager of the Maine Credit Union League and this year's master of ceremonies, noted, "With the troubled economy on the minds of many, there couldn't be a better time to educate students on the importance of being financially fit." Maine's credit unions will conduct two more Financial Fitness Fairs during the month. Pennsylvania Newsmakers, a television show hosted by Dr. Terry Madonna, featured Steven Kaplan, the state's secretary of banking, and Mike Wishnow, Pennsylvania Credit Union Association senior vice president of communications and marketing, discussing Financial Literacy Month (Life is a Highway April 2). Kaplan said there is a need to make financial education a lifelong learning process, beginning in kindergarten and continuing through adulthood. The program can be seen April 5-11 on television stations throughout the state. In Washington state, the Department of Financial Institutions is promoting financial education. Boeing Employees CU (BECU) is involved, offering a contest for elementary school students. During the month, students send in their best savings tip and are entered into a drawing. Fifteen winners will attend a BECU Savings Clinic at a Seattle Mariners' game. AmeriCU CU, based in Rome, N.Y., is expanding the Credit Union National Association's National Credit Union Youth Week (April 19-25) to a month-long celebration. It will use the Youth Week theme, "Magic of Saving," to encourage youth to save and manage their own money. The credit union will have magicians at select branches, and will offer prizes, literacy workshops, games and more to engage youth ages 5 to 18. Wright-Patt CU, Fairborn, Ohio, will conduct a community book drive to benefit literacy programs and schools near its 22 member centers. "Many organizations in the Miami Valley are facing a shortage of necessary supplies in these difficult economic times," said Jeff Carpenter, vice president of membership and development. "What better way to celebrate National Credit Union Youth Month than to invite our young members to help others in their own communities?" Wright-Patt will join others across the country in the National Credit Union Youth Saving Challenge. Others promoting the National Saving Challenge to encourage youth about financial matters and including special activities such as workshops and magicians include New Mexico Educators FCU, Albuquerque; DuPont Fibers FCU, Chesterfield, Va.; and Frontier Community CU, Leavenworth, Kan.

CU System briefs (04/02/2009)

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* DORCHESTER. Mass. (4/3/09)--Two people were arrested in connection with a robbery Wednesday of Tremont CU, Dorchester, Mass. Charges are pending, and the identities of the suspects had not been released, as of Wednesday, a police spokeswoman said. Two men wearing gray hooded sweatshirts and sunglasses walked into the credit union and said they had a bomb. The robbers demanded money and left with at least $200,000 stuffed into a bag before fleeing the scene (The Boston Globe April 2) … * FLORENCE, S.C. (4/3/09)--A 72-year-old woman, a former lending director at a South Carolina credit union, received a six-year sentence for embezzlement after taking out fraudulent loans in other people’s names and stockpiling more than $1 million between 1998 and 2006 to pay medical bills for her sick husband. Christine McLamb created new loans to pay off existing ones, altered records of members whose identities she stole so they wouldn’t notice and also to protect their credit, prosecutors said. McLamb stole the money from Health Facilities FCU, Florence, S.C., by creating 90 loans in members’ names, prosecutors said (The April 1) … * RALEIGH, N.C. (4/3/09)--State Employees' CU has renovated more than 100 branches across North Carolina, equipping them with a handicap-accessible teller window. While its newer branch buildings incorporate the design, SECU chose to retrofit all its branches. The project took more than a year to complete. The new windows prompted member Tai Martin, who uses the Boone-New Market Street branch, to say that "it's nice to be able to actually see who I'm dealing with in the branch. With the lowered countertop, I don't have to use my knee to sign my name." Patty Munns, senior vice president of SECU's Facilities Services department said, "We have members who are confined to a wheelchair or have limited mobility, and whether they need this service temporarily or permanently, SECU is committed to making all branches member-friendly and convenient for everyone." … * TAMPA, Fla. (4/3/09)--Ed Gallagly, former CEO of Tampa-based Florida Central CU for 44 years, died Tuesday at home after a battle with cancer. He had served on the board of directors of PSCU Financial Services the past 11 years. Gallagly was one of the founders of the Filene Research Institute and served on its research council from 1990 to 1996. He was a director of Southeast Corporate CU from 1977 to 1980 and was a delegate to the World Council of Credit Unions for more than 30 years. He also created the annual Management Perspectives Seminar, which provided the opportunity for boards and CEOs to study international cooperative banking systems abroad. He authored Fair Deal, a book offering credit union alternatives to fringe banking abuses. Gallagly received the prestigious Herb Wegner Award for individual achievement, and was selected as CUES CEO of the Year. In 1997, he was inducted into the Florida Credit Union Hall of Fame. Services are at 10 a.m. ET today in Tampa (Tampa Tribune March 31) …

SECU mortgage program helps 1400 struggling members

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RALEIGH, N.C. (4/3/09)--Since its Mortgage Assistance Program (MAP) began in February, State Employees CU (SECU), Raleigh, N.C., has helped 1,400 members with loan balances totaling $140 million improve their financial situation. In many cases, members modified their mortgages and reduced their rates by 2% to 3%, which resulted in decreased monthly payments of several hundred dollars, SECU said. MAP helps members who may be in a delinquency or possible foreclosure situation, and who anticipate income loss soon. Options include mortgage loan extensions, mortgage loan modifications or refinances and partial-payment alternatives. Budgeting, financial counseling and debt restructuring also are part of MAP. Job loss, divorce and medical crises led to many delinquencies, SECU said. “As unemployment rates continue to rise and the job market wanes, more members are facing the difficult task of paying bills with less income,” said Phil Greer, SECU senior vice president of loan administration. “Some are facing home foreclosure, and SECU will do everything we can to keep that from happening.” SECU also developed the SECURE Mortgage. Members can consolidate their SECU mortgage balances and any other loans owed to SECU under a low-interest, first mortgage loan. Financing may be up to 100% of the value of the member’s primary residence. With a SECURE Mortgage, funds of up to $5,000 may also be advanced for an emergency savings account. SECU has $17 billion in assets.

Illinois CUs invest nearly 100 million in student loans

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NAPERVILLE, Ill. (4/3/09)--Illinois-based credit unions will invest nearly $100 million in securities issued by the Illinois Student Assistance Commission (ISAC) to finance low-interest, federally secured loans through the Federal Family Education Loan Program to Illinois students and their families. The loans will make college affordable for thousands of Illinois students for the second straight year. Twelve credit unions so far have committed to lending with the $100 million in funds secured last September. The figure could grow as new participants join and commitment levels increase in the next six months. The announcement of these funds will be made at a press conference today at Chicago-based Alliant CU, one of the participating credit unions. "Our message to Illinois' college-bound students and their families is that we will have plenty of money to lend you to go to school," said ISAC Executive Director Andrew Davis. "We salute our partner credit unions and the Illinois Credit Union League for again recognizing the importance of higher education for the public good and making sure Illinois students have access to federally backed, low-rate student loans," Davis added. The league played a critical role in security credit unions' support. "We are pleased to once again team up with ISAC and continue backing its efforts to help students get a quality education," said Dan Plauda, league president/CEO. In addition to Alliant CU, credit unions participating include:
* Baxter CU, Vernon Hills; * Citizens Equity First CU, Peoria; * CommonWealth CU, Kankakee; * Corporate America Family CU, Elgin; * Credit Union 1, Rantoul; * I.H. Mississippi Valley CU, Moline; * ISU CU, Normal; * Motorola Employees CU, Schaumburg; * Scott CU, Collinsville; * SIU CU, Carbondale; and * University of Illinois Employees CU, Champaign.
"The credit unions stood tall in providing the backing for us to meet the rising demand for student loans in the state of Illinois," said Illinois Designated Account PUrchase Program (IDAPP) Director Steve DiBenedetto. He invited students to explore their options at a newly redesigned website, Last year, a lack of liquidity, increasing tuition costs and federal policy changes cut lender profits and disrupted student lending in some states. State student loan agencies in Minnesota, Massachusetts and Pennsylvania ceased student lending operations, while IDAPP continued to lend through the year with the backing of credit unions.

CU capital continues downward decline

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MADISON, Wis. (4/3/09)--For the third consecutive month, credit union capital declined in February, according to Steve Rick, Credit Union National Association (CUNA) senior economist. The movement’s overall capital-to-asset ratio dipped slightly to 10.2% in February from 10.5% in January, according to the February CUNA monthly sample of credit unions. “The total amount of credit union capital now stands at $88.5 billion, down from the high water mark of $90.8 billion set last November,” Rick told News Now. “Credit union capital as a percent of total assets fell to 10.2 % in February, down from 11.1 % a year earlier. “With the recession expected to boost savings and asset growth to double digits in 2009, the overall credit union capital-to-asset ratio could fall to around 9% by year end,” he added. “Credit union buffers have not been that low since 1993.”
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Credit union savings balances rose 2.8%, to $728 billion in February from $708 billion in January. Share drafts led savings growth (7.7%), followed by individual retirement accounts (4.3%) and regular shares (3%). Money market accounts and one-year certificates increased 2.5% and 0.9%, respectively. “Credit union savings growth is off to a strong start in 2009,” Rick said. “Savings balances increased 4.4% through February, up from 3.8% for the similar period in 2008. Individual retirement accounts and money market accounts grew the fastest over the last year, rising 17.5% and 16%, respectively. “Share certificate growth has slowed to 3% over the last year as credit union members were unwilling to lock up their funds into a low-rate term deposit and had expectations of interest rates rising over the next few months,” he added.
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Credit union loans outstanding decreased 0.14% during February 2009, compared with 0.06% during the same period last year. Fixed-rate mortgages led loan growth, increasing 1%, followed by home equity loans (0.4%). Used-auto loans fell 0.01%, as did new-auto loans (0.55%) and adjustable-rate mortgages (0.66%). Credit card loans and unsecured personal loans dropped the most, 2.69% and 1.89%, respectively. The loans-to-savings ratio declined to 79.9% in February from 82.2% in January. The liquidity ratio increased to 19.9% in February from 18% in January. Credit unions’ 60-plus day delinquencies remained constant at 1.5% in February.

Judge hears arguments on Hannaford data breach trial

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PORTLAND, Maine (4/3/09)--A U.S. District Court judge heard arguments Wednesday and said he would decide in a few days whether supermarket giant Hannaford Bros. is potentially liable for damages from a data breach that exposed more than four million credit and debit card numbers to hackers last year. Judge D. Brock Hornby's upcoming ruling will determine whether parts or all of the suit, which was filed against the Scarborough, Maine-based grocer last year, will go to trial. Attorneys for Hannaford asked the judge to dismiss the case, while attorneys for the plaintiffs asked the judge to certify the case as a class-action suit and let it proceed to trial (Portland Press Herald and Maine Sunday Telegram April 2). The case examines two central questions, which Hornby said are "fascinating and difficult issues": To what extent are merchants responsible for security the electronic data that gets processed with every card-based purchase, and what should the consequences be when the data are stolen? Between Dec. 7, 2007, and March 10, 2008, cyber criminals hacked into Hannaford's system and accessed card numbers used at 165 Hannaford supermarkets in the Northeast and 106 Sweetbay stores in Florida. Of the four million cards compromised, at least 1,800 numbers were stolen and used for unauthorized purposes. The breach was discovered Feb. 27, 2008, and Hannaford made the breach public March 17, 2008. Credit unions in New England, New York and Florida were among the financial institutions that re-issued cards for members whose accounts were compromised (News Now April 17, 2008). More than 20 lawsuits were filed after the breach. They were consolidated and assigned to the Maine court. Plaintiffs' attorneys seek damages for thousands time and money lost dealing with the theft, as well as damages because Hannaford allegedly knew about the breach at least three weeks before making a public announcement. The delay, said the attorneys, exposed consumers accounts to more fraud.

Pa. Senate passes robbery felony bill on to House

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HARRISBURG, Pa. (4/3/09)--A Pennsylvania bill that would establish robbery of a financial institution as a second-degree felony regardless of the method used to commit the robbery garnered support of the state Senate Wednesday. Senate Bill 605, introduced by State Sen. Mike Waugh (R-York), passed on a 49-1 vote (Life is a Highway April 2). “There is great concern with the lack of uniformity of sentences for robbery of a financial institution,” Waugh said. “Considering our current law does not specifically define and classify such robberies, it has been left to the courts to make the determination on a case-by-case basis.” S.B. 605 amends Title 18 (Crimes and Offenses) of the Pennsylvania Consolidated Statutes. The legislation addresses the specific action of taking or removing money of a financial institution, and would classify such a robbery as a felony of the second degree. Language is also included in S.B. 605 to ensure equal classification of all bank robberies, regardless of how the demand for money is made--orally or in writing. S.B. 605 now goes to the state House for consideration. The Pennsylvania Credit Union Association is in support of the bill (News Now March 26).

Florida state regulator issues ceasedesist against CU

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TALLAHASSEE, Fla. (4/3/09)--The Florida Office of Financial Regulation (OFR) has issued a cease and desist order against Eastern Financial Florida CU, a $1.69 billion asset credit union based in Miramar, Fla. The March 19 order, which the credit union consented to, outlines 15 practices the credit union must cease and orders the credit union to improve its capital level, establish a complete and effective management team, and deal with problem loans, including member business loans (South Florida Business Journal April 1). Last year, the credit union lost $40.2 million, which meant its net worth-to-total asset ratio fell dropped to 6.5%, below the regulator's 7% ratio required for a well-capitalized credit union. OFR's order requires Eastern Financial Florida to submit a plan to restore its net worth to well-capitalized levels. The credit union has not had a permanent CEO since Stephen McGill left the position in February 2008. OFR ordered it to evaluate all executive positions for weaknesses and hire additional ones, including a CEO. Other issues, said OFR, included operating without effective leadership or oversight; operating without adequate core deposits; operating without adequate policies to fund future losses of problem loans; operating without adequate loan writing standards and loan reviews; and carrying an excessive concentration of member business loans. According to the article, the credit union said it is addressing the concerns "quickly and fixing them so we can come out of this recession sooner than other financial institutions." The credit union's statement added it is proud of the work its staff has already done to mitigate the impact of the state and national economy.

NCUF posts free payday lending toolkit

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KANSAS CITY (4/3/09)--To help credit unions build sustainable payday loans as low-cost options for consumers, the National Credit Union Foundation (NCUF) has posted a toolkit of payday lending alternatives. Payday Lending: A REAL Solutions Implementation Guide is available for free download on the REAL Solutions Impact Center. The 121-page toolkit was developed by former Credit Union National Association Chairman Nancy Pierce, president of Tipton Research Group in Kansas City and a field coach for NCUF’s signature program, REAL Solutions. As one of five REAL Solutions field coaches, Pierce has worked with eight state credit union leagues to help more than 100 credit unions develop products and services for working families with low wealth and modest means. The guide is intended to develop solutions that are appropriate for each credit union and its membership, Pierce said. “It’s not a one-size-fits-all toolkit; several turn-key products are featured as examples," she added. "Ten credit union models were selected to offer a broad array of loan features, pricing structures and underwriting criteria.” The toolkit includes sample procedures and marketing materials, collection techniques, and time-tested loan results. It also includes interactive Excel worksheets to help each credit union make pricing decisions on open-end and closed-end loans. “Credit unions can be part of the solution to high-cost payday lenders,” said REAL Solutions National Program Director Lois Kitsch. “Payday loan alternatives enable credit unions to reach out to members who are struggling financially and help them break the cycle of debt.” Credit unions that research members’ other credit obligations find that 10% to 20% of members have outstanding debt at payday lenders, Kitsch said. She said members typically cite three reasons:
* Some members admit in focus groups they’re afraid their credit union will turn them down because they have credit issues; * Other members believe their credit union’s hours and/or location aren’t convenient when they need quick cash; and * Most members say their credit union doesn’t offer small, short-term unsecured loans that can be accessed quickly and conveniently.

iBelong commercials to air on Spanish radio

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HARRISBURG, Pa. (4/3/09)--Latino communities throughout Pennsylvania will soon be hearing “Yo pertenezco” (iBelong) radio commercials about the benefits of joining a credit union as part of Pennsylvania’s iBelong campaign.
The staff of WLCH Radio Centro in Lancaster, Pa., record iBelong radio spots in Spanish. (Photo provided by the Pennsylvania Credit Union Association)
The Pennsylvania Credit Union Association has announced that, beginning Monday, it will air two Spanish-language 30-second radio spots. The spots use a similar style and the same music from the original spots, and were recorded using voice talent from the staff of WLCH Radio Centro in Lancaster. The spots--“Never Knew” and “People are Great”--can be heard from the iBelong website. Mike Kaczenski, committee chair and CEO of Sun East FCU, Aston, said that sharing the iBelong message with the Hispanic community throughout Pennsylvania was recommended by the Advocacy Marketing Steering Committee. The spots will run as part of the campaign’s 2009 media plan, and will air in the Erie, Lancaster, Lehigh Valley, Philadelphia and Pittsburgh media markets.

Polish CUs Were Not Banks campaign nets results

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SOPOT, Poland (4/3/09)--Poland’s “Don’t Blame us. We’re not banks” campaign has generated significant publicity for credit unions in the country. The tagline appeared on billboards, newspaper ads, and in radio and television commercials. Major Polish newspapers and television news programs also reported on the two-week campaign. The message, developed by Poland’s trade association for credit unions, the National Association of Co-operative Savings and Credit Unions (NACSCU), also attracted anger from Polish banks. “The banks wanted the campaign banned,” said Pawel Grzesik, head of NACSCU’s Warsaw office. “They said the ads suggested Poland’s banks were not secure, something we never said. “We were right in defining ourselves as conservative institutions, and the current economic trends are paying us back for that position,” he added. “The Polish middle class has become very disillusioned with the banking industry.” About 70% of Poland’s banks are based in other countries. Grzesik said he expects foreign economic issues to affect Poland. “Poland is not an island, and we wanted to clearly differentiate ourselves from the banking industry’s challenges,” Grzesik said. “We received word that some of these institutions already are on the edge of liquidity crises, and we assume that financial problems in Rome, Frankfurt and Paris will soon find their way to Poland.” It’s important to spread the message that there is a different type of financial institutions, according to Grzegorz Bierecki, NACSCU president and treasurer of the World Council of Credit Unions’ board of directors. “People want to do business with institutions that will not hurt them,” he said. “Credit unions are local, member-owned institutions and the only ones people currently can trust.”