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U.S. Central 1Q financials reflect more OTTI charges

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LENEXA, Kan. (5/3/10)--U.S. Central FCU's latest financial report indicates its projection of losses in existing investments has moderated during first quarter 2010, with total projected losses largely flat with fourth quarter 2009 levels. However, other-than-temporary-impairment (OTTI) charges increased for certain bonds. U.S. Central recorded a $45.4 million net loss for the quarter, compared with $507.3 million of losses in first quarter 2009. In both instances, U.S. Central's net losses were driven primarily by OTTI charges, which totaled $57.7 million and $519.5 million in first quarters 2010 and 2009, respectively. First quarter 2010 OTTI charges of $57.7 million were caused by further deterioration of certain non-agency residential mortgage backed securities. Excluding the OTTI charges, U.S. Central recorded net gains on financial instruments of $3.8 million, compared with $4.7 million for first quarter 2009. "As a result of cumulative OTTI charges recorded through the first quarter of 2010, U.S. Central's retained earnings have been fully exhausted, and all [Paid- in Capital] and [Membership Capital Shares] have been fully depleted. In addition, the Capital Note has been depleted by $650.3 million," the financial report said. The capital note refers to a $1 billion capital note U.S. Central received on Jan. 28, 2009, from the National Credit Union Share Insurance Fund. U.S. Central's regulatory capital ratio and retained earnings ratio, as of March 31, equaled 6.9% and 1.8%, respectively, the same as in March 31, 2009. Using actual capital balances, the capital ratio and retained earnings ratio were 0.9% and 0.0% for first quarter 2010, compared with 5% and 0% as of March 31, 2009. Net interest income for the Lenexa, Kan.-based U.S. Central totaled $14.3 million. That compares with $24.3 million for first quarter 2009--a 41.1% or $10 million decrease. Fee income totaled $6.1 million, compared with $5.4 million in first quarter last year. That marks an increase of $700,000 or 13.4%. Operating expenses were $11.7 million--a decrease of $1.1 million or 8.8% from first quarter 2009. Assets dropped $2.7 billion or 7.7% to $32.4 billion from $35.1 billion as of Dec. 31, 2009. The assets reflect primarily a $2.3 billion decrease in cash held at the Federal Reserve Bank of Kansas City. As of March 31, total funding--excluding capital accounts--was $38 billion, compared with $41.5 billion on Dec. 31, 2009. That is a decrease of 8.4% or $3.5 billion. Within this category, borrowed funds dropped by $5.8 billion, reflecting the repayment of U.S. Central's borrowings under NCUA's Credit Union System Investment Program (CU SIP). Members' share and certificate accounts rose by $2.3 billion. Member accounts remain U.S. Central's primary source of funding, totaling $28.8 billion at March 31. Its borrowings of $164.3 million under NCUA's Credit Union Homeowners Affordability Relief Program (CU HARP) will mature in fourth quarter. U.S. Central owns certain investments securities guaranteed by monoline insurers, including Financial Guaranty Insurance Co. (FGIC) and Ambac Assurance Corp. In fourth quarter 2008, U.S. Central concluded that FGIC had insufficient funds to pay claims. In fourth quarter 2009, it concluded the same for Ambac. OTTI charges have been recorded on securities insured by the two companies. Ambac is expected to pay 25% of required claims but nothing is expected from FGIC. For the full first quarter financial report, use the resource link.

IWall St. JournalI notes CUs mortgagejumbo loans

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NEW YORK (5/3/10)--More lenders--including credit unions--are stepping up to offer jumbo loans or mortgages that exceed $729,750, and The Wall Street Journal points to two credit unions' programs in particular in its Friday issue. "Since the mortgage crisis, banks haven't been eager to make large loans without federal protection, so the market for such mortgages suffered, crimping sales of expensive homes," said the article. However, the money is gradually becoming more available, said the article. It notes that the New York region benefits from having a number of financial institutions that make the loans--"from national lenders and investment firms to credit unions and smaller banks." "Credit unions have also become a popular jumbo outlet," said the Journal. "They certainly filled the void locally...You used to never see a credit union do mortgage lending," said the article, quoting Guy Cecala, publisher of Inside Mortgage Finance. "Long Island's Teachers FCU offers jumbo loans up to $1.5 million with 20% down, while Bethpage FCU will make loans up to $2.5 million, though it requires a 45%^ down-payment on those loans," said the Journal noting that the availability of money is improving. For the full article, use the link.

Third nomination received for CUNA board special election

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MADISON, Wis., and WASHINGTON (5/3/10)--The Credit Union National Association (CUNA) has received a third nomination for the District 5, Class B CUNA Board position, which is up for a special election. The latest nomination announced is for William Jacobs, White Sands FCU, Las Cruces, N.M. Other candidates are Angela S. McCathran of People's Trust FCU, Houston, and Roger Heacock, president/CEO of Black Hills FCU, Rapid City, S.D. The nomination deadline is at the close of the business day Wednesday. A special election will be conducted by written ballot beginning Friday and ending June 4. District 5 includes Arizona, Colorado, Kansas, Montana, Nebraska New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah and Wyoming. The seat is currently held by CUNA Chairman Kris Mecham, who resigned, effective June 1. He will leave the U.S. this summer to perform mission work in Mongolia for his church. The successful candidate's term of office will begin immediately and will expire at the adjournment of CUNA's 2013 Annual General Meeting. Nominees must be an employee or voting board member of the nominating credit union. The nomination must be in writing and seconded by two other credit unions of the same size group from the district. Credit unions wishing to nominate a candidate should complete a nomination form and obtain the candidate's consent and two seconding nominations. Nomination forms will be accepted by fax at 608-231-4878, by email at thanson@cuna.coop, or by hard copy at 5710 Mineral Point Road, Madison, WI 53705.

Vermont card acceptance bill moves to governors desk

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BURLINGTON, Vt. (5/3/10)--A card acceptance bill that could affect how consumers use their credit and debit cards at merchant locations in Vermont has passed the state Senate, according to the Association of Vermont Credit Unions (AVCU). Vermont Gov. Jim Douglas is expected to sign the legislation into law when it arrives on his desk, AVCU said. On Thursday, the Vermont House of Representatives voted to send a scaled down version of S. 138 back to the Senate by a vote of 139-0 (Newslines Express April 30). AVCU, Vermont credit union leaders and experts from payment processors, card companies and Vermont banks have told legislators that S.138 was bad consumer legislation that could negatively affect the ability of consumers to use their credit and debit cards at merchant locations statewide. Although all parties on the card-issuing side of the merchant transaction--and card networks themselves--still strongly oppose the bill, opposition by AVCU and others resulted in improvements, AVCU said. Key changes include:
* Removal of language that could have allowed surcharging by merchants for payment by credit or debit card; * The setting of an allowable minimum plastic card transaction of no more than $10, which must be prominently displayed at point of sale. Merchants previously sought a limitless minimum of their choosing; * Merchants will not be required to accept plastic at all of their locations; however, this was already the case under most network regulations; * Statutory penalties for violations by networks of certain provisions having to do with locations, minimums and discounts have been limited to offenses in those areas only, as opposed to prior language which opened the door for penalties against all kinds of other possible violations; * A confusing definition of “processor,” which could have unintentionally included credit union card processors--as opposed to merchant processors--or credit unions as processors, has been eliminated; and * The bill’s provisions apply only to merchants with a physical presence in Vermont.
The House version also moved the effective date for many of the provisions from July 1 to Jan. 1. The House bill altered the Senate version’s mandate that Vermont’s financial institution regulator conduct a study of the impact of direct interchange fee negotiation between merchants and card issuers. The report, due by Dec. 15, requires the regulator to compile results of already performed studies and make recommendations back to the legislature. One provision never in contention by any of the parties remains unchanged between House and Senate. It makes the possession of card skimming devices illegal and carries a penalty of 10 years imprisonment and up to a $10,000 fine.

Savings up 0.7 loans down 0.4 in March

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MADISON, Wis. (5/3/10)--Credit unions’ savings nationwide are robust, while credit unions collective loan growth is still meager, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly review of credit unions for March. Credit union loans outstanding decreased 0.4% during March, up from a 0.6% decrease during February. Credit union loans in March totaled $578.8 billion, compared with $580.9 billion in March 2009. Fixed-rate mortgages led loan growth, increasing 0.7%, followed by adjustable-rate mortgages and unsecured personal loans, which rose
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0.4% and 0.1%, respectively. On the decline were new-auto loans (-2.1%), other mortgages (-1.8%), and credit card loans and home equity loans (-0.4%). Used-auto loans decreased less than 0.1%. “The recent results show that credit union loan growth remains very weak while savings inflows are strong,” Mike Schenk, CUNA vice president of economics and statistics, told News Now. “Several factors are contributing to the weak loan growth. For one, members appear to be concerned about debt loads and are paying down balances in an effort to adjust to new economic realities. “In addition, credit unions remain concerned about the specter of rising interest rates and are selling substantial portions of fixed- rate first-mortgage originations,” he added. Credit union savings balances increased 0.7% in March, down from a 1.9% increase during February. Credit union savings in March totaled -
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$768.5 billion, compared with $741.2 billion in March 2009. Regular shares grew 2.7%, followed by money market accounts (2%) and individual retirement accounts (1.7%). One-year certificates and share drafts decreased 0.9% and 2.6%, respectively. Credit unions’ 60-plus-day delinquencies decreased slightly to 1.8% in March. “One of the more promising developments seen in the data is that the delinquency rate inched down--the first time that’s happened in more than a year,” Schenk said. “An improving economy and recent labor market growth may mean this is the beginning of a trend--but we'll have to wait to see if this is the case. In any event, the decline seems especially significant because it occurred even though loan balances had declined marginally.” The loan-to-savings ratio remained at 74% in March. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 19%. The movement’s overall capital-to-asset ratio remained at 10% in March. The total dollar amount of capital is $90 billion.

SECUs youth week challenge nets 2.3M deposits

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RALEIGH, N.C., and MADISON, Wis. (5/3/10)--State Employees' CU (SECU), based in Raleigh, N.C., saw 13,000 young members save $2.3 million in deposits in one week during the National Youth Saving Challenge, which it held during National Credit Union Youth Week (April 19-23).
The Dobson, N.C., branch of Raleigh-based State Employees' CU and its youth program mascot, Fat Cat, welcomed students from a local school during its Youth Saving Challenge, the week of April 19-23. (Photo provided by the State Employees' CU)
SECU also opened 527 new youth accounts during the nationwide campaign spearheaded by the Credit Union National Association (CUNA). Challenge prizes at SECU included extra deposits of $50 to $100 to randomly selected winners. To promote the Saving Challenge, branch personnel at SECU's 230 locations created displays, held financial education activities, and presented workshops on financial topics in schools and communities. SECU's youth programs--Fat Cat for ages 12 and under, and Zard for teens up to 19 years old--focus on financial education. Both have dedicated educational websites. www.cufatcats.org and www.teenzard.org, plus newsletters to complement the specialized savings accounts. The $20 billion asset SECU has a Fat Cat mascot and uses Fat Cat "Smart Money" workbooks to teach financial concepts to its youngest members. It incorporates the Biz Kid$ television show and National Endowment for Financial Education (NEFE) curricula for middle school and high school students, respectively. CUNA will have nationwide results this week, and News Nowwill report the results as well as a roundup of some of the activities credit unions conducted to encourage youth to Get in the Saving Game.

How Wright-Patt saved members 26M

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FAIRBORN, Ohio (5/3/10)--Wright-Patt CU, Fairborn, Ohio, saved its members more than $26 million in direct financial benefits during 2009. The Credit Union National Association (CUNA) estimated in its annual Benefits of Membership report that the credit union provided $1,268 in savings throughout the year for households with “high use” of the credit union. CUNA’s report compares credit unions’ dividend rates, loan rates and fees to those of other banking institutions. The 2009 report shows an increase of more than $3 million for the credit union from the previous year’s report. The following shows how Wright-Patt’s products and services compared to area banks:
* Classic credit card: 8.70% lower rate; * Credit card late fee: $15 lower fee; * Regular savings ($1,000 balance): 0.52% higher return; * Checking nonsufficient funds fees: $5 lower fee; * Mortgage closing costs: $359 lower; and * 60-month new car loan: 1.72% lower rate.
In the past two years, Wright-Patt also paid more than $7 million in excess earnings to its membership in special patronage dividends. Wright-Patt has $1.7 billion in assets.

Mississippi CUs raise 13000 for tornado victims

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YAZOO CITY, Miss. (5/3/10)--Mississippi credit unions have raised $13,000 and counting for victims of a tornado that destroyed homes and killed 12 individuals in the state on April 24. “I was in tears when I saw the response,” said Dawn Parks, CEO of BenchSmart CU, Yazoo City. Yazoo City was hit hardest by the storm. Parks had asked credit unions using the Mississippi Credit Union Association’s (MSCUA) listserv to help the storm victims. After the message, donations began pouring in from credit unions around the state. Parks and her staff are shopping, assembling and delivering care baskets containing personal care items for individuals who lost their homes or suffered severe damages as a result of the storm. She said she was passing out the baskets as fast as she could Friday before more storms were scheduled to hit the area last weekend. “People have lost their homes and cars, and they can’t get to the [American] Red Cross,” Parks said. “Their faces turn white when we pull up [with the baskets].” So far, BenchSmart has delivered about 60 baskets, and hopes to deliver another 60 this week, depending on funds. Parks said she anticipates her staff will continue shopping for, filling and delivering the baskets every day this week. “It’s going great so far,” Parks said. “We’ve also had a few board members come and volunteer.” Parks said it’s important to her that credit union representatives deliver the baskets. “We wanted them to be touched by a credit union employee,” she said. It’s unknown how many BenchSmart members suffered damage to their homes, but Parks said she hopes to have a count next week. The credit union did not suffer any damages, and neither did credit union staff. “We were all blessed, which made us capable to help others,” she said. “It’s been an awesome, humbling experience.”

CU System briefs (04/30/2010)

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KANSAS CITY, Mo. (5/3/10)--The Association of Corporate Credit Unions (ACCU) has appointed Larry Harmon as interim executive director. He replaces Brad Miller, who recently became president/CEO of Southeast Corporate FCU. Harmon is president of Qversal Financial Solutions LLC, based in Kansas City, Mo. Qversal provides consulting services to corporates, credit unions, broker-dealers and investment advisors on regulatory compliance, financial-project initiatives, mergers and enterprisewide risk- management initiatives. Harmon has more than 30 years' experience in the financial industry, with expertise in investments, derivatives, operations, payment systems and audit, and strategic planning and budgeting. "Our first objective will be to work closely with corporates as the [National Credit Union Administration] finalizes plans for a legacy asset program, and the pending developments with the rules and regulations governing corporates," said Harmon. Steve Roy, ACCU chairman and president/CEO of TRICORP FCU, Portland, Maine, noted Harmon's background with corporate credit unions, credit unions and the broader financial industry. "His understanding of the regulatory and compliance issues, coupled with a deep knowledge of financial analysis, will prove invaluable as we navigate the changing corporate environment," Roy said ... * MADISON, Wis. (5/3/10)--Brian McCrory has been appointed to represent the Irish League of Credit Unions (ILCU) as a director on the World Council of Credit Unions (WOCCU) board, replacing board representative Mark Bailey. McCrory, in his first year as an ILCU board member, spent six years on the ILCU Supervisory Committee and was chair in 2006-2007. He serves on the Legislation and Administration committees, is chair of the Northern Ireland Committee and editor of CU Focus magazine. He has also served on advisory committees to the first and deputy first ministers' offices in Northern Ireland's Legislative Assembly and as director of the Northern Ireland Social Economy Forum. An educator, he is credit committee chair of Belfast Teachers' CU Ltd. Bailey's original WOCCU board term expires in July, making McCrory eligible to run as an incumbent for another term. Earlier, it was announced that Anne Cochran, president/CEO of the Louisiana Credit Union League, was elected to the WOCCU treasurer position, which Bailey also had held (News Now April 22) ... *
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CHICAGO (5/3/10)--National Credit Union Administration (NCUA) Chairman Deb Debbie Matz, right, and NCUA Board Member Mike Fryzel, left, meet with Illinois Gov. Pat Quinn, center, during the Illinois Credit Union League’s 80th Annual Meeting in Chicago last week. Quinn--a staunch supporter of credit unions and a lifelong credit union member--and Matz were both keynote speakers at the event, which began Thursday and ended Saturday. Nearly 690 executives representing 120 credit unions attended the conference, said the league.(Photo provided by the National Credit Union Administration) ... * BOULDER, Colo. (5/3/10)--Elevations CU and Longs Peak CU announced Thursday plans to merge, subject to a vote by the members of Longs Peak CU and approval by regulators. If approved, the merger would take effect June 1, with each credit union operating separately until the organizations' integration is complete, which would require several months, said a press release. Elevations would be the name of the surviving organization, with Gerry Agnes continuing as president/CEO. Long Peakes CU President Lisa Cortese would become vice president of the Loveland market. The merger would result in an expanded Front Range market, which will include Boulder and Broomfield Counties plus the city of Loveland in Larimer County. Longs Peak Board Chair Bob Jansma said the merger "would mean a stronger credit union better able to meet the financial needs of all members." The merged credit union would have nine branches and additional products and services ... * PALM BAY, Fla. (5/3/10)--An off-duty security guard was credited for thwarting an attempted robbery of a Palm Bay, Fla., branch of Melbourne-based Space Coast CU Thursday afternoon. The suspect, Floyd Francis, 23, was arrested after the guard, Rueben Torres noted that Francis put a plastic bag on his head while waiting in line. Torres went to his car and got his gun, a 9mm, and pulled it on the would-be robber, who was weaponless and gave up (Orlando Sentinel and Florida Today April 29) ... * MONTPELIER, Vt. (5/3/10)--Gordon A. Fish, a longtime leader in Vermont's credit union movement, has died, the Association of Vermont Credit Unions has learned (Newslines Express April 30). Fish served on the board of the then-called Vermont Credit Union League from 1961 through 1969 and from 1978 to 1983. He was second vice chair of the board in 1978 and first vice-chair from 1979 through 1982. He also was a league appointed delegate to meetings of the Credit Union National Association, and was active in his chapter and on league committees. Fish was a board member and chairman/president of Fairbanks CU (now Northern Lights FCU) for many years ...

Illinois league foundation hold elections

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NAPERVILLE, Ill. (5/3/10)--The Illinois Credit Union League (ICUL) elected its table officers for the coming year at its 80th Annual Convention Friday. Also, the Illinois Credit Union Foundation (ICU Foundation) elected officers to its board. With a Hawaiian theme of “Surf’s Up: Catch a New Wave,” ICUL’s three-day convention concluded Saturday in Chicago. Dennis Hall, CEO of I.H. Mississippi Valley CU in East Moline, was elected chairman for a one-year term. Hall has been on the league
Incoming Illinois Credit Union League (ICUL) Chairman Dennis Hall (left), receives the oath of office from outgoing league chairman, John Bratsakis, during the ICUL’s annual convention last week.
board, representing the Illinois Quad Cities Chapter of Credit Unions since 2001 and was a member of the legislative, executive and Credit Union Service Group committees. He will serve in this capacity for the ICUL Service Corporation (LSC). Outgoing chairman John Bratsakis will continue as ICUL director for the Thomas W. Doig Chapter of Credit Unions, a position he has held since 2001. Bratsakis is senior vice president of Baxter CU in Vernon Hills. Geraldine Burek, CEO of South Division CU, Evergreen Park, was elected as vice chairman. Burek has served as ICUL director since 2003, representing the Chicago Metro Chapter of Credit Unions. She also was chairman of the annual convention and legislative committees, served on the executive committee, and on the Credit Union Political Action Council (CUPAC) board for 21 years. She began serving on the ICU Foundation board last year. Burek will also serve as LSC vice chairman. Pete Paulson, CEO of Corporate America Family CU, Elgin, was elected as secretary/ treasurer. He has served as ICUL director representing
Click to view larger image New officers and board members of the Illinois Credit Union Foundation board of directors include: in front, sitting from left: Thomas Pierce, foundation secretary/treasurer and CEO, Canals & Trails CU, Lockport; Greg Worthen, foundation chairman and vice president, Olin Community CU, Bethalto; and David Mooney, Foundation vice chairman and CEO, Alliant CU, Chicago. In back, standing from left: Geraldine Burek, CEO, South Division CU, Evergreen Park; Ed Jacob, CEO, North Side Community FCU, Chicago; Peggy Cummins, CEO, Three Rivers Community CU, Mt. Carmel; and Michael Lee, president, Midwest region, Members United Corporate FCU, Warrenville. (Photos provided by the Illinois Credit Union League)
the Fox Valley Chapter of Credit Unions since 2003. Paulson also participated on the annual convention and executive committees, and just completed chairing the legislative committee. He was also on the LSC board for four years. Also as part of the convention, the ICU Foundation held its annual meeting and elected new officers: Greg Worthen, vice president at Olin Community CU, Bethalto, as foundation chairman; David Mooney, CEO, Alliant CU, Chicago, as vice chairman; and Tom Pierce, CEO, Canals & Trails CU, Lockport, as secretary/treasurer. Current board members include: Burek; Peggy Cummins, CEO, Three Rivers Community CU, Mt. Carmel; John Fiore, CEO, Motorola ECU, Schaumburg; Janet Francoeur, CEO, Riverside Community CU, Kankakee; Ed Jacob, CEO, North Side Community FCU, Chicago; Michael Lee, president, Midwest region, Members United Corporate FCU, Warrenville; and Thomas Pierce, CEO, Canals & Trails CU, Lockport.