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WABC radio interviews CUNAs Hampel on MBLs

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NEW YORK and WASHINGTON (4/5/11)--In an interview on WABC Radio in New York Saturday, Credit Union National Association (CUNA) Chief Economist Bill Hampel provided information about credit unions' role in small business lending, discussed raising credit unions' member business lending (MBL) cap, and warned about the impact of interchange on consumers. The interview was on "The Small Business Authority Hour," hosted by Barry Sloane, CEO/president/chairman of Newtek Business Services, The Small Business Authority, which sponsors the program. Also on the program was co-host Laura Smith, and Michael Minerva of Capital One. Hampel first explained the credit union difference and educated listeners about credit unions, then moved on to the topic of the hour. Fifteen years ago, credit unions had few MBLs--about $2.5 billion, Hampel said. "Now it's a major growth area for credit unions," he said, adding credit unions today loan about $40 billion. Small business loans are "their fastest-growing loans." He noted that regulations and restrictions have meant that "a lot of businesses are looking for new loans." When asked about the regulatory cap on MBLs, Hampel responded: "It is ironic--credit unions didn't have a cap for their first 80 years, not until about 15 years ago. Then, when we get a limit [imposed], the loans start going up." He noted a bill in the Senate proposes to lift the cap to 27.5% of assets from 12.25%, which would "allow credit unions the flexibility to meet the needs of small borrowers. Credit unions are telling us that they have had to slow down (business lending)--not because they don't have the money but because they're bumping into the cap," he said. After the cap is lifted, credit unions can generate $10 billion-$11 billion worth of business loans, he said. "And that's without tax subsidy, without a bailout," said Sloane. "Yes. It's a deficit-free stimulus," Hampel responded. Hampel also explained what would likely happen if the Federal Reserve's proposal to limit interchange fees progresses. Consumers will be charged more for using their cards and "will likely not use the cards." "Financial institutions--banks and credit unions--need profits to stay in business. If that source of revenue goes away, they have to make it up and regulators will force them to make up the revenue," he said, adding "Free checking is an endangered species." Also, "consumers could likely see per-transaction fee on each debit card transaction." To listen to the interview use the link. The Small Business Authority, powered by Newtek is a CUNA Strategic Services provider.

CUs loan delinquency rate drop significant says CUNA economist

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MADISON, Wis. (4/5/11)--Credit union loan delinquency rates finally broke out of their past 12-month range of 1.70%-1.80% in February, falling to 1.68%, according to the Credit Union National Association's (CUNA) Monthly Credit Union Estimates for February, released Friday. "This is down significantly from the 1.83% reported by credit unions in February 2010," said CUNA Senior Economist Steve Rick. "This drop is even more impressive when you factor in that the denominator of the ratio, total loans, fell 0.4% in February and 1.1% over the last year. We expect the downward trend in loan delinquency rates to continue throughout the year with the ratio falling to 1.3% by year end."
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Share certificate balances fell 0.6% in February, while regular shares balances grew 3.5%, he said, adding, "Credit union members continue to prefer the liquidity of regular shares as they wait for the Federal Reserve to raise interest rates and then move funds to share certificates." Credit unions' savings balances totaled $816.6 billion for February, an increase from February 2010's totals of $783.8 billion, according to the monthly estimates. Regular and other savings accounts accounted for 30% of the amount, while certificates made up 26.4%; money market accounts, 22.3%, share drafts, 11.8%, and individual retirement accounts (IRAs) 9.5%. Share drafts led savings growth with an increase of 6.9%, followed by regular shares, which rose 3.5%. Money market accounts decreased 1% while IRAs grew less than 0.1%.
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On the loans side, credit union loans outstanding decreased 0.4% during February, compared with a 0.6% decrease in January 2011. Adjustable-rate-mortgages grew 0.9% and fixed-rate mortgages increased 0.1%. Used-auto loans fell 0.2%, home equity loans decreased 0.4%, and new-auto loans dropped 1.2%. Credit card loans and unsecured personal loans each fell 1.8%. Fixed rate first mortgages were the largest piece of the loans distribution share--27.2%, followed by used-auto loans at 17.9% of total loans, adjustable rate first mortgages at 12.5% of loans, and new-auto loans at 10.9%. Credit unions' 60+-day delinquencies remained at 1.7%, and the loan-to-savings ratio fell to 70%, while the liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) remained at 19%. Capital growth in February did not keep pace with asset growth, pushing down the capital-to-asset ratio to 9.92% from 10.1%, Rick told News Now. Credit unions' total dollar amount of capital is $94 billion, according to the monthly estimates.

Federation lines up speakers for Mid-Atlantic conference

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NEW YORK (4/5/11)--The National Federation of Community Development Credit Unions will hold its second in a series of regional conferences, Mid-Atlantic Regional Conference: Credit Unions and Community Finance: Lessons and Impact, April 27 in Charlottesville, Va. The event, organized in partnership with the University of Virginia’s Darden School of Business and the Virginia Credit Union League, will feature Prof. Gregory Fairchild, executive director of the Tayloe Murphy Center and associate professor of business administration at the Darden School of Business, who will unveil research analyzing the impact of community development financial institutions (CDFIs). In addition to Fairchild, confirmed speakers include:
* Randy Chambers, chief financial officer, Self-Help CU, Durham, N.C., and federation board chairman; * Daniel Merenda, vice president of planning and consultation, Council of Community Services; * Paul Phillips, president/CEO, Freedom First CU, Roanoke, Va.; * K.C. Soares, Ph. D., international management consultant and executive director, Smith Soares Associates; * Pablo DeFilippi, federation director of membership; and * Terry Ratigan, federation senior development consultant.
Participants will learn about resources available from the federal government and regional programs, designing successful strategies to meet the needs of low- and moderate-income (LMI) communities, learn from field experts and listen to community-based organizations serving these markets. The event is designed to help credit unions gain a better understanding of:
* CDFI certification and low-income designation; * Resources to serve the underserved; * Programs to meet the needs of LMI consumers; * Partnerships to expand service to the underserved; and * Tools to develop outreach strategies in LMI markets; and * Reporting requirements and the regulatory environment.

League to INJ BIZI CUs helping economy

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HIGHTSTOWN, N.J. (4/5/11)--New Jersey Credit Union League President Paul Gentile “set the record straight” with an editorial in the April 4 edition of in response to an editorial by New Jersey Bankers President John McWeeney. Gentile responded to McWeeney’s editorial, “Banks, credit unions must compete on level ground,” by noting the structural difference between banks and credit unions. “Credit unions are structured as nonprofit financial cooperatives and have volunteer boards of directors, who come from the membership,” Gentile wrote in his response, “Credit unions are helping the boost economy’s rebound ” and said they have “volunteers elected by their fellow members. There are no stock options. There is no director pay.” Credit unions enjoy their tax exemption because of that cooperative structure, Gentile explained. In turn, the average savings and loan rates at credit unions are better than at their for-profit competitors. “McWeeney failed to note that there are more than 3,000 subchapter S banks in this country that also are tax-exempt,” Gentile added. While New Jersey banks boasted profits of $860 million in 2010, a 5% increase from 2009, they pulled back on their lending, Gentile said. Meanwhile, the “real story” about New Jersey’s credit unions is their positive effect on the economy, he wrote. “Through the third quarter of [2010], credit union mortgage lending in New Jersey was up 9%,” Gentile explained. “Credit union small-business lending was up 16.6% through the third quarter. Credit unions do true small-business lending, with an average loan of approximately $123,000.” Gentile also pointed out a major advantage banks have over credit unions: the ability to raise capital. Banks can raise funds in capital markets, where credit unions can only create capital through retained earnings. This can at times slow credit union growth, but it also serves as a hedge against credit unions getting caught up in risky financial moves such as the subprime mortgage mess that was a critical factor in the financial crisis, he said. Responding to McWeeney’s contention that New Jersey credit unions should not be allowed to take municipal deposits, Gentile wrote: “In this era of high property taxes, how can the bankers argue against allowing credit unions the same opportunity to compete for municipal deposits that can help drive more competition and give municipalities a better return on their money to help lower taxes? This authority is already allowed in half the states in the country.” In closing, Gentile noted that Sen. Mark Udall (D-Colo.) introduced legislation to raise the member business lending cap on credit unions from to 27.5% of assets from 12.25%. Gentile cited the potential economic growth and job creation the measure would spur. The Credit Union National Association has estimated that the MBL cap lift could provide up to $13 billion to small businesses in the first year alone and create over 140,000 new jobs, at no cost to taxpayers. “We don’t begrudge the bankers for their success, but they must recognize that credit unions can play an even more important role in helping our economy,” Gentile wrote.

First CU opens in former USSRs Georgia

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TBILISI, Georgia (4/5/11)--The global credit union movement has come to the country of Georgia. First Credit Union (FCU) was formed last week in Tbilisi, Georgia ( April 4). The main advantage of FCU in Georgia over any other financial institution in the country is that members know where the money they deposit is going--primarily back out to other members in the form of loans, said in the article. The founders are former bankers. They say the credit union will fill a need in the Georgia financial services market, which previously consisted only of banks and micro-finance organizations. Because of the credit union’s cooperative structure, FCU members will have a relatively high interest rate on their deposited money, 17% annually which is 70% to75% higher than the average bank, said the article. Before the end of the year the credit union hopes to offers 12 new products at four branches in Tbilisi, expanding thereafter to other regions of Georgia. Mamuka Machavariani, head of FCU’s supervisory board, described the credit union as a financial institution where members not only control the money they invest, but that money is insured by law.

Top 10 INews NowI stories for March (04/04/2011)

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MADISON, Wis. (4/5/11)--National Credit Union Administration pronouncements and interchange stories dominated the News Now monthly top 10 stories list for March. The stories are: 10. Hackers steal $527,000 from LES FCU account at bank BATON ROUGE, La. (3/8/11)--Computer hackers from the Ukraine made unauthorized transfers totaling nearly $527,000 from LES FCU, Baton Rouge, La., in September 2009 through the credit union's commercial account with Capital One, according to a lawsuit filed in U.S. District Court Thursday. 9. Wall St. right target to recoup corporate losses: CUNA WASHINGTON (3/24/11)--Credit Union National Association (CUNA) General Counsel Eric Richard said the National Credit Union Administration (NCUA) is "looking at the right kind of parties" if the agency, as reported, intends to attempt to reclaim billions in securities-related corporate credit union losses from the biggest Wall Street firms. 8. NCUA: Ponzi scheme helped close St. Paul Croatian CLEVELAND, Ohio (3/14/11)--The National Credit Union Administration (NCUA) has filed an adversarial action in the U.S. Bankruptcy Court in an attempt to preclude a debtor from discharging loans that he allegedly fraudulently obtained from the failed St. Paul Croatian FCU as part of his Chapter 7 bankruptcy filing. 7. Survey: Tellers are key to satisfaction DENVER (3/16/11)--Tellers have a giant effect on how members/customers feel about a credit union or bank, according to a new study, "Customer Experience with Teller Transactions" by Prime Performance, which advises financial institutions on improving the client experience. 6. Ten inducted to CU House Hall of Leaders WASHINGTON (3/4/11)--Ten credit union leaders who have made a significant impact on the credit union movement at the local, state or national level were inducted into the Credit Union House 2011 Hall of Leaders this week. 5. Cheney warns reg burden is growing ‘crisis’ WASHINGTON (3/3/11)--Credit unions, owned by their members, already have strong incentives to treat consumers well, but they face a crushing "crisis of creeping complexity" under a steady accumulation of regulatory requirements, Credit Union National Association (CUNA) President/CEO Bill Cheney testified before a House subcommittee. 4. NCUA bans trio from CU-related work ALEXANDRIA, Va. (3/22/11)--Three former credit union employees have been banned from future work at any federally insured financial institution under prohibition orders issued by the National Credit Union Administration. 3. NAACP: Delay interchange to assess consequences WASHINGTON (3/14/11)--The NAACP, the well-known civil rights organization, wrote to the Speaker of the U.S. House urging that a congressional review be launched before the Federal Reserve Board acts to implement limits on debit card interchange fees. 2. Senate, House bills would delay Fed interchange plan WASHINGTON (3/16/11)--Credit Union National Association President/CEO Bill Cheney said last night that the proposed interchange delays introduced in both the Senate and House Tuesday give credit union members and other consumers "a ray of hope that the debit card programs they have come to appreciate may continue unchanged, at least for the short term." 1. NCUA could tighten rate-risk program rules ALEXANDRIA, Va. (3/18/11)--A proposed rule that would require federally backed credit unions to create written interest rate risk policies and develop an individual interest risk management insurance program was the central topic of Thursday's National Credit Union Administration (NCUA) board meeting.

Pierce named chairman of MCUA board

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ST. LOUIS (4/5/11)--Dennis Pierce, president/CEO of the Community
Dennis Pierce, president/CEO of Community America CU, Kansas City, Mo., was named chairman of the Missouri Credit Union Association on March 28. He is shown with outgoing chairman Stan Moeckli. (Photo provided by the Missouri Credit Union Association)
America CU in Kansas City, Mo., took the oath of office March 28 as chairman of the board of the Missouri Credit Union Association (MCUA) during MCUA's 82nd Annual Advocacy and Business Meeting. The meeting was held March 28-29 in Jefferson City. Pierce was elected to a one-year term. Outgoing chair Stan Moeckli noted that he made the MCUA record books as the first chairman to visit all of the chapters representing MCUA's constituents. Nearly 150 people converged on Jefferson City, Mo., for the two days. MCUA President Mike Beall reported on efforts by the association and the state's credit unions in a number of state and federal issues related to advocacy and compliance. He also reported on MCUA's efforts on products and services such as shared branching, and education, training and charitable giving.

Alabama State GAC meets in Montgomery

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MONTGOMERY, Ala. (4/5/11)--Alabama credit unions met last week in Montgomery for the Alabama State Governmental Affairs Conference (GAC).
Click to view larger image At the Alabama State Governmental Affairs Conference last week were, from left, state Sen. Cam Ward (R-Alabaster); Joe McGee, CEO of Legacy Community CU, Birmingham; Linda Cencula, Alabama Telco CU, Birmingham; and Patrick La Pine, president/CEO of the League of Southeastern Credit Unions. (Photos provided by the League of Southeastern Credit Unions)
Speaking on a variety of state and federal legislative and regulatory topics were: Ryan Donovan, vice president legislative affairs at the Credit Union National Association (CUNA); Herb Yolles, National Credit Union Administration (NCUA) Region III director; Alabama Credit Union Administration (ACUA) Administrator Larry Morgan; and the League of Southeastern Credit Unions' (LSCU) governmental affairs staff. Four state legislators who have supported credit union issues, including public deposits, spent time with the group during a Legislative Outlook. They urged credit unions to visit lawmakers and provide information about legislation. Often they can't make informed decisions without knowledge from the groups the legislation would affect, the lawmakers said. Afterward, 38 lawmakers attended the GAC's Legislative Reception and interacted informally with credit unions. During the visits to the state house, credit unions addressed a variety of topics--including public deposits and interchange fees--with lawmakers. Although the interchange fee is a federal issue now, the merchants have been asking state governors to write their members of Congress. The meetings were especially important with so many new faces in Montgomery, said LSCU.
Click to view larger image Speaking at a regulatory roundtable during the League of Southeastern Credit Unions' Alabama State Governmental Affairs Conference last week in Montgomery, Ala., were, from left, National Credit Union Administration Region III Director Herb Yolles and Alabama Credit Union Administration Administrator Larry Morgan.
During the regulatory roundtable, ACUA's Morgan said he plans this year to meet with all state-chartered credit unions, beginning with the ones he doesn't already know. He encouraged attendees to contact him when they have a problem. Morgan said he's willing to work with credit unions before it's too late or to look at a regulation that might be outdated. NCUA's Yolles praised Alabama's credit unions for performing better than the national average and noted that interest-based risk is an area that could be a concern for credit unions. He urged credit unions to communicate with their examiners and to question anything they don't understand. Credit unions have rights and must feel empowered to exercise them, Yolles told the group. He also addressed the corporate stabilization plan and answered questions on that subject. CUNA's Donovan discussed CUNA's strategy for interchange and member business lending legislation. On interchange, CUNA uses a five-point plan, with the first point centering on making sure the problem is solved. In 2010, bankers spent more than $30 million in lobby efforts, compared with credit unions' $3 million, he said. Donovan urged credit unions to take part in the movement's Action Alert and rally their members because that's one area where bankers can't compete. Will McCarty, LSCU senior vice president of governmental affairs, noted that 300 bills--well below the norm--have been introduced in the 2011 Alabama Legislature session. On the regulatory side, Scott Morris, LSCU director of compliance, advised credit unions to keep up with regulation changes. During the events, Family Security CU, Decatur, received the President's Award for most overall money raised for the political action committee, and the Cheaha Chapter was presented the Leadership PAC fundraising award for raising the most money in a chapter.