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NEW: CenCorp Members Vote To Merge With Alloya Corporate

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WARRENVILLE, Ill., and SOUTHFIELD, Mich. (Filed 2:15 p.m. CDT 4/4/13)--The members of $1.4 billion Central Corporate CU (CenCorp) today voted overwhelmingly in favor of its proposed merger with $1.4 billion Alloya Corporate FCU.

The vote was 190 to 8. This follows the National Credit Union Administration's approval of the merger on March 14. The effective date of the merger is April 30.

"This merger adds 300 members to Alloya's current membership, plus significant scale," noted Charles W. Furbee, Alloya's current CEO. "Alloya is well-positioned for continuing success."

"We are excited about the synergies that the merger brings," stated William A. Walby, current CEO of CenCorp. Walby will be Alloya's CEO after the merger. "Members saw additional value in combining two strong credit union-owned organizations to deliver their financial and correspondent service needs into the future."

As the synergies are realized, the annual expenses of the combined corporate are expected to fall by several million dollars, while adding products and features. The increased scale will create additional opportunities, said the corporates.

The combined corporate will conduct business in 10 core states, providing investment, financial, lending and correspondent services to more than 1,400 member-owner credit unions. Headquartered in Warrenville, Ill., Alloya will also conduct major operations from offices in Southfield, Mich., and Albany, N.Y.

For more information use the link.

Patent Lawsuits To Be Consolidated

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WILMINGTON, Del. (4/4/13)--The Judicial Panel on Multidistrict Litigation has ruled to consolidate eight ATM patent infringement lawsuits filed against financial institutions and small businesses brought by a single patent holder, Automated Transactions LLC (ATL).

Monday's decision rejected ATL's request to keep the cases separate, and is seen as a blow to ATL. The cases will be consolidated before Judge Sue Robinson of the U.S. District Court for the District of Delaware, who has previously ruled one of ATL's patents is invalid.

ATL, which says it owns 13 ATM patents, has sent demand letters to a number of financial institutions, including credit unions and community banks, as well as small businesses in a number of states. The letters offer a license to its patents and threaten litigation if an agreement is not reached.

ATL lost similar litigation last year against IYG Holding Co., the major shareholder of 7-Eleven, when a Federal Circuit Appeals Court ruled 7-Eleven did not infringe ATL's patents and that seven of the 13 patents were invalid because they claimed technology that is not patentable.

The Credit Union National Association is "aware of ATL's demands against ATM owners, including credit unions and other small financial institutions, and is actively monitoring these cases," said Robin Cook, CUNA's assistant general counsel for special projects.

The cases being transferred involve five banks in Delaware, Massachusetts and New Hampshire, and two Vermont credit unions, but the panel noted as many as 28 actions with potential tag-along actions in 10 other districts could become involved.

The two Vermont credit unions--New England FCU, a $916 million asset credit union based in Williston, and Heritage Family FCU, with $335 million assets in Rutland--support the motion to transfer their cases, said the panel's transfer order.

In transferring the cases, the panel disagreed with ATL's arguments that the cases had too few common elements because defendants use a variety of ATMs. The panel noted the potential actions and tag along actions, and said "centralization will allow a single judge to preside over discovery relating to the 13 related patents at issue and should aid the consistent construction of the patents' claims."

The eight actions address "common questions of fact," the panel said. Also, consolidation would be convenient for parties and witnesses, and "promote the just and efficient conduct of the litigation."

Institutions whose cases were consolidated include IYG Holding Co., Trustco Bank (Delaware), Southbridge Savings Bank (Massachusetts), Mascoma Savings Bank (New Hampshire) and Northfield Savings Bank (Vermont).

CU System Briefs (04/04/2013)

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  • AUSTIN, Texas (4/4/13)--Texas Governor Rick Perry Monday signed a proclamation declaring April as Financial Literacy Month, according to the Texas Credit Union League (LoneStar Leaguer April 3). "The issuance of this proclamation brings greater awareness to the problem of financial illiteracy in our state and in our country," said Texas Credit Union Foundation Executive Director Courtney Moran. "Furthermore, it helps promote the importance of getting involved in the financial education of our youth as well as adults," she added.  The governor's proclamation said, "Sound financial management is an important skill for all Texans.Whether saving for money for a home, college education or retirement, budgeting and successful financial planning are crucial to reaching our goals." The proclamation continued, "Through careful money management, Texans of all income brackets can add to their economic security and create a better quality of life. We can achieve financial stability and independence by establishing realistic and comprehensive plans that identify financial weaknesses and build on financial strengths." He urged all Texans to "recognize the importance of saving, investing and having clear financial goals. Through the application of sound financial planning principles, we can live well now and in the future." …
  • MAPLE GROVE, Minn. (4/4/13)--Topline FCU President/CEO Harry Carter announced he will retire at the end of 2013, said the $340 million asset, Maple Grove, Minn.-based credit union.  Tom Smith, Topline's executive vice president and chief operating officer, will succeed Carter. Smith has more than 21 years as an executive in the financial services industry. He joined the credit union in 2009 as vice president and chief lending officer. Carter has been active in the credit union industry for 22 years, including serving as chair of the Minnesota Credit Union Network Board of Directors. Prior to joining Topline in 1999, Carter held senior officer roles at a large Minneapolis advertising agency, a large Michigan bank, and another large Minnesota credit union …

Top 10 News Now Stories For March

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MADISON, Wis. (4/4/13)--An article about HarborOne CU's membership vote to convert the $1.9 billion asset Brockton, Mass., credit union to a mutual cooperative bank charter was the most-read News Now article in March.

The top 10 articles for the month include:

10. Overdraft Bill Addresses Problems That Don't Exist At CUs

WASHINGTON (3/21/13)--A bill introduced this week that would cap overdraft fees is "legislation that seems to address a problem that doesn't exist in the credit union system," according to the Credit Union National Association.

9. Brown, Moran Introduce Privacy Notice Bill In Senate

WASHINGTON (3/21/13)--Legislation to end the redundancy of privacy notices was just introduced in the Senate. The bill (S. 635) diverges slightly from the language of a similar bill passed recently in the House. For instance, the Senate bill would require credit unions and other financial institutions to make their privacy policy always accessible in some form in order to qualify for the bill's exemption from sending annual privacy notices.

8. Privacy Notice Bill Could See House Vote Next Week

WASHINGTON (3/8/13)--H.R. 749, the Eliminate Privacy Notice Confusion Act, is scheduled for a full U.S. House Tuesday. The House just announced that the item is on its suspension calendar for that day.

7. Improving Loan Losses, New Auto Loan Growth Fuel Strong CU Earnings

MADISON, Wis. (3/5/13)--The National Credit Union Administration's just-released 2012 credit union data confirm that the trends the Credit Union National Association had reported on throughout 2012 continued in fourth quarter, and that 2012--from almost every vantage point--was the best year for credit unions since before the start of the Great Recession in 2007, according to a CUNA economist.

6. CUs To Furloughees: 'Be Assured, We've Got Your Back'

MADISON, Wis. (3/4/13)--In a stellar example of credit unions putting members' interests above the bottom line, credit unions across the U.S. are rallying to assist members with furloughs that began at midnight Friday after the federal government's stalemate on wide-ranging budget cuts, called sequestration.

5. Indirect Auto Lenders Put On Notice By CFPB

WASHINGTON (3/22/13)--The Consumer Financial Protection Bureau on Thursday reminded indirect auto lenders of their compliance responsibilities under the Equal Credit Opportunity Act.

4. NCUA Seeks Comment On Fixed-Asset Rule Clarifications

ALEXANDRIA, Va. (3/14/13)--At what was a very brief meeting this morning, the National Credit Union Administration has just voted to seek comments on a proposal that clarifies and reorganizes portions of its rule addressing federal credit union ownership of fixed assets.  Comments will be due 60 days after the plan is published in the Federal Register.

3. NCUA Releases FCU Fair Lending Letter

ALEXANDRIA, Va. (3/19/13)--The National Credit Union Administration's criteria for conducting a fair lending exam or off-site supervision contact are addressed in a new letter to credit unions () released today.

2. NCUA Liquidates I.C.E. FCU

ALEXANDRIA, Va. (3/15/13)--I.C.E. FCU, Inglewood, Calif., has been liquidated by the National Credit Union Administration.

1. HarborOne Members Vote To Convert To Bank

BROCKTON, Mass. (3/18/13)--Members of HarborOne CU in Brockton, Mass., have voted to convert the $1.9 billion asset credit union to a mutual cooperative bank charter.

Texas CUs Vote Yes On League Consolidation

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AUSTIN, Texas (4/4/13)--Member credit unions of the Texas Credit Union League voted overwhelming in favor of a single cooperative organization, the Cornerstone Credit Union League, which, if passed by two other states, would consolidate TCUL, the Arkansas Credit Union League, and the Credit Union Association of Oklahoma.

"A tremendous amount of work, research, and consideration has gone into this measure," TCUL President/CEO Dick Ensweiler said. "I applaud our member credit unions for recognizing and respecting the power of collaboration."

Member credit unions of the Arkansas league will vote on the measure April 11. The Oklahoma association's members' vote will be during its annual conference May 13-15. Delegates voting from all three states must vote yes on the measure for it to become official.

Texas credit union delegates cast their favorable votes Wednesday afternoon during TCUL's special member business meeting in Austin, which was held in conjunction with its Texas Governmental Affairs Conference and Member Meeting & Expo. The conference continues through Friday.

"This is an exciting time for our movement, and the first step toward the realization of the Cornerstone Credit Union League," said Paul Trylko, president/CEO of Amplify FCU and chair of  TCUL's board of directors. "We have an extraordinary amount of talent and passion in all three organizations, and I'm confident in the future of the Cornerstone Credit Union League."

If credit unions in Arkansas and Oklahoma vote yes, an initial board of directors will assume positions as the combined league's board, with three directors from Arkansas, three from Oklahoma, and 12 from Texas. The new league would then become official on July 1.

The three leagues, which have worked together closely over the years, signed an agreement to consolidate on Jan. 3.

Media Stories Relate Reasons For CU Growth

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NEW YORK (4/4/13)--Low costs are cited as a primary reason many consumers switch to credit unions in two articles that originally appeared in and were picked up Tuesday in FOX Business.

Consumers are turning to credit unions for one reason above all others: lower cost, says Charles F. Beaucamp, assistant professor of finance at Middle Tennessee State University, Murfreesboro, in "Lower Costs Drive Credit Union Growth."  He offers a brief history of credit unions, explains how they differ from banks, and looks at the pros and cons of using credit unions for savings.

"The major difference between banks and credit unions is their respective organizational structures," Beaucamp said. "Owned by equity investors, banks are organized as for-profit entities that serve both the individual and business communities," he said, adding credit unions are organized as not-for-profit financial cooperatives owned by their depositor members.

"The recent growth in credit union membership can be traced to a large migration of clients from larger banks over to credit unions," he said. "This has not been so much a backlash against banks, but simply consumers searching for lower-cost alternatives to traditional banks."

The article noted many banks instituted fees, "thus driving up the costs to consumers. On the other hand, credit unions have not experienced these cost increases and have leveraged their not-for-profit operating structures to offer competitive rates."

In "What Can You Gain by Ditching Your Large Bank," says banks and low interest rates are pushing consumers to look for alternative ways to bank. "Banks have steadily increased fees in the past two years," the article said, citing a Bankrate Checking Survey, which found 72% of America's largest credit unions offer free checking, compared with 39% of banks. Banks dropped to 39% from 45% in 2011 and 76% in 2009, it said.

More than 5.6 million Americans recently closed their bank account, with 214,000 opening new accounts at a credit union, said Andrew Schrage, co-owner of Money Crashers."Two of the best alternatives to banks for keeping your money in a place where it also can gain a return are credit unions and money market mutual funds," he said.

"Many consumers believe that if you join a credit union, you have to give up access and convenience, but that is no longer the case," said Boeing Employees' CU (BECU) spokesman Todd Pietzsch in the article. "At BECU and most credit unions, you will find similar services to a bank. And as credit unions work together in a cooperative ATM network, members have access to over 30,000 surcharge-free ATMs throughout the country," Pietzsch said.

To view the articles, use the links.

Marketing/BD Council Announces Exec Committee

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MADISON, Wis. (4/4/13)--The CUNA Marketing and Business Development Council announced its executive committee and officers during the council's 20th annual conference, March 24-27 in Anaheim, Calif.

Michelle Hunter, senior vice president marketing and development for Credit Union of Southern California in Brea, Calif. was elected council chair. Kathryn Davis, senior vice president of marketing and human resources for Xceed Financial CU in El Segundo, Calif. will become vice chair, and Andy Reed, manager of business development for American Airlines FCU in Fort Worth, Texas will serve as secretary/treasurer.

Newly elected to the executive committee is Jason Lindstrom, chief marketing officer for Belvoir FCU in Woodbridge, Va.

The CUNA Marketing and Business Development Council executive committee also includes:

  • Amy Davis, vice president of marketing, Red Canoe CU, Longview, Wash.;
  • Nancy Hutchinson, senior vice president of marketing and business development, Minnesota Power Employees CU, Duluth, Minn.;
  • Sean McDonald, director of business development, Mid-State FCU, Carteret, N.J.;
  • Mia Perez, chief administrative officer, Louisiana FCU, La Place, La.;
  • Hilary Reed, vice president of marketing, Bucks First FCU, Bristol, Pa.;
  • Amber Scott, vice president of marketing, 1st MidAmerica CU, Bethalto, Ill.; and
  • Debra Trautman, manager of marketing for the Maine Credit Union League.

Delaware League Reports Mergers' Impact On State

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NEW CASTLE, Del. (4/4/13)--Since the year 2000, Delaware has seen the merger of almost 20 credit unions.

The most recent merger of two Delaware credit unions occurred in mid-March, with $5 million Preferred Financial FCU, Wilmington, merging into $44 million Eagle One FCU, Philadelphia. This month Eagle One will acquire $9 million Lancaster (Pa.) Postal Employees FCU, the Delaware Credit Union League said (DELCU News Spring/Summer 2013).

Reasons for the mergers cited by the league include:

  • Member demand for additional services. For merging credit unions, the ability to provide expanded services to members was most frequently cited reason for joining with another credit union, the league said.
  • Financial constraints of small credit unions during a sluggish economy. Nancy Gregory, CEO of Preferred Financial Federal CU, cited this as one reason for her credit unionʼs merger with Eagle One FCU.
  • Compliance costs. Compliance is a fixed cost, regardless of a credit union's size, Bill Hampel, Credit Union National Association senior vice president of research and chief economist, told the league. Small credit unions may feel the need to merge with larger institutions to manage the additional paperwork, Hampel said.
  • Field of membership erosion due to industry trends, company decline or aging membership. When the Chrysler plant in Newark closed, Delpart FCU, which served Chrysler employees, merged with American Spirit FCU, also of Newark.
  • Lack of interest in volunteer positions. The board of Hercules FCU, Wilmington, decided to pursue a merger with $116 million Community Powered FCU, Bear, rather than look for a successor for its retiring CEO. The credit union also had difficult time finding new volunteers to fill board and committee positions.

FHLB San Francisco Awards CUs $920K In Housing Grants

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SAN FRANCISCO (4/4/13)--The Federal Home Loan Bank (FHLB) of San Francisco has awarded six credit unions $920,000 in first-time homebuyer grants.

Workforce Initiative Subsidy for Homeownership (WISH) and Idea Development and Empowerment Account (IDEA) match $3 for every $1 contributed by the homebuyer, up to a maximum grant of $15,000, and are made available through participating FHLB members to households earning up to 80% of area median income.

The funds can be used for down payment and closing costs, which can be significant barriers to homeownership. Both programs require participants to complete a homebuyer counseling program.

The funds were part of $10 million in grants allocated by FHLB of San Francisco to 27 of its member financial institutions.

Credit unions receiving WISH grants include:

  • CoastHills FCU, Lompoc, Calif.; $60,000 grant;
  • Meriwest CU, San Jose, Calif.; $300,000;
  • Star One CU, Sunnyvale, Calif., $60,000;
  • Travis CU, Vacaville, Calif., $60,000;
  • TruWest CU, Tempe, Ariz., $250,000; and
  • Yolo FCU, Woodland, Calif., $100,000.
Credit unions receiving IDEA grants include:

  • CoastHills FCU, $15,000;
  • Meriwest CU, $30,000; and
  • Travis CU, $15,000.
WISH grants are targeted to working families and individuals transitioning from renting to owning. The program can complement or supplement local, state, and federal homeownership programs.

The IDEA program is directed at homebuyers who saved for the purchase of a first home through an individual development account, or participate in their local housing authority's Family Self-Sufficiency homeownership program, or participate in a lease-to-own program administered by a nonprofit or government entity.