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What do California budget woes mean for CUs

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LOS ANGELES (5/22/09)--With the state having more than a $21 billion budget deficit hole to fill, about 60% of Californians who voted Tuesday opted to reject five ballot measures designed to keep the state solvent through 2009. The measures would have prolonged tax increases, capped state spending, earmarked money for education and involved the state in a borrowing plan against its lottery. The failure of the measures, declining revenues since the state passed its budget, and significant home foreclosure rates and high unemployment have created severe financial problems in the state (The New York Times May 20). What do these developments mean for the state’s credit unions? “California faces a new, harsh fiscal reality after Tuesday's election,” Melissa Ameluxen, director of state government affairs for the California Credit Union league, told News Now. “The state’s legislative leaders now have to close an estimated $15.4 billion to $21.3 billion budget gap. It’s no secret that deep cuts are likely in the works. We also are facing the overall downturn in the economy, repercussions from slashed services, job loss and hiring freezes, all of which have an impact on our state’s credit union members,” she said. “However, California credit unions have a strong record of helping public employees,” she added. “As we approach the rarely met constitutional deadline to pass a state budget, the state stops payment to a select group of state employees and state contractors. As a service to those members, many credit unions provide bridge loans to replace the paychecks the state has temporarily cut. During this turbulent time, California credit unions stand ready to help our members with sound financial services.”

Does census youth report mean changes in CUs approach

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MADISON, Wis. (5/22/09)--Roughly half of children under age 5 are minorities, according to U.S. Census Bureau estimates released Wednesday. As the nation’s population becomes more diverse, credit unions will need to change the way they reach out to potential members, according to several credit union representatives. Phil Heckman, Credit Union National Association (CUNA) director of youth programs, said credit unions will need to change the way they reach out to youth, but noted that “immigrant populations with strong family ties present credit unions with a better opportunity to reach the children through the parents and the parents through the children.” Erayne Gee Hill, director of community and public relations at Unity One CU in Fort Worth, Texas, echoed similar thoughts. Unity One has successfully reached out to the Hispanic community in the Fort Worth area, she said. “[Credit unions] will have to change the way we communicate and which part of the population we target,” Hill told News Now. The most important way to reach out is to be visible, she said. Unity One uses its mascot to reach children under 5, and has opened an in-school branch at an elementary school. “At the start of the 2008 school year, the kids had deposited more than $21,000. Our branch staff reads every Wednesday at the neighborhood library branch, and we have become very recognizable,” she said. The credit union also formed an advisory board of community leaders, immigrants and Mexican officials when it opened a new branch in a predominantly Hispanic area of the city. “One important thing that we learned was that we should hire staff who were from the area and spoke fluent Spanish,” Hill said. “We did that, and today all employees at the branch are familiar with the area and speak Spanish fluently. It has made a difference. While this branch was first viewed as a risk by our critics, it has thrived.” Credit unions also can generate ideas about outreach just by talking to members who represent the minority they are trying to reach. Unity One recently launched a Quinceanera savings account. Quinceaneras are parties, or coming-of-age ceremonies that celebrate young Hispanic women who have turned 15. The idea for the account was generated from staff talking to members. “Our staff is good at engaging people,” Hill said. “They talk to people and get ideas about what we can do.” Josh Allison, relationship management officer, Horizon CU, Spokane, Wash., said his credit union has had a successful experience reaching out to Hispanics through a local high school. Horizon CU recently built a branch that is located just a few hundred yards from Moses Lake High School and has a large number of Hispanic students. Horizon wanted to reach out to them, but knew that historically, many Hispanics distrust banking institutions because the financial systems in some Hispanic countries are corrupt. To break down the barrier of distrust, Horizon worked with the high school to offer presentations in classes and invited students to become members of the credit union. The credit union has conducted field trips and scavenger hunts to the credit union, where students met with member service representatives and built relationships with them. “It worked,” Allison told News Now. Many Hispanic students ended up becoming members of Horizon, he added. Allison added that with the help of the credit union trips, resources from Junior Achievement and the National Endowment for Financial Education High School Planning Program, students increased their financial literacy knowledge. Students started with a 43.75% average concept familiarity percentage and increased it to a 76.75% by the end of the semester, he said. Bellwether Community CU, Manchester, N.H., participated in a Latino festival last summer and provided information sheets about its products in Spanish. It also has worked to increase bilingual staff at its branches. “We try to provide Spanish language materials if we are presenting or appearing in a market that has a higher percentage of the Hispanic community,” Madeline Anderson, Bellwether marketing manager, told News Now. Lin Standke, CUNA manager of youth programs, suggested that when reaching out to any potential member, credit unions first get their community’s demographics--including ages, ethnicities and location. “When you know where people live, work, shop, go to school you can make better decisions about how to reach them,” Standke told News Now. Credit unions can contact school districts to see what financial education they offer and whether the credit union can offer teaching assistance or set up an in-school branch. Partnerships with local churches and service organizations also can help credit unions serve the population they want to reach. Other suggestions:
* Start an advisory board for youth and adults; * Hire staff that are multilingual and cross cultural; * Teach staff how to work with multi-cultural staff and membership; * Develop marketing materials, forms or signs that are multilingual and cross cultural; and * Examine products and services to determine if any need to be or can be adapted to serve multicultural members.
In addition to outreach, credit unions also need to build relationships. “For many minorities, trust is an important factor,” Standke said. Also, bring along staff members who represent the minority you’re trying to reach, Allison added. In addition to outreach, credit unions need to commit to serving minorities in their mission statement and strategic plan, Standke said. “If you don't, your efforts will be short lived and you'll lose the respect of the community,” she said.

Former CEO claims retaliation over board spending

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WAYNE, N.J. (5/22/09)--A trial date has not been set yet in the case of a former credit union CEO who filed a whistleblower lawsuit on Dec. 3 in Passaic County Superior Court, Paterson, N.J. against First Jersey CU. The complaint filed in court alleges that former President/Chief Operating Officer Joann Lazzara, was fired Oct. 17, 2008, in retaliation for expressing concerns during a June 2007 state audit about board members' spending. Lazzara's complaint says board members violated the Wayne, N.J.'s credit union's travel spending limits and did not disclose the expenditures to members. At the time, the credit union was losing $200,000 a year in income because its new $6 million building was paid for by using liquid assets instead of taking a mortgage, and the board cut the marketing budget and refused to hire an additional business development position, the court document says. The complaint says the credit union told Lazarra it terminated her for not meeting the credit union's goals, but the lawsuit maintains the goals set were "unrealistic." Lazzara's complaint says some board members and their guests took cruises to the Mediterranean, Alaska, Panama and Scandinavia and spent more than double the credit union's per-trip limit. The document outlines expenditures totaling more than $221,743.42--an average of $5,685 per trip--for 39 trips taken by 12 board and examining committee members from 2004 through 2007. Lazzara's attorney, Robyne LaGrotta of Totowa, N.J., filed the lawsuit under the New Jersey Conscientious Employee Protection Act, on Dec. 3. She is getting depositions and told News Now that the case could drag out over two years. Currently the suit is in the 450-day discovery process and the discovery could be extended.

N.Y. association elects board chair officers

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ALBANY, N.Y. (5/22/09)--Al Frosolone, president/CEO of Niagara's Choice FCU, Niagara Falls, N.Y., was elected chair of the Credit Union Association of New York's board of directors during the association's annual meeting in Albany, N.Y.
"While these are challenging times for the credit union industry due to the volatility of the financial marketplace, it is also a time of great opportunity," said Frosolone. "I believe the association's best years are still ahead of us, and it will be my privilege to serve as chairman of this group as we navigate through the current crisis while creating value for our members now and into the future." Other officers elected included:
* Vice-chair, Lou Jimenez, CEO of Montauk CU, New York, N.Y.; * Secretary, Laurie Baker, senior vice president/chief operating officer, The Summit FCU, West Seneca; and * Treasurer, Bill Spearman, president/CEO, Mid-Hudson Valley FCU, Kingston.
Both Jiminez and John Gibardi, president/CEO of Entertainment Industries FCU, New York, N.Y., were re-elected to their director positions. New board member is Mark Pfisterer, president/ CEO of AmeriCU CU, Rome. He will represent credit unions with more than $500 million in assets. The new officers were officially seated immediately after the association's annual business meeting Wednesday. The association's board consists of 11 directors representing five asset categories: less than $25 million, $25 million to $50 million, $50 million to $100 million, $100 million to $500 million, and more than $500 million.

CUNA closed for Monday holiday no INews NowI

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WASHINGTON and MADISON, Wis. (5/22/09)--The Washington, D.C., and Madison, Wis., offices of the Credit Union National Association will be closed Monday in observance of the Memorial Day holiday. News Now will not publish a Monday edition but will resume regular publication schedule on Tuesday.

CU System briefs (05/21/2009)

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* WASHINGTON (5/22/09)--California Commissioner of Financial Institutions William S. "Bill" Haraf was elected to a two-year term as treasurer of the Conference of State Bank Supervisors (CSBS) during the organization's 108th annual business meeting last week. Haraf, whose department oversees state-chartered banks, credit unions and other groups, will also serve as treasurer of the State Regulatory Registry LLC and the CSBS Education Foundation. He will also serve on the CSBS Executive Committee … * WASHINGTON (5/22/09)--Brooke Shearer, 58, a former Credit Union National Association (CUNA) communications director in CUNA's Washington office during the early 1980s, died Tuesday at her home after a battle with cancer, said an article in the Washington Post (May 10). As part of her duties, Shearer wrote a monthly column for Credit Union Magazine and was CUNA's spokeswoman. Shearer, a former journalist with the Sunday Times of London and the Christian Science Monitor as well as a private investigator, served as Hillary Clinton's personal aide during Bill Clinton's 1992 presidential campaign. Shearer was the daughter of Lloyd Shearer, who wrote for Parade magazine, and the wife of Strobe Talbott, former Time magazine editor who was second ranking official at the State Department in the Clinton administration and now heads the Brookings Institution research and policy center. During Clinton's second term, she served in the Interior Department, helping developing countries establish national park systems. She was founding director of the Yale World Fellows program and was on the board of the International Center for Research on Women. Survivors include Talbott, two sons, her mother, two brothers, and one granddaughter …

New law helps CUs says California newspaper

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INLAND VALLEY, Calif. (5/22/09)--Local credit unions struggling to pay increased deposit insurance fund fees will obtain some relief now that President Barack Obama has signed S.896, the Helping Families Save their Home Act, into law, a California newspaper said. Obama signed the law Wednesday. Of interest to credit unions are portions of the bill that will create a corporate credit union stabilization program to help credit unions weather the ongoing financial crisis and extend the $250,000 share and deposit insurance coverage ceiling until 2013 (News Now May 21). Credit unions may also spread the cost of National Credit Union Share Insurance Fund (NCUSIF) replenishment over a longer period of time. They will have a total of eight years to deal with the cost of a premium assessment that has resulted from losses at some wholesale corporate credit unions. Premiums are based on asset size. Any impairment related to the NCUSIF replenishment may be booked over a seven-year period. For Altura CU, a $900 million asset Riverside, Calif.-based credit union, the passage of the law allows it to pay $6.2 million in insurance-fund fees amortized over eight years (Inland Valley Daily Bulletin May 21). “It’s a good thing, because we don’t have to take the [$6.2 million] hit all at one time,” Mark Hawkins, Altura president/CEO, told the newspaper. Arrowhead CU, San Bernardino, Calif., will pay $5 million over seven years, and $2.2 million over eight years into the NCUSIF, the paper added. Arrowhead has $1 billion in assets. Amortization plans are similar for all credit unions, Debbie Kwon-Moore, director of federal governmental affairs for the California Credit Union League, told the paper. Without the new legislation, the burden of having to pay NCUSIF all at once could have caused many credit unions to go out of business, she added.

Montana CU Network honors pro volunteer

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HELENA, Mont. (5/22/09)--The Montana Credit Union Network has honored its 2009 professional of the year and its 2009 volunteer of the year.
From left, Bob Bjelland, CEO of Fergus FCU; his wife Annette Bjelland; and Lorrie Durbin, Fergus FCU accounting manager, react when Bob Bjelland was announced as the 2009 Professional of the Year at the Montana Credit Union Network’s awards banquet.
MCUN President/CEO Tracie Kenyon (left) and Bernie Neibauer, President/CEO of Russell Country FCU (right), pose with Bryan Fox (center), Montana's 2009 Mitch Reed Volunteer of the Year and member of the board of directors of Russell Country FCU. (Photos provided by the Montana Credit Union Network)
The network named Bob Bjelland, president/CEO of Fergus FCU, Lewistown, as Professional of the Year. The award recognizes Bjelland’s contributions to credit unions and is one of the highest honors bestowed in Montana’s credit union system. Bjelland has been Fergus president/CEO for 24 years, and his credit union career extends 35 years. Under his tenure, Fergus FCU expanded services and assets and is creating a main street park for its community. The network also honored Bryan Fox, a member of the Russell Country FCU board of directors, for his commitment and contributions to the Montana credit union movement, his credit union, and his community during the past 30 years by presenting him the 2009 Mitch Reed Montana Volunteer of the Year Award. “Bryan’s 30 years of service to Russell Country FCU [Great Falls] have made him a seasoned board member, yet he still maintains a desire to keep up on the newest trends developing within the credit union industry,” said Bernie Neibauer, Russell Country FCU president/CEO. “Bryan understands the need for change in an ever-changing business climate. I appreciate his insight and value his opinion on local, national and international financial topics.” Fox assisted in two mergers and the implementation of credit and debit cards.