Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

CU System Briefs (05/29/2013)

 Permanent link
  • O'FALLON, Ill.  (5/29/13)--Two Scott CU employees were robbed on Friday while loading money into an ATM in O'Fallon, Ill. A suspect approached the two employees and indicated that he had a weapon. He forcibly took the money and ran from the scene ( May 24).  Police are continuing their search and investigation. Both employees involved were unharmed ...
  • NEW CASTLE, Del. (5/29/13)--A man was robbed outside the Del One CU, New Castle, Del.,  after making an ATM transaction Sunday evening. Police say the man was driving away from the ATM when a car pulled in front of his vehicle and stopped. Two men approached his car and demanded the money he just withdrew from the ATM. After the victim turned the money over, the robbers hit him in the face with a handgun and drove off. The victim was later treated at a local hospital (Times Union May 27) ...
  • ENDICOTT, N.Y.  (5/29/13)--Visions FCU is warning members and non-members that someone is using the credit union's name in a phishing scam involving text messages. A text message  stating that their Visions card had been deactivated was sent to the recipients cell phones. They were told to call the number provided in the text immediately to correct the problem. These texts were not from the credit union but from people trying to steal bank and card information. Visions FCU President Tyrone Muse instructed people to not reply to the text message and, if they had already done so, to contact the credit union, where its staff would work with them to fix the problem ...

CUNA's E-Scan: Mobile Services Head Three Of Top 10 Trends

 Permanent link

MADISON, Wis. (5/29/13)--Mobile banking, mobile payments and mobile malware head up the list of Top 10 trends credit unions will need to consider as they create their strategies and goals, according to the Credit Union National Association's just-released 2013-2014 Credit Union Environmental Scan.

The 86-page E-Scan is a strategic planning tool that boards and senior management can use during their strategic planning sessions in the summer and fall, said CUNA Editorial Director Steve Rodgers.

Mobile payments "is a new ballgame," according to the E-Scan. "Members used to come to credit unions to get cash and credit union-branded checks or plastic cards. But members won't be coming to credit unions to get their mobile payment-branded devices. Mobile payments will be driven by access, not devices. The challenge will be to retain your members in a mobile payments world."

The scan notes that mobile banking has gone from "cutting edge to mainstream faster than any other financial innovation" and is becoming a "basic expectation, especially among younger consumers."

And the proliferation of mobile services and devices have attracted malicious software (malware), which means credit unions must invest in malware detection and prevention while educating members to protect themselves.

Other key trends credit unions can expect to consider during their planning session:  

  • A rebound in lending;
  • Meager earnings due to downward pressure from the Federal Reserve's low-interest-rate policy;
  • The Unite for Good campaign toward the strategic vision in which Americans choose credit unions as their best financial partner;
  • Service in the new frontier--the unbanked and underserved;
  • A heavier compliance burden;
  • Prioritization  for CEO succession planning as more CEOs retire; and
  • Raising Gen Y's awareness about credit unions.

The E-Scan is available in paper or electronic formats and includes six chapters on recurring topics such as lending, marketing/demographics, economics, legislation and finance, and six chapters addressing issues of the day--such as mobile payments, serving the underserved, enterprise risk management, CEO succession planning, and more.

The E-Scan can be purchased by CUNA-affiliated credit unions as a single report or as part a strategic planning package that includes a DVD, monthly newsletter and PowerPoint presentation. For more information, use the link.

U.S. Volunteers Learn Corporate Social Responsibility

 Permanent link
PUNTA CANA, D.R. (5/29/13)--More than 100 U.S. credit union board members learned lessons in social responsibility last week from $58 million asset credit union Maimon in Punta Cana, Dominican Republic.

Click to view larger image Victor Miguel Corro (left), Worldwide Foundation for Credit Unions vice president, translates as Board Member Ramon Diaz, of Maimon--a Dominican Republic credit union--shares his credit union's experience in corporate social responsibility.
The World Council of Credit Unions (WOCCU) facilitated the training with Maimon as a part of the Credit Union National Association's Volunteer Institute for a second consecutive year.

Maimon is affiliated with Asociacion de Instituciones Rurales de Ahorro y Credito Inc., (AIRAC), World Council's member association in the Dominican Republic.

Maimon board member Ramon Diaz opened with a presentation on the credit union's story and ways in which it helps its community. In 1990, in the midst of a banking crisis that had left many families without savings, 26 members with $300 founded Maimon. Today, it has 60,000 members and works on the sustainable development of their communities by establishing what they call "social responsibility reserves."

That fund meets basic needs, improves schools and offers cultural events in the community. Maimon also has partnered with other organizations to develop a "business incubator," which provides micro-entrepreneurs with start-up capital loans and free advice on business planning, financial management and accounting.

Click to view larger image Maimon, a World Council of Credit Unions member association in the Dominican Republic, manages a funeral home for members who cannot afford to bury loved ones. (Photos provided by the World Council of Credit Unions)
An example of Maimon's community involvement is the construction and management of a funeral home for those who cannot afford to bury their loved ones. Every member of Maimon is granted access to the service, including a hearse and crypt, for a monthly fee of 40 cents.

"Maimon's commitment to the growth and prosperity of its community readily encompasses the values that all credit unions strive toward," said Kevin Smith, CUNA director of volunteer education. "It's an invaluable benefit for our volunteers to be able to witness this eye-opening testament to how engaged a truly community-first credit union can be."

After the presentation, CUNA pledged $1,000 toward Maimon's social responsibility efforts, matching last year's donation.

Victor Miguel Corro, Worldwide Foundation for Credit Unions vice president, provided translation at the event and gave insight into the Dominican economy and credit union system.

"Part of what we do at World Council is connect peers in the industry, and having Ramon participate in the Leadership Institute was key to this priority," Corro said.

Corro also manages WOCCU's International Partnerships Program, through which AIRAC receives advocacy support from the Wisconsin Credit Union League.

CUNA Volunteer Institute gathers volunteers each year who serve on credit union boards across the U.S. Those attending gain an understanding of issues affecting their credit unions, including enterprise risk management, economic trends and strategies for reaching a younger demographic. Participants also can earn a Certified Credit Union Volunteer designation as expert board members.

For more information, use the link.

In The Media: 'Liberate' CU Lending

 Permanent link
MADISON, Wis. (5/29/13)--A bill in Congress to raise credit unions' member business lending (MBL) cap should be cheered not just because of its bipartisanship, but also because raising the cap "spreads freedom," according to one of two articles that discussed the MBL issue this past week.

"Those concerned with government eroding options for entrepreneurs should cheer this legislation, which lifts regulatory barriers to an untapped source of capital for start-ups--America's credit unions," wrote John Berlau, senior fellow at Competitive Enterprise Institute, a nonprofit public policy organization, in Daily (May 24).

He was referring to Senate Bill 968, sponsored by U.S. Sens. Mark Udall (D-Colo.) and Rand Paul (R-Ky.), which would raise the MBL cap to 27.5% of assets from 12.25%.

Traditional sources of small business lending have dried up, and "credit unions have stepped in to fill the void," Berlau wrote.  He referred to an interview on with Rohit Arora, CEO of the Biz2Credit, who noted that government barriers to credit-union business lending would deprive thousands of entrepreneurial ventures of seed capital credit unions could provide.

"The bills don't go far enough; the cap should be eliminated entirely," wrote Berlau.  For the full article, which also cited statistics from the Credit Union National Association, use the link.

In another article, Public Service CU CEO David Maus said his Denver-based credit union expects to hit the MBL cap within a year unless Congress raises it ( May 27). Of bankers' opposition to raising the cap, Maus said that even if credit unions doubled that the 6% market share they have, "it wouldn't hurt [the banks] but it would add tremendous benefit to the economy. We help a lot of small business, and usually the people we help are people who have already been turned down by banks."  Use the link for the full article.

CUNA has said that raising the MBL cap will generate $13 billion in funds for small business loans and help create 140,000 jobs.  CUNA, the leagues, and credit unions are working to remove barriers through the political process.

Removing barriers is one of the three prongs of CUNA's Unite for Good campaign toward reaching CUNA's strategic vision for credit union movement, in which "Americans choose credit unions as their financial partners."

Oregon CUs Urge Parity On Occupancy Rule

 Permanent link
SALEM, Ore. (5/29/13)--Oregon state-chartered credit union representatives urged adoption of an occupancy rule that gives parity with rules applying to federally chartered credit unions in a meeting with the state Department of Consumer and Business Services (DCBS) this month.

In February, DCBS adopted a temporary rule allowing a state-chartered credit union up to six years to partially use unimproved property held for future expansion, according to the Northwest Credit Union Association (Anthem Recap May 24).

"It can be difficult to obtain permits, particularly when cities change building codes halfway through a project that can slow down the entire process," said Jerry Liudahl, chief credit officer at Oregon Community CU in Eugene, told NWCUA. "A three-year window is too narrow to effectively get things done and we would appreciate the DCBS permanently adopting a rule that gives us parity with the federal act."

DCBS took the next step toward adopting the rule in early May, convening an advisory group made up of state-chartered credit unions to discuss the permanent adoption of the rule. Nearly one third of Oregon's state chartered credit unions sent a representative to participate, said John Trull, NWCUA director of regulatory advocacy.

The temporary rule was set to expire after 180 days on July 31, said Rick Blackwell, DCBS senior policy analyst. Blackwell asked if there was interest in adopting the text of the temporary rule on a permanent basis. All of the credit unions' representatives expressed support for permanent adoption of the rule, said NWCUA.

Participants also were asked how the rule will impact small business--fiscally and from a regulatory standpoint. The rule potentially lowers the long-term cost for facilities and doesn't create a compliance burden, said Kevin Cole, chief financial officer for Maps CU in Salem.

Several participants encouraged DCBS to define unimproved real property, by using the same definition proposed in the National Credit Union Administration's Fixed-Asset Rule.

"Defining unimproved property ensures credit unions and the regulator are on the same page," Trull said.

After receiving input from the advisory group, the DCBS filed the notice of proposed rulemaking with the Secretary of State office.

TransUnion: Credit Card Delinquencies Drop

 Permanent link
CHICAGO (5/29/13)--The national credit card delinquency rate--the ratio of borrowers 90 or more days past due--decreased to 0.69% in the first quarter from 0.73% a year earlier, according to the most recent TransUnion report.

"We traditionally see credit card delinquencies and balances decline during the first three months of the year as many people pay down their holiday shopping balances or use their tax refunds to pay off their debts," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit.

"In addition to the seasonal quarter-over-quarter drop, the year-over-year improvement in credit card delinquencies is indicative of how consumers continue to value their credit card relationships," Becker said.

The delinquency rate experienced a steep 18.8% seasonal decline from the end of 2012, when it stood at 0.85%, said the Chicago-based global company that specializes in information gathering and risk management.

At credit unions, members' 60-plus-day delinquency rate declined to 1% during March from 1.1% in February, according to the Credit Union National Association's March monthly sample of credit unions.

Average credit card debt per borrower also dropped 1.7% to $4,878 in the first quarter from $4,962 in first quarter 2012, said TransUnion. On a quarterly basis, card debt decreased 4.8% from $5,122 in the fourth quarter.

Since the beginning of the recession at the end of 2007, the credit card delinquency rate has declined five out of six first quarters on a quarterly basis. The average first-quarter decline for that timeframe has been 7.2%.

Twelve states saw their delinquency rates rise year over year, with Massachusetts and North Dakota the only ones to experience double-digit basis point increases--and those from low starting points.

Sixty-five percent of metropolitan statistical areas (MSAs) experienced declines in their respective delinquency rates in first quarter relative to one year ago. That is improved from the previous quarter, when only 33% of MSAs experienced year-over-year decreases. Some MSAs experiencing the largest year-over-year decreases in the first quarter included: Seattle (28.1% decline to 0.41%), Denver (26.9% decline to 0.49%) and Salt Lake City (22.6% decline to 0.48%).

The TransUnion quarterly analysis of credit card performance also examines origination rates, which are evaluated one quarter in arrears to account for the reporting lag of new accounts.

In the fourth quarter, new credit card originations dropped 1.6% relative to fourth quarter 2011 (to 7.57 million from 7.70 million accounts). The share of non-prime, higher-risk originations (with a VantageScore 2.0 credit score lower than 700 on a scale of 501-990) was 28.14% in the fourth quarter, slightly below 28.38% in fourth quarter 2011, but higher than the 27.72% in fourth quarter 2010.

"Though fourth-quarter credit card originations had dropped compared to the prior year, the number of new credit cards entering the marketplace is still significantly greater than what we saw just a few years ago," Becker said.

TransUnion forecasts credit card delinquencies to increase slightly to roughly 0.71% in the second quarter, based on current economic assumptions.

AVCU's Meeting Hits Decade-high Attendance

 Permanent link
MONTPELIER, Vt. (5/29/13)--The Association of Vermont Credit Unions' Annual Meeting and Convention attracted more than 220 attendees last week, the event's largest registered attendance in more than a decade.

Association of Vermont Credit Unions Board members Bob Morgan, left, of North Country FCU, South Burlington, Vt., and Jim St. Peter, of New England FCU, Williston, Vt., were elected by acclamation to three-year terms at the association's annual meeting. (Photo provided by Association of Vermont Credit Unions.)
The conference exhibit hall was sold out with 20 exhibitors. Five vendors participated for the first time.

AVCU Board members Bob Morgan, North Country FCU, South Burlington, and Jim St. Peter, New England FCU, Williston, were elected by acclamation to three-year terms.

A bylaw amendment proposed by the board was passed by a voice vote. It would:

  • Allow for meetings and/or votes of the AVCU membership to be conducted through modern technological means whereby participants may be aware of comments by others, visually or audibly.  Voting electronically would be permissible when appropriate safeguards ensuring the integrity of the process are in place;
  • Create an associate membership category that carries no voting or right to hold office; and
  • Make housekeeping changes replace outdated bylaw provisions that were no longer relevant.

Visa, MasterCard Sue Retailers Opposed To Interchange Settlement

 Permanent link
BROOKLYN, N.Y. (5/29/13)--Visa Inc. and MasterCard Inc.Friday filed a lawsuit seeking declaratory judgment from a Brooklyn, N.Y., federal court against 11 retail organizations that opted out of a $7.25 billion interchange settlement proposal in an antitrust lawsuit against the card companies.

The card companies seek a declaration from the U.S. District Court Eastern District of New York that their fee practices from Jan. 1, 2004, to the proposed settlement date of Nov. 27, 2012--the period in which merchants opting out could seek damages under the interchange settlement--did not violate the federal and state antitrust laws.

Monday was the deadline for nearly eight million retailers to opt out of the proposed settlement, which would end an eight-year battle over fees the card companies charge merchants.  Last week Wal-Mart and 18 other major retailers said they would opt-out and consider separate legal action. They indicated the settlement offers inadequate compensation for the billions of dollars they pay in interchange fees each year and forces them to sign away rights to initiate future lawsuits over antitrust issues (Reuters  May 24).

"A declaration in plaintiffs' (card companies) necessary to prevent the continuation of endless, wasteful litigation between defendants and plaintiffs," argued the Visa and MasterCard motion, noting that the settlement isn't the first between the card companies and the merchant community. It referred to a Visa check litigation settlement in 2003 in which Visa paid a "substantial sum of money." That settlement did not stop other litigation, such as the interchange fee litigation.

The lawsuit names only organizations that originally were party to the negotiations of the proposed settlement but who opted out. They include the National Association of Convenience Stores, National Grocers Association and National Restaurant Association.

Credit unions are not a party in the lawsuit, but the Credit Union National Association is monitoring the outcome. Credit unions and other financial institutions would be impacted by the settlement's terms, which would require a reduced interchange rate fee of 10 basis points for an eight-month period and would apply to all card issuers.

If the total interchange rate fee were reduced by $1.2 billion, those credit unions with card programs would lose about $50 million in total revenues, roughly 0.5 basis points of their total assets, CUNA said. The loss would hit a small number of credit unions with especially active credit card programs.

CUNA said that interchange revenue means credit unions can provide cost-effective, essential credit card services to their members. The temporary reduction in interchange revenue that credit unions would experience will not likely find its way into the pockets of consumers, but more likely will go into those of merchants, said CUNA President/CEO Bill Cheney (News Now Nov. 12).

The card companies' motion for declaratory judgment noted that the settlement would be the largest private antitrust damages recovery in U.S. history and would require the card companies to make "significant changes" to some of their merchant rules.

Christian Sci. Monitor: CUs, Co-ops Have No Investors To Please

 Permanent link
MADISON, Wis. (5/29/13)--The benefits that credit unions and cooperatives offer consumers through their cooperative ownership structure were emphasized in a May 26 article in the Christian Science Monitor.

"If you buy products--from a bunch of carrots to a car loan--why not buy from a company you own?" the article, headlined, "Co-op: shopping where you own the place," asked readers.

Member-owned credit unions added nearly two million members in 2012, the article said.

Commercial banks face competitive pressures because they must serve two masters: customers and shareholders, said Stephen Brobeck, executive director Consumer Federation of America, a Washington-based group of nearly 300 consumer advocacy organizations told the Christian Science Monitor. Banks tend to favor investors, Brobeck told the Monitor.

In contrast, members of Pennsylvania State Employees CU (PSECU), Harrisburg, Pa., pay $1 to join the credit union. To qualify for membership, they must be employees of state, county, and municipal governments, or graduates of affiliated universities, the article said.

PSECU members receive benefits such as a free credit score report each month. ATM surcharges are reimbursed up to $20 per month. In January, PSECU distributed $10 million in dividends to 234,000 members. The average beneficiary received $42. Some members received more than $3,000.

Cooperatives are experiencing growth in others sectors as well, the article said. Grocery co-ops, with 1.3 million members in the U.S., have increased memberships and revenues at a 10% annual rate during the past decade.

To read the article use the link.