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Regulators from four states meet with NASCUS

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CHICAGO (6/17/08)--“It’s important to bolster regulator-to-regulator communication to ensure regulators are taking appropriate actions to help credit unions mitigate their risks and maintain operations in a safe and sound manner,” National Association of State Credit Union Supervisors (NASCUS) Chairman George Reynolds told state regulators at a meeting last week. Reynolds, senior deputy commissioner of the Georgia State Department of Banking and Finance, met with regulators from Illinois, Kansas, Michigan and Wisconsin June 11 to discuss legislative issues affecting state agencies. The Illinois Department of Financial Institutions co-hosted the meeting at its agency offices. The meeting covered credit quality, compliance and governance issues, unrelated business income tax (UBIT), proposed regulations, examiner training and national housing legislation. Ongoing training for credit union directors also was emphasized by regulators. NASCUS has held its annual regulator meeting series for four years. Regulators also met in Boston and San Francisco this year. The series will finish in Nashville, Tenn., Sept. 10. The regulators also plan to meet at the NASCUS State System Summit in Seattle Aug. 21.

Fitch announces ratings for Southwest Corporate

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NEW YORK and PLANO, Texas (6/17/08)--In what is becoming a trend reflecting today's economic market, Fitch Ratings has reaffirmed the ratings of yet another corporate and added a Negative Watch component. Fitch maintained the ratings of Southwest Corporate FCU but placed them under a Negative Watch. The ratings are:
* Long-term Issuer Default Rating (IDR): AA-; * Short-term IDR: F1* * Short-term debt: F1+; * Individual A/B.
In its press release, Fitch said it "recognizes Southwest's ample liquidity, low reliance on borrowings, robust risk management practices and solid franchise. Southwest has the intention, and importantly, the ability to hold its investment securities until recovery or maturity." Fitch also noted that "Southwest's earnings performance compares well with other corporate credit unions." The ratings agency also said it placed the corporate's ratings on a Negative Watch primarily because it was concerned about an increasing possibility that the corporate could realize investment losses related to the deterioriating collateral performance of mortgage-backed securities. "I think that it is important to note that Fitch is citing a possibility but not a probability of losses," said John Cassidy, president/CEO of the Plano, Texas-based Southwest Corporate. "Southwest Corporate management is also very mindful of the possibility of experiencing losses related to our residential mortgage-backed security portfolio, but we remain confident that there is a low probability that we will realize meaningful investment losses," he said. The corporate's staff perform "rigorous investment credit analysis," including "multiple loss scenario projections on a bond by bond basis, supplemented by ongoing external validations performed by third-party experts," Cassidy added. "Fitch cited the level of our investment credit analysis when commenting on the close monitoring of mortgage collateral performance by our staff." Cassidy reiterated several points made in Southwest Corporate's 2007 Annual Report:
* As with any supply-and-demand market, the lack of trading activity in mortgage-backed securities caused the corporate's recorded asset fair values to decline; * Despite that decline, Southwest's investments are comprised of high quality assets; * The corporate expects the asset fair values to recover, over time, when more typical trading levels resume; and * The corporate's operating results have never been stronger and it has ample sources of liquidity to prevent the need to sell securities during the current market dislocation.

Hundreds to build home this weekend for wounded vet

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GOLDEN, Colo. (6/17/08)--Hundreds of laborers and volunteers involved with the credit union movement will help build a home for wounded Iraq war veteran Staff Sgt. Travis Strong three days this weekend. Starting Friday morning, Colorado Lt. Gov. Barbara O’Brien, Democratic National Convention Committee CEO Leah D. Daughtry, Homes For Our Troops Founder and President John Gonsalves, and officials representing the National Journal and credit unions will begin to construct a home for Strong in a Homes for Our Troops Build Brigade event. Homes for Our Troops is a non-profit organization that builds homes for wounded American soldiers. The home will be located in Golden, Colo., and is a joint project with the credit union movement, the Democratic National Convention Committee and the National Journal Group. The Credit Union National Association, the Credit Union Association of Colorado and the Credit Union Association of Wyoming also have partnered to raise funds, provide donated materials and volunteer labor for the project. The home will be presented to Strong and his family around the time of the Democratic National Convention, Aug. 25 to 28 held in Denver. A similar event will take place in St. Paul, Minn., before the Republican National Convention.

Variable pay programs more popular at CUs--Salary survey

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MADISON, Wis. (6/17/08)--More credit unions are looking to variable pay programs to increase compensation without increasing base pay, as wage increases remain flat across the nation due to the economic downturn, says a new Credit Union National Association (CUNA) report. Variable pay programs--which tie monetary rewards to performance measures and productivity--help credit unions keep salary expenses aligned with bottom-line results.
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Although variable pay programs increased overall, bonuses remained the most common way to boost compensation, according to the 2008-2009 Complete Credit Union Staff Salary Survey, published by CUNA’s center for research and advice. Among credit unions with $1 million in assets or more, 62% offered bonus payments--rewards not tied to preset performance criteria--and 42% offered incentive payments--rewards tied to preset performance criteria--to their employees. Management and nonmanagement employees were equally likely to be eligible for incentive payments, while management employees were more likely than nonmanagement employees to be eligible for bonus payments. A little more than one-third of survey respondents reported that management and nonmanagement employees were eligible for incentive payments in 2007, while 59% of management and 48% of nonmanagement employees were eligible for bonuses. The percentage of credit unions offering bonuses to nonmanagement employees increased from 42% the previous year. “The current economy and lack of wage growth are causing employees to experience higher financial stress than in the past,” said Beth Soltis, senior research analyst for CUNA’s center for research and advice. “In addition to incentive pay, credit unions may also want to consider adopting some non-monetary methods to compensate and inspire employees, like sabbatical days, development opportunities and flexible working arrangements. The survey provides compensation data for 89 full-time and eight part-time positions at credit unions with $1 million or more in assets. The data include: base salaries, incentives, bonuses, total cash compensation, and salary ranges. The report--available in print or Adobe PDF format--also contains job descriptions, benchmarks for salary and benefit expenses, base pay increases and turnover rates. An electronic version of the survey’s data tables is also available for purchase. This new offering allows users to apply formulas and insert the data directly into the credit union’s spreadsheets. Also available are CUNA’s Geographic Customized Salary Survey and Online Peer Comparison. The customized geographic report provides average and median base salaries and percentile figures for selected cities or geographic areas. The online peer comparison provides unlimited access to the 2008 salary survey database, which allows users to create customized peer groups using various criteria, such as: credit union name, asset size, number of members, field of membership, number of full-time employees, number of services offered, total loans outstanding, and geographic region. Customized report parameters include percentiles and date-specific trending. For more information, use the resource link.

MarylandDC league elects officers presents awards

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OCEAN CITY, Md. (6/17/08)--More than 600 credit union staff, volunteers and business partner representatives gathered at the Maryland and District of Columbia Credit Union Association’s (MDDCCUA) third annual meeting and convention recently where they listened to speakers, elected officers and presented awards. At the meeting, Michelle Singletary, nationally syndicated columnist for The Washington Post suggested several opportunities for credit unions to help people build wealth (Focus Newsletter June 16). Among them: market the credit union’s presence, form alliances with community agencies and groups, hold seminars, provide a remittance service, establish an Internal Revenue Service volunteer income tax assistance program, fill the banking gap with specialized services, and offer a second-chance checking account. Dennis Dollar, former National Credit Union Administration chairman and president of Dollar and Associates, predicted that credit unions will be the dominant community financial institutions, share branching will be a key credit union differentiator, and credit unions will retain their federal tax exemption. Awards presented at the meeting included:
* The Hall of Fame Congressman Wright Patman Memorial Award--the MDDCCUA’s top award--was presented to J. Wesley Bone, MDDCCUA chairman and board member of First Financial of Maryland FCU, Lutherville. Bone concluded 37 years of service as the credit union’s chairman of the board. Patman was a co-sponsor of the original Federal Credit Union Act. * The 2008 Volunteer of the Year--the Janet C. Glomp Memorial Award--went to Richard Reinhardt, director emeritus, Destinations CU, Baltimore; and * The 2008 Professional of the Year--Judith A. Burgin Memorial Award--went to Cindy Prestandrea, president/CEO, Prince Georges Community FCU, Upper Marlboro.
The election results for the four at-large seats on the MDDCCUA Board of Directors were announced by a VoteNet representative at MDDCCUA’s third annual business Meeting held on June 14 at the Clarion Fontainebleau Hotel in Ocean City, Md. The following incumbents won the election, each with three-year terms:
* Miguel Boluda, Jr., CEO, PAHO-WHO FCU, Washington, D.C.; * Chris Conway,CEO, Educational Systems FCU, Greenbelt; * Charles Mallon, CEO, Congressional FCU, Washington, D.C.; * Rod Staatz, CEO, State Employees’ CU, Linthicum.

Iowa CUs describe ordeal

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MADISON, Wis. (6/17/08)--Credit unions in Iowa began the cleanup process to assess damages from last week's floods that put several cities under water. However, many still aren't allowed back in the buildings and the true damage hasn't surfaced yet. "We're still monitoring the situation," said Phil Tschudy, media relations manager for CUNA Mutual Group. "Due to the heavy evacuation in many cities, particularly in Iowa, the extent of those damages will not be known until the credit unions are allowed back to their buildings." Because flooding is covered by federal insurance, CUNA Mutual may not be notified of losses due directly to flooding," he told News Now. News Now contacted a number of affected credit unions in Iowa. Des Moines (Iowa) Metro CU, relocated its operations to First Class CU in West Des Moines Tuesday night, but is moving back its original location and should be back to normal operations by noon today, Brent Helin, Metro CU CEO, told News Now. “We are about 250 yards from the Des Moines River and it was at high flood level--where it was at in 1993. They were forecasting a higher crest this time, so we relocated before any potential flooding arose,” Helin said. “However, we’re fortunate that the river level has come down, and we’ve started to relocate back to our offices. We didn’t really have any [flooding] issues.” Des Moines Metro was in the process Monday of moving data processing and vital records back to the credit union, Helin said. “We’re just going to keep our fingers crossed,” he added. Cedar Falls (Iowa) Community CU closed last Tuesday on orders from the city and relocated to another branch in the area, but then reopened Friday, said Helen Pearce, executive vice president of the credit union. “We had a little water in the basement, but we put in a plug and now we are fine,” she said. “We relocated to another branch in town and put a message on our website. Our business continuity plan worked.” In the downtown area, people in the community came to sandbag and saved two downtown levees. However, one levee sustained a breakthrough and there was flooding, she said. “A lot of our members did not have flood insurance,”’ Pearce said. “Some had flood insurance on their homes but not on the contents. A lot of homes are gone. Many members are waiting to see what FEMA does. In many places, members have to wait for inspectors to arrive and inspect the damage. “Material items can be replaced but sentimental items such as pictures and crafts made by children cannot,” she concluded. Collins Community CU, Cedar Rapids, has six out of seven branches operating, said Rick Benhart, credit union president/CEO. “One branch has a basement full of water, no power and it is not operating,” he said. Of the credit union’s 180 employees, about eight to 10 are experiencing a loss of their homes. “We’re trying to help them and using different loan programs to help people directly affected by the 100-year and 500-year flood plains,” Benhart said. “I have an extremely dedicated staff, and they are working extremely hard,” he added. “One branch has telecommunications out, and the staff is using cell phones. I’m very proud of all our staff. They are dealing with the emotions of members coming in and talking to them about the floods. So far, so good. We are seeing lot of credit unions helping other credit unions.” The flood waters in Cedar Rapids are receding, but city officials are keeping people out because of fears that power poles might not stay up because the ground is not solidified yet. Officials also are worried about contamination and other concerns, Benhart said. In Iowa City, the University of Iowa Community CU's Student Memorial Union branch, closed on Friday due to flooding on campus, according to CEO Jeff Disterhoft. "There is three feet of water in the branch, and there may be more. We don't know because no one is allowed in or out," Disterhoft told News Now. The student union branch manager, Jennifer Broich, has been reassigned to the credit union's Iowa Avenue branch. So far, three employees have material challenges with flooding of their homes but there may be more, he said. "We're giving them as much latitude as possible to take care of things they need to do, such as water and power outages. Many have more than a casual amount of water in their homes," Disterhoft said. The credit union's board and staff will meet this afternoon to brainstorm ways the credit union can assist and determine who to partner with in the relief efforts and how the credit union will do so. "We feel fortunate. Cedar Rapids and Cedar Falls have people in much more need. We're doing our best to determine who to partner up with to help," he said. In Waterloo, Iowa, Midwest Utilities CU's disaster plan was to move the credit union to Mid-American Energy, the business that it serves. But although the energy plant wasn't under water, everything else around it was, cutting off access, said Robert Hill, Midwest Utilities CEO. So, the credit union moved its operation to Hill's house. "We were only there for two days," Hill explained. "We reopened the credit union on Friday." Running the credit union's operation from Hill's home was a challenge because of Internet connections and software, but Midwest was able to serve its members. To let members know the credit union was closed, Hill put a sign on the credit union's door, and contacted the local newspaper and news stations about the closing. Iowa Community CU, Waterloo, closed its Waterloo branch last week and reopened it Monday, Mark Heth, Iowa Community CU CEO, told News Now. The Cedar Rapids branch also was closed and was relocated to Collins Community CU in Cedar Rapids. The credit union plans to offer disaster loan assistance to members, Heth added.

CU System briefs (06/16/2008)

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* LINCOLN, Neb. (6/17/08)--First Lincoln FCU has reported that counterfeit cashier's checks bearing its name are in circulation. The counterfeit items display the credit union's routing number, but the telephone number 1-888-214-2033 displayed is not accurate, according to the Federal Deposit Insurance Corp. They also have scrolled top and side borders and a patterned light blue hexagonal background, with the embossed numeric dollar amount printed in red. The back of the fake checks is white with blue lines and says, "This check is void without a patterned background on front." Authentic checks are light green with blue print, have red check numbers, have perforated top and bottom edges, and carry a warning on back that the back of the document is blue and has LineMark lines that change from dark to light in reflected light … * DECATUR, Ala. (6/16/08)--Family Security CU (FSCU), Decatur, Ala., received several phone calls Friday from individuals from California, Texas and Illinois concerning FSCU cashier's checks attached to lottery letters. All of the checks are counterfeit. "They have our name and address, but these checks are not in the correct format and have the wrong authorized signature at the bottom," Gina Turney, FSCU director of compliance and security, told News Now. FSCU expects more individuals to call about the checks within the next few days, Turney added … * TULSA, Okla. (6/17/08)--Tulsa Teachers CU was the target of massive three-pronged phish attempts earlier this month, according to a Tulsa Better Business Bureau alert (Tulsa World June 12). The attack, which originated in Davidson, N.C., involved e-mail phishing, text-messaging to cell phones and vishing or telephone calls, all asking for personal information. The attacks affected less than 20 credit union members. A few provided the information, and the credit union has closed their accounts and reopened new ones … * EDGEWATER, Md. (6/17/08)--Maryland and District of Columbia Credit Union Association staff and credit union officials met with congressional candidates recently at Aberdeen Proving Ground FCU's Operations Center. The candidates--State Sen. Andrew Harris, M.D., (R) and state attorney Frank Kratovil (D)--are running for the seat of Rep. Wayne Gilchrest (R-Md.). They answered questions from representatives of nine credit unions in the Dist. 1. The meeting is part of a process to determine who receives MDDCCUA's "Friend of Credit Union" status (Focus Newsletter June 16) … * RALEIGH, N.C. (6/17/08)--Coastal FCU in Raleigh is offering Interest on Lawyer's Trust Accounts (IOLTAs), a general trust account that bears dividends for attorneys and law firms that handle money on behalf of their clients. The $2.02 billion asset credit union said its IOLTA has no minimum balance requirements, has no monthly maintenance fees, and allows for unlimited monthly deposits and withdrawals. North Carolina law, effective June 30, requires that all attorneys holding money in trust for their clients must use an IOLTA. Coastal is participating to help attorneys comply with the law and to provide a public service … * PALO ALTO, Calif.(6/17/08)--Addison Café is the new online branch aimed at Generation Y members of the Addison Avenue FCU, a $2.064 billion asset credit union in Palo Alto, Calif. Members can apply for share draft accounts, auto and student loans, mortgages, and credit cards or participate in the site's blog …