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NerdWallet: Merchants do not pass on interchange savings to consumers

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MADISON, Wis. (6/18/14)--An article on Tuesday described how merchants reacted to the interchange fee cap rule by pocketing the difference rather than passing the savings along to consumers.
The article outlines the findings of a paper published by Todd Zywicki, a published, nationally recognized expert on consumer credit. He, along with colleagues at the International Center for Law and Economics, just studied the effects of the interchange rule.
Prior to the new law, interchange fees would be assessed by issuers, such as Visa and MasterCard, to merchants when a credit or debit card transaction was executed. Debit card usage was usually free of charge to the consumer. On average, the financial institutions would end up getting 2% of the transaction as interchange fees.
The interchange rule was intended to cap the fees, and was supposed to limit them to charges that were "reasonable and proportional to the actual cost" of the service.  It reduced the fees financial institutions were collecting, allowing merchants to save money, which, they argued during the legislative battle that won the cap--they would pass along to consumers. Not so, says NerdWallet.
Under the interchange rule, merchant fees are capped at 1.12%. "Yet they keep that 0.88% difference rather than pass on savings to consumers," NerdWallet explained in the article. "What genius politician thought that merchants would pass on those savings? There is no incentive for them to do so. Merchants are businesses. If a business finds a way to save on costs, they will save on costs, which increases their net profit."
In a letter to Congress last fall, the Credit Union National Association (CUNA) and finance industry partners highlighted that "there is no evidence that consumers are seeing lower prices" on retail goods, a direct contrast from what they were promised by merchants.
"Despite promises by retailers, and despite a realized $8 billion windfall by these retailers over this past year, consumers have yet to see discounts for using their debit cards at the register," the letter said (News Now Sept. 24, 2013).
Credit unions and community banks are being harmed by the regulation, according to CUNA. The letter noted a U.S. Government Accountability Office study which found smaller community banks and credit unions, which were supposed to be "exempted" from the fallout of this legislation, have instead seen interchange revenue decreases of 5% in the first three months following interchange fee cap implementation.
(See related story: Retailers appeal 'interchange fee' lawsuit settlement.)

Andrews FCU provides steaks to D-Day vets

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SUITLAND, Md. (6/18/14)--Andrews FCU saluted D-Day veterans recently by serving 600 steaks to the American heroes and their families in the same place U.S. forces famously sieged 70 years earlier.

Click to view larger image Click for larger view
To commemorate the 70th anniversary of D-Day, the Suitland, Md.,-based credit union delivered the meals with the help of Steak Team Mission, which has served more than 50,000 steaks to servicemembers across the globe since 2002.

Meals were served to the veterans and their family members at the Château Bernaville in Picauville, the home of the Allied Conservatory Foundation in Normandy, France.

The Château also served as headquarters for the German General Wilhelm Falley, who was in command of the German defenses stationed at the Cotentin Peninsula. Falley was ambushed and killed there by troops from the U.S. 82nd Airborne Division.

Founded in 1948 to serve military and civilian personnel, Andrews provides an array of financial products and services to its members.

The $1 billion-asset credit union serves more than 100,000 members spanning the District of Columbia, Joint Base Andrews in Maryland, Joint Base McGuire-Dix-Lakehurst in New Jersey, and military installments in Germany, Belgium and the Netherlands.

Fort Campbell FCU treats military members to a free movie

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CLARKSVILLE, Tenn. (6/18/14)--For the seventh straight year, Fort Campbell FCU, Clarksville, Tenn., with $456 million in assets, demonstrated its support for the military by hosting Warrior Week Movie Night at a local theater.  On Friday, the credit union treated 560 active duty soldiers and their family members to a free showing of the movie, "How to Train Your Dragon 2" by DreamWorks.
Click to view larger image From left, Fort Campbell FCU employees, Alicia DeJesus, Jenna Greene, Karen Morgan, Kim Clarkson, Vanessa Seals and Susan Dickinson greeted members of the military and their families on Warrior Week Movie Night. (Fort Campbell FCU photo)
Military families were greeted by employees of Fort Campbell FCU and were shown to a private access line, which began forming two hours before show time. By 6 p.m., the first two theaters were sold out.
One movie attendee expressed her gratitude by saying, "This is why I love Fort Campbell. No other military post has treated us this well. Thank you."
Warrior Week Movie is also a favorite among the Fort Campbell CU employees, who are provided with an opportunity to show their appreciation for those who serve in the military.

Suncoast CU pledges $250K to local YMCA

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TAMPA, Fla. (6/18/14)--Suncoast Credit Union Foundation, the charitable arm of Tampa, Fla.-based Suncoast CU, with $5.7 billion in assets, announced a $250,000 capital campaign pledge to support development of the first-ever permanent facility of the YMCA of Suncoast, Citrus County.
The gift will be used to establish the Youth and Teen Center, a 1,000-square-foot after-school center for middle and high school students.
"With over 8,500 YMCA members in Citrus County, we felt it was our responsibility to support the YMCA in constructing a permanent space for children and teens," said Mary Tlachac, executive director of the Suncoast Credit Union Foundation. "This new space will allow members to come together to learn values and positive behaviors, healthy eating and exercise habits, and social responsibility."
The center will include skill-building and recreational opportunities, and will be staffed by positive, caring adults who are trained to work with adolescents.
Only 19% of U.S. children get 60 minutes of physical activity a day, according to the latest findings of the YMCA's Family Health Snapshot, a survey that gauges children's activity levels during the school year.

Neb. league honors volunteer, elects board officers

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LINCOLN and OMAHA, Neb. (6/18/14)--Names have been in the news for Nebraska credit unions of late, as the Nebraska Credit Union League both honored a longtime credit union leader and announced new board officers this month. 
The league named Tom Bolton, board chairman and director of Liberty First CU, Lincoln, Neb., with $158 million in assets, as the 2014 Volunteer of the Year during its annual awards banquet June 5.
Bolton has served in a leadership role for the credit union for more than 28 years, including board chair since 1995. Bolton also has been a Liberty First member since 1969.
"Tom's commitment to credit unions goes beyond being a volunteer," a press release announcing the award said. "He has made personal efforts to push the credit union movement forward by participating in chapter, league and national events as well as contributing to (political action committee)."
Meanwhile, the league also named new officers to its board and to the Cooperative Solutions Group, the league's for-profit subsidiary, at a recent reorganization meeting.
The following were elected as officers to the league board:
  • Chair: Ronny Miller, president/CEO, Gallup FCU, Omaha, Neb., with $16 million in assets;
  • First vice chair: Stan Fraser, president/CEO, Nebraska Energy FCU, Columbus, Neb., with $252 million in assets; and
  • Second vice chair: Jerry Barnett, president/CEO, LincOne FCU, Lincoln, Neb., with $46 million in assets.
Officers elected to the Cooperative Solutions Group were:
  • Chair: Fraser, Nebraska Energy FCU;
  • Vice chair: Kevin Frenzel, vice president of lending, Liberty First CU; and
  • Secretary/treasurer: Amy Brodersen, president/CEO, Family Focus FCU, Omaha, $29 million in assets.

Arsenal CU partners with local high school on job shadowing program

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ARNOLD, Mo. (6/18/14)--Arsenal CU opened the doors of its main office in late May and early June to five high school student interns.
Click to view larger image St. Mary's High School students (from left to right) Andrew Nowak, Mike Ulsas, Tim Kroger, Matt Jones and Jake Adler pose with Arsenal CU Marketing VP Ken Moser. The students learned about marketing and accounting in an internship that took place in late May and early June. (Arsenal CU photo)
Three members of the quintet--Jake Adler, Matt Jones and Mike Ulsas--spent four days at the Arnold, Mo. office learning about marketing, branding and advertising. The other two--Tim Kroger and Andrew Nowak--spent five days learning about basic accounting principles and practices. All five are rising seniors at St. Mary's High school in St. Louis.

The marketing interns learned how member and customer surveys are performed. They also discussed marketing campaigns, conducted online research, and developed a direct-mail marketing piece of their own. 

The accounting interns received an overview of accounts payable and the automated clearinghouse that posts and rejects credit and debit transactions in real time. They also reviewed financial statements and helped with Arsenal's charity outreach on their last day by making bag lunches for the homeless. All five received a crash course in financial commodities, credit, saving, investing, the history of the credit unions and the difference between credit unions and banks.

"We enjoyed serving as a host site for these students and assisting them with not only their post-secondary plans, but also helping them become more financially literate while they spent time with us," said Arsenal CU vice president of marketing, Ken Moser.

St. Mary's, an all-boys Catholic high school in St. Louis, has made internship programs a graduation requirement. Arsenal also participated in the program last year--the St. Mary's internship program's inaugural year.

Arsenal CU has about $200 million in assets.

Iowa CUs post strong 1Q loan growth

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DES MOINES, Iowa (6/18/14)--Iowa credit unions ranked second in the nation in annual loan growth for the first quarter, according to data released by the National Credit Union Administration, while share and deposit growth also experienced robust gains.

Only Idaho outpaced the Hawkeye State in loan growth.

Credit unions in Iowa also experienced the second-fastest growth nationally in total loans year-over-year, with total loans and leases jumping 14.4% to $8.3 billion.

"Consumer confidence is building with continued low interest rates on consumer loans and an improved housing market," said Patrick S. Jury, president/CEO, Iowa Credit Union League. "We're finding that consumers are more willing to purchase big ticket items like a home or car, and Iowa credit unions are able to assist them with their financing needs."

The state's credit unions also saw a 5.1% step up in share and deposit growth, to $10.5 billion, outpacing the national average of a 3.6% increase. Total assets ticked up 5.3% to $12.2 billion as well.

Membership growth gained 1.7% in the first quarter year-over-year, bringing total membership for Iowa credit unions up to 1,021,449.