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Security No. 1 consumer credit card concern

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SAN FRANCISCO (7/2/08)--Credit unions offering credit card programs to members may want to reference a recent study indicating that security is cardholders’ No. 1 concern. Javelin Strategy and Research released a report, “Credit Card Satisfaction--an Effective Acquisition and Retention Strategy Must Focus on Multiple Facets of the Relationship,” which analyzes consumer perceptions affecting selection of a credit card issuer and a card at the point of transaction. Javelin surveyed three age groups--Baby Boomers, Generation X and Generation Y. About 80% of respondents said that as the fear of data breaches rise, security was their No. 1 concern. Security at point-of-purchase also was noted. “Security fear at the point of purchase is important for issuers to understand,” said James Van Dyke, Javelin president of strategy and research. “The focus and press coverage that data breaches have received as a point of vulnerability in card fraud has led to an increased focus by consumers on security features of their cards when choosing one to make a purchase.” Online experience, rewards programs and interest rates also were cited as driving factors in deciding on a card, Javelin said.

CUs response to the economy should be modest

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NEW YORK (7/2/08)—Credit unions’ response to the economy should be modest, attendees at America’s Credit Union Conference & Expo in New York City were told Tuesday in a session with the Credit Union National Association’s (CUNA) economists. Bill Hampel, chief economist, and Mike Schenk, senior economist, provided an economic outlook for credit unions.
Because other lenders are tightening their lending standards, making up for loan losses, people with good credit can’t get loans. That means credit unions can increase their loan volume, said Bill Hampel, Credit Union National Association chief economist, at America’s CU Conference & Expo Tuesday.
“With very few exceptions, credit unions are collateral damage to the subprime crisis and recession. If you’re a credit union in what used to be the hottest real estate market, and you have negative effects, it's not what you did--it’s where you are,” Hampel said. “Negative effects are not caused by the credit union, nor are they long-lasting. The economy won’t boom out of crisis. It will level off and gradually recover,” he said. Hampel advised:
* “Let your capital cushion do its work. You’ve saved it for a rainy day. It’s started raining and it’s pouring. The capital is an umbrella you’ve kept dry. Now is the time to open it and get it wet.” * Avoid penalizing members with higher fees and loan rates, and lower dividend rates just to protect income. * Rising delinquencies and loan losses do not require modifying lending policies. “If you’ve been stable for the past decade and loan losses have doubled, it’s OK.” * Adjust the net income budget and monitor it closely. * Tell members about share insurance. A lot of members don’t understand that credit unions are insured.
“The economy is still in the throes of correction,” Mike Schenk, senior economist at the Credit Union National Association (CUNA), told America’s Credit Union Conference & Expo Tuesday in New York. (Photos provided by CUNA)
Schenk compared the current cycle with historical cycles of inflation. “We are in a recession that started late last year. Although the economy didn’t slow down as much as expected, it will be fourth quarter or into next year before it picks up again. This recession cycle is more gradual, with slower recovery expected.” The outlook for economic growth has been 2%--below the long run average of 3%. CUNA economists expect growth to be 1% for next quarter and a little over 1% for the full year. “There’s not a lot of good news for next year. We probably will see a trend increase as the year continues, but it’s nothing to write home about.” Schenk noted that housing prices are a cyclical market, but the current cycle is different. Historically, prices go up for four to five years, then down four to five years, and up again. The housing boom, however, went up for nine years. “That suggests to us that the pain and suffering are not over,” he said. “You have a very stressed consumer. Consumers face job market weakness and slow income growth, low savings rate, a high debt, falling wealth in the housing and home equity markets, high energy prices," Schenk said. Consumer confidence is at its lowest, he added. And “the real wild card is how credit union members respond through these tough economic times.” The conference, which ends today, is presented by CUNA. To view CUNA economists’ latest economic overview, use the resource link. For more information from the conference, use the link to Credit Union Magazine's ACUC Daily.

Compliance certification training eSchool offered

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MADISON, Wis. (7/2/08)--Credit union volunteers and non-compliance staff can be recognized for their successful completion of compliance training in a new Credit Union National Association eSchool beginning in August. The 10-session Compliance Certification Training for Staff e-School is a complete compliance training package for volunteers and non-compliance staff. Running from Aug. 6 - Dec. 17, the eSchool will cover mortgage and consumer lending, deposit accounts, and general operations regulations such as the Bank Secrecy Act, Bank Bribery Act, IRS information reporting and withholding requirements, various privacy regulations, and more. Also, participants will learn about the National Credit Union Administration and federal share insurance, along with agency management issues. Those who are interested may take the Regulatory Compliance Training and Certification Program (RegTraC) Level 1 exams to test their knowledge of the topics and obtain a Compliance Achievement Award. Credit union staff and volunteers can further their financial management knowledge and learn to improve the performance of their credit unions during the eight-session Financial Management e-School: Part II. Participants of this Aug. 27--Oct. 15 eSchool will gain a better understanding of how their financial management decisions affect credit union growth through the following advanced-level topics:
* Aug. 27--Capital adequacy and measuring risk-based capital; * Sept. 3--Introduction to the financial planning case study and simulation overview; * Sept. 10--Advanced asset-liability management and credit: Interest rate risk assessment and managing core deposits; * Sept. 17--Financial planning, budgeting, and building the "ideal" capital position; * Sept. 24--Forecasting and strategically planning for long-term growth; * Oct. 1--Portfolio management strategies; * Oct. 8--Financial planning issues: Case studies and simulation case presentation; and * Oct. 15--Investment options to achieve financial goals and objectives.
An e-School is a series of interactive classroom sessions that feature live, real-time instruction from industry experts via the Internet and a telephone conference call. Students also have an opportunity to interact with the instructor and other participants through online chats and live discussion. Participants may register for specific webinars or the entire series of sessions as an eSchool.

CU MatriMoney program garners 400000 in deposits

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FARMERS BRANCH, Texas (7/2/08)--Filene Research Institute’s MatriMoney initiative is a wedding cash gift registry for newly engaged couples that acts as a savings account guests can contribute toward. The gift-giving program is a way to attract younger members to credit unions, according to the Texas Credit Union league (LoneStar Leaguer June 30). Since June 2006, when Mountain America started the program, the credit union has had more than 300 registrants open accounts, with more than $400,000 in deposits, she added. The credit union has loaned $700,000 through the program. Mountain America FCU’s success stories in introducing the MatriMoney program are the subject of a Filene podcast. In it, Annette Zimmerman, senior vice president of the $2.301 billion asset, West Jordan, Utah-based credit union, is interviewed by Filene’s Maureen Maddox. Because no other establishment offers this type of service, the MatriMoney concept is a crucial service for the credit union to offer potential members, Zimmerman said. Also, 38% of MatriMoney participants at Mountain America have become new members of the credit union. In addition to Matimoney’s basic savings account concept, the credit union also added a secondary checking account which allows money to be given via the Internet, and a specially tailored debit card, depicting wedding rings, which started conversations and stimulated public interest. Both of these features contributed to the success of the program, Zimmerman said. “It’s a great marketing opportunity and a great way to brand our credit union,” Zimmerman said. MatriMoney’s generational approach and appeal also have led to interest in mortgage assistance, car loans and other services at the credit union that closely fit the needs of newlyweds, Zimmerman said.

MCUL CUcorp hold elections

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PLYMOUTH, Mich. (7/2/08)--The Michigan Credit Union League (MCUL) and CUcorp board of directors met June 24 in Northville Township, Mich., to elect the next CUcorp board of directors and the Michigan Credit Union Foundation. Robert Brava, president/CEO, Community Choice CU, Farmington Hills, and Bradley Swee, president/CEO, Meijer CU, Grand Rapids, were elected to two-year terms on the CUcorp board. Swee will serve as secretary/treasurer. Bava and Swee join Chairman James Costello, executive vice president, NuUnion CU, Lansing; Vice chairman William Thiess, president/CEO, Detroit Edison CU; and Peter Dzuris, president/CEO, Northland Area FCU, Oscoda. MCUL Chairman Andrew List, president/CEO, Option 1 CU, Grand Rapids, serves on the board as ex officio, and MCUL Vice Chairman George Isola, manager, Ishpeming (Mich.) Community FCU, was elected to a director seat. Elected to two-year terms on the Michigan Credit Union Foundation were:
* Doug Burroughs, CUNA Mutual Group vice president, credit union services; * Karen Dahl, president/CEO, Northern United FCU, Escanaba; and * Pamela Goven, president/CEO, Shawbox Employees FCU, Muskegon Heights.
The three join:
* April Clobes, vice president of e-commerce, Michigan State University FCU, East Lansing; * Janice Rose, president/CEO, E&A CU, Port Huron; * H. Vance Bargo, president/CEO, Family First CU, Saginaw; and * MCUL President/CEO David Adams.
The next meeting of the league and CUcorp policymakers will be held Sept. 18-19.

Study Retirement accounts primary driver of income assets

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NEEDHAM, Mass. (7/2/08)--Retirement accounts, which represent more than $17 trillion of U.S. retirement funds, will be a primary driver of income assets, according to new research from TowerGroup. Therefore financial institutions, including credit unions, should focus more on this area if they wish to succeed in the overall retirement income market. The TowerGroup research report, titled “Wrestling with Retirement Income: Key Challenges and Solutions for the Wealth Management Industry,” is authored by Sean Cuniff, a research director in the Brokerage and Wealth Management Practice at TowerGroup. U.S. financial institutions are devoting enormous amounts of resources to retirement income planning, and spending millions of dollars on advisory tools, income-focused products, and marketing. However, many firms are struggling to find a way to launch effective and profitable retirement income programs, particularly those targeted to consumers comprising the large “affluent” and “emerging affluent” asset segments. TowerGroup believes that, through 2011, the largest opportunity for retirement income services is in the affluent segment ($500,000 to $1.5 million in investable assets) and the emerging affluent segment ($250,000 to $500,000 in investable assets). Clients in these markets have sufficient assets to warrant careful planning and ongoing management, yet they do not have enough wealth to be immune from concerns about running out of assets prematurely. Offering retirement income solutions to the affluent and emerging affluent U.S. population is a challenging proposition. Yet the coming wave of retiring baby boomers presents an opportunity that cannot be ignored, TowerGroup said. TowerGroup believes a “holistic” advisory solution incorporating the smart use of technology is the only way to offer clients the comprehensive solutions they need to effectively manage their retirement income. To achieve success in this area, organizations must:
* Align the divisions of the organization to overcome existing product and service silos; * Focus on holistic advice and planning to offer more than strictly a product solution; * Retain tax-advantaged accounts using experienced and well-trained personnel; * Rethink service models by applying expert teams, centers of expertise, or alliance programs; * Evolve revenue and compensation strategies towards asset-based and non-traditional fee arrangements; and * Invest in technology to improve advice, maximize the use of client data, manage complex revenue arrangements, and streamline regulatory licensing and training.
Financial institutions that effectively target retirement assets and promote fee-based solutions will be able to generate long-term stable revenue while meeting the needs of their clients, the report said. The careful use of technology will enable them to make such offerings available to clients at a reasonable cost and win a competitive advantage.

CU System briefs (07/01/2008)

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* COLUMBIA, Md. (7/2/08)--The Maryland and District of Columbia Credit Union Association is working with FDI Collateral Management to administer the electronic titling process for vehicles registered in Pennsylvania and other areas where the service is offered (Focus June 30). Credit unions can receive training through the league. The deadline for electronic titling in Pennsylvania is July 10, but a grace period is available until July 30. The league will host a webinar for credit unions interested in the service ... * CHATTANOOGA, Tenn. (7/2/08)--Margaret Hill Burton, 64, was sentenced one year for embezzling more than $91,000 from Progressive Teachers FCU, Chattanooga. Burton worked at the credit union from 1998 to 2006 (The Chattanoogan June 30). Prosecutors said she made false loan advances to members and then took the money for herself ... * WEST LAFAYETTE, Ind. (7/2/08)--NFL New Orleans Saints Quarterback Drew Brees made his annual summer return on June 13 and 14 as part of his continued partnership with Purdue Employees FCU (PEFCU) and his commitment to the Lafayette community. Brees began his visit with an appearance at the Purdue Athletes Life Success Program (PALS) at Purdue University. PEFCU awarded bicycles to children participating in the camp. Brees has been a member of the credit union since 1997. (Photo provided by Purdue Employees FCU) ... * WEST LAFAYETTE, Ind. (7/2/08)--Purdue Employees FCU (PEFCU) raised $50,000 for the Purdue Athletes Life Success Program (PALS) through the 2nd Annual Brees Dream Foundation Golf Outing. Golfers from nine different states joined football celebrities Drew Brees, Bob DeMoss, Travis Dorsch, Bernie Flowers, Nick Hardwick, Mark Herrmann, Leroy Keyes, Kyle Orton and others on the course. From left are: PEFCU CEO Bill Connors; Connors’ wife, Lisa; Brittany Brees; PALS Director Bill Harper; and Drew Brees. Brittany and Drew founded the Brees Dream Foundation. (Photo provided by Purdue Employees FCU) ...

CenCorp announces 1 million fee-waiver dividend

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SOUTHFIELD, Mich. (7/2/08)--Central Corporate CU (CenCorp) announced that it will waive processing fees for members this month and in November as a patronage dividend. The fee waiver will save members about $1 million, Cencorp said in a release. The waiver intends to reward members who use the corporate’s services the most. “These patronage refunds reward members that use the fee-based services that make a positive contribution to CenCorp’s operating results,” said Bill Walby, CenCorp CEO. CenCorp is a $3.5 billion corporate credit union that provides investment, credit and correspondent services to 400 credit unions, primarily in Michigan.

Membership Growth Task Force presents recommendations

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NEW YORK (7/2/08)--Membership Growth Task Force Chairman Dick Ensweiler presented the group’s findings and recommendations to the Credit Union National Association’s (CUNA’s) Board Tuesday during America’s Credit Union Conference & Expo this week in New York.
At a press conference, Dick Ensweiler, right, chairman of the Membership Growth Task Force and president of the Texas Credit Union League, discusses the task force’s findings and recommendations to the Credit Union National Association’s (CUNA) Board. Also shown are CUNA’s Mark Wolff, left, senior vice president of communications, and Mike Schenk, senior economist and liaison to the task force (Photo provided by CUNA)
“Fifteen percent of potential members are actually members of credit unions, and it’s not growing,” Ensweiler, president of the Texas Credit Union League, said. Potential members “are getting inconsistent messages about credit unions, and branding isn’t the answer because credit unions want to do their own marketing to show they’re unique from other credit unions,” he said. Marketing messages emphasizing member-owner benefits and tax-exemption are not messages that resonate with potential members. “We need an awareness and image campaign” that should focus on “what people care about—trust, respect, or whatever the right message is today.” Although credit unions are squeezed financially and aren’t allocating the extra funds needed for marketing, they could explore ways to work together, to collaborate, he said. Metrics is also an issue. Credit unions need to measure their growth initiatives to determine whether their approach to growth is doing what they intend, he said. The task force determined three “ripe” markets: the youth market, the Hispanic\ethnic market and the underserved. It made 21 recommendations in five areas. The group recommended that credit unions should:
* Develop a clear, consistent message with strong appeal so the market can understand and “buy into” what credit unions are promoting. * Do more to serve many markets such as youth, immigrant/ethnic groups and underserved groups. * Learn from “best practices” when exploring growth opportunities; * Free up resources, possibly through collaboration; and * Measure membership growth initiatives with crucial metrics.
The task force made recommendations that would:
* Assist with awareness and image issues; * Look at both a national image campaign and near-term options; * Assist credit unions in reaching out to new markets; * Improve the dissemination of ‘best of breed’ or ‘best practices’ ideas; * Improve back office operations and collaborative efforts the task force recommends; and * Assist in identifying and applying growth metrics.
CUNA Chairman Tom Dorety accepted the report and has directed CUNA staff to review it and report back to the board in September. Immediate past CUNA Chairman Allan Kemp McMorris, who formed the task force, said it “has produced a very timely, thorough and far-reaching report for those focused on membership growth, which today is a core concern of the credit union movement.”