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NEW: NCUA Loses Corporate CU Claims Against Barclays Capital

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WICHITA, Kan. (7/10/13, UPDATED 5 p.m. CT)--Saying that the claims are time-barred, a federal court in Wichita, Kan., today dismissed the National Credit Union Administration's lawsuit against  Barclays Capital over the sale of residential mortgage-backed securities (RMBS) that caused losses to U.S. Central FCU and Western Corporate FCU.
Also, in a separate ruling today, U.S. District Judge John W. Lungstrum reaffirmed an earlier ruling he made in a similar lawsuit filed by NCUA against Credit Suisse Securities: that a tolling agreement NCUA had entered with the defendants, and which NCUA had argued extended the time allowed to file the lawsuits, "is not effective in extending the applicable three-year limitations period under the Extender Statute."
NCUA had argued in eight cases filed against brokerage firms in the court and other districts that it had met the statute of limitations for filing the lawsuits because of tolling agreements that delayed filing dates or because of the statute that extended the time to file in certain situations.
The dismissal, if upheld by higher courts, likely will impact not only NCUA's lawsuits but other agencies as well.  The court ruling specifically mentioned an amicus brief filed by the Federal Deposit Insurance Corp. as part of the Credit Suisse case and rejected the FDIC's arguments.
NCUA's suit against Barclays related to 12 RMBS certificates sold to the two corporates, which were liquidated as a result of losses stemming from investments prior to the financial crisis.
The Credit Union National Association is studying the court documents, and News Now will have more details in Thursday's issue.

Overdraft Price Study: CUs Still the Best Deal

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LAKE BLUFF, Ill. (7/10/13)--The national average price for overdrafts (ODs) on checking accounts rose to $30 as of June, matching the national average charged by banks the past four years.  The cost of overdrafts has risen steadily since 2009, according to a new study, which shows credit unions again remain the best deal for consumers.
Credit unions' average for 2013 is $28, one dollar higher than in December 2012, but still considerably lower than what banks have charged the past five years studied, according to data from Moebs Services, a Chicago-area economic research firm specializing in financial services. Banks have charged an average $30 since 2010, when they increased the price from $29. Credit unions charged $25 from 2009 through 2011 before increasing the fees in 2012 to $27.
"Despite the increases by credit unions (the past two years), their OD fees remain $2 lower than banks, which is still a statistical difference," said Michael Moebs, economist and CEO of Moebs Services. "Credit unions' falling OD volume forces them to increase price to maintain revenue. Overall industry OD revenue fell in the first quarter to an annualized total of $31.1 billion," he said.
However, it may not be the price itself but the frequency of assessing OD charges that underscore the fact that credit unions are the better deal for consumers, said the Credit Union National Association.
"In our experience, the stated price of an overdraft fee is not a good indicator of the impact on users," said Paul Gentile, CUNA executive vice president of strategic communications and engagement. "A better indicator is how often the fees are assessed. The data suggest that credit unions impose the fee much less frequently than do banks--resulting in a lower dollar value of fees paid by credit union members than that paid by bank customers," he said.
He cited a 2009 study by Victor Stango, PhD., University of California, and Jonathan Zinman, PhD., Dartmouth College, that found bank accountholders incurred more overdraft fees in a typical year--paying fees on an average of four transactions per year. Credit union members, by contrast, paid the fees for an average 1.5 transactions per year.
In the Moebs study, the largest of the 2,906 depositories reporting fees as of June, had the highest price--an average of $35 for institutions in two asset categories above $5 billion in assets. That compared with $29 in the $100 million to $500 million asset range and with $25 for smaller institutions.
"The consumer who occasionally or frequently overdrafts saves substantially by going to community banks and credit unions," Moebs said.  He noted that institutions with $25 billion to $50 billion had the largest increase--16.7%--in average OD price--to $35 in 2013 from $30 in 2012.
The survey also noted regional differences. Financial institutions in the West and Midwest had lower OD prices with a median of $29, compared with $30 in the South and East.

CU System Briefs (07/10/2013)

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  • PORTLAND, Ore. (7/10/13)--Before awarding $50,000 to six non-profits, Portland, Ore.-based Advantis CU tapped the power of the social network, allowing the public to vote on 14 GROW Community Fund semi-finalist non-profits. The $989 million asset credit union told the Northwest Credit Union Association that more than 40,000 votes were cast (Anthem Recap July 3). "Inviting the public to vote helps us understand the priorities of those who live and work in the communities we serve," said Wendy Edwards, Advantis vice president of marketing and human resources. Grants went to: Growing Gardens, $10,000 to buy tools for the Garden Tools for Schools program; Boys and Girls, $5,500 to buy beds for 175 girls ages 10-18 in foster care at the Seneca House; David's Harp, $10,000 to buy a commercial oven for a community kitchen serving low- and no-income adults with mental illnesses; DoveLewis Emergency Animal Hospital, $9,500 for surgical equipment; Impact NW, $10,000 to bring child abuse prevention workshops to Portland elementary schools; and Meals on Wheels, $5,000 to purchase new kitchen equipment ...

LSCU & Affiliates Refreshes Brand For State Advocacy

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BIRMINGHAM, Ala., and TALLAHASEE, Fla. (7/10/13)--The League of Southeastern Credit Unions (LSCU) and Affiliates is refreshing its brand architecture, and plans to launch the refreshed brand Aug. 1.
LSCU & Affiliates is the parent brand for the league and its subsidiary organizations--The LSCU Service Corp. (LEVERAGE) and the Southeastern Credit Union Foundation.
Two new brands are being added to the structure to enhance the awareness and influence of credit unions in Montgomery, Ala.; Tallahassee, Fla.; and Washington, D.C. The LSCU will begin using the Alabama Credit Union Association (ACUA) and Florida Credit Union Association (FCUA) brands with lawmakers, candidates and regulators for a greater state-specific identity and recognition.
"As the LSCU & Affiliates grows, it's important that we constantly look at our brand positioning to ensure that it's also evolving," said LSCU & Affiliates President/CEO Patrick La Pine. "State-specific 'association' resonates much better with lawmakers and candidates. All politics is local.
The refresh also will apply to any other organization either fully owned or managed by the LSCU--Credit Union Service Centers of Alabama (CUSC) and Credit Union Vendor Management (CUVM).
"Going forward, if other state leagues are interested in consolidating, this new brand positioning demonstrates our commitment for maintaining state-specific brand identity, which we know is becoming an important issue for some," La Pine said.
The LEVERAGE brand also received a slight makeover. LEVERAGE is selling more products and services in other states, and will remove the current LSCU Service Corp. tagline from the LEVERAGE logo, LSCU said. A new tagline was developed that is not state/league specific, but shows more of what LEVERAGE means to its clients nationwide.
LEVERAGE, "Your Advantage," lets credit unions know that working with LEVERAGE gives them an advantage over their competition, LSCU said.
"For Alabama and Florida credit unions, the LSCU & Affiliates will be our main brand and nothing significant will change," said La Pine. "The ACUA and FCUA brand will be laser focused on advocacy efforts only."

Michigan CUs Team Up For 'Impact Saginaw'

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SAGINAW, Mich. (7/10/13)--Credit unions in Saginaw, Mich., have teamed up for Impact Saginaw, a collaborative effort on special projects to enrich lives of people in the community.

Click to view larger image Sixteen credit unions announced Impact Saginaw last week at the Saginaw Children's Zoo. From left are: Nancy Parker of the zoo, Alan Watson of Catholic FCU, Linda McGee of Wildfire CU, Mike Murphy of Tri To Finish, Bridget Looby, Catholic FCU; Tina Dowe of YMCA Saginaw and Dana Tell of Team One CU.

Leaders from all 16 credit unions with offices in Saginaw announced that Impact Saginaw's first activity will be a Triathlon for Kids on July 27, followed by sponsorship of a CU at the Zoo day on Aug. 17 in which families will have a free day at Saginaw's Children's Zoo, according to the Michigan Credit Union League (Michigan Monitor July 8).
"We tend to hear more about what's wrong with Saginaw instead of what's right," said Gerald Hutto, president/CEO of Team One CU and chairman of the Impact Saginaw Committee. He came up with the idea that began with a committee of credit unions meeting to talk about ways they could work together to benefit the community. "Because all of the credit unions involved have a strong commitment to this community, we felt it was the right time and place to bring us all together to make a difference."

Click to view larger image Local television, radio and newspaper reporters interview Linda McGee, vice president of membership development for Wildfire CU and spokeswoman for Impact Saginaw, a collaborative effort of credit unions to enrich lives in Saginaw, Mich. (Photos provided by the Michigan Credit Union League)

Linda McGee, vice president of membership development at Wildfire CU, welcomed credit union representatives and local dignitaries who gathered at the zoo last week for the announcement. Credit unions recognized they could do more together than individually, she said, adding, "We know this community has been through some tough times and in some cases, continues to go through some tough times."
While the first two projects are event-oriented, the group may look to more concrete projects of need for its future efforts.
The triathlon will be coordinated through the Saginaw YMCA and race management company Tri to Finish. Credit unions will sponsor the event, giving 300 young people the opportunity to participate for free.  The August event coincides with the zoo's back-to-school event. Impact Saginaw will provide free admission to the zoo, plus free-ride tickets to the first 500 children who attend.
Impact Saginaw demonstrates the credit union difference, said Hutto.  "The credit union community is different than many competing institutions. We each operate our credit unions to provide our members with the best in financial services, but we are also interested in making our communities a better place to live, work and play."
Team members include: Wildfire CU, Team One CU, Catholic FCU, Wanigas CU, Security CU, Frankenmuth CU, United Financial CU, Saginaw Medical FCU, Family First CU, Generations Family CU, Valley State Employees CU,COPOCO Community CU, Saginaw County Employees CU, First Area CU, Amalgamated CU and Lake Huron CU.
Raising public awareness about credit unions is one of the three tenets underlying the Credit Union National Association's and state leagues' Unite for Good rally to bring to reality a strategic vision in which "Americans choose credit unions as their best financial partner." For more on Unite for Good, use the link.

Polish & Slavic FCU Hands Out $200K In Scholarships

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BROOKLYN, N.Y. (7/10/13)--Polish & Slavic FCU last week awarded $200,000 in college scholarships to 280 high school, undergraduate and graduate-level students, marking the 13th year the Brooklyn, N.Y.-based credit union has sponsored the scholarship program.
Click to view larger image These students were among the 280 high school, undergraduate and graduate-level students awarded $200,000 in college scholarships through a program sponsored by Brooklyn, N.Y.-based Polish & Slavic FCU. (Photo provided by Polish & Slavic FCU)
The PSFCU Scholarship Awards ceremonies took place in New York and Chicago. Since its inception in 2001, the credit union's scholarship fund has helped make college a reality for more than 2,300 students, while dispensing $2.8 million in financial aid.
"Our roots took hold in 1976 with the pledge to help Polish immigrants find a better future in America," said Krzysztof Matyszczyk, PSFCU board chairman. "This laudable scholarship program is consistent with our mission to help our members attain a better and more prosperous future."
As in previous years, the PSFCU Scholarship program consisted of three parts:
  • Scholarships for high-school graduates who have been accepted to college;
  • Scholarships for college students; and
  • Acceptance to the "Astronomy Adventure with Copernicus," a program for students enrolled in Polish supplementary schools.
This year also featured a fourth component, "Byc Polakiem," a contest where individuals ages 9-25 competed to win a week-long stay in Poland, with PSFCU covering the travel expenses.
The college scholarships awarded by PSFCU to recent high school graduates is administered by the Credit Union Association of New York.  The scholarship program geared toward current college students is conducted solely by PSFCU.

Poll: Consumers Don't Understand Purpose Of a Budget

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WASHINGTON (7/10/13)--Many credit unions with financial education components are aware of surveys that indicate consumers lack the financial knowledge to make sound money decisions. Yet another survey drives home that point. This time, the poll found 57% of consumers surveyed misunderstand the purpose of a budget.

Consumers polled view a budget as a restriction, not a reflection of priorities, said the National Foundation for Credit Counseling (NFCC), which conducted the poll on its website.

"A budget actually provides the structure through which a person can be in charge of his or her spending, directing the dollars to their best use," said Gail Cunningham, NFCC spokesperson. "Spending should be a reflection of a person's priorities, but without a plan, the priorities often get pushed aside in favor of the tyranny of the urgent."

The reluctance to construct a budget suggests people may be afraid to face the financial facts, choosing instead to allow the most pressing financial need or urge of the moment make that decision for them.

That means credit union financial educators will need to explain even more about setting and following budgets. NFCC pointed out that a spending plan provides a number of benefits.   Credit unions can use this list to add to their own financial education arsenal. When educating members about budgets, be sure to explain that a spending plan:
  • Creates a thoughtful awareness of spending;
  • Relieves financial stress;
  • Increases financial security;
  • Helps structure a plan for the future;
  • Allows planning for large purchases;
  • Assists in meeting financial goals;
  • Frees up money to designate for savings;
  • Uncovers money available to invest;
  • Allows preparation for emergencies;
  • Avoids late payments through scheduling timely payments;
  • Finds hidden money for debt repayment; and
  • Potentially raises the credit score.
Credit unions can find a host of financial education materials, including resources for budgeting on the Credit Union National Association's  website, in the Home and Family Finance Resource Center. Use the links.

Instead of being restrictive, a budget often creates more money by use of smart spending choices, said NFCC.  It suggested starting out by tracking spending for one month.

"It's a shame that budgeting has a negative connotation," said Cunningham. "Everyone needs a spending plan, but when times are tough, a budget is even more critical. When every penny counts, it's important to count every penny."

New York CUs Outperforming Banks

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ALBANY, N.Y. (7/10/13)--New York State credit unions began 2013 with a strong financial performance, exceeding bank and national industry averages in several key categories, said the Credit Union Association of New York.

"This report reaffirms that more and more New Yorkers are choosing credit unions for their financial services, from mortgages and business loans, to savings and checking accounts," said William J. Mellin, president/CEO of CUANY. "Along the way, they're discovering the unique financial and personal benefits that come with credit union membership."

The statistics are highlighted in a new quarterly New York Credit Union Performance and Trends Report published by CUANY in partnership with Callahan & Associates Inc.

New York credit unions exceeded national averages in asset, share, membership and loan growth during the first quarter, the report indicated.
Highlights include:
  • New York credit unions remain more highly capitalized than their local competitors. As of March, credit unions in the state reported an average capital ratio of 11%--well above their local bank peers, CUANY said.
  • Asset quality for New York credit unions also is stronger than that of banks nationwide, which are charging off 0.83% of their loan portfolios. Credit unions also continue to have a lower delinquency ratio than local and national banks.
  • New York credit unions recorded a return on assets (ROA) in the first quarter that is 41 basis points above local banks' ROA.
  • Credit union loan originations hit $4.4 billion in March 2013--a nearly 9% increase over March 2012.
  • First mortgages, bolstered by the current refinancing boom, continue to be the largest portion of the loan portfolio at New York credit unions. At the end of March, first mortgages made up 41.1% of all outstanding loans.
  • Credit unions originated $850 million in first-quarter member business loans, holding 19.1% of all outstanding small-business loans at New York financial institutions by the end of March.
  • Membership growth at New York credit unions during first quarter remained faster than the national average, CUANY said.

What's Next For New Cornerstone CU League?

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FARMERS BRANCH, Texas (7/10/13)--Now that it has a board in place, the next step for the newly created Cornerstone Credit Union League is to form a consolidated strategic plan, Dick Ensweiler, league president/CEO, said.
The merger of the Arkansas, Oklahoma and Texas credit union leagues became official July 1, at which time a new board was announced (News Now July 1).
The board directed league staff to review the 2013 strategic plans for the leagues in all three states, and consolidate the plans into one document, Ensweiler said (The Leaguer July 9). The board will review the consolidated plan at its September meeting, the first official meeting of the board. The plan will carry the league through 2013, he added.
The board will hold its first strategic planning session in 2014.
Branding will be a priority for the new board, Ensweiler said. The league is rebranding marketing and promotional materials and updating publications, websites and social media sites.
The Texas Credit Union League's former subsidiary, Credit Union Resources, will maintain its identity. The Texas Credit Union Foundation, which consolidated with the foundations in Arkansas and Oklahoma, will be renamed the Cornerstone Credit Union Foundation.