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CU System briefs (07/11/2012)

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  • BISMARCK, N.D. (7/12/12)--Georgia Schwartz of Glen Ullin, N.D., a longtime employee of credit union based in Williston, N.D., pleaded not guilty to charges of embezzling about $130,000 from Glen Ullin CU, now Western Cooperative CU. She is charged with embezzlement and misapplication from a credit union and making false entries.  Court records indicate that money was taken over 24 years from the credit union, and Schwartz allegedly kept two sets of records to conceal the theft. A trial is scheduled for Sept. 11 in Bismarck (SFGate.com July 11) …
  • ALBANY, N.Y. (7/12/12)--A CUNA Mutual Group Golf Tournament has raised more than $27,000 for the New York Credit Union Foundation's initiatives in financial literacy and independence for New Yorkers, said the foundation in a press release.  Roughly 140 people from credit unions across the state, plus vendors and credit union friends, turned out for the event.  In addition to CUNA Mutual as Title Sponsor, sponsors included Professional Sponsor Vining Sparks, Amateur  Sponsors SEFCU and Melrose CU; and Major Sponsors Adirondack Chapter, Alloya Corporate FCU, AmeriCU CU, Bethpage FCU, Covera, GPO FCU, Montauk FCU and The Summit FCU.  Dannemora FCU's winning foursome included, from left, Tyler Smith, Nancy Drolette, Matt Davis and Jim Dowdle. (Photo provided by the New York Credit Union Foundation) …
  • HARRISBURG, Pa. (7/12/12)--The Enterprise Inc. Foundation of St. Louis, Mo., made a $3,000 contribution to Pennsylvania Credit Union Foundation during a check presentation ceremony at TruMark Financial CU, Trevose, Pa., said the Pennsylvania Credit Union Association (Life is a Highway July 11).  Kaushika Kansara, group development manager of Enterprise's car sales division, praised the credit union movement for its advocacy of financial education and information about purchasing autos. TruMark is a business partner of Enterprise. Enterprise has contributed more than $25,000 to the foundation in the past five years.  From left, are foundation Executive Director Jo Wambach, Kansara, and Rick Stipa, TruMark Financial CU CEO and board member of the foundation. (Photo provided by the Pennsylvania Credit Union Association) …

Fla. United Way encourages poor to open accounts

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ORLANDO, Fla. (7/12/12)--Several United Way agencies in South Florida have teamed up with credit unions and banks for an asset-building campaign to help unbanked and under-banked individuals increase their financial stability.

United Ways of Broward, Miami-Dade and Palm Beach Counties Wednesday announced the launch of Bank On South Florida, which focuses on low-income households without checking or savings accounts (unbanked) or who have an account but continue to rely on alternative financial services (underbanked). Bank On South Florida is part of a national Bank On campaign operating in more than 100 communities.

The project's inaugural financial institution partners include two credit unions--City County CU, Fort Lauderdale, and Power Financial CU, Pembroke Pines--as well as 10 banks.

"An average unbanked individual will spend $1,000-$2,000 annually in fees simply to cash paychecks from check-cashing stores," said Bill Mills, director of Bank On Florida. "This is a substantial amount of money that Bank On South Florida will be helping put back into the hands of our low-income working families, and enable them to keep and grow their hard-earned dollars with mainstream banking institutions."

The Federal Reserve Bank has estimated that 8.4% of unbanked households and 16.8% of underbanked households exist in the tri-county metro area. The households rely on predatory lenders such as check-cashing stores, payday lenders and rent-to-own stores. That reliance prevents them from growing assets, said a press release from the agencies.

Participating nonprofit community organizations will provide financial education and coaching, and work with candidates to remove any barriers or obstacles impeding a banking relationship. They will then provide candidates with a qualified referral to a participating credit union or bank, which will then work with the individuals to provide affordable banking products and to grow their assets.

Inaugural nonprofit partners include South Florida Urban Ministries, Hispanic Unity of Broward County, Urban League of Broward County, Housing Partnership Inc., 211 Network and Consolidated Credit Counseling Services Inc.

Mortgage-biz casualties fall as fewer FIs fail

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DALLAS (7/12/12)--The number of mortgage-related businesses to fail or close down during the first half of 2012 has declined by more than a quarter from the same point in 2011, while fewer credit unions and banks are failing, despite an increase in departures of mortgage bankers.

During the second quarter, the failure of 25 mortgage-related entities was tracked in the Mortgage Graveyard from Mortgage Daily (PRNewswire July 9).

Failures of the entities eased from the first quarter's 27. The decline was even more significant when compared with the 37 tracked in the second quarter 2011.

Compared with the first half of last year, the first-half 2012 total was down 30% because of a one-half reduction in the number of credit unions failures and more than one-third decline in bank failures.

Failures among types financial institutions this year and last year are:

  • Credit unions: Eight (first half 2012) vs. 16 (first half 2011);
  • Banks: 31 (first half 2012) vs. 48 (first half 2011); and
  • Nonbanks: 13 (first half 2012) vs. 10 (first half 2011).
Mortgage bankers that have shuttered their doors increased 30%.

During the three months ended May 31, the Federal Deposit Insurance Corp. and the Comptroller of the Currency issued a combined 246 regulatory orders against banks, climbing from 221 orders issued in the three months ended Feb. 29. The increase suggests that the third quarter could see an uptick in bank failures, Mortgage Daily said.

Phoenix to invest 50M with local FIs

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PHOENIX (7/11/12)--The city of Phoenix will invest up to $50 million with local financial institutions, including credit unions, through federally insured deposits, city officials said.

The financial institutions must be Arizona-chartered or have a physical presence in Maricopa County, in which Phoenix is located (Tucson Citizen.com via Arizona Republic News July 10).

Phoenix is the most recent city to join several other municipal and state governments that have looked to credit unions and community banks in the aftermath of the financial crisis, the newspaper said.    

Credit unions in several states are increasingly accepting municipal deposits from city and town governments. More states are trying to pass laws to obtain that capability. Many municipalities are not aware they can use credit unions as depositories. Education is a key focus of credit unions that do accept these deposits, said several credit unions that offer the service (News Now June 29).

Phoenix officials told the newspaper they aim to help local financial institutions provide them with capital to fund loans to local businesses and individuals. The city mainly invests its money in U.S. government securities, the paper said.

To read the article, use the link.

S.C. CUs awarding mini-grants in MADTAG campaign

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COLUMBIA, S.C. (7/12/12)--Credit Unions of South Carolina are offering 20 mini-grants to state residents who are making an impact in their communities.

The $100 mini-grants are part of a pilot cooperative campaign called "Make a Difference. Tag, You're It!" (MADTAG). The campaign highlights acts of service and encourages South Carolinians to pass the goodwill along to others, according to WTOC.com (July 11).

The campaign was created under the leadership of the South Carolina Credit Union League Media Committee (News Now Feb. 21)

To apply, interested South Carolina residents must post a message on the MADTAG Facebook page describing how they would use $100 to make a difference in their communities. The post must include specifics on how the $100 would be used and the town where the funds would be used. Posts will be accepted until July 27.

Winners will be announced July 31.

Mini-grant award winners will be directed to a participating credit union in their community to collect their funds.

Winners will be asked to document by photo, video and social media how they used the $100 to make a difference.

FORUM CU creates small-biz advisory council

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INDIANAPOLIS (7/12/12)--FORUM CU, Indianapolis, has formed a small business advisory council comprising senior executives and small business owners who are also active members of the credit union.

Click to view larger image Members of the newly created FORUM CU Small Business Advisory Committee include, from left, Jay Smale, Laurie Seland, Scott Myer, Bill Mulford, Renee Lucas, Carmen Clift, Teresa Alles, and Cassandra Faurote. (Photo provided by FORUM CU)
The council's first official meeting was held in November. 

"We have been developing this concept for the past several years and are delighted to have our first council members in place," said Andy Mattingly, FORUM CU chief operating officer.

Council members serve a one-year term and meet quarterly to network with each other and provide input on FORUM product and service initiatives.

"FORUM is a cooperative credit union, so ensuring that our members' voices are an integral part of our decision making process is critical," Mattingly said. "We also want to be sure they are receiving a professional benefit from these meetings, such as networking opportunities and the ability to create meeting agendas aimed at helping them grow their businesses."

Topics addressed by the council include a new checking account that will roll out in the fall, FORUM's new online banking system that went live in March, and community involvement initiatives for small business owners.

The Credit Union National Association (CUNA) and credit unions are urging the U.S. Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

Study Mobile use not impacting financial system yet

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FRAMINGHAM, Mass. (7/12/12)--Mobile payments have more than doubled in popularity, reaching in excess of 33% of consumers surveyed--although payments have not yet made a large impact on the financial system--according to the IDC Financial Insights eighth annual Consumer Payments Survey, released Monday.

The report, "Business Strategy: Results from the 2012 Consumer Payments Survey," focused on the use of emerging payment technologies.

Of consumers who had made a mobile payment, more than half used PayPal Mobile (56%), with Amazon Payments and Apple's iTunes service tied at about 40%. Also, prepaid cards showed strong growth, particularly in the network branded and benefit submarkets.

"Based on our results, we expect to see continued growth in open-loop prepaid cards and mobile payments next year, and believe that the improvements being offered in electronic bill delivery will break electronic bill presentment and payment out of its doldrums as well," said Aaron McPherson, practice director, IDC Financial Insights. "The advent of new card-linked offer programs should increase the influence of rewards on the average consumer; however, this will depend on how many banks choose to move ahead aggressively with these programs, and how many merchants choose to support them."

He told American Banker (July 10) that mobile payment's growth has not yet made a significant impact on the financial system.

Other findings include:

  • Network-branded (open loop) prepaid cards have drawn neck and-neck with closed loop cards in consumer penetration. Strength was seen in all categories, including benefit and payroll cards. This could reflect economic and regulatory factors, as well as better marketing by financial institutions and independent issuers, said IDC Financial Insights.
  • For the second consecutive year, both biller and bank-operated online bill pay sites were used by more than 50% of the consumers surveyed. Overall, 73.5% of U.S. consumers now use online bill payment. This confirms that online bill payment is now the dominant way bills are paid in the U.S., said the report.
  • Despite the popularity of digital downloads, such as apps and music, more respondents reported buying physical goods with their phones than online services, digital goods, or virtual currency.
IDC Financial Insights emphasized the results should lend urgency to financial institutions' efforts to develop products in the prepaid cards and mobile payments areas. Demand clearly exists, and financial institutions need to make sure they are not left behind by non-financial institutions that are more narrowly focused on the opportunity, IDC Financial Insights said.

The company said reward programs are one of the strongest areas for financial institutions to build upon, because financial institutions are party to most commercial transactions and have the best data. They also have a history of offering rewards on their cards and working with retailers on cross-promotions. With the limits on debit card interchange creating a revenue gap, targeted offers provide a replacement revenue source, and can anchor ventures in the prepaid and mobile payments markets, IDC Financial Insights said.

Tornado-damaged CU to reopen in Alabama

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BIRMINGHAM, Ala. (7/12/12)--Six months after the building was severely damaged by a tornado, Secure First CU will celebrate the grand re-opening of its main branch in Birmingham, Ala., on July 19.

A tornado ripped a large portion of the roof off the building on Jan. 23 and also did structural damage to the drive-thru, second floor and front entrances (News Now Jan 25).

A ribbon-cutting ceremony is scheduled for 9 a.m. on July 19. The credit union will celebrate with its members all day with door prizes and giveaways.

"We are grateful that no one was injured and the credit union has been able to operate after sustaining such considerable damage," said Jordan Sullivan, Secure First president. 

Secure First has kept its main branch in operation during the renovation through the use of a mobile unit from Pensacola, Fla.-based Pen Air CU.

Survey Small biz short on funding suggests raising MBL cap

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WASHINGTON (7/12/12)--A survey by a trade association for small businesses--which supports expanded business lending for credit unions--indicates that many small businesses are unable to locate funding sources. Among the solutions it suggests is increasing credit unions' member business lending (MBL) cap.

Further, the survey indicates that--when small businesses do go to a credit union--they like what they get, rather than what they receive from big banks.

Cash flow issues continue to plague a significant number of small businesses in the U.S., said the 2012 Small Business Access to Capital Survey from the National Small Business Association (NSBA).

The cash flow problems of small businesses have been "exacerbated in recent years," said NSBA in the report. Nearly half  (43%) of small-business respondents said that in the past four years, their loans or lines of credit were reduced. Nearly one in 10 had their loans or lines of credit called in early by their bank. Of those who experienced the early loan call-in, 19% were given fewer than 15 days.

"Given that the average balance on a loan or line of credit is $265,060, 15 days is a death sentence for most small business," said the report. "Adding insult to injury, 60% of those who reported changes in their loans or lines of credit stated that the reason was due to the bank's internal risk assessment, and 15% weren't even given a reason."

While 60% of small businesses responding to the survey did business with a large bank, only credit unions and small community banks received a majority overall positive rating by respondents, said NSBA.  Credit unions received a 60% positive rating; small banks, 73%, and large banks, 47%.

Small businesses' clients are taking longer to pay their bills--21% of businesses surveyed reported longer payment times with a notable jump in terms of net 60 to 90 days, said the report. Fifty-five percent of small subcontractors on federal projects reported late payments from a prime contractor.

NSBA offered two bright spots from the survey.  Nineteen percent of businesses surveyed said that with the recent passage of the JOBS Act, they are more likely to seek outside investors.

"Yet more must be done to improve finance options for small business," said the report, "from increasing the lending cap on credit unions to strengthening [Small Business Administration] lending programs to reforming the way the banking industry treats small-business loans."

NSBA is a member of a coalition that recently signed a letter put together by the Credit Union National Association (CUNA) to Congress urging passage of legislation to lift credit unions' MBL cap to 27.5% of assets from the current 12.25%. Lifting the cap would generate $13 billion in new small business loans and help create 140,000 jobs.

NSBA noted that its data from "as far back as 1993," indicate a "clear correlation to a small-business owner's ability to hire and his/her ability to get financing."