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Summer of iPad initiative a success says CU

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KENTWOOD, Mich. (7/20/12)--Although the summer's not over yet, Community West CU's 'Summer of the iPad" initiative, which involves giving $25,000 worth of iPads to young adults in the community, is a success so far, says the Kentwood, Mich.-based credit union.

The initiative provides iPads to randomly selected young adults--recent high school graduates and current college undergraduates--who are furthering their education and pursuing careers.

"The response from our current young adult members has been tremendous," said CWCU President/CEO Jon Looman. "We have over 250 registered, and there is so much excitement surrounding this initiative."

So far, iPads have been presented to recipients from a variety of schools and workplaces. Among them: a student from Ferris State University studying education, a business management student from Davenport University, an athletic trainer going to Grand Valley State University, and someone working on creating fuel injectors for diesel engines.  "After the initial shock of learning they received an iPad, all recipients have been extremely grateful," said the credit union.

"Through various social media outlets, we continue to expand knowledge of the initiative, as well as our credit union," said Looman. "In the end, we want to assist all of our young adult members in understanding their finances, as well as make an impact on our community, and we believe this initiative will accomplish both items."

Grammar constitution stand in way of bank ban

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MADISON, Wis. (7/20/12)--Credit unions monitoring a situation in Vermont, where a state regulator has forbidden a state-chartered credit union from using words such as "bank" and "banking" in its marketing, can take heart. Grammar and constitution stand in the way of the ban, according to The Financial, which pointed out the ludicrousness of banning the terms in an article Thursday.

In "War of the Words: Vermont Bankers Battle Credit Union over B-Word," the Brand tells readers that Montpelier, Vt.-based Vermont State Employees CU (VSECU) is banned from using the words after a complaint filed by Vermont bankers.  "But the credit union may be the one getting the last laugh."  It cited several offending phrases from marketing examples, including:

  • "We are a not-for-profit banking cooperative."
  • "At VSECU, we're making banking a little more exciting."
  • "It's another example of how VSECU is redefining banking."
"What about 'online banking'? Or 'mobile banking'?" the article asks. "Why should VSECU's use of these common, socially accepted, industry-wide terms be restricted, when practically every other credit union in Vermont (and the rest of the world) can use these words with impunity? Where does one draw the line?"

Trying to limit "banking" as a verb is "way beyond reason," the article said. "The words 'bank' and 'banking' are concepts that transcend a single industry. 'Bank' (as a verb) is more generally understood to mean 'save' or 'deposit' or to manage one's core finances. When consumers say, 'I bank with XYZ Financial,' that's what they mean."

Then the article brings up the U.S. Constitution, with: "Hello? Ever heard of the First Amendment? Any lawyer worth his or her salt should be able to get this thrown out on grounds of free speech. How on earth can it be constitutional to restrict one's ability to make analogies and allusions to anything? Trying to limit the use of words based on context and intent is a very, very slippery slope," said the article.

The article continues pointing out tongue-in-cheek situations where a ban just won't work. "Using the common cliché, 'You can bank on it,' could be punishable…There would be no 'bank shots' in billiards. Jet planes couldn't 'bank sharply.'" It also offers some ways the credit union could exploit the situation for marketing and poke fun at those want the ban the words.

The article's main conclusion: "People are going to call it banking, and both sides need to just get over it."

For the full article, use the link.

Older members carrying more mortgage debt

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WASHINGTON (7/20/12)--The perception of financial security among seniors is falling by the wayside--another apparent victim of the mortgage crisis, said a new study from AARP. Americans age 50 and over are carrying more mortgage debt than ever before, and more than three million are at risk of losing their homes, according to the study.

This will present challenges for credit unions in serving a segment of their membership long perceived as having wealth.

"Although mortgage delinquency rates at credit unions are much lower than those found in the AARP study, credit unions should be aware that many of their senior members will be facing challenges with mortgage debt," said Credit Union National Association Chief Economist Bill Hampel.

"In addition, members that had been counting on the equity in their homes to provide a large portion of their retirement nest egg will be looking for other ways to fund retirement.  For many that will require postponing retirement and finding a safe place to invest in the meantime.  Credit union retirement accounts can meet part of that need," he told News Now.

As of December, about 3.5 million loans held by people age 50 and over were underwater--they owe more than their home is worth, according to the AARP study. That means more seniors have no equity in their homes, which has long been considered as a source of financial security for the elderly.

Among the findings:

  • As of December 2011, 16% of loans of the 50-plus population were underwater.
  • Roughly 600,000 loans of people in this group were in foreclosure, with another 625,000 loans 90 or more days delinquent.
  • The percentage of loans that are seriously delinquent increased 456% to 6% in 2011 from this segment for 1.1% in 2007.
Of mortgage borrowers age 50-plus, middle-income borrowers have been most burdened by the financial crisis. Those with incomes ranging from $50,000 to $124,999 accounted for 53% of foreclosures of the 50-plus population in 2011. Borrowers with incomes below $50,000 accounted for 32% of foreclosures in this segment.

The percentage of Americans carrying mortgage debt as they age and the amount of that debt has increased steadily during the past 20 years. The largest increase in the percentage of older homeowners with mortgage debt is in the 75-and-over age group, but Americans 55 and older also increased their mortgage debt.

"This increase partly reflects increased borrowing that was spurred by historically low interest rates and high home values prior to the housing market collapse," the study said. "It may indicate that the oldest borrowers have tapped their home equity to finance their needs in retirement."

Foreclosure rates for first mortgages of the 50-plus population rose to 2.9% in 2011 from 0.3% in 2007. For this group, delinquency rates of more than 90 days increased to 3.03% in 2011 from 0.77% in 2007.

The increase in serious delinquency rates for the oldest borrowers is troubling, said AARP.

Several factors have contributed to this surge. The rising amount and incidence of mortgage debt, the length of time people have been living on a fixed income, and higher living expenses stress the budgets of older households, said the study.

Also, before tax income dropped 5.4% from 2007 to 2010 in real terms for households where the age of the head of household is 75 and over, AARP.

Consumers CU launches smart business services

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KALAMAZOO, Mich. (7/20/12)--Consumers CU in Kalamazoo, Mich., announced a focus on business services that includes the launch of its new BusinessPlus Checking and ePayroll Services.

"Our business portfolio is designed perfectly for the small business owner who is looking for quality personal service," said Gary Ferguson, vice president of business services. "We bring our credit union philosophy to meet the needs of business members right here in West Michigan." All decisions are made locally by Consumers for its business members.

The $364 million asset Consumers' line of business services includes:

  • New BusinessPlus Checking--with tiered rates;
  • New ePayroll Solutions--offering Automated Clearing House (direct deposit)  payroll for employees;
  • Business savings and certificates of deposit;
  • Online banking and bill pay;
  • Business loans and business mortgages; and
  • Free presentations to employees and breakroom connections.
A new feature of Consumers Business Services is BusinessPlus Checking. The account has no monthly service fee and earnings interest on daily balances that exceed $10,000. A tiered-rate structure provides greater earning potential, Consumers said.

"This enhanced business checking product is designed to simplify our members' business banking needs," Ferguson added. "Competitive rates will be earned on tiered balances with no confusing 'sweep' accounts."

Features of BusinessPlus Checking include:

  • No minimum balance, with interest tiers beginning at $10,000;
  • Free and unlimited automated clearing house credits and debits received into the account;
  • Free and unlimited check writing;
  • Free online banking and e-statements;
  • Free business debit card;
  • 150 free deposit items per month;
  • $1,500 in free daily cash deposits;
  • $1 per additional $1,000 deposited; and
  • Five free online bill payments per month.

Bethpage Bellco SECU of Md. partnership invests in member value

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BETHPAGE, N.Y.; GREENWOOD VILLAGE, Colo.; and LINTHICUM, Md. (7/20/12)--Three credit unions in New York, Colorado and Maryland plan to open a joint operations center in Baltimore, Md., and Denver, Colo., to maintain financial strength by sharing non branch-related resources.

Bethpage (N.Y.) FCU, Bellco CU, Greenwood Village, Colo.; and SECU, Linthicum, Md., announced their management teams and boards approved the plan to migrate some back-office operations to the new service centers  beginning early next year. 

They emphasized that the move to shared centers does not represent an institutional merger but an efficient sharing of resources.

"All three credit unions will remain independent organizations. We each have established management teams and local boards that will continue to focus on serving our local communities," explained Kirk Kordelski, president/CEO, Bethpage FCU.  "The main difference a shared service center provides is greater flexibility to service the growing needs of our membership. Sharing that cost over three financial institutions creates a larger scale to drive down expenses, therefore improving our value to members."

The transfer of services will be phased in over a two-year period. 

Pat  Pritchard, an experienced CEO, has been hired by the three credit unions to run the shared services centers.  Prichard will report to two boards:  the Operating Board, which is comprises the three credit union CEOs, and the Governance Board, made up of two members from the each credit union's boards.

"Three credit unions can fund jointly what an individual credit union would find unaffordable on its own," explained Doug Ferraro, president/CEO of Bellco CU." For example, with a shared resource pool, we will also be able to better manage spikes in loan demand and member service calls.  The changes our members see will be positive ones."

Rod Staatz, president/CEO of SECU, said, "With the cost savings that we will realize by sharing services, we will be able to offer members better hours, more advanced technology solutions, and better service levels--even during busy periods.  All of these changes will help SECU and the two other credit unions provide the high standard of service members have come to expect."

A fact sheet from Bethpage FCU noted that the reorganization is a major milestone in its decade-long growth strategy. The agreement means it will expand its work force by 13%, creating an estimated 158 Bethpage jobs on Long Island, N.Y. Reassigned employees will fill 91 of those positions, which are of equal or greater responsibility and compensation than their current jobs.

SECU has more than $2.4 billion in assets and serves more than 220,000 members at  its headquarters and 19 branches. Bellco, with more than $2 billion in assets, serves more than 200,000 members with 17 branches.  The $4.8 billion asset Bethpage serves more than 196,000 members with 26 branches.

Catalyst Economy requires proactive management of cash flow

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PLANO, Texas (7/20/12)--Credit unions will need to have a very proactive management of cash flow to keep available funds working in this challenging economy, according to an executive at a Catalyst Corporate FCU subsidiary.

"It will also require credit unions to retain a relatively low as possible cost of funds management in order to assimilate some form of spread," Brian Turner, Catalyst Strategic Solutions director and chief strategist, told the Texas Credit Union League (LoneStar Leaguer July 19).  

Interest rates--in light of Federal Reserve Chairman Ben Bernanke's statement Tuesday to the U.S. Senate Banking Committee--are not going to increase much during the next couple of years, Turner told the league.  

"Loan demand will continue to be moderate at best as consumers continue to temper their spending behaviors in light of uncertainty," Turner said. "Share growth will not be impacted (as to trends). Unless the employment sector again turns south, delinquencies will be unaffected while liquidity profiles will continue to strengthen."

Net margins will remain tight, Turner said. Industry trends from the first quarter will continue through the remaining months this year, he added.

"Industry stats show some improvement in earnings and loan growth but it is isolated with the larger credit unions ($500 million in total assets or greater), which although accounting for only 5% of the number of institutions, control about 65% of the assets and equity of the industry," Turner told the league.

Filene Corporate governance in Canadian U.S. CUs

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MADISON, Wis. (7/20/12)--Credit union governance can be likened to finding that elusive pivot point on a playground teeter-totter, the sweet spot that balances three different dimensions--the interests of members/owners, the oversight responsibilities of directors, and the operational role of management, according to a new Filene Research Institute report.  

Using another metaphor, the governance literature refers to these three dimensions as a three-legged stool, according to the report, "Corporate Governance in Canadian and U.S Credit Unions."

What are the credit union implications?

The findings compare major and minor details of different (and often not-so-different) approaches to governance in the three systems and among different-sized credit unions. Some differences emerged. For example, as a federated system, Desjardins excels at some aspect of board development and system governance in ways that the more atomized U.S. and Canadian credit union systems do not, said the report.

Other implications for credit unions include:

  • Most respondents in the U.S. and at centrally affiliated Canadian credit unions reported that management--not members or boards of directors--was the most important body in driving the change process at credit unions. Desjardins credit unions point to members as predominant initiators of change.
  • There is little evidence that the board holds itself or its individual members accountable for performance. Without such self-scrutiny, the only the only realistic check on governance competence is market failure or regulatory intervention--which, despite recent activism, should not be considered an integral part of healthy board governance.
  • Effective boards cannot be built through the activities of a once-a-year nominating committee appointed by the board. Credit unions should consider replacing the nominating committee with a member-elected governance committee or augmenting the role of a nominating committee to function as a full standing committee that embraces board development, improved board performance, and member engagement/education as an ongoing, year-round priority. Fully empowered supervisory committees also can play this role.
  • The cooperative philosophy and ideals, together with the credit union ethos, are the basis of cooperative governance. However, few members seem to acknowledge that basis, and without the endorsement of the membership, the validity of this governance structure must be questioned, said the report.
The report, a collaborative effort between Filene and the Credit Union Central of Canada, with participation from Quebec's Desjardins Group, follows up two recent Filene governance projects: "Tracking the Relationship Between Credit Union Governance and Performance" and a three-part series by Professor Bob Hoel about how boards can add more value.

The study includes an in-depth review of financial institution governance research and calls out the differences between credit unions and other firms. Also, the authors conducted a dozen interviews with credit unions of all sizes across all three major North American credit union systems.

For more information, use the link.

Two Rhode Island CUs set to merge

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SMITHFIELD, R.I. (7/20/12)--Two Rhode Island credit unions--Navigant CU and Columbus CU--have announced their intention to merge, with Navigant remaining as the continuing institution.

Warren, R.I.-based Columbus CU's employees will stay on as employees of Navigant CU, which is based in Smithfield, R.I., and has $1.3 billion in assets, according to the Provident Business News (July 18)

Among the reasons cited for the merger by Columbus CU, with $68 million in assets, was enhanced and expanded access to services for its members. Among the services offered by Navigant CU are a suite of commercial loans, business services and consumer products.

Columbus CU's two branches will remain open in addition to Navigant's 10 other branches in northern and eastern Rhode Island.

The merger is subject to regulatory approval and is expected to be finalized by the end of the year.

CUNA Collections and Bankruptcy School topics announced

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MADISON, Wis. (7/20/12)--Topics have been announced for the  CUNA Collections & Bankruptcy School, taking place Sept. 10-13 in San Diego.

The CUNA Collections & Bankruptcy School is offered in two parts:

Introduction: Building the Foundation

  • Introduction to Bankruptcy;
  • The Economy & Its Impact on Collections;
  • Introduction to Collections;
  • The Psychology & Communications Collections; and
  • Best Practices Roundtable Discussion.
Advanced: Expanding Your Knowledge

  • The Economy & Its Impact on Collections;
  • Hot Topics in Bankruptcy & Collections;
  • You Be the Judge: Case Law Update;
  • Technology: What's Available & What Works for the Collection Department;
  • Collections Ethics; and
  • Best Practices Roundtable Discussion.
The CUNA Collections & Bankruptcy School features breakout lectures, networking sessions and roundtable discussions led by collection and bankruptcy experts.

The CUNA Lending Council is offering scholarships of up to $2,500 for qualifying credit unions attending either the introduction or advanced part at the school. The deadline to apply is July 30.

CU System briefs (07/19/2012)

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  • COLORADO SPRINGS, Colo. (7/20/12)--In March, Colorado Springs-based Ent FCU partnered with the American Red Cross to train more than 30 Ent volunteers in the event of a local disaster. In June, they put their "Ready When the Times Comes" training to use.  Eight were called up to support shelter operations for evacuees of the recent Waldo Canyon wildfire in Colorado Springs.  The eight volunteers gave more than 160 hours of their time and served a critical role filling the gap of needed local volunteers until national assistance teams arrived, said the credit union. "Ent's volunteers were heroes," said Thomas Gonzalez, CEO of American Red Cross's Pikes Peak Chapter. Pictured are Ent's volunteers with Ent President Randy Bernstein (fifth from left) and Executive Vice President Barb Winter (fourth from right). (Photo provided by Ent FCU) …
  • HARRISBURG, Pa. (7/20/12)--Four credit unions in Pennsylvania are participating in the new "Bank On Lancaster," launched last week by the United Way of Lancaster County. The project provides opportunities for unbanked people to open accounts and receive free financial education, said the Pennsylvania Credit Union Association (Life is a Highway July 13). Participating are Wheatland FCU, Citadel FCU, Lancaster Red Rose CU, and LANCO FCU, as well as nine banks and two nonprofit organizations. Lancaster County has an estimated more than 20,000 people who are unbanked. The average unbanked person spends 5% of net income on unnecessary fees, which for a lower-to-medium income work amounts to about $40,000 over an average working life, said  …
  • MANSFIELD, Texas (7/20/12)--Texas Trust  CU has launched its Mobile Solutions portfolio so members can conduct financial business remotely with their mobile phone. Members can access account information, check balances on the account, transfer money between accounts, view their transaction history and search for surcharge-free ATMs. The Texas Trust Mobile App is available for Apple, Android and Blackberry smartphones. The free app can be downloaded by visiting these companies' app stores and searching for "Texas Trust Mobile Banking." To enable the app, members must be first signed up for Texas Trust's Home Banking feature. Those with older phones can access the same information through the credit union's mobile website.  The Mansfield, Texas-based credit union also said it plans to offer more mobile banking services in the next 12 months …Texas Trust launches mobile solutions
  • JACKSONVILLE, Fla. (7/20/12)--Charles Alfred Henderson, a longtime member of the board of directors at Campus USA CU, Gainesville, Fla., died July 13 in Jacksonville. He was 85. The University of Florida professor emeritus  served on the credit union's board for 33 years, and served two terms as board chairman (The Tallahassee Democrat July 16).  He taught at University of Florida for 21 years before retiring in 1985, was a former school principal, and was active in education-related organizations.  He is survived by his wife of 61 years, Ann Messer Henderson, and several nieces and nephews …