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N.J. league Banks promos now center on capital insurance

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HIGHTSTOWN, N.J. (7/28/08)--Banks' commercials are shifting from products and services' features and conveniences to touting their capital position--a sign of a crisis of confidence in the banking system, according to the New Jersey Credit Union League. League President/CEO Paul Gentile, in his president's message to credit unions in the league's weekly newsletter, noted that capital strength is what banks are promoting in the wake of the failure of IndyMac bank (The Weekly Exchange July 21). In that failure, depositors lost funds beyond the limit of deposits covered by federal insurance. Credit unions throughout the country are reporting that members have inquired about federal deposit insurance, he wrote. "Credit unions of course have a higher capital ratio than banks, just over 11% compared to banks' 10%. Here in New Jersey, credit union capital is near 12%," Gentile said. Although credit unions' insurance has the same protection as that of the Federal Deposit Insurance Corp., the National Credit Union Share Insurance Fund is less recognized among consumers, Gentile noted. The situation serves as a reminder, he said, that consumers' knowledge of credit unions is still much lower than that of banks. He questioned whether credit union leaders themselves could adequately describe the differences and similarities between credit unions and banks. Gentile suggested leaders explaining the differences should emphasize the difference in credit union structure, describe how credit unions exist solely to meet the savings and lending needs of members (as opposed to shareholders demanding high profits), and explain that banks have an edge in raising capital quickly while credit unions can do so only through retained earnings. "The 11% capital level credit unions maintain has been built up over years of prudent management," he said. "Credit unions also have higher capital requirements than banks and do not enjoy a risk-based capital structure like banks. These are all things bankers would not want to deal with." He noted the league will include "How to be a credit union advocate" in its education offerings.

Northeast CU offers storm relief loan program

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PORTSMOUTH, N.H. (7/28/08)--Northeast CU (NECU) is offering a relief loan program Friday to help homeowners and renters in the area recover from severe damage to their homes and properties from storms that hit Thursday. The Relief Loan Program--Neighbors Helping Neighbors--aims to help victims recover from their losses, make necessary purchases and repairs, and get back on their feet, the Portsmouth, N.H.-based credit union announced Friday. "In many cases, our neighbors may not have insurance that will cover all of the damages sustained by this devastating storm," said Peter Kavalauskas, president/CEO of the more than $550 million asset credit union. By reacting quickly, the credit union hopes to provide "another financial option while they may be waiting for government programs, private insurance or similar funding to rebuild," Kavalauskas said. The program offers two loans:
* The Homeowner Relief Loan has no payments for 90 days, a 5.9% annual percentage rate for up to $20,000 with repayment terms of 60 months, or a 6.9% APRE with repayment terms of 84 months. It is unsecured and applications are due by Aug. 31. * The Renters Relief Loan includes no payments for 90 days, a 7.49% APR for a loan up to $5,000 with repayment terms of 60 months. It, too, is unsecured and has an Aug. 31 application due-date.

Illinois league advises CUs a safe harbor

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NAPERVILLE, Ill. (7/28/08)--While some segments of the financial services industry are experiencing economic difficulties, Illinois credit unions remain safe and sound institutions for more than 2.7 million consumers who keep their money there, said the Illinois Credit Union League (ICUL). There are about 8,500 credit unions nationwide, with more than 90 million consumers as members, holding about $800 billion in assets. In Illinois, more than 430 credit unions hold $20.8 billion in assets. Member deposits in federal and almost all state-chartered credit unions are federally insured by the National Credit Union Administration (NCUA) through the National Credit Union Share Insurance Fund (NCUSIF), the league emphasized in a press release. “Consumers who have federally insured funds in credit unions should rest assured that their deposits are safe up to at least $100,000 per account, with additional coverage of up to $250,000 for certain retirement accounts,” said Dan Plauda, ICUL president/CEO. The NCUSIF is in strong condition, with an equity ratio estimated at 1.24% for June 30, projected by year-end to be 1.28%, according to NCUA. Data from NCUA also show that Illinois credit unions are well capitalized, with an overall capital-to-asset ratio of 11.2%-- a capital cushion of $3.12 billion. In addition, data compiled by the Credit Union National Association indicates that Illinois consumers, at a time when they are concerned about their economic futures, trust credit unions to be a “safe harbor” for their money. Savings at credit unions in Illinois grew by more than 6% in the 12 months ending March 2008. When it comes to lending, credit unions operate in the best interests of their members and are more conservative, unlike other more traditional financial institutions that exist to build up profits for stockholders, the league said. As a result, credit unions steered clear of the subprime crisis and other risky lending practices. Mortgages at Illinois credit unions grew by nearly 17% in the 12 months ending March 2008--at a time when mortgage loans have forced other lenders to scale back or close their doors entirely, the league said. Also, Illinois credit union mortgage delinquencies at the end of the first quarter stood at 0.42%. First mortgage charge-offs were 0.05%. “Credit unions as a whole are very sound places to do business and exist solely to serve the best interests of their members. The more than 2.7 million consumers who belong to an Illinois credit union can have full confidence in their stability during the current national economic downturn. Not one penny of federally insured funds has ever been lost by a credit union member,” Plauda concluded.

Truliant FCU mortgage closings up 39

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WINSTON-SALEM, N.C. (7/28/08)--Truliant FCU experienced a 39% increase in closed mortgage loans from January through June over the same period in 2007. In June, a month in which area home sales dropped 18%, according to the North Carolina Association of Realtors, Truliant saw an increase of 51% in mortgages closed (Weekly Update July 25). Truliant achieved mortgage growth because it did not enter the subprime lending market, according to the North Carolina Credit Union League. This enabled the credit union to provide its members with mortgages they can afford. “Our mortgage department stays extremely busy,” said Marc Schaefer, Truliant president/CEO. “We take the necessary steps and time to analyze members’ needs to ensure they understand all of their options and the costs associated with each. By placing this information within the context of all their financial needs, we help them purchase a home that they can both enjoy and afford. “As a credit union, we are member-owned and pride ourselves on doing what is best for our members,” he added. The $1.086 billion asset Truliant FCU is based in Winston Salem, N.C.

New Mexico election rarity a way for CUs to shine

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ALBUQUERQUE, N.M. (7/28/08)--The Credit Union Association of New Mexico (CUANM) and credit unions will take advantage of a rarity in this year's election campaigns to educate candidates about issues and challenges facing credit unions. New Mexico's elections will be among the most-followed in the nation because no incumbents are running for re-election in any of the House seats open this election year, says Juan Fernandez, vice president of government affairs at CUANM (CUANM Network July). That means three races are up for grabs, with two expected to be very close races, he said. Democrat Martin Heinrich and Republican Darren White are running to replace Rep. Heather Wilson (R-1st District) in Congress. Democrat Tom Udall and Republican Rep. Steve Pearce will run for the seat vacated by Sen. Pete Domenici (R), who is retiring. Democrat Harry Teague and Republican Ed Tinsley are competing for the seat vacated in the 2nd District by Pearce. Pearce was the first New Mexico lawmaker to co-sponsor the Credit Union Regulatory Improvements Act (CURIA) and is a strong credit union supporter. "This political situation provides credit unions with a golden opportunity to shine and to demonstrate that we can have an influence in elections," Fernandez wrote. CUANM is "taking the necessary steps to make the most of this election rarity. We are reaching out to all campaigns, educating them about the issues and challenges that credit unions face, and supporting the most credit union-friendly candidates." Some credit unions in the state are planning to have spotlight events where candidates discuss their agenda with members while others will have voter registration drives, said Fernandez. CUANM is supporting Pearce for Senate, Heinrich in District 1 and Ben Ray Lujan in District 3. It also is talking with the Teague and Tinsley campaigns to educate them about credit unions. The Credit Union Legislative Action Committee (CULAC) is supporting Pearce, Heinrich and Lujan, according to Trey Hawkins, political director at the Credit Union National Association. CULAC has contributed $10,000 to Pearce and $5,000 each to Heinrich and Lujan.

eSchool will show how to analyze other income loans

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MADISON, Wis. (7/28/08)--Credit union lending professionals will learn how to analyze and qualify loan requests from members based on “other” income sources during a CUNA eSchool in September. Using Tax Returns to Qualify a Loan eSchool, Sept. 16-30, will explore how to analyze forms and schedules to verify non-traditional incomes and determine a member’s ability to repay a loan. This eSchool also will teach how to:
* Quickly obtain monthly net or gross income from a borrower's personal income tax return; * Identify the information that borrowers hide and reveal in their own interest when applying for a loan, and how this may affect their borrowing ability; and * Understand the forms involved in non-traditional income situations and obtain the relevant information.
Additional CUNA eSchools beginning in September include:
* The six-session CU Finance for Non-Financial Managers and Volunteers eSchool, which meets Sept. 16-Oct. 21 to help those without a background in finance to better understand their credit union’s numbers. While the main focus is on understanding and analyzing financial statements, students also will come to better understand asset-liability management; budgets; ratios; accounting; and rates, risks, and returns. * The 10-session CU Spanish Certification eSchool, Sept. 17--Nov. 19, which is designed for credit union staff with previous Spanish-language experience. The eSchool advances previous training and teaches vocabulary that is specific to the financial industry. Attendees also will study articles, adjectives, personal and object pronouns, verb conjugation, and proper pronunciation. Students can earn a CU Spanish certification. * The four-session Complete Credit Union Leadership eSchool, Sept. 9-18, which will cover self-awareness as an element of leadership, mastering the art of giving and receiving critical feedback, the keys to creating intended outcomes, and the power of wellness.
For more information, use the links.

Georgia CU Affiliates Consumers still confident in CUs

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DULUTH, Ga. (7/28/08)--Though consumer confidence in the financial services industry is shaky, Georgians have found safety in credit unions, according to Georgia Credit Union Affiliates (GCUA). The percentage of Americans saying that they have a “great deal” of confidence in U.S. banks fell to 32%, according to a June 23 Gallup poll. That figure is down nine percentage points from June 2007 and 17 percentage points from June 2006. About 1.8 million Georgians belong to a credit union, but many more have not discovered the benefits of belonging. “Credit unions might be one of the best kept secrets in financial services,” said Mike Mercer, GCUA president. Mortgages at Georgia credit unions grew by 14.9% for the past 12 months ending in March. Credit unions operate more conservatively and tend to hold more of their mortgage loans--70%--in portfolio rather than sell them to Fannie Mae and Freddie Mac in the secondary market, the league said. The state’s credit unions have a capital cushion of $1.84 billion. Credit union deposits are insured by the National Credit Union Share Insurance Fund up to $100,000.