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Utah league CU short-term loans provide needed service

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SALT LAKE CITY (7/6/10)--Rates for short-term loans offered at Utah's credit unions are much lower than those assessed by payday lenders there, and credit unions' alternative loans come with features to assist members in managing their credit. Scott Simpson, president/CEO of the Utah League of Credit Unions, made those points to media last week, saying that credit unions' short-term loans offer rates that are half those of payday lenders. Credit unions' loans also come with credit counseling and a savings plan, and are given only to people whose credit is so poor they don't qualify for other kinds of credit, he said. Credit unions must as a necessity charge a higher interest rate because of the risk involved because short-term loans often have a high rate of default. "When you extend credit, it comes at some cost," he said. "This is not a product of first resort; it's a product of last resort," he told News Now, adding that few members use it. One credit union told him less than one-tenth of 1% of its members use that product. "But when they have no where else to go and they need cash, they can work with an institution that offers traditional products and can help them transition into a better savings structure or environment," he said. The comments were made after a group calling itself the Coalition of Religious Communities held a press conference criticizing eight credit unions in the state for offering short-term loans, which the group said was predatory (Salt Lake Tribune, Deseret News and Associated Press June 30). "It's frustrating, because we were responding to clamor in the environment, where people wanted someone to displace payday lenders," Simpson told News Now. "But credit unions are lending other peoples' (members') money and they need to mitigate the risk," he said. Credit unions' rates are half of what the marketplace is bearing. If credit unions stop making these loans, consumers who want or need fast access to cash will be driven back to payday lenders, said Simpson "If credit unions stopped offering those products, I guarantee that those people that need them would be using payday lenders and they would be paying a lot more," he told the Tribune. The typical rate charged by payday lenders is 521% annual percentage rate (Deseret News June 30). Associated Press reported the story and it has been picked up nationally in media such as The New York Times, The Washington Post, ABC News, CBS News the Huffington Post and more.

Golden 1 to help state workers cut to minimum wage

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SACRAMENTO, Calif. (7/6/10)--As an appeals court Friday upheld a ruling allowing California Gov. Arnold Schwarzenegger to cut state workers' salaries to minimum wage in the absence of a budget, a credit union announced its preparations to help workers faced with a lower or no salary until the state passes a budget. Sacramento-based The Golden 1 CU announced its "readiness to assist active state worker members who may be impacted" in a press release Friday. "In the event active Golden 1 members who work for the state receive minimum wage or zero pay related to the budget impasse, the credit union plans to offer State Budget Payroll Loans to help affected members with checking and Direct Deposit," said the credit union. Eligible members with a Golden 1 checking account and Direct Deposit of their state payroll checks will be offered the loans with rates as low as 0% annual percentage rate. "Golden 1 has a legacy of giving back to its communities during tiems of need," said President/CEO Teresa A. Halleck. The $7.3 billion asset credit union has more than 680,000 members. Schwarzenegger issued an order Thursday that put 200,000 state workers on minimum wage--$7.25 an hour--next month. July pay for most hourly state employees will be withheld to minimum allowed by law. Regular salaries would be restored when the budget is final (Sacramento Bee July 2). State Controller John Chiang had said he wouldn't follow the order unless ordered to do so by a court. On Friday the 3rd District Court of Appeal upheld a two-year ruling allowing the governor to cut the wages to minimum wage. The court agreed with the Sacramento Superior Court ruling, saying Chiang overstepped his authority by refusing to issue minimum wage paychecks to state workers during California's budget impasse in 2008. Chiang's office has not indicated whether he will appeal to the state Supreme Court. The governor's order was triggered by lawmakers' failure to enact a budget by Thursday, the start of the fiscal year. It exempts about 37,000 state workers in six bargaining units that have tentatively agreed to labor deals, said the newspaper.

CU loans savings and asset trends see reversals in May

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MADISON, Wis. (7/6/10)--The Credit Union National Association’s (CUNA) monthly review of credit unions for May reflected three reversals in recent trends--in loans, savings balances and asset quality, according to a CUNA economist’s analysis.
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Credit union loans outstanding increased less than 0.1% during May, compared with a decrease of less than 0.1% during April. Credit union loans in May totaled $580.4 billion, compared with $583.4 billion in May 2009. Fixed-rate mortgages led loan growth. They increased 0.9%, followed by credit card loans and used-auto loans, which rose 0.8% and 0.6%, respectively. Unsecured personal loans climbed 0.4%, while both adjustable-rate mortgages and home equity loans increased 0.2%. New-auto loans decreased 1.5%. “Loans grew in the month, on the heels of six consecutive months of declines,” Mike Schenk, CUNA senior economist, told News Now. “While balances are still down on a year-to-date (-1.3%) and year-over-year (-0.5%) basis, the recent increase gives some hope that seasonal patterns will emerge with stronger buying and borrowing during the summer months. “Most loan-types we track saw increases, with fixed-rate mortgages and credit cards, showing the largest percentage increases in the month,” he said. “New-auto loan balances and fixed-rate second mortgage balances continued their respective declines.” Credit union savings balances decreased less than 0.1% in May, down from a 1.1% increase during April. Credit union savings in May totaled $798.2 billion, compared with $753.1 billion in May 2009. Individual retirement accounts grew 1.7%, followed by money market accounts (0.9%) and regular shares (0.2%). One-year certificates and share drafts decreased 0.8% and 2.3%, respectively.
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“Savings balances declined in May after three successive months of fairly strong increases,” Schenk said. “Balances are still up on a year-to-date (3.7%) and year-over-year (6.0%) basis, but seasonal patterns are likely to cause tepid growth or contraction in the coming months. Consumers continue to reflect a preference for short-term, liquid savings. Money market deposit accounts reflected the strongest percentage increase in the month.” Credit unions’ 60-plus-day delinquencies remained constant at 1.8% during May. “A third notable change was seen on the asset quality front,” Schenk said. “Delinquencies, inched up in May after trending down for three consecutive months. Our expectation is that marginally improving labor markets and loan growth related to normal seasonal trends will both help to return delinquencies to their recent downward trend in the coming months.” The loan-to-savings ratio remained constant at 73% in May. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities-- remained at 19%. The movement’s overall capital-to-asset ratio remained at 10% in May 2010. The total dollar amount of capital is $91 billion. “Of course, the double whammy of the Euro debt crisis and Gulf oil spill, combined with a ‘de-stimulated’ housing market and weak labor market gains, have bruised consumer confidence and underlined the fragility of the current recovery,” Schenk said. “In this environment, spending and borrowing will be constrained, but with the Fed on the sidelines and big differences between long-term and short-term interest rates, any loan growth at all will help to boost credit union bottom lines,” he added.

Missouri governor shows interest in credit union outreach

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ST. LOUIS (7/6/10)--Missouri Governor Jay Nixon met June 25 with representatives of the Missouri Credit Union Association (MCUA) to discuss issues of interest to credit unions. Nixon met with MCUA President/CEO Rosie Holub and Senior Vice President Peggy Nalls, according to MCUA's newsletter, The Missouri difference (July 2). They discussed the Missouri Department of Transportation's decision last session to sever ties with 10 Highway Department credit unions. They also discussed the influx of funds into credit unions as consumers search for safe, local institutions as their primary financial institutions. MCUA said Nixon and his staff also were interested in: the Real Deal program and how credit unions across the state are reaching out to those affected by a troubled economy; payday loan alternatives, Get Checking, Volunteer Income Tax Assistance, free financial education, community outreach programs and Homes for Our Troops. MCUA will supply additional information to the governor's staff and work with Travis Ford, director of communications, in the Department of Insurance, Financial Institutions and Professional Registration, the newsletter said. "We were fortunate to be able to meet with the governor at a time when he and his staff were not involved with the legislative session," Holub said. "Governor Nixon was familiar with credit unions as financial cooperatives and was very receptive to hearing more about credit union involvement in the communities they serve," she said in the newsletter.

Russias president signs CU microfinance bill

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MOSCOW (7/6/10)--Russian President Dmitry Medvedev has signed a bill into law that aims to create a legal framework for microfinance institutions, including credit unions. The law comprises government regulation of the microfinance industry and terms of microloans (Prime-TASS News July 2). Under the law’s provisions, credit unions--and banks, pawnbrokers, savings and loan associations and other entities--can provide microloans. Microfinance institutions will not be allowed to do microloan business with a borrower if, as a result, the borrower’s microloan debt to the institution would exceed one million rubles, or $34,770.

Illinois REAL Solutions partners discuss successes

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NAPERVILLE, Ill. (7/6/10)--IIlinois REAL Solutions partner credit unions met in Naperville, Ill., last month to discuss the Volunteer Income Tax Assistance (VITA) program and other initiatives, including a unique homeowner counseling program, according to the Illinois Credit Union League (ICUL). During the 2010 tax season, 10 Illinois credit unions worked with the Center for Economic Progress (CEP) to serve as the on-site financial institution partner for VITA sites statewide. This year, the total number of new accounts opened at all VITA sites in Illinois is 1,397, compared with 1,332 accounts in 2009. CEFCU, Peoria; Community Plus FCU, Rantoul; Consumers Cooperative CU, Waukegan; Kane County Teachers CU, Elgin; RIA FCU, Moline; and SIU CU, Carbondale, were first-year participants. Continuing partners are Generations CU, Rockford; North Side Community FCU, Chicago; NuMark CU, Joliet; and Sherwin Williams CU, South Holland. Cornerstone CU, Freeport, presented information about a community partnership program that helps to teach individuals and families homeowner basics, such as advantages and disadvantages of homeownership, the loan process, understanding credit, budgeting and shopping for a home. The mayor of Freeport recommended during a city council meeting that the city discontinue its own homeownership counseling workshops and instead refer people to Cornerstone, especially because the credit union’s sessions are free. The credit union also plans to host home improvement workshops to educate people on how to fix up their homes as an option to selling, given the continuing downturn in the real estate market. The first session will be late summer or early fall. Other projects discussed included:
* Matrimoney, a savings vehicle to help young couples save for their wedding and other life events; * Alternative checking programs; * Efforts to incorporate National Endowment for Financial Education materials into Lincoln’s Challenge, a National Guard program that assists high school dropouts, and Jesus is the Way, a local prison ministry; * High school branches; * Matriculas, individual tax identification numbers, and other outreach efforts to Hispanics; * Bank on Illinois, the Illinois State Treasurer’s Office program in Rockford, Aurora and Carbondale to help the unbanked and underserved; * Chapter-initiated financial literacy activities and events; and * Credit unions’ involvement with Money Smart Week, designated by the Federal Reserve in April in which community groups, including financial institutions such as credit unions, have events to promote personal financial literacy.
The next meeting for Illinois REAL Solutions partner credit unions will be Sept. 15. ICUL and the Illinois Credit Union Foundation have teamed up with the National Credit Union Foundation to offer the REAL Solutions for Low Wealth Households program in Illinois. Currently 48 credit unions are participating. REAL stands for Relevant, Effective, Asset-building, Loyalty-producing. It operates in 27 states nationwide.

Maine CU poll reports top three trends for May

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WESTBROOK, Maine (7/6/10)--Continued increase in deposits, more members using core services and more members getting rid of credit cards were the top three trends credit unions identified for May in an online poll conducted by the Maine Credit Union League. The focus was on delinquencies within the past year. About 37% of credit unions responding said delinquencies had stayed the same in May 2009, 33% reported an increase and 30% said they had decreased, the league said in its Weekly Update (July 2). For those that reported a change in delinquencies, 100% said the change was due to an increase in loan charge offs and 18% attributed it to an increase in collections staff. Other results:
* About 16% of credit unions surveyed said delinquencies increased in May over the previous month, while 52% said they stayed the same and 32% said they decreased. * About 50% of the credit unions said lending increased, 30% said lending stayed the same, and about 20% said lending decreased; and * Of those experiencing an increase in lending, 64% reported a hike in mortgages and auto loans, 50% reported increases in home equity lines of credit and 7% saw increases in member business loans--7%.

Growth strategies focus of Community CU Growth Conference

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MADISON, Wis. (7/6/10)--This year’s Credit Union National Association (CUNA) Community Credit Union and Growth Conference will focus on ways credit unions can grow their membership and revenue through innovative strategies. The conference, in Boston Oct. 6-9, is themed “Putting the Pieces Together for Growth.” Credit unions attending the conference will learn:
* How to launch growth initiatives, including ones that reach out to the rapidly expanding youth and underserved populations; * Strategic ways to use traditional and non-traditional marketing strategies, like social media, to build relationships in the community. * How to grow revenue and stay strong through recessionary times.
Keynoters will be Dr. Kevin Freiberg, author of “BOOM! 7 Choices for Blowing the Doors Off Business-As-Usual” and president of San Diego Consulting Group, and Ty Warren, author of “White Hat Leadership: How to Maximize Personal and Employee Productivity.” General sessions include:
* Economic Outlook for Credit Unions, featuring CUNA Senior Economist Steve Rick; * Best Practices in Community Credit Union Performance; and * Compliance Issues Impacting Credit Unions.
Also, CUNA will present the 2010 Community Credit Union of the Year Award during the conference. The award recognizes outstanding work by community credit unions. For more information, use the link.

Redesigned CUNA website debuts

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MADISON, Wis. (7/6/10)--The Credit Union National Association’s (CUNA) website goes live today with a major redesign to enhance the site’s appearance, navigation and organization. Together the changes make comprehensive improvements to, the most widely read website in the credit union system. The redesign has been in development for the past six months. “We have used survey feedback from our readers to guide a series of design improvements that will make our site easier to use, quicker to navigate, and more visually appealing,” said Kevin Knope, CUNA director of Web-based systems and support, who spearheaded the redesign effort. The redesigned features these major changes:
* Better navigation. CUNA reconsidered how the site was laid out from the perspective of its visitors, choosing labels and groupings that are most natural for them. Content is now grouped under four major categories: “Issues & Advocacy,” “Regulation & Compliance,” “Education & Training,” and “Products & Services,” with drop down menus delineating the specific content in each area for faster navigation. The new site also takes greater account of the different audiences that it attracts, using tabs to more clearly identify specific destinations of interest to different groups, such as consumers, press, and state credit union league staff. And it more prominently features links to the social networking sites CUNA has established--such as the recently launched CUNA*verse blog. * Improved integration. The site has added more links from informational pages to product and services pages, and vice versa, making it easier for visitors to find what they are looking for, regardless of where within CUNA the content is produced and where it resides on the site. * Increased automation. System generated lists highlighting recent additions and popular pages keep the site fresh and help visitors stay on top of what's new and what's of current interest. * Faster performance. Enhancements to the underlying technology of the site enable pages to offer more interactive features and still display faster than in prior versions of the site. * Streamlined appearance. A more attractive and contemporary design presents a stronger initial impression of CUNA and the credit union movement.
CUNA’s website is the most visited in the credit union movement, attracting more than 100,000 visitors a month to its more than 80,000 pages of information. The site receives about 45,000 page views per day. For many, the starting point is News Now, CUNA’s online daily news service, whose headlines will continue to be prominently featured on the home page along with a listing of CUNA's top initiatives.

McGee named LSCU board chair

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BIRMINGHAM, Ala. and TALLAHASSEE, Fla. (7/6/10)--Joe McGee, president/CEO of Legacy Community FCU in Birmingham, Ala., was elected chairman of the League of Southeastern Credit Unions (LSCU) and Affiliates on June 17. Outgoing Chairman Rich Helber turned the gavel over to McGee during the annual meeting held in conjunction with the LSCU’s First Annual Convention and Exposition in Orlando. The current LSCU executive committee is:
* Chairman-- McGee; * Chairman-elect--Mary Ott Wood, Florida West Coast CU, Brandon, Fla.; * Vice Chairman--Steve Swofford, Alabama CU, Tuscaloosa, Ala.; * Secretary--Tina Williams, Mobile Educators CU, Mobile, Ala.; and * Treasurer--Brent Lister, First Florida CU, Jacksonville, Fla.
The league also announced changes to senior management staff at LSCU. Carol Lucas, chief financial officer, will retire at the end of this year. She has served the Alabama Credit Union League and LSCU for 22 years. Scott Morgan was promoted to senior vice president of finance and administration. Morgan, who is based in the Tallahassee, Fla., office, will oversee accounting, human resources, information technology, and facility services for LSCU and Affiliates. Will McCarty has been promoted to senior vice president of governmental affairs. McCarty, who is based in Birmingham, has been with the league for 10 years, most recently as vice president, legislative affairs/staff counsel. Liz Aperauch was promoted to director of human resources. She previously served as human resources manager.

Cheney on board outlines priorities as CUNAs new CEO

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WASHINGTON (7/6/10)--William “Bill” Cheney, who officially became president/CEO of the Credit Union National Association (CUNA) over the long holiday weekend--on July 5--says his first priority upon taking the helm at CUNA is to assure a smooth transition of power during this volatile time for credit unions. “We can’t miss a beat, either in Washington or Madison (Wis.), as we represent and serve credit unions,” he said, referring to the CUNA operations based in each of those cities. “Credit unions are facing serious legislative, regulatory and financial challenges. So, now more than ever, credit unions need a strong, responsive national trade association--and they have one in CUNA.” Cheney comes aboard CUNA at a time when hot-button issues abound. CUNA and credit unions have fought a tough battle against government controls on interchange fees, and now work for further improvements in the pending legislation. If enacted, CUNA stands ready to work for credit union interests as the Federal Reserve implements the controls. Also on the front burner is the long-term credit union goal to increase the statutory cap on member business lending (MBL). Last week, Sen. Mark Udall (D-Colo.) offered an amendment to include legislative language in a small business-stimulus bill that would increase the MBL cap to 27.5% of a credit union’s total assets. The Senate is expected to take up that bill this summer. And on the daily operational side, Cheney notes, credit unions--like almost all businesses--are working to deal with tough economic conditions caused by the meltdown in the housing and mortgage markets. Under his leadership, Cheney says, advocacy will remain CUNA’s top priority. “That doesn’t mean it’s our only priority, but it’s our first priority.” The new CUNA chief is confident that his deep background in the credit union movement gives him the skills for a successful tenure at CUNA. Cheney has more than 20 years experience working in credit unions—nine of which were spent as CEO. He has also spent the last four years heading the California and Nevada Credit Union Leagues. “CUNA has successfully been representing credit unions for 75 years. That will continue, and my experience brings a slightly different perspective to the table,” he said. Cheney congratulates his predecessor--exiting CEO Dan Mica--on a great leadership during his 14 years at the CUNA reins. Mica announced his intended departure last August and has helped guide CUNA through the search process for a strong successor. When announcing his plan to move on, Mica noted his personal philosophy that “change is a good thing” and should occur in one’s life every 10 years or so. He said it was his love of the credit union movement that drew him to stay as CUNA president/CEO for 14 years. Reflecting Mica’s positive attitude regarding change, Cheney says, “Anytime there’s change, especially when you’ve had such a great leader as Dan Mica…for 14 years, it's an opportunity to step back and look at what we’re doing as an organization and see how we want to improve for the benefit of credit unions going forward.” For more on Cheney, the July issue of CUNA’s Credit Union Magazine features an in-depth Q-and-A with the new CUNA president/CEO.

CU System briefs (07/05/2010)

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* CINCINNATI (7/6/10)--A former manager of the now-defunct Good Samaritan Employees CU based in Cincinnati, has been sentenced to 33 months in prison, followed by three years of supervised release, for defrauding the credit union. Ann Bryson, 63, of Cincinnati, also was ordered in U.S. District Court to pay restitution of more than $245,432, the amount embezzled (US Fed News July 2). Bryson pleaded guilty on March 11 to one count of bank embezzlement, which occurred while she was manager between 1998 and 2005. Court documents said she wrote credit union checks and money orders to pay personal expenses and manipulated records to evade detection. The credit union was liquidated in November 2005 ... * BROOKLYN, N.Y. (7/6/10)--Polish & Slavic FCU (PSFCU) recently awarded $300,000 in scholarships to 298 students to help defray
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their education costs. The credit union, with more than $1.3 million in assets, has offered an annual scholarship program for 10 years. This year's scholarships bring the total the credit union has handed out in scholarships to more than $2 million, which went to more than 1,4000 students in the past decade. Most recipients are in New York and New Jersey. The program recently expanded to Chicago, where PSFCU opened two branches earlier this year. In addition to its annual scholarship program, PSFCU donated more than $500,000 to endow the Chair of Polish Studies at Columbia University and has donated to the Institute of World Politics in Washington, D.C. "In these incredibly challenging times, it would be easy to step back our efforts and blame the economy, but that's not what we're about, and that's not what our members expect from us," said Dr. Thomas Bortnik, chairman. Some of the scholarship recipients are pictured here. (Photo provided by Polish & Slavic FCU) ...