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CU System Briefs (07/08/2013)

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  • PORTLAND, Maine (7/8/13)--A scheduling conflict has prompted the Maine Credit Union League to change the date and location for its 2014 Annual Meeting & Convention--to June 26-28, 2014, in Portland.  The league had announced at this year's convention  that next year's event would be June 19-21 in Bangor. It has since been advised of a scheduling conflict for those dates. As a result, the board approved the new date and location. The convention will be held at the Holiday Inn by the Bay in Portland.  The change also affects the league's Annual Convention Golf Tournament for Ending Hunger, which will return to Belgrade Lakes Golf Course in Belgrade on June 26, 2014 ...
  • BRADENTON, Fla. (7/8/13)--Sherod Halliburton has taken the helm as president of Bradenton, Fla.-based Manatee Community FCU. Halliburton succeeds Cindy Barco, who retired after 35 years. Halliburton has served as the $25 million asset credit union's executive vice president since February 2012.  In 2007, he became the first non-Tropicana employee ever appointed to the board of directors and was instrumental in expanding the credit union's membership from Tropicana employees into a community development financial institution (Bradenton Herald July 3).  Before that  Halliburton was executive director for the Bradenton Central Community Redevelopment Agency ...

Tax-status Preservation Efforts Continue At Leagues, CUs

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MADISON, Wis. (7/8/13)--The Credit Union National Association and state leagues and associations across the country are urging credit unions to engage their members in preserving the tax status of credit unions. Credit unions, in turn, are doing their part, including asking for "love letters."
 
In Washington state, Spokane Teachers CU invited nine other credit unions from the region to a June 21 "summit" to discuss strategies for working together on the tax status issue. The group aims to tap into the same cooperative energy that provided results last year in Spokane on the issue of raising credit unions' member business lending cap, said the Northwest Credit Union Association (Anthem Recap June 28). Last year Spokane credit unions collected 5,000 member signatures in two weeks for that effort.
 
This time around, STCU President/CEO Tim Johnson and his staff decided to keep the message positive to fit in with its vision statement, "To be the most loved and valued financial relationship on earth." The result: a campaign asking members to "Write us a love letter." Between July 15 and July 26, frontline staff at STCU's 16 branches will ask members to sign a petition that says, "We love our not-for-profit credit union!"
 
The credit union will keep the message more general because too specific language may not work in all situations, STCU told NWCUA.  This year's petition is addressed to no one specifically and makes no mention of pending legislation or congressional discussions. Instead, it will include a short summary of the benefits provided by credit unions, ending with this request: "Help preserve tax-exempt credit unions. It's good for consumers and communities."
 
The credit union also is encouraging back-office employees to obtain at least one letter to members of Congress from credit union supporters, saying they love their credit union just the way it is. Writers are asked to deliver their letter--typed or handwritten and  short or long--to an employee or a branch. Or they can call the credit union to pick up the letter.
 
To encourage staff to write their own letters, the credit union is staging letter-writing parties in its headquarters' cafeteria. STCU has informed staff about the campaign through the company's intranet site, its daily e-newsletter for employees and direct e-mails from Johnson. Now its Community Relations and Communications staff are visiting each branch for staff meetings, providing talking points and other materials including letter-writing tips that can be used by both employees and members.
 
STCU  also is educating members about the effort  through its summer member newsletter , on its website and in its social media platforms. When the petition drive begins June 15, the "Write us a love letter" message will appear on plasma screens and other branch materials. Word of mouth is expected to be the biggest driver for the effort.
 
During the June 21 meeting, STCU provided other credit unions with logo-free versions of its petitions and collateral materials that can be adapted to fit other credit unions.  The goal is to put all petitions and letters together in binders by the time Congress starts its summer recess on Aug. 5.
 
NWCUA also reported that Northwest credit unions are rolling out internal and external campaigns to support the "Don't Tax My Credit Union" campaign. Oregon Community CU in Eugene is leading that charge, producing more than 1,800 contacts to Congress in the past few weeks, while Red Canoe CU in Longview, Wash., leads with 497 contacts--the result of one e=-mail "ask" to its members (Anthem Recap June 28).

Examples in other states:
  • Michigan credit union supporters made nearly 3,600 contacts with their lawmakers in Congress, said the Michigan Credit Union League, citing statistics from the Credit Union National Association (Michigan Monitor July 1). The league said Michigan had 3,582 contacts, mostly through the website CUNA set up for the "Don't Tax My Credit Union!" campaign at donttaxmycreditunion.org.
  • Maine credit unions have generated nearly 1,000 e-mails and letters to senators in the past two weeks telling them "Don't Tax My Credit Union," said the Maine Credit Union League Friday (Weekly Update July 5). It encouraged those who have not responded yet to the Call to Action to do so.
  • Last week the Association of Vermont Credit Unions said it was "putting the final touches on a letter to all credit union CEOs and board chairs urging them to reach out to members," said AVCU's newsletter, Newslines Express (June 28). It pointed credit unions to CUNA's Tax Status Advocacy Toolkit.

Emerging Loss Trends Threaten CUs' Financials--From ACUC

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NEW YORK (7/8/13)--Credit unions are becoming more susceptible to emerging-loss exposures that can cause immediate losses or result in third-party claims, litigation and subsequent losses, a CUNA Mutual Group risk management specialist said during an America's Credit Union Conference Discovery Breakout Session Wednesday.
 
Click to view larger image Credit unions face a two-pronged loss threat--from fraudulent acts committed directly against the institution and through litigation by third parties--Roger Nettie, CUNA Mutual Group senior risk management consultant, said during a Discovery Breakout Session at America's Credit Union Conference in New York Wednesday. (Photo provided by CUNA Mutual Group)
Roger Nettie, CUNA Mutual Group senior risk management consultant, said credit unions face a two-pronged loss threat---from fraudulent acts committed directly against the institution and through litigation by third parties.
 
The conference, presented by the Credit Union National Association in New York City, ended Wednesday.
 
Direct losses can result from myriad reasons, including employee dishonesty, illegal funds transfers and electronic crime. Employee dishonesty is universal, but the most commonly victimized organizations are in banking and financial services, according to the 2012 Global Fraud Study conducted by the Association of Certified Fraud Examiners.
 
The study indicated employee frauds lasted a median of 18 months before detection, with a median loss of $140,000. The study showed more than one-fifth of these caused losses of at least $1 million. "The longer a perpetrator works for an organization, the higher fraud losses tend to be," Nettie said. "CUNA Mutual Group claims records show that over a five-year period, employee dishonesty represented just 13% of fraud claims, but 45% of fraud losses."
 
Many credit unions believe their employees are all trustworthy and that they have strong enough internal controls to prevent internal theft from occurring. Yet, it still occurs.
 
"Fraud does not discriminate," Nettie said. "There is no immunity to this exposure based on geography, asset size, employee tenure, or past experience."
 
Another growing area of direct losses is wire fraud, especially from home equity line of credit accounts, with credit unions reporting more than $25 million in losses from 2007 to 2012. The average reported loss in 2012 was $175,000, with some approaching $1 million. "Credit unions experiencing losses generally had inadequate security for large dollar transfers, enabling crooks to easily defeat callback security measures," Nettie said.
 
Consequently, CUNA Mutual Group implemented new terms with its funds transfer coverage to encourage additional controls for remote requests and discourage the practice of accepting large-dollar remote requests. Nettie offered recommendations to limit wire fraud, such as spotting fraud red flags and using layered levels of security.
 
Also, electronic crime continues to cause direct losses through computer malware and money mules who illegally transfer money on behalf of scam operators, typically in another country. Prevention measures such as cookies, device recognition, Internet protocol and challenge/response questions have limited effectiveness. As alternatives, Nettie suggested out-of-band authentication, hardware tokens, digital certificates and biometrics.
 
Liability losses for credit unions continue to be led by employment practices liability (EPL) claims and subsequent litigation. "EPL losses make up nearly two-thirds of all of CUNA Mutual Group Management and Professional Liability losses, with the most common allegations being wrongful termination, retaliation, and race and gender discrimination," Nettie said. He suggested credit unions have updated policies and procedures reviewed by legal counsel and provide regular staff training.
 
Nettie also discussed the growing incidence of costly lender liability claims, which generally allege the credit union failed to follow state law requirements in their Notices of Intent to sell repossessed property and Notices of Deficiency letters. "Usually, this is a case of you getting sued by your worst borrower and then having it mushroom into a class action lawsuit," Nettie said. "It's vitally important to have your forms reviewed and approved by legal counsel for each applicable state, and train employees on how to properly complete the forms."
 
If you missed News Now's and Credit Union Magazine's coverage of the ACUC, use the links below.

More Than 100 CU Advocates 'Unite' Outside Today Show

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NEW YORK (7/8/13)--More than 100 credit union advocates decided "what better way to start off 'Today'" than to  gather outside of NBC's Today Show in bright-blue Unite-for-Good and aSmarterChoice T-shirts to help spread awareness about credit unions. The fun and unique effort was the brainstorm of the Credit Union National Association and was executed the final day of CUNA's America's Credit Union Conference (ACUC), held in New York City from June 29 to July 3.

Click for slide show Today Show host Savannah Guthrie waves to some of the 100 or more credit union folks who showed up in the New York City dawn at the Today Show site wearing Unite for Good and aSmarterChoice t-shirts to foster awareness of credit unions. (CUNA Photo)


 
As anyone familiar with morning television knows, the Today Show attracts an iconic crowd each morning it airs, as fans visible through windows behind the show's hosts can be seen as they wave "Happy birthday, Mom" signs or wear "Will you marry me, Josie" T-shirts.
 
"When we first conceived of this, we were kind of wondering what kind of turnout there would be when we asked attendees to get up at 6 a.m. on the last day of the conference for the show," CUNA Vice President of Marketing Communications Amy Nigrelli said of the event. "It became clear really quickly that credit union folks were really up for this. We are thrilled that so many people participated." 
 
The credit union crowd, not part of the official show, got some great exposure as they formed a window-framed backdrop--waving their Unite for Good and aSmarterChoice signs--to musical giant Usher as he chatted and joked with the show's hosts.

The Unite for Good T-shirts, however, were no joke.  They refer to CUNA's new strategic vision, being embraced by credit unions across the country, where "Americans choose credit unions as their best financial partner."  The vision promotes three key goals credit unions will need to reach to achieve CUNA's shared vision for the credit union system: removing barriers, creating awareness and fostering service excellence.
 
And the aSmarterChoice T-shirts, of course, refer to the consumer website created by CUNA and the state credit union leagues, which helps people find a credit union to join.
 
Also during the ACUC, the throngs of people moving through one of Manhattan's most bustling thoroughfares, Times Square, saw a message in the neon lights letting them know that, in part due to their current tax status, credit unions provide benefits for their members including higher rates on savings for members and lower fees.  The message also shared shared the DontTaxMyCreditUnion.org website address.

In June, the Times Square crowds saw they would get better rates and lower fees by switching to a credit union, and were urged to find one at www.aSmarterChoice.org on the same CBS electronic billboard.
 
CUNA arranged for the message to run hourly--and four times for the tax message--on the iconic CBS Screen on famed 42nd Street beginning April 15 and running through July 4.
 
Attending the Today show was one of many media news outlets CUNA  interacted with while in New York City for the ACUC. The other outlets included The New York Times, Wall Street Journal, Forbes, Fortune Magazine, FOX Business Network, Reuters and USA Today.

Appeals Court: Lower Court Erred In Dismissing CU Breach Suit

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KNOXVILLE, Tenn. (7/8/13)--A Tennessee appellate court Wednesday overturned a lower court's ruling that dismissed a lawsuit by Copper Basin FCU (CBFCU) and CUMIS Insurance Society against FiServ Solutions Inc. over nearly $545,000 in losses incurred during a data breach.
 
The Court of Appeals of Tennessee at Knoxville reversed the decision and remanded the case to the lower court for further proceedings, saying "we hold that the complaint alleges sufficient facts to allow the case to proceed, and, therefore, dismissal was in error."
 
The credit union is alleging negligence and breach of contract stemming from a computer hacking in which it found out that its antivirus firewall and protection software had not been activated and allowed for hackers to access passwords and change user names. CUMIS's insurance policy covered the funds in the event of a computer hacking.
 
At issue was a master agreement between CBFCU and Fiserv's Integrasys division for technical support and Web defense services, which required the purchase of Trend Micro Antivirus Firewall and Protection software. The contract subscription was renewed in May 2009. In July 2009, credit union employees contacted FiServ about an unusual number of "pop-up" advertisements on their computers, and FiServ informed them it corrected the problem, said the court's opinion document.
 
On July 15, the credit union learned about the hackers'  origination of  "transfers from CBFCU's account with Volunteer Corporate into a large number of privately owned accounts distributed in banks across the U.S.," said the ruling.  The credit union and VolCorp retrieved all but $544,789.41 of the stolen funds. Afterward, according to the court documents, the credit union discovered the Web defense software had never been activated. It filed suit on July 12, 2011.
 
FiServ had argued that the credit union had filed the case too late and that the Web defense and technical support duties were governed by the master agreement. The credit union said a separate, earlier contract applied to the case, and that the master agreement covered only provision data process services.
 
The appellate court said that the lower court's reliance on the master agreement  in dismissing the case was in error and that the suit had been filed within the time period allowed.

"Of course we're pleased with the appellate court decision, but because this matter is still pending, we are not able to comment further," Phil Tschudy, media relations manager of CUNA Mutual Group, told News Now.

CUAD Inducts Three To Hall Of Fame

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BISMARCK, N.D. (7/8/13)--The Credit Union Association of the Dakotas inducted three credit union professionals into the CUAD Hall of Fame in a ceremony during an awards banquet at its Annual Summit in Grand Forks, ND.

 
The three inductees are:
  • Marvel Ebenhahn, president/CEO, Community CU, New Rockford, N.D.;
  • Patty Pretzer, former marketing vice president, Town & Country CU, Minot, N.D.; and
  • Dick Schmidt, board member, Service First FCU, Sioux Falls, S.D.
Ebenhahn has worked 60 within the credit union system.  She is Community CU's first and only manager.
 
Pretzer retired in 2012 after 26 years with Town & Country CU.  As vice president of marketing, she coordinated advertising, promotions, community relations, special events, and member services. She was active in the Credit Unions United Chapter of Minot, serving on the board for many years, and was also a strong advocate for youth financial literacy, said CUAD.
 
Schmidt has been committed to the credit union movement in South Dakota for the past 40 years.  He has championed the underserved, and urged credit union management and board to look beyond credit scores and focus on character and collateral.

How CUs Fared During Superstorm Sandy--From ACUC

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NEW YORK (7/8/13)--Surviving and recovering from a devastating event such as Superstorm Sandy requires a well-rehearsed disaster preparation plan and consistent communications with members and staff.
 
Click to view larger image Mike Retelle, right, CUNA Mutual Group property and claims manager, facilitated a panel discussion on lessons learned from Superstorm Sandy during a breakout session at America's Credit Union Conference Tuesday in New York. At left is Shawn Gilfedder, president/CEO of McGraw-Hill FCU. (Photo provided by CUNA Mutual Group)
That was the message shared Tuesday by three CEOs whose credit unions were greatly impacted by last October's disaster, during an America's Credit Union Conference Discovery breakout session.
 
The conference, presented by the Credit Union National Association, ended Wednesday.
 
CUNA Mutual Group Property and Casualty Claims Manager Mike Retelle facilitated a panel discussion that included Robert Allen, president/CEO, Teachers FCU, Hauppauge, N.Y.; Gene Brody, president/CEO, Bay Ridge FCU, Brooklyn, N.Y.; and Shawn Gilfedder, president/CEO, McGraw-Hill FCU, East Windsor, N.J.
 
As one of the largest Atlantic hurricanes on record, Sandy left a swath of destruction 900 miles wide across 24 states, killed at least 80 people in the U.S., and caused more than $65 billion in damage, according to published reports in LiveScience.com and the Los Angeles Times. While all of the panelists' credit unions remained operational during and after the storm, life for many in the affected area has not returned to normal eight months after it occurred.
 
"Sandy still has a lingering effect on our membership as insurance recoveries have, for the most part, not covered all their damages," Brody said. "Many of our properties that serve as collateral for our loans are still in need of further renovation and reconstruction."
 
The physical and emotional damage caused by Sandy is permanent, Brody added. "Many people had to leave their properties for long periods of time, and some have still not gone back to their homes."
 
Teachers FCU members were afforded temporary relief from their loan payments for up to six months to have the necessary cash flow to fix their properties. The credit union also offered new loans to help affected members renovate their properties and gave employees time off to tend to their properties as well as cash or loan assistance, if needed.
 
Despite having disaster preparation plans in place, credit unions identified areas for improvement. The three panelists offered these recommendations to their colleagues:
  • Review and update the credit union's disasters preparedness policy and procedures on an ongoing basis;
  • Practice leadership before a crisis, have a documented plan representing all facets of the organization and be prepared for the unknown;
  • Maintain consistent and direct communication with staff and members;
  • Realize perception will become reality if not managed during and after the crisis;
  • Identify staff's personal needs. They are impacted by these events personally just like members; and
  • Employees' core values showcase themselves during times of crisis--make sure all employees have a clear vision of the organization's mission and vision.
During his 30-plus years at CUNA Mutual Group, Retelle said he has seen the bond among a credit union, its staff, and its members strengthen in stressful times. Being prepared to successfully react to a major crisis will showcase a credit union's focus and core values, he added.
 
"The actions taken by these credit unions spoke volumes to their staffs and members that even in the worst of times the credit union was willing to help on the personal side and still make sure the member's financial needs were cared for," he added. "They showed that their staffs are more than just employees and their members more than just an account number; they are all part of the credit union's family."
 
If you missed News Now's and Credit Union Magazine's coverage of the ACUC, use the links below.

Grant: Don't Give Until It Hurts

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NEW YORK (7/8/13)--Is workplace altruism a sucker's bet? It can be if you help others to the detriment of yourself, said professor and author Adam Grant on the final day of the Credit Union National Association's America's Credit Union Conference (ACUC)  here.
 
Don't be too altruistic in the workplace, warned Adam Grant, Wharton School of Business professor and author of "Give and Take: A Revolutionary Approach to Success." Being a doormat is a sure recipe for frustration in the workplace, he told credit unions at the final general session Wednesday at America's Credit Union Conference. ACUC was presented by the Credit Union National Association in New York City June 28-July 3. (CUNA photo)
Grant, a Wharton School of Business professor and the author of "Give and Take: A Revolutionary Approach to Success," identified three types of employees:
  • Givers, those rare folks who enjoy helping others without taking credit;
  • Takers, manipulative people who try to get as much as they can from others without giving anything in return; and
  • Matchers, those who'll help others as long as they eventually get something in return.
Most employees, Grant said, fall into the final category.
 
Givers, Grant warned, often can be the worst performers: "They can be the least productive and make the most errors because they're too busy helping their peers." In the long run, however, those who help others succeed often advance themselves because they help create value for their organizations.
 
"If we create an atmosphere where givers thrive," Grant said, "we can lift all boats."
 
Grant told his credit union audience that organizations can create such a culture by:
  • Getting the right people on the bus and, conversely, "keeping the wrong people off the bus";
  • Recognizing, rewarding, and promoting givers;
  • Tracking who in the organization helps others and adds value; and
  • Establishing a culture where people feel free to ask for help.
Asking for helps is "hard for givers, but it must be done sometimes," Grant said. "Successful givers ask for help; failures try to go it alone."
 
Takers tend to have certain traits in common, according to Grant's research. CEOs who are takers tend to say "I" and "me" instead of "we," and they often have salaries far higher than those of their colleagues.
 
These CEOs also can be self-satisfied and vain, often displaying large photographs of themselves, indicating "it's all about me." Disgraced Enron CEO Kenneth Lay, for example, published a full-page photo of his face in the company's 1997 annual report--a telling indication, Grant said, of his onerous intentions.
 
But like Lay, many takers are adept at hiding this trait, the final ACUC keynote speaker said Wednesday. They appear to give, but don't. "If you're a taker, you want people higher up to think you're generous. It's all about kissing up and taking others out."
 
One way givers can help others without being taken advantage of is by doing "five-minute favors," quick, easy tasks such as making an introduction or providing recognition, Grant said. If the recipient doesn't reciprocate, chances are he or she is a taker.
 
"Giving is sometimes seen as a sign of weakness," Grant assessed. "But it can be a strength."
 
CUNA's ACUC was held here June 28 to July 3.  For full coverage of the events use the links to News Now and Credit Union Magazine.