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CU System briefs (08/25/2011)

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* BILLINGS, Mont. (8/26/11)--Sarah Anne Housley, 34, a former employee of Montana Health FCU, Billings, Mont., was sentenced Wednesday to one year and one day in prison for embezzling more than $100,000 from the credit union. The funds included $94,158 stolen from her grandparents' account in hundreds of transactions from January 2008 until July 2010. Housley had been employed at the credit union for seven years. The theft was discovered when an audit showed her teller drawer was thousands of dollars short. She allegedly spent the funds on covering her overdrafts, vacations, house payments and more. U.S. District Judge Jack Shanstrom also ordered Housley to pay $110,690 in restitution (Associated Press Newswires Aug. 24) … * HARAHAN, La. (8/26/11)--Michael Hooper, president/CEO of Baton Rouge, La.-based La Capitol FCU, was elected to Credit Union Cooperative Branching board of directors during its annual meeting Aug. 15, said the Louisiana Credit Union League (eNews Aug. 24). He will replace Susan Leake, who retired last year. He served as chief financial officer/executive vice president for 10 years before becoming president/CEO of La Capitol … * NEWBURYPORT, Mass. (8/26/11)--David Michael Flaherty, 61, president of Louise E. Mills CU in Merrimac, Mass., died Saturday at a medical center in Boston. He was a member of the math department at Triton Regional High School, where he taught for 25 years. He is survived by his wife and three daughters. Funeral services are today at 11 a.m. at All Saint's Anglican Church, Amesbury, Mass. (The Daily News of Newburyport Aug. 24) … * IOWA CITY, Iowa (8/26/11)--Robert F. "Bob" Kanak, past president and board member of the Federal Employees CU, Des Moines, Iowa, died Aug. 18 in Grove, Okla. He was 91. He worked with the U.S. Postal Service for 28 years before retirement. Kanak is survived a son, three grandsons, eight great-grandchildren and a sister (Iowa City Press-Citizen Aug. 25) …

Late fees have dropped says report

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CHICAGO (8/26/11)--Late payments to credit cards are at their lowest level in 17 years; however, one reason late payments have declined is because consumers being more cautious in using their cards, a study indicates. The rate of payments 90 days or more past due dropped to 0.06% during second quarter, compared with 0.92% during second quarter 2010, said TransUnion, a Chicago-based credit reporting agency ( Aug. 25). Economists had forecast that the late payments would decline, but the decline during the quarter was faster than expected, said TransUnion. During the last quarter, the average borrower's debt rose $20--to $4.699 per person.

PSECU bucks trend adds 31 jobs

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HARRISBURG, Pa. (8/26/11)--While Bank of America goes through with its plans to lay off 3,500 workers across the nation, at least one credit union is doing its part to provide service and create jobs. Pennsylvania State Employees CU (PSECU), based in Harrisburg, Pa., has announced two initiatives that will benefit its members and the economy: expanded ATM surcharge rebates and extended call center hours. In October, traditionally celebrated as International Credit Union Month, PSECU will thank members for choosing the PSECU Check Card by increasing the monthly surcharge rebate to $8 from $4 for all members who use an out-of-network ATM. The monthly rebate jumps to $20 for members with qualifying Direct Deposit with the more than $3 billion asset credit union. The rebates will allow members to use a broader network without worrying about surcharges, making it easier for them to access their money, said PSECU in a press release. Extended call hours will mean PSECU is adding 31 new positions to accommodate an almost 40% increase in hours that service will be provided to members. Beginning in January, the call center will be open until 9 p.m. Monday through Friday and until 5 p.m. on Saturday. The initiatives are core to the credit union's goal of providing quality service and access, as well as supporting the economy, said Gregory A. Smith, PSECU president. "Not only are we giving back to the member in more ATM access and call center hours, but we are also helping our economy by adding 31 jobs to the roster." He noted that many banks responded to the interchange debit fee changes in the Dodd-Frank Act by increasing their service charges and downsizing. "PSECU is responding by putting members and their needs front and center of our day-to-day operations."

Auto delinquencies continue downward trend

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CHICAGO (8/26/11)--The national auto delinquency rate--the rate of borrowers 60 or more days past due--decreased for the seventh consecutive quarter, dropping to 0.44% at the end of the second quarter, according to TransUnion, the third largest credit bureau in the U.S. The company has an ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgage, credit cards and auto loans (Marketwire Aug. 23). Although auto delinquencies were expected to fall since last quarter, in part due to seasonal influences, the second-quarter TransUnion data released Tuesday shows a moderate deceleration on a year-over-year basis since the third quarter of 2010. Delinquencies in U.S. credit unions’ “all other non-mortgage loans”--which includes auto loans, unsecured personal loans and all other non-mortgage loans--dropped to 1.32% in 2010 from 1.61% in 2009. For first quarter 2011, delinquencies dipped to 1.12%, according to data from the Credit Union National Association. “Historically, first and second quarter auto delinquencies tend to be lower than those experienced in the second half of the year--all other things remaining equal,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit. “However, over the last seven quarters--on a year over year basis---we have seen delinquencies trend downward as consumers continue to pay down debt. “With auto sales improving, more auto loans are opened by consumers placing downward pressure on auto delinquency rates,” he added. “A consumer’s ability to repay is also helped by the recent low interest rates for new- and used-car loans, making purchase decisions and monthly payments more affordable.” Between the first and second quarters, 43 states experienced declines in their auto delinquency rates. Also, 60% of metropolitan statistical areas (MSA) saw declines in their delinquency rates last quarter. During the first quarter, 64% of MSAs experienced a decline in auto delinquency rates, compared to 49% in fourth quarter 2010. “Today, national auto delinquency rates are at historic lows, at half the levels found in credit card nonpayment rates and over 10 times lower than seen in the mortgage sector,” Turek said. “Lenders that have money to lend are attracted to auto finance, as it is a relatively low-risk, short-term asset and auto loan delinquencies are expected to remain at historically low levels through the end of the year. Consumers should benefit in the form of competitive offers, making purchase decisions easier and more affordable.” TransUnion’s forecast is based on economic assumptions--such as unemployment rates, consumer sentiment, disposable income and interest rates. The forecast changes as the economy deviates from a conservative economic forecast or if there are unanticipated shocks to the economy affecting recovery.

CUs take precautions as Hurricane Irene draws near

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MADISON, Wis. (8/26/11)--Although Hurricane Irene’s arrival to the U.S. mainland was still in question late Thursday, credit unions in several states, including North Carolina, were preparing for a possible landfall. The first hurricane of the season, with winds up to 115 mph, as of Thursday afternoon Irene was a Category 3 storm on a five-point scale. The storm has caused flooding and power outages across the Caribbean, and U.S. officials have warned Irene could cause damage along the east coast as far north as Maine. Agility Recovery, a CUNA Strategic Services provider, is offering, “Hurricane Irene: Current Threats & Practical Steps to Prepare, a webinar to help credit unions prepare for this weekend at 10:30 a.m. ET today. The webinar will provide an update on the threats Irene presents and the potential impact to businesses. The presentation will address the factors unique to Irene and practical steps for preparation in advance of the storm. Credit unions within range of Irene’s potential path were making preparations of their own on Thursday. At $682 million asset Marine FCU, Jacksonville, N.C., the credit union’s emergency engagement group is meeting daily to review the threat posed by the storm and plan ahead accordingly. The credit union announced Wednesday that all branches in North Carolina would be closed Saturday. Marine FCU President/CEO Craig Chamberlin said the primary focus--if and when Irene hits the area--will be setting up a command center at the credit union’s headquarters. “Our primary function isn’t to see that our branches or our ATMs are OK, but to make very certain but our people are OK,” Chamberlin told News Now. “Bricks and mortar can be replaced. People can’t be replaced.” Chamberlain said he and his senior staff were in Phase 2 of a five-phase disaster preparation preparedness plan on Thursday morning. He expected the plan would be elevated to Phase 3 by today. He estimated he and his staff had been through six hurricanes since 1995. While a Category 3 hurricane presents real danger, he said residents would leave the area if the storm elevates to “a strong Category 4.” “The biggest blessing, providing nothing changes, is that we’re on the west side of it, not on the east side,” he said of Irene. With branches in each of North Carolina’s 100 counties, $23 billion asset State Employees’ CU, Raleigh, has also prepared for Irene’s arrival. The credit union has sent extra cash to every branch east of Interstate 95, according to Leigh Brady, SECU’s senior vice president of education services. “Quite frankly we’ve already seen an increase in members coming to get extra cash,” Brady said. “I think some of it is accommodating people who are leaving the affected areas already.” Brady said the credit union has no plans to close branches early today. SECU branches are not open on Saturday. “We’ll make whatever accommodations we need to make for employees,” Brady said. The North Carolina Credit Union League (NCCUL) staff reached out to credit unions in the eastern part of North Carolina on Wednesday. “We wanted to ensure that our credit unions had all the resources and information they need to properly implement their disaster preparedness plans and get ready for the storm,” said NCCUL President/CEO John Radebaugh. “All credit unions that were contacted reported that they were carefully following their disaster preparedness plans while carefully monitoring the movement of Irene.” After passing over North Carolina, Hurricane Irene is expected to remain a hurricane alongside of Virginia, Maryland and Delaware, heading through New Jersey to the New York metro area and New England through Sunday (Property Casualty 360 Aug. 26).

VolCorp elects three board members

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NASHVILLE, Tenn. (8/26/11)--Volunteer Corporate CU (VolCorp), Nashville, Tenn., elected three board members at its annual meeting on Aug. 18.
Elected to three-year terms on the board of directors were:
* Janice Jones, CEO, United Southeast FCU, Bristol, Tenn.; * Wade Stapleton, CEO, LifeWay CU, Nashville; and * Todd Swims, CEO, Leaders CU, Jackson, Tenn.
New board officers elected included:
* Chairman, Ken Swann, CEO, City of Memphis CU; * Vice chairman, Gary Land, CEO, Chattanooga (Tenn.) Area Schools FCU; * Treasurer, John Jacoway, executive vice president/chief financial officer, Southeast Financial CU, Franklin, Tenn.; and * Secretary, Karen Jordan, CEO, P&G Jackson (Tenn.) Employees FCU.
Other members serving on the board include, Mike Haggard, CEO, HealthNet FCU, Cordova, Tenn.; and Bonnie Sensing, CEO, Nashville Firemen’s CU. VolCorp is a not-for-profit financial cooperative that serves natural person credit unions nationally.

Two Harbors FCU targeted by text-message scam

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TWO HARBORS, Minn. (8/26/11)--Members of Two Harbors (Minn.) FCU have been targets of a text-messaging scam using the credit union’s name. Members have been receiving text messages reading, “Two Harbors FCU Notice: Your Card 4287-xxxx has been deactivated,” according to the Two Harbors Police Department (Duluth News Tribune Aug. 25). People who call the contact number in the text message are prompted to type in their credit card number. The line disconnects after the credit card number is entered. Two Harbors FCU advises members receiving the bogus texts to contact the credit union.”

Filene study How to handle choice overload in the CU

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MADISON, Wis. (8/26/11)--The assumption that consumers always benefit from having more options to choose from does not always hold. In some cases, consumers benefit from fewer, rather than more, options. So says the latest research from the Filene Research Institute, which tells what this means for credit unions and their members. Credit unions need to know how to handle choice overload in their products and services, says "The Psychology of Choice Overload: Implications for Retail Financial Services," a Filene report authored by Alexander Chernev, associate professor, Kellogg School of Management, Northwestern University. "Retail is retail, whether you're selling prom dresses, chocolates, or even checking accounts," says Ben Rogers, Filene research director. "Consumers consider their available options and choose. For retail firms like credit unions, part of your responsibility is to make those choices easier." The research outlines three ways credit unions can make choices easier for members:
* Know that less is more. Interviews with credit union CEOs indicate that many recognize the need to pare their offerings to an efficient core group, said the report. Credit unions should ask themselves why streamlining decisions like those made recently in banking by ING Direct and Ally work. * Actively curate the credit union's offerings. Instead of reducing the number of available options offered by the credit union, consider focusing on a smaller number of options promoted by the credit union. Instead of overwhelming a new member, the credit union may decide to promote only the subset of options that most likely appeal to new members. Sometimes telling the consumer which option is the most popular is enough to help the member decide. * Organize around defaults. Take a cue from the benefits area. The practice of allowing employees to opt out of 401(k)s, rather than asking them to opt in, results in dramatically higher participation rates. Setting default options at a credit union can ease the decision burden on members. Deciding whether each option is better or worse than a default option is easier than evaluating each option against all other options.
"Credit unions have made great strides toward becoming full-service financial institutions. But the urge to be all things to all people has a downside," said Rogers. Instead, offer a well-considered assortment of products--big enough so members have choices, but small enough so the options don't overwhelm.