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CU System briefs (08/27/2010)

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* MARLBOROUGH, Mass. (8/30/10)--The Massachusetts Credit Union League's Community Hope Initiative raised more than $35,000 at its annual golf tournament to benefit the Massachusetts Coalition for the Homeless in Northborough. The tournament attracted 128 golfers. Teams from the NMTW Community CU, Lowell, took first and second place awards. Al Santoro of Members Plus CU, Medford, had the men's most accurate drive, and Cheryl Gorman of Harvard University Employees CU, Cambridge, won the women's counterpart (e-Weekly Aug. 26) ... * COLUMBUS, Ohio (8/30/10)--Credit Union of Ohio has donated $50,000 to the Ohio Statehouse Museum, to be used to continue its third phase of construction and help with transportation costs for children to visit the museum. Phase II of the construction was completed last summer. Phase III, an inspirational area underneath the rotunda entitled The Heart of Democracy, should be completed as early as November. "We serve members throughout all 88 counties of Ohio and felt this donation would be a great way to give back to all our member communities at once," said Credit Union of Ohio CEO Rich Capuano. The credit union has $115 million in assets and 21,000 members ... * SALT LAKE CITY (8/30/10)--Mountain America CU has launched an application for the Apple iPad and is the first credit union in the country to offer an iPad optimized app, it announced. "Success in the mobile space is critical--many people have access to a cell/mobile device more often than they do a PC," said Tony Rasmussen, senior vice president of the more than $2.8 billion asset credit union. The new app is optimized to take advantage of the additional "real estate" on the screen. Previously the credit union provided an iPhone app that could also be used on an iPad, but that appeared slightly pixilated when used in full-screen mode ...

Members United Corporate records more losses in July

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WARRENVILLE, Ill. (8/30/10)--Members United Corporate FCU reported $8 million in additional other-than-temporary-losses as of July 31, creating a $4.6 million loss for the month and nearly $11.2 million in losses year to date. That leaves the Warrenville, Ill.-based corporate's with retained earnings totaling $3.9 million as of July 31. However, the corporate is seeing improving OTTI loss projections and said it expects to retain favorable net interest income relative to budget for the remainder of 2010. Its unaudited financial report as of July 31, is on the corporate's website. (Use the link). A retained earnings balance of $9.6 million was sufficient to absorb the OTTI monthly loss, and no additional capital depletions in were necessary, said the $8.9 billion asset corporate. Assets for the month a year ago totaled $8.7 billion. Regulatory capital, consisting of retained earnings and membership capital shares, totaled $18.4 million, compared with $200.5 million in July 2009. Losses the past 12 months have depleted $79.4 million of paid-in capital and $460.1 million of membership capital shares, leaving $14.6 million in qualifying membership capital shares as of July 31. Members United holds 464 separate investment positions totaling $4.7 billion in par. Roughly $610 million in OTTI has been recorded on 169 positions totaling $2.2 billion in par amount (on average 25%). No OTTI has been recorded on the other 295 positions that aggregate $2.5 billion in par. The next OTTI investment review will be based on data as of Sept. 30, and is scheduled to be recorded in the financial statements as of Oct. 31. The October results will then be reported in November. Depletion of capital shares, if required, would occur as of Nov. 30, the corporate said.

Fake checks circulating with name of Colo.-based CU

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COLORADO SPRINGS, Colo. (8/30/10)--Air Academy FCU, Colorado Springs, Colo., contacted the Federal Deposit Insurance Corp. to report counterfeit official checks bearing the institution’s name are in circulation. The counterfeit items display the routing number 092005411, which is assigned to First Interstate Bank, Helena, Mont. Air Academy FCU issues its official checks through a payable-through account held at First Interstate Bank. The items are similar to authentic official checks. However, the counterfeit items display a security feature statement embedded within a darkened top border and above the bottom border in the lower-right corner.

Five Ohio league board nominees appointed

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COLUMBUS, Ohio (8/30/10)--Five nominees for the 2011 Ohio Credit Union League Board of Directors were appointed by acclamation. Five director positions were up for election--Districts I, II, and III and Membership Categories A and C. Only one nomination was received for each position. Therefore, the five candidates are elected by general consent or acclamation (eLumination Newsletter Aug. 25). The league directors are:
* District I--Barry Shaner, Directions CU, Sylvania; * District II--Phil Meyer, Ohio University CU, Athens; * District III--Robin Thomas, Taleris CU, Cleveland; * Membership Category A--Jennifer Ferguson, Bay Area CU, Oregon, and * Membership Category C--Steve Behler, Kemba CU, West Chester.
All will serve three-year terms expiring 2014.

Filene Four governance areas ripe for improvement

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MADISON, Wis. (8/30/10)--Credit union directors are unreliable judges of their own efficacy, and there several areas ripe for governance improvement, according to a recent Filene Research Institute survey. When asked to self-judge the quality of their governance and the strength of their credit union’s performance, the directors who considered their governance practices good also said that their credit unions performed well. But when the directors were matched with their credit unions’ actual returns on assets (ROAs) over seven years, there was no statistical correlation to above-average ROAs. Volunteer credit union boards display a broad range of competence and engagement, according to Tracking the Relationship between Credit Union Governance and Performance, sponsored by the Credit Union Executives Society. The report is the latest in a string of Filene research into credit union governance practices. The research identifies several best practices that allow credit union leaders to improve both governance and performance. The research shows areas that could be improved:
* Time management--Effective meeting management is a challenge, and boards seem to have only a vague sense of how their meeting time is spent. To improve, boards must know how their time is currently spent and then prioritize agendas to spend more time on strategy. * Director evaluations--A lack of board introspection means board chairs and other directors need to be proactive in formally evaluating their own contributions. They should consider implementing annual board effectiveness surveys, formal peer feedback, formal reviews of the chair, and feedback from management. * Continuing education--One way to encourage better governance is to demand individual improvement. Surveyed directors who ranked their boards in the top decile of governance performance all had formal continuing-education policies, while those in the lowest decile rarely did. * CEO evaluations--The board/CEO link drives financial performance. The only governance practice that yielded a strong positive correlation with actual credit union ROA performance was whether boards felt they had an effective CEO evaluation in place.
“Credit union governance is one of those issues that never seems urgent, but thinking about it and improving it just might be a more important issue than anything else we face right now,” said Mark Meyer, Filene CEO. “As a credit union director myself, I can vouch for the importance of holding ourselves as accountable as we hold management.” Using in-depth interviews and survey tools, researchers from the Rotman School of Management at the University of Toronto plumbed credit union board practices in areas, such as time allocation, decision-making processes, board composition, director selection, board performance measures and credit union performance measures. The study provides other insights. Time management and meeting inertia are hard to overcome. Credit union directors mirror the feelings of their counterparts on publicly held boards in saying their boards need to spend more time on strategy and risk management, and less time on operational matters and routine items. Most directors agree that attracting and retaining younger, more diverse directors with a broader base of backgrounds is a priority. Yet, many respondents said they feel challenged to find qualified volunteers who are willing to commit. Many boards seem to be adopting a wait-and-see attitude rather than emphasizing more rigorous recruiting practices such as evergreen lists, Filene said. Several interviewees stressed that it is hard to remove underperforming directors--even when their terms are up--for fear of hurt feelings.

Indiana league convention focuses on shoes for hope

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INDIANAPOLIS (8/30/10)--Manny Ohonme, founder of Samaritan’s Feet, one of the largest humanitarian not-for-profit organizations in the world, will present the keynote address at the Indiana Credit Union League Convention next month. From humble beginnings and a poverty stricken lifestyle in Africa, to the corporate boardrooms in lower Manhattan, to his current role as a global philanthropist, Ohonme will challenge attendees to enrich their work lives, enhance innovation, and improve team dynamics to develop their skills as socially conscious, purpose-driven leaders. Attendees can participate in a special collection for Ohonme’s organization, Samaritan’s Feet, which is dedicated to changing lives through Shoes of Hope distributions in Indiana, nationwide and globally. Collection points will be available at various convention events for shoe donations. The organization is in particular need of children’s athletic shoes. The league will collect new shoes for either boys or girls. “We are looking forward to having Manny kick off the convention by sharing his enthusiasm and experience,” said league President John McKenzie. “We want to help his organization meet its goal of raising 10 million shoes in 10 years.”

Congressmans session hosted by Illinois league

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NAPERVILLE, Ill. (8/30/10)--U.S. Rep. Bill Foster (D-Ill.) and Chief of Staff Jason Linde recently visited the Illinois Credit Union (ICU) System Center for a dialogue session with area credit unions, hosted by the Illinois Credit Union League (ICUL).
Click to view larger image Visiting the Illinois Credit Union (ICU) System Center recently for a dialogue session with area credit unions, hosted by the Illinois Credit Union League are, from left: Robert Palumbo, CEO, DuPage CU; Libby Calderone, CEO, Earthmover CU; Carl Sorgatz, CEO, Hawthorne CU; U.S Rep. Bill Foster (D-Ill.); Robert Schroeder, CEO, Illinois Community CU; and Bill Hicks, chairman, DuPage CU. (Photo provided by the Illinois Credit Union League)
Credit union representation included DuPage CU, Naperville; Earthmover CU, Aurora; Hawthorne CU, Naperville, and Illinois Community CU, Sycamore. At the session, credit unions stressed that credit unions did not cause or contribute to the financial meltdown and requested that Foster, who is a member of the House Financial Services Committee, watch for opportunities to streamline unnecessary laws and regulatory burdens on credit unions. Specific topics discussed by the group included: the new Consumer Financial Protection Act (CFPA), maintaining the National Credit Union Administration (NCUA) as an independent regulator, allowing NCUA to conduct examinations on behalf of the new Bureau of Consumer Financial Protection Bureau, rejecting any amendments related to bankruptcy cramdowns, and support for pending legislation allowing federally insured credit unions to increase the cap on member business lending. Also discussed were ICUL Service Corp.’s (LSC) initiatives and the impact of recent legislation, including an interchange provision of the CFPA on LSC’s operations. Credit Unions nationwide oppose the provision. As part of the visit, George Fiegle, LSC executive vice president/chief operating officer, and Cathy Pettis, LSC senior vice president of operations, provided Foster with a tour of all ICU System departments--including its call center where LSC provides service to more than 2,500 credit unions across 45 states. “We believe [Foster] obtained a much more informed understanding and appreciation for the cooperative nature of credit unions, the league and service corporation,” said Don Edwards, ICUL senior vice president of federal governmental affairs.

Iowa MBL saves 40 jobs at grain elevator

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OTTUMWA, Iowa (8/30/10)--An Iowa credit union is receiving both media and congressional attention for saving 40 jobs at Troy Elevator, a grain elevator that was destined to close when its relationship with a bank fizzled. Pending legislation in Congress would allow credit unions to help more such businesses at no expense to taxpayers, said the Credit Union National Association (CUNA) and the Iowa Credit Union League. Troy Elevator, with locations in Troy, Bloomfield, Pulaski and Blakesburg, Iowa, will continue operations and keep 40 Iowans employed, thanks to Community lst CU, said the league. For the past 18 months, Community 1st CU worked with the grain elevator to keep it from closing. Recently it provided a guaranteed loan through the U.S. Department of Agriculture's (U.S.D.A.) Rural Development Program. Troy Elevator, in business since 1928, suffered severe damage at its Pulaski site during a tornado in 2008. Its president, Robert Newton, began working with his lender at that time to restructure the company's long- and short-term debt to recover from the tornado's damages. In January 2009, the lender informed Newton it would no longer do business with Troy Elevator. "We had never missed a payment or been late in our 18-month relationship with the bank," said Newton. "We were completely shocked and frustrated that they wouldn't help us." In December 2009, Community 1st began working with the company. "We knew Troy Elevator was having issues with its lender, and we didn't want to see them close their doors," said Terry Maloy, president/CEO of 1st Community. The grain elevator applied for the U.S.D.A. loan through the credit union and received approval earlier this month. It reorganized and kept all 40 jobs in Iowa. "We are so thankful to Community lst CU for stepping up to help us during our desperate time of need, especially when banks turned us away," Newton said. "We were able to save our business and the jobs of our employees thanks to this credit union." The league noted that although Community 1st was able to help the grain elevator, it may not be able to make a loan to the next struggling business owner because federal law restricts a credit union from lending more than 12.25% of its assets. Community 1st is at the maximum cap of its assets, which means it would be forced to turn away the next business owner in need of access to capital, even though the business would qualify for the loan. "Iowa credit unions have always practice safe lending practices, and now more than ever, Iowans are turning to credit unions with their business lending needs," said league President/CEO Patrick S. Jury. "Iowa credit unions are in a position to do even more if given the opportunity, allowing for greater capital expenditures, greater economic activity and--ultimately--more job creation," he added. CUNA urged credit unions to continue to seek federal legislators’ support for increased member business lending (MBL) authority while lawmakers are in their home districts during the current District Work Session, which ends Sept. 13. “Credit union representatives are right now talking to their senators about how an increase in the MBL cap would positively affect the economy by infusing as much as $10 billion of new credit into small businesses, and as many as 108,000 new jobs into the job market, at no cost to the taxpayer,” said John Magill Friday. Magill is CUNA senior vice president of legislative affairs. “This story shows that CUNA figures reflect the real needs of real small business owners. It is proof positive that now more than ever MBL relief is warranted--vital to small businesses--and should be passed by Congress without hesitation,” Magill added. When the Senate is back in session, it is expected that chamber will return to its work on a small business jobs bill, which is a possible vehicle for an amendment that would increase the MBL cap to 27.5% of assets, up from 12.25%.