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How CUs in Katrina states recover--Third in series

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MADISON, Wis. (9/1/10)--Credit unions affected by Hurricane Katrina in 2005 have seen unprecedented challenges the past five years since the Gulf Coast disaster. How well did they recover?
Click for slide showWearing a face mask and poncho as protection from thick mold inside The New Orleans Firemen's FCU's east branch, Kathy Dionne, former branch manager, reaches for a mold-covered musical fire engine. (Photo provided by CUNA).
Today News Now looks at one credit union that not only survived but is thriving, despite members moving from New Orleans. Tomorrow, News Now will provide statewide analysis from the Gulf Coast leagues, which helped coordinate efforts to help their credit unions survive the catastrophe. The New Orleans Firemen's FCU (NOFFCU) has seen a lot of changes since Aug. 29, 2005, according to Judy Delucca, president/CEO. Her credit union lost a branch when the New Orleans levee broke. Nineteen of its 57 employees lost their homes. Several employees lived in converted quarters at the credit union through March 2006, when the credit union provided trailers and recreational vehicles to move to their properties while they rebuilt. They ended up living in trailers through the end of 2007. Today, 15 of the 19 still work at the credit union. Those who left did so when spouses were transferred out of state. Employees who lived in St. Bernard's Parish cannot rebuild there. Instead they moved to the North Shore, to Slidell and Mandeville. The credit union has built new branches to accommodate the growing membership there. The major change is a growth spurt. Before Katrina, the credit union counted five branches. Today, it has nine. It grew from $75 million in assets before the hurricane to $135 million. Today it has more than 18,000 members--growing faster the past three years than before--and 300 select employee groups (SEGs). "Today we're more innovative about sharing facilities and working cooperatively. We're members of Shared Branching with the credit union cooperative, and we use credit union Shared Branching networks across states," Delucca said. "We had large numbers of members who moved away but kept their accounts because shared branching allowed the credit union to keep providing them great service," Delucca told News Now. She noted that the credit union's greatest number of members is in New Orleans. "Our next-greatest is in Atlanta, Houston and Dallas--where people went when they evacuated. "We've learned that though members move, the credit union can continue to serve them and serve them well, and keep them within the credit union movement." She said that the credit union had a good name after Katrina because it was there, servicing members. There were also operational changes. Before Katrina, everything was run, driven and controlled in-house. The credit union owned its ATMs. Now it outsources them to a third-party vendor and has a 24/7 call center in Dallas, with one in New Jersey as a backup. NOFFCU also added new layers to facility management, which, in an emergency, secures facilities, obtains generators, puts up plywood on windows, and turns off electricity and gas. Before Katrina, managers had to know where the water and gas lines were. "Now in the event of a hurricane, we keep operations running and have employees in a safe area. And it's seamless. The phones switch, the members get their updates with a computer. The management team doesn't have to travel. They can be in touch by cell phones, text messages, provide information for the call center...It worked well," Delucca said. In October 2005, News Now accompanied DeLucca and the credit union's East Branch manager, Kathy Dionne, to the flooded branch. The branch was covered in dried, cracked mud and mold from the flood. Its ATM was missing. Today, the branch no longer exists. "We sold the property. New Orleans East has not really recovered yet. There are still a lot of empty apartment buildings, and the area's not stable," DeLucca said. The credit union likely will deploy ATMs at strategic locations, but not provide a physical branch for the next five years. "After Katrina, we were in the recovery mode for the first two years. Now, we're planning forward, not just recovering," she said. The credit union is expanding, having merged with smaller credit unions and added a branch in Picayune, Miss. It plans to build another in New Orleans within five years, depending on the costs of federal regulators' assessments. During the recovery, the credit union considered a community charter to diversify, but "we didn't want to do that. We serve parishers but there is no one community that services the entire area where our branches are. Also, serving multiple SEGs and low-income areas mean we can penetrate more deeply. We look for the underserved; it's a part of what credit unions are supposed to do," Delucca said. "Nobody expected the region and credit unions here to survive, much less thrive," she told News Now. She attributes survival to "working cooperatively with other credit unions." She also noted that other credit unions from across the nation "helped us and took us in and sent Christmas presents for employees. We wanted to keep it a cooperative." Delucca is already preparing for the next disaster--the BP oil spill. In typical credit union fashion, she's thinking of others. The local economy is based on the fishing industry and tourism, which are affected by the spill. More people are asking for assistance in repaying of their loans. The credit union is working with them to extend agreements and provide workouts because the "the money is not coming in. The department of collections is no longer called that, thanks to Katrina. Today, it's the Member Solutions Center. The name helps employees to remember why they're there."

NCUA gets extension in Kappa Alpha Psi case

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WASHINGTON (9/1/10)--The National Credit Union Administration (NCUA) has been granted a three-day extension to file its renewed response in Kappa Alpha Psi FCU's lawsuit contesting its liquidation before a U.S. District Court for the District of Columbia. Originally NCUA was to file its renewed response to a "show cause" order by Aug. 30. However, NCUA's counsel Fred E. Haynes requested a three-day delay to Sept. 2, citing that other litigation took longer than expected, according to court documents. The credit union consented and the extension was granted Tuesday by Judge Emmet G. Sullivan. The show-cause reply will be due tomorrow. The plaintiff credit union's plaintiff's reply deadline will move to Sept. 20 from Sept. 15. That means NCUA's new deadline to file its sur-reply to the credit union's reply will move to Sept. 24 from Sept. 22, according to the documents. The hearing for the order to show cause is scheduled for Oct. 15. There NCUA is expected to show cause why it liquidated the Texas-based credit union. NCUA ordered the liquidation of the $750,000 asset credit union on Aug. 3 and formally carried out the liquidation orders Aug. 13 while the credit union's request for an injunction was being brought to court. The credit union dropped the injunction after NCUA redistributed its assets to its former members (News Now Aug. 19 and Aug. 18). Kappa Alpha Psi claims the liquidation was unjust and that its net worth ratio was affected by "full accrual accounting" and NCUA's assessments related to its Temporary Corporate Credit Union Stabilization Fund. NCUA has said the liquidation was the result of the credit union's inability to generate consistent operational profits, build its net worth position, maintain its records in a sound manner, grant quality loans and adequately collect on delinquent loans (News Now Aug. 19).

CU System briefs (08/31/2010)

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* RANCHO CUCAMONGA, Calif. (9/1/10)--CO-OP Shared Branching, a subsidiary of CO-OP Financial Services, has appointed Doug Burke to its Board of Directors. Burke is president/CEO of Lakewood, Colo.-based CU Service Network (CUSN). He has extensive credit union experience that will help ensure CO-OP Shared Branching continues to provide convenient, innovative account access solutions in the credit union movement, said CO-OP. Bill Raker, chairman of the board, noted that Burke is a "consistent, staunch and long-term champion of shared branching" and is dedicated to the "better financial health of credit unions and their members" ... * CHARLESTON, W. Va. (9/1/10)--C. Dana Rawlings has been named CEO of Pioneer West Virginia FCU, effective last month. He formerly was chief operating officer of the $430 million asset Smart Financial CU in Houston, Texas. Pioneer, the seventh largest credit union in West Virginia, has four offices, 13,000 members, $129.5 million in assets and 44 employees. An article about the new CEO in the Charleston Daily Mail (Aug. 30), also included a statement from West Virginia Credit Union League President Ken Watts, noting that "there will be great things in store" for the credit union under its new leadership ... * TALLAHASSEE, Fla. (9/1/10)--Kathy Rolfs has joined the staff of the League of Southeastern Credit Unions as communications coordinator. She previously served as communications manager at the Florida Attractions Association, a Tallahassee-based trade association, and as marketing director for Premier Bank, a locally owned community bank where she was responsible for all external and internal communications, the marketing and charitable giving budgets and the development of strategies and plans to facilitate business growth ...

Maines Fall Share It campaign begins

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WESTBROOK, Maine (9/1/10)--The Maine Credit Union League kicked off its Share It! Fall Campaign, which invites members to share their favorite Shared Branching moment or why they love Shared Branching. Members can submit comments through Facebook or for a chance to win $500 or a global positioning system. The Share It! Prize Patrol also can be conducted by credit union branch staff. Each participating branch will receive $60 with campaign envelopes to split between three members. Credit unions that participate can win $500 for their favorite charity by entering a script or photos of how it presented Shared Branching and the Prize Patrol money to members. The most creative entry will win, the league said. There were a record 70,000 Shared Branching transactions in Maine during July, the league said. Shared Branching allows members to use other credit unions’ ATMs or branches to conduct financial transactions.

Gulf Coast CUs get advice on oil-spill claims

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Patrick La Pine, president/CEO of the League of Southeastern Credit Unions, explains the oil spill impact to the Gulf Coast region and proposed credit union efforts to help at a recent meeting in Pensacola, Fla., with credit union executives, the National Credit Union Administration and other area financial regulators. (Photo provided by the League of Southeastern Credit Unions)
PENSACOLA, Fla. (9/1/10)--Nearly 30 credit union executives and staff convened in Pensacola, Fla., to discuss ways they can be a resource for those impacted along the Gulf Coast in the aftermath of the huge oil spill this spring. The League of Southeastern Credit Unions (LSCU) Credit Union Response to the Gulf Oil Spill forum offered dialogue with regulators from the National Credit Union Administration (NCUA), the Florida Office of Financial Regulation (OFR), the Alabama Credit Union Administration and the Louisiana Office of Financial Institutions. Tim Hornbrook, NCUA associate regional director, told credit unions to take each possible solution on a case-by-case basis. He instructed credit unions to find simple ways, such as waiving late and ATM fees and modifying loans to help those who are hurting. Linda Charity, director, Division of Financial Institutions with OFR, suggested credit unions should be open-minded about loans and to document every loan. Robert Hayes, bureau chief, Bureau of Credit Unions with OFR, reminded attendees to look at their check-cashing policies before the oil-spill checks begin arriving. Glenn Latham, administrator for the Alabama Credit Union Administration, said credit unions should find ways to help those hurting by considering small loans to help them feed their family. “I thought we had good dialogue between the regulators and credit unions,” said LSCU President/CEO Patrick La Pine. “A lot of good ideas came from the forum that credit unions can consider.” Three Pensacola credit unions--Pen Air FCU, Gulf Winds FCU and Navy FCU, shared best practices they have implemented since the oil spill last April. “We wanted to do something more than just giving money,” said Kurt Stenerson, Gulf Winds vice president of marketing. “The response from the community to the fund has been great. We can see firsthand how the animals along the Gulf are benefitting from this program.” Two of the credit unions are participating in a Florida Bridge Loan program for small businesses.

CUs go back to school with members

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TLC Community CU, Adrian, Mich., participated in student move-in at Adrian College and Siena Heights University. Barb Bates, TLC youth financial literacy specialist, and Maria Garcia, member service representative, helped students open checking accounts. TLC also distributed magnetic calendars with each student’s schedules. (Photo provided by TLC Community CU)
North Jersey FCU, Totowa, partnered with the United Way for a “Backpacks for Kids” event last month. North Jersey employees stuffed school supplies into backpacks and donated them to the United Way Foundation. The foundation will give the supplies to a public school in the state. The credit union also plans to market its North Jersey FCU Kids Kash Club to students. The club was developed to help children 17 years or younger learn about money. (Photo provided by North Jersey FCU)
MADISON, Wis. (9/1/10)--In the midst of the beginning of school for many students nationwide, credit unions are pitching in to make the back-to-school process easier on students and their families. To help families prepare for their college-bound students’ expenses, Power Financial CU, Pembroke Pines, Fla., offered a free workshop for parents Aug. 18 at one of the credit union’s branches. The workshop was taught by local college planning specialists, who told parents that shouldn’t focus on a college’s “sticker price,” but rather what kind of financial aid packages a school offers its students. Technology CU, San Jose, Calif., is helping college and high school students with a new suite of banking products. The Plug In student banking package offers a checking account with online banking and bill pay. It also offers a credit line of up to $500 for students. Students can access their account through the credit union’s website. Finance Center FCU, Indianapolis, and North Central High School Athletics are offering a Panther Free checking account for students. In exchange for the rights to promote Panther Checking at school events, the credit union will give back a percentage of the revenue generated from the accounts to the high school’s athletic program. The account is available to students, parents, faculty, staff, alumni or fans of the high school. The accountholder receives a branded debit card and checks. The school hopes to open 500 new accounts during the school year. As schools nationwide open their doors for the year, so do student credit union branches. Fort Campbell FCU, Clarksville, Tenn., and Clarksville-Montgomery County School System are offering student-operated credit union branches at two local high schools. Thirty-two students from the schools spent their summer learning finances to help operate the student-run branches ( Aug. 10). The branches will be open to students during lunch breaks, and will offer deposits, withdrawals, transfers and loan payments. Christian Financial CU, Roseville, Mich., is launching its first student branch inside De Salle Collegiate High School. The branch will be operated by students at the school, with the help of Christian Financial. Students who work at the branch will receive school credit, said the Michigan Credit Union League (Michigan Monitor Aug. 31). Credit unions also have provided scholarships to students throughout the year. Some credit unions that recently awarded scholarships are Northwest Community CU, Springfield, Ore., and Northwest FCU, Herndon, Va. Northwest Community granted 10 scholarships to students. Full-time students received $1,000 each and part-time students received $500 each. The foundation of Northwest FCU awarded 21 students $90,000 through two scholarship programs. The foundation awarded 15 scholarships of $5,000 and six scholarships of $2,500. Credit unions outside the U.S. also are helping struggling families prepare their students for school. Gerry McConville, manager of Dundrum CU in Ireland, told The Sunday Independent (Aug. 29) that more parents are coming to the credit union for help with their children’s school costs. St. Dominic’s CU, Waterford, Ireland, is offering back-to-school loans at a rate of 6% annually, the newspaper added. Credit unions also have garnered media attention for their back-to-school savings tips. Bob Marquette, CEO of Members 1st FCU, Mechanicsburg, Pa., and Mike Wishow, senior vice president of marketing and communications at the Pennsylvania Credit Union Association, discussed student credit cards and how to finance college and tuition during a segment of Pennsylvania Newsmakers, said the association (Life is a Highway Aug. 27). The segment is aired across the state on Sundays, Mondays, Tuesdays and Saturdays. The Texas Credit Union League’s blog talk radio show, “Your Money, Your Matters,” also will broadcast a show about budgeting for back to school. The show, “Getting the Family Budget in Order for Back to School,” will run every Tuesday for one hour at 11 a.m. The show will offer listeners a chance to call in with questions or comments. The Credit Union National Association (CUNA), through its Home and Family Finance Center radio show, also discussed school-related topics. Phil Heckman, CUNA’s director of youth programs, was quoted in The Daily Gazette via The Associated Press, suggesting parents help their children learn how to budget for school by allowing them to buy something extra with money left over from buying school necessities (Aug. 9).

LSCU CEO proposes CU help to oil-spill claims czar

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Patrick La Pine, president/CEO of the League of Southeastern Credit Unions (left), met with Ken Feinberg, the Gulf Coast Claims Facility administrator, named by President Barack Obama as the independent manager of the $20 billion Gulf Coast Compensation fund. La Pine proposed potential credit union involvement to assist to those along the Gulf Coast affected financially by the oil spill. (Photo provided by the League of Southeastern Credit Unions)
TALLAHASSEE, Fla. (9/1/10)--The CEO of the League of Southeastern Credit Unions (LSCU) has proposed that credit unions get involved with assistance to those along the Gulf Coast affected financially by the British Petroleum (BP) oil spill. Patrick La Pine, LSCU president/CEO, and Will McCarty, league senior vice president of governmental affairs, recently met with Ken Feinberg, the Gulf Coast Claims Facility administrator, who was named by President Barack Obama as the independent manager of the $20 billion Gulf Coast Compensation Fund. The fund was set up with money from BP Oil Company in response to the Deepwater Horizon oil spill, which began in April. During the meeting, they discussed two major issues:
* Cashing of checks paid to claimants; and * Using the compensation fund to serve as a loan guarantor for small loans made by credit unions, especially to small businesses on the Gulf. Many of these businesses and their employees depend on summer revenue to survive through the off season. This year, summer revenues will not sustain coastal residents through the next nine months because of the losses incurred from fishing restrictions and a sharp decrease in tourism after the oil spill.
Feinberg recognized the value of credit unions’ strong response to the financial impact of the oil spill, LSCU said. Knowing that credit unions have the closest relationship to their members, he agreed that credit unions could offer help financially, as well as serve as a source of information for people on the Gulf who file claims. Although existing regulations and legal requirements of the fund are in place and won’t allow for the fund to guarantee loans by credit unions and banks, Feinberg did commit to speak to BP CEO Robert Dudley about the issue. He promised to tell BP that it would be beneficial to work with credit unions to assist individuals affected by the spill, and that BP guarantee loans because it would be a wise investment. LSCU said it will work to continue to build its partnership with the Gulf Coast Claims Facility, other involved parties, and state and federal regulators to assist those affected by the spill.