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CU System briefs (08/09/2011)

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* CANDIA, N.H. (8/10/11)--New Hampshire credit unions raised $150,000 for the Make-A-Wish Foundation of New Hampshire for 2011, according to the New Hampshire Credit Union League. The amount raised surpassed the initial goal by $5,000, and was achieved through the efforts of New Hampshire’s 26 credit unions and a series of statewide and local fundraising initiatives, the league said. The announcement was made at the 11th annual Richard D. Mahoney Credit Union Charity Golf Tournament in Candia, N.H., where 128 participants and 15 major tournament sponsors raised $60,500 … * KENNEWICK, Wash. (8/10/11)--A College Place, Wash., man who was tricked by an Internet scam into opening a credit union account and moving money that was transferred to him was sentenced to five days in jail after pleading guilty to attempted second-degree trafficking in stolen property (Tri-City Herald Aug. 8). Robert Randle Carron, 47, was suspicious about what he was asked to do by a company called Ardex but continued transferring money from what he believed was purchasers of construction supplies to sellers of the supplies. He opened an account at Gesa CU, Richland, Wash.; received money transfers; and transferred part of the funds to others through a wire transfer. He wa allowed to keep the remainder as a fee. He made six money transfers into his Gesa CU account and was caught after a victim six wire transfers had been made from his savings account into Carron's account … * ANCHORAGE, Alaska (8/10/11)-- A methamphetamine addict in Anchorage, Alaska, was sentenced Monday to more than 13 years in prison for robbing four credit unions and banks in the area. Dennis Dale Hubble Jr., 38, also was sentenced to five years of supervision upon release, said the Karen Loeffler, U.S. attorney for the District of Alaska. U.S. District Judge Timothy M. Burgess also ordered Hubble to make restitution of more than $14,000 to the victims and undergo treatment during prison. The robberies occurred at Wells Fargo Bank on Nov. 15, Denali Alaskan FCU on Nov. 23, a Wells Fargo branch on Jan. 7, and a branch of Alaska USA FCU March 13. Hubble pleaded guilty to the robberies plus to a fifth uncharged robbery (Targeted News Service Aug. 8) …

CU ATMs help Yahoo Finance writer avoid fees

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NEW YORK (8/10/11)--A Yahoo! Finance contributor's article on "How I Avoid Paying Bank Fees" writes that credit union ATMs are one of the ways she avoids fees. Tal Boldo noted that "with banks competing for my business, I have plenty of opportunities to avoid paying bank fees. Adopting good financial habits is usually all it takes" (finance.yahoo.com Aug 8). "I asked my credit union for a list of ATM machines in my area that won't charge me a withdrawal fee. The list included the names of affiliate credit unions as well. I use these ATM locations only and as a result never pay a withdrawal fee," she wrote. Her 10 tips also included advice about fees for paper statements, overdrafts, cash back, balance transfers, late payments, credit card interest, checking accounts, annual credit card fees and returned checks.

Woman shot at drive-through ATM in Florida

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LEESBURG, Fla. (8/10/11)--A woman who was shot while withdrawing cash from a drive-through ATM at a credit union branch in Leesburg, Fla., Tuesday was recovering in an Orlando hospital of two gunshot wounds. The 55-year-old Fruitland Park woman was not identified. The incident occurred at about 6 a.m. outside the Leesburg branch of Orlando-based Insight Financial CU (myfoxorlando.com and wftv.com Aug. 9). Police said three people in a pickup truck pulled up and blocked the woman's exit from the drive-through lane. One approached her and she refused to open the car door. Although she was shot, she managed to call 911 as the robbers left. The credit union was not open at the time; however it opened for business as usual Tuesday.

CUNA Mutual Another wave of ATM fee lawsuits hits CUs

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MADISON, Wis. (8/10/11)--Another rash of lawsuits continues to be filed against financial institutions for failing to properly disclose ATM fees. CUNA Mutual Group reminds credit unions simple preventative steps can help them avoid costly fines and legal fees. The lawsuits, which began in 2009, allege violation of section 205.16 of Regulation E. This provision applies when a consumer initiates an electronic funds transfer or balance inquiry at an ATM owned or operated by an institution that does not hold the account related to the transfer or inquiry. As of June 30, CUNA Mutual had 44 open claims related to class action lawsuits alleging violations of Reg E, said Brad Mundine, CUNA Mutual senior manager of Credit Union Protection Risk Management. The suits span 14 states with litigation and loss exposure expected to exceed $3 million, he said. When credit unions charge a fee to a consumer who uses a non-credit union ATM network card or debit card, section 205.16 of the regulation requires:
* Posting a sign in a prominent and conspicuous location on or at every ATM owned or operated by the credit union stating that a fee will (or may) apply, and * Disclosing the fee on the terminal screen or paper notice before the consumer is committed to paying the fee. It is not necessary to include the amount of the fee on the sign.
In addition, section 205.9 of the regulation requires the amount of the fee to appear on the receipt. Violation of Reg E could result in a fine of up to $500,000, plus costs and attorney fees based on the class action filing, CUNA Mutual said. “The lawsuits typically involve missing signage on or at the ATM and incorrect fees disclosed on the sign at the ATM,” Mundine said. “In addition, many of the lawsuits involve remote ATMs serviced by third-party vendors. Many credit unions involved in the lawsuits erroneously believed the fee notice sign was not necessary since the fee was disclosed on the terminal screen of the ATM.” Many of the lawsuits were filed by a retired Michigan couple, who reportedly combed that state searching for ATMs that lacked ATM fee signs. The couple has filed 40 lawsuits against credit unions and banks in the last 18 months. Credit unions must be vigilant in ensuring their ATMs satisfy the fee disclosure requirements of Reg E, Mundine said. “These lawsuits can be avoided simply by inspecting the ATMs periodically to ensure the fee sign is intact. Another way to avoid lawsuits is to not place the fee amount on the sign. The regulation does not require the amount of the fee to be included on the sign.” Also, it is critical to develop and maintain written procedures for regularly inspecting ATMs, CUNA Mutual said. It recommends inspecting ATMs weekly or when the ATM is serviced, whichever provides for more frequent inspections. Credit unions should also photograph each ATM at the time of inspection, maintain a log to track the inspections for all ATMs, and have management periodically review the log to ensure proper inspections are taking place. These steps may also assist in the defense of a potential class action lawsuit, said the company. At a minimum, the ATM inspection log should contain:
* ATM location inspected; * Date of inspection; * Status of ATM fee sign/notice (missing or present); * Action taken (e.g., replaced sign/notice); and * Initials of employee performing the inspections.
Credit unions using a third-party vendor for servicing ATMs should require the vendor (through the contract or maintenance agreement) to inspect the ATMs for the fee sign/notice. Missing signs should be replaced immediately. To ensure ATMs meet the regulation’s signage requirements, CUNA Mutual also suggests credit unions:
* Maintain a supply of signs/stickers to replace any that have been defaced or removed from ATMs. * Periodically test the ATMs using a non-credit union issued ATM network card or debit card to confirm the fee appears on the screen and the transaction receipt. * Consider a general signage notice stating, “A fee will [or may or specify transactions to which a fee will apply, as applicable] be imposed for providing electronic funds transfer services [or a balance inquiry].” * Confirm the ATM fees are properly disclosed on the screen and transaction receipt and the fee signage is posted on any new ATMs being deployed. * Ensure ATM fee notice signs are not damaged or removed during ATM remodeling projects. If not possible, place the fee notice sign in a temporary alternate location on or at the ATM in a prominent and conspicuous manner and return it to its permanent location once the remodeling project is complete.
Mundine recommends policyholders, which represent more than 90% of U.S. credit unions, visit CUNA Mutual’s Protection Resource Center at www.cunamutual.com to access a webinar and other risk prevention tools that can help credit unions prevent further losses.

Registration opens for Spring 2012 DE training

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MADISON, Wis. (8/10/11)--Registration is open for the Spring 2012 Credit Union Development Education (DE) training class taking place April 18-25 in Madison, Wis. Attendees of the six-day total immersion experience will learn about credit unions’ social responsibility and domestic and international development, through interactive education and professional networking. “Sometimes the experiences we have from listening to others, and sharing our ideas, are so powerful that they inspire you to do more,” said Patrick Livingston, director of strategic projects at Coastal FCU, Raleigh, N.C., after attending DE training in April. “DE training also helps you develop your own sense of understanding of credit union philosophy, and further shapes your desire to learn and grow.” Inspired after the training, Livingston co-founded a group for local credit union staff to network informally and learn more about credit union values. “CU Aware” meets monthly and continues to grow in attendees and content. The group was started with fellow DE training graduate Brandon McAdams, who also works at Coastal FCU. DE training is open to everyone, from new employees who need a credit union orientation, to seasoned executives who need to recharge. Participants will:
* Acquire skills in credit union outreach initiatives, problem solving, technical assistance, team building and public presentations. * Earn certification as Credit Union Development Educators (CUDEs). They join a networking group that includes more than 1,000 graduates from the U.S. and more than 30 other countries. * Realize that local issues are global--and that global issues are local. * Understand that credit unions grow stronger by working cooperatively.
CUDEs return to their jobs with a new understanding of how to promote cooperative principles and credit union values as distinct advantages in today’s competitive financial services marketplace. “Since the DE training earlier this year, we have had more than 60 credit union people express interest in attending the next training,” said Lois Kitsch, National Credit Union Foundation’s national program director. “Registration is limited to 42 attendees.” For more information, use the links.

New Catalyst Corporate counts 866 members so far

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DULUTH, Ga. (8/10/11)--More milestones in the plan to launch Catalyst Corporate have been reached. It now has 866 members, and last month, Georgia Corporate FCU and Southwest Bridge Corporate FCU transferred members’ pledged Perpetual Contributed Capital (PCC) into escrow --signaling confidence that the business plan laid out earlier this year will succeed. The joint strategic plan, presented to member credit unions in March, stated that as soon as sufficient capital subscriptions were obtained, pledged funds would be moved into an escrow account at U.S. Central Bridge FCU to prepare for the eventual transfer of the funds to PCC on the date of the merger. “Together we have raised $91.3 million in PCC,” said Greg Moore, president/CEO of Georgia Corporate. “And perhaps more importantly--these capital pledges represent more than 865 subscribing members.” To date, about 74% of the previous capital shareholders of the two corporates are on board as capitalizing members of Catalyst Corporate. “The fact that so many credit unions, after completing months of due diligence, chose to partner with Catalyst Corporate through capitalization speaks volumes about the value we can achieve,” said Southwest Bridge Corporate President/CEO Dianne Addington. Moore agrees: “Credit unions have confirmed that they believe in a cooperative model, and that they appreciate the importance of scale when choosing a corporate,” he said. He noted the operating efficiencies presented by their model “make a difference that goes beyond better pricing. It means that we won’t have to rely on our balance sheet, and that means less risk.” Credit unions have made it known that they want to continue to use the services of a corporate, but to reduce their exposure to risk. The corporate will minimize the amount of capital a credit union puts at risk, and minimize “the risk we take with those assets,” Addington said. She pointed out that Catalyst Corporate’s model balance sheet is more conservative than what is required by new regulation 704. Plans for the operational merger also are underway and going smoothly, Moore said. “Our members have given us positive feedback as we have introduced them to the new system and enhancements to products and services that will result from the consolidation,” he said. “In particular, they are pleased that their lines of credit will remain intact--a key concern for many credit unions that are capitalizing Catalyst.” The National Credit Union Administration is expected to approve the merger application this month, with the consolidation taking place on Sept. 6.

Filene explores patronage dividends

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MADISON, Wis. (8/10/11)--“Credit Union and Cooperative Patronage Refunds,” the newest report from the Filene Research Institute, examines patronage refunds, a tool credit unions and other cooperatives use to manage capital levels, return value to members, and tie members more closely to their organizations. Authors Joel Dahlgren, and Dan Kitzberger examine the details of common refund practices outside the credit union system and weigh the pros and cons of how the practice is increasing within the credit union industry. “The patronage dividend is a back-to-the-future tool that allows credit unions to reward cooperative ownership, build member loyalty, and stimulate growth,” said Mark Meyer Filene CEO. “We know that capital positions are under stress at many credit unions, but there is long-term value in the process, and it is one of the few true differentiators available to credit unions.” Using cooperative theory, Dahlgren and Kitzberger argue that credit unions should go beyond traditional interest-rate thinking to consider patronage dividends as a long-term commitment to the most loyal members. The difference between a cooperative—such as a credit union--and an investor-owned firm resonates in how well the cooperative rewards members who contribute the most to its ongoing success. The 64-page report features:
* Three credit union case studies that show how $887 million asset CoVantage CU, Antigo, Wis.; $1.4 billion asset Dow Chemical Employees’ CU, Midland, Mich.; and $2.1 billion asset Wright-Patt CU, Fairborn, Ohio, calculate their patronage refunds and why they see value in offering them; * An in-depth examination of how patronage refunds affect tax liability at non-credit union cooperatives; and * Discussion of how patronage dividends drive a member-centric conversation about capital management.
The report redirects discussions about managing capital into considerations about rewarding credit union owners.

Randolph-Brooks exceeds 1B in auto loans

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LIVE OAK, Texas (8/10/11)--In midst of a slow economy, $4.3 billion asset Randolph-Brooks FCU (RBFCU) has surpassed $1 billion in auto loans for the first time in its history. The Live Oak, Texas-based credit union’s leaders credit the current low rate and consistent across-the-board lending policies for both financing and refinancing as reasons for its lending success. “We’ve seen an increase in members who have taken advantage of our low-rate loans for an auto loan or to refinance a vehicle,” said Mark Sekula, Randolph-Brooks FCU chief lending officer. “At the same time, we’ve also seen many new members join RBFCU because of our low rates, then transfer their other accounts to us because they receive a superior value on overall products and services.” Much of the loan volume has come from vehicle refinancing, Sekula said. “Refinancing is one of the most profitable decisions a purchaser can make; by refinancing a vehicle, you essentially pay less interest for the same product, and put more money back into your pocket,” he said. The credit union dropped its auto loan rate to a 1.9% annual percentage rate at the beginning of June and has seen an increase in loan applications and approvals. However, the growth the credit union is experiencing began before the rate drop. Randolph-Brooks FCU was one of the first financial institutions in South Central Texas to significantly drop lending rates. Since the first significant loan rate drop in April 2009, the credit union has seen growth in several categories, specifically:
* Membership rose 23%--by almost 70,000 members; * Assets increased 40%--about $1 billion; and * Loans increased 34%--roughly $750 million.
During the past five years, it has also seen a 75% growth in overall assets.

Kern Schools FCU passes 6 capital ratio goal

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BAKERSFIELD, Calif. (8/10/11)--Kerns Schools FCU (KSFCU) in Bakersfield, Calif., reached a 6.53% capital ratio as of June 30, passing the 6% goal set by federal regulators in the summer of 2009. The credit union’s improved financial health is mainly due to reducing costs. The goal was attained at the $1.38 billion asset credit union after two years of layoffs (more than 40 employees) and branch closures (six) caused by the recession-led market turmoil (The Bakersfield Californian Aug. 9). A credit union’s capital ratio is a bottom-line measure of financial stability determined by dividing its net worth by it total assets. Regulators use the gauge to judge whether a financial institution is strong enough to absorb financial losses. At the end of second quarter 2010, KSFCU’s capital ratio was 4.31%. Credit union officials said they are on the way to achieving the 7% capitalization level regulators require to be well-capitalized, the newspaper said. The credit union also charged off tens of millions of dollars of bad debt since 2009, and maintained a fairly healthy loan loss reserve to cover bad debt, the paper said.

Greathouse receives Global Womens award

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GLASGOW, Scotland (8/10/11)--Greta Greathouse, chief of party for the World Council of Credit Unions’ (WOCCU) development program in Haiti, has been honored with the second annual Leadership Award from the Global Women’s Leadership Network (GWLN), a WOCCU program.
Click to view larger image Greta Greathouse (left), head of World Council of Credit Unions’ (WOCCU) Haiti development program, accepts the second annual Global Women’s Leadership Network (GWLN) Leadership Award in Glasgow, Scotland, as (from left) outgoing WOCCU President/ CEO Pete Crear, GWLN Chair Susan Mitchell and incoming WOCCU President/CEO Brian Branch applaud the honor. (Photo provided by the World Council of Credit Unions)
The annual award honors outstanding achievements in support of credit union development, particularly worldwide credit union women’s leadership development. Greathouse received the honor during the GWLN Forum held last month with WOCCU’s World Credit Union Conference in Glasgow, Scotland. Greathouse had directed WOCCU’s Haiti development program, the Haiti Integrated Finance for Value Chains and Enterprises (HIFIVE), for just seven months before a devastating earthquake struck the Caribbean island nation in January 2010, taking more than 330,000 lives and rendering more than one million people homeless. The program lost its headquarters building, but all staff members survived the earthquake and immediately set about rebuilding Haiti’s credit union movement. “Greta exemplifies the leadership that we all aspire to,” said Brian Branch, WOCCU’s new president/CEO. “When the earthquake happened and most expats left the country, Greta stayed. She took care of her staff and let them find their families, then had them report back to work. Credit unions were back up and operating out of tents days after the disaster, well before other financial institutions.” Significant progress has been made in the Haiti program since the earthquake, with HIFIVE this year taking over administration of a $10 million grant from the Bill & Melinda Gates Foundation to develop cell phone financial transaction capabilities for Haiti’s residents. The country’s caisse populaires (credit unions) damaged in the earthquake also have begun rebuilding with the help of more than $1.2 million raised by the Worldwide Foundation for Credit Unions from the global credit union movement. “Great leaders inspire others to act,” said Susan Mitchell, GWLN chair and CEO of credit union consulting firm Mitchell, Stankovic & Associates in Boulder City, Nev. “Greta inspired members of the Global Women’s Leadership Network and the people of Haiti with her determination and commitment in never allowing the credit union to be cut off from its members. She knew it was a lifeline for the community. In dire circumstances, Greta demonstrated great leadership.” “My work to help to stabilize and to rebuild the HIFIVE project and the credit union sector in the difficult days following the earthquake was a team effort,” Greathouse said. “I share this award with my great team in Haiti and with the people of Haiti whose perseverance and dignity are an inspiration to me each day.” Last year, the organization’s inaugural award was presented to Stan Hollen, president/CEO of CO-OP Financial Services, for his support of GWLN and the global credit union movement.

Wisconsin CUs performance for 2nd Q improves

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MADISON, Wis. (8/10/11)--Wisconsin credit unions showed continued improvement for the first half the year, with assets and total savings increasing and the percentage of delinquent loans declining, according to data compiled by the Wisconsin Department of Financial Institutions (DFI). “Despite some challenges in the current economy, credit unions are well-positioned to continue serving their Wisconsin members as reflected in a solid net-worth ratio of 9.8%,” said DFI Secretary Peter Bildsten said. As of June 30, total assets among state credit unions were $21.6 billion, compared with $20.6 billion as of June 30, 2010--an increase of 4.9%. Total savings were $18.9 billion, a rise of 5.7% from $17.8 billion on June 30, 2010. The percentage of delinquent loans also showed improvement, dropping to 1.8% from 2% during the period. Ginger Larson, director of the Office of Credit Unions--the agency that regulates state-chartered credit unions--also pointed to improvement in credit unions’ return on assets compared to 2010. “Through June, return on assets is running at just 0.5%, an improvement over the 2010 figure of 0.3%,” Larson said. “This is a positive sign and reflects a healthy credit union industry in the state.”