Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

CU System Archive

CU System

IBloombergI Small biz cant get loans from bailed-out banks

 Permanent link
NEW YORK (9/17/10)--The plight of small business owners who can't get loans from large banks that were bailed out during the financial crisis is spotlighted in Thursday's Bloomberg. Although the item doesn't mention credit unions' efforts to serve members with small businesses, it describes the need for more small business lending. Small companies created 64% of net new jobs the past 15 years, according to the Small Business Administration, Bloomberg reported. A record 41% of small business owners say they can't get adequate financing, said the National Small Business Association. New small business loans dropped 33% last year to $191.6 billion, the lowest since 2000, said the Federal Financial Institutions Examination Council. Outstanding loans fell 16% as of June 30 when compared with June 30, 2009, the article reported. It pointed out that Wells Fargo & Co., JP Morgan Chase and Bank of America received a combined $189.3 billion in the government's Troubled Asset Relief Program (TARP) and debt guarantees from their regulator, the Federal Deposit Insurance Corp. (FDIC). Two of the banks refused to make a loan to a small businessman who wanted to hire a dozen people with a $1.1 million loan. The third bank offered less than 70% of what the applicant needed. All in all, the businessman tried 17 lenders in 2008 and 2009. Although the banks say their small business lending increased the first six months of 2010, they define small businesses as those with annual revenue of less than $20 million. The Bank of America, which noted a 1% increase in small business lending during the first half of the year to small and mid-sized businesses said 80% of the loans went to companies with more than $20 million in sales. Although the bank claimed there is weak demand from the smallest businesses, Justine Petersen, a nonprofit microlender in St. Louis, said that's because entrepreneurs are frustrated with lenders and have given up asking for money. The lender said it is experiencing "unabated demand" for the loans, Bloomberg reported. Credit unions backed a recent amendment in Congress to raise their member business lending (MBL) cap to 27.5% from 12.25%, to infuse $10 billion into small businesses and create 100,000 jobs the first year at no expense to the taxpayer. However, the Small Business Jobs and Credit Act, which passed the Senate this week, does not include the amendment. Instead, it would provide $30 billion to encourage more bank lending without the MBL provision. The bill does have provisions of interest to credit unions, such as higher Small Business Administration (SBA) loan limits, increasing SBA 7(a) loan limits to $5 million from $2 million, raising 504 loan limits to $5.5 million from $1.5 million, and increasing 7(a) "Express Loans" to $1 million from $300,000. The bill also ups the definition of microloans from $35,000 to $50,000. (See related story, "Small biz jobs bill approved by Senate).

CUNAs e-commerce site maintenance this weekend

 Permanent link
MADISON, Wis. (9/17/10)--The Credit Union National Association's (CUNA's) e-commerce site will be undergoing maintenance this weekend. Beginning at 7 p.m. CT today, the site will not be able to take orders. Normal operations will resume Monday at 7 a.m. CT.

CUs in several states announce mergers

 Permanent link
MADISON, Wis. (9/17/10)--Credit unions in several states have announced mergers with other credit unions, according to local media reports. SOFCU Community CU, Grants Pass, Ore., and Oregon First Community CU, Coquille, Ore., plan to merge, effective Feb. 28 and pending regulatory approval. Both will operate as affiliates of First Community CU. David Elmer, executive vice president at Oregon First, will be president/CEO. Charla Zeltvay, president/CEO of SOFCU, and Dal King, president/CEO of Oregon First, will continue their leadership positions as presidents of their affiliate credit unions under First Community. Both will remain in their positions until their retirement dates of February 2012. Elmer told News Now that the motivation for the merger is to better serve both credit unions’ members as their individual CEOs retire. “It’s a great opportunity,” he said. “In the end, our goal is to better serve the members.” There will be no layoffs, and the resulting credit union will have about 70,000 members and $700 million in assets, with 34 branches. None of the branches overlap, he added. Partners 1st FCU and Food Marketing FCU, both in Fort Wayne, Ind., also have plans to merge. Partners has about 30,000 members and $238 million in assets. Its five branches will serve Food Marketing members beginning Oct. 1. Partners 1st has 32 branches in 22 states, according to The Journal Gazette (Sept. 15). David Fleming, CEO of Partners 1st, said Partners offers more services than Food Marketing because of its larger size. Prairie Trail CU, Joliet, Ill., merged with Argonne CU, Romeoville, Ill., on Sept. 1. Brian Cedergren, Argonne CEO, will be president/CEO of the combined credit union, and Matt Thraen, Prairie Trail CEO, will be president of the credit union’s Joliet division (Bugle Newspapers Sept. 15). No employee positions were lost in the merger. Argonne had 16,000 members and $200 million in assets before the merger, and Prairie Trail CU served 12,000 members with $73 million in assets. The merger is expected to help the credit unions reduce their fixed costs, the newspaper said.

Australian regulator to Abacus Change ad

 Permanent link
CANBERRA, Australia (9/17/10)--Australia's credit union regulator is requiring the country's credit union and mutuals organization to change an ad that claims consumers can save $35,000 by switching from big banks to credit unions. The regulator, Australian Securities and Investments Commissioner Peter Boxall, required Abacus, the credit union and building society industry group, to knock off $5,000 from the ad after banks complained the ad was misleading because of allegedly faulty methodology by the research firm, Infochoice (Herald-Sun Sept. 17). Boxall outlined several concerns about the research's disclosures of types of interest rates, the credit unions and building societies selected for the research, and the timing of the calculation. The new $30,000 savings figure is based on an average of four new Infochoice comparisons run randomly. Abacus said the savings are "definitely over $30,000." That figure was at the lowest end of the savings range consumers can expect, said the organization.

Trinidad and Tobago CUs urge government to change rescue plan

 Permanent link
PORT-OF-SPAIN, Trinidad and Tobago (9/17/10)--The Cooperative Credit Union League--the umbrella organization for credit unions in the Caribbean country of Trinidad and Tobago--is urging the government to change its financial rescue plan for Colonial Life Insurance Company (CLICO) so it won’t harm credit unions. Budget measures that will pay small CLICO depositors $75,000 each and provide larger depositors government IOUs over a 20-year period at 0% interest could “mash up” the credit union sector and adversely affect members, the league told Prime Minister Kamla Persad-Bissessar (Trinidad Express Sept. 15). CLICO, one of the largest companies in the country, collapsed and is being rescued by the government, the newspaper said. Also, Lincoln Beckles, president of the Association of Co-operative Credit Union Presidents of Trinidad and Tobago, sent a statement Tuesday to Persad-Bissessar, asking her to establish an oversight committee for CLICO investors and managers, the newspaper said. The committee would monitor CLICO’s daily operations and develop a plan for the 20-year repayment measure in the national budget.

CUs auto leasing making a comeback

 Permanent link
MADISON, Wis. (9/17/10)--Relying on a track record of friendly service and low interest rates, credit unions--a long-time stalwart source for car loans--are making a comeback in vehicle leasing. In an article titled “How to Beat the Dealer’s Price on Leasing,” Gary Hoffman of AOL Autos said the move by credit unions is positive news for consumers and business people because credit unions provide another vehicle-financing option in the face of several months of rough going for borrowers and lenders (KMTR.com Sept. 15). “Between 2002 and 2004, many credit unions abandoned leasing after being burned in cutthroat competition with banks, specialized leasing companies and the automakers’ own financial units,” Hoffman wrote. Bigger credit unions generally have continued leasing despite the economy--and they usually have leasing experts in-house or under contract--Jim Henderson, senior vice president at Educators CU, Racine, Wis., told the publication. Educators has offered leasing since 2002. Now, leasing is attracting the interest of other credit unions and their service providers again, Hoffman wrote. “Credit unions especially are looking at any source they can to get some excitement going, and leasing is slowly creeping back,” John Kurtz, league rep./consultant at the Texas Credit Union League, told the publication. Credit unions often provide creative, flexible terms, such as “tailoring the lease duration and monthly payments to an owner’s specific driving habits,” Hoffman wrote. The article also mentioned the lease programs of Greylock FCU in North Adams, Mass., and Credit Union of Texas in Dallas. To read the article, use the link.

N.Y. ICBSI CUs are option as banks raise fees

 Permanent link
NEW YORK (9/17/10)--A New York affiliate for CBS mentioned credit unions as a low-cost option for consumers as banks raise fees. CBS said credit unions are an option “that may save you money” (Sept. 15). The story, “Banks Raising Fees to Combat New Regulations,” focused on banks raising their credit cards’ interest rates to generate revenues. The hike in rates is related to new credit card regulations that aim to prevent card companies from charging consumers excessive fees. Fees are a big problem, Kelli Grant of Smartmoney.com, told CBS. Free checking [at big banks] has basically disappeared, she noted. She also urged consumers to communicate with their financial institutions regarding fees. However, many credit unions continue to offer free checking.

Mortgage CUSO Refinance business booming

 Permanent link
FAIRBORN, Ohio (9/17/10)--Refinancing is alive and well in Ohio, according to a mortgage credit union service organization (CUSO). myCUmortgage, a Fairborn, Ohio-based CUSO credit unions employ to help members with homeownership, processed a record 2,450 loan applications in August and closed a record 764 loans totaling $103 million in a single month. "Based on our 17% increase year-to-date in applications, it proves that members are turning to credit unions for their refinancing and mortgage needs," said Tim Mislanski, myCUmortgage president. The increase in home refinances was attributed to low interest rates. On Thursday, mortgage buyer Fannie Mac said that 30-year mortgages climbed for the second straight week but remained near the lowest level in decades (The New York Times Sept. 16). The average rate was 4.37%, up from 4.35% a week earlier and 4.32% the previous week. The 4.32% rate was the lowest level on records since 1971. The average rate on 15-year fixed loans dropped to 3.82% this week, the lowest since 1991 and down 3.83% last week. Rates have been at or near the lowest level in decades since spring, when investors sought the safety of Treasury bonds, which lowered their yield. Mortgage rates tend to track that yield. Hopewell FCU, a $64 million asset credit union based in Heath, Ohio, partnered with myCUmortgage and closed more than $3.5 million in mortgage loans in August, said Jim Johnson, Hopewell president/CEO. myCUmortgage also announced it will host a free webinar at 2 p.m. to 3 p.m. ET on Sept. 27 about mortgage solutions for credit unions.

Elevations Foundation expands relief to new wildfire

 Permanent link
BOULDER, Colo. (9/17/10)--A new wildfire in Colorado has prompted Boulder-based Elevations Foundation to extend relief to a second area to help people affected by wildfires in the state. Last week, the foundation--which is the charitable arm of the more than $950 million asset Elevations CU--announced it would accept donations for the Fourmile Canyon fire relief efforts. That fire scorched thousands of acres and destroyed 166 homes in the foothills, just west of Boulder, said the foundation (News Now Sept. 10). Since then, another major wildfire has roared through an area just west of Loveland, said the foundation, which again moved quickly to establish a fund to support those relief efforts. "All money donated on behalf of the Reservoir Road fire will go directly to those aiding in this fire relief effort and to those families who have lost their homes or been displaced," said Gerry Agnes, president/CEO. "In addition, Elevations Foundation will match all donations up to $10,000 in total," Agnes said. The first fire directly affected a credit union employee who was evacuated and several members who lost their homes. Donations can be made at any of the nine Elevations CU branches, including its newest branch at Loveland. Members also can donate over the phone by calling 970-667-8585, 303-443-4672 or 800-429-7626. Credit union membership isn't required to donate. The foundation will accept donations through Sept. 30.