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CU System Archive

CU System

Few CUs report damages in Gustav

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MADISON, Wis. (9/3/08)--Some credit unions sustained minor damages from Hurricane Gustav, but no major losses have been reported yet, according to CUNA Mutual Group. Gustav made landfall about 70 miles west of New Orleans. The Category 2 hurricane was responsible for 7 deaths in the U.S. and prompted a massive evacuation in Louisiana (Bloomberg.com Sept. 2). The CUNA Mutual Credit Union Protection Claims staff is monitoring policyholders in the New Orleans area and southern Mississippi and is not expecting reports of major wind-related damage. Flooding will likely occur along the path of Hurricane Gustav, Phil Tschudy, CUNA Mutual Group media relations manager, told News Now. “Evacuation losses have prevented some credit unions from getting back to their buildings, but we remain cautiously optimistic that damage to these credit unions will be minor,” he said. “Once evacuation orders have been lifted, CUNA Mutual will contact policyholders and will have claim adjusters in the area as needed.” Many credit unions are now open in Mississippi, but they’re “operating on skeleton crews,” Charles Elliott, Mississippi Credit Union Association, told News Now. Three credit unions in Mississippi were closed Tuesday--two because of limited staff. Many credit union employees evacuated the area and haven’t returned yet, he said. “Many employees evacuated, and hopefully they’ll get back today,” Elliott said Tuesday. He also noted that there are power outages in the state. Keesler FCU, Biloxi, was open Tuesday except for the Stennis branch. The branch was closed because the building in which it is located was closed. Some Keesler branches had limited drive-up service available, the credit union said on its website. No damages to credit unions have been reported to the association. Access to some areas is still limited due to storm debris and flooding, but most credit unions have provided initial condition reports, with many reporting they were open today, the association said. “We were prepared for the worst and hoping for the best,” Elliott said. The association is working with the Louisiana Credit Union League on shared branching to help some credit unions that are offline, Elliott added. The Alabama Credit Union League has been in contact with its credit unions, and there is no reported damage, Adena Whitman Zamora, league director of public and political affairs, told News Now. “Everyone is doing well,” she said. “[The league] is on standby to help where we can.” The league also will help its credit unions prepare for upcoming storms, she added. Although there were mandatory evacuations for Hardin, Orange and Jefferson Counties, the Texas coastline was spared, according to the Texas Credit Union League (TCUL). No credit unions reported any damage to TCUL, and the league is continuing to follow up with them. “It looks like our credit unions are in good shape,” said Linda Webb-Manon, league communications director, told News Now. Mobiloil FCU, Beaumont, Texas, was closed Tuesday to prepare for Gustav. Credit union members were able to perform financial transactions at 3,400 CU Service Centers nationwide, including 205 in Texas, the credit union said in a release. New Orleans was spared from the storm, and Baton Rouge was hit harder than anticipated. Credit unions were not able to open Tuesday because the city was evacuated. The Louisiana Credit Union League has contacted its credit unions and is staying in touch through text messaging. Phones are working sporadically. The disaster plan and shared branching for credit unions worked well, the league said.

CEO to INY TimesI--Our best friends were people at CU

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COLUMBUS, Ohio (9/3/08)--The CEO of Bob Evans Farms had good things to say about credit unions in an interview with The New York Times (Aug. 30). Steven A. Davis, chief executive of the restaurant chain headquartered in Columbus, Ohio, told about his upbringing in Milwaukee, Wis., as an African-American. He noted his mother was a postal clerk and father was a welder and line supervisor. His parents had set a goal that all five of their children obtain college degrees. They did. How did they do it? With help from a credit union. "Recently, my mother told me, 'Our best friends were the people at the credit union.' My parents borrowed money at the beginning of each school year and hurried to try to pay back that loan before the next school year started," Davis told the Times. For the full story, use the link.

Altura CU creates budget-impasse loans

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RIVERSIDE, Calif. (9/3/08)--Altura CU has set up a series of loans and other programs to assist state, county or school employees experiencing financial hardship as a result of California's budget impasse. State legislators are at an impasse about the state's budget, and state workers face a serious financial blow from potential job or pay cuts, said the Riverside, Calif.-based credit union. Nearly 10,000 state employees have been laid off. Gov. Arnold Schwarzenegger announced plans to cut the pay of another 200,000 employees to the federal minimum wage of $6.55 per hour. California Controller John Chiang refused to implement the pay cut and is being challenged in the courts by the governor. "Given the uncertainties surrounding the budget approval process, we are concerned about the financial impact on our members," said Jennifer Binkley, executive vice president/chief operating officer, at the $915 million asset credit union. Altura's programs are open to state, county or school employees who are members of the credit union or who are eligible. They can take advantage of one of these programs:
* $5,000 signature loan, with no processing fee, no interest or payments for 90 days. The term can be up to 48 months, and there is no prepayment penalty. * $10,000 signature equity loan for homeowners, with no payments or interest for 90 days. The loan has a $50 processing fee. Its term can be up to 60 months. There is no pre-payment penalty. * Delayed payroll loan, in which Altura will advance funds, for each payday that payroll is delayed, for up to three months maximum with no processing fee, interest or payments for up to 90 days. The term is up to 18 months. There is no prepayment penalty. * Skip-a-pay, where members already having an Altura loan can take advantage of the credit union's Skip-a-Pay program. The credit union will waive these requirements: the $25 fee, the six-month waiting period before skipping the first payment, and skipping only one payment a year.

CU loans still growing delinquencies level off in July

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MADISON, Wis. (9/3/08)--Credit union loans grew and delinquencies leveled off in July--indicating credit unions are faring well in the credit quality crisis.
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The dollar amount of credit union loans outstanding grew 1.2% in July, compared with 0.9% for the same period in 2007, according to the Credit Union National Association (CUNA) monthly sample of credit unions. Other loans (3.7%) and adjustable-rate first mortgages (2.4%) reflected the highest monthly percentage increases, followed by used-auto loans (1.3%), home equity loans (1.2%), and credit cards (1%). Credit union savings balances declined 0.5% in July 2008, compared with a 1.1% decrease in July 2007.
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“As banks tighten their lending underwriting standards, credit unions are picking up market share,” Steve Rick, CUNA senior economist, told News Now. “Credit union loan balances rose 5.3% in the first seven months of 2008, up from 3.3% in the similar period last year. Growth in the fixed-rate mortgage portfolio continues to lead the way with an increase of 0.8% in July and 14% year-to-date.” Money market accounts rose 0.7%, while regular shares, certificates and share drafts declined 1.7%, 0.4% and 0.4%, respectively. With loan growth outpacing savings growth, the loan-to-savings ratio increased to 83% in July from 82% in June. The liquidity ratio--the ratio of surplus finds maturing in less than one year to borrowings plus other liabilities--decreased to 15.6% in July from 17.4% in June. Regarding asset quality, credit unions’ 60-plus-day delinquencies have remained at 1% for the past seven months. “The overall credit union loan delinquency rate appears to have leveled off around 1.05% over the past couple of months, a hopeful sign that the credit quality crisis infecting other lenders is not having a significant negative impact on credit union balance sheets,” Rick said. The movement’s overall capital-to-asset ratio is 11%. The total dollar amount of capital remains at $90 billion.

Faith-based CU lends more than a helping hand

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JACKSON, Miss. (9/3/08)--Hope Community CU, a faith-based Jackson, Miss., credit union with branches in three states, provides banking services to the underserved and invests in community development. It also comes through in a hurricane. Although it still early in the recovery process from Hurricane Gustav, and because most people are still evacuated from the affected areas until Thursday, Hope Community will provide assistance to members in areas affected by the hurricane, Bill Bynum, CEO, told News Now . “We’re making plans to provide access to loans and account to members and people experiencing disruption,” Bynum said. “We’re also looking at being of assistance to other faith-based institutions in harder-hit parts of southwest Louisiana. We also plan to help provide access to funds from philanthropic organizations and government sources of assistance, such as Federal Emergency Management Agency (FEMA) payments.” The $63.5 million asset credit union was started in 1995 when members of Anderson United Methodist church in Jackson organized Mississippi’s only church-sponsored credit union (clarionledger.com Sept. 2). Over the past 13 years, the credit union has grown through partnerships with other community development churches and faith-based organizations. The Enterprise Corporation of the Delta was Hope Community’s sponsor in 2002, and helped broaden the credit union’s reach onto more low-income communities, the paper said. The credit union opened a branch in New Orleans eight months before Hurricane Katrina struck in August 2005, and was in a solid position to help in the aftermath of the hurricane’s devastation, Bynum told the paper. The credit union will open a branch in Biloxi, Miss., by the end of the year, Bynum added. It now has branches in New Orleans and Memphis.

CO-OP Shared Branching surpasses Wachovia now No. 2

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ATLANTA (9/3/08)--CO-OP Shared Branching locations has topped 3,400, which means CO-OP is second only to Bank of America for the most banking branches in the nation. CO-OP surpassed Wachovia's 3,305 branches this week.
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Branches continue to be an essential element of the delivery channel mix for members desiring face-to-face interaction, said CO-OP. According to statistics from the American Bankers Association, even with the advent of Internet banking, 92% of members use a branch at least once a month to conduct a transaction. "Despite the rise of new technologies, members still consider physical locations a top priority in the selection of a primary financial institution," said Carroll Beach, president/chief operating officer of CO-OP Shared Branching. "With the growth and cooperation of shared branching, credit unions are on an even playing field to meet member demand for access closer to work or home while avoiding the capital expense of building proprietary brick and mortar," Beach added. So far this year, CO-OP Shared Branching has added 75 credit unions, accounting for 84% of new participants through all shared-branching providers.

NY Times Check CUs for mortgage Deals

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NEW YORK (9/3/08)--Credit unions are touted as a good source for mortgage loans in a Sunday article in The New York Times. Credit union mortgages are available to any consumers who meet a credit union’s membership requirements, are not typically marketed through brokers, and have become more attractive in the past few months, according to the article, “Check Credit Unions for Deals,” by Bob Tedeschi. Credit unions have come through the mortgage crisis better than conventional lenders because they are fairly conservative and usually lend to those members they know fairly well, Bill Hampel, chief economist for the Credit Union National Association (CUNA), told the paper. Mortgage lending at credit unions nationwide has gone up in the past year, which is unusual in a down economy, and unlike most lenders, “credit unions still have money to lend,” Hampel added. The article also mentioned the $3.039 billion asset Bethpage (N.Y.) FCU, which offered an adjustable-rate mortgage in late July at 4.875%. The loan features a fixed rate for the first three years and then can adjust by a maximum of two percentage points annually or every three years, depending on the product. The rate can never go beyond 10.875%. Because they are nonprofit institutions, credit unions can charge lower rates than conventional lenders, Michael Dean, Bethpage senior vice president of lending, told the paper. The article also directed readers to CUNA’s website for a list of credit unions.