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WOCCU monitoring disasters overseas

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MADISON, Wis. (10/1/09)--The World Council of Credit Unions (WOCCU) has not received any reports from the field about credit unions in several nations and territories hard-hit by earthquakes, tsunamis and Typhoon Ketsana along the Pacific Rim Tuesday and Wednesday. The countries, some of which have areas of widespread damage and climbing death tolls, are:
* Sumatra, an Indonesian island hit by an 7.6 earthquake, killing at least 75 people and trapping thousands. Padang, a city of 900,000 people, is on one of the most active fault lines where the Indo-Australia tectonic plate grinds against the Eurasia plate (Reuters Sept. 30); * The Samoa Islands--Samoa and American Samoa--hit by a tsunami with four waves, each 15 to 20 feet high. The death toll stood at 119 people, with dozens more missing. The tsunami caused a tsunami advisory along the West Coast of the United States, but the impact was uneventful(The New York Times and Los Angeles Times (Oct. 1). *Tonga, south of the Samoas--Six people were confirmed dead and four were missing. * Vietnam, hit by Typhoon Ketsana, confirmed at least 41 deaths from flash floods and mudslides. Hardest hit were the provinces of Quang Nam, Thu Tien Hue and Quang Tri, with four other provinces also affected, said the government. * Cambodia, hit by the typhoon, has 11 confirmed dead. * Philippines, hit by Typhoon Ketsana, confirmed at least 246 deaths and 2.3 million people with flooded homes. More storms were heading toward the Philippines Wednesday.
According to WOCCU's 2008 Statistical Report, Vietnam has 1,015 credit unions, and Indonesia has 950. Any credit unions in Sumatra are counted in the Indonesia total. Figures for Samoan Islands were not available, said WOCCU spokesman Michael Muckian. Cambodia has 80 credit unions, Tonga has 63, and the Philippines, 1,278. None have reported damages so far.

Economy sparks more CUs in mortgages FHA programs

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MADISON, Wis. (10/1/09)--Credit unions are playing an increasing role in the lending arena--particularly mortgage lending. As qualification standards tighten and private mortgage insurance (PMI) becomes harder to obtain, lenders are turning to Federal Housing Administration (FHA) programs to meet demand, explained Linda Clampitt, senior vice president of CU Members Mortgage. Clampitt added that CU Members Mortgage processed 111 FHA loans ($15.6 million) in 2007. However, that number jumped to 851 loans ($129 million) in 2008, and 1,341 loans ($198.5 million) to date in 2009. “FHA loans offer a valuable option for originators because it is one of the most flexible mortgage products available during these difficult economic times,” Clampitt said. “We’ve added 142 credit unions this fiscal year to our list of FHA sponsored agents, and seven additional credit unions are in process right now--that’s more than double what we had last year. “FHA programs offer low down-payment options for the credit qualified at reasonable costs,” she added. “And because an FHA loan insures the lender against loss, this type of loan typically has an interest rate that is among the best in the market.” In previous years, there were so many conventional products available that many credit unions did not work FHA programs extensively, Clampitt said. Also, until last year, credit unions saw success by offering other loan options. But the sweeping changes in the mortgage industry have changed the lending environment completely. The challenge now facing many credit unions is having a strong compliance department to help navigate regulatory changes accurately and having the technology to respond to demand and the expense to manage both, Clampitt said. Credit unions originated 38.8% more first-lien mortgages in second quarter of 2009 compared to the same time in 2008, according to Callahan & Associates’ First Look Program market research. Credit unions surveyed reported originating a combined $30.7 billion in mortgages during the quarter, up 16.1% from the first quarter of 2009. Growth in credit union lending comes at a time when credit availability for consumers remains a key issue. Consumers are looking for help and value, and they are finding both at credit unions nationwide, the company said.

Survey How FIs can help consumers through economy

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BROOKFIELD, Wis. (10/1/09)--Credit unions can help their members survive a tough economy by providing more robust online functionalities--such as same-day bill pay, free budgeting tools and alerts to avoid service fees, says a new survey. Fiserv, a financial services technology provider based in Brookfield, Wis., asked consumers how their financial activities have been impacted by the recession and how financial institutions can help them gain a greater sense of control of their finances. The survey, “Coping with the Crisis,” was conducted by Forrester Consulting on behalf of Fiserv. It questioned 1,002 online adults in the U.S. The survey updates a previous study conducted by Fiserv in October 2008. About 91% of consumers who use online banking said it is critical for managing finances. Because of the recession, 32% of online banking users said they are accessing their accounts more often--an increase from 28% in October 2008. Roughly 74% said they are paying more attention to their finances than in previous years, compared with 71% last October. Thirty-eight percent of consumers said they wanted their financial institutions to send them alerts to avoid service fees. About 33% indicated they wanted same-day bill payments, 31% wanted free budgeting tools, and another 31% said they wanted reminders when their online bills are due. The survey also asked consumers what functionalities would help them control their finances the most. Some of the suggestions included:
* Being able to pay bills the same day they are due (64%); * Alerting consumers to issues they need to pay attention to, such as due dates or a low balance (56%); and * The ability to manage all accounts from one site (53%).
More than one-third of consumers surveyed noted that personal financial help from their financial institution also would help them feel in control of their finances.

GTE FCU cuts nearly 5 of staff

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TAMPA, Fla. (10/1/09)--Due to a struggling economy, GTE FCU laid off about 5% of its employees at its Tampa, Fla., headquarters on Friday. The credit union had roughly 600 employees. The board looked at several scenarios when assessing the layoffs--including the “human factor” and net worth, Doug Richardson, GTE FCU senior vice president of marketing, told News Now. Employees who were laid off received severance packages based on their years of service. The credit union is not planning any future layoffs, unless area unemployment rates significantly increase. Currently, the unemployment rate in the Tampa area is at 10%. “We made loans to people who had jobs and now they’ve lost their jobs,” Richardson said. GTE FCU also closed eight branches Sept. 15. The branches were located in Portland, Maine; Baton Rouge, La.; New Orleans; and north Florida. The credit union alerted members prior to the closings that they could still receive service through GTE’s telephone center, shared branching and CO-OP network ATMs. “We did the best we could,” Richardson said. The closings allow the credit union to focus more on the Tampa area--where 75% of members are located, he added. Although GTE FCU is being careful with its funds given the tough economy, it is still putting a lot of time and energy into its U22 savings and debit account program, which was launched this year and targets 12- to 22-year old members. As of this week, the program has 1,600 accounts with 56% brand-new accounts, Richardson said. The credit union has offered some incentives, such as meeting Tampa Bay Rays baseball player Evan Longoria, and is looking to further promote U22 at an upcoming music festival.

SW Corp. keynoter Feldstein Expect double dip recession

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DALLAS (10/1/09)--Although recent data has brought hopeful signs to the economy, credit unions can expect a recovery that will be difficult to sustain, according to Harvard University Professor of Economics Martin Feldstein. Feldstein will be a speaker at Southwest Corporate FCU's 32nd annual Economic Forum Oct. 27-28 in Dallas. Credit Union National Association (CUNA) Chief Economist Bill Hampel and others will also speak at the forum. "This recovery is very different from a normal business cycle, so results cannot be interpreted like a normal business cycle," Feldstein said. "Recent economic improvements have been driven by fiscal stimulus and special programs. Consequently, I think this recovery will run out of steam next year, and we'll see 'double dip' recession." His presentation at the forum will explore the reasons why he believes the recent economic upswings are only temporary. Feldstein is a member of President Barack Obama's Economic Recovery Advisory Board. He previously was a member of President George W. Bush's Foreign Intelligence Advisory Board and was President Ronald Reagan's chief economic adviser. He also served for nearly 30 years as president/CEO of the National Bureau of Economic Research, a private, nonprofit research organization specializing in the American economy. To solidify the current economic recovery, said Feldstein, the Obama administration must deal with two hurdles: bank balance sheets and downward pressure on real estate prices that comes from the foreclosure process. "The administration recognizes the problems but doesn't have policies to deal with them effectively. That's going to increase risk going forward," he said. He indicated that the real estate market's woes may not be over. "About one-third of existing home sales today are the result of defaults and foreclosures. I don't think we've seen the end of declining home values," he said. "And commercial real estate may be the next big disaster. Banks are not going to be willing to roll over loans to commercial investors, so defaults are likely to increase." The Federal Reserve will face challenges in trying to keep a lid on inflation, Feldstein said. "The Fed has played a non-traditional role over the past year--issuing credit--and the effect has been to put a lot of extra cash in the bank. The question is: 'Are there going to be problems with inflation in undoing that?'" He acknowledged recent positive indicators in industrial manufacturing and housing, but suggested that the consequences of a fiscal deficit that is 5% of the gross domestic product will be a slowing of economic growth and a rise in inflationary risk. "The fiscal deficit is much bigger and much worse than any we've seen," Feldstein said. In addition to Feldstein and CUNA's Hampel, other speakers will include financial experts Marci Rossell, former economist at the Dallas Federal Reserve and former chief economist at CNBC; William Ford, former president of the Federal Reserve Bank of Atlanta and former American Bankers Association chief economist; Gigi Hyland, National Credit Union Administration board member; Charles Idol, Southwest Corporate consultant and credit union industry economist; and Phil Gramm, former U.S. senator from Texas. Early bird registration will end Tuesday.

CU savings surprisingly down loans up

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MADISON, Wis. (10/1/09)--Credit union savings balances unexpectedly declined in August, while loans grew slightly, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly sample of credit unions.
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Credit union savings balances declined 0.5% in August, but grew 8.3% to $755.1 billion during the first eight months of 2009. In August, money market accounts led savings growth with a 1.4% increase, followed by individual retirement accounts (1.2%). One-year share certificates declined 0.7%, while regular shares and share drafts declined 1.6% and 2.1%, respectively. “Credit union savings balances fell a surprisingly large 0.5% in August, reversing the surge in savings balances seen this year,” Steve Rick, CUNA senior economist, told News Now. “We typically see a seasonal savings decline of 0.46% in August as members withdraw funds for vacations and back-to-school shopping. But we had been seeing a strong underlying trend of monthly growth in savings of around 0.8%. “Year-to-date credit union savings balances are up 8.3%, compared to a 5.8% gain for the similar period last year,” he added. “Given the savings pace so far, credit unions could end up posting a 10% increase in savings balances this year, the fastest pace since the 11.3% posted in 2002.”
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Credit union loans outstanding increased 0.7% to $590.5 billion during August and 1.7% during the first eight months of 2009, down from a 5.1% increase during the same period in 2008. During the month, credit card loans led loan growth, rising 1.6%, followed by unsecured personal loans (1.4%) and home equity loans (1.3%). New-auto loans, used-auto loans, and other loans each increased 0.7%, while fixed-rate and adjustable-rate mortgages increased 0.6%. Other mortgages decreased 0.8%. “Loan balances grew a modest 0.7% in August, slower than the 1% pace set last August,” Rick said. “Credit union members are still hesitant to take on new credit due to worries of possible job losses. The government's ‘Cash for Clunkers’ program did reverse a nine-month slide in new-auto lending. “Credit unions posted a 0.73% increase in new-auto loan balances in August, up from no growth last August,” he added. “The program probably pulled forward new-auto demand, so we expect a sharp drop in new-auto lending for the next few months.” The movement’s overall capital-to-asset ratio increased to 9.9% in August. The total dollar amount of capital is $89 billion. Credit union 60-plus-day delinquencies remained constant from July 2009 to August 2009 at 1.7%. “The credit union movement's capital-to-asset ratio climbed back over 9.9% in August, up from its recent low of 9.4% in May, but below the 11% set last August,” Rick said. “Delinquent loans now stand at 1.72% of total loans outstanding as rising unemployment and falling home prices increase both default and collateral risk.” The loan-to-savings ratio increased slightly to 78.2% in August 2009. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased slightly to 19%.

Rosenthal honored for community economic development

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WASHINGTON (10/1/09)--Clifford Rosenthal, president/CEO of the National Federation of Community Development Credit Unions, will be honored by the Insight Center for Community Economic Development in Washington, D.C., Nov. 12, for his commitment to community economic development. The center, formerly known as the National Economic Development and Law Center, is honoring individuals who have played important roles in improving the lives of low-income and working families. The center and federation have been longtime partners to help those in poverty, the low-income and working families. The federation represents more than 200 community development credit unions, which provide credit, savings, transaction services and education to more than one million residents of low-income urban and rural communities.

CU System briefs (09/30/2009)

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* MILFORD, Conn. (10/1/09)--A man robbing Sikorsky Financial CU in Stratford, Conn., Tuesday morning threatened to shoot the tellers and members during the incident (Connecticut Post Sept. 30). The man wearing a dark hoodie pulled over his head entered the $605.2 million asset credit union, yelling and screaming. He vaulted over the counter, ordered four tellers and four customers to "get down" on the floor, and threatened to shoot everyone, said police. He grabbed money from cash drawers, jumped over the counter again and ran toward a donut shot. No weapon was displayed and no one was injured … * HARRISBURG, Pa. (10/1/09)--Angelique Pattillo has joined the Pennsylvania Credit Union Association (PCUA) as a compliance and operations officer. She has 14 years of credit union experience in positions from teller to branch manager at Members 1st CU, Mechanicsburg, and Patriot FCU, Chambersburg. In her new position, Pattillo will assist credit unions with compliance questions on PCUA's toll-free hotline and e-mail, and provide Compliance Cavalry services in the central part of the state (Life is a Highway Sept. 30) … * TEMPE, Ariz. (10/1/09)--Tempe Schools CU today will launch its first Health Education Loan Program (HELP), which focuses on reduced interest rates on auto loans, credit cards, mortgage loans, and loan consolidation with fiscal checkups and special loan experts. The HELP Program was inspired by Statewide FCU, Flowood, Miss., which piloted a similar program called Credit Emergency Room. This month the Tempe Schools CU staff will wear scrubs and be identified with name badges and area of expertise. Special LOANcologists will help consolidate loans. The AUTOstesiologists and CARdiovascular Surgeons will assist with reducing rates on auto loans. The HOMEotology Specialist and OrthoHELOC Technologist will provide a no-cost mortgage analysis and waive appraisal fees if the loan is refinanced with the credit union. And VISAcular Specialists will assist with credit cards …

Bankrate Banks charging record fees

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NEW YORK (10/1/09)--Banks fees for bounced checks, ATM use and checking account service charges hit record highs in August, according to a study released Wednesday. Bounced-check fees averaged $29.58 for the first bounced check, an increase of 2.1% from 2005 (ABCNews and USA TODAY Sept. 30). Roughly 26% of banks surveyed use a tiered pricing system to impose progressively higher fees for multiple overdrafts in a 12-month period. The average cost for the second, third, and fourth bounced checks rose to nearly $34 each. Charges for an interest-bearing checking account were up nearly 3.5% from 2004 data-- to a record $12.55 per month, said Bankrate(USA TODAY). Last year the cost was $11.97 or 5% less. The average minimum-opening balance requirement increased to $473.12 from $376.75. ATM fees also rose. In 2009, the average fee to use another bank's ATM was $3.54, up 16% from 2004 and 7% since 1999, when the average fee was $1.12. This includes the fee charged at the ATM as well as that charged by the consumer's bank. Consumers also paid more for online banking. Online checking accounts that earn interest have a higher average minimum balance--$681.50--than traditional banks but they offer better yields, lower balance requirements and lower monthly fees, said Bankrate. Bounced-check fees at online banks increased to $29.78 and the average ATM surcharge increased to $1.88.