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Missouri CUs help small businesses succeed

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ST. LOUIS (9/6/11)--Missouri credit unions are taking to heart the plight of the small business, according to the Missouri Credit Union Association (MCUA), which provided examples of how credit unions stepped in to offer loans when banks and other lenders refused to do so. The results? The businesses are all successful, thanks to the credit unions' input during the loan process. What's more, credit unions making these small business loans have seen their lending portfolios increase. That's significant at a time when the economy has produced the first-ever decline in the nation's credit union loans outstanding, said MCUA in "Missouri Credit Unions Help Small Businesses Succeed," in the Missouri Courier (Winter). Some of the examples provided:
* CommunityAmerica's CU in Kansas City provided a loan to Emily Brown for her bridal shop, Emily Hart Bridal. Brown had been turned down by two banks for a loan, but CommunityAmerica used Brown's significant dress inventory as collateral for what she needed to relocate her business. "I would have sunk without the credit union," she told MCUA. Today, she has 2,300 square feet and already needs to expand and hire more staff. * Arsenal CU in Arnold approved a loan for Lara and David Mark to
When David and Lara Mark decided to expand their successful David's Guitar Loft, which provides music lessons to students in Missouri, none of the larger banks would risk lending to them. However, Arsenal CU, Arnold, loaned to them, and their second location is meeting its business expectations. (Photo provided by the Missouri Credit Union Association)
expand their business, David's Guitar Loft, which provides music lessons to students from ages six to 70. "We approached bigger banks where we already had accounts and good standing, but none were willing to take a risk on us," said Lara Mark. The second location is on track with its business projections. "It's crucial for credit unions and other financial institutions to help small business," she said. "It might be easier to finance big companies, but you lose the philosophy of small ones that offer a lot more to the communities we serve." * West Community CU in O'Fallon, offered a home equity loan of credit to help Kimberly Saguto turn her catering company into a full-service banquet center. Previously she was turned down by four financial institutions because she didn't have a business track record. She opened the doors in August and has experienced a steady climb in bookings. * Assemblies of God CU, Springfield, provided a loan to Marine Corps veteran Shawn Motlagh so he could buy a Rosati's Pizza franchise. "It's sad that banks don't want to loan money in this economy because small businesses could really help the economy improve," he told MCUA. * American Eagle CU, St. Louis, provided a loan to Dr. John Freund to mark his 20th anniversary in the field by expanding his St. Louis office. His business plan had been repeatedly rejected by other financial institutions and commercial lenders.
Like credit unions in other states, Missouri credit unions are working to support the Small Business Enhancement Act (H.R. 1418 and S 509), which would raise their member business lending cap to 27.5% from 12.25%, so they can offer more business loans at a time when the economy needs it. Raising the lending cap would result in an injection of $13 billion for small business lending and create 140,000 new jobs--without cost to taxpayers, said the Credit Union National Association.

CU System briefs (09/05/2011)

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* ONTARIO, Calif. (9/6/11)--The California and Nevada Credit Union Leagues and credit unions met with legislators in district meetings and town halls over a five-week period district work period about issues such as the passage of HR 1418 and S 509, which would increase credit unions' member business lending cap to 27.5% from 12.25%. Seven lawmakers supporting the legislation, including author Rep. Ed Royce (R) are from California. Credit unions met with: California Democrat U.S. Reps. Brad Sherman, Adam Schiff, and Judy Chu, and Republican Reps. John Campbell, Dana Rohrabacher; Tom McClintock, Darrell Issa and Gary Miller, as well as with Nevada U.S. Reps. Shelley Berkley (D) and Joe Heck (R). Credit union representatives also attended town hall discusses hosted by Reps. San Farr and Xavier Becerra. Becerra was named to the congressional "super committee" addressing the national debt crisis. The Credit Union National Association has urged credit unions to take the opportunity of the congressional recess to meet with lawmakers in the district. Pictured here are credit union leaders with Campbell. (Photo provided by the California and Nevada Credit Union Leagues) … * KANSAS CITY, Mo. (9/6/11)--Kansas City credit union leaders met with U.S. Rep. Emanuel Cleaver (D-Mo.) to urge support of lifting credit unions' member business lending cap to 27.5% from 12.25%. The meeting took place in Cleaver's district office Aug. 24, said the Missouri Credit Union Association (MCUA) (The Missouri difference Aug. 30). Cleaver said there is a need for jobs and he supports the bill. From left are: Jay Swearingen, MCUA; Ron Miller, Edison CU; Pat Yokley, CommunityAmerica CU; Cleaver; Amy McLard, MCUA; Tim Vogler, United Labor CU; and Mark Heineman, Catholic Family CU. The Credit Union National Association has encouraged credit unions to meet with their representatives in Congress during the August congressional recess. (Photo provided by the Missouri Credit Union Association) … * FARMERS BRANCH, Texas (9/6/11)--Members Choice CU, a $358 million asset credit union based in Houston, Texas, has been designated as a Preferred Lender by the U.S. Small Business Administration (SBA), according to the Texas Credit Union League (LoneStar Leaguer Sept. 2). The designation, which gives the credit union final credit decision and most servicing and liquidation authority for SBA 7(a) loans, streamlines the process to provide financial assistance to the small-business community. "Being part of this program allows Members Choice CU to help create jobs and further economic development in our area, and we couldn't be happier about that," said President/CEO Steve Gilman. To date the credit has granted more than $16 million in business loans to small businesses, including Kitchen 'n Bath Liquidators, Pigtails & Crewcuts, Fusion Taco among others …

Rep. Foxx receives N.C. CU Advocate award

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RALEIGH, N.C. (9/6/11)--About 45 credit union representatives joined the North Carolina Credit Union League (NCCUL) in presenting the CU Advocate Award to U.S. Rep. Virginia Foxx (R) Wednesday. Created by the league this year, the Credit Union Advocate Award honors state and federal legislators who have demonstrated an understanding of and appreciation for credit unions. “Congresswoman Foxx has consistently supported credit unions on issues of real importance, including bankruptcy cramdown, interchange and business lending,” said Dan Schline, NCCUL senior vice president of association services. “She has proven to be a terrific ally for credit unions and their three million members in North Carolina.” In accepting the award, Foxx praised credit unions for their advocacy efforts and for what she called “common-sense positions” on the issues. Members of the league's Governmental Affairs Committee vote on Credit Union Advocate Award nominees. The committee also selected U.S. Rep. Larry Kissell (D). Kissell accepted his award at the NCCUL Annual Meeting in in June. In addition to league staff, representatives attending the luncheon and award ceremony were from Allegacy FCU, Winston-Salem; Lion’s Share FCU, Salisbury; Members CU, Winston-Salem; Piedmont Advantage CU, Winston Salem; State Employees’ CU, Raleigh; Truliant FCU, Winston-Salem; Winston-Salem City Employees FCU; and First Carolina Corporate CU, Greensboro.

CUs not exempt from Texas gun law

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FARMERS BRANCH, Texas (9/6/11)--Credit unions are not exempt from a Texas law that restricts employers from preventing employees from having firearms or ammunition in their vehicles parked at work. The bill, SB 321, went into effect Thursday. It restricts an employer from prohibiting an employee who holds a license to carry a concealed handgun--or who otherwise lawfully possessed a firearm or ammunition--from transporting or storing the firearm or ammunition in a locked, privately owned motor vehicle in the employer's parking area. The law does not permit a person to carry the firearm or ammunition where it is otherwise prohibited by state or federal law. The law exempts certain schools and businesses involved in oil, gas and chemicals. Credit unions are not included in the exemptions, according to the Texas Credit Union League LoneStar Leaguer (Sept. 2). The league advised credit unions to review and possibly revise employment policies regarding employee possession of firearms or ammunition in cars parked in their parking lots.

CUs cope with Irenes inconveniences

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MADISON, Wis. (9/6/11)--Credit unions in the eastern part of the U.S. learned to cope with inconvenience in the wake of Hurricane Irene last week.
With devastating floodwaters, Vermont was among the areas most affected by Hurricane Irene. Sixty four state roads were closed due to flooding. (Photo provided by Association of Vermont Credit Unions)
Though it was not hit directly, Vermont was among areas affected most by Irene. Much of the state was devastated by flooding. Association of Vermont Credit Unions (AVCU) President Joe Bergeron summarized reports from state government, political leaders, and others to provide an update on the state’s recovery status on Friday:
* 120 homes destroyed or sustaining major damage; * 64 closed state roads; * 65 closed state bridges; * Four Red Cross shelters still in operation (along with several local shelters) for persons who lost housing; * 10,000 homes still without power; * 90 public schools still closed; and * $10 million in special low-interest financing for Vermont businesses and farms damaged by the storm is available from the Vermont Economic Development Authority.
A Vermont State Employees’ CU branch at the state office in Waterbury was flooded by the overflowing Winooski River and is expected to remain closed indefinitely. Although the homes of most of his staff avoided damage, Credit Union of Vermont CEO Brian Fogg reported that employee Austin Burbank had five feet of water in his basement. Fogg spent Monday with Burbank shoveling mud out of the basement and transporting three dump truck loads of debris, according to the AVCU (Newslines Express Sept. 2). Fogg also learned Aug. 29 that Credit Union of Vermont member Dennis Hayward was killed in a tractor accident related to the flooding. AVCU Project Manager Colin Ryan was stranded Sunday night when the road near Weston he was traveling on ended abruptly due to flooding damage.
Remnants of a metal bridge destroyed by floodwaters in Townshend, Vt. (Photo provided by River Valley CU)
Tom Edwards, manager of Green Mountain CU’s Rutland branch, was unable to reach home all week because of road damage seven miles from his home. He’s not sure when he will be able to return home, said AVCU. In Pennsylvania, Blue Chip FCU, Harrisburg, Pa., was without power until Wednesday. To continue serving members and meet end-of-the-month obligations, the credit union moved key equipment to a temporary office so back office postings such as direct deposits, share draft clearing, and posting mail/night drop deposits could be processed, according to the Pennsylvania Credit Union Association (PCUA) (Life is a Highway Sept. 2). Staff set up a station in the credit union’s parking lot; distributed snacks, beverages and credit union giveaways; and employees took deposits from members. The deposits were then taken to the temporary office site for processing. Power resumed on Wednesday morning, equipment was moved back and set up, and the security system was back up and running by noon. “By noon, all was right with the world again,” Blue Chip President/CEO Cathi Martin told PCUA. Credit unions in eastern North Carolina also cleaned up in the wake of Hurricane Irene. Branch closures and some damage was reported near the direct path of the storm, but the main impact to operations seemed to be the loss of electrical power. By Thursday, all credit union branches were reported back on line and fully operational, according to the North Carolina Credit Union League (Weekly Update Sept. 2). State Employees’ CU (SECU), based in Raleigh, N.C., closed six branches Monday, while some others delayed opening. These closures and delays resulted from a loss of electrical power, but no significant structural damage was reported. Two SECU employees reported damages to their homes. A tree fell through the roof of one employee’s home. Two trees fell through the roof of another employee’s second residence. No one was injured in either instance. Marine FCU, Jacksonville, N.C., reported three branches closed early in the week due to a lack of power. The locations in New Bern, Havelock and Swansboro, which all lay near the path of Irene, reopened once electrical service was restored. Chief Operating Officer Jeff Clark noted that there was slight property damage, but the lack of power had a larger impact. Weyco CU had no power at any of its three branch locations in Plymouth, New Bern and Ayden on Monday, the North Carolina league reported. Manager Steven Hardison said Thursday that all three locations had power and had resumed normal operations. The storm damage was not limited to the immediate coastal areas, said the league. The drive through at Telco CU, Tarboro, N.C., was damaged by the wind. “The wind got underneath it and blew out some of the ceiling, a light fixture and some of the electrical lines," said CEO Charles Johnson. The exposed electrical lines and debris were secured on Wednesday and the drive through reopened. A contractor will repair the damage later. Tree limbs also snapped power lines at First Carolina People's CU, Goldsboro, N.C., which forced the credit union to close Monday. The hurricane prompted the National Credit Union Foundation to activate to raise funds for credit union people impacted by the storm.

Organizations vendors vie for CUs correspondence services

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MADISON, Wis. (9/6/11)--Even before last week's developments in the corporate credit union system, service providers and other organizations, including other corporates, were announcing that they could provide correspondent, item processing services to credit unions considering leaving their current provider. Although credit unions that are members of U.S. Central Bridge Corporate, Western Bridge Corporate and Southeast Corporate FCU have been given time to weigh their options by the National Credit Union Administration (NCUA), the credit unions are being targeted with messages from service providers seizing an opportunity to grow and serve them. Last week, a group of corporates decided not to pursue a new charter, called PayNet, which would have potentially succeeded U.S. Central Bridge Corporate. Instead, they announced they would pursue partnerships to offer wholesale correspondence and investment service. Western Bridge Corporate and Southeast Corporate FCU also last week announced that their efforts to raise their capital goals by Aug. 31 had failed. Southeast Corporate is moving to Plan B--seeking a merger, and NCUA has announced contingency plans for Western Bridge. NCUA assured credit unions they need not make their service decisions immediately. It also urged credit unions to use due diligence in making the decisions about who would provide their correspondent services. (See related story, "Corporates' PayNet a no-go, prompts NCUA contingency plans.") The service providers offer an array of item processing services that can be confusing, so a credit union must be clear on which services it is getting from a provider . Some of the providers recently vying for partnerships stemming from the corporate credit union crisis include:
* Bluepoint Solutions, Vista, Calif., which announced a conversion plan for credit unions leaving Western Bridge well before the Aug. 31 capital deadline. The program provides credit unions with options of moving to their item processing in-house, to another corporate credit union or to a CUSO without investing in new branch capture software. The company, which was chosen a CUNA Technology Council "Best of Show" winner in 2010, has partnered with Catalyst Corporate, Corporate America CU, Corporate One FCU, CUsource, Mid-Atlantic Corporate FCU, and Palmetto Corporate Services. * ProfitStars' Enterprise Payment Solutions, Monett, Mo., a subsidiary of Jack Henry & Associates. It recently announced a partnership with Corporate One for electronic payments transactions and remote capture, check conversion and Check 21 settlement options. * Minnesota Item Processing Corporate (MnIPC), a St. Paul, Minn.-based credit union service organization (CUSO) that has served credit unions for more than 30 years, according to a release sent by the Minnesota Network of CUs. The check processor provides share draft processing, return item collection, long-term check image storage and home banking access, check deposit and collection, remote branch capture and merchant capture services. * iVia Exchange Services, a subsidiary of the Missouri Credit Union Association and a recently announced partner of the Kentucky Credit Union League, provides imaged item processing, remote branch capture, consumer deposit capture and point of deposit services. * ProDraft Service Inc., Bismarck, N.D., which signed up 26 credit unions this year for correspondent services such as wire, automated clearinghouse (ACH), credit, and international services, as well as share draft processing and check 21 deposit services. * Other corporates. Last week both Alloya Corporate and the new Catalyst Corporate, in press releases announcing they had met or exceeded their capital goals, touted their services to other credit unions that may be impacted by other corporates' situation.
These are just the providers that have contacted News Now in the past two weeks. There are more. What is clear is that credit unions have several options for service, but they will need to do due diligence to pick the services that best serve them and the corporate system.

Corporates PayNet a no-go prompts NCUA contingency plans

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ARLINGTON, Va., and LENEXA, Kan. (9/6/11)--The National Credit Union Administration (NCUA) said it is implementing contingency plans after the Payments Network FCU (PayNet) organizing council announced Friday that PayNet will not launch. Representatives from many of the nation's corporates met in Lenexa, Kan., last week to explore options for continued operation of payments products provided to corporates by Lenexa, Kan.-based U.S. Central Bridge Corporate FCU. Their conclusion: rather than charter a new corporate credit union, PayNet, the group will continue working cooperatively to create partnerships that allow uninterrupted products and services to the bridge's credit unions. The member-driven solution to charter PayNet as a vehicle to provide back-office payment and settlement services to consumers through the bridge corporate's member corporate credit unions "did not achieve sufficient support to launch PayNet as a viable business model," said NCUA in a press release. Scott Hunt, the agent for U.S. Central Bridge's conservatorship, announced NCUA would activate its contingency plans in a letter Friday to members of the bridge corporate. "NCUA will look to alternative resolution plans to facilitate the orderly transition of member services to other providers," Hunt said. "While we have a fiduciary duty to achieve the least, long-term cost resolution of U.S. Central Bridge, we remain committed to minimizing disruption to its corporate members, and in turn, natural person credit unions and American consumers." The agency said it has evaluated U.S. Central Bridge's individual service lines and will determine an appropriate resolution for each, including transitioning select services to other providers. It noted it has had "a number of contingency plans in place since the beginning of the corporate system resolution in preparation for this potential outcome." "We have no plans to immediately shutter U.S. Central Bridge operations, nor will we ask corporate credit unions to immediately transition away from U.S. Central Bridge," Hunt said. NCUA urged the 15 corporates involved in the failed PayNet initiative to "conduct due diligence on possible alternatives to ensure any eventual transition does not disrupt service to their members." The corporates' efforts had focused on organizing a new corporate credit union to purchase U.S. Central Bridge's various businesses to provide ongoing service to corporates. However, the group determined that would not provide the most efficient outcome for the Credit Union System, said the corporates in a press release Friday. “The efforts to organize an ongoing corporate credit union to acquire U.S. Central Bridge operations was an effort that needed to be explored, but it has been determined that partnering with leading vendors within the payments industry is the appropriate course of action at this time," said Brandt Peterson, executive vice president of SunCorp and a member of the Organizing Council. "Our primary goal always has been to ensure continuity of services to participating credit unions. We are much closer to a solution that will meet the needs of credit unions both in the short term and well into the future. The most important message for participating credit unions is that our solution will ensure minimal disruption to credit unions,” Peterson said. The group reaffirmed the importance of aggregation during the meetings with potential partners held during the past two days. Credit unions are cooperatives, and to that end, aggregating volumes and pooling resources provides the best outcome for the collective over time. Participating members include Alloya Corporate FCU, Catalyst Corporate FCU, CenCorp, CO-OP Financial Services, Corporate One, FirstCorp, Kansas Corporate, Kentucky Corporate, Missouri Corporate, SunCorp, Southeast Corporate, The Members Group, TriCorp, VolCorp, and Western Bridge Corporate FCU.