Credit Union Periodicals

SEMINAR MAY 25- California Credit Union League

2005-05-09T15:15:00.000-07:00

Reducing & Resolving Check
Loss Situations
Brought to you by the COOP Network and
the California Credit Union League

Since every credit union issues its own cashier’s and/or teller’s
checks, and accepts checks for deposit drawn on other credit
unions or banks, every employee should know about checks
and drafts to prevent or recover losses!

The information that you’ll receive at this program will potentially
save your credit union hundreds of thousands of dollars that
would otherwise be spent to resolve errors, disputes, or losses!

Join nationally recognized credit union operations
expert Ty Parker as he tells you how to:

Defend your credit union against critical loss issues
such as fraud and insufficient funds
Establish criteria for taking checks for deposit
Resolve stop payment issues with member and
credit union checks
Determine the impact of Check 21 on existing law
Avoid losses from lost or stolen cashier’s and
teller checks
Include important provisions in your account
documentation to deal with members, credit unions,
attorneys, or third parties

Seminar bonus! Don’t miss the special demonstration of
Check Management Solutions™, a new online training,
loss prevention, and problem resolution tool
for credit unions!

Who Should Attend?
This program is designed for anyone at the credit union who is
responsible for dealing with members’ or the credit union’s
checks and share drafts or who has a checking
account, including:
Senior Management
Operations Managers
Member Service Managers
and Representatives
Tellers
Front Line Staff
Compliance Officers
Loan Officers
Accountants
Bookkeepers
Tellers
CPAs
Attorneys

Seminar Dates & Sites:

Wednesday, May 25
California Credit
Union Center
R. M. Johnson
Training Facility
9500 Cleveland Ave.,
Suite 200
Rancho Cucamonga, CA
91730
800.472.1702

Thursday, May 26
DoubleTree Hotel
Sacramento
2001 Point West Way
Sacramento, CA 95815
916.929.8855

Seminar Schedule:

Registration:
8:00 am-8:30 am

Seminar:
8:30 am-11:45 am

Lunch:
11:45 am-12:30 pm

Seminar:
12:30 pm-2:25 pm

Break:
2:25 pm-2:35 pm

Product Demo:
2:35 pm-3:15 pm

Program Concludes:
3:15 pm-3:30 pm

--------------------------------------------------------------------------------

Registration is open now!
Call toll-free at 800.472.1702, ext. 8250
or register online at www.ccul.org

News Briefs- April 2005

2005-04-25T11:53:00.000-07:00

At Press Time "News Brief" Credit Union Times,
April 25, 2005

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- Graham out at Kinecta FCU
- New York League Raises Money for Political Action in its First Time Fundraiser
- Loan Participations Generating Record Growth for MBL Portfolios
- Business Loan Applicants Tend to Fumble with Incomplete Documents
- PCUA Sets Theme for SNAP Campaign
- Busy Legislative Week Ahead for CUs
- Truliant FCU, NC League Exchange Ideas with Suriname Credit Unions
- CUNA: Energy Bill Duplicative for Financial Services
- Top Marketing/Communication Staffers at WesCorp, U.S. Central Depart
- Americans Flocked to Bankruptcy Courts in March
- NCUA's Web Site Phished
- Card Security Breach Refocusing Attention On Cross Platform Program
- Kinecta's Interim CEO a Longtime Hughes Employee
- Michigan League Launches Big Co-op Ad Campaign
- eCU Technologies to Offer Aggregation to Symitar Member Connect Clients
- Kentucky CUs First to See End of Bank One Name
- Competition Sets Sights on Branching Out

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Graham out at Kinecta FCU

MANHATTAN BEACH, Calif. -- Tom Graham is no longer CEO of the $3 billion Kinecta FCU. According to the credit union, board member David A. Gale has been named interim CEO. Graham joined Kinecta in 1990 as senior vice president of administration -- at that time the CU was called Hughes Aircraft Employees FCU. Graham quickly moved up the ranks until landing the CEO job in 1998. He helped lead the CU through a difficult name change in that the venerable Hughes name wasn't an easy parting for members. Graham was named to the CUNA Mutual board just last January and he also serves on the board of WesCorp.

pgentile
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New York League Raises Money for Political Action in its First Time Fundraiser

LATHAM, N.Y. -- The New York State Credit Union League says its first fundraising dinner to benefit its state political action committee "far surpassed expectations." The League raised just over $7,200 to benefit CUPAC. To raise additional funds, the League also held a 50/50 raffle. The winner, Empire Corporate FCU's Kevin Brauer, donated the money back to CUPAC. All proceeds raised from the dinner will be used to make campaign contributions to legislators who vote for and support credit unions and members.

ebarr

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Loan Participations Generating Record Growth for MBL Portfolios

WASHINGTON - As word of mouth continues to spread on the benefits of loan participations, credit unions are taking notice. Since June 2004, the nation's top 20 credit unions in loan participations saw a 185% increase in the number sold and a 120% increase in the number bought, according to Callahan & Associates, Inc. At the top of the list is $640 million Evangelical Christian Credit Union, which generated 38.3% of the $1.1 billion business loan participation sellers market. The $3.5 billion Patelco CU and $1.5 billion Texans CU led the way on the buying side as both captured 19.5% of the $1.6 billion on the purchasing end. Member business lending has opened a number of avenues for growth, Callahan found, including the popularity of loans participations. The loan arrangement offers portfolio diversification and can increase the return on earning assets.

msamaad

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Busy Legislative Week Ahead for CUs

WASHINGTON--The House appears to be pushing through some bills important to credit unions prior to going on recess next week. The House is expected to take up the Expanded Access to Financial Services Act of 2005 (H.R. 749), introduced earlier this year by Congressmen Jim Gerlach (R-Pa.) and Brad Sherman (D-Calif.), on the suspension calendar. The bill would permit federal credit unions to offer money transfer and check cashing services, as well as selling travelers checks and money orders to anyone within their field of membership. The suspension calendar is typically reserved for noncontroversial measures--such as the Net Worth Amendment for Credit Unions Act (H.R. 1042), which could come before the House on the suspension calendar this week also--but the Gerlach-Sherman bill has faced some opposition from the banking community and the anti-immigration lobby. Additionally, the House Financial Services Committee plans to mark up H.R. 1185, Federal Deposit Insurance Reform Act of 2005, and H.R. 1224, Business Checking Freedom Act of 2005, on April 27. Credit unions' interest in 1185 is to ensure credit unions receive coverage parity with FDIC-insured institutions. The Business Checking Act would permit the Federal Reserve to pay interest on so-called 'sterile reserves' and include credit unions in the Fed's annual fee study.

scooke@cutimes.com

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CUNA: Energy Bill Duplicative for Financial Services

WASHINGTON--CUNA wrote Speaker of the House Dennis Hastert (R-Ill.) last week on the possible duplicative nature of the new energy bill, as written, for credit unions. Section 1287 of the Energy Policy Act of 2005 (H.R. 6) overlaps privacy provisions already included in the Gramm-Leach-Bliley Act. Part (a) of the section allows the Federal Trade Commission to issue rules to protect electric consumers' privacy from disclosure in connection with the sale or delivery of electric energy, according to CUNA's letter. The FTC is also authorized to issue "issue rules prohibiting the sale of goods and services to an electric consumer unless expressly authorized by law or the electric consumer," CUNA cited. "It is safe to say that virtually all of our credit union members are "electric consumers." By our very nature as financial institutions, credit unions are connected with " the sale or delivery of electric energy to electric consumers." Our members routinely pay their electric bills through their credit unions by check or credit card," CUNA explained. CUNA had supported an amendment to correct these provisions, but it was not permitted by the rules of debate adopted by the House Rules Committee. However, Congresswoman Deborah Pryce (R-Ohio) engaged the Energy Committee Chairman in a colloquy to clarify the scope of the provisions.

scooke

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Top Marketing/Communication Staffers at WesCorp, U.S. Central Depart

LENEXA, Kansas and SAN DIMAS, Calif. -- U.S. Central and WesCorp are each seeing some changes at the top with their marketing/communication staffs. WesCorp Director of Marketing Freda Amir is resigning her position effective Friday. Amir is moving to New York to take a job with Goldman Sachs as its vice president of business development services. Amir has been with WesCorp for two years, and said the experience has been invaluable. "WesCorp has given me a great background, great management skills that enabled me to take the position at Goldman," said Amir, who already has experience in a large brokerage company. Prior to WesCorp, she worked for Morgan Stanley in a marketing role. As far as how WesCorp is perceived, Amir said from a marketing standpoint the corporate has tried to present its members with personalized service. "The message has been warm, close knit. That's the type of marketing we strive for, to focus on the members, all the members," she said. She noted the corporate will continue to put on free Webinars so even its smallest members can participate. At U.S. Central, Director of Public Affairs/Communication Roger Dick has left the company. Details on Dick's departure are few, though Dick did stay on long enough to complete another annual report. Dick was a key figure on U.S. Central's expansive 30-year annual report put out last year.

pgentile

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Kentucky CUs First to See End of Bank One Name

LOUISVILLE, Ky. -- Savoring at the prospect of finding new business among merger-weary bank customers, Kentucky credit unions Monday were plotting a new marketing strategy to take advantage of that big take-down of the Bank One name following its 2004 merger with New York-based JPMorgan Chase & CO. A spokesman for the Wall Street megabank revealed Kentucky -- with TV ads sprouting up across the state this week -- is the launching pad for its national "makeover" of the well-known Bank One to the new Chase nomenclature. "Every time we see merges like this, it always means more business for us since you know those bank customers don't like to change their checks and don't like receiving higher fees," said William Rissel, president of the $417 million Fort Knox FCU of Radcliff, whose CU has already starting thinking ad language. One suggestion, "How about 'Do you like chasing your bank out of town?' or 'Are you tired of chasing your money?'" quips Rissel. The JP Morgan spokesman said after Kentucky other states next in line on the week-to-week list of conversion ads and signage change include Oklahoma, Wisconsin and Utah with the remaining coming throughout 2005.

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Competition Sets Sights on Branching Out

CHICAGO -- Nsight, a research project funded by design/build firm NewGround, finds that more than half of community bankers are planning to add one to five new branches in 2005-2006. According to the survey, some 41% of community bank leaders have opened free-standing branches in the last to years compared to storefront branches(6%) and branches that operate within another retailer (5%). When asked to identify the weakest feature of their branches, 25% responded merchandising, followed by employee training (15%), convenience/location (13%) and brand identity (11%).

CUNA Initiates Radio Tour on Pre-K Financial Education Effort

2005-04-19T09:47:00.000-07:00

cutimes-

WASHINGTON—CUNA President and CEO Dan Mica is hitting the airwaves, stumping for CUNA’s new ‘Thrive by Five’ preschool financial education materials.

“Parents who don't take steps to teach their preschoolers basic spending and saving concepts and values are leaving it up to strangers, chance, or television,” Mica said. He taped interview last week with 15 radio stations in major media markets, including Atlanta, New York, Washington D.C., and parts of Florida.

“The taped interviews we’ve lined up, together with a radio news release on the Thrive by Five program already in circulation, are expected to reach a combined audience of at least 10 million consumers,” CUNA Senior Vice President of Communications Mark Wolff said. “In virtually every instance, we have been able to point parents to free materials on the CUNA web site and emphasize this unique aspect of credit unions’ commitment to youth financial education.”

The Thrive by Five materials include free activities to download to teach young children how not to lose money and how money is used to buy something, among other things. - scooke

Presidents to Sign Bankruptcy Reform Act Into Law Tomorrow

2005-04-19T09:45:00.000-07:00

Tuesday 04/19/2005
12:01 PM

WASHINGTON—President George W. Bush will sign the Bankruptcy Abuse Prevention and Consumer Protection Act (S. 256) into law tomorrow afternoon, according to a White House spokesperson.

“I commend the House for acting in bipartisan fashion to curb abuses of the bankruptcy system,” President Bush said upon passage of the bill in the House last week. “These commonsense reforms will make the system stronger and better so that more Americans — especially lower-income Americans – have greater access to credit. I look forward to signing the bill into law.”

“This was a major legislative victory and credit unions played a very strong, very instrumental role in its passage,” CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn stated. “We were one of actually two groups that were consistent in their grassroots activity on this bill and we actually deserve a lot of credit for its passage.”

NAFCU Director of Political Affairs Murray Chanow noted that there is a six-month waiting period before the bill becomes law. “There will be a lot of adapting for all financial institutions getting ready for the roll out of this thing, which should be toward the end of the year this year,” he said.

The Justice Department will be coming out with the implementing regulations, according to Chanow. - scooke@cutimes.com

Prime Alliance Becomes MortgageClick™ Shareholder

2005-04-18T17:32:00.000-07:00

WOBURN, Mass. — Count Prime Alliance Solutions among some of the newest shareholders in MortgageClick™, the Web-enabled mortgage decisioning platform distributed to credit unions.

MortgageClick, which is powered by Prime Alliance, was created in 2003 as an extension of Members Mortgage Company. The technology was spun off as a separate entity in January 2004. It has built over 90 sites, experienced a 350% growth in transactions, and processed $2 billion in mortgage requests since its inception.

Five credit union recently signed on to use MortgageClick, including: New England Teamsters FCU, Pacific Northwest CU, Freedom CU, RTN FCU, and First Pioneer CU. - ebarr with credit union times

New Online Voting Poll: Do Credit Unions Have a Sensible Alternative to “Bank”?

2005-04-18T16:52:00.000-07:00

WEST PALM BEACH, Fla. — CUNA Chairman Dick Ensweiler has challenged credit unions to stop using the word “bank” in their marketing efforts, but is there a common sense alternative?

For many credit unions “banking” is used as a generic term that describes financial transactions. Members “bank” at branches, they utilize the Web for “online banking”, and so and so on. Ensweiler believes credit unions should try and show the credit union difference and avoid “bank” and “banking” altogether.

However, some believe that will only confuse the consumer even more. Some consumers still don’t know what “credit union” means and even confuse the term with a labor union.

On the other hand the credit union vs. bank war is so fierce these days, shouldn’t CUs find alternatives?

What do you think? This is the subject of Credit Union Times latest online voting poll. The question is as follows:

Should credit unions eliminate “bank” and “banking” from their marketing vocabulary?

• Yes

• No

• Not Sure -
author- pgentile

News Briefs- March 2005

2005-03-15T11:41:00.000-08:00

MBAA Summit Addresses "Growing Threat" of Fraud to Mortgage Industry

WASHINGTON -- Fraud against mortgage lenders has levels so high it threatens the entire mortgage industry, says the Mortgage Bankers Association. To address the crisis, the MBA last week held a summit entitled "Protecting the Real Estate Finance System: Combating Mortgage Fraud Against Lenders" that attracted a cross-section of industry plays to identify a series of recommendations to combat the issue. Addressing attendees, MBA Chairman-elect Regina Lowrie, president/CEO, Gateway Funding Diversified Mortgage Services said concern about mortgage fraud "against our home finance industry has reached such heightened levels that top management of lender has to decide how they are going to address this growing threat and protect their company, their employees' jobs and the borrowers they serve." Ann Fulmer, president of Georgia Real Estate Fraud Prevention & Awareness Coalition (GREFPAC) called fraud against mortgage lenders "bank robbery without a gun." MBA plans to launche on March 31 a Web site, "The Mortgage Fraud Against Lenders Resource Center" to help lenders identify, communicate and prevent mortgage fraud.

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Atlanta Hotbed of Bank Merger Activity in 2004

ATLANTA - With much of the spotlight on big mergers from the likes of Bank of America and other national banks in 2004, several regional banks saw record upheavals last year here. Atlanta was home to several notable bank mergers in 2004, according to the Atlanta Business Chronicle. SouthTrust Corp. merged with Charlotte-based Wachovia Corp., which is the number one bank in the metro Atlanta area, according to the FDIC. The number two ranked bank in deposits, SunTrust Banks, Inc., completed a merger with number 12 ranked National Bank of Commerce in 2004. Number nine ranked Bank of North Georgia merged with Charter Bank & Trust Co. The merger activity here is in line with a recent survey that showed 76% of bankers view other community banks, including regional and "mega" banks as their most serious competitive threat. Grant Thornton's Twelfth Annual Survey of Community Bank Executives also showed that competition from credit unions continues to grow. Of the 442 respondents to the survey, 71% felt that CUs are posing more of a threat to their operations, compared to 64% the previous year.

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ROA on the Rebound for Colorado Credit Unions, CEOs Say

DENVER - Return on assets for Colorado credit unions were at their lowest levels since 1993 but the state is poised for a rebound this year. The Colorado Credit Union League reported that ROA, which is net income divided by average assets, decreased to 0.62% in 2004 compared to 0.71% in 2003. According to a March 11 article from the Denver Business Journal, Colorado CUs had total deposits of $10.25 billion, a 4.5% increase from a year ago, trailing the 5.4% national deposit rate. The slowed economy impacted Colorado as it did most other states. Lending, for instance, totaled $8.96 billion, 10.4% less than the rate for loans nationwide. Several credit union CEOs were optimistic that as the state's economy improves, delinquency levels will decrease and ROA will rise, the article read. Colorado credit unions, as with others nationwide, are starting to impose tougher credit standards and charging off more delinquent loans. Charge-offs are a double-edged sword because while they can improve delinquency numbers, they can also negatively impact a CU's net income. Still, some CUs may be willing to operate with a lower ROA to provide more services to members, one CEO said.

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Illinois CU Fund Raid Halted by Judge

SPRINGFIELD, Ill. -- The state's practice of raiding accounts of agencies which regulate credit unions and banks has been halted temporarily by a state judge holding the funds supported by examination fees needed protection. In granting a restraining order last Friday on a request of the Illinois Credit Union League and a group of bank and thrift trade associations, Sangamon County Court Judge Leo Zappa directed the Department of Financial and Professional Regulation to stop diverting the funds for general purposes. The Illinois League and the trade groups had brought suit in December against the Department arguing the diversion would injure supervision and would force huge and unwarranted increases in examination fees to make up the difference in siphoned funds. The state maintained its action was legal to solve a budget crisis. Judge Zappa ruled that CUs would suffer irreparable harm by continuing to pay the fees, if the fees are subject to further transfers and to be used for purposes other than regulation.

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Matz Announces PALS Workshop to Combat Predatory Lenders

BALTIMORE--NCUA Board Member Debbie Matz announced today that she will be holding a free Partnering and Leadership Successes workshop in Baltimore on July 7. Panelists at the workshop will discuss the following topic --"Knock Out Predatory Lenders and Improve Your Bottom Line." At the workshop, credit union leaders will tell how they attract members who previously relied on check-cashers, payday lenders, pawnshops and other predatory lenders to meet their cash needs. "There are many shining examples of credit unions providing emergency loans, financial education, and other needed services to help new members break free from the grip of predatory lenders," Matz said. "These credit unions have found that it's not only the right thing to do - it's good business." To register for the Summer PALS workshop, visit http://www.ncua.gov and click "PALS Workshop Registration, July 7, 2005." The workshop will take place from 10 AM - 3:30 PM at the Hyatt Regency on Baltimore's Inner Harbor, just a few blocks from Oriole Park at Camden Yards, which will be hosting a four-game series between the Orioles and 2004 World Series-winning Boston Red Sox.

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Sunshine State Withdrawing Application to be a Bank

TALLAHASSEE, Fla. - Sunshine State Credit Union is withdrawing its application to become a mutual bank today, but will reapply as soon as it has a new chief executive in place. The credit union's previous CEO, Mark LeCain, left last week in what sources said was a forced resignation. Michelle Clark, a Sunshine State CU vice president, explained that in light of the credit union's termination of its CEO last week, it did not want the application to continue before federal regulators. "We wanted to get a new CEO in place and start fresh with our application," Clark said. The withdrawal leaves unclear whether the credit union will reapply but various sources speculated that it may be unlikely. The chairman of the credit union's board resigned last month citing stress related health problems and federal banking regulators have been to the credit union twice in relation to the application. Both phenomena can be considered black marks for the credit union, the sources said. The $170 million credit union's members voted in late June 2004 to become a mutual bank. Instead the institution's application has languished before federal regulators, leading to widespread speculation about both the credit union's desire to become a bank or its ability to pass regulatory muster as a bank.

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Nassau Educators Hits Member Milestone

WESTBURY, N.Y. - Nassau Educators Federal Credit Union has topped the 100,000th member milestone. Positioning its niche as providing a more personalized banking experience, the over $900 million credit union is gearing up to open two new branches this year. "It's always been about service," said Nassau Educators President/CEO Ed Paternostro. "Our service is what sets us apart, and our products are consistently among the best values anywhere, not just locally, but nationally. Word-of-mouth is our best advertising. It's made the credit union what it is today."

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OSI's Acquire/Convert Strategy

GLASTONBURY, Conn. -- Open Solutions Inc. has made a number of core processing acquisitions that affect the CU space in recent years, but it says it's strategy post-merger is quite unique. OSI Chairman and CEO Louis Hernandez said OSI spends a lot of time researching the CU clients of companies it is considering acquiring to get a feel for what kind of processing they are looking for. Hernandez said OSI looks for CUs that want to improve their systems and to that end ultimately convert to the OSI platform. In fact OSI, does absolutely no marketing of acquired systems. On the other hand OSI doesn't phase out acquired systems, it continues to support them, but hopes to see the bulk of CUs eventually move to its platform. OSI plans to implement this strategy with its latest acquisition, the U.S. CU operation of CGI. This business consists mainly of CU clients of the old C.U. Processing, based in Southfield, Mich., that CGI acquired a number of years ago.

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Power Breakfast Brings Indiana CU, Banks Together to Talk Issues

INDIANAPOLIS -- Representatives from more than 300 Indianapolis-area institutions met over a breakfast recently hosted by the Indianapolis Business Journal to participate in a panel discussion on a variety of topics. Indiana Credit Union League President John McKenzie represented credit unions at the Power Breakfast Series - Banking & Finance on Feb. 25. Other panelists represented the areas of law, banking, and venture capital. Among the topics covered by the panel were the importance of technology in the world of financial services, the role of financial institutions in the city's economic development efforts, and how to keep capital flowing so more small businesses can succeed. Also on tap for discussion was the "banks vs. credit unions' issue. According to the Indiana Credit Union League, when the issue of whether credit unions should pay federal income taxes came up, there was no argument in favor of it from other panelists who also questioned why the American Bankers Association keeps pushing for it. McKenzie said the panel was a good opportunity to showcase the credit union difference, CUs' important role in the financial services industry, and how the business community as well as consumers benefits from CUs.

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NCUA Studying Whether Sunshine State Will Have to Re-Vote

ALEXANDRIA, Va.-- NCUA is studying whether the $170 million Sunshine State Credit Union, headquartered in Tallahassee, will have to again submit disclosure statements to its members and conduct a re-vote should it re-apply with federal banking regulators to become a mutual bank. The credit union withdrew its application to change charters on March 14 in the wake of the departure of its CEO Mark LeCain. Michelle Clark, a credit union vice president, said that the credit union does not believe it will have to conduct a re-vote and Alan Theriault, a consultant with CU Financial Services agrees. "They are just going to pick the process back up again when they have a new CEO and nothing really will have changed," said Theriault, who has served as the credit union's adviser during the charter change process. But the final answer may not be that simple. The NCUA's regulations do not specifically address a reapplication for charter change after an initial member vote and the agency will merely say it is studying the issue. A lot may hinge on whether the changes in leadership in the office of the CEO, combined with a new chairman of the board and possibly other changes amount to a material change to the credit union's status, according to another source.

News Briefs- February 2005

2005-02-21T10:20:00.000-08:00

Former CU In Ohio Prepares For Stock Offering

DUBLIN, Ohio - Ohio Central Savings, a mutual savings bank which began life in 1949 as Ohio Central FCU, has filed paperwork with the Securities and Exchange Commission indicating that it intends to issue stock and become a publicly traded firm The move is somewhat unusual in that the former credit union is leaving the mutual holding company structure which has been popular with many credit unions which change their charters to those of mutual banks. The credit union converted to a bank and adopted the mutual holding company structure in 1998 but has never issued any stock. Instead in 2001 the former credit union affiliated with another bank also in a MHC called Third Federal Savings of Cleveland. Under the plan, Third Federal handled the mortgages and Ohio Central handled auto lending. Since 2001, the former credit union told potential investors, it has not originated any conforming mortgages but has originated $117 million in auto loans, $90 million of which it sold to Third Federal. The bank plans to offer 690,000 shares at an initial price of $10.00 per share for $6.9 million.

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Despite Large Merger, Underserved Area Addition, January Stats Normal

ALEXANDRIA, Va.--A large credit union merger and underserved area adoption in Pennsylvania highlight January's bland charter activity statistics. As previously reported in Credit Union Times, American Heritage Federal Credit Union adopted the entire City of Philadelphia, population 1.5 million, as an underserved area last month and Citadel Federal Credit Union and Atlantic Credit Union merged into a nearly billion-dollar credit union. Other than those two facts, not much stood out from NCUA's January 2005 Insurance Report of Activity. Eight credit unions converted to a community charter, the largest of which was $113.5 million Central Bergen Federal Credit Union in Hackensack, N.J. that was approved for a community of 1.4 million potential members. Community charter conversions added just 2.6 million potential members in January. Federal credit unions adopted 16 underserved areas, including Campus FCU and ASI FCU, each of which adopted Orleans Parish as an underserved area with nearly half a million residents. Pacoima Development Federal Credit Union, a new charter approved last month with 178 potential members, also added an underserved area of 185,323 in Los Angeles County. Mergers continued on at a steady pace with 23 approved in January.

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Mid-Atlantic CUs Form Multiple-Owned Full Service Real Estate CUSO

HERNDON, Va. -- A new full-service realty CUSO formed by CU Realty of VA, MD, DC LLC (CUR LLC), a chapter of parent company CU Realty of Tempe, Ariz., is off to a fast start. The CU Realty program, formed by 12 charter investors, launched locally last month. Within the first 13 days, the CUSO received 518 registrations resulting in 388 mortgage leads. The CUSO is designed to assist CU members through every step of the home buying and selling process, with the opportunity to receive up to a 1% rebate on the sales price of the home. Members have access to MLS listings with additional information on the properties including photos, neighborhood maps, school, crime and demographic reports. In addition, they get to work with a network of "approved agents" who represent the member through their transaction. CUR LLC President Colleen Daly, mortgage manager for Northwest FCU said the CUSO is confident that through the CU Reality program, credit unions can secure additional first mortgage loans and crack the 2% share of the mortgage market they've held on to for several years.

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SSFCU Helps Colorado Sky Sox Play Ball

COLORADO SPRINGS, Colo. -- San Antonio-based Security Service Federal Credit Union has stepped up to the plate to help Minor League Baseball's Colorado Sky Sox. As part of a partnership agreement reached between the Pacific Coast League team and SSFCU the stadium name will now be changed to Security Service Field. According to SSFCU the partnership will boost image awareness while supporting a great team. The stadium will also undergo a $4 million renovation ranging from a state-of-the-art home clubhouse area with underground batting/pitching cages and 2,536 new box seats with cup holders, to the addition of a new five-tiered picnic terrace area and indoor banquet area. The 12-year agreement includes stadium sponsorship and advertising, special stadium benefits for some 110,000 SSFCU members living here and countless promotional and community partnerships. The two organizations have also teamed up to create a new, facility specific logo.

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PCUA Enters Litigation in Support of State Banking Department

HARRISBURG, Pa. -- The Pennsylvania Credit Union Association has entered field-of-membership litigation in support of the order issued by Secretary of Banking William Schenck approving a five-county community charter for TruMark Financial CU and providing community chartering guidance to Freedom CU and Corry-Jamestown CU. Since Schenck issued his order Dec. 22, 2004, Freedom CU has been granted their community charter and Corry-Jamestown's application is pending. The Pennsylvania Bankers Association challenged the Department of Banking's community charter approval process and Trumark's tax-exempt status by asserting that community chartered CUs should pay the state's Mutual Thrift Tax, a tax levied on mutual savings banks. While we believe there is little merit to the bankers' taxation argument, it requires a rigorous defense by our Association on behalf of all Pennsylvania credit unions and their members, said PCUA President/CEO Jim McCormack. PCUA SVP Communications and Marketing Mike Wishnow said while the case will be heard by a panel of judges who don't have credit union expertise "and who'll we'll have to start with Credit Union 101, the good news is that at the end of the day if we're successful the appellate court in Pennsylvania will have stated for the record that credit unions and mutual savings banks are not the same."

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Freddie Mac Introduces Home Possible(TM) Suite of Low Downpayment Mortgages

WASHINGTON --Freddie Mac has come out with a new mortgage program for borrowers with limited credit and savings. Home Possible(TM) Mortgages is a new suite of low downpayment mortgage products to help working families and key community workers such as police, firefighters, teachers and healthcare workers with savings issues or imperfect credit become homeowners. Home Possible Mortgage combines borrower education and early delinquency counseling, zero and 3% downpayment mortgage products and flexible credit requirements making it possible for borrowers to purchase single family property with as little as a $500 downpayment. Home Possible Neighborhood Solution(TM) Mortgages offers these features plus others designed to make home buying more possible for teachers, law enforcement officers, firefighters and health care workers. Both products - Home Possible and Home Possible Neighborhood Solution Mortgages - are available through Freddie Mac's national network of more than 2,000 lenders and 10,000 mortgage brokers using Freddie Mac's automated underwriting service Loan Prospector(TM).

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NYS League to Introduce New Online Compliance Information System

LATHAM, N.Y. -- The New York State Credit Union League on Feb. 22 will introduce its new "InfoSight: Direction for the Future " online compliance system which will provide CUs with a direct link to fast-changing CU compliance information in New York State as well as the ability to access regulatory and compliance information from other states and federal regulators. InfoSight is a shared system created by the Florida, Georgia, Michigan, Ohio and Texas credit union leagues. Among the features of the NYSCUL's new system are comprehensive compliance information for New York State, the federal government and other states; topics categorized by areas of operation for easy reference; complete text of laws and regulations; FAQs for instant answers to common questions; new rules and amendments added within 30 days of taking effect; and links to NCUA, CUNA, E-Guide and other popular compliance sites for CUs.

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ACB Undecided on Whether to Answer Tax Panel's Call for Comments

WASHINGTON--America's Community Bankers has not decided yet whether it will comment in response to the President's Advisory Panel on Federal Tax Reform recent request for public comment. One of the specific items the panel is requesting is comment on aspects of the tax system that are "unfair," according to a Treasury release. However, the panel is not looking for specific proposals at this point, it emphasized. "We haven't decided what we're going to do with that panel," ACB Executive Vice President for Governmental Affairs Robert Davis commented. If ACB does choose to "opine" to the panel, he said ACB's message has always been consistent: that large bank-like credit unions should be taxed. He noted that that Congressional Budget Office report each year indicates that credit unions avoid paying about $1 billion in taxes each year due to their exemption. The American Bankers Association and Independent Community Bankers did not provide immediate comment.

CU updates of the week

2005-02-01T16:47:00.000-08:00

- North Carolina League Risk Management Meeting Focuses on Check Fraud

- 2005's Economy May Rely Less on Government Stimulus

- Utah League Fires Back on Schools Donation

- Wescom Resources Group Releases Integrated CUDL Upgrade

- Matz Raises CU Concerns and How They are Being Addressed

- Mortgage Bankers Association Predicts "2005 Looks to be a Strong One"

- CCUL Hires Government Relations Veteran

- Bluepoint Offers Free Webinar on Paperless Initiatives at CUs

- Newly Sworn-In Treasurer to Keynote Feb. 9 NCUA Economic Summit

- American Heritage FCU President/CEO Teams up with PCUA VP to Promote Financial Literacy on Television

- Johnson Highlights CU Capital Issues as Key Goal for 2005

- Proper Expertise Critical to MBL Program Success, Lending Experts Reiterate

- Bank of America Discontinues Foreign Exchange Fee, Transfer Fee for Cash Transfers to Mexico

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North Carolina League Risk Management Meeting Focuses on Check Fraud

ASHEVILLE, N.C. -- Check usage may be declining, but unfortunately the same cannot be said for check fraud. Strategies for fighting check fraud was the focus of the recent meeting of the Risk Management Council of the North Carolina League. About 50 security officers from throughout the state came for the conference which featured fraud fighting tips from a mix of law enforcement officials and credit union officials. In addition to advice from law enforcement, a panel discussion featuring North Carolina credit union security officers shared stories on how their credit unions prevent check fraud. Jim Odell, senior manager with CUNA Mutual Risk Protection also presented attendees with information about emerging frauds and suggestions for working with CUNA Mutual to identify risks.

ebarr@cutimes.com

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2005's Economy May Rely Less on Government Stimulus

MADISON, Wis. - Credit unions can expect the nation's economy in 2005 to "stand on its own," with much less government-supplied monetary and fiscal stimulus. This, according to the just released 2005 Economic & Market Outlook, published by MEMBERS Capital Advisors, the registered investment advisor affiliate of CUNA Mutual Group. MEMBERS Capital has a slightly less optimistic outlook than the consensus, said John Moreno, client services manager at MEMBERS Capital. Rising short-term interest rates and no new tax cuts will create more volatility in the economy and markets during the first half of the year and temper economic growth from the 4%-plus pace of the past 18 months. Another situation that could negatively affect the economy long-term is the $430 billion federal budget deficit and the $500 billion merchandise trade deficit. "Growing outlays needed to service the budget deficit can crowd out more economically productive spending," Moreno said. "The supply of government bonds required to finance the deficit must find buyers, or interest rates will rise." On a brighter note, U.S. corporations are more profitable and healthier financially than they have been in years. Rallies in equity and corporate bond markets and a financially sound banking system have significantly lowered the cost of capital.

msamaad@cutimes.com

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Utah League Fires Back on Schools Donation

SALT LAKE CITY -- The rhetoric over who gives more to Utah education -- banks or credit unions -- heated up Friday with the Utah League of Credit Unions firing a salvo charging banks are woefully behind -- $700,000--CUs. On Thursday the Utah Bankers Association blasted the League's $50,000 spending for a "stop the bank attacks" e-mail and ad campaign claiming such money would be better spent on schools by announcing a $50,000 schools donation "in lieu of a media campaign." "Instead of re-fighting a battle that was decided two years ago, we challenge the League of Credit Unions to end their attacks and use the money they are spending to mislead the public to support a truly worthy cause -- Utah's education system.," declared Howard Headlee, president of UBA. The Utah League fired back with a press releases of its own calling the UBA's claims of education donations laughable compared to contributions CUs make under the Children's Miracle Network program and outright grants totaling $751, 930 to 357 Utah schools benefiting 144,000 students. Besides, CUs, said the League, "donate a much higher percentage of their assets" than banks "and do so voluntarily." Moreover, citing size inequity, the League noted banks hold $151 billion in assets, while CUs have under $9 billion

jrubenscut@aol.com

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Wescom Resources Group Releases Integrated CUDL Upgrade

PASADENA, Calif. - Wescom Resources Group (WRG) has released a new version of its Credit Union Direct Lending (CUDL) integration solution for client credit unions of the Wescom Credit Union technology CUSO. Called CUDL 2.0, the upgrade was developed to support CUDL's own recent upgrade to version 4.2 and will be installed at all the CUSO's CUDL clients by April, WRG officials say. The new version integrates with WRG's CUIntegrator solution to make it more functional, reliable and easier to install, the CUSO says. It also helps credit unions reduce funding time by minimizing loan processing steps and adds more robust search functions for such things as Social Security numbers and charge-off information. "Our staff members can open an account and fund the loan using fewer key strokes because the software does all the work behind the scenes. There's also less chance of error because of the increased automation," says Teri Thompson at Sierra Schools Credit Union in Reno, Nev., which plans to implement CUDL 2.0 next month.

mrapport@sc.rr.com

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Matz Raises CU Concerns and How They are Being Addressed

PALM SPRINGS, Calif.--During the Winter meeting of the America Associations of Credit Union Leagues, NCUA Board Member Debbie Matz laid out five areas of concern she had for credit unions and shared initiatives that the credit union leagues are implementing to handle the issues. "My concerns are all related issues which, taken together, can threaten the future of the credit union movement," Matz stated. "Slow membership growth could lead to the disappearance of small credit unions. Reputation risks, along with the disappearance of small credit unions, could lead to taxation. And taxation could lead to more conversions to mutual savings banks." Leagues should be encouraging credit unions to reach out to the unbanked, like the Pennsylvania Credit Union Association, which started a program to help credit unions providing check-cashing services for non-members. The leagues should also facilitate partnership to aid small credit unions and avoid their disappearance. Additionally, the leagues should be educating credit unions on the reputation risks they take with certain programs like indirect lending, among other things. However, overall, Matz said she was optimistic about the future of credit unions.

scooke@cutimes.com

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Mortgage Bankers Association Predicts "2005 Looks to be a Strong One"

WASHINGTON -- The Mortgage Bankers Association released its long-term economic forecast for 2005, 2006 and 2007 yesterday, and according to the association is forecasting strong economic growth for the three years. Among the MBA's projections it forecast residential mortgage production in 2005 will be slightly down from the second biggest year on record in 2004, but it would still tie with 2002 which was the third-biggest year ever. The MBA expects purchase loans to total $1.559 trillion this year, decline slightly in 2006 to $1.517 trillion, then edge up to $1.556 trillion in 2007. Residential refinance loans will total $983 billion in 2005, $689 billion in 2006, and $559 billion in 2007. The MBA also sees the job market getting stronger. In addition, said MBA Chief Economist Doug Duncan, "There will likely be a slight uptick in the inflation rate in 2005, which will support the Fed's continued march upward with the fed funds target as the Fed maintains focus on its number one objective of keeping inflation at bay."

ebarr@cutimes.com

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CCUL Hires Government Relations Veteran

RANCHO CUCAMONGA, Calif.--The California Credit Union League has hired Shari McHugh, a partner in the Sacramento-based government relations firm of McHugh & Associates, to support the league's advocacy efforts. "With more than 14 years' experience working with California legislators, regulators and other elected and appointed officials on a wide range of issues, Shari brings extra depth and scope to League advocacy as we take credit unions into a challenging political environment," League Senior Vice President of Government Affairs Bob Arnould commented. McHugh will assist League advocacy efforts on a contract basis. McHugh & Associates was established in December 2000.

scooke@cutimes.com

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Bluepoint Offers Free Webinar on Paperless Initiatives at CUs

VISTA, Calif. -- Document management firm Bluepoint Solutions is hosting a free document management Webinar Feb.10. The event will be co-hosted by Houston Postal Credit Union, and will be geared toward looking at successful paperless strategies for credit unions. "Plenty of credit unions launch paperless initiatives," said Steve Powell, EVP at Bluepoint and co-presenter of the session. "Unfortunately, many of them are less than a smashing success. This is an opportunity to learn from a credit union that truly got it right." ww.bluepointsolutions.com.

pgentile@cutimes.com

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Newly Sworn-In Treasurer to Keynote Feb. 9 NCUA Economic Summit

DES MOINES, Iowa--U.S. Treasurer Anna Escobedo Cabral will keynote the upcoming Access Across America Economic Empowerment Summit in Des Moines, Iowa. The Feb. 9 summit will concentrate on federal and private resources available to all credit unions to assist with outreach efforts. The program will address a wide variety of topics and top government speakers will provide useful information for credit union attendees, NCUA Chairman JoAnn Johnson said. Cabral oversees the U.S. Mint and acts as a spokesperson for the Treasury Department on a range of issues. She also advises the Treasury Secretary on matters relating to coinage, currency and the production of other instruments issued by the United States and is integrally involved in the president's economic agenda. "We are extremely pleased to have Treasurer Cabral to address this summit as one of her first appearances since being sworn in as the 42nd Treasurer of the United States," Johnson said. "Treasurer Cabral recognizes the role of the nation's credit unions in empowering Americans from all walks of life to achieve the American Dream of financial independence and economic empowerment." Cabral was sworn in as Treasurer Jan. 18.

scooke@cutimes.com

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American Heritage FCU President/CEO Teams up with PCUA VP to Promote Financial Literacy on Television

PHILADELPHIA -- American Heritage Federal Credit Union President/CEO Bruce Foulke and Pennsylvania Credit Union Association Vice President Michael Wishnow will soon be making their television debut here. The two taped a segment entitled "Managing Your Money" for the local television program Public Voices with Henry Veguilla on WYBE, an independent, public television station that broadcasts to the entire Greater Philadelphia region. Public Voices, an original WYBE program, gives viewers up-to-date breaking news and events information in the tri-state area. "Financial literacy and money management education are issues that are very important to us at American Heritage," said Foulke. "We feel it's part of our responsibility to educate both our members and the public about the significance of making wise financial decisions." The segment is scheduled to air at 7:30 p.m. on Friday, February 11

mdigiovanni@cutimes.com

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Johnson Highlights CU Capital Issues as Key Goal for 2005

LAKE BUENA VISTA, Fla.--Credit union capital issues topped NCUA Chairman JoAnn Johnson's list of priorities for 2005, she told attendees of NAFCU's CEO Conference today. Producing "significant, meaningful improvements relating to capital for all credit unions," was a highlight of Johnson's speech. "While we will build on last year's successes, we must keep a keen focus and not waver on producing results in modernizing regulations relating to capital standard for credit unions." Among the capital issues she wants addressed, Johnson said, was legislative change for a risk-based capital system for natural person credit unions. She also said she wants to propose a risk-based capital system for corporate credit unions, lower the RegFlex qualifying net worth ratio from 9% to 7%, and permit well-managed low income credit unions to have the option to release the portion of secondary capital accounts that no longer count toward net worth. In addition, Johnson said she wanted to continue improving agency efficiency; enhance federal credit union's safety and soundness, as well as that of the insurance fund; and support regulatory improvements on Capitol Hill, among other items.

scooke@cutimes.com

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Proper Expertise Critical to MBL Program Success, Lending Experts Reiterate

EAU CLAIRE, Wis. - Beyond the basics of business services, best practices, market segmentation and targeting within the MBL arena, having the "proper expertise" to carry out a successful program is critical. These were the views of two lending experts at a recent lending session --Larry Middleman, president/CEO of CU Business Group and Larry Accola, senior vice president of business services at $631 million Royal CU. CU Business Group provides business lending, deposit and consulting services to 109 CUs in 23 states. Middleman highlighted several key success factors based on his view of CU best practices including a connection to the business community, executive involvement in business development, and ready access to a loan participation network. Accola's presentation highlighted Royal's 22-year history in business lending and its $190 million business loan portfolio. "I enjoy talking with credit unions to give them the benefit of our experiences and help them out," Accola said. Credit unions attending had varying levels of experience from just researching the best way to get started to those with 20 years of experience. Everyone agreed that having the proper expertise readily available is the most important factor in a successful program, both experts noted.

msamaad@cutimes.com

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Bank of America Discontinues Foreign Exchange Fee, Transfer Fee for Cash Transfers to Mexico

CHARLOTTE, N.C. -- Bank of America is eliminating its $10 remittance fees and 3% foreign exchange fees on money transfers to Mexico from branches in Chicago, effective immediately, through its SafeSend service it introduced in 2002. The bank said it intends to roll out the free service nationwide by the end of the year. However effective immediately, Bank of America is eliminating its foreign exchange fee and reducing its transfer fee from $10 to $8 for transfers of up to $1,500 from Houston and the rest of the country. BofA said it has relationships with 44% of Hispanic households in its nationwide territory. In 2004, the bank opened more than 1 million checking accounts for Hispanic customers.

ebarr@cutimes.com

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Some Credit Unions add small business services

2005-01-31T16:53:00.000-08:00

Frisco company says its business banking software can help
As credit unions have sought a wider audience, the prospect of servicing businesses has become an obvious target.

But writing business loans and managing business transactions takes a different set of skills and people than the traditional consumer services credit unions provide.

That's kept business work down. Nationally, only about three in 20 credit unions carry some sort of business loan.

Frisco-based IntegraSys, a company that sells technology services to credit unions, believes it has found a way to add to that ratio.

Starting in February, some of its credit union clients plan to roll out business banking on something of a virtual basis.

The timing looks good. With its Virtual Branch Business Services product still in beta-testing, IntegraSys has signed up about 75 institutions.

"We've often felt credit unions are passing up on a great thing," said Marshal Kipp, IntegraSys product manager. "Even within their membership, they probably have a number of small business owners."

That varies from institution to institution.

For example, a study by the industry's Credit Union National Association found that a full 30% of the firefighters served by a Houston credit union have their own businesses.

Nationally, about 10% of credit union members have their own businesses, according to financial research firm Tower Group Inc.

Aggressive credit unions
And as credit unions shift from industry-based member groups to geography-based memberships, the small business market grows more attractive, said Kevin Lytle, vice president of executive development for the Credit Union National Association.

So-called "community charters" represent a small percentage of all credit unions -- about 1,500 of 10,000 nationally. But community credit unions tend to be more aggressive in reaching out to new members and new lines of business.

At least three Metroplex institutions have signed on with IntegraSys: Arlington Federal Credit Union, Dallas-based Credit Union of Texas and Share Plus Federal Bank, which was a credit union until last fall.

IntegraSys is a unit of Fiserv Inc., a financial services conglomerate based in Brookfield, Wis. Fiserv acquired Integrasys from Electronic Data Services in July 2003.

Share Plus was attracted to Virtual Branch because it could add services easily, said Chief Executive Craig Barnes.

"We don't have to gear up and put a whole department in," he said.

On the lending side, IntegraSys is working with financing operation CDS Cos. of Lynbrook, N.Y.

Under the system, IntegraSys customers can make loans on behalf of CDS without putting their own assets in the deal.

"It doesn't put liability on the credit union or bank," Barnes said.

CDS, the operation taking that risk, has a 30-year track record in small business lending. The privately held specialty lender handled more than $300 million in loans last year and a bad loan rate of less than 1%.

It views the credit unions as conduits to reach even more small businesses. CDS will either underwrite the full loan or service the loan for a credit union or bank.

With IntegraSys' system and CDS behind it, credit unions get some deep lending resources, said CDS CEO Leonard Leff.

For Credit Union of Texas, IntegraSys is offering a low-risk way of trying out business banking.

"This is a unique way for us to dabble and dip our toe into the water," said John Sutton, operations vice president there.

His credit union wasn't particularly looking to get into that line until it saw what IntegraSys was offering.

Share Plus is interested in attracting more deposits, and businesses can be a good source for that. The savings bank has 80 small businesses on its book already. Those are likely first customers for the services it's adding via IntegraSys. Share Plus is one of the first operations trained on the Virtual Branch system. It plans to start pushing business services in a month or two.

As they look into business lending, credit unions will face a learning curve, Kipp said.

"Some of this is new to them, but the language is familiar," he said.

Business lending comes down to individual decisions, whereas car loans and home mortgages are judged against regimented standards, notes CUNA's Lytle.

Credit unions ought to look carefully before leaping on the business bandwagon.

"It has to reflect what your members need," Lytle said.

bizjournals.com
Chad Eric Watt
Staff Writer

Dayton credit unions offer new version of payday loans

2005-01-17T09:48:00.000-08:00

From the January 17, 2005 print edition

Brian Womack
For Business First
Dorothy Johnson's grandson, Lamar Keitt, got into a vehicle accident last spring that left him with a broken hip, punctured lungs and a concussion.

He also had brain injuries so serious that he needed to go to an Austin, Texas center to undergo intensive medical help, but the family didn't have the cash.

To come up with the money, Johnson, a 66-year-old retiree, sold pork chop lunches at local factories, but she had to get a loan as well. She could have landed some quick cash at a payday loan business, but instead turned to Day Air Credit Union for a $250 loan with no credit check and no collateral.

She got the loan - and took her grandson to Texas.

Johnson is a customer of a relatively new program offered by Day Air and two other credit unions that give lower-income people an alternative to payday loan businesses that charge interest rates some customers can't afford. The program started a few years ago, but the credit unions have only recently found a formula that keeps the program in the black.

So they are looking to start marketing the program to attract more users and expand to other local credit unions in the coming year.

"As a nonprofit, we get favorable tax treatment," said Doug Fecher, president and chief executive officer at Fairborn-based Wright-Patt Credit Union, which along with Day Air, piloted the program. "We have to give something back to the community."

Day Air Credit Union in Kettering started the effort - called the Salary Advance Loan program - soon after Wright-Patt, and it is breaking even. Another credit union, Code Credit Union in Dayton, joined the program this past summer.

With the growing momentum behind the program, Fecher would like to see six to 10 more credit unions start offering it in the next year - and the number of users double or triple.

Here's how the program works: Credit union members get up to a $250 loan and have a month to pay it off. The limit can rise to $500 if the user does well with repayments. The interest rate on the program is annualized at 18 percent, which costs about $3 in one month's time. In addition, there is a fee of $35 to use the program for one year.

Although these costs may seem somewhat steep, they're not nearly as high as they are for many payday loans.

Traditionally, payday loans cost about $15 for each $100 borrowed, and are usually due in two weeks, said Bill Burke, president and chief executive officer of Day Air. Those fees stack up fast with multiple loans and become too much for some consumers, he said.

"We felt they were paying an exorbitant fee, and we felt that there had to be some way to provide those services at a lesser cost," Burke said.

Steven Schlein, spokesman for Community Financial Services Association, an Alexandria, Va.-based association for payday loan companies, said the fees payday loan companies charge are "very reasonable" and that companies in his industry don't let consumers get more than four loans at one time.

He said payday loan businesses are serving a market niche, and he's not frightened by the new service from the credit unions.

"Where have they been the last 10 years while we've been in business?" Schlein said. "We welcome competition; the consumer will decide what benefits them."

The new program got under way when University of Dayton management lecturer Victor Forlani and Dayton City Commissioner Dean Lovelace convened a meeting with credit unions about the growing number of payday loans among some of the city's more vulnerable consumers.

"When they approached us with this whole concept, I wanted to do anything that I could to help," Burke said.

But the credit unions wanted to be careful, too. Short-term loans like these are difficult because the failure rate can be so high. In addition, the inherent costs of processing a loan can drive away lenders.

Because there were so many questions surrounding the program, the credit unions didn't even unveil the program to all their members, but instead depended on word-of-mouth marketing and revealing it to people who might need it.

But now credit unions are letting members and the rest of the public know about the program.

Jill Bissinger, vice president of marketing at Day Air, said she's preparing to market the service with press releases, signs in the store and information in Day Air newsletters.

"We want to let the community know about it," Bissinger said.

Brian Womack is a senior reporter at the Dayton Business Journal, an affiliated newspaper.

Increasing market share is prompting Central Ohio's credit unions to add new locations

2005-01-17T09:36:00.000-08:00

Business First of Columbus
From the January 17, 2005 print edition
By: Lisa Hooker

For Business First
For some time, financial futurists have predicted the demise of the branch office, declaring it would be replaced by electronic banking.

And while branches are most commonly associated with traditional banking institutions, credit unions are adding branches because their membership ranks are swelling.

"As any organization grows - and credit unions are growing - they need a physical presence,"says Dave Fearing, chief operating officer of the Ohio Credit Union League Services Corp. of Dublin "That's why we're seeing an expanding credit union branch network."

Federal Deposit Insurance Corp. statistics that show for the 12 months ended June 2004, the number of financial institutions in the United States dropped by 194, but the number of depository offices increased by 1,594.

Fearing says many credit unions started with a single membership base. But over the years, credit unions have moved to geographical expansion.

"As they do that, it's no longer good enough to be in a single company on the plant floor," Fearing says. "As they expand into the community, expand membership and the companies they serve, credit unions need to have increased visibility and customer access. Branches do that for them."

Sharon Custer, president and CEO of BMI Federal Credit Union in Columbus, said financial institutions having branches is a concept that's here to stay.

"Those same folks who said there'd be no branches are probably the same folks who said we'd have cashless society by now," she says.

"What customers do on the Internet banking platform is largely transactional," Custer says. "They pay bills and transfer money. Relationships are built at the branch level."

It's Custer's belief that customers want to see a human being at a branch office to handle procedures such as loan applications or the opening of accounts.

Branching out
BMI Federal operates nine offices. Five locations are open to all of its members and four are housed within companies.

Its newest office is in the Great Southern Shopping Center on South High Street.

The credit union in 2003 merged with Southside Community Credit Union which had a small office near the intersection of Lockbourne and Williams roads.

Custer says she noticed a "huge gap" in credit union services for people in Central Ohio who lived south of Interstate 70.

"So we started looking for a better location," she says. "We opened at Great Southern in September (2004) after renovating the site."

CME Federal Credit Union operates branch locations in downtown Columbus, Westerville and Pickerington.

Jim Riederer, president and chief executive of CME, said the credit union opened two branches in October, 2002, relocated another and built a new facility in Pickerington.

CME also has a Hilliard branch on the drawing board for 2005, with ground expected to be broken this spring. That office will debut dialogue banking, a branch concept new to Central Ohio credit unions.

Dialogue banking will allow CME to remove the teller line, says Suzanne McCann, the credit union's vice president of sales and marketing.

"Instead, it's replaced with a multi-functional tower that puts our tellers side-by-side with the customer," she says.

McCann says the concept is "similar to a kiosk at a mall.Two tellers share a kiosk and a divider provides privacy."

So, the transaction that's a necessity now becomes a sales opportunity.

McCann says by removing the physical barrier of the teller counter, the credit union can increase personal interactions and deepen relationships by spotting additional financial needs.

A separate self-service kiosk lets members make deposits, withdraw cash, apply for a loan or open a certificate of deposit.

Sharing branches
Though Central Ohio's credit unions are expanding, opening a branch isn't an insignificant undertaking.

"It's a huge financial commitment for a credit union, as opposed to, say a Bank One or Huntington, who can afford to put up branches more frequently," Fearing says. "To level the playing field, credit unions have developed a shared branch network."

Called the National Shared Branch Network, it's a way for credit unions to share and settle transactions electronically.

"Because of our size, we're often locationally challenged," Custer says.

But if a credit union participates in the shared branch network, Custer says "their members can go into another participating credit union's lobby and conduct their business just like they were at their home credit union."

BMI is among the participating 1,600 credit unions nationwide that offer shared branching, while CME is considering joining in 2005.

"Credit unions recognize there's plenty of market share for all of us," Riederer says. "We have a lot more customers who can enroll as members before we're fiercely competing with each other. That's one reason why the shared branch concept works so well."

CU-to-mutual conversion rule takes effect soon

2005-01-14T07:26:00.000-08:00

ALEXANDRIA, Va. (1/14/05)--The National Credit Union Administration (NCUA) Board adopted a final rule amending its regulation regarding the conversion of insured credit unions to mutual savings banks.

NCUA Board Chairman JoAnn Johnson questions NCUA staff attorney Frank Kressman about the conversion disclosure rule (photo provided by CUNA)

Effective immediately, the rule will require:

A converting credit union to provide its members with additional disclosures about the conversion before conducting a member vote, which must address:

Ownership and control of the credit union;

Operating expenses and their effect on rates and services;

The effect of a subsequent conversion to a stock institution; and

The costs of conversion.

This information will have to be placed in a prominent place with each written communication that a credit union sends to its members regarding the conversion, and credit unions must take specific steps to ensure that the disclosure is conspicuous to the member. These disclosures may be modified upon approval by the NCUA Regional Director and, in the case of a state-chartered credit union, the appropriate state supervisory authority.

The membership vote on conversion must be by secret ballot and be conducted by an independent entity. NCUA has also included guidelines for conducting a fair vote.

A federally insured state credit union must provide NCUA with information about how the laws of the state where it is chartered relates to NCUA's conversion rule.

The final rule will be effective immediately upon publication in the Federal Register. Chairman JoAnn Johnson stated the board felt it was important to get this consumer protection regulation in place immediately to protect members as well as to provide certainty to credit unions considering conversion as to what procedures to follow in the conversion process. She stated that the aim of this rule is to provide members with access to clear, concise, accurate and meaningful information so that they can be fully informed when they vote on the conversion.

"Requiring additional disclosures to members in a set format prior to conducting the vote on conversion will go a long way to ensuring that crucial information is not lost in the large volume of information that members receive concerning the conversion," Johnson said.

Board Member Debbie Matz pointed out that NCUA has gained a great deal of knowledge concerning conversions since the passage of the Credit Union Membership Access Act of 1998; this final rule is a result of observations of the actual experiences of credit unions.

News Briefs-CU Times

2005-01-13T09:56:00.000-08:00

NAFCU Announces 2004 White Hat Award Winner

ARLINGTON, Va.--Members 1st Federal Credit Union in Mechanicsburg, Pa. was named NAFCU's White Hat Award winner for the second year in a row. The honor goes to the NAFCU member that raises the most money for NAFCU/PAC, the trade group's political fundraising arm. Members 1st raised $45,000 for the PAC in 2004, a record for the White Hat Award. Members 1st set the previous record at around $27,000 in 2003. According to George Nahodil, Members 1st senior vice president of marketing, the credit union aims to win the award again next year and hopes to serve as an example for other credit unions. "We think it's important for credit unions to support the PACs to support the credit union movement," he said. Members 1st raised the funds through cookouts, a golf outing, raffles, selling NAFCU/PAC Pals, and other means. The symbolic White Hat will be awarded at NAFCU's Annual Conferences in Las Vegas this summer.

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Members Choice CU President Appointed to Texas CU Commission

AUSTIN, Texas -- Barbara Sheffield, president/CEO of Members Choice CU, Houston, was appointed to the Texas Credit Union Commission by Gov. Rick Perry. The Commission supervises the Texas Credit Union Department. The department's functions include the supervision and regulation of all credit unions organized and chartered under the law of the State of Texas. The nine-member commission includes five public and four credit union industry members. No bank, savings bank or savings & loan representatives are allowed to serve on the Commission. Sheffield currently serves as sub-committee chair of the Texas Credit Union League Legislative and Regulatory Advisory Committee. She is also on the board of the Texas Credit Union Foundation.

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Certified FCU Among Latest to Launch MBL Program

COMMERCE, Calif. - Certified Federal Credit Union has signed on with J.R. Bruno & Associates to kick start its member business lending program. The $42 million credit union serves mostly members of California's grocery industry and the community of Commerce here. Those groups are among the target groups for Certified FCU's business lending program, said Jeffrey Weinstein, president/CEO. "While we strongly believe that member business lending should be in every credit union's future strategies we also understand the complexity and dangers that accompany such products," Weinstein said. Small business owners in the grocery business have been particularly hard hit by the consolidation among banks, and the reduction of available business capital, Weinstein said. "When a progressive member of the local financial community like Certified Federal Credit Union reaches out to provide options, everyone benefits," Weinstein said. J.R. Bruno & Associates, a Glendora, Calif.-based business lending consultation firm to credit unions, will also help Certified FCU with the process to become an SBA lender. Formed in 1949, the credit union serves 12,000 members.

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Northwest Corporate Moves to Federal Charter

PORTLAND, Ore. -- Northwest Corporate has moved to a federal charter effective Dec. 31, 2004. "As we have grown through the years to a regional corporate and providing services nationally through our business partnership with other corporate credit unions, we felt it was best to become federally chartered to reflect this strategy," said President/CEO Kathy Garner. As part of the move, Northwest Corporate is changing its name to Northwest Corporate FCU. There are now 13 federally-chartered corporates, and 16 state chartered.

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LAFCU in Michigan Hires Frucci of Omni as CEO

LANSING, Mich. -- Robin Frucci, former president and CEO of Omni Family CU in Battle Creek, took over Monday as CEO of the $440 million Lansing Automakers FCU. Frucci had resigned from Omni Family in December. As CEO, he replaces Richard Gifford, who retired from LAFCU in May. Serving as acting CEOs until a successor is named at $132 million Omni Family are Al DeMars, chief financial officer, and Daniel Gatfield, operations officer.

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Fourth Meeting of Financial Literacy and Education Commission Slated for Tomorrow

WASHINGTON--The Financial Literacy and Education Commission, on which NCUA Chairman JoAnn Johnson sits, will hold its fourth meeting tomorrow. Outgoing Treasury Assistant Secretary for Financial Institutions Wayne Abernathy will open the meeting, which will be addressed by U.S. Mint Director Henrietta Holsman Fore, Congresswoman Judy Biggert (R-Ill.), and Deputy Assistant Secretary for Financial Education Dan Iannicola, Jr. The FLEC will also hear from other guest speakers on best practices for financial education. The commission was established under the Fair and Accurate Credit Transactions Act and includes representatives from 20 different federal departments, agencies, and commissions. The goal of the commission is to improve financial education across the country.

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CNBS Adds Three New CU Owners

OVERLAND PARK, Kansas -- Credit union broker dealer CNBS has announced that it has raised over $2 million in its latest ownership offering. The offering closed on Dec. 31. Three new credit unions came on as owners -- People's Community FCU (Washington), Georgia Federal CU, and IH Mississippi Valley CU. In addition, Louisiana Corporate and Arizona FCU increased their ownership stake in CNBS. It now has eight corporate CU owners and eight natural person CU owners. Hague said the new influx of capital will help CNBS be more aggressive in the inter-dealer market. CNBS' first offering, about a year ago, was predominantly done to give its corporate CU owners a chance to tender their ownership. Once U.S. Central and CNBS put an end to their non-compete agreement, it opened the doors for U.S. Central to offer broker dealer services through CUs via corporates, and CNBS to offer broker dealer services to corporates. At that time CNBS was completely owned by corporate credit unions, thus presenting a conflict of interest for those CNBS corporate CU owners that chose to offer their members broker dealer services via U.S.Central or for those corporate owners starting their own broker dealer CUSOs. During that offering, 10 corporates tendered their ownership.

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CU Business Group Marks Milestone with 100th Credit Union Client

PORTLAND, Ore. - On the heels of a 2004 milestone that saw more than $200 million in loan packages, CU Business Group recently celebrated another one when it signed on its 100th credit union. The corporate credit union-owned CUSO provides business lending, deposit and consulting services to 109 credit unions in 23 states. It just signed its latest partnership with $1.1 billion Redwood Credit Union of Santa Rosa, Calif. "One hundred credit unions is a significant milestone for us," said Larry Middleman, CU Business Group's president/CEO. "We started the CUSO just over two years ago with three employees, three laptops, and a zeal to assist credit unions with their members' business needs. To reach this level of credit union partnerships in such a short time has far exceeded our expectations." CU Business Group reached another milestone in late 2004 when it went over the $200 million mark in loan packages received. About half of these loans are commercial real estate, which tend to be larger dollars, according Middleman. The other half are classic small business loans such as lines of credit for working capital and term loans for equipment. Middleman said the CUSO has signed on 12 credit unions over the last three weeks.

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PULSE Members Approve the Discover Merger

RIVERWOODS, Illinois and HOUSTON - The 4,100 member financial institutions in the PULSE EFT Association, about 1,000 of which are credit unions, have approved overwhelmingly the proposition that they will become the first financial institution partners with Discover Financial Services. Cindy Ballard, executive vice president with PULSE could not say what the exact vote was in favor of the merger, but said it had been "overwhelming." The members could vote by mail or in special meeting in Houston on January 11. Most voted by mail and Ballard could not say how many members actually attended the meeting. "The approval of this agreement by PULSE's members demonstrates that financial institutions recognize the strong benefits of combining the PULSE and Discover networks to establish a new choice for electronic payment products and services," said Stan Paur, PULSE CEO. "Our combined entity will be able to provide financial institutions of every size and type with a full-service debit platform and a comprehensive set of products, including credit, signature debit, PIN debit, gift card, stored value card and ATM services."

Missouri charters first new CU in seven years

2005-01-12T08:55:00.000-08:00

(CUNA News)
KANSAS CITY (1/12/05)--Missouri's Division of Credit Unions approved the charter of Missouri Farmers Union CU in December--the first new credit union chartered in the state in seven years.

Steve Burdic, president of the Jefferson City-based credit union, said he expects to have deposit insurance approved from the National Credit Union Administration sometime this month (Kansas City Star Jan. 11).

He said the credit union is looking forward to providing farm operating loans as well as consumer loans to its members.

Missouri Farmers Union filed a business plan with the Missouri Department of Economic Development's Division of Credit Unions in June 2004.

According to its website, "The MFUCU's goal is to build an organization that has the potential to take back our economy from the banks and large corporations and return it to the control of household economies in our neighborhoods across the entire state," said Tony Barnicle, credit union project coordinator.

Bush fills panel to study national tax overhaul

2005-01-10T16:42:00.000-08:00

WASHINGTON (1/10/05)--President George W. Bush Friday appointed nine members of his President's Advisory Panel on Federal Tax Reform to study and make recommendations about the reforming the U.S. tax code.

The White House said in a statement "the bipartisan panel will advise the Secretary of the Treasury on options to reform the tax code to make it simpler, fairer, and more pro-growth."

The President intends to appoint to the panel:

Connie Mack III (chairman), senior advisor, Shaw Pittman LLP and former U.S. Senator. Sen. Mack served as chairman of the Joint Economic Committee and was a member of the Finance and Banking committees.

John Breaux (vice-chairman), former U.S. Senator. Sen. Breaux served on the Finance Committee and the sub-committee on Taxation and IRS Oversight.

William Eldridge Frenzel, former Member of the U.S. House of Representatives. Frenzel served on the Budget Committee and the Ways and Means Committee. He is a Guest Scholar at the Brookings Institution.

Elizabeth Garrett, Professor of Law, University of Southern California. Garrett served as Legislative Director and Tax and Budget Counsel to former U.S. Sen. David L. Boren.

Edward P. Lazear, senior fellow, Hoover Institution and Professor of Human Resources, Management and Economics, Stanford University's Graduate School of Business. Lazear is the founding editor of the Journal of Labor Economics.

Timothy J. Muris, Foundation Professor, George Mason School of Law and Of Counsel, O'Melveny & Myers LLP. Muris served as chairman of the Federal Trade Commission from 2001 to 2004.

James Michael Poterba, Department of Economics, Massachusetts Institute of Technology. Poterba serves as Associate Department Head. He has taught at MIT since 1982.

Charles O. Rossotti, Senior Advisor, The Carlyle Group. Rossotti served from 1997 to 2002 as Commissioner of Internal Revenue. He formerly served as the President, Chief Executive Officer and Chairman of the Board of American Management Systems.

Liz Ann Sonders, Chief Investment Strategist, Charles Schwab. Sonders joined U.S. Trust, a division of Charles Schwab, in 1999 as a Managing Director and member of its Investment Policy Committees.

According to the Washington Post (Jan. 7), Treasury Secretary John Snow said "everything's on the table," including possibly the popular home mortgage and charitable deductions. It also reported that a national sales tax or flat tax also could be in the cards.

The Credit Union National Association (CUNA) continues to follow developments related to tax reform, according to CUNA President/CEO Dan Mica

"From the roster of names released by the White House today, it is clear that President Bush has succeeded in putting together a truly ‘blue-ribbon' commission to look at the essential issues related to tax policy," said Mica. "We look forward to working with the commission as it gets about to its duties over the next seven months."

President Bush sent a letter last May to CUNA's Mica outlining his support for the credit union tax exemption, particularly because of credit unions' structure as "service-oriented, member-owned financial cooperatives.

(CUNA News)

Oregon CUs step up as public funds depositories

2005-01-07T11:49:00.000-08:00

BEAVERTON, Ore. (1/7/05)–A law that went into effect Jan. 1 last year allows Oregon public funds managers to deposit funds into credit unions, and several credit unions have taken steps to be an approved depository.

Credit unions must meet statutory requirements and be approved for such deposits, however, says the Oregon Credit Union Association (Oregon Outlook January 2005).

First, the finance division of the Oregon State Treasury has to approve a credit union for it to accept public funds deposits from police and fire districts, public schools, water districts and public power entities.

Both credit union employees and public funds managers should know if they have such approval.

The treasurer's office also is examining which institutions are holding funds and if they have approved status. If a non-approved institution does have such funds, the department will work with it to complete statutory requirements.

Also, Oregon credit unions are limited to $100,000 for deposits, so credit union staff must keep track of public funds deposits and make certain they do not exceed that amount.

(CUNA News)

Concise Updates

2005-01-04T08:59:00.000-08:00

Credit Union Times Reported..

St. Joseph's CU, NAMA Tsunami Fundraising Efforts Grow
WESTBROOKE, Maine -- A St. Joseph's Credit Union and Northwest Atlantic Marine Alliance (NAMA) team effort to help raise money for fishermen and their families impacted by the Tsunami has grown into a statewide campaign coordinated by the Maine Credit Union League. Through the month-long "People Helping People Catch Relief" campaign NAMA and credit unions across the state will raise funds for Tsunami victims in several countries. In addition, part of the funds collected will benefit the more than 13,000 credit unions and four million credit union members affected in that region. Committed to the fishing community and part of a network of people with connections to Sri Lanka and other heavily damaged areas, St. Joseph's CU Board Director/NAMA Coordinating Director Craig Pendleton sparked the initial fundraising efforts into motion. As administrator for the entire relief effort, St. Joseph's CU will absorb all of the International Wire Transfer costs to distribute the funds, representing a savings of $25 -$60 per wire. All funds collected will be sent to the World Forum of Fisher People which is headquartered in Sri Lanka, one of the areas hardest hit by the Tsunami, and the Sri Lanka Centre for Development Facilitation, an organization that has created a network of credit unions that have lead to the enhanced position of women in Sri Lanka.

m.digiovanni

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NCUA Allows CUSOs to Offer a Crop of Small Business Services

ALEXANDRIA, Va. - NCUA recently reminded credit unions that a number of services can be offered from CUSOs that serve small businesses. In a Dec. 21 opinion letter, NCUA Associate General Counsel Sheila Albin responded to Corning Federal Credit Union's request on the matter. The CU's CUSO intends on serving new and existing businesses. Albin wrote that NCUA's CUSO rule 12 C.F.R. S712.5 allows such services as income tax preparation, estate planning, retirement counseling and accounting services. Corning sought permission to engage in other services not specifically listed as examples of permissible activities in the rule such as providing expert testimony in tax deficiency hearings; counseling on the financial and tax implications of leasing and buying capital assets; counseling on property and casualty insurance needs; and assessments regarding business assets and the value of a business. Albin wrote that in 1982 NCUA specifically identified "family financial services" as preapproved activities for CUSOs, which includes those listed in the rule and personnel benefit plan administration. The rule was changed with a replacement of "family financial services" years ago with a "financial counseling services" category. NCUA also added business loan origination to the list of preapproved CUSO activities.

m.samaad

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USA FCU Converts to State Charter, Cites Michigan's Progressive CU Act

AUBURN HILLS, Mich. -- At a time when state-chartered credit unions in some states are converting to federal charters because of their restrictive state charters, USA FCU applied for and was approved to convert to a state charter because of the greater flexibility of Michigan's newly updated Credit Union Act. Eighty-six percent of the voting members of USA FCU approved the switch to a state charter. The credit union, one of the largest in Michigan, is now called USA Credit Union. The credit union has approximately $577 million in assets and almost 66,000 members. According to the Michigan Office of Financial and Insurance Services, the former USA FCU indicated in its application that the charter conversion will result in an increased ability to strengthen the credit union through expanded membership growth opportunities and the opportunity to offer new products and services because of state-chartered CUs' expansive incidental powers.

ebarr@cutimes.com

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Wells Fargo Now Among Top Mutual Fund Companies

SAN FRANCISCO - Wells Fargo & Co., the nation's largest bank, is now one of the nation's 20 largest mutual fund company thanks in large part to a $29 billion asset acquisition. The $656 billion bank recently acquired $29 billion in assets under management from Strong Financial Corp., which included $24 billion in mutual fund assets and $5 billion in institutional investment accounts. The acquired asset management businesses offer mutual funds to individual investors and accounts for institutional clients including approximately 775,000 active accounts and 370,000 households. The Strong Funds included in the acquisition will be reorganized into the Wells Fargo Funds family in the second quarter of 2005 and will feature 120 mutual funds. The acquisition also includes the assets of Strong's Retirement Plan Services business, which are becoming part of Wells Fargo's Institutional Trust Services group. The state of Wisconsin has also appointed Wells Fargo to administer the EdVest and Tomorrow's Scholar college savings programs. With the completion of the acquisition, the company's total assets under management and administration are approximately $656 billion, including $100 billion in mutual fund assets under management.

m.samaad

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Congressman Matsui, a Friend to CUs, Dies New Year's Day
WASHINGTON--Credit unions will have to start the new legislative session with the loss of a strong supporter. Congressman Robert Matsui (D-Calif.) died January 1, 2005 at Bethesda Naval Hospital. He was 63. Matsui had been fighting a rare stem cell disorder in recent months. He entered the hospital Dec. 24 with pneumonia, a complication of his illness. CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn noted that Matsui was an early cosponsor to H.R. 1151 and more recently signed on in support of the Credit Union Regulatory Improvements Act. He had also supported credit unions' tax exemption. The congressman is survived by his wife, Doris; son, Brian; and granddaughter, Anna.

s.cooke

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Michigan Business Connection Taps Bankers Systems for Automated Lending

ANN ARBOR, Mich. - Michigan Business Connection has aligned with Bankers Systems, Inc.'s Rembrandt Lending System to help the CUSO establish effective and compliant business lending documentation. MBC, which became a legal entity in March 2004 and began serving members in August, has amassed more than $3 million in business loans, according to William Beardsley, president/chief lending officer of the CUSO. Beardsley said one of the main reasons MBC chose Bankers Systems' Rembrandt was because "the technology behind the solution is fast, reliable, and helps us perform documentation more accurately." In addition, the lending system also allows the CUSO to "automatically selects the documents (needed) for each transaction, eliminating any guesswork on our part," and the ability to interface with Baker Hill's OnePoint, MBC's credit relationship management solution MBC was founded by five Michigan CUs: MidWest Financial CU; State Employees CU, Lansing; Detroit Edison CU; Macomb Schools and Government CU; and Christian Financial CU, Roseville.

m.samaad

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Curlee, 25-Plus Year Attorney for Credit Unions, Dies New Year's Eve

IRMO, S.C. -- Thomas Curlee Jr., a former attorney for the South Carolina League, its member credit unions, and other credit unions nationwide for more than 25 years, passed away Dec. 31 following a two-year battle with leukemia. He was 61. Curlee is survived by his wife, their two daughters, his parents, a sister and two brothers and two grandsons. A memorial service is being held today.

e.barr

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$1.4 Billion CU in Texas Plans to Convert
DALLAS - The $1.4 billion Community Credit Union headquartered here has become the latest credit union in the country to declare its intention to change to a mutual savings bank charter. According to the credit union CEO Gary Base, the credit union has applied to NCUA, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the Texas Credit Union Department to make the change. Under Texas law, a state chartered credit union which seeks to change its charter that of a mutual bank must obtain the agreement of a majority of members attending a meeting called to vote on the proposed change and must obtain the permission of the state or federal regulator which will regulate the institution.

d.morrison

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Converting CEO Chairs Texas CU Commission

DALLAS - Gary Base, CEO of the $1.4 billion Community Credit Union which has announced its intention to convert to a mutual savings bank, is the chairman of the Texas Credit Union Commission, a body of nine industry and public representatives charged with reviewing the state's credit union laws and regulations and advising the state's credit union regulator. Base is scheduled to serve on the Commission until mid-February in 2005. There are two other members of the Commission who are connected to the industry as board members or CEOs. Despite his institution's seeking to change its charter, Base said he remains "very pro-credit union" and that he has no plans to resign from the position until the charter actually changes. Gary Janacek, CEO of the $24 million Scott and White Employees Credit Union, a $25 million sole-sponsor credit union headquartered in Temple, Texas, the other CEO on the Commission, said the CU's move did not necessarily indicate Base should resign. "It's not a done deal yet," Janacek said, "the membership still has to vote and Chairman Base has served very well."

d.morrison

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Credit Unions Doing Their Part for Tsunami Victims

WEST PALM BEACH, Fla. -- Credit unions are stepping up to help tsunami victims. Many credit unions, such as Lake Michigan CU and Security Service FCU, have already established accounts to accept donations for victims. In some cases members have set up their own accounts to help victims. Some credit union help is very pin pointed. For example in Boseman, Montana an account has been started at Rocky Mountain Credit Union to help survivors in Baan Talae Nork,a tiny village on the Thailand island of Phuket. Another account has been established at Portland, Oregon-based PACE Credit Union to help airlift a local surgeon home from West Thailand after her leg and hand were crushed during the tsunami. Wescom CU's employee-run charity, the WeCare Foundation, was on hand to man some eight stations during the Rose Bowl to help raise funds for victims. According to the American Red Cross, the Pasadena Tournament of Roses Association's decision to allow donation areas is unprecedented in the history of the Rose Bowl. Navy Federal Credit Union will post links on its Web site (www.navyfcu.com) to six organizations identified by the Wall Street Journal as those that will directly reach victims in affected areas. According to Navy FCU Spokesperson Loren Carson, not only will the links help protect members from being duped by fake charities but also gives members control over how their donations are distributed.

m.digiovanni

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November CU Numbers No Surprise

WASHINGTON--Credit union loan and share growth performed basically as expected through November. "Loan growth kind of muddled along but was half way decent in November," CUNA Economist Bill Hampel explained. According to CUNA's Monthly Credit Union Estimates, loans were up 0.6% in November. On the other hand, savings drooped 0.3% for the month. "So we're running on target for loan growth to be the strongest since 2000 and actually savings growth is going to be even weaker than it was in 2000," Hampel said. The loan-to-share ratio increased from 74% in October to 75% in November, the data showed. However, most credit unions should be concerned when that number reaches around 85%, Hampel advised.

s.cooke
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San Diego County CU Extends Consulting Deal with eCU Technologies

HARRISBURG, Pa. - eCU Technologies, the technology CUSO for Pennsylvania State Employees Credit Union, will be providing consulting services for $2.5 billion San Diego County Credit Union for an additional six months. eCU has been helping San Diego County develop make better use of the CU's Symitar Episys core processing system since November. That contract has been extended through June. "We believe eCU's help will increase our productivity and reduce our time-to-market with programming requests. Their assistance will be, and has been, very valuable with scoping-out projects that benefit both our staff and members," says Heather Moshier, executive vice president of IT at 156,000-member San Diego County. An analyst and a programmer from the CUSO will continue helping the credit union develop its use of Symitar's PowerOn modules, formerly known as report generators, the CUSO says. "This is a big project for us," says Alan Brunner, COO for eCU Technologies. "We feel our programming expertise and Symitar knowledge will help streamline the credit union's in-house operation procedures and improve their project forecasting, ultimately, satisfying their end-users."

m.rapport

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Georgia Banks Aims to Halt CU Biz Lending Expansion in 2005

ATLANTA - The Georgia Bankers Association recently said it doesn't plan to let up on its opposition to expanding business lending powers for credit unions. In March 2004, the GBA joined other states in backing a House of Representatives proposal to re-examine the tax exemption for CUs, the Atlanta Business Chronicle reported in a Dec. 31 article. The GBA has also said it will continue to oppose the expansion of CUs' member business lending authority, as it did in 2004. The GBA admits that even though total assets of the Georgia's CUs are lower than those of commercial banks here, some are considerably larger than some community banks, GBA Director of Government Relations Elizabeth Chandler told the publication. Deposits at CUs here have grown nearly 45% to roughly $10.6 billion from $7.3 billion since 1999, according to the Georgia CU Affiliates (GCUA). Still, the growth is relatively small compared to banks: metro Atlanta deposits have increased 59% to $80.6 billion, up from $50.5 billion in 1999, the newspaper reported, citing FDIC data. The GCUA counter that CUs, unlike commercial banks, are not in the business of "harvesting profits from one group (customers) and delivering them to another (third-party shareholders)," the state league told the publication.

m.samaad

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Credit Unions Continue Strong Hold Among Members in Auto Lending

WASHINGTON -- Despite dealing with continuing competition from manufacturers' rebate and incentive offers and an overall more intense auto loan market, credit unions continue to hold their own in funding members' auto loans. According to Callahan and Associates, credit unions' auto loan penetration rate among members as of September 2004 was 15.7%. While that's only up slightly from their 14.6% penetration rate in 1995, EVP Jay Johnson noted the more recent number is almost equal to credit unions' overall share of the auto loan market. "Auto loans have historically been credit unions bread and butter," says Johnson. "Historically auto loans have been the first borrowing relationship a member has with their credit unions. Credit unions know this business very well and have been able to offer very competitive rates even in the face of manufacturers' rebates and incentives. They're holding their own."

e.barr
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Wescom Resources Group Brings Online Member Apps to Unitus Community CU

PASADENA, Calif. -- Wescom Resources Group said it has helped the $657 Unitus Community CU launch online membership applications. WRG is one of two major CUSOs dedicated to helping credit unions get more out of the Symitar core processing system -- the other is Pennsylvania State Employees CUs' eCU Technologies, which also made news today. (See earlier item on this page). Unitus' previous online member application required that a potential member e-mail their application to the credit union. The CU would then have to re-enter the data into Symitar for processing. WRG cut down on this labor intensive process by allowing members to apply for an account right from the Unitus site. The application is automatically transferred to the Symitar core system, and the application and ChexSystem report remain in a processing queue until the CU receives the signed application and funds. Once those two elements are in place, a member service representative simply has to make one click of the mouse to activate the account.

p.gentile

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Ensweiler Disappointed by Community CU's Conversion Attempt

DALLAS - Dick Ensweiler, CEO of the Texas Credit Union League and CUNA Chairman said he was disappointed that Texas' sixth largest credit union has announced it is seeking a mutual thrift charter. The $1.4 billion Community Credit Union, headquartered in Plano, has announced that it will seek its members' approval to become a mutual bank. Under state law, the credit union will have to gain the approval of a majority of members who vote on the matter at a meeting assembled for the vote. The credit union can conduct a mail-in ballot of its 220,000 members on the question, but under state law it does not have to, according to the state's Department of Credit Unions. "Of course it's disappointing," Ensweiler said, "but in the end it's their decision according to what is best for their members and their business needs." Ensweiler said that Community CEO Gary Base and the chairman of the credit union had visited him personally last week to deliver the news. Ensweiler also said that Community's move should not be taken as a comment on the state's CU charter, pointing out that the credit union could have chosen a federal charter and chose not to do so.

d.morrison
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WOCCU Sending Staffer to Assist Asian CUs in Tsunami Clean Up

MADISON, Wis.--As credit unions in Indonesia, Sri Lanka, and elsewhere affected by the massive tsunami that hit the area a week ago, the World Council of Credit Unions is sending its former Sri Lanka project director Normunds Mizis for a first-hand look. The Indonesia Credit Union Federation, CUCO, is still assessing the damage to credit unions and their members, while more than 100 community credit unions in Sri Lanka and at least one district (credit) union were destroyed. Many staff, primary society members and their families died as the tsunami washed inland up to one kilometer, WOCCU reported. The Sri Lanka Credit Union Federation, SANASA, has worked to bring food, blankets, and clothing to the affected communities. WOCCU is asking the international credit union community to provide funds for disaster relief efforts in Sri Lanka and Indonesia. The organization is currently working with SANASA, CUCO and the Association of Asian Confederation of Credit Unions to help provide immediate assistance. Contributions can be made to the Worldwide Foundation for Credit Unions, Inc.

s.cooke

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NLRB Dismisses CUNA Mutual Complaint Against Union

MADISON, Wis. -- The National Labor Relations Board has dismissed a CUNA Mutual charge that the union failed to bargain in good faith. The ruling came down in a Dec. 30 letter from the NLRB to CUNA Mutual and its union, the Office of Professional Employees International Union Local 39. CUNA Mutual alleged Local 39 violated Section 8(b)(3) of the National Labor Relations Act, which covers failure of a union to negotiate collectively with the employer. The NLRB admonished CUNA Mutual for sticking steadfastly to its final offer. "The Employer's rigid adherence to its last, best, and final offer is one of the factors I have relied on in finding overall Employer bad faith bargaining in Case 30-CA-16807. The Union's bargaining conduct to date has, in part, been a response to the Employer's unlawful conduct," the letter states. It went on to say the union has never refused to meet, and has bargained in good faith with CUNA Mutual. CUNA Mutual has been saying for months it believes its proposal is in the best interest of the company and is more than fair for union employees. It seeks a union vote on the proposal. The union surveyed its members on the proposal and said members found too many problems with it to warrant a vote. CUNA Mutual said it has not received the written letter, but is exploring an appeal based on the NLRB's verbal notification.

p.gentile

Where do you stand?

2005-01-03T10:10:00.000-08:00

Poll ran by Credit Union Times:

Should credit unions award members large patronage dividends at the end of their fiscal years? • Yes, it rewards members who use the CU as their primary financial institution and shows the CU difference, • No, that money should be given back throughout the year via better rates, • Not sure.

38.3%
• Yes, it rewards members who use the CU as their primary financial institution and shows the CU difference

58.51%
• No, that money should be given back throughout the year via better rates

3.19%
• Not sure

What's your vote?

Kansas bankers successfully push for CU audit

2005-01-03T10:04:00.000-08:00

CUNA News Now- Monday 1/3/05 edition

TOPEKA, Kan. (1/3/05)--The Kansas Post Audit Committee will examine state-chartered credit unions--a process initiated by a request from the Kansas Bankers Association to the legislature's Financial Institutions and Insurance Committee.

The committee approved the request Dec. 14 and will review the Department of Credit Unions' procedures for ensuring institutions' safety, soundness and compliance with the law, according to its website.

Kansas Credit Union Association President/CEO Marla Marsh noted that the request is part of the national effort by the American Bankers Association to revoke the nonprofit, tax-exempt status of credit unions (Dos Mundos Dec. 16).

Among the issues noted in its scope statement:

How have Kansas credit union services changed in recent years and how have they grown in comparison to other industries;

Does the Department of Credit Unions have adequate procedures for ensuring the safety and soundness of credit unions and how do they compare to oversight procedures for other financial institutions;

Are the department's actions in relation to credit unions' expanded services consistent with state law; and

Is the department effectively regulating the influence of out-of-state credit unions?

According to State Sen. Ruth Teichman (R-Stafford), the earliest the report could be completed is March). Teichman is the chair of the Senate Financial Institutions and Insurance Committee.

Credit union moves HQ to 'dead center' of region

2005-01-03T09:51:00.000-08:00

Tropical Financial Credit Union has moved its headquarters from Miami to Miramar to be closer to its customer base and branch network as it expands in South Florida.

Tropical, South Florida's third-largest credit union, will add a branch in January at its new headquarters at 3050 Corporate Way, in the Miramar Park of Commerce.

The credit union, which has about 125 staffers at its headquarters, is keeping a branch at 8000 N.W. 7th St., in Miami, where it had been based since the late 1970s.

Tropical is now headquartered "in the dead center" of where its 520,000 South Florida members live and from where it recruits employees, said Greg Blount, Tropical's president and CEO.

Tropical has nine branches in Broward, six in Miami-Dade and four in Palm Beach counties, along with one in Sarasota County.

It is chartered as a community credit union for Miami-Dade, Broward and Palm Beach counties.

Employers with an office in any of the three South Florida counties and those who live, work, worship or attend school in the region may join Tropical.

The Miramar office is the 20th for Tropical, which has $650 million in assets.

During the second half of 2005, Tropical plans to open a branch in a Wal-Mart Supercenter planned for the corner of North Lake Boulevard and 10th Street in Lake Park.

That would be Tropical's 12th South Florida branch in either a Wal-Mart, Albertson's Food & Pharmacy Store or Winn-Dixie Store.

Author: Jim Freer
South Florida Business Journal

Banks, credit unions get ready for another battle

2005-01-03T09:43:00.000-08:00

As Georgia bankers prepare to lobby the new Congress, one issue from the past year is sure to resurface in 2005: pushing the government to tax the state's growing number of credit unions and, in the words of bankers, "level the competitive playing field with credit unions."

Unlike banks, which pay federal income taxes and whose shareholders keep their profits, credit unions are cooperative, not-for-profit financial institutions. They do not pay federal income taxes and reinvest earnings in the institution as well as redistribute a portion to their members.

In Georgia, the credit union movement began in 1922 when Boston merchant Edward Filene visited Atlanta to advocate for creation. Three years later, the General Assembly passed the State Credit Union Act of 1925.

Credit unions have grown significantly in the ensuing years, gaining momentum in the late 1990s following the passage of expansion legislation.

Since 1999, deposits or "share accounts" in Georgia credit unions grew about 45 percent to around $10.6 billion from about $7.3 billion, according to industry association Georgia Credit Union Affiliates.

The growth nonetheless lags that of Georgia commercial banks, whose merto Atlanta deposits grew 59 percent to $80.6 billion from $50.5 billion in 1999, according to the Federal Deposit Insurance Corp.

While total assets in the state's credit unions are still far lower than those of commercial banks, many dwarf the average community bank and enjoy an unfair tax advantage, said Elizabeth Chandler, director of government relations for the Georgia Bankers Association.

In March, the Georgia Bankers Association co-signed a letter supporting a House of Representatives proposal to re-examine the tax exemption for credit unions, and the GBA has said it will oppose in 2005, as it did in 2004, the expansion of credit unions' commercial lending authority.

Georgia Credit Union Affiliates responds that credit unions, unlike commercial banks, are not in the business of "harvesting profits from one group (customers) and delivering them to another (third-party shareholders)," and since they are not for profit should not pay income taxes.

The five largest credit unions in the state are: Delta Employees Credit Union, with nearly $2.6 billion in assets; Atlanta Postal Credit Union, with about $1.5 billion; Georgia Telco Credit Union, with nearly $987.7 million; Robins Federal Credit Union, with $853.3 million; and Lockheed Georgia Employees Federal Credit Union, with $768.6 million.

From the January 3, 2005 print edition
Author: Jill Lerner
Atlanta Business Chronicle

Orlando credit union renews indirect lending program

2005-01-03T09:10:00.000-08:00

Orlando credit union renews indirect lending program
Orlando Business Journal

The Orlando Federal Credit Union and Aimbridge Indirect Lending in Denver, Colo., have renewed their indirect lending program. The program connects credit unions with an automotive dealer network to provide members and potential members with automobile loans and leases.

"We have been running on Aimbridge's platform for more than six years and we were compelled to continue the successful relationship," says Danny Snider, executive vice president of lending for Orlando Federal Credit Union.

Orlando Federal Credit Union has six branches throughout the area and serves more than 22,500 members in Orlando and Orange County. It has about $135 million in assets.

Credit Unions sell credit card portfolios to Dallas Operation

2005-01-03T07:37:00.000-08:00

Credit unions sell credit card portfolios to Dallas operation
Dallas Business Journal

Three credit unions, including Fort Worth-based Corps of Engineers Federal Credit Union, have sold their credit card programs to TNB Card Services of Dallas.

TNB Card Services is a division of Dallas' Town North Bank set up to provide credit, debit and related services to credit unions and their members.

Corps of Engineers Federal Credit Union has 3,200 members and assets of more than $45 million.

Corps of Engineeers Federal Credit Union President Carol Johnson said in a written statement that TNB could better offer products and services to its members than Corps of Engineers credit union could by itself.

"Our members were asking for more card options, and TNB's card program provided a better overall card product than we could offer," she said.

In addition to Corps of Engineers, 1st Community Federal Credit Union of San Angelo and Rio Grande Credit Union of Albuquerque, N.M., sold credit card programs to TNB Card Services.

Web site: www.tnbcard.com

Products and Services Briefs

2004-12-30T16:07:00.000-08:00

Products and Services briefs
CUNA News Now

PASADENA, Calif. (12/30/04)--Tinker FCU, Oklahoma City, Okla., will integrate a dozen Wescom Resources Group (WRG) software solutions upon completing its Symitar conversion May 31. The simultaneous launch of the WRG and Symitar tools will allow the $1.3 billion asset credit union to improve technology services to its members. Tinker FCU will use WRG's online membership application, bill pay, home banking and eAlerts, among others ...

PORTLAND, Ore. (12/30/04)--Digital FCU, Marlborough, Mass., selected Western Reliance Corp. as its collateral and mortgage protection insurance provider and tracker. The $2.5 billion asset credit union was drawn to Western Reliance's focus on technology, according to Ed Crisci, vice president of DCU Financial, an investment and insurance credit union service organization ...

DES MOINES, Iowa (12/30/04)--California CU, a $1 billion asset credit union in Glendale, Calif., has signed a long-term contract with The Members Group for credit card processing. Nearly 22,000 credit card accounts were converted by The Members Group this fall. The credit union also has access to The Vault, a private client website that offers online reporting solutions and portfolio analysis tools ...

CHICAGO (12/30/04)--MarketerNET LLC, a provider of end-to-end marketing solutions for mortgagors and credit unions, hired John Jira as executive vice president of sales. Jira previously was president of Experian Automotive Information and vice president of consumer credit services for TRW. He will be responsible for MarketerNET's strategic direction in sales, customer service and marketing efforts ...

What was the biggest story of 2004?

2004-12-27T12:20:00.000-08:00

The results on the poll of the biggest story of 2004- do you agree?

16.21%
• Plethora of high-profile leadership changes (Dennis Dollar, Mike Kitchen, Brian McDonnell, etc.),

26.9%
• Charter conversion battle at Columbia CU,

5.17%
• Failed mergers: Portland Teachers CU/Oregon Community CU and North Dakota and South Dakota Leagues,

18.97%
• Continued banker attacks (Utah once again, bankers unite),

7.93%
• Check 21 ushers in potential of electronic image exchange,

4.83%
• CU business services boom (new CUSOs, more SBA activity),

4.14%
• Credit/debit/ATM arena developments (Amex and Discover now in the game, Wal-mart case fallout, ATM network moves),

5.86%
• Capital developments (GAO finds alternative capital not needed, JoAnn Johnson’s proposed capital changes),

4.83%
• Strong congressional support for tax-exemption and Credit Union Regulatory Improvements Act.

5.17%
• Labor dispute at CUNA Mutual Group

Creditable Cause-Credit unions look to expand program

2004-12-27T11:57:00.000-08:00

Dorothy Johnson's grandson, Lamar Keitt, got into a vehicle accident this past spring that left him with a broken hip, punctured lungs and a concussion. He also had brain injuries so serious that he needed to go to an Austin, Texas, center to undergo intensive medical help, but the family didn't have the cash.

To come up with the money, Johnson, a 66-year-old retiree, sold pork chop lunches at local factories, but she had to get a loan as well. She could have landed some quick cash at a payday loan business, but instead turned to Day Air Credit Union for a $250 loan with no credit check and no collateral.

She got the loan -- and took her grandson to Texas, she said.

Johnson is a customer of a relatively new program offered by Day Air and two other credit unions that gives lower-income people an alternative to payday loan businesses that charge interest rates some customers can't afford. The program started a few years ago, but the credit unions have only recently found a formula that keeps the program in the black. So they are looking to start marketing the program to attract more users and expand to other local credit unions in the coming year.

"As a nonprofit, we get favorable tax treatment," said Doug Fecher, president and chief executive officer at Fairborn-based Wright-Patt Credit Union, which along with Day Air, piloted the program. "We have to give something back to the community."

Day Air Credit Union in Kettering started the effort -- called the Salary Advance Loan program -- soon after Wright-Patt, and is breaking even. Another credit union, Code Credit Union in Dayton, joined the program this past summer.

With the growing momentum behind the program, Fecher would like to see six to 10 more credit unions start offering it in the next year -- and the number of users double or triple.

Here's how the program works: Credit union members get up to a $250 loan and have a month to pay it off. The limit can rise to $500 if the user does well with repayments. The interest rate on the program is annualized at 18 percent, which costs about $3 in one month's time. In addition, there is a fee of $35 to use the program for one year.

Although these costs may seem somewhat steep, they're not nearly as high as they are for many payday loans.

Traditionally, payday loans cost about $15 for each $100 borrowed, and are usually due in two weeks, said Bill Burke, president and chief executive officer of Day Air. Those fees stack up fast with multiple loans and become too much for some consumers, he said.

"We felt they were paying an exorbitant fee, and we felt that there had to be some way to provide those services at a lesser cost," Burke said.

Steven Schlein, spokesman for Community Financial Services Association, an Alexandria, Va.-based association for payday loan companies, said the fees payday loan companies charge are "very reasonable" and that companies in his industry don't let consumers get more than four loans at one time.

He said payday loan businesses are simply serving a market niche, and he's not frightened by the new service from the credit unions.

"Where have they been the last 10 years while we've been in business?" Schlein said. "We welcome competition; the consumer will decide what benefits them."

The new program got under way when University of Dayton management lecturer Victor Forlani and Dayton City Commissioner Dean Lovelace convened a meeting with credit unions about the growing number of payday loans among some of the city's more vulnerable consumers.

"When they approached us with this whole concept, I wanted to do anything that I could to help," Burke said.

But the credit unions wanted to be careful, too. Short-term loans like these are difficult because the failure rate can be so high. In addition, the inherent costs of processing a loan can drive away lenders.

Because there were so many questions surrounding the program, the credit unions didn't even unveil the program to all their members, but instead depended on word-of-mouth marketing and revealing it to people who might need it.

But now credit unions are letting members and the rest of the public know about the program.

Jill Bissinger, vice president of marketing at Day Air, said she's preparing to market the service with press releases, signs in the store and information in Day Air newsletters.

"We want to let the community know about it," Bissinger said.

By: Brian Womack
DBJ Senior Reporter

Supply and Demand Motivate CUs to Offer Exec Comp Plans

2004-12-27T07:11:00.000-08:00

GLENDORA, Calif. – Credit unions are clearly doing all they can to woo executives through attractive compensation and benefits plans

This is one of the conclusions from a just released survey from Executive Compensation Solutions and KG & Associates on executive benefits at CUs. The survey’s questionnaire was sent to more than 2,000 CEOs of CUs with $50 million or more in assets with 213 CUs responding.

Approximately 44% of surveyed respondents offer at least one non-qualified benefit plan to their executives. Thirty-two percent offer a 457(b) plan and 23% offer a 457(f) plan, the survey showed. Another 15% say they are using split dollar arrangements to deliver non-qualified benefits and a combination of 457(b) and 457(f) plans were offered by 12% of respondents.

Credit unions in the $500 million and $750 million asset range offered more 457(b) plans at 56%. Among the top reasons for offering 457(f) plans were supplemental retirement, 73%; retention, 55%; motivation, 18%; and recruitment, 12%.

The survey comes at a time when the IRS has met with CUNA and NAFCU to come up with clearer guidance on how 457 plans are administered at FCUs.

How Credit Unions add new employer groups

2004-12-20T09:41:00.000-08:00

How credit unions add new employer groups

When a company wants its employees to be able to join an established credit union, there are not many regulatory hurdles to jump.

According to Wendell Lyons, president of the Kentucky Credit Union League in Louisville, companies do not need a certain number of employees, and they do not need to apply through an agency or organization.

Any group that wants to be affiliated with a credit union only needs to submit a letter to the board of directors, asking that the credit union's charter be amended to include the new group.

If the directors agree to add the group, the credit union then must submit an application to the Kentucky Department of Financial Institutions, if it is a state-chartered organization. If it is a federally chartered credit union, it must submit an application to the National Credit Union Administration office in Atlanta. Louisville is in the Atlanta region.

The NCUA allows credit unions to submit applications via the Internet, "and the approval process is streamlined somewhat," said Lyons. The NCUA usually will make a decision on an application in about a month, he said.

There are regulatory requirements credit unions must meet. For example, the new group must be within the operational area of the credit union's main office or branch. But the approval process primarily is a formality, Lyons said, and it would be unusual for the NCUA not to approve an application.

"By and large, the regulator takes the position that if the members of a credit union want to add a group and the employees of a particular company want to be served by that credit union, the application will be approved," Lyons said.

According to Tim Root, vice president of marketing and retail at L & N Federal Credit Union, the NCUA might turn down an application if the new group has a large number of employees.

"If the company has, say, 10,000 employees," Root said, "the NCUA might believe it is big enough (for that employer) to form its own credit union."

Â— Thomas Pack

© 2003 American City Business Journals Inc.

Credit Unions seek strength in numbers

2004-12-20T08:34:00.000-08:00

Credit unions seek strength in numbers
Andy Giegerich
Business Journal staff writer
(Article from Bizjournal)

After 68 years of competing, two of the state's oldest credit unions have decided to coexist.

Milwaukie-based Electra Central Credit Union and Portland-based Pace Credit Union will serve a combined 35,000 members and have assets of around $530 million, according to Electra Chairman Bob Pearson. Boards from the two credit unions are still mulling over a name for the blended entity.

Along with their venerability, the credit unions sport some high-profile accounts, including those serving Portland General Electric Co. and TriMet employees.

The merger comes at a good time for both outfits, Pearson said.

"We both needed to grow, and this was the best option," he said. "It's really the best thing for our members in this climate, given what's going on between the banks and credit unions."

Oregon banks and credit unions have lately battled over various financial issues. The battle could hit a higher pitch as the state Legislature heads into session next month.

Lou Bruneau, Pace's chairman, said the merger made more sense than building new branches, which would result in higher passed-down costs to members.

Electra was formed in 1928, while Pace was formed in 1936.

The two sides say the merger could be completed by October 2005.

Ron Barrick, current chief executive officer of Pace Credit Union, will serve as the new entity's CEO.

His wife Cindy Barrick, current CEO of Electra Central Credit Union will serve as transition team leader for the merger. Cindy Barrick will "stay on with the new entity at least until integration complexities have been worked out," said a credit union spokesman.

The merged credit union will maintain an administrative office in Milwaukie, at the site of the current Electra Central Credit Union administrative offices. The combined credit union will have branches at 3717 S.E. 17th Ave., 3010 S.E. Belmont St., 120 S.W. Taylor St., 828 N.E. Multnomah St. and 1010 S.W. Gibbs St.

Brooklyn Credit Union Closes

2004-12-16T13:03:00.000-08:00

Member funds are insured and will be released within five days

December 16, 2004, Alex., Va. -- The National Credit Union Administration (NCUA) today placed Midwood Federal Credit Union of Brooklyn, New York, into liquidation.

NCUA’s Asset Management and Assistance Center will issue checks to each of the 1,110 members of Midwood Federal Credit Union within one week. Through NCUA’s National Credit Union Share Insurance Fund, credit union members’ deposits are insured up to $100,000 per account.

NCUA made the decision to liquidate Midwood and discontinue its operations after determining the credit union is insolvent and has no prospects of restoring viable operations. NCUA had placed the credit union into conservatorship November 19, 2004. Under NCUA management, it was discovered the credit union was insolvent and had severe operational problems. At the time of liquidation, the credit union assets were approximately $4.3 million.

NCUA chartered Midwood Federal Credit Union in 1981 to serve members and employees of the Congregation Shaarei Zion of Bobov in Brooklyn, New York. Through the years its charter was expanded to serve several refugee assistance organizations located in New York City.

The National Credit Union Administration is the federal financial agency that charters and supervises the nation’s federal credit unions. NCUA also operates and manages the National Credit Union Share Insurance Fund. Backed by the full faith and credit of the U.S. government, the Fund insures over 83 million account holders in all federal credit unions and the majority of state-chartered credit unions.

NCUA News

Final FY 2004 funding for CU programs delayed

2004-12-09T13:04:00.000-08:00

WASHINGTON (1/21/04)--The scheduled cloture vote on the fiscal year (FY) 2004 omnibus appropriations bill appeared headed for defeat as Senate Majority Leader Bill Frist (R-Tenn.) yesterday conceded he did not yet have the required 60 votes to cut off debate, reported National Journal's CongressDailyPM (Jan. 20).

Sixty votes are needed to overcome a procedural obstacle to bring the legislation to a final vote, as not enough Republican Senators accept the omnibus spending bill and too many Democratic Senators oppose it. The current continuing resolution funding the government at FY 2003 levels expires Jan. 31.

A Frist spokeswoman reportedly said that if the cloture vote fails, a new cloture petition would be filed to force a vote Thursday.

The omnibus spending measure would provide:

$61 million for the Community Development Financial Institution Fund;
$1.5 billion for the Central Liquidity Facility;
$1.2 million for the Community Development Revolving Loan Fund;
$180 million or more for Microenterprise programs;
$10 million in new funding for micro-finance activities in Mexico;
$650 million for the Millennium Challenge Account (MCA); and
$2 million for credit union development activities in South Africa and Mexico through the U.S. Agency for International Development.

The House approved this bill on Dec. 8.

Credit Union's Leeway Rankles Area Banks

2004-12-07T09:06:00.000-08:00

Posted in the Bizjournal From the December 6, 2004 print edition
By a contributing writer whom I've enjoyed reading her articles: Tania Anderson

Credit unions' leeway rankles area banks
Nationwide debate over the tax-exempt status of the country's credit unions -- and how that status affects its competition with banks -- has spilled over into Maryland.
Maryland banks, which command more than 77 percent of the financial services market in Maryland, say credit unions have an unfair advantage because they don't pay taxes and they don't have to follow the community reinvestment requirements placed on banks more than 20 years ago.
Credit unions, bankers say, should either follow their original charter of only offering membership to a small niche of the community or start paying taxes and abide by the same regulations as banks.
"It's over the last 10 years that this issue has slowly become more important to the banks because the level of competition has slowly grown," said Gary Geisel, chief operating officer of Provident Bank in Baltimore.
Credit unions and banks have for years waged a turf war, but the tension is growing these days as the banking industry becomes more aggressive in its lobbying efforts. Congress was even faced with two bills this session that would have changed how credit unions are regulated. While the bills didn't make it to the President's desk, industry observers expect at least one of them will return next year.
In their defense, credit unions say they are simply operating within the framework afforded them by Congress. Credit unions, which were launched through legislation in 1934, were given the ability to expand beyond their intended target audience in 1998 by Congress. Now they can offer membership to several different companies or even entire communities.
"Ever since then the banks have been very upset about credit unions expanding," said Patricia Raymond, vice president of governmental and public affairs for the Maryland Credit Union League.
Competing for deposits
Leaders of credit unions, which represent nearly 23 percent of the market in Maryland, say they don't understand why bankers are fighting so vigorously for what they say is a small sliver of the financial services pie.
"Credit unions have 5 or 6 percent of total deposits in the United States," said Rick Webb, president and CEO of Atlantic Financial Federal Credit Union in Baltimore. "Why are [banks] so afraid of credit unions when we're such a small percentage of the whole pot?"
There are nearly 120 credit unions in Maryland, compared with about 150 depository institutions, including 92 commercial banks.
Credit unions say they need the tax exemption because they can't sell stock and there's no other way to expand capital than through more deposits. Any profits are given back to the customers in the form of dividends and lower interest rates on loans.
Still, bankers argue that credit unions have expanded so far from their original charter that they look more and more like banks, except for not having to pay taxes.
In 1991, seven credit unions in Maryland had more than $1 billion in assets and now there are 80, according to the Maryland Bankers Association. The Annapolis-based trade group also says that from June 1994 to June 2003, the annualized growth of credit unions was 7 percent in Maryland, compared to 4 percent for banks. They attribute the growth to the credit unions being able to offer memberships to large bases of people.
"The problem is the growth is coming in from a new breed of credit unions," said Kathleen Murphy, president and CEO of the Maryland Bankers Association. "As market share continues to grow, there's more pressure on communities in the state because the tax base for the providers of financial services is moving to those that are not taxed."
Taking the battle to Capitol Hill
Banks have been particularly aggressive this year in getting Congress to consider eliminating the tax-exempt status of credit unions. The American Bankers Association launched a campaign earlier this year dubbed "Operation Credit Unions" that gets members to lobby for an equal tax status and equal regulations.
It's not clear yet whether bankers will get legislation introduced next session to address the tax issue, but the association wants the industry to start talking about it as much as possible.
The two bills Congress considered in this session would have relaxed some of the regulations governing credit unions.
One bill, which would have relaxed several regulations that credit unions have to follow, never made it out of the House. The second bill, which proposed charging credit unions lease fees for federal land and would have allowed them to start offering money transfer products, passed the House but didn't get out of the Senate.
Tania Anderson is a contributing writer in Arlington, Va.

What are Credit Unions?

2004-11-16T16:08:00.000-08:00

Credit unions are cooperatively owned financial institutions. Like chartered banks, they provide services such as loans and mortgages as well as checking and savings accounts. But they differ in key respects, including how they are governed, how they are accountable to the community, and where they invest.

When you choose to "bank" with a credit union, you become a member. This membership gives you a vote, and places you on equal footing with all other members. You have direct influence on the types of services offered, policy matters and the strategic direction of the credit union. You also have the opportunity to elect members to the Board of Directors, or to run for a position yourself there's the issue of accountability. Since credit unions are democratically owned and operated, they are, by their very nature, accountable to the community of members they serve. Decisions are not made based on the demands of a majority shareholder or the bottom line, but in response to the concerns of all members.

Third is the matter of investments. Except for excess liquidity, members' deposits are invested in other members of the credit union through loans and mortgages. And this keeps dollars circulating in the local economy. In contrast, the chartered banks make investments worldwide based on the amount of profit that can be made.

by Catherine Leviten-Reid

Small Credit Unions Vanish in Mergers

2004-10-08T10:52:00.000-07:00

From the October 8, 2004 print edition

The squeeze is on: Small credit unions vanish in mergers
Eric Engleman
Staff Writer (American City Business Journal)

The pace of credit union mergers in Washington is picking up speed, and state regulators say they are alarmed by a trend in which many of the smallest credit unions are being swallowed up by larger ones.

Small credit unions tend to serve small groups of employees or remote communities, and regulators suggest they thus have a unique role to play in Washington's financial services landscape. As one reaction to the growing series of mergers, the state Department of Financial Institutions is organizing seminars across the state aimed at helping credit unions survive in an increasingly competitive marketplace.

"A lot of these small credit unions are in a community. When they get merged out, the community loses," said Linda Jekel, DFI's director of credit unions.

Washington has seen nine mergers involving state-chartered credit unions so far this year, with two more pending, up from a total of six the year before. Meantime, the number of credit unions statewide is shrinking. Since 2000, state-chartered credit unions have declined by 17 percent; federally-chartered credit unions fell by 8 percent.

Credit unions are under growing pressure to offer services like ATMs, debit cards, and online bill pay to compete with banks and other financial services companies. Many of the smallest credit unions can't afford that kind of technology build-out and are opting, instead, to be absorbed by their larger competitors.

"You need to be a certain size to compete. A merger helps you do that," said Chuck Cockburn, president and CEO of Watermark Credit Union of Seattle. Watermark, which has $440 million in assets, swallowed up a smaller competitor, King County Medical Society Federal Credit Union, in July. The merger added $15 million to Watermark's balance sheet and 2,700 new members.

DFI organized two succession-planning seminars for small credit unions in January, which were attended by 60 people in Seattle and Spokane. Jekel said many small credit unions don't plan for what to do when their CEO retires, making it more difficult to stay independent in the long run.

The department also held a series of interest-rate risk seminars across the state in late September, which more than 200 people registered to attend. It organized a roundtable discussion with the Washington Credit Union League in the summer and plans a second in December. Meantime, the department actively encourages credit unions to share resources like marketing directors and auditors, and to study the example of larger credit unions when rolling out new products and services.

Unlike bank acquisitions, credit union mergers do not involve a payout. Credit unions are nonprofit cooperatives; they have no stockholders, and no credit union can "buy" another one. But a large credit union can sweeten the pot by offering the managers of a smaller credit union an attractive severance or retirement package -- or continued employment in the merged organization.

Richard Brandsma, president and CEO of Sound Credit Union in Tacoma, has completed three mergers in the past two years, the latest with Pierce County Federal Credit Union in July. He said smaller credit unions have often asked him about the possibility of a merger. "There are some smaller credit unions that can barely afford to buy PCs," Brandsma said. "It's very tough. Smaller credit unions have a very, very difficult job in today's marketplace."