Tuesday, September 22, 2009

Pacific CUs form new network

NADI, Fiji (9/22/09)--Credit unions in the South Pacific will gain greater political leverage and more educational opportunities with the formation of the Pacific Credit Union Network.

Members of the Pacific CU Network Advisory Committee and its supporter organizations are, from left: Michael Koisen, Papua New Guinea; Brian Branch, World Council of Credit Unions; Penisimeni Fifita, Tonga; Faataga Faataulofa, Samoa; Peter Mason, Credit Union Foundation Australia; and Manoa Seruvakaula, Fiji. Seruvakaula represented Anane Vadei, who will be Fiji's permanent committee representative.
The new organization, sponsored by Credit Union Foundation Australia (CUFA) and facilitated by World Council of Credit Unions (WOCCU), held its first organizational meeting last week at the Pacific Credit Union Technical Congress, a four-day educational event jointly sponsored by CUFA, WOCCU and the Fiji Savings & Credit Union League.

The network will provide technical assistance, communications and advocacy support, and develop a Pacific credit union database, said Peter Mason, CUFA CEO. The Australian credit union development organization began planning the network last year.

"The distance between credit unions located on South Pacific islands has kept many of them from developing the critical mass necessary for growth," said Mason. "The new network will provide the political and technological relationships to help them better serve their members."

The network was introduced to 102 congress participants from 11 countries. In addition to participants from Australia, Fiji and the U.S., countries attending were Kiribati, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste (East Timor), Tonga and Vanuatu.

Other congress highlights included sessions on board/management relationships, strengthening credit union legislation, understanding the cost of delinquency, credit union marketing and a regulatory forum.

Faataga Faataulofa from Samoa makes a point during the Pacific Credit Union Technical Congress, which met last week. (Photos provided by the World Council of Credit Unions)
Members of the new network's advisory committee, which will help lead the group's development initiatives, include Anane Vadei, Fiji, who was represented on the committee by fellow countryman Manoa Seruvakaula; Michael Koisen, Papua New Guinea; Faataga Faataulofa, Samoa; and Penisimeni Fifita, Tonga. CUFA will serve as the network's secretariat, with WOCCU providing facilitation and resources.

The network and congress are the latest cooperative efforts between WOCCU and CUFA designed to help develop credit unions in the South Pacific. This is a region in which CUFA's influence especially has been of great value in fostering credit union growth, according to Brian Branch, WOCCU executive vice president and chief operating officer.

"CUFA has provided critical leadership in developing and supporting Pacific region credit unions for many years," said Branch. "We are now seeing the fruits of CUFA's dedication, and our collaboration as credit unions puts improved management practices in place to prepare for increased regulatory oversight that is coming in the wake of the global financial crisis."

Courtesy of cuna.org

N.Y. Times: CUs clear deposits quicker than banks

NEW YORK (9/22/09)--Credit unions generally clear deposits quicker than banks do, according to a finance columnist for The New York Times.

In his Saturday column "Hurry Up and Credit My Account," Rob Lieber wrote that many readers have sent him angry questions about overdraft fees after he wrote about them earlier this month. The questions have come as the fifth anniversary for the law known as Check 21 approaches, Lieber noted.

Check 21 allows financial institutions to turn paper checks into digital images and handle them electronically instead of having to send volumes of paper checks around the U.S. on airplanes to settle them.

"Banks can and do move faster than regulations require," Lieber wrote. "And some have pushed their daily deadlines for depositors later by a few hours. Credit unions in particular tend to clear deposits more quickly, according to a 2007 Federal Reserve study of the effects of Check 21."

For the full story, visit www.nytimes.com

Courtesy of cuna.org

Monday, September 21, 2009

Illinois league iPod giveaway promotes iBelong, CU awareness

NAPERVILLE, Ill. (9/21/09)--The Illinois Credit Union League (ICUL) is giving away 30 iPods at CUs in 30 days to promote International Credit Union Day Oct. 15 and the iBelong awareness campaign in the state.

This campaign, which runs through Sept. 30, provides residents with 30 opportunities to win an Apple iPod Shuffle by visiting www.ibelongillinoissurvey.org and filling out a brief survey describing their banking patterns and preferences. Every day this month, one participant will win an Apple iPod Shuffle, regardless of whether the winner is a member of one of Illinois' participating credit unions.

ICUL officials hope Illinois residents will hear their message detailing the perks of credit union membership, including lower rates on loans and higher yields on savings. There is no obligation for residents who fill out the survey to become credit union members.

"Credit unions are not-for-profit financial cooperatives that work hard to give you better service, a safe place to save money, and access to affordable loans," said Dan Plauda, ICUL president/chief executive officer. "No wonder 90 million people across the country, including 2.7 million in Illinois, belong to a credit union."

ICUL is in its second year running its "iBelong" campaign, licensed last year from the Pennsylvania Credit Union Association (PCUA), with Chicago-based advertising agency HGadgroup. The awareness campaign has been partially responsible for increasing credit union membership in the state by more than 39,000 in 2008. The 2009 campaign is ongoing.

Courtesy of cuna.org

Nevada CUs serve members despite tough economy

RANCHO CUCAMONGA, Calif. (9/21/09)--Credit unions in Nevada--a state hit harder by the economy than most--are still managing to serve their members.

"Despite the economy, credit unions there are seeing an improvement in some areas," said Daniel Penrod, senior industry analyst for the California and Nevada Credit Union Leagues. For example, members are saving more and deposits have grown 3.75% through the first two quarters, mostly in basic savings and money market savings.

"Credit unions are doing their best under very difficult circumstances. The state has been hit by the local economy and the local housing crisis. Most of the state lives off tourism. And the global economy has exacerbated problems for financial institutions," Penrod told News Now.

"Still, credit unions are finding ways of making mortgages. Their primary fixed rate was 1.5% for second quarter. That's not a large number, but any positive number for that area is huge," Penrod said. Historically the number is 4% or 5%.

Credit union members, like credit unions, are conservative. "They're not out seeking exotic mortgages and aren't racking up more debt than income." Being conservative means that during the good times, the numbers might not be as high as others. But when the economy drops, they don't drop as low as other financial institutions' numbers, he said.

Nevada is dealing with a struggling job market--unemployment was greater than 13.2% in August, according to the Bureau of Labor Statistics. But struggling members can get help from credit unions. "Credit unions are very different than other lenders. They are able to lend, willing to lend, and they have the means to do so," Penrod said.

In areas where they can, credit unions have always been big on modifications and being proactive with members in terms of offering deferment options, modifying principal or rate, or offering to delay a payment two months and tack the missed payment onto the end of the loan term, he said. "They help as much as they can. Of course, with an upside down mortgage situation, help is limited."

According to Henry Kerman, league spokesman, credit unions can provide member assistance through Credit Union Home Loan Payment Relief (HLPR) loans and personal loans.

The nation's auto industry struggles have bled over into financial institutions, and Nevada's auto loan programs are no exception--both new- and used-auto loans are down. "Members are more wary of large purchases, and manufacturers are taking market share with 0% and 1% loans. Credit unions can't match that. Manufacturers make money on the sale and therefore can decrease the rate on the loan. Credit unions don't have that," said Penrod.

Kertman noted that credit unions perform loan modifications on auto loans (as well as on mortgage loans).

Of the 27 credit unions in Nevada, 12 work with CU Direct Lending (CUDL) on auto loans, according to Bill Meyer, communications coordinator for the auto lending service provider. Nationwide, CUDL works with 700 credit unions' programs, he told News Now.

CUDL doesn't have data specific to Nevada, but provided a look at second-quarter auto trends in 60+ day delinquency rates, noting that credit unions' delinquencies are the lowest of all lender categories--at 1.18%--compared with banks at 1.62%, captives at 1.34%, finance companies at 4.47%, and others at 4.88%.

"CUDL is telling credit unions across the board that they should make sure their underwriting criteria and risk lending and risk management practices are current," Meyer told News Now. "It's imperative that they take a close look at these and make the necessary adjustments to correspond with economic conditions. They must take proactive steps toward reviewing their practices and review them on a regular basis."

Indirect lending in Nevada is especially under heat. "It's important for credit unions not to abandon the point-of-purchase lending as a way to generate loans," Meyer said. "Ninety percent of car buyers are getting their loans at the point of sale--at the dealership. Credit unions must work closely with members, and they need indirect lending with the dealership so they can be there for the members. Members will buy cars. Credit unions need to be there to capture that loan."

Credit unions have been able to maintain a high level of market share in auto lending. "In the past 18 months, they have increased their markets share to 22%-23% from 20%--share even with the current conditions," he said. Credit unions had 22.8% of the market share in second quarter. That compares with 30.7% for banks, 29% for finance companies, and 17.5% for captives.

Credit unions are consistent in their lending practices and in who they loan to, he added. "Dealers look to credit unions as a stable, true resource for auto loans. Other financial institutions can't say that."

The bottom line is Nevada credit unions are well capitalized at 7.84% for second quarter, said Penrod. "That's above the 7% standard NCUA (National Credit Union Administration) has set for well-capitalized credit unions. "Despite the struggles and issues Nevada credit unions face, they are maintaining their capital level and do the best to have as much leverage as possible to serve their members," he said.

Kertman noted that the league's annual convention Nov. 16-18 in Las Vegas will help out the Nevada's largest city, and it will address credit unions' financial condition for California and Nevada credit unions. "It will be one of the key topics." But holding a meeting there means that Nevada's credit unions are also conducting "business as usual," he said.

Courtesy of cuna.org

Dodd may introduce overdraft fee bill this week

WASHINGTON (9/21/09)--Senate Banking Committee Chairman Chris Dodd as early as this week could introduce a bill that would require financial institutions to seek permission before they can enroll their accountholders in an overdraft protection program.

Sen. Charles Schumer (D-N.Y.) himself recently came out in favor of increased consumer protections related to overdraft protection plans, saying that he would support legislation that targets abusive overdraft practices. Schumer is expected to co-sponsor Dodd's legislation once it is introduced.

Speaking at Albany, New York's College of Saint Rose earlier this month, Schumer said that any pending overdraft legislation should require consumers to be given a chance to opt in or out of overdraft protection programs and increase the disclosure of fees and APR charges on overdraft loans.

New York Democratic Rep. Carolyn Maloney has introduced House legislation, H.R. 1456, the Consumer Overdraft Protection Fair Practices Act, that would treat many of the same issues listed by Schumer.

CUNA representatives have spoken with Senate Banking Committee members and staffers in an effort to "educate them about how and why credit unions offer this service to their members, the features of the various programs and our concerns regarding the legislation that has been introduced in the House," CUNA Vice President of Legislative Affairs Ryan Donovan said.

Courtesy of cuna.org