media plannerpromo.sourcemedia.com/promoart/SM_CSGLibraries...relationship management, small...
Transcript of media plannerpromo.sourcemedia.com/promoart/SM_CSGLibraries...relationship management, small...
m e d i a p l a n n e r
R media.cujournal.com
The Nation’s Leading Credit Union Newsweekly
2011
2011A POWERFUL NETWORK for Your Products and ServicesSourceMedia provides news, data tools, analysis and commentary for credit union and financial services executives. In addition to Credit Union Journal, publications include U.S. Banker, Bank Technology News and American Banker, as well as live events and custom marketing services.
The community of professionals we serve is committed to building and operating successful credit unions. And it depends on information services that offer market perspective and insight to enhance and support decision-making. Reaching this community daily, weekly and monthly, we are positioned to provide up-to-date news coverage and in-depth analysis of the key issues affecting the industry—the perfect vehicle for your advertising message.
CREDIBLE COVERAGE in Print and Online Credit Union Journal delivers the latest information to credit union leaders so they can serve their members in this growing market. Influential credit union heads look to Credit Union Journal each week for the latest developments in the credit union community.
For the past thirteen years, our readers have turned to us for trustworthy and concise coverage on growth strategies, member relationship management, small business services, legislative changes and other relevant topics.
Combined with the voluminous content available at CUJournal.com, Credit Union Journal provides unmatched value to credit union decision-makers.
With Credit Union Journal,
you can reach credit union leaders
in print, online, or in-person all
year long.
BESTPRACTICES
CREDIT UNION JOURNAL
2010
CU Journal Issues
Call For Entries For
Best Practices Awards.
See Page 5 For Details
MasterCard Offers Windfall
To Its CU Stockholders
PURCHASE, N.Y.–MasterCard,
one of just two stocks owned by
credit unions, announced a ma-
jor windfall for credit unions with
the conversion of closely held
Class B shares to commonly
traded Class A shares.
The company,
which issued
Class B shares
to its credit
union and
bank owners
as part of its
2006 initial
public offer-
ing, announced
that 7.5 million
Class B shares
will be eligible
for conversion
under a four-week
program. Effec-
tive June 1, all of those Class B
shares were converted to Class
A shares on a one-for-one basis
and now are eligible for sale on
the open market.
Class A MasterCard shares,
under siege recently because
of proposed legislation to lower
card interchange fees, closed
up 63 cents last Wednesday at
$201.02 in the wake of the an-
nouncement.
Hundreds of credit unions re-
ceived Class B shares in the IPO
and were forced to hold a large
portion of those shares for three
years. Credit unions also received
Visa shares as part of Visa’s
2008 IPO. The two issues are the
only common stocks credit unions
are permitted to own.
CU Card Card Portfolio Sales
Likely To Hit New Low In ‘10
PETERBOROUGH, N.H.–Credit
unions appear to be on track
to make 2010 the year of the
fewest sales of credit card
portfolios.
During the first quarter, just
two portfolios of more than $1
million in outstandings were
sold, according to TRK Advisors,
Vol.XIV, No 23
June 7, 2010
ON
DEADLINE
CUs Hit The Hill To Push
For Interchange Relief
WASHINGTON–Credit unions will be making a last-ditch effort to
lobby Congress on the issue of interchange this week with a CUNA-
sponsored “National Hike
the Hill.”
At press time, the num-
ber of credit union reps
expected was reportedly
lower than anticipated, but
CUNA said it was confident
attendance will be strong.
CUNA President Dan
Mica has called on credit unions to rally in Washington June 8 and
9 to show their dissatisfaction with the interchange amendment
currently included in the Senate version of the regulatory reform
Continued on page 29
CRED IT UNIO N
JO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
Continued on page 29
Continued on page 30
Index
cujrounal.com
Class Action Suit Raises Stakes In
New York Mortgage Tax ChallengePage 2
Kinecta, NuVision Propose Union Of
Own In $4.7B Merger Page 3
How 1 CU Learned Cash Really Is
The ChampionPage 4
CUs Facing Tougher Exams Page 4
A Day In The Life
Of CUs Page 5
By Ray Birch, Correspondent
WEST PALM BEACH, Fla.–
The R&D dollars being spent
by credit union suppliers
offer a look back at trends
from the first half of 2010
and insights into what the
second half of the year--and
beyond--might hold. In this
issue Credit Union Journal
offers readers a look-ahead
at what Q3 and Q4 might
hold for CUs, plus strategies
for meeting challenges.
Coverage begins on page 13.
The Second-
Half Forecast
CU Launches Effort To
Reach Out To Muslims
TOTOWA, N.J.–North Jersey FCU is reaching out to its large
Muslim community by becoming one of the first American finan-
cial institutions to offer Sharia-compliant financial products.
New Jersey is home to the second-largest percentage of Muslims
in the U.S, with more than 700,000 Muslims in Bergen County
alone. The credit union said its deposit program is consistent with
the principles of Islamic Law (Sharia).
“We were approached by some of the leaders of the [commu-
nity] mosques; they came to explain how it is really difficult for
those who are observant to get mortgages or car loans, because it
By Matt Blumenfeld, Reporter
NEWARK, N.J.–In the latest legal salvo over the $140 million fraud
at U.S. Mortgage/CU National Mortgage, Suffolk FCU, the biggest
victim in the case, filed suit in federal court last
week against Fannie Mae for return of some
$42 million the secondary mortgage market gi-
ant bought under false pretenses from the failed
mortgage company.
The suit, filed in the district of the New
Jersey-based CU National, claims Fannie Mae
should have known that mortgages sold to it by
the company’s CEO Michael McGrath were not
valid and that the constant pipeline of mortgages
By Ed Roberts, Washington Bureau ChiefSuffolk FCU Sues Fannie Mae As
Part Of CU National Litigation
Continued on page 29
CUNA President Dan Mica urges CUs to “Hike The
Hill” to lobby against interchange reform.
Gary Meyerhoff
Sonnenschein Nath
Debate Over What Q1 Lending Decline Might Mean
WASHINGTON–A 5% decline during
the first quarter in overall lending at credit
unions has led to several different interpreta-
tions of what it might portend.
The performance marked one of the
sharpest quarterly declines ever reported by
credit unions. In its analysis, N
AFCU sees
the precipitous drop as potentially indicating
a more lasting shift in consumer behavior,
while CUNA contends the decline signals
that a lending rebound will simply be slower
than expected.
“We are in the midst of a sustainable eco-
nomic recovery and that means labor markets
will improve substantially and consumer be-
havioral changes seen the last year or so will
begin to turn around,” said CUNA Senior
Economist Mike Schenk. “But loan demand
won’t go up quite as rapidly as it typi-
cally does in a rebound, because people
are concerned about their debt levels. We
expect loan demand will be substantially
higher in the second and third quarters.”
Overall, CUNA is projecting 4%
CU loan growth for the entire year, but
household debt will continue to mute
demand, Schenk noted. “We do believe
By Ray Birch, Correspondent Continued on page 29
SOARING?ARE YOUR CARD NUMBERS
www.themembersgroup.com I turn the page to learn how
CUJ060710_page01 1
6/3/2010 3:27:07 PM
BESTPRACTICESCREDIT UNION JOURNAL2010CU Journal Issues Call For Entries For Best Practices Awards. Go to www.cujournal.comFor DetailsDays & Counting
3White House Kick-Starts CU Bid To Raise Cap On MBLsWASHINGTON–The decade-long effort to lift the member busi-ness loan limit, which had been dying on the vine, was revived by the written endorsement of Trea-sury Secretary Timothy Geithner.
“The administration’s support of our efforts to increase the industry’s business lending is a very significant step forward as we continue to pursue enact-ment of such legislation in this Congress,” said NAFCU Presi-dent Fred Becker.
Treasury Secretary Geithner told House Financial Services
Committee Chairman Barney Frank that
he supports raising the MBL limit for healthy credit unions to as much as
27.5% of as-sets, more than double the current 12.25% limit.
Credit unions have been working for years to raise
the limit but were losing hope of getting a legislative change this year until a high-ranking Treasury official said during a House hear-ing the Obama administration supports the MBL bid as part of a broader bill that would provide small business loan capital for community banks. Geithner’s letter to Frank formalizes the Administration’s support.
The Treasury secretary sug-gested certain conditions for the increased limit, including a proven record of making MBLs, proof the credit union is near the current limit and has strong capital. “It is important that re-forms are not done in a way that inappropriately introduces more risk to credit union members, the credit union system, the National Credit Union Share Insurance Fund or the financial system as a whole,” wrote Geithner to Frank.
Vol.XIV, No 22 May 31, 2010
ONDEADLINECRED IT UNIO N
JO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
Continued on page 22
Index
cujrounal.com
CUs May Take Up To A 9BP Hit From Overdraft Reform
Page 2Alaska USA Using Mergers, P&As To Expand On West Coast
Page 3Ahh, Life Is Good. For Your Bak’s CEO, Ads Say
Page 4Targeting A Younger Demo, Connex CU Says It’s Time To ‘Unbank’
Page 4How To Gain–& Keep–A Bigger Piece Of The Mortgage Pie
Page 84 Low-Cost Steps To Clean Up Data, Con-nect With Members
Page 8
Strategies WillAffect Revenue
WILMINGTON, N.C.–Credit unions that have approached the upcoming Reg E deadlines as a marketing opportunity and not just an operations issue stand a much greater chance of protecting their debit card revenue, analysts told Credit Union Journal.
With less than one month left to com-ply with the new law, major card proces-sors and industry experts believe that the majority of credit unions are prepared for the respective July 1 and Aug. 15 deadlines, but also agree that many are not. They cite widespread differences in CU readiness in
Continued on page 12
NEW ORLEANS–Credit unions have no choice but to re-examine their fee structures and opt-in policies in the wake of pending changes to Reg E.
And they will have to move quickly.Fabio Biasella, VP and managing
drecto of Strategic Advisory Services with Raddon Financial Group, told the CUNA CFO Council’s annual meting, “Every fee is under assault. It’s hard to quantify how much of a threat there is to various income streams.”
Biasella said the typical CU household
Time To Rethink Fee Structure
Continued on page 12
By Ray Birch, Correspondent By Frank J. Diekmann, Editor
New Refi Boom In Wings?
BEAVERTON, Ore.–The ongoing sovereign debt crisis in Europe could lead to another surge in mortgage refinance volume this sum-mer, but CUs should temper their optimism.
“If rates continue to fall I would anticipate another mini refi boom, maybe not as much last year because much of that was caused
By Matt Blumenfeld, Reporter
Critical Reg E Deadline Approaching
012345678
Jan ‘07 Jan ‘08 Jan ‘09 Jan ‘10
15 YR CONF30 YR CONF
Continued on page 13
Mark-To-Market RuleFor Loans Is Proposed
By Ed Roberts, Washington Bureau Chief
NORWALK, Conn.–The Financial Account-ing Standards Board last week proposed rules
that would extend market value accounting to a new set of holdings, including loans.
The move has been widely criticized by credit unions and banks, who say it could wreak havoc as current rules allow them to report loans at book val-
ue as long as they have an intent to hold them.Marking the loans to market value could re-
Continued on page 22
By Ray Birch, Correspondent
CU Difference Is Not A Trivial Pursuit
CANTON, Ohio–First Ohio Community FCU is hoping members’ interest in movies, sports, and history will drive branch traffic and cross-sales.
The $25-million CU is playing its own ver-sion of Trivial Pursuit with members, ask-ing them a new ques-
tion each day of the week during May and June. Each time members answer correctly, they’re entered into a drawing for a $25 Visa Gift Card that will be held the first week of July.
Continued on page 22
Robert HerzFASB
Mortgage Rate Trends Over The Last Three Years
Source: Informa Research Services
CUJ053110_page01 1 5/27/2010 3:52:39 PM
media.CUJournal.com
2011ThE CREDIT UNION MARKETPLACE is Expanding While American taxpayers were bailing out other financial services providers, it was credit unions that were helping bail out American consumers in 2010 and into 2011 with more favorable pricing on products and services, and a willingness to offer helpful financial counsel.
Americans have responded by moving some $925 billion of their assets into credit unions during 2010, up significantly from less than $700 billion at the end of 2008. Now, as the American economy recovers, America’s credit unions are poised to grow even faster as they get ready to surpass more than $1 trillion in assets.
As of June 2010 there were 7,598 federally insured credit unions with nearly 92 million members.
2007 88.5
2008 89.9
2009 91.2
MID-YEAR 2010 91.7
2006 87.4
2005 86.1
Source: CUNA, Economics and Statistics Department, prepared September 7, 2010
Source: CUNA, Economics and Statistics Department, prepared September 7, 2010 Source: CUNA, Economics and Statistics Department, prepared September 7, 2010
2007 $770.1
2008 $825.8
2009 $896.8
MID-YEAR 2010 $916.1
2006 $726.2
2005 $694.2
Source: CUNA, Economics and Statistics Department, prepared September 7, 2010
2007 $646.8
2008 $691.8
2009 $763.3
MID-YEAR 2010 $788.6
2006 $615.3
2005 $590.8
Source: CUNA, Economics and Statistics Department, prepared September 7, 2010
Credit Union asset size ($ in billions)
SavingS entruSted to credit unionS ($ in billions)
Credit Union MeMbership (Membership in millions)
media.CUJournal.com
Readers pass their copy to 3.1 other people.
OUR CIRCULATION IS STRONG—And AuditedCredit Union Journal is the only BPA-audited credit union newsweekly, guaranteeing our subscriber claims and ensuring the highest industry standards.
Our 8,103 subscribers* turn to Credit Union Journal for the credit union community news and information they need to manage their business. But our publication reaches more than just our influential subscribers. Each week, our subscribers pass their issue along to approximately 3.1 individuals**, making total weekly readership more than 25,000 strong.** Sources: * June 2010 BPA Worldwide Statement, based on 8,103 qualified circulation
**Harvey Research, March 2008, Ad Q® Study
The TiTles you need To reach...
Job Title
... At the InstItutIons You WAnt
Business Type
68% CEO/President/ CU Head/ Chairman
88% Credit Union
2% Director/ Board Member
Other
1% Association/Government/College/Library
2% CUSO/EFT Network
3% Consulting Firm/Vendor/Others Allied to the Field
6% Other Paid
EVP/SVP/CFO/CIO/VP/AVP/Mgr16%
14%
Source: June 2010 BPA Worldwide Statement, based on 8,103 qualified circulation
Source: June 2010 BPA Worldwide Statement, based on 8,103 qualified circulation
BESTPRACTICES
CREDIT UNION JOURNAL
2010
CU Journal Issues
Call For Entries For
Best Practices Awards.
Go to www.cujournal.com
For Details
More Losses Recorded,
Higher Assessment Likely
ALEXANDRIA, Va.–NCUA had
more bad news for credit unions
last week, announcing it has
added eight more credit unions
to its troubled list and set aside
an additional $170-million to
cover losses at natural-person
credit unions. The additional re-
serves cut the reserve ratio for
the National CU Share Insurance
Fund and, with two other nega-
tive indicators, point to a higher
premium assessment later this
year, agency officials said during
the NCUA Board’s monthly meet-
ing. The other negative indica-
tors are significantly lower inter-
est earnings on the NCUSIF’s
$9.4 billion in Treasury securi-
ties, and high share growth
of 11% for the first quarter of
the year, which would cause to
greater dilution of reserves later
in the year. NCUA had originally
budgeted $750 mil-
lion for losses in
natural-person
credit unions,
but the addi-
tional reserves
increased that
pot to $896-
million. Me-
linda Love, chief
examiner for
NCUA, warned of
increasing losses
as the condition
of some of the
deteriorating, large
credit unions becomes clearer.
“There is an increasing potential
that $750 million will not be
sufficient to cover the potential
losses (of those troubled, large
credit unions),” said Love. “We’ll
know more about losses at the
big credit unions later in the
summer. The losses by natural-
person credit unions are one of
the two components that will
figure into a special assessment
credit unions will be charged this
year, with a separate payment
Vol.XIV, No 21
May 24, 2010
ON
DEADLINE
CRED IT UNIO N
JO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
Continued on page 24
Auditors Express Doubts On Corps
WARRENVILLE, Ill.–Losses for corporate
credit unions continue to pile up at an accel
-
erated pace, r
aising doubts about the corpo-
rates’ ability to continue as “
going concerns”
and new questions about whether NCUA will
be forced to go back to Congress and seek ad-
ditional assistance for the corporate b
ailout.
Growing losses at Members U
nited Cor-
porate FCU have elim
inated almost all of the
$9.5-billion corporate’s member capital and
“raise substantial doubt about Member Unit-
ed’s ability to continue as a going concern,”
the corporate’s auditors McGladrey & Pullen
Continued on page 24
Index
cujrounal.com
Bill Creates New Problems For CUs
Page 3
Earnings Up Despite Loan Slowdown
Page 3
CU Launches Site With Goal Of
Doubling MBLsPage 4
‘Private Member Advisor’ Aims To
Help Deepen Member Relationships
Page 4
Self-Help CU Uses Secondary
Capital To Finance New CDCUPage 5
Don’t Confuse Bigger
With Better Page 8
NEW ORLEANS–To get a sense of how balance sheet demands
have changed for credit unions one need travel no further than
the CFO Council’s annual meeting here last week.
Finding income streams, especially to replace those that will
likely be diminished under pending rules related to Reg E and
plastic cards, and knowing at a greater level of detail exactly
what each member and product means to the credit union were
primary discussion points. While a number of presenters and CFOs
on hand stressed the importance of not losing sight of why credit
unions exist, little doubt was left that compressed margins have left
few choices but to reexamine fees and pricing.
Yet even with an overhaul of those revenue streams, the silver lin-
Continued on page 23
WEST PALM BEACH, Fla.–Hacking into your credit union’s da-
tabase has never been so cheap and easy, thanks be to Zeus.
Wanna-be fraudsters are just an
Internet connection away from down-
loading free, effective hacking tools
from criminal websites and file-shar-
ing programs. The most pernicious free
tool on the Net today? Certainly the Zeus Banking Trojan, malicious
software that can download itself onto computers and steal data.
5 Cheap,
Easy Ways to
Hack-A-CU
How 1 CU Grew Its MBL
Volume By 2,900%
ERIE, Penn.–A novel indirect lending program for a wide variety of
consumer products, combined with an aggressive marketing and com-
munity outreach campaign, has led to big results for one CU here.
Erie FCU has seen its business lending portfolio swell from
$275,000 in 2007 to nearly $8 million by the
end of 2009 and more than doubled its num-
ber of “Business Affinity Partners,” the term
it uses for SEGs.
“When I was going out to recruit new businesses to join the credit
union (in 2008), they were telling me about how they were struggling
in this economy,” VP of Business Development Sandi Carangi said,
explaining that area businesses were chiefly concerned with their cus-
tomers’ lack of credit access. “A lot of the credit companies they were
going through were no longer approving loans to anyone had a credit
Continued on page 19
Continued on page 24
By Frank J. Diekmann, Editor
By Kevin Jepson, Technology Correspondent
By Matt Blumenfeld, Reporter
Kids, Try This At Home
SPECIAL REPORT:
TECHNOLOGY
See pages 13-19
Old Scammers Eye New Targets
PLEASANTON, Calif.–With enforcement of the new Red Flag
rules imminent, a new analysis suggests scammer are now seeking
out other weak links.
The report from Javelin Strategy & Research found that the per-
centage of fraud victims whose accounts were taken over by change
of address declined to 24% in 2009 from 66% in 2006 as institu-
tions began to comply with the RFR requirement to provide an
Continued on page 24
By Ed Roberts, Washington Bureau Chief CUNA CEO Dan Mica, Michigan Economic Development Corp.’s Paul
Brown and Kalamazoo County State Bank CEO James MacPhee
testify before Congress. For hearing coverage, see page 10.
By Matt Blumenfeld, Reporter
Finding New Revenue Streams In
Wake Of Rules Tops CFO Agenda
see our ad
inside!
CUJ052410_page01 1
5/20/2010 3:05:48 PM
Texas’ OCECU Shut Down;13th CU Failure In 2010ORANGE, Texas–NCUA and state regulators last week shut down Orange County Employees Credit Union, the 13th credit union failure of 2010. Regula-tors immediately assigned the assets of OCEFCU to Sabine FCU, a $150-million credit union based in the same town, under a purchase-and-assumption agree-ment. NCUA said the rapidly deteriorating financial condition of the credit union, which had shrunk to just $1.7-million in assets as of March 31 from $4 million as of Sept. 30, 2009, along with negative net worth led to the closure.
Herb Yolles Will Head UpRegion III Through Year-EndALEXANDRIA, Va.–NCUA named Herb Yolles as temporary Regional Director of Region III
through the remainder of 2010. Yolles joined NCUA in 1978 and he has served during his career as CFO, deputy director of examination
and insurance, president of the Central Liquidity Facility, and Inspector General. Most recently Yolles Associate Regional Direc-tor of Operations in Region II.
To Mark 75th Birthday,BECU Giving Out CashSEATTLE–To mark its 75th anniversary, BECU is handing out $1 bills. The credit union, chartered in 1935 by 18 employ-ees of Boeing, passed out the largesse last week at its Capitol Hill branch in the city and will be handing out more cash today at Northgate Mall. The credit union is also be donating $25 for every account opened to the Lifelong AIDS Alliance, except for Friday, when the money will go
Vol.XIV, No 24June 14, 2010
ONDEADLINE
People Ignoring People
MADISON, Wis.–A new Filene Research Institute study finds credit union management needs to better listen to their employees.
The study suggests “statistically…good ideas are just as likely to come from the front line as from man-agers, and that even job tenure and edu-cation levels are only weak predictors of who has quality ideas. It also shows that employees don’t speak up often enough.”
Chief Research Officer George Hofheimer noted, “Ideas come from every aspect of the organization and the researchers were un-able come up with any correlation that linked specific types of in-dividuals to ideas.”
“Employee Voice and (Missed) Opportunities for Learning in Credit Unions” is the result of an 18-month study by Ph.D re-searchers Ethan Burris of the University of Texas at Austin; James
CRED IT UNIO NJO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
MEMPHIS, Tenn.–Where should credit unions invest their dollars when it comes to e-banking?
Increased personalization, widespread adop-tion of mobile banking and direct person-to-person payments are the future of electronic banking, according to industry experts.
“As time goes on you will see the self-ser-vice model evolving to the next level,” pre-dicted uMonitor President/CEO Dinesh
Sheth. “You and I will be doing everything from our desks or smartphones. The consumer will be getting more comfortable doing everything from any device.”
With personal fi-nancial management solutions (PFM) al-ready catching fire, the next major change in electronic banking will be personalizing that channel and turning it into a true virtual
What Lies Ahead For E-Services? Continued on page 22
Index
cujournal.com
CU destroyed by tornadoPage 2
First Tech’s secrets to strong performance
Page 4
Hard lessons from the BP oil spillPage 8
CEO steps down amid probePage 11
Opportunities in deposit-based payments
Page 12
What’s in it for Me? Page 15
Continued on page 22
By Matt Blumenfeld, Reporter
By Matt Blumenfeld, Reporter
Continued on page 21
At a press conference last week in DC, from left, CUNA’s Dan Mica, ICBA’s Cam Fine, and NAFCU’s Fred Becker.
Last-Ditch Effort Made To Kill Interchange Proposal
WASHINGTON – Hundreds of credit union executives criss-crossed the halls of Congress last week in an effort to convince lawmakers to scrap the provision of the bank reform bill that would establish price controls over debit card interchange, but their efforts face great odds.
“I think we all know that this stays in the bill unless we see a mini-riot by credit unions and community banks that will be most affected by this,” said Buddy Gill, political director for the Texas CU League, who was accompanying a delegation of credit union executives on their rounds yesterday.
He was referring to a Senate version of the bank that includes
By Ed Roberts, Washington Bureau Chief
Continued on page 22
As Seen On TV–And Elsewhere
LANSING, Mich.–Credit unions are doing anything but taking the summer off when it comes to advertising, especially on the airwaves.
Several credit unions and associations in dif-ferent markets last week announced plans to ag-gressively role out cam-paigns designed to boost awareness and member-ship. The Michigan CU League has budgeted some $4-million and launched what it said was the largest ad campaign by credit unions in the state’s history. In the Washington and DC markets, the Mary-land and DC CU League added new components to its “What’s In
By Frank J. Diekmann, Editor
Mich.’s $4M Campaign Leads The Way
Continued on page 21
A scene from Michigan CUs’ new TV spots.
SpecialReport:
E Services
Herb YollesNCUA
Study: CU Staff Aren’t Being Heard
CUJ061410_page01 1 6/10/2010 4:36:28 PM
CRED IT UNIO NJO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
Stock Prices Of Fannie,Freddie Plunge After ReportWALL STREET–The stock prices of mortgage giants Fannie Mae and Freddie Mac plummeted last week after announcing they had been ordered to delist from the New York Stock Exchange.Fannie Mae’s stock was down 45% to 51 cents and Freddie Mac’s stock was down 47% to 65 cents at presstime. The Federal Housing Finance Agency,
the federal regulator for the two secondary mortgage market giants, said the delisting order was not taken due to the compa-nies’ performance.The two companies have been hemorrhaging red ink and have tapped more than $145 billion combined in federal aid. They have an open credit line with the
Treasury Department through 2012. OTC trading of shares of the two companies is expected to start approximately July 8.Card Delinquencies, Charge-Offs Hit Near Highs During Q1PORTLAND, Ore.–Credit card delinquencies and charge-offs at credit unions remained near all-time highs, even as the average balance on card accounts contin-ued to grow in the first quarter, according to AssetExchange, a card broker for credit unions.The delinquency ratio as of March 31 rose to 4.6%, believed
to be its highest ever, while the charge-off ratio was at 1.9%. At the same time, the average balance on a CU card grew to $2,619, up from $2,471 a year ago, the company said.Student Loan CUSO Launched In WisconsinMADISON, Wis.–The $1-billion UW Credit Union has formed a CUSO called CU Campus Resources to offer a private stu-dent loan program for CUs, as well as the colleges. CU Campus
Resources has partnered with Cology, Inc., Scottsdale, Ariz., to provide the core processing.
Vol.XIV, No 25June 21, 2010
ONDEADLINE
PITTSBURGH–According to some small credit unions, there is a
disconnect between the direction NCUA is providing examiners on
evaluating small CUs and what field staff are actually doing.Leaders of community development and low-income credit unions
shared just that concern, and others, with NCUA Chairman Debbie
Matz during a plenary session at the 36th Annual Conference on
Smaller CUs Say NCUA, Examiners Inconsistent
Amidst The Gloom, CUs Hit A New Milestone: 10% MarketshareWASHINGTON–For the first time in history, credit unions in the U.S. have reached the 10% mark in terms of share of retail consumer deposits. It’s a significant milestone CUs will likely surpass in the coming years, suggested Callahan & As-sociates. “With the strong share growth we are seeing currently and how credit unions are remaining active with competitive rates, I think
we will continue to see credit unions make strides here,” said Nick
Connors, senior industry analyst. “They are positioned well.”Credit unions hit the 10% mark in March after closing 2009 at
9.8%. It has been a steady climb for the industry over the past year,
gaining ground each month after a marked drop in 2008 to 9.2%. Continued on page 13
Continued on page 22
Index
cujournal.com
Big Mergers Shake Up Markets In MI & FL, Shore Up Troubled CUsPage 3‘SURF Dude’ Kicks Off Summer ATM Promo In Maine
Page 3When The Going Got Tough...Process Made EasierPage 4
CU Employees Who Hit The Lottery Share Their Plans
Page 16Special Report: CUSOsPages 20-21
Continued on page 21
By Matt Blumenfeld, Reporter
By Ray Birch, Correspondent
1990 1995 2000 2005 2010
0
2
4
6
8
10
6.9%8.1% 8.4%
9.6% 10.0%
CU MARKETSHARE
Why 1 CU Is Embracing A Little Monkey BusinessTAMPA, Fla.–GTE FCU is hoping is efforts to capitalize on a local
icon will generate some real monkey business. The $1.6 billion credit union launched its “Mys-tery Monkey Tour” based on a rhesus monkey
that has achieved cult status in southwest Florida as it has roamed around the area for the last year, narrowly avoiding capture multiple times.
By Ray Birch, Correspondent
Durbin Kills 1 Argument Against Interchange ReformBy Ed Roberts, Washington Bureau ChiefWASHINGTON–The chief sponsor of the Senate’s interchange
amendment creating price controls agreed last week to exempt all
government programs from his provision, eliminating an argument
being used by credit unions and banks lobbying against the measure.
Sen. Richard Durbin, the Illinois Democrat working to develop a
regulatory scheme for the $50-billion-a-year market for credit and debit
card interchange, said last week he will propose a new exemption, or
carve-out, from the Senate-passed provision for some $8-billion a year
in government benefits programs delivered with debit cards.Durbin made the announcement during a hearing on how the Continued on page 22
ALEXANDRIA, Va.–The NCUA Board approved a $1-billion charge to pay for the corporate credit union bailout, while also disclosing that losses accrued by the Nation-al CU Shares Insurance Fund have reached almost $1.1 billion for 2010, presaging an-
other big assessment later this year.The corporate assessment comes after last year’s charge of $1.1-billion, which included $337-million for the first year of the corpo-rate bailout and the remainder to replenish reserves for the NCUSIF. This year’s corpo-
rate assessment amounts to 13.4 basis points and must be accrued by credit unions for the second quarter, and paid by Aug. 30.NCUA Chairman Deborah Matz said the
decision to assess the corporate charge was a difficult one. “We wrestled with this, both in terms of the amount and the timing,” said
NCUA OK’s $1B In New Corporate-Related Charges
By Ed Roberts, Washington Bureau Chief
Continued on page 22
Source: CUNA
NCUA Chairman Debbie Matz speaks in Pittsburgh
CUJ062110_page01 1
6/17/2010 4:41:15 PM
Source: Harvey Research, March 2008, Ad Q® Study
2011
DELIVERING READERS WITh Purchase Power & InfluenceEach week, influential credit union leaders and decision-makers look to the Credit Union Journal for the latest developments in the credit union community, and that includes information about new products, services and solutions. While other publications are read only by those making policy changes—not purchasing decisions— our subscribers hold the key to the industry’s massive buying power and influence.
Over 91% of our readers are involved in the purchase of products or services at their credit union Source: Zoomerang Subscriber Study, September 2009
Business Development/Marketing 76%
Member Relationship Management 68%
Risk Management 68%
Information Technology 63%
Facilities 63%
Business Intelligence 61%
Security 60%
Document Processing 59%
Insurance 59%
Lending Services 58%
E-Commerce Solutions/Web site 58%
Processing 55%
Investments 54%
Auto Loan Services 54%
Card Services 52%
Mortgages 47%
Source: Zoomerang Subscriber Study, September 2009Source: Zoomerang Subscriber Study, September 2009
Percentage of readers with Buying influence
90% of readers have taken action during the past year as a result of an advertisement and/or articles in Credit Union Journal.
77% Discussed an ad/article with someone else in the company
72% Referred an ad/article to someone else in the company by passing along a tearsheet, photocopy or actual issue
38% Visited advertiser’s Web site
10% Requested additional information from a company, sales representative or distributor
20112011
media.CUJournal.com
OUR ONLINE AUDIENCE is GrowingCUJournal.com, the online companion to Credit Union Journal, is updated throughout the day with breaking credit union news and analysis. Online traffic has been steadily increasing in 2009.
In addition to traditional Web site advertising, the Credit Union Journal Daily Briefing is sent to an opt-in list comprised of 7,857* credit union leaders—and the list continues to grow each month.
Topics regularly covered online include: Technology, Corporate Credit Unions, Growth Strategies, Insurance, Lending, Facilities, Mortgages, and more.
91% of business professionals declare that online advertising is effective at driving traffic to Web sites; 62% say that it is effective at delivering targeted promotions; and 60% state that it is effective at generating leads.
Source: ABM 2007 Forrester Study
Source: *Publisher’s Own Data, November 2009
CUJournal.com At-A-Glance(monthly average)
Visitors: 36,670 Unique Visitors: 12,712Page Views: 87,885 Source: HitBox, December 2010
2011
AmericanBanker.com Community Banking Update Daily Briefing Intraday Updates Morning Scan Mortgages UpdatePayment Systems Update Technology UpdateWealth Management UpdateWashington Regulatory Update
The FinTech 100
US-Banker.com U.S. Banker Bulletin
Morning Scan
25 Most Powerful Women in Banking The Mentor Factor
Brand Awareness Studies
Case Studies
Classified Advertising
Co-Branded Emails
Conferences
Contract Publishing
Cover Wrap/Bellyband
Custom Events
Custom Publishing
Custom Research
Dedicated Dialogues
Donor Subscription Program
eBooks
Executive Roundtables
Inserts
List Rentals
Marketplace Buyer’s Guide
Microsites
Online Surveys
Podcasts
Polybag/Envelopes
Reprint Services
Supplements
Videocasts
Web Seminars
White Papers
Print ONLINE ENEWSLETTERS EVENTSCUSTOM SOLUTIONS
BankTechNews.com Bank Technology News Bulletin
We are dedicated to meeting your marketing needs and growing your business. Our strongest programs are those that we custom build for our clients, based on their marketing and sales objectives. From building brand recognition to generating leads to crafting custom programs, Credit Union Journal has a solution for you. Make your budget work harder in 2011 by combining the right advertising solutions to achieve short- and long-term goals.
Visit Solutions.SourceMedia.com to learn how we can build your custom marketing program.
february 5,2007
T h e F i n a n c i a l S e r v i c e S d a i l yVo l u m e C L X X I V N o . 8 7 A m e r i c a n B a n k e r. c o m
SuBSCrIptIoNS: 800-221-1809
May 7, 2009thursday
KBW Bank Index 11.5%ABA/Nasdaq Index 3.2%
toDAY’S NEWSBanks needing more capitalwill have until June 8 to develop a plan and until Nov. 9 to implement that plan, regulators said. Page 2
WASHINGtoNThe Senate approved a bill that would increase the FDIC’s borrowing authority. Page 3
MortGAGES Pipeline: An upcoming horror film depicts the consequences of denying a mysterious woman a loan extension. Page 4The number of underwater homeowners continued to grow in the first quarter as home prices dropped further, a Zillow report says. Page 4Lenders that financed eight General Growth Properties malls want them removed from the company’s Chapter 11 bankruptcy case. Page 4
CoMMuNItY BANKING Page 5
CArDS Discover says it expects its loan chargeoff rate to rise to about 8% this quarter. Page 6
WEALtH MANAGEMENtFidelity Investments says it manages the most assets for U.S. millionaire households, followed by B of A and Goldman Sachs. Page 7
tECHNoLoGYA subprime auto lender is testing two types of technology that it hopes will make its debt easier to sell. Page 9Jack Henry execs say they are not concerned about Metavante’s deal to sell itself to Fidelity National Information Services. Page 9
MArKEt MoNItorBlackRock, Federated Investors and Franklin Resources made preliminary bids for B of A’s mutual fund unit, sources say. Back pageHuntington is teaming up with the state of Ohio to lend to companies there. Back page
Though 13 banks have bought back preferred shares issued through the Treasury Depart-ment’s capital initiative, all but one continue to haggle with the government over the price of the program’s warrants.
Only two banks have completed the process of exiting the Capi-tal Purchase Program, and the first was the privately held Centra Financial Holdings Inc. of Mor-gantown, W.Va.
To buy its way out of the gov-ernment’s $15 million investment, the $1.2 billion-asset company proposed paying a dollar for each of its 750 warrants. The Treasury insisted on the $1,000 face value, or a $750,000 payment.
“It was incredibly unfair,” said Douglas Leech, Centra’s chairman, president, and chief executive offi-cer. The company’s board opted to proceed with the sale rather than continue to operate under restrictions enacted by Congress in recent months, or risk dilution for other investors. “We felt that the financial penalty for staying in the program would have been exponentially greater,” Leech said.
Another TarpTangle: PriceOf Warrants
So close and yet so far away.First State Bancorp. in Albu-
querque was well on its way to sat-isfying regulators’ capital require-ments when it ran into another setback.
Under a regulatory order, the company’s $3.5 billion-asset bank must boost its total risk-based capital ratio to 12%. A deal that First State made in March to sell its Colorado branches would have accomplished that.
But last week the company reported a wider-than-expected loss for the first quarter. The loss ate up so much capital that it now could take several quarters to hit the target in the September order. And in all likelihood, First State will have to do so by continuing to shrink itself; its shares are trad-ing below book value, making an equity sale prohibitive.
“If the capital markets would free up a little, we would consider”
Loss Means Branch Sale Won’t Lift Capital After All
The suggestion was barely out of Federal Deposit Insurance Corp. Chairman Sheila Bair’s mouth before lawmakers began embracing the idea of creat-ing a systemic risk council to over-see large financial companies.
To date discussions about a systemic regulator have centered on expanding the Federal Reserve Board’s powers. For months Sen-ate Banking Committee Chairman Chris Dodd and other senators have expressed concern about that idea, given the central bank’s track record in the run-up to the finan-cial crisis.
At a hearing Wednesday, Bair offered the first real alternative: a council composed of existing reg-ulators that would have the “teeth” to intervene when necessary.
The idea quickly drew favor from Dodd and others.
Council for SystemicOversightGains Steam
Not JustThe Fed“Nobody really has a handle right now on the entire system,” Bair said, proposing a panel of several agencies to police big firms.
Labor DayAssets per employee at selected large banking companies. Dollars in millions. Additional data begins on page 10
The ever-shrinking bank divi-dends could start vanishing.
After drastic cuts over the last year or so, more large banking companies might have to suspend their dividends to raise capital to counter mounting losses.
“When you’ve got loan losses, you’ve got to come up with the money [to cover them] some way,” said Ed Yardeni, the president of Yardeni Research Inc. “Paying out dividends just doesn’t make any sense.”
Most of the major banking firms have cut their dividend to a dime a share or less as the reces-sion has deepened. But the fear of losing investors has made these firms reluctant to discard divi-dends completely. Also, keeping even a small one lets them tout a track record of cutting checks to
A Penny for Your RecoveryWhy any dividend might now be too steep
Online account opening’s notexactly on the IT frontier ,but its potential as a low- costengine for deposit growth pro-vides a new option for the fu-ture of community and re-gional banks.
“It’s...almost a standalonebranch without overhead,”says Stratton Huggins, a vp ofmarket ing for RenasantBank, a $4 billion institutionbased in Tupelo, MS.
Renasant generated $1 mil-lion in online account openingsin five months starting in latein 2008 after it outsourced thefunction to Goldleaf Finan-cial Solutions. The bankachieved those results withminimal increase to call centerstaffing and no branch expan-
sion. “It costs a lot less than the$25,000 per month it wouldcost us to open, provide staffand pay for one new brick andmortar branch,” Huggins says.
Smaller banks’ outsourcingof electronic account openingsto Andera , Me tavan te ,Goldleaf and others on a pay-per-transaction basis has thusfar lagged the actual innova-tion—much of the technologyis a couple of years old, andmost large banks already offer
Fighting external fraud has become like whack-a-mole; with theonline channel increasingly secure, organized crime has taken to ex-ploiting the weaknesses in the call center as they evolve their multi-channel business model. The mallet that accompanies the carnivalgame might be easier to wield, but the biggest banks are lookingat PINs, voice biometrics, automated KBA, and enterprise fraud de-tection to combat shape-shifting fraudsters.
“Call center authentication is the biggest pain point to me rightnow,” says Stan Swalbenest, remote channel risk director in con-sumer risk management at JPMorgan Chase. “When I look at myportfolio, the biggest risks I see are social engineering-through thecall center, through the branch.”
JPMorgan Chase certainly isn’t alone. Call center fraud is increas-ingly sophisticated, with reps vulnerable not just to advanced social
banktechnews.com
BOFA GREETSCUSTOMERSIN AN ANTI-
PHISHING“TEACHABLE
MOMENT” Page 13
FLASHING BLINGMobile payments gets anew playerPage 10
IN THE SUNA Phoenix bank opens itsroof to solar powerPage 14
After Heartland Payment Systems suffered its massivebreach in January, CEO RobertO. Carr issued a call to action,suggesting payments playersimplement end-to-end encryp-tion and share breach forensicsamong themselves. Some dis-missed this rant as a public re-lations strategy to distract fromHeartland’s culpability in thecase, but Carr made good onhis word in early May with theformation of the Payments Pro-cessing Information SharingCouncil (PPISC).
Carr kicked off the inauguralmeeting of the PPISC as a newsubsidiary of the Financial Ser-vices Information Sharing andAnalysis Center (FS-ISAC), firmin his belief that the entire indus-try would benefit from the
CALL CENTER
Phone FraudAdvancesBiometricsThe call center is the weakest link in multi-channelfraud; voice biometrics emerge as a viable solution
CHANNEL MIGRATION
Grow Without Getting BigCommunity banks outsource e-account opening for low-cost deposits
SECURITY
BreachSharingGets Off theGroundHeartland’s call for the industry to work together finds willingparticipants
BY THE NUMBERS
JUNE 2009 TECHNOLOGY INNOVATION. BUSINESS RESULTS. VOL. 22 NO. 6
$4.9 billion
$2 billion
25%
IS EMV THEANSWER?
Whether it’s a bold acquisition, a shrewd secu-rity play, a payments platform or energy-savingdata center, these firms are making waves thatbuck the economic storm.
February 2009 Beyond Business as Usual
us-banker.com
Microfinance is filling an importantniche for an under-served and
unbanked U.S. population, and it’sattracting big banks like Citi to
the movement. Can a for-profitmodel coexist with the spirit
and mission behind this anti-poverty strategy?
TREASURY, TARP ON TRIAL
Community bankers are up in arms over theFDIC’s hike in risk-basedassessment rates. Theirargument: Risks to thesystem are higherbecause of the actionsof the biggest banks.
THE SINS OFOTHERS
‘09 AD BUZZWORD:STABILITYMarketing budgets may decline for a thirdstraight year. But somebanks see opportunitywith consumers andinvestors looking for DDA safe-havens.
MICRO MISSION,
MACROCHALLENGE
0902USB_cover.3.qxd 1/12/09 4:43 PM Page 1
CREDITUNIONJOURNAL
Technology ReportPages 15-22
T H E N A T I O N ’ S L E A D I N G I N D E P E N D E N T C R E D I T U N I O N N E W S W E E K L Y
Vol.XIII, No 33 August 17, 2009
cujournal.com
By Matt Blumenfeld, Reporter
BIRMINGHAM, Ala.–Is the record number of CU liquidations in2009 a reflection of regulatory agencies acting quickly–or too late?
Some analysts have questioned whether state and federal regulatorshave been up to the task as losses have mounted and net worth hasdeclined into low single digits at some credit unions, forcing closures,P&As, and losses to the insurance fund. But regulators told CreditUnion Journal they have acted as quickly as possible, and that in casessuch as the red numbers posted by some corporate CUs, no one could
State Agencies Say Losses, Closures NotReflective Of A Lack Of Oversight
2010 MarketplaceDirectory Out Next Week
Used Car DealerConvicted In Repo Fraud
MidFlorida FCU ConvertsTo State Charter
Tricorp Slashes Dividend On CUThat Gave Withdrawal NoticeBy Matt Blumenfeld, Reporter
RUTLAND, Vt.–One CEO here is wondering if the rate his corporateis paying is reflective of market realities, or is it a punishment?
After the conservatorship of US Central and WesCorp and numerousother shocks to the corporate system, Credit Union of Vermont CEO
Brian Fogg was simply looking outfor his members, he said, when hegave Tricorp its 36-month notice
that it intended to withdraw all of its funds from the corporate.Nearly two months after that notice was given, Fogg was surprised to
hear from Tricorp CEO Steve Roy that the corporate’s board decided toplace all MCS accounts from credit unions that had given notice into adifferent classification and cut their dividends to just one basis point.Because the corporate was paying just 12 basis points on the $110,000that CU of Vermont had with Tricorp, the move was not one to savemoney but was instead a “slap” at CUs that were looking outside the cor-porate system, Fogg contended.
“Corporates have cost [natural person] credit unions tremendous loss-
see our ads inside!
The Role Of Regulators
DEADLINE
By Matt Blumenfeld, Reporter
MADISON, Wis.–Credit unions across the country are scrambling tocomply with the open-ended lending segment of the CARD Act thatgoes into effect on Aug. 20.
Several sources and CU CEOs indicated they are not prepared to bein full compliance, and both CU trade groups were lobbying for exten-sions as Credit Union Journal was going to press. The rule requires finan-cial institutions to notify consumers what they owe on open-end prod-ucts 21 days before the bill is due. If an institution fails to send thisnotice, the account cannot be considered late.
CUs Scramble As CARDCompliance Days Away
ON
Index
unSocial MediaHow CUs Are Using MySpace, Facebook To Track Down Debtors
By Kevin Jepson,Technology Correspondent
WEST JORDAN, Utah–The collectionsteam at Mountain America CU here is usingFacebook and MySpace to find memberswho aren’t paying their credit union loans.
By Ed Roberts, Washington Bureau Chief
LAS VEGAS–In last week’s NCUA takeover of Community One FCUthere was little doubt the troubled credit union’s net worth ratio was farbelow the critical level set under NCUA’s minimum capital rules.
The $160-million credit union, which wracked up almost $12 millionin losses over the last 18 months, had less than 1% of net worth, wellbelow the 2% level where NCUA rules qualify a credit union as “criti-cally undercapitalized.”
But the NCUA’s net worth calculations leave a lot of discretion by theregulators and management in determining what qualifies for net worth.
In the recent takeover of Mutual Savings CU in Birmingham, Ala.,
No Standard For Net Worth LeavesCalculation In Eye Of The Beholder
20112011
CUJournal.com Daily Breifing
2011Ja
nu
ar
yF
eb
ru
ar
ym
ar
ch
ap
ril
Jun
eJu
lya
ug
us
ts
ep
te
mb
er
oc
to
be
rn
ov
em
be
rd
ec
em
be
rm
ay
issue materials due special reports bonus distribution
1/31/101/171/241/31
12/22/2010 12/29/2010 1/5 1/12 1/19
2011 Preview/The Year AheadLending in 2011TechnologyGrowth Strategies for 2011Fraud & Risk Prevention
2/72/142/212/28
1/262/22/92/16
Insurance & Non-Interest Income SourcesTechnologyCredit/DebitCUNA GAC Issue
• NAFCU Technology & Security Conference, Las Vegas; CUES Symposium
• CUES Executive Summit• CUNA’s Governmental Affairs Conference, Washington, DC
3/73/143/213/28
2/233/23/93/16
CUSOsAuto LendingTechnologyAd Recall Study
• CO and MO Credit Union Leagues’ Annual Meetings
4/44/114/184/25
3/233/304/64/13
LendingThe Bottom Line ReportTechnologyInsurance & Non-Interest Income Sources
• OH, CT, IL, VA and MN Credit Union Leagues’ Annual Meetings• DE, KS, SC Credit Union Leagues’ Annual Meetings; NAFCU CEO’s Conference; CUNA HR/TD Council Annual• Texan Credit Union League Annual Meeting, NACUSO Annual Meeting
5/25/95/165/23 5/30
4/204/275/45/115/18
Credit/DebitMobile Banking ServicesFacilities/Branch AutomationTechnologyMortgage Lending
• GA and WI Credit Union Leagues’ Annual Meetings• MI, MS, PA Credit Union Leagues’ Annual Meetings• CUNA CFO Council Annual Meeting; ME Credit Union League Annual Meeting
• NM, NE, NY Credit Union Leagues’ Annual Meetings
6/66/136/206/27
5/256/16/86/15
2011 2nd Half ForecastTechnologyCUNA America’s Credit Union ConferenceNAFCU Annual Conference & Exhibition
• Mid-America Credit Union Association Annual Meeting• NC, AZ, FL/AL Credit Union Leagues’ Annual Meetings• CUNA’s America’s Credit Union Conference• NAFCU Annual Conference & Exhibition; CUES Annual Conference
7/47/117/187/25
6/226/297/67/13
LendingCorporate Credit UnionsTechnologyCompliance
• WOCCU World Conference, Scotland
8/18/88/158/228/29
7/207/278/38/108/17
Strategic Planning 2012Credit/DebitFraud & Risk PreventionTechnology2012 Marketplace & Buyer’s Guide Directory
• LA Credit Union League Annual Meeting
9/59/129/199/26
8/248/319/79/14
Mortgage LendingComplianceTechnologyThe Big Branch Report/Facilities
• MN, IA Credit Union Leagues’ Annual Meetings• NAFCU Congressional Caucus• WA Credit Union League Annual Meeting
10/310/1010/1710/2410/31
9/219/2810/510/12 10/19
Auto LendingTechnologyDay in the Life of Credit UnionsInsurance & Non-Interest Income Sources Facilities/Branch Automation issue
• KY, CA/NV Credit Union Leagues’ Annual Meetings• OR Credit Union Association Annual Meeting
11/711/1411/2111/28
10/2611/211/911/16
Credit/DebitCorporate Credit UnionsTechnologyBest Practices Awards
12/512/1212/19
11/2311/3012/7
Ad Recall StudyTechnology2011 Year in Review
• CUES Directors Conference
The editorial calendar and bonus distribution are subject to change. Please contact your sales manager for the current schedule.
E d i t o r i a l C a l E n d a r
media.CUJournal.com
2011P Display aDvertising rates
Four CoLor
FreQUenCy 1X 7X 13X 26X 39X 52X
Tabloid Spread $10,780 $10,455 $10,145 $9,840 $9,590 $9,335
Half Tabloid Spread $9,825 $9,530 $9,270 $9,020 $8,800 $8,560
Full Page $6,780 $6,580 $6,380 $6,190 $6,040 $5,875
Junior Page $5,815 $5,640 $5,470 $5,310 $5,150 $4,995
¹/³ Page $4,770 $4,630 $4,490 $4,350 $4,220 $4,100
¼ Page $3,970 $3,850 $3,735 $3,620 $3,510 $3,410
Two CoLor
FreQUenCy 1X 7X 13X 26X 39X 52X
Tabloid Spread $10,050 $9,755 $9,460 $9,170 $8,945 $8,705
Half Tabloid Spread $9,085 $8,815 $8,575 $8,340 $8,135 $7,915
Full Page $5,765 $5,875 $5,695 $5,525 $5,385 $5,245
Junior Page $5,085 $4,935 $4,785 $4,640 $4,505 $4,370
¹/³ Page $4,040 $3,925 $3,805 $3,690 $3,580 $3,475
¼ Page $3,240 $3,140 $3,050 $2,955 $2,870 $2,885
BLaCk & whiTe
FreQUenCy 1X 7X 13X 26X 39X 52X
Tabloid Spread $9,500 $9,215 $8,940 $8,670 $8,450 $8,225
Half Tabloid Spread $8,540 $8,285 $8,065 $7,845 $7,650 $7,445
Full Page $5,585 $5,420 $5,255 $5,100 $4,970 $4,840
Junior Page $4,630 $4,490 $4,360 $4,230 $4,100 $3,980
¹/³ Page $3,575 $3,470 $3,365 $3,265 $3,170 $3,070
¼ Page $2,770 $2,690 $2,610 $2,525 $2,450 $2,380
PreMiuM PoSiTioN ChargeS
Back Cover (13X min) + 20%
Inside Front Cover + 15%
Center Spread + 15%
Guaranteed Position + 10%
P Classified RatesMarketplace Weekly rates — Four color
fReQUeNCY 4X 12X 25X 52X
1 column inch x 4 inches $2,350 $3,780 $7,350 $12,060
2 column inch x 4 inches $3,590 $5,190 $7,530 $14,460
2 column inch x 6 inches $4,890 $6,950 $12,030 $18,980
3 column inch x 3 inches or 1 column inch x 12 inches
$5,680 $7,330 $13,000 $19,820
3 column inch x 6 inches (half page) $7,600 $19,380 $37,050 $66,300
3 column inch x 12 inches (full page) $10,000 $25,500 $48,750 $87,100
CareerZone Line rates — (MiniMuM 1 CoLuMn inCh x 4 inChes)
FREQUENCY 1 WEEk 2 WEEk SpECiaL BLiNd Box 52 WEEkS
Cost $390 per column inch
$350 per column inch $295 $90
Size Breakdown requirementS
1 column inch = 3 inches Submissions must be in 300 DPI, CMYK, grayscale in PDF, JPG, TIFF or EPS format.
2 column inch = 6.5 inches The deadline for art is Close-of-Business Wednesday for publication the following Monday.
3 column inch = 10 inches All art should be submitted to the sales representative and copy [email protected].
P Online Advertising rAtesHome Page advertising
Ad size dimensiOn (pixels)
mAx File size
price (per mOnth)
Accepted FOrmAts*
Leaderboard 728x90 23k $5,690 R Static or Animated GIF
R JPEG
R Rich Media (HTML & Flash)
R Third Party, Redirects or Internally via DoubleClick
Medium Rectangle 300x250 25k $5,070
Skyscraper 120x600 25k $4,555
Marquee 234x60 12k $3,620plus 20 words of copy
Button 120x90 10k $2,280
*Plus a single referring URL (destination page/site)
dePartment advertising
depArtment Ad dimensiOns (pixels)
mAx File size
price (per mOnth)
Choose your Department:
R Technology
R Corporate Credit Unions
R Financial Performance
R Insurance
R Lending
R Facilities
R Mortgages
R “Roadblock” Exclusive position on all spaces within department
n/a n/a $6,830
R Leaderboard 728x90 23k $3,415
R Medium Rectangle 300x250 25k $4,660
R Skyscraper 120x600 25k $2,845
R Marquee 234x60 12k $3,210 plus 20 words of copy
R Button 120x90 10k $1,710
enewslettersdAily BrieFing (per week) When you sponsor the Daily Briefing, your text or graphic message is seen by over 6,000 decision-makers at credit unions.
120x90 plus 50 words of copy $2,380/week
*Additional ad sizes are available upon request. Contact your sales manager.
15% commission to recognized advertising agencies. See advertising contract or account representative for agency commission and cancellation terms.
media.CUJournal.com
2011P Custom Advertising dEdiCatEd dialoguEs
4 pages $15,620
6 pages $24,780
8 pages $32,590
spotlight rEports
2 pages $7,245
Co-BrandEd Emails
Per Email $2,275
WEB sEminars
Per Event $15,525
*All ranks are net.
Custom programs and EvEnts
Contact your sales representative for all custom programs and event sponsorships.
print mEChaniCal spECifiCations
dimensions Width x height
Full Page Spread 21” x 12 ¾”
Full Page Tabloid 10” x 12 ¾”
Junior Page 7 7/16” x 10”
½ Page Vertical 4 7/8” x 12 ¾”
½ Page Horizontal 10” x 6 ³⁄ 8”
¹/³ Page Square 7 7/16” x 6 ³⁄ 8”
¼ Page Vertical 4 7/8” x 6 ³⁄ 8”
¼ Page Horizontal 7 7/16” x 4 ¼”
Printing Process: Web Offset, SWOP standards applyTrim Size: 10 7/8” x 12 ¾” Live Area: 10” x 12 ¾” Bleed: 11 1/8” x 14”Binding Method: FoldBlack & White: Negatives, RRESD, film base 4 mil. Half tone screens 85–100 line. Furnish print with each negative.
P CreAtive FormAts & speCiFiCAtions [print]pdF speCiFiCAtionsWe prefer to receive digital advertising files in Adobe’s PDF format created from an Adobe application using the PDF/X-1a:2001 specification. Typically, PDF files are created from Postscript files utilizing Adobe Acrobat Distiller, but PDF’s created directly from InDesign will work as well. We do NOT recommend exporting PDF files directly from your native operating system, Quark or other non-Adobe applications. The results of exporting from non-Adobe applications can be unreliable and will not meet our specifications because the profiles listed below were not used in the creation process.
Creating PDF’s from InDesignFrom the File –> Adobe PDF Presets menu, choose PDF/X-1a:2001. Then choose Export from the File menu.
Creating PDF’s from QuarkFirst you will need to create a Postscript file from Quark and then create the PDF with Acrobat Distiller.There are two files you should download and utilize in the creation of both your Postscript and PDF files from our FTP site:
PostScript Printer Description FileThe PostScript Printer Description (PPD) file is used by Quark and the PostScript for the creation of your Postscript file. Download this file, uncompress, and then place in the following folder for your respective Operating Systems:
Ftp://AdDrop:[email protected]/Distiller%20Settings/DDAPv3_PPD.sitOS 9: Macintosh HD/System Folder/Extensions Folder/Printer Descriptions Folder/OS X: Macintosh HD/Library/Printer/PPDs/Contents/Resources/en.proj/
Ftp://AdDrop:[email protected]/Distiller%20Settings/DDAPv3_PPD.zipWindows: C:\WINNT (or WINDOWS in XP)\system32\spool\drivers\w32x86\3
Adobe Acrobat Distiller Setting FileThis Adobe Acrobat Distiller job profile will automatically setup Distiller with the correct settings to create PDFs from your Postscript files. Download this file, uncompress, and then placed in the following folder for your respective Operating Systems:
Ftp:// AdDrop:[email protected]/Distiller%20Settings/SourceMedia.joboptions.sit
OS 9: Macintosh HD/Application/Adobe Acrobat X/Distiller/Settings/*OS X: Macintosh HD/Users/Shared/Adobe PDF X/Settings/*
Ftp:// AdDrop:[email protected]/Distiller%20Settings/SourceMedia.joboptions.zip
Windows: C:\Program Files\Adobe\Acrobat X\Distiller\Settings** X denotes the Adobe Acrobat version. The installation location of your Adobe Acrobat may vary.
postsCript CheCklistPrior to making the Postscript file, please check your file to make sure that it meets the following SourceMedia’s specifications:Check Page Sizen Page size should not be larger than the maximum allowable dimensions. Maximum single page
image area is: 11” W X 17” H and maximum spread image is: 22” W X 17” H. n All pages should be built to trim size. All bleed elements should extend 1/8” or more beyond trim
size. The trim sizes for our publications are detailed in our rate card.
Check Colors usedn Ensure all color NOT intended to separate as a spot color is defined as Process color (CMYK)
Check Fontsn Ensure that all fonts used are PostScript type 1 fonts. We do not accept TrueType or
MultipleMaster fonts.
Check Imagesn All images must be CMYK or Grayscale TIFF or EPS between 200 & 300 DPIn Do not nest EPS file into another EPS file n Do not embed ICC profile with imagesn Total area density should not exceed SWOP standard of 300%
CreAting pdF Ads in ACrobAt distillerCreate a PostScript file from your page layout application, using the DDAP PPD that you downloaded. Make sure you only output one page per Postscript file.n Launch Acrobat Distillern Select the SourceMedia Distiller Job Optionn Drag your PostScript file on to the Distiller window to create your PDF file
ProofsAll color documents must include a SWOP standard color proof. We will attempt to color-match on press, as closely as possible, to what is provided. All B/W documents must include a composite laser.
Files can be sent on CD/DVD ROM or via FTP
Ftp inFormAtion (With proofs sent to the indicated address.)Set your FTP Client software to the following configuration:FTP Site Address: ftpfiles.sourcemedia.comUser Name: AdDrop Password: rainbow Upload files to: /dropbox/AdMaterialsWhen files are uploaded, please notify Production Department.
Send files with proofs to:SourceMedia/Credit Union Journal, One State Street Plaza, 27th Floor, New York, NY 10004Attn: Advertising Production Manager
R Brand Awareness Studies
R Case Studies
R Classified Advertising
R Conference Dailies
R Conference Sponsorships
R Custom Events
R Custom Publishing
R Custom Research
R Dedicated Dialogues
R Donor Subscription Programs
R eNewsletters
R Executive Roundtables
R Marketplace Buyer’s Guides
R Microsites
R Online Surveys
R Podcasts
R Reprint Services
R Sponsored Supplements
R Videocasts
R And More
media.CUJournal.com
2011ACCEPTED FORMATS
SourceMedia uses DART for Publishers. DART for Advertisers clients are encouraged to submit Internal Redirects. Other accepted formats are Static GIF, Animated GIF, JPEG, Flash and a variety of DART approved third-party Rich Media Agencies such as Atlas, Mediaplex, Point Roll, EyeBlaster, etc.
RICh MEDIA SPECIFICATIONSAdobe Flash: (We support up to Flash version 9)Please include the following:n Compressed Flash file (*.swf)n A backup GIF or JPEG image file
Compiling your *.fla file into a *.swf file:1. Create the Flash ad in the form of a button.
In the button object Action (TOP LAYER): n Use clickTag command as part of the getURL and check the URL Expression box.
The clickTag variable means that you do not need to hard code a click through URL or click command into the .swf file. The clickTag variable is given a value in the Rich Media code in the ad server, which is passed into the clickTag variable in the .swf file once the ad is clicked on.
n Set the target Window as _blank. Do not check the Window Expression box. n Set the Variables as “Don’t Send.”
2. Use a single click-through URL for your campaign.Button Object Action getURL example:
on (release) { getURL (_level0.clickTag, “_blank”); }
3. All files should begin with the same file name. For example, abc.468x60.swf and abc468x60.gif
4. In order to preview the background color of your .swf file in DART for Publishers, ensure it is not set in Flash. Instead, set the bottom/last layer to have a graphic that spans the complete movie, so no matter what the background color is set to the user will always see the background color.
Note: When submitting a Macromedia Flash banner(s) you must supply a compiled .swf file and a standard GIF or JPEG image file used as back-up for non-Rich Media enabled browsers. Please Include the URL for each ad campaign.
For more information, contact:Salman [email protected] x127
P CreAtive FormAts & speCiFiCAtions [online] P sourCemediA terms oF Agreement [print And online] COMBINATION RATES
Available to any Customer or General Rate Advertiser who contracts a minimum of six (6) pages in any combination of SourceMedia brands within a given market group.
INSERTS
Furnished inserts are billed at black and white space rates plus non-commissionable mechanical charges. Each side page of an insert will count as one (1) insertion toward combination rates or frequency discounts. Call your Advertising Sales Representative if you require further details.
AgENCY COMMISSION
15% of gross billing to recognized agencies, provided account is paid within 30 days of invoice date.
CANCELLATION CLAUSE (ONE WEEk PRIOR IN WRITINg)
Cancellation, in writing, permitted only before ad close date. No refunds will be issued on scheduled pages cancelled after the close date. Cancellations on premium positions will not be accepted. All incomplete schedules are subject to a short rate. All prices quoted are contingent upon fulfilling the obligations of the program you select. Any changes in the level of commitment will result in short-rates to the published 2008 rates. Online contracts must be canceled with 30 days with notice in writing.
PAYMENT TERMS: NET 30 DAYS
PAYMENT REMITTANCE ADDRESS
SourceMedia, Inc.PO Box 71633Chicago, IL 60694-1633
SALES CLAUSE & DISCLAIMERS
SourceMedia reserves the right to cancel or reject any advertising at any time, and to add the word “advertisement” at the top of any copy which in SourceMedia’s opinion simulates editorial matter and might be misleading to the reader.
SourceMedia will not be bound by any conditions, printed or otherwise, appearing on order blanks or copy instructions when such conditions conflict with regulations set forth in the rate card.
SourceMedia is not liable for delays in delivery and/or non-delivery in the event of an Act of God, action by any government or quasi-government entity, fire, flood, insurrection, riot, explosion, embargo, strikes whether legal or illegal, labor or material shortage, transportation interruption of any kind, work slowdown, or any combination beyond the control of SourceMedia affecting production or delivery in any matter.
No conditions printed or otherwise, appearing on the space order, billing instructions or copy instructions which conflict with the publisher’s stated policies will be binding on the publisher. SourceMedia’s liability for any error will not exceed the charge for the advertisement in question. SourceMedia assumes no liability, if for any reason it becomes necessary to omit an advertisement. SourceMedia also reserves the right to limit the size of space to be occupied by any advertisement.
Requests for specified position at run of position (ROP) rates are given consideration but no guarantee is made unless the position premium has been provided for in the contract.
SourceMedia reserves the right to hold advertisers and/or their agencies jointly and severally liable for such monies as are due and payable to the SourceMedia.
Unless otherwise agreed upon, materials will be picked up from the most recent insertion.
SUBMISSION INFORMATION
One-pixel border: SourceMedia highly recommends inserting a one-pixel border around the ads that have a white background so the user may be able distinguish it from white background areas of the site.
Referring URL/link and Tracking: SourceMedia will not schedule any campaigns with inactive referring URL/link (destination page/site) or 1x1 tracking pixels.
FTP INFORMATION
Email or FTP Information: Send materials and files using the following FTP. Please use the name of the folder or the subject line of the email to specify the name of the product where your ad will run.
Email materials/notification to your Online Ad Traffic Coordinator at [email protected].
FTP Site Address: ftpfiles.sourcemedia.comUsername: aduserPassword: fulcrum29
One State Street Plaza, 27th Floor, New York, NY 10004
BESTPRACTICESCREDIT UNION JOURNAL2010CU Journal Issues Call For Entries For Best Practices Awards. Go to www.cujournal.comFor Details
More Losses Recorded,Higher Assessment LikelyALEXANDRIA, Va.–NCUA had more bad news for credit unions last week, announcing it has added eight more credit unions to its troubled list and set aside an additional $170-million to cover losses at natural-person credit unions. The additional re-serves cut the reserve ratio for the National CU Share Insurance Fund and, with two other nega-tive indicators, point to a higher premium assessment later this year, agency officials said during the NCUA Board’s monthly meet-ing. The other negative indica-tors are significantly lower inter-est earnings on the NCUSIF’s $9.4 billion in Treasury securi-ties, and high share growth of 11% for the first quarter of the year, which would cause to greater dilution of reserves later in the year. NCUA had originally
budgeted $750 mil-lion for losses in
natural-person credit unions, but the addi-tional reserves increased that pot to $896-
million. Me-linda Love, chief examiner for NCUA, warned of increasing losses as the condition of some of the deteriorating, large
credit unions becomes clearer. “There is an increasing potential that $750 million will not be sufficient to cover the potential losses (of those troubled, large credit unions),” said Love. “We’ll know more about losses at the big credit unions later in the summer. The losses by natural-person credit unions are one of the two components that will figure into a special assessment credit unions will be charged this year, with a separate payment
Vol.XIV, No 21 May 24, 2010
ONDEADLINECRED IT UNIO N
JO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
Continued on page 24
Auditors Express Doubts On Corps
WARRENVILLE, Ill.–Losses for corporate credit unions continue to pile up at an accel-erated pace, raising doubts about the corpo-rates’ ability to continue as “going concerns” and new questions about whether NCUA will be forced to go back to Congress and seek ad-
ditional assistance for the corporate bailout.Growing losses at Members United Cor-
porate FCU have eliminated almost all of the $9.5-billion corporate’s member capital and “raise substantial doubt about Member Unit-ed’s ability to continue as a going concern,” the corporate’s auditors McGladrey & Pullen
Continued on page 24
Index
cujrounal.com
Bill Creates New Problems For CUsPage 3
Earnings Up Despite Loan SlowdownPage 3
CU Launches Site With Goal Of Doubling MBLs
Page 4
‘Private Member Advisor’ Aims To Help Deepen Member Relationships
Page 4
Self-Help CU Uses Secondary Capital To Finance New CDCU
Page 5
Don’t Confuse Bigger With Better
Page 8
NEW ORLEANS–To get a sense of how balance sheet demands have changed for credit unions one need travel no further than the CFO Council’s annual meeting here last week.
Finding income streams, especially to replace those that will likely be diminished under pending rules related to Reg E and plastic cards, and knowing at a greater level of detail exactly what each member and product means to the credit union were primary discussion points. While a number of presenters and CFOs on hand stressed the importance of not losing sight of why credit unions exist, little doubt was left that compressed margins have left few choices but to reexamine fees and pricing.
Yet even with an overhaul of those revenue streams, the silver lin-Continued on page 23
WEST PALM BEACH, Fla.–Hacking into your credit union’s da-tabase has never been so cheap and easy, thanks be to Zeus.
Wanna-be fraudsters are just an Internet connection away from down-loading free, effective hacking tools from criminal websites and file-shar-ing programs. The most pernicious free
tool on the Net today? Certainly the Zeus Banking Trojan, malicious software that can download itself onto computers and steal data.
5 Cheap, Easy Ways to Hack-A-CU
How 1 CU Grew Its MBL Volume By 2,900%
ERIE, Penn.–A novel indirect lending program for a wide variety of consumer products, combined with an aggressive marketing and com-munity outreach campaign, has led to big results for one CU here.
Erie FCU has seen its business lending portfolio swell from $275,000 in 2007 to nearly $8 million by the end of 2009 and more than doubled its num-
ber of “Business Affinity Partners,” the term it uses for SEGs.“When I was going out to recruit new businesses to join the credit
union (in 2008), they were telling me about how they were struggling in this economy,” VP of Business Development Sandi Carangi said, explaining that area businesses were chiefly concerned with their cus-tomers’ lack of credit access. “A lot of the credit companies they were going through were no longer approving loans to anyone had a credit
Continued on page 19
Continued on page 24
By Frank J. Diekmann, Editor
By Kevin Jepson, Technology Correspondent
By Matt Blumenfeld, Reporter
Kids, Try This At Home
SPECIAL REPORT: TECHNOLOGYSee pages 13-19
Old Scammers Eye New Targets
PLEASANTON, Calif.–With enforcement of the new Red Flag rules imminent, a new analysis suggests scammer are now seeking out other weak links.
The report from Javelin Strategy & Research found that the per-centage of fraud victims whose accounts were taken over by change of address declined to 24% in 2009 from 66% in 2006 as institu-tions began to comply with the RFR requirement to provide an
Continued on page 24
By Ed Roberts, Washington Bureau Chief
CUNA CEO Dan Mica, Michigan Economic Development Corp.’s Paul Brown and Kalamazoo County State Bank CEO James MacPhee testify before Congress. For hearing coverage, see page 10.
By Matt Blumenfeld, Reporter
Finding New Revenue Streams In Wake Of Rules Tops CFO Agenda
see our ad inside!
CUJ052410_page01 1 5/20/2010 3:05:48 PM
BESTPRACTICESCREDIT UNION JOURNAL2010CU Journal Issues Call For Entries For Best Practices Awards. See Page 5 For Details
MasterCard Offers Windfall To Its CU StockholdersPURCHASE, N.Y.–MasterCard, one of just two stocks owned by credit unions, announced a ma-jor windfall for credit unions with the conversion of closely held Class B shares to commonly traded Class A shares.
The company, which issued
Class B shares to its credit union and bank owners as part of its 2006 initial
public offer-ing, announced that 7.5 million Class B shares will be eligible for conversion under a four-week program. Effec-
tive June 1, all of those Class B shares were converted to Class A shares on a one-for-one basis and now are eligible for sale on the open market.
Class A MasterCard shares, under siege recently because of proposed legislation to lower card interchange fees, closed up 63 cents last Wednesday at $201.02 in the wake of the an-nouncement.
Hundreds of credit unions re-ceived Class B shares in the IPO and were forced to hold a large portion of those shares for three years. Credit unions also received Visa shares as part of Visa’s 2008 IPO. The two issues are the only common stocks credit unions are permitted to own.
CU Card Card Portfolio Sales Likely To Hit New Low In ‘10PETERBOROUGH, N.H.–Credit unions appear to be on track to make 2010 the year of the fewest sales of credit card portfolios.
During the first quarter, just two portfolios of more than $1 million in outstandings were sold, according to TRK Advisors,
Vol.XIV, No 23June 7, 2010
ONDEADLINE
CUs Hit The Hill To Push For Interchange Relief
WASHINGTON–Credit unions will be making a last-ditch effort to lobby Congress on the issue of interchange this week with a CUNA-sponsored “National Hike the Hill.”
At press time, the num-ber of credit union reps expected was reportedly lower than anticipated, but CUNA said it was confident attendance will be strong.
CUNA President Dan Mica has called on credit unions to rally in Washington June 8 and 9 to show their dissatisfaction with the interchange amendment currently included in the Senate version of the regulatory reform
Continued on page 29
CRED IT UNIO NJO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
Continued on page 29
Continued on page 30
Index
cujrounal.com
Class Action Suit Raises Stakes In New York Mortgage Tax Challenge
Page 2
Kinecta, NuVision Propose Union Of Own In $4.7B Merger
Page 3
How 1 CU Learned Cash Really Is The Champion
Page 4
CUs Facing Tougher ExamsPage 4
A Day In The Life Of CUs
Page 5
By Ray Birch, CorrespondentWEST PALM BEACH, Fla.–
The R&D dollars being spent by credit union suppliers
offer a look back at trends from the first half of 2010 and insights into what the
second half of the year--and beyond--might hold. In this issue Credit Union Journal
offers readers a look-ahead at what Q3 and Q4 might
hold for CUs, plus strategies for meeting challenges.
Coverage begins on page 13.
The Second-Half Forecast
CU Launches Effort To Reach Out To Muslims
TOTOWA, N.J.–North Jersey FCU is reaching out to its large Muslim community by becoming one of the first American finan-cial institutions to offer Sharia-compliant financial products.
New Jersey is home to the second-largest percentage of Muslims in the U.S, with more than 700,000 Muslims in Bergen County alone. The credit union said its deposit program is consistent with the principles of Islamic Law (Sharia).
“We were approached by some of the leaders of the [commu-nity] mosques; they came to explain how it is really difficult for those who are observant to get mortgages or car loans, because it
By Matt Blumenfeld, ReporterNEWARK, N.J.–In the latest legal salvo over the $140 million fraud at U.S. Mortgage/CU National Mortgage, Suffolk FCU, the biggest
victim in the case, filed suit in federal court last week against Fannie Mae for return of some $42 million the secondary mortgage market gi-ant bought under false pretenses from the failed mortgage company.
The suit, filed in the district of the New Jersey-based CU National, claims Fannie Mae should have known that mortgages sold to it by the company’s CEO Michael McGrath were not valid and that the constant pipeline of mortgages
By Ed Roberts, Washington Bureau Chief
Suffolk FCU Sues Fannie Mae As Part Of CU National Litigation
Continued on page 29
CUNA President Dan Mica urges CUs to “Hike The Hill” to lobby against interchange reform.
Gary MeyerhoffSonnenschein Nath
Debate Over What Q1 Lending Decline Might Mean
WASHINGTON–A 5% decline during the first quarter in overall lending at credit unions has led to several different interpreta-tions of what it might portend.
The performance marked one of the sharpest quarterly declines ever reported by credit unions. In its analysis, NAFCU sees the precipitous drop as potentially indicating
a more lasting shift in consumer behavior, while CUNA contends the decline signals that a lending rebound will simply be slower than expected.
“We are in the midst of a sustainable eco-nomic recovery and that means labor markets will improve substantially and consumer be-havioral changes seen the last year or so will begin to turn around,” said CUNA Senior Economist Mike Schenk. “But loan demand
won’t go up quite as rapidly as it typi-cally does in a rebound, because people are concerned about their debt levels. We expect loan demand will be substantially higher in the second and third quarters.”
Overall, CUNA is projecting 4% CU loan growth for the entire year, but household debt will continue to mute demand, Schenk noted. “We do believe
By Ray Birch, Correspondent
Continued on page 29
SOARING?ARE YOUR CARD NUMBERS
www.themembersgroup.com I turn the page to learn how
CUJ060710_page01 1 6/3/2010 3:27:07 PM
THE NATION’S
LEADING INDEPENDENT CREDIT UNION NEWSWEEkLy
2011 MEDIA kIT
BESTPRACTICESCREDIT UNION JOURNAL2010CU Journal Issues Call For Entries For Best Practices Awards. Go to www.cujournal.comFor DetailsDays & Counting
3White House Kick-Starts CU Bid To Raise Cap On MBLsWASHINGTON–The decade-long effort to lift the member busi-ness loan limit, which had been dying on the vine, was revived by the written endorsement of Trea-sury Secretary Timothy Geithner.
“The administration’s support of our efforts to increase the industry’s business lending is a very significant step forward as we continue to pursue enact-ment of such legislation in this Congress,” said NAFCU Presi-dent Fred Becker.
Treasury Secretary Geithner told House Financial Services
Committee Chairman Barney Frank that
he supports raising the MBL limit for healthy credit unions to as much as
27.5% of as-sets, more than double the current 12.25% limit.
Credit unions have been working for years to raise
the limit but were losing hope of getting a legislative change this year until a high-ranking Treasury official said during a House hear-ing the Obama administration supports the MBL bid as part of a broader bill that would provide small business loan capital for community banks. Geithner’s letter to Frank formalizes the Administration’s support.
The Treasury secretary sug-gested certain conditions for the increased limit, including a proven record of making MBLs, proof the credit union is near the current limit and has strong capital. “It is important that re-forms are not done in a way that inappropriately introduces more risk to credit union members, the credit union system, the National Credit Union Share Insurance Fund or the financial system as a whole,” wrote Geithner to Frank.
Vol.XIV, No 22 May 31, 2010
ONDEADLINECRED IT UNIO N
JO UR NA LT H E N E W S W E E K L Y F O R G R O W T H - O R I E N T E D C R E D I T U N I O N S
Continued on page 22
Index
cujrounal.com
CUs May Take Up To A 9BP Hit From Overdraft Reform
Page 2Alaska USA Using Mergers, P&As To Expand On West Coast
Page 3Ahh, Life Is Good. For Your Bak’s CEO, Ads Say
Page 4Targeting A Younger Demo, Connex CU Says It’s Time To ‘Unbank’
Page 4How To Gain–& Keep–A Bigger Piece Of The Mortgage Pie
Page 84 Low-Cost Steps To Clean Up Data, Con-nect With Members
Page 8
Strategies WillAffect Revenue
WILMINGTON, N.C.–Credit unions that have approached the upcoming Reg E deadlines as a marketing opportunity and not just an operations issue stand a much greater chance of protecting their debit card revenue, analysts told Credit Union Journal.
With less than one month left to com-ply with the new law, major card proces-sors and industry experts believe that the majority of credit unions are prepared for the respective July 1 and Aug. 15 deadlines, but also agree that many are not. They cite widespread differences in CU readiness in
Continued on page 12
NEW ORLEANS–Credit unions have no choice but to re-examine their fee structures and opt-in policies in the wake of pending changes to Reg E.
And they will have to move quickly.Fabio Biasella, VP and managing
drecto of Strategic Advisory Services with Raddon Financial Group, told the CUNA CFO Council’s annual meting, “Every fee is under assault. It’s hard to quantify how much of a threat there is to various income streams.”
Biasella said the typical CU household
Time To Rethink Fee Structure
Continued on page 12
By Ray Birch, Correspondent By Frank J. Diekmann, Editor
New Refi Boom In Wings?
BEAVERTON, Ore.–The ongoing sovereign debt crisis in Europe could lead to another surge in mortgage refinance volume this sum-mer, but CUs should temper their optimism.
“If rates continue to fall I would anticipate another mini refi boom, maybe not as much last year because much of that was caused
By Matt Blumenfeld, Reporter
Critical Reg E Deadline Approaching
012345678
Jan ‘07 Jan ‘08 Jan ‘09 Jan ‘10
15 YR CONF30 YR CONF
Continued on page 13
Mark-To-Market RuleFor Loans Is Proposed
By Ed Roberts, Washington Bureau Chief
NORWALK, Conn.–The Financial Account-ing Standards Board last week proposed rules
that would extend market value accounting to a new set of holdings, including loans.
The move has been widely criticized by credit unions and banks, who say it could wreak havoc as current rules allow them to report loans at book val-
ue as long as they have an intent to hold them.Marking the loans to market value could re-
Continued on page 22
By Ray Birch, Correspondent
CU Difference Is Not A Trivial Pursuit
CANTON, Ohio–First Ohio Community FCU is hoping members’ interest in movies, sports, and history will drive branch traffic and cross-sales.
The $25-million CU is playing its own ver-sion of Trivial Pursuit with members, ask-ing them a new ques-
tion each day of the week during May and June. Each time members answer correctly, they’re entered into a drawing for a $25 Visa Gift Card that will be held the first week of July.
Continued on page 22
Robert HerzFASB
Mortgage Rate Trends Over The Last Three Years
Source: Informa Research Services
CUJ053110_page01 1 5/27/2010 3:52:39 PM