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CREDITUNIONJOURNAL

Edgy Campaign Urges Gen YTo Drop The Bank.........Page 2

Interest In Private InsuranceSurges........................ Page 2

‘Cash For Clunkers’ ImpactsInvest In America......... Page 3

Let’s Get Fiscal: Promo Tied ToFinancial Health............Page 4

iPay Teams Up With Mid-Atlantic Corp To Offer Bill PayService....................... Page 4

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 WeekWEST PALM BEACH, Fla.–CreditUnion Journal will publish its2010 Marketplace Directory nextweek. This handy annual refer-ence of all things credit union isa special value to subscribers.With contactinformation forCU regulators,trade associa-tions andother organi-zations, thedirectoryalso fea-tures a listof suppliersto the credit union industry. Noregular edition of CU Journal willbe printed the week of Aug. 24,but subscribers can get dailyupdates at www.cujournal.com.

Used Car DealerConvicted In Repo FraudSAGINAW, Mich.–A former townofficial pleaded guilty to usinghis used car dealership to steal$85,000 from the sale of autorepossessions he was selling forCommunications Family CU.

Henry Schumann, 52, keptthe proceeds from the sale ofat least nine cars his dealer-ship, M&H Auto Brokers, wassupposed to selling for thecredit union.

Schumann is a former mem-ber of the Bangor TownshipBoard of Trustees and theBangor Township PlanningCommission.

MidFlorida FCU ConvertsTo State CharterLAKELAND, Fla.–Members atcredit union giant MidFlorida FCUhave overwhelmingly approvedthe $1.4-billion credit union’sconversion to a state charter,enhancing its ability to expandinto neighboring counties.

The credit union, to beknown as MidFlorida CU, plansto remain in Florida with anexpanded field of membership

Continued on page 28

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


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

Cont. on page 34

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


CUJ_Page1,2.qxd 8/13/09 3:47 PM Page 1

Vol.XIII, No 1 January 5, 2009

By Ray Birch, Correspondent

ARLINGTON, Va.–Decisions regarding thefunction of capital are expected to get a lottougher for credit unions in 2009 as many wres-tle with shrinking net income, and others arecontent to keep that number flat.

“If you are conservative, you have a tendency

to keep the capital at your institution,” offeredNAFCU Director of Research and Chief Econ-omist Tun Wai. “If you’re thinking about servingyour members, you have to worry aboutwhether a high amount of capital is optimum.”

But ROA ratios, which are expected toshrink further in 2009, will challenge creditunions to grow without dipping into capital,

which may not be optimal.“We are in a squeeze right now,” reminded

Wai. “This year will be a continuation of lowROA. That means you have to have capital soyou can take a hit in order to be able to survive.You won’t have to liquidate an investment andtake a loss on it.”

TToolbox Foolbox For 2009or 2009




What To Do With Capital, ROA Hot Topics As Year Begins

New Year, New Rates

DEADLINE

By Lisa Freeman & Stacy Kaper, SourceMedia

WASHINGTON–There’s no question where the new Congress’ andthe Obama administration’s legislative priorities will lie–economicstimulus. The question is how credit unions can demonstrate thatsome of their pet projects, such as lifting the cap on member businesslending and capital reform, fall right in line with those priorities.

“The Obama administration’s priorities for 2009 will be economicstimulus right off the bat,” said Ryan Donovan, CUNA’s VP- legisla-tive affairs. “What credit unions need to do to be successful is to maketheir priorities relevant to Congress. They’re looking at economicstimulus, we’re looking to lift the caps on member business lending,and in this economy there is a need for more business lending. Thisis something that doesn’t cost the taxpayers a dime and is exactly the

Eyes Turn To WashingtonFor Leglislative Priorities

ONCREDITUNIONJOURNALT 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

Landmark UBIT TrialPostponed In ColoradoWASHINGTON–A federal judgehas delayed the trial date of aColorado credit union’s lawsuitagainst the IRS over the taxagency’s application of theUnrelated Business Income Tax(UBIT).

State-chartered credit unionshave been fighting the IRS fordecades over what is taxableunder UBIT, with credit unionsclaiming services and productslike insurance sales, ATM feesand others are related to thecore business of credit unions,and so are exempt from UBIT.

The $1.8-billion Bellco CUfiled its suit disputing IRSassessments for its sale ofcredit life disability insurance,accidental death and disabilityinsurance and revenues itearned from its CFS FinancialServices operation and is seek-ing repayment of $199,000 inback taxes, penalties and inter-est. Bellco’s suit came on theheels of a similar actionagainst the IRS by CommunityFirst CU, Madison, Wis. TheBellco case had been set forAug. 31, 2009. A new date hasnot been set.

“We have no reason tobelieve that the judge’s actionsays anything about how thiscase is likely to turn out.Courts often reschedule trialsjust to manage their overallworkload,” said CUNA GeneralCounsel Eric Richard. “Weanticipate the credit unionparty to the case will seek aprompt trial date at the appro-priate time.”

Much Talk, Little Action InStatehouses On ForeclosuresST. PAUL, Minn.–Credit unionshave been bracing themselvesfor moratoriums in 2009 on fore-closures, but despite all therhetoric no state has yet to passany such legislation. Analysis byAmerican Banker, an affiliate ofCredit Union Journal, found thatnone of the initiativesannounced to date, includingthose in Minnesota, New York,Michigan, and California, have


Annual Dividend Helps CUsDifferentiate Themselves FromOther TroubledFinancials....................Page 3

Relationships–With Citizens OfSmall Town & In Pricing–HelpBoost SFCU..................Page 4

RCU Takes On Troubled REALFinancial CU.................Page 5

Community News........Page 19

Index

www.cujournal.com

WEST PALM BEACH, Fla.–It’s an annual rite when previewing a newyear to predict it will be “challenging.” For 2009, that prediction is likely tobe an understatment.

For those reasons and more, Credit Union Journal kicks off 2009 with anexpanded commitment to being a crucial resource to credit unions in grow-ing and this year, despite the ongoing recession. Effective with this issue theJournal introduces a new tagline, “The Newsweekly for Growth-OrientedCredit Unions,” with plans to provide coverage in every issue on strategiesfor success in all aspects of credit union operations. Our pledge is to sup-port that tagline week in and week out.

The Journal will continue to provide credit unions with the resourcesreaders have asked for and continue to count on: our Leaderboard series,our annual Best Practices issue, the Grow Show conference, expert analysis,peer group leaders, and much more.

Will 2009 be challenging? More than ever. But many credit unions willnot just survive 2009, they will grow and prosper and expand to serve mem-bers. To do so, they will need a “toolbox” to fix problems and build thatfuture. In this issue, readers will find more than a dozen “tools” to pick from,with economic previews and other insights being offered to Credit UnionJournal readers. The toolboxes begin on page 8.

Credit Union Journal’s


COLORADO SPRINGS, Colo–One credit union is starting off2009 with an attempt to grab share before other financials follow suit,slashing its 36-month auto loan rate to 2.99%.

The offer, which Air Academy FCU expects will be in place all year,provides a better alternative than placing funds in low-paying invest-ment vehicles and will help offset mortgage loan portfolio repricing asmembers rush to refinance, said Keith Kauffeld, VP of operations atthe $390-million CU. “We are just trying to get ahead of the marketbecause we think many more credit unions will move to these lowauto loan rates soon.”

Kauffeld doesn’t think it will take credit unions long to increasetheir interest in auto loans, or any consumer loan, after the recent Fedrate cut. “Normally, you almost consider writing a consumer loan a

100YEARS100VOICES

NEW FEATURE CELEBRATES CUS’ 100TH BIRTHDAY

As CUs mark their 100th anniversary in the U.S., throughout 2009 CreditUnion Journal will publish “100 Voices” on CU uniqueness. See page 9.

Why 1 CU Is Starting Off 2009By Slashing Its New Auto Loan Rate

CUJ_Page1,3,4,5,20,21.qxd 12/31/08 12:11 PM Page 1

THE NATION’S

LEADING INDEPENDENT CREDIT UNION NEWSWEEkLy

2010 MEDIA kIT CREDITUNIONJOURNAL

Feds Doubt $125 In MissingFunds Will Be Found..... Page 2

CUNA Mutual Expands 401(k)Business..................... Page 3

CU Elections Tossed.... Page 3

Space Coast, Eastern FinancialMerger Moves Forward...Page 3

ACUC Coverage............Page 4

Views & Opinion.......Pages 6-8

Quick Reads...............Page 10


Vol.XIII, No 26 June 29, 2009

cujournal.com

More Losses Seen On MBSALEXANDRIA, Va.–The deteriora-tion of the mortgage market andrising foreclosures and delin-quencies is expected to causeincreasing losses on billions ofdollars of mortgage-backedsecurities being held by corpo-rate CUs, according to NCUA.

The prediction comes asNCUA revealed it has pumpedalmost $20 billion into U.S.Central FCU and WesCorp FCUover the last six months tokeep the two corporates afloat.

Scott Hunt, director ofNCUA’s Office of CorporateCUs, said current estimatesare that U.S. Central will havea loss of $1.7 billion andWesCorp a loss of $5.7 billionon their mortgage securities,but agency officials expectthose numbers to be evenhigher because of the ongoingdeterioration in the market.

Hunt cited several factors:ongoing rise in foreclosures;growing delinquencies amongpayment option ARMs; andgrowth in mortgage refinancings.

The further deterioration ofthe primary mortgage marketis expected to take an addi-tional toll on those corporatesthat have large holdings ofmortgage-backed securities,Hunt explained. All corporates

are already under a strictcapital restoration plan, he

noted.Hunt said the agency

believes it had successfullystemmed a "silent run" on the

corporates that occurredin 2008 by pumpingalmost $20 billion intothe system. That included

a $10-billion emergency loanfrom the National CU ShareInsurance Fund into U.S.Central and WesCorp; $8.2 bil-lion of so-called CU SystemsInvestment Program, or SIPnotes; a $1 billion capital notefrom NCUSIF into U.S. Central;and $450 million of so-calledCU HARP funds through theCentral Liquidity Facility.

Guarantees on all corporatedeposits helped boost confi-dence in the system, he said.

Jeffrey Fincher FIA Card Services, N.A.302.432.3401 [email protected]

Contact us today to discuss your credit card program options.


DEADLINEON

By Kevin Jepson, Technology Correspondent

SWAINSBORO, Ga.–Piney Grove Community FCU here keeps pen-and-carbon-paper ledgers andisn’t on the World Wide Web–itcan’t afford the technologiesmany take for granted.

“We’re all manual and havebeen for the last 40 years,” saidJames Green, manager at the$51,000 CU. “That’s all weknow, and it hasn’t been a prob-lem.” Green thinks automation could ease operations at the CU, how-ever. “We’d like to add computer and programs, but we can’t afford it.

NCUA Brings IT To ComputerlessCUs, But Some Aren’t Interested



BOSTON–Weighed down by the declining economy, CUNA isexpected to announce more job cuts in the coming days.

Officials with the trade association, which has been hit hard by itsstock market investments, declined to specify the extent of the job cutsbecause of its impact on morale, but said they expect to make them offi-cial this week or next.

CUNA President Dan Mica said last week he expects the job cuts andother steps taken in recent months to help the trade group balance itsoperating budget for 2009. “CUNA is doing fine. CUNA is in the samesituation as credit unions across the country,” said Mica, during an inter-

Ode To David Hasselhoff HasLoan Officer On Way To VegasBy Ray Birch, Correspondent

TUKWILA, Wash.–BECU loan officer David Johnson’s “crush” onactor David Hasselhoff has him one step closer to winning $1 million.

Johnson appeared last week onAmerica’s Got Talent, a national talentshow on NBC that awards $1 millionand a contract for an ongoing show inLas Vegas to one performer. Johnson,whose hobby is singing and playingthe guitar, sang a humorous song hewrote about his high school infatua-


ALEXANDRIA, Va.–Even as credit unions were cheering the new seven-year installment plan for the corporate credit union bailout new chargeswere emerging last week that will hit their bottom line by year-end.

NCUA was telling credit unions it expects to assess an additional $1-billion premium by the end of the year to replenish reserves for theNational CU Share Insurance Fund, even after the agency transfers the$5.9 million cost of the corporate bailout to a new Corporate CU Sta-bilization Fund.

And several corporates were telling their members they expect to take

CUs Should Prepare To Be HitWith More Corporate Charges


With Its Belt Already Tight, CUNASays It’s Going To Get Even Tighter

By Joyce Moed, Reporter

LOWELL, Mass.–Now that saving money is suddenlytrendy, one credit union here has created several new prod-ucts aimed at cashing in on that trend while helping itsmembers build wealth in tough economic climate.

Northern Mass Telephone Workers Community CUis promoting four new programs to help its membersreplenish their savings and regain their financial security.



BECU’s David Johnson performs on TV.

Suddenly Savers?A CU Journal Series

How 1 CU Helps MembersBuild Wealth In Tough Times

Index

Special Report:TECHNOLOGY

CUJ_Page01.qxd 6/25/09 3:43 PM Page 1

A 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 more than ten 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.

Vol.XIII, No 1

January 5, 2009


ARLINGTON, Va.–Decisions regarding the

function of capital are expected to get a lot

tougher for credit unions in 2009 as m

any wres-

tle with shrinking net income, an

d others are

content to keep that number flat.

“If you are conservative, you have a te

ndency

to keep the capital a

t your institution,” offered

NAFCU Director of Researc

h and Chief Econ-

omist Tun Wai. “If you’re thinking about serv

ing

your members, you have to worry about

whether a high amount of capital is

optimum.”

But ROA ratios, which are expected to

shrink further in 2009, will challenge credit

unions to grow without dipping into capital,

which may not be optimal.

“We are in a squeeze right now,” reminded

Wai. “This year will be a c

ontinuation of low

ROA. That means you have to have capital so

you can take a hit in order to be able to survive.

You won’t have to liquidate an investment and

take a loss on it.”

TToolbox Foolbox For 2009

or 2009




What To Do With Capital, ROA Hot Topics As Year Begins

New Year, New Rates

DEADLINE

By Lisa Freeman & Stacy Kaper, SourceMedia

WASHINGTON–There’s no question where th

e new Congress’ and

the Obama administration’s legislativ

e priorities will lie–economic

stimulus. The question is how credit unions can

demonstrate that

some of their pet projects, such as lif

ting the cap on member business

lending and capital reform, fall

right in line with those priorities.

“The Obama administration’s priorities

for 2009 will be economic

stimulus right off the bat,” said Ryan Donovan, CUNA’s VP- legisla-

tive affairs. “What cre

dit unions need to do to be successful is to

make

their priorities relevant to Congress.

They’re looking at economic

stimulus, we’re looking to lift t

he caps on member business le

nding,

and in this economy there is

a need for more business lending. This

is something that doesn’t cost the taxpayers a dime and is ex

actly the

Eyes Turn To Washington

For Leglislative Priorities

ON

CREDITUNION

JOURNALT 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

Landmark UBIT Trial

Postponed In Colorado

WASHINGTON–A federal judge

has delayed the trial date of a

Colorado credit union’s lawsuit

against the IRS over the tax

agency’s application of the

Unrelated Business Income Tax

(UBIT).

State-chartered credit unions

have been fighting the IRS for

decades over what is taxable

under UBIT, with credit unions

claiming services and products

like insurance sales, ATM fees

and others are related to the

core business of credit unions,

and so are exempt from UBIT.

The $1.8-billion Bellco CU

filed its suit disputing IRS

assessments for its sale of

credit life disability

insurance,

accidental death and disability

insurance and revenues it

earned from its CFS Financial

Services operation and is seek-

ing repayment of $199,000 in

back taxes, penalties and inter-

est. Bellco’s suit came on the

heels of a similar action

against the IRS by Community

First CU, Madison, Wis. The

Bellco case had been set for

Aug. 31, 2009. A new date has

not been set.

“We have no reason to

believe that the judge’s action

says anything about how this

case is likely to turn out.

Courts often reschedule trials

just to manage their overall

workload,” said CUNA General

Counsel Eric Richard. “We

anticipate the credit union

party to the case will seek a

prompt trial date at the appro-

priate time.”

Much Talk, Little Action In

Statehouses On Foreclosures

ST. PAUL, Minn.–Credit unions

have been bracing themselves

for moratoriums in 2009 on fore-

closures, but despite all the

rhetoric no state has yet to pass

any such legislation. Analysis by

American Banker, an affiliate of

Credit Union Journal, found that

none of the initiatives

announced to date, including

those in Minnesota, New York,

Michigan, and California, have


Annual Dividend Helps CUs

Differentiate Themselves From

Other Troubled

Financials............

........Page 3

Relationships–With Citizens Of

Small Town & In Pricing–Help

Boost SFCU............

......Page 4

RCU Takes On Troubled REAL

Financial CU............

.....Page 5

Community News......

..Page 19

Index

www.cujournal.com

WEST PALM BEACH, Fla.–It’s an annual rit

e when previewing a new

year to predict it

will be “challenging.” For 2009, that prediction is likely to

be an understatment.

For those reasons and more, Credit Union Journal kicks off 2009 with an

expanded commitment to being a crucial re

source to credit unions in grow-

ing and this year, despite th

e ongoing recession. Effectiv

e with this issue the

Journal introduces a new tagline, “The Newsweekly for Growth-Oriented

Credit Unions,” with plans to provide coverage in every issue on strat

egies

for success in all as

pects of cred

it union operations. Our pledge is to

sup-

port that tagline week in and week out.

The Journal will co

ntinue to provide credit unions with the reso

urces

readers have asked for and continue to count on: our Leaderboard serie

s,

our annual Best Practices issu

e, the Grow Show conference, ex

pert analysis,

peer group leaders, and much more.

Will 2009 be challenging? More than ever. But many credit unions will

not just survive 2009, they will grow and prosper and expand to serve mem-

bers. To do so, they will need a “to

olbox” to fix problems and build that

future. In this issu

e, readers w

ill find more than a dozen “tools” to pick from,

with economic previews and other insights being offered to Credit Union

Journal readers. The toolboxes begin on page 8.

Credit Union Journal’s


COLORADO SPRINGS, Colo–One credit union is starting off

2009 with an attempt to grab share before other fin

ancials follow suit,

slashing its 36-month auto loan rate to 2.99%.

The offer, which Air Academy FCU expects w

ill be in place all year,

provides a better

alternative than placing funds in low-paying invest-

ment vehicles and will help offset m

ortgage loan portfolio repricing as

members rush to refin

ance, said Keith Kauffeld, VP of operatio

ns at

the $390-million CU. “We are just try

ing to get ahead of the market

because we think many more credit unions will move to these lo

w

auto loan rates soon.”

Kauffeld doesn’t think it will tak

e credit unions long to increase

their interest

in auto loans, or any consumer loan, after the rece

nt Fed

rate cut. “N

ormally, you almost consider writing a co

nsumer loan a

100YEARS

100VOICESNEW FEATURE CELEBRATES CUS’ 100TH BIRTHDAY

As CUs mark their 100th anniversary in the U.S., throughout 2009 Credit

Union Journal will publish “100 Voices” on CU uniqueness. S

ee page 9.

Why 1 CU Is Starting Off 2009

By Slashing Its New Auto Loan Rate

CUJ_Pa

ge1,3,

4,5,20

,21.qx

d 12/

31/08

12:11

PM P

age 1

CREDITUNIONJOURNAL

Edgy Campaign Urges Gen YTo Drop The Bank.........Page 2

Interest In Private InsuranceSurges........................ Page 2

‘Cash For Clunkers’ ImpactsInvest In America......... Page 3

Let’s Get Fiscal: Promo Tied ToFinancial Health............Page 4

iPay Teams Up With Mid-Atlantic Corp To Offer Bill PayService....................... Page 4




cujournal.com





2010 MarketplaceDirectory Out Next WeekWEST PALM BEACH, Fla.–CreditUnion Journal will publish its2010 Marketplace Directory nextweek. This handy annual refer-ence of all things credit union isa special value to subscribers.With contactinformation forCU regulators,trade associa-tions andother organi-zations, thedirectoryalso fea-tures a listof suppliersto the credit union industry. Noregular edition of CU Journal willbe printed the week of Aug. 24,but subscribers can get dailyupdates at www.cujournal.com.

Used Car DealerConvicted In Repo FraudSAGINAW, Mich.–A former townofficial pleaded guilty to usinghis used car dealership to steal$85,000 from the sale of autorepossessions he was selling forCommunications Family CU.

Henry Schumann, 52, keptthe proceeds from the sale ofat least nine cars his dealer-ship, M&H Auto Brokers, wassupposed to selling for thecredit union.

Schumann is a former mem-ber of the Bangor TownshipBoard of Trustees and theBangor Township PlanningCommission.

MidFlorida FCU ConvertsTo State CharterLAKELAND, Fla.–Members atcredit union giant MidFlorida FCUhave overwhelmingly approvedthe $1.4-billion credit union’sconversion to a state charter,enhancing its ability to expandinto neighboring counties.

The credit union, to beknown as MidFlorida CU, plansto remain in Florida with anexpanded field of membership









see our ads inside!



DEADLINE





Cont. on page 34

ON


Index












CUJ_Page1,2.qxd 8/13/09 3:47 PM Page 1

media.CUJournal.com

ThE CREDIT UNION MARKETPLACE is Expanding In 2009 the retail financial marketplace was pounded by an unprecedented storm. Consumers were searching for a safe harbor, and they found it in credit unions. That credit unions have become America’s trusted financial provider was never more evident in the first six months of 2009, when total membership grew to 90.5 million Americans, up nearly one-million people from 89.9 million Americans just six months earlier.

That credit unions are a true growth story is evident in the $735 billion in savings Americans had entrusted to their credit unions at mid-year 2009, up from $698 billion at year-end 2008. It appears credit unions will reach $1 trillion in total assets even faster than many had projected.

Credit unions continue to aggressively meet member needs, especially business lending and other services aimed at small and medium-size businesses. And they need to know about your products and services to meet their needs.

As of July 2009 there were 7,868 federally insured credit unions with over 90 million members

2007 88.5

2008 89.9

mid-year 2009 90.5

2006 87.4

2005 86.1

Source: CUNA, Economics and Statistics Department, prepared May 28, 2009

2007 $770.1

2008 $825.8

mid-year 2009 $869

2006 $726.2

2005 $694.2


2007 $646.8

2008 $691.8

mid-year 2009 $735.4

2006 $615.3

2005 $590.8


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 8,225 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 2009 BPA Worldwide Statement, based on 8,225 qualified circulation

**Harvey Research, March 2008, Ad Q® Study

The TiTles you need To reach...

Job Title

... At the InstItutIons You WAnt

Business Type

52% CEO/President/ CU Head/ Chairman

82% Credit Union

2% Director/ Board Member

Other

2% Association/Government/College/Library

5% CUSO/EFT Network

9% Consulting Firm/Vendor/Others Allied to the Field

12%

1% Other Paid

EVP/SVP/ CFO/CIO/

AVP/ Manager/Supervisor/Treasurer/Comptroller

12%

21%

Source: Zoomerang Subscriber Study, September 2009

Source: Zoomerang Subscriber Study, September 2009

Vol.XIII, No 18

May 4, 2009

WASHINGTON–As the Senate was poised to vote on a co

rporate

stabilization bill, a g

roup of credit union execu

tives organized by credit

union consultants Callahan & Associates began a petitio

n drive ask-

ing Congress to withhold actio

n on the corporate bailout until th

ey

hold hearings.

Callahan’s, which was the consultant for several corporates,

had col-

lected almost 500 signatures prior to last w

eek’s Senate vote.

The group questions the need for NCUA to have authority to bor-

row as much as $30 billion for an emergency, as

the bailout legislation


WASHINGTON–The Senate was expected

last week to pass a

bill that

would allow credit unions to stretch out the $5.9 billion payment for the

corporate credit union bailout over sev

en years.

The bill was passed without the controversial

cramdown measure that

had been attached in the House. The cram

down amendment would have

allowed troubled homeowners to ask a bankruptcy court to amend the

terms of the mortgages. That measure, which was vehemently opposed

By Joyce Moed, Reporter

MADISON, Wis.–The phenomenon of

members putting off ret

irement due to

the recession is cr

eating a golden oppor-

tunity for credit unions to position them-

selves as the tru

sted adviser to help them

navigate their way back to retire

ment.

John Vardallas, CEO/founder of TheAmerican

-

BoomeR, here, said that delayin

g retirement is cr

ossing

all businesses and industries,

as millions of baby boomers have lost much of their


Coverage On

Pages 28-29


Beware Politicians Bearing

‘Better’ Cards Legislation

By Michael Bartlett, Reporter

WASHINGTON–Credit unions are being urged to

beware politicians who have “bet-

ter answers” for the credit card

business.

Credit card rates, fees

and

practices have become a pop-

ulist issue for both sides of the

aisle as politicians look to

soothe an angry public, many of

whom have seen their card APRs

rise sharply even when they have

Areyou

offering a

toprank

ed 401(k)

to youremploy

ees?

Find out more on page 19


The Road (Back) To RetirementCongress Eyes Extending Payment Period For Corporate Rescue

DEADLINE

By Kevin Jepson, Technology Correspondent

LAKE JACKSON, Texas–Texas

Dow Employees CU (TDECU) has

launched an iPhone application at

Apple’s App Store, becoming the

first credit union or credit union

organization to offer an officia

l

iPhone application.

The free TDECU iPhone app,

called CULoc8, arri

ved at the App

Store on April 13. TDECU mem-

bers can download the applicatio

n to

Texas Dow ECU Launches

First CU App For iPhone

ON

CREDITUNION

JOURNALT 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

Rhode Island’s Coastway

CU Converts To Bank

CRANSTON, R.I.–Members of

Coastway CU, the state’s fourth

largest credit union, voted over-

whelmingly in favor of converting

to a mutual savings bank.

The 89-year-old credit union

said 78% of voting members

favored the charter switch for

the $300-million credit union.

More than 6,000 mem-

bers–or 27% of the credit union

membership–cast ballots,

Coastway said.

The vote is subject to final

certification by NCUA, and the

conversion must approved by

the R.I. Department of

Business Regulation and the

FDIC.Coastway reported a $1.1-

million loss for 2008 and a

$126,843 operating loss for

the first quarter of 2009.

Member Tried To Finance

Wedding With Bad Check

SAN MATEO, Calif.–A judge has

set a jury trial for a member of

San Mateo CU who prosecutors

say fraudulently w

ithdrew

$20,000 to finance her wedding

but ended up spending her wed-

ding day in county jail.

Prosecutors say 26-year-old

Briana Balancier, who runs the

Happy Little Hearts day care

center in San Mateo, deposited

a U.S. Bank check for $35,000

at her credit union March 3

and tried to withdraw the

money three days later. Credit

union officials told her she

needed to wait 11 days unless

U.S. Bank informed them that

the check was valid.

That same day, the credit

union received a fax that

appeared to be from U.S. Bank

approving the check. Balancier

withdrew $20,000 over the

next three days–$12,000 in

cashier’s checks and $8,000

in cash–and used the money to

pay the wedding caterer, venue,

disc jockey and photographer.

The check later bounced,

and the credit union contacted

U.S. Bank employees, who said

the letter was a forgery.

Police arrested Balancier on

March 19, two days before her

wedding ceremony.

Automotive CUs Brace For

Impact Of Biggest Cuts In

Recent History..........

....Page 3

Regulators Opt To Ground

Eastern Financial Florida

CU............

............

.......Page 3

Arizona Effort Seeks To

Differentiate The CUSO From

The Credit Union...........P

age 5

Washington Watch......Page 10

Index

www.cujournal.com



Special Report:

Credit & Debit

Cards

Economy Forces Members To Keep

Working, Giving CUs A Chance To Shine

Group Opposes Plan, Calls For HearingsSenate Vote On Corporate Bailout Expected

Good To Grow

Growth Ideas Shared At

CU Journal’s Grow Show

CUJ_Pa

ge1,3,

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1,12,1

4,22,2

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09 4:

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1

Vol.XIII, No 14 April 6, 2009

By Lisa Freeman, Managing Editor

MADISON, Wis.–Entering the second quarter of a year many expect to bea low point in a recession, demand for loans and the ability of credit unionsto fund them is in large part dependent upon regional factors.

“I have never seen more variability by market and by member,” saidDave Colby, an economist with CUNA Mutual Group. “They all say themember demand for loans is there; it’s about what capability and capacity




Senate Pushes Ahead WithHelp On Corporate BailoutBy Ed Roberts, Washington Bureau Chief

WASHINGTON–The Senate Banking Committee endorsed a measurethat would provide as much as $24 billion in funding for the National CUShare Insurance Fund on an emergency basis, moving ahead with help forNCUA’s corporate credit union bailout.

The provision would vastly increase the amount of funds NCUA couldborrow from the Treasury for the NCUSIF from the current $100 millionto a nominal $6 billion, with an additional $18 billion available on an emer-gency basis.

NCUA, which had asked for as much as $30 billion of emergency bor-rowing capacity, said last week’s action was an important step forward in get-ting Congress to help in the corporate bailout. The measure also marks the

(877) 570-2824 | www.cu24.com


Leadership & The Recession

DEADLINE


NORWALK, Conn.–The Financial Accounting Standards Boardvoted several changes to its mark-to-market rules last Thursday to easethe strain on CUs and other financial institutions–but rejectedrequests to allow the entities to apply the changes retroactively to their2008 financials.

The five-member board, which sets the rules for generally acceptedaccounting principles (GAAP) agreed the changes will be effectivegoing forward.

The rule changes will allow entities to delay taking so-called other-than-temporary impaired (OTTI) charges on distressed securities ifthey assert they do not have an intent to sell the securities and it is

FASB Rejects RetroactivityFor Mark-To-Market Rules

ONCREDITUNIONJOURNALT 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

NCUA Gives CUs Time ToExpense NCUSIF PremiumALEXANDRIA, Va.–NCUA directedcredit unions to expense the pre-mium it assesses to recapitalizethe National CU Share InsuranceFund when the premium isassessed, probably in the fourthquarter of this year.

The guidance, to be explainedin a new Accounting Bulletin 09-2, is based on the AmericanInstitute of Certified PublicAccountants’ Statement ofPosition 01-6, which states, “tothe extent that the NCUA Boardassesses premiums to coverprior operating losses of theinsurance fund or to increasethe fund balance to ‘normaloperating levels,’ credit unionsshould expense those premi-ums when assessed,” NCUAsaid.

If a credit union chooses touse any other treatment for thepremium they should be pre-pared to provide written guid-ance from their auditors to sup-port that treatment, NCUA said.

NCUA is expected to assessa premium of $5.9 billion topay for the corporate creditunion bailout. But Congress isconsidering several measuresthat would allow credit unionsto stretch out the costs of thepremium over several years.

SECU Keeps At-RiskMembers In Their Homes RALEIGH, N.C.–State EmployeesCU said it has helped more than1,400 at-risk members keeptheir homes through its newlylaunched Mortgage AssistanceProgram.

To help provide additionallending alternatives within theMortgage Assistance Program,the credit union recently devel-oped a new product, theSECURE Mortgage. This prod-uct provides members anopportunity to consolidate theirSECU mortgage balances andany other loans owed to SECUunder the security of a lowinterest first mortgage loan.Financing may be up to 100%of the value of the member’s


Save To Win Offers $100KPrize As Part of Effort To BoostConsumers’ Savings.... Page 3

Disclosures Reveal $197KMore For Mica..............Page 4

State Issues Cease-And-DesistTo Eastern Financial......Page 3

Country’s Bankers Not HappyWith Campaign.............Page 3

CUs Escape Flood........Page 3

Index

www.cujournal.com

15%

13

11

9

7

5

3

1

-1

-3

-5%

Unsecured Cards

New Cars Used Cars

1st Mortgages

DEPENDINGon LENDING

2007

2006

2008

2007

2006

2008

2007

06 2008

2007

2008

Loan Demand At CUs?Depends On The Region

2006

Analysts Say Challenge To CU LeadersGoes Well Beyond Balance Sheet


CLEVELAND, Ohio–Effectively leading a credit union in the cur-rent environment is about much more than just managing the bal-ance sheet.

Both management consultants and veteran CU leaders told CreditUnion Journal that members and employees are both looking to man-agement teams to set the tone about the condition of the credit unionand what might lie ahead.

“You didn’t start this fire but as leaders you’re the ones that have todeal with it,” said Jim Cardwell, CEO of Cardwell Group. “You haveto have a core message and you need to say it over and over.”

Many CU leaders have never been through “lean times,” and eventhose who experienced the downturns in the 1980s, early 90s and inthe wake of the tech crash of the early 2000s acknowledge they havenever seen or even worst-case scenario-planned for the current finan-cial services market.

“These times are unique for this generation of credit union leaders,”

CU loan growth 2006 to 2008Source: NAFCU

CUJ_Pages1,2,3,6,11,12,14,18,24,26.qxd 4/2/09 2:24 PM Page 1

CREDITUNIONJOURNAL

Feds Doubt $125 In MissingFunds Will Be Found..... Page 2CUNA Mutual Expands 401(k)Business..................... Page 3CU Elections Tossed.... Page 3Space Coast, Eastern FinancialMerger Moves Forward...Page 3ACUC Coverage............Page 4Views & Opinion.......Pages 6-8Quick Reads...............Page 10


Vol.XIII, No 26 June 29, 2009

cujournal.com

More Losses Seen On MBSALEXANDRIA, Va.–The deteriora-tion of the mortgage market andrising foreclosures and delin-quencies is expected to causeincreasing losses on billions ofdollars of mortgage-backedsecurities being held by corpo-rate CUs, according to NCUA.The prediction comes asNCUA revealed it has pumpedalmost $20 billion into U.S.Central FCU and WesCorp FCUover the last six months tokeep the two corporates afloat.Scott Hunt, director ofNCUA’s Office of CorporateCUs, said current estimatesare that U.S. Central will havea loss of $1.7 billion andWesCorp a loss of $5.7 billionon their mortgage securities,but agency officials expectthose numbers to be evenhigher because of the ongoingdeterioration in the market. Hunt cited several factors:ongoing rise in foreclosures;growing delinquencies amongpayment option ARMs; andgrowth in mortgage refinancings.The further deterioration ofthe primary mortgage marketis expected to take an addi-tional toll on those corporatesthat have large holdings ofmortgage-backed securities,Hunt explained. All corporatesare already under a strictcapital restoration plan, henoted.Hunt said the agencybelieves it had successfullystemmed a "silent run" on thecorporates that occurredin 2008 by pumpingalmost $20 billion intothe system. That includeda $10-billion emergency loanfrom the National CU ShareInsurance Fund into U.S.Central and WesCorp; $8.2 bil-lion of so-called CU SystemsInvestment Program, or SIPnotes; a $1 billion capital notefrom NCUSIF into U.S. Central;and $450 million of so-calledCU HARP funds through theCentral Liquidity Facility.Guarantees on all corporatedeposits helped boost confi-dence in the system, he said.

Jeffrey Fincher FIA Card Services, N.A.302.432.3401 [email protected]

Contact us today to discuss your credit card program options.


DEADLINEON

By Kevin Jepson, Technology CorrespondentSWAINSBORO, Ga.–Piney Grove Community FCU here keeps pen-

and-carbon-paper ledgers andisn’t on the World Wide Web–itcan’t afford the technologiesmany take for granted.“We’re all manual and havebeen for the last 40 years,” saidJames Green, manager at the$51,000 CU. “That’s all weknow, and it hasn’t been a prob-lem.” Green thinks automation could ease operations at the CU, how-

ever. “We’d like to add computer and programs, but we can’t afford it.

NCUA Brings IT To ComputerlessCUs, But Some Aren’t Interested


By Ed Roberts, Washington Bureau ChiefBOSTON–Weighed down by the declining economy, CUNA is

expected to announce more job cuts in the coming days.Officials with the trade association, which has been hit hard by its

stock market investments, declined to specify the extent of the job cuts

because of its impact on morale, but said they expect to make them offi-

cial this week or next.CUNA President Dan Mica said last week he expects the job cuts and

other steps taken in recent months to help the trade group balance its

operating budget for 2009. “CUNA is doing fine. CUNA is in the same

situation as credit unions across the country,” said Mica, during an inter-

Ode To David Hasselhoff HasLoan Officer On Way To VegasBy Ray Birch, CorrespondentTUKWILA, Wash.–BECU loan officer David Johnson’s “crush” on

actor David Hasselhoff has him one step closer to winning $1 million.Johnson appeared last week onAmerica’s Got Talent, a national talentshow on NBC that awards $1 millionand a contract for an ongoing show inLas Vegas to one performer. Johnson,whose hobby is singing and playingthe guitar, sang a humorous song hewrote about his high school infatua-

By Ed Roberts, Washington Bureau ChiefALEXANDRIA, Va.–Even as credit unions were cheering the new seven-

year installment plan for the corporate credit union bailout new charges

were emerging last week that will hit their bottom line by year-end.

NCUA was telling credit unions it expects to assess an additional $1-

billion premium by the end of the year to replenish reserves for the

National CU Share Insurance Fund, even after the agency transfers the

$5.9 million cost of the corporate bailout to a new Corporate CU Sta-

bilization Fund.And several corporates were telling their members they expect to take

CUs Should Prepare To Be HitWith More Corporate Charges


With Its Belt Already Tight, CUNASays It’s Going To Get Even TighterBy Joyce Moed, Reporter

LOWELL, Mass.–Now that saving money is suddenlytrendy, one credit union here has created several new prod-ucts aimed at cashing in on that trend while helping itsmembers build wealth in tough economic climate.

Northern Mass Telephone Workers Community CUis promoting four new programs to help its membersreplenish their savings and regain their financial security.Continued on page 22


BECU’s David Johnson performs on TV.

Suddenly Savers?A CU Journal Series

How 1 CU Helps MembersBuild Wealth In Tough Times

IndexSpecial Report:TECHNOLOGY

CUJ_Page01.qxd 6/25/09 3:43 PM Page 1

Source: Harvey Research, March 2008, Ad Q® Study

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 one or more of the below actions 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

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 6,278 credit union leaders—and the list continues to grow each month.

CUJournal.com At-A-Glance(monthly average)

Visitors: 34,794 Unique Visitors: 13,323Page Views: 102,664 Source: HitBox, September 2009

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

CUJournal.com Daily Briefing

AmericanBanker.com Community Banking Update Daily Briefing Intraday Updates Morning Scan Mortgages UpdatePayment Systems Update Technology UpdateWealth Management UpdateWashington Regulatory Update

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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

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JANUARY Mortgage Technology Conference

FEBRUARY

MARCh Best Practices Retail Financial Service

APRIL Mortgage Servicing ConferenceAnnual Card Forum & Expo

MAY Credit Union Journal Presents: The Grow Show

JUNE Underbanked Financial Services SymposiumMobile Commerce Summit

JULY/AUGUST

SEPTEMBER

OCTOBER ATM, Debit & PrePaid ForumThe 25 Most Powerful Women in BankingFinancial Services Marketing SymposiumSmall Business BankingFinancial Services Collections & Credit Risk Conference

NOVEMBER Annual Mortgage Fraud and Risk

DECEMBER Banker of the Year AwardsCEO DialogueCFO Dialogue

2010 SourceMedia conferences and events in the credit union, financial services and banking industries

“ This was a great conference, filled with actionable strategies and ideas that financial services marketers can start using right away.”

— Sue McClure, SVP/Marketing Distribution, UMB Financial Corp.

Conference dates are subject to change. Visit SourceMediaConferences.com for a full list of events and dates.

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