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ALEXANDRIA, Va.-NCUA released a study showing that many small credit unions currently lose money on their debit cards but for most credit unions debit is extremely lucrative.

The study shows that the larger the credit union, the greater the profit margin on debit transactions. So that it costs credit unions over $1 billion in assets about two cents and they earn an average of 38 cents per transactions; it costs credit unions between $500 million and $1 billion ten cents and they earn 45 cents per transaction; and it costs credit unions from $100 million to $500 million eight cents and they earn 27 cents per transaction.

But the profit margin decreases significantly for smaller credit unions, with costs for those from $50 million to $100 million at 19 cents and revenues 29 cents; $10 million to $50 million costs are 21 cents and revenues 27 cents; and credit unions under $10 million paying 31 cents per transaction and earning the same back.

Many credit unions actually make money on the average transactions, NCUA found.

The NCUA study confirms what many in the industry have suspected, that debit cards are extremely profitable for card issuers. CUNA estimates that credit unions earned $2.6 billion from debit fees last year.

The study was attached to a letter NCUA Chairman Debbie Matz released this morning to Federal Reserve Chairman Ben Bernanke, who is writing rules to implement the Durbin amendment's cap on debit fees.

Matz told the Fed Chairman she is concerned that proposed caps of 7 cents or 12 cents per transaction for the largest car issuers-those over $10 billion in assets-will eventually be applied to all issuers because of market forces that will drive more debit transactions to lower cost cards.

Matz told Bernanke she believes that the Fed's final rule should include "meaningful exemptions for smaller card issuers related to network exclusivity and merchant routing" to protect the smaller issuers from market forces.



TUSCALOOSA, Ala.-NCUA said credit unions in the storm-ravaged states of Alabama, Tennessee, Mississippi and Georgia can provide emergency services for non-members and other credit unions under special circumstances.

NCUA said it also providing emergency lines of credit for hundreds of credit unions in the worst-hit counties through the National CU Share Insurance Fund or Central Liquidity Facility. Under its normal disaster plan, NCUA is encouraging credit unions to ease terms and documentation for loans to finance recovery efforts.

NCUA's action comes after more than 350 people were killed in the four states by a series of as many as 230 tornados.

In response, President Obama has now declared that a major disaster exists in Tennessee and ordered federal aid to supplement state and local recovery efforts. The President's actions make federal funding available for the following affected counties: Cheatham, Davidson, Hickman and Williamson.

Four additional counties in Mississippi were added to the list of those announced Saturday. Mississippi's Chickasaw, Choctaw, Neshoba and Webster counties can also access federal emergency assistance programs.



CLEVELAND-A federal judge has ordered the repatriation of $2.3 million traced to last year's collapse of St. Paul Croatian FCU from a Macedonian bank while authorities try to determine whether the funds were among those siphoned from the one-time $240-million CU.

The funds were transferred to the Capital Bank AD by Koljo Nikolovski, the purported Macedonian crime figure who is being tried on charges of participating in a $170-million fraud that sunk the credit union, one of the biggest credit union frauds ever.

Federal prosecutors said Nikolovski's nephew, who was among nine individuals indicted in the fraud scheme, tried to personally access the funds in Skopje, Macedonia, but was turned away because he did not have a valid power of attorney.

Koljo Nikolovski is being held in prison while he awaits trial on charges of siphoning as much as $5 million from the credit union through a bribery and phony loan scheme that allegedly earned the credit union's CEO, Anthony Raquez more than $500,000 in exchange for approving the loans. Raquez allegedly approved the loans even though Nikolovski, the purported leader of a Macedonian crime syndicate, and the other borrowers had no intention of repaying them.

The failure of St. Paul Croatian, based in the Cleveland suburb of Eastlake, has spread beyond the shores of Lake Erie, to several credit unions and a nearby church that had uninsured deposits in the credit union. NCUA also claims the credit union helped finance an $8-million Ponzi scheme hat bilked dozens of parishioners at St. Paul Croatian Church, the credit union's chief sponsor.



WASHINGTON-Regulators closed five more banks last week, making a total of 39 failures so far this year.

NCUA and the Utah Department of Financial Institutions also closed Utah Central CU, the seventh credit union failure of the year.

The most recent bank failures were of: $476-million Community Central Bank of Mount Clemens, Mich.; $260-million The Park Avenue Bank, Valdosta, Ga.; $308-million First Choice Community Bank, Dallas, Ga.; $352-million Cortez Community Bank, Brooksville, Fla.; and $71-million First National Bank of Central Florida, Winter Park, Fla.

The FDIC estimates the five failures will cost its Bank Insurance Fund $643.2 million.

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