BOSTON–Among the undercurrents readily expressed during the Credit Union Journal's Business Development & SEG Conference here is concern by credit unions that have gotten caught up in the mass move to community charters that the move may have been a mistake. A number of attendees indicated they are worried over the costs involved in moving to community, the expanded competition, and the feeling by many members who joined as part of SEGs that they have been abandoned. Many of the new community charters have been unprepared for the transition, agreed Paul Lucas, a Virginia-based consultant. If you're a SEG-based credit unions and you can't market to them effectively, how in the world can you do it as a community charter? asked Lucas. Don't look at your members as members, look at them as consumers. It's getting tougher to get your message out there. If anything, when you go community you should step UP your SEG marketing.

WAYCROSS, Ga. – Volunteer directors contemplating converting their credit unions to banks need look no further for evidence of the financial benefits than to Atlantic Coast Federal Savings Bank, known until December 2000 as Atlantic Coast FCU. That’s where Charles Martin, Jr., a career machinist at CSX Transportion, the former credit union’s sponsor, earned $86,670 from his board service last year–something he performed for nothing when he represented the key employee group on the credit union’s board. That included $21,000 in directors’ fees, $30,000 in stock and $13,550 in stock options, among other things, according to the bank’s annual proxy statement filed last week. Since taking the ex-credit union public just two years ago, the 59-year-old Martin, now chairman of the board, has accumulated $635,000 worth of Atlantic Coast stock. And when he leaves the board, Martin can look forward to a $100,000 Director Retirement pay and $52,000 Director Emeritus package, just like three former volunteer credit union directors–all also CSX retirees–received last year. Still, Martin’s compensation does not compare to that of Robert Larison, Jr., the president and CEO of Atlantic Coast who engineered ths witch to bank. Larison took home almost $840,000 last year and has amassed stock valued at $2.4 million in the ex-credit union.

BOSTON – Credit unions seeking to grow are being told by several experts that they often look in the wrong place. Specifically, credit unions looking for both savings or loan growth typically turn to new members, who are expensive to acquire, when they really ought to be focused on the members they have already captured. Many of the speakers addressing the Credit Union Journal's Business Development & SEG Conference at the Hyatt Hotel here repeatedly stressed credit unions are wasting precious budget dollars reaching out potential members rather than making the more effective investment in current members. Credit unions talk about growth and are growth obsessed, observed Mark Riddle, senior research analyst with Raddon Financial Group. Credit unions could grow just with the members they already have. Retention is the primary driver of growth. It's not that you're not bringing in new households, its that you're not retaining the credit unions you have. Riddle pointed to Raddon research that showed the top 10% of credit unions have a 94% retention rate, while the bottom 10% have a 90% retention rate."

SAN DIMAS, Calif. – The consolidation of the corporate credit union network continues apace, with corporate giant WesCorp FCU expected to announce a deal to acquire Suncorp FCU as early as today. The deal comes as the ever-shrinking corporate network is in the process of digesting several mergers; WesCorp itself is completing its own acquisition of Volunteer Corporate FCU, the Tennessee corporate known as VolCorp. In addition, Northwest Corporate CU is in the processing of merging with Southwest Corporate FCU; Mid-States Corporate FCU recently completed its merger with Empire Corporate FCU to form Members United FCU; and several other corporates are considering combining forces in a trend that has seen the number of corporates shrink by a fourth over the last decade. A WesCorp deal for Suncorp would create a corporate with almost $30 billion in assets, more than twice as large as any other corporate, except for U.S. Central CU, the corporates’ corporate. WesCorp’s last merger was in 2005 when it acquired Pacific Corporate FCU, the Hawaii corporate; and before that in 1998 when it acquired Idaho Corporate FCU.

KENSINGTON, Md. – Hundreds, if not thousands of Lafayette FCU members working as foreign aid workers in Iraq and Afghanistan have lost their vote under a new bylaw adopted secretly that requires that all votes at the annual meeting or any special meetings be conducted in person. The move comes as growing numbers of credit unions are expanding the ability of members to vote by authorizing, in fact encouraging, mail-in or electronic balloting. Disclosure of the new bylaw, passed in the days after a mere 65 members turned out for a special meeting culminating the credit union’s failed conversion to mutual savings bank, comes as opponents of the conversion are bidding to gain representation on the board. Tom Carter, an employee at U.S. Agency for International Development, one of the credit union’s main sponsors, said the secretly-passed bylaw will prevent hundreds of overseas workers with US AID from voting on credit union issues, many of them stationed in Iraq or Afghanistan. “There’s quite a large number of AID employees serving overseas,” said Carter, who has worked more than two decades helping develop credit union systems in the Third World. Several AID workers have been protesting the disenfranchisement with letters and emails to the U.S. Foreign Service, said Carter, who helped organize a petition drive to recall the Lafayette board for its ill-fated conversion try. Lafayette officials rejected the petition last week, prompting opponents of the bank shift to focus on electing two allies to the board of the $330 million credit union at next month’s annual meeting.

TALLAHASSEE, Fla. – An item in the April 11 Credit Union Journal Daily Briefing about the new headquarters at Southeast Corporate FCU was incorrect, as the completion of the headquarters was celebrated this week.

PHOENIX – Desert Schools FCU said it raised $150,000 for Children’s Miracle Network and the Phoenix Children’s Hospital through its annual golf tournament. That’s more than $50,000 more than was raised last year. In addition to the 18-hole tournament, the event featured prizes and contests throughout the morning and afternoon, including longest drive and closest to the pin competitions as well as an appearance by Shane Doan from the Phoenix Coyotes hockey team.

McLEAN, Va. – Long-term mortgage climbed higher this week, after four straight weeks of holding steady, according to Freddie Mac. The average for the 30-year, fixed-rate loan rose to 6.22% this week, from 6.17% last week; while the average for the 15-year, fixed-rate loan climbed to 5.90%, from 5.87% last week. ARM rates also moved higher, with the average for the one-year ARM increasing to 5.47%, from 5.44%; and the average for the five year ARM inching up to 5.93%, from 5.92%. Freddie Mac Chief Economist Frank Nothaft said the interest rate rise was related to data released last week showing the country had stronger job growth in March than markets anticipated. He also said mortgage refinancing has remained strong, with 40 percent of total mortgage applications for refinancing. Among those borrowers who are choosing to refinance now, a large share are doing so to avoid an adjustment to their monthly payment as the initial period on their adjustable-rate loan expires or to extract equity through a cash-out refi, said Nothaft.

WASHINGTON – The National CU Foundation announced it is now accepting applications for its annual innovation grants. The Foundation hopes to award as much a s$500,000 in innovation grants, part of its REAL Solutions program. The available funding will be determined by money earned on investments in the Community Investment Fund. The Foundation is seeking applications to finance innovative programs in financial literacy; low-cost transaction services; savings; credit and homeownership.

CALABASAS, Calif. – Countrywide Financial, the nation’s largest mortgage lender, reported yesterday that foreclosures in its portfolio soared to 0.83%of the total dollar figure of loans in March, almost double from a year ago, as market conditions continued to deteriorate. Foreclosures are rising as housing price appreciation slows and lenders tighten their underwriting standards, according to the Mortgage Bankers Association. The MBA reported that last month the foreclosure rate for the nation rose to 0.54% in the fourth quarter of 2006, the highest since it has measured in 37 years of surveys.

EL SEGUNDO, Calif. – Officials of beleaguered Continental FCU asked for NCUA help to fend off a hostile takeover from Wings Financial FCU, after the much-larger credit union once again resisted the credit union’s overtures. Glatt said he was cheered by NCUA’s announcement last week they will review their merger rules to see if they should be amended to cover hostile takeovers, such as the Wings Financial bid. He said he hoped some kind of relief from the federal regulator could be forthcoming, such as an order for a moratorium on the Wings Financial entreaties. “We’d much rather have a regulatory answer, than a legal one,” said Glatt, of the potential for asking the courts to issue a cease and desist order to stop the hostile takeover. Glatt, the industry consultant who took the pilot’s seat at Continental FCU last August, said he was cheered by first quarter financial results, which indicate a turn-around plan may be starting to bear fruit. He cited a 3% ($6 million) increase in both deposits and assets in the first three months of the year, and growth of “a few hundred members”. Net income was virtually nil, as funds were expended on both the expansion plans and on defending against the Wings takeover bid, he said. “We had budgeted for expansion of products and services,” Glatt told The Credit Union Journal.

ALEXANDRIA, Va. -- NCUA, which has been slow to embrace the move to more corporate transparency embodied in the Sarbanes-Oxley Act, moved yesterday to pry open the internal records of credit unions to their members. Two rules proposed yesterday would require credit unions to disclose the compensation paid to management in mergers; and give members greater access to credit union books, records and minutes to board and committee meetings. The proposals come as the internal proceedings of credit unions are coming under increasing fire; during conversions to mutual savings banks, or the current hostile takeover battle between two airline credit unions. Congress has also raised the issue of transparency among credit unions. And a study issued last year by the General Accountability Office, the chief auditor for Congress, recommended that credit unions make more information generally available on executive compensation, just as publicly owned corporations are being required to do. Until now, NCUA has been slow to respond, saying that increased corporate disclosures required by Sarbanes-Oxley are generally aimed at curbing management abuses seldom seen at credit unions. But recent cases where credit union boards and management have expended significant resources--sometimes hundreds of thousands of dollars paid by the credit union--to fight off member challenges; at Columbia CU, DFCU Financial CU and Lafayette FCU, have spurred NCUA to act. In the member access rule, all federally chartered credit unions would be required to make all non-confidential records, books and minutes available to members for legitimate purposes, such as reviewing a charter conversion or merger. The second proposal would require all credit unions during a merger to submit information to NCUA as part of the merger application detailing any compensation to be earned by top management as a result of the combination.

ROCHESTER, Minn. – NCUA has approved the conversion of former IBM employees credit union, Think FCU to mutual savings bank, officials announced yesterday. At $1.2 billion, the credit union giant once known as IBM Mid-America FCU, is one of the biggest credit unions to make the switch to bank. Think members voted narrowly, 51% to 49%, last month to make the charter switch, which credit union executives said will not entail a sale of stock in an initial public offering. Think is the second largest credit union, behind only $1.4 billion Community CU, to convert to bank.

KENSINGTON, Md. – Lafayette FCU acted yesterday to quash a member petition urging a vote on a recall of the board of directors, under fire for its failed attempt to convert the $330 million credit union to bank. Lafayette Chairman Arnold Rosenthal notified organizers of a recall attempt that the credit union’s own review had disqualified enough member signatures to quash the petition initiative. In addition, the credit union chief added, the credit union would not accept the petition because it was based on ‘false’ and ‘misleading’ information, according to a letter sent by Rosenthal to the organizers. Tom Carter, one of the organizers of the recall petition, said yesterday his group wants to meet and discuss their options. The petitioners have qualified two representatives to run for the board at next month’s annual meeting. Credit union representatives were not available to comment last night. Lafayette had planned to convert to a mutual savings bank, then to public bank, but a narrow vote on the charter switch was disqualified by NCUA, prompting the credit union to withdraw its conversion bid.

ODESSA – First Basin CU, has begun the process of converting to a mutual savings bank.

OMAHA, Neb. – The state Department of Banking and Finance agreed this week that it is OK for credit unions to use the term ‘bank’ in their promotional and other literature. As recently as 2004, the state regulator ordered Liberty First CU of Lincoln to stop using the term in its advertising. The Nebraska CU League has been lobbying for years to change the arcane state provision that prohibits a variety of people and businesses from using the word bank in the title or a description of their businesses. But credit unions argued use of the term is unavoidable in some instances, such as when referring to their offering of Internet banking services.

HARRISBURG, Pa. – The Pennsylvania Supreme Court has agreed to review the bankers’ challenges to community charters granted TruMark Financial CU and Freedom CU, two of the broadest fields of membership ever granted. The two community grants, both encompassing more than five million residents in five counties surrounding Philadelphia, were approved by the Pennsylvania Banking Department and upheld last year by the appeals panel, the Commonwealth Court. The state’s High Court is scheduled to hear oral arguments May 14 in a related case in which the bakers are challenging the tax exemption for state chartered credit unions, an issue that was brought out in the FOM cases. The case could have severe ramifications for credit unions, as the Pennsylvania Department of Revenue, one of the defendants in the suit, estimates that the tax exemption saves credit unions as much as $20 million a year in corporate and other state levies.

ATLANTA – Shares in electronic payments giant CheckFree Corp. fell more than 7% yesterday to close at $35.35, after the company conceded an analyst’s report the company’s largest customer, Bank of America, may pull some of its business in-house. BofA's business accounted for $170 million, or 20% of CheckFree's fiscal 2006 revenue, with bill-pay services accounting for $150 million. Also weighing down the stock was the filing of a shareholders suit claiming the company filed false financial statements in order to prop up its share price last year. CheckFree recently completed the acquisition of Carekker Corp. for $180 million, and is in the process of acquiring Corillian Corp. for $250 million.

PORTLAND, Ore. – Morris ‘Mac’ McElwee, who helped build Oregon’s biggest credit union, Portland Teachers CU into a credit union giant, passed away last month at the age of 79. The cause of death was Guillane-Barre syndrome. McElwee became treasurer-manager of the credit union that had less than $10 million in assets and he ran it until 1984 when it had grown to $140 million. Today, the credit union, now known as OnPoint Community CU has more than $2.3 billion under management and more than 180,000 members.

ODESSA, Texas – Another credit union, First Basin CU, has begun the process of converting to a mutual savings bank. The $105 million credit union has submitted member disclosures to NCUA for the required approval by the federal regulator, NCUA confirmed. The agency is currently reviewing disclosure statements for two would-be converts, including First Priority CU, a $130 million Boston credit union formerly known as Postal Community CU.