SBA Expands 7(a) Criteria
On May 1, the agency said the temporary 7(a) loan size standard will parallel the standard for its 504 Certified Development Company loan. The net worth for the company and its affiliates cannot be in excess of $8.5 million. The average net income after federal income taxes excluding any carry-over losses for the preceding two completed fiscal years cannot be more than $3 million.
The change was scheduled to go into effect the week of May 4 and will run through Sept. 30, 2010, the SBA said. As a result of the temporary change, more than 70,000 additional small businesses, including auto and RV dealerships, auto industry suppliers and others could be eligible to apply for SBA 7(a) loans, according to the agency.
In March, the SBA raised the guarantee on 7(a) loans to 90% and reduced fees for borrowers. Since then, it said it has seen average weekly 7(a) loan volume increase by more than 25% and new SBA loans made by nearly 450 lenders who had not made loans since October 2008.
NAFCU Adds Sessions
On Luring Latinos
Credit union executives who want to learn how to tap into the Latino market can attend two sessions at NAFCU's annual conference.
NAFCU is joining forces with the Network of Latino Credit Union Professionals for two workshops: "What Works in Serving the Latino Market: An Overview of Product Mix and Delivery Approach" and "The Regulatory Framework: Myths and Reality of Serving Immigrant Populations."
"Better understanding of the Latino market is critical. By the year 2050, Latinos are expected to comprise 25% of the population of the United States, making this demographic a market of great opportunity for credit unions," said NAFCU President/CEO Fred Becker.
"NAFCU's premiere conference is a great venue for us to share our expertise about the Latino market," said NLCUP President Carlos Calderon."
NAFCU's 42nd Annual Conference & Exhibition will be held July 21-25 at the Gaylord National on the Potomac in National Harbor, Md. The deadline for early registration is May 29.
Texas League Subsidiary,
Benefit Provider Partner
Credit Union Resources, an affiliate of the Texas Credit Union League, and New Benefits Ltd., have formed an alliance to bring health benefit solutions to members.
Credit unions can offer members savings on prescription drugs, dental care, hearing aids, alternative medicine, diabetic supplies and nutritional supplements among other products through CU Benefits Express, according to Credit Union Resources.
The alliance also provides credit unions with the opportunity to offer their members Coast to Coast Vision Plan's eye care and supplies, TelaDoc, a national network of doctors who provide cross coverage consultations and LifeLock, an identity theft prevention program.
The Dallas-based New Benefits, which has offered wholesaling and customized discount health benefit programs since 1990, serves more than 4,000 clients.
Ga. CUs Surpass Banks
Members at Georgia's credit unions enjoyed better car loan rates than bank customers in 2008, according to a new report from the Georgia Credit Union Affiliates.
Georgia's credit unions beat banks in the 48-month car loan category with rates at 5.97% compared to 8.05% for banks, the Georgia Credit Union Benefits Index noted. Five-year car loan rates at credit unions were 5.79% and 7.38% at banks. Credit unions also had better rates on individual retirement accounts at 3.09% compared to 2.33% at banks.
Loans issued by Georgia's credit unions totaled $4.0 billion in 2008, nearly identical to the $4.1 billion distributed in 2007. Credit unions approved more than 360,000 loans to Georgians in 2008, compared to 348,000 in 2007, according to the index. While the number of loans increased in 2008, the average loan amount was slightly less in 2008 than in 2007-$11,029 compared to $11,874.
The index is the first of an ongoing report to be updated on a semiannual basis, serving as a barometer to help Georgia consumers make more informed personal financial decisions in an unprecedented economic environment, the GCUA said. It uses data compiled from more than 170 Georgia credit unions and banking institution statistics from Datatrac, a rate survey firm.
CUNA Adds Sessions
On Policy Issues
In light of the challenges facing credit unions in particular and the economy in general, CUNA's annual conference will feature several sessions dealing with these issues.
The breakout sessions include:
Critical issues update with CUNA President/CEO Dan Mica;
Legislative-regulatory update-covers key credit union policy issues including spreading out credit unions' costs associated with the corporate credit union network, bankruptcy, regulatory restructuring and interchange fee income;
TARP 101-analyzes this Treasury Department program for banks and its impact on credit unions;
Net worth restoration plan primer-explores the issues behind developing a restoration plan and what it means in terms of restoring net worth;
Facing up to problems in the credit union system-examines the future of corporate credit unions, NCUA's approach to assisting them and the effect on credit unions;
"How to" on the Obama mortgage-modification plan; and new examination issues.
CUNA's America's Credit Union Conference and Expo is scheduled for June 21-24 in Boston.
"This is one of the most difficult years most professionals will ever have to face in a lifetime of credit union involvement," Mica said in a statement. "The issues seem to change almost daily and the information needed to be proactive is in a constant state of change, which is why we felt it was important to add these sessions to help prepare credit unions for the balance of this year and next."
Sharing With Russian CUs
America's economic crisis seems fairly new, but U.S. credit union executives have nonetheless gained enough wisdom to share it with those just starting to feel the global pinch.
A World Council of Credit Unions delegation shared advice and strategies with Russian credit union executives last week during the third Russian credit union forum, sponsored by the Russian Credit Union League.
"This is a tough time for U.S. credit unions, as it is for financial institutions worldwide," said Anne Cochran, president/CEO of the Louisiana Credit Union League and WOCCU board member. "If we in this room have any advantage over our competitors, it is that we represent financial institutions that are member-owned and member-operated."
Cochran, whose league has partnered with RCUL as part of WOCCU's International Partnerships Program since September 2007, was joined by fellow U.S. delegates Eric Richard, executive vice president and general counsel of CUNA, and Rod Taylor, president/CEO of Barksdale Federal Credit Union, Bossier City, La.
Forum topics covered external regulation and self-regulation, legislation, accounting, taxation and governance in crisis situations. The meeting drew more than 160 credit union leaders from all regions of Russia and several neighboring countries. U.S. delegates expressed cautious optimism about the strength and stability of credit unions, noting signs that an economic turnaround may be forthcoming.
"Patience and wisdom are the orders of the day," Richard said. "We are just beginning to see some small signs of possible recovery in the economy. Our goal is to hang on as the environment improves."
"It is my hope that through our combined strength credit unions will continue serving members well no matter what economic issues come to bear on the global credit union movement," she said.
Consumers Tend to
Dump Merged Banks
Economic instability has taken its toll on the banking industry creating heightened levels of stress with countless financial institutions and the people they serve. A recent J.D. Power and Associates study set out to measure customer behavior post-merger.
J.D. Power found that the probability of customers changing banks swells three-fold after their bank has merged with another financial organization.
Rockwell Clancy, the executive director of financial services at J.D. Power and Associates explained, "Overall, customers of acquired banks perceive that acquiring institutions are far less focused on customer interests and personal service than their previous bank."
"As a result," Clancy said, "these customers are much more likely to change banks, particularly during the first six months following the announcement of a merger of acquisition."
J.D. Power and Associates looked at customers of financial institutions that recently merged, including Chase/WaMu; Wells Fargo/National City and PNC/National City. About 75% of customers of these merging firms said they received notice about the mergers from outside sources, other than their bank. Less than one-half of the banks' clientele reported that they received an adequate amount of information regarding the merger of their financial intuition. In addition, when customers found out about a merger from a source other than their financial institution, such as the media or family, they are twice as likely to change banks.
According to the report, post-merger customer discontent is with the magnitude and number of changes made to customer banking activities; changes made to routine customer banking activities, such as bank hours, fees or automatic payment or debit functions; and communication about impending changes.
Rockwell Clancy stated, "Customers who are uneasy about their financial institution's merger present a sizable opportunity for competitors. Conveying messages about the competing bank's stability and reliability and not subjecting the customer to unpleasant surprises will resonate with this group and could potentially result in new business."
The 2009 Bank Mergers and Acquisitions report is based on responses from 3,111 customers evaluating 17 banks. The report was fielded in February 2009.