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CURRENT Newsletter | 8 August 2013

Aug 8, 2013 by Lewis Wood

News and Information For and About Virginia's Credit Union System

Headline News

News About Credit Unions

Compliance/Regulatory Affairs News

Governmental Affairs News

Financial Services/Marketplace News

Education & Networking Opportunities

News From Credit Unions

Chapter News

Community Involvement

News About The Competition

Headline News

Congressman Morgan Griffith Supports CU Tax Exemption; Rep. Scott Rigell Says Exemption Should Be Safe So Long as CUs Stay 'True to Their Mission'

Rep. Morgan Griffith (R-9th) is quoted in the newsletter of Eastman Credit Union as supporting continuation of the credit union tax exemption, while colleague Scott Rigell (R-2nd) told credit union representatives Monday that Congress would likely continue to support the exemption so long as credit unions remain true to their mission.

As you know credit unions are in the midst of a massive campaign to save the credit union tax exemption. As part of the Don't Tax My Credit Union campaign, advocates have been emailing, phoning and visiting Virginia's congressional delegation since May, working to ensure Congress understands that a tax on credit unions will amount to nothing more than a tax on the nation's 96 million credit union member-owners.

"We know that tax bills are being drafted on both sides of Capitol Hill," says League President Rick Pillow, "and we're using every means and opportunity to press our case with lawmakers. Here in Virginia, credit unions last year delivered more than $695 million in direct financial benefits to their members, a benefit made possible by our tax exemption."

Although Congress is in recess for district work sessions until Sept. 9, now is not the time to let up on our efforts.

Even lawmakers who have expressed their support for the tax exemption need to continue to hear from us. We need to ensure the tax exemption is a top-of-mind issue even for those not serving on the key tax writing and financial services committees.

To that end, we strongly encourage you to:

  • Take advantage of any available public event to engage your Representatives and Senators.  Many will hold town hall meetings, others will not, but be on the lookout for these opportunities and prepared to take advantage. We were able to meet with Reps. Rigell and Rob Wittman (R-1) by taking advantage of the district work session.
  • Whether your Senators or Representatives have a town hall or public forum or not, arrange in-district meetings. Oftentimes, members of Congress have more time available for these “Hike at Home” meetings than in Washington during session, and there's another positive to in-district meetings – they're in a more relaxed atmosphere.
  • Keep driving your membership to www.DontTaxMyCreditUnion.org! Just over 200 credit unions have generated a third of all the 650,000 messages to the Hill, merely by asking their membership to engage via the website and email.  This remains our best and most potent weapon, and clearly we have only scratched the surface of our potential in this area. Virginia's lawmakers have received 14,913 Don't Tax My Credit Union messages!
  • Also, if you happen to attend a lawmaker's public event or just happen to run into a lawmaker, please share their feedback on our Don't Tax My Credit Union message and where they stand on this important issue. Drop an email to ksherbin@vacul.org.

[related: Rep. Morgan Griffith Supports Credit Union Tax Exemption] (via The Advocate Blog)
[related: Credit Union Advocates Meet with Rep. Scott Rigell] (via The Advocate Blog)
[related: Rep. Rob Wittman Reaffirms Support for Credit Union Tax Exemption] (via The Advocate Blog)
[related: NCBA Urges Tax Policy Writers To Support CUs]
[related: Advocacy Strength Is Key To Repel Bank Attacks]

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CUNA, Coalition Ready Response, Strategy on Interchange Ruling

The Credit Union National Association will meet with a broad coalition of finance industry representatives this week to chart a response strategy and approach to last week's U.S. District Court decision striking down the Federal Reserve's price caps on debit interchange fees.

CUNA also is contacting Federal Reserve staff to detail the negative impact of the ruling on credit unions and other small card issuers as that agency considers an appeal. The judge left the rule in place for the time being, pending the Fed's issuance of new rules; however, there will be additional briefings to determine the length of time the existing rule can stay in place. A hearing has been set for Aug. 14.

[read more]
[resource: CUNA's Confidential Update on Interchange Decision] (You must be logged into the League website to view this. Register here if you need a password.]

[related: Durbin Interchange Decision Unexpected, Appeal Uncertain]
[related: Stores Cheer, Banks Fume as Judge Throws Out Fed’s Swipe-Fee Cap]

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What Obama's GSE Speech Means for Housing Finance Reform

President Obama ended his administration's self-imposed blackout regarding housing finance reform on Tuesday, finally endorsing a specific approach after effectively punting on the issue more than two years ago. Although the administration still appears worried its participation in the debate might further polarize the issue, the issue has been gathering such momentum in the past two months that the White House can no longer afford to stay silent.

Obama was tactical in his approach, offering broad principles that were largely consistent with the administration's white paper released in 2011 and dovetailed with a bipartisan bill already introduced in the Senate. The paper suggested three possible ways to reform the system, including full privatization of the market and the elimination of any government support. But Obama made it clear Tuesday he no longer saw that as a viable option, even if he was careful to suggest the government should only have a "limited" role in the system. (American Banker Online, Aug. 7)

[related: Obama Outlines Housing Reform Goals In Speech]
[related: Obama Four-Point GSE Reform Plan Includes a Nod to CUs]

> Also of interest on the GSE front: Even as policymakers plot the demise of the government-sponsored enterprises, Fannie Mae is trying harder than ever to win business from small and midsize financial institutions.

Over the past few months, Fannie has raised the prices it pays to community-based lenders for mortgage loans, enticing them to sell loans directly to Fannie, rather than to large-bank aggregators like Wells Fargo (WFC) and JPMorgan Chase (JPM).

The change in pricing is part of a broader effort by Fannie's regulator, the Federal Housing Finance Agency, to level the playing field between community-based lenders and large banks.

Historically, large banks have received volume discounts from Fannie and Freddie Mac. Small lenders, however, did not receive the discount and tended to sell their loans to whichever commercial bank that offered better pricing.

Last year, 2,200 banks, credit unions and mortgage bankers sold $286 billion in loans for cash to Fannie and Freddie, triple the volume in 2007. Not only has the total volume of loans delivered to the GSEs increased substantially but the number of community-based lenders has jumped 18% from 2007 to 2012. (American Banker Online, Aug. 8)

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Obama Signals Support for Easing Mortgage Rules

Pressure is mounting for bank regulators to dial back pending mortgage rules after President Obama said he's worried the housing market could become too constrained by "overlapping regulations."

In the wake of the president's housing address on Tuesday, the media largely concentrated on his recommendations for housing finance reform. But Obama appeared to touch on forthcoming rules that many in the industry are concerned could hurt credit availability.

"Now that we've made it harder for reckless buyers to buy homes that they can't afford, let's make it a little bit easier for qualified buyers to buy the homes that they can afford," Obama said in the speech. "So [Department of Housing and Urban Development Secretary] Shaun Donovan has been working with the finance industry to make sure we're simplifying overlapping regulations; we're cutting red tape for responsible families who want to get a mortgage but keep getting rejected by the banks."

Many said the president was apparently referring to the separate rules defining "qualified mortgages" and "qualified residential mortgages." The Consumer Financial Protection Bureau released its final QM rule in January that created an ultra-safe class of loans that receive added legal protections from liability lawsuits. But the bank regulators have yet to finalize their definition of QRM, which are a different set of mortgage standards tied to a risk-retention rule. Lenders have worried the two definitions might be incompatible and have urged the regulators to ensure the two definitions are consistent with each other. (American Banker Online, Aug. 8)

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FASB Plan Would Name CUs As Non-Public Entities; Could Bring More Flexible Accounting Requirements

In a major step that could be positive for credit unions, the Financial Accounting Standards Board Wednesday issued a request for public comment on a proposal that would allow nonpublic business entities to use accounting and reporting alternatives under U.S. Generally Accepted Accounting Principles (GAAP).

Such entities, that could include credit unions, could be subject to more flexible accounting requirements, although FASB acknowledged that whether alternatives allowed under GAAP would be permitted "may ultimately be determined by regulators."
 
Comments are due to FASB Sept. 20, and CUNA will be posting a CUNA Comment Call on its Regulatory Advocacy website this week.
 
The proposal includes a revised definition of "public entity." When finalized, this definition will be used by FASB to identify the different needs of users of private company financial statements as opposed to the users of public company financial statements, according to the "Proposed Accounting Standards Update."
 
The framework should also help identify opportunities for reducing the complexity and costs associated with preparing financial statements in accordance with GAAP for nonpublic entities. The proposal, in and of itself, would not affect existing requirements.

[read more]

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NCUA’s Low-Income Credit Union Initiative Boosts Growth, Community Investment

One year after the National Credit Union Administration announced its low-income credit union initiative, the number of designated credit unions has grown significantly, creating the potential for greater community investment and access to financial services in underserved communities, Board Chairman Debbie Matz announced Wednesday.

“We launched NCUA’s low-income credit union initiative one year ago, as part of my Regulatory Modernization Initiative,” Matz said. “To relieve federally chartered credit unions of the burden of determining if more than 50 percent of their members met the definition of low income, NCUA performed the analysis and then informed the qualifying credit unions. Since last August, 821 federally insured credit unions, with 11 million members and $101.8 billion in assets, have accepted the low-income designation. There are now 1,961, two-thirds of which are federal credit unions, with the low-income designation. The most recent data show these credit unions have 17.8 million members and assets of $157.6 billion. By streamlining the designation process, we have been helping more credit unions help more people.”

[read more]

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NCUA Offers Webinar on Budget Preparation

The National Credit Union Administration will present a webinar on budget preparation at 2 p.m. on Aug. 13. The Tuesday afternoon session will be led by Vanessa Lowe, economic development specialist with the agency’s Office of Small Credit Union Initiatives, but is open to credit unions of all asset sizes. She’ll focus on how to create a budget that captures the strategic mission of a credit union, including gathering the required documentation and identifying other budget preparation issues, the agency said.

Registration is free and online. Participants may submit questions in advance at WebinarQuestions@ncua.gov with “Budget Preparation Webinar” in the subject line.

[read more]

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News About Credit Unions

CU Loans Up, Savings Down In June

Credit union loans outstanding increased in June, while savings balances dropped, according to the June monthly sample of credit unions by the Credit Union National Association. Credit union loans outstanding grew 0.8% in June and 2% during the first half of 2013. Fixed-rate first mortgages led loan growth, rising 1.7%, followed by used-auto loans (1.6%), new-auto loans (1.5%), unsecured personal loans (1.2%), and credit card loans (1%). With loan growth outpacing savings growth during June, the loan-to-savings ratio increased from to 67.5% in June from 66.7% in May.

[read more]

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CUs, Big Banks' Loan Approval Rates for Biz Loans See Uptick

Large banks approved more small-business loans in July than they have in any month since before the recession. Banks with $10 billion of assets or more approved 17.4% of small-business loan applications last month, according to a monthly survey by Biz2Credit, an online loan marketplace. Credit unions also increased small-business lending in July.

They approved 45.1% of small business loan applications, ending a 13-month decline. Loan approval rates by small banks fell for the second consecutive month, dipping to 49.4%. Alternative lenders approved 63.2% of loan applications, down from 63.4% in June. (American Banker, Aug. 7)

> Member business loans are becoming an increasingly important part of credit unions' portfolio mix. Virginia-based credit unions now hold $1 billion in MBLs and the loan category has been growing by an average of 24% the past four years.

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Moebs Study Finds CUs Ahead of Banks in Website Info

Credit unions do a better job of providing information on their websites than other FIs, but many credit union websites are still lacking important information, according to a recent study by Moebs Services, an economic research firm in Lake Bluff, Ill.

In a major expansion of its annual survey of financial institutions, Moebs Services reviewed website information for 1,676 financial institutions with assets of at least $500 million, the company said.

Researchers reviewed the websites, searching for answers to 15 consumer transaction questions about services, products and fees, the company said, and then Moebs surveyists phoned the call centers of the same FIs to ask the same questions.

According to the results of the study, 40% of credit unions offered the information sought on their websites, while only 28% of banks provided the same level of information on theirs. The study also noted that information on websites was not always consistent with responses from call center staff.

[read more]

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Compliance/Regulatory Affairs News

NCUA Alerts CUs On ECOA Valuations Rule

Details of the Consumer Financial Protection Bureau's new rule on real estate appraisals and other written valuations under the Equal Credit Opportunity Act, and how the rule could impact credit unions, are addressed in a new National Credit Union Administration Regulatory Alert (13-RA-07).

The appraisal rule, issued under Regulation B, implements changes to the Equal Credit Opportunity Act (ECOA) that were made under the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is intended to ensure that consumers can receive information prior to a loan closing about how the property's value was determined.

[read more]

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Governmental Affairs News

The Advocate Newsletter Available Online

The August edition of The Advocate – our governmental affairs newsletter – is available online. See it here.

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Aid Our Advocacy Mission: Report Your Micro-Lending Initiatives

Credit unions: We're again collecting your micro-loan data through our Reality Check survey. Basically, we're asking you to report information on loans you've made of $3,000 or less, excluding credit cards. Please give us a hand and provide this data, which we use to support our advocacy efforts! Report your micro-loan data for the first six months of 2013 at this web address: Online Survey

Only aggregate data is used. We would also love to share your stories about members helped by your small loans. Photos of the members you've helped would also be appreciated! Email them to pr@vacul.org. We have a downloadable version of the survey as well! (PDF, 267kb)

We use this information to produce our Impact Report, the latest version of which we've been distributing to lawmakers! We use this information to produce our Impact Report, the latest version of which we've been distributing to lawmakers! 

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Financial Services/Marketplace News

Half of U.S. Adults Now Bank Online, Pew Says

Online banking has passed a milestone in the U.S. — more than half of adults now use it, according to a report released Wednesday by Pew Research Center. And among internet users (who make up about 85% of the U.S. population), 61% bank online.

The report also took the pulse of mobile banking usage in this country and found that 32% of U.S. adults and 35% of those who have cell phones use it. The Pew project interviewed 2,252 adults this spring.

On both digital banking fronts, adoption has grown considerably in the past three years. In 2010, Pew found that 46% of U.S. adults (58% of internet users) were banking online. In 2011, only 18% of cell phone owners were using mobile banking.

E-banking is more common in younger and wealthier population segments. Among those aged 18 to 29, 67% use online banking and 54% use mobile banking. Similarly, in the 30-to-49-year-old segment, 65% use online banking and 40% bank on their mobile device. Among seniors (over 65), online banking is still used by almost half (47%), but mobile banking is used by a scant 14%.

The wealthiest Americans, with more than $75,000 per year in household income, are heavy users of online banking — three quarters say they do — and mobile banking (44%). However, those with a bit less income ($50,000 to $74,999) were slightly more inclined to bank on a mobile device — 45% say they do.

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Credit Standards Easing for Business Loans, Not Households: Fed

Lenders are feeling more comfortable easing credit standards for commercial and industrial loans, but not as much when it comes to household loans, a Federal Reserve Board report said Monday. In the Senior Loan Officer Opinion Survey, which the Fed releases every three months, banks were asked whether lending standards now are above or below the midpoint level for standards set by an institution during the past eight years.

A majority of banks surveyed reported that lending standards for all six categories of residential mortgages remained at least somewhat tighter than the midpoint level hit since 2005.

Those categories include prime conforming mortgages; mortgages guaranteed by the Federal Housing Administration or the U.S. Department of Veterans Affairs; prime jumbo mortgages; subprime mortgages; nontraditional mortgages; and home equity lines of credit. For prime residential mortgages, nearly 42% of institutions in the survey group said lending standards had tightened. Over half said that standards remained "near the midpoint" for mortgages that were either guaranteed by the FHA or the VA.

Separately, a modest number of U.S. banks also reported that standards were tighter than the midpoint for prime credit cards, subprime credit cards, auto loans and other consumer loans. Twenty-eight percent of institutions in the survey group said standards for credit card loans were at least "somewhat tighter," while 25% of U.S. banks said standards were tighter on auto loans. (American Banker Online, Aug. 6)

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U.S. Home Prices Jump 11.9% in June, 7.9% in Virginia

U.S. home prices surged 11.9 percent in June from a year earlier, reflecting stronger demand amid a tight supply of homes for sale. CoreLogic, a real estate data provider, said Tuesday that home prices climbed on an annual basis in 48 states, including Virginia, where single-family home prices rose 7.9 percent in June from a year ago. All told, U.S. home values increased 10 percent through the first six months of the year, the firm said.

[read more]

[related: Home Prices Rise Again, But at a Slower Pace]

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Mortgage Closing Costs On the Way Up

Higher mortgage rates aren't the only things driving up the cost of buying a home. Mortgage closing costs are up, too. Loan origination and other fees rose 6% the past year to $2,402 nationwide on a $200,000 single-family mortgage loan to a customer with excellent credit and a 20% down payment, according to survey data from Bankrate.com.

Origination fees accounted for the bulk of the increase. They jumped 8%, while third-party fees edged up 1%, indicates the survey conducted every June.

[read more]
[related: How Community Banks Are Adapting to Refi Slowdown] (American Banker Online, subscription may be required)
[related: Mortgage Closing Costs Up 6% This Year]
[related: Mortgage Loan Rates Keep Lid on Home Refinancing]
[related: As Mortgage Rates Rise, ARMs Finding Favor

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CUNA Study: Women's No. 1 Priority Is Saving For Retirement

The Credit Union National Association's Women's Financial Survey finds the most important financial concern for women isn't buying a house or paying off debt, but saving for retirement.

"The fact that women are thinking about retirement planning is a good sign that the message is getting out there that time is one of the most important aspects of  retirement savings, and the sooner they start the better," said CUNA Executive Vice President of Strategic Communications and Engagement Paul Gentile.

The survey also indicated that although women aren't confident in their financial knowledge, they might know more than they think.

[read more]

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More Americans Are Leasing Cars

Those low, low monthly payments in the TV ads seem awfully tempting if you are considering a new car. And car shoppers taking advantage of low-payment lease deals have helped booming U.S. auto sales that seem headed for the highest level since 2007. Leases, counted as sales in the overall total, accounted for about 22.5 per cent of new-car transactions in July, according to analysts at J.D. Power, maintaining 2013 at one of the highest leasing rates in the past decade.

Propelled in part by motorists with leases ending who take out new leases, leasing share could rise higher from here, according to Power analyst Thomas King. Leases do usually offer lower monthly payments than auto loans because you are paying only the difference between the new car value and the car's estimated value after two or three years at the end of the lease. And you might be able to lease a more expensive car than you can easily buy. But leasing is not for everyone.

[read more]
[related: The Zero Percent Car Loan Will Cripple Industry]

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Cars on U.S. Roads Getting Older

The average age of all light vehicles on U.S. roads rose to a record high of 11.4 years in 2013, up from 11.3 years in 2012 and 10.8 years in 2010. The data comes from the latest survey conducted by IHS Inc. subsidiary R.L. Polk & Co. The company reviewed more than 247 million U.S. car and light truck registrations in January of this year to retrieve the data.

The rise marks the 11th consecutive year that the average age of U.S. cars has risen, beginning in 2002 when the average was 9.8 years. The average age of passenger cars is now 11.4 years and the average age of light trucks is 11.3 years, both record highs. (247WallSt, Aug. 6)

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More Than 7 Million Student Borrowers in Default: CFPB

There are more than 7 million borrowers in default on federal or private student loans, according to the Consumer Financial Protection Bureau. In a blog posting Monday, the CFPB said it found that among those borrowers, about 6.5 million borrowers had defaulted on two federal loan programs as of June 30.

The agency does not have regulatory jurisdiction over federally backed loans but they make up more than 83% of the roughly $1.2 trillion loan market. (American Banker Online, Aug. 6)

[related: Student Loan Fix Heads To President's Desk]

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Education & Networking Opportunities

Upcoming League Events:

  • Leadership Workshop (Sept. 10)
  • VACUPAC 2013 Golf Classic (Sept. 24)
    Sign Up for VACUPAC Golf Early and Enter Raffle for Free Greens Fees
    The Crossings is graciously donating green fees to a team of golfers for our milestone 25th Annual VACUPAC tournament. Any team that signs up by Sept. 3 is eligible for the raffle. We have  a great day of golf planned on Sept. 24, including a sit-down buffet of pulled pork and sides. Sign up here to play and to sponsor the event!
  • Legislative Leadership Forum (Sept. 25)
  • Fall Compliance Conference 2013 (Oct. 16-18)
    • Other Educational Opportunities:
    • Woods Rogers Law Firm – Labor and Employment Seminar (Lynchburg) (Oct. 1)
    • Woods Rogers Law Firm – Labor and Employment Seminar (Danville) (Oct. 8)
    • Woods Rogers Law Firm – Labor and Employment Seminar (Charlottesville) (Oct. 10)
    • Woods Rogers Law Firm – Labor and Employment Seminar (Richmond) (Oct. 17)
    • Woods Rogers Law Firm – Labor and Employment Seminar (Roanoke) (Oct. 22)
      • Discounts available on Woods Rogers seminars for League affiliates
        • VACUL32 --50% off all registrations
        • 32NEW -- Anyone bringing someone new will receive 10% off their registration

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News From Credit Unions

Richmond Magazine Readers Honor VACU for Best 'Bank' Service

Virginia Credit Union is honored for offering the “Best Bank Customer Service” in Richmond Magazine’s annual survey of reader picks.

“At Virginia Credit Union, we never forget that we work for our members,” says VACU President/CEO Jane Watkins. “As a member-owned cooperative, our focus is on our members and on helping them achieve success.”

The brief article highlights Virginia Credit Union’s financial education efforts, noting the more than 12,000 people who participated in financial education programs for members and the community last year. 

[read more]

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Chapter News

Richmond Chapter Meets Aug. 20

Patrick Pillow, son of League President Rick Pillow, will be the featured guest speaker at the Richmond Chapter's Aug. 20 meeting.  You may have seen the heartwarming article in the Richmond Times Dispatch recently about him “Answering the Call.”

Patrick will speak about the value of serving others. The Chapter will also celebrate Staff Appreciation Night!

[learn more]

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Roanoke Valley Chapter Plans Aug. 23 Golf Tournament to Benefit VACUPAC

Join the Roanoke Valley Chapter for a day on the links to benefit the Virginia Credit Union Political Action Committee (VACUPAC). Proceeds will help the chapter meet its 2013 VACUPAC goal and support the governmental affairs and advocacy mission of Virginia's credit union system.

Location: Hanging Rock Golf Club
Date: Friday, Aug. 23
Time: 8 a.m. registration; 9 a.m. shotgun start.
Lunch will be provided and follows play.

Registration fee is $75 per golfer and a number of sponsorship opportunities are available for credit unions and their business partners!
[Download the tourney packet for details] (pdf, 944kb)

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Community Involvement

Cabot Creamery Hosting Community Bike Tour in 2014; Credit Unions Invited to Participate in Stops in Virginia

In 2012 Cabot Creamery held its first Community Tour, a two-month program that celebrated those who give their hearts, time and skills to strengthen communities. The tour traveled up the East Coast with event stops along the way celebrating cooperatives, community service and volunteerism.

At the center of the tour were sponsored cyclists, Myron and Cathy Skott, who biked the tour, following the East Coast Greenway and sharing this message in the communities they visited. Response to the 2012 tour was so was so overwhelmingly positive that Cabot has decided to do it again in 2014!! The first item of business is to invite like-minded organizations – such as credit unions -- to participate!

[read more]

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News About The Competition

Amex, Wells Fargo Partner on Credit Card

Wells Fargo will begin offering new credit cards issued on the American Express network by mid-2014, the two companies said Wednesday. Customers of the bank will be able to apply for the cards through mail, online, phone and 6,000 retail store locations. Wells Fargo will have a pilot program for customers in select U.S. markets starting in the third quarter of 2013.

[read more]

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