Tag Archives: Arizona Credit Union League & Affiliates

Make Larger Loans To Small Businesses - AZ Business Magazine Sept/Oct 2010

Arizona’s Credit Unions Want To Make Larger Loans To Small Businesses

As lending opportunities for small businesses throughout Arizona continue to tighten, legislation has been moving through Congress that would enable Arizona’s credit unions to make more loans to small businesses. The media is filled with reports about how small businesses are having trouble gaining access to affordable credit. Credit unions did not take TARP money during the financial crisis, and they can help small businesses create jobs and jumpstart the economy, all at no cost to the taxpayer. This is inconsistent with additional proposals that would give added TARP money to the for-profit banks in order to stimulate small-business lending.

Many local credit unions stand ready to help. But unlike banks, credit unions are constrained by an arbitrary cap that, under current law, limits the amount of small business loans they can make to 12.25 percent of total assets. The Senate is currently debating legislation introduced in the House, the Small Business Lending Fund Act, and Sen. Mark Udall (D-Colo.) has offered a proposed bipartisan amendment to the bill that would raise the business lending cap on credit unions from 12.25 percent of assets to 27.5 percent.

Upholding credit unions’ history of prudent and responsible lending, the credit union would need to meet certain criteria and be approved by the National Credit Union Administration to lend in excess of the current 12.25 percent cap. A credit union would have to be well capitalized (above 7 percent); at or above 80 percent of the current business lending cap for one year before applying; have five or more years of business-lending experience; have a history of strong underwriting and servicing of business loans; and have strong management, an adequate capacity to lend and policies to manage increased business loans. This amendment also includes provisions that would protect the National Credit Union Share Insurance Fund. The Treasury Department also sent a similar proposal to Congress earlier this year.

If the credit union member business lending cap were raised from 12.25 percent to 27.5 percent of assets, the estimated increase of small business loans would be $10 billion in the first year, leading to the creation of 108,000 new jobs, according to estimates from the Credit Union National Association. More than 1,600 of those jobs would be created here in Arizona. Just as important, this arbitrary lending cap increase would come at no cost to the U.S. taxpayer.

Small business is the cornerstone of our community and the key to increasing jobs and economic recovery. The additional lending authority would enable credit unions to do more of what they do best — make safe-and-sound loans to members. In this case, to members who are looking to start or expand a small business in Arizona.

As member-owned, not-for-profit, cooperative financial institutions, supporting local business is natural, and oftentimes, members are seeking a business loan that is too small for banks. The average size of a credit union small business loan in Arizona is only about $240,000, and Arizona credit unions maintain only about 2.6 percent of the local business lending market share.

A well-run member business lending program has the potential to bring a great amount of success to the community. First and foremost, the member businesses have another lending option, allowing them a chance to succeed with the right loan. However, a member business lending program requires personnel and resources. With a cap that is as low as 12.25 percent, many credit unions find the cap too restrictive to offer business loans.

With more capacity to make small business loans, credit unions throughout Arizona can do more to help spur the creation of new jobs, and help accelerate our nation’s economic recovery.

Arizona Credit Unions
Currently Offering Member Business Loans

  • Arizona Federal
  • Arizona Heritage Credit Union
  • Arizona State Credit Union
  • AEA Federal Credit Union
  • Continental Federal Credit Union
  • Credit Union West
  • Arizona Central Credit Union
  • First Credit Union
  • Tempe School Credit Union
  • Tombstone Federal Credit Union
  • Desert Schools Federal Credit Union
  • Vantage West Credit Union
  • TruWest Credit Union
  • Tucson Federal Credit Union

Austin De Bey also contributed to this article.  He is vice president of governmental affairs for the Arizona Credit Union League & Affiliates, www.azcreditunions.coop.

Arizona Business Magazine Sept/Oct 2010

Arizona’s Credit Unions Are Helping - AZ Business Magazune Sept/Oct 2010

Arizona’s Credit Unions Are Helping Those Who Depended On Payday Loans

With Arizona’s payday loan industry now history, the state’s credit unions are jumping into the resulting void to both help consumers and gain new members.

Called REAL Solutions, the Arizona Credit Union League & Affiliates’ new program offers an option for consumers who depended on the short-term loans made by the payday loan industry. But in proverbial teach-to-fish fashion, REAL Solutions also aims to help those consumers build long-term financial security.

One service provided by REAL Solutions is a small dollar emergency loan, which allows credit union members to get short-term loans at lower interest-rates than normal payday lenders would offer.

The average payday loan was typically for 14 to 30 days, and the fees varied between $15 and $20 per $100 borrowed. Under this model, a 14-day loan could carry an APR of 520 percent. With REAL Solutions, interest rates vary by credit union, with rates starting as low as 12 percent.

While these loans are an option for consumers, they are not the solution to borrowers who relied heavily on payday loans. However, credit union loans can benefit the borrower in ways that payday loans cannot. If repaid on schedule, the short-term loans can build the borrower’s credit score, because payments to credit unions are reported to credit bureaus, while most payday loans are not. Credit building allows borrowers to obtain better interest rates and terms on their next loan products.

Some credit unions also will put a portion of the loan repayment in a savings account if paid on time. The amount is small, but normally will cover the fee involved in setting up the loan.

Because borrowers can easily fall into a debt trap with payday loans, credit unions only provide members with the opportunity to have one of these short-term loans at a time. This keeps the borrower from getting into a never-ending cycle of taking out a loan to pay off another loan.

Two additional components of the REAL Solutions program are low-interest credit cards and member-rewards programs.

Low-interest credit cards help members gain financial stability. These credit cards are designed to be less of a financial burden on the cardholder by keeping interest rates lower than normal cards.

Credit union members also can enroll in a member-rewards point program, which is similar to a credit card rewards program. The member receives a point for every dollar paid in interest, as well as incentive-based points for continued membership, referring new members or utilizing member-friendly services such as online bill pay. The members can use the points they accumulate for items such as discounted loan rates or even to waive fees they have incurred.

The Arizona Credit Union League realizes that education is the key to financial stability and freedom. Proper financial education on budgeting, debt management, identity theft prevention, building credit, home buying, retirement savings and buying a car are key to being financially empowered.

REAL Solutions includes such benefits as:

  • Second chance checking
  • Member rewards
  • Credit building loan programs
  • Free financial education (for all stages of life)
  • Short-term, small-dollar emergency loans
  • Credit building credit card programs
  • Reloadable prepaid debit cards
  • Low-cost personal loans
  • Overdraft protection
  • IDAs (Individual Development Accounts)
  • ID theft/fraud services
  • Holiday loan skip pay

Each REAL Solutions Credit Union provides independent programs and services. Names of services and programs may vary depending on the credit union.

Arizona credit unions participating in REAL Solutions:

  • AEA FCU
  • Alhambra CU
  • Altier CU
  • American Southwest CU
  • Arizona Central CU
  • Arizona Federal CU
  • Bashas’ Associates FCU
  • Canyon State CU
  • Credit Union West
  • Desert Medical FCU
  • Desert Schools FCU
  • First Credit Union
  • Hughes FCU
  • MariSol FCU
  • Mohave Community FCU
  • Pima FCU
  • Pyramid CU
  • Southwest Health Care CU
  • Tempe Schools CU
  • TruWest CU
  • Tucson Federal CU
  • Tucson Telco FCU
  • Vantage West CU

Austin De Bey also contributed to this article.  He is vice president of governmental affairs for the Arizona Credit Union League & Affiliates. For more information about the REAL Solutions program and the credit unions that offer it, visit the Arizona Credit Union League website at www.azcreditunions.coop.

Arizona Business Magazine Sept/Oct 2010

Credit Union CEOs

Profiles Of ACULA Members And Credit Union CEOs

Pat Bodnar

Senior Vice President
Arizona Credit Union League & Affiliates

Pat Bodnar has never worked at a credit union. Yet, as senior vice president of the Arizona Credit Union League & Affiliates, she certainly works for them.

In the 24 years that Bodnar has been at the league, her colleagues say she has reached out to the business community more than anyone else on the staff.

Bodnar started out as an administrative assistant before moving on to director of administration and finance. She then became vice president of governmental affairs, and in 2004 was promoted to her current position of senior vice president.

“I didn’t know anything about credit unions when I started,” Bodnar says. “It’s been great fun to have a job that you love.”

Prior to joining the league, Bodnar handled constituent services for then-Gov. Bruce Babbitt. When Babbitt left office, the credit union opportunity came up.

“I fell in love with credit unions and their philosophy,” she says.

No doubt her tenure in the Babbitt Administration boosted her interest in political activity.

“I’ve always been interested in politics and politicians,” Bodnar says.

She was instrumental in developing a governmental affairs department at the league, and continues to oversee legal and legislative affairs and regulatory issues that affect state and federal credit unions. Bodnar is also responsible for public awareness campaigns, communications, community involvement, international partnerships and member service issues.

She credits her development of a government affairs program with helping to advance her credit union career.
“We’re turning credit union members into political activists,” Bodnar says. “Things like getting out the vote turn them on.”

When credit unions wanted to expand by making loans available to the business community, Bodnar was instrumental in forming a business lending council. The group assists business members in obtaining Small Business Administration loans and shares best practices among credit unions interested in making business loans.

“Small businesses need more options, not fewer,” she says. “Small business is the engine that drives economic growth.”

For her efforts, Bodnar was named SBA Advocate of the Year in 2007. She also serves as treasurer of Arizona Saves, an organization that strives to help Arizonans become financially self-sufficient through debt reduction and asset building. Bodnar also is a founding member of ArizonaFirst, a coalition of financial institutions dedicated to a public/private partnership aimed at preparing for any disaster or crisis in Arizona.

Robert D. Ramirez

President and CEO
Vantage West Credit Union

Not many people get promoted after 30 minutes on the job, but that’s exactly what happened to Robert D. Ramirez, president and CEO of Vantage West Credit Union in Tucson.

Born in Nogales, Ramirez received a degree in accounting from the University of Arizona in 1976. He worked for Sundt Corporation and Capin Mercantile Corporation before joining the Davis Monthan Federal Credit Union (which later became Vantage West) as assistant controller in 1985.

“I always tell my employees, watch for the keys that drop at your desk,” Ramirez says. “On my first day, my supervisor, the chief financial officer, resigned. I became acting CFO a half hour after I started.”

Six months later, examiners gave the credit union what Ramirez calls “a pretty bad rating.”

“I promised my boss, the president, that if he would give me three months I would get us back to a No. 1 rating,” Ramirez says. “If I did, he said he would double my salary and make me chief financial officer.”

Ramirez and his boss both made good on their promises. Ramirez moved up the ranks to executive vice president in 1996, and has served as president and CEO of Vantage West since April 2000. In addition, he holds the title of vice chair of the Arizona Credit Union League & Affiliates board of directors.

When Ramirez came onboard, the credit union had $99 million in assets with 36,000 members. It has grown to more than $1 billion in assets with 105,000 members.

“We’re consistent in providing overall value for the member,” he says. “Our goal is to be consistent, to meet their needs whenever we can.”

That became a little more challenging since the national economy took a nosedive. In the past year, Vantage West modified more than 3,000 loans totaling in excess of $55 million.

Mary Marshall

Retired CEO
Alhambra Credit Union

Early on, Mary Marshall experienced the value of credit unions. While living in the state of Washington, a local credit union provided needed assistance to her family.

“That’s when I knew I wanted to work there,” Marshall says. “I convinced them they needed to hire me.”

She started as a loan officer, and after five years enrolled in the Credit Union National Association (CUNA) Management School in Madison, Wis. Attending the CUNA Management School, Marshall says, “opened my eyes to the possibility of running my own credit union.”

When her family relocated to Arizona in 1984, Marshall figured it was time to pursue her career goal.

“I felt that I was schooled in credit unions and was prepared to see what I could do with another small credit union,” she says.

At the time she joined the Alhambra Credit Union, currently located at 35th and Northern avenues, it was what she referred to as “a sleepy little shop” that was serving the Alhambra School District, and was housed in the district.

“It wasn’t growing,” Marshall recalls.

It had 700 members and assets of less than $2 million. Twenty-two years later, when Marshall retired in December 2007 as Alhambra’s CEO, the credit union had 3,700 members and close to $20 million in assets.

So it’s not surprising that Marshall was the 2009 recipient of the Arizona Credit Union League and Affiliates Very Outstanding Credit Union Person award. For more than 35 years, the league has given the award to a special individual, recognizing that person’s level of service to the credit union community.

Antigua map

The ACULA Formed A Partnership To Help Peer Credit Unions In Antigua

Arizona credit unions are reaching out to professional colleagues in the former British colony of Antigua, offering instruction, training and guidance to help credit unions on the tiny Caribbean island expand and modernize.

Working through the World Council of Credit Unions (WOCCU), the Arizona Credit Union League & Affiliates has established a partnership with the Credit Union League of Antigua. The term partnership indicates joint interests and benefits, and that’s the nexus of what the industry calls its financial cooperative concept.

Credit union experts from Arizona have traveled to Antigua, which is in the eastern Caribbean north of the equator, to share ideas and strategies for improving services to their members and becoming more sophisticated in the making of loans.

Antigua has an estimated population of 85,000 and was granted its independence in 1981. The largest of the English-speaking Leeward Islands, Antigua is about 14 miles long and 11 miles wide. The island has a handful of credit unions, the largest of which has assets of approximately $24 million, compared to one of Arizona’s largest, the Arizona State Credit Union, with assets of $1.1 billion.

Scott Earl, president and CEO of the ACULA, says the partnership was formed last year to enable Antigua credit unions to see what drives the industry in the United States.

“Typically, partnerships are established with developing countries,” Earl says. “It goes both ways. We send folks to Antigua who did some training there, and they have come up here. We learn from them as well, focusing on the roots of providing services to our members. The exchange helps rejuvenate our industry as well.”

Robin Romano, certified chief executive and CEO of MariSol Federal Credit Union, recalls a trip to Antigua last year. The focus was on bringing Antigua’s credit unions up to today’s standards.

“No matter what country you are in, credit unions pretty much operate in the same basics,” Romano says. “Members are members, and uniformity is comforting. Since Antigua got its independence, credit unions have been trying to improve their regulations and become a little more modern. When I say modern, I don’t mean technology. Most of them are computerized. But, they operate similarly to the way credit unions here did 30 years ago.”

What has changed in the past 30 years? Antigua credit unions were only offering signature or auto loans and savings accounts.

“Many had not ventured into checking accounts, certificates of deposit or money markets,” Romano says. “Few were doing any form of real estate lending.”

Because Antigua has no credit reporting system, much of the training dealt with how to determine the credit-worthiness of potential borrowers.

“We talked about different methodologies,” Romano says. “It’s a small island. You can call around for shared information. We talked about the evaluation of credit to make better decisions. In modern times, more people default. They were having issues with defaults and weren’t quite sure how to handle that. I have expertise in lending and I went to six credit unions, making presentations to staff and board members on how to do things better. We also talked about different collection methods. Collectors there have the same issues we have here. We were able to relate to one another.”

The trip did provide sort of a return on investment for the Arizonans.

“Going back to smaller institutions was a way of refreshing yourself on one-to-one operations,” Romano says. “Somebody comes in and they know that person’s entire life history. That intimate relationship was very rewarding.”

Mary Lee Blommel, a member services consultant for the ACULA for 27 plus years, went to Antigua last year with representatives of three Arizona credit unions. One of the Arizonans visited five Antigua credit unions, conducting sessions onloan underwriting and emphasizing the importance of doing a check with creditors. Another visitor focused on how best to provide services to members.

In addition to the face-to-face exchanges, the league arranges conference calls and Webinars to keep the lines of communication open with Antigua credit unions. Topics have included risk management and asset liability management — making sure they have adequate funds to lend.

“We did a one-hour Webinar on risk management — investment risk, loan risk, and credit union risk in these trying times,” Blommel says. “It went very well. They had the opportunity to ask questions. I could count at least 20 people in that room.”

credit unions transformation

The ACULA Has Transformed Over The Decades

In the 75 years since the formation of the Arizona Credit Union League & Affiliates, the organization’s role has changed markedly as its membership soared. Actually, the first credit union law in Arizona was introduced, passed by the Legislature and signed by the governor in 1929. Thus, Arizona became the 29th state to enact a credit union bill.

Even before credit unions were officially recognized and regulated by the state, a mutual investment group known as Pyramid was launched in Tucson in 1925. Once the Arizona law was passed in 1929, Pyramid Credit Union received one of the first — some say the first — charter to formally operate as a credit union.

Five years later in November 1934, the Arizona Credit Union League, as it was then called, was formed. By 1948, there were 25 credit unions in the state with 3,000 members and almost half a million dollars in assets. Today, 56 Arizona credit unions represent about 1.6 million members, with assets in excess of $11 billion.

Initially, the league focused on organizing new credit unions throughout the state. In the early years, there were just a few state-chartered credit unions. Scott Earl, president and CEO of the Arizona Credit Union League & Affiliates, tells how the league’s efforts fostered growth.

“Field reps would arrange meetings with employer groups,” Earl says. “They’d be driving down the road looking for parking lots outside of businesses. If a lot of cars were parked there, they’d put credit union charter applications on the hoods of the cars. I don’t know how many organizations were created as a result during those years, but I’m sure many were.”

Gary Plank, who retired as president and CEO of the league in 2007, recalls being an organizer when he entered the credit union profession in Iowa in 1966.

“We felt the best way was to talk to the management of the company to see if we could generate interest in a credit union for the good of their employees,” Plank says.

The largest Iowa credit union back then had assets of about $7 million. Today, the assets of that same credit union exceed $1 billion, Plank says.

Plank says two factors triggered the phenomenal growth of credit unions: the addition of share-draft checking so direct deposits, including Social Security benefits, could be accepted; and a decision by the federal government to insure savings accounts.

Indeed, as credit unions grew, officials saw the need to offer more products and services, such as debit and credit cards, individual retirement accounts and first and second mortgages.

“The league was the incubator for a lot of these products and services, helping individual credit unions along the way,” Earl says. “An outgrowth of that cooperation is shared branching.”

Under shared branching, credit unions join networks that enable their members to transact business from virtually anywhere in the country where a joint operating logo is displayed.

“Shared branching addresses one of the competitive disadvantages credit unions had, which was a lack of convenient locations,” Earl says.

In the 1990s, the league’s role shifted dramatically, becoming more of an advocate for credit union legislation at the state and federal levels. In other words — lobbying.

“We put a great deal of resources into that today,” Earl says.

Services the league provides include consulting, governmental affairs activities, regulatory compliance, legal, human resources, education, communications, publications and public relations. The league works in cooperation with Credit Union National Association (CUNA), U.S. Central Credit Union, the World Council of Credit Unions and the CUNA Mutual Group.

Having the support of the league and national and international credit union organizations is helping Arizona credit unions cope with the current recession. Though a few mergers have taken place, Earl says they are not the result of the economic downturn.

“Almost always when a merger occurs it’s to provide better service to the members,” he says.

Yet, the economy is having an impact on credit unions. Many of its members — average Arizonans — have defaulted on loans or gone into bankruptcy. The good news, Earl says, is that credit unions have been reworking those loans to help their members get through difficult times.

“The challenge for the league,” says Earl, “is to find new efficiencies for credit unions to collaborate so they can provide better products and services to their members. We have to keep looking for ways for credit unions to work together.”

Credit unions, which are not-for-profit operations, have good capital and strong reserves, Earl says.

“We built those reserves for a rainy day,” he adds. “And for a lot of consumers, it’s pouring rain. But we will be around. We’ll be just fine and will continue to be of greater service to citizens.”