Standing together in commitment to the credit union philosophy of service-first and People Helping People, Michigan credit unions continued to do great things on behalf of their more than 4 million members.
The Michigan credit union movement showed its spirit and caring in the wake of last summer’s devastating hurricanes in the nation’s Gulf Coast region. Collectively, Michigan’s credit union community raised more than $620,000 for humanitarian relief and credit union rebuilding — a remarkable figure, given the state’s slow economy and the fact that credit unions gave generously less than a year before to aid victims of the December 2004 tsunami in Southeast Asia.
Despite dire predictions about the effects of the hurricane devastation on American enterprise, the U.S. economy proved resilient enough to quickly shake off its effects, at least from a national perspective. Gross domestic product posted healthy growth throughout the year, although record-high energy prices helped set off inflation alarms at the Federal Reserve, which continued its pattern of quarter-point interest rate hikes.
These increases, however, only returned lending rates to more natural levels after a period of historic lows, and did not seem to adversely effect the nation’s continued economic expansion.
Michigan’s economic performance in 2005, however, was another story. The state’s key industry — motor vehicle production, research and development — found itself in crisis, bleeding jobs and red ink. Many criticized the state’s tax and regulatory climate as decidedly unfriendly to industry and entrepreneurship, and there was no shortage of partisan bickering in Lansing about how best to fix the problem.
Still, Michigan credit unions appeared to be coping well under less-than-ideal circumstances, posting solid numbers and effectively meeting the needs of their members.
The legislative arena was particularly active. After more than a decade near the top of the credit union wish-list, meaningful bankruptcy reform finally became law in 2005. Attacks on the credit union tax exemption intensified, highlighted by a lengthy hearing before the U.S. House Ways and Means Committee in November. But the unanimous support of Michigan’s congressional delegation for credit unions’ tax status remained solid.
Meanwhile, the Credit Union Regulatory Improvements Act, or CURIA, gained co-sponsors and momentum on Capitol Hill, raising hopes for additional progress in the future. Michigan finished the year with seven co-sponsors among its 15 U.S. House members — the best percentage of any large-state delegation.
2005 saw Michigan credit unions launch their largest and most ambitious cooperative advertising effort in history, covering the state with a high-quality brand image campaign that ran from August to October. This statewide credit union TV campaign broadcast advertising spots with an aggregate value of some $2 million — four times what was raised and allocated by credit union cooperative advertising efforts in 2004.
Cooperative advertising, along with the Community Reinvestment Initiative (CRI) and intensified legislative advocacy, form the coordinated three-tiered strategy unveiled by the MCUL in 2005 to protect and promote Michigan credit unions. Through CRI, Michigan credit unions are coordinating and documenting their community service activities to underscore what makes them different from banks. This program has become a model for the nation, emulated by several other leagues and recently showcased by CUNA.
The MCUL launched its revolutionary Online Learning Center, while League InfoSight, the credit union on-line compliance information system developed through the collaborative efforts of the MCUL and four other state leagues, continued to gain in utility and popularity.
In addition, Michigan’s CU Village now provides project management for 12 other large leagues for a national compliance support consortium known as League InfoSight, Inc.
Michigan’s Allan Kemp McMorris staved off a challenge to keep his seat on the CUNA Board of Directors and was subsequently elected CUNA vice chairman. Michigan retained its national leadership in youth financial literacy education and the MCUL again partnered with state lawmakers in the Financial Literary Legislative Challenge, a special effort to help build financial skills among Michigan youth. MCUL publications were again recognized for excellence in the national award competition sponsored by CUNA.
The credit union movement continued to cope with historic consolidations and changes. The word “conversions” was a hot topic among credit union leaders in 2005 as several large credit unions nationwide — including another in Michigan — launched efforts to convert from a credit union to a mutual savings bank charter.
The MCUL continued to support transparency and appropriate member/ consumer protections in the conversion process, while respecting the right of credit unions to change their charters if they so choose. This policy on conversions, approved by the MCUL Board, has been held up as a model for the rest of the country for its emphasis on process enhancements and member education. This issue will affect the credit union movement for years to come, and the MCUL can take pride in its principled stance and the strong support it has received from member credit unions.
MCULLAF and MCULLAF, the Michigan credit union movement’s federal and state PACs, respectively, both had good years in 2005. Fund raising for MCULAF was up by more than one-third, topping $100,000 for the first time since strict campaign finance reforms were implemented by the Michigan Legislature in 1999. Legislative events and grassroots advocacy efforts such as Hike the Hill, Capitol Day and the CUNA and MCUL Governmental Affairs Conferences were successful and well attended.
Michigan credit union leaders got their first look at the new DeVos Place when the 2005 MCUL Annual Convention and Exposition (AC&E) returned to Grand Rapids for the first time since 2003.
At the AC&E, MCUL/CUcorp retiree Ronald D. Hale became the newest member of the Michigan Credit Union Hall of Fame, while Alfreda Schmidt was honored by the Michigan Credit Union Foundation as the recipient of its 2005 Credit Union Community Volunteer Award.
The MCUL continued its generous efforts on behalf of the fledgling credit union movement in Macedonia. Michigan’s Drew Egan and Hank Hubbard spent a week in the southeast European nation in October, training credit union staff, meeting with government officials and promoting the growth and awareness of cooperative savings and credit.
Remarkably, all of the MCUL’s many achievements were accomplished while maintaining membership dues that are among the lowest in the entire country. In 2005, sound financial stewardship maintained the Michigan League’s capital base and proud status as the strongest and best-funded credit union trade association in the nation — and the world. The year was beyond doubt another successful one financially for both the MCUL and its subsidiaries. The MCUL continued to invest member capital in a well-managed, high-grade mix of corporate stocks and bonds, and for the fourth consecutive year, the MCUL’s stock and bond portfolios outperformed market indexes.
CUcorp sales revenue and net earnings contributed directly to the League’s success. For the fourth consecutive year, CUcorp was able to pay a dividend representing 50 percent of its net income to the MCUL, an estimated $248,000 in 2005. CU Village.com grew to $1.19 million in total sales revenue while serving more than 200 credit unions and leagues with Web site design and content services. Significantly, the consistent net earnings of both CUcorp and CU Village effectively subsidize a portion of MCUL operations, helping to keep membership dues 25 percent lower than they would be without these subsidiary earnings.
Sadly, mortality once again diminished the credit union movement’s ranks in 2005. Among those to whom credit unions bid a final farewell were George J. McCormick (Feb. 5), Albert L. Lindow (March 22), Neil Ahola (March 30), Gwendolyn Smith (May 1), Mary Claire Roberts (June 5), Norbert Joanisse (June 24), Robert T. Stevenson (Aug. 6), James Shaffer (Aug. 8), John A. Marble (Sept. 11) and Joseph H. Kelly III (Dec. 10).
That 2005 was another positive year for Michigan credit unions is beyond dispute — but equally obvious is that these are challenging times, times that require the combined strength and resources of all credit unions. Throughout the history of the credit union movement, credit union leaders faced challenges equally daunting and were able to win significant victories through unity, maintaining strong trade associations while upholding the timeless principles of cooperation and volunteerism. Continuing in that tradition today, credit unions can face whatever the future holds with confidence.
Despite a less-then-vintage year for Michigan’s economy, 2005 will be remembered as another period of strength, stability and progress for Michigan credit unions. This continued success and resiliency is a testimony to the power of unity and cooperation and the vital importance of a strong and effective trade association, both at the state and national levels.
The Year in Review MCUL 2005
MCUL/CUcorp Consolidated Statements of Financial Position
MCUL/CUcorp 2005: Financial Report and Statistics
Consolidated Statements of Activities and Changes in Members' Net Assets
The Operating Environment
The Year in Review CUcorp 2005