…to help all of Delaware’s credit unions exist, compete, and prosper                                      
SPRING, 2003    

 EZ LAUNCH CARD PROGRAM - No Risk, No Fuss, No Problem!

Now you can offer the benefits of a first-class credit card with no work and no start-up costs.  In fact, no other card program is easier.

These days, if you don’t offer a great credit card to your members, your competition will.  Fortunately, there’s an easy way to provide extra convenience for your members, while adding significant revenue to your credit union’s bottom line.  There’s no simpler or better way to start a productive credit union program than with EZ Launch.
            EZ Launch is a complete turnkey credit card program.  That means that all the work is done for the credit union.  The EZ Launch program is operated by the ICUL Service Corporation, a subsidiary of the Illinois Credit Union League.  The ICUL Service Corporation markets the program, including sending pre-approvals to your members.  They manage the approval and underwriting of loans.  They provide member service.  They manage monthly payment and statement processing.  They perform collections and assume the default risk.  What’s left for you to do?  Simply sign up for the program and provide ICUL with your membership list.  After that, simply promote the credit card twice a year in your newsletter.
            What’s in it for you?  Your credit union receives 5% of the finance charge that’s collected on each member’s credit union credit card.  You’ll receive this revenue each month along with a detailed report. You always have the option to purchase the outstanding loans on your card accounts, if you want.
            Your members may take advantage of three different Visa programs.  Along with a competitive finance rate, each card comes with its own distinct package of benefits: Visa Classic (no annual fee); Visa Platinum (no annual fee); and Visa Platinum with Rewards Program.  Each Visa card will prominently feature your credit union’s name – helping you build member loyalty.
            ICUL will never compete with your credit union.  They will not cross-sell any product or service to your member.
            What about any catches or hidden fees?  There are none whatsoever.  EZ Launch won’t cost your credit union a penny.  It won’t subject you to financial liability.  And it won’t burden your operations with time-consuming applications, approvals, statement processing or program management.  It really is as simple as it seems.

For more information on the EZ Launch program, contact Jane Bailey, DCUL, (302) 322-9341 or (800) 292-7875.

         EZ Mortgage Program for Small CUs

            Think your credit union is too small to offer a mortgage program?  Well, think again!  Resource Mortgage Corporation, a Delaware League’s business associate, offers a competitive mortgage program that is designed to work well in a small credit union.   

            Resource Mortgage serves mostly credit union members.  Currently working with fifteen Delaware credit unions, they offer members a wide array of mortgage programs and products, including 100% financing, FHA/VA programs, USDA Rural Housing programs, home equity and debt consolidation loans. 

            As a mortgage broker, Resource Mortgage can “shop” numerous lenders to get your members a loan that best suits their needs and financial situation.  Whether it’s a first home, a vacation home, or an investment property, Resource Mortgage can help members obtain the financing to make their dreams come true.  

            Participating credit unions need only to market the program; assist members in completing a short application, pull a credit report and submit them to Resource Mortgage.  Resource Mortgage handles the complete transaction all the way through to the closing of the loan.  Once the loan closes, Resource Mortgage remits 50 basis points of the loan amount back to the credit union.  That’s a lot of money for very little effort on your part!

            Why allow members to obtain mortgages at other financial institutions that may cross-sell products that compete with your credit union’s.  Contact the league and ask for more information on how your credit union can begin a mortgage program today.

 Marketing Made Easy

Are you beginning to detect a theme here?  We know a small credit union has limited resources (funds and staff) to devote to providing a service for their members.  That’s why the Delaware League is trying to make your job easier.  Here’s a marketing program from CU ink called “Marketing Made Easy.” 

“Marketing Made Easy” is your credit union’s recipe for success.  This results-driven marketing program serves up the ingredients your credit union needs to build stronger relationships with your members.  With a choice selection of topics, a variety of pieces to complete your promotion, and prices that are easy to digest, Marketing Made Easy will get your credit union cookin’ in no time at all! 

Each quarter a new promotion topic is added to the menu with the previous topics available a la carte.  Full-color inserts, brochures, and posters are pre-printed and ready to ship.  All you need to do is to place your order.  Semi-customized postcards can also be produced and mailed directly to your members.

             Now you can purchase professionally designed marketing materials printed in full-color for a fraction of the standard cost.  Easy?  You bet!  The work is already done for you and the prices are based on the combined orders of all the participating credit unions.

For a closer look at the Marketing Made Easy program, visit CU ink at www.cuink.com and look for the MME logo.  Or, contact the league and ask to speak with Jane.  This offer is too sweet to miss!  

        

    Check Kiting*

What To Look For So Your Credit Union Funds Won’t Be Gone With The Wind

            Kiting is the practice of withdrawing funds or writing a check on an account by taking advantage of check clearing time.  Using two or more different financial institutions, a kiter deposits worthless checks or drafts from one institution to cover non-sufficient funds in another institution.

The ability to recognize the characteristics can help you detect kiting activity before loss is sustained.  Some of the clues of kiting are:

A high volume of debits and credits compared to similar type accounts.

High and escalating balances with low collected funds balances.

A pattern of checks/drafts drawn on an account followed by a deposit within a day or two that increases the balance of the account to an amount higher than that which existed prior to the withdrawal.

A pattern of drafts or an account having the same payee and deposited into an account at another financial institution.

A pattern of frequent deposits of checks/drafts drawn on another financial institution against an account in the same name to which the checks/drafts are being deposited, most likely signed by the same depositor.

Awareness of these characteristics and following up on any suspicious accounts will go a long way towards controlling kiting activity.  It may also be beneficial to monitor new accounts for a period of time after they are first opened.  It is important to note that a lack of internal controls and a breach of security assist a check kiter in their scheme.

  *from “Everything You Want to Know About..., A Resource Guide for Small Credit Unions,” California Credit Union League  

Managing Risk*

There are two types of risk: speculative risk and pure risk.  A speculative risk may result in either loss or gain.  There are the risks inherent in doing business, such as the likelihood of a percentage of loans going bad or the value of investments decreasing.  Pure risks are events that can only produce a loss.  Some examples are: 

    Although these risks are very different they should both be treated as serious potential threats to credit union officials.

ANALYZING/IDENTIFYING
           The goal of risk analysis is to identify the risks and estimate the probability of loss.  The risks your credit union faces must be identified before you can put a program in place to prepare for them.  Purchase of an efficient insurance package is dependent upon identifying and analyzing possible risk.  You must ask yourself “what is the likelihood of a particular disaster befalling your credit union and what would it cost if it did?”  Once the risks have been identified you must decide how to handle each one.  To what degree can the risk be avoided, reduced, spread or transferred?  You will need to choose a program to deal with each of these options.

MONITORING
          Once the risk has been identified and analyzed it needs to be monitored.  A risk may grow to the point where it is no longer efficient to agree to assume the situation or it may shrink so that it is no longer necessary to insure against it.
           The nature of risk faced by your credit union will change for various reasons.  The risk of embezzlement, for example, grows proportionately with an increasing number of employees.  Changes in the size or nature of operations (such as the introduction of a computerized account system) may also result in a change in the level of risk.  Trends in the economy, in the community or within your field of membership can all affect the likelihood of incurring risk.  An orderly approach to risk management will protect your credit union over the long run.
continued in next issue.

   
UPCOMING EVENTS

CU MEMBERS HOME BUYING/SELLING SEMINAR
July 23, 2003
6:30-8:30 pm
DCUL Office

CARDS REFRESHER TRAINING
August 19, 2003
9 am-1 pm
DCUL Office 

HOW TO CREATE AN IN-HOUSE TRAINING PROGRAM
August 26, 2003
8:45 am-4 pm
DCUL Office

USA PATRIOT ACT TRAINING SESSION:
Customer Identification Rule
August 27, 2003
8:45 am-1:30 pm
DCUL Office

LOAN REVIEW WORKSHOP
(Supervisory Committees/Auditors)
September 9, 2003
5:30-8:30 pm
location pending

 BASIC ACCOUNTING I CLASS
September 10, 2003
8:45 am-4 pm
DCUL Office
 

**SMALL CU ROUNDTABLE**
Review of Individual CU Bonds
Hosted by CUNA Mutual
September 11, 2003
5:30-8:30 pm
DCUL Office 

VERIFYING BORROWERS’ INCOME USING TAX RETURNS
November 7, 2003
9 am-4 pm
location pending 

DE/MD VOLUNTEER LEADERSHIP CONFERENCE
November 8-9, 2003
Ocean City, MD 

For more information about any of these meetings, contact Alice Smith at the league.

Portrait Of The Typical Credit Union Member

If we could do a sort of composite drawing of the “average” credit union member, here’s what we would come up with:  He’s 41 years old and wears shirts with one white and one blue collar.  He’s married, and has a household income of $45,000.
            Chances are better than one in three that he—or someone in his household—has a share draft account.  If so, he probably says it is his principle transaction account, even though he has another one with another institution.  And if he has a share draft account, it is most likely that he will name the credit union as his primary financial institution, and say that he chose it for convenience more than anything else.
            He has a VISA ATM card (from a bank) and a Sears Department Store charge card.  He doesn’t have an IRA, but thinks it is somewhat likely that he will start one, unless he is already covered by an employer’s 401k plan.
            He owns his own home and his family has two cars, but his mortgage and one of his auto loans come from other institutions.  He uses his credit union for payroll deduction.
            All in all, he’s quite pleased with his credit union, but would like to know more about financial options.  He appreciates getting straight answers he can understand and trust.

Member Demographics
   ·         The peak age range for members is 35-44.  Membership is lowest among adults 18-24 and over 65. 
   ·         Membership is highest among consumers in the $30,000-$80,000 household income bracket.
   ·         Ethnic minority groups are more likely than non-minorities to be credit union members.
   ·         Men are more likely than women to be credit union members.
   ·         Membership eligibility among non-members is highest among adults 18-24.
   ·         The average length of membership is 11 years.
   ·         Full-time employment is markedly higher among members than non-members.
    ·         Nearly three-quarters(73%) of members are homeowners, as compared to 69% of non-members.
    ·         Twenty-six percent of members have at least a four-year college education, as compared to 19% on non-members.