September 30, 2005

HEADLINE NEWS

CU Luncheon to Honor Senator Carper
     The League’s Governmental Affairs Committee will join the Credit Union National Association (CUNA) governmental affairs staff in hosting a luncheon for Delaware Senator Tom Carper. The event will take place on Wednesday, October 19, at Credit Union House in Washington, D.C.
     The League GAC Fund will cover the cost of a bus to take participants to Washington. The bus will make one stop at the League office at 8:30 a.m. and then at the Park and Ride near Odessa at 9 a.m.
     All Delaware CUs are encouraged to send a representative to the luncheon, which will take place from 11:30 a.m. – 1 p.m. Cost of the luncheon is $20 per person. Following the luncheon, CUNA staff will give us an update on happenings in Washington. The bus will leave no later than 3 p.m. and should be back in Delaware by 5 p.m.
     Please return the registration form that was sent to each CU manager/CEO no later than Friday, October 7.

Credit Union House Donations
     The League would especially like to encourage representatives from the following CUs to attend the luncheon, since they have made contributions to support Credit Union House:
            American Spirit FCU
            Chestnut Run FCU
            Delaware Alliance FCU
            DEXSTA FCU
            Diamond State FCU
            DPL FCU
            ICI America FCU
            Seaford FCU
            Southern Delaware Postal Employees FCU
            Wilmington Police and Fire FCU.
     Along with the League governmental affairs committee, Delaware CUs have contributed almost $4,000 to Credit Union House.

Mica: CUs “Will Be There” for Colleagues in Hurricane
     Credit unions’ response during the past month’s hurricanes was “amazing,” but they can do more, CUNA president/CEO Dan Mica told CUNA’s Future Forum attendees last week.
     With Hurricanes Katrina and then Rita, the credit union system – credit unions, leagues, CUNA, CUNA Mutual, the National Credit Union Foundation (NCUF), corporates, and NCUA – came together to assist their colleagues.
     Although more than $1.5 million has been pledged to NCUF’s Disaster Relief Fund, “we will need more,” said Mica. “When the cameras go off, and the lights go away, the needs will still be there. I’m asking you to consider helping some more. Months from now, while we’re celebrating Thanksgiving and Christmas, people will still be living in tents. Give to the one effort that helps those in your credit union family. Let them know that when everyone else goes away, we’re going to be there.”
     Credit unions can still help through the system’s Relief Effort and Support for Credit Unions (R.E.S.C.U.) program by donating funds, physical and staffing support, and making a commitment to Adopt-A-CU, he said. Information can be found at www.cuna.org.
     The League would also like to recognize Delaware credit unions’ efforts in this regard. To date, we have only had reports from Dover FCU and Diamond State FCU regarding their contributions.
     In the last edition of TOGETHER, we also reported that Kathy Greenwood, operations manager of Seaford FCU, had volunteered to help the Red Cross in the flood-stricken areas. We are pleased to report that Kathy left on September 23 for her three-week “tour of duty.” At the present time, she is working in Washington, utilizing some of her organizational talents, reports John Watson, CEO of Seaford FCU.

COMPLIANCE UPDATE

NCUA Letters to CUs
§ Letter 05-CU-12 – Frequently Asked Questions on Residential Tract Development Lending. This letter assists CUs in complying with NCUA’s real estate lending requirements for financing residential construction in a tract development. Key topics addressed are appraisal requirements, common underwriting characteristics, and calculations and limits for loan-to-value ratios.
§ Letter 05-CU-13 – Update on Cashing FEMA Disaster Assistance Checks and Government Benefit Checks Issued by the U.S. Treasury. Key topics in the guidance for depository institutions are check reclamation actions (based on forged endorsements), reminder of the key security features of Treasury checks, and accelerated direct deposit enrollment to assist Social Security recipients.

December 1^st Deadline for 2005 ACH Compliance Audits
NACHA (National Automated Clearing House Association) requires all financial institutions that receive or originate ACH transactions to conduct an annual compliance audit. This compliance audit must be completed by December 1^st of each year.
The League has partnered with Verisure to present a webinar on this annual ACH audit. The webinar will be held from 10-11 a.m. on October 26. The cost to participate is $100. To register, contact Don Baumann at 315-638-4333 or call Bernadette at the League for a registration form.

New “Designation of Exempt Person Form” Available
The new OMB-approved Designation of Exempt Person Form, FinCEN Form 110, is now available for use. The Magnetic Media Instructions supporting the new form have also been released. Both the new form and the Magnetic Media Instructions may be downloaded from the FinCEN website: http://www.fincen.gov/fin110_dep.pdf
The form is available in a fill-in format that can be completed using Adobe Acrobat or Reader software. For the best results in completing the form, the user should download the most current version of the Adobe Reader, which is also available from the FinCEN website. The use of the form is mandatory after January 2006. The primary means of filing this form is through the Bank Secrecy Act Direct E-filing system. Check the FinCEN website under BSA E-Filing for further information. Other methods of filing may also be used.

Two Upcoming Webinars on the Bank Secrecy Act
The Bank Secrecy Act is one of the regulations that requires ongoing training for all credit union personnel. With the recent commitment of NCUA to enforce BSA regulations during examinations, this regulation should be a top priority!
CUNA's "Requirements of the Bank Secrecy Act" webinar on October 11 (repeated on November 15) provides the information CUs need to ensure that BSA training requirements have been met before the examiner walks in the door. This webinar is for all credit union staff and managers. To register, go to CUNA’s website: http://training.cuna.org/elearning/webinar/bsa.html An online exam will be included with this webinar, which will help ensure your CU staff has a BSA training record as well as an adequate knowledge level to comply with BSA requirements. Cost of the 1.5 hour session is $219.

League Offers IRA Training in November
     The League will hold its annual IRA training on November 29-30. The sessions will cover traditional and Roth IRAs and Coverdell ESAs in two full-day sessions. This popular program is valuable for both beginners and repeat participants.
     The Essentials program on November 29 will cover IRA fundamentals, contributions, and withdrawals, so that participants will be able to work with IRA owners and provide basic IRA transactions with confidence.
     The Advanced program on November 30 will address more complex IRA issues: periodic payments, excess and recharacterizations, death benefits, and income attributable, and Coverdell ESAs. The cost of each day’s training is $235. An early registration deadline is October 28, 2005.

MORE SYSTEM TRAINING

CUNA Mutual Announces CU Investment Webinars
     CUNA Mutual Group’s fall series of weekly investment webinars for credit unions begins October 5, offering a virtual classroom setting and opportunities for live discussions. Topics and dates are as follows:
§      Investment Risk Return Profile (Oct. 5). Participants will define their unique risk/return profile or determine what it should be. The session will focus on portfolio-level risks, including information needed to write investment policies that align with the credit union’s lending practices and deposit base. Benchmarking and its benefits for portfolio managers will also be covered.
§      Investment Risk Measurement Fundamentals (Oct. 12). The second webinar defines the types of risk that CUs must measure and manage, with particular emphasis on interest rate risk and liquidity risk. Other topics include fundamental measures of risk/return for individual securities and regulatory mandates that determine permissible investments for CUs.
§      Buying the Right Investment (Oct. 19). Participants will get a macro view of the investment process and descriptions of fixed-income sectors and the features and structure of each type of security.
§      Portfolio Strategies (Oct. 26). The closing session connects information presented in the first three. Instructors will cover the risks/rewards of various active management strategies including interest rate anticipation, curve strategies, sector rotation and security selection. Participants will learn a step-by-step portfolio construction process, with emphasis on best execution and understanding trading costs. The benefits of bottom-up and top-down analysis will be covered.
     Each 90-minute webinar begins at 2 p.m. EDT and costs $149 per session, per connection. Participants may mix and match classes. To register, visit www.cunamutual.com and click on Learning Opportunities, then CU Financial Education, or call (800) 937-2644, Ext. 7890.

NCUA OPINION LETTERS
The following is a summary of recent NCUA opinion letters. The number in parentheses after the subject is that given to the letter by NCUA, as well as the date of the issuance, and can be used when requesting copies of the letters. NCUA opinion letters are available on NCUA’s website (www.ncua.gov), on the CUNA website (www.cuna.org), or by calling Susan Fallon at the League office.

Overdrawing an Account to Enforce a Statutory Lien (07-28-04; 04-0515) – NCUA received an inquiry, asking whether the statutory lien provision of the Federal Credit Union Act permits a federal CU to overdraw a member’s share or share draft account to credit the member’s overdue loan payment. NCUA Associate General Counsel Sheila Albin responded by clarifying that the Act and NCUA regulations do not permit an FCU to overdraw an account. An FCU may only impress the statutory lien on the existing balance in a member’s accounts and cannot use the statutory lien authority to create an overdraft or overdraw the account.
Consistent with the Federal CU Act, this interpretation also seeks to ensure that, if an overdraft as a result of a transfer from a savings account to meeting the loan obligations occurs, the member will have been provided with appropriate disclosures and agreed ahead of time to this course of action.

Electronic Applications, Signatures Okay (08-05-04; 04-0543) – Federal law generally provides that electronic documents and signatures have the same validity as paper documents and handwritten signatures, NCUA told a CU in this opinion letter. The CU inquired whether an electronic membership application may rely exclusively on the member’s electronic signature. And, if this is permissible, the CU asked if it may retain as its permanent file copy only the electronic version of the application. Both are permissible, according to NCUA. In addition, NCUA said that as long as the CU follows E-Sign Act requirements for electronic signatures, the CU may rely on the electronic signature and need not require an applicant to print the form and sign it in handwriting. To open an account, however, a valid photo identification is required.

DELAWARE NOTES

League communications director Alice Smith attended a luncheon last week in Washington, at which Governor Ruth Ann Minner was the keynote speaker. The lunch was hosted by the Washington Area State Relations Group, to which CUNA belongs. Alice joined Phil Drager and Nancy deGrandi of CUNA’s State Governmental Affairs division.

Thanks to Delaware Alliance FCU for making a contribution to help sponsor a small CU at the Volunteer Leadership Conference scheduled for October 15-16 in Ocean City, Maryland.

BauerFinancial, Inc., an independent bank rating and research firm, has issued updated Bauer Financial™ star ratings for the nation’s 8,975 banks and 9,128 credit unions based on the most recently released financial data (6/30/05). The star ratings are assigned based on the financial condition of the institution. The ratings range from zero to five-stars with five-stars being the highest. Delaware CUs earning a “superior” five-star rating are:
            American Spirit FCU
            Chestnut Run FCU
            Delaware FCU
            DEXSTA FCU
            Dover FCU
            DPL FCU
            DuPont Stine-Haskell Employees FCU
            First State Refinery FCU
            Milford Memorial FCU
            New Castle County Delaware Employees FCU
            New Castle County School Employees FCU
            Provident FCU
            Sussex County FCU
            U-Del FCU
            Wilmington Postal FCU

The Credit Union Times recently printed a letter to the editor from League communications director Alice Smith. The September 21 issue of the trade publication featured the League’s affirmative response to an editorial that asked, “Does a league keep track of all the volunteers serving its credit unions?”

EDUCATION OPPORTUNITIES

League Council Meetings in October
10/25 Tri-State Compliance Conference – 10 a.m. – Lancaster Host Resort. Fee to be announced.
10/27 Marketing Council: Working with the Media – 10 a.m.-1 p.m. No fee for council members; $65 for non-council members. Regis. deadline: October 20.

October QuickBites Teleconferences
10/05   Home Equity Lending, 11 a.m.-noon
10/13   Member Loyalty, 11 a.m.-noon
10/18   CUs 101: Introduction to CUs, 11 a.m.-1 p.m.
10/20   ALM Seminar, 11 a.m.-1 p.m.
10/26   Identity Theft, 11 a.m.-noon
The fee for each one-hour session is $99; the two-hour session is $169. Deadline to register: one week prior to the session. Call Bernadette to enroll.

One-Hour BSA Compliance Webinars
§      Thurs., Oct. 20, 10 a.m. – Bank Secrecy Act
§      Thurs., Oct. 20, 2 p.m. – USA Patriot Act
§         Tues., Oct. 25, at 10 a.m. – CTR and SAR Form Filing Details
§         Tues., Oct. 25, at 2 p.m. – OFAC, CTR, and FinCEN Exemption Form Filing Details
The fee for each session is $100. For more information or to enroll, phone Don Baumann of the co-sponsor Verisure at 315-638-4334.

CU Investment Seminar – Wednesday, October 12, from 9:45 a.m.-noon at the League office. The presenter is Brad Stewart, VP and chief investment officer of Mid-Atlantic Corporate. Discussion on current economic conditions and what to expect in 2006. Fee: $25. Regis. deadline: October 5.

CU Development Conference for CUs under $10M in Assets – Saturday, October 15. Full day session at the Hilton at the Philadelphia Airport. Call to register at 800-622-7494, ext. 3106.

Mid-Atlantic Corporate Conference Calls – Call 800-622-7494, ext. 3106, to enroll. There is no fee.
10/6     Debit Pass Card
10/18   Yield Opportunities
10/27   Asset/Liability Management