HEADLINE NEWS

Membership in CUs Continues to Increase
     More and more consumers are taking advantage of the value credit unions bring to them. CU membership grew to more than 86 million by the end of 2004 – a 2.4% increase from year-end 2003. According to numbers from the Credit Union National Association’s (CUNA) economics and statistics department, those members belong to 9,320 CUs. California is the top state for CU membership.
     In Delaware, membership at the end of 2004 was 216,218, which is a 1.48% increase over 2003. There are currently 36 CUs in Delaware.
     Nationally loans grew 10.4% to $429.1 billion at year-end 2004, compared with a 9.4% growth for the same period a year earlier. In Delaware, loans grew 9.8% to a high level of $729,323,365.

Mark Your Training Calendar! Summer PALS Workshop on July 7
     The Delaware League will join with five other leagues and the National CU Administration in hosting a free Partnering and Leadership Successes (PALS) Workshop in Baltimore on Thursday, July 7. The “Knock Out Predatory Lenders and Improve Your Bottom Line” workshop will focus on providing affordable alternatives to predatory lending and how CUs can win over loyal new members, strengthen their earnings, and knock out competitors who are making a fortune by preying upon potential members. Panels of CU leaders will share their best practices in meeting the cash needs of new members who previously relied on check-cashers or payday lenders.
     The workshop will be held at the Hyatt Regency on Baltimore’s Inner Harbor. To register, visit http://www.ncua.gov and click “PALS Workshop Registration, July 7, 2005.”

CUs Impacted by New Overdraft Guidance
     Financial regulators, including NCUA, issued final joint guidance concerning disclosure and administration of overdraft protection programs.
     Depository institutions may offer overdraft protection programs to transaction account customers as an alternative to traditional ways of covering overdrafts. The final joint guidance contains three primary sections:
§           Safety and soundness – to ensure that financial institutions offering overdraft protection programs adopt adequate policies and procedures to address credit, operational, and other associated risks.
§           Legal risks – to alert institutions of the need to comply with all applicable federal and state laws and to advise institutions to have their overdraft protection programs reviewed by legal counsel to ensure overall compliance prior to implementation. Several federal consumer compliance laws are outlined in the guidance.
§           Best practices – to address the marketing and communications that accompany the offering of overdraft protection programs, as well as the disclosure and operation of these programs.
     Some of these best practices include 1) avoiding the promotion of poor account management; 2) providing a clear explanation of the discretionary nature of the overdraft protection program; 3) clearly disclosing fees; 4) explaining the impact of transaction clearing policies on the overdraft fees consumers may incur; and 5) monitoring program usage.
     The agencies also advise insured depository institutions to distinguish overdraft protection services from “free” account features, to prominently distinguish balances from overdraft protection funds availability, and to alert consumers that a transaction will trigger fees.
     The complete Guidance on Overdraft Protection Programs can be viewed at http://www.ncua.gov/letters/2005/CU/05-CU-03Encl.pdf.

NCUA NEWS

Letters to Credit Unions
§           Letter 05-CU-04: CU Financial Trends. This annual report highlights CU financial trends for 2004, based on data compiled from year-end 2004 call reports submitted by federally insured credit unions.
§           Letter 05-CU-05: Community Development Revolving Loan Fund (CDRLF). This letter provides general guidelines for technical assistance grants which are available to low-income designated CUs.
§           Letter 05-CU-06: Independent Appraisals Expected by NCUA. In this letter, NCUA and other federal regulators issued answers to frequently asked questions about the rules for selecting appraisers. The 28 questions-and-answers emphasized that regulators expect appraisals to be independent for both residential and commercial real estate transactions. “For all lending activity, a regulated institution should ensure that independence is maintained when selecting appraisers, ordering appraisals, and reviewing appraisals,” one answer stated. It also said that regulated institutions may not accept a borrower-ordered appraisal or let a borrower select an appraiser. However, they may accept an appraisal transferred from another regulated institution if the appraiser is engaged directly by the institution and has no direct or indirect interest in the property. You can find the document at www.ncua.gov/letters/letters.html.

NCUA Regulatory Alert 05-RA-04: Secure Communication Systems
     In this Regulatory Alert, NCUA notified CUs that the Financial Crimes Enforcement Network (FinCEN) is changing its process for email delivery of 314(a) information under the USA Patriot Act to a new secure web-based distribution system.

NCUA Updates Compliance Manual
     The agency has updated its Compliance Self-Assessment Guide, and it is posted on its website. The guide is intended for use by a CU’s board of directors and management, compliance officers, and others having responsibilities for compliance as part of their duties. The guide covers most, but not all, federal consumer protection laws and regulations. A hard copy of the guide will be published soon. 

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) or by calling Susan Fallon at the League office.

Individual Taxpayer Identification and Matricula Consular Number for CU Reporting Purposes (03-0964; 12-9-03) – In this letter, NCUA was asked if it is permissible for a federal CU to provide lending services to members who use individual taxpayer identification numbers (ITINs) and matricula consular cards or state identification cards, rather than social security numbers. The FCU requesting the opinion accepted matricula and ITIN identification from new members to open share and share draft accounts and now wanted to begin to make loans to these members. The FCU would perform credit checks and report borrower activity to credit reporting agencies based on their ITIN or matricula numbers. NCUA said that such a practice is permissible; however, it did emphasize that the FCU’s board of directors must ensure that its policies and procedures identify and address any risk associated with the new lending activities.

FCUs May Provide or Reimburse Officials for Business Equipment (03-1053; 12-03-03) – FCU volunteer officials may use FCU-owned equipment, specifically computers and cellular phones, or receive reimbursement for personal equipment or Internet access to carry out the responsibilities of their positions if the reimbursed costs are reasonable and proper for performing their duties.

Debt Cancellation Agreements (03-1039; 01-28-04) – NCUA said its lending regulation preempts state laws that attempt to limit or prohibit charges related to debt cancellation or suspension agreements that FCUs offer with member loans. These products protect an FCU against credit-related risks and have been specifically pre-approved as an exercise of an FCU’s incidental powers. The agency’s lending regulation expressly preempts state laws affecting the rates of interest and amounts of finance charges or terms of repayment. Another letter, 03-1039, dated January 28, 2004, also states that FCUs do not need to obtain a state insurance license before offering debt cancellation agreements to members.

SYSTEM NEWS

Discovery Conference Discount Registration Ends April 11
     Best-selling author Tim Sanders will be the keynote speaker at CUNA Mutual Group’s Discovery Conference 2005 – “Experience the Power” – in Orlando, FL, June 15-18. Sanders, leadership coach for Internet giant YAHOO, is a highly sought after speaker on marketing and leadership strategies and author of the N.Y. Times best-selling book, Love is the Killer App: How to Win Business and Influence Friends. He also will share ideas from his soon-to-be-released book, The Likeability Factor: How to Boost Your L-Factor and Achieve Your Life's Dreams.
     The 10th annual Discovery Conference will be at the Orlando World Center Marriott Resort & Convention Center. Discounted registration of $800 is available until April 11, with further discounts when three or more attend from one credit union or organization. Rates increase to $950 after April 11.
     Offering more than 80 learning sessions filled with practical, action-oriented information, Discovery Conference 2005 will help attendees run CUs more effectively, grow business profitably, and improve their personal performance. Subject experts on all aspects of credit union operations will gather in Orlando, along with more than 800 participants, to share information and ideas, network with colleagues, and get fresh perspectives on challenges facing the industry.
     For complete information on the event and accommodations and to register for Discovery 2005, go to www.cunamutual.com and click on “Register for Discovery 2005,” under News and Events.

New In-house CU Training Program: CU Advance
     The League announces the new CU Advance program, a competency-based learning program developed by CUNA’s Center for Professional Development. Learners take courses based on their own personal competencies, knowledge, training, and experience.
     Each CU Advance learning module consists of 5-6 courses. Each course is designed to provide 15-20 minutes of optimum learning enjoyment. This unique approach to self-study education allows learners to take a pre-test for each module; and then, based upon the results, they can take the recommended courses or skip to the final exam. After completing the course and the final exams, learners receive credit. CU Advance courses now offered:
§           Business Math: Lending and Credit
§           Business Math: Share and Deposit Accounts
§           Credit Union Sales
§           Business Communication Skills.
     Interested CUs can sign up for a free demonstration. Sign up for all four topics and get a free gift. Demonstration topics and dates:
§           CU Advance – May 17
§           Competencies & Staff Assessments – June 21
§           Blended and Experiential Learning – July 20
§           Career Pathing – August 17.
     For more information, visit CUNA’s website, http://training.cun.org, and choose “Self-Student Certificate Programs,” then “CU Advance.” Bernadette Hines at the League office can also provide valuable information about this program.

Government Grant Scam Hits CU
     Probably the most widespread scam the last few years is the government grant scam, in which a caller or e-mailer says the government is giving away money. First State FCU reports that several of their members have been targeted by this scam, in which the member has paid up to $250 to cover a one-time “processing fee” in order to receive a promised government grant. Of course, the grant money never comes. Warn your members: The government doesn't give away money to individuals for no particular reason. In another version of the same scam, the caller asks for a checking account number to debit the one-time processing fee.

DELAWARE NOTES

Congratulations to the members, staff, and volunteers of DELAWARE RIVER AND BAY AUTHORITY EFCU, which celebrates its 40^th anniversary on April 14.

At the Herb Wegner dinner, held at CUNA’s Governmental Affairs Conference, a video tribute was shown featuring CU employees and volunteers who were deployed by the military overseas. One of the individuals featured was Kristen Holderbaum, DELAWARE FCU member service representative, also known as Specialist Kristen Holderbaum, who served as an MP in Riyadh, Saudi Arabia, from September 2002-May 2003.

The quick-thinking staff at the Milford branch of SUSSEX COUNTY FCU helped to avoid a loss to the CU by identifying a member who was trying to pass twelve counterfeit U.S. postal orders. This nationwide scam has been listed on CUNA Mutual Group’s Protection Resource Center website. The League also distributed an email/fax risk alert on this scam.

Our sympathy goes out to the family of Andy Fleuette, who passed away on March 16 after a short illness. According to his wife Pam, Andy had worked with CUs in Delaware and Maryland for almost 30 years and had become a friend to many.

These CUs have begun using the following Mid-Atlantic Corporate services:
SEAFORD FCU – Zephyr^® ACH files/returns and ACH origination
DELAWARE ALLIANCE FCU – SimpliCD

In the March 28 issue of The Credit Union Journal, Callahan & Associates has ranked NEWARK, DELAWARE CITY EFCU at #2 in member service usage for CUs with assets of less than $2M. This ranking represents small CUs that are top performers in lending, savings, and member service usage, which demonstrates the importance of striving for full member usage of a CU’s products.

EDUCATION OPPORTUNITIES

April Quick Bites Calls
4/5     Anti-Terrorism Alphabet Soup (OFAC, new account IDs, and Bank Secrecy Act), 11 a.m.-noon.
The fee of $99 includes unlimited staff participation at your own site. The deadline for registration is March 29. Call Bernadette to enroll.  

One-Hour Compliance Webinars
§           Thursday, April 21, at 10 a.m. – Bank Secrecy Act and Anti-Money Laundering
§           Tuesday, April 26, at 10 a.m. – USA Patriot Act and OFAC
§          Wednesday, April 27, at 10 a.m. – CTR and SAR Form Filing Details.
§          Thursday, April 28, at 10 a.m. – OFAC, FinCEN, & CTR 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.

Mid-Atlantic Corporate Education Sessions
§           Corporate Symposium on Long-Term Security for CUs. April 14-15, at the Nemacolin Woodlands Resort & Spa, Farmington, PA.
§           Domestic Wires & Cash Management Webinar. April 6, at your own CU, at 11 a.m.
§           “Where Are You With Check 21 Initiatives? What Is Next?” Conference Call. 11 a.m.
§           “Measure ALM Risk Effectively” Conference Call. April 19, at your own CU, at 11 a.m.
To register for any of the listed education events, contact Mid-Atlantic’s marketing department at 800-622-7494, ext. 3106.

League Education Day, Trade Show, and Annual Meeting – April 22-23, at the Baycenter in Dewey Beach, DE. Friday morning’s speaker will be Rick Olson who will talk about turning CU members into raving fans with great member service. The popular afternoon topic tables will cover areas such as Bank Secrecy Act compliance, bankruptcy/collections, marketing, investments, board issues, insurance, mortgages, auditing, identity theft, and several new CU services.