Volume 26, Number 13                                      July 15, 2006

HEADLINE NEWS

Preliminary Escheat Report Due August 1, 2006
      All credit unions are required to make a preliminary report to the Delaware State Escheator at the Bureau of Unclaimed Property by August 1, 2006. The report lists unclaimed property, which refers to various types of personal property of Delaware residents that has been abandoned for five years or more, including share and share draft accounts, uncashed share drafts, dividends, etc.
      Every Delaware CU, regardless of whether it holds unclaimed property, must file a copy of Form AP-1 (Report Verification), which provides a summary of the CU’s report and which must be signed and verified by a CU officer. An additional itemized form must be completed if you hold unclaimed property. The preliminary report is due in August, and the final report and remittance of monies in any such accounts are due by November 10, 2006. During that three-month interval, CUs need to advertise the existence of these abandoned accounts.
      Unclaimed property forms and a booklet describing the process for submitting unclaimed property is available at http://www.state.de.us/revenue (click on “Unclaimed Property”). The League has sent a full packet of escheat information, including those materials, to each CU manager/CEO.
      Remember, amounts in excess of $25 must be reported to the state of the member’s last known address. You will need to contact each applicable state to obtain the correct filing forms, deadlines and dormancy periods (which vary state to state).
For example, in Maryland and most recently in New York, the dormancy period has dropped to three years before abandoned property must be turned over to those states. And in New York, any check issued by New York State that remains unpaid after one year is to be considered abandoned property and turned over to the state.
      Contact Susan Fallon if you need contact information for other states or if you need more detailed escheat reporting information.

Delaware Credit Unions Support Community Involvement
     Delaware FCU employees recently taught financial literacy courses to Holy Cross Elementary and Caesar Rodney High School students. Each course was tailored to the students’ respective comprehensive levels, age groups, and teacher specific requests, according to Amanda Lennon, marketing manager for the credit union. The credit union also holds Financial Freedom Seminars several times throughout the year for the general public, as do Dover FCU and DEXSTA FCU.

Delaware Federal Credit Union's Debbie Jewell (left) and Amanda Lennon (right) deliver financial literacy courses to Holy Cross Elementary School Students.

     Speaking of Dover FCU, the credit union held a birthday celebration on June 24 in honor of its Kids Making Cents Club’s fifth birthday. Since its beginnings in 2001, the Kids Club has focused on educating parents and their children about the importance of starting good saving habits early in life. Open to children age 17 and under, the club has more than 2800 little savers enrolled, according to marketing director Carole Langiu. More than 350 children and their families attended the birthday party, which was held at the Central Delaware YMCA and Aquatic Center to emphasize young members’ physical well-being, as well as their financial fitness.
      Delaware First FCU again hosted a lemonade stand on June 9 to raise money for children’s cancer research. “Alex’s Lemonade Stand” celebrates the legacy of Alexandra “Alex” Scott who bravely fought neuroblastoma, a childhood cancer, for over 7 years. Alex started a successful nationwide campaign for childhood cancer research by selling lemonade. Delaware First was able to raise $467 through member and staff participation on June 9.
      Often TOGETHER reports other community involvement activities under “Delaware Notes.” We encourage Delaware credit unions to email or call us with information about the many ways that you support your community. Involvement is extremely important – and fun for members and staff – as shown by the examples above.

COMPLIANCE UPDATE

NCUA Insurance Coverage and Signage Changes
     In March 2006, the National Credit Union Administration approved an interim final rule increasing the share insurance coverage from individual retirement accounts (IRAs) and Keoghs from $100,000 to $250,000. The interim final rule became effective April 1.
     NCUA’s share insurance rules also have been changed to reflect that each CU member receives coverage for the “Standard Maximum Share Insurance Amount,” which is currently $100,000 and may be increased from time to time.
     The required official sign about National Credit Union Share Insurance Fund (NCUSIF) insurance coverage needs to be revised to contain a statement that share accounts insured through the NCUSIF are backed by the full faith and credit of the United States government. NCUA recently issued a proposed rule for this change.
      Additionally, NCUA will provide all insured CUs with an initial supply of the revised official sign at no cost and will make a downloadable graphic available on the agency website. NCUA will inform insured CUs how and when they will receive their initial supply of the revised official signs and will set a reasonable period to comply with the rule’s requirements to display the official sign when the agency issues the final rule and a subsequent Letter to Credit Unions, most likely in November.
     Caution: Under the deposit insurance reform law, an insured CU will be subject to a penalty of up to $100 per day for every day it fails to display the revised signs after receiving them from NCUA and after a reasonable compliance period for making changes at teller windows, on websites, and, if applicable, to advertisements.

Notifying Members of NCUA Insurance Coverage
     Your credit union is responsible for notifying your members about NCUA’s insurance coverage. Section 745.13 of NCUA’s Rules and Regulations states that an insured CU shall provide notice by placing either a copy of Part 745, the Appendix, or one or more copies of the NCUA brochure titled “Your Insured Funds” in each main office or branch of the CU.
      Copies must be provided to members at their request. Please insure that the CU is giving out the revised edition. The pamphlet was updated in May 2006 and provides a wealth of information regarding share insurance coverage for most account scenarios. To obtain the “Your Insured Funds” pamphlets:
•          Write to National Credit Union Administration Publications, 1775 Duke Street, Alexandria, VA 22314-3428 or call (703) 518-6340.
•          Fax your request for publication #8046 to (703) 518-6417.
The cost is $14 for 50 copies. You also may download “Your Insured Funds” by visiting
http://www.ncua.gov/Publications/brochures/insured_funds/funds.pdf.

NCUA Alert on Appraisal Standard Revisions
     NCUA has issued Regulatory Alert 06-RA-04 notifying federally insured CUs that a new issue of appraisal standards reflects a greater emphasis on an appraiser’s process of problem identification. The alert also reminds credit unions that Part 722 of the agency’s Rules and Regulations defines the transactions that require the services of an appraiser. CUs must ensure that appraisals adhere to the 2006 version of the Uniform Standards of Professional Appraisal Practice (USPAP).

NCUA Resources Are Now Available
•          NCUA’s 2005 Annual Report. It contains vital credit union data, the auditors’ report, and annual performance report. CUs can order a free annual report by calling NCUA Publications at (703) 518-6340. The report is also available online: http://www.ncua.gov/ReportsAndPlans/annualrpt/annualrpt.html

•          2006 Directory of Federally Insured Credit Unions. The directory lists all federally insured CUs by state and includes pertinent information and data. It is available on the website:
http://www.ncua.gov/data/directory/cudir.html. Or you can call and request a copy for $15 at (703) 518-6340.

•          Comparison of Old and New FCU Standard Bylaws. CUNA has prepared a side-by-side comparison chart of the pre-1999, 1999, and recently-issued 2006 NCUA Federal Credit Union (FCU) Standard Bylaw provisions. FCUs are not required to adopt the revised bylaws – they may adopt all, part, or none of them. A copy of CUNA’s comparison can be found on CUNA’s website: www.cuna.org/compliance/member/download/bylawschart.pdf or by calling Susan Fallon at the League.

CU SYSTEM NEWS

Card Insurance Renewals to Require Fraud Insurance
     As of August 1, all credit unions applying for renewal for insurance coverage on debit card and credit card fraud losses must have in place tougher fraud-detection systems, or neural networks.
     CUNA Mutual Group has informed credit unions it will drop their insurance if they – through card processors they hire or through their own in-house processing systems – don’t have acceptable fraud-detection software (ATM & Debit News July 6).
     The neural networks can detect suspicious transactions across banking and merchant payment channels and anticipate the use of a fraudulent card.
Chris Ryan, director of CUNA Mutual's credit union protection unit, told the publication that all insurance renewals will require the systems. The move is to counter dramatically increasing losses from card fraud the past three years. In 2005, credit unions claimed about $89 million in insured card-fraud losses. Driving the increase in losses is an increase in debit card use.
      Several well-known detection systems are available, but CUNA Mutual is neutral on which to use. Examples are Fair Isaac Corporation's Falcon neural network and ACI Worldwide Proactive Risk Manager software.
     The CO-OP Financial Services Network provides card-processing services to some credit unions through eFunds Corporation. Jim Hanisch, executive vice president of CO-OP, said CO-OP is supportive of CUNA Mutual's move and said credit unions on the network are quickly adopting the use of fraud detection systems as a result of CUNA Mutual's requirement.
      CO-OP is offering special pricing to license the use of Falcon, the fraud software offered by eFunds. So far, about 400 credit unions plan to use the Falcon through the CO-OP processing services, he told the publication. Those who license the Falcon also get Fair Isaac's Card Alert ATM fraud-detection system, he said.
      For more information on insurance coverage required for your CU’s cards program, contact Irene O’Sullivan, Corporate Property and Casualty Specialist for CUNA Mutual Group, at (800) 333-2644, ext. 5794. Irene recently addressed the League’s Card Council on this matter.

Potential New Services Introduced by Filene Report
     Seven innovations that could change credit union operations are the topic of the Filene Research Institute's i3 group's Key Findings: 2.0. In addition to describing seven new products and services, the 36-page report summarizes field test results and proposes ways credit unions can put these ideas into practice in their communities. Seven of the innovative programs described in the report:
1.  SmartScore. SmartScore empowers members by providing them with free credit scores and educating them about the credit score process, how to improve their scores and gain control over their personal finances, and ultimately establish ways to manage their debt wisely.
2.  Hi-5 – A Youth Savings Account. Hi-5 is a savings account providing incentives for young members to save while helping them learn about the benefits of regular saving throughout their lives.
3.  Lifetime Auto Loan. U.S. credit union members total 87 million, yet credit unions capture only 19% of the auto lending market. The Lifetime Auto Loan is an open-end credit agreement – comparable to a home equity line of credit – for multiple loan advances. It is designed for members with changing auto needs as they pass through life stages.
4.  The Flex.One Account. Some consumers prefer maintaining all their financial accounts in a single unified account. The Flex.One account pools all of a member's accounts – savings, loans, mortgage, share draft, credit cards – into one account offering members convenience and significant savings. 
5.  MoneyWorks. Target marketing is more effective than mass marketing for financial services providers. MoneyWorks is designed to use "advocates" to market credit union services to consumers. It provides a low-cost delivery channel for services and products and serves as a source of income for advocates, similar to Pampered Chef or Tupperware. The credit union advocates can be credit union or contract employees. 
6.  MatriMoney. Cash is the preferred gift to newlyweds, but is often an awkward guest at the wedding table. MatriMoney allows cash gifts to be given in a socially acceptable way while building up the newlyweds' special savings account.
7.  CU1031 Exchange. Consumer real estate is an untapped, unexplored market for credit unions. The 1031 Exchange is an option for consumers looking to put cash in hand, relocate properties, diversify investments, and/or take care of retirement or vacation home considerations. Credit unions can become qualified 1031 intermediaries to get a unique foot in the real estate door.
      The report, written by Mark Meyer, Filene's director of innovation, also profiles new members of the i3 group, which is comprised of 39 future credit union leaders with a mission to identify and create new product, service and business models to transform the credit union industry. For more information, call (608) 231-8550 or use the resource link: http://www.filene.org/i3_info.html.

DELAWARE NOTES

Our condolences to the families and friends of the following individuals on recent deaths:
•          To DPL FCU CEO Anthony Hinds on the recent death of his mother in Panama.
•          To First State FCU administrative assistant Maricel Arnell on the death of her husband.
•          To the Delaware First FCU family on the passing of Earvil “Whitey” Eastridge, who had served on the CU’s board for 13 years before his retirement.

Branch Manager Position. Dover Federal Credit Union is seeking a professional individual to assist in the growth and development of the CU’s West Dover Branch. Qualifications: high school diploma; three years experience in a credit union or similar financial environment; supervisory experience; and proficiency with computers.

Accounting Manager Position. Dover FCU also has an immediate opening for a mid-level manager to be responsible for cash management, investment accounts, fixed assets, liabilities, accruals, and deferrals. Qualifications: associate degree in accounting and three years of supervisory experience. Audit, analytical and advanced math skills a must. Individual reports to the CFO.

For either position listed above, send a cover letter, resume, and salary requirements to: Human Resource Department, Dover FCU, P.O. Box 02009, Dover AFB, DE 19902. Fax (302) 678-8037. Email: mailto:hshupe@doverfcu.com

CU Position Sought. Individual with seven years experience as a head teller – two with a credit union – seeks a CU position. Also able to perform a wide variety of daily functions beyond head teller duties. For a copy of this resume, call Ruth Lawley at the League office and ask for resume # 07-05-06.

EDUCATIONAL OPPORTUNITIES

July/August QuickBites Teleconferences
One-hour sessions – 11 a.m.-noon
•   7/19 What If They Say No? – Cross-selling
•   7/27 Collections
•   8/02 Product Strategies – Delivery Channels
•   8/10 Pricing Strategies for a Low Rate Market
•   8/15 Dealing with Difficult, Distraught & Demanding Members
•   8/23 Website Compliance
•   8/31 Membership Development for Small CUs
Two-hour sessions –11 a.m.-1 p.m.
•   7/25 CU 101: An Introduction to Credit Unions
•   8/16 Bank Secrecy Act
The fees for the one-hour sessions are $99, and the two-hour sessions are $169. Deadline to register: one week prior to the session. Call Bernadette to enroll.

North Law Firm Bankruptcy Webinar: Limiting Cramdowns in Chapter 7 and 13 – Thursday, July 20, from 1-2:30 p.m. Fee: $125. To register or for more information, go to http://www.culaw.com.

Robbery Training – Wednesday, August 2, in Room 414 of Del Tech’s Terry Campus Conference Center in Dover. A light meal that will be served at 5 p.m. Session: 5:30-8:30 p.m. Session full.

Multi-Day Bankruptcy Conference. This September 18-21/22, the North Law Firm Bankruptcy Conference will move to the beautiful Hershey Lodge, in Hershey, PA. The NLF Bankruptcy Conference is an in-depth four or five day (your choice) program designed to provide credit union professionals with the information and training they need in order to analyze and fight consumer bankruptcy cases. The conference fee is $750 until August 18. For more information, go to http://www.culaw.com.

Small Credit Union Development Conference. NCUA’s Office of Small CU Initiatives has scheduled a free workshop on Saturday, September 16, at the Renaissance Hotel at the Philadelphia Airport. Time: 8:30 a.m.-3 p.m. Topics: disaster recovery planning, regulatory hot topics, financial literacy, and due diligence-best practices. Small CUs can visit NCUA’s website to register: www.ncua.gov/CreditUnionDevelopment/Events/Index.htm.

League Activities in June/July

COMPLIANCE/COMMUNICATIONS/EVENTS

           Staff Travels. League president Patrick Mahaney has visited 31 out of 34 Delaware credit unions and will complete the entire circuit in July. In addition, he recently returned from CUNA’s Future Forum, where he encountered Carole Langiu of Dover FCU. League executive vice president Jane Bailey joined up with DEXSTA president Jerry King at CUNA Mutual’s Discovery Conference. Finally, Alice Smith attended the American Association of Credit Union Leagues’ 2006 PR/Communications/GAPS Conference, where she accepted a publication award on behalf of the league for last year’s October credit union supplement.

          Compliance Issues and Risk Alerts. The League recently distributed copies of CUNA’s monthly Compliance Challenge to update CUs on issues such as suspicious activity reports, lending questions, and special member meetings. The League continues to keep credit unions abreast of risk management concerns involving “phishing scams,” counterfeit cashier’s checks, and recent lottery scams.

GOVERNMENTAL AFFAIRS

     Credit Freeze Legislation. Governor Ruth Ann Minner signed the security freeze bill (SS1 to SB109) into law at a public ceremony on Monday, July 10, at her Dover office. Several members of the coalition formed by George Fitzgerald and spearheaded by Delaware credit unions were in attendance, including AARP and ING Bank. League president Patrick Mahaney, George Fitzgerald, Delaware Federal Credit Union CEO Duke Strosser, Delaware Alliance Federal Credit Union board chairman Betsy Cole, and League communications director Alice Smith also joined about 25 other people who were at the bill signing.
      Governor Minner praised Sen. Robert Venables (D-Laurel) who sponsored the bill, Rep. Pam Maier (R-Drummond Hill), and Rep. Donna Stone (R-Dover South) for their efforts in getting the law on the books. Senator Venables, in turn, recognized the efforts of George Fitzgerald in creating the coalition that lobbied for the bill’s passage. All of these individuals are shown in the photo below.

     Regulatory Relief Bill. CUNA has opposed a House recommendation that the Senate add to its modest bill the provision that would eliminate the business-lending ceiling for thrifts. CUNA asked credit unions and leagues across the country to contact their federal lawmakers during the week-long Independence Day holiday. State leagues showed an immediate and strong response to CUNA's call to action, according to Political Affairs
Senior Vice President Richard Gose, who said thousands of emails and phone calls went out across the country to explain to lawmakers that the thrift provision could seriously threaten the credit union charter. Delaware credit unions who have shared their communications with the League include American Spirit, Delaware, Delaware Alliance, Dover, DPL, and Louviers FCU.

     Data Security Legislation. Congressman Mike Castle is one of the co-sponsors of The Financial Data Protection Act of 2005 (H.R. 3997), which requires institutions to notify consumers of breaches of sensitive information. League staff members Patrick Mahaney and Alice Smith have had several conversations with Congressman Castle and his staff on this proposed legislation. In addition, the Senate Banking Committee recently introduced a financial data protection bill (The Data Security Act, S. 3568), which is co-sponsored by Senator Tom Carper. Dover FCU CEO David Clendaniel subsequently wrote an excellent letter to Senator Carper reviewing the pros and cons of this bill and how it directly impacts the operations of Dover FCU.

LEAGUE SERVICES

     Mystery Shopping Program. The League’s mystery shopping program is now in five states: Delaware, Pennsylvania, New Jersey, Maryland, and Illinois.

     Shared Branching. The League introduced shared branching to eleven credit unions on June 28. The League has negotiated an agreement with the Pennsylvania Credit Union Service Centers to offer their program to Delaware credit unions. Currently the network has approximately 1243 participating credit unions with over 2100 locations covering 44 states.

May and June Education Sessions Recap

TOGETHER is published on the 15th and 30th of each month by the Delaware Credit Union League, 4 Quigley Boulevard, New Castle, DE19720. Information to be published should be sent or phoned into the League no later than the Monday of the week preceding the publication date. Telephone: (302) 322-9341 or (800) 292-7875. This newsletter can also be found on the League website: www.dcul.org. Hard copies of the newsletter will be mailed to each credit union CEO/manager for distribution to those without computer access. Readers can receive a reminder when the newest edition is posted to the Web by emailing susan@dcul.org. Editor: Alice Smith (alice@dcul.org).