Volume 26, Number 9                                           May 15, 2006

HEADLINE NEWS

Aid for Afghanistan
      Many of you who attended the League’s annual business meeting heard a heartfelt plea from Sam Simpson, former manager of Dupont Stine-Haskell Employees FCU and, since the CU's merger with Louviers FCU, branch manager at the Stine-Haskell site.
     Sam’s son has recently been stationed in Afghanistan and has communicated the poor conditions in which the people there live – especially the children. Sam is organizing a shipment of clothing and small toys to Afghanistan. He will also accept cash donations which can be used to purchase supplies.
     Sam is especially looking for clothing (it is now the summer season there) – tshirts, sweatshirts, and shoes are very good items to donate. He will also take small toys (e.g. beanie babies or Matchbox type cars). All donated items can be brought to the League office in New Castle for Sam to pick up.
     If you wish to make a cash contribution, please make checks payable to “Christiana Rotary Club Foundation,” and send to Sam Simpson, 7 Ferncliff Road, Newark, DE 19711-5510. A check made payable to the Foundation is tax-deductable.
     The deadline for all donated items and monetary contributions is the end of May.

NCUA Risk Alert on Disaster Preparedness and Response
     The National Credit Union Administration (NCUA) has sent Risk Alert 06-01 to all federally insured credit unions, regarding “disaster planning and response.” Because of the recent disasters, CUs are reminded of the importance of performing ongoing reviews for disaster preparedness and response. 
     This risk alert addresses the “lessons learned” from the recent disasters and makes the following requirements that will be reviewed during the exam process:

• Implement pre-disaster actions to ensure a constant state of readiness and take steps to safeguard assets and vital records if an early warning is received.
• Communicate disaster preparedness and response efforts before, during, and after an emergency to keep members, volunteers, employees, and regulators fully aware of the situation.
• Utilize a cross-section of people to develop, test, and implement disaster preparedness and response plans.
• Ensure back-ups are available not only for data but also for personnel, worksites, equipment, vendors, and other resources.
• Treat disaster preparedness and response plans as “living documents” to be updated as circumstances change.

     NCUA Risk Alert 06-01 includes excellent disaster planning tools at various websites. In addition, NCUA is developing an examination questionnaire to assist in reviewing the key elements of disaster preparedness and planning. The questionnaire has not been finalized but will be distributed in an upcoming “Letter to Credit Unions” and will be posted on the website at www.ncua.gov. For a copy of the alert, go to:
www.ncua.gov/letters/RiskAlert/2006/06-Risk-01.doc

Upcoming League Education Offerings

• Consumer Lending Foundations – May 23. This full-day session with Bill Elrod (who has done this training previously for the League with high evaluations) will guide participants through the entire lending process, including the credit application, the interview, the credit investigation, the credit decision, and proper follow up. Participants will also receive in-depth information regarding the tools utilized in making a credit decision, including the application, credit report, credit score, and debt-to-income ratios. This session will benefit new lenders, experienced lenders, credit committee members, and seasoned lenders seeking refresher information. Fee: $250.
• Know Your Member – Bank Secrecy Act and Patriot Act Compliance for Front Line Staff – Two sessions on June 23 – 9 a.m.-noon or 1-4 p.m. – so more staff can come to the training.
• The Three R’s of Checks: Risk, Relationship & Recourse – June 14, from 9 a.m.-noon. This workshop will address the need for front line decision-making in regard to Regulation CC and funds availability. Instructor Kim Smith will take participants through a variety of scenarios which point out the key elements of accepting negotiable instruments. This workshop will also touch on fraud, forgery, and the use of technology in creating bogus items. Fee: $95; registration due by May 30.

All three sessions will be held at the League office. The registration fee includes lunch, instruction, and handouts.

The League office will be closed on Monday, May 29, in observance of Memorial Day.

COMPLIANCE RECAP

NCUA Bylaw Rule Changes
     The Credit Union National Association (CUNA) has issued an analysis of the NCUA’s final rule intended to update, clarify, and simplify the Federal Credit Union (FCU) Bylaws. The CUNA analysis reminds credit unions that the final rule on FCU bylaws was effective April 26. Credit unions are not required to adopt the changes and may choose to adopt some, all, or none of them.
     The allowable changes include:

1. Section headings for ease of finding provisions pertaining to a particular topic;
2. Raising from 500 to 750 the maximum number of signatures that may be required to call a special meeting, a provision not supported by CUNA;
3. Requiring the board of directors to establish a training policy for directors and volunteers in areas such as ethics, fiduciary responsibilities, regulatory compliance, and accounting;
4. Allowing notices and ballots to be distributed electronically to members who consent to receive the information in this manner and clarifying that a "properly designed" ballot is one that preserves the secrecy of the ballot;
5. Prohibiting both the compensated officer and the financial officer from serving on the supervisory committee;
6. Including staff commentary at the end of some articles that address frequently asked questions;
7. Including an introduction addressing the legal nature of the FCU Bylaws, the amendment process, and NCUA's position on internal disputes. The final rule was adopted at the agency's April 20 open board meeting.

Rule on Overdraft Privilege Plans
     The NCUA Board has approved a final rule requiring credit unions that offer overdraft privilege plans to disclose information about these fees on periodic statements, when an account is opened, and in advertisements that promote the service. 
     Under the interim final rule, these changes were effective as of December 8, 2005, with a proposed mandatory compliance date this summer. The final rule delays the mandatory compliance date until October 1, 2006. This delay will provide credit unions with additional time to implement the necessary operational changes, which should be especially helpful for small credit unions. The revisions will require credit unions that promote the payment of overdrafts in an advertisement to disclose on the periodic statements the total fees imposed for paying overdrafts and returning unpaid items for both the statement period and the calendar year-to-date. 
     The revised regulation is intended to apply not only to credit unions offering “courtesy pay” programs but also to those credit unions that cover overdrafts on an ad hoc basis. It is not intended to apply to credit unions that move funds between multiple accounts of a member to cover an overdraft.  

Skip a Payment Disclosures
     NCUA has issued a clarification statement (Legal Opinion Letter 05-0903A) concerning skip payment programs and required disclosures. The opinion clarifies that if a credit union charges a fee each time a member skips an open-end loan payment, similar to a transaction fee, then the skip payment fee IS considered a finance charge. The only circumstance where a skip payment fee is not considered a finance charge is when all members pay the skip payment fee, regardless of whether they participate in the skip pay program. The above mentioned legal opinion letter clarifies an earlier legal opinion letter (#05-0903)  issued by NCUA March 28, 2006, regarding skip payment fees and whether they should be considered finance charges. At that time, NCUA stated that skip payment offers for closed-end credit after the initial extension of credit did not require additional disclosures. For open-end credit, NCUA stated that no additional disclosures were necessary if the credit union adds the (skip pay) feature within 30 days after providing the initial disclosures and the finance charge is the same. Again, the March 28th opinion should be read in conjunction with the April 19th clarification. NCUA Legal Opinion Letters 05-0903 and 05-0903A will provide greater details. 

New Flood Hazard Form Released
     FEMA has posted online a new Standard Flood Hazard Determination Form, which replaces the previous form that expired October 31, 2005, but remained in effect until the new form was released. Click here for the new flood form http://www.fema.gov/pdf/nfip/sfhdf.pdf.

GOOD NEWS ABOUT DELAWARE CREDIT UNIONS

Youth Week Saving Challenge Results in Delaware
     The National Youth Saving Challenge, which took place during National CU Youth Week, was a huge success nationally and in Delaware. In just one week’s time, 346 CUs saw more than 66,000 youth make deposits worth more than $9.6 million in the Challenge. Three Delaware CUs participated in 2006:

1. American Spirit FCU – 50 youth depositors and 11 new accounts brought $5,102 into the CU.
2. Louviers FCU – 56 youth depositors and 2 new accounts brought in $4,007.95, which was 191% of the CU’s goal for the program.
3. Pipefitters FCU – 13 youth depositors deposited $609.93 at the CU.

Hopefully more Delaware CUs will become involved in this program in 2007.

Dover FCU Marks Asset Milestone
     On the heels of announcing a first-time ever bonus dividend payout to its members in December 2005, Dover FCU has topped the $200,000,000 asset mark, making it the second largest CU in the state. Board chairman Martin Talmud commented: “It is because of the support of our members that we have achieved this milestone.”
     In other CU news, the CU announces the hiring of Jenell Daniels as the new training coordinator.

Delaware FCU in CU Management
     Delaware FCU is one of the credit unions interviewed for an article in the April 2006 issue of Credit Union Management magazine. Entitled “Technology Behind the Brand,” the article shows how various credit unions are utilizing today’s advances in technology to enhance their brand recognition and marketing efforts. Sharee Coleman, vice president of marketing, describes how the CU is working to build their members’ comfort level with technology and identity theft issues. Obviously, the information systems staff at the CU plays a major part in this effort. In recognition of its service to members, the department was recently honored at Delaware FCU’s annual meeting on May 9 as the CU’s outstanding department. In addition, lending manager Shari Lord was named as the CUs outstanding staff member.

Compliance Council Meeting
     The first Compliance Council meeting of the year was held April 19 at the Lancaster Host Resort & Conference Center. Forty-two individuals, representing 28 credit unions from Pennsylvania and Delaware, heard presentations on cost effective delinquency reduction techniques, disaster recovery/business continuity planning, and Bank Secrecy Act/anti-money laundering. Dawn Sutcliffe and Savannah Jarrell from Delaware Alliance FCU, Christeen Richards from Wilmington Postal FCU, and Susan Fallon from the League, attended.

CU POSITIONS AVAILABLE

Vice President of Finance/Comptroller: Candidate must have mastered the applications of Generally Accepted Accounting Principles (GAAP) and have a proven track record of successful leadership in a growing credit union of at least $50 million in assets. A minimum of 10 years of credit union or related experience, with at least five of these years managing three or more direct reports, is required. A bachelor’s degree in accounting or a related field is the minimum educational requirement. A master’s degree in finance, accounting, business administration and a CPA or CMA designation is highly desirable. For a more detailed description of this position, see ../creditunions/vp.html

Vice President of Member Service (Lending & Operations): Candidate must have mastered implementing superior member service while maintaining sound internal controls, effective risk management, and efficient work flow by working through and with highly motivated staff. The CU requires a proven track record of successful leadership in lending, collections, branch operations and member relationship management in a growing credit union of at least $50 million in assets. The candidate will possess a minimum of 10 years of credit union or related experience, with at least five of these years managing three or more direct reports. A bachelor’s degree in business or related field is the minimum educational requirement. A master’s degree in business administration, business development, and a CCUE, CUDE, or similar designation is highly desirable. For a more detailed description of this position, see ../creditunions/vpms.html

Resumes for either of these positions should be sent to VP Search, Delaware Credit Union League, 4 Quigley Blvd., New Castle, DE 19720.

CREDIT UNIONS IN THE MEDIA

     There has been a lot of buzz in the media lately regarding credit unions – written by columnists in prestigious newspapers and as parts of TV scripts.

• An April 16 episode of West Wing had President-elect Santos (played by Jimmy Smits) commenting about taking risk. He said something to the effect of …”gambling is a risk, the stock market is a risk…I’m more of a credit union kind of guy.”
• ABC’s April 30 Extreme Makeover: Home Edition, also had a CU connection. The show featured the story of the William Py family of Philadelphia, who received a new home where the couple can raise their orphaned grandchildren. The property is located across the street from American Heritage FCU, and the CU was used as a studio for the crew to discuss the building project.
• Credit unions were also mentioned on an episode of “Unan1mous,” which airs on the Fox channel. One of the characters on the show has a BMW or Mercedes, and the others were questioning how he was paying for it. His response was that “my credit union gave me the money.”
• Michelle Singletary, a personal finance columnist for the The Washington Post (also syndicated in The News Journal), is a “big fan of credit unions.” In her April 20 column, she wrote an article on the new insurance protection limits at banks and CUs. She points out the fact that “under the National Credit Union Administration’s guidelines, IRAs and self-directed Keogh accounts are separately insured from one another, even when they are held at the same credit union.”
• The Wall Street Journal personal finance columnist Ron Lieber ran a column on CUs in the WSJ's May 7th edition. From a personal finance standpoint, the article steers consumers toward CUs. “It's getting easier to join a credit union – and if you're not checking their rates, you may be costing yourself a lot of money by not doing so,” writes Lieber. “That may come as a surprise. CUs have their roots early in the 20th century, when they were created to serve the needs of people of modest means whom banks were ignoring. Today they claim 88 million members in the U.S., including plenty of people who could just as easily use any regular bank. Why do they choose CUs instead? In large part because the interest rates they pay depositors are often higher, and their loan rates are frequently lower, than those at regular banks.”

EDUCATIONAL OPPORTUNITIES

May QuickBites Teleconferences

One-hour session – 11 a.m.-noon
5/25      Listening Skills
Two-hour session –11 a.m.-1 p.m.
5/31      CU Financials for Staff and Volunteers*
     The fee for the one-hour session is $99, and the two-hour session is $169. Deadline to register: one week prior to the session. Call Bernadette to enroll.
* QuickBites now have a 14-day archive feature that allows your CU to listen to the program up to two weeks after the live teleconference. Therefore, for one fee, you have unlimited access for two weeks. Why not sign up your board of directors to listen to the session on May 31?

Consumer Lending Foundations – Tuesday, May 23, from 9 a.m.-4 p.m. Designed for loan officers and credit committee members. For more details, see Upcoming League Education Offerings, the third article in this issue. Fee: $250. Check to see if space is still available by calling Bernadette Hines.

Small CU Roundtable (under $10M in assets) – Wednesday, May 24, at the League office from 5:30-8:30 p.m. The first hour of the session will be devoted to Bank Secrecy Act training with NCUA examiner Mike Renkey answering questions. Participants should submit topics of interest for the discussion. Fee: $12 to cover a light dinner. R.S.V.P. to Ruth Lawley by May 17.

Bank Secrecy Act/Patriot Act Compliance Seminar for Front Line Staff – Tuesday, June 13.  Two sessions: 9 a.m.-noon and 1-4 p.m. This session is designed to help your CU fulfill NCUA’s annual BSA training requirement. Fee: $95. Regis. deadline: May 30.

Working with Checks & Negotiable Instruments for Front Line Staff – Wednesday, June 14, from 9 a.m.-noon. This course covers the 3 R’s of checks: risk, relationship, and recourse. Special emphasis on Regulation CC and funds availability, as well as fraud. Fee: $95. Regis. deadline: May 30.

One-Hour BSA Compliance Webinars
These courses are now being offered in an “on demand” format – connect to them at the time and place you choose. The next set of live webinars is:
     BSA Training
                5/2              Bank Secrecy Act (8-9 a.m.)
                5/4              USA Patriot Act
                5/9              CTR/SAR Forms Completion
                5/11            OFAC, FinCEN, CTR Forms
These sessions begin at 8 a.m., and the fee is $125. For more information, phone Don Baumann of the co-sponsor Verisure at (315) 638-4334.

League Activities in April/May

COMPLIANCE/COMMUNICATIONS/EVENTS           
            League President’s Travels. Patrick Mahaney has visited 30 out of 34 Delaware credit unions and will complete the entire circuit by the end of May. Pat has been very busy getting acquainted with the credit union community as evidenced by the following statistics:
*attended ten CU annual meetings; *met with 32 managers/CEOs; *met members of 24 boards of directors; *attended two national league meetings; *attended CUNA’s Governmental Affairs Conference and fund-raising events for Senator Carper and Congressman Castle; *attended a MARS (Mid-Atlantic Regional Services) meeting; *met with NCUA Region II director Edward Dupcak four times and has talked to all current NCUA auditors in the district; and *has started on-going dialogues with the Maryland DC Credit Union Association and the Pennsylvania Credit Union Association for new business ventures.

            Compliance Issues and Risk Alerts. The League recently distributed copies of CUNA’s monthly Compliance Challenge to update CUs on issues such as individual retirement accounts (IRAs), skip-a-payment programs, Regulation E, and courtesy pay program. The League continues to keep credit unions abreast of risk management concerns involving “phishing scams,” counterfeit cashier’s checks, and e-mail viruses.

            Media Contacts. The Delaware League annual meeting awards and elections have been featured so far in The News Journal and CUNA’s News Now. News releases were also sent to various credit union trade publications and local media.

GOVERNMENTAL AFFAIRS

            Credit Freeze Legislation. Delaware Senate Bill 109 will be introduced in the Senate very shortly. The proposed law will allow Delaware residents to freeze access to their credit reports. George Fitzgerald has taken a leading role in the enactment of the bill. His efforts include forming a coalition of groups to support this bill, led by state credit unions and more than 70 civic groups and other organizations, representing 527,000 Delawareans. George was one of the speakers at a press conference held in Dover on May 9 introducing the final version of the bill. League president Patrick Mahaney and Delaware FCU CEO Duke Strosser were also in attendance. Vanessa McCall, manager of Newport Site Employees FCU, gave personal testimony about the negative results of identity theft.

            Regulatory Relief Bill. On May 4, the Senate Banking Committee unanimously approved a much pared-down version of financial institution regulatory relief. The bill contains only four substantial provisions specific to credit unions, as well as a myriad of technical changes to language in the Federal Credit Union Act. Two important credit union issues addressed by the bill are: 1) a revised definition of net worth that would protect merging credit unions under a pending accounting change proposed by the Financial Accounting Standards Board; and 2) authority for federal credit unions to cash checks and provide money-transfer services to anyone in their field of membership. The bill also would allow an increase to 15 years from 12 years in the limit on federal credit union personal and business loan maturities and authority for federal credit unions to negotiate for nominal land rents on military installations. It is not clear when the bill will be brought to the Senate floor. CUNA has commented that, although the Senate’s action on regulatory relief is welcome, it in no way mitigates the need for other reform measures for credit unions, such as prompt corrective action and member business lending reform. Duke Strosser, CEO of Delaware FCU and a member of CUNA’s coalition for regulatory relief reform, has worked closely on this issue with legislative assistant Hilary Jochmans in Senator Carper’s office – the Senator is a member of the Senate banking committee.

           CULAC Fund-raising. At the League annual meeting, we raised $419 for CULAC through the sale of raffle tickets for three golf drivers made by Dick Stoops and donated by Sussex County FCU. In addition, we sold “Credit Union – People Helping People” wristbands. Many thanks to League board member Kate Toner and governmental affairs committee member Charlie Gleason for helping to man the booth. As of the first quarter of 2006, the League had achieved about 25% of its CULAC goal for 2006. Our biggest fund-raising efforts occur in the summer with “dress down days” and in October with the candy sale. The League’s annual report featured a one-page “honor roll” recognizing the Delaware credit unions that support political advocacy in many ways. Hope your credit union is listed!

LEAGUE SERVICES

            Mystery Shopping Program. This program is really taking off. The League recently recruited a credit union in Bucks County, PA, and one in Chicago, IL. Currently, we have two in Delaware and one in Maryland. Another credit union in Pennsylvania is interested as well, but there is no commitment yet.

            Shared Branching. Bob Hinchey, Senior Vice President of Fee Services, Pennsylvania Credit Union Association, facilitated an annual meeting roundtable on shared branching to gauge the interest level from Delaware CUs. Since there was significant interest, the Delaware League is proceeding with an agreement with the PCUA to offer their shared branching network in Delaware. The League will be holding an introductory session on this service sometime this summer.

            AIG Bank – New Business Member.  AIG has joined DCUL as a business member to offer reverse mortgages to CU members. This is the only product this division of the bank offers. We plan a member education session this summer on reverse mortgages.

            CUSO Dissolution.  DELCU Financial Services, LLC, the CUSO owned by 15 Delaware credit unions, was dissolved on May 3, 2006. A distribution of the assets was presented to each of the owner credit unions.  Since its inception in August 1999, the CUSO has offered surcharge-free ATMs, trust services, non-member check cashing services, and title services. All services have been discontinued with the exception of the non-surcharge ATM alliance which continues to thrive through the Allpoint Network and the reciprocal agreement the CUSO credit unions have with each other.

EDUCATION AND TRAINING

            Annual Meeting Education Sessions. Patrick Adams addressed 125 credit union staff and volunteers from 10 a.m. – noon on Friday, April 21, regarding “Lending….. Strap in and Hang On!” His presentation was entertaining, educational and thought provoking. The afternoon topic tables covered 14 different subjects that encouraged networking with peers and discussion of various issues that are important to the operation of each credit union.
           
            Educational Partnerships. The League continues to partner with the Illinois League to offer the Quickbites teleconferences. The League has also partnered with the Verisure Company to present monthly webinars on the Bank Secrecy Act, USA Patriot Act and OFAC, risk management issues, and ACH. The most recent webinar offering from the North Law Firm in California is on credit union rights and concerns.
            The League also joined with the Cooperative Extension Service to offer a two-day training in the areas of money management, consumer fraud, and working with members’ financial needs.         
           
            Professional Councils. The Collection Council had their first meeting for 2006 on March 14th, with Jonathan Rhodes, CEO Fed Direct FCU; Ken Demello, CFO Fed Direct FCU; and Paul O’Reilly, attorney and partner of CU Collections, LLC. The presentation included several collection laws in Delaware and tri-state areas. Bob Nagle of Saul Ewing, LLC, addressed the Human Resource Council on April 4th regarding workplace privacy. The Mortgage Council met on April 11th with Mark Randolph of GMAC discussing creating wealth with mortgage programs.

         Education Awards. Bernadette Hines attended New Castle County School Employees FCU’s annual meeting held on March 16 to present STAR, MERIT and VAP certificates that were earned in 2005 by the credit union’s staff – four individuals earned eight certificates.  Alice Smith attended First State FCU’s annual Meeting on April 1st to present STAR and MERIT certificates to three individuals who earned four certificates.  Pat Mahaney attended DEXSTA’s appreciation dinner to present four individuals with six STAR certificates earned in 2005. Most recently, Alice attended Delaware FCU’s annual meeting to present 43 STAR and MERIT certificates to 13 staff members. Education awards for achievements in 2005 were presented to the following credit unions at the Delaware Credit Union League’s annual meeting:

• The most STAR & MERIT Certificates in the year 2005 - Delaware FCU
• The most VAP and VLP Certificates in the year 2005 - NCC School Employees FCU
• The highest seminar participation in the year 2005 - Delaware Alliance FCU

March and April Education Sessions Recap

*  The League receives quarterly notification of participation for Verisure webinars.

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).