Volume 27, Number 11                                       June 15, 2007

HEADLINE NEWS

E-Scan Lists Member Growth Among Top 10 Insights  
     With credit union membership growth barely staying ahead of U.S. population growth, each credit union needs to carefully study its field of membership to develop strategies for reaching eligible nonmembers. The importance of reaching out to new members has made the list of the top insights in CUNA's recently released 2007/2008 Credit Union Environmental Scan (E-Scan).
     The “Top 10 E-Scan Insights” identifies the key trends and challenges affecting CUs in the coming years with ten in-depth chapters on each issue. The top insights, as identified by E-Scan analysts, are:
1.   Membership growth. Since 2000, average annual membership growth has been 1.9%, and similar growth is expected for the next few years.
2.   Older members. Credit unions are in the midst of a major decline in the number of peak borrowers – members age 25 to 44. This demographic shift has worked against CU lending efforts for about seven years, and it'll continue through at least 2010.
3.   Loan growth. After experiencing double-digit loan growth in five of the past seven years, CU loan growth was 8.7% for 2006 and is expected to drop to 6% for 2007 and 2008. Rising interest rates, an increase in member savings, and weak pent-up loan demand are contributing factors.
4.   Innovation. This is something a lot of financial institutions talk about, but few deliver. Innovation will be one of the key drivers of value and differentiation in the new financial services economy. All financial services have become commodities. Using price as your primary strategic differentiator is becoming less effective.
5.   New IT architectures. Your information technology (IT) architecture is the foundation of your core lending system. Many CUs, however, continue to rely on aging platforms. If data management is the backbone of your CU, then managing data will require more integrated and sophisticated database and reporting systems.
6.   Earnings. CU financial performance will be under pressure from many fronts in 2008. A weak housing market, lower home prices, a flat yield curve, intense competition, a slowing economy, lower loan demand, and deteriorating credit quality will combine to lower earnings, but increase asset growth, in 2008.
7.   Payment systems. Through an effective payments strategy, your CU can deliver additional value to members while generating new sources of revenue. The most significant trend the past five years has been rapid growth of electronic payments – debit cards, credit cards and ACH transactions.
8.   Security. IT departments spent roughly $61 billion on security in 2006 to satisfy regulators and to protect consumers' financial data. The high cost of protection appears to be worth it – surveys show that 50% of consumers would switch providers if their personal information were to be compromised.
9.   Business lending. The number of CUs offering business services to their members is approaching 2,000. Many CUs that offer or think about offering business services are well positioned to earn loyalties of the business owners within their fields of membership. That's because 52% of small-business owners are less than "very satisfied" with their current business-banking relationships.
10.  Legislation/regulation. Banking interests have changed tactics, pulling back on taxation and attacking CUs on their record of community service in an effort to impose regulations, such as the Community Reinvestment Act, on credit unions.
     In addition to the top 10 insights, the E-Scan covers more than 50 important CU topics and 125 strategic implications for planning. The E-Scan is available in three formats - report, PowerPoint presentation, and DVD. The PowerPoint presentation contains over 100 slides that can be mixed and matched to meet specific needs. The 30-minute video provides a concise overview of the report. 
     For more information or to order CUNA's 2007/2008 Credit Union Environmental Scan resources, visit advice.cuna.org and click on "Reports" or call (800) 356-8010, press 3, and ask for stock number 27762 (report - $81), 27764 (PowerPoint - $225), or 27763 (DVD - $199). 

NCUA NOTES

CUs Urged to Work With Mortgage Borrowers Unable to Make Their Payments
     NCUA in Letter to Credit Unions 07-CU-06 urges CUs to work with mortgage borrowers unable to make their payments. Federally insured credit unions are reminded that prudent workout arrangements can be in the long-term best interest of both credit unions and their members. NCUA encourages credit unions to consider reasonable workout agreements, whenever sound, that allow members to keep their homes.  
     Borrowers who are unable to make their mortgage payments should contact their lender as soon as possible to discuss available options. Examples of constructive workout arrangements include modifying loan terms and/or moving borrowers from variable-rate loans to fixed-rate loans.
     NCUA reminds credit unions that existing regulatory guidance and accounting standards do not require immediate foreclosure on homes when borrowers fall behind on payments. In addition, under the Homeownership Counseling Act, institutions are required to inform delinquent borrowers about the availability of homeownership counseling within 45 days of the date the late payment was due. A sample notice can be found at http://www.cuna.org/compliance/member/eguide/eguide_home_own_counsel.html. 
     CUs must provide the homeowner with notification of the availability of any homeownership counseling they offer and either:
•   Availability of homeownership counseling provided by HUD-approved non-profit organizations that serve the homeowner's residential area; or
•   The HUD toll-free telephone number (800-569-4287) through which the homeowner can obtain a list of the counseling organizations.
     In addition to these counseling provisions, credit unions must also notify homeowners in default of the mortgage and foreclosure rights of servicemembers and their dependents under the Servicemembers Civil Relief Act (SCRA). This additional notice requirement became effective late last year.
     To access the NCUA’s letter, go to http://www.ncua.gov/letters/2007/CU/07-CU-06.doc

NCUA Letter on Nontraditional Mortgage Products
     The National Credit Union Administration (NCUA) has posted its Letter to Credit Unions 07-CU-07 on the agency website; the letter addresses the agency's release of final illustrations of consumer information for nontraditional mortgage products. NCUA, in conjunction with federal bank and thrift regulators, issued the final illustrations last week as part of a federal effort intended to help borrowers make sense of nontraditional mortgage products.
     The illustrations supplement interagency guidance issued in October 2006 that discusses prudent underwriting and risk management practices for nontraditional mortgage loans, which allow borrowers to do such things as defer repayment of principal and sometimes interest.
     The illustrations are comprised of:
          •   A narrative explanation of nontraditional mortgage products;
          •   A chart comparing interest-only and payment option adjustable rate mortgages (ARMs) to a traditional fixed-rate loan; and
          •   A table that could be included with monthly statements for a payment option ARM showing the impact of various payment options on the loan balance.
     Institutions are not required to use the illustrations. They may choose to use the illustrations, provide information based on the illustrations, or provide the consumer information described in the guidance in an alternate format. The letter can be found at: http://www.ncua.gov/letters/2007/CU/07-CU-07_encl.doc

Backup Withholding Rate  
     The backup withholding rate of 28% will continue to be in effect until December 31, 2010. Generally, backup withholding is required on interest or dividend bearing accounts whenever: (a) the member has not supplied a TIN to the credit union as required, (b) the IRS has notified the credit union that the TIN supplied by the member is incorrect, (c) the IRS has notified the credit union that the member has underreported interest or dividend income, or (d) the member has not certified that he or she is not subject to backup withholding due to underreporting interest or dividend income (this certification is not required for accounts established prior to January 1, 1984).

CU SYSTEM NEWS

Delaware League Organizes Home Buying & Selling Seminar
     Executive vice president Jane Bailey announces that the League is coordinating a Home Buying & Selling Seminar on July 31, 2007. The seminar will be held from 6:30 to 8:30 p.m. at the League office.
     Credit unions are urged to advertise this session to your members. The seminar, facilitated by GMAC Mortgage, will provide first-time homebuyers and sellers with information on real estate services, mortgage options and process, appraisals, settlement and much more. One lucky attendee will win an iPod!
     Jane is providing each credit union with a flyer, session agenda, and registration sheet to post in your credit union’s lobby. Marketing materials, including an article for your newsletter or website, is also available. Credit unions are asked to enroll their own members and then report the number of attendees to Jane no later than July 20.

CUNA Mutual Adds First Mortgage Documents to LoanLiner
     CUNA Mutual Group, a provider of financial products and services to credit unions, has added a new product line to LoanLiner that provides customers with a core set of documents to support each step of the first mortgage lending process.
     The new product line provides state-specific documents and cross-over LoanLiner documents, which can be used with other real estate secured loans such as home equity or business lending. The product line meets secondary market requirement and supports most first mortgage loan originations.
CUNA Mutual's partnership with LoanLiner adds:
•   Peace of mind knowing documents are compliant and up-to-date;
•   Help from professional compliance experts;
•   Protection under the LoanLiner warranty; and
•   First mortgage documents that are state-specific, allowing credit unions to generate new loans.
     According to the National Credit Union Administration, 4,636 credit unions have nearly $160 billion in first mortgage loans on their books. About 34.5% of all credit union loans are first mortgages.

Del-One Corporate Grand Opening on June 6                  
     Del-One (Delaware FCU) held the grand opening of its new corporate office on June 6. Activities included a ribbon-cutting ceremony, special one-day only loan and deposit rates, a live radio remote broadcast by WDSD 92.9 FM, and entertainment for the entire family. Del-One’s Community Outreach team hosted Alex’s Lemonade Stand, which generated $250 to help raise awareness and find new cures and treatments for pediatric cancer patients. Members signed up for several new services, including 40 new accounts opened, $725,000+ in new term share certificates, and $525,000+ in new auto loans, as reported by Sharee Coleman, vice president of marketing.
     The new Del-One corporate center and branch office, located at 270 Beiser Blvd. in Dover (in the Enterprise Business Park and across from Kraft Foods), offers members convenient drive-up service and ATM lanes, a cybercafé where members can freely access Del-One’s online branch, an after hours depository, safe deposit boxes, and a unique multi-purpose auditorium, which will facilitate Del-One’s free Financial Freedom Seminars.
     Del-One now has 7 branches throughout the state which serve more than 29,000 members and more than 200 Delaware businesses. Five original charter members of the credit union were honored at the event, including Watson Baker, one of the first 40 members who helped establish the Delaware Highway Federal Credit Union in 1960. Watson’s wife, Betty, was the credit union manager from 1971-1992. The name changed to Delaware State Employees Federal Credit Union in 1967; then in 1995 the name changed to Delaware Federal Credit Union; and finally in 2006 the trade name “Del-One” was adopted.

Long-time Del-One credit union members Betty and Watson Baker.

Del-One staff, volunteers, charter members, and guests participate in cutting the ribbon for the new corporate office

DELAWARE NOTES

Best wishes to JoAnn Bernstein, who retired on May 31, 2007, after 20 years with LOUVIERS FCU.  She is looking forward to traveling with her husband, Vic, and spending time with her family.

DEXSTA FCU’s new lending manager is Dee Chimenti, and she is located at the Foulk Road branch. Dee was promoted from the downtown branch manager. That position is now held by Yvonne Mason, a former member service representative

Dawn Sutcliffe, DELAWARE ALLIANCE FCU CEO, attended America’s Credit Union Conference and Expo in Las Vegas from June 3-6.

The African-American Credit Union Coalition awarded Tarra Jackson, DEL-ONE vice president of lending, a scholarship to attend the CUES CEO Institute Program for three years. Ms. Jackson received her scholarship during the GAC Conference in Washington, D.C., in February and has since completed her first leg of the program in Philadelphia, PA, on April 20, 2007.

DOVER FCU has named Charlene Nardo as branch manager at the North DuPont Highway office in Dover. She brings more than 35 years of experience in the financial industry with her, most recently in Bankcard Services. Charlene, a firm believer in continuing education, is committed to the 6th Sigma Program, which uses data driven methodology to reduce money-draining waste and combat workplace inefficiencies.

Computer Systems Operator for North Wilmington Credit Union.Complete system duties, troubleshoot system problems, provide system support.  Fax cover letter and salary requirements to 302-225-0619 Attn: HR Manager or email to hrmanager@dexsta.com.

Teller Position Available – Wilmington Postal FCU is seeking a full-time teller; experience preferred but will train. Ability to accurately process member transactions is necessary. Good member service skills; reliable, personable, and member focused. Competitive benefits including paid vacations. Fax resume with cover letter and salary requirements to 302-633-6481 Attn: CEO.

EDUCATIONAL OPPORTUNITIES

June QuickBites Teleconferences
One-hour sessions run from 11 a.m.-noon:
•     6/19  Why  Members Sue CUs and Win
      [A similar session will be hosted by North Legal Webinars on June 21 from 1-2:30 p.m.    Cost:$125.Register at www.culaw.com.]
The fee for the one-hour session is $99. Deadline to register: one week prior to the session. Call Bernadette Hines to enroll.

CUNA Mutual Insurance Review Workshop – Monday, June 18, from 5:30-8:30 p.m. The discussion of a credit union’s insurance coverage and needs will be led by Heidi Hodgson and Tom McLane, CUNA Mutual sales representatives.

Mid-Atlantic Corporate FCU Golf Outing and Annual Meeting – June 21-22 in Gettysburg, PA.

Supervisory Committee & Internal Audit Conference – June 25-27 in Atlantic City, NJ. Don’t miss this opportunity to attend CUNA’s national training program in our area. Fee: $895. Individual day sessions: $375. Contact Bernadette Hines for a brochure, or register online at training.pcua.coop.

Marketing Council – Thursday, June 28, from 10 a.m.-noon at the League office. Topics: October CU Supplement and MCI Coin Sales. Regis. deadline: 6/22. No fee for council members; $75 for non-members.

The following is a brief summary of the legal opinions published by NCUA's Office of General Counsel during 2006 and the first part of 2007 (as of May 1). The number in parentheses after the subject is that given to the letter by NCUA, as well as the date of 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.

Membership Access to FCU Membership List (#06-0127B; 2/6/06)
NCUA was asked if a federal credit union (FCU) must provide a copy of its membership list, with contact information, to a member upon request. According to NCUA, in matters of corporate governance such as this where the FCU Act, NCUA regulations, and the FCU Bylaws are silent, an FCU should look to the law for shareholder-owned corporations of the state where it is located to determine access rights to membership lists. NCUA has addressed the issue of the rights of a member to inspect the membership list, stating, “The general rule in most jurisdictions is that a shareholder is entitled to inspect corporate minutes and other records as long as he has a proper, nonvexatious purpose.” [OGC Legal Opinion 96-0541.] NCUA’s consumer privacy regulation, which generally restricts credit unions from releasing nonpublic personal information subject to certain notice requirements, specifically recognizes among its various exceptions release of information required by state law. 12 C.F.R. §716.15(a)(7)(i). To the extent state law requires release, this exception to NCUA’s consumer privacy regulation would apply.

Change in Number of FCU Directors, Number of Employees Permitted to Serve on FCU Board (#06-0318; 3/28/06)
Changes in the number of directors or the number of employees permitted to be directors are amendments to the FCU’s bylaws and require a two-thirds vote of an FCU’s board. The FCU bylaws require a board to be between 5 and 15 members and allow FCU boards to change the number of directors by resolution. FCUs may not reduce the number of directors unless a corresponding number of board seats are vacant. Requiring the bylaw amendment process for changes to the number of directors prevents small minorities of a board from acting to manipulate or concentrate control.

Removal of Directors by Members at a Special Meeting (#06-0446; 4/27/06)
Question: If the members of a federal credit union (FCU) voted to recall or remove all of the FCU’s directors, would NCUA appoint itself as conservator of the FCU or, alternatively, would NCUA appoint a new board? NCUA’s response: In the situation where an entire board of directors is removed, the FCU’s Supervisory Committee has the responsibility to serve as an interim board until the Supervisory Committee schedules an election of directors by the members, as it is required to do by the FCU Act. 12 U.S.C. §1761d. The NCUA Board appoints itself as conservator of a credit union only if the grounds for conservatorship in the FCU Act are met. 12 U.S.C. §1785(h). A copy of a 1979 NCUA Legal Opinion Letter addressing the role of the Supervisory Committee in the event of the removal of all the directors from the board as well as the selection, timing and function of the interim board of directors is available as an attachment to Letter #06-0446.

Preferential Loan Rates to Employees (#06-0343; 4/18/06)
NCUA was asked if a paid employee, who also serves as a volunteer credit committee member, may receive a loan rate reduction offered by the credit union to all employees. NCUA responded that, while CU employees may receive preferential loan rates, the rates for officials must not be more favorable than the rates for comparable loans to other credit union members. 12 C.F.R. §701.21(d)(5). Officials include any member of the board of directors, credit committee, or supervisory committee. 12 C.F.R. §701.21(d)(2). The rule, intended to limit insider dealing, prohibits preferential treatment of officials regardless of whether they are employees or receive compensation.

Conflict of Interest with Board Members (#06-0608; 7/26/06)
NCUA answered a question about whether a conflict of interest exists for a director who is employed at a company owned by the same majority owner as a company involved in a sale of real property to the credit union. Answer: Based on the facts presented, the director does not appear to be sufficiently linked to the transaction to raise a prohibited conflict of interest under the Federal Credit Union (FCU) Bylaws. In the circumstances presented, the director does not have a financial or personal interest in the company owning the property being considered for purchase by the credit union. The director is merely employed at a company that has the same majority owner as the company involved in a sale of real property to the credit union. The director is not the majority owner of the two companies and is not a director of either of the companies.
     The FCU Bylaws prohibit directors and others acting on behalf of a credit union from participating in any discussion or decision that conflicts with that person’s financial or personal interest. There is no conflict of interest unless a director has a direct or indirect interest in a company with a financial interest in the transaction or the director himself has a direct or indirect financial or personal interest in the transaction. A conflicting interest can be direct or indirect and extends to any interest the person has in a corporation, partnership, or association with a financial interest in a matter under consideration by the credit union.

Share Insurance Coverage of Guardian Accounts (#06-0840; 9/18/06)
A credit union inquired about the extent of account insurance for guardian accounts that a probate judge set up for minors. Funds deposited by a conservator, guardian, or custodian in one or more accounts for the benefit of a ward or minor are aggregated and insured up to the standard maximum share insurance amount. Guardian accounts are insured as single ownership accounts separately from any other accounts of the conservator or minor. To obtain account insurance for guardian accounts, either the conservator or the minor must be a member of the credit union. Further, the guardian accounts the probate judge has established for the minor are insured separately from any other guardian accounts the judge has created for other minors. Each minor receives up to maximum in account insurance for the aggregate amount of funds in all accounts the probate judge has established for the minor.

Member Business Loan Requirements for Constructing Boats (#06-1025; 11/06/06)
NCUA states that a loan to construct a boat that will be used for commercial purposes must comply with the additional requirements in NCUA Rules 723.3. NCUA rules define an MBL as a construction and development loan if the financing arrangement involves “acquiring property or rights to property, including land or structures, with the intent to convert it to income-producing property.”

Political Activities for Credit Unions (#06-0928; 11/28/06)
The NCUA received an inquiry, asking the extent to which credit unions may engage in political activity, specifically whether they may host events in support of particular congressional candidates. FCU political activities are subject to NCUA regulations only to the extent they involve donations; however, the Federal Election Campaign Act (FECA) rules and regulations, as well as applicable state and local laws, also apply. FECA prohibits credit unions from direct political contributions in connection with elections. Permissible political activity includes establishment and administration of separately segregated funds (SSFs), and limited sponsorship of fundraising events, subject to reimbursement by an SSF. Credit unions are encouraged to consult the FEC Office of General Counsel for information concerning its guidelines: Office of General Counsel, Federal Election Commission, 999 E. St., NW, Washington, DC 20463.  You may also call (800) 424-9530 or visit www.fec.gov. 

Disease Specific Health Insurance for Volunteers (#06-0932; 12/08/06)
A federal credit union may choose to provide an insurance plan if the insurance is reasonable in coverage and amount, is within the bounds of safety and soundness, and ceases upon the insured leaving office, except for any pending residual claims. The Federal Credit Union Act generally prohibits directors and committee members from receiving compensation but allows FCUs to provide reasonable health, accident and similar insurance protection at the credit union’s expense. It is permissible for FCUs to reimburse officials for costs related to health insurance as long as the reimbursements do not amount to compensation. To comply with the compensation prohibition, an FCU must have a written policy addressing the extent of coverage for which the FCU will provide reimbursement, documentation requirements, and how the FCU will monitor direct application of its funds to insurance premiums. 

Establishing No-Interest/Dividend Accounts for Members Lacking a TIN (#06-1101; 12/11/06)
NCUA said federal credit unions may establish non-interest-bearing share accounts for members without a Social Security Number. The agency's opinion letter was released in response to a question whether credit unions "may establish an account, which does not pay dividends or interest, for members who do not have a Social Security Number (SSN) or other taxpayer identification number (TIN)."  While permissible, the agency cautioned federal credit unions to be "careful to comply" with Truth in Savings Act (TISA) disclosure and notice requirements. NCUA said state-chartered credit unions should contact their state supervisory agency to determine "if a no-dividend account is permissible and, if so, likewise must comply with TISA requirements." While federal credit unions are authorized to pay dividends on share accounts, the Federal Credit Union Act and NCUA regulations do not require dividends to be paid on every type of share account, according to the agency.

FCU’s Ability to Provide First-Time Homebuyer Education to Non-Members (#06-1135; 12/20/06)
Federal credit unions may provide financial counseling services that “promote thrift or otherwise assist members on financial matters. Non-members may receive these services as part of the federal credit union’s community outreach efforts, provided nonmembers are not charged a fee that exceeds any actual cost assessed the credit union by a third party.

Additional Guidance on Using Automated Valuation Methods (#06-1219; 01/19/07)
NCUA previously issued legal opinion letter #06-0824 (10/31/06) stating that automated valuation methods (AVMs) alone could not substitute for an appraisal or independent valuation. NCUA now offers additional guidance, noting that an AVM and/or tax assessment would meet the valuation requirement if the valuation is also reviewed by a loan officer or an individual with knowledge, training, and experience in the real estate market where the loan is being made.

Split Dollar Life Insurance & Nonpreferential Loans (#06-0924; 01/19/07)
NCUA’s rule prohibiting a federal credit union official from receiving a preferential loan does not prevent credit unions from funding an employee benefit plan obligation to an official with collateral assignment split dollar life insurance because the prohibition on preferential loans applies to volunteers, not compensated employees.

Examiner Access to Federal Credit Union Board Minutes (#06-1134; 01/23/07)
A federal credit union's board of directors does not have the right to withhold from NCUA examiners the minutes of meetings held in executive session. The Federal Credit Union Act requires a federal credit union's board of directors to keep minutes of all their meetings, including those held in executive session. NCUA examiners are entitled to access all credit union records, including all board meeting minutes.  

Permissibility of Federal Credit Union Making Member Business Loan to Law Firm Where CEO’s Wife Is a Partner (#06-1224; 01/23/07)
Although NCUA’s member business loan regulation prohibits federal credit unions from making member business loans to their chief executive officers or their "immediate family members," a federal credit union may issue a line of credit to a law firm in which the CEO's spouse is a partner as long as the law firm is a separate corporate entity and the credit union applies its usual member business loan policy, procedures, and underwriting guidelines. In addition, the CEO must not be involved in the decision to issue the line of credit or its terms and amount and should not have any communications with credit union staff and officials regarding the law firm's application.

Matching Plan for Employee Savings (#06-1030; 02/23/07)
A federal credit union may offer a monthly matching deposit for special savings accounts for employees as an employee benefit if it meets certain NCUA regulatory requirements, including NCUA’s regulation on employee benefits. Employees must also be members to have an account and the federal credit union must comply with Truth in Savings Act disclosure requirements. (ERISA and/or tax implications should be discussed with legal counsel.)

Dividend Rewards Programs for Use of Certain Services (#07-0211; 03/19/07)
A federal credit union may offer an account that provides members with financial rewards, including a premium dividend rate, based on their use of other specific products or services the credit union offers as long as appropriate disclosures are made under the Truth in Savings Act (TISA). NCUA has previously taken the position that a variable rate structure for similar types of shares is supportable if founded on a rational basis. In this case, the credit union's desire to promote its various automated services and thereby achieve related cost savings is a sufficient rational basis to support the proposed variable rate structure.

NCUA Insurance Coverage for Health Savings Accounts (#07-0113; 03/21/07)
Funds held in a Health Savings Account (HSA) at a federally insured credit union qualify for NCUA share insurance if the owner of the funds is a member or otherwise eligible to maintain an account. Funds will be insured in the same manner as an individual account or, if a qualified payable-on-death beneficiary is named, as a revocable trust. The custodian's identity will not affect the insurance coverage.

Preemption of Virginia Abandoned Property Provision (#06-1214; 04/11/07)
A state law that attempts to govern a federal credit union's imposition of account fees and charges, including how and when fees are assessed against inactive or dormant accounts, directly conflicts with the Federal Credit Union Act and NCUA regulations and is therefore preempted by federal law.

NCUA Share Insurance Coverage for Irrevocable Trust Accounts and Inherited Individual Retirement Accounts (#07-0132; 04/18/07)
1) An irrevocable trust account with multiple grantors or beneficiaries will continue to be covered by NCUA share insurance even if one grantor or beneficiary relinquishes his or her membership after the account is opened. Coverage would continue because of the nature of irrevocable trust accounts. 2) An IRA account will continue to receive NCUA share insurance coverage after the owner's death even if the designated beneficiary who inherits the IRA is a non-member. NCUA’s share insurance rules provide continuing coverage for a designated beneficiary regardless of membership status.

COMMUNICATIONS/PUBLIC RELATIONS

            League Helps Generate Some Great PR. Since last month, there have been several articles related to credit unions and the League that staff members helped to cultivate. Of course, there have been more articles in various papers regarding the League annual meeting, board elections, and the volunteer/professional awards. A recommendation from League communication director Alice Smith resulted in Russell McCready, the new chairman of Dover FCU, being featured in the “Board Banter” column in the June 2007 issue of Credit Union Directors Newsletter. Jane Bailey’s picture was featured in the June 2007 issue of Credit Union for Kids Update for her successful silent auction at the League annual meeting, which raised over $2000 for Children’s Miracle Network.
            Finally, George Fitzgerald has contributed three advice columns in The News Journal's Business Monday section. Featuring a question and answer format, the first column talked about the new credit freeze bill in Delaware. The second dealt with credit repair outfits. In that article, George referred to credit unions as great places for higher savings rates and lower loan rates. The third article, which appeared on June 11, explained how debit cards and credit scores are related.

            Peach Blossom Print. Press releases sent to newspapers throughout Delaware that included a picture of Governor Minner being presented with the peach blossom print at the League annual meeting have generated interest from the general public to purchase copies of the print. At least three people inquired about the print after an article appeared in the Delaware State News. In addition, two credit union individuals have expressed an interest in purchasing a print. All ten prints from our original order have been sold in the past two years. The League can order additional prints from Credit Union House; the cost of each print is $295. In a side note, Governor Minner’s picture posing with Pat Mahaney and the Little Guy was featured on the state of Delaware’s website for several weeks after the annual meeting.

            Credit Union Week Supplement.  Alice Smith and Jane Bailey are coordinating the CU supplement to be run in The News Journal during International Credit Union Week in October. The project will be announced and discussed at the league marketing council at the end of June.

LEAGUE SERVICES

            Allpoint Promotional Materials. DLS coordinated a bulk purchase of Allpoint statement inserts for credit unions on the Allpoint Surcharge-free ATM Network. We were able to amass an order of almost 60,000 inserts, bringing the cost per 1000 to a very affordable amount ($50/1000). Credit unions may choose to customize the inserts for a flat fee of only $100. Visions, Ink. is producing the inserts in time for the June statement mailings.

            Service Newsletter Online. The second quarter issue of Service Issues has been posted on-line. It is filled with valuable information regarding credit union services. The issue may be found at http://www.dcul.org/creditunions/si_current.htm.

GOVERNMENTAL AFFAIRS

            GAO Study: Banks Profit, CUs No Rival. On May 30, 2007, the Government Accountability Office (GAO) released a report titled “Information on Selected Issues Concerning Banking Activities.” The report covered a wide range of issues relating to banks and thrift operations, their profits, and the benefits they receive from certain favorable tax treatment. The report stemmed from a request last September made by then-Representative Bernie Sanders (I-VT) (and now a U.S. Senator) that GAO examine the corporate welfare the banking industry receives, as well as study how much the Savings and Loan bailout cost the taxpayers. Sanders also directed GAO to study the benefits banks receive by electing Subchapter S tax status and how that reflects on banker claims of an uneven playing field between themselves and credit unions. He also charged the government agency to examine the salaries and compensation packages of bank executives and directors, as well as how much non-interest income their industry made in the last five years. The report did not fully address all of the Congressman’s questions but it did provide independent conclusions that discredit many banker claims that their industry is suffering from competition by credit unions.
            The 39-page report does prove that bank and thrift profits appear healthy and unaffected by competition from credit unions. GAO also provides data showing bank profits at an inflation-adjusted average of 7% annually, as opposed to 3% for credit unions. In addition, GAO noted that bank return-on-assets (ROA) has increased dramatically every year since 1993. During the same period, credit union ROA remained constant or in some instances actually declined. Finally, the report provides significant ammunition for credit unions to defeat banker arguments that CURIA and the credit union tax exemption are unfair or provide credit unions with the upper hand in the marketplace.
The release highlighted several findings within the study:
•          Thirty-one percent of all banks paid no corporate income taxes at all by becoming Subchapter S corporations;
•          Some banks have evaded millions of dollars in U.S. taxes by setting-up illegal tax shelters;
•          The cost to American taxpayers for bailing out the Savings and Loan Industry in the 1980s has grown to more than $200 billion in today’s dollars.
            Download the full report at http://www.gao.gov/new.items/d07593r.pdf.

            CURIA Co-Sponsorship Stands at 93. Co-sponsors continue to pile on to the Credit Union Regulatory Improvements Act (H.R. 1537). CUNA lobbyists report that there are rumors that House Financial Services Committee Chairman Barney Frank (D-Mass.) will hold a full committee hearing on CURIA. However, no date has been set. In all of the 109th Congress, the bill reached 125 co-sponsors, whereas it has already reached 93 this year, including nine new co-sponsors to make up for the 11 no longer serving in the House for various reasons.

            Letters to Congress on CURIA. The ABA is claiming to have sent 5,400 letters to Congress opposing CURIA, while statistics from CUNA’s Grassroots Action Center (http://capwiz.com/cuna/home/) show credit union members have only sent 2,298 in support of our own bill – only two from Delaware. Are we going to let the bankers show us up on the Hill??? We can’t let the bankers dictate the legislative future of credit unions. Have your members and staff send letters to their Representatives by going to http://capwiz.com/cuna/issues/alert/?alertid=9521681&PROCESS=Take+Action. Contacting our members in Congress only takes a few minutes, but the benefits to credit unions will have a lasting impact if the legislation passes. For a summary of CURIA’s benefits and CUNA’s plan, please visit http://www.cuna.org/league/member_league/download/hr1537_sum.pdf.

MAY EDUCATION SESSIONS

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).