Volume 27, Number 19                                     October 15, 2007

HEADLINE NEWS

President Bush Issues Credit Union Day Greetings
     President Bush and First Lady Laura Bush send best wishes to credit unions for International Credit Union Day 2007, October 18.
     In his letter, the President recognizes credit unions for playing “an important role in advancing prosperity and expanding opportunities for our citizens. These institutions build financial security, encourage social responsibility, and provide services to individuals in America and around the world.” He also acknowledges “credit union employees for your professionalism and commitment to excellence.”
     Celebrated on the third Thursday of every October, International Credit Union Day is a time for credit unions and their members to come together and reflect on their ideas and contributions to their communities. Delaware credit unions’ annual Credit Union Day Supplement will be inserted into the October 16th News Journal.

Have New CU Board Members? Send Them to This Session
     League president Patrick Mahaney will lead a discussion of Board of Directors’ Fundamentals on Tuesday evening, November 7. This session is especially designed for newly elected board members, as well as those considering running for office. Having served as a member of DEXSTA FCU’s board for sixteen years, Mahaney will cover the background of credit unions, major board responsibilities, and director liabilities. The session will begin with a light meal at 5 p.m. and will end at 7:30 p.m. The cost is $95 per person, and each participant will receive a copy of the Volunteer Achievement Module, V100, Board of Directors: Duties and Responsibilities (a $42 value). Please register by October 24, so books can be ordered.

New Faces on the Delaware Credit Union Scene
    
      Paula Campbell, president/CEO of Diamond State FCU, recently retired after 24 years of service. Paula has accepted a position with Sussex County FCU, where she will work as vice president of business development, beginning in November.
     Her replacement, Lisa Jackson, joined the credit union on October 1 as the new president/CEO. Lisa previously served for five years as controller with the University of Virginia Credit Union.

Retiring DiamondState CEO Paula Campbell
(seated) and president/CEO Lisa Jackson

     Meredith Jeffries is busy in her new role as president of New Castle County Delaware EFCU, having been promoted from the position of operations manager. Prior to that position, she was the assistant manager of Wilmington Newspaper FCU and provided technical and accounting assistance to two other Delaware CUs. Before serving in Delaware, Meredith served as vice president of lending for Philadelphia FCU.

     American Spirit FCU announces that former NCUA examiner Joseph Petrosky has come out of retirement to become the credit union’s vice president of finance. In addition, Jennifer Harwig has been hired as a staff accountant.

     The board of Louviers FCU has named Bob Walls as director of human resources and special projects to help implement the credit union’s expanded field of membership, serving the cities of Newark and Wilmington.

     And most recently, DEXSTA FCU named Sherry Sawicki is the new marketing coordinator.

NCUA NEWS

NCUA Adopts Revised Members' Information Access Rule
     During its meeting on September 27, the National Credit Union Administration (NCUA) Board voted unanimously to issue a final rule to standardize and clarify existing member inspection rights regarding federal credit union (FCU) books, records, and minutes.
     The rule provides that a group of FCU members, upon submission of a proper petition, have the right to inspect and copy the FCU’s books and financial accounting records, as well as minutes of the meetings of the credit union’s members, board of directors, and committees. The final rule tracks, in large part, the Office of Thrift Supervision’s (OTS) rule governing the right of shareholders to inspect the books, records, and minutes of federal stock savings associations.
     The final rule, approved unanimously by the board, adopted the following changes to the original proposal:
•  It increased to 500, up from 250, the maximum number of signatures that must be attached to a petition to inspect and copy the non-confidential books, records, and minutes of its credit union. The rule requires that 1% of the membership, with a minimum of 20 names and a maximum of 500, must be represented on a petition.
•  Members may petition for information for a “proper purpose.” The final rule includes a definition of proper purpose as “a purpose that relates to the protection of the members' financial interest in the credit union.”
•  The final rule also requires that those represented on a petition for information have been members for at least 180 days.
     Chairman Johnson specifically noted that the intent of the rule is to standardize these requirements, indicating that all members of all FCUs should have the same inspection rights, as opposed to the various state-by-state requirements that members were subject to prior to this rule.
     The rule will be effective 30 days after publication in the Federal Register.

Which Regulations Require Annual Disclosures?
     The following information answers the question: Which regulations require credit unions to send consumer disclosures to members on an annual basis?
►  NCUA’s Privacy Regulation
►  HUD’s Regulation X (Real Estate Settlement Procedures Act) Escrow Account Statement
►  Regulation Z (Truth in Lending) Annual Billing Rights Statements
►  Regulation E (Electronic Fund Transfers) Annual Error Resolutions Notice

     Annual Privacy Notice: Section 716.5(a) of NCUA’s Rules and Regulations states that a credit union must provide an annual privacy notice after the initial notice is given. Annually means at least once in any period of 12 consecutive months during which a member relationship exists. The credit union may define the 12-consecutive-month period, but it must do so on a consistent basis.
     RESPA Annual Escrow Account Statement: If the credit union services mortgage loans, it must deliver an annual escrow account statement to the borrower within 30 calendar days of the end of the escrow account computation year, after conducting an escrow account analysis. [Regulation X, Section 3500.17]
     Regulation Z Annual Billing Rights Statement: (open-end loans). This notice must be sent at least once per calendar year either to all consumers or to each consumer entitled to receive a periodic statement. As an alternative, a short-form billing rights statement may be provided with each periodic statement. [Section 226.9(a)]
     Regulation E Annual Error Resolution Notice: An error resolution notice must be delivered at least once each calendar year. Alternatively, the credit union may include an abbreviated notice on or with each periodic statement. [Section 205.8(b)]
     Note: There are a number of annual IRS reporting requirements that credit union must comply with, e.g., 1098s, 1099s, etc.
     For more information on any of these regulations, contact Susan Fallon at the League office or use CUNA’s Compliance e-Guide (http://www.cuna.org/compliance/member/eguide/index.html).
[Source: South Carolina’s Noteworthy]

CU SYSTEM NEWS

Nationwide Credit Union Locator Revamped
     The credit union match-up website – formerly CU Match Up – has undergone a transformation with a new name, design, and tools.
     New features of the re-branded website – now called Find a Credit Union – include improved search results that are displayed by search type, alphabetically, or randomly; a search radius that allows users to narrow results within 10, 25, 50 or 100 miles of their zip code; detailed maps and directions; and a “Frequently Asked Questions” section.
     Users can find a list of credit unions they may be eligible to join by completing a series of simple fields, such as city, state, zip code, occupation, religious affiliation or employer information. They also can learn how to apply for membership, as well as search in English or Spanish.
     The Delaware League was one of the original participants in this program. Check out the new look here: http://www.findacreditunion.com/ or go to the Delaware League’s website (www.dcul.org). The site lists credit unions in 28 states and in the District of Columbia. The site was featured in personal finance expert Liz Pulliam Weston's column in July, resulting in more than 89,000 hits by 8,000 visitors.

■  Already part of the database, but need your password to make changes to your information? Contact Susan Fallon at susan@dcul.org or call the League office at 302-322-9341.
■  Want to be a part of the Find a Credit Union database, ensuring consumers can find your credit union? Contact Susan!

CU Loans, Mortgages Show Growth
     Credit unions saw sustained growth in loans outstanding and mortgages during August, according to the Credit Union National Association’s (CUNA) monthly sample of credit unions. Credit union loans outstanding increased 1.3% in August, growing 6.7% over the past 12 months. Other loans, other mortgage loans, and adjustable-rate mortgages led loan growth, increasing 3.3%, 3.1% and 2.6%, respectively.
Balances in other mortgages have increased 19% over the past 12 months, followed by credit card loans outstanding (14.9%). More here: http://www.cuna.org/newsnow/07/system100207-2.html
     “The August monthly estimates are sending a strong, clear message that things have changed,” Mike Schenk, CUNA vice president of economics and statistics, stated. He noted consumers are beginning to mend their balance sheets. “They are less confident than they have been in the past,” he said. “They are spending less, borrowing less, and saving more.”

Newsweek: CUs Most Promising Payday Solution
     In her most recent column, Jane Bryant Quinn, columnist for national publication Newsweek, said that credit unions are the “most promising solution” for payday lending. She mentioned recent efforts to create low-cost payday lending products for members, singling out four credit unions.
     Quinn said that QuickCash, a product offered at Langley FCU in Hampton, Va., provides 36-day loans for $100 and up, at an annualized rate of 18%. Madison, Wisconsin-based Summit CU (state-chartered) provides members with a 29.9% line of credit with an annual fee of $25 (Newsweek, October 8).
     Both these programs just break even but are evidence of how much lower payday lending rates can be, according to Quinn's column. San Diego, California-based USA FCU, which serves military members and others, absorbs losses on its 18% program, but justifies it as a member service, Quinn added.
     The biggest industry success story, according to Quinn, is a 12% payday loan offered by State Employees CU in Raleigh, North Carolina, which features automatic repayments from member checking accounts. Quinn quoted State Employees’ CEO Jim Blaine who said it is his credit union's “most profitable product.”

DELAWARE NOTES

SUSSEX COUNTY FCU opened its newest branch on September 24. The Millsboro office, located at 216 Washington Street, joins the credit union’s branches in Lewes and Milford and its corporate office in Seaford. All three branch buildings have the same exterior design, according to Allen Riley, vice president of operations, who supervised the project. Replicating the exterior design helps in reducing construction costs and provides higher visibility to the members. However, the interior of the 3,000-square-foot Millsboro branch has been reconfigured for the comfort of the members, according to Riley. The branch has a television in the lobby area for member information, safe deposit boxes, and a drive-up ATM.

Sussex County FCU’s New Millsboro Branch Office

Kudos to the following CUs that received 5-star ratings from BauerFinancial, Inc., an independent financial institution rating and research firm: American Spirit, Chestnut Run, Delaware Alliance, Del-One (Delaware Federal), DEXSTA, Dover, DPL, First State Refinery, ICI America, Milford Memorial, New Castle County Delaware Employees, New Castle County School Employees, Preferred Financial, Provident, Seaford, U-Del, and Wilmington Postal. The ratings are based upon 2007 second quarter financial data as reported to financial regulators. Five stars (superior) is the highest rating given by the firm. Six additional CUs received four-star (excellent) ratings: Delaware River and Bay Authority Employees, Delaware State Police, Delaware V.A., Edge Moor DuPont Employees, Louviers, and Sussex County. The three Delaware credit unions with less than $1.5 million in assets are not rated.

Sussex County Federal Credit Union is seeking a Collections Manager to oversee the daily operations of our collections area. This position will work with the Collections Department and the Collections Attorney to maximize collection efforts and minimize losses. In addition, the Collections Manager is responsible for maintaining collection files, procedures, statistics and reports. Candidates should have a minimum of 2 years collection experience and a minimum of 2 years supervisory/management experience.
Please submit resume to Sue Hoefs, Vice President of Lending, shoefs@sussexcfcu.com Fax 302.629.2583

Individual with investment and financial advisement experience seeks CU position. Holds a securities series 7 & 66 license. Proficient in Spanish. For a copy of this resume, call Susan at the League office and ask for resume #10-01-07.
 
EDUCATIONAL OPPORTUNITIES

October QuickBites Teleconferences
One-hour sessions run from 11 a.m.-noon:
•    10/25   Face-to-Face Selling Skills
•    10/30  Disaster Recovery: Business Continuity
The two-hour session runs from 11 a.m.-1 p.m.:
•    10/17  Teller Regulations
     The fee for the one-hour session is $99, and the two-hour session: $169. Deadline to register: one week prior to the session. Call Bernadette Hines to enroll.

North Legal Webinar: “Getting the Most for Your Collateral in Chapter 7 and 13 Bankruptcy.” Thursday, October 18, from 1-2:30 p.m. at your own CU. To enroll, go to www.culaw.com. The fee is $125 by credit card; $135 by check.

Board of Directors’ Fundamentals – Tuesday, November 7, from 5-7:30 p.m. at the League office. Designed for newly elected board members, as well as those considering running for office. Presenter: Pat Mahaney, League president and former DEXSTA board member for 16 years. Fee: $95, which includes VAP Module V100 (a $42 value). Registration deadline: October 24.

DE/MD/DC Annual Volunteer Leadership Conference.  October 26-28 at the Clarion Fontainebleau Hotel in Ocean City, Maryland. Contact Alice Smith to see if space is still available for the conference.

RESERVE THE DATE!

•    2008 CEO Summit. January 21-24, 2008. Key West, Florida. For more information, go to: http://training.pcua.coop/on_site/PAA1218_fct.html. The early bird tuition is $575 until December 7. The deadline for hotel reservations at the Casa Marina Hotel and Beach Club is December 21.
•    IRA Training (Essentials and Advanced).  November 27 and 28. 9 a.m.-4 p.m. $235 early bird registration fee per day if enrolled by October 26.

Washington/State Legislative Update
October 15, 2007

Delaware Credit Freeze Law Better Than That Offered by Credit Bureaus
          In an effort to give consumers more control over their credit files and to deter the financial consequences of identity theft, three major credit reporting agencies announced plans to grant credit freezes to all consumers in those 15 remaining states that haven't enacted a Credit Freeze law. Delaware, Maryland, New Jersey, and Pennsylvania already have such a law (Bankrate.com September 25).
          Beginning October 15, TransUnion will give consumers in those 15 states the ability to freeze their credit files. Equifax announced it will have a similar plan in place sometime in October, with Experian offering the option beginning November 1 (The News Journal October 5). At press time, the credit bureaus’ fee structures are still being determined.
          Under Delaware law, each credit bureau can charge an initial fee of $20/credit bureau/applicant to set up the freeze. But unlike other states, there will be no additional charge to thaw and re-freeze consumer files for their new credit needs, unless the consumer loses his/her personal identification number. The ID Theft Resource Center (San Diego, CA) says the average ID theft victim spends 18 months repairing his/her credit with an out-of-pocket cost of $1500, so preventive efforts are helpful.
          The plans announced by the three credit bureaus won't pre-empt state laws establishing state-set prices or their procedures on freezes. Also under Delaware law, the applicant can apply via regular mail, versus the more inconvenient and expensive certified mail process of other states.
          Thawing your credit freeze today can take up to three business days after a credit bureau receives your thaw request. But in January 2009, Delaware law (unlike many states) requires that a thaw be completed within 15 minutes by the credit bureaus.
          Credit freeze applicants should also consider implementing the credit bureaus’ free Opt-Out Registry at 888-567-8688 (there is a “permanent option”). While a separate action, it can be a companion piece to the credit freeze, as it blocks the sale by the credit bureaus of one's credit header data to direct mail houses, and from there, credit and insurance mail offers, considered by some experts to be a fraud source if intercepted.
          Despite the added protection, however, file freeze doesn't prevent identity theft entirely, because of the many types of ID theft perpetrated by thieves. If you want additional information, check the website of your state's Attorney General or Office of Consumer Affairs.

Still Stalled Overdraft Bill Monitored
          Credit Union National Association (CUNA) lobbyists continue to meet with staff of key House Financial Services Committee members to express credit union opposition to a draft bill that addresses overdraft protection plan abuses. To date, the bill remains stalled after a vote in late September was postponed. CUNA has not learned of a rescheduled vote or even when rescheduling might occur.
          CUNA supports the intention of the bill, the Consumer Overdraft Protection Fair Practices Act (H.R. 946), which seeks to crack down on abusive practices associated with some overdraft or bounce protection plans. However, CUNA would oppose the bill unless there are significant changes to ensure it does not inadvertently preclude credit unions from offering their legitimate “bounce protection” plans to members.
          As written, the bill would classify overdraft protection programs under the Truth in Lending Act and include the service fee associated with overdraft protection programs as a finance charge in the APR calculation. It could prevent credit unions from offering overdraft protection plans for fear of exceeding the 18% lending ceiling that applies to federal credit unions, CUNA has warned.       
          CUNA has identified two other areas of concern regarding the bill. According to Senior Vice President of Legislative Affairs John Magill, even if the usury issue is abated, CUNA has an issue with the bill considering the overdraft service fee as part of the APR because of a longstanding policy that overdraft protection is not a lending product. “We believe the alternative disclosures would actually be helpful to consumers, such as the disclosure of the cost of using the bounce protection versus the cost of the institution’s bounced check (NSF) fee and line of credit,” Magill noted.
          Finally, CUNA has said the bill, as is, has the potential to present “significant” operational issues for credit unions and other financial institutions by requiring a member’s written agreement prior to the extension of overdraft coverage. Also, a proposed 90-day effective date would be inadequate for compliance.

Supplemental Information: Report Shows Overdraft Fees Draining Accounts of College Students
          The Center for Responsible Lending, a non-profit research group, issued a report last week entitled “Billion Dollar Deal” that analyzes the impact of overdraft fees on the bank accounts of college students. The report states that banks use “abusive” overdraft loans to collect nearly $1 billion per year in fees from young adults and that some universities are contributing to the problem by granting a single bank exclusive marketing privileges on campus.
            The report was conducted to review the trend of increased debit card use among college students 18-24 and the increased use of “abusive” overdraft practices among major banks. Concerning methodology, the report analyzed the checking account transactions of 18- to 24-year-old account holders spanning an 18-month period, using data from a consumer tracking panel. Major findings from the report include:
•  Banks use “abusive” overdraft loans to collect nearly $1 billion per year in fees from young adults who earn relatively little as students or new members of the workforce;
•  Debit card point-of-sale (POS) transactions are the leading cause of overdraft loans for young adults; and
•  Young adults pay more than $3 for every $1 borrowed for debit card overdrafts.

Google Advertising
          CUNA has decided to embark on a new type of advertising—virtual! Google has a program whereby you can advertise in one of two ways—either by using key words (such as credit unions or CURIA) or by choosing web sites (such as CNN.com or NYTimes.com) which utilize Google’s advertising. CUNA is running a national campaign (the entire USA) and anyone who types one of the keywords in the Google search engine stands a chance of seeing one of CUNA’s ads pop up! The site campaign is limited to the DC metro area. There are 2 different text ads, as well as a few of the “Little Guy” banker clips and a “Mica Minute.” CUNA recently completed a short-term campaign on Capitol Hill that used political satire to poke fun at the banking industry’s over-the-top rhetoric about credit unions.

Internet Gambling Rules Could Hit 7,000 CUs
          The Treasury Department and the Federal Reserve Board on October 1 announced a joint proposal to implement the Unlawful Internet Gambling Enforcement Act. While the proposal raises a number of concerns, the Credit Union National Association (CUNA) recognizes that the agencies’ plan reflects some of the concerns expressed by credit unions and other financial institutions regarding compliance with the new law, said Mary Dunn, CUNA SVP and deputy general counsel.
          In meetings with Treasury this summer, CUNA explained, for instance, that compliance would be better facilitated if the implementing rule included a specific list of unlawful businesses or activities. Although the proposed rule does not include such lists, it does seek comment on whether there should be such an inclusion. It also proposes guidance regarding compliance procedures and practices that financial institutions may follow when designing their own compliance plans.
          The Internet gambling law, adopted in October 2006, forbids anyone engaged in unlawful Internet gambling from accepting credit payments and requires participants in the payments system, including credit unions and other financial institutions, to identify and block restricted transactions.
          Under their joint plan, the agencies propose to apply the rules to five payment systems: automated clearinghouse (ACH), money transmissions, check clearing, wire transfers and credit cards.
          Even with this scope of application, the agencies determined in their cost/benefit analysis that 7,609 of the nation's 8,477 credit unions would be affected by the new requirements.
          Public comments are due to the agencies not later than December 12. The law requires a final plan to go into effect within six months after publication in the Federal Register.
            CUNA's Dunn said that she anticipates that the final rules will contain modifications to the proposal in response to comments. “I think the Fed and Treasury are really looking for practical ways to help financial institutions with compliance,” Dunn said.

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).