Volume 27, Number 20                                     October 30, 2007

HEADLINE NEWS

Delaware CUs Celebrate CU Week With Advertising Supplement
     Credit unions in Delaware helped to celebrate Credit Union Week by publishing their sixth “Credit Union Supplement” in The News Journal, Delaware’s statewide newspaper. The 20-page, full-color supplement was paid for with advertising from Delaware credit unions and was published on October 16.
     According to Alice Smith, communications director for the Delaware Credit Union League, “Most credit unions realize they need to tell the public who we are, to advertise credit union services, and to maintain visibility among members and potential members alike. This publication was underwritten by the advertisements of 12 credit unions and featured a directory of all 35 credit unions in Delaware.”
     The supplement utilized the theme, “Delaware Credit Unions: Looking Out for the Little Guy,” and featured the “Little Guy” icon created by the Credit Union National Association (CUNA). The supplement included an explanation about the nature of credit unions and how to join. There were also informational articles on car buying, financial literacy, and other items of interest to consumers, such as lower credit card fees offered by credit unions. Call the League for copies of the Supplement.

Another Successful Volunteer Conference
     Over 280 credit union volunteers and guests attended the 11th annual Volunteer Leadership Conference in Ocean City, Maryland, the last weekend in October. Seventeen Delaware credit unions enrolled 93 people for the conference, which enables board and supervisory committee members to enhance their leadership skills, receive updates on information affecting credit unions, and gain new ideas through networking.
     Speakers included NCUA Chairman JoAnn Johnson, who focused her keynote speech on the re-regulation of the federal credit union bylaws (see related article which follows). She also urged the volunteers to see the regulatory process as an ever-evolving one that needs credit unions’ input to prevent regulations from becoming out-of-date and irrelevant. Johnson took care to note that although the agency wants to minimize regulatory burden, its aim is to protect the rights of the member-owners. Because of this, she also emphasized that members deserve the right to know what is going on in the institution they own and that members also should have full and complete information about the governance of the credit union.
     Attendees also heard from former NCUA Chairman Dennis Dollar, who provided his unique perspective on the challenges and opportunities he forecasts credit unions will face in the year 2020. Other sessions addressed technology, the Bank Secrecy Act, supervisory committee duties and responsibilities, and board assessments.

JoAnn Johnson	Dennis Dollar

NCUA Adopts Modified Bylaw Plan
     The National Credit Union Administration (NCUA) on October 25 voted two-to-one to re-incorporate federal credit union bylaws into regulation, but added language to its original proposal to clearly state that disputes should first be dealt with internally by a credit union and concerned members.
     Vice Chairman Rodney Hood cast the dissenting vote saying the board's action would "regulate to the exception" and add unnecessary rules to the regulatory structure.    
     Stressing that the NCUA will not be taking actions against minor bylaw violations and that bylaws will not become a focus of examiners, NCUA Chairman JoAnn Johnson said she favored the rule: "The bylaws are meaningless if they can't be enforced." She said that adding credit union operating rules back into regulation will restore member confidence in credit union bylaws.
     Board member Gigi Hyland cast the other vote in favor of the action. Noting that some credit union members have found bylaw disputes bounced back and forth between state and federal courts under the current system of adjudication, Hyland said the rule would create a "final forum" for such disputes.
     The rule will become effective 30 days after publication in the Federal Register.

FACT Act Rule Applies to CUs
     At the same board meeting, the NCUA board received reports on two final rules that involve provisions of the 2003 Fair and Accurate Credit Transactions (FACT) Act.
     One rule limits the sharing of marketing data and generally provides consumers an opportunity to "opt out" before a company uses certain information provided by an affiliate to market its products or services to that consumer. The rule would cover federal CUs and affiliates such as a credit union service organization (CUSO).
     The rule, issued jointly with federal banking and thrift regulators and the Federal Trade Commission, becomes effective January 1, 2008, but compliance isn't mandatory until October 1 of that year.
     The other FACT Act rule requires credit unions and other financial institutions to draft identity theft prevention programs. Known as the identity theft "red flags" rule, this joint final regulation emphasizes that financial institutions will have flexibility in how they develop their plans. The requirements call for "reasonable policies and procedures" that will:
•     Identify patterns, practices, or specific activities—the so-called red flags—that indicate the possible existence of identity theft;
•     Be able to detect those practices and activities;
•     Respond appropriately to triggers and prevent or mitigate identity theft;
•     Ensure the plan is periodically updated to reflect changes in risks to the consumer or to the safety and soundness of the financial institutions;
•     Require debit and credit card issuers to assess the validity of change of address notifications; and
•     Address what institutions, as users of consumer reports, must do when they receive notice of an address discrepancy from a reporting agency.
     The red flag rule is similar to the proposal that has been hanging in limbo for years, and financial institutions have one year to comply with the requirements.

NCUA Regulatory Alerts
     1)  NCUA has issued Regulatory Alert 07-RA-07 to inform all federally insured CUs that the Federal Financial Institutions Examination Council (FFIEC) recently released the revised 2007 Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual. The revised manual provides guidance on risk-based policies, procedures and processes for CUs to comply with the BSA and safeguard operations from money laundering and terrorist financing. Revisions were made throughout the manual, and sections with significant updates are noted in the table of contents. The revised manual is located on the FFIEC website at http://www.ffiec.gov/bsa_aml_infobase/default.htm

     2)  NCUA has posted on its website its Regulatory Alert 07-RA-08), advising credit unions that a Department of Defense rule that set a 36% cap on lending to military service members and their dependents went into effect October 1. The 36% "military annual percentage rate (MAPR)" must include all fees and charges, including those for single premium credit insurance and other ancillary products. The final rule applies to "consumer credit," which the DoD defines as payday loans, vehicle title loans, and tax refund anticipation loans that meet specific parameters.

OTHER NEWS BRIEFS

■   The Credit Union National Association (CUNA) has issued a final rule analysis for the Federal Reserve Board's amendment to Regulation D, which includes annual adjustments for reserve requirements and reporting requirements for depository institutions, effective October 31. For 2008, the first $9.3 million in net transaction accounts will be exempt from the reserve requirements. Transaction account amounts between $9.3 million and $43.9 million will have a 3% requirement, and transaction account amounts over $43.9 million will have a 10% reserve requirement.
■   The maximum amount of earnings subject to the Social Security tax in 2008 will increase to $102,000 from $97,500 with the tax rate holding steady at 6.2%. The Medicare tax rate is unchanged at 1.45%, with no maximum wage limit.
■   Fitch Ratings affirmed Monday the "AA-" insurer financial strength ratings of the CUNA Mutual Insurance Society (CMIS); its wholly owned property casualty subsidiary, CUMIS Insurance Society Inc. (CUMIS); and its affiliate, CUNA Mutual Life Insurance Co. (CMLIC). It also affirmed CMLIC's CMG Notes Program with an "AA-" medium-term note rating. The rating outlook is "stable," said Fitch (Business Wire Oct. 15).

Annual ACH Audit Must Be Completed by December 1
     NACHA (National Automated Clearing House Association) requires all financial institutions that receive or originate ACH transactions to conduct an annual compliance audit. This compliance audit must be completed by December 1st of each year. Audit requirements are included in Appendix 8 of the ACH Rules. Both the CU and its third-party service provider must retain proof that they have completed an audit of compliance in accordance with the ACH rules. CUs must retain the records evidencing completion of the audit for a period of six years from the date of the audit and provide the documentation to NACHA upon its request.
     Many times your auditing firm can provide this service to your CU. However, our League has arranged for the Pennsylvania Credit Union Association to also provide ACH and Bank Secrecy Act audits. For more information, contact Jane Bailey at the League office.

StretchPay, a CU Alternative to Payday Loans, Is Now Available to Delaware Credit Unions
     StretchPay, the credit union salary advance alternative conceived and piloted in Ohio, is currently being offered by thirty-two credit unions in four states (Ohio, Maryland/DC, Michigan, and Wisconsin). The Delaware League has joined these states to offer this program as a service to members who need a little help along the way.
     StretchPay is a special line-of-credit loan designed to make it easy and less expensive for members to obtain affordable short-term credit. Significantly less expensive than a traditional payday loan, StretchPay is offered to your members using minimal underwriting criteria.
     A credit union may offer StretchPay in association with a not-for-profit organization called Credit Union Outreach Solutions, Inc. (CUOSI). “The fees saved by members are incredible, and we make every effort to get repeat borrowers into financial education counseling so they can break free of the payday lending merry-go-round,” said Bill Burke, CEO of Day Air CU and chair of CUOSI. “It’s the right thing to do.” CUOSI was formed to fuel credit union outreach and community commitment initiatives.
     If you would like more information on offering StretchPay to your members, contact Jane Bailey, EVP, Delaware League, at (302) 322-9341 or jane@dcul.org. You may also read more about this program in the next issue of Service Issues, coming soon. Helping members achieve financial “wellness” is what credit unions were formed to do.

Support Needed for Wildfire Victims
     The National Credit Union Foundation and the California Credit Union League have activated the online disaster relief system CUAid.coop to raise money for credit union employees, volunteers and members affected by the wildfires raging in Southern California.
     Credit union supporters can now help credit union people in Southern California by making donations through a secured website: www.cuaid.coop. All donations via CUAid.coop will be forwarded to credit union organizations in affected areas through the National Credit Union Foundation, a tax-exempt organization under Section 501(c)(3) of the U.S. Internal Revenue Code.
     For more information on how your CU or members can help, refer to the information emailed to each CU manager/CEO or contact Alice Smith. 

DELAWARE NOTES

LOUVIERS FCU presented Tyrran P. Coleman, II, with a scholarship towards his pursuit of a master's degree in taxation from Villanova University.

Recently Faith Simpers, marketing director of LOUVIERS FCU, met with the Latin American Community Center to discuss how to expand the CU’s services to Hispanic members in Wilmington.

Tyrran Coleman	Faith Simpers and children from the Latin American Community Center

The Delaware Valley publication, Consumers’ CHECKBOOK, has given top marks to Keystone FCU, Norristown Bell CU, Freedom CU, and Delaware’s own LOUVIERS FCU. The survey found that small and medium-sized financial institutions rated higher in terms of customer satisfaction than the big national banks. Of the 67 banks and credit unions rated in the magazine, 24 received CHECKBOOK’s top marks for service. Visit www.checkbook.org.

Credit unions serving Sussex County were featured in a September article in the Morning Star Business Report. The following credit unions were interviewed for the story: DEL-ONE, DOVER, SEAFORD, SOUTHERN DELAWARE POSTAL EMPLOYEES, and SUSSEX COUNTY. Alice Smith, League communications director, helped to direct the reporter, Ann Wilmer, to each of these credit unions for their stories.

The Delaware Business Ledger highlighted credit unions in its October issue. There were articles on Credit Union Day, the free patriotism CD sponsored by Delaware CUs and donated to schools and libraries, the DEL-ONE corporate center opening and back to school donations, the League’s publication award, LOUVIERS FCU’s scholarship program, and the definition of a credit union.

EAGLE ONE FCU was featured in the National Association of Credit Union Supervisory & Auditing Committees’ latest newsletter. Jeannette Cooper, the CU’s supervisory committee chair, was given the Golden Service award at the association’s annual conference in Maui.

Positions Sought. Two individuals with customer service and cashier experience seek CU positions. Call Susan Fallon at the League and ask for resumes #10-16-07 and #10-17-07.

EDUCATIONAL OPPORTUNITIES

November QuickBites Teleconferences
One-hour sessions run from 11 a.m.-noon:
► 11/07  Create an Irresistible Offer (Sales)
► 11/15  Presenting with Power & Pizzazz
► 11/20  Indirect Lending
The two-hour session runs from 11 a.m.-1 p.m.
► 11/28  Business Development
     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: “Credit Reporting in Bankruptcy.” Thursday, November 15, 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.

Professional Councils
► Financial Management Council: “Economic Overview for 2007 and Beyond.” Wednesday, December 5. Register with Charlie Jenkins.
► Cards Council: “Consumer Regulations and Your Plastic Cards.” Thursday, December 6.
► Mortgage Council: “The Perfect Storm – Why Did the Mortgage Market Go So Wrong So Fast?” Tuesday, December 11.
     Register with Jane Bailey for both the Cards and Mortgage Councils.
     All three sessions will be held at the League office from 10 a.m.-noon. There is no fee for council members. There is a $75 participation fee for non-council members.

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.

League Activities in October

          Credit Union Day Supplement. This year’s Credit Union Day Supplement appeared as an insert in The News Journal on Tuesday, October 16. Jane Bailey coordinated the advertising that supported the supplement, and Alice Smith was responsible for the articles. The League would like to thank the twelve CUs that supported the publication with advertisements: American Spirit, Chestnut Run, Del-One (Delaware), Delaware Alliance, Delaware First, Delaware State Police, DEXSTA, Dover, DPL, Eagle One, Louviers, and New Castle County School Employees. In addition to the advertisements, the center of the supplement featured a two-page directory of every credit union in Delaware. Former DEXSTA marketing director Jennifer Zeberkiewicz wrote the key story, based upon member testimonials submitted by Delaware Alliance, Dover, and DPL. In fact, Dover held a contest to solicit these testimonials and also used them in the credit union’s ad. It is a tactic that other credit unions might consider for another year.

          Staff Travel. League staff attended Milford Memorial FCU’s Member Fair on September 13. League management attended the Association of DuPont Credit Unions’ (ADCU) Annual Conference on September 20-22 in Lancaster, Pennsylavania. This year’s conference was hosted by Sussex County FCU. League staff also participated in the Delaware State Chamber of Commerce’s “Principal for a Day” program. League president Patrick Mahaney served at the Colwyck Elementary School near New Castle, and Bernadette Hines was acting principal at St. Paul’s Catholic School in Wilmington.

GOVERNMENTAL AFFAIRS

          Credit Union House Contributions. American Spirit, Del-One, DPL, and New Castle County Delaware Employees join seven other Delaware credit unions which have made contributions to Credit Union House. Other contributing credit unions include Seaford, Southern Delaware Postal Employees, Delaware Alliance, ICI America, DEXSTA, Provident, and Chestnut Run. Individual and credit union contributions from Delaware to date total over $4500.

          CULAC Update. Fourteen credit unions are participating in the League’s annual candy bar sale to raise funds for CULAC; our one new participant this year is Sussex County FCU. Upon the sale’s completion in November, almost $2,000 should be generated for CULAC. Delaware should easily make our goal of $4,741.58 for 2007.
          The staff at Del-One (Delaware FCU) joined American Spirit, Delaware Alliance, and DEXSTA FCU in participating in Dress Down Days to support CULAC. Their combined efforts garnered $700 for CULAC.
           
          CUNA’s 2008 Governmental Affairs Conference. The 2008 GAC is right around the corner. This is going to be the first year it will take place in a new venue: the Washington Convention Center. This year’s conference will be held from Sunday, March 2, to Thursday, March 6. The League has reserved a block of 15 rooms for credit unions that applied early. Individual credit unions can make their own reservations when the GAC Housing opens on Monday, November 5, at 2 p.m.

LEAGUE SERVICES

          2007 Business Mixer Golf Outing. The League organized its annual fall business mixer golf outing on October 9 at the Deerfield Golf and Tennis Club. Nabbing First Place honors for the day was the foursome from DPL FCU: Kevin Oakes, Anthony Hines, Bob Oakes, and Wayne Needles.

First Place Winners	Second Place Winners

Taking Second Place was the foursome of Frank Minutola, Joe Rush, Tony Casarino, and Bill Rehrig. Longest Drive honors went to Kevin Oakes of DPL FCU and Joyce Swanson from Experian. Closest to the Pin were Sandy Schenk of the Pennsylvania Credit Union Association and Ed Krystopolski of Delaware Engineering. Fifteen teams took to the greens. The Delaware League wants to thank all who participated in this annual event.

EDUCATION AND TRAINING

          Professional Councils. The Collection Council had its last meeting on September 12 with Chris Pippett, attorney for Saul Ewing LLP. He discussed bankruptcy issues, which included creditor options under Chapter 7 and maximizing recovery in Chapter 13 proceedings. Christa Scalies, president of Dahlink Financial, provided a short presentation on how to convert your non-performing receivables into cash. On September 26, the Mortgage Council met with Don Jeffries of Academy Mortgage (formerly of AIG Mortgage), who discussed the unique mortgage option of “Reverse Mortgages” and explained how to offer it to senior members.
          The new council brochure for 2008 has been mailed to credit union CEOs/managers, so credit unions can enroll early. Remember: These councils allow credit union professionals with like responsibilities to network about best practices and areas of concern. For a copy of the 2008 brochure, contact Bernadette Hines at the League office.

          Individualized Training Courses for Volunteers. League CEO Patrick Mahaney provided Preferred Financial FCU with personalized supervisory committee training. On November 7, he will conduct a training session for new board directors at the League office. These two sessions are available to individual credit unions upon request. Please contact Pat Mahaney for more information.

September 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).