Volume 27, Number 5                                          March 15, 2007

HEADLINE NEWS

Lots of Training Opportunities at End of March
     The League is hosting three training sessions at the end of March which are suitable for front line staff, loan officers, and boards. All sessions will be facilitated by Rick Menton, CCUE, who has 25 years of experience with credit unions and leagues.
     Advanced Loan Officer Workshop. Tuesday, March 27, from 9 a.m.-3 p.m. at the League office. This session is designed for lending staff with at least a year’s experience. Topics will include loan interviewing, analyzing applications, credit reports, collateral, debt ratios, underwriting, 0% interest, payday lending, member business lending, risk based lending, compliance and policies. The fee is $190 per person, which includes lunch.
     What’s Different in Board and Management Policies? Tuesday, March 27, from 5:30-8:30 p.m. at the League office in New Castle. CU board members and management will learn the differences between day-to-day operational policies (management) versus broader CU governing policies (board). There will also be a discussion of succession plans and case studies of conflicts that can arise. The fee is $85 per person, which includes a light meal.
     Robbery Awareness. Wednesday, March 28, from 9 a.m.-noon at the League office. All credit union staff members should have annual training on what to do in case of a robbery. During this training program, participants will learn what procedures can reduce the threat of a robbery. The program will also cover preventative measures, as well as what to do during and after a robbery, systems security breaches, bomb threats, and carjackings. The fee is $75 per person, which includes lunch.
     The registration deadline for all three sessions has been extended to Tuesday, March 20. After that date, call to see if space is still available. Credit unions with assets under $20 million are encouraged to use their education training vouchers to attend any of these sessions.

Is your CU using the new NCUA share insurance sign? Official signs posted at the CU must be changed by
May 22, 2007.

COMPLIANCE RECAP

Guidance on Using Automated Valuation Methods for Appraisals
     The National Credit Union Administration (NCUA) has reiterated that credit unions can use automated valuation methods (AVMs) to determine the value of real property for smaller mortgages. Credit unions can use AVMs in the lending process, provided each market valuation calculated by the AVM is reviewed by an individual with knowledge, training, and experience in the local real estate market. This individual can be a credit union employee, such as a loan officer.
     NCUA’s appraisal rule exempts certain transactions from the requirement of a formal appraisal but requires a “written estimate of market value.” As compared to formal appraisals, AVMs are computer-generated estimates of value, generally based on tax and comparable sales data. Last October, NCUA’s Office of General Counsel issued a letter stating credit unions could use AVMs. Based on inquiries about the October letter, NCUA issued OGC Opinion 06-1219 –  http://www.ncua.gov/RegulationsOpinionsLaws/opinion_letters/2006/06-1219.pdf – to provide additional clarification on regulatory requirements related to use of AVMs. The letter clarifies AVMs can be used by credit unions for mortgage or home equity transactions with a value of $250,000 or less when the market valuations provided by the AVM are reviewed by an individual with "knowledge, training, and experience in the local real estate market," and that the reviewer can be an employee of the credit union.
     The letter also notes related guidance on managing credit risks associated with home equity lending from the Federal Financial Institutions Examination Council (FFIEC). The FFIEC guidance addresses (1) the due diligence an institution should undertake in evaluating whether or not to use an AVM product and (2) that sound business practice prescribes appraisals and evaluations be independent from the loan production staff whenever possible. (See NCUA Letters to Credit Unions 05-CU-07 and 05-CU-06 at www.ncua.gov.) 
     The letter recommends that credit unions with questions about the use of AVMs in meeting the requirement for a written estimate of market value should consult their examiner, regional office or state supervisory authority.

Pennsylvania Bankruptcy Court Reaffirmation Form Revised
     Credit unions that have members in Pennsylvania should be aware that the Reaffirmation Agreement, Form 240A, which must be filed in the U.S. Bankruptcy Court, was revised in January 2007. The Court will only accept the new form, which can be found at http://www.uscourts.gov/rules/BK_Forms_06_Dir/Form_240A_0107.pdf. This form is applicable to filings in the Eastern, Middle, and Western District Bankruptcy Courts in Pennsylvania.
     The Reaffirmation Agreement and Order were revised and reformatted as two forms. The new Director’s Procedural Forms 240A, Reaffirmation Agreement, and 240B, Order on Reaffirmation Agreement, became effective on January 1, 2007. Page 1 and Part D of Form 240A were reformatted and Form 240B was revised in several places: http://www.uscourts.gov/rules/BK_Forms_06_Dir/Form_240B_0107.pdf.

Annual Privacy Notice Reminder
     Under Part 716 of NCUA’s Rules & Regulations, a privacy notice must be sent annually to all members. The regulation states that the privacy notice may be combined with another document if the notice is “clear and conspicuous.” If your credit union decides to deliver your privacy notice by a newsletter, you need to make sure that everyone who needs to receive the privacy notice receives the newsletter. The annual notice must be provided to each member, regardless of whether a member has elected to opt out of information sharing.
 
Other Required Annual Disclosures
     Credit unions also have other annual disclosures to send to members. Both Regulation E (for accounts with electronic fund transfers) and Regulation Z (for open-end credit accounts) require an annual Error or Billing Resolution Notice, respectively. Both regulations require that a long-form disclosure must be delivered at least once each calendar year (Reg. Z actually requires notice every 6-18 months), unless the credit union includes an abbreviated notice on or with each periodic statement. Loans with RESPA escrow require delivery of an annual statement as well.
 
CU SYSTEM NEWS

CUNA Mutual’s 2007 Discovery Conference

     Online registration has opened for CUNA Mutual Group's 2007 Discovery Conference, June 20-23, at the Gaylord Opryland Resort and Convention Center, Nashville, Tenn. The conference theme is "Common Vision, Uncommon Experience, Think Discovery." Headlining the event will be Larry Kudlow, CEO of Kudlow & Co. LLC, an economic and investment research firm and host of CNBC's "Kudlow & Company." Closing keynoter will be author and strategist Ram Charan. His 2007 book, Know-How: The Eight Skills That Separate People Who Perform From Those Who Don’t, offers insight on why some leaders excel while others fail.
     Early registration is recommended, as Discovery 2006 sold out in record time. The registration fee is $1200, with further discounts available when three or more attend from one credit union or organization. For complete information on the event and to register for the 2007 Discovery Conference, go to www.cunamutual.com/discovery.  If you have any questions, please contact Linda Nesheim, at (800) 356-2644, Ext. 8892, or via email linda.nesheim@cunamutual.com. 

CUNA Conference Offer for Small Credit Unions    
     America’s Credit Union Conference & Expo (formerly CUNA Future Forum) will be held June 3-6, in Las Vegas. The outstanding lineup of keynote speakers includes Christopher Gardner, author of Pursuit of Happyness; Doris Kearns Goodwin, author of Team of Rivals; and Daniel Pink, author of A Whole New Mind.
     All credit unions under $35M will receive one FREE registration to this conference. Each additional attendee is just $400. This is a great way for small credit unions to take part in an outstanding educational experience. For more information, visit http://cuna.org/initiatives/small_cu/index.html.

National Youth Savings Challenge in April
     CUNA invites affiliated credit unions to participate in the fourth annual National Youth Saving Challenge, held in conjunction with Youth Week (April 22-28), to encourage young members to open new accounts and make savings deposits throughout the week. Credit unions can participate by registering for free on the CUNA website and setting saving goals. CUs then tally the total amount of deposits, the number of new accounts opened, and the total number of deposits made by young members during the week and report their results to CUNA to determine figures on a national level.
     More than 66,200 thrifty youngsters deposited nearly $10 million into their savings accounts during the third year of the saving challenge.  Additionally, the 346 participating credit unions welcomed more than 7,600 new member accounts. 
     CUNA's website contains educational and promotional materials for Youth Week along with free planning resources for credit unions. The site also includes celebration suggestions from fellow credit unions, success stories, general press releases and media tips to alert local media about this event, and more.
     For more information, go to www.cuna.org and enter "Youth Week" in the search box. Questions pertaining to National Credit Union Youth Week and the National Youth Saving Challenge may be directed to Philip Heckman, director of youth programs for CUNA, at (800) 356-9655, Ext. 4088.

New Coin in Circulation
     The U.S. Mint's redesigned $1 coin is now in circulation. According to the U.S. Mint website, the U.S. is honoring the nation's presidents by issuing $1 circulating coins featuring presidents' images in the order they served, beginning with Presidents George Washington, John Adams, Thomas Jefferson and James Madison in 2007. The government will mint and issue four Presidential $1 Coins per year. The Mint has made information on the $1 coin program available for credit unions and other interested parties at the following website: http://www.usmint.gov/mint_programs/$1coin/index.cfm?flash=yes.
     CUs are encouraged to sell these coins to members and to donate any profit to CULAC. Call Alice Smith at the League for more information. Participating CUs will have to sign a CULAC Fundraising Agreement.

CLASSIFIEDS

Marketing Manager Position Available. Del-One (Delaware) FCU is advertising a full-time position that will be responsible for the direct supervision of a marketing coordinator and will report directly to the vice president of marketing. Experience in the following areas is required: graphic & web design; advertising & public relations; business development & financial literacy; market research & trend analysis; public speaking & presentations; sponsorships & special events coordination; and supervision & mentoring.
     The chosen candidate should have, or will be in the process of obtaining, a bachelor’s degree in marketing or a related field. Credit union experience, 2-4 years in a management capacity, and a comprehensive portfolio are preferred. The chosen candidate will be rewarded with a competitive salary, quarterly incentives, an extensive array of benefits, and an environment where creativity and growth are nurtured and encouraged. Due to the nature of this job as related to special events, the chosen candidate will be expected to work approximately 15-25 Saturdays per year. Please forward serious inquiries only to the Vice President of Marketing, Del-One, 655 S. Bay Rd., Suite 5A, Dover, DE, 19901, or email your resume and electronic portfolio to sharee.coleman@del-one.org.         

Equipment for Sale. Del-One FCU has items to sell from their vacated Milford branch. Interested parties may contact Shari Lord at 302-422-1420 Ext. 105 or Judy Cook at 302-678-7068 for more information. The deadline for pickup is March 26.
        • workstations
        • envelope night drop

Money Laundering Report Published. The Financial Action Task Force has issued a report that examines the ways in which money can be laundered through the exploitation of new payment technologies such as prepaid cards, Internet payment systems, and mobile payments. The report can be viewed at http://www.fatf-gafi.org/dataoecd/30/47/37627240.pdf.

EDUCATIONAL OPPORTUNITIES

March/April QuickBites Teleconferences
One-hour sessions – 11 a.m.-noon
•  3/20 Top Ten Collection Tips
•  3/29 Decedent Accounts
•  4/3   Check Fraud
Two-hour session – 11 a.m.-1 p.m.
•  CU 101: Introduction to Credit Unions
The fee for one-hour sessions is $99; the two-hour session is $169. Deadline to register: one week prior to the session. Call Bernadette Hines to enroll.

Council Meetings
•  Marketing Council. Thursday, March 22. Speaker: Ronni Cohen on the Delaware Money School and First State Saves (new consumer savings initiative). R.S.V.P. to Alice Smith by March 18.
•  Human Resource Council. Wednesday, April 4. Topic: “Best Practices in Hiring and Promotions for Credit Union Staff.” R.S.V.P. to Bernadette Hines by March 18.
     Sessions are held at the League office from 10 a.m.-noon, ending with lunch. There is no charge for council members. Non-council members can attend for a fee of $75.

NCUA Small CU (under $10M) Conference – Saturday, April 28, from 8 a.m.-3 p.m. at the Hilton Philadelphia Airport. No charge for this session. The agenda and registration form can be found at http://www.ncua.gov/CreditUnionDevelopment/Events/Index.htm

Washington/State Legislative Update
March, 2007

Kanjorski, Royce: CURIA to Come in Early Spring
          Passage of a 2007 Credit Union Regulatory Improvements Act (CURIA) is Rep. Paul Kanjorski's fourth-highest legislative priority, the Pennsylvania Democrat told the Credit Union National Association's Governmental Affairs Conference (GAC). The longtime credit union supporter said only relief to Hurricane Katrina victims, a terrorism risk insurance extension, and government-sponsored enterprise reform rank higher than CURIA. "It's a good bill," Kanjorski said. "It should do the job we both want done and not punish anyone. Let's get 200 co-sponsors." He said the 2007 bill, which he and Rep. Ed Royce (R-Calif.) intend to jointly introduce in early spring, would include two significant changes from previous legislation. It will propose to: (1) Allow credit unions, regardless of charter type, to serve underserved areas; and (2) Boost the member business lending cap to "at least 20%" of assets, up from the current 12.25% limit. Also, Kanjorski said, the new CURIA provision on conversion standards "won't allow smart-aleck law firms to raid credit unions. We had to give up a lot of ground with H.R. 1151," he added, referring to the landmark 1998 Credit Union Membership Access Act. "It's time to take some back." He called for credit unions in 2007 to help garner 219 co-sponsors, the number of supporters needed for a majority vote and passage of the legislation.

NCUA to Propose Bringing Bylaws Under Regulations
          National Credit Union Administration (NCUA) Chairman JoAnn Johnson told a group of 4,000 credit union representatives that the agency is preparing a proposal to reincorporate federal credit union bylaws into regulations. Addressing the Credit Union National Association (CUNA) Governmental Affairs Conference, Johnson said her agency has been examining to what extent it should enforce federal bylaws. Credit union bylaws were removed from federal regulation in the early 1980s under then-Chairman Edgar Callahan in an effort to reduce the volume of regulation. However, in some recent conversion cases members have complained about an inability to get their credit unions to follow their own bylaws.

TJX Breach Wider Than Originally Reported
          While the Massachusetts legislature prepares a bill to require retailers experiencing data breaches to be liable for all costs, Framingham, Massachusetts-based TJX Companies announced that a data breach disclosed in January is more far-reaching than previously believed. However, it is still too early to measure the impact on credit unions and their members, says CUNA Mutual Group. Credit unions are not required to report to CUNA Mutual Group when they reissue credit or debit cards related to breaches, says Philip Tschudy, manager of media relations at CUNA Mutual. Credit unions that have reported reissuing cards would not be representative of credit unions overall. In terms of losses reported due to fraud, "it's still very early in the process. The original breach announcement is only a month old, and it is far too soon to predict the losses," Tschudy told News Now. Fifteen Delaware credit unions have reported that 12,576 cards have been compromised in the breach.

Data Security Bills on the Move
          Although Congress was unable last year to sort through about a dozen competing bills intended to set up federal rules regarding personal financial data security, the subject remains a top priority for lawmakers in 2007, said Dean Sagar, CUNA vice president of legislative affairs. "Competing committee jurisdictions and conflicting ideas held up final action on any proposal last year," said Sagar, "but the need for national standards remains and Congress will continue to pursue the issue as one of its top concerns." CUNA is closely monitoring the House and Senate for action on data security legislation. CUNA will continue to push for legislation that would (1) prohibit the retention of sensitive, identifying information by merchants and certain non-financial companies from plastic card magnetic strips, (2) require that the breaching party (i.e., the merchant) reimburse the consumer or financial institution for any losses incurred, and (3) implement a uniform national standard.

Bankers Survey: Biggest Threats Are Regional Banks, Wal-Mart, Not Credit Unions
          Regional and mega-banks, not credit unions, continue to be the biggest competitive threat, according to bankers polled in Grant Thornton’s 14th Annual Survey of Bank Executives. Two-thirds of all banks (66%) continue to express concern about competition from credit unions, a level that has remained fairly consistent over the past several years, according to the survey. While 57% expressed concern about the outflow of retail customers to credit unions last year, now only half (50%) express concern. Twenty-six percent were concerned about losing their commercial clients to credit unions, compared with 40% last year. Instead, bankers seem more interested in competing with credit unions on a level playing field: approximately half (48%), including 62% of mutual savings bank executives, say that the barriers against credit union conversions to bank charters are too stringent, the survey showed. Nearly seven in 10 bankers (68%) say they are concerned about competition from regional or mega-banks while large banks cite these mega-banks as a concern, compared with only 62% of the smaller banks surveyed. One in three bankers said Internet banks are their biggest competitors, 39% indicated brokerage firms and 25% said insurance companies. Seven in 10 (70%) of all bankers, including three-fourths (76%) of small banks and 81% of rural banks, say the entry of Wal-Mart into the financial services business would be a threat to their banks’ business. (Credit Union Times, Feb. 27)

2006 Big Year for Banks
          Banks collected a record number of deposits in the fourth quarter, while consumer and corporate loan growth continued to falter, the Federal Deposit Insurance Corporation recently reported. Deposits surged by $247.2 billion during the quarter, to $7.8 trillion, besting the record set two years earlier by 23%, the agency said in its quarterly briefing report. But total loans and leases grew less than 1%, to $7.2 trillion, the smallest quarterly increase in nearly five years, while mortgages increased only 0.05%, the smallest increase in three years. Overall, the industry's earnings declined 5% from the third quarter, to $35.7 billion, the lowest quarterly total for the year, but full-year earnings still set a record for the sixth straight year. The industry earned $145.7 billion for the year, eclipsing the 2005 total by $11.8 billion. The annual earnings record was attributed largely to non-interest income, which rose 8.4%, to $240.7 billion. In contrast, total loans grew 0.8% in the fourth quarter, to $7.2 trillion. (American Banker Online, Feb. 23)

Mica Questions Banks' Sincerity After More Record Profits
          Congress should take a good, long look at the profits being amassed by banks and say “are you kidding?” when they complain about credit unions, said Credit Union National Association President/CEO Dan Mica after noting banks’ and thrifts’ increased profits for 2006.

“Little Guy” Storms Capitol Hill
          The Credit Union National Association (CUNA) carried out an advertising campaign in Washington during the Governmental Affairs Conference, one with a dual intent: to expose bankers' anti-credit union antics in a humorous way and to educate a Capitol Hill audience about how credit unions "look out for the little guy."
          To back up credit union visits to discuss issues with federal lawmakers during the CUNA Governmental Affairs Conference at the end of February, CUNA ran a cartoon-format ad in well-known Capitol Hill publications, Roll Call and The Hill. "The ad poked fun at bankers and their attempt to confuse consumers – and Congress – about credit unions and what credit unions really do for people," said Pat Keefe, CUNA vice president of communications andmedia outreach. "Our aim is to expose bankers' antics in a humorous but sharp-edged way – to drive home the point that bankers are manipulating Congress and the public about credit unions."
          On Jan. 4, swearing-in day of the 110th Congress, CUNA introduced its "Little Guy" campaign designed to "change the conversation on Capitol Hill" to focus on what is best for 89 million hardworking Americans who belong to credit unions.
          Recently CUNA ran a different "Little Guy" ad each of three days in Congress Daily, a publication widely read by lawmakers and their staffs. Each ad featured a short statement about credit unions and why the financial cooperative structure makes creditunions "work for working people."
          "The Little Guy is intended to be iconic, an easily remembered point of differentiation about who credit unions serve," according to CUNA's Keefe. He said the campaign is designed to break through all the competing messages on Capitol Hill with one that is both memorable and meaningful and can educate readers about what credit unions are and how different they are from for-profit banks.

CUNA STAFF CONTACT INFORMATION
Please Use CUNA As Your Resource!!!
With questions involving Capitol Hill offices and federal legislative issues, please contact the Legislative Affairs staff directly.

Federal Issues Staff

John Magill  – Senior Vice President, Legislative Affairs
202-508-6715 - O
202-841-8943 – C
jmagill@cuna.com

Dean Sagar  – Vice President, Legislative Affairs
202-508-6721 - O
202-297-3052 - C
dsagar@cuna.com

John Hildreth – Senior Legislative Representative
jhildreth@cuna.com

Debbie Kwon-Moore -- Senior Legislative Representative
dkwon-moore@cuna.com

Phil Drager – Senior Legislative Representative
pdrager@cuna.com

State Issues Staff

Christopher Johnson – Vice President of State Government Affairs
202/508-6719
cjohnson@cuna.com

Nancy deGrandi
202/508-6719
ndegrandi@cuna.com

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).