Volume 28, Number 23                                                    December 15, 2008

HEADLINE NEWS

NCUA Hot Buttons in 2009
     Delaware League president Patrick Mahaney and executive vice president Jane Bailey attended a meeting with officials from the National Credit Union Administration’s Region II office and executives from surrounding leagues on December 4. Representatives from Delaware, Pennsylvania, Maryland, DC, New Jersey, Virginia and West Virginia met at the NCUA office in Alexandria.
     The meeting was initiated by the Delaware League to ascertain expected areas of focus for NCUA in 2009. An economic overview of Region II shows that foreclosures and unemployment are up, delinquencies and charge-offs are up, and credit card portfolios are becoming an area of concern.
     NCUA will be focusing in 2009 on third party due diligence, Bank Secrecy Act, and mortgage issues. Other areas of concern are debt restructuring, credit quality, and red flag compliance. However, the following items are generating the most interest and will be high on the list of items examiners will be looking at for 2009.
•   Examination Schedules. Examiners will be spending more time at the credit union. NCUA is now requiring examiners to spend 80% of the exam on site.
•   Supervisory Committee Audits. These required audits are coming under closer scrutiny to verify they are viable. Fraud detection is a major cause of concern, especially when you consider that many of the recent fraud cases would have been caught much earlier if the supervisory committee had been up to the task. Supervisory policies and training will also be part of this inspection.
•   Collections will also be getting a closer look, especially if your credit union has entered into new programs such as indirect lending. The credit union’s collections program should be commensurate with any new program. Overall the thrust here is to validate that your credit union has thought about risk and has put into place a method to mitigate that risk.
•   Member Business Loans (MBL). Currently MBL programs are being scrutinized because they are often understaffed and under-monitored. NCUA is not discouraging this type of loan but is stressing the need to use care when entering into these offerings and to use a measured approach to growing this part of your portfolio.
•   Mortgage Loans, Especially Refinances and Home Equity Lines of Credit. NCUA examiners will be looking specifically at how the credit union is managing the dropping home prices and the subsequent impact on the credit union’s portfolio value and liquidity.
     NCUA also announced it will be adding three new supervisory examiners and a problem case officer to the region. In addition, due to an overload of work in Region V, a temporary change of status has occurred. Alaska has been added to Region II and Nevada to Region I. We have lost 50 credit unions in the region year to date. Also news of note, former NCUA board member Debbie Matz has been named to an Obama transition team looking at NCUA. [Information provided by League president Patrick Mahaney]

IRS Announces 2009 Standard Mileage Rates
     The Internal Revenue Service has issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. Beginning on January 1, 2009, the standard mileage rates for the use of a vehicle will be:
•   55 cents per mile for business miles driven;
•   24 cents per mile driven for medical or moving purposes; and
•   14 cents per mile driven in service of charitable organizations. 
The new rates are slightly lower than rates for the second half of 2008, which were raised by a special mid-year adjustment in response to a spike in gasoline prices.

COMPLIANCE RECAP

Amendments to Home Mortgage Provisions of Reg Z (Truth in Lending)
     The Federal Reserve Board recently approved a final rule for home mortgage loans to better protect consumers and facilitate responsible lending. The rule prohibits unfair, abusive, or deceptive home mortgage lending practices and restricts certain other mortgage practices. The final rule also establishes advertising standards and requires certain mortgage disclosures be given to consumers earlier in the mortgage lending process. These rules apply to all credit unions providing mortgage loans to their members.

NCUA Alert on Regulation D
     The Board of Governors of the Federal Reserve System recently announced amendments to Regulation D. These amendments reflect the annual indexing of the reserve requirement amounts for 2009. See Regulatory Alert 08-RA-08.

Topics of Other NCUA Letters
     Copies of the letters listed below can be found on NCUA’s website: http://www.ncua.gov/letters/letters.html.
•   08-CU-21. CU financials for first half of 2008
•   08-CU-22. Share insurance coverage enhancements
•   08-CU-23. Central Liquidity Facility
•   08-CU-24. Identity theft red flags and consumer reports address discrepancies and records disposal procedures
•   08-CU-25. Credit unions holding foreclosed properties as foreclosed and repossessed assets

NCUA Accelerates to 12-Month Exam Schedule
     Extraordinary economic times and an incumbent need to be proactive rather than reactive in credit union regulation spurred the National Credit Union Administration (NCUA) to approve an accelerated schedule for risk-based examinations. At its recent open board meeting, the NCUA approved a 12-month examination cycle to supplant the current 18-month cycle.

Important Revisions to Family and Medical Leave Act
     Effective January 16, 2009, employers must comply with final rules revising the Family and Medical Leave Act (FMLA). The changes provide new military family leave entitlements, as well as update and clarify the existing provisions. The final rule is expected to improve communication between employees, employers, and health care providers to make the law operate more smoothly and provide needed clarity for both workers and employers about their responsibilities and rights under the FMLA.
     Under statutory changes that go into effect January 16, credit unions and other employers must provide two new forms of military family leave.
•   “Qualifying exigency leave,” which provides 12 work-weeks of leave under certain circumstances, such as short-notice deployments, military events or activities, and post deployment activities; and
•   “Military caregiver leave,” which provides 26 work-weeks of leave to care for a covered service member with a serious injury or illness who is the employee’s spouse, child, parent or next of kin.
     The Department of Labor, in issuing a final rule to implement the 2008 rule changes, also updated the 1993 Family and Medical Leave Act (FMLA) employee notice provisions. The new rule covers standard posted notices, as well as individual notifications, to an employee regarding such things as leave eligibility and conditions of leave.
     The rule also updates the medical certification requirements for FMLA leave, such as allowing an employer representative to contact, with limitations, an employee’s health care provider directly about certification and clarifying the process for handling incomplete or insufficient certifications.
     Credit unions should consult their human resources counsel for a detailed analysis of how this new rule will impact their institutions, advises CUNA’s compliance department. Consequently, it can be assumed that credit unions will need to review and update their FMLA policies and procedures and FMLA-related forms/resources to reflect these changes. Also, CUNA notes, credit unions must be prepared to provide adequate training on the updated rule to management and supervisors where appropriate.

How Long Is Too Long for Holidays?
     Around the winter holidays each year, one of the most frequently asked questions of the Credit Union National Association's compliance folks: Is there any federal regulation limiting the number of consecutive days a federal credit union can remain closed?
     There is no federal law or regulation that limits a federal credit union's closing (all Delaware credit unions are federally chartered.)
     CUNA says even federal credit unions have several things to keep in mind if planning a longer than usual holiday closing.
     When closed for a national holiday, the entire credit union staff can be off. However, when closed on a day that isn't a national holiday, the following must be considered:
     1.  At least some employees in back office departments should be working to clear checks before the midnight deadline, deal with wire transfers, release funds availability holds on deposits and perform other required functions; and
     2.  Credit unions should stay open for business long enough to provide sufficient service to members and to remain competitive with other financial institutions in the same area.
     For this and other great compliance advice from CUNA, use this resource link CUNA Compliance Challenge to access the December CUNA Compliance Challenge.

CU SYSTEM NEWS

NCUA Continues Share Insurance Outreach
     The National Credit Union Administration (NCUA) has continued its active promotion of the safety of federally insured credit union deposits through a nationwide advertising campaign.
     “At times of economic difficulty and uncertainty surrounding the financial services system, it is more important than ever for the NCUA and other federal agencies to step forward and remind consumers of the strength and safety of federal deposit insurance.  While the crisis that intensified during the summer has been unsettling, it has also served as an opportunity for NCUA to increase our educational efforts,” noted NCUA chairman Michael E. Fryzel.
     Throughout the past two months NCUA has remained steadfast in its efforts to furnish the public with the information they need regarding share insurance. The following list describes October, November and December initiatives:
•    NCUA provided nearly 9,000 radio stations across America with 90-second and 30-second public service announcements (PSAs) regarding NCUSIF insurance.
•    NCUA supplied each federally insured credit union with an “Uncle Sam” federal insurance poster. The poster, intended for display in credit union lobbies, informed members of the recent change in coverage to $250,000 and emphasized the safety of insured funds.
•    A newspaper ad featuring the same “Uncle Sam” motif appeared in 23 major newspapers nationwide between October 1 and November 17.
•    Ten-second radio ads were aired in six major-market radio stations throughout the months of November and December, again describing the changes and share insurance coverage and the security of member funds in a federally insured credit union.
•    NCUA continued to update its Share Insurance Toolkit. Several updates were made, including but not limited to: Chairman Fryzel’s video message to credit unions, board member Hyland’s share insurance webinar, brochures reflecting the new changes in insurance coverage, an updated share insurance estimator, an NCUA fact sheet, and most recently the easy to use share insurance Powerpoint, “Share Insurance and You.”

CUNA Unveils Comprehensive Due Diligence Guide
     The Credit Union National Association (CUNA) has unveiled its comprehensive guide to help credit unions successfully negotiate the important and difficult territory of third-party vendor relationships.
     About nine months in the making, the guide has three core functions: risk assessment and planning; a focus on due diligence and contract formation; and risk management monitoring and control. The guide is the product of CUNA’s Due Diligence Task Force, formed by CUNA Chairman Tom Dorety and the CUNA Board of Directors in response to regulatory concern over how to best meet credit unions’ due diligence responsibilities involving third-party vendors without unnecessary duplication of effort. Third-party vendor relationships and strategic planning were identified in January by the NCUA as a key credit union examination issue for 2008.
     Task Force Chairman Henry Wirz, who is president/CEO of SAFE CU in Sacramento, California, identified the following as the top two elements of the extensive due diligence guide:
•    First, credit unions must look at their strategic plans and assure that whatever service they wish to offer through a third-party relationship is consistent with that plan, and
•    Second, once a credit union has determined a new service is consistent with its plan, it must establish a process to manage that service just as it would monitor and evaluate any employee.
     The group vice chairman, Bill Raker, noted that the new guide can be considered a template and a set of best practices that will establish consistency in vendor relationships.
     Titled simply “Third Party Vendor Management Guide,” the 94-page resource is available online through the CUNA website at http://www.cuna.org/initiatives/due_diligence.html.
     The Delaware League has emailed a copy of this guide to all our CEOs. However, you might want to visit the website where you will find additional information such as best credit union practices and a list of all NCUA letters which have been published on this topic.

DELAWARE NOTES

Dr. Jill Biden, wife of the incoming Vice President of the United States, visited her credit union, NEW CASTLE COUNTY SCHOOL EMPLOYEES FCU, last week. Dr. Biden graciously accepted an invitation to have her picture taken with the credit union staff. Yes, she was accompanied by Secret Service agents.

(l to r)  Dot Kenney, Shannan McMann, Alex Johnson, Lori Mays, Terri Keene, Dr. Biden, Jean Moore, Stephanie Mitchell, Sandra Toppin and Colin MacArthur

Business Development Coordinator. Responsible for developing a strategic plan for expansion of new business and providing tactical steps for implementation. Will serve as the primary liaison for the credit union’s existing Select Employee Groups (SEGs) while coordinating formal presentations at potential new groups. This position requires 50% travel; preferably a B.A. degree in a related field; minimum 4-6 years of external marketing experience focused on the development of new and management of existing, multiple business relationships. All applicants will be subject to an extremely thorough background and credit check. Send cover letter, resume, and salary requirements to: Attn: HR, Dover Federal CU, 1075 Silver Lake Blvd., Dover, DE 19904. Equal Opportunity Employer M/F/D/V

Business Development Officer. Ideal candidate must possess excellent communication skills with the ability to represent the credit union in the community. Responsibilities include developing new and existing business relationships, attending community events and onsite visits at selected employee groups, making presentations, cold calling, networking, and increasing awareness of the credit union in the community. Previous business development experience required, preferably with credit unions. Position involves regular travel throughout New Castle County, including some evenings and occasional weekends. A bachelor’s degree in business administration is required. Please send resume and salary requirement to: American Spirit FCU, Attn: HR, 1119 Elkton Road, Newark, DE 19711.

EDUCATIONAL OPPORTUNITIES

January QuickBites Teleconferences
One-hour sessions run from 11 a.m.-noon:
1/06 – Ten Commandments of Career Success
1/21 – Hands-on Business Development
1/29 – Notary Public Training
The two-hour session runs from 11 a.m.-1 p.m.
1/08 – Regulation CC: Check Holds
The fee for the one-hour sessions is $99; the two-hour session is $169. The deadline to register with Bernadette Hines is one week prior to the session.

Five or More Things Supervisory Committees Should Know – Monday, January 26, from 5:30-7:30 p.m. at the League office. Newly appointed members of the supervisory committee are urged to attend. More than just the basics, this session has two topics that many CUs find difficult to deal with: member complaints and elections. Fee: $99 per registrant. Registration deadline: January 19

Marketing Compliance for CU Professionals –  Tuesday, January 27, from 9 a.m.-4 p.m. Has your CU checked your newsletter, website, and print ads to make sure they are in compliance with rules and regulations? This hands-on session will review various samples of marketing materials to see where a CU can get caught not complying with the law. Fee: $199 for registrants or $179 for 2009 registrants of the League Marketing Council. Registration deadline: January 16

PLAN AHEAD IN 2009!

League Activities in October and November

COMMUNICATIONS/PUBLIC RELATIONS

          CEO Meeting on iBelong Statewide Marketing Campaign. Last spring, the Delaware League Marketing Council heard about a potential statewide advertising program called “iBelong,” which had been initiated by the Pennsylvania Credit Union Association (PCUA) in 2008. Many of you may have seen the ads on major TV programs in the Philadelphia market, such as Good Morning,America and recently the Country Music Awards. The League hosted a meeting for credit union CEOs on Tuesday, December 8, where Jay Young from PCUA discussed how the iBelong Campaign was developed, research results, and the possibility of Delaware credit unions joining the program in 2009. PCUA is very willing to have Delaware participate, even on an individual credit union basis. Currently those credit unions in New Castle County already benefit from the ads being shown in the Philadelphia TV market. Hopefully Delaware credit unions would join together in supporting additional advertising in the Salisbury market, which covers Kent and Sussex Counties. A sub-committee has been formed to explore this marketing opportunity.

          Financial Support for the Biz Kid$ TV Program. The Delaware League has contributed $200 to help support the innovative financial education program, Biz Kid$, created by the Emmy-winning producers of Bill Nye, the Science Guy. This will be the third season for this hit program that promotes financial education. To date, the national credit union system has raised $5.2 million to underwrite the first two seasons. In the past, none of our local PBS stations carried the show, but in 2009 it is scheduled to broadcast in all 50 states. In order to continue providing this educational program to an estimated 118 million potential viewers, leagues and credit unions have been challenged to raise $2.6 million.

          Delaware League News and Risk Alerts. The League emailed 12 news alerts and 3 risk alerts during November.

          League Staff Travel. Pat Mahaney, Jane Bailey, and Alice Smith attended the groundbreaking for DEXSTA’s new branch in Middletown on November 19. Alice Smith attended a session on “innovative board recruitment” on December 5, sponsored by the Delaware Association of Non-Profit Agencies. Pat and Jane also attended a meeting with NCUA Region II (see first article in this newsletter). Pat has recently visited with Milford Memorial and ICI America Federal Credit Unions.

GOVERNMENTAL AFFAIRS

          CUNA’s Governmental Affairs Conference. This year’s conference will be held from February 22-26 at the Convention Center in Washington, D.C. Currently, we know of only 9 Delaware people that will be attending, including Pat Mahaney; American Spirit (1); DEXSTA (1); Delaware Alliance (2); Sussex County (2); and Delaware State Police (2). The Hike to the Hill will be held on Wednesday, the 25th. The Governmental Affairs Committee has approved sponsoring a van for the day trip. In addition, we are offering a scholarship for GAC registration to any CU under $35M in assets. Alice Smith will be setting up meetings with our members in Congress, including our new Senator.

LEAGUE SERVICES

          MetLife New Business Member. MetLife will become a new league business member for its reverse mortgage program. Don Jeffries, formerly of Academy Mortgage, is now with MetLife and continues to be our reverse mortgage representative.

EDUCATION

          CEO Summit. To date, no one from Delaware has registered for the CEO Summit in January in Key West, FL.  This summit is sponsored by the Mid-Atlantic Regional Service Corporation (MARS), which includes Delaware.

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).