Volume 28, Number 3 February 15, 2008
Volume 28, Number 3 February 15, 2008
HEADLINE NEWS
DCUL Annual Meeting Registration
The Delaware Credit Union League will be celebrating its 50th anniversary at the League’s 2008 Annual Meeting. Our 2008 convention will be held at a new location – the Dover Downs Hotel & Casino – on April 4-6.
The meeting schedule has changed, along with the venue. Information-packed education sessions and our traditional trade show will be held on Saturday this year. The Saturday night dinner-dance will feature “The Fabulous Hubcaps.” The annual business meeting will be held on Sunday morning; and the keynote speaker will be Mark Lynch from Australia, where credit unions lost the battle to preserve their tax-exempt status. The festivities will conclude with dinner and harness racing on Sunday evening.
Hotel and conference registration is now open. You can find information about the meeting on the League website by clicking on the following link: http://www.dcul.org/creditunions/2008_annual_meeting/CU%20Information/cu_brochure.htm. An information packet and registration form – addressed to the CEO – have also been mailed to all credit unions.
You must contact the hotel directly for room reservations, which are due by March 3. Single reservations may be called in to 866-473-7378 or go to www.doverdowns.com and click on “Book a Room” then “Group Sales.” Use our group code: GDCUL.
The conference and meal reservations are due by March 15. Call Jane Bailey at the League with any questions.
Professional/Volunteer Awards Nominations Due February 29
The Delaware Credit Union League is now accepting nominations for the 2007 Outstanding Professional and Volunteer Awards. Presented at the League’s Annual Meeting in April, these annual awards recognize dedicated service and professionalism of credit union staff and board members.
The Outstanding CU Volunteer Award is given to recognize the noble service of one CU volunteer who best exemplifies the credit union spirit through dedication to and belief in the credit union movement. The Outstanding CU Professional Award is given to recognize one CU professional who has selflessly given time, effort, and talent to support and promote the CU ideal and the betterment of CUs in Delaware.
Information and nomination forms have been mailed to all credit union CEOs and board chairpersons and must be returned to the League office no later than Friday, February 29. A committee comprised of former award recipients will select the winners. For more information or a nomination form, please contact Alice Smith at the League office.
Online registration has opened for CUNA Mutual Group’s 2008 Discovery Conference, which will be held June 18-21 at the Westin Diplomat Resort and Spa in Hollywood, Florida. Credit unions registering before March 5 will receive an “Early Bird” rate of $1,000, a $250 savings. Additional savings are available for three or more credit union attendees. For complete information on Discovery Conference, please go to www.cunamutual.com/discovery.
NCUA NOTES
The following are recent publications from the National Credit Union Administration (NCUA). They can be found on the agency’s website, www.ncua.gov, under “Credit Union Resources.”
Letter to CUs 08-CU-01: Pandemic Planning.
This letter includes pandemic planning guidance developed by NCUA and other Federal Financial Institutions Examination Council (FFIEC) agencies. NCUA and the FFIEC agencies recommend a business continuity plan include the following key factors:
• A preventative program to reduce the likelihood that operations will be significantly affected by a pandemic;
• A documented strategy that provides for scaling the institution’s pandemic efforts;
• A comprehensive framework of facilities, systems, or procedures to continue critical operations if a large number of staff are unavailable for long periods of time;
• A testing program to ensure the pandemic planning practices and capabilities are effective; and
• An oversight program to ensure ongoing review and updates are made to the pandemic plan.
Letter to Federal CUs 08-FCU-01: Operating Fee Schedule for 2008. In March, CUs will receive an NCUA invoice for your 2008 operating fee. The operating fee and the capitalization deposit adjustment will be based upon the assets and the insured shares, respectively, that your CU reported as of December 31, 2007. NCUA reports that the 2008 assessment rate has increased by 9.85% from the 2007 rate. The combined payment will be due no later than Tuesday, April 15, 2008.
Letter to Federal CUs 08-FCU-02: Permissible Interest Rate Ceiling. This letter informs CUs that the NCUA Board has voted to continue the current 18% rate as the permissible interest rate ceiling for loans made by federal credit unions.
Fraud Alert 08-Fraud-02: Vishing. The NCUA has warned numerous times about “phishing” scams in which crooks send e-mails claiming to be from legitimate financial institutions, companies, or government agencies asking consumers to “verify” or “re-submit” confidential information such as bank account and credit card numbers, Social Security numbers, passwords, and personal identification numbers. A variant on that approach using telephone systems, “vishing,” is increasingly being used to obtain this information from unwary consumers.
An example of a vishing scam is when consumers receive a recorded message telling them that their credit card and/or financial institution account has been breached and to immediately call a number provided in the recorded message. The phone number provided in the message leads the consumers to a “fraudulent call center” established by the perpetrator of the fraud. The perpetrator then attempts to obtain confidential account information and login credentials in order to access the account.
To protect themselves, consumers are advised to be highly suspicious when receiving messages (telephone, email, or otherwise) directing them to call and provide personal, confidential, and/or account related information. Rather than provide any information, consumers should contact their financial institution or credit card company directly to verify the validity of the message using contact information they already have in their possession.
HMDA Data Due – Don’t Be Late
Credit unions subject to Home Mortgage Disclosure Act requirements for 2007 activity must submit loan/application register (LAR) data to the Federal Reserve Board (FRB) by March 1, 2008.
Noting that date in a recent regulatory alert, the National Credit Union Administration (NCUA) also warned of the possible consequences of a late filing.
A credit union must file HMDA data in 2008 if it meets these three criteria:
Following the March 1st deadline, the Fed will provide a list of delinquent filers to NCUA, and credit unions appearing on this list could become subject to civil money penalty assessments.
CU SYSTEM NEWS
Webinar Features Top Eight Security Tips
CUNA Strategic Services and Perimeter eSecurity will host a free webinar on credit union security February 21 at 2 p.m. The webinar, “Top Eight CU Security Tips,” will provide eight steps that credit unions can take to mitigate network risks. Perimeter will discuss how layers of protection within the network can control threat exposure and defend against the latest attacks.
For more information, online readers can use this link: Credit Union Security webinar.
'Make Waves. Vote' Advocacy Tools Available
Credit unions can encourage their members to vote in the 2008 elections with a new statement stuffer and courses from the Credit Union National Association (CUNA).
The CUNA Center for Professional Development is offering “Communicating the Credit Union Difference” and “Direct Lobbying at the Grassroots Level” for credit union professionals. The courses are free and online. To register, go to http://www.cuna.org/pol_affairs/online_training.html
A new CUNA statement stuffer, “Make Waves. Vote,” is available and provides information on why members should vote, how to register to vote, or how to get an absentee ballot. CUNA also has a slew of free Get-Out-The-Vote materials, designed to help credit unions spur their members to the polls. Forty-four percent of registered voters are credit union members, says CUNA. Go to http://www.cuna.org/pol_affairs/election/ for more information.
Postage on the Rise
The cost of a first-class stamp will increase a penny in May to 42 cents. Forever stamps (which are good forever) may currently be purchased for 41 cents and can continue to be used after the price hike. However, the cost to purchase Forever stamps will rise on May 12, along with the postage increase. Save a penny and stock up on Forever stamps before May. Under a new Postal Accountability and Enhancement Act, postage costs will be adjusted annually each May. The United States Postal Service will provide a 90-day advance notice of rate changes each year.
Allpoint Network Hits 1,000 Member Milestone
Allpoint Network now serves more than 1,000 financial institutions with surcharge-free access to 32,000 ATMs, according to a company announcement. The milestone “proves that ATMs continue to be a major factor for consumers when selecting a financial institution,” said Ben Psillas, Allpoint founder and president.
Consumer demand for surcharge-free ATM access is increasing due to rising surcharge fees. The increase of the average ATM surcharge outpaced inflation by 205% in 2007 and continues to rise, the company stated in a press release.
Allpoint has created partnerships with credit union organizations and state credit union leagues in Pennsylvania, Illinois, Maryland, Delaware and New Jersey. It has also made alliances with Credit Union 24, First Data and Fiserv. Allpoint is a division of Cardtronics.
A.M. Best Affirms CUNA Mutual's Financial Strength Rating
CUNA Mutual Group’s financial strength rating has been affirmed as “A” (Excellent) by ratings agency A.M. Best. In listing the company’s outlook as “Stable,” A.M. Best recognized CUNA Mutual’s “excellent risk-adjusted capitalization, overall operating profitability and conservative balance sheet.”
A.M. Best assigned the “A” rating to the principal companies of CUNA Mutual Group, including CUNA Mutual Insurance Society and CUMIS Insurance Society, Inc., the company’s primary U.S. property and casualty subsidiary.
CUNA Mutual’s excellent underwriting results in 2007 and its strong position in supporting credit union interests were cited as strengths by the ratings agency. The company, which just completed the second year of a three-year transformation, also plans expansion into new product areas, which also was noted in the most recent rating.
“In 2007, we built on our financial strength and improved our ability to serve and support the credit union market,” said Jeff Post, CUNA Mutual president and CEO. “2008 will be a year where we develop new markets and new products that help CUNA Mutual grow – at the same time we provide more value to credit unions and their members.”
DELAWARE NOTES
LOUVIERS FCU made a monetary contribution to the Extreme Makeover: Home Edition project that is rebuilding homes for two families who live in the city of Wilmington. The credit union has also extended an offer to open an account for each of the family members at its Maryland Avenue branch.
Congratulations to the staff, volunteers, and members of AMERICAN SPIRIT FCU, which celebrated its 45th anniversary on February 5.
CUNA Mutual Group would like to announce the promotion of Troy Mooney as the new Vice President of Sales in the East Region. Troy has been with CUNA Mutual Group since 1982 in a variety of leadership roles. His most recent leadership position was the Regional Sales Manager in CUNA Mutual’s South Region. Troy’s passion runs deep in credit unions and the system partners who serve credit unions. Troy is a Chartered Life Underwriter and is currently working on his MBA.
Bauer Financial Ratings
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), 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 third quarter financial data as reported to financial regulators. Five stars (superior) is the highest rating given by the firm. Four 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.
EDUCATIONAL OPPORTUNITIES
February/March QuickBites Teleconferences
One-hour sessions run from 11 a.m.-noon:
3/05 Embracing Your Hispanic Market
3/11 Phone Collection Techniques
3/19 Medical Leave for Small CUs
3/27 Phishing, Pharming & More
The 1 ½ hour session runs from 11 a.m.-12:30 p.m.
2/21 Safe Deposit Compliance Update
The two hour session runs from 11 a.m.-1 p.m.
2/25 Growing Auto Loans by 10%
The fee for the one-hour sessions is $99; the 1 ½ hour session, $129; and the two-hour session fee is $169. The deadline to register with Bernadette Hines: one week prior to the session.
CU Volunteer Program: Board Strategic Planning – February 20 at Del-One FCU, 270 Beiser Blvd., Dover, from 4:30-6:30 p.m. Also February 27 at the League office from 5:30-7:30 p.m. Instructor: Patrick Mahaney. Fee: $95 per participant for either session. A light meal will be served one-half hour before the session begins. Registration deadline: Call to see if space is available.
Supervisory Committee Roundtable – Monday, February 25, from 5:30-8 p.m. at the League. This session will provide a networking opportunity for supervisory committee members to discuss the procedures and challenges of being on this committee. Cost: $25 per person, including a light meal. Registration deadline: February 20.
Policies vs. Procedures and How to Write Them – Tuesday, February 26, from 9 a.m.-3:30 p.m. at the League. Instructor: Carolyn Warden. During this session, participants will gain hands-on experience writing and editing policies and procedures. Fee: $150. Registration deadline: February 19.
Combined Collection & Mortgage/Home Equity Council Meeting – Wednesday, March 5, from 10 a.m.-noon at the League. Topics: the housing crisis and mortgage foreclosures. No fee for council members; $100 for non-members. Registration deadline: February 27.
| UPCOMING DEADLINES 2/29 Volunteer/Professional Award Nominations 3/03 Hotel Room Reservations at Dover Downs for League Annual Meeting 3/15 League Annual Meeting Reservations |
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RECENT LEGAL OPINIONS FROM NCUA
The following is a brief summary of the legal opinions published by NCUA's Office of General Counsel during the second half of' 2007 and January 2008. The number in parentheses after the subject is that given to the letter by NCUA, as well as the date of issuance, and can be used when requesting copies of the letters. NCUA opinion letters are available on NCUA’s website (www.ncua.gov) or by calling Susan Fallon at the League office.
Receipt by Federal Credit Unions of Stock in Visa, Inc. (07-1022 – November 1, 2007)
In the fall, Visa announced completion of a restructuring that will result in Visa, Inc., issuing common stock to members of Visa U.S.A., including credit unions. The National Credit Union Administration (NCUA) issued a November 1 letter regarding the permissibility of credit unions accepting Visa, Inc., stock. The letter was sent from NCUA to Visa, Inc., stating that federal credit unions (FCUs) could receive and retain Visa, Inc., stock as a result of Visa, Inc.’s, restructuring. While the general rule is that federal credit unions are prohibited from investing in the stock of companies, the Visa restructuring presents a unique situation. This situation differs from a typical investment situation in that FCUs are not actually paying any money to invest in Visa. “Accordingly, we conclude FCU receipt of this Visa stock is the by-product of a permissible lending activity, and an FCU may receive and retain the stock unless its examiner determines holding the stock is a safety and soundness problem for that FCU.”
Member Agreement to Accept Electronic Communications Regarding Conversions (07-0627 – June 26, 2007)
Federal credit unions converting to mutual savings banks must facilitate communications between members during the balloting and allow members to receive communications with other members electronically, NCUA said in this letter. “Our view is, if a member has provided his or her email address to the credit union for any purpose, the credit union must assume the member has agreed to accept conversion-related communications electronically,” said NCUA in a new legal opinion letter furnished to Silver, Freedman & Taff, the Washington lawyers who have engineered most of the conversions to mutual savings banks. This view is specific to electronic member-to-member communications contemplated in the mutual savings bank conversion rule. NCUA noted that these electronic communications are not subject to the consent requirements of NCUA’s Truth-in-Savings rule nor the E-Sign Act. One purpose of the revised MSB conversion rule was to improve the flow of information between members on a pending conversion proposal. NCUA cautions credit unions not to impose additional procedures or engage in any activity that would hamper conversion related member-to-member communications.
NCUA Clarifies Credit Union Political Activities (07-0222 – June 19, 2007) NCUA’s General Counsel's Office clarified an earlier opinion letter on permissible credit union political activities. The June 19 letter was in response to a Credit Union National Association (CUNA) request to clarify a November 2006 NCUA opinion letter on the same subject. The revised opinion – which notes NCUA does not have jurisdiction over federal election law governing credit union political activities – does outline a number of ways in which credit unions may legally participate in political activities. For example, credit unions may advocate for the election or defeat of federal candidates or solicit funds for federal candidates when communicating directly with their members. The Federal Election Commission regulates federal election laws.
Permissibility of a FCU Replacing Third-Party Collateral Protection Insurance (CPI) and Private Mortgage Insurance (PMI) with an Internal Program. Two letters: (07-0633 – November 19, 2007) and (07-0231 – January 2, 1008)
An attorney asked if a federal credit union (FCU) may replace the credit life insurance (CLI) policies it offers borrowers with a debt cancellation (DC) program. NCUA responded that the agency does not object to this substitution if it is permissible under applicable state law and the terms of the CLI contracts. The attorney also asked if the draft notice the sponsoring company plans to provide for the FCU to use with its borrowers is adequate. NCUA generally does not review individual forms for particular credit unions or companies. For guidance, however, CUs could follow, although it would not be required, Regulation Z’s requirements for credit card issuers changing CLI providers. Also, the Comptroller of the Currency’s requirements for disclosures related to DC programs provide another model for disclosures to borrowers being converted from CLI to DC programs.
NCUA Clarifies Regulation Z Definition of "Open-end" Credit (07-1024 – January 16, 2008)
NCUA, in a recent legal opinion letter, clarified that an extension of consumer credit by a federal credit union (FCU) meeting the definition of “open-end credit” under Regulation Z is a “line of credit” under the NCUA's regulations. What that means, the letter said, is that such credit would not be subject to a maturity limit.
The January 16 letter also acknowledges that an earlier legal opinion, OGC Op. 92-0232, has created confusion in its discussion of a particular loan product as a “hybrid or bifurcated loan.” It added that this new communication supersedes the older one and is intended to clarify the agency's interpretation regarding application of the Regulation Z definition of open-end credit in determining if a loan product is a line of credit for purposes of NCUA regulations.
“NCUA's interpretation of Regulation Z, confirmed as correct by legal staff at the Federal Reserve Board, is that any extension of consumer credit is either open-end credit or closed-end credit,” wrote Michael McKenna, NCUA deputy general counsel. “Accordingly, an extension of consumer credit by an FCU meeting the Regulation Z definition of open-end credit is, for NCUA’s purposes, a line of credit and not subject to maturity limits. An extension of consumer credit by an FCU that does not meet the Regulation Z definition of open-end credit is, therefore, closed-end credit and subject to applicable maturity limits under the FCU Act and NCUA's regulations,” the letter clarified.
CUNA Mutual Group, which provides lending forms to credit unions, historically has taken the position that open-end lending plans meeting the definition of open-end credit under Regulation Z would not need to follow the general maturity limits. This NCUA opinion letter confirms CUNA Mutual’s position that federal credit unions doing multi-featured open-end consumer lending do not need to be concerned about maturity limits.
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).