Volume 28, Number  7                                                                April 15, 2008

HEADLINE NEWS

2008 Delaware League Annual Meeting/Convention Wrap-Up
     The Delaware League’s 50th annual meeting and trade show was every bit a success, according to those in attendance. This year Dover Downs Hotel and Casino was our new venue and the event was held earlier than usual on April 4-6.
     With “Putting You in the Winner’s Circle” as a theme, the weekend featured a variety of educational, social, and business events for credit union professionals, volunteers, and their guests. Over two hundred people from 28 credit unions throughout the state attended the three-day event.

Business Meeting Highlights
     Business conducted at the 50th annual meeting included election of two League board members and adoption of two revised bylaws.
     Incumbent board members Meredith Jeffries (New Castle County Delaware EFCU) and Jerry King (DEXSTA FCU) were elected for three-year terms. At the reorganizational meeting, the board officers remained the same:
            Joel Romaine (DPL) – Chairman
            Jerry King (DEXSTA) – Vice Chairman
            Kate Toner (Wilmington Postal) – Secretary
            Meredith Jeffries (New Castle County Delaware Employees) – Treasurer
The remaining board members are Cheryl Chilcutt (Chestnut Run), Allen Riley (Sussex County), and Sharon Schaefer (Delaware First).
     The two amended bylaws dealt with associate membership in the League and the deletion of electing CUNA delegates as one of the responsibilities of the League board of directors.

Jerry King and Meredith Jeffries

Educational Sessions
     Frank Diekmann, publisher of The Credit Union Journal, conducted the convention’s first education session entitled “What the Heck Is With These Headlines?” Diekmann commented on the fact that while credit union asset size has almost quadrupled in 20 years, the number of credit unions has shrunk to levels not seen since Franklin Roosevelt’s era. He emphasized that credit unions need to do a better job in differentiating ourselves from banks, especially the facts that we are: 1) member owned, 2) democratically controlled, and 3) offer better deals. Using a quote from Frank Pollard, a credit union CEO, Diekmann concluded his talk by saying, “Members want good rates, great service, and they want to be treated special.”
     In another change of pace, Saturday afternoon had three breakout sessions, rather than topic tables. Frank Diekmann spoke on “What Do People Think of Credit Unions, If They Think of Them at All?”;  Dean Gray, CUNA Mutual risk manager, gave a security solutions overview; and Mark Lynch from Australia spoke on how boards need to cope with change, just as staff members do.
     Mark Lynch also served as the keynote speaker preceding Sunday’s business meeting. He presented a cautionary tale of “The Lessons to Learn From Taxing Australia’s Credit Unions.” He emphasized that Australian CUs lost the taxation fight because the movement was totally unprepared, very few members got involved in the fight, and there were no state leagues to help in organizing a grassroots effort.

Fundraising
     Many credit unions and individuals donated items for the Children’s Miracle Network auction which generated $1,222 for the charity. In addition, a 50/50 drawing at the dinner dance raised $408 for the Credit Union Legislative Action Council (CULAC).

Business Meeting Speakers
     Greetings and comments were given at Sunday’s business meeting by Ed Fox and Jay Murray of Mid-Atlantic Corporate FCU; Paul Butler of CUNA Mutual Group; Christopher Pippett, the league’s retained counsel; and Jane Walters, NCUA Region II director. In addition, Ed Fox was given a rocking chair in honor of his impending retirement. The remarks made by League board chair Joel Romaine and president Pat Mahaney are included at the end of this newsletter.

The owner, trainer and winning jockey are shown with members of the League board and staff, in addition to Bill Husfelt (third from right) of Del-One FCU who won the anniversary horse blanket at the CMN silent auction.

And Finally, Awards!
     League education director Bernadette Hines announced at the business session that 61 certificates were earned by six credit unions in 2007. As a result, the following credit unions received awards:
     •  CU attending most seminars in 2006 – Delaware Alliance FCU
     •  CU earning most STAR/MERIT certificates – Del-One (Delaware FCU)
     •  CU earning most VAP/VLP certificates – DPL FCU
     This year two 2007 Outstanding CU Volunteers were honored: Verle “Vic” Carter of Louviers FCU and Bob Seaberg of Del-One. The 2007 Credit Union Professional was Joe Sisofo, manager of Wilmington Police and Fire FCU.

Vic Carter	Bob Seaberg	Joe Sisofo

Long Road for Treasury’s CU Plans
     After reviewing details of the U.S. Treasury’s long-term plan to overhaul the nation’s financial institution regulatory structure (including the elimination of NCUA), Credit Union National Association President/CEO Dan Mica remained convinced the plan is perilous for credit unions and consumers.
     Mica attended Treasury Secretary Henry Paulson's March 31 briefing on the agency’s regulatory restructuring blueprint. During the briefing in Washington, Mica explained to Paulson that the Treasury proposal would result in the demise of credit unions as they function today. Paulson rejected that assertion and said, “If you read the executive summary, you'll see it is not our intent and that would not be the effect.” Mica said the report's language indicates otherwise.
•  A significant percentage of the nation's larger credit unions would no longer be tax exempt and have little incentive to operate as cooperatives owned by their members;
•  Under the “Blueprint,” a mere 6% of the assets under supervision of the proposed Prudential Financial Regulator would be in not-for-profit, cooperative federally insured depository institutions (FIDIs), i.e., former credit unions. The types of regulation and supervision that a for-profit institution requires are very different from those that best apply to not-for-profit cooperatives;
•  Nothing in the report calls for the single regulator to have employees who specialize in regulating institutions other than banks;
•  Given the distribution of assets under supervision - almost all banks, it appears unlikely that the Prudential Financial Regulator would not expect all institutions to act like for-profit banks, and design its regulations and supervision to deal with for-profit institutions; and
•  A number of descriptions in the report regarding credit unions are very similar to the mischaracterizations that the banking industry routinely uses. Some of the most biased statements in the report are found on page 160, reflecting banker rhetoric that credit unions must only serve those of modest means and must remain small institutions. 

CU SYSTEM NEWS

Write to Treasury in Support of Credit Unions
     CUNA and the Delaware League want the Treasury to know just how damaging its proposal would be to credit unions. So, we are asking that all CU board members and management staff and members of the League governmental affairs committee generate letters and e-mails to Treasury Secretary Henry Paulson expressing concern with his “Blueprint for a Modernized Financial Regulatory Structure.” You could use one or two of these points in your letters:
•    One of the most unfortunate parts of the proposal is that it apparently does not understand or ignores the powerful role that the cooperative structure plays in credit unions. We really do behave differently than a for-profit organization (include an example from your CU).  We need a regulator that understands how and why cooperatives work the way they do.
•    The proposal might provide greater flexibility for the nation’s very largest financial institutions, but why should that be done at the expense of smaller institutions like credit unions?
•    Putting credit unions under the supervision of an agency, 94% of whose regulated institutions would be banks, would be the same thing as eliminating credit unions.
•    Credit unions provide enormous benefits to their 90 million members (insert example from your CU). Combining credit unions with banks would eliminate this distinction.
•    From CEOs: I take seriously what our credit union does for our members. I don’t own it; our members do. My personal stake in this is much less than it would be if I were a banker. Nevertheless, I think that harming the credit union system in this way would be absolutely wrong.
•    From CU Board Members:  I’m very proud of what our credit union does for our members. I have the same membership rights as my fellow members. I’m not even paid for my service on the credit union’s board. Nevertheless, I think that harming the credit union system in this way would be absolutely wrong.
     Letters should be mailed (not faxed) to:         
     The Hon. Henry M. Paulson, Secretary of the Treasury,
     1500 Pennsylvania Ave, NW
     Washington, DC  20220.
Please fax/send a copy to Alice Smith at the League office.

Lots of Opportunities in May for Bank Secrecy Act Training
     The League and CUNA are both offering several Bank Secrecy Act (BSA) training courses in May. NCUA has stated that BSA compliance is one of its top priorities and key focus areas in exams. Inadequate or lack of training for staff and volunteers is a frequently cited violation in NCUA exams.
     The Delaware League is hosting two sessions – one designed for front-line staff and one for board and supervisory committee members. The sessions will be led by Robbie Thompson, general counsel and director of regulatory compliance with the New Jersey Credit Union League. The emphasis for each session will, of course, be different: staff members must know how to comply with BSA and identify suspicious activity, and volunteers must be aware of the compliance rules and be vigilant that their staffs are fully trained.
     The sessions will be offered three times at the Delaware League office in New Castle:
■   Front Line Staff BSA Training: Tues., May 6
Two sessions are available so as many staff members as possible can be trained. Session one: 9-11:30 a.m. and Session two: 1-3:30 p.m. Lunch will be provided between sessions from 11:45 a.m.-12:45 p.m. The fee is $75 per person per session or $70 per person for two or more registrants from one credit union. Registration deadline: April 22.
■   Board/Volunteer BSA Training: Tues., May 6
One evening session from 5:30-6:30 p.m.; a light meal will be served from 5-5:30 p.m. The one-hour course will cover an overview of BSA, penalties of non-compliance, and a review of recent enforcement actions. The fee for the evening session is $65 per person or $60 per person for two or more registrants from one credit union. Registration deadline: April 22.
     Contact Bernadette Hines at the League office for more details or a registration form.
     For those CUs that want more detailed training, CUNA will conduct two Bank Secrecy Act conferences, one in Washington, D.C., May 18-21, and the other in Atlanta, GA, October 19-22. The conferences will feature informative discussions on practical, operational compliance issues; open forums for questions and answers; big picture compliance trends; overviews of common mistakes; and networking opportunities. For information, go to http://training.cuna.org/on_site/BSADC08_fct.html.
 
DELAWARE NOTES

Congratulations to the members, volunteers and staff of the following credit unions that are celebrating milestone anniversaries in April:
     E.W.O.D., 50 years on April 18;
     Louviers, 40 years on April 25; and
     New Castle County School Employees, 55 years on April 27.

Best wishes to Cheryl Chilcutt upon her retirement as CEO of Chestnut Run FCU following the CU’s annual meeting. Cheryl has been succeeded by Melba Saxton, former vice president of operations. We are happy to report that Cheryl will continue to represent the CU on the Delaware League board.

Customer Service Teller. Kent County-area credit union is seeking an individual for a part-time position as a teller/customer service representative. 20 hours per week. Credit union, banking or financial industry experience necessary. Must be good with the public. Send resume to: D.J.K., Provident Federal Credit Union, 401 South New Street, Dover, DE 19904.  

IRA Specialist. Sun East Federal Credit Union based in Aston, PA, is looking for an experienced IRA specialist. Good public relations skills; basic typing and math skills; good reasoning and problem solving skills; good organizational skills; IRA knowledge; self starter; ability to communicate effectively in a written and verbal format; comprehensive PC knowledge; a thorough knowledge of credit union products, services and procedures. For more information or to fill out an application, please check out our website at www.suneast.org. Qualified candidates should send their resume and salary requirements to: pwallace@suneast.org or fax to: (610) 485-7517.

Part-time CU Position Sought. Individual with ten years of retail management experience and customer service skills seeks a CU position. For a copy of this resume, call Susan at the League office and ask for resume #03-31-08.

EDUCATIONAL OPPORTUNITIES

May QuickBites Teleconferences
One-hour sessions run from 11 a.m.-noon:
◘    5/06  Using the Telephone for Fun and Profit
◘    5/15  ACH Fundamentals and More
◘    5/29  Membership Retention in a GenY World
Two-hour session runs from 11 a.m.-1 p.m.
◘    5/21  Asset-Liability Management - ALM
The fee for the one-hour sessions is $99; the two-hour session is $169. The deadline to register with Bernadette Hines: one week prior to the session.

Human Resource Council: Avoiding Legal Pitfalls Under the Americans With Disabilities Act – Wednesday, April 23, from 10 a.m.-noon. at the League. Speaker: Attorney Robert Nagle. No fee for HR Council members; $100 per person for non-council members. Call today to enroll!

Collection Pitfalls in Auto Deficiency Cases (How to Get Paid Without Being Sued) – Tuesday, April 29, from 10 a.m.-noon at the League. Collecting delinquent auto loans in Delaware is highly technical, and the penalty for misstep is severe. This session will show you how to protect your CU. Presenter: Debt collection attorney Clark Kingery. Fee: $50 per person. Registration deadline: April 22.

Bank Secrecy Act: Two sessions for two different audiences on Tuesday, May 6, at the League.
◘    Front Line Staff Training offered twice: 9-11:30 a.m. and 1-3:30 p.m. Lunch will be provided between sessions. Fee: $75 per person or $70 per person for two or more from one CU.
◘    Board Training offered from 5:30-6:30 p.m. Volunteers need to understand the importance of BSA requirements and the ramifications of non-compliance. Light meal served from 5-5:30 p.m.
Fee: $65 per person or $60 per person for two or more from one CU.
     Register early because these sessions are sure to fill up! Cut-off date to register is April 22. 

Board Chairman Joel Romaine’s Comments Regarding the
Delaware Credit Union League's 50th Anniversary
Presented at the League Annual Meeting on April 6, 2008

     As Chairman of the Board of Directors of the Delaware Credit Union League, I would like to welcome each of you to our 50th Annual meeting.
     Human beings mark time by creating milestones. Twenty-fifth anniversaries are special because you figure that if you made it to that milestone, perhaps what you celebrate makes sense to someone. Fiftieth anniversaries are big deals because that’s half a century, and few of us live long enough to celebrate the 100th anniversary of something we started. 
     There is some debate in the credit union world as to whether this is the 100th anniversary of credit unions in the United States, as St Mary’s Bank, America’s first credit union, claims; or it’s the 99th, as CUNA says it is. Whether it’s our 99th or the 100th anniversary, the financial needs, which gave birth to the movement, still exist. The world has changed in 100 years, but our mission has not.
     Credit unions didn’t spring up in Delaware with the formation of our League in 1958. Issued charter number 663 on October 15th, 1935, Wilmington Postal Credit Union became Delaware’s first credit union. If my math is correct, that’s 72 years ago. What was going on in 1935? President Franklin D. Roosevelt signed the Social Security Act into law; Bruno Hauptmann was accused of the kidnapping and murder of the Lindbergh baby; Elvis Presley was born; Porky Pig made his cartoon debut; and Parker Brothers introduced the game of Monopoly. That was quite a year. Oh, did I forget to mention that the United States was in the depths of the Great Depression, which began in 1929? Starting with the stock market crash and not truly ending until we entered World War II in 1941, millions of Americans suffered severe financial hardships. 
     Although Massachusetts passed the first state credit union act in 1909, it wasn’t until 1934 that the Federal Credit Union Act became law, allowing credit unions to organize anywhere in the United States under either state or federal law. By 1935, 39 states had credit union laws, and there were over 3,300 credit unions serving 642,000 members. In those troubling times, credit unions must have been a godsend to those unable to obtain bank financing. 
     The founders of Wilmington Postal FCU were fortunate; having a federal job during the Great Depression must have been a blessing. I have a sense of that because in 1937 my father was hired by the Post Office. Dad really wanted to go to college; but like many, during those dire times, dreams were put on hold or permanently snuffed out, as financial realities forced life altering choices. Dad was fortunate to retire from the post office, and he never forgot the lessons of the Great Depression.
     He often worked second and third jobs, because he vowed to my mother to manage their money so that she would never have to worry where her next meal came from. Dad’s been gone almost 20 years, but my mother has never wanted for anything. Dad belonged to a credit union; and in 1971 when I needed my first car, he took me to his credit union and cosigned my loan.  
     In the 72 years since Wilmington Postal FCU was founded, the world has changed, but the need for reasonably priced financial services remains. Credit unions are still here: “Not for Profit, Not for Charity, But for Service.”
     When the Delaware Credit Union League was founded on September 18, 1958, Dwight David Eisenhower was our 34th President, Nikita Khrushchev became the Premier of the Soviet Union and made the Cold War a lot hotter, but more important to me was that my New York Yankees were on their way to meet the Milwaukee Braves in the World Series. In 1958 there were only eight baseball teams in each league. It was the first year that the Giants and Dodgers played in California after abandoning New York City; the Athletics, who had moved from Philadelphia in 1955, were playing in Kansas City, but would eventually join the Giants and Dodgers in the Sunshine State; and the Milwaukee Braves, who had moved from Boston in 1953, would eventually move to Atlanta. 
     Yes, things have changed in the past fifty years, but our basic need for financial independence and our desire to provide for our families remain a constant concern. Fifty years ago credit unions were there for us, and thanks to your efforts, they remain today the best deal for the American consumer. 
     We don’t tell the story of our roots as often as we should.  How many of our employees know it? We do a poor job of communicating our uniqueness; we let our competition define us. Many people find history boring, and I’ve noticed a few of you nodding off as I deliver these remarks, but if we tell our history, like the great story that it is, citing examples of what we do for people, people will listen.
     What makes credit unions different is our collective story. Banks tell their stories in their annual reports, in the price of their stock, in the details of mega-mergers, and through items in the financial sections of the newspaper. Our story is the story of people; we tell our story in the money we lend; we are “People Helping People.” If you could talk to the founders of our credit unions or talk to those brave souls who, against all the regulatory hurdles, are trying to birth new credit unions, you will hear the stories of their dreams – dreams of financial independence for the little guy. 
     No matter the size of your credit union, don’t distance yourself from our story. Size doesn’t matter, the dream matters. Don’t let the competition paint you with a broad brush. Paint yourself on your own terms. 
     Credit unions were founded for a noble cause. You, the volunteers and professionals who keep the dreams alive, are noble. Yes, noble! Perhaps a passé term in these jaded times, but it’s okay to pat yourselves on your noble backs for a job well done.
     Together let’s celebrate the 50th anniversary of the Delaware Credit Union League, the 72nd anniversary of the credit union movement in Delaware, the 100th anniversary of credit unions in America, and the efforts of all of those who came before us, those pioneers who looked beyond themselves and found solutions in the cooperative movement. Let us pass on our stories, our dreams and our mission to the next generation.

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League President Patrick Mahaney’s Comments at the League Annual Meeting on April 6, 2008

     Welcome to your Delaware Credit Union League's 50th Annual Meeting! We are gathered here to mark history. Looking back has been an interesting study. We noticed that fashion has changed dramatically in 50 years and I must say in most cases for the better.  
     However, my goal today is to try to encapsulate the present and foretell what we can expect for the future of credit unions. We need to look at our past to get an idea of our future. I see the words past and future as a word association – much like: right and wrong, up and down, left and right, yes and no, and Yankees and Red Sox (depending in what city you reside will determine which is the evil side of that equation). Speaking of the evil side, here’s another word association: Credit Unions and Banks. In each of these word associations, there is a decision-making period or process:

•    Whether the credit union answers yes or no is predicated upon the situation and an historical knowledge it has developed over time. The answer you give will affect the future of whoever receives that response. For example, as a loan officer, your yes or no on a loan application definitely affects that member’s future.
•    Right and wrong. Predicated mostly by how your parents taught you and raised you as kids and what you absorbed by watching them and others you respect, this drives your sense of duty, fairness and ethics. Credit unions by nature have respect for the law. Their very structure is designed to be advocates for their members and get them the best deal. Fairness and ethics are hallmarks of the industry.
•    Up or down. These variables are based generally on knowledge of location and past experience. All this gets you where you need to be in the future. Credit unions today rely heavily on the past to govern their decisions. We tend to hedge towards the safe and easy path. Today we see that times are changing and yet we lean on, if not sit on, our laurels. Historically we see technology driving membership to more progressive institutions. Members are requiring more services and delivery systems that match what they see outside our walls. Yet credit unions as a group move slowly to adapt.

     There is a correlation to all these word associations. None of them address the decision making process – it is implied. As board members and management, you are a part of that middle ground, the “Present.” You are the decision makers and molders of the future. In each of these word associations you must decide the path you will take. The past is our historical reference to all things. It helps us make decisions that impact our futures. Here’s a sample of how that works.
     In my first example, “Yes or No and the Loan Officer,” how did the credit union determine the answer? The past. After all, it’s credit histories that determine one’s worthiness to borrow funds. However, this ability also definitely affects our futures! How else can anyone buy homes and vehicles? Pay for education?
     So how we handle money in the past will affect our future. We as an industry teach our members to be mindful of their credit reports, and we assist folks in repairing and planning to improve their futures. It has been said that if we do not learn from our past, we are doomed to repeat our failures! A person’s credit history is a prime example of that principle.
     The past or history can teach and give us direction for our futures and aid us in the planning needed to assure that future. Thus our history aids in decision making, planning and adapting. We do this in the present. However the present is but a fleeting glimpse of time. For the decision today affects tomorrow but is history moments after the decision is made. We can elect to do nothing and continue to operate as we do today and suffer the consequences.
     This would seem to make a clear and obvious case for planning. Today NCUA examiners are ensuring that credit unions complete strategic planning. Without it, the future becomes scary and intimidating.
     The present is change. It is the period between past and future – the decision-making piece of our word associations. Change can be scary, and we are in a time period that is complicated, challenging and confusing. However, history shows that this is normal. 
     Today we face a tough economy with rising delinquency and mortgage foreclosure numbers that are in the millions. The U.S. government is proposing a stimulus package that most experts feel will do very little to stimulate the economy.
     We now hear Henry Paulson, Secretary of the U.S. Treasury, floating a trial balloon saying that all financial institutions should come under the same regulatory body. This would remove our tax free status and not-for-profit entity, increase fees and give a raw deal to consumers by effectively converting credit unions into banks.
     This is driven by the disaster created by our friends in the banking industry, helped greatly by the investment community.  As an industry we can claim this is not of our creation. Our very nature kept us from this disaster, but we will feel the effects as part of the secondary market. When someone is close to losing their home, the tendency is to let other loans lapse to try and save the home. That is where we will feel the pain.
     Clearly this would not be the best for credit unions. Credit unions of today need to plan for tomorrow but remember your membership in the decision-making present.
     Credit unions of the future need to be tied more closely to their memberships, work with their communities, and become good neighbors. We need to continue to be ever watchful over legislation and be ready to rally to prove we are a force to be reckoned with.
     We need to be keenly attuned to our memberships and lead in the creation of services that help generate or repair credit, create wealth, and instill a sense of financial responsibility in children.
     We have an opportunity to lead American consumers into a bold new world of financial responsibility by stepping in to assist Americans in trouble. That has been a hallmark of our past – people helping people. At this time, our past comes full circle to the present, and that can mean good things for the many new members we will draw to the safety and security of a people’s movement – a credit union movement.
     The glories of the past are behind us, the reality of the present is upon us, and the challenges of the future are before us!

Ladies and gentlemen of the Delaware Credit Union League: Thank you for your attention, your passion, and your commitment.

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).