Members First - California and Nevada Credit Union Leagues

credit union
Members First
Vol. 40 | No. 1 | Dec. 2013/Jan. 2014
Feature Story on Page 12
A CEO’s Thoughts: ‘It’s More than a Job’ | Page 6
New Column: Where’s the Heat? | Page 10
2013 Annual Meeting & Convention | Page 18
From ‘Okay’ to ‘Good’ or ‘Great’ | Page 22
credit union
Editiorial Deadline Schedule
Credit Union Digest publishes six bi-monthly
issues per year.
Themes:
Dec. 2013/Jan. 2014 | Vol. 40 | No. 1
February/March 2014 Issue
DEADLINE: Dec. 12, 2013
‘Movement’ or ‘Industry’—Do You Care?
April/May 2014 Issue
DEADLINE: Feb. 13, 2014
Coming Soon: Credit Union, M.D.
credit union
Members First
Vol. 40 | No. 1 | Dec. 2013/Jan. 2014
June/July 2014 Issue
DEADLINE: April 17, 2014
2020: Will Your Credit Union Survive?
Feature Story on Page 12
August/September 2014 Issue
DEADLINE: June 19, 2014
Your CU—Anytime, Anywhere
Read CU Digest online by visiting
www.ccul.org/publications/cudigest
What's Inside
December 2014/January 2015 Issue
DEADLINE: Oct. 16, 2014
Land of the Giants
Themes subject to change. For more information, please contact Credit Union Digest
Editor-in-Chief Carol Payne at 800.472.1702,
ext. 6040, or at cpayne@ccul.org.
Congratulations, and thank you, to the following credit unions that recently became
members of the California Credit Union
League:
Fresno County FCU
Susan Ryan, CEO
susanr@fresnocfcu.org
$490 million in assets
55,000 members
Fresno, CA
Rolling F CU
Doug Aleson, CEO
dougaleson@att.net
$45 million in assets
6,300 members
Turlock, CA
San Bernardino Community
College District Employees FCU
Heather Jedinak, Manager
hjedinak@sbccdcc.ca.us
$2.8 million in assets
390 members
San Bernardino, CA
Three California credit union CEOs and their
employees come forward to discuss what it means to
go above and beyond in helping secure a firm foundation for the movement’s future, as many in the
industry are increasingly leading the “all hands on
deck” charge when their members need them most.
A CEO’s Thoughts: ‘It’s More than a Job’ | Page 6
New Column: Where’s the Heat? | Page 10
2013 Annual Meeting & Convention | Page 18
From ‘Okay’ to ‘Good’ or ‘Great’ | Page 22
October/November 2014 Issue
DEADLINE: Aug. 14, 2014
The Right Fit
Please Welcome Our
New Members
On The Cover:
NEW
5
league governance
New 2013–2014 League Board Installed
6
a ceo's thoughts on leadership
Finish What You Start—‘It’s More Than a Job’
8
advocacy
California Freshmen Stand Up for CUs
9
legal
Know How UCL Can Affect Your CU
10
12
where's the heat?
Hot Topics That Won't Waste Your Time
feature story
Advocacy: All Hands on Deck
16
statement of ownership
17
2013 chapter forum
Chapter Relevance Examined at Forum
18
annual meeting & convention
REACH Up • REACH Out • REACH Deep
20
asked & answered
‘Opt Out’ Notices: Short Versus Long
21
research & information
The Rules on Check Date Discrepancies
22
economic perspective
From ‘Okay’ to ‘Good’ or ‘Great’
23
market performance
Growing Loans: Find Your Direction
25
credit union solutions
Student Lending: Golden Ticket to Gen Y
26
closing thoughts
The CFPB: My “Meltdowner’s” Nightmare
27
to our readers
Credit Union Digest: It’s All About YOU
credit union digest | december 2013/january 2014 | members first
3
EDITOR-IN-CHIEF
Carol E. Payne, Vice President, Communications and
Marketing | cpayne@ccul.org
credit union
ASSOCIATE EDITOR
Matt Wrye, Manager of Publications | mattw@ccul.org
ASSISTANT EDITOR
George Sun, External Marketing & Member Communications
Manager | georges@ccul.org
Cindy Tullues, Senior Marketing and Member Communications
Writer | cindyt@ccul.org
EXECUTIVE STAFF
Diana R. Dykstra, President and Chief Executive Officer
Lucy Ito, Executive Vice President and Chief Operating Officer
Bob Arnould, Senior Vice President of Advocacy
Cindy Cavanaugh, Senior Vice President and Chief Financial Officer
Tony Kitt, Senior Vice President of Strategic Innovation and Planning
Larry Palochik, Senior Vice President of Member Solutions
Sharon Weber, Executive Assistant
GRAPHIC DESIGN
Natalie J. Moreno, Senior Graphic Designer
Danielle Price, Graphic Designer
CONCEPT
Carol Payne | Matt Wrye
EDITORIAL CONTRIBUTORS
Victoria Allen | Melissa Ameluxen | Greg Badovinac |
David Creager | Donna Dyer | Jeremy Empol |
Rita Fillingane | Dwight Johnston | Clarissa Martin |
Dianne Molvig | Arnold Ramirez | Tina Ramos-Ingold |
Andrea Svoboda | Cindy Tullues | Tonja Wheatley |
Thomas H. Wolfe
Providing Innovative Support and Services to Member Credit Unions Since 1933.
Winner of the following:
• 2012 CUNA/AACUL Pro and Blockbuster Honorable Mention
• 2011 and 2012 Communicator Award of Distinction
• 2011 CUNA/AACUL Pro and Blockbuster Award
CALIFORNIA LEAGUE BOARD OF DIRECTORS
At-Large Director Teresa Freeborn | 310.607.2177 | tfreeborn@xfcu.org
At-Large Director Teresa Halleck | 858.597.8690 | thalleck@sdccu.com
At-Large Director Eileen Rivera | 310.491.7500 | erivera@SkyOne.org
At-Large Director Jon Hernandez | 310.371.4242, ext. 217 | jhernandez@calcomcu.org
At-Large Director Hank Barrett | 209.549.8511, ext. 3000 | hbarrett@valleyfirstcu.org
At-Larger Director Linda Walmsley | 323.845.4475 | lwalm@firstent.org
Group A Director Chris Coursen | 714.641.5946, ext. 12 | chris@fairviewcu.org
Group B Director Charles Papenfus | 909.822.1810, ext. 215 | chuckpapenfus@inlandvalleyfcu.com
Group C Director Rick Hanan | 510.483.1300 | rhanan@smw104fcu.org
Group D Director Marla Shepard | 858.636.4221 | mshepard@calcoastcu.org
PHOTOGRAPHY
Natalie J. Moreno | Carol E. Payne | Cindy Tullues | Matt Wrye
CONTACT INFORMATION
CALIFORNIA LEAGUE EXECUTIVE COMMITTEE
Chairman Teresa Freeborn | 310.607.2177 | tfreeborn@xfcu.org
Internet address | www.ccul.org
Mailing address | P.O. Box 51476, Ontario, CA 91761-0076
Communications Department Fax | 909.390.3014
Vice Chairman Jon Hernandez | 310.371.4242, ext. 217 | jhernandez@calcomcu.org
Credit Union Digest (ISSN#08921075) is published
bi-monthly by the California and Nevada Credit Union
Leagues, 2855 E. Guasti Road, Ste. 600, Ontario, CA 91761-1250;
1201 K Street, Suite 1050, Sacramento, CA 95814.
CUNA BOARD MEMBERS
Annual subscription rate: $48 members, $250 non-members. To
subscribe, contact LaDonna Kohler at ladonnak@ccul.org. Periodicals
postage paid at Ontario, CA and additional mailing offices.
ADVERTISING
Matt Wrye, Manager of Publications | mattw@ccul.org
POSTMASTER
Send address changes to Credit Union Digest, P.O. Box 51476,
Ontario, CA 91761-0076. Single issues are available; call
909.212.6044.
At-Large Charles Papenfus | 909.822.1810, ext. 215 | chuckpapenfus@inlandvalleyfcu.com
Jeff York* | 805.733.7640 | jeff.york@coasthills.coop
Brett Martinez* | 707.576.5101 | bmartinez@redwoodcu.org
NEVADA LEAGUE BOARD OF DIRECTORS
Chairman Wayne Tew | 702.939.3020 | teww@ccculv.com
Vice Chairman Eric Estes | 702.293.7772, ext. 183 | eestes@boulderdamcu.org
Secretary/Treasurer Wallace Murray | 775.882.2060 | wmurray@gncu.net
Director Barbara Reuter | 775.945.2421, ext. 4013 | breuter@fhcunv.org
Director Dennis Flannigan | 775.789.3108 | dennis@greatbasin.org
* Ex-Officio California League Board Member
The California and Nevada Credit Union Leagues reserve
the right to edit letters to the editor and all submissions.
The Leagues do not take responsibility for the return of
unsolicited materials. For more information, contact
Editor-in-Chief Carol Payne at 909.212.6040.
Credit Union Digest is printed on recycled paper.
©2013 California and Nevada Credit Union Leagues
USPS 011-679
www.UniteForGood.org
4
credit union digest | december 2013/january 2014 | members first
league governance
New 2013–2014 League Board Installed
T
he California Credit Union
League and Nevada Credit
Union League board meetings
were held on Oct. 29 during general
session at this year’s Annual Meeting
and Convention, giving conference
attendees the opportunity to be a part
of this time-honored annual tradition.
Teresa Halleck—CEO of San Diego
County CU and outgoing chairman of
the California League—thanked board
members for their time and effort in
helping guide the League through
a year filled with opportunities and
challenges. She recognized California
credit unions for continuing to seek
new ways to help their members
thrive.
The California League board and
general session attendees applauded
Halleck for her leadership during the
past two years.
Xceed Financial FCU CEO Teresa
Freeborn officially became the California League’s new board chairman
during the meeting. Freeborn said she
looks forward to engaging with the
League and its member credit unions
as 2013 transitions into a new year.
Wayne Tew, CEO of Clark County
CU and chairman of the Nevada
League, was retained as chairman of
Nevada for another year. General session attendees and the Nevada League
board thanked Tew for his leadership
and said they look forward to another
year of his chairmanship.
Tew said Nevada credit unions are
prepared to serve their members for
another year as the national and state
economies continue recovering.
2014 California Executive
Committee
•Chairman: Teresa Freeborn, Xceed
Financial FCU, term ends 2014
• Vice Chairman: Jon Hernandez,
CalCom FCU, term ends 2014
•At-Large: Charles Papenfus,
Inland Valley FCU, term ends 2014
California League Board of
Directors
•At-Large: Teresa Freeborn,
Xceed Financial FCU, term ends
2016
•At-Large: Teresa Halleck, San
Diego County CU, term ends
2014
•At-Large: Eileen Rivera, SkyOne
FCU, term ends 2015
•At-Large: Jon Hernandez, CalCom FCU, term ends 2016
•At-Large: Hank Barrett, Valley
First CU, term ends 2014
•At-Large: Linda Walmsley, First
Entertainment CU, term ends
2014
• Group A: Chris Coursen, Fairview Employees FCU, term ends
2015
• Group B: Charles Papenfus,
Inland Valley FCU, term ends
2016
• Group C: Rick Hanan, SMW 104
FCU, term ends 2014
• Group D: Marla Shepard, California Coast CU, term ends 2015
•Ex-officio: Jeff York, CoastHills
CU—CUNA Director
•Ex-officio: Brett Martinez, Redwood CU—CUNA Director
Nevada League Board of
Directors
The 2013-2014 California Credit Union League Board of Directors (L-R): Hank Barrett, CEO of Valley First
CU; Eileen Rivera, CEO of SkyOne FCU; Charles Papenfus, CEO of Inland Valley FCU; Diana Dykstra,
President and CEO of the California and Nevada Credit Union Leagues; Rick Hanan, CEO of SMW 104
FCU; Teresa Freeborn, CEO of Xceed Financial FCU and Chairman of the California Credit Union League;
Jon Hernandez, CEO of CalCom FCU; Linda Walmsley, Director of Compliance for First Entertainment
CU; Marla Shepard, CEO of California Coast CU; and Chris Coursen, CEO of Fairview Employees FCU
•Chairman: Wayne Tew, Clark
County CU, term ends 2015
• Vice Chairman: Eric Estes, Boulder Dam CU, term ends 2014
•Secretary/Treasurer: Wally Murray, Greater Nevada CU, term
ends 2015
•Director: Dennis Flannigan,
Great Basin FCU, term ends 2016
•Director: Barbara Reuter, Financial Horizons CU, term ends
2014
The 2013-2014 Nevada Credit Union League Board of Directors (L-R): Wally Murray, CEO of Greater
Nevada CU; Eric Estes, CEO of Boulder Dam CU; Wayne Tew, CEO of Clark County CU and Chairman of the Nevada Credit Union League; Dykstra; Barbara Reuter, CEO of Financial Horizons CU;
and Dennis Flannigan, CEO of Great Basin FCU
credit union digest | december 2013/january 2014 | members first
5
a ceo's thoughts on leadership
Finish What You Start—‘It’s More Than a Job’
By Matt Wrye, Manager of Publications
I
t felt like a dark day for Barbara
Lamberth, a day when “you’re
ready to call it quits.” Then someone said something she’d never forget.
“Stick with it, Barbara. Ride this
out. There’s a light at the end of the
tunnel,” she recalls a colleague telling
her. “He inspired me to stay here.”
It was 1974 and Lamberth was
23 years old, serving as a receptionist
for Downey School Employees FCU.
California was at the forefront of the
aerospace industry, and destiny had its
sights set on Jerry Brown as the next
governor of the state—his first time in
office. Nearly 23,000 U.S. credit unions
were serving members, with 1,800
rooted in the Golden State.
The City of Downey, similar to so
many other Los Angeles County suburbs, was taking on the look and feel of
one of those “all-American” cities. Even
today, the world's oldest McDonald’s
restaurant sells burgers and fries out
of a small 1950s archway structure on
Lakewood Boulevard.
If anyone can attest to this, it’s
Lamberth, a local girl through-andthrough. “I lived in the same house in
Downey from the day I was born until
the day I got married,” she said.
Lamberth retired as CEO of
Downey FCU in October. For 40 years
she was involved—at one time or
another—in every role possible, except
accounting. She was CEO since 2005.
“I’m a working CEO. I like to get
in there and be involved,” Lamberth
said. “I like to see results and accomplishments. I love taking a project from
beginning to end.”
Her passion is lending, or “helping
people,” as she describes it. She’d love
to come back as a teller “in the next
life.”
As the local community matured
over the years, so did the credit union.
Downey School Employees FCU was
chartered to serve school district employees in 1957, just one year after the city
6
incorporated. The
credit union added
hospital and medical
staff to its membership
after merging with
Downey Community Hospital FCU in
1974, and eventually
changed its name to
what it is today after
being granted a community charter.
“Even though we
received our community charter in 2000,
we still didn’t want to
serve all of Southern
California,” Lamberth said. “Downey
was—and always has Above: Barbara Lamberth takes a break from life inside the office to reminisce about Downey FCU’s history near the entrance of the credit union.
been—our focus.”
At $180 million in Right: With scenic old town Downey behind her, Lamberth poses for a
photo on the credit union's second story balcony just a few weeks before
assets and more than
retiring in late October.
13,000 members, the
credit union’s leaders aren’t focused on
Lamberth notes how the credit
growing bigger. If it’s meant to be, it will
union industry was a victim of circumbe, says Lamberth. Its operations were
stance during the financial crisis and
once housed in a space no bigger than
ensuing economic drag. She feels “very
the office it currently allots its CEO. “We
lucky” to have taken over a financially
run really lean.”
sound credit union before the financial
The credit union was always a
markets crashed.
rule-follower. It kept its loan portfolio on
“Now that the recession is behind
the conservative path. Yet it balanced
us, we need to look toward the future,”
“head and heart” by finding ways to
Lamberth said. “We never want to
give members a leg up in life, even as an compromise the soundness of our credit
evolving business model found its way
union as we guide our members from
into different areas of this cooperative.
a young age into their senior years. I
Decades ago, many for-profit busihope I’ve left this credit union in a posinesses essentially espoused the same
tion where it can accomplish that.”
“people helping people” philosophy
BARBARA LAMBERTH
of credit unions, but in their own way,
Lamberth said.
• Retired CEO of Downey FCU
“I think our society lost that aspect
• Served for 40 years
of life—both businesses and people,”
• CEO from 2005−2013
she said. “Now businesses are turning
DOWNEY FCU
back to a more service-oriented model.
But here at Downey Federal Credit
• Founded: 1957 (Downey School
Union, we feel we’ve never lost that.
Employees FCU)
We’ve had members stick with us, and
• Assets: $180 million
we want to give back to them.”
• Members: 13,300
credit union digest | december 2013/january 2014 | members first
What 40 Years
Taught Her:
Take Care of Your Own
“You have to look at what works for your credit
union, not what others are doing. We always had
one focus: To be the financial institution of choice
for the Downey community. We can’t worry about
others. We worry about Downey FCU. We have to
take care of our own first.”
It’s More Than a Job
“Are we being everything our members expect of
us in this economy? Am I here to get a paycheck,
or to make sure this organization can meet its
needs and serve members to the best of its ability?
If we can’t service our members in a way they
deserve and need, then our credit union shouldn’t
be here.”
Listen, Listen, Listen
“You only fight the battles you really have to win.
Some credit union CEOs take on their regulators
head to head, and I ask ‘Why?’ I like to sit back,
listen, keep my mouth shut, and concentrate on
what matters most. I tell my staff, ‘I might not be
the smartest person out there, but I can listen.’
Education and knowledge are powerful, but it takes
listening to make things work.”
Find the Right Balance
“We’re a little late on the technology side. Do we have
to be leading edge right now? Is it worth spending
money just to benefit a few individuals? These are
the difficult questions we have to balance with what
our aging membership really needs. In everything, we
want to do what’s best for our members.”
Do What Makes Sense
“We implement initiatives when it makes sense for
our members. You never want to start something
and do it halfway. You want to make sure it’s going
to work, and that takes time.”
Engage the Next Generation
“It’s my hope that our credit union’s next
generation of employees can raise the bar and take
things to the next level. There’s tremendous talent
out there. We need to listen and digest what our
future leaders are saying, and not overly criticize
them. We can’t run this movement without their
thoughts. We need to give them the opportunity to
grow and show them there’s more to this industry
than just their jobs.”
Remember Your Roots
“Because we are safe and sound, we’re able to take
a little more risk and give back to our members. The
risk will be minimal, but the goodwill and rewards will
be wonderful. That’s what a credit union is all about.”
credit union digest | december 2013/january 2014 | members first
7
advocacy
California Freshmen Stand Up for CUs
By Jeremy Empol, Vice President of Federal Government Affairs
I
n a show of strong support for the credit union
movement, the following
California freshmen (first-term
members of Congress) took the
initiative to support the federal
credit union tax exemption in an
open letter to the House Ways
and Means Committee.
Led by Reps. Jared Huffman, D-Santa Rosa, and Paul
Cook, R-Barstow, this brief letter
affirms the group’s outright support for the credit union movement’s tax status.
Other legislators signing
the document include Reps.
Ami Bera, D-Sacramento; Julia
Brownley, D-Oxnard; Tony
Cardenas, D-Pacoima; Doug
LaMalfa, R-Chico; Alan Lowenthal, D-Long Beach; Scott Peters,
D-San Diego; Eric Swalwell,
D-Livermore; Raul Ruiz, D-Palm
Springs; and Mark Takano,
D-Riverside.
Please take the time to call
the offices of any—or all—of
these members of Congress to
thank them for their support.
If you have questions on
how you can further show
your appreciation for these
representatives, please contact
Jeremy Empol, the Leagues’ vice
president of federal government
affairs, at jeremye@ccul.org.
L-R: Rep. Jared Huffman, D-Santa
Rosa; Rep. Paul Cook, R-Barstow
8
credit union digest | december 2013/january 2014 | members first
legal
Know How UCL Can Affect Your CU
By Thomas H. Wolfe of Moore Brewer Wolfe Jones Tyler & North
I
n Rose v. Bank of America1, the
California Supreme Court held that
a claim under California’s Unfair
Competition Law (UCL) may be based
on violations of the federal Truth in
Savings Act (TISA) even though Congress repealed the provision of TISA
authorizing a private right of action.
The UCL is found in California
Business and Professions Code §17200,
et seq., and defines “unfair competition” as any business act or practice
that is unlawful, unfair or fraudulent,
as well as deceptive, unfair, untrue, or
misleading advertising.
Background
The plaintiffs in Rose brought
a class action suit against Bank of
America, claiming unlawful and unfair
business practices based on a violation
of TISA’s disclosure requirements2.
The bank objected on the grounds
that the repeal of former §4310
reflected Congress’ intent to bar any
private right of action. Former §4310
authorized account holders to seek
civil damages for noncompliance, but
that provision was repealed in 1996,
effective Sept. 30, 2001.
The trial court dismissed the action,
and the court of appeal affirmed.
The U.S. Supreme Court, however,
reversed it, holding that a state UCL
claim may be based on violation of a
federal statute, even after the provision
authorizing civil actions is repealed,
“when Congress has also made it plain
that state laws consistent with the federal statute are not superseded.”
State relating to the disclosure
of yields payable or terms for
accounts to the extent such
State law requires the disclosure of such yields or terms for
accounts, except to the extent
that those laws are inconsistent with the provisions of this
chapter, and then only to the
extent of the inconsistency. The
Bureau may determine whether
such inconsistencies exist.”
The court reasoned that, by leaving
the savings clause in place, Congress
explicitly approved the enforcement of
state laws relating to the disclosure of
yields payable or terms for accounts
that are consistent with the provisions
of TISA. The bank argued the UCL is
not such a statute, but the court noted
that a UCL action does not “enforce”
the law on which a claim of unlawful
business practice is based.
The court cited Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel.
Co.3, which states:
“By proscribing ‘any
unlawful’ business practice,
section 17200 ‘borrows’ violations of other laws and treats
them as unlawful practices
that the [UCL] makes independently actionable.”
In other words, the UCL does not
depend on the existence of a private
right of action in an underlying statute.
It does not merely bolster the enforcement of another statute, but provides
an independent remedy for the act
of engaging in “unlawful, unfair or
fraudulent” business practices. It is
designed to serve as a deterrent to
such practices and the resulting harm
to consumers and competitors.
Because the plaintiffs were neither
attempting to enforce nor seek damages
for TISA violations, and because the equitable remedies of restitution and injunctive relief sought under the UCL were
consistent with the congressional intent
of TISA, the UCL claim was proper.
What CUs Should Know
UCL claims can be based on any
business practice deemed “unlawful,
unfair or fraudulent.” An underlying
statute does not need to be violated in
order to support a UCL claim.
Credit unions are encouraged to
work with their legal counsel to ensure
that policies, procedures, forms, and
practices are accurate and in
compliance.
Rose v. Bank of America, 57 Cal. 4th 390; 159 Cal. Rptr. 3d
693 (Aug. 1, 2013)
12 U.S.C. §4301, et seq.
3
Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel.
Co., 20 Cal. 4th 163, 83 Cal. Rptr. 2d 548 (1999)
1
2
A Proper Claim
The court looked at §4312, referred
to as TISA’s “savings clause,” which
preserves the authority of states to regulate bank disclosures so long as state
law is consistent with TISA. It states:
“The provisions of this
chapter do not supersede any
provisions of the law of any
credit union digest | december 2013/january 2014 | members first
9
Where's the Heat?
Hot Topics That Won't Waste Your Time
Editor’s Note: It is our pleasure to introduce “Where’s the Heat?,” a new column delivering strategic advice from leaders of
the Leagues’ business units! The following is geared to provide you with at least one golden nugget of information that could
help drive your credit union’s goals toward success. Enjoy!
NO INTERFERENCE
Legendary basketball coach John Wooden once said, “Don’t let what you cannot do interfere with what you can do.” As
credit unions discuss the future direction of their organizations, these words hold significant meaning. We commonly refer
to this exercise as “strategic planning.” In practice, however, strategy and planning, while very closely related, should be
two distinct endeavors. Strategy should be focused on the purpose or mission of your credit union. What do you want your
credit union to be? In what competitive arenas will you focus your efforts? What will be your primary competitive position?
Operational or business planning then explores how you might advance your strategy. Make no mistake, you will have
capabilities and limits that will impact the manner and speed in which you implement your strategy, but they should not
define what you aspire to be in the long term. So to borrow on coach Wooden’s quote: Don’t let what you are not able to
do, relative to your strategy, interfere with what you can do. | Questions? Contact
Mark Klinkert, VP of Education and Training for the Leagues, at 909.212.6002 or
markk@ccul.org
TAKE SMALL STEPS
If you’re afraid to plunge into the realm of digital media, you’re in good company. Don’t feel
overwhelmed. There are small steps any credit union can take to better engage their members through technology.
When it comes to young consumers, it’s all about video, video, video. While pamphlets, flyers, brochures, and
print advertising are important, video is increasingly trumping those other mediums. That means how your credit
union interacts with Gen Y is critical, both inside your branch and on the outside. Retaining and attracting younger
adults takes a visual messaging presence via e-mail, the Internet, and mobile platforms. Too scary? Too costly?
You’d be amazed at how far the smallest digital media budget can propel your credit union. Don’t “go big” all at
once. A simple, targeted plan is all you need to get started. I remember when
computers were a bit scary, perhaps even risky, 15 to 20 years ago. Over time,
people of all ages adapted, just as they are today. Your credit union can adapt,
too. All it takes is a little willpower. | Questions? Contact Joe Keller, VP of C-Sun
Studios and Digital Media for the Leagues, at 909.212.6020 or jkeller@ccul.org
10
credit union digest | december 2013/january 2014 | members first
STRATEGIC PLANNING | MEDIA | HEALTH-BENEFITS | COMPLIANCE | MARKETING
HEALTH CARE LAW: STAY FOCUSED
With a new year in sight, it’s crucial your credit union stays focused on a few key pillars of the Patient Protection and Affordable
Care Act. In addition to CUVitality, credit unions with fewer than 50 employees should be sure to consider the benefits of the
public marketplace (aka “the exchange”). Using the public marketplace may end up being more financially beneficial to your
credit union and staff. For larger credit unions, make sure your plan complies with the minimum coverage requirements,
and that your employees’ contribution toward medical benefits is within the boundaries of the law. There’s a myth that major
requirements of the law have been postponed. However, the individual mandate is still in place, as well as the requirement for
large employers to provide insurance. The penalty for not complying is what has been delayed. Additionally, the “exchange
notices” your credit union sent to employees by Oct. 1 should also be sent to new employees going forward. Keeping these
provisions top-of-mind will help your credit union as it navigates into 2014. | Questions?
Contact Lynn Athens, VP of Collaborative Office Solutions and Human Resources for the
Leagues, at 909.212.6038 or lynna@ccul.org
ARE YOU READY?
In case you’ve been living under a rock, new mortgage rules from the Consumer Financial Protection Bureau (CFPB) are upon us. Is
your credit union prepared? Beginning January 2014, credit unions must comply with CFPB rules (changes to Regulations Z, X, and
others) regarding ability to repay, mortgage originator compensation, expanded high-cost mortgage and homeownership counseling
coverage, mortgage servicing, and higher-priced mortgage appraisals. By now, you have probably taken steps to review and
update your credit union’s mortgage policies and procedures. Without a doubt, this is most likely in addition to your normal duties,
making it difficult to stay ahead of the compliance curve. I encourage you to visit www.ccul.org/research, the Leagues’ Research
and Compliance webpage. It’s your one-stop resource for everything compliance, as well as
shared compliance and internal audit services under CURoots Services. We’re here to help—
and only a click away! | Questions? Contact Rita Fillingane, VP of Research and Collaboration
for the Leagues, at 909.212.6055 or ritaf@ccul.org
THE POWER OF E-MAIL
Social media is all the buzz, and for good reason. Your credit union certainly doesn’t want to miss out on
the opportunity to engage in what is essentially a virtual cocktail party. But let’s not forget about something
that’s tried and true: e-mail. E-mail is one-to-one, personal, and its use remains pervasive in the online community. You
may have noticed how Facebook, Twitter, and other websites almost ubiquitously require your name and e-mail address. It has
become an integral part of your members’ digital identity as much as a mailing address or cell phone number. Social media adds
to the conversation about your credit union, but it’s not an impactful source of traffic to websites or conversions on those sites.
It’s an awareness-building tool, not so much a purchase-making tool. If your credit union hasn’t done so, I strongly encourage
leveraging the power of e-mail as a critical part of your member acquisition and product adoption strategies. And if you already
have an e-mail strategy in place, there always remain opportunities for better implementation. A carefully crafted messaging and
execution strategy can bring you closer to reaching those meaningful conversions you
desire. | Questions? Contact George Sun, Manager of Image Arc Marketing Solutions, at
909.212.6047 or georges@ccul.org
credit union digest | december 2013/january 2014 | members first
11
feature
By Dianne Molvig
I
t takes no arm-twisting to motivate
Jennifer Gorden to rally in support of
credit unions. Her reason is simple.
“Credit unions have been there for
me since I was young, when my mother
opened an account for me,” said Gorden,
an accountant for United Health CU.
Now, more than ever, it’s time to give
back to credit unions—and to step up and
advocate like never before, she says.
Gorden is one of thousands of
credit union employees in California and
Nevada who are shifting their volunteer
spirit into high gear as the threat of federal taxation rears its head once again.
The “all hands on deck” philosophy is
striking a chord with staff, volunteers,
and members nationwide who have
eagerly answered the call to spread the
“Don’t Tax My Credit Union” message.
The Credit Union National Association (CUNA), in conjunction with state
leagues, launched this ambitious campaign in May. With 245,000 letters sent
12
to Congress from California and Nevada
as of mid-November, and 1.2 million
from all states, the efforts of Gorden and
her peers are not in vain.
She’s never signed up for a bank
account, but some of her friends and
family have. Sometimes “that’s hard
to watch,” Gorden said. She’s watched
them rack up fee upon fee and land in a
financial rough spot with no help
of escape.
“I don’t have to use a Bank
of America ATM and pay $2.50
every time I need money,”
Gorden said. “As a credit union
member, I have a better option,
and I try to pass on that message to everybody.”
L-R: United Health CU
CEO Linda White and
Accountant Jennifer
Gorden
credit union digest | december 2013/january 2014 | members first
At the Heart of the Matter
Months ago, United Health CU put
the wheels in motion to launch an electronic newsletter for its 4,600 members.
The nationwide “Don’t Tax My Credit
Union”
feature
She questions that logic. “If they
If credit unions
campaign provided
carve
out a certain asset size, it could
lose
their
tax
exempthe perfect reason
"As a credit union
open the door for taxation of smaller
tion, “the landscape
to forge ahead.
credit unions down the road.”
and climate will
“We sent a
member, I have
White believes credit unions must
look so different,”
direct email blast
a better option,
White said. “And the stand together, whether it’s on the tax
to all of our memexemption or any other political advocapeople we employ
bers, which is the
and I try to pass
here—and what they cy issue. Take, for example, the effort to
first time we’ve
do every day—would raise the cap on member business lendever done that,”
on that message to
ing. While it’s a non-issue for United
look completely difsaid CEO Linda
everybody.”
Health CU, it’s still a critical factor for
ferent.”
White.
other credit unions.
Her staff’s
It was easy,
“We need to have that tool in our
enthusiasm
for
the
thanks to the
—Jennifer Gorden, Accountant
toolbox,”
White said.
movement
is
shining
resources and
for United Health CU
She applauds CUNA and the
more than 75 years
information availLeagues for collaborating together on
after the Fedable from the
the “Unite for Good” campaign. “We
eral Credit Union Act was amended by
California and Nevada Credit Union
need to speak with one voice,” she
Congress to exempt federally chartered
Leagues, White said. She customized it
said, “and let everybody know we are
credit unions from income taxes. The
by adding a personal message, explainunited.”
nation’s 6,900 credit unions pay a mixing to members that although the credit
ture of taxes on payroll, property, sales,
union didn’t usually send out mass
emails, “this was an issue near and dear and unrelated business income, dependDemocracy in Action
ing on whether they’re state or federally
to me.”
For Stacy Oates, getting involved
chartered, but not corporate income.
It was just the beginning. Employees
in advocacy is much like exercising her
White has heard her share of
and volunteers posted Facebook messagright to vote.
opposing viewes, sent "tweets" through Twitter, wrote
“It’s important
points from credit
letters, and signed up for Connect For
to
remember
every
“When we join
union CEOs. If
The Cause, the Leagues’ online advocacy
day that we have a
the movement is
network that brings legislators virtually
together, the power of
voice,” said Oates,
face to face with the opinions of pro-credit subjected to fedbranch manager
our voices can achieve
eral income taxes,
union constituents in their districts.
for Ventura County
credit unions will
The “don’t tax” message is also
CU. “When we join
amazing things.”
convert to mutual
prominent on United Health CU’s websavings banks
site, as well as when members are put
—Stacy Oates, Branch Manager
or “Subchapter
on hold via the phone system.
for Ventura County CU
S” corporations,
White engages her staff by drivwhere taxation
ing home the fact that preserving
would get passed
credit unions’ tax exemption will have
down to member-owners in a similar
an enormous impact on what credit
fashion to shareholders of Subchapunions—and employees—can do for
ter-S banks. Credit unions would
members. She makes it personal.
have to adapt, those CEOs argue.
“I tell them, ‘Think of a member
“That’s not what I work for,”
you’ve helped, and then think how that
White emphasized. “We have to
member might not have been helped
keep that in the forefront of our
by going to a bank,’” White said. “Our
minds.”
tax-exempt status affects the way we do
Another argument is,
business here. It makes a big difference
only the largest credit
in how we interact with members and
unions would lose their
serve them.”
tax exemption. Smaller
This, she tells her employees, has
ones need not worry.
bearing on how they do their jobs, and
how they feel about their jobs. The message is clear: If you enjoy helping people
the credit union way, it’s essential credit
L-R: Ventura County
CU Branch Manager
unions retain their tax-exempt, not-forStacy Oates and CEO
profit, cooperative business model.
Joe Schroeder
credit union digest | december 2013/january 2014 | members first
13
feature
together, the power of our voices can
achieve amazing things.”
Oates has been talking up credit
unions with family, friends, and at the
local chamber of commerce to explain
why the tax exemption is vital to not
only members, but the community as a
whole.
“We have to have choices in the
financial industry,” she said. “The success of Bank Transfer Day shows that
people want an alternative to banks.
So it’s important that we talk about the
philosophical differences between forprofit banks versus credit unions.”
There couldn’t be a better time to
spotlight the credit union difference,
said Ventura County CU CEO Joe Schroeder. “If we can’t do that today with
the reputation the big banks have, then
when could we do it?” he said.
The “Don’t Tax My Credit Union”
campaign is a great chance for credit
unions to tell their story. “It’s up to us to
advocate our position,” he said. “That’s
really what democracy is all about.”
Schroeder emphasizes that everyone
needs to be involved. Leaving advocacy
solely to the Leagues and CUNA will
come up short in results. As experienced
as they are, these organizations still need
the full engagement of credit unions if
they plan on hitting legislative home runs
in state capitols and on Capitol Hill.
“I’ve been in meetings with congressional representatives or chiefs of
staff. I’ve heard them say, ‘I appreciate
the trade association’s position, but I
want to talk to people who actually run
credit unions,’”
he said. “If I were
a congressman,
“As a credit union
that’s what I
would say too.”
employee… we can
Credit unions
cannot simply
show we truly believe
pay their annual
in what we do.”
dues and expect
the groundwork
in advocacy to
—Maricela Jauregui, VP of
be laid for them.
Member Services for South
The Leagues and
Bay CU
CUNA are “only as
strong as the legs
underneath them,”
Schroeder said.
“And the legs underneath
are all the credit unions
in California, Nevada,
and across the country.”
He doesn’t particularly like knocking on
doors in Congress, sending letters, and so on.
“But that’s part of
my job,” he added.
Schroeder
wishes more
credit union
leaders would
see it that way.
Advocacy is “such a
small yet important
investment.” He recognizes some boards
have difficulty comprehending the need
for advocacy.
“But if we don’t
step up and become
advocates for our
position, then who’s
going to do that?” he
said.
The time to
step up is now,
not later, Schroeder said. CUNA and
L-R: South Bay
CU CEO Jennifer
Oliver, Member
Services Representative Suzette
De Alba, and VP of
Member Services
Maricela Jauregui
Pump it Up
Like body muscle, building political muscle takes time and effort. If you lapse
into idleness, you lose strength.
It boils down to a basic lesson: An ounce of prevention is worth a pound of
cure.
That’s why credit unions need to exercise and develop their political strength
on an ongoing basis, said Joe Schroeder, CEO of Ventura County CU.
“That’s why I think it’s important we develop relationships with our members
of Congress, and that we do this when they’re in their district offices, not only
in Washington.”
Years ago, credit unions sat back, resting on the fact that they were “the good
guys.” They saw no need to get political, he said.
“All of a sudden, we lost a court case in the 1990s that resulted in limits on our
field of membership,” Schroeder said. “We all ran like crazy to Washington,
D.C., and we won that battle. But we should have marshaled our resources and
built relationships in D.C. before that.”
14
credit union digest | december 2013/january 2014 | members first
Such relationships are key whenever a legislative issue arises, said Jennifer
Oliver, CEO of South Bay CU. In the case of credit unions’ tax exemption, the
question is “if” and “when” it will come up for a vote in Congress.
“We don’t know when that might happen, so we have to be out there
constantly,” Oliver said. “When the moment comes for lawmakers to make a
decision, credit unions need to be top of mind.”
feature
the Leagues were smart in mobilizing the “Don’t Tax My Credit
Union” campaign long before the tax exemption debate begins in
Congress. Waiting until then could lead to the unthinkable.
“Somebody could cut a deal in Washington, D.C. and all of
a sudden we’d get taxed, or maybe the large credit unions would
get taxed,” Schroeder said. “That’s why we need to get on board
before a crisis hits.”
How Many Are Needed?
A Clear Call to Advocate
But are there enough constituents in this
camp to sway Congress?
You can’t miss the “Don’t Tax My Credit Union” message
posted inside South Bay CU. There’s a video prominently displayed
on the credit union’s website, as well as a big banner hanging in
the lobby. There’s also a kiosk where members can send a message to Congress online.
“We’ve also been sending out emails to our members almost
every week,” said CEO Jennifer Oliver. “We get out there and ask
members to ‘Please act now.’”
Every Friday, and on CUNA’s national social media rally days,
all employees wear “don’t tax” T-shirts. Among them is Member
Services Representative Suzette De Alba. The T-shirt is a conversation starter, even outside the credit union, she said.
“When I walk around our neighborhood for lunch, people stop
me and ask what we mean by ‘don’t tax our credit union,’” she
said. De Alba is only too happy to explain that if credit unions lose
their tax exemption, members will pay higher loan rates and fees.
She’s worked at South Bay CU for only a few months. But
when the “Don’t Tax My Credit Union” effort began, “I dove in
head first, because every little bit helps.”
Just as committed to the cause is Maricela Jauregui, vice
president of member services, who’s spent half her life working in
credit unions, ever since she graduated from high school 18 years
ago.
She’s been posting “don’t tax” messages on the credit union’s
Facebook page and photos on Instagram. She manages both of
these accounts for the credit union.
She’s also posted messages and photos on her personal Facebook
and Instagram pages to raise awareness with family and friends.
“I grew up in the credit union movement, and I strongly
believe in it,” Jauregui said. “As a credit union employee, we all
can be advocates and come across as genuine. We can show we
truly believe in what we do.”
Oliver is convinced that activism on behalf of members,
employees, and volunteers is critical. Organizational lobbying in
the halls of Congress isn’t enough.
“The banking associations have a boatload of lobbying
money, and we have a smidgeon of that,” Oliver said. “If we try
to outspend them, we’ll lose that battle. The only way to do this is
through a grassroots effort.”
There’s another reason she promotes a grassroots approach.
While the Leagues and CUNA are prominent in the movement,
they’re not well known to the general public, or even to credit
union members. Members will more likely support the credit union
they know personally.
“The trade associations give us the tools to communicate, and
I’ll take all the tools they can provide me,” Oliver said. “But the
‘don’t tax’ effort has to be our responsibility. It’s credit unions that
have a connection with the 96 million members across the country
who need to participate in this.”
The numbers tell the story: Thousands of credit union members in California and Nevada don’t want their credit unions
taxed.
Thousands more letters are not only
welcome—they’re needed, according to
David Creager, manager of grassroots
advocacy for the California and Nevada
Credit Union Leagues.
David Creager,
“California and Nevada credit unions have Manager of Grassstepped up and are leading the nation
roots Advocacy
for the California
in this effort,” Creager said. “This is
and Nevada Credit
particularly important because this fight
will set the stage for our advocacy efforts Union Leagues
for years to come. A victory or loss here
will echo throughout any efforts we undertake as a movement
for many years to come.”
He added: “This is why we need to keep doing more. We
don’t just need a victory—we need a shutout, a sweep, a
dismantling of our political foes’ arguments.”
Credit unions in both states that have participated in the “Don’t
Tax My Credit Union” campaign can be proud of the support
they’ve mustered this year. The following puts into perspective
just how powerful the credit union message is resonating with
consumers near and far:
 245,000
letters sent to Congress from California and
Nevada, and 1.2 million from across the nation.
 255,000
letters still needed from California and Nevada,
and 3.8 million nationally.
 67
California and Nevada credit unions
have participated so far.
 More than 55,000
individuals from California and Nevada
have taken action.
* Data as of mid-November.
credit union digest | december 2013/january 2014 | members first
15
Research & Information
The Pieces You Need to Solve the Compliance Puzzle
R&I Hotline—Do you have compliance, operational, or technical questions?
Call 877.243.5728 from Monday-Friday, 8:30 a.m.−5 p.m. Consultants can
provide the answers you need.
EXCLUSIVE
League-member benefit
Visit "Research and Compliance" at
InfoSight—Your free online compliance resource on
regulatory and operational topics/issues. Available 24
hours, 7 days a week!
TIPs Bulletins—Technical Information and Procedures (TIPs) bulletins help
you understand recent changes in laws and regulations, and how they affect
your credit union.
Statement of Ownership
16
credit union digest | december 2013/january 2014 | members first
www.ccul.org for more information!
2013 chapter forum
Chapter Relevance Examined at Forum
C
hapter members from across
California and Nevada gathered
Oct. 26–27 in San Francisco
to attend the 2013 Chapter Reception
and Forum, which offered valuable
networking and educational sessions
for attendees who were eager to share
individual stories about the work their
chapters are accomplishing.
The forum, held at the Hyatt
Regency in downtown San Francisco,
offered strategies for recognizing whether
a California Credit Union League or
Nevada Credit Union League chapter
is heading into irrelevancy, and what
leaders can do to reverse this trend.
Insightful presentations were made
by Mark Arnold, president of On The
Mark Strategies, and John Tippets,
former CEO of North Island CU and
American Airlines FCU, as well as other
speakers.
The night before, attendees
applauded their peers during the
Chapter Awards Reception at the Four
Seas Restaurant, and on Saturday there
were other recognitions as well.
The following individuals and
chapters were recognized for their
outstanding achievements in 2013:
Chapter Awards of Excellence
• Dawn Wales—Tri County
Chapter
• Debbie Flannigan—Orange
County Chapter
• Dree Johnson—East Bay Chapter
• Esther Klein—Sacramento Valley
Chapter
• Marvel Ford—Greater Valley
Chapter
Chapter All-Star Awards
•
•
•
•
•
•
•
•
•
Beach Cities Chapter
East Bay Chapter
El Camino Chapter
Monterey Bay Chapter
Northern Nevada Chapter
Orange County Chapter
Sacramento Valley Chapter
San Francisco Chapter
Santa Clara Chapter
Representatives from Tri-County, Monterey Bay, San
Francisco, and Northern Nevada chapters display their Best
Practice Showcase trophies.
Chapter Best Practice
Showcase Awards
• Monterey Bay Chapter—Leadership
• Northern Nevada Chapter—
Education
• San Francisco Chapter—Information
• Tri-County Chapter—Advocacy
Chapter PAC Awards (Political
Action Committee)
• Greater Valley Chapter, Highest
Dollar Amount Raised—$37,770
• San Francisco Chapter, Highest
Percentage of Goal—631 percent
Chapter RMJ Awards (Richard
Myles Johnson Foundation)
• Beach Cities Chapter, Highest
Percentage of Goal—266 percent
• Beach Cities Chapter, Highest
Dollar Amount Raised—$6,648
L-R: Chris Bruno, CEO of McKesson Employees FCU; Mark
Klinkert, VP of Education and Training for the California
and Nevada Credit Union Leagues; John Tippets, former CEO
of North Island CU and American Airlines FCU, and keynote
speaker; Linda White, CEO of United Health CU; and Larry
Palochik, SVP of Member Solutions for the Leagues
Want to See More?
To view the 2013 Chapter Forum photo
gallery, visit http://amc.ccul.org/cn
and click on “Photos”!
Attendees pose for some fun
photos in between networking
and educational sessions, where
they learned how to improve their
chapters and credit unions.
credit union digest | december 2013/january 2014 | members first
17
Attendees of the California and Nevada Credit Union Leagues’
2013 Annual Meeting and Convention “reached up, out, and
deep” and gained a renewed vision for leading their cooperatives
into another year of opportunities and challenges. Enlightening
discussions from innovative leaders—from within and outside
the credit union movement—provided valuable insight and ideas
for credit unions to revolutionize their members’ lives.
18
credit union digest | december 2013/january 2014 | members first
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3
4
5
6
7
8
9
10
1.
2.
12
3.
4.
5.
6.
7.
8.
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11
Richard Myles Johnson Foundation board members with other attendees at the RMJ
Foundation Gala (L-R): Eileen Rivera, CEO of SkyOne FCU; Donna Dyer, Sales and Market
Manager for CUNA Mutual Group; Patsy Van Owerkerk, CEO of Travis CU; Dana Schuller, SVP of Organizational Development for SchoolsFirst FCU; Tena Lozano, Manager of
Consumer Advocacy for the Leagues; Teresa Freeborn, CEO of Xceed Financial FCU and
Chairman of the California League; Richard Johnson, credit union icon and former CEO of
Western Corporate FCU; Tony Boutelle, CEO of CU Direct Corp.; Bill Cheney, President and
CEO of the Credit Union National Association; Diana Dykstra, President and CEO of the
Leagues; Hank Barrett, CEO of Valley First CU; and Jim Updike, CEO of Honda FCU
L-R: Cheney; Brian Branch, President and CEO of the World Council of Credit Unions;
and Dykstra
Shapiro Group Advisory Committee members (L-R): Gary Perez, CEO of USC CU; Chris
Coursen, CEO of Fairview Employees FCU; Diana Michaels, CEO of Western Healthcare FCU; Stephen Serfozo, CEO of McClatchy Employees CU; Chuck Papenfus, CEO of
Inland Valley FCU; Nancy Blackstock, CEO of Atchison Village CU; Suzanne Leedale,
CEO of SLO CU; Chris Bruno, CEO of McKesson Employees FCU; Patrick Redo, CEO of
All U.S. CU; and Larry Palochik, SVP of Member Solutions for the Leagues
Jan Owen, Commissioner of the California Department of Business Oversight; Rick
Metsger, Board Member for the National Credit Union Administration; Bob Arnould,
SVP of Advocacy for the Leagues; Dykstra; Elizabeth Whitehead, Region V Director
for the NCUA; Palochik; Mary Martha Fortney, President and CEO of the National
Association of State Credit Union Supervisors; and Sharon Lindeman, VP of Regulatory
Advocacy for the Leagues
L-R: Rita Fillingane, VP of Research and Collaboration for the Leagues; Lucy Ito, EVP
and COO of the Leagues; Ed Chow, Western Regional Director for the Consumer Financial Protection Bureau; and Lindeman
Glenn Gortney, VP of Education and Outreach for San Francisco Fire CU (far right),
with high school students at the “Bite of Reality” Financial Literacy Workshop.
The PAC Golf Tournament (L-R): Arnould; Henry Wirz, CEO of SAFE CU; and Dave
Roughton, President and COO of SAFE CU
Leo H. Shapiro Lifetime Achievement Award winners (L-R): Stan Hollen, CEO of CO-OP
Financial Services; Johnson; Van Ouwerkerk, this year’s recipient; Wirz; and Barry
Jolette, CEO of San Mateo CU
Outgoing California Credit Union League Chairman and San Diego County CU CEO
Teresa Halleck (far left) and Dykstra (far right) with League Award winners (L-R):
Roxanne Ostrem, Board Chairman for Ventura County CU; Freeborn; Annice Kim, CEO
of L.A. Healthcare FCU; Randy Thompson, President of Thompson Consulting Group;
and Greg Moore, EVP of Member Relations for Catalyst Corporate FCU
L-R: Eric Bruen, CEO of Desert Valleys FCU; Susan Conjurski, CEO of Printing Industries
CU; Linda Walmsley, Director of Compliance for First Entertainment CU; and Fillingane
Nevada Credit Union Advocate of the Year Award presentation to Silver State Schools
CU (L-R): Dykstra; Mike Randall, COO; and Arnould
L-R: California Credit Union Advocate of the Year Award presentation to SchoolsFirst
FCU (L-R): Abiy Fikreslassie, Lending and Service Center Representative; Brenda Zimmerman; VP of Branches; Alayne Charlton, SVP of Member Service Delivery; Aaron
Mickelson, Manager of Operations Support; Dykstra; Diana Kot, VP of Membership
Development and Advocacy; and Kevin Marin, SVP of Organizational Performance and
Strategic Planning
L-R: Caroline Casey, CEO of Kanchi and keynote speaker; Neil Goldman, CEO of Goldman Consulting and Strategy and convention emcee; Dykstra; and Deanne Figueras,
Manager of Meetings, Conventions, and Small Credit Union Support for the Leagues
L-R: Rivera; Palochik; Jane McGonigal, Director of the Institute for the Future and
keynote speaker; and Goldman
L-R: Teddy Goff, Co-Founder of Precision Strategies, Former Digital Director of the
“Obama For America 2012” campaign, and keynote speaker; Dennis Flannigan, CEO of
Great Basin FCU; and Wayne Tew, CEO of Clark County CU
L-R: Luke Williams, Executive Director of the Berkley Center for Innovation and Entrepreneurship at New York University, and keynote speaker
Sights, Sounds, and Stories
Visit http://amc.ccul.org/cn to read more about each day’s events, view
photos, and watch videos that were shown at the convention!
credit union digest | december 2013/january 2014 | members first
19
asked & answered
‘Opt Out’ Notices: Short Versus Long
By Clarissa Martin, Research and Information Consultant
A
sked: When a credit union
engages in a “pre-screen,”
what notice to members is
required regarding their right
to “opt out” of future pre-screen
solicitations?
A
nswered: The overall notice
consists of two parts: a short
notice and a long notice. They
should be in the same language as the
offer of credit or insurance.
The Fair Credit Reporting Act
(FCRA)1 allows creditors to obtain credit reports for transactions not initiated
by the member called “pre-screen offers
of credit.” When a credit union engages
in pre-screening, it is required to provide a notice to the consumer with their
right to opt out of pre-screened solicitations for credit or insurance2.
The Short Notice
The short notice should be clear,
conspicuous, simple, and an easy-tounderstand statement.
Regarding its content, the short
notice should:
• State that the consumer has
the right to opt out of receiving pre-screened solicitations,
and should provide the toll-free
number the consumer can call to
exercise that right.
• Direct the consumer to the existence and location of the long
notice, and shall state the heading for the long notice.
• Not contain any other information.
Regarding its form, the short
notice should:
• Be in a type size that’s larger
than the size of the principal text
on the same page, but cannot
be smaller than 12-point type. If
provided by electronic means,
then reasonable steps should be
taken to ensure the size is larger
than the size of the principal text
on the same page.
• Be on the front side of the first
page of the principal promotional
document in the solicitation, or,
if provided electronically, on the
same page and in close proximity
to the principal marketing message.
(The Federal Trade Commission
has defined “principal promotional document” as the document
designed to be seen first by the
consumer, such as the cover letter.)
• Be located on the page and in
a format so the statement is
distinct from other text, such as
inside a border.
• Be in a type style that is distinct
from the principal type style
used on the same page, such as
bolded, italicized, underlined,
and/or in a color that contrasts
with the color of the principal
text on the page, if the solicitation is in more than one color.
The Long Notice
The long notice should also be
clear, conspicuous, simple, and an
easy-to-understand statement.
Regarding its content, the long
notice should state the information
Model Notices
For models of short and long notices,
visit League InfoSight
(http://ca.leagueinfosight.com) and
type in “Pre-screen opt out notice” in
the keyword search bar.
required by section 615(d) of the Fair
Credit Reporting Act3. The long notice
shall not include any other information that interferes with, detracts from,
contradicts, or otherwise undermines
the purpose of the notice.
Regarding its form, the long notice
should:
• Appear in the solicitation.
• Be in a type size that is no
smaller than the size of the principal text on the same page. For
solicitations provided other than
by electronic means, the size
should never be smaller than
8-point type.
• Begin with a heading in capital letters and underlined, and
identifying the long notice as
the “PRESCREEN & OPT-OUT
NOTICE.”
• Be in a type style that is distinct
from the principal type style
used on the same page, such as
bolded, italicized, underlined,
and/or in a color that contrasts
with the color of the principal
text on the page, if the solicitation is in more than one color.
• Be set apart from other text on
the page, such as by including a
blank line above and below the
statement, and by indenting both
the left and right margins from
other text on the page.
1
2
3
20
credit union digest | december 2013/january 2014 | members first
15 U.S.C. §1681, et seq.
12 C.F.R. §1022.54(c); 16 C.F.R. §642.3.
15 U.S.C. § 1681m(d).
research & information
The Rules on Check Date Discrepancies
By Arnold Ramirez, Research and Information Consultant
W
hen I was a teller, it
surprised me I could
often catch missing
dates or other date discrepancies on checks that were
presented for payment by our
credit union’s members.
I wasn’t necessarily taking
extra care to review the dates on
negotiable instruments—I just
had a lucky knack for spotting
these inconsistencies.
The following is some useful information on check dates
so you can get it right.
Antedated or Postdated1
There are countless reasons
why a member would want to
delay or accelerate the date on a
negotiable instrument.
The date stated on the
instrument determines the
time of payment if the check is
payable at a fixed period after
the date. Generally, an instrument payable on demand is not
payable before the date of the
instrument.
Whether a member wants to allow
time to deposit funds into the account
on which the check is drawn, or shorten the time before the check becomes
stale-dated, members are within their
right to antedate or postdate a check.
Antedated checks are nearly impossible to detect unless the member brings
it to the credit union’s attention.
Postdated checks may be deposited or declined based on the credit
union’s check policy. A credit union
may charge against the member’s
account a check that is otherwise properly payable from the account—even
though payment was made before the
date of the check—unless the member
has provided the credit union with a
notice of postdating which describes
the check with reasonable certainty.
Notices of postdating are effective
for six months and must be received
by the credit union in a time and
manner that affords the credit union
a reasonable opportunity to act. If a
credit union charges a check before
the date stated in the notice of postdating against a member’s account, the
credit union may be liable for damages for the resulting loss. The loss
may include damages for dishonor of
subsequent items.
Undated Checks2
If an instrument is undated, its date
is the date of its issue, or, in the case of
an unissued instrument, the date it first
comes into possession of a holder. The
credit union may rely on the holder to
determine the date of issue.
As the depository institution, the
credit union should not affix a date
on the negotiable instrument, as this
would constitute an altered item.
Stale-dated Checks3
A negotiable instrument is staledated six months after its date.
As the paying institution, a credit
union is under no obligation to a member having a checking account to pay a
stale-dated check, but it may charge its
member’s account for a payment made
thereafter in good faith.
It may be appropriate for the credit
union to address the issue of stale-dated
checks in their account agreement. The
credit union should discuss their options
with counsel before establishing policy
on stale-dated checks.
1
2
3
California Commercial Code §§3113(b) and 4401(c).
California Commercial Code §113(b).
California Commercial Code §4404.
credit union digest | december 2013/january 2014 | members first
21
economic perspective
From ‘Okay’ to ‘Good’ or ‘Great’
By Dwight Johnston, Vice President and Chief Economist
T
he economy and has dodged several bullets and managed to rack
up another “okay” year.
“Okay” is probably the best grade
merited, despite stock prices. Without
the headwinds, 2013 might have turned
out better.
What’s Behind Us
Let’s take a look back before we
peer into the future:
• Europe had a couple of close calls
in 2013, but a crisis was avoided
at the last moment, sparing us
from a global slowdown.
• Interest rates shot up and threw
the housing market just slightly off
course, but the jump in rates did
little to impact the overall economy.
• The United States did not have to
attack Syria, or any other country
for that matter.
• The economy even survived
“tapering terror” stemming from
the Federal Reserve’s looming
downshift of asset purchases.
• The last one almost got us, as
Congress nearly fired a projectile directly into the heart of the
economy with the threat of an
ongoing government shutdown.
What’s Ahead
Can we move beyond “okay” to
“good” or “great”?
Let’s start with the “buts” and caveats. The federal budget deal—which was
not a deal, but a delay—likely means
the very end of 2013 and beginning of
2014 will be weaker than if a true deal to
avoid any future shutdowns or defaults
had been achieved.
Once the haze clears over Washington, D.C., the economy will rebound and
perhaps make up for lost time.
There are still some worrisome
signs of weakness coming from China
and Europe that could foretell a weaker
global economy, which would drag on
the United States. But there are no direct
threats of this right now.
22
Major Employment Sectors in California and Nevada*
High (2006)
Low (2009-2011)
August 2013**
15.2 million
13.8 million
14.7 million
945,000
545,000
617,000
Manufacturing
1.49 million
1.23 million
1.25 million
Trade/Transportation
2.92 million
2.6 million
2.76 million
Business/Professional
2.27 million
2.03 million
2.31 million
Government
2.52 million
2.36 million
2.356 million
1.3 million
1.11 million
1.17 million
California
Total Non-farm Payrolls
Construction
Nevada
Total Non-farm Payrolls
Construction
146,000
47,000
52,000
Hospitality/Leisure
340,000
302,000
324,000
Trade/Transportation
233,000
204,000
224,000
Business/Professional
162,000
146,000
147,000
Government
162,000
146,000
152,000
* Sub-categories are a part of total nonfarm payrolls. ** The latest information available at press time
due to the federal government shutdown in October 2013
Source: U.S. Bureau of Labor Statistics
Yet as former U.S. Defense Secretary
Donald Rumsfeld might describe it, there
are also “what we don’t know—we
don’t know” things that will surprise us.
Nevada’s Job Outlook
Nevada’s job recovery hasn’t been
strong, but the largest single sector of
employment, Hospitality/Leisure, is not
far below pre-recession levels.
The second largest sector, Business/
Professional, is also closing in on prerecession levels.
The gaping hole in the employment
picture remains in construction. That
sector represented more than 11 percent
of all non-farm payroll jobs at the economy’s peak in 2006 and has dwindled to
4.4 percent of total employment.
It’s not an easy hole to fill, but there
are anecdotal reports that suggest a modest recovery in construction is growing
more likely.
California’s Job Outlook
The outlook for jobs in California is
especially bright from several perspectives.
credit union digest | december 2013/january 2014 | members first
More than half the jobs recovered
since the turnaround in this state came
from two sectors: Trade/Transportation
and Business/Professional. Those two
sectors have performed very well.
Since those sectors depend greatly
on international trade and global growth,
imagine the numbers we could see if the
global economy steps up a notch in 2014.
Just as important as the growth
number is the fact that these two sectors are the two highest-paying major
employment areas as identified by the
Bureau of Labor Statistics. I included the
construction sector to demonstrate an
area I believe is on the verge of a more
significant recovery.
Any improvement in the national
and global economies beyond “okay”
will be felt even more strongly in California due to the state’s sensitivity relative
to the bigger picture. At times, this has
worked against the state.
But if the national economy is ready
to move to the next level, the California
job market is in a perfect position to outperform the rest of the United States.
market performance
Growing Loans: Find Your Direction
By Dwight Johnston, Vice President and Chief Economist
T
he most common concern
expressed at almost any gathering of credit union executives
for more than a year has been sluggish
loan growth.
There are certainly some exceptions to this, but the overall tone of
comments is confirmed by a historically low loan-to-share ratio in California and Nevada. Loan volume has not
fallen, but overall loan portfolios have
grown by only 1.5 percent during the
past 12 months.
California and Nevada credit
unions do a very good job at generating mortgage loans. In fact, mortgage
originations by credit unions in our
two states have exceeded the national
average by a fair margin.
But mortgage loan portfolios are
virtually flat. During the refinance boom
earlier this year, most credit unions
opted to package and sell the mortgages
rather than take on interest rate risk
since rates are at record lows. It looks
like a very good decision in hindsight.
However, putting cautious interest
rate decisions aside, most credit unions
simply couldn’t afford more exposure
to real estate this past year.
Room to Grow?
The accompanying pie chart shows
a breakdown of all credit union loan
portfolios in California and Nevada.
If you add the slices, credit union
exposure to all types of real estate loans is
65 percent. That seems to be pushing the
envelope on concentration. Some credit
unions have room to add to this category,
but they are exceptions to the rule.
Unfortunately, given the outlook for
a stable-to-improving housing market,
the category with the greatest opportunity for growth remains mortgage loans.
But the concentration factor eliminates
this huge category for most credit unions.
Auto lending should continue growing, but I expect sales will remain flat for
the next 18 months after experiencing a
Loan Breakdown at CA and NV Credit Unions*
0-1%
2% 6%
1%
13%
3%
23%
Unsecured Credit Cards
First Mortgages
Student Loans
Other Unsecured Loans
Other Real Estate Loans
Other Loans
Auto Loans
Non-Real Estate Member Business Loans
52%
* As of June 30, 2013
Source: Callahan and Associates
strong three-year recovery. Competition
for auto loans has been intense and will
remain so. This will limit growth and
profitability to some extent.
What’s Left on the Table
Now that I’ve shot down the two
best categories, what’s left?
The answer depends on your
credit union’s membership and expertise within the remaining categories.
Business loans, while statutorily
limited, are still a growth opportunity.
In their most recent earnings reports,
regional banks stated they are replacing lost earnings from a sharp slowdown in mortgage lending with an
aggressive front on small-to-medium
business loans. I recognize this is a difficult lending product for many credit
unions, but don’t let the challenges
of developing programs dissuade you
from exploring your options.
Credit card lending is a “niche” category after so many credit unions sold their
operations over the past several years.
In its absence, perhaps a push
for old-fashioned personal loans will
add to margins. The dramatic growth
of person-to-person lending websites
shows a real appetite for these loans.
Loan participations can also help
if your credit union can find sellers
and is adept at due diligence.
I could go on and on with the pros
and cons of other loans, but you get the
drift. There’s no prospect for a superstrong economy or rising wages anytime
soon. If your credit union is struggling
for loans right now, it will likely continue if you continue to do the same thing.
Consider All Options
Credit unions want more loans—
that’s a given. First, you should
answer some questions.
What loans do you really want to
make? What risks can you take? What
are the capabilities of your staff? And
what loans will serve your membership best?
These can be daunting questions
to answer, and some of you might find
that the answers require a change in
vision and direction.
But there is no silver bullet for
loan growth, and growth won’t come
to those who wait.
credit union digest | december 2013/january 2014 | members first
23
credit union solutions
Student Lending: Golden Ticket to Gen Y
T
here are approximately 76
million Generation Y or Millennials (born between 1980 and
2000) in the United States, of which 5
percent will consider a credit union for
their financial needs.
While the prospects appear grim,
the opportunity for credit unions to
reach the Millennial member and
diversify loan portfolios is ripe for the
picking.
The solution? Student lending.
The challenge? Most college-bound
students and parents are unaware of
credit unions as a higher-education
loan option.
Federal student loans will always
be king due to ease of access, no credit
requirements, extended forbearance,
income-based repayment, and payment deferment.
However, as the cost of
college grows—a staggering 257 percent increase in
tuition from 1983-2013—
many students find themselves in need of extra money
to cover expenses, despite tapping
every federal dollar available to them.
Now, enter credit unions into
this picture. Credit unions are quickly
becoming an alternative to fill this
funding gap by working with companies such as Credit Union Student
Choice, the foremost provider of
higher education financing services to
America’s credit unions.
Currently serving nearly 250 credit
unions across the nation, Credit Union
Student Choice enables credit union
partners to efficiently enter the private
student lending market with low inter-
est rates, flexible repayment terms
(including in-school deferment), and
zero origination or prepayment fees.
Credit Union Student Choice manages operational aspects, including
loan origination and processing, and
call center support, while the credit
union retains full control of the program. Marketing, training, and business development provides additional
program support, adding value to the
credit union’s bottom line.
For more information, whitepapers,
or to attend a free webinar, visit
www.studentchoice.org.
credit union digest | december 2013/january 2014 | members first
25
The CFPB: My
“Meltdowner’s” Nightmare
I
“Maybe as the CFPB
matures as an agency, it
will come to realize there
are impacts—positive
and negative—from its
decisions. Consumers
should be protected.
Financial institutions also
need protection from bad
regulatory policies.”
Closing
Thoughts
By Greg Badovinac
Compliance Officer, Western FCU
26
n the late 1970s, comedian Robin
Williams had a routine involving
Shakespeare, Studio 54 in New
York, and the damaged Three-Mile
Island nuclear power plant. He called
it, “Shakespeare (A Meltdowner’s
Nightmare).”
As we enter 2014, compliance
professionals are experiencing their
own Shakespearian “meltdowner’s”
nightmare. We call it the Consumer
Financial Protection Bureau (CFPB).
Between October 2013 and January 2014, two sets of regulatory fiats
became effective: One dealing with
international money remittances, and
the other with real estate lending.
It’s become evident to long-time
compliance officers (and those who
deal with compliance issues) that the
CFPB does not have a clear understanding of the financial institution
industry and what we do on a daily
basis to meet the financial needs of
American consumers.
To be fair, the CFPB was not given
great flexibility when the Dodd-Frank
Act became law. On the consumer
protection side of this massive law,
most of us in the credit union world
have come to understand it is not a
great law.
But the CFPB had opportunities
to make it better for financial services
providers and still protect the interest
of consumers. The bureau has made
consumers the first, second, and third
priority of its regulatory efforts.
Recently, I was a part of a meeting in Washington, D.C. with CFPB
officials. During the frank and honest
discussion, it was evident to me these
officials were not overly interested
in how their regulations impacted
financial institutions or our ability to
provide services.
For example, I received blank
stares from the officials when I mentioned that the international remittance transfer limit—which mandates
credit union digest | december 2013/january 2014 | members first
compliance if doing more than 100
transfers per year—meant that if a
credit union completed eight or more
per month, the credit union was “in
the business of international transfers.” Eight per month? Two per week?
Really?
Looking at real estate regulations,
it appears the CFPB has placed the
same qualifying standards on closedend second mortgages as it has for
first-trust deed loans that are sold in
the secondary market. People with
experience in the banking or credit
union world know that second mortgages are almost always kept in the
institution’s portfolio, as there is no
open market for these loans.
This is a nightmare for bankers and
credit union leaders. The leadership at
the CFPB and its key people who are
developing regulations are not from the
financial services world or regulatory
agencies of credit unions and banks.
If the individuals writing and
approving regulations do not know our
reality, we get handed bad regulations
resulting in consumers receiving less
value from our products and services.
I have spent more than 20 years
reading regulatory proposals, responding to public comment requests, and
implementing final regulations. The
ideas I supported in public comment
letters may not have been approved or
accepted. The decision-makers knew
the realities of our world when we, as
well as bankers, rejected their ideas.
I don’t have that confidence in the
CFPB.
Maybe as the CFPB matures as an
agency, it will come to realize there are
impacts—positive and negative—from
its decisions. Consumers should be
protected. Financial institutions also
need protection from bad regulatory
policies.
I hope I am still working in credit
union compliance when this nightmare
ends.
to our readers
Credit Union Digest: It’s All About YOU
We’re not sure if you’re feelin' it, but we are.
The world is moving so fast, we can’t believe
2014 is here, shinning like a bright beacon and
full of possibilities.
At the same time, 2014 also holds a fair
amount of cautious optimism.
A lot of magazine editors write columns to
discuss the content of the publication, and how
great the line-up is. But what’s really great about
any publication, including Credit Union Digest, is
YOU, our readers.
The content you provide via in-depth
interviews and face-to-face comments is the
impetus that ignites the spirit of this publication.
CU Digest strives to provide a touch point for “the
individual,” and that individualism is personified
in the various resources within the pages of your
magazine.
In such a busy world, we seldom take the
time to comment on the appreciation that is
warranted. We appreciate your commitment to
the industry, your staff, your volunteers and board
members—and what we appreciate the most is
your commitment to your own ideals that foster a
deeper understanding of credit unions in America
and the communities you serve.
You are not single-focused, but speak to
a broader audience, just as this publication is
committed to accomplishing.
In 2014, we will continue publishing useful
and relevant insights within “Where’s the Heat?
Hot Topics That Won’t Waste Your Time”—a
new column in this current edition that introduces
the leaders of our newly created business units
(www.ccul.org/affiliates). Shoot them an e-mail
sometime—they are here to help!
We will also continue reaching out to you
with comprehensive resources to help you reach
your goals, and work to construct a blueprint for
your strategic direction. We want to continue our
partnership with you in providing useful resources
for helping you maintain a competitive edge.
Last, but not least, we will fight the good fight.
The political machinery impacting our industry
is continuing to “grind.” Our responsibility is to
help ensure that attempts to cripple credit unions
are unsuccessful. With that said, CU Digest and
the Leagues’ other publications and e-blasts are
committed to giving you up-to-date information
to make your credit union successful.
CU Digest is only a magazine, but the people
who make up this publication—their issues,
concerns, and stories—are the backbone. YOU
hold the answers to so many asked and unasked
questions. YOU are the movement’s leaders, but
others will follow. Solutions, resources, tools, and
opinions are presented in each edition that reflect
YOUR voice and will hopefully take our industry
to the next level.
Just look inside to find what’s relevant for
YOU!
Diana R. Dykstra
President and CEO
Carol E. Payne
Editor-in-Chief
credit union digest | december 2013/january 2014 | members first
27
California and Nevada Credit Union Leagues
P.O. Box 51476 | Ontario, CA 91761-0076