Signal Magazine Q2 by LSCU MarComm

The Magazine of the League of Southeastern Credit Unions

Making an Educated Decision for Your CUâ&#x20AC;&#x2122;s Future Needs

INSIDE LSCU CU Banking & Due Diligence State GAC Overview ATM ADA Compliance Issues SECUF & Alabama Tornado Victims Summer 2011

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Message from the President The credit union philosophy of “People Helping People” is very fitting, but when you see it in action it’s truly awesome! When the tornadoes swept through Alabama on April 27, credit unions began to mobilize right away to help their staff, members, and fellow credit unions that were hit hard. In Tuscaloosa, DCH Credit Union’s processor was offline for a number of days. Alabama Credit Union and Tuscaloosa Credit Union stepped in to help DCH’s members access their money through shared branching. In Rainsville, Community Credit Union had its branch destroyed. Pen Air FCU in Pensacola offered its mobile branch the next day. Within five days, the mobile branch was on the site of the former branch and serving members. The outpouring of help was tremendous. The Southeastern Credit Union Foundation (SECUF) quickly activated its Disaster Relief Fund allowing credit unions to solicit grants from the foundation and for credit unions to donate money. (See story on page 27). The SECUF has given out more than $35,000 in grants. We also worked with the National Credit Union Foundation (NCUF) to activate their online disaster relief system www.cuaid.coop. As donations started pouring in from around the country through CUAid, the SECUF board announced it would match the CUAid donations up to $100,000. As part of this effort, the SECUF board announced a $25,000 donation to the Alabama Chapter of the American Red Cross as well as an LSCU Chapter community project match to LSCU Chapters affected by the storms of up to $10,000. This money can be used by chapters to help facilitate local projects in their respective geographical areas. We spoke with NCUA Region III Director Herb Yolles the day after the storms to update him on the status of Alabama credit unions. At our request, the NCUA quickly activated its Disaster Assistance Response for credit unions in Alabama and across the South. This means credit unions will be able to make loans with special terms, while reducing documentation and guarantee lines of credit through the National Credit Union Share Relief Fund. Many credit unions began offering low- and no-interest loans right away. It’s been amazing to watch the credit unions help their communities. Listerhill Credit Union in Muscle Shoals partnered with the Northwest Alabama Red Cross to launch Rebuild Alabama. Listerhill matched staff and member donations and then presented the Red Cross with $50,000. Five Birmingham-area credit unions partnered with the local CBS affiliate to accept donations at all of their branches. Tuscaloosa Credit Union worked with the local housing authority to help 116 families get back on their feet after the tornado wiped out the housing authority’s neighborhood. These are just a few of the many stories happening every day. A few days after the storm hit, some of my staff and I loaded up a minivan with generators and supplies and headed for the hardest hit areas. There, we spent some time with area credit unions to see how they were doing and how we could help. I can’t get out of my mind how everyone was just thankful to be alive and hopeful for the future. I thought a few might be down, but even the credit union staff that didn’t have power five days after the storm were all positive. The credit union philosophy is alive and well. I am encouraged by that. Our collaborative spirit sets us apart from other financial institutions. It will take a lot of work, time, and money to rebuild from these terrible storms. However, our credit unions are embedded in their respective communities and the way they have worked together during this time of great need will certainly remain in the memories of their members for years to come. I know it has left a lasting impression on me.

Patrick La Pine President & CEO League of Southeastern Credit Unions

SIGNAL: Vol. 2, Issue 2

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Table of Contents

Editor Amy Jowers Contributer Bill Berg Mike Bridges Joseph Davis Mary Elicia Del Santo Amber Tynan

President’s Message

CU President Profile

Feature Article Making an Educated Decision for Your Credit Union’s Future Needs “One of the key things we try to ensure we understand is what type of investment we must make in resources and/or capital, regardless of the solution and of course, we want to fully evaluate the risks with the solution we take and how to manage those risks.”

Production Detra White April Banta Letters to the editor may be submitted at submission@lscu.coop.

CU Volunteer Profile

Advocacy State GACs Inform, Educate, & Teach Advocacy PAC Fundraising Awards

LSCU Legislator Profile

Coming Soon Image campaign commercial to hit the air soon.

Cam Ward

Highlights 8 | Feature Article

Hear from several credit union CEOs, including corporate, about performing due diligence on banking services in light of the corporate credit union crisis.

Bill Nelson

A Magazine of the League of Southeastern Credit Unions

SIGNAL: Vol. 2, Issue 2

12 | CU Volunteer Proﬁle

Meet newly announced “CU Volunteer of the Year” and a pair of volunteers who have more than 100 years combined experience of “volunteerism” for their credit union.

14 | State GACs

LSCU’s first annual state Governmental Affairs Conference provides advocacy information, education, and opportunity for attendees.

Compliance ATM ADA Compliance Issues Fiduciary Duties of FCU Directors Regulatory Q&A

Cooperative Initiatives Southeastern Credit Union Foundation: Charity, Community, & Cooperation after the Storm 2011 Foundation Scholarship Winners

Remnants of what used to be homes in Tuscaloosa’s Housing Authority’s 6.9 acre housing facility.

Education LSCU Educational Conferences Prepare Credit Unions for Success Increase Your Knowledge by Attending Upcoming League Education Events Your Credit Union’s Disaster Preparedness Plan: Is it Ready for the Next Disaster?

Communications Moving to Multimedia: An Inexpensive Way to Reach Your Audience LSCU Statewide Image Campaign TV Commercial Filmed in Birmingham

League News LSCU Announces Recipients of LSCU, CUNA Awards

Industry Your Future Online Community

LEVERAGE Listening for Your Future Compliance Execution on Time, on Task, Guaranteed Mobile Payments Momentum

LSCU Staff Directory

Bill Marquardt, 2011 Recipient of the LSCU Distinguished Service Award

Highlights 22 | Compliance Learn more about ATMs and ADA and what that means for your credit union.

24 | Cooperative Initiatives

The tornadoes took a toll on Alabama credit unions, staff, and members. See how the Southeastern Credit Union Foundation worked with those affected.

33 | Industry Thinking about a new website? Read about your future online to determine the best fit for you.

SIGNAL: Vol. 2, Issue 2

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CU PROFILE

CU President Proﬁle MARK JOHNSON 1.

How did you become involved with running a credit union? I was in community bank management prior to getting involved in the credit union and my primary role was a loan officer. I had been in lending and operations for more than 13 years before I was approached by a director of Naheola Credit Union to interview for the CEO position. I was a vice president at the bank and next in the line of succession. My former boss was not that old and not planning to retire anytime soon, so my succession track at the bank was still a long way off. It turned out to be great timing for me to be able to advance my career and remain in the area. Community banking and credit unions have a lot in common. However, there is a HUGE difference in the culture of the organizations. Needless to say, I am glad I have made the transition. You attended the CUNA GAC this year for the first time. Why is it important for credit unions to take time to meet with their lawmakers? It is easier to emphasize an issue when you can see a person’s face. It is more personable and essentially means more than just writing letters. At the CUNA GAC this year, I enjoyed getting the chance to meet with our federal lawmakers. We have a lot of issues right now that need to be addressed. The more that credit unions can meet with their legislators and tell them the “real” impact of the legislation, the more difference we can make. You are taking part in the LSCU Image Campaign. Why do you think credit unions should take part? It is past time for credit unions to brag on themselves. We have not created the mess the big banks caused because we stuck to the basics of conservative investments and skilled consumer lending. Therefore, we DO give banking a better name. (The LSCU Image Campaign is using the tag line: Credit Unions: We’re giving banking a better name.) All credit unions will benefit from this campaign and the pricing is fair even in these times (campaign fair share amount is based on $42 per million in assets).

A Magazine of the League of Southeastern Credit Unions

SIGNAL: Vol. 2, Issue 2

What are you doing for your members that have been affected by the economy? We do anything we can to help members struggling to make loan payments. We will Mark Johnson, CEO Naheola Employees CU stretch some loan policy limits if it makes sense to do so. We will re-amortize loans, if possible. In addition, we almost always have a certificate of deposit special that is above market rates that are only offered to existing members. We try to do things that benefit our membership as a whole! Where do you see opportunity for your credit union for this year and next? We have really strengthened our balance sheet over the last few years, and we are and have been ready to lend. We are poised to offer great rates for borrowers when they are ready and, in return, we will be able to offer much better rates to our depositors. We have recently offered a “cut your losses” campaign where members could bring in their high interest credit cards and we would pay them off at a much lower rate and better term. If the balances were really high, we would offer them a HELOC and pay the closing costs. Our members have really appreciated that we are offering things that help them right now. ■

Credit Union Statistics Company:

Naheola Employees CU

Location:

Pennington, Alabama

Assets:

$ 71,650,420

Members:

5,861

$ 55,485,515

Loans:

$ 39,460,246

MIKE RALEY 1.

How did you get your start in the credit union industry? While working as the senior product development officer for a Maryland bank, I was told by a peer that a local head hunter had just the job for me. If I was interested, she would connect me with him. I interviewed with him and then with his client. In 1984 I became the first full time marketing director for Pentagon Federal Credit Union located in Alexandria, Virginia. That was my first job in the credit union industry. You are actively involved in your chapter (Southernmost) and currently serve as the chapter president. Why is it important for credit unions to be involved in their chapters? How does it help a credit union by being involved? Credit union employees benefit in three ways when their credit union participates in chapter functions, especially at the Southernmost Chapter. First, they hear the latest information about what is happening in the credit union industry from our guest speakers. We hold eight dinner meetings a year, September through May. Second, employees attending the meetings have an opportunity to meet and share work experiences with people from other credit unions. They also get to socialize with employees from their own credit union that they normally do not interact with because they work in different locations. Third, our vendors support the chapter and attend the meetings giving them an opportunity to mix with staff without trying to promote their products. By being a part of the chapter, the credit union is making a clear statement to its employees, to other credit unions, and to vendors. That statement is this: “we are a part of the credit union movement, and we still support coming together to share ideas to make all of us stronger.” South Florida was heavily hit by the down economy, even more so than other areas. How has your credit union helped members that have been affected by this? In a down economy, members need access to loans more than ever. We have what is now called a pay day loan, but we call

Credit Union Statistics Company:

Baptist Health South FCU

Location:

Coral Gables, FL

Assets:

$7,955,658

Members:

8,756

$35,964,510

Loans:

$22,850,769

it a No Credit Check Loan. After meeting some basic member requirements, members can get a $500 loan for a low fee, a competitive rate, and a term of six months. This is a very popular and useful Mike Raley, CEO Baptist Health South FCU loan for many of our members. We also offer a Counter Offer Loan. Instead of just turning someone away when they do not qualify for the loan they applied for, we make them a counter offer. The amount is probably lower and the rate higher, but the member is not turned away. Also, in some specific cases, we have lowered the rate on an existing loan or extended the term to make the monthly payment more affordable. Our members love us for working with them. What are the challenges you see for credit unions now that they’re beginning to see some recovery? The economic situation we are in did not happen overnight. The recovery will also not happen suddenly. We need to be patient and plan accordingly. My credit union does not have a lot of extra capital. So, new projects must make money or be paid for out of earnings. This limits what we can do, but it also protects our future. We look at our business model this way: “we are a small business that happens to be a credit union.” This view reinforces controlling operational expenses and encourages staff to look for ways to increase income with new products and through better cross selling of existing ones. As you look at 2011 and beyond, where do you see opportunities for credit unions? The future for smaller credit unions, especially those under $50 million, is going to be difficult. Our future is not going to be in “going it alone.” We need to work together and share successful ideas. We need to have our League to work with us to find products and services that we can’t get on our own. We need vendors to create pricing structures that don’t punish the small guy. We need to get over the negativity associated with merging. We need regulators that guide us and not criticize us. We need to find again the cooperative effort that made credit unions great and put it to work. ■

SIGNAL: Vol. 2, Issue 2

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FEATURE

Making an Educated Decision for The last few years have been financially arduous, to say the least, for most everyone due to the economic crisis. The majority of people have had to take a step back from their financial woes, take a look at what they have, and regroup to make the best choices to be successful - and responsible - in their financial lives. In the shadow of the corporate credit union crisis, this type of “due diligence” is no different for credit unions, both natural person and corporate credit unions alike. The National Credit Union Administration’s (NCUA) initial analysis assessed that potential credit losses on all securities from the corporate crisis could approach upwards of $16 billion, with a most reasonable estimate in the current environment of $10.8 billion. Thus, the losses at U.S. Central and WesCorp presented immediate capital concerns to a level necessitating the conservatorship of the two corporates and eventually trickling down to Members United, Southwest, and Constitution Corporate FCUs being conserved as well. When corporates of this magnitude were conserved, it resulted in retail corporate credit union and natural person credit union losses as well as a loss of confidence in the corporate credit union system. Terry West, president/CEO of VyStar Credit Union based in Jacksonville, Florida, with $4,225,511,954 in assets and 383,456 members, served as chairman of CUNA’s Corporate Credit Union Task Force as well as the Next Steps Task Force on which he continues to chair today. Terry West “My greatest concern when the corporate situation first unfolded was that the situation posed systemic risk to the entire credit union system and if not appropriately resolved could lead to the failure of the credit union system,” said West. According to West, “the corporate system has provided great value to many credit unions for many years, and I believe it has value to credit unions moving forward. A tremendous advantage it can provide is as aggregator of volume for credit unions within the financial system, enabling credit unions to have a greater voice in the financial marketplace than if we splinter by using various other sources. Regardless, I encourage credit unions to evaluate what their needs are and to evaluate a number of solutions as they decide how to proceed.”

A Magazine of the League of Southeastern Credit Unions

SIGNAL: Vol. 2, Issue 2

After evaluating his credit union’s needs, Bill Enfinger, CEO of FOCUS Credit Union based out of Chattahoochee, Florida, with $119,365,542 in assets and 11,818 members, and his board determined financial service sources other than a corporate were the best solution for their credit union’s banking needs. Enfinger’s credit Bill Enfinger union had to write off a significant amount of money which came out of their members’ dollars. The result: “tightening the belt” internally at the credit union. Loan rates and fees did not increase. “We were not going to pass it on to our members,” said Enfinger. “Our approach was, and is, to be good stewards of our members’ money.” “We looked at who would be the best at delivering financial services for us,” continued Enfinger. “We found changing to the Fed for check processing and wire transfers cost less. The Fed can provide our credit union with the long-term stability we are looking for.” Enfinger also stated that, although they chose to go a different route than using a corporate credit union, “the staff is professional and experts in their fields; the customer service is excellent. We just had to do what was best for us.” Currently, FOCUS is using an “a la carte” strategy for its financial services instead of one corporate credit union. And, according to Enfinger, the credit union continues to save money. “It doesn’t mean that this is the best for everyone,” said Enfinger. “But it’s the best for us.” Tommy Cobb, CEO of Tuscaloosa Credit Union based out of Tuscaloosa, Alabama with $48 million in assets and 5,000 members, says the direct effect of his credit union was close to $500,000 that his members lost in the form of lower dividends or reduced/delayed services. “The indirect effect is that I am no longer able Tommy Cobb to focus all my efforts on safety and soundness for my members,” says Cobb. “I am responsible for the safety and soundness of every credit union member in America.” A member of Corporate America CU, based in Irondale, Alabama with assets of more than $3.7 billion and 369 members (December, 2010), Cobb states the corporate system is not risky but that natural person credit unions must remember that they run the system. It’s not the other way around.

Your Credit Union’s Future Needs “We must insist on a flow of information from corporate including financials, budgets, board minutes, business plans, expense accounts, and salaries,” said Cobb. Cobb says it would prove difficult to get this type of information from a third party vendor and that he will take his “chances with a corporate.” Jeanne Kucey, president/CEO of Jetstream Federal Credit Union based out of Miami Lakes, Florida with $126,708,068 in assets and 15,717 members, did not decide to recapitalize with a corporate until their due diligence process was complete. The credit Jeanne Kucey union wrote off just over $72,000 in capital with Southeast Corporate Federal Credit Union. Kucey said that the credit union returned to profitability despite realizing the capital loss and incurring increased premiums. “We achieved this by cutting expenses, including staffing, and implementing numerous work place efficiencies,” said Kucey. “Once the pros and cons of each alternative were detailed, we felt that recapitalization of Southeast was in our best interest,” said Kucey. “I completely understand and agree with credit unions seeking out corporate alternatives, it’s part of the due diligence process and there is not a one size fits all solution to the current crisis.” West’s credit union, VyStar, was a member of multiple corporate credit unions and had to write-off several million dollars in capital it had invested at three of the corporate credit unions. The credit union also had to evaluate where it would receive the services it had been receiving from those corporates if they do not continue to exist in the future or if they cannot continue to provide the types of services the credit union needs. “We have been evaluating our various options for the services we need, both

from a corporate solution perspective and non-corporate solution perspective,” said West. “One of the key things we try to ensure we understand is what type of investment we must make in resources and/or capital, regardless of the solution and of course, we want to fully evaluate the risks with the solution we take and how to manage those risks.” CONTINUED ON PAGE 11

SIGNAL: Vol. 2, Issue 2

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Making Informed Decisions (Continued) More so than natural person credit unions, corporates are also having to perform due diligence on what is best for their members. According to Brad Miller, president/CEO of Southeast Corporate Federal Credit Union, the $2.9 billion corporate headquartered in Tallahassee, Florida, after extensive discussions with member credit unions, considerable evaluation of business options by the board and management, and an assessment of the Brad Miller new (NCUA) corporate Regulation Part 704, the board determined that the stand-alone business model that includes recapitalization “provides members the best overall option in terms of providing continuity of services, preserving and protecting member capital, and maintaining and enhancing long-term member value.” Miller said during the many town hall meetings Southeast Corporate held to discuss their recapitalization plan, they received input and questions on a number of aspects of the plan. “Foremost to many was the disposition of our legacy assets and the outlook for their remaining membership capital shares (MCS). Southeast’s MCS owners still have about three quarters of their capital left (about $60 million),” said Miller. ”We explained why we believe recapitalization of Southeast Corporate best protects members’ MCS as much as possible going forward.” Miller says the most significant change Southeast’s members will see is the movement of a portion of its members’ term deposits off the balance sheet onto off-balance sheet products that generate fee income rather than interest income. Now that the NCUA has given Southeast Corporate the “green light” to proceed with its recapitalization effort, Miller says they have started a 90-day capital subscription period effective May 25 to raise $80 million in PCC. “We continue to look for ways to improve our operations and be less dependent on interest income as this will provide better protection to member capital going forward as is detailed in our plan,” said Miller. “We still have a ways to go, but we understand and are committed to our members’ call for a more efficient corporate system that continues to provide the quality service levels our members deserve.” Although Corporate America’s losses were relatively small and manageable, they have done their due diligence and continue to look for ways to reduce risk and further protect its membership, according to one of Bonds’ president’s reports on the corporate’s website.

When the NCUA specified its actions and provided some idea of how the newly issued Part 704 was going to impact all corporates’ operations going forward, there were “no surprises” for Corporate America as a result of the corporate’s preparation during the regulation’s comment period. In the report, Bonds stated: “We have had discussions with other corporates regarding the benefits we could provide to their members through merger or acquisition. These conversations have involved both bridge corporates and un-conserved corporates alike. We hired a large international consulting firm which just completed a detailed analysis of our ability to receive merger partners. The consultants concluded that we could do so while continuing to provide exceptional service to both our existing members and the members of the merging corporates.” “Any alternatives to the corporate system are more expensive, less stable, and outside the control of the credit union industry… and often they are banks,” said Bonds. “Corporates typically pay in excess of Fed Funds. Corporates perform item processing, ACH, wires, and other transactions at a cost lower than other providers.

One of the key things we try to ensure we understand is what type of investment we must make in resources and/or capital, regardless of the solution and of course, we want to fully evaluate the risks with the solution we take and how to manage those risks. In closing, West recommends credit unions to: “Evaluate what the risks are for both the corporate credit unions and the non-corporate solutions to your needs. Then decide which solution best meets your needs and your appetite for risks. Also ensure you are well versed in the new corporate credit union regulations, which were designed to help ensure the types of problems that have happened to the corporate system do not recur.” Following the corporate credit union crisis, every credit union now realizes the landscape has changed. A greater sense of due diligence is required, while corporates, like Southeast, know the road to restoring confidence will have rough spots. One thing is certain, any decision made by a corporate or a natural person credit union will be rooted in what is best for its member. ■

SIGNAL: Vol. 2, Issue 2

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VOLUNTEER

CU Volunteer Proﬁle Sal Marino & Jack Wisdom, CU Volunteers, APCO Employees Credit Union If you are part of the Alabama credit union movement, chances are you’ve heard of APCO Employees Credit Union (APCO) board members Sal Marino (83) and Jack Wisdom (85). They have been on the APCO board (and friends) for more than 50 years and both have a deep passion for their credit union and what the credit union movement stands for. 1. What brought you to become a member and volunteer of APCO? Provide us with some of your background and how that brought you to the credit union. S: We both like to help people and believe credit unions provide a real financial service to people. I started out on the credit committee when APCO was just starting off with one room and three employees, Ms. Herring and two assistants. I’ve been chairman on two different occasions and vice chair for 18 years. Been on the board for 51 years. J: I’ve been on the board for 50 years, treasurer for 18. We both worked at the Alabama Power Company as electrical engineers. S: We have 101 years of experience as board members! 2. You’ve been on the board for more than 50 years now. What is the biggest change you’ve seen over the years at the credit union? S: Biggest change we’ve seen is the technology and the overwhelming number of services. A passbook was all we had and it was 12 percent interest no matter what you loaned. Members would come in with their passbook, deposit a dollar. The credit union would mark it down in their passbook. There was even a limit of $25 to the amount of money you could have in your account…not today though! J: What hasn’t changed is that we still feel like part of the family. 3. What are some of the accomplishments you are proud of being a part of at the credit union? S: We introduced the electromechanical computer to Ms. Herring. This was a “computer” that calculated interest on loans on a daily basis. It was a slow process using cards but it was the start of the technology explosion. J: Instrumental in hiring Larry Morgan as the CEO 30+ years ago. (Larry Morgan retired as CEO and is now the administrator for the Alabama Credit Union Administration.)

How have you approached your position as a director APCO? S: The role of the board is to provide excellent service to members and make sure the credit union is safe and sound. J: We look out for members and solvency of the credit union. For years, we helped get the statements out to members. I helped with the folding… S: …and I helped with the stuffing. What do the two of you do in addition to your credit union board duties? J: What our wives tell us to do…[laughs] S: Buy and sell stock in an investment club that we started with Alabama Power more than 50 years ago. J: We capitalized it with just $750; now it’s $2 million. S: Jack and I talk on the phone about it every day. You both have remained close friends for all these years. Did you meet as board members or before? J: We started work on the same day at the Alabama Power Company…and been together ever since! Went to different colleges though. I went to the College of Electrical Engineering at the University of Alabama and Sal went to the College of Electrical Engineering at Auburn University. S: Jack lives a block away. We travel together. We both have places in Florida in the same complex. We all went to Rome to visit my son who is an archbishop at the Vatican. We talk on the phone every day. Plus, I like being around Jack because then I can say I’m the youngest. ■

Sal Marino, APCO Employees CU

Jack Wisdom, APCO Employees CU

A Magazine of the League of Southeastern Credit Unions

SIGNAL: Vol. 2, Issue 2

Maurice Johnson, CU Volunteer, Pen Air FCU 1.

What brought you to become a member of Pen Air FCU and later a volunteer? In 1965, we decided to purchase an Apache camper. The dealer asked if we were members of Pen Air. When we replied no, he said that Pen Air was a great financial institution and suggested that we should join. (What better advertising is there when you get a recommendation from a satisfied member?) We did and have been happy members since then. In 1978 Joe Whittington, a friend and member of the Pen Air Supervisory Committee who worked in the same engineering department as I, told me that CU Volunteer, Pen Air FCU a vacancy existed on the committee and asked if I was interested. I thought that it would be a way to give something back to the community. I accepted and was appointed by the board. Since my job as an avionics program manager for a Navy helicopter required a good deal of travel I did not seek board membership until 1991. I encourage others to become volunteers. I am the treasurer in two organizations: Better Investing, a non-profit that teaches others how to invest in the stock market, and NARFE (National Association of Active and Retired Federal Employees). Also, a member in two genealogy groups and a PC computer club. How have you approached your position as a director, now chairman, at Pen Air FCU? From the beginning I was fortunate enough to be surrounded by smart people who were much more knowledgeable than me. I listened and observed and continue to do that today. Our success today can be attributed to our dedicated employees, staff, Supervisory Committee, and our other directors.

Your credit union has had a 5-star Superior rating with BauerFinancial, Inc. for 80 consecutive quarters as of December 2010. What part does a board of directors play in achieving such an outstanding accomplishment? We strongly believe in the team approach. Every group has a job to do. Our board has a lot of confidence in our management team and this helps us greatly when we are making the tough decisions regarding policy. Our board is very aware of the pitfalls of micro-managing and I think that we do a job avoiding that. I believe that our great team spirit is responsible for our growth and success. As chairman, you are very active in the political advocacy of credit unions. From a director’s point of view, why is it so important to be involved? A fact of life is “The Squeaking Wheel Gets the Grease.” Our politicians are pressured by many having conflicting interest. The outcome is not always best for the people, including our members. If we are not adequately representing our industry we will come up short. This requires staying abreast of what is happening and actively contacting our representatives when necessary. You’ve been very influential and passionate about Pen Air “going green.” You were quoted in an article saying “I really believe in it. Pen Air has been building green since the late 90’s.” and that Pen Air has “been green since before green was a color!” What are some of the steps you took to get the credit union going in that direction? Also, what were some of the first “green” features of the credit union to come about (in the 90’s)? In 1997 we opened a new branch in Robertsdale, Alabama. Prior to construction, another director, A. C. Martin, and I had each installed Ground Source Water Systems at our homes for heating and cooling, and we were both convinced that this type of system would save energy. I went to our local electric coop to obtain more information since they were using this type of system. Their experience convinced us that this would save our members money and be good for the planet also. Shortly after that we constructed our new headquarters building in Pensacola using this type of system. We have since added two more branches with this technology and plan to use this in any future branch construction. ■

SIGNAL: Vol. 2, Issue 2

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ADVOCACY

Advocacy State GACs Inform, Educate, & Teach Advocacy The first annual LSCU State Governmental Affairs Conferences (GACs) were held in Montgomery and Tallahassee. The GACs were built to inform credit unions about the most current legislative and regulatory issues and setting a foundation for advocacy. With member business lending and interchange on the table in Washington, D.C. and public deposits in committee in Florida, it was the perfect time to bring credit unions together to discuss the issues and hear from state legislators. Each GAC featured time at the statehouse for meetings with lawmakers, as well as a legislative reception where lawmakers stopped by to discuss the issues in an informal setting. At the Alabama GAC, four credit union-friendly lawmakers spoke for an hour during the Legislative Outlook. All showed support for various credit union issues, including public deposits. Alabama House Minority Leader Craig Ford told attendees that they need to come to Montgomery and provide information for their legislators on the issues. The Florida GAC was highlighted when Rep. Clay Ingram (R-Pensacola) stopped by the conference to speak to the attendees about the public deposits bill he sponsored in the House. Rep. Ingram thanked the credit unions for what they do for members. The statehouse visits in Montgomery and Tallahassee centered on a variety of topics including public deposits, interchange fees, and the fact that credit unions have money to lend. Jacksonville area credit unions spoke about the new Bank On initiative to reach those without a bank account. Rep. Mia Jones (D-Jacksonville) said she was glad to see credit unions being a part of this initiative. Credit unions also told lawmakers that they are trying to lend to those needing loans and that credit unions have not turned off access to credit. LSCU President/CEO Patrick La Pine says all credit unions need to take the time meet with their lawmakers and talk about the issues.

(l to r) LSCU’s Jared Ross, State Emp. CU CEO Paul Numbers, Rep. Mia Jones, and VyStar CU CEO Terry West meet during Hill visit. CONTINUED ON PAGE 16

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“Our strength is in our numbers,” said La Pine. “I think as credit unions get involved and see that we are starting to move the needle, it gets them re-energized to be more involved and get more people at their credit union involved.” Each GAC featured a Regulatory Roundtable with NCUA Region III Director Herb Yolles along with each state’s regulator. New Alabama Credit Union Administration (ACUA) Administrator Larry Morgan talked about how he would like credit unions to work with the ACUA and talk to him about any problems. (See Larry Morgan story on page 25.) Linda Charity and Bruce Ricca from the Florida Office of Financial Regulation (OFR) said they would like

Alabama CU CEO Steve Swofford (l) and Family Security CU CEO Shane Nobley speak on the Political Action Roundtable at AL GAC.

state examiners to have more contact with credit unions and build relationships. Ricca said that anything an examiner tells a credit union to improve is meant with the credit union’s best interests in mind. OFR is also concerned about interest rate risk, as well as balance sheet diversification and the future directors for the institutions. Yolles said he is working with his examiners about communicating in a better manner, and credit unions may push back if they have questions after receiving the exam results. Yolles said credit unions have the right to question the results, and they must feel empowered to exercise those rights. He also said the NCUA is concerned with interest rate risk and third party vendors. At both GACs, Yolles and the state examiners took many questions from attendees. It was a great opportunity for credit unions to have their questions answered and interact with their federal and state regulators in the same room. Ryan Donovan, CUNA vice president of legislative affairs, updated attendees from both states about the current federal legislation that included member business lending and interchange delay. CUNA has a five-point plan on interchange that includes trying to solve the problem and securing 60 votes in the Senate.

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Advocacy (Continued) “Our strength is in our numbers. I think as credit unions get involved and see that we are starting to move the needle, it gets them re-energized to be more involved and get more people at their credit union involved.”

Currently they do not feel they have the 60 votes. Donovan pointed out that the bank lobby spent more than $31 million in 2010 while credit unions spent only $2.2 million. It shows the credit unions can’t outspend the banks, but they can send a better message: “Credit unions are the best way for consumers to conduct their financial services.” A significant amount of time was spent discussing PAC fundraising and advocacy best practices. Listerhill CEO Brad Green told attendees that if they aren’t involved in the legislative and fundraising process, they are letting someone else talk for them. He used the old adage, “If you’re not at the table, you’re on the menu.” Green, Family Security CU CEO Shane Nobley, and Alabama CU CEO Steve Swofford talked about the benefits of PAC fundraising and why it’s an important part of their credit union. At the Florida GAC, Mary Wood, CEO of Florida West Coast Credit Union and Jan Sheffield, chief of staff at Florida Commerce Credit Union, shared ways they have involved their staff in PAC fundraising. The message was to sell your employees on what it means to be a part of the credit union system.

Attendees also heard from the LSCU Governmental Affairs team on the hot state issues and the plethora of regulatory and compliance issues. At the Florida GAC, the League’s contract lobby team spent a time discussing the legislative session and how the landscape has changed over the years. This was a great way to indoctrinate credit union staff into the advocacy field. La Pine says getting involved isn’t as hard as one might think and that state GACs were a good start for many credit unions.

(l to r) Family Savings FCU Board Member Ronnie Reed, and Alabama Teachers CU CEO Ron Summerall talk to Alabama State Rep. Craig Ford.

“It only takes a minor commitment in time and resources to make an impact collectively. It’s about harnessing the power of our large grassroots network,” said La Pine. Credit unions should mark their calendars for January 25, 2012 for the Florida GAC and April 4 - 5, 2012 for the Alabama State GAC. Visit the LSCU Video Center to see a wrap-up video of the Alabama and Florida State GACs. The videos feature interviews with lawmakers from both states. ■ Rep. Ingram speaks to attendees about the public deposits bill he sponsored in the FL House.

Mark your calendars for January 25, 2012 for the Florida GAC & April 4 - 5, 2012 for the Alabama State GAC

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PAC Fundraising Awards At both of the LSCU State GACs, credit unions and chapters were presented awards for their PAC fundraising efforts. In Alabama, Family Security CU was presented the President’s Award for most overall money raised for the PAC, while the Cheaha Chapter was honored with the Leadership PAC Fundraising Award for raising the most money in a chapter.

LSCU GAC member Linda Cencula presents Family Security CU CEO Shane Nobbley with the President’s Award for Alabama.

In Florida, Suncoast Schools was awarded the President’s Award for the most money raised by a credit union, while the Tampa Chapter received the Leadership PAC Fundraising Award for raising the most money in a chapter. ■

LSCU GAC member Mary Wood presents Suncoast Schools FCU CIO Kevin Johnson with the President’s Award for Florida.

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ADVOCACY

LSCU Legislator Profile

Cam Ward How did you decide to get into politics and run for the Alabama Legislature? I actually worked on the staff of several other elected officials before running myself. I previously worked on the state level as a Deputy Attorney General in both the Secretary of State and State Auditorâ&#x20AC;&#x2122;s office. After that I worked for three years for Congressman Spencer Bachus. I really wanted an opportunity to have a bigger impact on public policy debates so when an open seat came up as a result of redistricting I ran and was elected to the House in 2002.

Senator Cam Ward was elected to the Alabama Senate in the general election on November 2, 2010 after serving two terms in the Alabama House of Representatives. In the Senate, he is the co-chair of the Judiciary Committee and the Energy and Natural Resources Committee, and also serves on the Business and Labor, Confirmations, and Health Committees, as well as the Finance and Taxation General Fund Committee, which is responsible for writing the stateâ&#x20AC;&#x2122;s General Fund budget. Senator Ward currently is the Executive Director of the Industrial Development Board of Alabaster and is active in numerous community and civic activities. He also serves on the board of directors for Leadership Shelby County, the Greater Education Foundation of Shelby County, The American Village, and CASA of Shelby County. Senator Ward is also a member of the Alabama Bar Association and State Executive Committee for the Alabama Republican Party.

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The 2010 election saw a significant turnover in both the House and the Senate, resulting in the first Republican control of the Alabama legislature in more than 130 years. What are some of the unique challenges and opportunities you see in a legislature with so many new members and leadership? For years Republicans in the House and Senate have dreamed about the day we would be in charge and could pass our own legislative agenda. With a new Republican majority we have an excellent opportunity to address long needed reforms in ethics, education, taxes and over burdensome government regulation. These opportunities also present us with our greatest challenges. With so many goals and legislative priorities that we have developed over the years it is almost impossible to get them done all at once. It is going to take time to enact all of our legislative priorities and at the same time understand how running government can be much tougher than campaigning in the minority. We are doing a great job so far, but I believe we still have a lot of work ahead us. What major long-term issues do you see facing Alabama, and what should the Legislature do? I think that the slow economy is the biggest challenge facing Alabama today and for the next several years. With our unemployment still over 9%, people in Alabama are feeling the effects of decreased consumer spending. This has led to a dramatic decrease in state budget revenue as well as a record

number of businesses in bankruptcy. The legislature must work to make our tax system more attractive to new and existing businesses. We must start eliminating barriers to business development by cutting government red tape that exists with the state bureaucracy in Montgomery. Also, we have to start thinking outside the box by looking at work force training models that have utilized public/private partnerships to develop a more attractive employment pool. What role do you see credit unions playing in the financial services industry and in Alabamaâ&#x20AC;&#x2122;s economy? Credit unions play a crucial role in our state financial system. Many people do not understand that the credit unions were not part of the financial services meltdown that helped to contribute to our current economic recession. In fact, if it were not for the services offered by credit unions I believe that many private sector employers and employees would not have had adequate access to necessary credit. I believe that long-term sustained economic growth in Alabama will only be accomplished by maintaining a healthy financial services industry with credit unions being the backbone of small lending practices. This is in addition to the obvious economic benefits such as the large number of jobs created by the credit union industry in Alabama. Although they are not-for-profit member-owned financial institutions, credit unions are subject to significant regulatory requirements from both the state and Federal governments. What is your philosophy on the regulation of financial institutions, especially smaller ones like credit unions? We currently have too much regulation of the financial industry in particular credit unions. Credit Unions are treated too much harsher regulations nationally than any other financial institution. This is a burden on our economy and causes undue restraint on the potential that credit unions bring to smaller communities in our state.

also continue to work on cleaning up our state litigation system by providing for meaningful tort reform. Finally, I believe that we must reduce the volume of new regulatory procedures adopted every year in Montgomery. The power over adding or deleting government regulation should be left to the legislative branch of government and not unelected civil servants out of Montgomery. How does grassroots activism help in the legislative and political process? It has given people a bigger voice to be heard. The internet, social media in particular, have allowed anyone to organize and mobilize vast amounts of like minded people into lobbying their legislature for change. This has been a very healthy trend in our democratic process. Today, someone with no financial means or large organization representing them can have the same access to elected officials as any major political player in this state. In the long-term this has lead to elected officials spending more time addressing the concerns their constituents share with them. I hope that this trend continues and produces more interaction between elected officials and those whom we serve. â&#x2013;

What is your list of things you want to see the Legislature do in the next three sessions? I believe we need to continue to expand the economic and tax incentives offered to existing businesses in Alabama. We must

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LSCU Legislator Profile

Bill Nelson How and why did you become interested in politics? I became interested in politics at an early age, but my political and public service career began in 1972 when I was elected to the Florida Legislature. I consider it a privilege to represent the people of Florida in the Senate and work for them every day to help make our nation and state a better place to live.

Nelson’s public service career began in 1972, with his election to the Florida Legislature. During his three terms, he helped enact the nation’s first state law to protect consumers from computer fraud and advocated for responsible growth management laws. Elected to the U.S. Congress in 1978, he served six terms representing Orlando and the Space Coast. In November 2000, he was elected to the U.S. Senate after serving six years as a member of the Florida Cabinet. He currently serves on the Senate Commerce, Budget, Finance, Intelligence, and Aging committees and is recognized as the leading congressional expert on NASA. As a member of the Senate’s Commerce Committee, Nelson has taken on the cause of privacy by supporting measures to protect consumers from identity theft and working on legislation to stop unsolicited e-mails that plague individuals and businesses.

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What are the most important issues facing the U.S. Senate, and the country, right now and down the road? My goals are to get Floridians back to work, find ways to help reduce the nation’s debt responsibly without compromising programs like Medicare, maintain a strong national defense with our state’s military bases, hold the high ground and defend our leadership in science and technology with a strong space program, and protect Florida’s environment – continuing the federal commitment to the Everglades and making sure oil never again washes up on Florida’s shores. You co-sponsored legislation to give credit unions greater ability to make small business loans. How do you see the role of small businesses in the recovery, and what should credit unions be able to do to assist? I was proud to co-sponsor legislation designed to increase the ability of credit unions to make small business loans. Credit unions have been serving the needs of their members, including small businesses, for over 100 years. They are important pillars of local communities and economies. If we are going to get capital flowing to small business again, credit unions have be a part of the solution. That means Congress has to promote policies that encourage lending, while making sure that credit union lending practices remain safe and sound. You also co-sponsored legislation to delay the Federal Reserve’s proposed credit card interchange regulation. What problems do you see with the proposal, and how should it be fixed? I was proud to support common-sense, bipartisan legislation that requires a study of the potential impacts of capping debit card swipe fees on consumers, retailers, and credit unions. Despite provisions to exempt small debit card issuers from the

new law, we heard from many of our local credit unions, as well as federal regulators, about whether the exemption would work as intended. I was concerned that the Senate did not take the time to thoroughly examine this swipe fee proposal, which was a small part of a much bigger Wall Street reform law. Once we have the results of this study in hand, Congress can determine the best course to pursue for consumers and lenders, as well as the appropriate role for Congress.

Sen. Nelson poses with FOCUS CU CEO Bill Enfinger and SCORE FCU Branch Manager Deb Enfinger during a League event.

What role do you see for credit unions in serving the people of Florida and how do you see them as part of the economic recovery? Credit unions serve millions of Floridians today – from providing home mortgages, car loans, retail and commercial accounts, and loans for small businesses. To say that small businesses are the backbone of our local economy is an understatement. Ninety-nine percent of all registered businesses in Florida qualify as small businesses. I don’t know how you can talk about recovery of our economy without talking about the role of our nation’s credit unions. What is the importance of leaders of an industry, such as credit union leaders, being involved in the legislative and political process? My staff and I are always happy to meet with our local credit union leaders when in Florida or Washington, D.C. You are one of the best sources of information about local economic conditions and are a sounding board for which ideas make sense back at home. Your thoughts and expertise on issues that affect the local economy help me better represent Florida. ■

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ompliance Corner Bill Berg, MBA, CCUE, CUCE, BSACS, VP, Regulatory Affairs & Compliance Training

ATM ADA Compliance Issues There have been many questions and issues swirling around the July 2010 Department of Justice (DOJ) changes to the accessibility standards. Of course, ATM manufacturers are very interested in selling you the newest, fanciest, best thing since sliced bread, ATM that is not only speech enabled, but whistles your favorite tune too. According to CUNA’s November, 2010 Compliance Challenge, “There is a safe harbor for elements built in compliance with the original 1991 ADA accessibility standards – these elements will not require modification unless they are altered on or after the 2010 standards’ effective date of March 15, 2012. But according to the supplemental information to DOJ’s final rule, the communication-related elements of ATMs are considered ‘auxiliary aids and services,’ to which the safe harbor does not apply.” The updated accessibility standards governing the construction and alteration of facilities covered by the Americans with Disability Act (ADA) issued in late July, 2010 include new ADA standards for automated teller machines (ATMs), including communication-related requirements to make ATMs usable by individuals who are blind or have low vision. So what does that mean? Some people have hung their hat on the fact that their ATM is in compliance with the 1991 ADA standards and unless they modify their machine they feel they are OK. The problem with that approach is the DOJ’s interpretation that auxiliary aids do not earn safe harbor. So where does that leave you? The DOJ’s original 1991 ADA standards required that the ATM instructions and all information for use be made “accessible and independently usable by persons with vision impairments.” So practically speaking, ATMs would need to be speech enabled in order to meet either the 1991 standard for independent usage, or the 2010 standard specifically requiring voice guidance. In 1991, ATMs were simple money machines. Today, they can do all kinds of things such as balance transfers and inquiries, and it is not possible to have enough Braille instructions for all of the current functionalities.

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ATMs that do not comply with the 1991 standards must be modified to comply with either the 1991 or 2010 standards before March 15, 2012. However, credit unions should consult with their ATM service providers to determine exactly what changes will need to be made to their ATMs. Keep in mind it’s not just the hardware issues that your credit union faces. You have to make sure that your software is able to drive these new functions. It is unlikely that your regulators will begin examining credit unions for ADA compliance. Regulators could consider failure to comply as an unsafe/ unsound practice. However, it is more likely that the DOJ and especially disability rights groups could file a lawsuit if your ATM is not compliant. Your credit union could raise an undue burden defense if it were sued. Undue burden is not an exception, but a defense that can be raised if your credit union is ever challenged on why certain accommodations were not made. Section 36.303(a) of the ADA Title III regulation requires a public accommodation to take the necessary steps to ensure that no individual with a disability is excluded, denied services, segregated, or otherwise treated differently than other individuals because of the absence of auxiliary aids and services (like voice capability on an ATM). The only exception is if the public accommodation can demonstrate that taking such steps would fundamentally alter the nature of the goods, services, facilities, advantages, or accommodations being offered or would result in an undue burden. Undue burden is defined as significant difficulty or expense. In determining whether an action would result in an undue burden, the factors that should be considered include:

The nature and cost of the action needed under this part; 1. The overall financial resources of the site or sites involved in the action; the number of persons employed at the site. the effect on expenses and resources; legitimate safety requirements that are necessary for safe operation, including crime prevention measures; or the impact otherwise of the action upon the operation of the site. 2. The geographic separateness and the administrative or fiscal relationship of the site or sites in question to any parent corporation or entity. 3. If applicable, the overall financial resources of any parent corporation or entity; the overall size of the parent corporation or entity with respect to the number of its employees; the number, type, and location of its facilities. 4. If applicable, the type of operation or operations of any parent corporation or entity, including the composition, structure, and functions of the workforce of the parent corporation or entity. (See definitions under 28 CFR Part 36, Section 36.104) A credit union may raise an undue burden defense if certain auxiliary aids and services are prohibitively costly, but your credit union must have the documentation to back up such a claim in order to be successful if ever challenged in court. If your credit union has just returned to profitability and with the continuing assessments for the corporate conservatorships, you simply cannot afford to replace/retrofit all of your ATMs at this time. What should you do?

Develop a spreadsheet or list of all your ATMs that include the following elements: a. Purchase date Undepreciated book value b. Is it compliant with the 1991 ADA standards c. Is it compliant with the 2010 ADA standards d. Is it cost effective to maintain (usage patterns vs. maintenance and other costs) 2. Based on this inventory of ATMs, you may identify some ATMs that are not meeting their volume expectations and if the costs outweigh the benefits, it may make sense to close them. 3. Based on this inventory and available financial resources, you should develop a replacement schedule to bring your ATMs into compliance with the ADA standards as quickly as you can. 4. If purchasing a new ATM is the best alternative for your credit union, contact LSCU Director, ePurchasing Lori Vary (lori.vary@myleverage.com) or ePurchasing Coordinator Brandt Vinson (brandt.vinson@myleverage.com) with Ventelligence. Ventelligence will be conducting a number of ePurchasing events over the next year to help credit unions obtain the best pricing possible. Although the voice capability has received the most attention, there are other standards that should not be overlooked. Individuals in wheelchairs must be able to make a parallel approach to an ATM, and there are specific reach standards so an individual in a wheelchair can use an ATM. For additional information, visit League InfoSight that may be accessed through www.lscu.coop. (InfoSight is a member-only section. You will need to log in to view information.) â&#x2013;

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COMPLIANCE

Fiduciary Duties of FCU Directors The demands on credit union directors in today’s regulatory environment have never been greater. The National Credit Union Administration (NCUA) began developing the rule about two years ago for Federal credit union (FCU) board of directors with the final rule being adopted by the NCUA board in December 2010. It became effective January 27, 2011, with the requirement for financial literacy training to be completed within six months (July 27). According to NCUA’s final regulation on FCU board of director duties, key requirements simply stated are: 1. The board is ultimately responsible for the general direction of and control of affairs of each FCU. 2. The duties of a director must be performed in good faith, prudently acting in the best interest of the overall membership and FCU as a whole. 3. Within six months of taking seat on the board or a time reasonably after, directors must have a “working knowledge” of basic finance and accounting to understand the FCU’s income and balance sheets in order to ask the “right questions” of management and auditors. 4. A director may rely on other officers/employees they feel is “reliable and competent in the functions performed or the information, opinions, reports or statements provided” to help them meet their required duties. 5. Regarding the financial literacy piece, FCU’s should develop an internal director education policy, and comply with it. The training should provide directors an ability to ask the following questions: • What does this line item mean? • Why is it important to the credit union?

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• Is the value of the line item changing over time? If so, what does that change (either positive or negative) mean? • Is the change important to the credit union? The rule also contains a narrow ban on a federal credit union indemnifying its officials or employees. Indemnification is limited in the event of “gross negligence.” A credit union can still advance legal fees for its directors that it feels acted in good faith. However, if they are judged to be liable, the director will need to pay the credit union back for all advanced expenses. The general direction and control of the credit union have always been the role of the board of directors; however, the reasons behind the final rule were to provide clarification and standardization of key FCU director duties in one place as well as to focus the directors on their members. Plus, with the increasing size and complexity of credit unions today, a better understanding by the board of the credit union’s financials was necessary. While the examiners won’t “quiz” volunteers on their financial knowledge, they will look to determine whether a credit union has a proper training policy in place for its directors. Visit www.lscu.coop for upcoming workshops in your area. Also, this training will be offered at this year’s AC&E. Source: www.cuna.org, “Fiduciary Duties of Credit Union Directors, What’s New & What’s Not.” ■

Regulatory Q&A Larry Morgan, Administrator of ACUA

What drew you to the Alabama Credit Union Administration Administrator position?

A: Even though I’m an old guy, I still feel young and not ready to retire. I worked a year past regular retirement age at APCO and felt like I was keeping people from having a chance to move up. When Mr. Latham retired, I felt like we needed someone in there, and I was interested in it. I’ve worked in credit unions my whole life and I knew the agency needed a strong advocate in Montgomery. You need someone that is going to stand up to the NCUA because they will run over state chartered credit unions.

How can your 37 years of credit union experience help you as ACUA Administrator?

A: The biggest thing is that I can see both sides of issues. A lot of times I understand issues from a credit union manager’s perspective, not just the regulatory perspective. I see both sides and I understand both sides, and I think that’s a plus for me. It’s your agency, we’re here to regulate, but we’re also here to work with you the best we can. If you have complaints or problems, we want to hear them so we can correct it, especially if it’s caused by us. Credit unions need to be benefitting their members and that’s the whole purpose of a cooperative organization and we need to ensure that we work as a cooperative.

What is an area of concern you see in credit unions right now?

A: There have been several things that concern me in the credit union world. Some credit unions have gotten their bylaws to such a point it’s hard to be nominated. Some have things like 600 signatures or something from the membership to be nominated, that’s not very democratic. I think you need a maximum number, I think like 100 or 150. That’s not in many bylaws, and we think it should. It needs to be a democratic process. We shouldn’t just try to close the door and protect those already in office. We have too many credit unions that don’t get any new directors. They just get a group of individuals and they stay there until they die. In some cases that’s good, but in some cases they lose their perspective on what the credit union is all about when you serve so many years.

What’s been the reaction of credit unions since you were confirmed as ACUA Administrator?

A: I’ve started a program of trying to visit all of the state chartered credit unions this year. So far, the feedback I’ve gotten has been very positive for our agency. No one has had anything bad to say about the ACUA. I’m sure there will be some negative comments but I will address those when they come in. If you have a problem with the state agency or an issue with your examiner, the exam, or something in the exam, don’t be bashful about talking to us about it. We’re open minded; we’re willing to discuss it. If you have a complaint with an examiner, bring it forward and let’s discuss that.

Larry Morgan, Administrator of ACUA

Larry Morgan is the former CEO of APCO Employees Credit Union, a $1.8 billion credit union based in Birmingham, AL. He retired in December of 2010. Gov. Robert Bentley nominated Morgan as the new ACUA Administrator Feb. 3. He was confirmed by the Alabama Legislature on April 22, 2011. ■

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More protection,

More connections.

Knowing your members better builds relationships. And knowing how they prefer to communicate, and when they need increased protection, not only builds relationships, it builds connections that will last into the future.

WE ARE COMMITTED TO YOU. As of 2010, more than 10 million credit union members have relied on MemberCONNECT products to protect their financial futures.**

MemberCONNECT® offers your credit union access to valuable insurance products* and invaluable information about your members. Products available through the channels your members prefer. Information that helps ensure you can make the right protection available at the moment in their lives they need it most. So while you’re

Contact your CUNA Mutual sales executive today to find out how your credit union can build more member connections. Call 800.356.2644 or visit www.cunamutual.com for details.

building non-interest income for your credit union, you’re also building life-long connections. That’s what MemberCONNECT is all about.

* Life & AD&D insurance sold through CUNA Mutual Insurance Society. MEMBERS Auto & Home Coverage made available by CUNA Mutual Insurance Agency, Inc. and underwritten by leading insurance companies. Medicare Suite is sold through Humana. These insurance products are not deposits and are not federally insured or guaranteed by credit unions. ** Source: 2009 policyholder data.

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Common Purpose. Uncommon Commitment.

INITIATIVES

Cooperative Initiatives Southeastern Credit Union Foundation: Charity, Community, & Cooperation after the Storm Amber Tynan, executive director, Southeastern Credit Union Foundation As reported last year, the League of Southeastern Credit Union’s (LSCU) Foundation Board of Trustees approved the combination of the existing three foundations into one, resulting in the new Southeastern Credit Union Foundation (SECUF). The new organization will be comprised of $2.6 million in assets with the overall goal to improve operational efficiencies and expand the reach and effectiveness of the foundation. Amber R. Tynan was hired from within the LSCU structure to serve as the executive director. She comes equipped with nine years credit union experience. “We have a tremendous opportunity to expand upon the social mission of our credit unions through charity, community, and cooperation, and I am thrilled to be a part of it,” said Tynan. The SECUF’s mission is more than the services offered; it is something credit unions will want to be a part of and share in, by enriching the lives of those we encounter today, through charity, community, and cooperation. The foundation’s focus starts from a collaborative approach including: • Disaster assistance & relief • Needs-based education scholarship for credit unions • Financial literacy/education outreach • Children’s Miracle Network (CMN) fundraising • Grants to credit unions to develop and implement programs aimed at serving the underserved/unbanked populations, and • Credit union industry specific research “By making present our collaborative spirit, it will immediately resonate with our audience as it ties directly into the credit union industry overall,” Tynan said. “When credit unions and our community partners think of the SECUF they will know the tremendous impact we are making in our credit union communities. By focusing on the issues that matter most to our credit unions, we have a competitive advantage above our competition. We can also utilize the funding from credit unions to gain access to regional and national funding sources, further increasing our impact on the communities we serve.” Recently witnessed, with shock and sadness, was the worst outbreak of deadly tornadoes in the U.S. in more than 40 years. There has been heartbreaking loss of life, including many within the own credit union community. In times of natural disasters, concern for credit unions and the communities they serve is a top priority for the LSCU and the SECUF.

A few days following the storm, LSCU and SECUF staff conducted site visits of the areas affected by the April 2011 tornados, including Tuscaloosa, Cullman, Birmingham, Gadsden, and Rainsville. Many of the LSCU’s member credit unions were merely affected, but a handful sustained significant damage. “Visiting the affected areas and talking to credit union officials and members really drives home the human toll an event like last Wednesday’s tornados have on our communities,” said Patrick La Pine, president/CEO, LSCU. “I am heartened by the response of our credit union community and the human spirit in responding to this tragedy which will have a lasting impact on the region for years to come.” The credit union that was been hardest hit is Community Credit Union, based in Gadsden. A tornado completely destroyed its Rainsville branch. Pen Air Federal Credit Union, based in Pensacola, graciously provided its mobile branch so Community can continue to serve its members. “There are no words to express our appreciation to the League of Southeastern Credit Unions and Pen Air Federal Credit Union for providing us with the Pen Air mobile branch trailer along with much needed supplies,” said Joan Smith, COO, Community Credit Union.

Pen Air FCU, Pensacola, Fla., donated a mobile branch to Community CU in Gadsden, which the league delivered to Rainsville, where the credit union’s branch was destroyed by a tornado.

“Through your generosity, we will be able to serve our members during one of the most trying times we have ever witnessed. As you have seen firsthand, the devastation is indescribable. Knowing that we will be able to serve our Rainsville members on site is huge. The less additional stress we have to place on our members during this time, the better,” said Smith. CONTINUED ON PAGE 28

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Cooperative Initiatives (Continued) The SECUF has been working with the National Credit Union Foundation (NCUF) to determine what other means of assistance can be provided. At the SECUF’s request, the NCUF activated its online disaster relief system, CUAid (www.cuaid.coop), the weekend after the storms hit. With the activation of CUAid, any credit union, staff, or volunteer across the country can make a donation to the NCUF online and that money will go directly to credit union staff affected by the tornadoes. Credit unions and the communities they serve can be comforted knowing there is a resource to assist them in getting back to “business as usual” following the devastating storms across the state. The SECUF announced it will match up to $100,000 of donations made to the NCUF’s CUAid that will further community reinvestment projects. “The storm was so powerful that two weeks later there are still credit unions and credit union staff that need assistance,” said SECUF Chairman Joe McGee. “We’re extremely thankful that the foundation and our peer credit unions have risen to the occasion to aid in the disaster relief efforts for credit unions, their employees and members in Alabama. Our matching funds will only further the aid the SECUF and CUAid will be able to provide.” The SECUF has been continually working to initiate financial assistance to credit unions in need. The foundation is offering an LSCU Chapter Community Reinvestment Match Program to Alabama credit union chapters affected by the storms of up to $10,000. This money will help chapters finish projects in their respective areas. The SECUF also announced a $25,000 donation to Red Cross of Alabama to help aid the many people displaced throughout the state. Many credit union staff were severely affected by last month’s tornadoes, and the SECUF has given out more than 30 emergency grants to credit union employees and members with unique situations falling outside the scope of traditional disaster relief agencies, with a promise for more aid in the future based on documented need. The SECUF continues to receive reports of credit union staff that have lost their homes, including eight to date, along with information on injuries to credit union employees and family members. Profiles of these families will be circulated to give a better representation of their immediate needs. The SECUF will work to ensure that the needs of these families are met. While in Tuscaloosa, Remnants of what used to be homes in the LSCU and SECUF staff Tuscaloosa’s Housing Authority’s 6.9 acre housing facility. 28

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toured the Housing Authority’s 6.9 acre facility which housed 188 families, guided by Tuscaloosa Housing Authority Assistant Director Willie Fort, and Tuscaloosa Credit Union CEO Tommy Cobb. Of those families, 116 lost their homes entirely and are currently pursuing temporary housing opportunities. With the relationships of APCO Employees CU and the LSCU’s Governmental Affairs team, SECUF is working with Alabama Power and Alabama Gas Company on options to cover required utility deposits. This need falls outside the scope of any disaster relief organization. DCH Credit Union, also headquartered in Tuscaloosa, experienced damage to their facility and is seeking a temporary location. Fifteen of the employees were at the credit union when the storm hit and had significant damage to their vehicles, including blown out windows and dents from debris. Two employees of the credit union lost everything, including their homes. Many member credit unions and partners have contacted the LSCU and SECUF asking how they can help credit unions and credit union employees who were affected by the storms. “It’s so encouraging to see LSCU President/CEO Patrick LaPine discusses tornado damage with Becky White of DCH CU in us all living by our industry’s Tuscaloosa. foundation of ‘people helping people,’ because together we can make a greater impact within the communities and lives affected,” said Tynan. The SECUF has a specific Disaster Relief Fund that is available to assist credit unions, credit union employees, and credit union volunteers that have been impacted. Grants are available to fund emergency need as well as long-term and ongoing needs, according to Tynan. Through assistance with the SECUF and the NCUF, disaster relief funds can be used for a broad range of disasterrelated needs as identified by credit unions in affected areas and approved by the SECUF. “By making your tax-deductible pledge to the SECUF Disaster Relief Fund today, you allow the foundation to help our members when they need it most,” Tynan said. “Your donation goes directly to our credit unions, helping them rebuild their lives, strengthen their operations, and enriching their communities.” ■

FOUNDATION

2011 Foundation Scholarship Winners The Southeastern Credit Union Foundation, in conjunction with the credit union chapters in Alabama and Florida, awarded $1,500 scholarships to exceptional high school students. “We are delighted to introduce the high school scholarship program in Alabama this year,” said Amber Tynan, Executive Director, Southeastern Credit Union Foundation. “The scholarship program has been a successful collaboration between the League and our chapters for several years in Florida and was very well received in Alabama.” The chapters chose schools in their area for which they would like to offer the scholarship. As part of the scholarship application, students were required to submit an essay on one of the following four topics: Why Financial Literacy is Important to My State, Credit Unions vs. Banks, Money Management, or the History of Credit Unions. Once the applications were submitted, the high school guidance counselors selected the recipients. ■ North Alabama Education Credit Union President/ CEO & LSCU Board Member Greg Olmsted presents LSCU Scholarship check to Anna Claire Woodall at the Northeast Alabama Chapter meeting.

2011 Foundation Scholarship Winners Broward Chapter

Pinellas Chapter

Birmingham Chapter

Stranahan High School Fort Lauderdale, FL

St. Petersburg High School St. Petersburg, FL

Pinson Valley High School Pinson, AL

Central Florida Chapter

Sara-Mana Chapter

Cheaha Chapter

Edgewater High School Orlando, FL

Booker High School Sarasota, FL

Talladega County Central High School Talladega, AL

Holly Fussell

Christopher John Perez

Apopka High School Apopka, FL

Manatee High School Bradenton, FL

Mobile Chapter

Gulf Coast Chapter

Tallahassee Chapter

Sneads High School Sneads, FL

Leon High School Tallahassee, FL

Northeast Florida Chapter

Breon Robinson

Edna Whalen

Janiccia Felder

Valaree Marie Douglas

Evan J. Rau

Bartram Trail High School Jacksonville, FL

Northwest Florida Chapter Stephanie Elizabeth Hall Tate High School Cantonment, FL

Palm Beach Chapter Brionna J. Smith

Palm Beach Lakes Community High School West Palm Beach, FL

William Harrington

Alexandra Harkins

Briandra Diggs

James Rickards High School Tallahassee, FL

Tampa Chapter Teresa Christmas Pasco High School Dade City, FL

Natalia Torres Dr. Lennard High School Ruskin, FL

Thomas Ray Mathews

Kayla Maria Sillmon

Devante Gavin Monye Smith Baldwin County High School Bay Minette, AL

Muscle Shoals Chapter Anne Catherine Machtolff Sheffield High School Sheffield, AL

Ashley Stovall Rogers High School Florence, AL

Northeast Alabama Chapter Anna Claire Woodall Decatur High School Decatur, AL

Tuscaloosa Chapter Nick Bresnahan

Tuscaloosa County High School Northport, AL

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EDUCATION

League Education LSCU Educational Conferences Prepare Credit Unions for Success Cassandra Grayson, Association Services Chief of Staff Credit unions are amid many changes within the financial services industry and many of those changes requires knowledgeable and equipped credit unions to continue delivering top-tier financial services. The LSCU’s expanded educational offerings address the various training needs of credit unions with a forum of relevant content which gives credit union executives, staff, and volunteers the tools they need to perform in their positions more effectively and efficiently. Experienced executives walk away with tools that allow them to implement specific strategies and information that will positively impact his or her credit union. The conferences that the LSCU offers enable credit union professionals to learn about the latest topics and trends from industry experts. There are a number of topics that the LSCU calendar covers that credit unions can benefit from, including: • Lending, Collections • Bank Secrecy

• IRAs • Trust Accounts

• Marketing, Regulatory Compliance • Asset Liability Management and more

The partnerships that the LSCU has developed with chapters allow us to provide educational events at a local level, enabling credit union staff increased access to training without the added cost associated with travel. ■

Increase Your Knowledge by Attending Upcoming League Education Events Supervisory Committee Conference There is a reason close to 30 credit unions were represented at the 2010 Supervisory Committee Conference – they wanted their credit union to have all the tools necessary to function at its peak. Although this conference is designed primarily for Supervisory Committee Members and Board Members, this conference is also perfect for credit union mangers and compliance officers. Whether you are a supervisory committee or board member, or an experienced volunteer, this event will give you critical knowledge in contributing to your credit union. Conference attendees will receive the most recent information and updates covering credit union auditing, compliance, and fraud. This year, the LEVERAGE sponsored LSCU Supervisory Committee Conference will involve a wide variety of speakers and topics dedicated to enhancing credit union management and compliance. Credit unions should make it a priority to join LSCU for the Supervisory Committee Conference at the Grand Hotel Marriott Resort, Golf Club & Spa Sunday, July 31 – Wednesday, August 3. If you are a CPA, Continuing Education Credits are also applicable. Visit LSCU Events Calendar on www.lscu.coop for more details and registration information. LSCU Development Conference Leadership is integral within any credit union, and having leaders develop the requisite skills needed to move credit unions through the many obstacles that exist today is crucial. The Development Conference provides a mix of relevant educational sessions,

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motivational speakers, and fun networking activities, including a golf tournament. Attendees will also have the opportunity to interact with industry leaders in an intimate setting during the exhibitor showcase. This is an opportunity CEOs, executive management, and directors will not want to miss. There were close to 200 attendees at last year’s Development Conference, with 50 credit unions being represented. This is a premier conference for executive staff members seeking extended knowledge in credit union development. “I found the speakers to be profoundly in tune with the many challenges that face our credit unions today, said Alabama State Employees Credit Union Vice President of Lending Melanie Smith. “I came away from the conference with a new found motivation and a wealth of ideas. The speakers were enthusiastic, engaging, and very knowledgeable. Remember to mark your calendars for the 2011 LSCU Development Conference held November 1 - November 4 at the Grand Marriott in Point Clear, Alabama. This year’s sponsors include: • Print Resources: Golf Tournament Beverage Cart Sponsor • CO-OP Financial Services: Golf Tournament Breakfast Sponsor • Morgan Stanley Smith Barney: Golf Tournament Hole Sponsor • CUNA Mutual Group: Golf Tournament Hole & Lunch Sponsor • Southeast Corporate FCU: General Closing Session Keynote Official & Exhibit Hall Beverage Break Sponsor For more information on LSCU conferences and workshops, visit the LSCU Events Calendar on www.lscu.coop, email education@lscu.coop, or call Becki Payne at 800.846.8374, x2129. ■

Your Credit Union’s Disaster Preparedness Plan: Is it Ready for the Next Disaster? Disaster Recovery Conference Many credit unions are faced with situations that are out of their control such as natural disasters or accidents that affect their ability to operate and serve members successfully. There may be times when business operations are disrupted and a credit union’s ability to resume business is directly related to its preparedness in response to unforeseen events. In today’s rough economic climate, it is essential for credit unions to have a definitive response plan that equips them with the capability to counter crisis or disaster effectively. Attending the LSCU Disaster Recovery Conference is essential for those credit unions seeking important tips, as well as those lacking a well prepared disaster plan of action. “I always pick up good tips to implement in my credit union,” said one conference attendee. “I was able to identify items missing from my business continuity plan.” More than 25 credit unions were represented at last year’s Disaster Recovery Conference, which was sponsored by Florida Credit Union Shared Services. Those that attended the conference included presidents, CEOs, COOs, CFOs, senior operations personnel, and staff involved in developing and implementing the disaster preparedness plan of their credit union. There is no reason your credit union should not be prepared for a potential disaster. Preparation and strategy begin with the Disaster Recovery Conference set for July 12-13 at the Hilton Pensacola Beach in Pensacola FL. Visit LSCU Events Calendar on www.lscu.coop for more details and registration information. ■

COMMUNICATIONS

Communications Moving to Multimedia: An Inexpensive Way to Reach Your Audience Mike Bridges, VP, Communications & Marketing In 2005, the way the world communicated changed with the invention of YouTube. Email began to replace phone calls and regular mail, but it was the growth of YouTube that started a communications revolution. Anyone with a camera, a computer and limited skills could broadcast any and everything that was on their mind. Companies quickly realized that YouTube could be used to enhance communications to employees and customers, both current and potential. The world of communications has changed, but not everyone understands the power of today’s multimedia. When the LSCU debuted in January 2010, it began utilizing multimedia through audio podcasts and video. With its own video player on the LSCU website, www.lscu.coop, credit unions can now see and hear different forms of communications throughout the year. Examples of such include video recaps from the CUNA GAC that feature lawmakers and credit unions talking about the current issues. Through this medium credit unions may listen to Q&A with a lawmaker and better understand how that lawmaker feels about credit union issues. The League also provides video highlights events such as the AC&E, the state GACs, and the Development Conference to show those credit unions that were unable to attend what these events are all about. Audio podcasts have been used to share interviews with upcoming speakers, credit union CEOs, and legislators to name a few.

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Some credit unions are quickly seeing the benefits of using multimedia for internal and external communications. Alabama Credit Union, based in Tuscaloosa, began utilizing video technology in 2011 to enhance the communication within the credit union’s branches throughout the state. Alabama CU CEO Steve Swofford was asked by his marketing team to host weekly “Swoffcasts” to inform staff on timely topics. The idea was a winner from the start. “We did a survey before we started the broadcasts and about 60 percent of the staff felt they knew the priorities of the credit union. After a month, the number grew to 90 percent,” said Swofford. The videos are shot by the marketing team, using a flip camera. The content usually runs about three to seven minutes and is unscripted. Swofford generally talks off the cuff. While it’s a great way for the CEO to interact with employees that are sometimes hours away, it’s also a fun way for everyone to feel more involved with the credit union’s priorities. “It’s been an effective way to provide an enhanced form of communication,” said Swofford. “Mob” videos have been the approach Innovations Credit Union, based in Panama City, has used to differentiate and communicate to its members as well as non-members. In these videos, a large number of employees, members, and friends get together and

romance” (think Lady GaGa). In the end, the couple switches to choreograph a routine to a song that is lip synched by the group. Innovations and so does the banker. A great concept that plays to the Innovations CEO David Southall says the “mob” videos fit into the credit strengths of the youth market watching video on their computer or unions strategy when it changed its name to Innovations in 2005. phone, not the traditional media buy for the local news. “We made a conscious decision to take our sleepy credit union “The point of doing these videos is to involve our team members, and transform it into an entirely different place. Basically, we wanted members, friends, and families; our to differentiate ourselves from everyone cast consists of all those people. We else,” said Southall. have gained new members and their Innovations began with a YouTube relationships through these videos as account and a strategy. The credit union well,” said Southall. produces two videos per year, but also Don’t let this opportunity to reach places their commercials on YouTube. a large audience pass you by. The Utilizing this type of technology meant ease of producing multimedia is not having to spend a ton on media becoming less expensive by the year, buys throughout the year. They began and the number of YouTube videos with a holiday video that involved the is growing by the billions. As credit staff and lip synching to a popular song, unions begin thinking about 2012 and it became an instant hit. budgets or utilizing what’s left of the “We embarked on attracting the The Innovations CU crew performing in the latest video. 2011 budget, a hard look at strategic youth market and our mission was to multimedia usage has the potential to lower the average age of our membership,” really pay off. By hiring someone with a working knowledge of audio said Southall. “To be attractive to the youth market, you have to and video production, a credit union can reach a massive segment immerse yourself in it by doing the things that they like to do.” of members and non-members with minimal costs. Other Innovations “mob” videos include one that coincided with the opening of the new airport in Panama City. The latest video tells For credit unions that have multimedia questions, contact LSCU, VP a story about a young couple who are being beat up by their banker. Marketing & Communications Mike Bridges at mike.bridges@lscu.coop Innovations intervenes and rescues the couple from the “bad bank or 866.231.0545 x1022. ■ LSCU Video Player – http://www.lscu.coop/Communication-Press-Room/Video LSCU Audio Center – http://www.lscu.coop/Communication-Press-Room/Audio-Podcasts

LSCU on Twitter – www.twitter.com/LeagueofSECUs Patrick La Pine – www.twitter.com/patricklapine

LSCU Financial Literacy Outreach LSCU Councils

LSCU Statewide Image Campaign TV Commercial Filmed in Birmingham The television commercial, one of the main components of the LSCU Statewide Image, was filmed in downtown Birmingham by Scout Branding Company in early May. The commercial features an actor (Peter Linds) speaking directly into the camera and pointing out that “60 percent of you don’t know what a credit union is.” He then compares that to not knowing what chocolate tastes like or what a hug feels like. While letting the viewer know a credit union is a better place to do your banking, the actor says, “being a member of a credit union is like finding money every day.” The commercial is based on the tagline, “Credit Unions: we’re giving banking a better name.” To see a behind-thescenes video of the commercial and to hear the concept behind the ad, visit the online LSCU Video Center at www.lscu.coop. The finished commercial will be shown for the first time at the AC&E in June in Orlando. It will also be available for viewing at the LSCU Image Campaign information lab along with other collateral materials and an example of outdoor advertising (billboard). Fundraising for the LSCU Statewide Image Campaign will continue through June with the campaign kicking off in the fall around Labor Day. The LSCU is getting close to $1 million raised throughout Alabama and Florida. ■ SIGNAL: Vol. 2, Issue 2

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NEWS

League News LSCU Announces Recipients of LSCU, CUNA Awards LSCU Awards The LSCU is proud to recognize these professionals, volunteers, and credit unions that have made outstanding contributions to the development and growth of the credit union movement in Alabama and Florida. Congratulations to the following recipients of the LSCU’s prestigious awards: Distinguished Service Award: Bill Marquardt (posthumous), former CEO, City County CU of Ft. Lauderdale, FL For 17 years, Bill led City County Credit Union as CEO until he passed away late last year. During his time at the credit union, Bill remained focused on member service and, in turn, received CUNA Best Practices Award, Sales & Service. He made sure his employees were taken care of through excellent benefits, a culture of integrity, communication, and employee development. He also opened a car dealership, AutoBranch, at the credit union to ensure members who were buying vehicles were treated with honesty and respect which led to him being featured in several magazines as an expert on collections and “repos.” In addition Bill was very involved in the Florida Credit Union League, serving as a director on the FCUL Service Group board and a member of the Credit Union Political Action Committee with involvement in advocacy on the local, state, and national level. Professional of the Year: Joe McGee, president/CEO, Legacy Community Federal Credit Union, Birmingham, AL Joe began his credit union career at the Alabama Credit Union League. He then moved to Legacy FCU in 1991 and became president/CEO in 1999. He is an active credit union advocate, participating annually in Hike the Hill and, in 2006, testified before the Senate subcommittee of Banking, Housing, and Urban Affairs on the Consideration for Regulatory Release Proposals. Joe was an integral part of the consolidation of the Alabama and Florida leagues and is currently chairman of the LSCU board of directors. Joe is active at the chapter level and is a huge proponent of staff involvement in the chapter. Volunteer of the Year: Maurice W. Johnson, chairman, Pen Air Federal Credit Union, Pensacola, FL Maurice has been a member of the credit union since 1965, and has served on supervisory committee, then the board of directors for more than 30 years, serving the past seven as chairman. He is active in political action and makes trips to DC every year to promote credit unions. Maurice is also active in the chapter by attending all chapter meetings as well as other major credit union conferences. His influence has helped Pen Air earn 5-star superior rating from Baur Financial for 80 consecutive quarters as of December 2010.

Credit Union of the Year: Less than $100m: NAHEOLA Credit Union, Pennington, AL Mark Johnson is CEO of this $72 million in assets credit union that has grown $900,000 over the past 18 months with a net worth of 22.5 percent and a one percent delinquency rate. Community minded, the credit union provides financial training to the local middle school, high school, and college and provides a “job shadow” program for local college accounting students. In 2010, the credit union unveiled its “Simple” campaign to market to non-members, focusing on products, services, and alternatives services like online banking.

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$100 - $500m: Alabama Credit Union, Tuscaloosa, AL Steve Swofford is the president/CEO of this $410 million in assets credit union that has grown $61 million over the past 18 months with a net worth of 9.6 percent. Membership has grown by 1,700 in the past 18 months as well. The credit union provides financial literacy to local schools and developed “Secret Meals for Students,” a program where kids secretly get meals in their backpacks for the weekend. The program grew in one year from one school to 48 and from 18 students to 900 while raising $139,000 for the program. Advocacy is a priority for this credit union and staff is regularly educated on the issues and participate in payroll deduction for CULAC. $500m+: CFE FCU, Lake Mary, FL Joe Melbourne is the president/CEO of this $1.2 billion in assets credit union that has grown $48 million over the past 18 months with a net worth of 11.7 percent. The credit union opened three new student-run branches in 2010. CFE’s financial literacy in classrooms reached almost 10,000 students over the past two year, and the credit union supported four school districts with donations and sponsorships totaling more than $200,000. A $60,000 donation was made to three school districts based on the MyCFE4Schools partnership program in which CFE donates five cents for every signature transaction. The awards will be presented during the LSCU AC&E Closing General Session on Saturday June 18, 2011 in Orlando, FL.

CUNA Awards Congratulations to the following recipients of CUNA’s prestigious awards program. The entries of the first place winners will be sent to CUNA’s national competition, where they will compete with other state winners from throughout the country. The awards will be presented at the credit union’s choice of either their chapter meeting or their credit union. ■

Dora Maxwell Social Responsibility Community Service Award

Louise Herring Philosophy-in-Action Member Service Award

The Dora Maxwell Award program honors the work of credit unions in the community.

The Louise Herring Award recognizes the practical application of credit union philosophy through internal programs to improve members’ lives.

$200 – $500m 1st – Alabama Credit Union 1st – Insight Credit Union (FL) 2nd – Florida Commerce Credit Union $500 – $1b 1st – Alabama Telco Credit Union 2nd – Army Aviation Center FCU (AL) $1b+ 1st – CFE FCU (FL) 2nd – Pen Air FCU (FL)

Chapter 1st – Montgomery (AL) Chapter of Credit Unions

$250m – $1b 1st – Florida Commerce Credit Union $1b+ 1st – Pen Air FCU 2nd – CFE FCU

Desjardins Youth & Adult Financial Education Award The Desjardins Youth & Adult Financial Education Award recognizes leadership within the credit union movement on behalf of youth and adult financial literacy. $500m+ 1st – Army Aviation Center FCU

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INDUSTRY

Your Future Online Community By Brian Ramos, chief brand strategist, ThinkCreative More than 90 percent of your website visitors go immediately into online banking, completely bypassing the majority of the content on your site. Additionally, phishing scams hamper marketing integration with your online banking sites externally. These challenges and trends are the impetus for countless discussions about what the future holds for credit union websites. There are currently four categories of banking websites: • Marketing-oriented sites, i.e. today’s typical credit union site or marketing promotional site • Online-banking sites • Personal finance management (PFM) sites • Community sites Let’s take a look at the pros and cons of each of these platforms.

Marketing-Oriented Site By and large, most current banking websites fall into this category. The focus is on communicating the who, what, where, when, and why about your organization. The newer trend is to create a promotional site — generally a third or fourth site in the mix — that is tied to a unique marketing campaign. Examples of this type of site would be YoungFreeAlberta.com and WeLiveFitChallenge.com. PROS The pros of this type of site are that it generally is considered to be a “recruitment” tool for new members. It allows your organization to communicate rates, locations, hours of operation, a history about your organization, and, hopefully, reasons why a person should join or stay a member. The promotional sites have many times proven to be great visibility for a credit union. Many of these promotions gain lots of notoriety with their launch (newsworthy approach), but fade in effectiveness over time, later being dropped entirely. For example, I initially enjoyed Kentucky Telco’s “FireYourBank.com” campaign but now that URL directs to a ho-hum typical credit union site. CONS The cons of most current marketing sites is that most information is either not timely, rarely viewed, or, quite frankly, something the average member cares little about. A quick look at your Google Analytics report will support this. More than 90 percent

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of your web traffic goes directly to online banking. The remaining single digit traffic is peppered between branch locators, rates pages (although, that is typically now being viewed through a rates aggregator site like Bankrate.com), and, lastly, an occasional view of the “about” page. The general problem is this: You don’t know what somebody wants to read and when it will be most timely. So, all of that information ends up being housed in this online repository.

Online-Banking Site If 90 percent of your current site traffic is going to an online banking site, it’s pretty clear the product you choose and use is critical. A positive online banking product experience is a real make or break opportunity for a stronger member relationship. If you haven’t re-evaluated your solution lately, it’s worth the time to go through the exercise and assess all of the newer options on the market. PROS The pros of this site are that it is very utilitarian and can be a great means of keeping members long-term provided the product is good and intuitive and expanding in capability. It’s clear this market segment will only grow in its use. CONS While this site is the destination more than 90 percent of your members are going to, it’s most likely a third party product that you purchased or license. This site provides very little area for flexibility and generally a light skin applied to the design so it at least somewhat looks like your brand. You also have few marketing opportunities in most of today’s online banking platform choices such as an occasional small banner ad on some choice pages.

Personal Finance Management Site (PFM) This category is a large part of where I believe credit union marketing and IT budgets will shift towards in the next five years. PFMs like Mint, Wesabe, Geezeo, and Green Sherpa provide a vast wealth of capitalized knowledge for those banks and credit unions that have already adopted this platform. PROS These are the real movers in today’s market. For years, we’ve tried to essentially “guess” when someone might be in need of a loan or service. The marketing and communication expenses have been costly and vastly inefficient. As a

marketer for 20 years, I’m near giddy about the member insight this platform provides. Want to know what someone is saving for? What their goals are? This platform delivers! CONS Similar to today’s online banking product, these are almost universally a third party product license and therefore have limited opportunity to extend the brand (as of today). My expectation is that the way these companies adapt their software in the future with a more Open API (Application Programming Interface which enables websites to interact with each other using various web technologies) and design standards that allows credit unions greater integration to their overall brand. Additionally, services like Mint.com poach members by referring them to other financial institutions – mostly large banks like Ally or Chase – for banking, investment, and insurance.

Community Site Community sites are nothing new. The challenge has been how to make one a viable gathering place for members. The proliferation and success of social media and emerging technologies make this my best bet for tomorrow’s credit union website. Unlike banks, credit unions can embrace their core SEG groups and return to their roots in displaying their distinction from banks. Think a bank customer feels community? The problem has been that many credit unions and their websites look, feel, and sometimes behave like banks. Build a community by focusing back on the credit union mantra: “People helping People.” PROS This platform allows for much more engagement marketing. It’s a great platform for commerce, i.e. autos, as well as one to bridge your commercial members with your much broader member base. And, since credit unions are all about their community, it’s a great platform to help strengthen community-wide partnerships. CONS This platform takes a lot of work and time to really make one of these sites truly relevant. This cannot just be seen as a traditional “campaign” type of marketing effort that is up for a few months or even just a year, it must be ongoing and relevant. It also requires an investment in planning and “visioneering” what your members would most like to get from it.

What Will Future Credit Union Sites Look Like? While developing this article I ran across a great post on The Financial Brand: “New Visual Trends in Retail Banking Websites.” They called attention to the growing trend of large visuals (bing) and customized consumer viewing (iGoogle). I tend to agree that this is a trend and expect the credit union website five years from now will have far less written content and far

more visual and video content. Imagine how far internet bandwidth has come in the last five years; pair that with the fact that technology is doubling every 15 months, and you can quickly get a sense of just how much farther we will be: 16 times faster speeds and capabilities than we have today.

What Will Future Credit Union Sites Act Like? My prediction is that we will see a convergence of the four current categories down to two core ones: • Unified online-banking / personal finance management (PFM) site • Community / general information site

Uniﬁed Online-Banking / Personal Finance Management (PFM) Site Why do I believe this? Because of the industry trends, obvious pairings, and talking to ALOT of industry folks. A recent conversation with folks at Geezeo confirmed that the first is already occurring today. They’ve already been contracted by one of the largest banks in the country to build an online banking platform that will unify with their PFM. You’ll see much, much more of that to come.

Community Site Paired with General Info Site Just take cues from effective social media strategies today. Try to “sell” your products on Facebook and you’ll quickly see just how much people do NOT want to be “sold.” Present your products and services as a “solution” to an issue or helpful aid to a problem and you’ve got the start of a much stronger relationship. General information about your credit union will still be readily available but will become secondary as a communication hierarchy. An effective, useful, dynamic credit union site of the future will embrace promoting interaction between members and create engagement for the credit union with its members and prospective members. Want to know more about this subject? Contact Brian directly at bramos@thinkcreative.com or toll-free at 888.224.1169 x714. ■

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LEVERAGE

Listening for Your Future The hallmark of good business development is the ability to listen. We’ve heard about the 80/20 rule; where you should listen 80 percent of the time and talk only 20 percent. During the last year, LEVERAGE has had its ear to the ground to determine your needs and how LEVERAGE can assist in providing product and service solutions. One question we’ve asked during our credit union visits is “what are your thoughts as to what the future holds?” There are many ideas of what the future means. In this economy, my new definition of the future is turning possibilities into realities. It’s no longer the “dream big” philosophy of the past decade, but a simpler definition of turning possibilities into realities. We’ve heard our credit unions ask, “Is it possible to have relief from the pressures of new legislation while saving on expenses?” Or, “Is Mary Elicia Del Santo it possible to have new lending opportunities?” LEVERAGE is looking into the future to make these VP Business Development possibilities a reality for our credit unions. 866.231.0545 One area LEVERAGE has worked diligently in providing a solution for credit unions is regulatory me.delsanto@myleverage.com compliance. In listening to our credit unions, regulatory compliance is common concern. Regulatory www.myleverage.com overload is increasingly burdensome, and the cost of compliance is rising 15 percent annually (Deloitte) with the largest cost being compliance personnel (see graphic below). What used to be a one-person, even part-time position, has now grown in to entire compliance departments. And, with numerous resources available to credit unions on compliance guidelines, and information, it can be difficult to know and manage the right way of implementing new policies and procedures. Looking forward, the “light at the end of the tunnel” for regulatory relief is still quite a distance away. Answering the need to relieve some of these regulatory burdens, LEVERAGE now offers an automated compliance solution, powered by ComplyTrac, which provides credit unions with knowledgeable compliance staff guidance and a system with procedural controls to meet compliance requirements on a single platform. Credit unions see a reduction in costs, an easier method for performing tasks, and a more effective process for meeting compliance regulations. It also eliminates the risk of unforeseen expenses responding to regulatory changes. This complete solution will make peace-of-mind a reality for credit unions. Another possibility of the future and an area that you have voiced your concerns is new loan sources, particularly quality loans. Where are those opportunities? Later this year, LEVERAGE plans to offer merchant lending. Merchant lending will enable credit unions to offer automated and instantaneous 24/7 financing for potential customers at the point-of-sale. The reality of this solution is future loan growth in a new and virtually untapped market. The value we expect to show credit unions is increased revenue from higher yield loans, new business relationships from local merchants and service providers, and new cross-sell opportunities. We are excited about the future and turning the possibility of cost saving and increased income a reality for our credit unions. And, we continue to listen for your future. ■

Allocation of Compliance Dollars (Based on 2002 estimates) 8.9% 8.1%

45.4%

6.8% 6.5% 5.1% 2.8% 3.4% 4% 4.1%

A Magazine of the League of Southeastern Credit Unions

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Compliance personnel Compliance auditing & monitoring Compliance conferences & schools Forms & printing Compliance software Compliance related consulting Subscriptions & related costs Data processing for compliance requirements Outside counseling All other compliance costs

Compliance Execution on Time, on Task, Guaranteed The speed at which new regulations are being adopted and how they have dramatically increased the costs associated with maintaining a compliance program have placed a huge burden on any financial institution. With numerous resources available on compliance guidelines and information, it can be difficult to know and manage the proper implementation of the various new policies and procedures. LEVERAGE’s new automated compliance solution, powered by ComplyTrac, not only provides an information resource, it streamlines compliance procedures and reduces costs for credit unions, helping credit unions effectively execute regulations through an automated software.

Features • • • •

One system manages all policies, reviews, & updates Pre-packaged controls with continuous updates Enterprise risk management system with assessment history Task automation for routine controls with email notification & tracking • Guaranteed exam compliance & cost reduction

Beneﬁts • Complete & effective execution of compliance policies & procedures • Reduced costs on compliance consulting • Back office productivity increase • One system for organization of all policies & procedures • Quicker adoption of new products with improved compliance agility • Peace-of-mind during audit time ComplyTrac reduces time spent on compliance management and the expenses and need for outside consultants as well as eliminates the risk of unforeseen expenses responding to regulatory changes and guarantees exam compliance. All routine controls and audits are completed online, allowing your staff to quickly complete necessary tasks and get back to serving your members. Most importantly, ComplyTrac provides a peace-of-mind when implementing compliancerelated decisions. For more information, contact a business development consultant at consult@myleverage.com. ■

Staying In Step With Your Needs

Come Visit Our Experts In

Booth 504 www.doeren.com 248-244-3110 financialinstitutions@doeren.com

The League of Southeastern Credit Unions’ 2011 Annual Convention & Exposition

Auditing - External & Internal I IT Assurance I Regulatory Compliance I Merger & Valuation I Loan Reviews

Mobile Payments Momentum Steve Sievert, senior vice president, PULSE Technology has been the force behind change in our economy in recent years, altering the way consumers interact not just economically but socially. Technological advancements also have given consumers boundless mobility – the freedom to stay connected anytime, anywhere. This mobility has driven demand for the ability to perform tasks such as reviewing bank statements, transferring money, paying bills and even making purchases. In fact, the U.S. mobile payments market is on an incline, forecast to increase by 68 percent between 2010 and 2015, according to a survey by Credit Suisse. The benefits of mobile banking are fueling its growth, but with opportunity come challenges. A new report from Aite Group predicts the U.S. mobile bill payments market will reach $214 billion in gross dollar volume in 2015, up from $16 billion in 2010. This growth can be attributed to consumers’ adoption of smartphones, their continued embrace of m-commerce and mobile banking, as well as carriers’, handset manufacturers’ and card issuers’ adoption of near-field communication (NFC) chips. Consumers are more concerned with the hardware end of the mobile equation – the choice between an iPhone®, DROID or BlackBerry®. But growth rests on the software that enables the hardware to perform certain tasks. The following advancements in software technology could transform the phone into a wallet: NFC chip technology – A phone enabled bled with an NFC chip supports contactless payments by enabling ing two-way communication, meaning the phone can send transaction information to payment terminals or download information such as coupons from promotional signage. On-screen barcode-scanning technology ogy – Retailers such as Starbucks and Targett use mobile barcode technology as a payment system for their

store-branded gift cards. This option has proven to be a fast and convenient solution, as customers simply hold their phone’s screen in front of a special reader at the point of sale, decreasing time spent at the register. Some mobile applications use barcode technology that displays the user’s digital image, helping merchants authenticate transactions. MicroSD cards – MicroSD cards are essentially memory cards that contain payment card information. Consumers can self-install the card for mobile payments, coupons and much more. As you can see, there is no shortage of technology to support mobile payments, but having too many options can be a doubleedged sword. Having multiple technologies available stalls the market because there is not critical mass in any one. Consumers cannot decide on the best device or features that fit their lifestyle, without fear of the device becoming obsolete in the short-term. Merchants cannot determine which technology is most suitable for their business and customers because incentives are not yet clear. Even as the competition among technologies remains unresolved, carriers and manufacturers continue to move forward with their favored systems. In order to stay relevant, organizations are encouraged to do the same by educating themselves and making appropriate provisions to address the market need. Being flexible, and even changing business models to favor the emerging technology, will be the key to success in mobile payments. For more information, contact a business development consultant at consult@myleverage.com. ■

Steve Sievert serves as senior vice president dent of communications & marketing for PULSE, a Discover Financial Services company and operatorr of the PULSEE® electronic funds transfer network in Houston, Texas.

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