LSP fall11

Fall 2011

Winner of the CUNA Marketing & Business Development Council's 2007 Diamond Award.

Texas Credit Union League EDITORIAL Managing Editor Linda Webb-Mañon Contributing Writers Allison Griffin Debbie Rightmire Dianne Addington Elizabeth LaSane Howard Bufe Idrees Rafiq Jason DuPlant Kimberly Jones Linda Winkfein Mark Arnold Michael G. Brown Pierre Cardenas Susan Fletcher Susan Looney Tom Hodge Kirby F. Warnock ADVERTISING Advertising Sales Director & Account Executive Tracy Florida BUSINESS Chief Operations Officer Bob Gallman Subscription Coordinator Linda Webb-Mañon HOW TO REACH US 4455 LBJ Freeway, Suite 1100 Farmers Branch, TX 75244-5998 e-mail: lwebb-manon@tcul.coop Web site: www.tcul.coop

Contents

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22 FEATURE 16

Rising Above the Competition: How Credit Unions Can Remain Unique in the Crowded Financial Services Marketplace

by Kirby F. Warnock and Allison Griffin

DEPARTMENTS 2

President’s Message

What’s Your Domain Name, by Dick Ensweiller

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Chairman’s Forum

Collaboration Isn’t a Buzz Word; It’s an Effective Business Model,

by Pamela Stephens

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Managing Emotions Under Pressure, by Dr. Susan Fletcher Gary Tuma: A True CU CEO Success Story, by Linda Webb-Mañon ALM: The Art of Managing a Balance Sheet, by Debbie Rightmire

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Professional Development

Car Sales, FICO Scores Down, by Pierre Cardenas Collect Debts……Keep Members, by Elizabeth LaSane Neches FCU: How we leverage cause marketing, by Jason Duplant

LoneStar Perspectives is a quarterly publication of the Texas Credit Union League (TCUL) and is offered to TCUL–affiliated credit unions as a duessupported service. If you are not an employee or volunteer of a League- affiliated credit union and would like to sub scribe to this publication, an annual subscription rate of $20 is available.

LoneStar Perspectives is a trademark used herein under license. Copyright 2006 by Texas Credit Union League. All rights reserved.

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Regulatory & Compliance

CU’s Role in Protecting Member Data, by Idrees Rafiq Reg Z Clarification on 14 Days – Excedrin Headache #356, Regulatory Q&A with TCUL Information Central

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Philosophy in Action A RECIPE FOR SUCCESS, by Howard Bufe David Whittle 2011 TCUL Volunteer of the Year, by Michael G. Brown CUs Making the Difference Through Financial Education, by Linda Webb-Mañon

WES Publishing

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HR Corner

Human Resources… how it really affects your bottom line, by Susan Looney HR Q&A, by Kimberly Jones

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Small Credit Unions

Branding 101 for Small Credit Unions, by Mark Arnold Jonathan Matthews – Small CU Achiever of the Year, by Linda Winkfein

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Products & Services

Let’s Make A Deal, by Tom Hodge Engaging a New Era, by Dianne Addington

Main Office: (469) 385-6400 (800) 442-5762, Ext. 6400 Editorial: (469) 385-6486 Advertising Sales: (469) 385-6424 Advertising Design: (469) 385-6473 Subscriptions: (469) 385-6486 Letters to the Editor: lwebb-manon@tcul.coop

310 East Interstate 30, Ste. B107 Garland, TX 75043 469-429-9300 Publisher William Strunk Graphic Designer Marlina Rahman

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PresidentMessage

By Dick Ensweiller President/CEO Texas Credit Union League

What’s Your Domain Name?

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hase, Bank of America, Wells Fargo – they all offer savings and checking accounts, a mix of loan products, as well as investment accounts and other services. And while all three might price their products and services differently, they have at least one thing in common - .com. Yes, all three of these institutions can be found on a .com domain.

Why is that important? Because your domain name tells consumers if you are a profit-driven or peopledriven organization.

The United Nations has declared 2012 as the Year of Cooperatives, signifying the important role cooperatives play in our society. This is our opportunity to let the public know that credit unions are cooperatives, and that the cooperative business model works. Your League has created a “Credit Unions Build a Better World” Year of Cooperatives campaign that will launch on October 20, 2011 – International Credit Union Day. With your support and participation in this campaign, we hope to: • Increase consumer awareness throughout Texas about the uniqueness and benefits of credit union membership; • Motivate consumers to move their money to a member owned, local community focused and trusted credit union; • Position credit unions as safe and sound financial cooperatives; and • Celebrate the Year of the Cooperatives.

One simple way credit unions can participate is by changing their domain name. The .coop domain is not only a

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powerful marketing tool, because it provides credit unions one more way in which to differentiate themselves from for-profit, investor-owned financial institutions, but it also helps to reinforce trust with the member, as .coop domains are only given to bona fide non-profits.

The .coop extension is not new. Your League switched from .org to .coop in 2002, and we’ve encouraged our member credit unions to do the same. If you are still located on the .org or .com domain, I encourage you to make the switch to .coop in 2012 for several reasons: • Credit unions need to differentiate themselves from other financial institutions that offer similar services.

A .coop domain sets you apart on the Internet – today’s marketplace. It’s a way to be more than just another .com or .org.

• Credit unions need to promote the idea that they are financial cooperatives that work for their members.

A .coop domain emphasizes your focus on your members and their priorities – one glance and it’s clear that your members are your top priority.

• Cooperatives are recognized as businesses that are owned by and serve the people, are focused on core principles, and are not for profit. Using .coop to align your credit union with other cooperatives that also serve your community or field of membership is a great way ensure that people think about credit unions first for their financial services.

If you want to learn more about the .coop domain, I encourage you to visit http://www.nic.coop/.

Chairman'sForum

By Pamela Stephens President and CEO Security One FCU

Collaboration Isn’t a Buzz Word; It’s an Effective Business Model

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know I speak a lot about collaboration. Perhaps too much for some; however, I firmly believe that fostering a collaborative culture is not only the most effective way to further strengthen our movement, but it is also the best way to stimulate new ideas, strategies and innovations.

Collaboration is not just a “buzzword” – it’s a business model. And who better to embrace this business model than credit unions – we are after all financial cooperatives that have historically collaborated to achieve a common goal.

We operate in a highly competitive market space and the need to work collaboratively is becoming increasingly important. Unfortunately, it’s a lot easier to talk about collaborating than to actually do it. I believe some people may be resistant to collaborating because they fear it means giving up control. But if you always want to be in charge – to have things your way – then you aren’t really opening yourself up to collaboration. Collaboration is about respecting and appreciating the expertise, perspectives and talents of others, and working together to find solutions.

This year’s Dora Maxwell Social Responsibility Community Service Award recipients are excellent examples of effective collaboration.

Each of these credit unions identified complex social issues in their communities and recognized that alone they could not solve the problem, but through collaboration they could make a real impact.

Take Security Service FCU, for example. This credit union worked in partnership with the San Antonio Food Bank to create a Healing Garden at the St. Peter-St. Joseph Children’s Home, a garden that will have a tremendous impact for countless children coming in and out of the foster care system.

InTouch CU has, for several years now, partnered with the Children’s Medical Center, helping to create a comfortable and welcoming environment for the more than 460,000 patients the hospital sees annually. Thus far, the credit union has donated more than $150,000, and through these contributions, the hospital is able to purchase the most innovative technology, the best staff and the best resources available.

Communities of Abilene partnered with Big Brothers Big Sisters of Abilene to help provide strong role models for children in desperate need of one. Thanks to the credit union’s skip-a-loan payment, they raised more than $32,000 and were able to get 32 children – many of whom are from single parent households – off the waiting list for mentors.

And finally, FivePoint CU offers a wonderful example of collaboration, as credit union employees worked together to coordinate fundraisers to support Relay for Life. Through various fundraising events, including bake sales, “This is my Cancer Fighting” T-shirt sales, a “Cookin’ for a Cure” cook-book sale, and many other activities, credit union employees raised more than $27,000 to benefit members of their community who have been diagnosed with cancer.

It just goes to show, when credit unions collaborate, great things can happen!

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By Dr. Susan Fletcher National Speaker Psychologist and Author

News

Managing Emotions Under Pressure: How to Empty Your Bucket to Stay Calm and Productive in any Situation

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osing it,” “having a meltdown,” “freaking out”… this is what we say when someone isn’t managing his/her emotions in a productive manner. I like to call it having an exaggerated response.

I believe everyone has a bucket inside of them. When something causes stress, frustrates you, makes you angry or requires a lot of attention and energy the bucket starts to fill. When your bucket fills completely you are likely to have an exaggerated response and overreact to even the simplest of stressors.

Things that can fill your bucket include: • Sick child • Remodeling your home • Work deadlines • Trying to lose weight • Long commutes to work • Being sick • Difficult spouse • Difficult coworkers or boss • Financial stress • Job loss • Divorce • Learning new skills • Going back to school Ways to empty your bucket before it gets full include: • Getting enough sleep • Exercise • Spending quality time with friends and family • Church involvement • Community Volunteering • Hobbies • Reading • Staying organized • Meditation Be careful not to choose ways to empty your bucket with activities that cause it to fill back up causing even more stress.

I call it “stress recycling.” Poor choices for emptying your bucket include: • Affairs • Alcohol abuse • Substance abuse (illegal and prescription) • Smoking • Gambling • Gossip • Compulsive shopping • Overeating • Antisocial activities like lying, behaving impulsively • Withdrawing from social activities and groups • Borrowing money and not repaying it “While each position at a credit union has it fair share of stress,” says The People’s CU branch supervisor Jasmine

Villarreal, “I truly believe that the front line (tellers, member services, and loans) receive the bulk of stress on a daily basis.”

These positions have to be able to “handle the roller coaster of emotions and demands that will walk through our door on a daily basis.” Trying to calm down an upset member whose bucket is full can also cause the credit union employee’s bucket to get full.

Here are five smart moves for keeping your bucket from getting full and for managing your emotions under pressure: • Focus on the facts. Shift your thoughts to a factual level. This helps diminish the emotional intensity of the situation and increases your ability to handle a situation productively.

• Try to feel your toes: I don’t mean literally. If you start bending over in front of people, I’d really be worried about you. Instead, in your mind, concentrate on what the bottom of your feet feel like and get your breathing under control. I’d tell you to walk away but many times you can’t. I’d tell you to count to 10, but that isn’t enough. Concentrate on your feet and get your breathing under control.

• Simplify and stay in the here-and-now. Soldiers often say that time seemed to slow down when they were faced with a life or death situation which helped them focus on surviving. Many can’t even articulate how they knew what to do under pressure because it seemed automatic.

• Ride your bicycle up the hill. In other words, test yourself often. Terrie Johnson, vice president of Lending and Support Services at Texas Trust CU says that after 33 years at her credit union she rarely feels stress unless she is put in an unfamiliar situation.

Practice for times when you will need additional emotional endurance by working through tough and unfamiliar situations. Don’t wait for a tragedy in your life to find out what you are made of. Start with smaller events that will build up your resilience. If you don’t like to speak in front of others, try to do so in small doses before you are asked to present to your company board. Don’t automatically migrate to the software you are familiar with because it’s easier. By testing yourself often, you will build the confidence and skills needed for situations you can’t predict or control when under pressure.

• Focus on what you can control like your facial expressions, how honest you are, the amount of effort you put into your work, how well you listen, etc. When we feel out of control our emotional responses are less productive.

By using these smart moves, you can help yourself and your credit union work in the smart zone.

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News

Gary Tuma: A True CU CEO Success Story

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he history of Smart Financial CU has been full ups and downs.

At one time, things were so tough that the credit union’s very future was uncertain. Fortunately though, Smart Financial CU has had a string of great leaders, committed and determined to building a more solid foundation for this institution, which now has $450 million in assets.

The name Gary Tuma is synonymous with a true credit union CEO success story. Tuma took the helm of First Educators CU (now Smart Financial CU) in 1990 – a time when the credit union was still very much in the recovery stage after many years of financial challenges.

An always modest Tuma, who was named this year’s Texas Credit Union League (TCUL) Professional of the Year, is quick to give credit to his predecessor.

“Hal Thomas and the board of directors really deserve the credit for turning things around,” notes Tuma. “By the time I came along, the ‘really bad days’ were behind us. We certainly had the challenges of having no capital and figuring out how to repay the $3.75 infusion from Texas Share Guaranty CU, but Hal and his team did all the really ‘heavy lifting’ to get this place out of a pretty deep, dark hole.”

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Despite his attempts to deflect attention, Tuma has indeed put his stamp on Smart Financial CU. Prior to his arrival, for example, the credit union had been reduced to just two branches serving about 37,000 members. Assets were at about $82 million. Under his leadership, the credit union has grown to 17 branches, serving nearly 78,000 members and boasting over $450 million in assets.

Under Tuma’s guidance, Smart Financial CU formed in 1996 a Credit Union Service Organization (CUSO). This wholly-owned subsidiary has allowed the credit union to expand the scope of services it provides. Annuities, mutual funds, financial planning, retirement planning, auto/homeowners insurance, critical illness, disability income, life insurance, accident insurance, fraud protection and discounted dental benefits are some of the services now available to members.

By Linda Webb-Mañon, I-CUDE Vice President, PR & Communications Texas Credit Union League

Tuma serves as first vice president of the limited liability company and also sits on the board of managers.

Tuma also guided the credit union through a name change in 2004 – believing that Smart Financial CU better represents the credit union’s current and potential field of membership.

Credit union volunteer Jeffrey W. Hamlin says he had the opportunity to meet Tuma when Key FCU merged with Smart Financial CU in July 2008. At the time, Hamlin was serving on the board of directors of Key FCU. “I was immediately impressed with Mr. Tuma’s knowledge of the credit union movement and his personable approach to management and board relations,” recalls Hamlin. “Since then, I have come to learn of his long list of accomplishments in community service, professional associations and boards around the state.”

Hamlin isn’t the only one praising Tuma. Hal Thomas credits Tuma’s leadership for much of Smart Financial CU’s success.

“Through his leadership as CEO of Smart Financial CU, the credit union has survived the economic downturn better than most and has continued to grow – offering needed financial services to the educational community of the Houston area,” notes Thomas. “Mr. Tuma is sincere, honest, and fair. He listens to all sides of an issue and is careful to make his decisions based upon all the relevant information and facts.”

During Tuma’s 21 years (and counting) of service to the movement, he has touched (and changed) the lives of countless credit union members, staff and colleagues. Tuma exemplifies the credit union philosophy of “people helping people,” both in words and deeds. He’s

a man who is as well known for his big heart as he is for his professional accomplishments.

And he has worked tirelessly to preserve the “credit union way.”

“I think the credit union model is a pretty good one. We have an opportunity everyday to make someone’s life a little better,” notes Tuma.

Tuma is a Certified Credit Union Executive (CCUE) and not only graduated from Southwest CUNA Management School, he also was class president, an honors graduate and Alumnus of the Year.

Tuma is former chair of the Southwest Educators CU Association.

He is a member and supporter of the Filene Research Institute, and is a member of the executive team serving on the i3 committee.

And this year, Tuma was tapped to serve on the Texas Credit Union Commission.

Yet for all of his personal accomplishments and the successes of Smart Financial CU, Tuma says it simply could not have been possible without the support and hard work of his staff and board of directors.

“This business – the credit union movement – is all about the people. I have been blessed over the years with really great people who could see the challenges and were willing to support me in what we have tried to do,” says Tuma.

So what does the future look like for Smart Financial CU? Pretty awesome, says Tuma.

“We have survived the hard times and are excited about where this organization is going. Again, it is all about the people. We have great board and I enjoy the support of the best management team I have had the pleasure to work with in my 35+ years,” he says.

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By Debbie Rightmire Vice President Asset/Liability Management

News

ALM: The Art of Managing a Balance Sheet

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he balance sheet of a credit union paints a picture. The picture has changed over the last few years. Mastering the fundamentals of ALM (asset/liability management) requires understanding balance sheet relationships. As credit unions, our job is to buy money on the liabilities side of the balance sheet and sell money on the asset side. The result of this buy/sell process is called spread.

Managing balance sheet spread is one of the essential elements in ensuring profitability. In normal economic times, pricing is the primary way of controlling inflows and outflows of money on both sides of the balance sheet to maintain reasonable spread. Typically, low deposit rates discourage deposit growth and low loan rates encourage loan growth. However, recent years have proven that these tried and true methods aren’t always successful.

The majority of the liabilities side is member deposits.

Two primary things have happened on the deposit side (liabilities) during the last few years. First, most credit unions are paying the lowest rates in history for deposits, especially shares and certificates, and deposits continue to rise. Typical ALM mechanics suggests the inflows should slow or stop as a result of the very low deposit rates; however, that has not been the case. Second, credit unions are seeing members, uneasy about the low certificate rate rates, “park” money in money market or share accounts waiting for the market to rise.

On the asset side of the balance sheet, a number of credit unions are struggling to maintain loan balances. Members are reluctant to borrow given the economic environment despite the attractive rates. If loan demand is low, the result is that the new deposits go directly to the investment portfolio and produce a historically low rate of return. If loans are being made, they tend to be placed on the balance sheet at historically low rates. One of the few bright and fastest growing segments for Texas credit unions has been real estate loans. In addition to the low rate of return now, they also add interest rate risk to a balance sheet. This has implications for spread management in future years.

These recent changes to the balance sheet affect several primary ratios used to analyze credit union success:

Both loan and investment yields are at very low levels. Lower loan and investment returns result in an overall decline in Asset Yield.

2. Although loan and investment yields continue to decline, Cost of Funds is about as low as they can go. Asset yields may continue to decline but there is no way to offset that reduction by lowering dividend costs.

3. When Asset Yields decline and Cost of Funds are unchanged, Spreads decline (asset yield minus cost of funds). Industry standard spread for most credit unions should run in the 4.5 percent range. Spread for all federally insured credit unions at March 2011 was 3.13 percent 4. Spread is used to cover net operating costs and loan quality issues. If spreads decline and net expense and loan loss positions remain stable, this reduces core earnings or Net ROA. 5. Rapid deposit growth means that some credit unions are growing 10 percent+ in assets per year without the loan demand or earnings to support the growth. Therefore, Loan Mix and Net Worth ratios are falling.

Going forward, there are a few ALM essentials for good balance sheet management: • Keep asset durations short, increase liquidity durations.

• Price share certificates to ensure the credit union can reinvest the money at a higher rate. Without loan demand, allow share certificates to run off rather than have low or negative investment spreads.

• Minimize overnight investments. Move excess liquidity to longer term to enhance investment yield.

• If excess liquidity persists, resist the temptation to increase deposit rates quickly when the market rises.

Sound balance sheet management ensures sufficient spread to support your credit union operation regardless of the economic environment.

Asset Yield -Cost of Liabilities Spread -Net Operating Expense Ratio Operating ROA +/-Non-Operating Amounts - Net Charge Offs Net ROA

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12/85 11.59% -7.20% 4.39% -2.93% 1.46% +.00% -.31% 1.15%

12/93 7.05% -3.06% 3.99% -2.33% 1.66% +.02% -.27% 1.41%

12/03 5.08% -1.66% 3.42% -2.11% 1.31% +.03% -.35% .99%

3/11 4.10% - .97% 3.13% -1.81% 1.32% -.02% -.60% .70%

ProfessionalDevelopment

By Pierre Cardenas Senior Consultant Credit Union Lending Advice, LLC

Car Sales, FICO Scores Down Learn the ‘7 Habits of Highly Successful Lending’

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n the early 2000’s, $17 million vehicles were sold in the U.S. in one year. How is that for moving metal! Those were the good old days when tomatoes were cheaper and the economy was running on all eight pistons. Well let’s fast forward to 2010.

There were only $11.5 million new cars and trucks sold in the U.S. last year. What a difference - that is approximately $5.5 million less vehicles being sold in one year.

You know what that means right? The pie has shrunk and your piece has just gotten smaller. Not to mention that the competition has gotten larger. In 2010, Ally Bank financed more than 803,000 new vehicle purchases, resulting in nearly $23 billion consumer retail contracts in the U.S. Ally accounted for one in every eight new vehicle purchased that was financed in this country last year. In addition, the company provided financing for more than 2.8 million vehicles sold to more than 5,000 dealers in 2010. Consequently, those of you in the indirect auto market are also finding it difficult to achieve the level of volume you had enjoyed in the past.

It is getting more and more difficult to maintain growth in a consumer loan portfolio. Most of the loan growth credit Unions are achieving today is coming from the real estate mortgage & home equity loan products.

To make matters worse the latest annual study by R.L. Polk and Co. confirms that people are holding onto their cars longer. The average age of passenger cars in the U.S. rose from 9.2 years old last year to 9.4 years old this year, according to Polk. This reflects a steady increase in the age of cars since 1999, when the average age was 8.3 years. In addition, a report done by Detroit Free Press, the average purchase prices of new cars has risen from $28,160 in 2009 to $29,217 in 2010, an increase of about 3.75 percent.

So, let me sum it up here for you. Fewer autos being purchased, big players are hogging up the market, consumers are holding on to their vehicles longer and the price of new autos continues to rise. “Houston, we have a problem!”

In addition to this wonderful news, we are coming out of one of the worst delinquency and charge off periods in our history and have become gun shy about what we are going to approve or finance. Just look at the statistics, approximately 47 percent of all credit scores are below 699.

National Distribution of FICO Scores (Apr 2010) 800 & Above: 17% 750 – 799: 23% 700 – 749: 13% 650 – 699: 12% 600 – 649: 10% 550 – 599: 11% 500 - 549: 9% Up to 499: 5%

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Bottom line, if you are going to do some loan business in the mist of this challenging lending environment and grow your auto loan portfolio you are going to have to be very good at underwriting. From my 26 years in the financial industry I have identified seven habits that should be followed or incorporated into your lending program to put some good loan business on your books.

In future articles I will touch upon the “7 Habits of Highly Successful Lending,” with my first full article being focused on habit number one – Highly Trained Underwriter(s). Keep an eye out for it. For now, here are the 7 Habits of Highly Successful Lending Program: 1. Highly knowledgeable and well trained underwriters • Having a flexible lending policy is very important for this to take place.

2. Sales environment with a sales focused job description and compensation 3. Remote Delivery Channel accessible and easy to use – Loans by Phone 4. Out bound calling program to be proactive in seeking the loan business • Data-mining your current membership.

5. Onboarding program to follow up on every new member and new account.

6. Business Process Improvement culture that makes the process easy and quick for the member to do business with you.

7. Leadership Development Program so that you are empowering employees who have the confidence, experience and know-how to build and support a great organization where talented people want to work hard.

It all starts with the number one item in the “7 Habits of Successful Lending.” These seven are in chronological order as the first one is the key because nothing can happen without good solid underwriting. A good underwriter is worth their weight in gold.

Look for future articles on each habit.

ProfessionalDevelopment

By Elizabeth LaSane Collections Manager Neighborhood CU

Collect Debts……Keep Members

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id you forget? Your payment has not arrived.” Our members dislike the dreaded late payment notice as much as we dislike sending it. During tough economic times everyone feels uncomfortable when asking for money and collecting on an outstanding debt for your credit union. Imagine further, the discomfort when you may not have money to give due to the loss of a job or reduced income. The key is negotiation and being able to truly step into a members shoes to understand their position. In order to lessen the discomfort and secure payment while retaining your member you must tread lightly.

Try a “gentler” approach using these practical tips: • Send a tasteful letter or payment reminder: Draft an empathetic letter or reminder that makes light of their negligence. In these busy times, people have multiple things on their mind and may simply forget. Make it easy to pay by providing online payment tools or a self-addressed stamped envelope.

• Familiarize yourself with the members account: Just as you would prepare for an effective sales call you must prepare for an effective collections call in advance. 1) Briefly review the collection history and transactions to determine when and how payments are being made on the account. 2) Review any updated credit reports and collateral to evaluate possible collection tools available to assist the member.

• Email may be the answer: Sending a pleasant email requesting the member to follow-up with you may encourage them to be more open and honest regarding their financial situation. Sometimes the lack of a face-to-face environment can be a benefit as it eliminates the fear of hearing the sound of disappointment. The member may actually ask for your help.

• Watch your tone: Most members are embarrassed when they cannot pay their loan. We must maintain our tone at a normal level and always be courteous and respectful when communicating in calls and/or email. Being mean or nasty will not help in collecting the debt and can raise the blood pressure for you and your member!

• Don’t take it personal: Remember the member is upset at their situation not at you even if they use the phrase, “YOU.” • Encourage communication: Ask open

and closed end questions. Pause to prompt the member for their input. The few seconds of silence will be uncomfortable for both parties, but it will force the member to join the conversation.

• Never demand: Be open to what the member has as a plan to cure their delinquency. Remember plans must be mutual.

• In cases of true hardship be open to compromise: Determine if the situation is long or short term so that the method of conclusion will resolve the issue.

• Keep promises realistic: We would love for all members to be able to repay right away and many members will promise the unrealistic to get you off the phone. The truth is that many cannot pay as quickly as they may commit. If the member is promising more than they can do, ask them to reconsider. This is especially true if the collateral is an automobile.

They are struggling to keep the payment current.

What about insurance and maintenance? Also, collections professionals should not promise more than they can realistically do such as salvaging credit or waiving late fees. This will result in a loss of creditability for the credit union.

• Educate the members: Inform members on what options are available in the event of default so that there are no surprises. If you agree to accept a settlement, advise the member upfront of Internal Revenue Service (IRS) requirements before money is exchanged. Credit unions and other creditors must file a forgiveness of debt on all accounts with remaining balances greater than $599. This may change the member’s decision as this will create tax liability.

Additionally, educate the member on credit bureau reporting instances of late payments, no payment, charge off, repossession, foreclosure and settlements.

• Leverage: Offer to waive certain allowable fees to secure immediate payment. This creates goodwill and extends a helping hand.

• Ensure timely follow-up: If you accept a promise to repay for a Monday and you don’t receive it, follow up on Tuesday. This will let the member know you are holding them accountable for what they stated they were going to do.

• Apologize when necessary: Never make for an unworkable relationship by not admitting when you or your credit union is at error.

By collecting debts properly and with dignity, you can keep your members and collect your money without hurting anyone’s pride. That’s a win-win!

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ProfessionalDevelopment

By Jason Duplant Vice President of Marketing Neches FCU

Neches FCU: How we leverage cause marketing

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uilding a brand today is wildly different then it may have been 50 years ago. In the days of ‘Mad Men’ executive meetings, if you spent enough money, you could train your audience to agree to what your brand was. Today, a good marketing approach relies heavily on the culture of your organization and the transparency through which you are able to deliver your message.

Neches FCU’s culture consists of delivering Signature Service on a daily basis to our ‘family, friends, and community’.

Our high level of community involvement is a key area of our credit union’s success. We attribute this success in part to identifying which causes our credit union will support, how these activities will increase member loyalty, and how we can balance our ‘cause’ marketing with ‘traditional’ marketing.

Any effective community involvement will first rely on determining which causes the credit union will choose to support. You will know if a cause is a good match for the credit union if it is both appropriate and authentic, and is something that your team can embrace and believe in. Like many other credit unions, our primary focus and attention goes to the Children’s Miracle Network/Credit Union for Kids. However, we will still try to support as many local organizations as possible.

An example of this is the Remember Alex Brown (R.A.B.) foundation which encourages citizens to put away their cell phones and drive safely. We chose this cause because we felt that it tied directly in with our tagline of ‘Family. Friends.

Community.’ (Alex Brown’s life was lost while texting and driving and her parents started the R.A.B. Foundation in her memory as a tool to learn from others and make a difference.)

Through our local high school branches we were able to get over 1,000 young adults to sign a petition that they would not text and drive and in return we gave them the official ‘Don’t text and drive’ orange thumb bands created by the R.A.B. Foundation.

The second key ingredient to determining how your proposed cause will supplement your culture is to determine if the alliance will increase your credit union’s exposure and inspire loyalty among members. In our example of the R.A.B. Foundation, we deeply connected with the mission because of our credit union’s constant efforts to be an asset and resource to young adults, particularly our high school student members.

Moreover, there is plenty of research to back up the fact that consumers have an exponentially more positive image of a company who believes they are doing something to make the world a better place. We also know that our employees certainly feel more pride and passion for us as they see on a firsthand basis our focus on supporting our community.

The third ingredient to ensuring a proper fit between our credit union’s culture and community involvement is to

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determine how we can strategically balance our traditional and cause marketing efforts.

The ROI of cause marketing certainly cannot be easily measured in terms of sales or profits; however, at Neches FCU we hear first hand remarks and testimonials of the positive impact that we have had in our communities. We know and appreciate how important our community involvement is and live by the credit union philosophy of people helping people.

Jason DuPlant received the 2011 Marketing & Business Development Professional of the Year award. This award recognizes an individual for outstanding work in credit union marketing, business development, and communications, and acknowledges their success within the Texas credit union industry.

DuPlant began his credit union career more than 10 years ago as a marketing intern. However, he quickly climbed the ranks and is now vice president of marketing at Neches FCU. In his role of communicating the credit union difference his key focus is to strengthen the credit union brand image in the community, and his team accomplishes that in a variety of ways through traditional marketing, social media, staff involvement, community events, civic organizations, and networking.

DuPlant is involved in all levels of strategic planning and management along with fostering relations with seven different Chambers of Commerce and working closely with high school financial education. He’s enjoyed many successes in his career, including: • A Board of Director and President elect of the Port Neches –Groves Rotary International Club • 2010 Southwest CUNA Management School Graduate • In 2009 he received the First Place award, the Best in Show and the People’s Choice Awards during the Marketing/Business Development Council’s Lone Star Awards for the credit union’s youth program “n$pire.”

• In 2008 he completed the Leadership Beaumont Program

By Idrees Rafiq Assistant Vice President, IT Consulting Financial & Technology Resources

Regulatory&Compliance

CU’s Role in Protecting Member Data

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he proverbial line between what credit unions have to do from a compliance perspective and what they should be doing to proactively protect member data is vanishing, leaving credit unions with numerous questions. The credit union’s role to protect member information, although challenging and costly, is incredibly vital. The foundation of the credit union’s overall security posture lies with its attitude towards protecting members from data breaches. Credit unions successful in establishing a strong security posture have leveraged their regulatory and compliance requirements while simultaneously acknowledging compliance does not equate to member data security.

Credit unions accomplishing this are, per NCUA Regulation 748 Appendix A, performing a thorough security risk assessment which is the foundation for their security policy and program. The qualitative security risk assessments are based, not only on new regulatory requirements, but also new threats, trends, lessons learned from other breaches, and industry standard best practices specific for the size and complexity of their credit union. As a result, credit unions achieve the identification of vulnerabilities and ways to reduce risk while also achieving compliance.

From a regulatory and compliance standpoint, it is the credit union’s responsibility to: • Ensure safety and confidentiality of member records.

• Protect against anticipated threats or hazards to the security or integrity of such records.

• Protect against unauthorized access or use of such records that could result in substantial harm or serious inconvenience to a member.

It is not only important to identify areas of improvement, but also document where risks have already been identified and reduced. Examples of current security best practices to address in a risk assessment which support the credit union’s role in protecting member data include, but are not limited to: • Addressing encryption of confidential member data, both in storage and in transit.

• Exercising due diligence with third party vendors that have access to member information. The responsibility for safeguarding member information is not transferred to the vendors; therefore, credit unions are responsible for ensuring proper authentication, encryption, and monitoring procedures are in place to protect confidential member information.

• Reviewing alarm logs to ensure the perimeter alarm system has not been armed or disarmed at an odd time. To further reduce the risk, the perimeter alarm system can be configured to notify credit union management if the alarm system has been armed or disarmed before or after normal operating hours.

• Comparing a list of items monitored by the security

monitoring company (i.e. motion detectors, glass breakage, etc.) with the items that are physically present. As alarm companies improve their monitoring capabilities, they upgrade the physical devices.

It has been discovered that not all old devices are compatible with the new perimeter alarm systems.

• Assessing if camera angles are currently positioned to catch the face of a robber should they be wearing a cap. To better identify a robber, the installation of pin-hole cameras in either NCUA signage placed at the teller windows or in a height marker placed on the member entrance/exit door jamb could be used.

• Assessing all areas where member information may be stored. For example, copy machines are now equipped with a hard drive which stores images. As best practice, the risk assessment should address the destruction of data from the hard drive when the device is decommissioned. The risk assessment can state how the credit union has further reduced the risk by encrypting the hard drive or disabling features that would allow stored images.

The security risk assessment should also include reoccurring themes such as the rule of least privileges and multilayered security as they are applied to the various levels of the credit union’s operation.

Multi-layered approach – A multi-layer security platform should be deployed physically, administratively, and technically to supplement the primary security. Technical examples include firewalls being configured with intrusion prevention systems, automated alerts, a secondary firewall configured with an automatic failover, and strong activity reporting features.

Rule of least privileges – The rule of least privileges should be adopted to limit access to only those individuals whose job responsibility requires access. Strong activity reporting and review also complements these security measures.

Standards for data processing systems have established levels of access based on the employees’ role. This same methodology should be deployed to access software and networking components such as servers, firewall(s), router(s), etc. It is crucial that physical and administrative access controls also be in place to include limiting access to areas of the credit union containing confidential documents (file rooms, access to unlocked shred bins, server rooms, etc.)

Ultimately, the credit union is obligated to develop the risk based security policy and program to protect member information and protect the credit union from lawsuits, fines, reputation loss, financial and other asset losses. Although the risks cannot be completely eliminated, it is still the credit union’s responsibility to identify and reduce risks where member information can be breached.

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Regulatory&Compliance

Regulatory Q&A Reg Z Clarification on 14 Days – Excedrin Headache #356

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rior to the CARD Act: Periodic Statements had to be mailed at least 14 days before the member’s payment was due, to avoid finance or other charges (such as a late fee). The 14-day requirement was removed when the 21-day requirement became effective. The Fed failed to reinsert the 14-day requirement in February 2010, affecting all other open-end loans not covered by 21-day timing requirement. This Reg Z clarification inserts the law back on the books that was accidently removed.

Effective Oct. 1, credit unions must have procedures that periodic statements for most open-end plans are mailed at least 14 days prior to the date on which the required minimum periodic payment must be received in order to avoid being treated as late for any purpose. This requirement applies to all open-end loans not subject to the 21-day timing requirement (which covers only credit cards and open-end credit with grace periods). Therefore, consumer lines of credit, overdraft lines of credit, home equity lines of credit (HELOCs), and all subaccounts under a multi-featured open-end lending plan are subject to the 14-day rule.

We think few credit unions have “grace periods” – “a period within which any credit extended may be repaid without incurring a finance charge due to a periodic interest rate” – but many have “courtesy periods,” which follow the payment due date and during which a late payment fee is not imposed.

And courtesy periods are important in determining compliance with the 14-day rule.

There seems to be some confusion in credit union land over the word “grace” period. Back in the day, credit unions referred to the word “grace period” to mean two different actions. It was like “Yes, we give a “25-day grace” on credit cards. And yes, we offer a “10-day grace” on our loans.”

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Definitions: Grace Period: a period within which any credit extended may be repaid without incurring a finance charge due to a periodic interest rate.

Courtesy Period: a period of time following the payment due date during which a late payment fee will not be imposed.

The requirements: 1. How do you count the 14 days between mailing your periodic statement and the “due date”? For credit unions that offer no courtesy period, this would be the actual payment due date. For credit unions that offer a courtesy period, this would be the end of the courtesy period. The relevant due date must be stated on the periodic statement—the actual payment due date if there is no courtesy period or the date of the end of the courtesy period if you have a courtesy period.

2. Minimum payments received within 14 days after mailing cannot be treated as late for any purpose.

Treating an account as late includes: Assessing a late fee; increasing the APR to a penalty rate; freezing any of the member’s accounts; reporting the account as delinquent to a credit reporting agency; initiating collection activities including delinquency letters or phone calls by the collection department; or terminating certain benefits such as a rewards program.

3. Contractual payment due dates (such as weekly, biweekly and semi-monthly) that don’t allow enough time to comply with the Reg Z 14-day statement mailing must be changed – logically to a monthly contractual due date since statements are usually mailed monthly. This doesn’t mean that a member is prohibited from making partial payments with the same frequency as before (such a bi-weekly to track payroll deposits) – but these shorter periods can’t be a contractual requirement with ramifications for being late under the contract.

Your contract should have language that permits your credit union to make a contractual change to comply with a law or regulation. Please review your open-end contract, to ensure.

A payment amount that increases due to a change to one monthly contractual payment should require the 45-day Reg Z notice. Changing contract terms (amount due, due date, courtesy period) is likely to require a notice under state law as well.

These are issues that you have to discuss with your own lawyer.

(Excerpts reprinted with permission from the Credit Union National Association)

Rising Above the Competition:

How Credit Unions Can Remain Unique in the Crowded Financial Services Marketplace Adapt or die.

The dinosaurs discovered this—after it was too late. Unlike their mammal counterparts, they were unable to grow hair and survive the Ice Age. So they became extinct.

It’s not much different in business. A company must adapt to changing consumer demands, or else it will find itself on the trash heap of yesteryear.

Remember the Flip video camera? It seemed like a good idea at the time—an inexpensive digital camcorder—until everyone’s Smartphone was able to record video—then the Flip became disposable. However, it doesn’t have to end that way. Businesses that adapt and differentiate themselves can not only survive, but thrive.

Today we are witnessing a transformation in the financial services industry. Following the meltdown of 2008 and the ensuing bank bailouts, consumers are looking for stability, convenience and lower fees. They have more choices than ever, and the advent of banking online has made it easier than ever to switch an account to another financial institution.

Credit unions now find themselves in a crowded field of increased competition, PayPal, title loan storefronts, check cashing services and virtual banks. So just how do credit unions differentiate themselves from all the alternatives out there? How can you break through the clutter?

“Probably the single best strength a credit union enjoys is that it is member-owned and not beholden to shareholders,” says Jeff Farver of San Antonio FCU. “Credit union members use their money to help other members.”

What does this cooperative or “member-owned” structure mean for consumers?

Low (or No) Fees Credit unions offer a plethora of financial services for low – often no – fees. This commitment to providing affordable financial services continues to be at the heart of the credit union movement, even as other financial institutions find ways to nickel and dime their customers.

According to an August 29, 2011 article posted on Credit Unions online.com, “beginning in October, Wells Fargo plans to ‘test’ a $3.00 monthly debit card usage fee in Georgia, New Mexico, Nevada, Washington and Oregon. JPMorgan Chase is toying with something similar in Wisconsin, as well.

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As Wells Fargo and other mega-banks test new fees for debit cards, their actions can provide opportunities for credit unions.

“We don’t charge fees for debit cards or ATMs,” says Farver. “Adding extra fees for debit cards is counter to our values of being an organization of the member, by the member, and for the member.”

Better Rates and Returns Credit union members often will point out that their credit union offers better loan rates and higher returns on deposits. Unlike banks, a credit union does not need to provide dividends to shareholders. Those “dividends” instead benefit the members with better rates and returns.

Credit unions also earn praise from the financial press for their rates. A recent article posted on theStreet.com said that many consumers are moving their deposits to credit unions and away from banks for better rates on certificates of deposit.

Indeed, credit unions do beat banks on deposit rates across the board, but Donna Neal suggests that credit unions should train their team members to tap into that advantage to build a stronger, deeper member relationship.

By Kirby F. Warnock and Allison Griffin

“We’re better than most banks on CD interest rates, but banks … do better ‘relationship pricing’ where they handle a customer’s checking, savings, auto loan and CDs” says Donna Neal of My Community FCU in Midland. “We (credit unions) sometimes take the position of being ‘order takers.’ However, we’re addressing this in our training. Whenever a potential member comes in to open a checking account we should ask what they are paying for their car loan, and then ask them to move it here for a better rate.”

Lending and Underwriting Credit unions have been providing better rates on auto loans for years, interest rates so low that when it comes to car loans, “banks are not really any competition,” according to Neal.

Credit unions also underwrite home mortgages to their members in a much more “old-fashioned” way than banks. Unlike their bank counterparts, credit unions largely avoided the sub-prime mortgage meltdown by focusing on their individual members’ credit worthiness in a much more up-close and personal manner.

According to an article in the July 15, 2011 edition of The Washington Post, the fact that many credit unions hold on to the mortgages they make offers some reassurance to borrowers spooked by the mortgage markets unraveling in recent years. Some of these credit unions also rely less on computer-generated credit scores and other cookie-cutter requirements imposed on borrowers by the government’s big three. Instead, within the confines of regulatory requirements and lending best practices, credit unions often take into account a potential borrower’s family history, spending habits and existing credit union relationship when considering a loan application.

The Personal Touch Not only do credit unions tend to take a more personal approach to their members’ financial needs, but they also make it a priority to treat those members with a friendly, personal touch.

“One way we distinguish ourselves is our commitment to training,” explains Neal. “We have buy-in from the top management that training is an ongoing process and not a singular learning event. Once a new employee receives initial new-hire training it is understood that the training and development of that employee must continue. Satisfactory

member service is not acceptable. We must go above and beyond that to provide a personal touch. The credit union philosophy of ‘people helping people’ isn’t just a cool catch phrase here. It’s part of our business objective. Training is used to ensure we meet our business objectives to provide extraordinary member service.”

The Bottom Line “Consumers today are benefit oriented. They want to know, ‘What’s in it for me?’” says Farver. “We must be bold. Get the word out about what we can do.”

But is focusing on the financial benefits enough to differentiate credit unions from all the rest?

Or is there an opportunity to reconnect those tangible benefits that consumers understand with what is behind them—namely the cooperative structure of credit unions?

Pamela Stephens, of Security One FCU in Arlington, who serves as chairman of the Texas Credit Union League, suggests credit unions take up the torch and carry the cooperative message to their members.

“We always talk about ‘the credit union difference,’” says Stephens.

“But our difference does not come from low fees or better rates.

“The real differentiator for credit unions is our cooperative structure,” says Stephens. “Focusing on that core value is the best way for credit unions to rise above the competition.”

Stephens notes that when it comes to helping consumers understand cooperative organizations, credit unions may have an extra ally in the coming year.

The United Nations has named 2012 as the “Year of the Cooperatives.” The theme is “Cooperative Enterprises Build a Better World. For credit unions, this effort will officially kick off on “International Credit Union Day” scheduled for October 20, 2011. As cooperatively owned financial institutions, credit unions worldwide have an unprecedented opportunity to increase public awareness about their contributions, promote membership growth and encourage the adoption of policies and legislation that promote long-term growth and stability.

Those are some admirable goals that should tie in nicely with the benefits of belonging to a credit union.

Now let’s be bold and tell people about them.

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PhilosophyinAction

By Howard Bufe Assistant Vice President OnBalance

A RECIPE FOR SUCCESS Key Elements for a Strategic Plan

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he financial services landscape has changed dramatically in the last 18 to 24 months, a significant number of rule and regulation changes, a struggling economy, record low interest rates, low consumer confidence and sentiment. All of these things and many others have a lot of us pondering about the future and how do we meet or exceed the expectations of our members. There is no better time than right now to sit down and reassess your business plan.

The chances are that what we have perceived as normal will never be the same as before. We can either wait and react to changes in our environment or be proactive and redefine normal. Strategic planning gives you the opportunity to bring the future into the present so you can do something about it now. Strategic planning is a systematic process of envisioning a desired future, and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them.

When planning, it’s important to remember that the plan should be consistent with the credit union’s size and complexity, the board of directors should establish a strategic plan that documents management’s course in assuring that the credit union prospers in the next two to three years. At a minimum, this plan should outline the credit union’s future direction and the optimal capital position relative to share and asset growth. It enables the credit union to maintain a well thought out focus, make sound decisions, and will help identify risks or weaknesses within its operation that an economic downturn may magnify.

Every strategic plan should be comprised of the following significant key elements: • Strong commitment from the board and management o I believe Thane Yost said it best, “The will to win is worthless if you do not have the will to prepare.”

• Meaningful engagement in the process from key stakeholders o TEAMWORK – today, possibly more than ever before, it will take the entire team rowing in the same direction to overcome the continuous on slot of changes impacting our world. Make sure your team’s purpose and priorities are clear. What is your overall mission? What is your game plan? What is expected of each team member? How can each member contribute most effectively? What constants will hold the team together?

• Development of strategic objectives o Focus – Identifying the three to five key areas of focus for the credit union. Those

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might include financial, internal operations, membership, education, technology etc…

• Development of measurable goals, including a series of short-term goals o It is common knowledge that what get’s measured get’s done.

• Clearly defined responsibility, authority, and accountability o If you want to be successful in any endeavor, you must take ownership of the complete process, which begins with a vision.

• Efficient and effective operational processes o It’s imperative that we operate in the most efficient and effective manner as possible.

• Necessary managerial, financial, technological, and organizational resources to achieve goals and objectives o The best plans in the world can’t be accomplished without allocation of the adequate and appropriate resources.

• Policies, internal controls, staffing, training, and management o Reviewing policies to identifying any changes or updates that should be implemented.

Evaluate internal controls for operational effectiveness. Determining if appropriate staffing, experience, knowledge and skills are available to accomplish identified objectives.

• Communication of goals, objectives, and detailed business plans throughout all levels of the organization o High performance teams are empowered teams and information is a source of great power. To empower a team, begin by sharing information. What are the key metrics and performance indicators for the team? What do team members need to know on a daily, weekly and monthly basis to manage performance responsibly? How do team members know the score without asking?

• Periodic reassessment of the progress and effectiveness of the strategic plan o Monitor/Evaluate/Adjust You significantly increase the odds of success in any endeavor if you know who you are (niche), why you do what you do (mission), where you are going (vision), how you will get there (objectives & strategies), and what you will do once you arrive (foundation for future achievements).

PhilosophyinAction

David Whittle 2011 TCUL Volunteer of the Year

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isionary – one way to describe David Whittle When David Whittle made the decision to volunteer on the Board of Directors for JSC FCU in 1982, he did so as a result of his desire to better the credit union and the services that were provided to the membership. Whittle has served on the board of directors as a director, treasurer, and for the last 26 years, as the chairman. He has continued to provide his support, advice, and ideas to improve products and services offered to our membership, as well as ensuring the well being of our employees.

As president of JSC FCU, I have had the pleasure of working with Dave for the past 26 years. Dave was chairman of the board of directors at the time I joined the credit union and we have enjoyed an excellent working relationship during this time.

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By Michael G. Brown President JSC Federal Credit Union

Over the years, Dave has presented a very steadfast, caring nature for our employees. One example of this is the concern he shows to make sure that the benefits packages offered to employees not only care for the employee, but their family as well. His concern is not only for major medical insurance. He also strongly supports retirement benefits as well to ensure that employees will have savings when they retire. While most of Whittle’s contributions happen behind the scenes, employees see another side of his caring nature.

Anne Newstead, Southern Region vice president stated, “Mr. Whittle has been the chairman of the board of directors for the 15 years I have been employed at JSC FCU. He has always been very supportive of the staff, with praises for a job well done and for their dedication to their job, especially in emergency situations. He is very personable with all the staff and visits each branch at Christmas time to thank the employees and wish them Happy Holidays.”

Diane Rios, Friendswood Office branch manager said, “Mr. Whittle visits our Friendswood Branch often. He is always concerned about how the staff and members are doing. He takes the time to talk with the employees during his visits, and he makes all the employees feel important.”

As much concern Whittle shows for JSC FCU employees, he is equally concerned for its members and remains a strong advocate

for them. He possesses the ability to think from the membership’s perspective. He thinks about what their needs and desires are, and how the credit union can meet those needs by implementing new programs and services. Whittle also emphasizes and ensures a smooth transition for the membership when new products and services are introduced.

He does this by encouraging credit union staff to educate and clearly explain all products and services to members so that they understand them and will know how to use them. He encourages comments and suggestions from the membership and is very diligent about resolving problems that members have experienced.

David Whittle has been an instrumental part of the success that JSC FCU has had and continues to have. During his 29-year tenure as a director, JSC FCU has grown to a $1.5 billion credit union with over 117,000 members and 15 branch locations, including two high school branches.

In addition to serving as a director on the JSC FCU Board, Whittle worked for NASA from 1967 to 2005, receiving many awards for his work. He continues to be very active and dedicated within the community he serves, especially with his church.

Whittle possesses a willingness to serve. Whether for JSC FCU, his church, community, or family – everyone knows they can count on him.

He is one of a kind, and we are glad he is part of our JSC FCU family.

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PhilosophyinAction

CUs Making the Difference Through Financial Education

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exans are getting a better grip on their personal finances, thanks to the efforts of Texas credit unions. Through interactive workshops, classroom presentations, financial fitness camps, and various other programs and delivery channels, credit unions are effectively reaching consumers young and adult alike – arming them with the knowledge and skills needed to gain control of their finances.

The Texas Credit Union Foundation (TCUF) is an advocate of financial education and encourages credit unions to engage in financial education outreach through their local schools and community partners. With programs like the highly-acclaimed National Endowment for Financial Education High School Financial Planning Program (NEFE HSFPP), for example, TCUF executive director Courtney Nickles says credit unions can be confident in their ability to deliver a quality curriculum that will lead audiences toward a better understanding of money management principles.

“Credit unions truly are champions of the financial literacy cause, and now more than ever, Texans need our knowledge and expertise to help them make smarter financial choices at every life stage,” notes Nickles. “Texas credit unions, of course, have always shown a willingness to respond to the needs of the people in their communities, and credit unions seek out every opportunity to not only educate, but also to get people excited about improving their financial knowledge base.”

To honor those credit unions making the difference in their communities in the area of personal financial education, the credit union movement several years ago created the

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Desjardins Youth Financial Education Award Program, and recently introduced the Desjardins Adult Financial Education Award Program.

This year, Generations FCU (San Antonio), A+ FCU (Austin) and the Financial Fitness Greater Austin CU Facilitators each earned a first place Desjardins award.

Generations FCU earned a first place Desjardins youth award in the $150 to $500 million in assets category for its “No Suckers Here” program, which is designed to convey the importance of being prepared to deal with personal financial matters.

“The financial education of our children is one of the most important initiatives that a credit union can undertake,” says Generations FCU president and CEO Tim F. Haegelin.

“These programs reach out and guide students as they begin down the path to financial independence.”

The “No Suckers Here” program works with high schools, colleges and universities across Bexar County. Generations FCU meets with school administrators to determine the specific needs of their students and then tailors a program designed to fit those needs. The credit union launched “No Suckers Here” in three schools, and within five months, the program had expanded to five high schools and two colleges.

A+ FCU earned two Desjardins awards: a first place youth award for its youth camps and adult award for its financial wellness workshops. Quite simply, the credit union says its mission is to be a life-long financial partner to its more than 86,000 members.

By Linda Webb-Mañon, I-CUDE Vice President, PR & Communications Texas Credit Union League

The A+ FCU Youth Financial Camp was offered to members ages 10 to 13 to combine important financial education with the fun and excitement of a summer camp environment.

The credit union has provided financial education workshops for adults since 2007, on topics ranging from basic personal finance to more complex topics like estate, retirement, business and tax planning.

“By providing financial education to members and future members, we are helping them develop sound financial building blocks for every stage of life,” notes A+ FCU president and CEO Kerry Parker.

“Plus we are strengthening our partnership.”

Additionally, A+FCU is one of four credit unions in the Financial Fitness Greater Austin (FFGA) CU Facilitators group – a financial literacy and public awareness campaign whose main focus is to promote adult financial education amongst low- to moderate- income individuals and families.

The FFGA CU Facilitators Group, comprising Dawn AmbuehlSadek with A+FCU, Rachel Fausett with Greater Texas FCU, Monica Andry with University FCU and Luis Acuña with Velocity CU, also earned a first place award in the group category of the Desjardins Adult Financial Education Award program.

Nickles commends this year’s Desjardins award winners and all Texas credit unions for their efforts to provide consumers with muchneeded financial education.

For those credit unions not engaged in financial education, Nickles says the time is now to get involved.

“People are thirsty for the financial knowledge you can provide,” notes Nickles. “Don’t miss out on this opportunity to teach this valuable -- and vital -- information.”

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HRCorner

By Susan Looney Vice President CUER

Human Resources... how it really affects your bottom line

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uman Resources. There are a variety of views about the role of HR in an organization, from paper pushers to unnecessary overhead. However, many leaders are realizing that HR is a vital part of an organization, one that helps organizations maximize business strategies.

Coined in the 1960s, “Human Resources” is a term used to describe the individuals who make up the workforce of an organization. It also is the name of the function within an organization that is charged with the overall responsibility for implementing strategies and policies relating to the management of those human resources.

The origins of the function arose in organizations that introduced ‘welfare management’ practices and also in those that adopted the principles of ‘scientific management.’ From these terms emerged a largely administrative management activity, coordinating a range of worker-related processes and becoming known, in time, as the ‘personnel function.’ Eventually, human resources became the name for this function, reflecting the adoption of a more quantitative and strategic approach to workforce management.

Today, the role of HR in an organization continues to evolve.

The function now is to maximize the return on investment in the organization’s human capital and minimize financial risk. HR has now become an integral part of an organization’s management strategy.

HR functions today include setting strategies and developing policies, standards, systems, and processes. The typical areas that HR oversees includes: • Compliance with local, state and federal labor laws • Recruitment, selection, and on-boarding (orientation) • Employee record keeping and confidentiality • Performance, conduct and behavior management • Employee relations • Human resources analysis and workforce personnel data management • Compensation and employee benefits • Payroll • Training and development • Employee motivation and morale building (employee retention and loyalty) • Workplace liability management Whether you have two employees or 2,000, these critical HR functions must exist in the organization. In smaller organizations, these tasks are taken on by the president, another executive or even outsourced. In larger organizations, there are HR Departments, where a number of staff members specialize in many of the listed areas.

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So how do these HR functions really help the bottom line of an organization?

First, employees are an organization’s biggest asset. They are what will make or break your organization. Most organizations want to make income, including credit unions. They need to make income and control expenses at the same time.

HR plays a strategic role in both of these business strategies.

On the income side, HR plays an important role in enhancing employee productivity, attracting the best talent and reducing turnover. HR’s roles in these activities are involved and in depth. For example, to hire the right people, HR must develop an effective job description with the right qualifications needed, know the most effective places to recruit potential staff, conduct interviews with the candidates and conduct background checks. Once the employee is hired, HR’s role is to put programs in place that help to enhance employee productivity. These types of things include performance management systems, employee and management training, employee relations support, and much more.

On the cost containment side, HR plays an important role in compliance, employee benefits management and performance management. With the plethora of laws that affect employers, it is hard to keep up. And if an organization is not in compliance, that could cost thousands, even millions, of dollars. HR’s role is to keep up with the laws and make sure the organization is in compliance, whether it is making sure the right documents are filed with the right government agencies or making sure employees are treated fairly and without discrimination or harassment.

Over the years, HR has evolved into an integral part of the overall mission of an organization. Organizations and their leaders need to understand that HR is no longer focused simply on transaction tasks, but on tasks that deliver strategic transformation – tasks that truly affect the bottom line.

HRCorner

By Kimberly Jones Human Resources Consultant CUER

HR Q & A

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he National Labor Relations Board (NLRB) protects the rights of most private-sector employees to join together, with or without a union, to improve their wages and working conditions.

Recently, the NLRB issued a final ruling requiring most privatesector employers to notify employees of their rights under the National Labor Relations Act (NLRA). Effective Nov. 14, 2011, employers must begin posting this notice. Copies of the notice may be obtained from the NLRB’s website and regional offices beginning Nov. 1. The web site is www.nlrb.gov.

Below are some common questions regarding the NLRB’s final ruling that all credit unions should be aware of and their answers: Question: Does my credit union have to post the notice?

Answer: Yes. The posting requirement applies to all private-sector employers subject to the National Labor Relations Act. Some employers are excluded including the U.S. postal service, agricultural, railroad, and airline employers.

Question: There is no union at my credit union; will I still have to post the notice?

Answer: Yes. NLRA rights apply to both union and non-union workplaces; therefore all employers subject to the NLRB’s jurisdiction must post the notice. Please contact your attorney if you have questions regarding your credit union’s coverage by the rule.

Question: Do I have to post the notice in English or any other language a majority of my staff might speak?

Answer: Yes. If at least 20 percent of your employees are not proficient in English and speak another language, the notice must be posted in those other languages. The NLRB will provide translations of the notice.

Question: Are there any record-keeping requirements with this new rule?

Answer: No. There are no record-keeping or reporting requirements.

Question: What happens if my credit union fails to post the notice?

Answer: Failing to post the notice may be treated as an unfair labor practice under the NLRA. The NLRB may investigate allegations of unfair labor practices made by employees, unions, employers, or other persons.

Question: Is there a specific place I have to post the notice?

Answer: The notice must be posted in a location that is easily accessible to all employees. It is recommended that the notice be posted with the other legally required postings (ex. EEO, FLSA, etc.) that employers should have in their workplace. Additionally, the rule requires every covered employer to post the notice on an internet or intranet site if personnel rules and policies are customarily posted there.

For additional information regarding the NLRB’s final ruling on notification of employee rights, you may visit www.nlrb.gov. If your credit union has a question or needs assistance with their HR needs, please contact Kim Jones or Susan Looney with CUER, at (800) 4425762, extension 6432 or 6431. Also, visit us online at www.cuer.coop.

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SmallCreditUnions

By Mark Arnold President On the Mark Strategies

Branding 101 for Small Credit Unions

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“Successful brands are built by people. By visionary leaders.

By creative employees. By loyal customers.” —William Aruda, author, Urban Voice: It Takes a Village to Build a Brand randing. Thinking of the word often conjures images of dollar signs. Huge Chick-Fil-A billboard campaigns. Endless McDonald’s jingles. Innumerable Coca-Cola TV commercials.

Of course, the financial services world is hyper-competitive and full of large brands as well. Large credit unions have marketing staff, budgets and agencies to help them compete in the branding world.

But what is a small credit union to do? Here four steps (or branding 101) smaller credit unions can take when it comes to branding.

(1) Find your niche As Seth Godin, marketing guru and author of “The Purple Cow” says, “The most successful companies today are the ones that are finding a niche and serving it.” That certainly applies to credit unions. When it comes to branding, size doesn’t matter: niches do.

As a small credit union, you cannot be all things to all people. Ultimately, you must answer the question, “who is your credit union serving?”

Consider Communicating Arts CU in Michigan. They are a $32 million dollar asset credit union in Detroit. Their niche is serving the underserved. When it came time to open a second branch they didn’t’ hesitate to open in Detroit’s Highland Park area (one of the toughest parts of the city—so tough even the check cashers had left!). Why did they do that: because they know their niche and are serving it. The credit union prices accordingly, but they are clear about their target audience. They are one of the most successful credit unions in Michigan’s “Save to Win” program.

(2) Implement Cheers marketing The classic 1980s sitcom Cheers offers insights into how small credit unions can compete with their brand. In the show, when Norm walked into the bar, they called him by his name, sat him in his seat and served him his beer.

Cheers marketing means knowing your members better than anyone else. Knowing your members by sight when they walk in the door is a form of branding. Greeting them like no one else does (even better than their dog) sends a strong brand message: that they matter to you.

A major branding technique you can use is to turn your members into a referral engine. In his book, “The Referral Engine,” John Jantsch says, “Highly referred businesses are good enough to make people want to talk about them, but they amplify this natural desire by making word of mouth an essential element of the culture.”

(3) Leverage your size There are things you can do larger financial institutions can’t—especially with branding. Smaller credit unions are more nimble and have much less layers. For example, it’s harder for an ocean liner to change directions than a Seedo.

With your brand, answer this key question: what can you do better than larger financial institutions? That leads to a core principle with branding: differentiation. The more unique you are, the less competition you will have.

Mt. Lehman CU (approximately $40 million in assets) in Canada serves as an excellent example. Their tagline is “size is relative.” Rather than seeing their size as a negative they use it to their advantage. Their website even proclaims, “We measure our success in terms of personal relationships, not market share, asset size or annual earnings. Our commitment is to our members, and we believe that it is in your best interest for us to keep things small.”

(4) Develop a plan Every credit union—no matter its size—must have a brand plan. A brand plan defines your targets and focuses your vision and mission.

“Focus is critical to our brand and credit union’s success,” said Cindy Beauregard, CEO of Heart of Louisiana FCU. “Our brand plan identified specific groups we were good at serving.

Instead of focusing in every direction we now target similar subgroups, which leads to better results.”

Branding is more than awareness—much more. By taking the above branding 101 steps, small credit unions can also build successful brands.

Mark Arnold, CCUE, is an acclaimed speaker, brand expert and strategic planner. He is also president of On the Mark Strategies, a consulting firm specializing in branding and strategic planning. His web address is www.markarniold.com and his blog is blog.markarnold.com. You can also contact him at (214) 538-4147 or e-mail mark@markarnold.com.

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By Linda Winkfein VP of Small CU Development Texas Credit Union League

Jonathan Matthews Small CU Achiever of the Year

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onathan Matthews, CEO of Southland FCU, has received the Texas Credit Union League’s (TCUL) Small Credit Union Achiever of the Year award. Matthews accepted the award in front of his peers at TCUL’s September Leadership Conference & Expo.

Matthews began his credit union career in 1973, as a VOE high school student in San Antonio. After graduation, he remained in the movement, graduating from SCMS in 1986. In 1987, he accepted a position as vice president of operations at Plains Bell FCU. He continued climbing the ranks in the credit union movement, eventually landing at his current credit union.

When our Small CU Achiever of the Year accepted the position of CEO at his current credit union in 2008, the struggling credit union had been showing negative earnings for over two years.

Under his leadership, the credit union went from an NCUA Risk 4 financially troubled credit union to a risk rating score of 2 in May of this year. Under his leadership, the credit union continues to experience positive growth in loans, assets and membership.

Lorri Gaither and I have had the great pleasure of working with Matthews as he has served TCUL’s Small Credit Union Committee since 2009 as the representative for the Pineywoods area. He is currently serving as vice-president of the committee.

Matthews exhibits a genuine caring for credit unions and their members. He not only wants his credit union to achieve success but wants this for all credit unions. He is very willing to share his knowledge and experience, and has hosted and arranged many training sessions for credit unions in his area.

Matthews’ diligence and courteous efforts have brought about better communications in the Pineywoods Chapter as he serves as Chapter president as well. He has a dynamic energy and has the ability to transmit this to others. You always know that he will stand up for what is right and fair.

Under his leadership, the Chapter was recognized in 2010 with a TCUL Star Advocate Award for achieving 162 percent of their goal.

In his spare time… this SCMS graduate serves on TCUL’s Innovation & Collaboration Task Force.

Matthews is a leader in his community and has demonstrated and earned a keen respect among his peers. He was a Crockett area Chamber of Commerce volunteer in 2008. As Chapter president, Matthews was instrumental in pulling the Chapter together to help with the annual Salvation Army “Angel Tree” program and in the collection of peanut butter for the Salvation Army food pantry.

A good friend once shared this old quote with me “If you want work well done, select a busy man - the other has no time.” Jonathan is this type of person. It is truly amazing that he is able to do all these things but to actually do them with passion is even a step above.

The motto of Southland FCU is “Where People Helping People Really Matters.” Matthews truly believes this.

ProductsandServices

By Tom Hodge Senior vice president/Chief Sales Officer Credit Union Resources, Inc.

Let’s Make A Deal!

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redit unions want three things in 2011-increased net income, lower operating costs and balanced membership growth. Credit Union Resources is dedicated to bringing products, services and programs that do at least one of those things if not all three. We either manufacture those products or we partner with those “Best in Class” providers to try and offer a line of products and services that assist credit unions with these things.

Recently, we looked at all our endorsed vendors and explored opportunities to bundle products and services between Resources and our business partners. We wanted to find products that fit together and promote them for a limited time at a reduced price, and assist credit unions in attracting new and balanced membership growth. Also, with the reduced pricing, we could help credit union offer new products while lowering the initial cost and help create new revenue /net income. We also thought, let’s provide credit union members with the access and convenience they want while building loyalty and encourage a deeper and more profitable member relationship with credit unions. A lot to accomplish in one promotion, but we did find something that fulfilled all the requirements.

At TCUL’s 2011 Leadership Conference, Credit Union Resources, Inc. in partnership with CO-OP Financial Services began offering a portfolio of prime solutions that helps credit unions achieve some real savings; provide an opportunity to increase revenue, and at the same time, promote real balanced growth. Through this special offer, Texas credit unions who sign up by Nov. 15, 2011 can save almost $12,000! This promotion gives your credit union’s members access through: • The CO-OP/RTR shared branching network, which expands your branch distribution footprint to more than 4,300 national and worldwide locations • The CO-OP Member Center, which provides 24/7 live telephone account and lending support to your members • Linking your members to CO-OP’s network’s 28,000 surcharge-free ATMs • Opening the door to your members a full range of self-service mobile opportunities through CO-OP Mobile • Access to optional add-ons such as underwriting services through the CO-OP’s Member Center Express Link for additional member convenience In addition to the great member benefits, your credit union can benefit too. Participating in this opportunity help your members use your credit union as their primary financial institution because you’ve created new access points and access equals convenience in the minds of today’s consumers.

Convenience is the number one reason people choose a primary financial institution. This program can also reduce some

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marketing costs as this promotion is fully supported by turnkey marketing materials and strategies for communicating these new services to your members. The income potential from adding these services to your menu of products will attract new members and those new members as well as your current members will result in balanced growth with loans and other revenue producing programs offered by through your credit union. In addition, sign up to become an acquirer for the shared branching network and you add an additional income stream from handling transactions through your branches for other credit unions. Use your excess branch capacity to serve those members and get rewarded financially for your efforts.

Operating a credit union in these days of reduced spreads, complicated and burdensome regulations, and high delinquency from a weak economy continues to push even the most solid of credit unions to the brink. Credit unions are scrambling to add to the bottom line and/or to their capital positions from either adding fee income services, reducing operating costs or from adjustments to their growth. Some are succeeding, other are miserably failing. Resources and CO-OP can help and this promotion is designed to build your membership with members that are profitable. The cost has been reduced in order to get as many credit unions as possible to participate in the offer.

Finally, additional revenue that translates into higher net income is the ultimate objective. All of these can be accomplished while tackling the biggest obstacle, make my credit union more accessible. As it becomes more accessible, it becomes more convenient to your members. If it’s convenient, then most of your members become PFI and profitable members.

Contact Brian McCue, at (800) 442-5762, ext. 6426 or e-mail bmccue@curesources.coop.

By Dianne Addington President/CEO Catalyst Corporate FCU

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Engaging a New Era fficials from two dozen credit unions gathered for a special membership meeting on Aug. 30. It was a small group, but they symbolically represented the more than 680 credit unions that had cast votes to determine the fate of the proposed merger between Southwest Bridge Corporate and Georgia Corporate. The group applauded and posed for a few pictures after hearing the announcement that more than 98 percent of voting credit unions cast their ballots in favor of creating Catalyst Corporate FCU. On Sept. 6, after nearly a year-long process, Catalyst Corporate began operations.

The positive outcome of this process is gratifying, but it’s no surprise. We have had member input all along the way–-from the advisory council planning process to an earlier member vote on the plan, which received approval from 91.3 percent of the 540 voting credit unions. Most importantly, the membership voted with its capital pledges.

The merging corporates raised approximately $93 million in capital from 875 members, representing 74 percent of previous capital shareholders.

The fact that so many credit unions, after completing months of due diligence, chose to capitalize Catalyst Corporate shows that credit unions were looking for this type of business model. Credit unions have confirmed that they believe in a cooperative model, and that they appreciate the importance of scale when choosing a corporate.

The operating efficiencies that Catalyst can achieve make a difference that goes beyond better pricing. It means that Catalyst won’t have to rely on its balance sheet, and that means less risk.

Indeed, the Catalyst Corporate model balance sheet is more conservative than what is required by NCUA’s new regulation 704.

This merger allows for a strong, efficient, member-driven corporate that will meet the needs of the credit union community – both our current members and other credit unions that are seeking a corporate home.

We are so very encouraged by the overwhelming vote of confidence. And we are grateful for the credit union support that led to the creation of Catalyst Corporate.

Now, we can look ahead. Next up is the Economic Forum.

Catalyst Corporate will continue the tradition started by Southwest Corporate 34 years ago when it hosts the 2011 Economic Forum on Oct. 25-26 at the Embassy Suites and Convention Center, in Frisco.

This year’s event features, among other things, a trio of credit union-focused economists who will offer an insightful reading of the emerging 2012 financial landscape. Tun Wai, chief economist from NAFCU, along with Steve Rick, a senior economist with CUNA, will join veteran credit union economist Dr. Charles Idol for an in-depth look at next year’s operating environment.

But just as important as the information credit union economists and other financial industry experts will deliver at the Economic Forum is the opportunity for credit unions to come together and engage in the new era—the Catalyst Era. With continued member involvement and support, it promises to be the best era yet.

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