/LSCU_Directors_Newsletter_March_FINAL

Director’s Resource League of Southeastern Credit Unions

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March 2012 | Vol. 2, Issue No. 1

President’s Message The CUNA GAC in Washington, D.C. just wrapped up in March. I was pleased to see all the first-timers at the conference, many being volunteers. Our movement is unique in a number of ways, but most important are our volunteer boards and committees. You give of yourself for no compensation, and that’s a great message to potential members and our lawmakers.

It’s important that all of you not only stay active with your credit union business, but also get engaged on the advocacy side. In our volunteer profile, Dr. Dorothy Orr said she believes in the credit union movement so much that she’s traveled the world to bring the message to as many people as possible. Now you don’t have to travel the world to take part in advocacy. You can take a trip to the state capitol once a year to take part in the State Government Conferences that also involve meeting with your state lawmakers. Twice a year we head to Washington, D.C. to speak with our federal delegation at the CUNA GAC and “Hike the Hill.”

Another way to get engaged is through our Action Alerts. We need to send as many messages as possible to our lawmakers when we issue an Action Alert. This usually entails about 15 or 20 minutes to call the legislator’s office or to send an email. The League provides the phone number or a pre-written email. All of our calls and letters do get our lawmakers attention.

I appreciate the work you provide for your credit union and hope you will consider becoming more engaged on the advocacy side.

Post-Examination Feedback Survey Provides Venue for CU Exam Process Input We know that maintaining an effective regulatory compliance program and responding to exam-related issues are two of the most burdensome and time consuming aspects of a credit union CEO’s job.

To provide “best practices” data to the NCUA, OFR, and the ACUA that will benefit credit unions and the agencies alike, the League has developed a “Post-Examination Feedback Survey” that member credit unions may access through the League website, www.lscu.coop.

Credit unions are able to provide immediate feedback on their federal and/or state examination experiences. Once received, the information will be organized and shared with state and federal agencies in order to improve the examination process.

If you are involved in the examination process for your credit union and would like to provide your feedback through the survey, log in to www.lscu.coop and click on the Governmental Affairs tab. The survey is located under the Compliance & Operational Support section and is password-protected.

If you do not have access to the LSCU website already, go to www. lscu.coop, click on “login” in upper right corner of the homepage, and sign up for one. You should be approved within 24 hours of signing up.

Save the Date Alabama GAC April 4-5, 2012 Wednesday – Thursday Renaissance Montgomery Hotel & Spa Click here for more information Disaster Preparedness Workshop April 24, 2012 Tuesday South Fla. Educational Credit Union - Miami, FL Click here for more information Disaster Preparedness Workshop April 26, 2012 Thursday Guardian Credit Union - Montgomery, AL Click here for more information 2012 LSCU AC&E June 13-15, 2012 Wednesday – Friday JW Marriott Hotel - Orlando, FL Click here for more information

MBL, Supplemental Capital Key Issues for CUs

Exam Fairness Legislation Gains Co-sponsors

A full Senate vote on credit union Member Business Lending (MBL) legislation could now come at any time after a new version of the legislation was introduced late last week.

Credit unions support strong but fair and appropriate safety and soundness regulation and supervision to protect the financial resources of credit unions and their members.

Examinations should be based on the laws Congress enacts, and the regulations that the NCUA promulgates; the appeals process should protect from examiner retaliation.

The Small Business Lending Enhancement Act, has a new number, S. 2231, but is identical to Sen. Mark Udall’s (D-CO) S. 509. The new bill has been introduced under Rule 14 of Senate rules, and, as a result, has bypassed the committee process and can be called for a full vote immediately. A vote could be delayed until after the April recess.

The League is working with all four of our senators on this bill. Sen. Bill Nelson (D-FL) is a co-sponsor and we are asking him to help build support with other members of the Senate. The League will continue to work to answer questions for Sens. Jeff Sessions and Richard Shelby of Alabama and Marco Rubio of Florida.

In regards to Supplemental Capital legislation, Reps. Peter King (R-NY) and Brad Sherman (D-CA) recently introduced the Capital Access for Small Business and Job Act, H.R. 3993, which would provide credit unions with the ability to raise capital from alternative sources. These other sources of capital would still maintain the “one member, one vote” principal that is fundamental to the credit union structure. Reps.

Jeff Miller (R-FL) and Bill Posey (R-FL) have recently signed on to cosponsor the bill.

H.R. 3461, the Financial Institutions Exam Fairness and Reform Act, would make available to financial institutions the information used by examiners to make decisions in their examination; codify certain examination policy guidance; establish an Ombudsman at the Federal Financial Institution Examination Council (FFIEC) to which financial institutions could raise concerns with respect to their examination; and establish an appeals process before an independent administrative law judge. In March during the CUNA GAC, credit unions were able to discuss H.R. 3461 with legislators.

In late February, the League issued an Action Alert urging credit unions to contact their representatives asking them to co-sponsor H.R. 3993.

Supplemental Capital is an important option for credit unions.

The bill’s co-sponsors include: Reps. Spencer Bachus (R-AL), chairman of the Financial Services Committee, Vern Buchanan (R-FL); Mario Diaz-Balart (R-FL); Ileana Ros-Lehtinen (R-FL); Gus Bilirakis (R-FL); Corrine Brown (D-FL); Richard Nugent (RFL); Bill Posey (R-FL); David Rivera (R-FL); Thomas Rooney (RFL); and Dennis Ross (R-FL). Reps. Debbie Wasserman-Schultz (D-FL); Sandy Adams (R-FL); Allen West (R-FL); Jo Bonner (R-AL); Kathy Castor (D-FL); and Ander Crenshaw (R-FL) were added after the CUNA GAC in March.

Public Deposits Legislation Pushes On for CUs

How Board Members Can Support LSCU PAC Fundraising Efforts

The push for credit unions to have the ability to become qualified public depositories continues to be a top issue in both Alabama and Florida for the League’s Governmental Affairs (GA) team.

In Alabama, the GA team continues to push SB 299 by Sen. Bill Holtzclaw (R-Madison) and HB 315 by Rep. Mike Ball (R-Huntsville). It appears likely that there will be a hearing on both public deposits bills the week following the Alabama GAC in Montgomery on April 4-5.

This will be a tough fight with the banks, and it cannot be stressed enough that grassroots support on this legislation is very important.

The League will continue to meet with legislators to make sure they understand why this is a significant piece of legislation for credit unions.

In Florida, the 2012 Regular Legislative Session brought about significant legislative movement. HB 669 by Rep. Jason Brodeur (R-Sanford) was heard in the Insurance and Banking subcommittee during the first week, and it failed by a vote of 7-to-8. Eight of the members serving on the subcommittee voted against the bill, siding with the Florida Bankers Association, who argued that credit unions should not serve as qualified public depositories because they do not pay taxes.

Although the legislation did not pass this session, the GA team is focused on making sure the importance of the issue does not die. The League is focused on strengthening is grassroots network to ensure that when this legislation is heard in 2013, it passes.

Advocacy at the state and federal levels includes meeting with lawmakers and contacting them through calls and emails, however, there is another extremely important aspect of advocacy ­­— fundraising for the political action committee (PAC).

A strong PAC not only raises the credit union profile in the political arena, but also gives credit unions the strength to move their legislative agenda forward. This is especially true during an election year. Through the PAC, credit unions are able to support both state and federal credit-union-friendly lawmakers and candidates.

How can you, as a credit union volunteer, support the PAC? • Contribute individually • Discuss with CEO various PAC fundraising programs and incentives such as: * CU Staff payroll deductions * Jean’s Day for CU staff that contribute • Suggest CU’s participation in Deduct-a-Buck program, designed to invite CU members to contribute to the PAC If you would like to learn more about how you and your credit union can become involved in political and legislative success through PAC fundraising, contact LSCU Grassroots & Political Action Coordinators Blake Westbrook in Alabama at blake. westbrook@lscu.coop, or Andy Gonzalez in Florida at andy. gonzalez@lscu.coop.

Volunteer Spotlight

2012 LSCU AC&E Offers Special Tracks for Directors To enhance the educational experience at this year’s Annual Convention & Exposition (AC&E), breakout sessions are divided into suggested tracks for CEOs, credit union executives, and directors.

The goal is to provide credit union management with a wealth of information that complements their role at the credit union.

Some of the great sessions tailored specifically for directors are: • • • • • • •

Director’s Institute Workshop The Director’s Guide to Political Advocacy Technology Trends in the Financial Industry Building a Better Board Sustainable Growth CUSOs: When to Join, When to Build LSCU Golf Tournament (Saturday)

one vision. one voice.

The theme for the 2012 LSCU AC&E is “The Power of One.” For more information and to register for the AC&E, visit the LSCU Events Calendar at www.lscu.coop.

Study Shows Cooperative Image Campaign Gains Traction The 2012 LSCU Cooperative Image Campaign will run beginning in May. The League is producing a second TV ad with the same actor from the first ad. It will be a continuation of the theme which contrasts the fact that many consumers still don’t know what a credit union is. Both ads will run in markets across Alabama and Florida, as well as online.

The $1.3 million 2011 campaign showed an uplift in consumer awareness of credit unions. For the first flight of advertising, this is very encouraging.

Each quarter the Director’s Resource will feature a volunteer or volunteers talking about serving on a board of directors, the role of the board, or a hot credit union issue. In this edition, Dorothy Orr, BrightStar Credit Union chairman, talks about the importance of directors attending conferences like the CUNA GAC. Also, Alabama Credit Union chairman Gladys B. Jones discusses the significance of the CUNA Governmental Affairs Conference on credit union volunteers.

Dorothy Orr, BrightStar Credit Union chairman Dorothy has been chairman of BrightStar since 1988. She is a member of the Credit Union Hall of Fame and a Director of the Year winner from CUES. Dorothy is known as Miss Credit Union in South Florida.

Q: Why is it important that directors attend events like the CUNA GAC? “I have been going to Washington, D.C. since the ‘90s. I believe in the credit union movement ever since I was turned away for a loan by a bank when I was in college in the ‘60s. A friend told me to go to the Broward Schools Credit Union, now BrightStar, and apply for a loan. The president of the credit union met me at the door. I’ve been a member ever since. I have traveled across the world, through the World Council of Credit Unions, to spread the credit union message. That’s why I attend the CUNA GAC and go to the Hill to visit with my lawmakers. I believe in the movement and want to see it succeed.”

Gladys B. Jones, Alabama Credit Union chairman Gladys has served on the Alabama CU board for nearly 30 years. She recently became chairman for the second time. She has served for a total of seven years as chairman. She has also served a number of years as vice chair. She was awarded the Director of the Year Award a few years ago by the Alabama Credit Union League.

Q: Why should directors attend conferences like the CUNA GAC or the AC&E? Consumer awareness of credit unions pre- and post-campaign.

The third quarter Call Report data shows that Alabama and Florida credit unions added 48,000 new members. The average new membership for the first two quarters was 20,000 for both states.

Plus, 65,000 consumers visited www.betternameforbanking.com during the campaign, which is a phenomenal number.

To view the complete results of the 2011 campaign and to see the media buys, visit the LSCU Cooperative Image Campaign website.

There is still time to take part in the 2012 campaign which has 23 new credit unions taking part this year.

For information on the campaign, contact LSCU VP, Marketing and Communications Mike Bridges at 866.231.0545 ext. 1022.

“We need to be around other boards and interact with them. For many, you have to learn to be a director. So interacting with other board members and vendors helps us to see what’s going on. It gives us a better view of the credit union movement.

To be an effective board member you have to be prepared. Ask questions and if you don’t understand something, table it, don’t just vote because everyone wants to. The other thing that boards need to do is embrace that we all bring different talents, backgrounds, and points of view. All of our collective talent can help the credit union in many different ways.”

10 Core Principles and Practices for Boards of Directors (#1-5)

NCUA Focused on Relieving Regulatory Burdens on CUs

The road to exceptional governance begins with a board embracing a core set of principles and practices that give meaning to the overused term “great governance.” Embedded in core governance documents such corporate governance principles, a governance charter, and the board’s position description, these core elements are reinforced during board orientation and form the framework for a robust, systematic approach to governance.

Credit unions have been pushing to alleviate much of the regulatory burden that hinders the way they operate for members, and the issue has been a significant focus for the National Credit Union Administration (NCUA) in 2012.

1. Accountability. Directors understand they have a fiduciary responsibility to see that the organization fulfills its mission, acts in the best interests of its primary stakeholders, and protects the assets of the organization.

Recommended practice: A written position description documents the fiduciary duties, roles, responsibilities, and expectations of directors.

2. Governing not managing. Boards have an oversight function, but great boards govern—they don’t try to run operations—explicitly or subtly. Governance involves five overarching board roles: • Establishing the mission and setting high-level organizational goals • Approving major decisions and policies • Selecting a chief executive officer • Overseeing the CEO’s management of the enterprise • Connecting with external stakeholders, such as community and political leaders Recommended practice: Directors focus their work on higher-level strategic choices, priorities, and future directions. Great boards create the space for great management to operate.

3. Continuous learning. The CU industry is undergoing constant change, especially from new regulations and the need for innovative methods for improving outcomes and increasing efficiency. The board must be a “learning organization” with specific activities to integrate education and real-time learning into its work.

Recommended practice: The board follows a written education plan, updated at least annually, that identifies the vital topics for board education at meetings, retreats, and outside conferences.

4. Governance (not operational) information. The board relies on accurate, objective information when it oversees performance and makes decisions. The board receives information in advance of meetings, and directors are responsible for reviewing materials and coming to meetings prepared.

Earlier this year, the NCUA board unanimously approved a proposed rule enabling all federal credit unions (FCUs) to engage in activities permitted by the existing RegFlex rule without the need to apply for a special RegFlex designation.

The approved rule propsal complies with the intent of President Obama’s Executive Order 13579, asking independent agencies to modify, streamline, expand, or repeal regulations to provide relief from unnecessary burdens.

NCUA Board Chairman Debbie Matz said of extending the current RegFlex provisions to all federal credit unions, “as NCUA continually reviews its regulations on a rolling, threeyear cycle, we look for ways to streamline and consolidate rules to reduce any unnecessary burdens on credit unions without compromising safety and soundness.”

The RegFlex relief proposed rule allows FCUs to: • Make charitable contributions to charities of their choosing; • Accept non-member deposits, subject to predetermined limits, from local governmental entities or other credit unions; • Use a six-year time horizon to partially occupy unimproved property they acquire for future expansion; • Obtain certain exceptions to eligible obligations constraints; • Enter into borrowing repurchase transactions in which the purchased securities have maturities that exceed the maturity of the borrowing repurchase agreement, provided the investment value does not exceed net worth, and subject to certain mismatch timing constraints; • Purchase private-label commercial mortgage-related securities, subject to certain net worth constraints and four safety and soundness investment criteria; and • Invest in zero-coupon securities, subject to certain net worth or investment maturity limits.

Recommended practice: A visually powerful dashboard or balanced scorecard of carefully selected measures for finances, business strategy, and member service enables the board to track performance against goals and industry benchmarks.

Southeastern Director’s Conference

5. Participative and efficient meetings. Meetings are informative, interactive, and action-oriented. They follow written agendas, and questions and discussion are encouraged.

July 15-18, 2012 Sunday – Wednesday Sheraton Norfolk Waterside Hotel Norfolk, VA

Recommended practice: The strategic plan drives an annual “board education and work plan” and meeting agendas that focus on important, future oriented issues. The chairperson balances discussion and questioning with a commitment to reach closure, take decisive action, and stay on schedule.

Stay tuned for Part II: 10 Core Principles and Practices for Boards of Directors (#6-10) in the next issue of Director’s Resource.

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To receive the latest news from the LSCU, CUNA, and the NCUA, sign up for the League’s weekly newsletter, eSignal, at www.lscu.coop. Director’s Resource publisher – Joseph Davis (joseph.davis@lscu.coop)