SHARED BRANCHING

EDITOR-IN-CHIEF 

Carol E. Payne, Vice President, Communications and 

Marketing | cpayne@ccul.org 

credit union 

ASSOCIATE EDITOR 

Matt Wrye, Manager of Publications | mattw@ccul.org 

ASSISTANT EDITOR 

George Sun, External Marketing & Member 

Communications Manager | georges@ccul.org 

Cindy Tullues, Senior Marketing and Member 

Communications Writer | cindyt@ccul.org 

EXECUTIVE STAFF 

Diana R. Dykstra, President and Chief Executive Officer 

Lucy Ito, Executive Vice President and Chief Operating Officer 

Bob Arnould, Senior Vice President of Advocacy 

Cindy Cavanaugh, Senior Vice President and Chief Financial Officer 

Tony Kitt, Senior Vice President of Strategic Innovation and Planning 

Larry Palochik, Senior Vice President of Member Solutions 

GRAPHIC DESIGN 

Natalie J. Moreno, Senior Graphic Designer 

Danielle Price, Graphic Designer 

CONCEPT 

Carol Payne | Matt Wrye 

EDITORIAL CONTRIBUTORS 

Victoria Allen | Melissa Ameluxen | Greg Badovinac | 

David Creager | Donna Dyer | Jeremy Empol | 

Rita Fillingane | Dwight Johnston | Clarissa Martin | 

Dianne Molvig | Arnold Ramirez | Tina Ramos-Ingold | 

Andrea Svoboda | Cindy Tullues | Tonja Wheatley | 

Thomas H. Wolfe 

PHOTOGRAPHY 

Natalie J. Moreno | Carol E. Payne | Matt Wrye 

CONTACT INFORMATION 

Internet address | www.ccul.org 

Mailing address | P.O. Box 51476, Ontario, CA 91761-0076 

Communications Department Fax | 909.390.3014 

Credit Union Digest (ISSN#08921075) is published 

bi-monthly by the California and Nevada Credit Union 

Leagues, 2855 E. Guasti Road, Ste. 600, Ontario, CA 91761-1250; 

1201 K Street, Suite 1050, Sacramento, CA 95814. 

Annual subscription rate: $48 members, $250 non-members. To 

subscribe, contact LaDonna Kohler at ladonnak@ccul.org. Periodicals 

postage paid at Ontario, CA and additional mailing offices. 

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Traci Miller Olszowy, Manager, Membership Development | 

tracio@ccul.org 

POSTMASTER 

Send address changes to Credit Union Digest, P.O. Box 51476, 

Ontario, CA 91761-0076. Single issues are available; call 

909.212.6044. 

The California and Nevada Credit Union Leagues reserve 

the right to edit letters to the editor and all submissions. 

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unsolicited materials. For more information, contact 

Editor-in-Chief Carol Payne at 909.212.6040. 

Providing Innovative Support and Services to Member Credit Unions Since 1933. 

Winner of the following: 

• 2012 CUNA/AACUL Pro and Blockbuster Honorable Mention 

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CALIFORNIA LEAGUE OFFICERS 

President Diana R. Dykstra | 909.212.6001 | dianad@ccul.org 

Secretary Sharon Weber | 909.212.6003 | sharonw@ccul.org 

Treasurer Cindy Cavanaugh | 909.212.6006 | cindyc@ccul.org 

CALIFORNIA LEAGUE BOARD OF DIRECTORS 

At-Large Director Teresa Freeborn | 310.607.2177 | tfreeborn@xfcu.org 

At-Large Director Teresa Halleck | 858.597.8690 | thalleck@sdccu.com 

At-Large Director Eileen Rivera | 310.491.7500 | erivera@SkyOne.org 

At-Large Director Jon Hernandez | 310.371.4242, ext. 217 | jhernandez@calcomcu.org 

At-Large Director Hank Barrett | 209.549.8511, ext. 3000 | hbarrett@valleyfirstcu.org 

At-Larger Director Linda Walmsley | 323.845.4475 | lwalm@firstent.org 

Group A Director Chris Coursen | 714.641.5946, ext. 12 | chris@fairviewcu.org 

Group B Director Charles Papenfus | 909.822.1810, ext. 215 | chuckpapenfus@inlandvalleyfcu.com 

Group C Director Rick Hanan | 510.483.1300 | rhanan@smw104fcu.org 

Group D Director Marla Shepard | 858.636.4221 | mshepard@calcoastcu.org 

CALIFORNIA LEAGUE EXECUTIVE COMMITTEE 

Chairman Teresa Halleck | 858.597.8690 | thalleck@sdccu.com 

Vice Chairman Teresa Freeborn | 310.607.2177 | tfreeborn@xfcu.org 

At-Large Jon Hernandez | 310.371.4242, ext. 217 | jhernandez@calcomcu.org 

CUNA BOARD MEMBERS 

Jeff York* | 805.733.7640 | jeff.york@coasthills.coop 

Brett Martinez* | 707.576.5101 | bmartinez@redwoodcu.org 

NEVADA LEAGUE BOARD OF DIRECTORS 

Chairman Wayne Tew | 702.939.3020 | teww@ccculv.com 

Vice Chairman Eric Estes | 702.293.7772, ext. 183 | eestes@boulderdamcu.org 

Secretary/Treasurer Wallace Murray | 775.882.2060 | wmurray@gncu.net 

Director Barbara Reuter | 775.945.2421, ext. 4013 | breuter@fhcunv.org 

Director Dennis Flannigan | 775.789.3108 | dennis@greatbasin.org 

* Ex-Officio California League Board Member 

Credit Union Digest is printed on recycled paper. 

©2013 California and Nevada Credit Union Leagues 

USPS 011-679 

www.UniteForGood.org 

4 credit union digest | august/september 2013 | members first

LEADER 

2 

LEADER 

Mission FCU 

San Diego, CA 

161,000 Members 

$2.3 Billion in Assets 

Debra 

Schwartz 

President and CEO 

Education 

I have a Bachelor of Science in economics and marketing from 

the State University of New York, and a Master of Business 

Administration from the University of Southern California. 

First Credit Union Experience 

My stepfather belonged to a credit union at the factory where 

he worked in western New York. I remember him cashing his 

paycheck and getting a loan for our family car. 

Biggest Challenge as a CEO 

My biggest challenge is balancing competing priorities. While 

we clearly have a mandate to provide great products and 

services to our members, we also have a responsibility to our 

employees to offer an enjoyable and productive work environment, 

and to achieve strategic goals. 

League’s Role in the California CU Movement 

The most valuable service the League provides is communication 

on important issues. The League also plays a significant 

role in legislative and regulatory advocacy. 

Leisure Activities 

I enjoy going on travel adventures, as well as volunteering as 

a board member for the National Association of Federal Credit 

Unions (NAFCU) and for nonprofit organizations that help 

children. I’m a big sports fan (especially Yankee baseball and 

USC football) and love spending time with my family. 

Personal Philosophy 

Do your best. It’s important to put in 100 percent of your effort 

every day. I think tenacity is very important. Some initiatives 

take a lot of time, but it’s important to stay focused on the goal. 

We all make mistakes. Knowledge is power, because we learn 

from both our errors and successes. 

Advice for Future Credit Union Leaders 

Love what you do, and understand how we can really make 

a difference in our members’ lives. I think it’s important to 

be fully committed. Get away from your office to talk with 

your employees and members. They’ll learn from you, but 

you’ll also find out a great deal from them. 

Lupe 

Holguin-Buell 

Chairman of the Board 

Education 

My bachelor’s degree and master’s degree are both in education. 

I also have a Ph.D. in education with joint degrees from Claremont 

Graduate University and San Diego State University. 

First Credit Union Experience 

I just started a new school-teaching position when I heard 

about Public Schools Federal Credit Union, which is now 

Mission Federal Credit Union. It was wonderful to walk into 

a small, very friendly branch and be greeted by name. I still 

have my keychain I received when I became a member! 

Biggest Challenge as a Board Member 

Due to the increase in fiduciary responsibilities, the biggest 

challenge is to maintain a high level of expertise so we can 

recognize opportunities that support our member-centric 

focus, while also keeping an eye on the bottom line. The 

training we receive is crucial for staying up to date with continual 

changes. We maintain an open dialogue with our CEO 

to keep abreast of strategies that will benefit the credit union 

and our members. 

League’s Role in the California CU Movement 

The League not only represents a unified voice for credit 

unions, but also listens to each credit union’s story and needs. 

Leisure Activities 

I enjoy reading, gardening, and traveling. I also believe in supporting 

educational organizations that provide financial and other 

resources to qualified students whose goal is to attend college. 

Personal Philosophy 

I am confident everyone has the capacity to make a difference, 

whether in work or in their personal life. It is not the circumstances 

that define us, but what we can achieve through our 

own efforts and the support of our family, friends, and other 

people who make a difference in our own lives. 

Advice for Future Credit Union Leaders 

I encourage you to be committed to the core values of your 

credit union. You will find that those values remain a guiding 

and inspirational force in both calm and turbulent times 

in your leadership role. 

credit union digest | august/september 2013 | members first 

5

news & views 

Board Pay: the CEO’s Perspective 

by Matt Wrye, Associate Editor 

Such a question wouldn’t 

have been taken seriously several 

years ago, but times have 

changed. 

With the addition of Washington 

this year, 10 states now 

Should state-chartered credit unions in California and Nevada be 

expressly permitted to compensate board members? 

allow state-chartered credit 

unions the authority to pay board 

members to varying degrees, 

depending on the state’s provisions, 

according to the National 

Association of State Credit Union 

North Island CU 

CEO: Stephen O’Connell 

Assets: $1.1 billion 

Members: 80,000 

Headquarters: San Diego, 

CA 

Understanding that the duties of a board member in today’s 

environment may require more expertise and time commitment 

than what was originally considered in the formation of credit 

unions sometimes makes me believe that compensating them 

should be permissible. 

However, a board composed of volunteers who have the desire to 

do the right things for the right reasons with no financial benefit 

may often provide the most objective perspective of what is in the 

members’ best interest without prejudice for personal financial 

gain. 

I also believe that moving toward compensating board members 

jeopardizes a credit union’s ability to differentiate themselves from 

banks. 

Clark County CU 

CEO: Wayne Tew 

Assets: $480 million 


Headquarters: Las Vegas, 

NV 

Supervisors (NASCUS). Some 

credit unions participate while 

others do not. 

So why the change? The volunteer 

role of “board director” at 

both state and federally chartered 

I personally don’t feel a compensated board is within the 

spirit of a “not for profit” organization. When you open the 

door to board compensation, you also open the door to 

behaving like a bank. How could we continue advocating 

that our credit union is uniquely different if our board 

resembles a bank board? 

In addition, like many other small credit unions, we have 

weathered the tough economic times by cutting expenses. 

Unfortunately, many times the expense-cutting falls on the 

shoulders of our employees. Over the past few years, we 

have reduced staff, frozen wages, frozen our pension plan, 

and changed our medical plan to lower premiums. 

I believe volunteers are just that—volunteers. They 

understand when running for a board position that it’s a 

non-compensated seat. I would have a problem with 

compensating my board when my staff has not been 

adequately compensated. 

Dow Great Western CU 

CEO: Phylliss Rosas 



Headquarters: 

Antioch, CA 

Many years ago I worked for a state-chartered credit union 

in Minnesota, where state laws allowed compensation for 

board members. It was a stipend for meetings attended. 

Currently, Nevada law precludes compensation for credit 

union volunteers. 

I have not seen how compensation necessarily increases 

the interest of potential volunteers or attracts higher-caliber 

volunteers. If potential board members have increased 

interest to serve based on possible compensation, I would 

be concerned about the motives of those individuals. 


credit unions has evolved from basic 

overseer into something more elaborate as 

credit unions conform to new regulations, 

according to interviews with several CEOs. 

Some credit unions are also concerned 

they’ll have a harder time attracting new 

board members in the future. 

“Regulatory expectations for credit 

union boards continue to increase as credit 

union operations grow in complexity,” 

said Mary Martha Fortney, president and 

CEO of NASCUS. “However, the issue of 

whether credit unions should compensate 

directors is one which the credit union 

system has not reached consensus.” 

In a 2011 rule, the National Credit 

Union Administration (NCUA) reminded 

credit union boards of their fiduciary 

duties. Board directors of federally chartered 

credit unions are highly encouraged 

to prove to their cooperative institutions 

they can maintain an ongoing understanding 

of basic finance and accounting 

principles. It usually translates into 

hours of rigorous courses designed to 

build their aptitude for ensuring financial 

safety and soundness. 

Some state-chartered credit unions 

have followed suit, feeling compelled 

to comply, while others have improved 

upon their training initiatives already in 

place. 

Fortney said passage of board 

compensation laws doesn’t necessarily 

represent a “tipping point,” but rather 

that “state systems continue to consider 

a variety of powers which will provide a 

viable and productive regulatory environment.” 

“With more states recently permitting 

director compensation, it suggests 

others will continue to consider this 

authority in the future,” Fortney said. 

“The fact that some states allow compensation 

highlights the diversity and 

innovation that are particular strengths of 

the credit union movement.” 

The editors of Credit Union Digest 

asked six state-chartered credit union 

CEOs for their opinion. Here’s what they 

said: 

Meriwest CU 

CEO: Chris Owen 

Assets: $1 billion 


Headquarters: San Jose, CA 

USE CU 

CEO: Jim Harris 



Headquarters: San Diego, CA 

This is a very difficult question—one I’m not sure I know the 

answer to. On one hand, paying board members would compensate 

them for the time and dedication they give us, plus the fiduciary 

responsibility of managing increasingly large institutions. 

Additionally, payment could attract a larger number of interested 

candidates with deeper business backgrounds, improving a credit 

union’s success. Our business, after all, is retail banking. 

The downside would be attracting individuals who were just there 

for the paycheck. We embody a unique credit union culture and 

“not for profit—but for service” philosophy. Those individuals who 

believe in it and live it every day tend to inhabit credit union boards, 

as well as their other volunteer organizations. Our credit union 

philosophy is a good thing, culturally, and that very culture is what 

attracts our current and future member-owners. 

One of the basic tenets of our industry has been the volunteer nature of 

our board of directors. This is an important distinction between credit 

unions and our for-profit competitors. We believe this volunteer nature 

attracts volunteers who are truly engaged and interested in what’s good 

for members rather than seeking a role that will provide personal financial 

remuneration. 

Also, given the continual taxation battle, anything that would give bankers 

ammunition, or legislators cause to tax credit unions, should be 

avoided. 

We’ve been successful in attracting quality volunteers and do not believe 

compensation would make us any more successful. 

Santa Cruz Community CU 

CEO: Elizabeth Carr 



Headquarters: Santa Cruz, 

CA 

The foundational model of our financial cooperative movement has a spirit of 

volunteerism and “member-owned” philosophy at its core. Board compensation— 

which is a change to the financial cooperative model—speeds the erosion of our 

movement and all that it represents to its members. 

I have heard others say that compensation would attract higher quality board members. 

However, for those members with passion who understand and believe in the credit 

union model, compensation is not a key factor of their engagement. 

Furthermore, a change of this nature should dictate a membership vote for approval. 

While being a credit union board member today means more personal liability and 

responsibility in light of regulatory scrutiny and unchartered economic times, it is, in my 

opinion, a noble and highly respected volunteer position. 


7

advocacy 

Why the Tax Fight Matters 

By David Creager, Manager of Grassroots Advocacy 

It’s tempting to assume credit 

unions and our not-for-profit tax 

status will be viewed as sacred 

in Congress, and therefore worthy of 

protecting. For decades, the movement 

has been seen as the “white hat” in 

the banking and lending world. 

The truth is, that’s not how legislation 

is made. 

If the world was seen through a 

black-and-white lens, and if Congress 

always voted in the interests of “the 

people,” we could simply show off the 

value credit unions give back to their 

members. We could easily promote the 

benefits credit unions offer our states 

and the country. 

The numbers don’t lie. Even during 

the depths of the financial crisis, 

credit unions were the only bright spot, 

lending to small businesses, keeping 

working families in their homes, and 

helping our economy recover from the 

damage inflicted by big banks. 

However, we now find ourselves 

fighting to convince Congress to keep 

the credit union tax exemption as part 

of the federal tax code. This is truly a 

fundamental and necessary struggle. 

Any crisis is full of alarmists and 

deniers. Some say Congress will surely 

tax us immediately, while others say 

Congress is dysfunctional and will 

never pass a tax-reform bill. 

The truth is somewhere in the 

middle. If Congress crafts a bill abolishing 

the credit union tax exemption 

and it fails to become law, we’re still 

in grave danger. The political tone 

would be set for the future. 

Congress moves slowly, but it is 

more likely to act if the rough framework 

for a deal exists. With a foundation in 

Urge Your Members to Act NOW 

Credit unions are reaching new heights as they engage 

their members in the California and Nevada Credit Union 

Leagues’ grassroots efforts, including the PAC Payroll 

Deduction Program (www.ccul.org/advocacy/pac), 

Connect For The Cause initiative 

(www.ConnectForTheCause.org), and “Don’t Tax My 

Credit Union” campaign 

(www.ccul.org/advocacy/donttax). 

Together, these tools increase credit unions’ voice in 

Washington, D.C. and ensure a robust political action 

program that helps elect friends of credit unions. They 

also prevent those who would tax and regulate credit 

unions out of existence from getting elected. 

If your staff is not engaged in ALL of these activities, 

please schedule an opportunity for the Leagues’ 

advocacy team to speak at your credit union. We can help empower you in the 

critical fi ght to preserve the essential benefi ts your members enjoy today. 

Please contact David Creager, manager of grassroots advocacy for the Leagues, 

with any questions or assistance at 916.325.1372 or dcreager@ccul.org. 

place, republicans and democrats could 

begin to bargain over the specifics within 

a bill to create a consensus. If credit 

unions are protected early in the process, 

we are more likely to ensure our safety in 

the future. If we are targeted, we’re more 

likely to see a continued threat. 

This is why the fight must take 

place NOW. Over several years, we’ve 

taken every opportunity to tell Congress 

about our millions of members, 

and how they will jump to our defense 

if credit unions are threatened. Now 

it’s time to show them we mean it. 

Credit unions have already reached 

out—many of them in unprecedented 

ways—to engage their employees and 

members in this fight. We can’t lose 

steam. Your members should be aware 

that Congress has the power to threaten 

the membership principles they value 

so highly. 

Remember that victory today 

means more victories tomorrow. The 

political capital we build in overcoming 

this battle could help us win on many 

issues like regulatory relief, member 

business lending, and supplemental 

capital in the future. 

All of those issues require political 

strength, so let’s not waste this pivotal 

opportunity to build that strength. 

Success comes from a strong political 

program. Only by growing our profile 

and gathering more access and influence 

on Capitol Hill can we permanently 

guarantee that credit unions 

will remain safe. 


legal 

A CU’s Permissible Use of Photographs 

By Thomas H. Wolfe, Managing Partner of Moore Brewer Wolfe Jones Tyler & North 

With the pervasiveness of 

digital photography and the 

sheer simplicity of posting a 

photograph online, it is more important 

than ever that credit unions are 

mindful of legal rights associated with 

a photograph before posting it to a 

website or social media platform. 

Two key considerations are copyright 

law and right-of-publicity law. 

Copyright Law 

Copyright is a protection created 

by law in “original works of authorship 

fixed in any tangible medium of 

expression.” 1 In general, it grants the 

owner the exclusive right to do (and 

authorize others to do) the following: 

• Reproduce the work. 

• Prepare derivative works. 

• Distribute copies to the public by 

sale, transfer, rental, lease, etc. 

• Perform or display the work publicly. 

It also includes the rights of attribution 

and integrity. 

Additionally, a photograph is subject 

to a copyright from the moment of 

its creation. Subject to certain exceptions 

and limitations, the legal protections 

exist, regardless of whether the 

owner identifies it with a “©” symbol. 

Licensing 

Before posting a photograph, a 

credit union should always take steps 

to verify whether the photograph is 

subject to a copyright, the owner of 

the copyright, and ensure that it has 

the necessary permission to use it 

without infringing. This can typically 

be accomplished through a licensing 

agreement. 

A license, however, may have a 

limited scope and should be reviewed 

carefully. For example, a license to use 

a photo in a specific print advertisement 

does not necessarily permit the 

posting of that same photograph to a 

social media page. 

Exceeding the scope of a license— 

either as to the nature of the use or the 

length of time such use is permitted— 

can result in infringement. 

Social Media Terms of Use 

Unlike a website, social media 

is a platform owned by a third party, 

and the use of that platform is subject 

to the terms of use established by the 

platform owner. For example, the Facebook 

terms of use presently state: 

“For content that is covered by intellectual 

property rights, like photos and 

videos (IP content), you specifically give 

us the following permission, subject to 

your privacy and application settings: You 

grant us a non-exclusive, transferable, 

sub-licensable, royalty-free, worldwide 

license to use any IP content that you 

post on or in connection with Facebook 

(IP License). This IP License ends when 

you delete your IP content or your account 

unless your content has been shared with 

others, and they have not deleted it.” 

Credit unions would need to ensure 

that they have the legal authority to grant 

these additional licensing rights before 

posting a copyrighted photograph. 

Right of Publicity Law 

California’s right-of-publicity law 

prohibits the knowing use of a person’s 

“name, voice, signature, photograph, 

or likeness, in any manner, on or in 

products, merchandise, or goods, or for 

purposes of advertising or selling, or 

soliciting purchases of, products, merchandise, 

goods or services...” without 

that person’s prior consent. 2 For a minor, 

consent would need to be obtained from 

the parent or legal guardian. 

When posting a photograph of 

an individual, or identifying them in 

connection with an event, it is essential 

to ask whether or not it could be 

construed as an advertisement. Per 

the statute, courts will consider as a 

question of fact whether or not the 

use was so directly connected with the 

What the Law Says 

Copyright (U.S. Code)—www.copyright. 

gov/title17/92chap1.html#101 

Publicity (California Civil Code)— 

www.leginfo.ca.gov/cgi-bin/displa 

ycode?section=civ&group=03001- 

04000&file=3344-3346 

commercial sponsorship or the paid 

advertising as to constitute a use for 

which consent is required. 

Failure to obtain prior consent, if 

required, could result in damages of 

$750 or the actual damages suffered 

due to the unauthorized use, whichever 

is greater, any profits attributable 

to the use, plus possible punitive damages 

and attorney fees and costs. 

Release 

As with a copyright license, a best 

practice is to obtain a carefully drafted 

and signed release from the individual 

authorizing any and all anticipated 

uses of their name, likeness, etc., 

including for advertising purposes, and 

specifically releasing the credit union 

from any liability or damages associated 

with such uses. 

Employees 

Employers utilizing a photo or 

likeness of an employee have somewhat 

greater flexibility, but not much. 

Where the use of a photo or likeness 

of an employee is only incidental, 

and not essential, for the purpose of the 

advertisement or publication in which 

it appears, the courts will recognize a 

rebuttable presumption that failure to 

obtain consent was not a knowing use. 

However, the use of a signed 

release can help to eliminate any 

uncertainty. 

1 

17 U.S.C. §101, et seq 

2 

Cal. Civ. Code §3344 


9

California & Nevada 

Credit Union Leagues’ 

2013 Annual Meeting 

& Convention! 

October 28–30 

Hyatt Regency San Francisco 

5 Embarcadero Center 

San Francisco, CA 

Jane McGonigal 

World-renowned alternate-reality 

games expert and New York Times 

bestselling author. Embrace new 

technologies to improve and 

solve real problems. 

Teddy Goff 

Social media mastermind and 

former digital director of the Obama 

for America 2012 campaign. 

Propel your credit union into 

the future with social media.

How Far Will You ? 

The credit union landscape is rapidly changing with new 

opportunities and challenges. Reach your potential with cuttingedge 

innovations and business practices that will reinvent your 

credit union’s membership and operations. 

Register at amc.ccul.org today! 

Don’t miss … PAC Golf Tournament | Annual RMJ Donor 

Recognition Gala | Redesigned Exhibit Area | REACHTalks 

Luke Williams 

Leading consultant and educator 

specializing in disruptive 

innovation. Rethink the way you 

do business and leverage new 

innovations to help you thrive. 

Dr. Neil Goldman 

Credit union visionary from 

Goldman Consulting & Strategy. 

Practical insights and 

practices to transform your 

credit union. 

*Speakers and scheduled events are subject to change.

feature 

SHARED BRANCHING 

By Matt Wrye, Associate Editor 

Visualize walking into any—yes, any— 

of the nearly 7,000 credit unions across 

America to deposit a check, withdraw 

cash, transfer funds, or make a loan 

payment like you were standing inside 

your own credit union. Is it achievable? 

Realistic? Or even practical? 

The executives behind CO-OP Shared Branching—a 

business entity of CO-OP Financial Services in Rancho 

Cucamonga, CA—believe this ambitious goal is attainable, 

or at least a version close to it. 

“This is our zenith, our biggest moment,” said Sarah 

Canepa-Bang, chief strategy officer of CO-OP Shared Branching, 

and president and COO of FSCC, LLC. “California is the 

canary in the mine shaft for a lot of things happening across 

the rest of the country. This state leads in every trend we see, 

so it’s table stakes here.” 

Time will tell whether the vision becomes a reality for 

the credit union industry’s biggest shared-branching network 

operator and largest credit union service organization. 

For now, dreaming will have to suffice, as dreams are 

often the first step to something greater. 

Dreaming the Dream 

A look at the potential for universal shared branching 

that leaves out CO-OP would be akin to discussing search 

engine websites and ignoring Google. 

CO-OP says almost 1,800 credit unions located in the 

United States, two U.S. territories, and four countries were 

paying to be on its shared branching platform at varying 

levels of participation as of mid-2013. About 5,000 shared 

branch outlets operate in the United States, with an additional 

2,000 non-branch self-service kiosks located mostly in 

select 7-Eleven convenience stores. 

The system’s reach is proliferate, with Canepa-Bang and 

others setting their eyes on an even bigger goal. 

“Wouldn’t it be great if we could tell every congressional 

legislator that their constituents can walk into any credit union 


and conduct their business?” she said. “It would 

show how credit unions are able to put aside their 

competitive differences and make consumers a 

priority. Banks could never do that.” 

As CO-OP Shared Branching ventures 

into new ideas and tweaks its network to 

reflect what credit unions need, California 

stands out. Changes and initiatives that work 

well in the Golden State, or don’t, are usually 

an omen of how other states will fare. 

“California leads in both the good and 

bad because we have so many credit unions 

and branches involved in shared branching 

here,” Canepa-Bang said, alluding to the 6.2 

million credit union members who have access 

to shared branching—about 64 percent of the 

state’s total member population. “Credit union 

members in this state ‘get it.’” 

After one giant acquisition and two enormous 

mergers over the past 11 years, CO-OP 

Shared Branching now manages the largest, 

most integrated credit union shared branching 

network on the planet. In the United States, 

about one in every four credit unions is a participant, 

forming what many consider a dynamic, 

progressive, cooperative wonder within the 

industry. 

With CO-OP Financial Services President 

and CEO Stan Hollen at the helm, the organization 

and its business units own a majority stake 

in both Credit Union Service Centers (CUSC), 

its eastern U.S. flank, and Service Centers 

Corp., the Midwest centerpiece, as well as a 

minority ownership within 24 local networks 

across several states. FSCC—the successful 

California-based component which was formerly 

Financial Service Centers Cooperative before 

its merger into CO-OP Financial Services—conducts 

CO-OP Shared Branching’s operations 

throughout the West. 

“The major challenge is making sure 

those in the industry see shared branching as 

valuable,” Canepa-Bang said. “Some credit 

unions aren’t convinced shared branching is 

worthwhile. We’re going to do our very best to 

convince them otherwise.” 

Branches Dwindle—Technology Rises 

If shared branching subsists on 

physical locations and some degree 

of human contact, then CO-OP has 

a vested interest in the number of 

branches the industry keeps open 

and how they’re designed. 

By 2023, between 30 and 

40 percent of financial institution 

branches across the nation 

will likely disappear, according to 

research by Celent. 

Bob Meara, Senior 

Analyst for Celent 

Sarah Canepa-Bang, Chief Strategy 

Officer of CO-OP Shared Branching, 

and President and COO of 

FSCC, LLC 

“Some credit 

unions aren’t 

convinced 

shared 

branching is 

worthwhile. 

We’re going 

to do our 

very best 

to convince 

them 

otherwise.” 

—Sarah Canepa- 

Bang, Chief 

Strategy Officer 

of CO-OP Shared 

Branching, and 

President and COO 

of FSCC, LLC 

feature 

“It will mostly be the bigger banks where the 

branch boom is going to bust,” said Bob Meara, 

senior analyst with the financial services consultation 

firm. “But the number of credit union 

branches are likely to shrink too.” 

Aside from that forecast, branches have 

remained the dominant sales channel, according 

to software developer and market research 

firm Bancography. A recent Bancography report 

shows total U.S. financial institution branches 

peaking in 2009 before starting to drop the 

next year, mostly due to large bank mergers. 

By 2012, about 118,000 branches existed, or 

one for every 1,000 households. 

In the credit union realm, total U.S. 

branches peaked at around 14,500 in 2011, 

falling to 13,700 by late 2012, according to a 

research paper jointly released earlier this year 

by the Credit Union National Association’s 

(CUNA) Operations, Sales and Service Council 

and Technology Council. Before 2012, branch 

inventory rose almost every year since 1989, 

a time when it was less than half of today’s 

number. 

Preceding the financial crisis and recession, 

the expense of maintaining a branch was 

bearable, even if it didn’t “break even.” 

Not anymore, Meara said. A costly regulatory 

environment, combined with subpar loan 

demand and low-interest margins, is forcing 

many credit unions to revolutionize their 

branch strategy and realign the number of 

branches they manage, how large those sites 

should be, and how they should operate. 

“Whether you’re a for-profit institution 

or not, the revenue side is challenged,” Meara 

said. “Banks and credit unions are looking at 

how to grow revenue and reduce space cost. 

So it’s appropriate to look at branches.” 

In addition to being an incubator for 

opening new accounts and pitching products, 

branches have sported countertops, computers, 

and customer service personnel for 

conducting simple transactions for several 

decades. 

That’s steadily changing as self-service 

kiosks and ATMs with sophisticated options at 

many credit unions are fulfilling those transactions. Even CO- 

OP has plunged into this market by offering its NextGen ATM 

to credit unions, which provides traditional ATM functions 

and also performs shared-branch transactions. 

“Credit unions, by a long shot, are way far ahead of similar-size 

community banks in these areas,” Meara said. What’s 

more, video banker ATM technology awaits wider implementation 

in the future for consumers who feel comfortable with 

ATMs but want human interaction. 

Shared branching’s “time has passed” for credit union 

members who find no reason to walk into a branch, Meara 

said. And for credit unions heavily invested in digital tablet 


13

feature 

and mobile phone capabilities, along with full-service ATMs, 

the per-transaction costs are being pushed significantly 

lower. 

For other members, shared branching is a 

valuable convenience and could remain so for 

quite some time. Any credit union considering 

jumping aboard the platform should 

consider the “expensive” cost and whether it 

can be leveraged by participating in revenue 

opportunities that CO-OP’s shared-branching 

nexus offers, Meara said. 

“It really comes down to integration costs,” 

he said, “and whether you’re getting clear 

signals from your membership that they can’t 

live without it.” 

Right Place, Right Time? 

If every branch was a shared branch, the 

entire credit union industry “might draw in 

some additional business,” according to Mark 

Reed, industry analyst for credit union consultant 

Callahan and Associates. More cooperative 

value could possibly be generated systemwide. 

“It’s a great idea, but you have to get 

everyone involved to make it happen,” Reed 

said. “There are a lot of up-front costs for any 

credit union to get started, but there’s also a 

long-term benefit.” 

Reed points to an extensive CO-OP Shared 

Branching analysis that Callahan completed 

in 2012, which reviews balance sheet metrics 

of different-sized credit unions and includes 

CEO interviews. Shared branching has worked 

extremely well at some credit unions and not 

as well at others. 

So what’s one of CO-OP’s core selling 

points? A credit union can partially offset its 

costs—or sometimes fully offset, or even come 

out ahead—by becoming both an “issuer” and 

“acquirer.” 

In shared branching’s most basic form, the 

issuer pays each acquirer in the system every 

time an issuer’s member receives transaction 

services from an acquirer branch. Going a step 

further, an issuer also has the option of designating 

its own branches, and how many, as 

acquirers. It’s a unique structure 

the banking industry hasn’t touched. 

Naturally, pros and cons arise, 

the Callahan report shows. At one 

extreme, shared branching is a Godsend 

for certain employee-group 

credit unions. Members who don’t 

live close to their jobs, where the 

nearest branch is usually situated, 

can handle transactions at a different 

credit union closer to home—an 

Mark Reed, Industry Analyst for 

Callahan and Associates 

acquirer. In return, the fees 

acquirer branches earn can 

Craig Beach, President and COO 

of CO-OP Shared Branching and 

Credit Union Service Centers 

(CUSC) 

“Banks 

are turning 

up their 

customer 

service and 

implementing 

better 

management 

systems. If we 

don’t keep 

our edge, 

we’ll lose it.” 

—Craig Beach, 

President and 

COO of CO-OP 

Shared Branching 

and Credit Union 

Service Centers 

(CUSC) 

sometimes amount to a handsome pot by year’s end. The situation 

is rewarding for credit unions on both sides of 

the transaction. 

Another benefit: A member belonging to 

several credit unions can complete transactions 

between those institutions during a single visit 

to an acquirer, as long as those credit unions 

are all connected through shared branching. 

At the other extreme, long teller lines 

during high-traffic periods at an acquirer can 

infuriate members of that credit union, especially 

if they know non-members are causing the delay. 

The potential also exists for acquirers to 

“steal” non-members, whether intentionally or 

not. Although CO-OP has rules against acquirers 

directly soliciting non-members, those 

guests are still surrounded by the acquirer’s 

marketing and promotional messages. 

CO-OP is “certainly aware” of those issues, 

said Craig Beach, president and COO of CO- 

OP Shared Branching and CUSC. It routinely 

monitors acquirers through a secret-shopper 

program to help enforce the rules. 

Perhaps some credit unions in the same 

footprint haven’t subscribed to shared branching 

because they contend for the same local 

market share. 

“There are certainly pockets where there 

is competitiveness among credit unions, and 

maybe it hinders them from joining,” Beach 

said. “But I would make the case that you can’t 

not afford to come onto shared branching, 

because you can’t compete with a network of 

nearly 5,000 branches. And in reality, our competition 

isn’t between each other. It’s with the 

other 94 percent of the market—the big banks, 

regional banks, and community banks.” 

Sometimes the greatest hurdle to coming 

onto CO-OP’s system is data processing 

costs. “There’s certainly some concern about 

your data processor blowing up,” Beach said. 

“Those are issues we are consistently working 

on.” 

Another potential barrier is regulatory 

compliance and risk-taking, said Mary-Lou 

Heighes, president of Compliance Plus. Transaction 

record-keeping and 

reporting requirements under the Bank 

Secrecy Act (BSA), as well as policies 

encouraged under the Trea- 

sury 

Department’s Office of Foreign Assets 

Control (OFAC), can pose learning 

curves 

and extra work. 

“Shared branching can be 

good for members, but I’m not sure 

credit unions 

fully understand the larger risk impli- cations that it 

creates,” Heighes said. 

In most instances, an 

Mary Lou-Heighes, President of 

acquirer credit union’s 

Compliance Plus 


staff should make sure the issuer credit union has completed 

appropriate due diligence on the member who walked into 

the shared branch for services, depending on the transaction. 

The added steps aren’t mandatory, but considered a safe 

procedure. 

“I sometimes question shared-branching users’ costbenefit 

analysis,” Heighes said. “If it takes a while for a staff 

person to complete a Currency Transaction Report, that’s time 

and money. Acquirers might make extra money, but sometimes 

their back-office resources aren’t taken into account.” 

Shared branching isn’t impossible to maintain, but these 

potential obstacles “are just one more thing to think about,” 

Heighes said. 

Looking beyond the challenges, Beach said every credit 

union across the country would need to collaborate within 

their own regions, and together, for nationwide shared 

branching to materialize. 

“And frankly, data processors would need to crack open 

the door a little bit to help credit unions get that accomplished,” 

Beach noted, saying that widespread cooperation is 

a tough prospect. 

“If credit unions were absolutely sold that this could help 

them grow for the future and leverage the industry’s cooperativeness, 

then it can be done,” he added. “Banks are turning 

up their customer service and implementing better management 

systems. If we don’t keep our edge, we’ll lose it.” 

The ‘Greater Good’ 

Although Wescom CU isn’t on the CO-OP Shared Branching 

network anymore, CEO Darren Williams supports CO- 

OP’s drive to bring credit unions together. A different strategy 

might be warranted, though. 

“One option is to only go 

after credit unions where shared 

branching really makes sense, 

which might be one of several 

ideas CO-OP has already considered,” 

Williams said. “You’re 

going to find a number of credit 

unions where, for various reasons, 

their strategies don’t dictate 

expansion of their branch network, 

whether it’s proprietary or shared.” 

Darren Williams, CEO of 

Wescom CU 

feature 

Wescom began aggressively expanding its branch 

network in the early 2000s, including grocery store locations. 

The opportunity seemed ripe for eight of these in-store 

branches to become acquirers, so Wescom entered FSCC’s 

network. 

There was one problem. Very few Wescom members 

were using shared branching at other credit unions, and 

meanwhile, acquirer transactions from non-Wescom members 

at those eight supermarket branches were skyrocketing. 

“We were going to have to expand our teller line capacity 

at those stores just because of the higher volume from 

guest members who came in during their lunch hour or 

on Saturday,” Williams said. “We were making a little fee 

income, but it wasn’t the business we wanted to be in. We 

had to withdraw as a shared branching participant because it 

started impacting our member service objectives.” 

Compare Wescom’s story to Vons Employees FCU and a 

varying perspective unfolds. Because Vons Employees’ membership 

is spread out across Southern and Central California, 

shared branching has been essential to increasing and maintaining 

a healthy number of checking accounts. 

“It allows our members to look at us as their primary 

financial institution, tying them into debit cards, credit cards, 

auto loans, courtesy pay, and other products and services,” 

said CEO Steve Weakley. “It creates a synergy. It’s a win-win 

situation.” 

A part of the system for almost 10 years, most Vons 

Employees FCU locations are acquirers, making shared 

branching “very valuable,” Weakley said. 

On the issuer side, the credit 

union’s 41,000 members complete 

about 30,000 transactions per 

month at shared branches. Shared 

branching “builds our brand and 

convenience,” giving the credit 

union a good shot at competing 

with Chase, Wells Fargo, and Bank 

of America. 

“It’s also part of that bigger 

concept,” Weakley said. “Credit unions 

Steve Weakley, CEO of 

cooperate—it’s what we do. Shared 

Vons Employees FCU 

branching allows us to cooperate on a 

grand scale for the greater good of the movement.” 

CO-OP Shared Branching Snapshot (April 2013) 

Credit Unions 

Credit Union Members 

Shared Branch 

Locations 

Issuer/Acquirer 

Breakdown* 

California 

139 (35% of all CA CUs) 

6.2 million (64% of all CA 

members) 

392 (29% of all CA 

branches) 

43% are issuers; 

57% are issuers/acquirers 

Nevada 

5 (28% of all NV CUs) 

120,000 (36% of all NV 

members) 

34** (58% of all NV 

branches) 



United States 

1,728 (25% of all U.S. CUs) 

47.6 million (50% of all 

U.S. members) 

4,860 (35% of all U.S. 

branches) 



* A credit union must first participate as an "issuer." Only then does it have the option to designate any of its branches as "acquirers." 

** This Nevada shared-branch location count includes branches owned by out-of-state credit unions. 

Source: CO-OP Financial Services 


15

economic perspective 

The Good, the Bad, and the Promising 

By Dwight Johnston, Vice President and Chief Economist 

The mid-year job creation reviews 

for California and Nevada were 

recently published, with California 

meriting a B and Nevada improving 

from an F to a C+. 

The unemployment rate for California 

has declined from a peak of 12.4 

percent to 8.6 percent, and Nevada is 

down from 14 percent to 9.6 percent. 

But the unemployment rate calculation 

is taken from the household survey, 

which is narrow and includes “selfemployed.” 

A better picture can be gleaned 

from the nonfarm payroll survey of 

larger businesses. 

The California Scene 

California lost approximately 1.4 

million jobs, but recovered 700,000. 

What the table does not show is how 

consistent the uptrend has been since 

it began in earnest in late 2011. 

The first sector of strength is in 

“business/professional.” That sector, 

which is heavily influenced by the 

growth in the technology sector, has 

not only recovered the lost jobs, but 

hit a new high of employment. 

The trade and transportation 

sector still has a distance to go to full 

recovery. It started recovering late in 

the game. It has been a steady performer 

since early 2012. 

Other sectors—including hospitality 

and leisure, and private education 

and health care—experienced little to 

no deterioration in jobs and are setting 

new highs. These should remain 

steady performers going forward. 

The failures are in manufacturing 

and government jobs. Manufacturing 

not only lost jobs in the last recession, 

it’s been in a steady decline 

since 2001. Given the state’s business 

climate, this sector shows no promise 

now or in the near future. While the 

state’s improved budget has prevented 

a continued slide in the manufacturing 

sector, no improvement is in the 

forecast. 

California 

Total Jobs in California and Nevada * 

The construction sector holds the 

most promise for better performance. 

The recovery from the low has not 

been impressive despite improvement 

in the housing market and evidence of 

new construction. This area should be 

able to make significant strides in the 

months ahead. 

With the exceptions noted, it 

seems all major job sectors will 

steadily improve. The only real risk to 

a steady pace of job growth is a global 

slowdown. 

California’s two job recovery 

leaders, technology and trade, are also 

the most vulnerable sectors to any 

significant slowdown. The tech sector’s 

greatest vulnerability would be 

from falling business confidence if the 

stock market retreats significantly or 

becomes unsettled. 

The trade sector’s greatest vulnerability 

is a decline in the Chinese 

economy and Asia in general. If you 

start hearing about a serious Chinese 

economic slowdown, you can count on 

a hit to the trade sector in California 

and the nation. 

High (2006) Low (2009-2011) May 2013 

Total Non-farm Payrolls 15.2 million 13.8 million 14.6 million 

Construction 945,000 545,000 619,000 

Manufacturing 1.49 million 1.23 million 1.24 million 

Trade/Transportation 2.92 million 2.6 million 2.74 million 

Business/Professional 2.27 million 2 million 2.3 million 

Government 2.52 million 2.36 million 2.37 million 

Nevada 

Total Non-farm Payrolls 1.3 million 1.11 million 1.15 million 

Construction 146,000 50,000 50,000 

Hospitality/Leisure 340,000 308,000 324,000 

Trade/Transportation 235,000 209,000 222,000 

Business/Professional 162,000 133,000 144,000 

Government 163,000 148,000 151,000 

* Sub-categories are a part of total nonfarm payrolls 

Source: U.S. Bureau of Labor Statistics 

Nevada: Simpler Numbers 

Nevada lost almost 200,000 jobs 

during the recession and did not hit 

bottom until the second half of 2012. 

Nevada’s recovery of 50,000 jobs 

trails all other states on a per-capita basis. 

A late start to the state’s recovery helps 

explain this fact. The most important job 

sector is leisure and hospitality, and the 

recovery in this arena should be steady 

without any significant economic shock. 

There are also some proposals to 

restart construction on “the strip” in 

downtown Las Vegas. The construction 

sector would certainly benefit from 

this, but a real improvement is likely 

years in the future. 

Playing Catch-Up 

A look at the areas where growth 

is the weakest, the best, and sectors 

that are the most promising in either 

state can hopefully give credit union 

leaders a clearer view on the employment 

scene as they plan for the future. 

Just remember: California and 

Nevada were the last states to pull out 

of the recession. It’s catch-up time. 


market performance 

Are Credit Unions Off Their Game? 

By Dwight Johnston, Vice President and Chief Economist 

For the past 10 years or longer, California 

and Nevada credit unions 

have maintained loan-to-share 

ratios at or above the national average. 

In fact, the loan-to-share ratio in 2008 

for credit unions in both states was 85 

percent compared to 79 percent for credit 

unions nationwide. 

The tide started turning in 2009, and 

now California and Nevada credit unions 

are reporting a loan-to-share ratio of 59 

percent compared to the national ratio of 

66 percent. That gap hasn’t narrowed. 

Missing the Boat? 

The recession hit California and 

Nevada disproportionately harder than the 

United States, leading to less demand for 

loans. Additionally, many credit unions 

out West were forced into survival mode. 

Then the recovery sputtered into 

gear across the country. Despite this, 

loan demand appears to be lagging in 

California and Nevada. 

Is that really the case? Or are California 

and Nevada credit unions missing 

the boat? 

The Credit Union Loan Comparison 

table shows a few key comparisons 

of U.S. credit unions versus those in 

California and Nevada. From first quarter 

2012 to first quarter 2013, national loan 

portfolio growth was 5 percent, but only 

1.1 percent for California and Nevada. 

However, in total loans originated, 

California and Nevada equal the national 

pace (14.4 percent). This discrepancy in 

loan originations versus portfolio growth 

can be found in mortgage loans originated 

and sold. California and Nevada credit 

unions have sold 71 percent of first mortgage 

originations versus about 58 percent 

nationally. 

There are two reasons for this. The 

average mortgage balance throughout 

the West is much larger than the 

national average, limiting the number of 

single mortgages credit unions are willing 

to put in portfolio. 

But the key reason is current exposure 

to mortgages. Total real estate loans 

(first mortgages and other real estate 

lending) made up about 65 percent of 

all loans at California and Nevada credit 

unions in first-quarter 2013. Nationally, 

the exposure is about 53 percent. Credit 

unions across the nation simply have 

more room to add to mortgage portfolios 

than those in California and Nevada. 

California and Nevada credit 

unions can also take heart in their 

average member relationship. The average 

(which includes loans and shares 

divided by the number of members) for 

both states is almost $20,000 compared 

to the national average of nearly 

$16,000. 

The Auto-Loan Outlier 

After taking into account the reason 

for loan growth differences due to mortgages, 

we don’t appear to be lagging the 

nation in most areas. The only outlier is 

auto loans. 

In the Auto Loans-to-Members Ratio 

chart, it seems we are losing momentum. 

Credit unions added a significant 

Credit Union Loan Comparison 

(First Quarter 2013) 

California and 

Nevada 

National 

Loan Portfolio Growth (1Q 2012 - 1Q 2013) 1.1% 5% 

Loan Origination Growth (1Q 2012 - 1Q 2013) 14.4% 14.4% 

Percentage of First Mortgages to All Loans 52% 41.5% 

Percentage of Other Real Estate Loans to All Loans 13.4% 12% 

Percentage of Mortgage Originations Sold 71% 58% 

20% 

15% 

10% 

Mar-2003 

Mar-2004 

Mar-2005 

Mar-2006 

Source: Callahan and Associates 

Auto Loans-to-Members Ratio 

Auto Loans-to-Members Ratio 

U.S. Credit Unions 

Mar-2007 

Mar-2008 

Mar-2009 

Mar-2010 

CA and NV Credit Unions 

Mar-2011 

Mar-2012 

Mar-2013 

number of members over the past two 

years, which would lower the percentage 

of members who take out auto loans 

and explain the downward trend. Then 

again, so have credit unions nationally. 

Additionally, credit unions have 

been offering competitive rates. But for 

some reason, California and Nevada are 

slipping. 

Examine the ‘Why’ 

I don’t have the answer. But if your 

credit union is experiencing a loss of market 

penetration, it’s time to examine why. 

Have you devoted so many resources 

to mortgage lending that you’ve let auto 

lending efforts slide? Have you really 

communicated in every way possible how 

competitive your rates are? This is something 

you need to examine and not just 

dismiss by saying, “Oh, it’s the economy.” 

Overall, California and Nevada credit 

unions are doing a good job of providing 

products and services for members 

despite some lagging numbers. Maybe 

we just need more time. 


17

asked & answered 

Shared Branching and CTR Filings 

By Clarissa Martin, Research and Information Consultant 

Asked: Who is responsible 

for filing a Currency 

Transaction Report (CTR) if the 

transaction is conducted at a 

shared branch? 

Answered: Technically speaking, 

both the shared branch and the 

home credit union are required 

to file a CTR. However, to avoid 

unnecessary duplicative reporting, the 

Financial Crimes Enforcement Network 

(FinCEN) requires that only one report 

be filed for the same transaction. 

The rule regarding a financial institution’s 

obligation to file a CTR provides 

that 1 : “Each financial institution 

other than a casino shall file a report of 

each deposit, withdrawal, exchange of 

currency or other payment or transfer, 

by, through, or to such financial institution 

which involves a transaction in 

currency of more than $10,000.” 

Handling CTRs at Shared 

Branches 

The following tips are provided as 

a guide to help ensure CTRs filed at a 

shared branch are completed properly. 

The term “Acquirer/Outlet” represents 

a credit union or branch office 

conducting a transaction for someone 

who is not a member or accountholder. 

The term “Issuer/Host” refers to a credit 

union which the member belongs to. 

• The shared branch contract and 

user guides should spell out Bank 

Secrecy Act (BSA) responsibilities 

between the “home” credit union 

and the shared branch. Review 

the agreement and user’s guide 

for those responsibilities. 

• The home credit union should 

obtain a copy of the CTR from 

the shared branch and review 

it for accuracy. If the CTR is 

not accurate, then the home 

credit union will need to file an 

amendment. 

• Credit unions should keep a log 

of all cash transactions from 

shared branches that are more 

than $10,000 to ensure CTRs are 

being filed. 

• When there is one Issuer/Host 

credit union, the Acquirer/Outlet 

location would complete all 

sections of the report, sign the 

report, file the report with Fin- 

CEN, and fax the report to the 

Issuer/Host credit union. 

• When there are multiple Issuer/ 

Host credit unions, the Acquirer/ 

Outlet location would complete 

all sections of the report, sign the 

Three Relevant Examples 

report, file the report with Fin- 

CEN, and fax the report to each 

of the Issuer/Host credit unions. 

• When there is one Issuer/Host 

credit union and multiple outlet 

locations (or a single Acquirer/ 

Outlet location with transactions 

for one Issuer/Host credit union 

conducted at different times), 

the Issuer/Host credit union will 

complete all sections of the CTR 

report, sign the report, and file it 

with FinCEN. 

1 

31 C.F.R. §103.22(b) 

The following CO-OP Shared Branching User’s Guide from April is for transactions where there 

is one Issuer/Host credit union. 

• Example 1: A member of Credit Union A conducts transactions at Outlet X that would 

require a CTR. 

The Acquirer/Outlet owner is responsible for obtaining the information necessary to 

complete the CTR; preparing the CTR at the time the guest member makes the cash 

transaction; fi ling the CTR directly with the Internal Revenue Service (IRS); faxing the 

completed CTR to the Issuer/Host credit union; and retaining the original CTR for the time 

required by the regulation. 

The Issuer/Host credit union retains a copy of the CTR for the time required by the regulation. 

• Example 2: A member of Credit Union A conducts transactions at Outlet X and Outlet 

Z; or the transactions are made at Outlet X and Outlet X at different times, where, when 

combined, would require a CTR. 

The Issuer/Host credit union (A) is responsible for aggregating transactions at multiple 

Acquirers/Outlets—or at single Acquirers/Outlets when the transactions are not 

completed at the same time—as well as completing a CTR when required and fi ling the 

CTR directly with FinCEN. 

It is the Issuer/Host credit union’s responsibility to comply with federal regulations and 

aggregate transactions to fi le a CTR for transactions occurring at multiple locations within 

the same day (a branch of the Issuer/Host credit union, shared branches, ATMs, etc .). 

• Example 3 (transactions when there are multiple Issuers/Host credit unions): A member 

of Credit Union A and Credit Union B conducts transactions at Outlet X in accounts at both 

Credit Union A and Credit Union B that, when combined, would require a CTR. 

The Acquirer/Outlet owner is responsible for obtaining the information necessary to 

complete the CTR; preparing the CTR at the time the guest member makes the cash 

transactions; filing the CTR directly with FinCEN; faxing the completed CTR to the Issuer/ 

Host credit unions; and for retaining the original CTR for the time required by the regulation. 


esearch & information 

Social Security Card Curveballs 

By Arnold Ramirez, Research and Information Consultant 

In the credit union industry, Social 

Security numbers are commonly 

used to help identify individuals 

and report information about the individual 

to credit reporting agencies. 

Occasionally, credit unions are 

presented with Social Security cards 

that are labeled “VALID FOR WORK 

ONLY WITH DHS AUTHORIZATION” 

or “NOT VALID FOR EMPLOYMENT,” 

where “DHS” stands for Department 

of Homeland Security. Although these 

labels indicate the Social Security card 

was issued with certain restrictions, 

the restrictions have no effect on a 

credit union’s ability to provide services 

to the individual presenting the 

Social Security card. 

Credit unions should still recognize 

that the label indicates the individual 

may be residing in the country 

on a temporary basis. 

The following points are a few 

things to consider when deciding 

whether to provide services to individuals 

with specially marked Social Security 

cards with either of these labels. 

(Please note that some Social Security 

cards are marked with “For Work Purposes 

Only,” which pre-dates formation 

of the Homeland Security Department). 

Types of Social Security Cards 

The Social Security Administration 

issues three types of Social Security 

cards. All cards show the individual’s 

name and Social Security number, and 

all are used to track the individual’s 

earnings and benefits paid under the 

Social Security program. 

• The first type shows the name 

and Social Security number and 

lets an individual work without 

restriction. It is issued to U.S. 

citizens and people lawfully 

admitted to the United States on 

a permanent basis. 

• The second type shows the 

name and number and notes, 

“VALID FOR WORK ONLY WITH 

DHS AUTHORIZATION,” and is 

issued to people lawfully admitted 

to the United States on a 

temporary basis who have DHS 

authorization to work. 

• The third type shows the name 

and number, and notes, “NOT 

VALID FOR EMPLOYMENT.” It 

is issued to people from other 

countries who are lawfully admitted 

to the United States without 

work authorization from DHS, 

but with a valid non-work reason 

for needing a Social Security 

number; or who need a number 

because of a federal law requiring 

a Social Security number to 

receive a benefit or service. 

Regulation B 

Requesting information about a 

loan applicant’s residency status may 

be a violation of Regulation B §1002.5 

(b). Under this provision, a creditor 

is generally not permitted to inquire 

about the national origin of an applicant 

or any other person in connection 

with a credit transaction. 

However, if the applicant volunteers 

the information, the credit union 

may consider the information as long 

as it does not discriminate against the 

The Basics 

The Social Security number was 

originally devised to keep an accurate 

record of each individual’s earnings, 

and to subsequently monitor benefi ts 

paid under the Social Security program. 

Over time, use of the Social Security 

number as a general identifi er grew 

to the point where it became the 

most commonly used and convenient 

identifi er for all types of record-keeping 

systems in the United States. 

applicant on a prohibited basis (Regulation 

B §1002.6 (a)). 

This regulation does provide that 

the immigration status information 

may be used to ascertain the credit 

union’s rights and remedies regarding 

repayment (Regulation B §1002.6 (b)). 

According to the official interpretation, 

the applicant’s immigration status 

and ties to the community (such as 

employment and continued residence 

in the area) could have a bearing on a 

creditor’s ability to obtain repayment. 

Thus, the credit union may consider 

immigration status and differentiate 

between a noncitizen who is a longtime 

resident with permanent resident 

status and a noncitizen who is in the 

country on a temporary basis. 


19

credit union solutions 

CUDL Drives CU Auto Loan Activity 

During the past three years, more 

than 350 credit unions have 

implemented CUDL’s programs 

to help grow their auto loan portfolios. 

SAFE CU is one of those credit unions. 

“In 2011, we (SAFE) were looking to 

develop an online auto-buying program 

that would make it easier for our members 

to get pre-approved for their next auto 

loan from the comfort of their homes,” 

said Tarrah Palomino-Prim, assistant vice 

president of web services for SAFE CU. 

“We developed a specialized onboarding 

program that goes hand in hand with 

CUDL’s seamless SMART Approval application 

process.” 

The SMART Approval Appeal 

CUDL’s SMART Approval program 

streamlines the loan application process 

by providing access to convenient online 

pre-approval application and loan decision 

processes that run directly through a credit 

union’s website. 

Members can also easily apply for 

a loan via the AutoSMART Mobile App. 

Once a loan application has been submitted, 

an immediate decision is made. 

The Numbers 

• More than 77 percent of CUDL 

pre-approved members finance their 

autos through their credit union. 

• CUDL has helped fund $291.3 million 

in auto loans to credit union members 

through its pre-approval programs 

since 2009. 

Why Pre-Approval Campaign 

Manager? 

Through CUDL’s Pre-Approval Campaign 

Manager program, credit unions 

can capitalize on a comprehensive 

vehicle financing strategy that integrates 

pre-screened data into the CUDL system 

to ensure members receive their credit 

union’s marketed loans and rates when 

they go to the auto dealership. 

In addition, since a member has 

already been pre-screened and preapproved, 

there is no need for a dealership 

to run a credit report, saving credit 

unions and their members valuable time 

and money. 

“When we started our initial beta 

program, we weren’t sure what to 

expect, but we were hopeful we could 

achieve higher success,” Palomino-Prim 

said. “Our beta program performed so 

well that it quickly became a best practice 

within the online channel.” 


21

Compliance: A New 

Approach? 

“Credit unions have been 

worried about a ‘one-sizefits-all’ 

approach being 

‘the norm’ at the NCUA. 

Actually, we are seeing 

this at the CFPB. The 

‘credit union difference’ 

makes no difference 

to the CFPB.” 

Closing 

Thoughts 

By Greg Badovinac 

Compliance Officer, Western FCU 

Recently, I attended the American 

Bankers Association’s Regulatory 

Compliance Conference in 

Chicago. There were a few of us credit 

union folks among the 1,600 bankers 

attending this sold-out event. 

My “large” credit union would 

have been considered a small bank (if 

a bank). Thus, I tried staying in the sessions 

for small banks. After all, no credit 

union is close to the $100 billion or $1 

trillion asset size of the biggest banks. 

The sessions dealt with compliance 

issues that all financial institutions are 

facing: new mortgage banking regulations 

effective in January; anti-money 

laundering; a new examination focus; 

and customer due diligence. 

Two sessions that stuck out in 

my mind dealt with managing evolving 

compliance risk and dealing with 

Unfair, Deceptive, and Abusive Practices 

(UDAAP). Both of these areas apply to 

banks and credit unions, but they each 

deal with them differently. 

UDAAP is the catch-all that can be 

used by regulators and the courts if a 

financial institution is not dealing in a 

fair-and-square manner with consumers. 

It is a part of the National Credit Union 

Administration’s (NCUA) regulations, 

but hasn’t been in the agency’s focus. 

To banks, “evolving compliance 

risk” is essentially enterprise risk management. 

Banking regulators demand 

that banks have their hands around all 

aspects of risk in the institution—risk 

from deposit products, risk from lending 

products, regulatory compliance risk, 

credit risk, and business-focus risk. 

Even banks in the $1.5-$2 billion 

asset range have dedicated people and 

software to monitor and filter risks that 

pose issues for management and regulators 

quickly. 

Banks are required to have boardapproved 

policies on UDAAP and an entire 

program dealing with preventing practices 

that could be considered unfair or deceptive. 

Another aspect of the UDAAP program 

is the procedural process for dealing 

with consumer complaints, which 

ends with maintenance of responses to 

those complaints. 

I know many of you are saying, 

“Yes, but those are banks. Credit unions 

are different.” 

Not really. Banks and credit unions 

have similar, perhaps identical, regulations 

in dealing with many regulatory 

or compliance requirements. And at the 

end of the day, banks and credit unions 

want happy consumers who enjoy 

dealing with them and will bring back 

additional business. 

Please remember we have a new 

overarching factor: the Consumer Financial 

Protection Bureau (CFPB). After a 

rough start and continual senior management 

turnover, the CFPB is on to its 

next stage of regulatory “improvements 

to protect consumers.” The last thing 

that CFPB wants to explain to Congress 

is how consumers are not being treated 

“fairly” by financial institutions because 

of its inaction. 

We have seen through the implementation 

of international money remittance 

and mortgage regulations that 

the CFPB doesn’t distinguish between 

the Bank of Americas, Citibanks, local 

community banks, and credit unions. 

For the bureau, a financial institution is 

a financial institution. 

Credit unions have been worried 

about a “one-size-fits-all” approach 

being “the norm” at the NCUA. Actually, 

we are seeing this at the CFPB. The 

“credit union difference” makes no difference 

to the CFPB. 

We should expect to see the effects of 

a stronger CFPB in our examinations from 

NCUA and state regulators. The CFPB will 

be calling the shots on consumer protection 

regulations. Granted, we have a short 

CFPB history—but past performance is a 

guarantee of future performance. 

Thus, we can expect the new regulator 

to treat credit unions like banks, 

holding us to their standards. 

Are we getting ready for the new 

sheriff in Washington, D.C.? 



23

California and Nevada Credit Union Leagues 

P.O. Box 51476 | Ontario, CA 91761-0076

SHARED BRANCHING

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