Division of Credit Unions

Bulletins 1999

DCU Bulletin

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8701 FAX: (360) 704-6901

January 12, 1999 
No. B-99-1

Division Repeals MBL and Appraisal Rules

Repeal - MBL Rules. The Division has repealed its member business loan (MBL) rules, Chapter 208-464 WAC, effective February 28, 1999. However, the Division has initiated a separate rule-making to adopt a new set of MBL rules.

State credit unions must continue to comply with the NCUA rules on MBL, unless the NCUA determines that our new MBL rules adequately minimize risk. See NCUA rules at 741.203, and criteria for the determination at 723.20. The Division intends to submit its new MBL rules, after final adoption, to the NCUA for such a determination. If the NCUA reaches such a determination, state credit unions will no longer be subject to the NCUA's MBL rules. Nonetheless, state credit unions will continue to be subject to the MBL limitations in the Credit Union Membership Access Act (H.R. 1151).

Notwithstanding the repeal of the Division's MBL rules, the Division has taken the position that as a matter of safety and soundness the aggregate amount of a credit union's MBL, as defined by the Federal Credit Union Act, may not exceed an amount equal to 3 times its reserves, without the written permission of the Division.

New MBL Rules. As indicated above, the Division has initiated a separate rule-making to adopt new MBL rules. The Division believes that more flexible MBL rules can be crafted which will allow credit unions to better serve the needs of their members while also protecting the safety and soundness of these institutions.

The Division will use the NCUA's MBL rules as a starting point for drafting the Division's new MBL rules. See the NCUA's new MBL rules at Part 723, recently amended at 63 Federal Register 51793, 51802, September 29, 1998.

Interested parties should provide comments to the Division on which provisions of the NCUA's MBL rules should be amended or deleted, and what new provisions should be added, for the purpose of drafting the Division's new MBL rules.

Repeal - Real Estate Appraisal Rules. The Division has repealed its real estate appraisal rules, Chapter 208-480 WAC, effective February 28, 1999.

However, state credit unions must continue to comply with the NCUA rules on real estate appraisals, at Part 722. See NCUA rules at 741.203.

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8791 FAX: (360) 704-6991

January 14, 1999
No. B-99-2

Year 2000 (Y2K) Liquidity/Currency and Communication Plans
DCU’s Y2K Update #9

Credit unions must consider Y2K contingencies and plan to have adequate liquidity and currency through the first quarter of 2000. Your liquidity/currency demands during this time period will also be affected by your communication with your members on Y2K. Credit unions should consider each of these three elements (liquidity, currency, and communication) in their written Y2K-related plans.

This Bulletin is intended to provide guidance as you develop your liquidity/currency and communication plans. The Board of Directors of your credit union should approve your plans and any revisions to them. The Board should review your plans on a regular basis through the first quarter of 2000.

Background Information

While the Federal Reserve (Fed) believes that there will be no serious problems with financial institutions or ATMs being able to dispense currency in connection with Y2K, the Fed is planning to have additional currency available as a precautionary measure. The Fed has informally estimated that each of the 70 million households in the U.S. may withdraw an average of $462 in currency to purchase such necessities as gas and food.

There is approximately $460 billion of currency in circulation at the present time. The Fed has announced that it will increase its $150 billion currency reserve by $50 billion by the fourth quarter of 1999.

In addition, the Fed has the option to implement the following procedures:

• Speed up the turnaround time for returning currency to the banking system by adding additional workers and shifts at the twelve Federal Reserve Banks.
• Order the Bureau of Engraving to print $20 and $50 bills instead of $1, $5, and $10 bills.
• Allow worn currency to remain in circulation longer than normal.

This process is not new for the Fed. It has increased currency reserves in the past on a regional or local basis, such as when a natural disaster has forced citizens to temporarily conduct personal business with currency.

Communication

Member confidence is important to your credit union. We expect each credit union to promote member confidence through on-going communication regarding the Y2K issue.

Credit Union Action

By March 1, 1999, each credit union should (if it has not already):

1. Adopt a communication plan which addresses, at a minimum: on-going communication with members regarding Y2K, and identification and training of staff to handle member and media inquiries on Y2K. You should consider the potential for litigation based upon your representations.
2. Adopt a liquidity/currency plan. Your credit union should develop and document a variety of Y2K withdrawal estimates (at least a high, low, and most likely) based upon assumptions that are reasonable for your credit union. You should adjust your liquidity/currency plan as appropriate if 1999 withdrawals are significantly different than your Y2K estimate. (The frequency of ATM servicing in late 1999 should also be re-assessed, as necessary.)
3. Arrange adequate liquid assets and borrowing capacity to meet the anticipated withdrawals. At the least, each credit union should arrange an adequate collateralized or guaranteed line of borrowing through a corporate, the Federal Reserve Bank, or the Federal Home Loan Bank.
4. Arrange for access to adequate amounts of currency under your Y2K withdrawal estimate.

Failure to take these actions may be considered an unsafe and unsound practice.

Credit unions should keep the Division informed should media attention or member withdrawals exert unreasonable pressures on the credit union.

We will be reviewing each credit union’s liquidity/currency and communication plans as part of our exam process. Our review will include the items noted above.

Estimating Liquidity/Currency Needs

Unfortunately, no one really knows how much currency will be needed to cover withdrawals because of the Y2K issue. The currency demand will depend on how the public reacts to Y2K.

However, we expect each credit union to evaluate the potential impact of Y2K-related withdrawals on the operation of the credit union. The basis for this evaluation is an estimate of the aggregate level of withdrawals related to Y2K, over and above normal liquidity/currency levels.

One approach to develop an aggregate is to multiply the estimated number of members who will withdraw cash because of Y2K by the estimated average amount per withdrawal. For example, what would your liquidity/currency needs be if 75% of your membership withdrew an extra $500 in December 1999? Another approach is to ball-park the needed cash as a multiple of typical liquidity/currency levels.

Your analysis may need to be a good deal more complex than the above approaches. It should also estimate the timeframe over which you believe the withdrawals may occur. Depending upon the Y2K disruption, withdrawals may continue into 2000.

Some observers have suggested the following theories in regard to withdrawal behavior:

• The lower the level of member confidence, the higher the level of withdrawals.
• The lower the level of member loyalty, the higher the level of withdrawals. For example, larger community FOM credit unions may experience higher levels of withdrawal than smaller occupational or associational credit unions.
• Credit unions with proportionally higher average deposit balances may experience lower levels of cash withdrawals.
• Credit unions with proportionally higher levels of IRA and CD balances may experience lower levels of cash withdrawals.
• Credit unions with a higher share draft mix may experience higher levels of withdrawals.
• Members that do not keep excess balances in share draft accounts will look to savings or borrowings to fulfill their cash needs.

Each credit union must determine for itself how it believes withdrawal behavior will occur based on its membership and share mix.

Resources

The following contacts may assist you in establishing borrowing lines at the respective institutions:

Washington Corporate: 1-800-562-1012 Melody Muncy Chief Operations Officer
Federal Reserve Bank: (415) 974-2973 Ken Parker Discount Window
(206) 343-3682 Jeff Lewis Account Manager
Federal Home Loan Bank: 1-800 340-3452 Credit Department

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8791 FAX: (360) 704-699

January 15, 1999
No. B-99-3

List of Division Opinions and Bulletins Issued in 1998

Opinions

From time to time, the Division issues written opinions in response to questions about how a statute or rule should be applied to a particular factual situation. In order to make these opinions available generally to credit unions, we will publish a list of new opinions twice a year. The Division is happy to provide "redacted" copies of the opinions upon request. Enclosed is a list of opinions issued in 1998.

Please be aware that the opinions are limited to their facts; we may reach a different conclusion if presented with different facts or conditions.

Bulletins

In addition, the Division issues bulletins on regulatory developments. Enclosed is a list of the bulletins issued in 1998. A copy of each bulletin was provided to credit unions at the time the bulletin was issued.

Please call or fax your request to Diane Moye (at the Division office at the numbers above) if you would like a copy of an opinion or bulletin on the enclosed lists.

---

1998 DCU Opinions

1998 DCU Bulletins

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

February 11, 1999
No. B-99-4

DFI Director John L. Bley Announces Year 2000 Meetings With Financial Institutions (In Two Series - Late Winter and Summer)
First Series of Y2K Meetings

The first series of Year 2000 (Y2K) meetings will be held in Bellingham, Seattle, Vancouver, Spokane and Yakima in March. Our agenda for each meeting is as follows:

• 10AM - 12 noon: Y2K Overview/Community Resilience - John Bley
  12 noon - 3PM: Current Y2K Regulatory Issues - Compliance, Communication, Liquidity
• Bank/thrift lunch and breakout session: Wayne Fralin, Director of Banks; Mike Abe, Program Manager
• Credit union lunch and breakout session: Parker Cann, Director of Credit Unions; Mike Delimont, Senior Examiner

We will assemble together for the morning session, then break out into two sessions for the afternoon.

The first series of meetings are scheduled as follows:

March 02, 1999 Bellingham

March 03, 1999 Seattle

March 05, 1999 Vancouver

March 11, 1999 Spokane

March 12, 1999 Yakima

Please RSVP for the meeting you wish to attend by completing and faxing back page three. We will be contacting individual banks/thrifts/credit unions to arrange meeting rooms, and will advise you when the arrangements have been made.

We invite you to visit DFI's website for a discussion of Y2K issues by the Director and by the Division of Banks (DOB) and Division of Credit Unions (DCU):

Director: http://www.dfi.wa.gov/

DOB: http://www.dfi.wa.gov/banks/

DCU: http://www.dfi.wa.gov/cu/

Second Series of Y2K Meetings

We intend to conduct the second series of Y2K meetings this summer, perhaps through Washington Interactive Television (WIT). We will let you know when we have firmed up the second series of meetings.

DFI's March 1999 Y2K Meetings - RSVP Form

NAME:
Credit Union:
Telephone number:
Number of persons who will attend at the following site(s):
	March 02, 1999 in Bellingham:
	March 03, 1999 in Seattle:
	March 05, 1999 in Vancouver:
	March 11, 1999 in Spokane:
	March 12, 1999 in Yakima:

Please fax this page back to the Division of Credit Unions at (360) 704-6991.

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

February 24, 1999
No. B-99-5

Completing Year 2000 (Y2k) Testing with TransAlliance Before March 31, 1999

DCU’s Y2K Update #1

At a recent meeting with DFI, TransAlliance indicated that time is available for most Washington credit unions to complete their Y2K testing (with TransAlliance) prior to the end of March 1999. However, credit unions must make such arrangements with TransAlliance soon in order to take advantage of this window of availability.

We strongly encourage those credit unions that have not yet tested with TransAlliance to contact Deborah J. Olivey at TransAlliance, at (425) 644-5124, to schedule a time for your testing. We understand that many of you will need to schedule testing through your primary share and loan vendor. Others will need to schedule tests directly with TransAlliance. In each case, we encourage you to get your credit union on the schedule as soon as possible.

Credit Unions That Did Not Substantially Complete Y2K Testing By December 31, 1998 - Attachment To Supervisory Agreement

By letter dated January 19, 1999, DCU asked credit unions that had not substantially completed Y2K testing by December 31, 1998 to sign a Supervisory Agreement. In the Agreement, the credit union agrees to complete Y2K testing by March 31, 1999, which is the DCU benchmark for completion of testing.

We understand that some of the credit unions that received the January 19 letter will not be able to complete Y2K testing of certain vendor-supplied systems by March 31, 1999. Of course, the enhanced availability of testing with TransAlliance, discussed above, should make it easier for many credit unions to meet the March 31, 1999 benchmark. Nonetheless, some credit unions that received the January 19 letter may still feel that they cannot meet the March 31, 1999 benchmark, because of later testing by vendors. We have developed the enclosed Attachment (to the Supervisory Agreement) to accommodate this situation.

In the Attachment, the credit union agrees that it will successfully complete Y2K testing of its mission-critical systems by March 31, 1999, except for the vendor systems listed in the Attachment. The credit union must provide a date for the completion of testing of the listed systems. We expect the testing to be completed no later than June 30, 1999, which is the NCUA benchmark for completion of testing.

Credit unions in this situation should complete and sign the Supervisory Agreement and Attachment and return the entire January 19, 1999 letter with the Attachment to Mike Delimont of the Division as soon as possible.

Attachment to Supervisory Agreement with DCU
(Included with DCU Letter Dated January 19, 1999)

(Credit Union) is not able to comply fully with paragraph 1 of the Supervisory Agreement described above (Supervisory Agreement) because it will not be able to successfully complete Y2K testing of certain vendor-provided, mission-critical systems by March 31, 1999. However, the Credit Union has agreed to complete Y2K testing of such systems by certain dates, in accordance with the following:

Notwithstanding paragraph 1 of the Supervisory Agreement, the Credit Union agrees that it will successfully complete Y2K testing of its mission-critical system(s) by March 31, 1999, except for the vendor-provided, mission-critical system(s) listed below. The Credit Union agrees that it will successfully complete Y2K testing of the system(s) listed below by the applicable date(s) provided below.

Mission-critical

System Vendor Testing Completion Date

The Board of Directors of the Credit Union has duly approved the Credit Union's execution of this Attachment at a meeting held on , 1999.

On behalf of the Credit Union:

Board Chairman Date Managing Officer/CEO Date

 

Print name Print name

 

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

March 5, 1999
No. B-99-6

Year 2000 (Y2K) Reporting to the Division for March 31, 1999

DCU’s Y2K Update #11

As you know, the next quarterly Y2K report to the Division is due on March 31, 1999. You should focus in your report on member communication efforts, liquidity planning (see DCU Bulletin No. B-99-2) and business resumption planning (see NCUA Letters 98-CU-12 and 99-CU-1). In your report, please provide the following items as well as any other materials you believe demonstrate your progress on these essential Y2K topics:

1. A copy of your analysis estimating the potential Y2K liquidity and currency need. The worksheet developed by CUNA for this purpose is one acceptable approach. However, a credit union may use a reasonable approach.
2. A copy of the most recent Y2K liquidity plan approved by your board.
3. A list of resources available for Y2K liquidity purposes including assets as well as collateralized or guaranteed borrowing lines now in place or in process.
4. A brief summary or list of member Y2K communication efforts completed during the first quarter 1999 as well as any planned for the remainder of 1999.
5. A brief statement outlining the progress toward completion of your business resumption contingency plan.
6. Documentation to support resolution of any outstanding Y2K examination recommendations.

Beginning March 1, 1999, we will, during our on-site safety and soundness examinations, analyze your Y2K liquidity planning efforts. We will factor our analysis into the liquidity component of your CAMEL rating.

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

March 24, 1999
No. B-99-7

Division of Credit Unions’ Phone list

The following is a list of current Division staff, with their titles, direct telephone and fax numbers, and e-mail addresses. The Division's main telephone number is 360/902-8701. The Division’s fax number is 360/704-6991.

Office Staff:

Name           Phone number Fax number E-mail address

Parker Cann - 360/902-8778 - 360/704-6978 - pcann@dfi.wa.gov
Director of Credit Unions

Linda Jekel - 360/902-8753 - 360/704-6953 - jekel@dfi.wa.gov
Program Manager

William Opperman - 360/902-8758 - 360/704-6958 - wopperman@dfi.wa.gov
Financial Examiner Supervisor

Mike Delimont - 360/902-8790 - 360/704-6990 - mdelimont@dfi.wa.gov
Sr. Financial Examiner

Tina Philippsen - 360/902-8718 - 360/704-6918 - tphilippsen@dfi.wa.gov
Division Secretary

Diane Moye - 360/902-8791 - 360/704-6991 - dmoye@dfi.wa.gov
Office Assistant

Field Staff:

Caryl Ausejo - 360/902-8806 - 360/704-7006 - causejo@dfi.wa.gov
Sr. Financial Examiner

Sue Graham - 360/902-8816 - 360/704-7016 - sgraham@dfi.wa.gov
Financial Examiner Assistant

Austine Izuagbe - 360/902-8813 - 360/704-7013 - aizuagbe@dfi.wa.gov
Financial Examiner Assistant

Jaime Manio - 360/902-8807 - 360/704-7007 - jmanio@dfi.wa.gov
Sr. Financial Examiner

Rogelio Pascua - 360/902-8803 - 360/704-7003 - rpascua@dfi.wa.gov
Sr. Financial Examiner

Joseph Rogers - 360/902-8801 - 360/704-7001 - jrogers@dfi.wa.gov
Sr. Financial Examiner

Glenn Ross - 360/902-8817 - 360/704-7017 - gross@dfi.wa.gov
Sr. Financial Examiner

Rick Ullrich - 360/902-8802  -360/704-7002 - rullrich@dfi.wa.gov
Sr. Financial Examiner

Jay Weintraub - 360/902-8804 - 360/704-7004 - jweintraub@dfi.wa.gov
Sr. Financial Examiner

Feryl Woodworth - 360/902-8814 - 360/704-7014 - fwoodworth@dfi.wa.gov
Financial Examiner

If you have a problem reaching an employee, please contact Tina Philippsen at 360/902-8718.

We are located on the edge of the Capitol grounds - about a block north of the Capitol Building. Drop in and say hello the next time you are in town.

 

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

March 25, 1999
No. B-99-8

Division Increases Maximum Size of SOG Groups to 200 Persons

Under Division rules, state credit unions with an approved small occupational group (SOG) bylaw amendment may add SOGs that meet certain restrictions to their field of membership (FOM) without prior Division approval. WAC 208-472-041. Among these restrictions is a size limit - each SOG may not exceed 100 persons, or a higher number authorized by the Division. WAC 208-472-041(3)(d). The SOG provision was added to Division rules in 1996, and the 100 person maximum has not been increased since that time.

Effective January 1, 1999, the NCUA increased from 100 to 200 the maximum size of small occupational groups which may be added by federally-chartered credit unions to their FOM under the NCUA's streamlined procedure, without regard to whether the group was already included in another credit union's FOM. See NCUA IRPS 99-1. We believe that it is appropriate for state credit unions to enjoy the same level of regulatory flexibility to serve new groups of small size.

Consequently, the Division is increasing the maximum size of SOGs from 100 to 200 persons. This change takes effect as of the date of this Bulletin. No other restrictions on SOGs are affected.

The Division is considering additional changes to the SOG restrictions. The Division is seeking input from credit unions whether:

1. A further increase in the 200-person size limit of SOGs is warranted considering general population increases or competitive or other relevant factors.
2. SOGs may be added without regard to overlaps.

Please provide your written comments on this matter to Parker Cann at the Division.

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

May 14, 1999
No. B-99-9

Division Files NASCUS Accreditation Application

Application Filed

The Division of Credit Unions is pleased to announce that we filed the NASCUS accreditation application on May 7, 1999. We answered 65 questions and provided supporting documentation that covered the following areas:

Administration/finance
Personnel
Training
Examination
Supervision
Legislation
Accreditation Exam Scheduled for Late June 1999

In late June 1999, the NASCUS accreditation team will be on-site in Olympia to examine us. The team will interview staff and review on-site materials.

How Many States Are Accredited?

As of May 1, 1999, 21 state credit union regulatory agencies have been accredited by NASCUS.

More Questions?

We would happy to answer any questions. Please call Parker Cann at 360/ 902-8778 or Linda Jekel 360/ 902-8753.

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

May 25, 1999
No. B-99-10

Year 2000 Benchmarks and Reporting for June 1999

Y2K Update # 12

June 30, 1999 Benchmarks

As noted in NCUA letters and previous Division Bulletins, credit unions must by June 30, 1999:

1. Successfully complete Y2K testing of their mission-critical systems.
2. Complete their Business Resumption Contingency Plans.

The NCUA will roll up credit unions' Y2K compliance information into a national database for reporting to Congress.

June 1999 Reporting

Credit unions must file certain documents with the Division between now and June 30:

1. By June 8, 1999 - Filing of BRCP Questionnaire. The NCUA has drafted a questionnaire that we must use in evaluating your Business Resumption Contingency Plans (BRCP). Please complete the questionnaire, enclosed as Attachment I, and return it to the Division by June 8, 1999.

2. By June 30, 1999 - Filing of Quarterly Reports, etc. By June 30, 1999, credit unions must submit to the Division:

1. Their NCUA Year 2000 Quarterly Report for the second quarter.
2. The information requested in the enclosed Attachment II. If your Business Resumption Contingency Plan has changed since a copy was last submitted to the Division, please include a copy of the current Plan.
3. The credit union's response to any outstanding Y2K examination recommendations.
4. If your credit union signed a Supervisory Agreement with the Division regarding completion of testing, submit an updated NCUA Quarterly Report as soon as you have completed testing. Any credit union that signed a Supervisory Agreement that does not report completion of testing before June 8 will be contacted by the Division to verify the current status of testing. Credit unions that do not anticipate meeting the June 30 benchmark for the completion of testing will be asked to enter into administrative action with the Division and NCUA before June 30, as required by NCUA policy.

Summary of Liquidity Plan Information

As you are aware, each credit union was required to submit to the Division a Best, Worst, and Most Likely scenario for Y2K liquidity. The table below summarizes the data provided to date:

Each credit union must independently evaluate their field of membership and other circumstances to determine adequate liquidity and currency levels for late 1999.

Liquidity Plan Considerations

• Each credit union should arrange for sufficient liquid assets or borrowing capacity to meet its Worst Case possibilities.

• Each credit union should diversify its liquid assets among enough financial institutions to ensure access to at least some of those assets in the event of unforeseen delays in asset liquidation, processing wire transfers, etc.

• In most circumstances, each credit union should arrange a guaranteed or collateralized borrowing line, if they have not already done so. These borrowing lines could provide funds in the event of delays in raising liquidity through other channels. The lines may also help to remove some of the pressure on earnings and liquid assets.

• Each credit union should review its Liquidity Plan periodically to ensure it is adequate - at least monthly during the last four months of 1999.

Business Resumption Contingency Plan

As noted above, credit unions should complete their Business Resumption Contingency Plans by June 30, 1999. Quality contingency planning will help you and your members deal with unanticipated disruptions. The NCUA has provided guidance on business resumption planning in Letters to Credit Unions 98-CU-12 and 99-CU-1. Depending on circumstances at individual credit unions, the following practical suggestions may be useful.

• Include a variety of scenarios in your plan – not just a complete power failure. Consider things like intermittent power failures combined with adverse weather conditions, failure of selected components of applications (loss of loan module, inability to open CDs, etc), failure of ACH or ATM networks, slow cash deliveries, loss of one or more liquidity sources.

• Schedule "table top" exercises where the team walks through the various scenarios to ensure all aspects of operations are covered.

• Develop an employee notification system that includes an alternative to phone notification.

• Make sure that copies of the contingency plan are kept in employee homes in case the building cannot be opened.

• Establish minimum service levels. This could include the minimum security required to open the doors, the minimum staff needed to operate, and the minimum members of management needed to stay open.

• Develop a chain of command in the event that some members of management are not able to come to work. Include the Board and other volunteers if appropriate. Designate who can make the decision to execute the contingency plan.

• Develop a staffing plan that includes multiple shifts over an extended period of time. Employees may have to work off-hours to manually update records in time for the next business day.

• Devise methods for offloading critical files from the main system to PCs and laptops that can be used to support manual operations.

• Ensure that employees are personally prepared so their families are safe and they can come to work.

• Prepare a checklist for each location that employees will use when arriving on site during the emergency. It could include a perimeter check before entering the building for evidence of intrusion; checking power, heat and security systems upon entering, checking computer equipment and vaults; making sure elevators and escalators are working.
• Designate the individuals responsible for advising the media, public safety officials and regulatory agencies of the status of your operation throughout the emergency.

• Include a resumption procedure that includes all steps necessary to end the execution of contingency plans and resume normal operations. This could include bringing computer systems up to date, re-setting security systems, canceling extra security guards, stopping extra cash deliveries, etc.

• Review your contingency plan with your critical interface partners to ensure that your contingency plans and their contingency plans are not in conflict.

• Share contingency plans among the financial institutions in your local community to develop ideas and to help develop a common story that will instill public confidence in the soundness of the financial community.

Washington State's Year 2000 Readiness Report

The Governor’s office has compiled information on Y2K progress in a variety of industries. It is available to the public as the Washington State Year 2000 Readiness Report. This report is on the internet at http:access.wa.gov/2000 and may be useful to help inform your members about the Y2K issue. Two additional volumes of the report are anticipated, one in late July and another in October.

There is also an interactive database available at that web site that you may want to tell your members about. It allows the public to indicate the county they live in, choose from a variety of options for services provided (electric, gas, financial, etc.) in that county, and then print out a report of statements from those service providers on their progress on Y2K.

Attachment I

Contingency Plans

Section 1 - Contingency Planning

Section 2 - Business Resumption Contingency Plan

Section 3 - Liquidity Planning

The information provided in this report is certified correct by:

CEO/ Manager		Date

 

Attachment II

June 30, 1999 Y2K Report to Division

Credit Union Name CU #

Circle the correct response or fill in the blank below.

1) Which Corporate Credit Union(s) does your credit union belong to? What is the size of your guaranteed line of credit through that Corporate?

Wash. Corporate Yes No

Size of Guaranteed Line $

WesCorp Yes No

Size of Guaranteed Line $

Size of Guaranteed Line $  

2) Does your credit union have a borrowing line established through the FHLB? Yes / No

How large is the line? $

If pending, date to be finalized?

3) Does your credit union have a borrowing line established through the Federal Reserve Bank? Yes / No

How large is the line? $

If pending, date to be finalized?

4) Does your credit union have debit or credit cards through Equifax in:

1. the pass-through system Yes No
2. the Card-source program Yes No
3. the BT2000 CUMA program Yes No
4. the TBS system Yes No

5) Have the following plans been approved by the Board of Directors for your credit union?

1. Liquidity Yes No Date
2. Business Resumption Yes / No Date
3. Communications Yes / No Date

If changed since a copy was last submitted to Division, please send copies of the current plans to Division with this report.

6) Does your credit union plan to perform any additional testing over the weekend of December 31, 1999 – January 2, 2000? Yes / No

If yes, attach a brief description of the testing, the date and hours you anticipate being in the CU.

******

Certified Correct by Manager/CEO:

Signature:

Date:

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-8991

June 29, 1999
No. B-99-11

 

Division fax number to change

Effective July 15, 1999, the Division will no longer use the 902-8800 fax number. The following is a list of current Division staff, with their titles, direct telephone and fax numbers, and e-mail addresses. The Division's main telephone number is 360/902-8701. The Division's fax number is 360/704-6991.

Name                 Phone number    Fax number     E-mail address

Office Staff:

Parker Cann          360/902-8778                 360/704-6978             pcann@dfi.wa.gov
Director of Credit Unions

Linda Jekel              360/902-8753                 360/704-6953              ljekel@dfi.wa.gov
Program Manager

Mike Delimont         360/902-8790                  360/704-6990             mdelimont@dfi.wa.gov
Financial Examiner Supervisor

Tina Philippsen         360/902-8718                  360/704-6918              tphilippsen@dfi.wa.gov
Division Secretary

Diane Moye              360/902-8791                  360/704-6991            dmoye@dfi.wa.gov
Office Assistant

Field Staff:

Caryl Ausejo              360/902-8806                  360/704-7006             causejo@dfi.wa.gov
Sr. Financial Examiner

Sue Graham                  360/902-8816                 360/704-7016          sgraham@dfi.wa.gov
Financial Examiner Assistant

Austine Izuagbe              360/902-8813                  360/704-7013          aizuagbe@dfi.wa.gov
Financial Examiner Assistant

Rogelio Pascua              360/902-8803                     360/704-7003      rpascua@dfi.wa.gov
Sr. Financial Examiner

Joseph Rogers              360/902-8801                      360/704-7001      jrogers@dfi.wa.gov
Sr. Financial Examiner

Glenn Ross                      360/902-8817                  360/704-7017          gross@dfi.wa.gov
Sr. Financial Examiner

Rick Ullrich                      360/902-8802                  360/704-7002          rullrich@dfi.wa.gov
Sr. Financial Examiner

Jay Weintraub                  360/902-8804                  360/704-7004          jweintraub@dfi.wa.gov
Sr. Financial Examiner

Feryl Woodworth              360/902-8814                  360/704-7014      fwoodworth@dfi.wa.gov
Financial Examiner

If you have a problem reaching an employee, please contact Diane Moye at 360/902-8790.

Please remember the 902-8800 fax number will no longer work after July 15, 1999.

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

August 30, 1999
No. B-99-12

Year 2000 Reporting by September 30, 1999;
Systems Conversions in Remainder of 1999

Y2K Update # 13

Reporting Due September 15 and September 30, 1999

1. Reporting due by September 15, 1999 – Filing of the BRCP Questionnaire. The NCUA has prepared a questionnaire for evaluation of credit unions’ Business Resumption Contingency Plans (BRCP). Please complete the enclosed questionnaire and return it to the Division by September 15, 1999. We expect that all credit unions will have completed their BRCPs to the extent that they can answer "yes" to all of the questions on the questionnaire. If this is not the case, please contact Mike Delimont at (360) 902-8790 to discuss your situation.

We expect that we will ask you to complete this questionnaire again in October.

2. NCUA Quarterly Reports due by September 30, 1999 – From credit unions not 100% implemented as of June 30, 1999. Credit unions that were not fully Y2K implemented by June 30, 1999 should file an NCUA Y2K Quarterly Report by September 30, 1999, if they have not already filed a quarterly report indicating that they have achieved full implementation. Credit unions that do not expect to meet the September 30 implementation milestone should contact Mike Delimont well in advance of September 30 to discuss their situation.

Systems Conversion Reminder

Credit unions planning to convert or upgrade a system during the remainder of 1999 should review NCUA Letter No. 99-CU-10. The Letter contains regulatory guidance on conversions and upgrades and requires state credit unions to notify the Division of Credit Unions of the specifics of their conversion plans. The circumstances and content for such notifications are outlined in the Letter.

Attachment I

Contingency Plans

Section 1 - Contingency Planning

Section 2 - Business Resumption Contingency Plan

Section 3 - Liquidity Planning

The information provided in this report is certified correct by:

CEO/ Manager

Date

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

September 16, 1999
No. B-99-13

 

Y2K Testing and Implementation of Upgraded Equifax System

Y2K Bulletin # 14

The Division of Credit Unions (Division) has learned that Equifax implemented certain changes to its VISA/Mastercard systems on July 4, 1999. We understand that the changes affect on-line, batch processing, and pass-through systems.

Credit unions should test their upgraded Equifax system. Please review your testing documentation to ensure that your credit union has appropriately tested the upgraded Equifax system you are using.

If your credit union has not appropriately tested your upgraded Equifax system, you must complete testing and implementation of the system by September 30, 1999. If you have not tested this system, please sign the enclosed Supervisory Agreement below and return it to the Division promptly. In addition, please submit an NCUA Y2K quarterly report to the Division by September 30, 1999 reflecting the status of your systems.

Should you have additional questions, please contact Mike Delimont at (360) 902-8790.

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

September 22, 1999
No. B-99-14

Credit Unions May Disregard Division Bulletin No. B-99-13

Status on Y2K Testing and Implementation by Equifax

Y2K Bulletin # 15

In preparing our previous Bulletin, No. B-99-13, concerning testing of the Equifax VISA/Mastercard systems, we relied on information provided to us that subsequently turned out to be erroneous. After the Bulletin was issued, we learned that Y2K testing of the Equifax systems was completed in a timely manner by all of our credit unions prior to the June 30, 1999 Y2K benchmark.

Please disregard Bulletin No. B-99-13. We apologize for any confusion.

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

November 2, 1999
No. B-99-15

Year 2000 Rollover Contact Numbers

Y2K Bulletin # 16

It may be particularly important that the Division of Credit Unions be able to reach key individuals from your credit union over the weekend of December 31, 1999 through January 3, 2000.

Please take a few minutes to provide the contact numbers requested on the following form. If your credit union utilizes a telephone system that is not answered over the weekend and during non-business hours, please provide the alternative means of quickly contacting the key people at your credit union. The forms will be destroyed by March 6, 2000. Should an individual not have a particular method of communication, simply mark it N/A. The form should then be faxed to Mike Delimont at (360) 704-6990 by November 10, 1999.

 

---

DCU BULLETIN

Division of Credit Unions
Washington State Department of Financial Institutions
Phone: (360) 902-8718 FAX: (360) 704-6991

November 3, 1999
No. B-99-16

Investments in Certificates of Deposit

The recent experience with the failed Keystone National Bank (Keystone) reminds us that certificates of deposit are not without risk. Keystone had significant amounts of brokered deposits. Brokerage firms create brokered deposits by splitting up large master certificates of deposits (CDs) into smaller dollar denominations. Brokerage firms then sell the smaller denomination CDs to credit unions and other customers.

At Keystone, several credit unions may well lose interest and/or principal in excess of the $100,000 FDIC insurance limit. At this point it is possible that a credit union in another state will lose $300,000 in principal that is above the limit. In addition, several credit unions stand to lose interest from the time of the failure of the bank to the date the principal is returned.

A further danger may result when neither the depository institution's records nor the deposit broker's records show that the customer (e.g., credit union) is the owner of the deposit. Those deposits may not be insured.

Credit unions who choose to purchase certificates of deposit in other financial institutions should weigh carefully and monitor the potential risk. In addition, management should consider structuring the investment to avoid loss of principal or interest to the degree possible. This would include ensuring that the credit union name appears on the certificate of deposit or the broker's records.