Conference 7.286::dcu

    I don't think this says anything new.  It still attempts to rationalize
    a completely new fee structure with only 30 days' notice to the
    shareholders.
    
    
    
    I still have some basic questions:
    
    1)  If people under 18 or over 65 are exempt from checking minimums,
    are they also exempt from inactive account and associated minima as
    well?  (I've heard so, but not offically from DCU.)
    
    2)  Who asked for the Purchase Protection Program, has anyone ever
    benefitted from it, does it cost DCU *anything* to offer this, and if
    so, is the cost being passed on to us.  [This is insurance, which in
    most instances only covers what other insurance plans don't cover.]
    
    3)  The Mangone incident still is going to cost us $12M, ($18M less the
    $6M from the bonding agent).   The chances of recovering the $12M in
    the short term is practically nil, especially if it has to be pursued
    in the legal system, and even that will almost certainly result in a
    settlement for less than half of the balance (conservative estimate). 
    The attorneys working will almost certainly take this on a contingency,
    further reducing the actual cahs return to DCU.  The discussion here is
    appeasmement, but in the long term is more smoke and mirrors.  It
    presents the rosiest possible solution, and assumes that it will
    happen, but does not explore the alternate that we'll still be left
    with a $12 million shortfall.  All I can read into this is that this
    whole fee structure is an attempt to recover the Mangone money from its
    members.
    
    This impression is buoyed by the fact that CY91 delinquencies are
    projected (conservatively) at $1M, which in and of itself would not
    require the major restructuring of fees that has been thrust upon us.
    If delinquencies are "a direct cost to our members and our bottomline",
    then the Mangone shortfall should be considered in the same category
    and so accounted.  [Editorial comment:  Maybe if it had been, I
    wouldn't feel like I'm being used.]
    
    4)  Please rationalize the statement "individuals save more and borrow
    less in times of economic uncertainty".  If this is so, why aren't
    deposits up (they are), and if this is so, this ought to offset the
    downward trend in loans.  What is DCU doing with these deposits?  Are
    they not invested, and are they not earning an adequate return to
    offset the downward trend in loans?
    
    5)  Please rationalize the statement "This decrease in demand is a
    symptom of current economic conditions".  If this is so, and the
    economic situation reverses itself (which it ultimately will) will DCU
    reverse effects of this fee structure by "offering us more choices",
    for example, by eliminating the monthly charge, lowering the minimum from
    $1000 to $500 or less, or by paying interest on balances over $500
    instead of $1000?  (Or some combination of all of these, which is it would
    take to be competitive with at least half a dozen banking institutions
    in New England.   I somehow doubt it, but I had to ask.)

    
>        DCU's involvement in these participation loans was as an 
>        investment, and this investment offered excellent returns 
>        from 1985 through 1990.
    
    I LOVE IT!  $18M worth of non-performing loans, but hey -- they gave
    excellent returns before they defaulted!  So did Trump Casino bonds...
    
>                   ...Our current charge-offs, through July, are 
>        $471,238.45 as opposed to $266,803.69 in 1990 and $168,726.43 
>        in 1989.
>        
>        These are a direct cost to our members and our bottomline.
    
    If lower loan demand and less than a million in current charge-offs has
    brought us to this point, what's going to happen when the
    non-performing participation loans start to bite? Do they really think
    Mangone has several million bucks somewhere that we're going to get
    back?
    
    Tim

re: .1, Tony
    
>     4)  Please rationalize [ . . . ]
>                          What is DCU doing with these deposits?  Are
>     they not invested [ . . . ] ?

Rest assured, our little buddies on the BoD are actively seeking a Mangone
replacement talented at finding new Cape Cod participation loans in which to
invest these funds.

:^)
-Jack

>         Q.  For which loans are we experiencing a decrease in demand?
>         
>         A.  All loan products.  This decrease in demand is a symptom 
>         of current economic conditions as well as the changes 
>         occurring at the Corporation -- individuals save more and 
>         borrow less in times of economic uncertainty.
    
    I offer another answer.  The decrease in loan demand is due to the
    uncompetitive rates of that loan program.  Has DCU EVER surveyed it's
    members for the value of loans they we hold with other institutions? 
    Probably not.  But I "shopped around" 4 years ago and found an auto
    loan light years ahead of what DCU was offering at the time.  Ever the
    car dealership could have given me a better rate.
    
    I propose DCU return to it's stated purpose in the bylaws: "and to
    create for them a source of credit for provident or productive
    purposes." 
    
>         loss to DCU.  Our current charge-offs, through July, are 
>         $471,238.45 as opposed to $266,803.69 in 1990 and $168,726.43 
>         in 1989.
    
    Again, numbers with no context.  I want to see how much in total loans
    or credit has been granted which have resulted in the above
    delinquencies.  As a financial institution offering credit, DCU must
    allow for losses of this nature.  Are the losses greater than the
    anticipated losses?  Are they higher than the industry norm?  Are they
    higher than the current default rate in this region?  If an increase of
    $250K in defaults has led to the imposition of fees then DCU isn't
    adequately accounting for potential losses IMO.  Also, DCU please tell
    us how much income you expect to derive from the new fees and reduced
    interest payed to members? 
    
>         DCU's involvement in these participation loans was as an 
>         investment, and this investment offered excellent returns 
>         from 1985 through 1990.
    
    	Ah yes, investments with excellent returns.  Are the BoD idiots? 
    Does excellent return come at no risk?  No it does not.  "Investments"
    offering higher returns also offer higher risks.  And DCU (us) got
    burned by that higher risk.
    
    I would also like to point out, these participation LOANS were listed 
    in DCU financial statements under LOANS.  Does DCU view "loans" to it's 
    members as investments?  No it does not.  These were LOANS made to
    trust companies.  People received this money.  This was not money paid
    for stocks, bonds or T bills.  People who were non-DCU members received
    and spent this money.  That is NOT an investment.  
    
    If we have a BoD that cannot tell the difference between real estate
    speculation and investment then we are in BIG trouble.  Makes you
    wonder if they got any junk bonds in their inventory of
    'investments'...
    
>         Q.  How is DCU reducing its cost structure?
>         
>         A.  Over the past 18 months, DCU has been decreasing our cost 
>         structure with the following programs:  salary freezes at 
>         least until January 1, 1992, workforce reduction through 
>         attrition, reduction of travel, subscription and seminar 
>         enrollment, and the implementation of DCU IDEA$, an internal 
>         program, which offers DCU employees a communications channel 
>         to submit cost-saving ideas.
>         
>         In addition, our total employee base has decreased by 5% as 
>         our net assets grew by 21% during the last two years.
    
    DCU operating expense for "Compensation and employee benefits"
    increased 16.95% from 1989 to 1990.  Mary Madden indicated some of this
    was due to increased health care costs.  I asked her if DCU management
    was paid any bonuses and how they were evaluated for them.  Didn't
    really get an answer to this one.          
    
>         Q.  How long will the coverage last on our Purchase 
>         Protection Program?
>         
>         A.  The Purchase Protection Program's contract is reviewed 
>         annually by the insurance company on October 31.  We expect 
>         this coverage to continue.  A revised disclosure will be 
>         mailed to members with a DCU PLUS account.
    
    Who cares?!  Who asked for this?  Who wants it?  In these tough
    economic times when essentials are being eliminated, can we afford this
    baloney?
    
>         Q.  With the new fees, will the interest rates on the 
>         checking accounts increase?
>         
>         A.  With the increase in revenue from our checking accounts, 
>         we believe this will enable us to increase checking interest 
>         rates.
    
    OK, take it from these members to give it to other members.  This is
    bizarre.  Charge the small guy to give it to the guy who already has
    enough.  DCU clearly has gotten too big for us small fry.
    

        I'm real glad I waited to go home last night until .0 had been
        posted :-( It seems that the DCU attitude is "How dare you members
        tell us how to run OUR credit union".
        
        The only response I want to hear from the DCU at this point is "We
        are sorry. We screwed up. We will recind the service charges and
        clean up our act." I don't expect it to happen thou.
        
        Will the last person to leave the DCU please turn out its lights
        :-( 
        
        At that time, I suppose we can delete this notes conference as
        well :-(

       So, what I want to know is who asked the questions that she
    answered?
                                         Denny

    Denny, they were probably the most asked questions that were asked here
    and on the phone.
    
    I think DCU would have saved themselves alot of trouble and animosity
    if they had answered these questions before trying to cover up the
    change with a slick ad campaign.

       What I meant Mac, was that I don't think those are the questions that
    needed answered in this conference. Those were the ones they should
    have mailed out with 'the brochure'.
                                     Denny

    
    RE: .8
    
    So what's new?  DCU answers have always been to questions that it 
    wants to answer.  Answers to the tough or real questions will most
    likely remain unanswered.

>         Q.  How does the situation involving DCU's former president,
>         Richard Mangone, affect the credit union?
>
>         A.  The changes in our checking account program are not
>         related to any financial impact from the situation involving
>         our former president.
>
>         The total effect cannot be determined at this point.....

     In other words, we should expect the new fees to increase in the
     future to offset this problem!

     I think we need to determine other services we don't need from
     DCU.  That way, we can be proactive in knowing what DCU will offer
     us!  8-(

     One unhappy camper!

	Only in a bureaucracy would a decision like this be made:

	Demand for our product is falling, so we increased the price !

	Steve H

>>         Q.  Why is DCU now charging fees on the checking account?
         
>>         A.  Over the past 11 years, we have offered free checking 
>>         accounts to our 88,000 members nationwide.  Though our 
>>         checking account program is the most expensive program for us 
>>         to offer, we were able to pass this free service onto our 
>>         members because our loan demand was sufficient, our 
>>         delinquency rate was extremely low and the rate of return on 
>>         our investment was high.
         
>>         With the current economic pressures and Digital's workforce 
>>         reduction, we are experiencing a decrease in loan demand, an 
>>         increase in loan delinquencies and a decrease in the yield 
>>         from our investment vehicles.  Therefore, we have had to 
>>         develop effective alternatives to generate enough revenue to 
>>         meet the direct and indirect costs associated with our 
>>         checking account program (statement mailings, data processing 
>>         costs, check processing costs, equipment costs, personnel 
>>         costs and branch costs).
    
    Mary, all costs listed with the exception of the check processing costs
    are costs DCU incurs if they have a checking program or not.  I believe
    checking was targeted because of it's necessity to members and it's
    large number of accounts.  An increase in this program would generate
    the most money and people would be less likely to cancel it vs.
    canceling a Visa card if those annual rates increased.  Guess this one
    may have back-fired on them.
         
>>         It is our responsibility to assure that our program and 
>>         service expenses are met.  At times, this requires difficult 
>>         business decisions be made, but, before any decisions are 
>>         reached, we conduct research on members' accounts, pricing 
>>         alternatives and the competition.  Our decision to change the 
>>         checking account program was no exception to this approach.
         
    Oh, I believe you conduct "research on members' accounts"!  DCU knows
    with great accuracy how much they stand to gain from their rate
    increases.  Tell us though, how much account closing and member
    withdrawal was figured into the formula?  Are we ahead or behind
    target? ;-)
    
    And PULLEZE tell us who this mythical "competition" is?  I can't find
    anybody with such abysmal "choices" as DCU has given it's "members". 
    If DCU is trying to be a class by itself, you can stop trying!  You
    have arrived...  

    	re .11
    
    	Steve --
    
    	It's catchy.  Of course you recall that the cafeteria out
    	here at CXO did the same thing.
    
    	Joe Oppelt

I'm not sure how to beging my response:

	Here goes! I like manny of My fellow members feel very fustrated at the 
cloak and dager activities of the BOD. It is as if we either have a credit 
union where we are all hirings like we are for digital or That they are like 
congress once in power they are not accountable to us....

	The founding princple of a credit Union is a collection of people who 
have something in common ie place of work, club etc to pool there collective 
financial resources together to help one another. Through Loans, Investments 
etc.. It is a nongoal of a CU to establish it self as a bank! When it does this 
it defeates itself as a CU. Hence we are issued a share draft accouant and not 
a checking accouant etc. The Board is suppose to be elected Members and in 
General Not Professional  Banking / Accounating People. 

	I'm under the impression that This CU does not invest its money outside 
of the four walls of the CU! IF They did they should be getting subtantial ROI 
given the current state of the economy. If loans are down it is a direct result 
of there non-competive rates, and the degree of diffculty they make in obtaing 
them. 

	Banks are making a profit we should be getting a return on our 
investment if we are not getting high rates in savings and the cost of 
barrowing is High where are the profits from such action going??

	I agree with manny other noters in this conferance that it is time for 
the members of this credit union to wrest control of its CU from those who seem 
to be mismanging it! And turn it in to something for the benifit of its 
members. We can turn to NCUA for help in how to restructure it. 

	Along time ago I help start up a CU at another company and I recall 
that the NCUA provided all kinds of directiona and advice to help kepp a CU 
both within the framework of the LAW and to make it a profitable and keep its 
members satisfied. 

	BTW that stuff about X digital Employees defaulting on loans etc.. is a 
bunch of bull! The DCU doesn't know when an employee leaves dec or not and 
doesnot know if that is why they can't pay a loan or not. I have a friend who 
is a member of the DCU His wife left Dec about 5 years ago and thay still 
belong. There is no reason why a Person who left dec would be a good or bad 
credit risk.