Conference 7.286::dcu

    What March memo? Was it published? Any pointers would be appreciated.
    
    Simon
    

    
    RE:  .0
        
>    I'm having difficulty parsing this paragraph. Is their a hidden message
>    here? Is their an implication that there never was a board and
>    management team before? If so what was there?
    
    No hidden meaning Dave. It probably should have been"
    
    	"We are pleased with our performance in the first year of the NEW
        Board and Management Team."
    
>    And since our credit union made so much profit how about doing a
>    special dividend distribution to the owners. Alternatively please put
>    the interest rate up on the savings account.
    
    We're not quite back to where we should be but getting very close *IMO*.    
    I personally would like to see a return to this practice in the future.
    
>    It's nice to see positive operating results after the previous year's
>    debacle.
    
    DCU has always always had good profits.  It's just the extraordinary
    loss that we suffered made it look bad for a year or two (until they
    were written off, ie. "took the hit").
    
>    And finally I'd like to offer my appreciation for all the hard work put
>    in by the board and the management at DCU over the last year.
    
    Thanks.  I hope people do see and feel a difference.
    
    
    RE: .1
    
>    It would be nice if the term 'negitive growth' could be replaced with
>    LOSS.  Who are you tring to fool?
    
    Ed, I don't think the word "loss" is accurate.  Nobody has lost any
    money if savings decline.  Funds have merely shifted.  We should still
    watch out for this type of wording though.  
    
    The next sentence does use the word "decline" so I don't think there 
    is any attempt to fool people.
    
    RE: .2
    
>    What March memo? Was it published? Any pointers would be appreciated.
    
    Simon, you should have received it in the mail.  If not, then you
    can get one at a DCU branch or by calling the info center.  And as Bob
    has said, they are also posted in 4.* for everybody to read on-line.
    

>>    It would be nice if the term 'negative growth' could be replaced with
>>    LOSS.  Who are you trying to fool?
>    
>    Ed, I don't think the word "loss" is accurate.  Nobody has lost any
>    money if savings decline.  Funds have merely shifted.  We should still
>    watch out for this type of wording though.  

	I asked about this once before, and I'm still not sure what
	it means. It might mean "The sum of deposits has declined for the 
	second straight year", or it might mean, "The amount of money
	deposited this year has declined for the second straight year".
	Or something else. Would appreciate clarification, and straight
	wording in future memos.

				Tom_K

    
    The memo addresses *balances* at a given point in time, namely year
    end and comparing them to last year at the same time.  I do not believe
    the memo is discussing increasing or decreasing *rates* of growth.  A
    total of all deposits made during the year is meaningless.  It's what
    is left (after withdrawals) that matters.
    

What is the goal of the management of DCU for reserves?

We are at almost 5%.  Is it 6%?

I would suggest as we get closer to reaching our goal that more money
should be passed back to the owners.  (cheaper loan rates, higher
savings, etc.)


Example:

We start out at 4% but want to get to 6% reserve.

At   4% we put 100% profit into reserve.
At 4.5% we put 75% profit into reserve and 25% into owners.
At   5% we put 50% profit into reserve and 50% into owners.
At 5.5% we put 25% profit into reserve and 75% into owners.
At   6% we put  0% profit into reserves and 100% into owners.

The above approach will cause us to take longer to reach our  'GOAL' of
6%, but it also keeps the owners happy and willing to stay with DCU.

Thanks for the hard work,

	- mark

    
    
    Re:
    
>    DCU has always always had good profits.  It's just the extraordinary
>    loss that we suffered made it look bad for a year or two (until they
>    were written off, ie. "took the hit").
    
    Phil I'm really surprised at this comment coming from you. This is the
    sort of doublespeak the last board was famous for. Let's call a spade a
    spade. An "extraordinary loss" is a "loss" plain and simple. It is not
    a profit and an extraordinary loss. So DCU has not always had good
    profits. Yes it did before it made a loss for a couple of years due to
    fraud, mismanagement and a board asleep at the wheel. If you start
    convincing yourself that an extraordinary loss is not a loss you'll
    fall into the same trap.
    
    Dave

    
    Gentlemen, let's not get into a nit-picking word game here.  I know
    that an extraordinary loss is a loss.  By extraordinary, I meant that
    it was not attributable to a lack of support or massive defaults on the
    part of the DCU membership.  The extraordinary losses suffered (yes, 
    LOSSES) were from activities that were not (IMO) in the scope of DCU's 
    normal day to day business, ie. loaning money to members and accepting 
    deposits. 
    
    Dave, it is not uncommon for businesses (actually required if I
    remember correctly) to report extraordinary losses seperately.  No
    where in my reply did I say DCU didn't suffer a loss.  My point was
    that DCU's profitability is now and always has been very good.  That
    doesn't mean there haven't been losses.  Is this any clearer?
    

    The terms do matter, and as Phil points out, an extraordinary profit
    or loss is one which does not occur as a part of normal business.  And by
    considering the extraordianry loss separately, it is then possible to
    determine DCU's operating profitability.  If one took the extraordinary
    loss into general accounting, then it would be difficult to determine
    DCU's operating profitablilty.  If DCU was not operationally
    profitable, then we really would have something to worry about!
    
    So, while DCU does make a loss from taking the extra-ordinary losses
    into the bottom line, it is making an operational profit, so that
    those extraordinary losses can be written off.  If we weren't making
    an operational profit, then the extraordinary losses would be growing!
    
    It's kind of like you running a balanced budget ... with some sinking
    fund for a new car ... and then a tree falls and demolishes the car
    on the day after you forgot to renew the insurance ...  the result
    ... an extraordinary loss that you can recover from eventually, because
    you are running a balanced budget.  Unlike the person who is living
    on credit because he's lost his job ... the extra-ordianry loss puts
    him into bankruptcy.
    
    So, it is not wrong to describe DCU as profitable ... even when the
    extra-ordianry losses were being written off and the balance sheet
    was red.  If we weren't profitable, then the people who bailed out were
    right to do so!!!!
    
    Stuart

    re: .1
    

>    It would be nice if the term 'negitive growth' could be replaced with
>    LOSS.  Who are you tring to fool?
    
    There may be a better term, but LOSS would not be appropriate in this
    case.
    
    Gim
    

        
>>        The credit union experience its second straight year of 
>>        negative savings growth.  This decline is attributed to 
>>        sponsor cut-backs and a low interest rate environment.  

My husband is looking into a new financial institution, since his current bank 
is starting to charge for services he depends on.  The way I explained this
to him is that DCU has been losing deposits in savings accounts and
C.D.s for the last two years.  This is English, and it describes what has 
actually happened.  Why couldn't phrasing like this be used in the Treasurer's
Annual Report?

Tanya?

Elaine

One thing to remember here with regard to negative savings growth:
Given the incredibly low interest rates we've been seeing, literally
billions of dollars has been making it's way from savings accounts
and CDs into mutual funds and the stock market.

The point is that DCU is not alone in this problem...other banks,
S&Ls, and CUs have similar trouble.

I think "negative growth" is a valid term.  Note that a company
experiencing negative growth is not necessarily unprofitable.  Clearly
this is a warning sign and wake up call to management at both
strategic and tactical levels.

./chris

    
    To muddy the waters further... 8-)
    
    Negative savings growth may, in fact, be a GOOD thing for DCU where the
    capital ratio is concerned.  Had savings increased, the capital ratio may
    not have increased as much as it did.  Add to this the facts that DCU has
    an excess of deposits that it invests (NO REAL ESTATE!) and Digital
    employees tend to be very good savers and a tad debt averse and you see
    that DCU will probably always have an excess of funds to loan.  So a
    slight decline in savings is no cause for alarm.  Of course, should it
    continue, it would be a different story.
    
    As Chris points out, the low interest rates have driven a lot of cash
    from low return savings accounts.  In DCU's particular case, Digital's
    layoffs and DCU's resulting branch closures have also resulted in the
    loss of some members (and their savings).
    
    So much to discuss about "negative growth"...
    

How aout just saying "total deposits INCREASED" or "total deposits DECREASED".
This avoids emotive words like LOSS, as well as confusing phrases like 
"negative growth", and makes it clear that we're talking about the absolute
value of the deposits, not the rate at which they increase or decrease.

An issue like this isn't really very important -- I was able to figure out
what "negative savings growth" was intended to mean.  However, it's good
to try to communicate as clearly as possible.  Also, it is VERY NICE to
have a board in place that cares about communicating clearly!

	Keep up the good work,
	Larry Seiler

RE: 654.12

>The way I explained this  to him is that DCU has been losing deposits in 
>savings accounts and C.D.s for the last two years.  This is English, and it 
>describes what has actually happened.  Why couldn't phrasing like this be 
>used in the Treasurer's Annual Report?

>Tanya?

I stated that DCU's decline in savings or "negative growth" is primarily due 
to sponsor cut-backs (i.e. layoffs at Digital) and a low interest rate 
environment (i.e. deposits moving out of banks/credit unions and into stocks 
and mutual funds).  I don't believe this is a misleading statement. I do think 
it is too simplistic to say DCU is losing deposits since you can manage 
deposit growth or decline by the rate of interest paid on those deposits.  
I believe that DCU offers competitive rates on its deposits.  At the same 
time, DCU must balance deposit growth with its loan demand.  Today, DCU has 
more deposits available for lending than there is loan demand (excluding 30 
yr fixed rate mortgages that are being sold on the secondary market).  Thus, 
the DCU management team is working to stimulate loan demand by offering more 
competitive loan products.  I hope this gives you a better explanation.

    I also believe Chris, Phil, and Larry have made salient points
    regarding this topic.
    
    
Regards,

Tanya
    

    Gee, "losing deposits in savings accounts" would strike me as alarming
    and ambiguous if that was stated in a report.  Reason is that I would
    wonder what exactly was meant by "losing deposits."  Would it mean that 
    DCU was having fewer deposits, smaller deposits or that it was losing 
    track?  The terminology actually used by DCU strikes me as more precise
    and more readily understood.
    
    Steve

re: .17

I agree that DCU's terminology is a standard term in the accounting or financial
world, but to most members it doesn't mean a whole lot, and to some members it
sounds too much like the ousted BoD's doublespeak.

Bob

RE: .18

While I hate financial-babble as much as the next guy, I think I'd rather that
official communications continue to be expressed in the "precise" language of
the trade and require that members who care learn that language rather than
have an attempt made to "translate" said communications into more "user friendly"
language.

A similar analogy would be the term "stall" as applied to aircraft.  It's much
more useful to require that a pilot learn that it refers to the circumstance
in which the critical angle of attack of an airfoil has been exceeded, while
leaving behind the typically hysterical translation given by non-pilots than
it is to try and mealy-mouth around the concept.  It's concise, it's to the
point, and it's readily understood by those who have taken the time to learn
a bit.

I know it seems like I'm picking on you, Tooslow, but I'm not.  You're just
a good catalyst for those rare thoughts that manage make it out of my head! :-)
(sorta like Abbott and Costello, or maybe Mutt & Jeff...)

re: .16

Tanya is saying that "growth" and "negative growth" are two ways to describe a
number that changes.  However, the positive sounding term, "growth", is not 
necessarily good, and the negative sounding term "negative growth" is not
necessarily bad.

I was impressed by the report which summarized a lot of information on one side 
of one piece of paper.  Perhaps a report like this is required for NCUA and 
other financial overseers, and lawyers.

Would there be anything wrong with a two page report in English which explains 
what this means, to the extent that we are talking here?   I hear what .19 is
saying, that if you want to understand the credit union, you need to learn
the lingo.

But this is a common man's credit union.

And lingo for lingo's sake smacks of deception.

Nobody asked...

Elaine