Credit Union Exam Solutions Presents With Flying Colors

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.On this week's episode I discuss Liquidity with Subject Matter Expert Todd Miller.Don't miss part 2 tomorrow.Why discuss Liquidity today?Many reasons. A great deal of evidence that liquidity risks are increasing. Inverted Yield Curve - 85 days as of  11/3/2022Prior inversions over 10 days  – 18 days in May/June of 2007 -185 days in June 2006 through early 2007 (15-16 yrs removed from this) -226 days in 2000Inflation – Over 5% annualized since June 0f 2021.·        Last time inflation was over 5% was 1991. (30 years ago).  That was also a recession known today as the S&L Crisis.  Who knows how this may impact loan performance today. In the banking industry net charge offs were 1.4%, 1.61%, and 1.29% in 1990, 91, and 92. Current bank charge off ratios are under 0.3%, very similar to credit unions.·        Unlikely most management teams today have ever managed in an inflationary environment, compounded by an inverted yield curve.Prior to Covid the US savings rate was running in the 8% range. It spiked during Covid reaching a high of 33.8% in April of 2020. As late as March of 2021 is was 26.3%. We had 15 months of Covid where the savings rate was in double digits.  It’s been under 5% for all of 2022 and was down to 3.5% in July and August. It dropped to 3.1% in September of 2022, the most recent number I have. You can see this in share growth numbers.Share growth that was double digits from Dec 2020 to March 2022. From March to June, total shares increased by 2.8 billion, but 2.1 billion of that was non-member deposits. Member deposits grew a paltry $754 million or only .04%. Annualized that is growth rate of 0.49%. Borrowed money increased by $19.8 billion over the same 3 months, an increase of 42.2%. Of that $16.5 billion is less than one year maturity – so overnight most likely. NCUA now includes supplemental capital in borrowings. It is not broken out as separate line item. No longer able to determine what part of borrowed funds is actually being included in capital amounts. I’m sure with treasury  Emergency Capital Investment Program (ECIP) funding, secondary capital amounts also grew.  Treasury’s website shows 70 credit unions receiving $2.1 Billion in ECIP Funds. Supplemental capital rules are also new.   Interesting that NCUA chose to stop displaying secondary/supplemental capital amounts when it revised the call reports in March of this year. Per NCUA’s financial trends reports, subordinated debt grew 106% in 2021, and 480% during the first 6 months of 2022. No amounts were reported in the trend reports however.Loan growth in the same period was $85.3 Billion. How was that funded. Investments dropped $2 million, corporate deposits dropped $11.2 billion, cash with the federal reserve dropped $51.1 billion, and cash in other financial institutions dropped $2.5 billion. Cash and short term investment to assets fell from 16.24% to 12.94%. I have call report data going back to 2000. December of 2018 is the only time cash and short term investment numbers were lower. In 2018, investment portfolios were within 2% of par values so liquidating investments was a cost effective way to raise liquidity.  Current investment portfolio were around 7% underwater in June, probably more today. Liquidating investments may no longer be a reasonable way to raise liquidity.Asset Quality is still strong from the loan side. Delinquency and net charge off levels are at lowest levels seen in this century. Credit Risk management tools have come a long way in the last 10-15 years. Then again, there has been no inflation in the 21st century so who knows how loan losses will be impacted. The sudden end to share growth is telling though.  We have rising interest rates, and an inverted yield curve. On top of that net worth rates are less today than they were going into the great recession of 2007. Almost all the layers of risk in financial institutions are increasing.Asset quality issues are at the heart of most liquidity events

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.In this week's episode I chat with my team member and form CLF Vice President Steve Farrar.We discuss:Purpose of CLFTwo briefings to NCUA Board in 2022Operations of the CLFNovember 2021 Letter to Congress - expiration of temporary improvementsCLF Borrowing AbilityNatural Person MembershipAgent MembershipBorrowing from the CLFand much more.Below are excerpts of NCUA Chairman Todd Harper's statement on the CLF after the October 2022 Board meeting:"...With more than $29 billion in borrowing capacity, $1.2 billion in total assets, and nearly 4,000 regular and agent members, the CLF is a vital source of emergency liquidity within the credit union system. However, the pending expiration of the temporary CLF enhancements authorized by Congress at the start of the COVID-19 pandemic remains a very real concern.We already know of several credit unions experiencing liquidity issues in recent months, including some with more than $1 billion in assets. And, with ongoing inflationary pressures and likely continued interest rate increases, there is the potential for strong headwinds slowing the economy and increasing stress on households and financial institutions. Those headwinds could soon result in even more credit unions encountering liquidity issues. So, the CLF must stay alert and ready to support the credit union system and the Share Insurance Fund.For the CLF to work best, we need a flexible agent member option. By permitting corporate credit unions to become agent members for groups of credit unions, rather than requiring them to join for their entire membership, the CLF becomes a more affordable and attractive option for corporate credit unions to participate in. Without that agent membership, credit unions with less than $250 million in assets will be much less likely to have access to a federal liquidity backstop when they need it.And, without legislation to extend the temporary CLF enhancement provisions, there will be a $9.7 billion reduction in reserve liquidity for the credit union system at the end of 2022. Likewise, the 3,648 credit unions with less than $250 million in assets that now have access to the CLF through their corporate credit unions will lose a liquidity lifeline. These credit unions include most of our nation’s 509 minority depository institutions.We know through the painful lessons of the financial crisis more than a decade ago how quickly liquidity can dry up during periods of economic and financial stress. While we are grateful to Congress for allowing the CLF enhancements of the last few years, there is a real need to keep in place the ability of corporate credit unions to serve as an CLF agent for a subset of their members. That authority will allow us to provide emergency liquidity quickly when needed...Before a storm starts, we need to ensure the liquidity pipelines of the credit union system remain in good working order. That is why my fellow Board members and I continue to call on Congress to make permanent the CLF agent member enhancement. I thank Vice Chairman Hauptman and Board Member Hood for their steadfast efforts in support of this critical legislative goal."

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.In this episode of With Flying Colors I discuss NCUA's Risk Appetite Statement with ERM Expert David Seibert.David can be reached at www.davidseibertconsulting.comCreated by the United States Congress in 1970, the National Credit Union Administration is an independent federal agency that insures deposits at federally insured credit unions, protects the members who own credit unions, charters and regulates federal credit unions, and promotes widespread financial education and consumer financial protection. The NCUA protects the safety and soundness of the credit union system by identifying, monitoring, and reducing risks to the National Credit Union Share Insurance Fund. The NCUA is subject to a variety of risks that relate to its objectives, strategies, operations, reputation, and environment. Through the NCUA’s Enterprise Risk Management (ERM) program, the agency proactively manages risks to achieve its mission, as well as to maximize opportunities across the agency. The NCUA’s ERM program is overseen by the Enterprise Risk Management Council (ERMC), which was formally established by the Executive Director in 2015. Editorial note: I was the Executive Director that established ERM at NCUA. Since that time, the ERMC has focused on building foundational elements of the NCUA’s ERM program; identifying, assessing, and prioritizing enterprise-level risks; and developing risk response plans for those risks. The ERMC is comprised of the following NCUA executives:  Deputy Executive Director, serves as ERMC Chair  Chief Financial Officer  Chief Information Officer  Chief Economist Director,Office of Examination and Insurance  Director, Office of Continuity and Security Management  Director, Office of Business Innovation  Director, Office of Consumer Financial Protection  Director, Western Region The ERMC's mission is to optimize risk management prioritization and mitigation decisions to minimize the risk that events adversely impact the successful achievement of the NCUA's strategic goals and objectives. Further, the ERMC seeks to establish a risk awareness culture and appropriate risk management processes throughout the NCUA. An effective ERM program is a good management practice. An important part of a successful ERM program is a thorough risk appetite statement. That statement is a management tool that provides guidance from agency leadership to managers and staff on the amount of risk the NCUA is willing to undertake in pursuit of its objectives. The Federal Chief Financial Officers Council’s ERM Playbook explains that risk appetite statements, “help agencies make risk informed decisions with regard to allocation of resources, management controls, and potential consequences or impacts to other parts of the organization and can reduce surprises and unexpected losses.” 1 The ERMC developed a risk appetite statement for the agency through careful consideration and evaluation of the risks the agency faces, and focused on achieving several programmatic goals, including:  Communicating guidelines about the levels of risk the NCUA is willing to accept in pursuit of its mission and goals,  Promoting consistency in understanding, measuring, and managing risk across the enterprise,  Informing agency responses to risks and decision-making to balance limited time and resources, and  Driving a more risk-aware culture. The attached NCUA Risk Appetite Statement would provide greater clarity and transparency about how the agency approaches risks in order to accomplish its mission and to provide important guidance to NCUA staff and stakeholders. This risk appetite statement will help the NCUA align risks and opportunities when making decisions and allocating resources to achieve the agency’s strategic goals. This risk appetite statement is part of the NCUA’s overall risk management approach, shown in Figure 1. The NCUA will identify, assess, prioritize, respond to, and monitor risks to an acceptable level.  

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.CUCollaborate is a consulting, software development, and digital marketing company that helps credit unions grow. Sam Brownell, its CEO, seeks to help credit unions beat banks. The company focuses on three major areas: consulting, software, and marketing. In this episode, he joins Mark Treichel to share how they have found most of their clients' growth problems in these areas and helped overcome them through their holistic approach that outlines the best growth plan for credit unions. Sam then shares how their software allows interpreting data to provide the best possible results for mitigating the pain points most consumers experience. If you are looking to beat banks and maximize your impact, then don't miss this opportunity to learn how in this conversation with Sam and Mark!

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.This is a quick take on the NCUA's recent release of a simplified CECL Tool for Small Credit Unions. NCUA issued a press release on September 14th. Which put this tool out there for credit unions under a hundred million to utilize.In the press release that the tool is intended for use by credit unions with under a hundred million in assets, although it could be used by larger credit unions based on the discretion of their management and auditors. NCUA followed this up with about an hour long webinar, which is out there on YouTube: https://www.youtube.com/watch?v=mOCBF0d7SK4I'm going to highlight about six minutes of thatWebinar:Comments from NCUA Chairman Todd HarperComments from staff on what NCUA Examiners Will Look at in the exam regarding CECL.When a credit union over $100million may want to use this method - and what they might need to do if they opt to use it, such as reach out to their CPAs and possibly have their methodology validate, andmuch more.NCUA's press release on the CECL Tool: https://www.ncua.gov/newsroom/press-release/2022/ncua-releases-simplified-cecl-tool-small-credit-unionsNCUA's Link to the tool:https://www.ncua.gov/regulation-supervision/regulatory-compliance-resources/cecl-resources/simplified-cecl-tool

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.This Wednesday NCUA has its required public budget briefing (hearing).The trade groups will say the budget is too high. Other presenters may say the same.Several of my clients have asked my thoughts on NCUA's draft budget - and that is what I provide in this episode of With Flying Colors.If you are interested in reviewing NCUA's draft budget it can be found here: https://www.ncua.gov/files/publications/budget/budget-justification-proposed-2023-2024.pdf

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.When it comes to credit transactions or lending, redlining is a real thing. Fair lending must be the standard. So in order to help prohibit these acts of discrimination, Mike Taliefero co-founded ComplianceTech. And together with his business partner was able to develop software that is capable of combining HMDA data with loan origination data. Their suite includes Lending Patterns, CRA Check, Fair Lending Magic, Fair Servicing, and more. To learn more about ComplianceTech and fair lending, join Mark Treichel as he talks to the co-founder of ComplianceTech Mike Taliefero. Discover how and why ComplianceTech started. Learn how a fair lending compliance program should look in terms of staffing, organization, and scope of review. It's all about due diligence and Mike believes in that. Learn more about what ComplianceTech offers today.

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.Credit unions make a great impact on people's lives and on the communities where they operate. But they cannot do that without corporate governance. Credit unions can have tremendous operational and financial success, but if they don't have governance, they won't be able to function fully. They'll have ethical issues inside, and that is something that you can't just wish away. In this episode, Mark Treichel speaks with Michael Daigneault, CEO of Quantum Governance. They discuss all the different aspects of corporate governance at credit unions. Discover the three-legged stool of credit union governance. Learn why supervisory committees are important and what credit union boards are doing wrong. Start building a culture of leadership and trust in your credit union today!

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.NCUA proposed a rule which revises how federal credit unions can expel members. The NCUA Board unanimously approved a proposed rule that would amend the standard federal credit union (FCU) bylaws to adopt a policy by which a FCU member may be expelled for cause by a two-thirds vote of a quorum of the FCU’s board of directors. Currently, a credit union could expel a credit union member in two ways: by a two-thirds vote of the membership present at a special meeting called for that purpose, and for non-participation in the affairs of the credit union as specified in a policy adopted and enforced by the board.NCUA Chairman Todd M. Harper said, “While there are admittedly times in which the expulsion of a member is necessary to protect credit union members and staff, this is a power that credit unions should rarely use. That’s because the Federal Credit Union Act exists so that people, particularly those of modest means, can access safe, fair, and affordable financial services. That is the statutory mission of credit unions. So, in acting today, we want to preserve this guiding principle.”Under the Credit Union Governance Modernization Act of 2022, enacted by Congress on March 15, 2022, the NCUA has until September 15, 2023, to develop a final rule that FCUs may adopt to expel a member for cause.

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Check out our website:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.Hire us and gain:• Peace of mind during your exam process• Insider knowledge of NCUA procedures and expectations• Strategies to address potential issues before they become problems• Continuous access to our extensive subject matter expertiseWith our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union passers its exam with flying colors in its next examination.Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.Every quarter NCUA Board briefs the credit union community on the state of the NCUSIF - National Credit Union Share Insurance Fund.In this episode I summarize what NCUA said during its one hour briefing and what my take is on what it means for credit unions.I discuss:CAMEL CodesInsurance PremiumsInsurance DividendsThe health of the fund.How inflation, tightening liquidity, and the economy can impact the insurance fundSmall Credit Unions potentially losing access to the Central Liquidity Facility & Morehttps://www.ncua.gov/files/agenda-items/share-insurance-fund-board-briefing-20220922.pdf