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.marktreichel.comncuainterprehey, this is Mark Treichel with another episode of With Flying Colors. Today I want to chat about, , some things I've been picking up on by reading the American, , banker and also by listening to a podcast called the ABA Banking Journal, which I'm gonna play a snip of Pure, , shortly, but, There's some interesting things going on in the economy for many reasons, and there was an article in the American Banker, , that was called.There's an article in the American Banker called How Unrealized Bond Losses Are Hampering the Banking Industry. It's a fascinating article, but it talks about merger momentum slowing in banks because of the upside down nature of hold to maturity, investments, and other investments.If you will, but, in my mind, I think actually those unrealized bond losses in the credit union industry are likely going to speed up the mergers in credit unions. By the way, mergers in credit unions in 2022 were up about 20% over the 2021 rate. That's if you annualize the three quarters of this. Of this year into a full year., mergers are up about 20% and in a minute I'll tell you why I think mergers will likely be going up as well. But here's this, , a couple minute snippet of the ABA Banking Journal podcast that was published, , earlier or mid-November. So one final question for you. The, , um, you know, we, we, we've, we hear a lot about the, , we talk a lot in this industry about the, um, the credit union acquisitions of banks.Um, I, I don't think, I feel like we haven't seen as many in the, in the last year as we've seen kind of pre, pre pandemic, certainly. Um, what's the, what, what's your read on, , the long term tri on credit unions acquiring tax bank community? Well, you know, number one, um, I don't wanna, you know, downplay the concern that banking industry has over it, but there really haven't been that many in the whole scheme of things.Right. Um, you know, I mean, it's still a very, very small component of overall bank m and a. Um, that being said, , credit unions are able to pay cash to the seller and in an environment right now where you. The buying power of, , publicly traded banks is, , adjusting. Um, stock deals are maybe becoming a little more expensive.You know, people who can walk in, it's like buying a house. If somebody can walk in with a cash offer, you have to entertain it, right? So I think we'll see more credit union deals. I think, you know, thanks for better, for worse, have a responsibility to their investors to at least review those offers. , you know, um, and again, you know, it's gonna be hard to compete against a, a group that can pay cash and make the mathematics work like, like these credit union deals. All right, so that was interesting. I don't know if you caught it, but they talked about what do you think about the acquisition by credit unions?, Credit unions acquiring tax, paying community banks with a little needle there that it takes taxes out of the system if a, if a bank is acquired by a credit union, , which is there. The ABAs one argument about why it shouldn't be allowed. , and this is, I'm digressing a little bit, but , it was very interesting.The big difference between a bank acquiring another bank is they acquire it with stock. If stocks, if the stocks are down at both banks, it makes the acquisition less likely to go through at the banking level. Now, credit union deals are cash deals because there is no stock, and that makes them better deals.And as the, , guest on the show pointed out, I think at the dismay of the ABA person hosting it, , The credit unions are positioned to do it with cash and, , the bank stockholders have a duty to try and get the best return, which is why credit unions often win in that scenario. , but the article, so, so kind of linking that to the article, , the article in the American Banker says Merger momentum has slowed as bank valuations take a hit.And it goes on to say the unrealized bond l

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.Hey, this is Mark Treichel with another episode of With Flying Colors. The FTX fiasco, , is amazingly interesting. , it's kind of like driving by a. Crash on the highway. , and you hope that nobody, you know, was involved and lost any money or lost any lives. But, , there's a, a wonderful quote by, , billionaire, ,Warren Buffet who said, only when the tide goes out do you discover who's been swimming naked.Well, , that quote's been used a lot on different articles and different podcasts and different news articles that I've seen relative to this FTX situation. But today I want to talk about reputation, risk, and offering crypto to your members. So, , there's an article in American Banker dated yesterday by Claire William.And I would like to discuss the contents of that letter here on this podcast. The article is called F D I C, looking closely at Farmington State Bank in the FTX fiasco, the Federal Deposit Insurance Corporation and the Federal Reserve are looking closely at Farmington State. A small bank connected to the failed crypto exchange ftx.According to Acting FDI Seed chair Marty Greenberg Ft. FTX bankruptcy pause have revealed that Alameda Research, a hedge fund, affiliated with the exchange invested 11.5 million in the tiny Farmington State Bank, which now does business as Moonstone Bank in Washington State. That's a significant.Particularly get this for this bank, which has about 21.7 million of assets at the as of the second quarter and has only about 10 million in deposits for most of the decades. So this is extremely small for a bank, , and would be considered small on credit union standards. Article goes on to say that Revelation has spurred questions about Ft.X's reach within the banking system and Sam. Bankman Frees or SBF as he's been known to be called plans for it in the future, previously thought to be insulated from crypto turmoil. Bank regulators, including Gruenberg, have told Congress that their caution towards the crypto market has helped keep the traditional financial sector safe as crypto markets whipsaw.Greenberg in a press conference issued after the release of the agency's quarterly banking profile, said that the FDIC and the Fed are scrutinizing the Farmington situation. He's also considering other ways FTX might have ties to the banking sector. There's a lot of review as well that's going on withFTX. Gruenberg said, we're learning more about the operations of that company and whether there might be any additional connections to the banking system. We're not aware of them now, but there's a careful review ongoing. We'll see what it. Reveal. It's unclear to what extent regulators were involved in Alameda's investment into Farmington State Bank.Farmington was acquired by a holding company led. Jean Jin, the owner of Dell Tech Bank, whose best known client is the stablecoin issuer tether in 2020. After that, it applied and was approved by the Federal Reserve Bank of San Francisco in 2021. Then Alamia.Alameda acquired a stake of a little less than 10% than the bank just below the threshold for regulatory approval, huh? Just below the level for regulatory approval trying to stay off the radar in a press release. The bank said it has remained in close communication with our regulators. Throughout its business evolution and has built a robust processes, programs, and controls to ensure all of our activities comply with all applicable laws and regulations.It says that Alameda has only a non-controlling stake. And that FTX unwinding has unfairly affected its reputation. That's, so that's why I opened with reputation risk. Reputation risk, as you know, is something that NCUA examines you on... be careful offering apps that allow your members to buy crypto - yes it is buyer beware but they may blame you.  Is the risk worth the reward?marktreichel.com#linkedinbytreichel 

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.By notation vote, the NCUA Board approved moving management and oversight of Asset Management and Assistance Center (AMAC) activities from the Southern Region to an independent office led by the President of AMAC.The NCUA Board also approved by notation vote the transfer of examination and supervision responsibilities for the state of Ohio from the Eastern Region to the Southern Region. Seventeen full-time employees will transfer from the Eastern Region to the Southern Region to support the realignment. Both actions are effective January 1, 2023https://www.linkedin.com/in/mark-treichel/www.marktreichel.com/podcast

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 we discuss the fraud triangle and why NCUA will always do exams onsite.What is the Fraud Triangle?The fraud triangle is a framework commonly used in auditing to explain the reason behind an individual’s decision to commit fraud. The fraud triangle outlines three components that contribute to increasing the risk of fraud: (1) opportunity, (2) incentive, and (3) rationalization.

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 with Joe Goldberg - former head of NCUA's Fair Lending Program.NCUA examines federal credit unions with assets less than $10 billion; state supervisory authorities examine state-chartered credit unions with assets less than $10 billion; and the CFPB examines credit unions with assets over $10 billion.NCUA offers a number of fair lending resources for credit unions which are available on the Fair Lending Compliance Resources page. Materials include a fair lending guide, regulatory alerts, webinars, HMDA resources, exam procedures, and other related information.Fair lending laws and regulations include: the Equal Credit Opportunity Act (ECOA), and its implementing regulation, Regulation B; the Home Mortgage Disclosure Act (HMDA), and its implementing regulation, Regulation C; and the Fair Housing Act (FH Act). In addition, the National Credit Union Administration (NCUA) regulations contain nondiscrimination requirements for real estate-related loans. See 12 CFR § 701.31.At the conclusion of a fair lending examination, a credit union will receive a written examination report including an Overview, Supplementary Facts, Findings, Loan Exceptions and, if applicable, a Document of Resolution.At the conclusion of a supervision contact, a credit union will receive written results including an Overview, Supplementary Facts, and Findings. If the off-site supervision contact identifies deficiencies, OCFP will provide recommendations for corrective action.

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 had its November Board meeting with one item. Per the NCUA Board Action Bulletin:ALEXANDRIA, Va. (Nov. 17, 2022) – The National Credit Union Administration Board held its tenth open meeting—and third in person—of 2022. During the meeting, the NCUA’s Chief Financial Officer briefed the NCUA Board on the performance of the National Credit Union Share Insurance Fund for the quarter ending on September 30, 2022.“The Share Insurance Fund performed well in the third quarter,” NCUA Chairman Todd M. Harper said. “The changes in the interest rate environment over the last several months increased the income and earnings of the Fund.”The Share Insurance Fund reported net income of $26.2 million, $20.2 billion in assets, and $73.7 million in total income for the third quarter of 2022. The equity ratio for the Fund remains at 1.26 percent.Per NCUA policy, the equity ratio is updated on a semi-annual basis. The equity ratio as of June 30, 2022, was 1.26 percent, which remained the same from December 2021, and was calculated using an insured share base of $1.69 trillion on June 30, 2022.Additionally, for the third quarter of 2022:The number of composite CAMELS codes 4 and 5 credit unions increased 2.6 percent from the end of the second quarter, to 120 from 117. Assets for these credit unions increased 2.7 percent from the second quarter to $3.8 billion from $3.7 billion.The number of composite CAMELS code 3 credit unions increased 1.7 percent from the end of the second quarter, to 768 from 755. Assets for these credit unions increased 7.6 percent from the second quarter to $47.9 billion from $44.5 billion.“Unfortunately, the Share Insurance Fund report this quarter also shows another side of rising interest rates with an increase in the number of credit unions with a composite CAMELS code 3, 4, or 5 rating,” Chairman Harper said. “Additionally, several credit unions have experienced liquidity issues recently, including some with more than $1 billion in assets. And, with ongoing inflationary pressures and continued interest rate increases likely, the potential for headwinds slowing the economy and increasing stress on households and financial institutions continues to grow.“The NCUA Board will continue to monitor trends and developments in the economy, financial markets, and credit unions. If any issues arise, the Board will also be ready to take action to protect credit union members and the Share Insurance Fund.”At the end of the third quarter of 2022, there were four federally insured credit union failures that cost the Share Insurance Fund $7.0 million in losses.The third-quarter figures are preliminary and unaudited. Additional information on the performance of the Share Insurance Fund is available on NCUA.gov.Access Board Action Memorandums and NCUA rule changes at www.ncua.gov. The NCUA also live streams, archives, and posts videos of open Board meetings online.

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.

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.