Credit Union Exam Solutions Presents With Flying Colors

Steve Farr and Todd Miller, both former NCUA employees with extensive backgrounds in credit union risk management, delve into the intricacies of risk appetite and frameworks. They discuss how a strong risk culture is essential for effective governance and emphasize the importance of documented risk appetite statements. The trio of defenses in risk management is explored, illustrating how frontline units, risk management, and internal audits work together. They highlight best practices, including transparency in communication and the need for action plans when approaching risk limits.

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.## Episode SummaryMark Treichel discusses Credit Union Service Organizations (CUSOs) and CUSO examinations, drawing from his experience as a former NCUA Regional Director. He compares CUSO exams to credit union exams and provides insights into what credit unions and CUSOs can expect during these reviews.## Key Points1. CUSO exam frequency and types:   - Less frequent than credit union exams   - Three types: integrated exams, standalone exams, and independent reviews2. NCUA's authority to examine CUSOs:   - Based on agreements between credit unions and CUSOs   - Allows NCUA complete access to CUSO books and records3. Types of CUSOs likely to be examined:   - Those offering new or growing services (e.g., commercial loans, student lending, FinTech)4. NCUA's focus during CUSO exams:   - Systemic risks   - Individual credit union risks   - New or growing services5. Documents NCUA may request:   - Strategic plans   - Disaster recovery plans   - Organizational charts   - Board minutes   - Customer lists   - Policies and procedures6. Corporate veil considerations:   - Ensuring independence between CUSO and credit union operations7. "Primarily serves" requirement:   - Case-by-case determination   - Based on totality of circumstances## Notable Quotes"Getting a CUSO review, if your books and records are clean and your services are well documented and you can do a good job of controlling the narrative when NCUA comes in, when that happens, it's actually, can be a plus."## Upcoming NCUA Developments- Proposed rule on eligible obligations and loan participations expected between July and September## Resources Mentioned- Credit Union Exam Solutions: marktrico.com- CUSO Law: cusolaw.com- Previous podcast episode with Brian Lauer on CUSO regulation changes (episode number to be added in show notes)## Call to ActionSubscribe to "With Flying Colors" on your favorite podcast app for more expert insights on achieving success with NCUA.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Guest Speakers:- Todd Miller - Steve Farrar Key Topics Covered:1. Definition of Corporate Governance- Set of processes, customs, policies, and laws affecting how a corporation is directed and controlled- Structure of rules, practices, and processes that determine corporate culture- Board responsibility for setting corporate culture2. Resources for Directors- NCUA has limited specific resources on corporate governance- FDIC resources recommended:  * Pocket Guide for Directors  * 2016 Supervisory Insights  * Proposed guidance for larger institutions  * YouTube video on corporate governance3. Key Board Responsibilities:- Setting appropriate tone and corporate culture- Approving and overseeing strategic planning (3-5 year outlook recommended)- Establishing and approving policies- Creating code of ethics- Providing active oversight of management- Selecting qualified executive officers- Ensuring ongoing director training- Conducting board self-assessments- Overseeing compensation and performance management4. Important Considerations:- Board composition and diversity of skills/backgrounds- Documentation of strategic plan changes- Importance of independent but cooperative relationship with management- Training and self-assessment requirements- Three lines of defense in risk management:  * Frontline units  * Independent risk management  * Internal auditNotable Quotes:"By and large, directors are very dedicated and do a very good job of keeping our system safe and sound." - Todd MillerResources Mentioned:- FDIC Director's Resource Center- NCUA Required Policies List- Quantum Governance (board training resource)

Joe Goldberg, a former NCUA official specializing in fair lending, sheds light on essential fair lending practices for credit unions. He discusses the significance of laws like the Equal Credit Opportunity Act and the Fair Housing Act, emphasizing that credit decisions should be free of discrimination. Goldberg also tackles the challenges credit unions face during NCUA examinations and explains the nuances of disparate treatment versus disparate impact. His insights provide valuable guidance for ensuring compliance and promoting equity in lending.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/www.oldenlane.com1. Mike Macchiarola from Olden Lane discusses NCUA-assisted credit union mergers and why we may see more of them in the near future.2. Current industry challenges:   - 10% of credit unions are now CAMEL 3, 4 or 5   - ROA is at 69 basis points, lowest in a decade (excluding COVID dip)   - 764 credit unions have zero or negative ROA   - Rising cost of funds, asset quality concerns, fee compression3. Importance of pursuing mergers while credit unions still have "self-determination" rather than waiting for NCUA to dictate terms.4. Overview of the NCUA's Merger Partner Registry and how it's used when an assisted merger is needed.5. Process for NCUA-assisted mergers:   - NCUA identifies potential acquirers from registry   - Interested credit unions sign NDA and receive bidder's package   - Acquirers evaluate opportunity under time pressure   - NCUA seeks lowest-cost alternative but considers multiple factors6. Advice for credit unions considering assisted mergers:   - Hire experienced advisors to help navigate the process   - Be prepared to make decisions with imperfect information   - Understand NCUA's preference for full mergers over purchase & assumptions7. Importance of maintaining strong capital position to be an attractive merger partner.8. Discussion of how NCUA balances cost considerations with ensuring long-term stability when selecting merger partners.Key Quote: "Don't get yourself to the place where the NCUA is dictating terms because your option set is closing. You owe it to your membership, your staff, your management team, your legacy of your institution, its brand and its community not to get there." - Mike MacchiarolaCall to Action: Credit unions considering mergers or concerned about their long-term viability should visit www.oldenlane.com to learn how Olden Lane can assist with strategic planning and merger navigation.

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.# With Flying Colors Podcast: Exam Appeals at the Regional Level## Guest: Todd Miller- Former NCUA employee with nearly 34 years of experience- Roles included examiner, problem case officer, regional capital market specialist, and director of special actions in the western region- Served on NCUA's supervisory review committee## Key Points:1. Recent changes in NCUA's exam report process:   - Reports now reviewed at higher levels before issuance   - Credit unions no longer see draft reports, only draft exam findings and DORs   - Camel codes not discussed during exams2. Avoiding appeals:   - Communicate openly with exam staff throughout the process   - Understand risk ratings and proposed DORs/exam findings during the exam   - Negotiate corrective actions during the exam when possible3. Appeal process steps:   - Start with the examiner, then supervisory examiner, then regional director   - Adhere to timeframes for formal appeals (within 30 days)   - Gather documentation to prove your point4. Considerations for appealing:   - Weigh the cost-benefit of appealing vs. implementing changes   - Don't fear retaliation; appeals can be successful at the regional director level   - Start with the supervisory examiner, even for complex issues involving specialists5. Handling personality conflicts:   - Can be addressed as part of the appeal process   - Supervisors may reassign examiners depending on the situation## Takeaways:- Communication is key to avoiding surprises and potential appeals- Don't be afraid to appeal if there's a material disagreement- Appeals at higher levels (beyond regional director) can be more costly## Contact Information:- Email: cuexamsolutions@marktreichel.com- Website: www.marktreichel.comHere's a draft of show notes for the podcast episode. These notes summarize the key points discussed, including information about the guest, changes in NCUA's exam process, steps for avoiding and handling appeals, and important considerations for credit unions. I've also included the contact information provided at the end of the episode.Let me know if you'd like me to modify or expand on any part of these show notes.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/1. NCUA's Document of Resolution (DOR):   - Issued for serious, systemic problems within credit unions   - Indicates deep-rooted issues that require immediate attention   - Not a routine action, but a significant regulatory step2. Management Concerns:   - NCUA issues DORs when they conclude management is:     a) Unwilling to address the underlying problems, or     b) Unable to effectively tackle the issues   - Suggests a breakdown in the credit union's leadership or operational practices3. NCUA's Approach:   - These actions are not taken lightly by the NCUA   - Thorough investigation and consideration precede a DOR   - Indicates NCUA's serious concerns about the credit union's stability or compliance4. Rarity of Action:   - DORs of this nature are issued on rare occasions   - Underscores the severity of the situation when they are issued5. Professional Assistance:   - Expert help is available for credit unions facing NCUA actions   - Proper guidance can lead to time and cost savings   - May help in addressing NCUA concerns more effectivelyCall to Action: Reach out to learn how our experienced team can assist your credit union in navigating NCUA actions. We specialize in helping clients save time and money while addressing regulatory concerns.Background Context:The National Credit Union Administration (NCUA) is the federal agency that regulates, charters, and supervises federal credit unions. Their actions, especially severe ones like issuing a DOR, can have significant implications for a credit union's operations and future.Is there any specific area you'd like me to elaborate on further?

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.Guest: Vin Vieten, former commercial lender and NCUA regulatorhttps://www.linkedin.com/in/mark-treichel/Key Points:1. Credit risk rating systems are a standard practice in commercial lending and now required by NCUA regulations2. A good credit risk rating system should be dynamic, accurate, and updated regularly3. Credit risk ratings typically use a scale of 1-8, with 1-4 being "pass" grades and higher numbers indicating increasing risk4. Both quantitative and qualitative factors should be considered when assigning credit risk ratings5. Regular monitoring and updating of credit risk ratings can benefit both the credit union and the borrowerKey Quotes:"Rating credit risk is a standard practice accepted practice. In managing commercial loan risk, all the other regulators focus on it...""To be effective, the risk rating system should be accurate at all times...""I personally believe that the quantitative is the easy part. It's that qualitative. And that's where your skills as a lender come in."Resources Mentioned:1. NCUA Part 723 (MBL/Commercial Lending Rule)2. NCUA Examiner's Guide on Rating Credit Risk3. Interagency Guidance on Credit Risk Review4. OCC Handbook on Rating Credit Risk (2001)Takeaway: Implementing and maintaining an accurate credit risk rating system is crucial for effective commercial lending management and regulatory compliance.

Set up a call:https://calendly.com/cuexamsolutions/talk-to-mark-about-any-exam-topic?month=2024-10www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Host: Mark TreichelGuests: Todd Miller and Steve Farrar, former NCUA examinersKey Points:1. NCUA implemented a new policy requiring higher-level review of all examination reports before release to credit unions.2. The review process varies based on credit union size and CAMEL rating:   - Under $50 million and CAMEL 1-3: Supervisor review only (10 business days)   - $50-250 million or CAMEL 4-5: Division of Supervision review (additional 15 days)    - Over $250 million: Associate Regional Director review   - Over $1 billion: Additional reviews, can take up to 55 days total3. Exam cycles:   - Well-run credit unions under $1 billion: 14-20 months between exams   - Most credit unions: Annual exams (8-12 months apart)   - CAMEL 3 ratings: Follow-up within 180 days    - CAMEL 4 ratings: Follow-up within 120 days4. Challenges with the review process:   - Can delay report delivery beyond NCUA's 90-day goal   - May introduce new issues not discussed during fieldwork   - Lack of transparency for credit unions on report status5. Additional exam types discussed:   - Fair lending exams   - CUSO reviews   - Special follow-ups for recordkeeping or BSA issuesThe hosts emphasize the importance of credit unions staying in contact with examiners if reports are delayed and note that while the review process has benefits, it can sometimes lead to frustrations with timing and new findings. Are 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.Understanding HMDA## Episode SummaryIn this episode of With Flying Colors, host Mark Treichel interviews Joe Goldberg, a retired NCUA consumer compliance expert, about the Home Mortgage Disclosure Act (HMDA). Joe provides an in-depth overview of HMDA, its purpose, requirements, and importance for credit unions.## Key Points1. HMDA Background and Purpose   - Enacted in 1975 to address housing issues and prevent discrimination   - Provides over 45 years of good mortgage data2. HMDA Requirements   - Applies to credit unions meeting specific criteria (asset size, location, loan activity, and volume)   - Requires collection and reporting of 48 data points on mortgage applications and loans3. Data Collection and Reporting   - Data must be recorded in a Loan Application Register (LAR)   - LARs must be updated quarterly   - Annual submission deadline: March 1st of the following year4. Partial Exemptions   - Available for institutions originating fewer than 500 covered closed-end mortgages or open-end lines of credit   - Reduces reporting requirements from 48 to 22 data points5. Use of HMDA Data   - Regulators use it for fair lending programs and compliance checks   - Credit unions can use it to assess their performance and improve fair lending programs6. Compliance Tips   - File data even if late to avoid more serious violations   - Utilize resources like FFIEC's "Getting It Right Guide" and CFPB's website## Notable Quotes"HMDA goes back to 1975, which is when it was enacted. And so, as a result of that, we actually have mortgage data, good mortgage data, going back for over 45 years.""Even if you're late, file the data.""I just think it's important for credit unions to understand, though, that even though complying with HMDA can be a chore, that there is a valid reason for collecting the HMDA data, and that is to try and ensure that mortgage credit is offered and extended to everybody based on mortgage related criteria."## Resources Mentioned- NCUA Regulatory Alerts- FFIEC Website (www.ffiec.gov)- FFIEC's "Getting It Right Guide"- Consumer Financial Protection Bureau Website (consumerfinance.gov)- Lending Patterns software by Compliance Tech (used by NCUA)## About the GuestJoe Goldberg is a retired NCUA consumer compliance expert with over 40 years of experience as a lawyer. He has taught consumer law and worked in various aspects of financial regulation.## SponsorThis episode is sponsored by Credit Union Exam Solutions by Mark Treichel. Visit marktreichel.com for more information on optimizing your results with NCUA.