Credit Union Exam Solutions Presents With Flying Colors

John McKechnie, a credit union policy expert and former NCUA insider, shares crucial insights about the looming regulatory shifts in Washington. He discusses the potential consolidation of regulatory agencies like the NCUA into a bank-dominated framework, raising alarms about the safety of credit unions. McKechnie also delves into the risks of losing tax exemptions, highlighting tensions between banks and ‘mega’ credit unions. Advocating for proactive measures, he emphasizes the importance of member engagement and advocacy to navigate these challenges.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Have an LUA, or are you worried about getting one?  Don't miss this episode.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/The Perfect Storm: Credit Risk and Modern Collections with David ReedIn this episode, Mark Treichel sits down with David Reed, of Reed & Jolly law firm, to discuss the pressing issue of credit risk and loan quality in credit unions. As a former in-house counsel and collections manager turned credit union attorney, Reed brings unique insights into modern collection challenges and solutions.Key Topics:Analysis of NCUA's 2024 Supervisory Priorities letter and its unprecedented focus on credit riskRecord-high delinquency rates in credit cards and used car loansThe need to modernize collection practices with new technology and communication methodsImportance of board reporting and corporate governance in managing credit riskBalancing member service with sound financial practices in today's economic environmentGuest: David Reed Contact: david@reedandjolly.com | 703-675-9578

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Show Notes: With Flying Colors - Interview with Mike Macchiarola of Olden LaneGuest: Mike Macchiarola, Olden Lane (broker-dealer and investment advisor serving credit unions)Key Topics Discussed:- Interest Rate Environment: Impact of "higher for longer" rates on credit unions, with industry cost of funds rising to 218 basis points- Regulatory Changes: Shift in regulatory focus under new NCUA leadership and potential Trump administration impacts- Consolidation Trends: Record year for credit union-bank transactions (22 in 2023) and increasing branch deal activity- Technology & AI: Growing importance of digital platforms while maintaining personal touch ("clicks and mortars")- Profitability Challenges: Industry ROA at 64 basis points with significant variance across institutions- Leadership Demographics: Addressing aging C-suite and board populations while attracting younger talent- Consumer Financial Health: Rising credit card delinquencies (11%) and increasing household debt levels- Fee Income: Evolving regulatory landscape around NSF and overdraft feesContact Information:- Website: www.oldenlane.com- LinkedIn: Mike Macchiarola- Email: Available through contact form on Olden Lane websiteNotable Quote: "If it don't make sense, it don't make dollars." - Mike Macchiarola on credit union profitability

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Press ReleasesSecretary Bessent Announces Intention to Appoint First Deputy Comptroller of the Office of the Comptroller of the CurrencyFebruary 7, 2025WASHINGTON – Secretary of the Treasury Scott Bessent today announced his intention to appoint Rodney E. Hood as a Deputy Comptroller and to designate him the First Deputy Comptroller of the Office of the Comptroller of the Currency (OCC). In this role, Mr. Hood will also serve as Acting Comptroller of the Currency.“The strong leadership and career experience of Rodney Hood will strengthen the OCC’s efforts to ensure the safety and soundness of the banking system while also enhancing economic growth," said Secretary Bessent.“I remain steadfastly committed to serving the American people and the banking system by creating a regulatory structure that fulfills our obligations, fosters innovation, and promotes financial inclusion, including those Americans who have been debanked and underserved,” said Mr. Hood.The OCC is a bureau within the Department of the Treasury, and the Comptroller of the Currency is appointed by the President with the advice and consent of the Senate. By statute (12 U.S.C. § 4), the Treasury Secretary is responsible for appointing up to four Deputy Comptrollers of the Currency and designating one as the First Deputy Comptroller. During a vacancy in the position of Comptroller, the First Deputy Comptroller possesses the powers and performs the duties of the office of Comptroller.Mr. Hood was previously confirmed by the U.S. Senate in 2005 and again in 2019 to serve on the National Credit Union Administration Board. In 2019, President Donald J. Trump designated him as Chairman of the NCUA Board.  Before entering public service, Mr. Hood held senior roles in retail finance, commercial banking, affordable housing, and community development at JPMorgan Chase, GE Capital, Bank of America, Wells Fargo, and North Carolina Mutual Life Insurance Company.A North Carolina native, Mr. Hood holds a bachelor’s degree from the University of North Carolina at Chapel Hill.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Key Topics to Include:Economic data and analysisFinancial statement reviewKey performance/risk indicatorsLiquidity reportingInterest rate risk analysisInvestment portfolio oversightScenario testing and stress analysisModel validation and risk assessmentCredit risk integrationDocumentation and minutes

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Summary:In this special Archive episode of With Flying Colors, Mark explores the meaning and implications of "agreed upon corrective action" in credit union examinations. Drawing from his experience at NCUA, Mark explains how this term appears on examination reports and why its proper implementation is crucial for credit unions.Key Points Covered:Mark begins by breaking down the literal meaning of "agreed upon" using dictionary definitions, emphasizing that it means coming to a mutual arrangement or understanding. He shares a recent case where a small credit union reached out about their examination frustrations, highlighting how the agreed-upon process can sometimes break down.The Process:The examination report process typically includes a draft phase where credit unions can review and discuss findings with examiners. However, due to year-end pressures and internal goals, sometimes reports are finalized without proper consultation. Mark explains that the examination report's cover page explicitly states it should document "agreed upon corrective actions," making it important for credit unions to ensure they actually have input in this process.Recommendations for Credit Unions:Mark advises credit unions to push back when they don't receive proper opportunity for input. He suggests starting with the examiner, then moving up to the supervisory examiner if necessary. While NCUA has final authority on safety and soundness issues, credit unions should still receive the opportunity to influence report language to better serve their needs and their members' interests.Important Context:The podcast notes that NCUA implemented a higher level of review for examination reports, requiring supervisory review. While this creates more consistency, it can sometimes make immediate dialogue more challenging, especially when reports are delivered as final without prior discussion.Closing Thoughts:Mark emphasizes that credit unions must decide when to "go along to get along" versus when to advocate for changes. The goal should be finding language that satisfies both NCUA's safety and soundness requirements and the credit union's operational needs.Contact Information:Listeners can learn more about Mark's services at markteichel.com. The podcast releases new episodes once or twice weekly, providing expert insights on achieving success with NCUA.

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Kyle S. Hauptman Designated as NCUA Board ChairmanALEXANDRIA, Va. (Jan. 22, 2025) – President Donald J. Trump has  National Credit Union Administration Vice Chairman Kyle S. Hauptman as the thirteenth Chairman of the NCUA Board.“I am deeply honored that President Trump has asked me to serve as Chairman of NCUA,” Chairman Hauptman said. “I look forward to leading the agency’s dedicated professionals and working with my Board colleagues to create a regulatory structure that promotes growth, opportunity, and innovation within the credit union system.“My priorities as Chairman include:Re-examining the current NCUA budgeting process.Convening groups of NCUA employees to identify achievable internal efficiencies to reduce unnecessary frictions in the agency’s operations.Promoting the appropriate use of artificial intelligence (AI) as a tool for NCUA employees. One goal is enhancing productivity, but it’s also true that regulators who use technologies are more apt to understand why the regulated use them.Focusing on true financial inclusion, which means removing barriers to de novo credit unions and removing the ‘pain points’ that have led to fewer and fewer small credit unions. NCUA should be mindful that the only people who think compliance is easy are those that don’t have to do it.Codifying our procedures to protect Americans from regulation-by-enforcement. For example, no enforcement action should ever set - even clarify - policy. In America and other free societies, the sequence is: set speed limits, then give speeding tickets (no one has any obligation to be aware of someone else’s ticket).Making clear that credit unions and their members are best positioned to assess their communities’ climate risks.Re-assessing NCUA policies that may, even inadvertently, dissuade credit unions from serving low-income areas. This includes language around overdraft policies, particularly for credit unions located in states with especially punitive government late fees/penalties.Right-sizing credit unions’ obligations where possible under the Bank Secrecy Act, including NCUA’s regulations surrounding Suspicious Activity Reports.”

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/Episode Summary:In this episode of With Flying Colors, host Mark Treichel sits down with Steve Farrar, a former NCUA examiner and capital expert, to discuss the complexities of credit union capital management. With decades of experience, Steve shares insights into the evolution of capital regulations, the purpose of regulatory capital, and the challenges credit unions face in maintaining the right balance between risk and growth.Key Takeaways:Steve Farr’s Background: Steve shares his extensive career journey, from starting as an NCUA examiner in 1987 to becoming a key player in regulatory capital rulemaking.Purpose of Regulatory Capital: Understand why capital is essential for credit unions, from absorbing losses to maintaining public confidence.Net Worth Ratios and PCA: Dive into the history and significance of net worth ratios in ensuring credit union stability.New Complex Credit Union Leverage Ratio (CCULR): Learn about the simplified capital adequacy measure introduced in 2023 and its implications for credit unions.Risk-Based Capital: Explore how this tool provides credit unions with a tailored perspective on their capital adequacy.Capital Management Strategies: Discover best practices for developing a capital plan that aligns with your credit union’s unique risks and opportunities.Listener Questions:Have questions about credit union capital or topics from today’s episode? Send them to Mark via email at cu.exam.solutions@marktreichel.com or through his website at www.marktreichel.com. Your question might be featured in a future episode!Contact Information:For consulting inquiries or to learn more about how Mark and Steve can assist your credit union, reach out using the above contact details.Closing Thoughts:This episode highlights the importance of a strategic approach to capital management. Whether you’re grappling with regulatory requirements or looking to optimize your capital structure, this conversation offers valuable guidance for credit union leaders

www.marktreichel.comhttps://www.linkedin.com/in/mark-treichel/## Episode Summary: NSF and Overdraft Fees - What You Need to KnowIn this episode, Mark Treichel interviews Joe Goldberg, former director of the NCUA's division of consumer compliance policy and outreach, about the December 2024 NCUA letter addressing consumer harm from certain overdraft and NSF fee practices.### Key Topics Covered:Joe Goldberg discusses NCUA's recent guidance on problematic overdraft fee practices, including:1. Authorized Positive Settled Negative (APSN) fees - When a debit transaction is approved with sufficient funds but settles negative due to intervening transactions2. Multiple re-presentment fees - When members are charged multiple NSF fees for the same check/ACH item being represented3. Return Deposited Item (RDI) fees - When members are charged for depositing third-party checks that are returnedThe episode also covers:- NCUA's historical approach to overdraft oversight since 2005- Risk management principles credit unions should consider- The agency's current supervisory approach and expectations- New research findings on overdraft/NSF fee revenue at credit unions### Key Takeaways:- Credit unions should review their overdraft programs for compliance with current guidance- Self-identification and correction of issues is viewed favorably by NCUA- Overdraft/NSF fees typically comprise 2-5% of credit union revenue- The agency will continue monitoring these fees through call report data- Credit unions should ensure fee practices are fair and clearly disclosed to members### Featured Guest:Joe Goldberg - Former Director, Division of Consumer Compliance Policy and Outreach at NCUA (2014-2021)### Host:Mark Treichel - With Flying Colors Podcast