Credit Union Exam Solutions Presents With Flying Colors

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.

Why Does NCUA Ask to Meet with CU Board without CU Staff Present?Join Mark Treichel and his team as they delve into the rare but important topic of why the National Credit Union Administration (NCUA) might ask to meet with a credit union's board of directors without staff present. In this episode, Mark, Steve Farrar, and Todd Miller share personal experiences and insights from their extensive careers in credit union examination and supervision. Learn about the reasons behind such requests, how to handle these meetings, and the implications they might have for your credit union.  Guest Introductions Steve Farrar's Background Todd Miller's Background Increasing NCUA Board Meetings without Staff Board Chair vs. Full Board Meetings Meeting with Specific Board Members Supervisory Committee Conversations Handling Full Board Meetings without Staff Considerations for Board Responses Recording Meetings and Legal Counsel Emotional Responses and Agreement Caution Conclusion 

Guest: Vin Vieten, former NCUA Senior Credit SpecialistKey Topics:- Financial analysis for commercial lending- Credit proposal best practices - Global cash flow analysisKey Takeaways:1. Financial Analysis:   - Should be well-organized, consistent, and comprehensive   - Analyze 3+ years of financial performance to establish trends   - Examine income statement, balance sheet, and cash flow   - Provide value to borrowers through expert financial review2. Credit Proposals:   - Use a standard, logical format    - Include key information like ownership structure, industry analysis, repayment ability   - List all direct and related debt to show total relationship exposure   - Assign and justify an appropriate risk rating   - Highlight exceptions to policy on the cover page3. Global Cash Flow:   - Analyzes borrower, guarantor, and related entities to understand overall risk   - Depth of analysis depends on transaction complexity and risk level   - Should drive understanding of risk, not just regulatory compliance   - Default expectation is to obtain guarantees; exceptions must be well-documentedResources Mentioned:- NCUA Examiner's Guide on financial analysis and credit approval documents- Preamble to the proposed MBL rule from July 2015Contact: https://www.linkedin.com/in/mark-treichel/

# With Flying Colors Podcast: CAMEL Code 4 - What You Need to Know Episode SummaryMark Treichel discusses CAMEL Code 4 ratings for credit unions with guests Steve Farrar and Todd Miller, both former NCUA employees. They explore what a Code 4 rating means, its implications, and what credit unions should expect.## Key Points1. CAMEL Code 4 Definition:   - Indicates unsafe and unsound practices or conditions   - Risk management practices considered unacceptable for credit union size/complexity   - NCUA may have concerns about management's ability to correct problems2. Implications of a Code 4 Rating:   - Administrative action (usually unpublished Letter of Understanding and Agreement)   - Examinations every 120 days (6-12 weeks of examiner presence annually)   - Potential loss of Federal Reserve daylight overdrafts   - Possible assignment to NCUA's Division of Special Actions   - Federal Home Loan Bank may eventually be notified, potentially affecting borrowing terms3. Board and Management Responsibilities:   - Increased expectation for board to hold management accountable   - More frequent progress reporting to the board   - Need to authorize resources for problem resolution4. Financial Implications:   - May affect NCUSIF equity ratio, especially for larger credit unions   - Potential collateral requirements from lenders   - Possible issues with mortgage sales on secondary market5. Regulatory Oversight:   - NCUA approval required for changes in senior management and board members   - More detailed Document of Resolution (DOR) requirements6. Comparison to CAMEL Code 5:   - Code 5 indicates imminent failure risk   - Limited options, often leading to regulator-driven mergers or conservatorship## Guest Backgrounds- Steve Farrar: 30-year NCUA career, split between field work and central office roles- Todd Miller: 34-year NCUA career, including roles as examiner, capital market specialist, and director of special actions## Additional Notes- Discussion of historical tools like PUED (Prior Undivided Earnings Deficit) no longer available to NCUA- Emphasis on the challenging but potentially rewarding nature of working with troubled credit unions

Title: Credit Risk - NCUA's Top Exam Priority for 2024Key Points:- Credit risk is NCUA's #1 exam priority for 2024- Economic conditions are changing the credit risk environment - Trends show weakening credit quality and increasing delinquencies- Consumers have fallen behind inflation for over 2 years- NCUA is directing credit unions back to credit risk management fundamentals- Examiners will review lending programs, risk management practices, loan modifications, collections, and allowance for credit lossesGuests:- Steve Farrar - Former NCUA problem case officer and VP of Central Liquidity Facility- Todd Miller - Former NCUA examiner, capital markets specialist, and director of special actionsAdditional Notes:- Episode discusses NCUA's 2024 Letter to Credit Unions on exam priorities- Compares credit risk priority to previous years- Analyzes economic factors impacting credit risk like inflation, income growth, unemployment- Mentions potential issues in commercial real estate - Discusses implementation of CECL accounting standard- Notes NCUA's focus on concentration risk justificationThe show notes summarize the key points and guests from the episode while avoiding any direct quotes or reproduction of copyrighted material.

Here are some suggested show notes for this podcast episode:Title: So You're a CAMEL Code 3 - Now What?Summary:Mark Treichel, Steve Farrar, and Todd Miller discuss what it means when a credit union receives a CAMEL 3 rating from NCUA and what to expect in terms of increased supervision and requirements. They cover recent trends in CAMEL 3 ratings, how NCUA's oversight changes, and advice for credit unions on responding effectively.Key Points:- Recent trend of more large credit unions moving to CAMEL 3 ratings- NCUA increases supervision for CAMEL 3 credit unions, including:  - Follow-up exams every 6 months   - Documents of Resolution with specific deadlines  - Regional Director letters emphasizing concerns  - Monthly reporting requirements in many cases- Credit unions should expect it to take 14-20+ months before potentially being upgraded back to CAMEL 2- Importance of addressing core issues identified in Documents of Resolution- Boards should implement tracking/reporting on progress resolving issues- Management should provide regular updates to board on addressing concernsGuests:- Steve Farrar - Former NCUA examiner and central office staff member- Todd Miller - Former NCUA examiner and Director of Special ActionsHost: Mark Treichel, Credit Union Exam Solutions

Title: Understanding NCUA's National Supervision Policy Manual (NSPM) and Examiner's GuideKey Points:• The National Supervision Policy Manual (NSPM) was developed around 2013 to create consistency across NCUA regions in exam processes and policies• The NSPM has largely replaced the Examiner's Guide as the primary document for NCUA exam procedures• The NSPM is currently on version 22 and is updated frequently• Parts of the NSPM are redacted from public view, including sections on concentration risk thresholds• The Examiner's Guide is now outdated in many areas but the reference sections can still be useful• Job aids and questionnaires used by examiners in the MERIT system are not publicly available, reducing transparency compared to the previous AIRES system• Key NSPM chapters for credit unions to review:  - District management   - Federal and FISCU program chapters  - Regulatory waivers chapter• The podcast hosts express concerns about the lack of transparency around NCUA's concentration risk thresholds and exam procedures compared to other regulatorsGuests: Todd Miller and Steve Farrar, former NCUA examinersHost: Mark TreichelFor more information on working with NCUA, visit marktreichel.com

: Project Management of Your NCUA Documents of Resolution (DOR)Guest Speakers: - Steve Farrar (Former NCUA examiner and central office staff)- Todd Miller (Former NCUA examiner and director of special actions)Key Topics Discussed:1. Current trends in NCUA Documents of Resolution (DORs)   - Longer DORs with numerous action items   - Possible reasons: Merit system, examiner inexperience, post-COVID catch-up2. Communication challenges between credit unions and NCUA examiners   - Importance of clear understanding and negotiation of DOR requirements   - Impact of quality assurance reviews on agreed-upon terms3. Project management strategies for addressing DORs   - Establishing clear priorities and timelines   - Assigning accountability and resources   - Balancing reporting requirements with actual problem-solving4. Cost implications of DOR requirements   - Examiners may not fully understand financial impact on credit unions   - Potential conflicts between profitability goals and compliance costs5. Best practices for internal communication and reporting   - Transparency across management team and board   - Regular updates to board and supervisory committee   - Demonstrating commitment to corrective actions6. Importance of finding the right balance in reporting   - Avoiding excessive time spent on reporting at the expense of problem-solving   - Using summary reports effectivelyKey Takeaways:- Effective communication with NCUA examiners is crucial for managing DORs- Proper project management techniques can help credit unions address DOR items efficiently- Credit unions should be aware of and communicate the cost implications of DOR requirements- Regular, transparent reporting to internal stakeholders demonstrates commitment to improvement- Balance detailed reporting with actual progress on corrective actions

Guests: - Keith Stone, CEO of The Finest Federal Credit Union and New Jersey PBA Federal Credit Union- Rick Mumm, former NCUA examiner and credit union consultantKey Points:- Keith Stone discusses his background in credit unions, including chartering The Finest FCU for law enforcement in New York in 2014-2015- Rick Mumm shares his 35+ year career at NCUA, including work in chartering and field of membership  - They discuss the process of chartering the new New Jersey PBA Federal Credit Union, set to open next month- Key challenges in chartering a new credit union:  - Proving the concept/need for the credit union  - Securing initial capital funding   - Navigating NCUA's chartering process and requirements- Benefits of having experienced help to "speak NCUA's language" and present information properly- Importance of having a committed sponsor group and sufficient capital to start- How The Finest FCU is leveraging shared services to support the new NJ PBA FCU- Keith's work with new NYPD recruits, offering low-rate loans for equipment - Their mission to provide better financial services for law enforcementContact Info:Keith Stone: 646-661-1331Rick Mumm: rick@rcuservices.com

# With Flying Colors Podcast: Upcoming Episodes and Industry Updates## Episode SummaryMark Treichel provides updates on upcoming podcast episodes and discusses recent trends in the credit union industry based on Callahan's quarterly state of the industry report.## Key Points### Upcoming Episodes- Late August: Field of memberships and new charters, featuring Keith Stone of the Finest Federal Credit Union- September:   - "You're a Code Three. Now What?"  - "You're a Code Four. Now What?"  - NCUA meeting with credit union boards without staff present### Podcast Statistics- 192 episodes of "With Flying Colors"- 46 episodes of "Credit Union Regulatory Exams" (AI-driven audiobook style)- New schedule:   - Mondays: New "With Flying Colors" episodes  - Tuesdays: "Credit Union Regulatory Exams" episodes  - Thursdays: "Evergreen" topics from past episodes### Industry Updates (from Callahan's Report)- Profitability marginally better- Charge-offs flat- Net interest margin improved slightly- More credit unions engaging in hedging- Total credit unions: ~4,600- Total assets: $2.3 billion- Loan growth slowed to less than 4% (down from 12% in previous 12 months)- Share growth improved to 2.7% (up from 1.2% in previous 12 months)- Median credit union (assets $59 million) saw 1.22% decline in shares- Certificate growth at 31%- Unrealized losses down from $41 billion to $30 billion- Borrowings decreased from 6% to 5.3% year-over-year- Cash reserves built up to about 2%- Real estate loans down slightly- Consumer loans down 15%- Credit card loans up 7%- HELOCs up 20%- Commercial loans up 10%## Call to Action- Subscribe to the podcast- Rate the podcast on Apple Podcasts/iTunes- Check out services at marktreichel.com

10 Reasons Why NCUA Should NOT regulate Succession Planning.https://www.marktreichel.com/https://www.linkedin.com/in/mark-treichel/

Key Points:1. Recent NCUA exam focus areas:   - Interest rate risk and liquidity risk (2022-2023)   - Board governance    - Commercial lending programs   - Loan concentrations   - Consumer compliance, especially for third-party relationships2. Board governance issues:   - Increased expectations for board oversight and accountability   - Focus on risk appetite and concentration risk limits   - Need for analytical support and modeling for risk limits3. Communication challenges:   - Frustrations with examiner communication and expectations   - Importance of documenting discussions and agreements with examiners4. Enterprise Risk Management:   - Growing expectations for ERM programs, even for credit unions under $10 billion   - FDIC guidance on corporate governance as a useful resource5. Stress testing requirements:   - Increasing expectations for analytical support of policy limits   - Can be costly and resource-intensive for credit unions6. Information security:   - Ongoing area of focus, likely to increase given recent high-profile incidents   - May lead to more formal exam findings (DORs) on cybersecurity issues7. Third-party vendor management:   - Renewed emphasis on oversight of third-party relationships   - Recent incidents may fuel push for NCUA third-party vendor authority8. Looking ahead:   - Potential for increased NCUA staffing and resources for consumer compliance   - Importance of credit union communication plans for crisis situationsGuests: Todd Miller and Steve Farrar, former NCUA executives and current credit union consultantsHost: Mark TreichelThe podcast provides insights into current NCUA examination trends and offers advice for credit unions on navigating regulatory expectations.

In this episode of With Flying Colors, host Mark Treichel sits down with John McKechnie to discuss crisis communication plans and lessons learned from both good and bad crisis communications in the credit union industry.Key points covered:1. The importance of having a crisis communication plan in place before a crisis hits2. Lessons learned from the 2008-2010 financial crisis3. The critical need to inform members about the safety and soundness of their funds quickly during a crisis4. The value of tabletop exercises and planning for various crisis scenarios5. Identifying key stakeholders and prioritizing communication with them6. The role of social media and digital communication channels during a crisis7. Creating a dedicated landing page on your website for crisis information8. Conducting post-crisis analysis to improve future responses9. Balancing speed and accuracy in crisis communications10. Handling media inquiries and the importance of transparencyJohn McKechnie shares insights from his extensive background in the credit union industry, including his time at CUNA and NCUA. He emphasizes the importance of being prepared, transparent, and member-focused during times of crisis.Contact information for John McKechnie:Email: john@mckechniellc.comPhone: 202-997-5816Listeners are encouraged to reach out with any questions or suggestions related to crisis communication planning.

Navigating Life's Rapids: Joe Jacobi’s Journey from Olympic Gold to Performance CoachIn this episode of 'With Flying Colors,' host Mark Treichel interviews Joe Jacobi, Olympic gold medalist and performance coach. They discuss Joe's journey from winning America’s first Olympic gold in whitewater canoe slalom in 1992 to becoming a renowned performance coach, author, and life strategist. Joe shares insights on teamwork, adaptability, and the importance of finding personal growth and purpose in every phase of life. They also delve into the parallels between navigating rapids and overcoming life's challenges, highlighting how these lessons can be applied to leadership and personal development. Introduction and Sponsor Message Meet Joe Jacobi Joe's Early Mentorship and Olympic Glory Navigating Life Post-Olympics Performance Coaching and Life StrategiesJoe can be reached via LinkedIn:https://www.linkedin.com/in/jacobijoe/Or his website:http://joejacobi.com/

In this episode of 'With Flying Colors,' Mark Treichel discusses significant changes following the Supreme Court's overturning of the Chevron doctrine with Tony Hernandez, CEO of Defense Credit Union Council (DCUC), and Jason Sturrock, DCUC's new Chief Advocacy Officer. They explore the implications of this seismic shift for credit unions, the increased need for robust advocacy, and the legislative landscape's evolving nature. Additionally, they emphasize the importance of clear communication and agile responses to new regulatory and legislative challenges. The conversation also touches on the DCUC's unique advocacy role, upcoming legislative sessions, and preparations for the 2024 elections.00:00 Introduction to the Podcast00:35 Meet the Guests: Tony Hernandez and Jason Sturrock01:24 Discussing the Chevron Case03:06 Impact on Advocacy and Regulation11:54 The Role of Communication and Nimbleness19:00 Future Outlook and Final Thoughts27:54 Conclusion

Understanding the Supreme Court's Impact on Credit Unions: Chevron and Jarkezy CasesIn this episode of the 'With Flying Colors' podcast, Mark Treichel discusses recent Supreme Court decisions, particularly the Chevron and Jarkezy cases, and their potential impacts on credit unions. The Chevron ruling, which overrules the Chevron deference doctrine, signifies a major shift in how courts will review federal agency interpretations of ambiguous statutes, potentially leading to increased legal challenges and a shift in regulatory approaches. Treichel also covers the implications of the Jarkezy decision, which calls into question the constitutionality of administrative proceedings used by banking regulators to impose civil penalties, necessitating a move to federal court for such actions. Overall, the episode provides an in-depth analysis of how these judicial changes could affect credit unions and regulatory bodies like the NCUA.00:00 Introduction to Maximizing Success with NCUA00:39 Supreme Court Decisions Impacting Credit Unions01:27 Deep Dive into the Chevron Doctrine02:56 Implications of Overruling Chevron07:41 Potential Impact on NCUA Guidance11:53 Future of NCUA Regulations and Guidance19:29 Jarkezy Case and Its Implications23:26 Conclusion and Final Thoughts

NCUA has the authority to take what is called a conservatorship action, resulting in the credit union board of directors being removed.  NCUA then wears 3 hats:  insurer, regulator, and credit union operator - representing the interest of the members.These are complicated and rare, but one happened last week, and a few happen every year.  Steve, Todd, and I discuss everything you need to know about conservatorship.https://www.linkedin.com/in/mark-treichel/

NCUA is issuing more Letters of Understanding and downgrading more credit unions to CAMEL code 4s.  In this episode, Steve Farrar, Todd Miller, and I discuss everything you need to know about the LUA process.https://www.linkedin.com/in/mark-treichel/

https://ncua.gov/newsroom/press-release/2024/1st-choice-credit-union-conservedhttps://www.linkedin.com/in/mark-treichel/www.marktreichel.com

odcast Show Notes---**Episode Title:** Understanding Examiner Findings, Supplementary Facts, and Documents of Resolution**Host:** Mark Treichel**Guests:** Steve Farrar and Todd Miller---**Introduction:**Welcome to another episode of "With Flying Colors." I'm your host, Mark Treichel. Today, we're diving into the intricacies of NCUA examinations, focusing on how to handle examiner findings, supplementary facts, and documents of resolution (DOR). I'm joined by two esteemed guests, Steve Farrar and Todd Miller, who bring over six decades of combined experience with NCUA. ---**Episode Highlights:****1. CAMEL Codes Deterioration:**   - Recent NCUA board briefing highlighted a decline in CAMEL codes.   - Implications include tougher examinations and more complex reports.**2. Guest Introductions:**   - **Steve Farr:** 30+ years at NCUA, former problem case officer, and writer of the enforcement manual.   - **Todd Miller:** Nearly 35 years at NCUA, with extensive experience as a capital market specialist and director of special actions.**3. Examiner Findings:**   - **Definition:** Problems identified by examiners that need addressing but don't threaten the credit union's viability.   - **Implications:** Multiple minor issues could signal broader internal control problems.   - **Regulatory Citations:** Findings should be tied to regulations or supervisory guidance.**4. Supplementary Facts:**   - **Purpose:** Used to provide additional context and alternatives for addressing problems.   - **Specialist Input:** Often includes insights from various NCUA specialists.   - **Advice:** Utilize the supplementary facts to gain a broader understanding of potential issues.**5. Documents of Resolution (DOR):**   - **Significance:** Represents more serious issues that, if left unaddressed, could harm the credit union.   - **SMART Principle:** Actions required should be Specific, Measurable, Achievable, Result-oriented, and Timely.   - **Challenges:** Achievability and timeliness can be problematic, especially with delayed final reports.**6. Real-World Application:**   - Examples of how credit unions have managed large volumes of DORs.   - The importance of addressing issues proactively to avoid escalation.**Conclusion:**Thank you for tuning into this episode of "With Flying Colors." If you're looking to optimize your results with NCUA and save time and money, visit us at marktreichel.com. Stay informed, stay prepared, and you'll pass your exams with flying colors.---**Call to Action:**- **Subscribe:** Don't miss an episode—subscribe to "With Flying Colors" on your favorite podcast platform.- **Visit Us:** For more insights and direct support, visit marktreichel.com.- **Feedback:** Have questions or topics you'd like us to cover? Reach out to us via our website.---**Sponsor:**This episode is sponsored by Credit Union Exam Solutions by Mark Treichel. Optimize your NCUA results with our expert support.---**Additional Resources:**- [NCUA National Supervision Policy Manual](https://www.ncua.gov/regulation-supervision/manuals-guides)- [ECFR - Electronic Code of Federal Regulations](https://www.ecfr.gov/)---**Contact Information:**- **Host:** Mark Treichel- **Website:** [marktreichel.com](http://marktreichel.com)- **Email:** info@marktreichel.com---Be sure to tune in next week for more expert advice on navigating NCUA examinations and optimizing your credit union’s performance.