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What (in the CU World) are you Thankful for?

2009-11-10T09:02:25-06:00

By Lisa Hochgraf

There's a beautiful thing happening in my network (and probably a few others) on Facebook right now: People are committing to post every day from now until Thanksgiving about something they are grateful for.

You can imagine the obvious ones: family, friends, good health. But how about a good night's rest? (For those of you who know this insomniac well, that wasn't from me.) Or "a cup of coffee that makes itself and quiet to drink it in." Or "Paula Deen and her tasty recipes, one of which is in the oven right now!"

The Facebook posts are largely personal, but I have a pretty long list of things about working in the credit union world for which I'm grateful, as well. Here's four, right off the bat:

Volunteer boards of directors. I have a lot of respect for people that will take on such responsibility to help others.
CEOs who could make bank salaries with their skills and knowledge but choose to lead non-profit credit unions instead. Their work makes a huge difference in the lives of many.
Executives who return my writers' calls for interviews--and give them great information. Several of our writers, when new, commented on how pleasantly surprised they were when CEOs, SVPs and VPs would not only call them back but also give them great information for the articles they write for us. This is not true across all industries.
Working for CUES. I like my colleagues and our leaders. They're real people with talent, commitment and vision. Telecommuting is more than possible; it's a regular part of our work.

What in the CU world are you grateful for?

Lisa Hochgraf is a CUES editor.

Hoping for the Best; Fearing the Worst

2009-11-06T19:22:30-06:00

By Mary Arnold

Tuesday at CUES' CEO/Executive Team Network in Orlando was "think-outside-the-box" day for me. I know that's a worn-out phrase and I resisted using it when I filed my article that night for Wednesday's post on cues.org. Yet, here it is, still in my head.

We started "think-outside-the-box" day by hearing from Bucky Sebastian, CEO of $1.9 billion/204,000-member GTE Federal Credit Union, Tampa, Fla., about his idea for a new financial services cooperative charter that CUs could opt into. We wrote about it here, so I won't go into all the details, but the general idea is that CUs that moved to this charter would get open fields of membership, access to secondary capital and greater business lending authority, in exchange for complying with the Community Reinvestment Act and being subject to taxation.

After Bucky's session we heard from a Canadian attendee who said this charter vision is similar to Canada's current credit union structure. And in an extended workshop on charter choice, Richard Garabedian, a partner in the Washington, D.C., law firm of Luse Gorman Pomerenk & Schick, P.C., pronounced Bucky's proposal to be very similar to a mutual savings bank charter.

I'm sure there are similarities, but I don't think either structure includes the cap on CEO compensation at 20 times the average employee total compensation that Bucky is suggesting.

Next, I listened to what for me was a very sobering extended workshop led by Pete Duffy, associate director of Sandler O'Neil and Partners, L.P., New York. Even though I headlined my coverage "The Best of Times and the Worst of Times," it was the worst-of-times part that really hit me because I had not heard it before.

The best-of-times piece refers to the marketplace opportunity that still exists for credit unions to fill both the credit and the consumer trust vacuums that exist in financial services. Hanging over healthy CUs' heads, however, is the unknown cost of corporate stabilization and potential losses from large natural person credit union failures, Pete said.

In spring, NCUA ran a stress test on the insurance fund, releasing the results in late September. Based on his firm's analysis and that of a third party, Pete thinks the projected losses are on track. Here's what NCUA's results looked like: The analysis "produced an allocation of $32.6 billion in losses resulting in 38 failures with a maximum exposure to the NCUSIF of $577 million using the baseline assumptions," which don't include effects of corporate write-downs.

But if losses are being projected at $32.6 billion, why would the maximum exposure to the insurance fund be only about $.6 billion, or less than 2 percent of estimated losses? Answer: "NCUA is expecting large healthy credit unions to merge in the wounded ones," Pete said. Barring that, the agency would assess all federally insured CUs for the shortfall.

Pete called this possibility "an unlimited contingent liability on your capital," and estimated that $32 billion would equal 500 basis points over five years. "It is imperative that you recognize the need to understand and quickly deal with the risk the system represents to both your CU's capital and its future," he said.

After that, I half expected the second run of Luse Gorman Pomerenk & Schick's charter change workshop to be packed. It wasn't. I'm still not sure if that is good or bad. Obviously, I would hate to see CUs switching charters en masse, but I do want to know leaders are seriously considering the potential threat to their capital.

CUES member Henry Wirz, president/CEO of $1.5 billion SAFE Credit Union, North Highlands, Calif., took the coverage of Pete's sesson seriously enough to write a response, which we've published today on cues.org.

Among other things, Henry wrote, "The financial crisis could be a great opportunity to create a new credit union system. But in fact the rebirth that is occurring is usually the result of merging very unhealthy credit unions into a healthy credit union. The healthy credit union has to dedicate one year's business plan to the merger. The healthy credit union has to use precious capital. The healthy credit union has to forego other business plan initiatives to focus on the merger project. And a merger of two $50 million credit unions does not create a $100 million credit union organization or culture—it just creates an oversized $50 million culture and an organization that takes years to transform."

Later, he said, "There are some better options that will give birth to a new credit union system. The economic crisis is going to destroy the old and clear the way for something new. We should resolve to build something better than what we have." Read his ideas here.

On Wednesday, Chip Filson, president of Callahan & Associates, Washington, D.C., closed CEO/Executive Team Network. In some ways, his remarks about credit unions' record loan and share growth and extraordinary opportunity to provide a "countercyclical" force in today's economy reminded me of Pete's "best of times" opportunity thoughts.

However, Chip would not have agreed with Pete's nor NCUA's estimates of impending credit union losses. Back in the office yesterday, I Googled "NCUA stress test" wondering what others were saying about it. I found an article called "Time for the NCUA Board to Ask for Some Real Numbers and Undertake a Policy" on Callahan & Associates' Web site, creditunions.com.

While everyone doesn't agree on the numbers (be sure to read what Chip had to say), I think many could agree with this: "Cashing out problems at the lowest point of value resolves nothing. It merely shifts the burden of failure to the merged credit union or across the whole industry. Anyone can hold a garage sale," Chip wrote.

Mary Arnold is VP/publications for CUES.

Success Stories from CUES Award Winners

2009-11-03T11:19:49-06:00

Posted by Maria Kinney

Being involved with the CUES award programs means that I get to hear about many success stories in the credit union movement. Plus, I get to see CUES' role in the development of outstanding credit union leaders.

For example, CUES member Steve Schipull started his career in the financial services industry working for a bank. Now CFO of Generations Federal Credit Union in San Antonio, Steve didn't expect to end up in the credit union movement, where he has been for 10 years. But he notes that "the last ten years have truly impacted my overall leadership development and achievements way beyond expectations had I remained with the bank." Steve even went on to attend CUES' CEO Institute and earn the CCE (Certified Chief Executive) designation. And then, to top this off, Steve applied for the 2009 CUES Future Leader award and was ecstatic to find out that he was the winner! Steve says, "To be honest, I didn't expect to win with so many deserving leaders in our industry. Our industry faces many challenges and I am fortunate to be associated with so many dedicated professionals who live our story every day by serving our members. I am truly honored to be this year's CUES Future Leader award recipient."

Steve and other dedicated individuals were honored this year for their contributions to and achievements in the credit union industry. Please congratulate the following winners (and see full coverage of the award presentations here and here):

CUES Future Leader

honors a CUES member non-CEO who works to better their credit union, the movement and themselves. This year's winner is ... Steven L. Schipull, CCE, Generations FCU

Outstanding Executive

honors a CUES member credit union CEO who shows exceptional leadership qualities. This year's winner is ... William Rissel - Fort Knox FCU

Hall of Fame

is a lifetime achievement award honoring an individual's contributions to the credit union movement. This year's inductees are ... Gordon Dames - 2008 CUES Outstanding Executive; formerly with Mountain America CU, now with Southwest Business Corporation, and Mark Hawkins of Altura CU.

Outstanding Council Awards

are presented to the CUES Councils that plan outstanding professional development opportunities for CUES members on a local and regional level. This year's winners are ...

1-74 CUES members: Alabama (Outstanding Council)
      Iowa (Award of Excellence)
     Nevada (Award of Excellence)
75-150 CUES members: Rocky Mountain (Outstanding Council)
      Delaware Valley (Award of Excellence)
       Utah (Award of Excellence)
150+ CUES members: Michigan (Outstanding Council)
       Florida (Award of Excellence)
   Greater Southern (Award of Excellence)

Congratulations, 2009 CUES award winners! Keep up the excellent work! And calling all 2010 CUES award nominees ... I can't wait to hear your success stories!

Maria Kinney is member services assistant at CUES.

Podcast: Current Issues in Credit Unions, #42

2009-10-29T15:28:28-05:00

By Christopher Stevenson

This month, Faith, Katherine, and Rob discuss:

CARD Act updates,

HOEPA updates,

Regulation GG,

Pandemic preparation,

Ugottaloan, and

Big K Roundup (To Tweet or Not to Tweet; New Developments on Consumer Protection Agency; The Protocol: How Will it Impact a Credit Union's Relationship with its Broker-Dealer?)

The CICU hosts are:

Katherine E. Weber, Esq, member, Messick and Weber P.C. , Media, Pa.

Faith Anderson, American Airlines Credit Union, DFW Airport, Texas.

Robert Rutkowski, shareholder, Weltman, Weinberg and Reis Co., L.P.A., Cleveland, Ohio

The Last Time I saw Debbie Matz

2009-10-28T09:35:00-05:00

By Lisa Hochgraf

The last time I saw Debbie Matz, new NCUA chairman, it was at the New York Partnering and Leadership Success workshop on Oct. 11, 2004, here in Rochester, N.Y. I remember sitting in the full meeting room in the Strathallan Hotel, feeling impressed that the vision of one person, then NCUA Director Matz, could bring so many people together--and on a bank holiday to boot. The topic was "serving the underserved without losing your bottom line." This photo of Matz (middle); CUES member Mike Vadala, president/CEO of $418 million The Summit Federal Credit Union, Rochester, and a key event organizer; and Jean Howard, then executive director of Rochester's Wilson Commencement Park, was originally published with my coverage of the event.

So having had good first impressions, I am looking forward to seeing Matz again. She'll be speaking at CUES' Directors Conference, slated for Dec. 6-9 in Palm Springs, Calif. Matz has said that the NCUA is in the process of drafting significant revisions to its corporate credit union rule, and may be ready to issue the proposed changes for comment in November. I'll be watching to see what good questions attendees may ask Matz about this and other important regulatory topics. I hope you'll join the more than 250 CU directors and leaders who have already registered to attend. Or, if you can't, share your questions in the comments and I'll be glad to take them to the event for you.

Lisa Hochgraf is a CUES editor.