Posts From January, 2014

Regulatory Reaction 

Posted by Greg Michlig Thursday, January 30, 2014 12:02:00 PM

On Monday evening I decided it would be nice to do a little light reading. Instead, I started in on NCUA’s 197-page Proposed Rule on Prompt Corrective Action—Risk Based Capital. Let’s just say I didn’t make it all the way through that evening. I did, however finish up on Tuesday and, over the past couple of days, have taken in a series of other articles through the trades and from financial analysts.

The most important reading on this topic I have done, however, has been the emails that I have received from the CEOs of a few of NJCUL’s affiliated credit unions (along with several direct conversations). As has been documented in those aforementioned trade press articles, opinions on this rule vary and there are unique circumstances related to the application of the new measures depending on the credit union.

NCUA’s description of the proposed rule is, of course, logical and favorable. As I mentioned to those CEOs who emailed, their input provides necessary context when reviewing the information. As the state association for credit unions here in N.J., it is important to receive such emails and have the direct conversations I’ve had as well.

This is not a comment letter (although NJCUL will submit one) and the concerns with this proposed rule will be more universally fleshed out during the 90-day comment period and, certainly, during the CUNA GAC in a few weeks, but here are a few initial thoughts.

On page 14 of the draft (available here) it states that “Operating a credit union involves taking and managing a variety of risks…” Credit unions have shown that relative to other financial institutions, managing risk is a strength. While there is certainly room for adjustment to measurement of Risk Based Net Worth, this approach seems to significantly impair credit unions’ ability to take and manage risk in a way that will allow credit unions to grow. Furthermore, the proposal is heavily focused on concentration risk and doesn’t appear to take into consideration risk mitigation tools such as, but certainly not limited to, put options or rate structure.

I also find it interesting that the proposal also states, relative to potential additional requirements for individual credit unions, on page 86, that “(the rule) would provide that the appropriate minimum capital levels for an individual credit union cannot be determined solely through the application or a rigid mathematical formula or wholly objective criteria, and that the decision is necessarily based, in part, on a subjective judgment grounded in agency expertise.” Agreed, although there should also be consideration of the subjective judgment of the individual credit union’s management expertise in what could be a very sound risk-based approach that may or may not fit the rigid mathematical formulas and wholly objective criteria imposed through this proposed rule.

See what I did there?

The other part of the section that is bothersome is that, while subjectivity should certainly be an aspect of any major decision, what parameters will be in place to be sure that this subjectivity does not result in additional measures being imposed as the rule, as opposed to the exception? And whom, in particular, will have discretionary authority over whether or not additional requirements are necessary?

I could go on, but I won’t as there is still much discussion that needs to take place to fully understand the ramifications, pros, cons, etc. of this proposal. We’ll stay on it here at NJCUL and will more formally communicate relative to this issue in the coming weeks.

While I’m on the topic, you may have read in Tuesday’s Daily Exchange that I was recently appointed to the American Association of Credit Union Leagues’ (AACUL) Regulatory Advocacy/Compliance Advisory Committee. I am very pleased to be selected for this particular committee, noting that regulatory burden is a chief concern of nearly, if not all credit unions. I am looking forward to being the voice of New Jersey credit unions in this area and hope to positively impact the regulatory and compliance process through my involvement on this committee.

Engaging Young Professionals 

Posted by Greg Michlig Tuesday, January 21, 2014 8:43:00 AM

Age is both very specific and also relative. Depending on the situation, we may each cast ourselves as young or, um…otherwise. This goes for business careers as well.

What is a young professional? Is that label defined by the cutoff for the 40 Under 40 lists or the 30 Under 30 lists? The young professional groups we see and hear of today are said to have evolved from the Yuppies of the past (according to Wikipedia). For reference, Yuppies were defined as being in their 20’s or 30’s.

Depending on your path of entry into the credit union world, you may be a current young professional or, as the calendar has illustrated in my case, a former young professional. Either way, there is a point of reference for each of us and it is important that we recognize that in our industry.

It’s no secret that senior management in credit unions has matured along with the movement. Statistics will tell you that a large number of credit union CEOs are preparing for retirement in the next few years. While some of those positions may be filled by outside talent, many of the next CEOs will come from within. And hence, the position that person leaves will be filled, and so on and so forth.

As a leader, what steps are you taking to be sure that those in your organization are prepared to step up when the opportunity arises? As a young professional (YP), what are you doing to set yourself apart as a rising star? Together, are we effectively building our credit union community with top tier talent that understand and believe in the credit union difference?

You may have read in yesterday’s Daily Exchange that Aspire FCU's Melissa Nesi has been selected as N.J.'s representative for the “Crash” CUNA's GAC program, supported by Filene Research Institute and the Cooperative Trust. (In this case the magic YP age cutoff was 30.) As a participant, Melissa will attend exclusive events, network with the N.J. delegation as well as other YPs from throughout the country and have fabulous exposure to the largest credit union event of the year. She is also going to write about her “Crash” experience in her own words from the perspective of a young credit union professional. We will share her thoughts and photos in a feature story following the GAC.

This is a tremendous opportunity for Melissa, but it is also a quite limited opportunity in that N.J. can only have a single “Crasher.” That said, there are other ways to be involved.

The recent launch of NJCUL’s Creative You presents a YP development opportunity. While there are no age or experience designations for Creative You, the program has certainly engaged some of N.J.’s ambitious YPs in this, its inaugural year. Those participating will have the opportunity to hone their planning skills, delve into innovation processes, and develop and showcase their presentation talents.

Chapters offer an opportunity for YPs and non-CEO’s to be involved on a more local level. They also offer the possibility to gain experience through serving in leadership positions. I have seen chapters and regional groups thrive throughout the country through the engagement of YPs.

This past November, the North-Central Chapter held a meeting in Clark, N.J. where executives, vendors, and YPs were invited to network while enjoying an open bar and buffet. This unique and very informal event was specifically designed to engage YPs. Allowing for opportunities for peer-to-peer connectivity results in sharing of best practices and ideas, and growth of the “community” environment that has always been a tenet of a strong credit union presence.

We also strive to facilitate these peer-to-peer connections through the NJCUL roundtables. While the roundtables are not age specific, there are opportunities for professionals to make connections based on their areas of expertise. In some cases this may result in a YP connection or, perhaps, even a mentoring-type environment where a more senior leader is able to impart valuable knowledge from experience that would assist someone junior.

As I reviewed our educational offerings for 2014, I also had this in mind. You will find the same core operational subject matter throughout our education calendar as in past years, but we have also expanded to include more strategic and developmental topics. Most specifically, keep an eye out for Webinars related to tools for analyzing and assisting emerging leaders as well as some on delving into problem solving techniques and individual skills development.

If you are a “former” like me, how are you engaging your YPs in an effort to develop the next leaders of our movement? If you consider yourself a current YP, step up, be a credit union advocate, express your ideas, and ask the questions on your mind. The evolution of the credit union industry is ongoing, and together, through development and planning, we will ensure there are future leaders who are instilled with the values that make credit unions unique and essential and the skills that foster success. 

2014: A Look Ahead 

Posted by Greg Michlig Thursday, January 02, 2014 10:19:00 AM

Happy New Year! 2013 was certainly an interesting year for me personally and for the New Jersey Credit Union League as well. Actually, for me, I’d say “exciting” would be a more appropriate adjective.

The tail end of ’13 was hectic, to be sure. We prepared and finalized our 2014 budget and strategic initiatives, got the cuGreenLoans pilot off the ground, celebrated the holidays, and continued to spend a significant amount of time with our credit unions throughout the state. That said, I’m not one for excuses, so I’ll simply acknowledge the fact that I did not post to this blog in December.

As for 2014 and those strategic initiatives…this is where I sense the adjective “exciting” applies for all of us here at NJCUL. In August, we started to formally put the wheels in motion to identify what we can and should be doing differently, through all-staff strategic dialogue sessions. We spent a considerable amount of time discussing what we have heard from you, the credit union professionals of New Jersey, relative to our offerings. The NJCUL Board of Directors held a strategic planning session in October, which provided focus as we honed our strategy relative to our vision. Internally, we have processed our ideas in several iterations and have continued the dialogue on an ongoing basis.

Some of our initiatives will see implementation in 2014, while others are being developed to set the stage for what will come in 2015 and beyond. While not putting the cart before the horse with specifics, it is safe to say that we are working on some significant additions to the Banking You Can Trust campaign, designed to drive specific value for affiliated credit unions in terms of promotion and member acquisition. Outreach efforts will be increased in an effort to gather greater insight into the issues most important to you and processes will be implemented to ensure those issues become the focal points that drive NJ EDGE, PLAN, and READ. We will review our business partner platform to identify ways in which we can drive additional value for our affiliates. Metrics are being developed to quantify your involvement and engagement in League-driven opportunities, so that we may more formally recognize your contributions to the credit union community as a whole. I could go on, but the point here is to provide the sketch, not paint the picture.

As we look ahead to 2014, I see opportunity. As many of us have done in recent weeks, literally, the League has figuratively filled its plate full. But we have done so thoughtfully and with purpose, so we are able to accomplish the goals we have set forth. When the annual calendar turns again in just under 12 months, I hope you will look back at the year that was, relative to what we accomplished and positioned at the League and find amongst the adjectives that come to mind…“exciting.”

To your success in 2014!