SEPTEMBER–OCTOBER 2022 ALSO INSIDE Crypto Currency 2022 NAFCU Annual Awards Winners PUTTING PEOPLE FIRST NAFCUʼs New Board Chair: Focus on Members and Employees for Long-Term Success
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3 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 18 14 FEATURES 14 Putting People First NAFCU’s New Board Chair: Focus on Members and Employees for Long-Term Success 18 Crypto Convenience How Members Can Easily Invest 24 2022 NAFCU Annual Awards Winners COLUMNS 5 Conferences 6 From the Chair 8 Washington and Industry Briefs 10 The Bottom Line 32 Inside NAFCU Services 34 Management Insight 36 Executive Spotlight 38 Leadership Download 40 Compliance Central 42 From the President’s Desk 24 SEPTEMBER–OCTOBER 2022 • VOLUME 47, NUMBER 5 The NAFCU Journal (ISSN 1043-7789) is published bimonthly every other month. Sept–Oct 2022, Volume 47, Number 5. Published by the National Association of Federally-Insured Credit Unions, 3138 10th Street N., Arlington, VA 22201-2149. Periodicals Postage Paid at Arlington, VA, and at additional mailing offices. POSTMASTER: Send address changes to The NAFCU Journal, NAFCU, 3138 10th Street N., Arlington, VA 22201-2149. The opinions and ideas appearing in this magazine are not necessarily representative of policies of NAFCU. Manuscripts and advertisements are welcome, although NAFCU reserves the right to edit manuscripts and refuse advertisements. Contact publisher for advertising information and rates. Appearance of an advertisement does not imply endorsement or guarantee of the advertiser’s claims. For subscription or advertising information, call 800-336-4644 or 703-522-4770. Email: [email protected]; website: www.nafcu.org. ©2022 National Association of Federally-Insured Credit Unions, all rights reserved.
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5 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 CONFERENCES 2022–23 Calendar of Events Summer 2022 Congressional Caucus Sept. 11–14, in-person in Washington, DC Fall 2022 CFO Summit Sept. 20–22, in-person in Annapolis, MD Regulatory Compliance & BSA Seminar Sept. 27–29, in-person in Louisville, KY Management and Leadership Institute Oct. 17–21, in-person in Annapolis, MD Lending Conference Nov. 8–10, in-person in Greenville, SC Spring 2023 Regulatory Compliance School Mar. 13–17, in-person in Arlington, VA Strategic Growth Conference Mar. 21–23, in-person in Nashville, TN Board of Directors and Supervisory Committee Conference Apr. 17–20, in-person in Savannah, GA CEO & Senior Executives Conference May 17–19, in-person in Charleston, SC For more information about NAFCU’s conferences, go to www.nafcu.org/conferences. Looking for more educational opportunities? NAFCU’s Online Training Center has been redesigned to give credit union professionals easier access to the association’s training programs and library of webinars. For information and the current schedule of upcoming webinars, visit www.nafcu.org/ onlinetraining. Topics and dates subject to change. DIRECTORS Gary A. Grinnell, Chair Corning FCU (NY) Brian T. Schools, Vice Chair Chartway FCU (VA) Karen Harbin, Treasurer Commonwealth CU (KY) Lonnie Nicholson, Secretary EECU (TX) Melanie Kennedy Southwest Financial FCU (TX) James A. Kenyon Whitefish CU (MT) Frank Mancini Connex CU (CT) Keith Sultemeier Kinecta FCU (CA) Karen Rosales Arlington Community FCU (VA) Stephanie Sherrodd Sandia Laboratory FCU (NM) Eli Vazquez Bank-Fund Staff FCU (DC) EXECUTIVE STAFF B. Dan Berger President/CEO Anthony Demangone Executive Vice President/COO Meghan Burris Vice President of Communications and Media Relations Greg Mesack Senior Vice President of Government Affairs Randy Salser President of NAFCU Services Corporation MAGAZINE STAFF Haley Schmitz Editor LLM Publications Editorial Services and Design ADVERTISING [email protected] www.nafcu.org/advertise
6 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 federal regulators. NAFCU leadership is constantly soliciting credit union feedback through various channels, including committees that meet monthly on legislative and regulatory topics, the eight NAFCU Networks that serve as a platform for peer-to-peer communication, and the new quarterly working groups that focus on housing finance issues, digital asset regulation, and small business lending. At NAFCU, industry concerns are met with action. I am proud to serve as Chair of the NAFCU Board of Directors and I wholeheartedly believe in our industry’s cooperative mission. While numbers are important, sticking to our core value of ‘people helping people’ is what matters and I am confident in our ability to move the industry forward on behalf of so many American families and businesses. Gary Grinnell is president and CEO at Corning Credit Union in Corning, NY. FROM THE CHAIR VALUE THE RELATIONSHIP OVER THE TRANSACTION By Gary Grinnell, NAFCU Board Chair Our structure as credit unions allows us to prioritize extreme member service over anything else. In fact, the member-owned, cooperative model of credit unions is a big factor of what drew me to the credit union industry at the beginning of my career. There were no stockholder interests and I found that at credit unions, the pressure of performance did not weigh down employees or stifle innovation. Instead, the all-encompassing service-minded mission pushed the organization forward. I have witnessed firsthand how success can be achieved by taking full advantage of the credit union cooperative mindset and doing what our industry does best: focusing on our members and taking exceptionally good care of them. Allowing our credit union to revel in the long-term mindset of fostering unbreakable trust with members is not only rewarding, but also provides us with a unique advantage. At Corning Credit Union, I have impressed upon my own team that it should never be just about the transaction but rather always be about the relationship. We work hard to focus on each member—building a one-on-one relationship, providing real solutions, and always putting them first. Achieving success for the long-term goal of member trust and retention means you are achieving success as a credit union. I have a few ideas of how your credit union can reach this goal: ■ Pairing the personal, member touch points at your credit union with a digital experience that is on par with those at large banks. ■ Having your team actively engaged and building relationships with people in the community on a daily basis. ■ Ensure staff and your credit union’s leadership team are always accessible and available to your membership. While I believe this is the most important part of our industry’s mission, I am also aware of the demands credit unions must meet to remain competitive and innovative. We must remember that growth is important. Instead of offering new programs and products that members may or may not use, we should allow the strong relationships built with members guide the direction for new programs and products to better serve them. When you foster a deep understanding of your credit union’s membership, you will know the problems they face and the solutions they need—providing you a return on investment that can’t be matched. At NAFCU, the same value on member relationships exists in every corner of the association. Created to provide credit union members with the industry’s best advocacy, compliance assistance, and educational offerings, NAFCU’s mission rests on extreme member service. The award-winning staff members at NAFCU take time to understand the day-to-day issues facing our organizations and voice our concerns on Capitol Hill and with
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8 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 WASHINGTON AND INDUSTRY BRIEFS Advocacy is one of the core missions of NAFCU. We spend every day on Capitol Hill and at the agencies fighting for credit unions. We fight to remove obstacles to growing and serving your members and fight new laws and regulations that could harm credit unions. This is our passion. However, we need your help, because our message is even more amplified when credit union executives and volunteers engage directly with decision makers in Washington, D.C. You can provide support by submitting feedback through comment letters, joining NAFCU meetings with agencies, or visiting with your Member of Congress. As a constituent and voter, your voice matters. While the past few years have generally been good for credit unions, the risks that policymaking can pose to credit unions is starting to be seen. This is why credit unions, employees, and volunteers need to engage in Washington early, and often. November 8 is election day and I want to give you some highlights of why this election matters, and why we need to make sure that we elect members of Congress who understand credit unions and the difference you make for main street Americans. Right now, the White House and Congress are controlled by one party. Having one party control all levers of government can be dangerous for credit unions, whether it is Democrats or Republicans. As the founding fathers recognized, checks and balances are important to our government. When both parties are present, those checks and balances exist and allow us to prevent bad policies from becoming law, while also enabling Congress to have greater oversight of the Executive agencies. Here are two examples from the past year: 1. IRS Reporting: In the Administration’s effort to find revenue to pay for an ambitious package of social programs, they came up with an idea to close the “tax gap.” This idea would have every bank and credit union in the country report on consumer accounts that receive more than $200 in deposits in a year, virtually every American who has a bank account. This would have been an unprecedented violation of Americans’ financial privacy and would have posed an enormous burden on credit unions to track these accounts. Furthermore, it WHAT THE 2022 ELECTIONS COULD MEAN FOR CREDIT UNIONS By Greg Mesack, NAFCU SVP of Government Affairs would have placed in the hands of the Treasury Department a tremendous database of information that would be susceptible to cyber criminals, all without any proof that collecting this information would increase government revenues. Because of the advocacy of NAFCU and its members, we were able to just barely stop this policy from becoming law. Our grassroots sprang into action. Credit unions and their members reached out to their Senators and Members of Congress to voice their opposition. NAFCU used every tool at its disposal and worked with our champions on Capitol Hill to fight this provision. While we were able to stop it, the idea is not dead. This battle over IRS reporting is concrete proof of why election outcomes can be pivotal for the credit union industry. We were only at risk because one party controls all levels of government. Had there been a “Our message is even more amplified when credit union executives and volunteers engage directly with decision makers in Washington, D.C. You can provide support by submitting feedback through comment letters, joining NAFCU meetings with agencies, or visiting with your Member of Congress. As a constituent and voter, your voice matters.”
9 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 divided government, the IRS reporting provision would never have had a chance. Electing members of Congress who understand credit unions and the needs of our members allows us to keep bad ideas from becoming law. 2. CFPB War on Fees: Another example of why elections matter is the recent efforts by the Consumer Financial Protection Bureau (CFPB) to attack credit union non-interest income. With the change in Administration in 2021, came a change in regulators. With the appointment and confirmation of Rohit Chopra as director of the CFPB, the tone, tenor and focus of the Bureau changed dramatically. The CFPB has been aggressively targeting fees, such as overdraft fees, credit card late fees, and a slew of other fees it has inappropriately characterized as “junk fees.” There is no doubt that the CFPB is laying the groundwork to try to use its vast power to limit these fees, which are all permissible under the law and disclosed to consumers upfront under the CFPB’s own rules. The loss of non-interest income could be devastating for many credit unions and the affordable financial products they provide. Because Director Chopra is of the same party as those who control Congress, Congressional oversight and legislative pushback to any CFPB overreach of authority will be more difficult. Should the Republican Party regain control of the House in 2022, as many pundits predict, we should expect to see greater CFPB oversight and more pressure on the agency to ensure that it does no harm to credit unions or impede their ability to provide safe, affordable financial services products. Elections matter, and this election may be one of the most consequential. We need Congress to be strong and stand up to regulators who abuse their authority. This fall, NAFCU encourages you to get involved. Join NAFCU’s grassroots efforts, engage on the Legislative or Regulatory Committees, learn about the NAFCU/ PAC, meet with your member of Congress and, most importantly, vote. If you have questions about your Congressional race, contact the NAFCU Legislative Affairs team. NAFCU’s Grassroots Action Center allows credit unions to easily find their polling location, search for local candidates, and more. Take advantage of this resource ahead of the upcoming election by visiting www.nafcu.org/grassroots.
10 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 INVESTING IN THE SIF By Curt Long, NAFCU Chief Economist and Vice President of Research THE BOTTOM LINE The approach of Autumn brings with it several associated seasons: a new school year, a new football season, and, for credit unions, budget season. It is also a time when the NCUA Share Insurance Fund (NCUSIF or SIF) is most heavily scrutinized. While NAFCU is constantly monitoring the fund and the NCUA’s administration of it, most credit unions are addressing more important challenges. But budget season inevitably prompts the question of whether a SIF premium is on tap for the coming year. Fortunately, the answer to that question is most likely not. Whether a premium may be needed beyond this year will depend critically on how interest rates evolve. The SIF is a $20 billion fund whose operations are fairly simple. The key measure of health for the SIF is the equity ratio, which is analogous to a credit union’s net worth ratio and is simply defined as total equity—which consists of retained earnings and insured credit unions’ one-percent capitalization deposits— divided by total insured shares.1 The equity ratio operates in a window formed by two thresholds: a 1.2 percent statutory floor, below which the NCUA must establish a restoration plan, and the normal operating level (NOL) established by the NCUA, above which level the agency must issue distributions. The NOL historically was set at 1.3 percent but currently sits at 1.33 percent. There are four primary drivers of the equity ratio: share growth, investment yield, fund losses due to credit union failures, and operating expenses. While loss expenses can have a big impact in times of distress, those events are rare. Typically, the biggest drivers are share growth and investment yield. Higher share growth tends to reduce the equity ratio. Although credit unions contribute to fund equity in amounts proportional to share growth, those contributions are only one percent of insured shares, while the equity ratio is generally 20–30 basis points higher. That gap accounts for the diluting effect of share growth. This means that in most years, whether the equity ratio increases, or declines, depends on whether the SIF’s investment portfolio is able to earn a return that compensates for that year’s growth in insured shares. By making a few simplifying assumptions, we can establish a nearly linear relationship between the two, which we call the “hurdle rate” as shown in Chart 1. For any given level of share growth, investment yield above the hurdle rate (i.e., in the top left area of the Chart 1: NCUSIF Annual Share Growth & Investment Yield Investment Yield (%) Insured Share Growth (%) Note: Hurdle rate represents investment yield required to maintain a stable equity ratio for a given level of insured share growth. Sources: NCUA, NAFCU analysis 7 6 5 4 3 2 1 0 0 2 4 6 8 10 12 • 2000–07 • 2008–09 • 2010–14 • 2015–21 14 16 18 20 Hurdle Rate 2021 2020 2008
11 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 References 1. Note that unrealized gains and losses on SIF investments are not included in the equity ratio calculation. 2. See discussion during NCUA Board Meeting, May 26, 2022. Note that the agency had a similar strategy of investing in Treasuries with maturities up to 10 years as recently as 2017. That year the agency changed its investment policy to shorten maturities to no more than seven years. Later that same year, the agency announced that it would be conserving several large credit unions with concentrations in taxi medallion loans. 3. Note that the recent stability of the equity ratio is partly the result of the WesCorp asset management estate (AME), which has consistently outperformed forecasts. This has allowed that estate to repay a larger amount of its obligations to the SIF than anticipated. NAFCU does not include AME performance in its forecast. chart) would generally provide enough income to increase the equity ratio absent any major loss events. Prior to the Great Recession, the SIF was generally able to clear the hurdle rate, and during this period fund distributions out of surplus equity were common. However, the post-Great Recession era has been markedly different. In the first few years of the 2010s, the fund operated very close to the hurdle rate, but that was only because share growth was weak by historical standards. As share growth strengthened in the latter half of the decade, investment yield consistently fell short of the hurdle rate, precipitating a steady decline in the equity ratio (see Chart 2). COVID exacerbated this trend by driving up share growth to historically high levels. Relief may be on the way. Higher interest rates are already having an impact on the fund’s investment yield. Furthermore, the agency announced that it would resume investing in Treasury securities out to 10-year durations, up from a maximum of seven years previously.2 That means that substantially all of the upcoming investments purchased by the SIF will be at longer maturities until the portfolio is balanced. However, even if rates remain higher than they were prior to COVID, it will still take time for the SIF yield to improve. NAFCU estimates that with share growth near the historical average (roughly six percent), the fund’s yield will only improve by 30 basis points per year over the medium term. That means that, holding rates constant, the SIF would not earn a yield equal to the hurdle rate until 2025, assuming normal share growth.3 So, to the question of the day on whether a premium is likely for 2023? The answer is: “not very,” barring an unforeseen loss event. But NAFCU forecasts the equity ratio to resume a slow decline over the next few years before hopefully stabilizing in 2025. The last couple of years have taught us to be humble about forecasting the future. Who would have imagined in early 2020 that a potential outcome of COVID would be higher interest rates? NAFCU will continue to counsel caution from the NCUA, so that premiums are not assessed prematurely, and those funds can do what they ought to be doing: serving the needs of your members. “Who would have imagined in early 2020 that a potential outcome of COVID would be higher interest rates? NAFCU will continue to counsel caution from the NCUA, so that premiums are not assessed prematurely, and those funds can do what they ought to be doing: serving the needs of your members.” Chart 2: NCUSIF Equity Ratio (%) 1.45 1.40 1.35 1.30 1.25 1.20 1.15 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Notes: (1) Equity ratio shown is a 4-quarter moving average; (2) the large increase in the equity ratio in 2017–18 was the result of the merger or the Temporary Corporate Credit Union Stabilization Fund; (3) NAFCU forecast assumes 6 percent annual share growth, zero loss expense, constant Treasury rates as of June 30, and an overnight rate consistent with FOMC projections. Sources: NCUA, NAFCU analysis Historical NAFCU Forecast
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14 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 PUTTING PEOPLE FIRSTNAFCUʼs New Board Chair: Focus on Members and Employees for LongTerm Success
15 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 especially in advocacy efforts. In fact, one of his goals as Chair of the NAFCU Board is to increase NAFCU-member credit union engagement in advocacy efforts. “I would like to see more credit unions of all sizes get involved because we will always need a stronger voice in Washington D.C.,” he said. “I became more involved in NAFCU and accepted a seat on the board because I was impressed with the service provided by NAFCU staff to members,” said Grinnell. “Phone calls are always answered or returned quickly, staff does a good job listening to credit unions and identifying needs, and there is always a personal connection.” As he begins his year as Chair, Grinnell reflects on how his leadership strategy will share similarities to his strategy as CEO of CCU, but it will also differ in some ways. “As CEO at the credit union, my role is to protect our culture and values, execute our strategy and mission, and ensure long-term success for our members and team,” said Grinnell. “Similarly, the role of the NAFCU board is to help support the staff and to keep the organization focused on the mission. As Chair, my main role will be staying out of the way and allowing the great leadership and great team already in place at NAFCU do their job.” At CCU, the culture and organizational philosophy is to work together to serve members and position the credit union for sustainable, long-term success, said Grinnell. “It is important to grow and to diversify because we must be financially strong to thrive and continue to serve our communities,” he said. “CCU is fortunate to be in several localities—New York, Pennsylvania, North Carolina, and South When asked if there really is a difference when comparing credit unions to other financial institutions, Gary A. Grinnell, president, and CEO of Corning Credit Union (CCU) and newly elected chair of the NAFCU Board of Directors, often points to his own early-career experience. “While I was in college, I had three summer internships at a local community bank, then was offered a full-time position when I graduated,” said Grinnell. He worked there for three to four years, starting on the teller line, and moving into other operational and lending departments as he learned the business. “I always felt that something was missing from a cultural and personal perspective, so when I heard about an opening at a local credit union, Corning Credit Union, I applied and secured a position,” said Grinnell. “That was 25 years ago, and I quickly knew that I had found a home.” A collaborative, cooperative business model that focuses on members and the credit union team is the difference, explained Grinnell. “There is no competition between stockholder and customer interests, which places employees in a challenging position,” he said. “Because we focus on members, we don’t conduct business transactionally, we build relationships.” This ability to look at long-term success from an operational and strategic level allows credit unions to innovate, grow and meet competitive challenges in a way that benefits members, employees, and the organization, he said. Sharing ideas is not limited to team members of the same organization either, pointed out Grinnell. “I’ve learned a lot from my peers throughout the credit union industry, and although we might compete in some areas, everyone is willing to share,” he said. This collaborative spirit that involves working together to identify and advocate for issues that benefit credit union members is one way to get involved with NAFCU, he advised. When Grinnell became CEO of CCU, his involvement with NAFCU increased, Because we focus on members, we don’t conduct business transactionally, we build relationships.
16 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 Carolina—which gives us an advantage as we grow.” One example of this advantage at work is the ability to shift resources from a market that is stable to another market that is experiencing faster growth. “Our North and South Carolina locations are in areas experiencing strong growth in population, so our community banking approach requires more people on the ground to develop community relationships, identify and promote products community members need and create access to our services.” In addition to creating “community- focused” services that result in organic growth, Grinnell pointed out that it is also important for credit unions as they continue to innovate and partner with fintech organizations to generate income and actively seek new members who may not normally interact with credit unions in more traditional ways. “The two approaches of community-based, organic growth and a more innovative, inorganic growth with partners work together to position us for continued financial strength.” Grinnell’s focus on taking care of people— both members and employees—reflects advice he received at the beginning of his career. “I’ve been fortunate to work with talented, selfless people who want to see me and the credit union succeed, and every day I remember something I’ve learned from a number of great mentors,” he said. “In my early days, I was told to take exceptionally good care of people. Running the business is the easy part, but it’s the people that take an organization from moderately successful to greatly successful,” he said. “This sounds simple, but many organizations get it backwards and focus primarily on financials and operations, when it’s the people who make the real difference.” For this reason, when he is asked what he wants to be remembered for in the credit union industry, Grinnell said, “I want to be remembered for how our members feel about the credit union and how employees feel about working at CCU. I want them to love their credit union.” I want to be remembered for how our members feel about the credit union and how employees feel about working at CCU. I want them to love their credit union.
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CRYPTO CONVEN HOW MEMBERS CAN EASILY INVEST Credit unions partner with fintechs to provide new services 18 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022
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20 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 In May 2010, two large pizzas were purchased for 10,000 bitcoin. Since then, the value of bitcoin and other cryptocurrencies has exploded, and one bitcoin would buy thousands of pizzas.1 As consumers’ knowledge and understanding of digital currency grows, financial institutions have explored ways to offer access to the asset without the risk and volatility associated with the initial exchanges. In December 2021, the National Credit Union Administration (NCUA) gave federally-insured credit unions the green light to partner with third-party digital asset providers to buy, sell and hold digital assets with the third-party outside the credit union. Visions Federal Credit Union began a partnership with NYDIG to offer access to bitcoin investment to its members in January 2022, taking time to plan the introduction. A strategic roadmap that included development of educational materials for members and employees to create awareness and understanding, as well as creation of the branded tool, led up to a launch in June 2022. Offering access to bitcoin investment benefits members as well as the credit union, said Cynthia Schroeder, senior vice president of digital assets at Visions. “We are showing our members that we are innovators, and we offer them a chance to learn more about digital currency,” she said. “They can easily move money from their credit union account to a bitcoin account through their online and mobile app.” There has been obvious interest from members. In the first few weeks after introducing the product, Visions had 1,100 members sign up for a virtual wallet. “This is an opportunity to increase engagement with members because research shows that people check their digital account balances multiple times each day, which means they see our brand and our messages more,” said Schroeder. Another positive for the credit union is the fact that money transferred from the checking or savings account to the bitcoin investment account comes back to the credit union when the member sells the asset. “Previously, a member would withdraw funds to purchase bitcoin on another exchange, and those funds might not come back to Visions.” “It’s important for us to offer members access to cryptocurrency and to offer a better risk-based choice versus other cryptocurrency exchanges,” said Joe Keller, vice president of digital assets at Visions. “We provide a better controlled environment, a closed loop system, that minimizes the risks for hacks and eliminates the risk of scams.” “ It’s important for us to offer members access to cryptocurrency and to offer a better risk-based choice versus other cryptocurrency exchanges. We provide a better controlled environment that minimizes the risks for hacks and eliminates the risk of scams. ” JOE KELLER, VICE PRESIDENT OF DIGITAL ASSETS, VISIONS FEDERAL CREDIT UNION
THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 “ We are showing our members that we are innovators, and we offer them a chance to learn more about digital currency. ” CYNTHIA SCHROEDER, SENIOR VICE PRESIDENT OF DIGITAL ASSETS, VISIONS FEDERAL CREDIT UNION Underlying Technology Promises Greater Efficiencies While credit union members may enjoy and focus on access to cryptocurrency, it is only a small part of the innovative opportunities the technology provides. For years the digital assets team at Visions has focused on educating themselves to better understand the underlying technology for cryptocurrency and how it can apply to more than digital wallets, said Schroeder. “We’re excited about the efficiencies blockchain technology can provide in other areas by automating processes in activities such as payment processing or escrow analysis.” The NCUA also recognizes the opportunity presented by technology and in May 2022 issued a Letter to Credit Unions clarifying expectations for credit unions contemplating the use of new or emerging distributed ledger technologies. “Credit unions need to recognize the significance of cryptocurrency’s underlying technology and begin evaluating how it can be applied in their organization,” said Keller. “Learning about it now while the opportunities are emerging and identifying how it will help members and the credit union is critical.” Overall, the credit union industry is still in the very early adopter stage of cryptocurrency, said Greg Varnell, vice president of product and development for the Q2 Innovation Studio. “NYDIG, which is integrated to the Q2 digital banking platform, offers credit union members a way to buy, sell and hold assets in a way that complies with NCUA guidelines,” he said. “Unlike other exchanges that require passwords, certificates or keys that can be easily lost, access to the cryptocurrency account is handled through the member’s online account or mobile app, creating a closed interface that adds an extra layer of security.” When evaluating fintech partners for cryptocurrency, Varnell suggests: ■ Look for a company that focuses on a “compliance-first” approach to development. This is essential as the regulatory environment is evolving as technology evolves. ■ Evaluate the features that mean the most to your members, such as ease of use, security and real-time transactions. These features can differentiate the credit union from other financial institution offerings. ■ Understand the cost of integration, operation, and support. “The interesting thing about costs is that a lot of programs are financially positive—they are not a cost center, they are a revenue-producer,” said Varnell. “There are no upfront costs for implementation and transactional fees from member purchases go to the fintech and the credit union.” As credit unions expand their use of digital tools, it does affect staffing, but Varnell has not seen any additional staff required to implement a cryptocurrency service offering. “I have seen credit unions look for expertise and industry knowledge related to digital services as they add to their staff and leadership teams,” he said. “This is a trend that will continue as credit unions innovate and add more digital services.” References 1. A Brief History of Cryptocurrency. https:// www.cryptovantage.com/guides/a-briefhistory-of-cryptocurrency/ “ The interesting thing about costs is that a lot of programs are financially positive—they are not a cost center, they are a revenue producer. ” GREG VARNELL, VICE PRESIDENT OF PRODUCT & DEVELOPMENT, Q2 INNOVATION STUDIO 21
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24 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 NAFCU ANNUAL AWARDS WINNERS 2022 Each year, credit unions from around the country highlight top performing employees, volunteers, and institutions to be considered for NAFCU’s prestigious Annual Awards Competition. The Annual Awards are NAFCU’s way of providing recognition for these outstanding professionals and institutions. A panel of credit union peers narrows the entries down from dozens of welldeserving candidates to just eight winners that have made an exceptional mark on the industry.
25 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 “The 2022 award winners have shown their dedication to the credit union mission,” says 2022 NAFCU Awards Committee Chair Frank Mancini, president and CEO of Connex Credit Union. “Over the past year, they provided extreme service to not only their members, but also their communities at large. NAFCU is honored to recognize these winners for their exceptional representation of the credit union industry by providing unwavering support to their communities.” There are two asset-size categories with four awards each: Credit unions with assets of more than $250 million and credit unions with assets of $250 million or less. For information on entering next year’s competition, visit www.nafcu.org/annualawards. Interested credit unions are encouraged to begin nominations in January of 2023. CEO of the Year More Than $250M Ron Collier Indiana Members Credit Union Indianapolis, Indiana Ron Collier has shaped Indiana Members Credit Union (IMCU) in many ways throughout his 37-year career at the credit union. He first began working at IMCU in 1985 as a Training Director, creating unique staff training systems. One such system involved replicating a branch environment to train tellers through role playing real member issues. Collier created and implemented an employee retention and attendance program that is still in existence today and, as a result, IMCU has a very low employee turnover ratio. Also established under his guidance was the Member Service Phone Center, which today processes more than 15,000 calls each month. Collier was promoted to Vice President of Planning and Development and continued to advance in his career at IMCU until he was promoted to CEO in 2003. IMCU has only continued to grow under his leadership, with the introduction and implementation of many new products and services since 2003. In addition, Collier is extremely active in the community and has served on the Indiana Make-A-Wish Board, the St. Francis Hospital Foundation Board and has dedicated his time on many committees throughout the New Palestine community in Indiana. In 2010, Collier was instrumental in the founding of the Indiana Members Foundation, an organization created to provide a positive influence on the communities served by IMCU. Through the Indiana Members Foundation, school children in the community are equipped with the necessities for learning and succeeding in their education. Notably, IMCU received the Jefferson Award and the Dora Maxwell Award in recognition of the credit union’s fundraising efforts. Collier has demonstrated both his leadership and outstanding long-term service to Indiana’s credit union movement throughout his career. His focus has always been on the credit union, members, and employees.
26 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 CEO of the Year $250M or Less Steve Foley Bragg Mutual Federal Credit Union Fayetteville, North Carolina Throughout his three and a half years as President and CEO of Bragg Mutual Federal Credit Union, Steve Foley has assessed operations and employees, determined which policies, procedures, and training programs needed to be updated, and boosted employee morale. Under his leadership, Bragg Mutual began to see serious loan and asset growth in 2019 by focusing on “speaking with the member.” Member service speed increased, more products were being offered and used per member, and now, loan demand is very strong. After years of seeing membership decline, Foley opted to replace the existing Core to create more online banking opportunities and digital growth. Bragg Mutual’s membership stabilized and is now experiencing growth. The credit union has grown from $53 million in asset size to $110M during his term as CEO. Colleagues say Bragg Mutual’s recent successes are linked to Foley’s care for people and his ability ask hard questions. Foley is a “people first” person and his dedication to Bragg Mutual’s staff is one reason morale has risen since Foley’s time as President and CEO. He created the Soaring with Eagles award for which an employee is nominated by their peers and recognized for above and beyond service provided to members and the credit union. Because of Foley’s initiatives, Bragg Mutual now has a reputation for treating its employees right. Steve is a dynamic leader who worked hard to update the credit union’s systems and procedures and has overseen the training of Bragg Mutual employees to their highest levels. He stresses that education and training will make the credit union stronger and better, while prioritizing his own training and education by being a regular attendee of credit union industry conferences, including NAFCU’s CEOs, Strategic Growth, and Lending Conference. Foley has also spearheaded a management succession plan to ensure the success of the credit union moving forward. His ability to turn around Bragg Mutual’s trajectory has been written about in publications such as American Banker, CU Management Magazine, and CU Today. His leadership has helped steer the credit union toward continued success, growth, and expansion, evidenced by Bragg Mutual being recognized as one of the top 25 largest credit unions in North Carolina.
27 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 Professional of the Year More Than $250M Berenice Villarreal Randolph-Brooks Federal Credit Union Live Oak, Texas Professional of the Year $250M or Less Melissa Gehl Leading Edge Credit Union Windom, Minnesota As the first ever Senior Vice President and Chief Risk Officer at Randolph-Brooks Federal Credit Union (RBFCU), Berenice Villarreal has created a culture of compliance. Villarreal has overseen RBFCU’s regulatory compliance prior to and now in the two years following the credit union’s crossover to $10 billion in assets, which notably triggers heightened regulatory scrutiny. She has grown a team of more than 25 risk and compliance employees and, for the first time, RBFCU consults with its own legal staff of four full-time attorneys, rather than depending on outside counsel. In addition, under Villarreal’s leadership, the group of NAFCU Certified Compliance Officers at RBFCU has grown from 12 to more than 25 in three years. Villarreal has played an integral role in developing a more structured format for providing education and communication among risk professionals within the credit union space, which has been achieved through partnership with the Association In two short years, Melissa Gehl has guided Leading Edge Credit Union (LECU) through the coronavirus pandemic, created and developed new marketing plans, assisted with two field of membership expansions, and become the face of the credit union in existing and new markets. As Chief Marketing Officer, Gehl coordinates all business development and marketing activities throughout LECU’s 12 counties and the credit union has seen 10% member growth, 23% asset growth, and 14% loan growth in the past two years—all thanks to marketing efforts. In addition to her work as Chief Marketing Officer, Gehl serves as a service skills coach and mentor to LECU’s staff to ensure that service standards are carried out in every member interaction. She is involved in all areas of the credit union and specifically works with the management team to ensure a strong culture and drive brand awareness. of Credit Union Internal Auditors. Villarreal formed RBFCU’s own compliance management system by defining compliance responsibilities through use of a “three lines of defense model,” communicating those responsibilities to affected areas, and ensuring integration of compliance elements within credit union operations. In her life outside of RBFCU, Villarreal is a mother to four children, two of whom were adopted through her family’s involvement as a foster family with Texas Child Protective Services. Additionally, as an immigrant who came to the United States with her mother and father, Villarreal strongly believes in helping others with similar migrant stories and she currently serves as the Board Chair of Endeavors—a non-profit organization that serves vulnerable people in crisis through comprehensive, effective, and innovative services that empower them to build better lives for themselves, their families, and their communities. Colleagues would describe Gehl as the true embodiment of the “people helping people” motto. Under her guidance, LECU has begun to focus on financial literacy in younger generations. Gehl is committed to serving the community’s youth and was instrumental in the creation and mentoring of LECU’s High School Advisory Board. Notably, Gehl has worked hard to expand LECU’s brand presence, and she recently led efforts to complete a successful name change for the credit union, formerly known as Fulda Area Credit Union. She worked with LECU’s graphic design team to create the new logo, name, and brand and met with vendors regarding the development of LECU’s new website. The new name chosen for the credit union is a direct reflection of Melissa’s commitment to technology, along with the strength and confidence she reflects to LECU’s staff and community every day.
28 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 Volunteer of the Year $250M or Less Jamilee Jimenez Kaua’i Federal Credit Union Kaua’i, Hawaii Jamilee Jimenez lives by the motto “if others see you do good, they will follow.” She is a committed, productive member of the Kaua’i community and serves on the Kaua’i Federal Credit Union Public Relations Committee, which was founded to support the credit union’s efforts to encourage education and community outreach. In addition to volunteering with the credit union, Jimenez coaches middle school volleyball and high school track, participates in beach clean-ups, and volunteers many hours for the Kaua’i Marathon. Jimenez has also dedicated countless hours as a Hawaiian culture expert, serving the community as a cultural preserver for her own Hawaiian culture. She guides credit union staff on advanced subjects such as Hawaiian history, factual encounters that may be quoted by the credit union, Hawaiian grammar, and general representation to the community. Jimenez helps to reassure that the credit union’s presence in the community is always good-intentioned and received well—or “pono.” Jimenez attends Kaua’i FCU annual meetings and provides quality feedback. She is always the first to sign up when the credit union is looking for a volunteer and, through her volunteer position on the Public Relations Committee, Jimenez has been heavily involved in the credit union’s community efforts. Her participation at Kaua’i FCU and involvement in the tightknit Kaua’i community does not go unnoticed by her peers. The credit union staff appreciates her fresh ideas and perspective. Jimenez believes that all community efforts are intertwined and that volunteering at the credit union “allows her to be part of something much bigger than herself.” Volunteer of the Year More Than $250M Arland White, Jr. Tower Federal Credit Union Laurel, Maryland Arland White, Jr. has been a member of Tower Federal Credit Union since 1982 and currently serves as the credit union’s Board of Directors Chairman. White has served on Tower’s Board for over 20 years and brings to the credit union over four decades of experience in finance and accounting. He is known to jump in when there is a need, and has previously volunteered for positions on Tower’s Supervisory, Executive Compensation, Budget, Planning, Nominating, and Educating and Training Committees. Over the past two decades, his various positions and duties at Tower have given him a unique perspective on the changes that have taken place over time in the financial industry—and at Tower specifically—and the impact those changes have on Tower members. White recently retired from the Department of Defense after having a distinguished 40-year career serving our country. White is known for being approachable, willing to listen and open to new ways of doing things. He strives to keep Tower on pace with the latest technologies and maximize the value Tower provides for its members. In 2022, Tower successfully completed a major upgrade of its core technology systems following two years of planning and strategizing. White was at the helm of the process, guiding the Board and Senior Management Team through often difficult and unfamiliar waters, while always keeping any impact the changes would have on Tower’s members at the forefront of the project. White is always looking for new ways that the credit union can give back to the community it serves, and to honor Department of Defense employees and veterans. His philanthropic nature is apparent in his generous nature, willingness to assist those in need and engagement with the TowerCares Foundation—the credit union’s philanthropic arm, the Board of which he also serves on. Under White’s leadership, Tower was ranked Maryland’s #1 Bestin-State Credit Union for 2021 and 2022 by Forbes Magazine and was one of only five credit unions statewide to make the list in 2020. White’s leadership style is zeroed in on three primary areas: providing superior service and consistently meeting members’ financial needs; keeping Tower a secure place that members can trust as a safe harbor for their accounts; and weighing all decisions based on what the impact would be for members.
29 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 Credit Union of the Year More than $250M Abound Credit Union Radcliff, Kentucky Abound Credit Union has been proudly serving its community for more than 70 years. With 16 branch locations in the state of Kentucky, Abound has time and time again jumped in to help in times of crisis and the staff of over 300 employees takes pride in the fact that members view the credit union as a safe place for their money during times of uncertainty. Abound has adhered to principles of sound financial judgement, delivering affordable financial services to benefit members. In addition, the credit union continues to push toward an organization-wide goal of making a positive impact for credit union members and the broader communities served by the credit union. In 2021, devastating tornadoes struck portions of Kentucky and Abound quickly took action to live its ‘people helping people’ philosophy by serving the community and matching donations made for storm relief. Abound also began offering two storm relief lending options to help the Kentuckians impacted by the natural disasters. Abound team members made sure that any members impacted knew they could rely on Abound in their time of need. In addition to those specific actions, Abound Credit Union’s everyday involvement in leading financial education efforts across the state has a life-changing impact on its members and community at large. From being a leading advocate and financial supporter of the state’s recent high school financial literacy requirement to reaching thousands of elementary and middle school students directly through youth financial education programs, Abound’s community impact continues to expand significantly. Abound joined forces with the Omicron Nu Lambda Education Foundation in 2021 to improve the financial future of Hardin County residents through a partnership that is focused on changing even more lives and expanding Abound’s financial education to more adults. Omicron Nu Lambda’s outreach initiatives, specifically including underserved populations such as homeless communities, helps ensure no one in the community is left out of these important financial education efforts. Abound is also deeply committed to serving its military community. To assist veterans with higher education, Abound developed the Military Education Association with Elizabethtown Community & Technical College, which reduces the financial burden for vets and their families with scholarships and training. Abound has helped 80 veterans develop the expertise and contacts needed to start a business through our Veterans to Entrepreneurs training program, in addition to a continued promise to provide programs, services, donations and whatever else is needed to support the Fort Knox community. Abound is positioned to continue forward movement toward its goals and will remain engaged with the communities it serves.
30 THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 Credit Union of the Year $250M or Less Labor Credit Union Washington, D.C. Since 1935, Labor Credit Union has worked toward its mission to be the foundation of financial success for its members, including low- to moderate-income individuals, by helping them reach financial goals. The credit union, formerly known as Department of Labor Federal Credit Union, has developed programs aimed at contributing to brighter financial futures that are proving to be life changing for members. For example, Labor Credit Union’s “Make First Time Home Buying a Reality” grant program has had an immediate impact, doing exactly what its name sets forth: The credit union has turned members’ dreams of homeownership into reality. In addition, free financial coaching through a partnership with BALANCE, a financial counseling and education services provider, has served 1,532 Labor Credit Union members. Nineteen members who utilized the free financial counseling improved their credit scores by 100 points and were rewarded with $100 from Labor Credit Union for achieving this important personal finance goal. For 87 years, Labor Credit Union has always adhered to principles of sound financial judgement in order to continue to serve important financial needs for those in the labor movement. Labor Credit Union’s tradition and mission of service remains today, and the credit union has aggressively expanded offerings to benefit members. Not only do members benefit from competitive interest rates and reasonable loan terms, but they also benefit from new conveniences such as the recent expansion of mobile and online banking platforms. Over the last two years, Labor Credit Union has provided its members with over $600,000 in dividends and returned nearly $160,000 in fees. With the addition of $50,000 in grant awards, Labor Credit Union continuously strives to establish opportunities for members’ financial development and achieve the credit union’s goal of empowering members both personally and financially. In July of 2022, the credit union announced its new name. Although the U.S. Department of Labor (USDOL) is the credit union’s primary sponsor, the change reflects the credit union’s overarching goal of being inclusive of everyone who serves and supports the labor movement—including many groups, associations, and partnerships beyond the USDOL with mission statements that align closely with that of the USDOL. Looking forward, Labor Credit Union is poised for continued success. In addition to its new name, which is geared toward bringing additional members to the credit union, Labor Credit Union is in the planning stages of expanding and opening additional locations to continue to meet the banking needs of members and better serve the labor movement.
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