NAFCU Journal May June 2021

THE NAFCU JOURNAL May–June 2021 were issued, according to Brett Wheeler, CFO of USALLIANCE Financial. People were not spending as much due to con- cern about what might happen with their jobs and the fact that travel, entertain- ment and restaurant industries were either shut down or restricted by pandemic rules. Addressing Share Growth Challenges Wheeler does point out that USALLIANCE is different frommany other credit unions because, as a low-income designated credit union, the use of non-member and wholesale funding can be used as a “release valve” when members’ savings levels move up and down. “This gives us greater flexibility to balance our asset growth.” “We expect continued share growth across all credit unions as we see mem- bers deposit stimulus checks along with a greater percentage of their paychecks throughout 2021,” says Ann Kossachev, director of regulatory affairs at NAFCU. This will be due to continued hesitance to spend money until the economy, the job market and COVID-19 vaccination efforts show positive results, she says. “Mean- while, credit unions are looking for differ- ent investment opportunities to put their money to work for members so they can offer better rates and services,” she says. “For this reason, NAFCU has been talking with the National Credit Union Associ- ation (NCUA) about greater investment authority and flexibility, which might be temporary—and invoked in similar situa- tions in the future—or be permanent.” One example of additional investments opportunities includes the ability to invest in corporate bonds, says Kossa- chev. “Some state credit unions already have this ability, and the NCUA could set limits on the type of bonds and oversee investments to ensure the credit union investments are diversified—just as they do for other investments,” she says. “This particular change may require legislative approval, but conversations with NCUA have been positive.” Preparing for Uncertainty As advocates work with the NCUA to identify strategies to improve credit unions’ ability to manage the stress and strain presented by unusual circum- stances, such as a pandemic, it is critical that credit unions conduct stress tests as a component of planning for changes in deposit levels, loan repayments or other facets of business that can be affected by different factors. “We have incorporated stress testing and scenario planning in our planning process since 2008,” says PSECU’s Seibert. “The act of going through a hypothetical event and identifying gaps we would need to shore up or decisions that would mitigate risk is a valuable part of prepar- ing leaders throughout the organization to handle a variety of situations.” A challenge that must be overcome is garnering buy-in to the value of stress testing, admits Seibert. “It’s important to make the session engaging and not to get caught up in the details and let the numbers drive the discussion,” she says. The value of stress testing and scenario planning is the focus on strategy and how decisions will affect the organization and each department. “One best practice is We focused on the early warning signs. For example, we saw the likelihood of high unemployment early on and anticipated an increase in loan defaults, and we met to adjust qualifications for loans. BRETT WHEELER, CFO OF USALLIANCE FINANCIAL 27