What keeps credit union leaders awake at night?

Compliance on the brain

Compliance is a never-ending task confronting credit union leaders. At the 40th anniversary version of the Directors and CEOs Leadership Convention, which recently took place at Caesars Palace in Las Vegas, Credit Union Journal asked several folks to name their top compliance concerns. As one CEO aptly put it: “What is not a big compliance concern right now?”

For more coverage from the conference:

Lessons in leadership: On-site at the Directors and CEOs conference

Culture clash: Pitting sales against the credit union philosophy

All about innovation: Day two of the Directors & CEOs conference

Sharon Moore, CEO of $400 million City CU, Dallas

My background comes from compliance, so we do a pretty good job. The biggest issue is just keeping up. We are good with the rules from NCUA and the state regulators, but when there also are new regulations coming from other agencies, the CFPB, the Federal Reserve, and even our state legislature, then you have to work very hard to keep up. Then, with almost all of these, we have to coordinate with our core processor to make changes, which is time-consuming.

Wesley Shaw, CEO of $15 million Brazos Community CU, Alvin, Texas

What is not a big compliance concern right now? The biggest may be the new rules regarding reserving for loan losses, known as CECL. While the rules do not take effect until 2019, we have to start to get ready now because it will take a lot of time and resources. It will affect the bottom line if we do not do it right. Other issues we are watching closely include taxation and field of membership.

Rose Flores, CEO of $43 million Lubrizol Employees CU, Deer Park, Texas

Our biggest concern is we are trying to get into home equity lending and the bar is constantly moving. There is so much to learn. We do not do first mortgages, just unimproved property loans. We use CU Resources, the shared compliance resources though the Cornerstone Credit Union League. Compliance is a big burden on a small credit union. We cannot afford to have a compliance officer in-house full-time, but CU Resources has helped fill that need.

Rick Parker, CEO of $61 million Miami University Community FCU, Oxford, Ohio

Our biggest challenge is keeping up with IT risk assessments. NCUA is asking us to do more and more, and when you are a $61 million credit union, that can be expensive. We serve a college community, so we have all of the latest mobile apps, mobile banking, remote deposit capture and more. Every one of those services comes with its own unique risks, but we have to do it.

Earl Bell, board member of $777 million University of Michigan CU, Ann Arbor, Mich.

Cybersecurity is an area I want to make sure we are doing a good job tracking and in which we are strategically investing. At the same time, we want to examine mobile apps and robo advisors. We serve a lot of millennials being a university-related credit union, so we have to lead on technology – along with being secure, which is very hard. Our board wants to be sure we are doing all we can to make sure our members’ data is secure as we move more and more to the cloud. We just went through exams, which went well, so it appears we are doing a good job.

Harold Roundtree, president and CEO, $390 million UNCLE CU, Livermore, Calif.

I think about CECL [the Current Expected Credit Loss standards issued by the Financial Accounting Standards Board, which will change the current Incurred Loss Model due to fears the current model does not anticipate losses quickly enough – which FASB argued worsened the impact of the Great Recession last decade]. We have a few years to comply but we have to start planning right now. It is going to have an impact on all of us. Another concern is the Department of Labor’s rules on compensation as we switch from a fee-based model to the best interest of the member. It may not impact everybody, but those credit unions that are doing investments need to have it on their radar.