News & Highlights

NACUSO Goes to Washington!

Every year the NACUSO board and staff makes it a point to attend the Governmental Affairs Conference (GAC) in Washington D.C. And this year was no exception.

We kicked off our trip with our monthly board meeting, followed by the Legislative & Regulatory Advocacy Committee meeting with guest Dennis Dollar. He gave us an update on Legislative issues and priorities such as:

We agreed that our legislative and regulatory advocacy priorities for 2017 are:

  • Continue opposing costly and unnecessary vendor authority legislative priority
  • Advocate for expansion of CUSO lending powers, especially auto loan origination
  • Support national data-security standards and support issues good for the credit union movement (i.e. FOM expansion, supplemental capital)
  • Support expansion of MBL powers
  • Monitor issues/changes to CUSO Registry

With our marching orders in hand we set out to meet with key people to make sure the only CUSO trade association was heard. We met with NCUA Board Member Rick Metsger, representatives from NAFCU, NASCUS and CUNA. While Jack was busy in those meetings Shawna and Denise visited with our Platinum and Gold sponsors in the massive exhibit area. There were some amazing displays this year – it was bigger and better than ever. They also got to thank some of our newest members and great supporters such as Buzz Points, CU Prodigy, eDoc.

Special shout-out to Mastercard – an amazing supporter of the NACUSO Network Conference. They brought into the exhibit area what can only be called a “total immersion” experience. A trailer, that you walked into that took you through the home of the future. Using Masterpass you can order your groceries on your refrigerator and have them delivered or see inside the fridge from the store to see if you need something. You can download your public transportation tickets onto “wearable technology” like a ring on your finger. It was amazing and exciting.

On Monday night we celebrated the career of Stan Hollen, retired CEO of CO-OP Financial Services who received the Award for Outstanding Individual Achievement at the Herb Wegner Awards dinner. A record crowd of 900 also honored The Cooperative Trust (aka The Crahsers) and Maria Martinez, CEO of $139 million Border FCU in Del Rio, Texas. There was hardly a dry eye in the house as she told the story of growing up an undocumented immigrant in a house with little money but lots of love. How it inspired her drive and passion to serve the underserved.

Now that we’re all back home and are looking at our event just 5 weeks away we are inspired and excited to see everyone that believes in cooperation among cooperatives come together to network and collaborate and of course have some fun in Orlando. See you there!

Spotlight on Tom Snyder, EVP Direct and Channel Sales for Buzz Points

Each month we are highlighting at least one NACUSO member with an interview style format that is meant to be fun and informative. This month our focus is on Buzz Points, a new NACUSO member and first time exhibitor at the 2017 NACUSO Network Conference in Orlando on April 10th – 13th.

PART ONE: Life Story and Experiences

What’s your current position and can you give me a brief overview of what it is you do in your work?

EVP Direct and Channel Sales. I work to create strategic partnerships to expand the Buzz Points footprint. Our ultimate mission as a company is to leave the credit unions we partner with and their communities better than they were before we came. Supporting local is more than just a feature of the Buzz Points platform, it’s what our company stands for. It’s why we do what we do.

What would you say most motivates you to do what you do? What are you most excited or passionate about?

I have been in the community banking arena for almost 10 years and have worked with some great people. In doing so, I have seen firsthand how credit unions truly are mission-driven and are always looking for ways to provide better value to their members. I love being part of a team at Buzz Points that helps credit unions to increase member value and strengthen the local communities where they live and work.

I want to hear the story of how you came to work with credit unions. What attracted you to work for Buzz Points?

It goes back pretty far for me.  I was raised by a single mom with five children, so times were hard. When finances were tight, it was her local credit union that was there to provide help. I was attracted to Buzz Points mainly because I am passionate about helping credit unions succeed, compete against the big banks, and strengthen their local communities. It was a no brainer for me to align myself with a company that gives me the chance to give back…


The Greatest Finish in NFL History

Like many of my friends (Seahawks fans) last Sunday we just hoped for an entertaining game. Super bowl commercials have become so innovative because historically Super Bowl games are a snooze fest. Never has a Super Bowl game gone into overtime and more often then not it’s a blowout (Seahawks beat the Broncos 43-8 in 2014).

Boy oh boy we were not disappointed on Super Bowl Sunday. Brady set all kinds of records in Houston.  In case you were out of the country, the Patriots overcame a 25-point deficit midway through the third quarter to pull out the 34-28 win in the first ever Super Bowl overtime, and in the process set or tied enough records to all but confirm this was the greatest Super Bowl in NFL history. 24 records were set and another seven records were tied.

There are only a few human beings that might have the athleticism, skill and tenacity to break Brady’s record in our lifetime. Tom Brady officially passed Dan Marino’s all time passing record of 62,361 yards by 221 yards. Dan Marino is now 5th on that list. So in NFL terms, Tom Brady is a “better quarterback” than Dan Marino.

But Plato said “The measure of a man is what he does with power.” When you are a high profile sports celebrity you have all kinds of “power,” including the ability to influence others. That’s why so many companies offer endorsement deals to them, to convert that power into a stronger brand and sales.


Why is Credit Union Accounting Shrouded in Fog?

While there is abundant data in other areas of credit unions’ critical functions, such as loans, strategy, marketing, and regulation, accounting is a grey mist on the horizon.

We have found there is little to no industry data compiled in this area, and many credit unions are left wondering if their accounting team is staffed appropriately as well as whether they should outsource various functions, such as ATM balancing.

Debra Templin, CFO of CU Service Network, manages the company’s Outsourced Accounting Service, which assists many credit unions across the country. “The most frequent question we are asked is ‘are we overstaffed?’ That is a difficult question to answer without knowing the type of positions and activities that are performed within the accounting department.”

The accounting function mystery is so difficult to crack because it is three-fold. Not only do credit unions need data on how many employees are staffed in credit unions’ accounting departments, but secondly, they need more data on what accounting functions are being managed. And thirdly, are their resources appropriately aligned in their asset class.  Without these three pieces of information available concurrently, the individual data is basically irrelevant.

As you can imagine, obtaining all of this data from credit unions can be difficult. However, the need for this type of information couldn’t be more critical. We find credit union managers are frustrated and unsure of whether they need to grow or scale back their accounting team. Are they inefficient? Wasting money? Overstaffed? Understaffed? They have nowhere to go to compare.


Generating Protection and Value for Company and Stakeholders Through Enterprise Risk Management

The recent highly publicized news about unauthorized account openings by staff members at a large national bank reminds us of the benefits of an experienced and empowered Enterprise Risk Management (ERM) practice. A more risk-informed company is better able to protect itself. The collection and analysis of a company’s risk environment also keeps it aware of potential hazards now and in the future.

Benefits of a Strong ERM Function

The proper implementation and application of ERM practices carry numerous benefits for multiple stakeholders within an organization.

  • A company’s strategic plan can introduce new elements of risk beyond those presented in the context of day-to-day tactical operations. ERM can identify potential risk in a strategic plan and develop the appropriate mitigation processes to help maintain an acceptable level of risk exposure and ensure the successful execution of the company’s strategic objectives.
  • The ERM discipline is critical to informing the decisions a company makes with respect to its investments in infrastructure and technology. A regimen of ERM oversight on mission-critical business plans and due diligence activities can be invaluable when evaluating the merits of particular investment ideas.
  • A formal and highly visible ERM function heightens awareness among employees about the role individuals play in defending the enterprise against risk. The combination of employee training on risks that are specific to the business, with proactive monitoring of the work environment by all staff for anomalies or suspicious behavior, can lead to early detection and avoidance of risk. A broadly promoted “See something, say something” campaign can empower an army of employees to take an active role in protecting the organization from potential harm.
  • Credit union partners of an organization committed to a world-class ERM practice benefit from higher levels of security around the data they entrust to the organization, along with the increased focus the enterprise places on regulatory compliance which, when missing, can negatively impact the organization and its clients.


State Legalized Marijuana – Opportunities for Credit Unions

In the current low-interest-rate environment, credit unions are exploring new sources of revenue to augment deposit and non-interest revenue.  One new market that has emerged in recent years is state-legalized marijuana, which has created opportunities for credit unions willing to service marijuana-related businesses (MRBs).  This is intended as the first in a series of articles about the challenges and opportunities associated with banking MRBs.

The first thing to understand is that, as of the date of this article, it is permissible under federal policy for credit unions to provide banking services to MRBs.  This policy is reflected in a pair of memos issued by the Department of Justice (DOJ) and FinCEN on February 14, 2014 that collectively set forth the parameters by which banks and credit unions can service MRBs consistent with their anti-money laundering (AML) and BSA obligations.  The memos identify eight priority factors that guide federal enforcement of AML and BSA laws with respect to the banking of MRBs in states where marijuana has been legalized.  So long as financial institutions and their MRB customers avoid implicating any of the eight priority factors, they are effectively immune from federal enforcement action.

While initially met with skepticism, it has become increasingly clear over the last three years that financial institutions can rely upon the DOJ and FinCEN memos to service MRBs.  As marijuana legalization has expanded to over half the states, banks and credit unions across the country have been responsibly and profitably servicing MRBs with no interference from DOJ or FinCEN.  In fact, I am not aware of any DOJ or FinCEN enforcement actions against a bank or credit union in compliance with the respective memos.


The 5 Biggest Misunderstandings About Outsourcing Mortgage Loan Servicing

The mortgage loan has been originated. Now comes the hard part – beginning the long and arduous task of carrying out all the functions required to service the loan. Although the majority of lenders and servicers elect to perform servicing functions in house, huge benefits are to be gained by outsourcing the responsibilities to a trusted subservicer. These benefits include lower costs, more robust servicing technology and assistance with regulatory compliance (this help alone is often worth the move). Why, then, is there hesitation? This article addresses the 5 biggest misunderstandings about outsourcing mortgage loan servicing and what lenders and servicers need to consider and assess before opting to keep the servicing in house.

Misunderstanding #1 – Our credit union has the same per-loan cost to service in house as an outsourcing company.

Clarification – The real question here is what the credit union’s per-loan cost includes. More often than not, in-house servicers fail to calculate a comprehensive, fully loaded per-loan cost to service and therefore are not making like comparisons. For example, they exclude many fixed and variable costs (such as staff salaries, benefits and training, licensing fees, office supplies, postage, etc.) that are standard and customary when servicing a mortgage. Default costs and costs that stem from servicing mistakes – compensatory fees, etc. – are also typically excluded from their calculation. Let’s consider an industry perspective. Annually, trade organizations publish survey results of the typical cost to service based on loan portfolio sizes. According to the latest survey, financial institutions can expect to incur an average cost of $312 a year per loan for in-house servicing. Now compare the $312 in-house average to the average $75 annual per-loan price point of a leading outsourcer. True comparisons of actual per-loan costs for in-house versus out-of-house servicing reveal that substantial savings are gained by moving to an outsourced servicing strategy.


CUSO Guru’s 2017 Predictions

While sitting on my mythical mountaintop with my mythical beard flowing, some mythical predictions for 2017 have come to me and I feel compelled to share them (Denise told me I had to).

The New MBL Rule

For credit unions that have experienced business lenders, the new MBL Rule will enable them to customize their loan offerings that will make them very competitive with the community banks and annoy the banks even more.  For credit unions that do not have experienced business lenders but still make business loans, there will be many deer in the headlight moments as the credit unions try to explain why they made a loan to a member who convinced the credit union that the pet rock business was coming back and no security and guarantee was needed for the loan.

The community bankers trade association’s law suit against NCUA will fail but not before the trade association receives increased dues to fund their Don Quixote mission and not before their attorneys upgrade their boats from the fees earned.

The New Membership Rule

This also is a loser for the community bankers.  The current rule is less expansive than the membership rule enacted during the time Dennis Dollar was Chair of NCUA and the bankers lost that court battle.  I need to get to know the attorneys for the community bankers.  They are going to have really nice boats.


Advocacy Updates

NCUA Meeting Provides CUSO Guidance 6/16/16

NACUSO Visits NCUA to Discuss the CUSO Registry and CUSO Reviews

On June 14, Jack Antonini, NACUSO President and Guy Messick, NACUSO General Counsel met with NCUA Staff on the results of the CUSO Registry and the thinking on how CUSO Reviews will be handled.

The CUSO Registry sign-up period and the follow-up by NCUA found there were approximately 900 CUSOs.   NCUA believes that there are more CUSOs that have not reported.  Under the NCUA Regulations (Part 712.1(d)), “A CUSO also includes an entity in which a CUSO has an ownership interest of any amount, if that entity is engaged primarily in providing products or services to credit unions or credit union members.”   So these subsidiary CUSOs are considered CUSOs and required to make annual reports to NCUA.   The NCUA staff believes that many CUSOs were not fully aware of this requirement and there are a number of subsidiary CUSOs that have not reported.   NCUA will be following up with CUSOs to obtain these filings.   NCUA is also scrubbing the data and asking for clarification if the data is indicating that there may have been a reporting error. (more…)

Report on Advocacy Fund spending…NACUSO Working for you

Through the support of our partners, NACUSO raised approximately $63,000 in contributions toward its Legal and Litigation Fund in 2014 with a primary purpose to develop strategies for the most effective way to seek the repeal and/or mitigation of the impact of the CUSO Rule that NCUA had adopted in November 2013.  Subsequently, NACUSO established an Advocacy Fund to supplement the Legal and Litigation Fund.  The goal of the two funds together were to enable NACUSO to coordinate legal decision making, with a crucial advocacy component that will have more impact than the always risky option of legal action.  In total, $190,600 was contributed to the NACUSO Advocacy Fund.  Combined these two related initiatives received total contributions from NACUSO partners of approximately $253,600 in 2014 and 2015.

In keeping with our commitment to be fully transparent and to regularly communicate our usage of these dollars, we would like to provide you with the following information.  NACUSO spent the following amounts from the two funds during 2014 and 2015:


CUSO Registry Clean Up Period 4/22/16

As most of you know, all CUSOs are obligated under the NCUA Regulations to register certain information directly with NCUA on an annual basis.   Over 800 CUSOs did so in February and March.   NCUA is now in the process of making sure all CUSOs have registered.   Their new deadline is April 30.  They are taking CUSO information from the credit union 5300 call reports and sending out letters reminding “CUSOs” that they have to register.   Some credit unions may have incorrectly listed a company as a CUSO.  Other credit unions list their CUSO but use an acronym for the CUSO instead of the CUSO’s full name.   NCUA, not knowing better is sending letters to any and all companies listed on the call reports. (more…)

Regulatory Update 3/15/16

Letter to NCUA regarding CUSO Registry Acknowledgement: Yesterday, NACUSO informed you of a change we negotiated with our General Counsel (Messick & Lauer) with the NCUA regarding the CUSO Registry Acknowledgment each CUSO is required to agree to when submitting their CUSO registration in the NCUA’s CUSO Registry system.  As we pointed out in our Regulatory Alert yesterday, the acknowledgment required CUSOs to agree to be bound by statutes that only apply to credit unions and which imposed penalties that are not applicable to CUSOs.


Change to the CUSO Registry Acknowledgement 3/14/16

During the process of assisting with CUSO Registry questions, it came to our attention that in order to complete the CUSO Registry, CUSOs were required to agree to be bound by statutes that apply to credit unions and which imposed penalties that are not applicable to a CUSO.  On behalf of NACUSO and the many CUSOs in this industry, Messick & Lauer (NACUSO’s General Counsel) have advocated and negotiated to revise this acknowledgement to more accurately describe the duty of CUSOs to respond to the CUSO Registry.  It is a contractual duty with the credit union and not a direct regulatory obligation to NCUA.   As NCUA continues to pay more attention to CUSOs, NACUSO will continue to take action to be the voice of CUSOs and to resist any attempts at regulatory overreach.  The NCUA has changed the acknowledgement text.  For your reference, the text of the previous and current CUSO Registry acknowledgments are below. (more…)

Regulatory Update 2/26/16

NCUA’s CUSO Registry Training & Demonstration webinar held on February 11 is now available to be viewed.  If you missed the webinar, or want to view it again, to help you in completing the CUSO Registry, you can watch it by clicking on the following link:  View 2/11/16 Webinar. You have until March 31, 2016 to complete your initial registration of all CUSOs.

Regulatory Update 2/1/16: NCUA’s CUSO Registry Opens Today

Credit unions and credit union service organizations can now get additional guidance on NCUA’s CUSO Registry from a new agency website page. Registration for the CUSO Registry opens today and continues through March 31. The new website page explains the agency’s requirement that CUSOs report information directly to the agency if they wish to work with credit unions and provides links to related resources available to help those completing the registry. You can link directly to the CUSO Registry from the resources page.