Ancin Cooley, CIA, CISA on LinkedIn: #asksynergy #strategicplanning #operationalconsulting #boardconsulting (2024)

Contact us today to schedule your third or fourth-quarter strategic planning session—or get ahead of your 2025 needs. The unique challenges facing credit unions today require industry-specific expertise and a hands-on approach to strategic planning.Whether you’re assessing your indirect lending portfolio, managing #MBL participations, addressing liquidity risk, navigating unexpected #CECL allocations, or strengthening your talent pipeline, your credit union needs a strategic planning facilitator who goes beyond surface-level discussions. We specialize in helping you create both strategic and operational plans that ensure effective execution.Our strategic planning clients, both on the credit union side and the community banking side, range from $5 million in assets to $40 billion in assets. These clients consistently rank among S&P’s top 100 financial institutions. Let’s work together to ensure your credit union’s success.#StrategicPlanning #CreditUnions #GrowthStrategies #FinancialServices

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Thank you, Sam Brownell, for reposting this document. It’s a beautifully written, well-thought-out research paper. Iwouldn’t have even known it existed if you hadn't posted it.I think the engagement or debate I’m trying to spark around this topic is whether we’re looking at these mergers through a cooperative or capitalistic lens. I feel like I’m struggling to get engagement on that specific question. In my conversations with you and others, this critical point seems to be avoided. Here’s what I mean: If I look at these mergers purely through a capitalistic lens, I’m pro-merger 100%, 1,000% of the time, period. But if I view them through a cooperative lens, my stance on mergers becomes conditional. For example, as the document states, I fully support mergers where the institution is in financial distress or underperforming—First Choice down in Atlanta should have opted to merge instead of being conserved.However, when it comes to mergers driven by a lack of succession plans or the desire to expand services, that’s a different story. I want to point you to a specific statement in this document. In the introduction, it says that credit unions are non-profits. As a result, their primary objective is to serve the needs of their members while maximizing value in the form of higher savings rates and lower borrowing rates. That might be the goal of some institutions, but it’s not the goal of all. That’s the beauty of the cooperative movement—members and board members get to set their missions differently. Now, when the document highlights that members of acquired institutions often see improved financial outcomes, like lower loan rates, we must remember that you have to qualify for those loans to benefit from those rates. Let me cite a recent merger of a well-capitalized, well-run $320 million asset credit union with a $500 million asset credit union. The $320 million asset credit union had an 80% approval rate for members with credit scores between 620 and 680. They were doing just fine in terms of past-due rates, charge-offs, capital, and income. That was their sweet spot.However, the acquiring institution, the $500 million institution, I know for a fact that 80% of their loan approvals go to members with credit scores over 700. So what happens to those members of the acquired institution who fall outside these new approval perimeters? Do they even benefit from those lower rates, given that the acquiring institution has a different risk appetite than their former credit union? No.So, with all that said, I’m just looking for someone to answer a few questions: Are we looking at mergers through a cooperative lens, or are we viewing it through a capitalistic one? Is the efficient use of assets the goal of organizations built on cooperative values? Lastly (slightly off-topic), if everything is on the "up and up," why can't members be notified when a credit union starts considering a merger or join a merger network?

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Great work Damon Burns !!! You’re making our home town a better place!

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#AnswerBelow #CreditRisk #ERMThoughts #SynergyAnswers #MBLRisk #YourConsultantsFavoriteConsultant😎 Understanding the Criticized/Classified Asset Ratio for Member Business LoansIn a previous video (link: https://lnkd.in/gsyhB6MP), I discussed the definitions of special mention and substandard assets (link: https://lnkd.in/gCny_8jT). Today, let’s dive into a related metric: the Criticized/Classified Asset Ratio and why it’s essential for assessing risk, particularly for Member Business Loans (MBLs).I want to preface this by acknowledging that NCUA doesn’t require credit unions to follow a uniform definition of special mention, substandard, and doubtful assets like community banks do. This is verified on page 16 in footnote 12 of the Interagency Guidance on Credit Risk Review (link: https://lnkd.in/gzv9MUrh). However, as a CEO, commercial lender, or enterprise risk management (ERM) professional, understanding the quantity of risk in your MBL portfolios is critical.You calculate the criticized/classified asset ratio by taking the total of your special mention, substandard, and doubtful loans and dividing that by your institution’s net worth. It’s also a good practice to create a table that tracks this number quarterly to monitor whether it is increasing.There’s no specific threshold that signals immediate concern. However, from my experience as a community bank examiner, we started to worry when this ratio approached 25-30% of capital. If it was anywhere near 40%, you were looking at an asset quality rating of 3.Why should you care about this ratio?Granular Risk Insight (or want to know where you stand?): Even without an NCUA mandate, calculating this ratio provides a clearer picture of the health of your commercial loan portfolio. It allows you to track the aggregate portion of your MBL loans that are beginning to show signs of deterioration.Value of Trustworthy Loan Reviews (Credit Risk Review): This ratio is only as accurate as your risk ratings, so it’s vital that you are utilizing a reliable loan review firm that is independent and where you’ve given them a sufficient budget to take a deep enough dive into your portfolios. [Note: The NCUA was not a party to the 2003 Interagency Policy Statement on Internal Audit Functions and its outsourcing, which is verified on page 8 of the Interagency Credit Risk Review Guidance in footnote 4 (link: https://lnkd.in/gzv9MUrh)].If you would like to learn more about credit risk, please keep an eye out for our upcoming virtual workshops on MBL Participation Risk Management and our Introduction to Credit Risk Review and Intermediate Credit Risk Review courses, which will be dropping later this year. Also, if you ever want to talk shop or give me a high-level overview of an MBL loan you're concerned about, feel free togive me a holla. Two credit unions asked for a second opinion on a loan last week. #AskSynergy #SynergyAnswers

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#SynergyAnswers NonCore Funding Dependence Ratio? (Click below)Noncore liabilities, less short-term investments divided by long-term assets.(This definition begs what question? What are non-core liabilities?) Source: https://lnkd.in/e8MW5CzeWe were preparing to launch our Comprehensive #ERM Course two years ago. But just as we were about to roll it out, we noticed a rise in liquidity and interest rate risk-related DORs. We realized that while making the content more accessible, we weren't providing the depth the industry needed in these critical areas.So, we paused and revamped the course. Now, it features two tracks:One for Directors, CEOs, or those seeking an awareness-level understanding of ERM.Another for individuals who want to dive deeper into the specifics, particularly in areas like liquidity, interest rate risk, and credit risk (commercial credit risk 😎 )It’s taken a little longer, but I believe the result will be worth it. When it launches later this year, the course will provide both the breadth and depth needed for today’s challenges.I genuinely think it will be a game-changer because we’re approaching ERM not as a restrictive force but as an additive complement to your rapid growth strategies. ERM is not a brake—it’s a better suspension that allows you to go further, faster.Stay tuned for the release of the Comprehensive ERM Course and a series of virtual webinars. I can’t wait to share it with you.Our goalis to make graduate-level courses and mentorship accessible to everyone.

#ERMThoughts: (It’s important to note that none of the individual risk measures or numbers shown below create a problem. Instead, the issue arises when the institution, in this case, lacks the capital to sustain the credit, liquidity, and interest rate risk it is generating. CEOs, don't ever be envious of another instituion's rapid growth. Stick to the plan and run your on race.)As an ERM professional, your responsibilities go far beyond just BSA compliance or being a general counsel (There are alot of lawyer risk officers around). You’re tasked with understanding the universe of risks that impact your institution's ability to achieve its strategic goals — like interest rate, liquidity, and credit risk — and how they impact the balance sheet.That said, you’re not responsible for the first line of defense or day-to-day decision-making. That’s the domain of your CEO, CFO, and CLO. They are responsible for executing the strategic plan and crafting internal controls (Your internal audit process should be independently testing your internal controls but... this happened https://lnkd.in/e89dymcT . That's a whole other post... )Your role is not just about understanding the risks but also about providing strategic advice. You have the power to guide senior management in understanding how these risks interact and whether certain decisions are pushing the credit union outside of its set risk tolerances.You operate at both the 30,000-foot level— assessing aggregate risk across the institution — and the 3,000-foot level, evaluating the quality of risk management practices. Your primary focus is to ensure the institution stays on track to achieve its goals while managing the delicate balance between risk and strategy. And just as important as your technical expertise is how you communicate with the first line of defense. Too often, we focus on the analysis and forget that having a good “bedside manner” is just as crucial. Effective communication ensures that management teams can truly receive and act on your recommendations. To be successful, you want to be seen as a trusted partner, invited into the room to help shape decisions, not just report on them. Be well, #ERMJedi and may the force be with you. On a related note — we’re almost finished with our Comprehensive Enterprise Risk Management course that will be rolling out later this year, along with a few ERM-related virtual webinars. Stay tuned! #ERM #riskmanagment

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I posted this video on #BoardSuccessionPlanning two years ago (Shout out to the MDDC Credit Union Association for the speaking opportunity. Always a pleasure). Given the current discussion around the NCUA Board Succession proposal (https://lnkd.in/eCgXa5kV), it felt relevant to repost. If you or your Board would like more specifics (worksheets, policies, etc.) on effectively implementing your Board Succession process, join me on September 25, 2024, at 1 pm for a CUES Virtual Classroom experience. The session is titled "Practical Succession Planning: Securing Leadership Continuity and Strategic Success." This is a "task-based" learning experience where we'll walk through the process and impart the skills you need to ensure the continuity of your credit union's mission. #AskSynergy (Note: Board Succession is included in all of our strategic planning engagements. Schedule yours today.)

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