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Trust But Verify, Dennis Dollar Urges CU Volunteers
Wednesday, April 23, 2014 6:40 AM

Dennis Dollar

With no seat left empty, and in front of a captive audience, former National Credit Union Administration (NCUA) Board Chair Dennis Dollar highlighted the top 10 items every credit union board should monitor at the Cornerstone Credit Union League’s Annual Meeting & Expo yesterday in San Antonio. The conference runs through Thursday.

Those top 10 items include:

  1. True picture accounting. “In other words, when you are making strategic decisions for the credit union, you have to have the right numbers,” Dollar told the audience of credit union volunteers and CEOs. “Don’t be afraid to ask the tough questions. There is nothing wrong with saying to your CEO, ‘I want to have your back, and I want to know that when an examiner comes in or a member raises a question that I have confidence in the numbers. That they are real and that the numbers are correct’,” Dollar added.
     
  2. Understand the seven pillars of risk that are: credit risk, interest rate risk, liquidity risk, transaction risk, compliance risk, strategic risk, and reputation risk. “The NCUA is hot on interest rate risk right now,” Dollar noted. As the credit union gets bigger, Dollar says the “job” of a credit union volunteer gets bigger. Their liability gets bigger. “If you can’t grow with the job and with the credit union, then it might be time to step down into an emeritus position,” Dollar suggested.    
  1. Policy makers must formalize the policy process. “A well-functioning board should have a process in place where they review every single regulation every two years, if not once a year,” Dollar told the credit union audience. He noted that one of the primary responsibilities of the board is to set policy, and management implements the policy.
     
  2. Compliance. When reviewing policies on ongoing basis, Dollar says its good idea to have management give the board a brief compliance report at same time. “In an era in which exams are tougher and longer, and examination teams are bigger and looking into more things, it’s critical that boards perform their due diligence.”
     
  3. Succession planning. Dollar suggests that credit unions need 18 months of lead time to make a good decision about who will replace a departing CEO.
     
  4. Merger parameters. According to Dollar, mergers are a current fact of life in the credit union movement. Every credit union, he says, should have set merger parameters in place so that when an opportunity arises, they are prepared. “Parameters, not a policy,” he told attendees. “A policy locks you in, but parameters keep you from spending time on a merger that may not be a good fit.”
     
  5. Staying a credit union or taking the promise of a big conversion payday. According to Dollar, since 1995, there have been 36 credit union-to-Mutual Savings Bank conversions. The decision to convert, Dollar says, must be in the best interest of the member and not for personal gain. “Personally, I believe credit unions are the superior charter,” Dollar said.
  1. Staying out of the weeds. “Policy making,” Dollar explained, “is strategic and not tactical. Board interference can hinder management from implementing policy. Don’t overreach authority as board member. Trust, but verify. If you have a CEO you can’t trust, then you need replace them with one you can.”
     
  2. Training. It is crucial and it is needed, Dollar told the credit union audience. “As credit unions get bigger, you have bigger issues, and you have be able stay on top of those issues,” he said.
  1. Ensure your compensation and accountability for CEO is appropriate for an institution of your size and complexity. “You don’t want to constantly be replacing CEO because he goes somewhere else for better job,” Dollar stated.  

 

Helpful Resources: Cornerstone’s and Credit Union Resources merger assistance program. While neither Cornerstone nor Resources promotes or encourages credit union mergers, they do understand that it is a choice for some credit unions. Cornerstone and Resources will provide at no cost to credit unions registration and introductory services. Additional information is available online, at www.cornerstoneleague.coop/merger_assistance_program.html. If you have any questions, please contact your League Representative.  Additionally, you may contact Mike Delker, Cornerstone’s senior vice president of Credit Union Relations, at (800) 442-5762, ext. 6826, or Dean Borland, Resources’ assistant vice president, at (800) 442-5762, ext. 6627.

Credit Union Resources offers succession planning services, as well as strategic planning and consulting services.