Brad Miller stepped down from his position as executive director of the Association of Corporate Credit Unions in February to take over as president/CEO of the $3.3 billion Southeast Corporate Federal Credit Union. Credit Union Times caught up with him on March 18 to discuss his plans for Southeast Corp and his thoughts on proposed corporate regulations and corporate system restructuring.
Credit Union Times: The League of Southeast Credit Unions' comment letter is consistent with the CUNA Task Force's recommendation of just one corporate. Odds are you won't be the lone survivor if the industry follows that plan. Has the difference in opinion caused problems for Southeast Corporate as you meet with members regarding the future of the corporate system?
Brad Miller: My focus, and what we've been talking about here with our staff and board, is on serving credit unions and rebuilding the trust and confidence that credit unions have in their corporate so we can continue to play a role in their success. It's really not about protecting our turf from my view. It is about having new regulations that provide services credit unions need while balancing reasonable risk taking with a sustainable business operation.
I came into this position at Southeast Corporate with my eyes wide open. I understand the challenges ahead but also realize we have some really good opportunities to bring about positive change in the system. I've held a number of town hall meetings with members and have heard one thing very loud and clear: members want change. We have to adapt, evolve and meet the new dynamics for regs and deal with the legacy assets still out there. Ultimately, it comes down to what members will support.
I don't know what the optimal number of corporates is. I don't think anyone can say at this point what number is most efficient. It will be challenging to both create efficiencies and still be high touch, but by looking across the system we can find areas where we can collaborate and cooperate by sharing products, resources, etc. That's the model we will adapt going forward.
CU Times: Do you think your members are willing to recapitalize?
Miller: Initially, we're not planning to ask members for new capital. We can convert our remaining MCS to permanent capital, and we will be asking members to do that. But we won't ask for any new money. As part of the new business model and value proposition we've been working on, obviously we have to look at our long-term capital structure. But, we can manage our balance sheet down to the capital that's there to support it.
CU Times: Southeast Corporate isn't a pass-through corporate, but you do have a large percentage of your assets there. How will the corporate business model change without U.S. Central?
Miller: All corporates are going to have to evaluate and implement solutions for products and services they depended upon U.S. Central for. Even though we have a robust infrastructure and the expertise to expand our services, we are also looking for ways we can become more efficient.
CU Times: Are you saying that you are considering marketing some of your services to smaller corporates?
Miller: We can leverage our services to replace U.S. Central, but even we must evaluate the areas where we use U.S. Central, like ACH, auto settlement and, on the broker dealer side, when sell securities. But that is certainly one of the opportunities we're looking at, stepping in and providing services for smaller corporates.
CU Times: Given your recent experience at the Association of Corporate Credit Unions, how responsive do you think the NCUA will be when it comes to considering comments and suggestions from the industry to make adjustments to proposed corporate regs?
Miller: First of all, I do think changes were absolutely necessary. The corporate system has caused serious losses and credit unions are paying for them. But having said that, I think there needs to be a proper balance between risk and income that will allow for a sustainable business model. I think there are a lot of good suggestions but also a lot of difference in opinion. I've had good dialogue with NCUA when working through the more technical parts of the regulations, and I think NCUA will be responsive to the comments out there. There is certainly enough repetition in some areas to provide consistent guidelines. But the fact is, these issues are also very polarizing across the system. There are plenty of opinions, so it's a difficult task for NCUA, because there is so much fervor on both sides.