SAN DIEGO — Adding business deposits as a potential lower cost of funds option may be one way credit unions can take advantage of growing their member business services programs as the financial landscape continues to morph.
Margaret Dengler Ross, NCUA member business lending program officer, offered that suggestion at NACUSO's recent business services alliance in San Diego. Tying her presentation to the NCUA letter to credit unions 08-CU-20, which addressed evaluating risks, Ross encouraged the industry to "to read and review to understand what examiners have been instructed to look for and also good practices to implement."
"It's important to look at the risks that are changing and determine in advance what kind of corrective action might be necessary, rather than waiting to see what changes," Ross said. "Regarding business services, it's important to understand that business deposits may provide a lower cost of funds. It's a resource that credit unions offering MBLs should consider."
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Credit unions offering member business lending should proactively and continually validate that risk assessments are current and relevant, Ross also advised, adding credit unions should make sure due diligence is up-to-date and be aware of changes happening around them.
Meanwhile, new opportunities for growth amid a changing financial marketplace can be had for credit unions and CUSOs that are not afraid to seize the moment, according to Kirk Cuevas, principal partner with Dollar Associates, who also spoke there.
"Inaction will cost you, and right now, there's going to be a tendency to sit back and wait until the smoke clears, until the dust settles before you do anything," Cuevas said. "I challenge you that now is not the time to sit back and wait for things to happen."
Speaking on factors that could affect the regulatory landscape, Cuevas emphasized that fear of increased regulation and oversight should not deter safe and sound credit unions and CUSOs from partnering together to meet member needs and expectations. He said the key regulations and issues to watch include NCUA part 723-member business loan regulation, part 721-incidental powers, part 712-CUSO rule, vendor examination authority and the NCUA chartering and field of membership manual.
"You're going to have opportunities, and you've got to jump through and be ready to do it. That doesn't mean you do it carelessly. You do it measured; you do it with balance, safety and soundness."
Cuevas also suggested that credit unions and CUSOs make sure their voices are heard.
"Monitor NCUA Board actions and comment on proposed rules," Cuevas said. "Become involved in legislative advocacy efforts on the national and state levels, and document your efforts in meeting the needs of your members."
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