Alloya Corporate Federal Credit Union Balance Sheet Solutions

2016 Daily Wrap-Up

Credit unions from across the country are gathering in Chicago, Illinois on September 7-9, 2016, to not only hear from experts on a range of topics, but to network with peers – all while addressing key issues facing credit unions today.

In this space, we are providing a daily recap of presentations, conversations and photos from the symposium – so even if you are unable to attend, you can still get to see some of events.

Friday, September 9, 2016

The theme of the day was: Economic Potential vs. Secular Stagnation – or Bulls vs. Bears.

Credit union members were treated to two opposite viewpoints on where our economy stands and where we are headed. Presenters Steven Rick, Chief Economist, CUNA Mutual and Tom Slefinger, Senior Vice President of Institutional fixed Income Sales, Balance Sheet Solutions individually presented their takes on the state of the economy – before coming together for a spirited presidential style debate that had attending members asking for more.

Reaching Economic Potential and Beyond
Steven Rick, CUNA Mutual

“I tell people that according to the Fed – things are going pretty well. Numbers are moving in the right direction. A recession is not imminent.” said Rick. “Then I hear back, ‘Hey Mr. Economist… how good are your predictions.’ And I say, come on, Mom…” .

During this session, Rick shared his view that the economy is growing, thus reducing the probability of having a recession. “You can have an economy that grows forever. Recessions happen when you get ahead of yourself – and we are not,” said Rick.

Other points from Rick:

Employment

  • Strong employment gains close in on full employment
  • Unemployment numbers are back to 2005 levels.
  • Unemployment insurance claims the lowest in 40 years.
  • 15 million jobs added in the past 7 years with rising average hourly earnings.

Home sales are accelerating

  • 5.5 million home sales in 2016. Housing market is good, but not booming. It is nice and steady.
  • Quoting Warren Buffet: “When the tide goes out, you can see who is swimming naked.” This is what happened during the last recession with housing – More than Five million American were in foreclosure. Today, home prices are rising 6% - boosting household wealth.

Stock Prices

  • Not only are home prices rising, the stock prices are at record levels – also boosting household wealth.

Other

  • Inflation approaching 2% Fed target.
  • Debt burdens are the lowest in recorded history. The Fed has allowed Americans to pay off debt – so now their income is available to spend.
  • Low energy prices are increasing real household incomes. Americans are saving.
  • Record auto sales

Secular Stagnation: Implications for the Economy and Markets
Tom Slefinger, Balance Sheet Solutions

“It’s tough being a bear,” said Slefinger. “However, I’m not doom and gloom. I’m a realist. Our economy has been waddling through either slow growth or no growth over an extended period of time.”

During this session, Slefinger shared his view that growth is at recessionary levels. “The trend is not your friend.” Asking: “Why is it that 80% of Americans feel worse off than in 2005?”

Other points from Slefinger:

  • Economists have missed the last seven recessions, not realizing that we were in a recession until after the fact.
  • Revenue in the in the U.S. is on a down escalator.
  • 95 million Americans are not counted in employment data
  • Home ownership at lows; medium incomes have gone down; poverty at record highs; and the world economy is weak.
  • Real debt is 10 times larger than “official” debt. The higher the debt, the lower the growth.
  • Working age population is declining. With an aging population, spending will slow. “The boomer has turned into a bummer.”
  • 95% of income gains have accrued to the top 1% since 2009.
  • Labor productivity the lowest in 37 years.

Dueling Market Views
Moderated by Mark Schieffer, President, Balance Sheet Solutions

With plenty of audience participation, both Steven Rick and Tom Slefinger often found themselves on opposite sides of a variety of topics including employment and housing; and occasionally, they found some middle ground.

Soundbites from the debate:

Employment future & technology (UBER, driverless cars, etc.):
Steven Rick – The job with the most employees is truck drivers. As technology changes, these jobs will experience displacement, but America has always created new jobs. We went from horse and buggy to cars; farm equipment powered by mule or human hand to tractors. We advance. Old jobs cease and new jobs are created.

Tom Slefinger – Yes. Over the long term, new jobs are created and we move forward. But it takes a generation. The short-term pain is real and will have negative consequences on the economy.

Clinton or Trump
Steven Rick – Hillary will probably win – and the senate will be held by the Democrats.

Tom Slefinger – Trump represents change – and people want change for the sake of change. Hillary is the status quo. Trump would shock a lot of people, but so did the Brexit vote.

Thursday, September 8, 2016

Moxie in Motion
Keynote speaker, John Baldoni, brought his concept of MOXIE leadership to a room full of credit union leaders, asking: “Do you have what it takes?” Baldoni stated that successful leaders need to be fully present in the moment – while mixing in some fire, drive, resilience, humor and street smarts. Successful leaders should ask themselves three questions: What’s happening? What’s not happening? What can I do to influence the outcome?

Be There… Be Heard… Be Seen…
“Are you creating opportunities for development?” According to Baldoni, leaders should be looking on the bright side and not be swayed by the naysayers. Strong leaders seek opportunity for their team by looking for challenges that turn into opportunities for success.

NCUA Regulatory Update
J. Owen Cole, NCUA

Five fundamental components of a successful review include 1) market risk analysis; 2) earning at risk; 3) stress testing; 4) measurement systems; and 5) risk management.

Five benefits for supervision include 1) baseline and benchmarking; 2) enhanced risk analysis and surveillance of IRR; 3) improved resource allocation; 4) increased clarity and transparency; and 5) addresses IRR under PCA (without new regulation).



Member Feedback

 “This has been a really strong event,” said Dan Petterson, CFO, SAC FCU “In two days, I’ve acquired information that will help me and my credit union. I’m already looking forward to next year’s symposium.”

Breakout Sessions

  1. Leading with the Brain in Mind
    Marian Ruderman, Center for Creative Leadership

    Takeaway Value: Conscious engagement
    as a leader includes mindfulness, self-talk, emotion,
    sleep and exercise, and social connection.
     
  2. Analyzing Your Investment Portfolio and Changing Markets
    Ryan McCarroll, Balance Sheet Solutions, LLC

    Takeaway Value: Current state of fixed income markets; return as a function of risks; strategies to evaluate and optimize risk exposures.
     
  3. The DNA of Cybersecurity Risk
    Ken Otsuka, CUNA Mutual Group

    Takeaway Value: “Think before you click.” Best practices for securing members’ confidential data include encryption, block emails to personal email accounts, spam and web filters, intrusion detection system/intrusion prevention system, penetration testing, monitor system logs, third-party reviews of network security, secure paper records, and prohibit remote staff from using home computers. Conduct trainings to help facilitate change in employee behavior to reinforce good data security practices

No Credit Union is an Island
Alix Patterson, Callahan & Associates

“Keep the tower and make it our own,” said Patterson, emphasizing that resources are available and that credit unions can borrow and learn from each other, while fostering internal team creativity.

Patterson shared seven elements of a creative workplace that can help credit unions answer a question such as, what are we doing to help consumers save today to help all of us in the long-term?

  1. Reflect employees’ interests
  2. Embrace collaboration
  3. Encourage learning and teaching
  4. Respect communication
  5. Set a tone of risk-taking
  6. Foster creativity
  7. Celebrate the work

 

Wednesday, September 7, 2016

Last year’s symposium was really good for us. The diversity of sessions and the content they provided brought us back. We are looking forward to what this year’s symposium will provide.

Lindsey Merritt, CEO, 
Jordan Credit Union

Day one of the 2016 symposium started off with four pre-con sessions geared towards technology, business lending and liquidity risk management. The day concluded with Alloya’s Annual Meeting.

Mobile Payment Awakens
Richard Crone & Heidi Liebenguth, Crone Consulting, LLC

Takeaway Value: Create synergy between the mobile banking customer base from the retail side of the credit union and the commercial account relationships with retailers to drive acceptance of your own mobile banking app and wallet, while increasing payment processing services to merchants?

Addressable market for each of the “3 Waves” of mobile commerce:

  1. Mobile banking and integrated cross channel self-service by retailers
  2. Mobile payments, both cross-channel and at the physical point of sale
  3. Opt-in, user defined actionable offers and mobile self-marketing

ALM & Liquidity Risk Management
David Scott, Balance Sheet Solutions, LLC

Takeaway Value: “Do your policies reflect your actual process? Document, document, document.”

ALM best practices:
NEV, income simulation, assumption review, stress and sensitivity testing, scenario analysis

Liquidity risk management:
Identify, measure, monitor, and control funding and liquidity risk

How to Develop a Technology Strategy
Biff Myre, OnX Managed Services, Inc.

Takeaway Value: How does your credit union discuss and decide on technology strategy?

Aligning technology under your credit union’s strategic plan:

  1. Form a cross-organizational business-led technology steering committee
  2. Identify required technology initiatives
  3. Map member and business user processes
  4. Member and business user needs assessment
  5. Evaluate options

Connecting with Your Business Members
Larry Middleman, CU Business Group

Takeaway Value: Three ways to connect to business members via regulations (the final MBL rule gives credit unions the ability to manage MBL risks through their own policies and procedures) include,

  • Relationships – credit unions rank number one in trust
  • Lending – niche products and targeting
  • Deposits – next level business deposits package (analyzed business checking, business online banking, RDC, ACH origination

Annual Meeting

     

September 6-8, 2017  |  InterContinental Chicago Magnificent Mile - Chicago, IL