Adapt To New Rules To Grow Your Portfolio

Surviving in a new economy requires successfully managing risk and satisfying new regulatory requirements.


This is part one in a two-part series on how credit unions can respond to a changing economic and regulatory environment.

Comprehensive new financial regulations from the Dodd-Frank Act are likely the most sweeping financial regulatory reform in the U.S. since the Glass-Steagall Act was enacted after the Great Depression. New NCUA regulations have followed as well, and together they affect almost every aspect of the nation’s financial industry.

At the same time, credit union members have reigned in spending in this anxious economic environment, so competition for their business has grown even more competitive. Yet credit unions that have taken a proactive stance, with new tools and procedures designed to meet these challenges head-on, are nevertheless growing their portfolios and increasing profitability in all areas, from auto lending to real estate, credit cards and consumer loans.

“Are we lending more? Absolutely!” says Mark Mykleburg, lending manager of Prevail Credit Union ($232.5M, Seattle, WA). “We are proactive in pursuing lending, rather than pulling back in this economy. We wrote a business plan to purposely retool, remodel and regroup the indirect lending program. Once the business plan was adopted and the analytics put in place in mid-2009, we have been steadily growing and blowing away our volume goals.”

Like a rebellious kid forced to down a large spoonful of castor oil by his stern grandmother in a 1930s movie, most executives – no matter the industry – are greeting new federal regulations with the same enthusiasm reserved for foul-tasting medicine.

The Dodd-Frank legislation and new NCUA regulations were no different, though most quickly came to understand the goal they were aimed to achieve. Credit unions have always acted prudently, and many credit unions have embraced the new regulations as a further refinement of what they’d already been doing. By doing so, they have found that the new regulations, when all is said and done, have supported their growth.

Making credit unions secure for growth, after all, was the regulations’ intent. In writing about the new rule establishing Enterprise Risk Management and reporting requirements for corporate entities, the NCUA stated that those requirements are “similar to those required for banks under the Federal Deposit Insurance Act and the Sarbanes-Oxley Act.”  Nevertheless, at first many questioned the need.

“My initial reaction was ‘Here we go again!’ More government control and paperwork,” Mykleburg says. “It seems every time you turn around you must prove performance, track past history, and manage risk more than you ever have before.  Then you realize it actually is needed,” he added. “This is the world that we now live in.”

Lending Insights provides key analytics and reporting tools that help credit unions make more profitable loans, while meeting regulatory requirements. Lending Insights helps credit unions easily view and understand all aspects of their loan portfolios for timely and strategic decisions.

The second part in this series explores tools and strategies credit unions can use to successfully manage risk amid new regulations. See "Step Away From The Status Quo" for more advice on those strategies.

This is an excerpt from an article that appears in the Fall/Winter 2011 issue of CU Direct’s Merge magazine.

Credit unions interested in learning more about how Lending Insights can support and enhance their lending program, can contact Mike James at 877-262-3680, ext. 704, or, or visit



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