Credit Union Exam Solutions Presents With Flying Colors

Hey everyone.

This is mark twinkle with
another episode with Lang.

Color's, this is a classic episode of
Rick mom and feel the membership topics.

Rick was at NCUA for 30 some years.

And he helps me with some of my
clients and has a business of his

own that he helps credit unions.

On new charters old charters
making changes, et cetera.

It is April 14th.

As I'm recording this tomorrow is tax day.

I've got some things I need
to do relative to that.

So I decided to go with a classic.

Episode release as described.

Just a quick note on Thursday,
the ensuing board has their April

board meeting after skipping marks.

The first time that an NCAA
board has skipped a board

meeting in many, many years.

And there's only one item on the agenda.

And that item is the advanced notice
of proposed rulemaking parts, 7

49 records preservation program.

So that's probably one I'll watch on
YouTube instead of trying to go over to

NCUA or instead of trying to watch it live
because I'm not expecting there to be any.

Earth shattering.

News in that.

That item, however, I will have
a podcast on it on the backend.

Presuming that it makes sense to do.

All right.

I hope you got your taxes done.

I got mine done.

Got some final paperwork to do tomorrow.

And I hope you enjoy this classic
episode on field of membership with

Rick mam formerly and see you with.

Katie T: Do you wanna maximize
your success with NCUA?

Join Mark Trico as he shares with
you the insider's view on passing

your exam with flying colors.

The With Flying Colors Podcast
is sponsored by Credit Union

Exam Solutions by Mark Trico.

If you would like to work directly with
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with NCUA, so you save time and money,

visit us@marktrical.com to find out more.

Treichel: Hello, I'm Mark TriCal.

And you are listening to With Flying
Colors, the podcast where I interview

subject matter experts to provide
credit union leaders with tips on how

you can achieve success with NCOA and
pass your exam with flying colors.

Today, I'm joined by Rick Mumm.

To talk about field of membership
and all things cure related.

Now, cure stands for credit
union resources and expansion.

Rick, before we jump in for people who
are meeting you here for the 1st time.

Could you share a little bit about who you
are and your career experience at NCUA?

Mumm: Okay, sure thing, Martin.

Thank you.

Yeah, I was with NCUA, recently retired
after about 34 and a half years.

Right around 25 of those years, I worked
in CURE or It's predecessor offices in

the region start a division of insurance.

O.

C.

P.

O.

C.

F.

P.

A.

Whatever the name was, and I started out
in the division of insurance in region

six working on field of membership.

So I've got well over 25 years
of experience working with.

Build a membership in originally
region six, then region five.

And then when they move the divisions
of insurance out of the regions into

the central office for the whole
nation through the central office.

Treichel: Very good.

Do you remember what year was
it that Field of Membership

was centralized at NCUA?

Mumm: 2010.

It was the end of 2010.

It started in, in the 2010, all
the regions were rolled into the

central office the 1st of 2011.

Treichel: Right, right.

I should remember that because
before that at that juncture, I was

a regional director in Albany, New
York and field membership came up

through me through that point in time.

And then it was centralized with
the concept of creating synergies

by putting it all in 1 place.

So, Rick, you and I go back way back.

We started at N.

C.

U.

A.

Within a month or 2 of each other,
and we went through new examiner

training back when we were on
G street levels 1 through 5.

so from all the people at that, I know
I've known you as long as outlasted me

there by a little bit more than a year.

I believe with your 35 years.

But again, you and I go way back.

We learned the nuts and
bolts of how to do exams.

In training there, and it's great to
have an opportunity to kind of pick

your brain on field of membership
and all things related to cure.

So, with that, I'm going to go ahead.

Go ahead, Rick.

Mumm: Oh, no, I was going to
say, yeah, you know, that's true.

And you were actually, you were my
director of insurance for a short period

of time when you were the director.

Director of special actions in region 6.

Treichel: Yes.

Yes.

They gave me double
duty there for a while.

That's when I started to learn a
little bit about field of membership.

And also, I learned at that time that
I should rely on experts like you to

get the job done as opposed to trying
to learn it because it's so nuanced

and it's definitely 1 of those.

items that's more of
an art than a science.

So yeah, that was my first foray,
if you will, was when I was

acting as your supervisor then
for a very short period of time.

So we had a lot of fun back then.

Sure did.

So let's talk about all the things
related to different field of membership

and the things that CURE does.

And of course, the first thing
that would make sense to talk

about would be field of membership.

So as it relates to what you're now,
you've talked about being retired.

You're now Consulting and so let's talk
about field of membership and maybe

a little bit about, you know, your
consulting business and then we'll kind

of walk through different services.

You might offer.

Mumm: Okay, build a membership
encompasses a wide range of areas.

It, you know, it includes new charters.

It includes.

Adding groups, whether it's an
occupational or associational.

It's a community there.

You've got narrative communities.

You've got statistical communities.

You have previously approved communities.

There's underserved areas.

There's tips, which is a form of
a single common bond based on an

occupation, trade or profession.

So the field of membership, it also
includes conversions to and from

Fed, to and from charter, to and
from federal or private insurance.

So there's, it encompasses a wide
range of everything that a credit

union needs to do to be able to reach
out and serve its members and how

it will serve, serve its members.

Treichel: So of all those different
nuances of types of field of

membership, I'm going to ask
you a follow up question here.

So low.

So the tips, the trade industry and
professions, why do you think there

are not a lot of trade industry
and profession credit unions?

And then the flip side of
that when you retired from N.

C.

U.

A.

and we're last working in field
of membership, what was the most

frequent type of field of membership
that would come across your desk?

Mumm: Okay.

Yeah, the trade industry and profession.

I, I, why I think there's not a lot of
them is they're very specialized and there

gets to be a lot of legal nuances on how
to define a trade industry or profession.

So, you know, we've done when I
was there, I did one trade tip.

And that took over a year to get it
approved just because they're trying to

General counsel is trying to define The
trade, you know in the most succinct

way you could so vast majority Of all
tips are industry tips, which you know

would like airline police health care,
which are easier to Define but you know

those take a while to get approved also.

So You I think so just to come up
with a new tip to get it approved

takes a while, you know, to get
through the legal side of it.

Then once it's approved, you're,
you know, on the industry side,

anybody can apply for the same tip.

So, you know, the first, the first
one's the pioneer, so to speak, gets all

the arrows, and the tip gets approved,
then anybody else can, Pick it up.

So health care is very popular.

So as an example is you can get other
credit unions We'll get the health care

tips, but then tips are health care tips
are only good for Occupation so you can

go around pay any of the health care
providers, but if there's a health care

association That you also want to serve
You can't because a tip is occupational.

It's not associational So I think
it's kind of limiting and that

respects a lot of Credit unions
haven't tried to adopt a tip like

you would have thought they would.

I think that's my thought on on that.

Treichel: And so, and because they can't
use the association, this is 1 of those,

those subtle nuances that because you're
an expert and know the stuff backwards

and forwards, because, because a tip
couldn't Has to be linked to an occupation

and can't have those associations.

Someone might not want to convert
when they realize that because

they've already got some associations
in their field of membership

that they don't want to give up.

Am I interpreting that right?

Mumm: That's correct.

You know, cause like I remember
this is, you know, a long time

ago, a credit union converted.

To serve the insurance industry and
after they converted, they would

been serving the insurance industry.

They came back in and wanted to
add some association that dealt

with insurance agents or whatever.

And we had to tell him that.

No, you you can't because that's That's
an association and we can't mix and match.

So, you know, they stayed that the tip
for the insurance industry, but, you

know, I know they think if I recall
right that they wrote a couple letters

to board members or or something
to try to get that change so that

they could add associations, which.

You still can't.

So, because it is an association,
not an occupational group, so

that doesn't fit for a tip.

Treichel: Okay, great.

And which type of fielder membership
gets requested the most by credit

unions at this time of day?

Mumm: Probably, I would say underserved
areas are getting, you know, a lot

of, a lot of interest from multiple
common bond credit unions, because

those right now are the only ones
that can add an underserved area.

I know that's one of the changes.

Proposed changes.

The agency would like all the
charters to be able to serve

underserved, but right now it's
just limited multiple common bonds.

But that was a very, that's a very
popular field of membership addition.

You know, there's some community
expansions because, you know,

credit unions that expanded.

Their community way back when the
board expanded change definition of

the community and how big they can.

So, you know, some community credit
unions have gone back and try to

expand what they've already have.

And then I know before I
left, we were, you know.

Conversions from fed to state, you know,
that seems like that's a steady stream.

It doesn't really seem
to go away a whole lot.

Treichel: Sure, sure.

Well, and you mentioned the agency would
like to have Low income designations

be available for all types of field of
membership, which of course would require

change to the federal credit union act.

And that's 1 of those topics that the
trade groups, the credit union, national

association or CUNA and the national
association of federal credit unions

are NAFQ are all on the same page.

All 3 of the.

NCOA and the two, two major trade groups
would also like to see that happen.

It's not always that NCOA and the
trade groups are on the same page.

They can be at times, but in this
instance, they are on that same page.

So anything else relative to low income
designations and the, and the services

you might offer relative to low income?

Mumm: Well, low income designation and
underserved are two different things.

Treichel: Well, that's where
I get, you know, that's why I

don't do feel the membership.

So clarify that here.

Mumm: Okay.

Underserved area is the designation
or whether it qualifies is.

Through the cdfi or community
development Finance institution.

I'm, you know, i'm not really sure
what that stands for be honest.

It's just pdfi They determine the criteria
if an area qualifies as underserved

or not and then it is a The actual
serving of the underserved area is a

community based type field of membership
typically It's at the census tract level.

And so a lot of underserved areas are
based on census tracts low income.

That is an N.

C.

U.

A.

designated.

Designation and that's based on the credit
union's field of membership and if more

than 50 percent plus one of their field
members meet the low income designation

of basically median family income is under
80 percent of the national median that

family income, then you can get the low
income designation, which then affords

you additional some benefits, like, you
know, There's no limit on business loans.

You can take more non member deposits
that gives you access to some grants,

some loans, and also helps you to get
a certified as a CDFI credit union

through the CDFI, which then gives
you access to whatever programs they

have for their, their institutions.

Treichel: That helps clarify
one more follow up on that.

And the, the low income designation also.

Provides the opportunity
to get secondary capital.

Correct.

Mumm: Correct.

And that's correct.

Treichel: That's a big addition.

And there's a lot of credit unions
out there taking advantage of that.

Mumm: So correct.

And I should say that the
underserved, you have to apply for it.

Whereas the low income designation,
NCUA, after each exam, credit unions

provide their membership information
during exams, and that gets uploaded

to the system, NCUA runs that member
information through a geocoding software,

and if it shows that You qualify as low
income, but do not have the designation.

You will get a letter asking
if you want the designation.

So though a credit union can request
it at any time, if they don't have it,

there is some, you know, the agency will.

Reach out to the credit unions,
see if you want the designation.

Treichel: So, Rick on that.

So, if the agency does that as part
of the exam, and then sends a letter

saying, hey, the results reveal that
you qualify for low income designation.

How does that as a consultant
and what you're doing, if that's

automatically done in the exam prices,
how would what you do fit into that?

Mumm: Well, that's a good question
because not only do you get the letter

saying you automatically qualify if you
no longer qualify, you'll get a letter

saying you no longer qualify and then
you've got 5 years fix that to qualify.

So.

You know, I can help with that if
you get that kind of letter or also

if you want the designation, but
during the exam, you don't qualify

and but you want the designation, you
know, I can help discuss ways that.

And look at your member data to see how
close are you and suggest possible ways

that you can get your percent up over 50.

So you do qualify.

Treichel: Got it.

So NCOA and the exam process can
can qualify you, but there are other

methods and ways to measure it.

That you can help credit unions
potentially achieve the low

income designation when the NCOA
doesn't automatically anoint that.

Got it.

Mumm: Correct.

Treichel: So you also assist in,
in merger packages, I believe.

Could you talk through that a little bit?

Mumm: Yes.

Uh, when you want to merge,
and merging is very popular.

You know, I think just since we started,
more than half the credit unions are gone.

Because I think when we started,
there was But over 12, 000,

and now there's, what, under 5?

Yes, I think those numbers
are roughly correct.

Treichel: Yes.

Mumm: So there's a couple part
process when you go through a merger

is the regions process all the
mergers that feel the membership.

Has to go to cure to be reviewed before
the region will process the merger.

So you send in a merger package to the
region and then the region will send

that merger to cure to say, are these
not filled the memberships compatible?

And then cure will come
back and say yes or no.

And if the answer is yes, then
the region processes the merger

packet and it goes from there.

If the answer is no, then you
have to, if you wanted to merge,

you have to conform the field of
memberships for both credit unions.

So you can still merge or you just say,
okay, you know, this was a nice idea, but.

You know, we can't conform them for
whatever reason and we'd just rather not.

So I can help with.

Determining if the field of memberships
are compatible and how to get them

compatible if they're not up front before
the mergers ever submitted to the region

or and once you've gone through that
process, you know, I can also assist

in putting together the actual merger
application and sending it to the region.

Treichel: Okay, great.

And of course, when we're talking mergers,
this would be with the surviving credit

union being a federal charter, because
if a federal was going to merge into

a state charter, it's the state field
of membership rules that would rule.

Mumm: Correct.

Correct.

Yes.

Thank you for that clarification.

Yes.

Treichel: You got it.

Mumm: The continuing is the
federal, then yeah, the field

of memberships have to conform.

If the continuing is a state.

Then from the federal side, they do not,
you know, they're still going to have to

meet whatever various states, whatever
requirements they may or may not have

Treichel: got it.

Now, 1 other category of mergers.

You did not mention is emergency mergers.

And this would be a scenario
where the compatibility.

Issues that you raised are negated by it
being quote, unquote, an emergency, which

essentially is that what that the emerging
credit union is in danger of insolvency.

And because of that, the N.

C.

U.

A.

has the ability to merge incompatible
or not compatible fields of membership

because the theory is that that
reduces the cost to the insurance fund.

Is that a type of Merger
that you also work on,

Mumm: you know, I could, if they
want assistance, usually, if it is

an emergency merger, just like you
said, their field of memberships, all

compatibility rules are wave, you know,
just like you said, as a way to reduce

the overall insurance costs to the fund.

You know, they waive that requirement.

So any credit union can merge into any
credit union regardless if their field

of memberships are compatible or not.

Also on emergency merger.

Usually those are dictated or
helped along by the region or the

exam staff because they are in
danger of insolvency and that so.

There's, from a consulting standpoint,
there's, you know, there's not as

much as you can do with those because
the merging does have to be in

danger of insolvency or insolvent.

The region is usually right there.

They're finding, in many cases,
The merger partner in some, but

not all cases may even have to
go out and put that out for bid.

So that's the one thing that lends itself.

Treichel: That makes sense.

The one situation in danger of insolvency.

The definition is broadened over
time to the point where you can be, I

think, maybe 24 or 36 months away from
insolvency and actually be considered

with trends and different things.

There's analysis that can
get done that would show it.

However, you're right that that's
typically something that the region would

be pretty, pretty closely involved with.

So that's a great point.

So let's segue out of mergers.

Into bylaws, there's standard
bylaws, there's non standard bylaws.

So, relative to bylaws, is that something
that you do work on for credit unions?

Mumm: Yes, and I will help credit unions
with bylaws and do bylaw amendments.

It was actually, before I left, I
was probably the main bylaw expert

in CURE, and how that happened,
who knows, but somehow it did.

In fact The last version of the bylaws
that the board passed in uh that went

into effect in what 2020 is I was an
integral part in the writing of that

that bylaw set because it it came out
of My law committee that I was part

of back in 2013 14 somewhere in there
where there was discussions with the

industry on what They wanted in the
bylaws and so I was part of that and

our group wrote the bylaws and for
whatever reason, those bylaws just before

they're ready to get go to the board.

I don't know if there was fighting
between the board members or what, but

they never went, they got pulled and
then when the board finally revisited it,

they basically took those same bylaws,
dusted them off and that's added a few

changes and that's what got approved.

So.

I'm really happy that our group's
efforts did not go in vain, but yeah,

the, so helping with bylaw amendments
and letting, you know, help them with

what is a bylaw amendment, what would
get approved is one, what is not,

you know, there's a lot of good bylaw
amendments out there that people want,

but there's also credit unions want to do.

You know, everyone has their own
writing style and writing preferences,

you know, every time there was a
new regional director or whatever,

you know, the region would have to
change, you know, to regional directors

writing preference, and it's no
different with boards or credit unions.

They don't like the language in the bylaws
all the time, but they don't realize

is the bylaws, the regulation that the
board wrote and while most regulations.

You can do nothing.

You can't change it.

You can't request a change.

The board has allowed changes,
credit unions, the opportunity to

change their bylaw or change that
part of the regulation, but it

has to be a meaningful change and
not just, you know, we don't like.

A comma here, there shouldn't be
one or, you know, we want to make

it more generic or whatever, you
know, those types of changes are, you

know, wording or substance changes
that aren't aren't allowed the, you

know, are not going to get approved.

So, you know, I can go through and
help credit unions, let them know.

Okay.

You know, that's just a substance,
a non substance change for wording

that you want, that's not likely to
get approved versus, okay, here's

a amendment that you want that is
legitimate and has, would have a much

better chance of getting approved.

Treichel: Got it.

Yeah.

I would call that changing happy to glad.

That's not something that
you're going to get into a bylaw

that wouldn't get approved.

So, okay.

Got that.

So any other things that you're doing out
there for credit unions at this juncture?

Mumm: New charters, you know, somebody
recently reached out to do a new charter.

I can assist in that, or, you know,
at least start out and look at what

you have to see if I think, you know,
you've got a chance to be chartered,

you know, get over the preliminary.

Questions before, you know, you
go in and spend years and find out

you're never going to get chartered.

So I can assist with that.

And I haven't really done anything.

Something else would be like
share insurance questions.

I haven't really done
anything with that yet.

But, you know, that's a possibility
of someone, you know, just want, you

know, some guidance or, you know,
just to go over how share insurance

works with their staff or something.

That's something I'm,
you know, willing to do.

Treichel: So that would be like
a training on share insurance.

Got it.

So, Rick, with the background you have,
and you're new to this consulting thing,

just because you recently retired, but
you got a lot of expertise, what would you

say differentiates, You from what others
might be able to offer in this arena.

Mumm: That's a great question mark.

Thanks.

Yeah, i've been on Working with feel
the membership since the early 90s

when a large credit union converting
to a large community was 50 000 and

It had to be approved by the mca
board now You have communities that,

you know, if you can prove it, there
is no population limit, basically.

So, you know, I, so I've seen, kind
of grew up with field of, field of

membership from when, you know, as an
analyst, I process, Groups, whereas now,

you know, groups are processed online.

So, you know, I've, I processed the first
tip in the agency when we got that ability

in 1999, I probably, I processed the
first underserved agent first underserved

application that our region six did.

And it was.

Probably one of the first
process in the nation.

So I've talked to board members.

I've talked to board member
assistants or briefed them.

I've been in board meetings.

I've reviewed hundreds, if
not thousands of packages.

I know what to look for, what
works, what doesn't work.

I can better focus on, okay, what
should and shouldn't be in the package.

And I'm not wait, you know, you're not
wasting a lot of time just throwing a

lot of mud in a package where half of it
isn't even relevant and you continually

go back and forth with cure to get what
there needs to be, you know, I know what.

Here's looking for what holds things
up, what doesn't and can be able to

say, Hey, you know, you can do that,
but you know, you're going to add, you

know, another two, three months onto
the package, or we can do this and it'll

get, you know, approved a lot faster.

You know, I recently helped with
a conversion from state to fed

and they were wanting to, you
know, include a lot of groups.

For as part of their multiple common bond.

And, you know, I told them, no, you can
do that, but it's a lot more efficient.

If you just.

Convert with two groups and then
everything else after that, so that the

application gets approved goes through
much faster than having to go through

and sift through all these groups.

So, you know, I, I know little tricks
and what to look for versus, you

know, all the other consultants.

Nobody else has worked for NCUA or, you
know, Not in a capacity of processing

actual packages, seeing them when they
come in and they're lousy, and you have

to clean it up to make it acceptable.

So, you know, I know what a clean
package looks like, won't need

a whole lot of cleaning up or
changes for it to be approved.

So I think that what makes me a little
different than some of the other ones is

they may have processed a lot of packages.

But they haven't, they've never sat on
the other side and actually reviewed

a package that came in and had to,
you know, make sure that the package

was good and conformed with NCUA
requirements before it could get approved.

Treichel: That's a great answer, Rick.

It's You know, you've walked the walk.

It's 25 years of doing
field of membership.

You've forgotten more things about
field membership than I've ever

known, but you can put an efficient
sounds like you can put an efficient

package together because you know,
what's going to fly when it goes in.

So you can, that's going
to help with the timeline.

That's going to help with, you know,
putting a lean and mean package

in because of credit union, being
able to take advantage of your

25 years of experience on this.

So Rick, this was great.

I want to thank you for
being my guest today.

And.

Lastly, if a credit union wants to
reach out to you and get in touch with

you about the services you provide,
how would you like them to do that?

Mumm: They can send me an email
to info, I N F O at rcuservices.

com.

That'd probably be the best way.

Treichel: Okay, great.

And I will put that email in
the show notes for this episode.

And speaking of episodes, I listened
to a lot of different podcasts and one

of my favorites at the end of the show,
they have follow up questions that

were derived from previous episodes.

And it's possible that something
that I said here today Or that

Rick said will trigger a question
that you have to drill down into

one of the topics we talked about.

If you have such a question, I'd like
you to reach out to me and provide that.

And perhaps we can do
a follow up question.

Just show just on that question.

And you can reach me to do that at my
email address, which is CU exam solutions.

At mark trickle.

com.

I'll repeat that.

See you exam solutions at mark.

Trickle.

com or you can track me down
via my website, which is www.

marktrickle.

com.

All right, folks, that's it for today.

I'm Mark Trickle, and I hope
you would join me again next

time for with flying colors.

Katie T: Thank you for joining us on this
episode of with flying colors, subscribe

on your favorite podcast app to hear
future episodes where subject matter

experts of all varieties will provide
tips on how to achieve success with NCUA.

If you would like to learn more about
how we assist credit unions, check

out our services at marktreichel.

com.