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Hey everyone, this is Mark Treychel with
another episode of With Flying Colors.

I hope your summer is going well.

It's finally cooled off a
little bit across the country

and that's a good thing.

This is going to be a
catch up call, if you will.

I'm going to update you on some
things coming down the road.

I'm also going to talk about
just listen to Callahan's.

Quarterly, whatever they call
it, Callahan's quarterly state of

the industry, and I had a couple
of takeaways from that data.

That's always an interesting thing to take
a look at from a first blush of what's

going on quarterly and credit unions.

All right, so what's coming
up with with flying colors?

Later this month, I have an
episode coming out on field of

memberships and new charters.

And my guest on that will be Keith Stone
of the finest federal credit union,

and also an organizer and CEO of the
New Jersey PBA federal credit union.

I'll be joined on that with Rick Mumm,
a former colleague of mine at NCUA who

also does consulting on field membership
and also with me with my clients.

But anyway, that's coming up.

We'll talk about the new charter process
and how they were able to achieve the

fastest new charter being approved in
what we believe is the history of NCOA.

At least going back to when they gave
them out a dime a dozen back in the 60s.

So in the last 40 years, let's
say the quickest, but that's

coming up at the end of August.

Then in September, I have an
episode on your called something

like you're a code three.

Now what followed by another episode
called you're a code for now what we're

seeing more code four is by the way,
I'm very curious to see what the next

quarterly round of data will show.

I believe it'll show code threes are up.

And for the first time, perhaps a
material increase in code for assets.

We also have an episode coming up.

With the concept of NCOA is asking
to meet with the credit unions

board without staff present.

Yes, indeed.

That's happening far more frequently than
I can ever recall at my times during NCOA.

And I'll be discussing that.

Those three podcasts I just mentioned,
I'll be joined by members of my

team, Steve Farr and Todd Miller.

And you can expect to hear those
episodes in September on Mondays.

Other than Labor Day I'll probably
put that one out on a Tuesday, but

so that's coming down the pike.

I've also, I'm going to be on a
webinar coming up with the trade

association and I'm going to be a
guest on a couple other podcasts.

And when that happens,
I will alert you here.

And of course on LinkedIn and perhaps on
email, if you subscribe to my podcast.

Email list.

If you don't, I suggest that you
ask that you get added by going

to my website, marktreichel.

com or reaching out to me on LinkedIn.

It's hard to believe that with all
the years in place now of doing the

podcast this is the third calendar year.

So by the end of the year, we'll
have completed three years.

We have 192 episodes live.

With flying colors.

And some of you are aware, I have
a related podcast called Credit

Union Regulatory Exams where
it's an audio book style podcast.

It's AI driven in that it'll be,
for example, NCUA's priority letter.

The AI part of it is it's an AI voice
that I have coined Samantha shares as in

a hat tip to the shares of credit union.

And 99 percent of the time, you
can't really even tell that she's AI.

Occasionally you can, and I'm sure if
you do listen, you'll pick that up.

But if you like audio books and
you want to study some of the NCUA.

FDIC, OCC, other guidance out there.

That's a good way to do it, whether
you like to do it when you're

working out walking or what have you.

So if you haven't checked that out,
I encourage you to check that out.

But 46 episodes of that.

So what's 46, 192 238 episodes
combined of the two shows.

So far and moving forward, we will if
you subscribe you likely know that the

With Flying Colors comes out on Monday
FYI, Credit Union Regulatory Exam

podcast typically comes out on Tuesday.

And with the volume of podcasts that
we have done now, there are several

that are structured in a way that it's
what I would call an evergreen topic.

Evergreen meaning it always has relevance.

Moving forward starting in September,
actually this week, this past Monday,

we issued an evergreen topic on 10
reasons why you, why NCUA should not

regulate why NCUA should not regulate.

10 reasons why NCOA should not
regulate succession planning.

And we are going to have coming in
September without calling it a throwback

Thursday on Thursdays, we will be
issuing our evergreen podcasts topics.

Some of them will be on fair landing.

Some of them will be a commercial landing.

But there's quite a big arsenal of
those that we've built up over these

three years, and we will have one
of those coming out in September.

More often than not
every Thursday morning.

So you'll have With Flying Colors on
Monday, you'll have the Credit Union

Regulatory Guidance Podcast on Tuesday,
followed by With Flying Colors again

on Thursday and again, those will
be the evergreen topics on Thursday.

All right.

So I listened to Callahan talking about
the data for this most recent quarter.

And I'm going to flip to that.

Real quick here.

The numbers are generally I would say
the numbers that they reported for the

industry are better in the second quarter.

Some things that caught my ear were that
profitability was marginally better.

Charge offs were flat.

Net interest margin had
improved a little bit.

I'm curious about this.

They indicated that more
credit unions are hedging.

I would say historically,
not enough credit unions

have taken advantage of that.

Maybe because rates have gone up so much.

It's been an aha moment for the industry.

But this was ALM first that
was doing this portion of their

discussion and they indicated they
have a lot more credit unions.

Pursuing that product.

I think that's a fabulous thing.

And as a reminder, if you want to be
in hedging, you need to, it's easier to

do it when you're a code one or a code
two, then if you're not a code one or

a code two, cause then you need to get
NCWA's approval and by then it can be

painstakingly long to get that approval.

You're better off again, doing it
if you're a code one or code two.

That, that would be my thought on that.

Down to about 4, 600 credit
unions, total assets, the 2.

3 billion.

Interestingly, they showed and mentioned
that loan growth had slowed to less

than 4% over the last 12 months.

And that had been over 12%.

The last 12 months.

So from June to June of 24 to June of
23, compared to June of 23 to June of 22.

All right.

The other takeaway was that share growth.

Had improved.

The previous 12 months,
the chair growth was 1.

2 percent over the last 12 month period.

It was 12 2.

7%.

They're also very cautious
to differentiate between

the mean and the median.

Of course, the mean is the average.

The median is the middle most number.

So if you're looking at 4600 credit
unions, The median would be 2, 301 and

the interesting part on that and probably
the biggest takeaway from this was that

while share growth on the average was 2.

7%.

The median.

So the middle most credit union.

Shrunk 1.

22%.

And the middlemost credit union, they said
the asset size of that was 59 million.

By the way, the average credit
union in assets is 500 million.

Again they mentioned that 25 percent
of the assets Of the industry we're in

credit unions over 10 billion and that's
only 21 credit unions So that's where

the mean and the median can play havoc
with these numbers But the big takeaway

for me was that the median credit
union meaning half of credit unions

had at least a decline in shares of 1.

22%.

And of course, one thing that
gets lost in having growth at 2.

7 percent as the mean if
you're not growing as much as

you're paying your members.

So let's say.

And I don't have this
number here in front of me.

They didn't mention what the cost
of funds was or the cost of shares.

But let's say the industry grew at 2.

7 percent over the last year.

If the cost of funds was 2.

6%, that means share basically
grew 10 basis points.

If the cost of funds was 3.

5%, that means you actually shrunk
dollar for dollar because you're

basically not even retaining the
dividends you're paying to your members.

That's something I'm going to dig into.

I haven't had a time to go
look at the numbers and see

what the actual share cost was.

They didn't have it on one of
their slides, but it's something

I'm going to take a look at.

Certificate growth is at 31%.

Unrealized losses have come down from
in the industry in totality from an 41

billion unrealized loss to 30 billion.

So what's that a decrease the 25 percent
with rates likely according to all the

to rates being down here shortly, that
number should continue to get better.

Another takeaway was borrowings
had decreased a year over

year from 6 percent to 5.

3 percent and cash reserves were
being built up to about a 2%.

They talked about real estate loans.

Only being down slightly.

Consumer loans were down 15%.

Credit card loans were up 7%.

HELOCs were up 20 percent and
commercial loans were up 10%.

A lot of discussion about most of these
numbers look potentially alarming.

However, when you compare to pre
pandemic, they're really not that bad.

But, the proof will be in the
pudding to see what happens.

Do we have a soft landing?

Do we have a hard landing?

Where does the election take us?

Et cetera, et cetera.

I'm looking forward to see what
happens in code threes and code four.

As I mentioned, we've got podcasts coming
on out on the ramifications of those

slipping to a three slipping to a four.

Lastly, Callahan mentioned that charge
offs are down and delinquency is up.

So that's a quick take, a quick
summary of kind of what's coming

forward here for me from from this
podcast, from my other podcast.

Looking forward to getting some
feedback on those other podcasts

we've got already lined up.

I think they're pretty exciting and I
have some other some other ores in the

water of some things I'll be adding to the
podcast coming here in the fourth quarter.

And perhaps In 2025.

All right.

That's it.

That's a wrap as always.

I really appreciate you listening.

If you enjoy it, if you could alert your
friends and peers, that would be great.

And, or if you could rate us on
iTunes, Apple podcasts five stars,

hopefully if you'd have the opportunity
to do that would help me out.

I'd appreciate it.

And that's it.

That's Mark appreciate you listening,
signing off with flying colors.

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

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episodes where subject matter experts

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If you would like to learn more about
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com.