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

Today's topic of the day of the
podcast is going to be document

resolutions and project management.

I'm excited that I've got two of my
most frequent guests, Steve Farr ar

and Todd Miller, formerly of NCUA
and currently members of my team.

How are you guys doing today?

Good and a little bit of an introduction
in case somebody is hearing with

flying colors for the first time.

Steve, could you give a little
bit of your background at NCUA

before you change teams and started
helping credit unions more directly?

Glad to.

I always break my career
down into two parts.

The part is a examiner related, which
was half of my career, about 15 years.

And then the last 15 years was in the
central office and various assignments,

but my time as an examiner allowed
me to become, really well versed in.

The regulations in the Federal
Credit Union Act and credit union

operations, and I enjoyed that.

And as an examiner, I was involved in
multiple administrative actions as a PCO,

worked with the ones facing trouble.

And then I was able to help the
agency and worked in conservatorships.

Throughout the nation and all that
helps with my background and help me

when I went into the central office
and worked in risk management there.

And in that, we work on a lot of guidance
that's issued to the industry and wrote

a number of rules and regulations.

And then even after I got
out of in and see way and.

was retired.

One of my first jobs out of retirement
was the CFO at a large conservatorship.

So that was my first venture with
being on the other side and having

to be faced with NCOA giving us a
significant amount of actions in the

sense of a DOR for a conservatorship.

So that helps with this discussion today.

Yeah, it certainly does.

And when we talk, you, the three of us
talk about conservatorships a lot, and

of course, conservatorship is the most
harsh administrative action NCUA can take.

That's when they remove the board
and NCUA serves as both regulator.

Three roles, regulator, insurer, and they
represent the interests of the members.

It's a draconian action.

Saved for the most challenging
cases and we have a separate

podcast out there on that topic.

All right, Todd, a little
bit of your background.

I spent 34 years with NCOA.

I can break it up into
three different chunks.

One part as an examiner problem
case officer for about the first

third of my career, the middle
10 years from 2000 to 2010.

I was a capital market specialist
spent the last year at Westcore there

as a capital market specialist after
NCOA placed them in conservatorship.

And then from 2010 to the end of my
career in 2021 I was the director of

special actions in the Western region
supervising problem case officers

and capital market specialists.

I did have some regional lending
specialists under my purview

for a period of time as well.

Was also involved in a
lot of conservatorships.

Probably two of my bright points at
NCOA is two of the conservatorships I

managed were returned to the members and
those guardians are still there today.

So those are always enjoyable
exercises when you can continue

service in a situation.

Like that.

So all in all an enjoyable 34 years where
I got to see a little bit of everything.

Yeah, it was a great journey.

We all had, we dealt with a lot of
problems at NCUA and Steve, pivoting

back to you on, that, that experience you
had, you spent 30 some odd years at NCUA.

Now you're doing what we do now, but
you had that role as a conservatorship.

CFO, if you will, where you were getting
into a giving you document resolutions

that had a lot of tentacles to it.

And a lot of tentacles mean that you
probably need to have some sort of

project management wrapped around it.

So what are your thoughts as it relates
to document resolutions and resolving

them in a way that makes everybody happy?

I'm going to start with kind of a
discussion of a trend that we're seeing

that was different from when Todd
and I were working with our troubled

credit unions and that we are seeing
extremely lengthy documents of resolution

containing upwards of 30 action items.

Of and some of them would
have parts underneath them.

So they're extremely long.

And, because we always had that we
would prioritize and say, these are

the things we really need to do 1st to
make sure we can keep the doors open.

And I know there's more
of the I'll cover later.

And I thought maybe I'd put the
question out for Todd and that.

Is this is the reason that these doors
are containing the, everything that

they find that needs to be fixed, is it
because of the system that's being used?

The merit system or the exam system?

Do you think that's contributing
to why the long door item, doors?

Possibly, but it shouldn't because prior
to merit, NCOA had internal tracking

for doors, but not findings under merit.

Now they have reporting on
both doors and findings.

So merit might contribute
to a little bit of it.

What I think is probably a bigger
contributor to it is lack of experience

and problem resolution with examiners.

As you get more experience,
you get more discerning about

what is the most critical.

And you.

Over time come to understand that
cartings have finite resources.

So you can only address
so many things at once.

And I think just the younger
generation of examiners that hasn't

went through a recession before.

They haven't learned that lesson that
where cratings can only do so much.

And I think they just experience wise,
they don't know how to prioritize,

which one of these are these really
important and which ones are not.

So they treat everything as being
important, not understanding

that's an impediment to problem
resolution, not an aid to it.

That's my take on it.

Some of it might be merit, but
I think more it's just examiners

haven't had to write a lot of during
periods of stable time periods.

So they have just overreacted.

The other thing we're seeing is,
in the NSPM, it says indoors,

you should use the credit union's
language for corrective action and

negotiate with that, them about that.

And we see that not happening
anymore either, where the examiners

are just dictating and they're
not having that conversation with

management or understanding that
part of their requirement is to

negotiate this corrective action.

But you're right, some of these doors,
when you see a 30 item door and they have

to do them all in six months and they're
all things that take hundreds of hours

and lots of dollars, the examiners are
just giving a credit and lengthy door and

they're almost guarantee and failure in
the process, which doesn't help anyone

because it's going to make their job
harder and the credit is job harder.

And it just makes both sides
frustrated and it's just not.

The way to approach things
You know, I don't know.

I think it's maybe a combination
of a lot of different factors

and merit is probably part of it.

But you would think merit would
have actually reduced it because

they can track findings now
when they couldn't in the past.

A couple thoughts there that popped
into my mind that I wrote down is,

yeah, they should be negotiable,
but with the new approach.

It's not so new anymore.

Four or five years old approach where
all reports are reviewed by a higher

level that has complicated things.

And if something gets reviewed
in the office, we're seeing the

office drop something in that
was a document resolution that

surprises the credit union.

And oh, by the way, when they drop
that in there and they link it to

the dates that they established
when they might have given them the

draft, all of a sudden, the days have
passed, which can be very frustrating.

Another thing that popped into my
mind, Steve, you mentioned, 3840

document resolutions and in 1 report.

Two things that jumped into my head.

I remember giving one of our clients
some guidance saying, hey, why

don't you ask into a in their mind
what the priorities here are here.

We've suggested that in many instances,
but in one instance the examiner got.

obnoxiously frustrated that they
were asking for that information,

which isn't how it should be.

If you're going to tell me I have to do
40 things, you should tell me a little

bit of which ones are more important.

And then lastly, phone numbers are
seven digits long for a reason.

The optimal size of a board or a group
is seven for a reason, because it

gets too unwieldy if it gets bigger.

And we're, there's a frustration
that I'm seeing when the reports

get so long, or if everything's a
priority, nothing's a report priority.

All right, back to you, Steve on
that or anything else on this topic.

We'll pull it back right, to the topic,
of that project management and we'll

start with kind of everything that we
seem to deal with in our clients that

are expressing some frustration and
sue a, it, it's that communication,

communication, communication, the same
as real estate location, location,

location, and we're seeing a, a
variety of these communications being

more difficult than they should be.

And the only thing you can do is control
what's within your, Stephen Covey would

say, within your circle of influence.

So you need to make the efforts.

That you can make in trying to communicate
with your examiner and make sure number

one, you clearly understand what they're
asking for in that document of resolution

and, those dates are particularly useful.

And then, even as we speak, we've
looked at a report that we got

last night and what are we here?

22nd of August.

And it was a really big request
for turning basically the

operation around from unprofitable
for a long time to profitable.

And they want it completed
by the end of September.

It's I don't think you could do a real
quality one and get it through your

board in that sort of a time frame.

So that's the thing where they start
to have to communicate to the examiner

and say, this is an item that would
be approved by the board of directors.

The board, we have to prepare it.

We have to get it to the board.

They have to review it and all that.

That can't be done in that time frame.

So the communication is the most
important thing that you to get through.

Now, I'm going to open that up for you
guys to talk about that communication.

Todd, any thoughts on what Steve said
there about communication as it relates

to the door and project management?

It keeps us busy.

Our failures in
communication keep us busy.

It seems to be a common pattern with Folks
that call us up and hire us is quite often

there's been breakdowns in communication.

There's a lot of other things going on
too, but that seems to be involved in that

exam process with many of our clients.

I think you hit the
nail on the head, Mark.

In their quality assurance program is
creating some of this because the examiner

and credit unions reach some set of
agreements and then the quality control

process changes that so credit unions end
up surprised that doesn't help anyone.

I also think some of this is COVID
related, you know they spent two

years essentially working off site.

So you had things that weren't looked at.

So they're getting surprises during
exams because examiners haven't looked

at a specific area in detail in a couple
years now that they're back on site.

And some of it's the credit union side
too because credit unions now and many of

them, their executives are off site too.

So there's roadblocks being put up.

A well, I wouldn't call them roadblocks.

Let's call them hurdles that you have
to get over on both sides, so we just

had a shift in culture During the whole
pandemic and after that and that kind of

creates some of this too where You know
good communication takes effort on both

sides and we see breakdowns sometimes
on the crediting side sometimes on the

examiner side so that contributes to some
of it but doors, this is a sticky point.

Examiners, a lot of times, and we talked
about it earlier in the podcast they

don't have the experience they used to.

So a lot of times when examiners
are writing these doors, they have

no idea what the cost of these is.

And the cost is real.

Some of these doors, when they
take hundreds of hours and involve

third parties, you're looking
at costs that hit 100, 000, half

a million dollars really easy.

And then, they're complaining
about crediting's profitability,

but then they're putting a burden
on them that, okay, you just cost

them another five basis points of
expenses by what you're requiring.

And.

Outside of really experienced people
or problem case officers, and even in

many cases, then I don't think examiners
understand the cost implications of

what they're asking credit unions to do.

That's a great point.

That's a great point.

And then

the document resolution can
become incongruent, right?

Because we want you to improve
your profitability, but we

want you to do these 10 things.

And five of those things might require
going outside and hiring An expert, a

consultant, and oh, by the way, we want
it done by September, which gives you

one board meeting and you still have to
go out and find the consultant or even

if they give them three, four months,
sometimes, consultants, everybody

has a how do you get fully staffed
issue, credit unions, banks, schools,

police office, police officers, the
military, nobody can be fully staffed.

And or has challenged being fully staffed.

And then you've got new staff.

So you have all these challenges.

And then, out of thin air, they drop a
date on 4, 10, 12, 15 requirements that

many times are untenable and incongruent.

Very good.

Let's move it to the kind of
next thing that we've done.

What we see is the initial start process
of now you get you've done got your exam.

You communicated with the examiner.

You have you understand what that
door requires those action items.

And and the timeframes for doing
them, now you have to deal with it

internally is the project management.

And it, it's the same as you would have
any other process for project management.

And you may have people on your staff
that have taken the courses and have

project management certifications.

I've found that doesn't necessarily
make them a really good project manager.

And there's different systems of
doing it, but, now you have to deal

with that internal communication.

That you're going to have to deal with.

And, it always starts
with, here's the door.

Here's the primary point person on that.

Yeah.

Here's the resources that we're going
to need on that, in tracking the

timeframe, I would leave it up to
individuals as to how they like to

document their project management system.

But in that 1, another important thing
needs to be that internal reporting.

That's going to take place.

How is that going to be?

Or is there a community?

Committee that's going to meet, bi weekly,
monthly based on, volume and thing.

But, the strategy needs to be put in
place and thought through on those items.

So it really is that basic
project management thing, but it

needs to be, established early
on and communicated internally.

I have thoughts on that.

I have a couple things written
down and they just reinforce

things that Steve said.

The first one is transparency
in this reporting process.

Whatever tools you use, where you're
at in this project needs to be

transparent across your management
team and with your board of

directors and supervisory committee.

One, it demonstrates that, there's
commitment to correcting the issues.

Within it another thing I wrote down here.

There needs to be staff accountability
in this project management.

Steve mentioned it right up front.

But without that accountability
assigned to specific people,

projects have a way of falling apart.

The thing that thinking about
accountability, think about thinking

about internal reporting, the light
bulb that goes on in my head is NC ways.

Focus on corporate governance, right?

That reporting the progress to the board.

So the board's aware and that will
allow there to be appropriate.

Should help improve the fact that
there is appropriate accountability

and it should make NCOA a little
bit more comfortable that.

Everybody's taking it serious if
it's being tracked and watched and

then also watched by the board.

It's on that like I said, and then
it emphasizes that commitment to

correct most credit unions Not
most but a lot of the credit unions

that have documents of resolution.

They're either a code three or a
code four So if they're of any size

their examiner are gathering up their
financial reports and board minutes

every month And it makes it a lot easier
to With your examiner communications

if they can see every month, here's
what you're doing or once a quarter.

Here's what you're doing to address these
items in the document or resolution.

We talked a little bit about
prioritization before we started

in the project management.

It's good to set those priorities
within your project management plan.

If you got three or four door items
or a number of findings include the

findings to but prioritize these

this.

Some don't, but some and hours involved
in get because sometimes it's si

it's interesting.

You I think we were on a call with a
client where I might have brought this

up, but when I was at NCUA and at the
time Mark McWaters was the chairman, we

would be doing a budget briefing with
him, and it was like OPM did X, and

it's going to cost us this much more,
and Congress did this, and we have to

do this, and it's going to cost us this
much more, and he said, and we have a

chart that says, here's the increases
to the budget because other government

agencies made us do something, We put
it in the budget in maybe 2018, 2019,

and every year since then it's there.

It's something that gets purported.

But, every action has a cost,
more so now than yesterday.

And it's something to be cognizant of.

Steve, what else we got?

What's next on project management?

That was a, pretty much says it isn't
difficult, but it's just has to be

properly managed and resourced itself.

Very good.

Very good thing.

And that's the cost
benefit of this reporting.

Because we do see doors that end up
where you can reach a point where you're

reporting on projects and you're not
getting anything done because you're

spending all your time reporting.

Be careful to balance out what you
put in those reports, you do need to

be transparent and let people know.

throughout the organization,
be informed where you're at.

But there is a point where sometimes
you can spend more time reporting

than you do fixing the problem, and
you want to avoid that issue too.

Summary reports are good, and I think
disparity is when you do, especially

if you have one of these big long items
where you have 10 or 20 things that you

have to fix in a short period of time,
you have to be careful that you don't

spend all your time reporting and End up
not getting actual progress made because

reporting has taken up all your time and
we have seen situations where that has

happened, where that reporting becomes
such a burden that you're not actually

getting any corrective action done.

Those are great.

Yeah.

Thoughts on that, Steve.

Total agreement.

Total agreement.

I've got two, I've got two reporting
things that popped into my mind when

you said that number one was dating
ourselves here, 20 2000 Y2K, and we had

to report to the examiner had to report
to the credit union, had to report to

the examiner had to report to the S.

E.

The S.

E.

had to report.

To the office.

The office had to report to the
central office and the central office

had to report to Washington, DC.

If every system was red, yellow, or green,
and we broke our back, making sure that

we reported that two, three times a day,
and thank God there weren't any problems

because there was no time to do anything.

Other than report that everybody was
green or yellow or there weren't any reds.

The other reporting comment is a guy
near and dear to all of our hearts.

Bob Blattner in the old region six said
to me one time there was a report that

he had to send into the office that he
thought was so dumb that he changed the

last sentence that said, if anybody ever
reads this report, please give me a call.

Nobody ever called.

Very good.

That has not a lot to do with project
management, anytime you can think

about Bob Blattner it's a good day.

Thanks guys.

I appreciate your time today.

All right.

Take care.

Good luck.

Good luck and listeners.

I want to thank you as
always for listening.

This is Mark Treichel signing
off with Flying Colors.

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