Credit Union Exam Solutions Presents With Flying Colors

Mark Treichel: Hey everyone.

This is Mark TriCal with another
episode of With Flying Colors.

I'm excited today to be here
with Rob Johnson, president and

a principal owner of C Myers.

Rob, how are you doing today?

Rob Johnson: I could not be
better, especially getting a

chance to be on here with you.

I love listening to your show
and it's one of the benefits.

I, I love studying the industry, working
with credit unions, helping them.

It's.

This is actually my 35th year at C
Myers, so I've had the benefit of working

there for quite some time and have
just such an incredible team around me.

But we constantly love learning
and I learned something every

single time I listen to your show.

So thank you for having me on.

Mark Treichel: Yeah, I'm
excited to have you on.

A lot of credit unions
obviously use C Meyers.

Some credit unions might not
exactly know what it is you all do.

So maybe if you could to start us off, if
you could kinda walk through what it is c

Myers and you generally do from the 10,000
foot level, and then we'll dig into what's

going on in the industry here today.

Rob Johnson: Oh, we would be
happy to, and thank you for that.

And and yeah, it's a shame if they
haven't heard of us, but we can run

on something that today we, what we
really do is I'll say we, we focus on

decision information for decision makers.

It starts off that simple.

Of course, there's a lot.

To that, but we started off on the
number side of things, asset liability

management, things like that.

And we do thousands and
thousands of simulations a year.

But what we also found is a lot of
times, places weren't using enough

of the, those facts to, or in those
analyses to help make better decisions.

And so over time we built out a
lot of technology to help forecast

different outcomes and to.

To make more informed decisions, and
we actually think that modeling should

be about finding opportunities, and
so then that grew from there too.

We do a lot of financial modeling, help
places see the future from different

lenses to the strategic planning.

This year we'll be doing over 200
strategic planning sessions, and

then we do a lot on the execution.

We're finding that.

What was happening is you
could have a good strategy.

You could know what you need to
do numerically, but if you don't

execute, if you don't get it
done well then it was all talk.

And that talk doesn't
actually help the members.

It doesn't help the organization.

So we have a whole
department that helps drive.

Execution and strategic implementation.

And what we then found that
kind of the final little area

that work on is you do all that.

And you know what people get?

Keep saying is how do we get our people
better to help bring these things along?

And so we started years
ago getting into leadership

development and really training.

The executives and their teams for
them to look into the future better

for them to be a high performing group.

And so it's been exciting.

Every time over those 35 years, I start
to feel like I know what I'm doing.

I get humbled by the environment and the
different questions, and so it, it keeps

me excited getting to do these things.

So thank you for the
invitation and asking on that.

Mark Treichel: You got it.

Yeah.

You mentioned simulations and I think of
a couple different things when I think of

simulations from where you're speaking is
the simulations about how, I'm guessing

is like a LM and how your balance sheet's
gonna respond to the decisions you've

made and what decisions you can make.

Relative to moving forward, but from
an NCOA perspective, Steve Farr, who's

a guy on my team, he used to do Monte
Carlo simulations for the insurance

fund to stress test the insurance fund.

To prove to the CPAs that the insurance
fund was solvent, which became very

important during the corporate crisis
when there were a lot of bad investments

in the triple A rated investments
that were causing challenges to

the insurance fund because of that,
the great recession and all that.

But when we talk about simulations and
we talk about making better decisions.

What is it you're seeing out there
that you're being able to help

credit unions in that regard?

Here we, as we sit in the
second quarter of 2026.

Rob Johnson: Yeah.

One, one.

What I'll say is helping people go beyond.

One budget that is for one
year and thinking that tells

you what's going to happen.

And and so a lot of times what
is people do a lot of work to

create their one perfect budget.

You have to have a budget.

But everyone, when you then talk with
them, you're like how do you feel?

How confident is it that
budget's going to be telling

you exactly what's gonna happen?

Everyone's oh, pretty much by
January, we were already like this

is different and that's different.

And so one of the things that did is
first, beyond just trying to have that

perfect one budget, what if in a minute.

You just saw a totally different path.

What if we grew this much
instead of that much?

Or what if our expenses changed
at this level versus that level?

What if we really push our deposits this
way and then look at multiple years?

Here's one of the things that we
find, and it is one of those common

sense things when you think about it.

And then you say how are we
helping inform ourselves that way?

But when you look at places who
are doing really well this year.

There are a lot of cravings who
are doing really well this year.

They're having, their position,
have their best year ever.

And then you say is it because
of the work you did this year?

And of course the answer is no.

It's not because of the
work I did this year.

It's because of the work that
I did last year and the year

before and the year before that.

Building up our strength to be
positioned to do really right now.

So why is it if we know it's
obvious that it's not because

of what I've done so far as a.

April, that made us look
really good right now.

Then why do we then do our
planning for a 12 month window?

It doesn't make sense.

We need to look further out there.

Sometimes the actions that are
gonna build that strength for

you, if you just look at one year,
that doesn't build much momentum.

Maybe we don't worry about that right now.

But if you look further out and oh,
this builds momentum, that would

really help us and down the line, our
future selves are gonna be thinking

us today for making this happen.

That if we start doing
these steps right now.

Then we're going to actually build a lot
more momentum towards good things that are

going to make us stronger in the future.

And so one of the things that we
do, and it, and technology's amazing

these days is the technology.

We'll take a forecast and you can
test what if we change it and we

look at it over the next five years?

And you'll see an answer
in less than one minute.

That's incredible.

And so there's no excuse not to look
out 3, 4, 5 years not because you're

trying to have here is the scenario.

No, it's let's paint the picture.

If we just take a minute and then
we start laying out each of those

different directions, then you
start actually getting really good

feel for where the exposures are.

Where are the opportunities?

Where are we going to get stronger?

How do we need to target our team?

So I think that's a really big difference
is, as you said, sometimes those Monte

Carlo models that you're referring to, it
might take someone weeks to really say,

okay, here's what it is, and then it goes
through, it shows that risk and they're

like, oh, that's unlikely, or we're okay
there, and they start to discount it.

Versus starting to really
start seeing clear paths.

What happens to our earnings?

What happens to our net worth?

How are we achieving our goals
and our growth over this?

Are we excited by that?

And that really connects to
strategy once you start doing that.

Mark Treichel: And if you,
how do I wanna say this?

Like you said, budgets are wrong
in Jan once you get there, right?

That would, every simulation, the one
thing you know about it is it's not right.

It, but it can teach you a lot.

It's going to get you to
start thinking about it.

And if you go out one, two, instead
of one year, two years, or instead

of two years, three years, you
start thinking about, okay, in four

years this is where I'm gonna be.

Is that really where I wanna be?

And if it isn't where I wanna be,
what levers can I control today?

And I refer to a handful of
books on occasion, but one of my

favorites books is Atomic Habits.

And if you Oh,

Rob Johnson: great book.

Mark Treichel: Yeah.

And it's if you want, if you wanna
become a runner, don't go out and run

five miles, go run around the block
and then run, do that for a week,

then run around two blocks, right?

And then increment
incrementally over time.

Every week, you're able
to do a little bit better.

And the same thing ring rings true
to a personal financial statement or

a, a complicated or more complicated
financial statement like credit unions.

Does that make

Rob Johnson: sense?

Absolutely.

It makes perfect sense because that
time on fee that you're talking about.

You start strengthening up all those
muscles that support you, and so you'll

hurt yourself if you just this is it.

I'm going to just run
out, too long, too fast.

No, let's build up our muscle.

Let's build up our strength.

And that time on feet then starts to
actually make it easier to go further.

And so as you start going through
we have a lot of our clients, what

they do is every single quarter,
they're looking out multiple years.

Because they're continuing
to see what's this look like?

Not to calibrate to the one perfect.

That's why we keep mentioning
that is, is no, it's so easy to

see these different directions.

Now you get that habit, you start building
that muscle of thinking further out.

As we think further out, we start to see
problems and we see opportunities clear.

And then it's easier to take those
actions right now, and that habit,

that time, walking through and
thinking strategically, that's

a muscle you need to build.

And so seeing those implications,
a lot of times people are like I

thought if we just grew really fast
that this would be a good thing.

Which kind of growth?

Let's play around with those
different levels of growth.

You grow this way, it
looks good next year.

It really starts to hurt you the following
years because this is what's happening

to your cost of funds and you actually
aren't building up the relationships

that you might be looking for.

But if you do it over here,
it might take a little slower.

Buildup.

But if you're doing it well, you could
actually be serving more members.

You could be giving, you know
them benefits while you are

getting stronger over time.

And so that can really help them then get
used to as a team how to get more clarity.

And that takes just practice.

And so if we just do it once a year.

We're not going to get that time on feed.

Do it throughout the year
strategy, the strategic process.

It should be viewed with urgency and
thoughtfulness throughout the year, not

one session at the end of the year to
say now it's time to strategically think.

That's not gonna work.

Mark Treichel: And so the, let's
say someone hires you and says,

Hey we're doing our strategic plan.

You asked for some documents
from the last strategic.

You may probably, I'm guessing
you'd ask for the last strategic

plan, you'd ask for the budget.

Yep,

Rob Johnson: absolutely.

Mark Treichel: You'd ask for maybe
a sample board packet or two.

You'd probably interview
some of the key players.

And then you've got, so you learn a little
bit about them and then you've got your

framework of how you would tee that up.

Then you show up at their meeting, they
have three days set aside maybe one

of them's devoted to you presenting
and walking them through the strategic

plan as you're teeing that up.

How does that play out
in the credit unions?

How

Rob Johnson: does that work?

Mark Treichel: Yeah.

How's that work?

One,

Rob Johnson: one, is you're
talking about that process here.

Here's a lot of times what we see is.

There's a wide range, of
course, of strategic plans,

different levels of depth.

I will tell you love AI for a lot
of this too, because hey, let's take

your past several strategic plans.

Let's look at what's been happening
here, run it through, help summarize it.

But a lot of times what we find is
before we would say, oh, let's go

to that meeting on that date, no.

Let's first start talking now about what
are you looking to accomplish if you have

a 70 page strategic plan, but no one can
actually explain what you're trying to do.

And how you're going to be making
those steps forward, then we

might actually need to work more
on that clarity and alignment.

And let's get it to, these
are simply the most important

things we will be accomplishing.

And so sometimes it's actually to
simplify it a little bit more to

get the right things done instead
of putting everything in there.

And then we see so often that
there's this I'll say strategic

fatigue without progress.

You don't want that.

And so what we'd like to do is first.

Before that session out
there is, let's look at it.

Let's start to lay out a plan.

Let's then look at the numbers.

Because a lot of times
people don't actually test.

Can we even afford to do what
we're talking about doing?

Or, here's the fun side is on, you
look at a lot of cran unions right

now, they haven't been getting as
much growth as they would like.

They're not growing their
memberships as fast as they'd

want, especially engaged members.

A lot of places would like to
do more of that, but their net

worth ratio's been going up.

Now you start going through and
you connect how much cushion do we

actually have on our net worth ratio?

And that isn't as simple as
if I have 12, it's too much.

It's no, whatever that number is.

Understand your risks, understand
how much exposure you might have,

and that's where the some of
the scenario planning comes in.

But then look at some of your different
opportunities and say if we started,

actually we have a cushion here
to do even more than we thought.

Those are the great ones to be able
to do because yes, you have that

situation where, maybe a place needs
to slow down or do something different.

But normally what's happening right
now is people are starting to realize I

actually need to accelerate and have a
little bit more of a sense of an urgency

as to what we're going to accomplish.

And so that takes, let's lay
out the plan and thoughtfulness

now in April, for example.

So a lot of, we have a lot of people
at Sessions right now in April.

Really planning out let's do the real work
as a senior staff thinking through things.

Then do some sprints along the way.

How do we solve these problems?

And then towards the end of the year,
you've been bringing the board along and

then that October session or whatever
date it might be, is really just

helping to crystallize at that point.

But those who kinda wait until then
October, it starts getting slammed in

there with the budget process and now.

That.

What do I do?

And I'm, now I'm back to short-term
thinking versus long-term thinking.

If you start earlier, what happens is you
actually see a lot more opportunities.

I was.

I was raised, the CNC Myers is for
Cliff Meyers, and he always said,

the point at which you address a
problem is directly related to the

number of viable options to solve it.

So in other words, you start sooner,
even if it's not perfectly laid out,

you're actually gonna see it better.

You're gonna see it different.

You have more options.

You start to figure
those options out early.

What happens is now you can
start to lay out your plan.

You'll start to understand
what your costs are, what's

your cushion for your earnings?

And your net worth.

So you have a very deliberate plan,
and here are the alternatives.

Here are contingencies.

Now your budget gets easy.

Budget actually should not be a nightmare.

Your budget should already be almost
done if you actually have a really

clear strategic process, and it
should be more top down of here's

what we're trying to accomplish,
here's what we need to do as a team.

Now we need to have this much room.

Then let's work from there
as to how we might execute on

the operational side of that.

That actually is very freeing.

The people, once they make
that adjustment, and it hasn't

focused on the future better.

And one thing learned over time is if
we're just focused on what's right in

front of us, in the near term, we actually
have more of a risk of running into things

that we aren't positioned to handle well.

But I learned, one of the things
that did was I turned 50 a couple

years ago and leading up to that I
said, I wanna learn something new.

Yeah.

And and I learned how to ride an
adventure motorcycle and Oh wow.

Are riding a 500 plus pound motorcycle
going up a dirt side of a mountain.

And I learned that one,
it takes a lot of balance.

Yeah.

You're standing up on it the whole time.

You're shifting your weight, you're
trying to adjust to the terrain.

So I get, we gotta get our balance down.

And it was interesting because
as I was learning this.

It helped me think about the
credit unions in our business

model and what we do together.

And there are a lot of parallels
and you have a lot of time

thinking when you're out there.

And so we gotta know how to balance.

We also need to know the throttle on
the speed control there can be too fast,

but there's also definitely too slow,

right?

You're up on the side of the
mountain, you're climbing

up it, and you go too slow.

You're probably gonna drop that
bike and you don't wanna lift up

a 500 pound bike on the side of a
mountain and try and restart back up.

So some of that is we need to see out
there, we need to keep our momentum going.

And then if you're looking
ahead, 'cause what?

What's happening, I would
get myself in trouble and I.

I had instructors help me, and that's
some of what we do is we help people

through instruction and help them see
it different is they would keep teaching

me and they're like, Rob, you need
to spend five seconds looking way out

and one second right in front of you.

Right?

Because if you look way out, you'll
see what lines you should have.

You see where the big problems are.

You learn to then focus
on where you want to go.

Understand that those problems are
there, but don't stare at them.

If you stare at them, you're
gonna wind up hitting them.

Yep.

But if you know they're there,
and here's the line, you either

want this line or that line.

I'm good with any of those.

You start narrowing on that.

I see that.

I know I can roll over anything
that's right in front of me.

And so I just do little peeks down here.

If we stay out there, we'll be
on a much better, smarter line.

And it's actually a lot less work.

And so when I would normally fall
is if I'm staring right in front

of me and I get really tense.

And if you get tense and
you lock up, I'm down.

Mark Treichel: You're done.

Rob Johnson: I have a lot
of scratches to prove it.

Mark Treichel: You.

So I wrote down a few different
keywords you said there.

For affordability, momentum,
adjust to the train terrain.

And then one you didn't say,
but I think you did, but it

came to my mind is net worth.

Adjusting to the terrain right now.

Competition is huge in credit
unions amongst themselves, amongst

fintechs, amongst bitcoin, amongst
stable coin amongst banks which

probably is putting a lot of that
pressure you referred to on growth.

When I think net worth, I'm just
gonna spitball some thoughts on all

of these and you can take it wherever
you want when I think the net worth.

I think of, some, someone who
went into a challenging period

with 7% is having a lot more.

Problems than someone who
went in with 10, 12, or 14.

And if you're one of those that went
in at 10, 12, or 14, are you looking

at maybe turning that throttle up?

Because it's, because of all this
competition, maybe you're needing

to look at an acquisition of whether
it's a bank or whether it's your low

income and getting some sub debt and
doing some more for your members or

looking for another credit union.

To merge in and then
affordability with with inflation.

And the cha, NCO A has gone through
a 27% down staffing at NCO a creates

creating some of their issues.

There, there's, what's gonna happen
to white collar workers because of ai

but it always seems that credit unions
are, it's NCA, even in a good date.

NCA is about five to 7%
understaffed filling vacancies.

Credit unions are always even in good
days trying to fill staff, but the

competition out there for talented people,
and oh, by the way, you gotta pay 'em

20% more than you did two years ago.

That was a lot I threw at you.

But pick any of those to run with.

Rob Johnson: A lot of good parts
of everything you said there.

What's interesting is when I think of
a lot of the pieces that you're saying,

I'm actually going to jump industries
for a moment and talk about the dark side

for a moment, from a Creon perspective.

But I love watching and listening
to what Jamie Diamond says, and

you can learn so much from him.

And so what, when you were walking through
and saying that, it's like let's look at.

What he's done in some of his messaging
and what I heard with the connection

on the net worth and going through
things, and then this will connect to

mergers and different opportunities,
is he has said hundreds and hundreds of

times publicly, and it goes back to the
early 1990s, build a fortress balance.

It's one of his foundations.

You build a fortress balance sheet.

Now it's interesting 'cause, and
we believe, we wholeheartedly

believe in that, but we need to
actually work on defining what

does a fortress balance sheet mean.

'cause a fortress balance sheet does
not mean take my 14% net worth and take

it to 18% and lock down and let's it's
not an old outdated castle that is.

Just stone and it's immovable.

A fortress balance sheet, and he's
proved this over and over again is

one that's actually very dynamic.

It's fluid.

It can handle a lot of things.

It is reaching out to different areas,
but he accredits, he says, we run

hundreds and hundreds of simulations.

I understand where the problems are.

If I understand where the problems
are and I understand where the

opportunities are, then I know how
to balance that out ahead of time.

And so you look at that and you
think of what he's doing there.

Then he says, we've got
to have strong capital.

We need to price in our risk
appropriately, and we need to have

strong liquidity at all times.

And then as we go into
different initiatives.

We need to diversify our earnings, but
we need to do it in a strategically

coherent way, so it needs to make
sense for what we're trying to do.

As you look at then, what they've
done is each time there's a crisis,

they actually leap much further ahead.

They go out and they make really.

Inexpensive acquisitions that
then typically pay off for them.

But they're positioned with that
strength that you're describing

is how do we go into this?

And we see this on I'll say quite a few
credit unions have done a fantastic job

of how they position their fortress.

And a fortress is not the
place that we're not gonna earn

money and we're not gonna move.

No.

The fortress is, some
of the CRE unions that.

Really strong earnings, but diversified,
their risk profile is fantastic.

They look at a lot of different scenarios.

They're spending their time,
years into the future and then

knowing that they can roll over,
the challenges that come at them.

I think when you talk about this
environment, it is an incredible

opportunity for credit unions.

We can either, and we see two camps,
sometimes you see those who are

like, oh my goodness, the world is
moving too fast, and we're like.

It is gonna keep moving faster.

So if you're not comfortable with it,
then you might need to adjust that mindset

and those who are really excited and
positioned because of all the amazing

things they're doing for their members,
the social impact difference that they're

making, the value that they're adding.

When you talk about all that competition
coming in, there's also this other

major thing that's happening is
while leaders are feeling stressed.

The population.

People are feeling a lot of stress and
you're seeing that credit unions really

should be a solution to that stress.

We're positioned for that.

We should be creating that trust.

We should be creating that understanding.

We should be creating
that sense of community.

We should be making that difference
for them and creating extra

loyalty for them to say, wow.

You not only know me, but you helped
save me money in the right areas.

You helped me get a vision of the future.

And so if you do that well in a time
of stress, when people are feeling it,

you're gonna have a member for life.

And it's really focusing on that
engagement, that making a difference.

And some of that frankly, comes down
to focusing on the right metrics.

Instead of, I'll say some of the
simple metrics that places go for

they can be shortsighted and it can
cause 'em to miss opportunities.

Mark Treichel: Great point.

Great point.

And as you're, I kept thinking
Warren Buffet when you were

talking about Jamie Diamond.

'cause Buffet he's got a
lot of good investments and

his balance sheet has both.

He's

Rob Johnson: doing okay.

Mark Treichel: Yeah.

Doing pretty

Rob Johnson: well.

Mark Treichel: And then but he's
there ready to, when, what is it?

When the.

Rob Johnson: When the tide goes out, the

Mark Treichel: tide goes out.

Thank you.

Yeah.

When the tide goes out, you
know who's swimming naked.

So he's there to take those
opportunities, which is what Jamie

Diamond is doing, getting ready to
get some acquisitions at a good price.

Because they're aggressive in being well
positioned, but they've also got some

cash and liquidity outta the to ready
to go so they don't run their liquidity.

Too tight.

What is it that you're seeing?

The with the 500 rate shock
that, that we never expected.

And then NCOA was beating
up credit unions around NEV.

And oftentimes for good reason,
oftentimes maybe just because that tool

isn't the perfect tool and people were
getting beaten up by it a little bit.

But things have gotten a little
bit better generally speaking or

like in totality, liquidity's at a
better place even though growth is.

Isn't where they'd want it to be.

Any EVs are generally better.

A lot of credit unions made
some pivots because of that.

What are you seeing in, in
that world today and maybe o

over the next 2, 3, 4 years?

Rob Johnson: Yeah, I'll say
one on the last two years.

It is, it's what you said.

And we see it, I'll say,
proven out in the numbers.

One of the things that
we do for our clients.

Is we'll actually provide a graph of
here's all the NEV answers for any

environment you're interested in for
all of our clients and where do you

stand and how, and how have you changed?

How has the industry changed?

What we find is when we look at
those graphs, the economic values

have improved hundreds of basis
points over the last couple of years.

And there's that, the time
heals with that adjustment.

Does that mean that the risks that were
shown in some of the models were wrong?

No, because those risks that were
shown in the models were okay.

Now that rates have gone
up, they're then shocking.

Different environments from there.

Rates did not keep going up after
rates went to the 5% level short

term, and the long term rates
were around four rates since.

Stayed there for a while and started
to go down, and that helped heal

a lot of structures, but also
places started shifting a little

bit of what they were doing on.

Their pricing and their risk
management and connecting that.

What I see looking at it then is
we've seen more net worth strength,

we've seen more economic value
strength, we have seen more pressure

on the operating expenses and more
pressure on the non-interest income.

And and those are, a combination
of where the growth is.

But life is, as you said, more expensive.

It's more expensive to have
really incredible quality talent.

It's more expensive on the
technology front, and so how do we

then position ourselves for scale?

How do we make sure that as we're
investing in technology, we're actually

doing smarter contracts that don't make
us afraid of the scale because it'll cost

us too much if we wind up doing this.

And it is, it's amazing how sometimes
places are like, oh we signed on

with this new FinTech to do this.

And we're like, okay, so what if
it's really successful and you get

millions of your members, a million
members to do it, or a couple

hundred thousand members to do it?

They're like, oh no,
that would be horrible.

We're like, what do you mean?

They're like, you, we
couldn't afford that.

Then why are you doing it?

Mark Treichel: Right?

Rob Johnson: Are you not thinking
of the future and the scale?

And so we need to be smart about
how we're approaching our expenses

and those contracts to have it
where we're positioned for success

and we have that growth mindset.

We are seeing that those things though,
don't get captured by the economic value.

Economic value does not care if
interchange income goes away 'cause

it's just the value of your assets
minus value, your liabilities.

It's ignoring your non-interest income.

It doesn't care if your
operating expenses go up 10%.

And so that's where earnings come in
and understanding really your risk

to earnings and pulling those things
together, that's where, really trying

to get that whole, all those parts
of the strategy levers to work well.

And that's where we see how do we
generate enough earnings, make 'em

sustainable so we can keep doing
great things for the members and keep

expanding and accelerating our strategy.

We have to look at it from a
measure that captures that.

And so it's looking at the
bottom line earnings instead

of just stopping at the margin.

And that's something that we think
we've worked really hard to help

people see that those who really see
it the world looks a little easier

because that information helps 'em
then say what are our opportunities?

What do we do When you're
looking at going forward?

We do hundreds of forecasts help a lot
of places, not just of course with here's

what they're expecting, but really trying
to push out different environments.

Understanding, of course right now
some of the outlooks are concerns

about higher credit risk, lot more
uncertainty on, a year ago everyone's

rates are definitely going down.

The world keeps changing a
lot, and then they're like

maybe long-term rates won't be.

Going down.

Maybe they'll keep going up depending
on what's happening out there

geopolitically and all those pressures.

And so as you look at it, one of the
things that will also encourage is

understanding different yield curves it.

One of the problems that happens is
the simplification of the environment.

Oh, rates are either current
plus 1, 2, 3, or minus 1, 2, 3.

If that's your lens, you don't even know
what the definition of current is, and you

don't know how things move when short-term
rates move versus long-term rates.

And so there's opportunities in
understanding that and seeing some

different yield curves, seeing
some different pressures and

where we might actually do better
on this, or if I see a pressure.

What I find sometimes, and at
our place, we find, causes some

challenges for people is sometimes
people don't want to see a problem.

And so we need to change that mindset and
we need the change of mindset to, if I see

a problem, I can do something about it,
but if we don't wanna see it and act like

it's not there, then I can't act on it.

And that's part of what Jamie
Diamond was talking about on his

fortress balance sheet is I need
to know information is power.

Where are my risks?

Where are my concerns so I can act on it?

And so as a CEO for an organization,
they need to be demanding.

Show me our problems.

Show me where we could be hurt.

Oh, if the yield curve does that'd be
a problem, or this would be helpful

instead of just that current 1, 2, 3.

Life never moves that way, but I think
it's one of those simplifying assumptions

that people just tolerate and say,
oh, we're doing it for the examiners.

No, do it for yourself.

Demand better decision information.

Mark Treichel: No, that makes great sense.

And so I wrote down
ignorance is bliss, right?

You can't, you, you can't when you're
audited by, by your supervisory committee

and you're examined by NCUA and you
have more competition today than you

ever had put your head in the sand.

Is not a strategy.

It's a strategy for maybe being
on next quarter's merger list.

Yes.

And then you thinking about what you
just said, and I'm, and in the back of

my mind with my NCUA hat on and NEV I've
called that a rough justice calculator

and Todd Miller, who's on my team when
we're on with having client conversations

or when we're talking on the podcast.

He'll when he talks about NEV and he
pauses, his pivot is, I always preferred

income simulation, which is a little
bit of what you were walking through.

Absolutely.

Different yield curves
really determine that.

And then, swinging back a
little bit to, to inflation

and affordability that's there.

You gotta watch every dollar.

But on the income side.

What type of opportunities or what are
the headwinds relative to the potential

for new streams of income to help that
net interest margin, to help that in

income simulation in your projections
this year, three years, five years.

Rob Johnson: Yeah.

One, you know what I'm going to do is
I'm gonna answer using, using a name

of one of our clients just because
they've said we can and normally

keep everything very, I love it.

But because I think it then just
helps provide that real world.

Examples of what they're doing,
and it's it's Redwood Credit Union.

I don't know if you're familiar
with Brett and his team.

They're normally not gonna be
on the regulatory radar because

they're, they've been, historically
over the last two decades, they're

earning a 1 25 to one 50 R away.

Their net worth strength is
incredible, but they get a lot of

growth and they're always focusing
on the strategy going forward.

On the asset liability management, they're
some of the just top answers out there.

I bring this up and I use them
as an example because when you

say what do you look at for
different growth opportunities?

So they are, they're about
$10 billion right now.

They were, dealing with some of that.

Do we cross at the end of the year, right?

Yeah.

That, because for those who aren't
familiar, essentially when you cross,

and it depends on the organization, but
Redwood's been incredibly successful

having a lot of engagement and checking
accounts or, share draft accounts,

whichever label you like to use.

And what happens is then they have
a massive debit card penetration.

Which is great until you cross 10
billion and it's gonna cost you about

20 plus million dollars in earnings
just for crossing that magical line.

And, they viewed it years ago as
all that's gonna do is just take

money out of our members' pockets.

It is, it's, there's no value
add with this shift there.

This isn't helping the members in any way.

And I'm gonna say combine the
challenges of the environment

with, if you're also facing.

Okay, as I cross 10 billion, it's gonna
hurt me about $20 million in earnings.

Now, what's my sense of urgency?

If you view growth in earnings
potential with a sense of urgency

of I need to look three years
out, five years out, what do I do?

So what they did is in their
strategic plans, they said, okay.

What do we need to do to be number one
in our markets for mortgage originations

and really build these relationships up?

And so then they went through a, really
dedicated process of getting in there

better with realtors, really owning some
of this market, having really efficient

processes while still having good rates.

Bring that up because we're still
fighting a lot of places where, oh,

mortgage rates are so high, we're
only gonna get so much volume.

This might actually be the
time to try and dominate.

Market to try and build some of that,
especially if you have the A LM and

the net worth strength to do it.

And frankly, it's so funny, I
still run into people who are

afraid to put on mortgages at 6.5%,

but they put on a bunch of 'em at three.

That doesn't make sense,

Mark Treichel: right?

Rob Johnson: And okay, so we're going
to, we're gonna work on dominating

that market, but we're also worried
about debit interchange going down.

And a lot of places are facing this.

There's a lot of regulatory pressure
on what interchange income will look

like for debits and credit cards.

And so then they're working on
expanding their products out.

And then, okay, what's this product
pressure of overdraft income?

And so they're like look,
let's go ahead and hit head on.

They're in California,
overdraft income is.

That extra tight on, the caps on it.

And so then they came out with a new
benefits checking account and the

benefits checking account is, they're
like, look, this is giving our members

$75 of value every month, and all
they have to do is pay us seven bucks.

They then actually still make
non-interest income on it, but it is

really popular and the members are like,
oh my goodness, you're helping me if

my car breaks down, get to the shop.

You're helping protect my cell phone.

You're helping do these things and
you're creating this as an option for us.

Right there, they're already getting
all these letters from their members,

thanking them for how it helped them.

And it saved them so much more
over that seven bucks a month.

So it, they're actually hearing it from
the members as the social impact side.

But what they're also doing is
they're diversifying the income while

actually getting a lot more attention
and growth on a lower cost of funds.

And so I think some of it, while
these are just a few pieces

come down to product design.

Thinking through product
design and execution on it.

And then of course, are we
having the right implementation?

And so when I look at earnings
opportunities, I think yes,

there's earnings opportunities
on the lending side.

I think a key part is actually gonna
be how do we grow core engaged members?

Some of the.

I'll say the addictive side of things,
if we aren't careful, is some of these

single product members that we bring
in really quick to get a fast growth to

say that we hit this growth, but then
they aren't to actually engaged with us.

And so how do you design your products
to, to motivate more engagement and then

to motivate the members to do even more
with you because at the same time, they

have a really high money market rate.

They're paying today, 4, 4 15.

But only for members who are engaged with
them, who, they have direct deposit with

a certain amount and they have it where
you're either borrowing from us or using

our cusso because they're like, if you
don't have money, you know you don't need

to borrow 'cause you have plenty of extra
money, then are you part of our wealth

management or do you use our insurance?

But then what they do is they do a really
good job connecting different areas.

So someone starts coming in
for, remember we talked about

buying, getting a new mortgage.

When they're getting a new mortgage,
they're checking, do you know that you're

overpaying by a thousand dollars on your
insurance for your homeowner's insurance?

One, let's either save you that
a thousand bucks a month or this

actually could let you have more
money to borrow if you would like.

So giving the members options, saving
them that money that's going beyond.

And so what I bring that
story up because it's.

It took actually, Brett and
his team, they're looking

three plus years out always.

They already, right now, in early 26,
have their key bold steps done for

next year as to what's it gonna look
like, what are we gonna have to do.

It doesn't mean that they know the future,
but they actually scenario placed so much.

And so one of the things that, that
Brett has constantly told people,

he says what's really nice is when
I see we, they do all these tests

trying to break the credit union.

How do I break the credit union?

And they were doing this well before
crossing 10 billion, and, but he

knows, okay, here's what it would take.

That makes him actually make decisions
faster because he knows he can act on

an idea, act on an opportunity, and it's
not going to break the credit union.

We have that cushion, we have that room.

And that's connecting back to what you
said earlier about, there's knowledge

is power, but ignorance is bliss.

It is no, we are not going to
go the ignorance route, right?

We are going to actually embrace
learning and knowing more.

And so there are a lot of pieces
on that, but it is how do we grow,

how do we grow appropriately with,
being smart about getting engagement.

Doing it, not just through rate,
but if we're gonna pay a really high

rate, we're gonna make sure we have
a relationship with members and we're

building something for the future.

How do we get better at our lending
side of things and then competition.

It's so interesting, when we talk
about growth is, I like to ask

the question is your objective
and is it better to grow through

experience or grow through rate and.

People arguing I can grow through rate
faster if I just lower my loan rates.

Sorry, raise my deposit rates.

Experience takes time.

I don't know if it'll happen.

And experience is, making easy
for them using technology.

And there's a cost to that.

And I'll tell you in the end,
mark, it's a trick question because

it can't be one or the other.

We have to have an incredible experience.

We have to keep, they are constantly
focused on their technology,

the experience on their apps.

What is happening?

Is it, studying?

Is it, how do we shape seconds off
of it while making it more engaging

and beneficial to the member?

But at the same time, we have to, while
we're focused on our experience, we can't

have a great experience and horrible
rates and get the growth that we want.

We need to have a great experience
and we need to keep improving it.

So they actually have a whole program
for how they study their products,

how they improve 'em over time so
that they aren't just complacent with

what was good two or three years ago.

Doesn't mean it's gonna be good
going forward, but then paying good

rates doesn't have to be the best
rates, but we need to be competitive

and then we have to have it where
it's fantastically easy for them.

Lets them want to do it more, and then
all of a sudden your members are your

best salespeople and they're like, the
difference that it made when I went to

a place that really thought about me,
cared about me, made it easy for me to

do these things, paid me a really good
rate, and now here's what I'm doing next.

That's what I think credit
union needed to be focused on.

Is it is really pulling together our
strategy, our execution, having that

deliberate is our product mix, right?

Anyone who sits there and says,
we're a commodity business.

That is wrong.

You are not, Creighton.

Unions are not a commodity business.

Those products and what you're doing
and how you might design it and

the experiences you're creating,
these are people we're dealing with.

You're helping people.

And so really looking at it that way
and be driven by, I'm gonna make a

difference for more people and I'm
gonna do it in a sustainable way.

And so that, that's a long answer to your
question, but it's passionate about it.

Mark Treichel: It's a good answer.

It's a long answer.

And I wrote down a lot of words,
so I'm gonna, I'm gonna throw

some stuff back at you here as we
get get close to the end of this.

But you, so you said execution.

Earlier, and I had already
written down Super Bowl, I'm

gonna weave into Super Bowl.

But back in the 1970s when John
McKay was the coach of the Tampa

Bay Buccaneers, they were the
first team to never win a game.

They went oh and four.

The season was only 14 games back then.

They went oh 14 afterwards, he was
walking off the field and the inter

interviewer said, what do you think
about your team's execution today?

And he said, I'm all for it.

So the opposite of that is
what you were talking about.

Is everything working well together
and what do you have to do to win the

Super Bowl to go 16 and one, 14 and two?

You gotta have a good offensive
line, a good defensive line.

You gotta have a good quarterback.

You gotta a good, gotta have a good wide
receivers and a good defensive back.

You don't have to have the
best in every one of those.

You don't have the best rates, you
don't have to have the best court.

You don't dominate at every place, but
you can't really have any weaknesses of

materiality or that weakness is gonna
end up, causing you some problems.

And then the other thing, when I think of
that I think across selling a lot of what

you were talking about is if they come in
and do this, you gotta be able to do that.

But the way they, the way in my mind.

Organizations cross-selling can
have a negative connotation.

I came in here for this, but
you're trying to gimme that.

Rob Johnson: Yes.

Mark Treichel: But if you have good
leadership training and you understand

the organic whole of the organization
you're offering them some other

things they might not be aware of.

And if it's framed right.

And the call to the call center was
good and the treat and the teller

trot taught them, treated them well.

And whoever they dealt with was impacted
by good leadership training, which

trickled down to a really good culture.

That culture can be as
important as the rate.

Rob Johnson: Absolutely.

It, people aren't going to remember
that difference of 25 basis points.

They will remember, wow,
you treated me so well.

It was such a different
experience than what I'm used to.

You knew this and as you said, you
aren't just trying to force a cross sell.

You're actually, you understood my needs.

And there's, there are certain, there
are two things that as you were talking

there, and I do love the, I agree a
hundred percent on the execution on the

Super Bowl side of things that our team
has to be really good in a lot of areas.

And so one of the things that.

For example, they do is, it is
strategic planning throughout the

year, but they have a large expanded
team that they actually ha go

through the entire strategic process.

They're like a group
of 50 people involved.

And so talk about this all the
time, that yes, we could actually

get near term, the strategy is done
faster, having less people involved.

But if we have them involved and if
they understand it, they actually

start to permeate it throughout the
organization and they get it more.

And that's gonna help with
the execution because it's not

just a group of words up there.

It's really getting to the why and the
difference that we need to make as a team.

And Brett's always I know we
could be more efficient at this.

But I wanna be effective down the
road and keep building my team.

And that's invest a lot in his team.

And that makes a difference is that's how
those, the team works better together is

the blocking assignments and understanding
what each other are going to be doing.

That's what makes a great quarterback, is
actually that frontline protecting them.

Yeah,

Mark Treichel: absolutely.

Rob Johnson: You can take a great
quarterback and give him no front line

and it's not gonna work very well.

Mark Treichel: And he would
be playing for San Diego.

Yeah, that's

Rob Johnson: I, I have the
Arizona Cardinals here, so I.

Yeah we can talk about bad teams,

Mark Treichel: right?

I'm hoping Kyler Murray does
amazing things for the Vikings.

'cause I'm a Vikings fan, so we're
glad to have your quarterback,

we think, but we're not sure.

Rob Johnson: Yeah.

We got so much for him too,

Mark Treichel: right?

Yeah.

He's only costing us a million,
but but that's a whole but that's a

whole, that's a whole other podcast,

Rob Johnson: yes.

Yes it is.

It's,

Mark Treichel: yeah.

Rob, this has been fantastic.

If is there any other topic you wanna
hit before we wrap up here today?

Rob Johnson: Mark, I have the feeling
you and I could probably talk about week

long without overlapping too much on the
topics 'cause there's so much going on.

But right now I hope that we gave
your listeners a lot to think about.

I hope that they walk away feeling.

Motivated and excited for the future.

And that's the kind of energy
and mindset that we need.

I hope that they're focused on
that execution and what they do

and the difference that they could
make, and really spreading that

vision and looking further out
instead of what's in front of them.

And if we're just dealing with all the
problems right in front of us, it's a lot

more likely that we're gonna be stumbling.

And so the more that we get our head up.

We're looking out there and
and if they need help obviously

we love doing this stuff.

We'd love to help more organizations,
but I just appreciate the

opportunity to be here with you.

Mark Treichel: Yeah, this has been fun.

I've enjoyed it.

And if someone wants to re, someone
has listened to this and said,

Hey, yeah I need to talk to Rob.

I like what he was saying there, and
I think he could help my credit union.

How's the best way for them to reach you?

Rob Johnson: One, I'll say
the best way is see myers.com

because our team you think I sounded
hopefully good enough, but our

team's out there doing the real
work and helping a lot of people.

So that way our whole team
is there to help serve.

We have about 80 plus people on
our team helping organizations and,

paramount very focused on the credit
unions and the difference for them.

Me personally, I'm rJohnson@cmyers.com

and I would.

I'd welcome contact too.

Mark Treichel: That's awesome.

Rob, this has been a lot of fun.

I want to thank you for your time today.

Rob Johnson: Yeah, this is incredible.

Thank you, mark.

Mark Treichel: You got it.

And listeners, watchers, I want to
thank you for listening or watching.

I hope you'll do the same again soon.

This is Mark TriCal signing
off with flying Colors.