NWCUA MAXX Coverage: Hood IDs ‘Opportunities,’ Says He Has Heard ‘Concerns’ Around CUSO Rule

A reposted Article from CU Today

BOISE, Idaho – NCUA Board Member Rodney Hood offered updates on a number of issues to a credit union audience here, including that he has heard “concerns” around NCUA’s CUSO rule that he is working to address.

Speaking to the Northwest Credit Union Association’s MAXX Conference, Hood touched on a range of topics, including financial performance data and where he sees “opportunities” moving forward, including building relationships with fintechs.

Hood, emphasizing a point he often makes that he believes “regulation needs to be effective, but not excessive,” offered an update on the financial state of credit unions at the end of Q2, including:

  • Membership hit 127 million
  • Assets increased to $1.98 trillion, with Hood saying assets have certainly now surpassed $2 trillion in Q3
  • The CU loan portfolio stood at $1.19 trillion
  • Net income was $21.3 billion, up from $18 billion over the same time one year earlier (due to changes in provisions)
  • ROAA was 112 BPs vs. 80Bs in Q2 2020

NCUA Board Member Rodney Hood speaks during the MAXX Annual Convention.

“Nothing has been more impressive to me than the fact you have been able to do this with a strong eye on capital adequacy,” said Hood, citing  growth to $201 billion in capital, up 9% year over year, with an industry capital ratio of 10.17% at the end of Q2. “You’ve done that amid a lot of headwinds.

Strong Performance in Northwest

Hood said the 171 credit unions in the three states served by the Northwest CU Association—Washington, Oregon and Idaho––have seen asset growth of 185% over the past few years, with membership growing to 8.1 million.

“I think that’s why we should now be bullish about opportunities on the horizon,” said Hood.

The Opportunities

Among the opportunities cited by Hood:

  • Hood said he believes it’s critical the agency provide credit unions with a “roadmap” to working with fintechs. “I believe that through strategic partnerships we can find ways to improve the mortgage process and help low-income communities” via fintechs, he said, adding that as part of an expanded technology initiative at NCUA it will soon be adding a full-time person to oversee fintech partnerships.
  • NCUA will soon be rolling out its MERIT–Measurement and Examination Risk Identification Tool, which he said will improve examinations.
  • Hood again stressed his view on the importance of financial inclusion, citing the oft-quoted figure that 40% of Americans do not have $400 for an emergency. “If we don’t provide help with those small-dollar loans, people will turn to pernicious payday lenders,” Hood said.
  • Hood told credit unions he cares “very much” about diversity, equity and inclusion (DEI) and said NCUA’s new ACCESS initiative will provide additional support.
  • Hood called for additional help for small credit unions. “I want to see that they get all the kinds of support they need to survive in today’s environment,” he said. “I hope to find ways to streamline the regulatory burden so they can be there to help their communities.”
  • Secondary capital/subordinated debt offer opportunities more credit unions should leverage, according to Hood. “I hope many of you have used it. It can help you with capital adequacy and in building out your strategic plan,” he said.
  • Hood repeated his call for an NCUA Advisory Board, saying, “I think you need to have ways to come to us at times other than comment periods.”
  • Hood said he has heard some “misgivings around the agency’s CUSO rule” related to indirect lending, and he has asked NCUA staff to find ways to address those concerns, especially around ensuring credit unions retain data and relationships.

Posted in NWCUA in the News.