WEBVTT NOTE This file was generated by Descript 00:00:00.480 --> 00:00:02.350 Samantha: Hello, this is Samantha Shares. 00:00:02.910 --> 00:00:07.270 This episode covers N C U A’s new proposed rule on Succession Planning 00:00:07.270 --> 00:00:09.760 voted on at the July 18th Board Meeting. 00:00:10.350 --> 00:00:12.920 The proposed rule passed by a vote of 2 to 1. 00:00:13.698 --> 00:00:16.708 The following is a word for word real audio of that item. 00:00:17.248 --> 00:00:20.448 This podcast is educational and is not legal advice. 00:00:20.868 --> 00:00:24.848 We are sponsored by Credit Union Exam Solutions Incorporated, whose 00:00:24.848 --> 00:00:27.908 team has over two hundred and Forty years of National Credit 00:00:27.908 --> 00:00:29.768 Union Administration experience. 00:00:30.308 --> 00:00:33.958 We assist our clients with N C U A so they save time and money. 00:00:34.428 --> 00:00:38.398 If you are worried about a recent, upcoming or in process N C U A 00:00:38.398 --> 00:00:42.778 examination, reach out to learn how they can assist at Mark Treichel DOT COM. 00:00:43.288 --> 00:00:47.638 Also check out our other podcast called With Flying Colors where we provide tips 00:00:47.638 --> 00:00:50.198 on how to achieve success with N C U A. 00:00:50.951 --> 00:00:52.511 And now the N C U A Board. 00:00:52.871 --> 00:00:56.781 Our first item of business, we will consider proposed rules, succession 00:00:56.781 --> 00:01:01.341 planning, 12, uh, CFR parts 701 and 741. 00:01:01.691 --> 00:01:05.491 Staff presenting are John Berry, Policy Officer, Office 00:01:05.491 --> 00:01:06.951 of Examination and Insurance. 00:01:07.306 --> 00:01:11.356 And Ariel Pereira, Senior Staff Attorney, Office of General Counsel. 00:01:11.696 --> 00:01:14.366 Good morning, John, and good morning, Ariel. 00:01:14.386 --> 00:01:15.286 Always good to see you. 00:01:15.286 --> 00:01:18.386 And, John, welcome to the board table for the first time. 00:01:18.416 --> 00:01:18.596 Thank you. 00:01:18.596 --> 00:01:20.726 I understand that you're going to do double duty today. 00:01:21.096 --> 00:01:23.586 Uh, I am looking forward to your presentation. 00:01:24.031 --> 00:01:25.781 Please begin whenever you are settled. 00:01:25.961 --> 00:01:26.131 Thank you. 00:01:27.111 --> 00:01:29.031 Staff 1: Uh, good morning Chairman Harper, Vice Chair 00:01:29.031 --> 00:01:30.781 Hoffman, and Board Member Otzka. 00:01:31.201 --> 00:01:34.671 My colleague John Berry and I are here to present for your consideration a proposed 00:01:34.671 --> 00:01:36.411 rule entitled Succession Planning. 00:01:37.191 --> 00:01:40.971 Today's proposed rule is the second NCOA proposal on this topic. 00:01:41.491 --> 00:01:46.081 At its January 27, 2022 meeting, the Board approved the proposed rule 00:01:46.081 --> 00:01:49.741 to establish succession planning requirements for federal credit unions. 00:01:50.251 --> 00:01:54.371 This new proposed rule modifies the earlier proposal based on the public 00:01:54.381 --> 00:01:58.241 comments received and upon further consideration of the issues involved. 00:01:58.801 --> 00:02:01.711 The changes are designed to further strengthen succession planning 00:02:01.711 --> 00:02:05.441 efforts for both consumer federal credit unions and consumer federally 00:02:05.441 --> 00:02:07.631 insured state chartered credit unions. 00:02:09.261 --> 00:02:13.221 Failure by a credit union board to plan for vacancies in elected and appointed 00:02:13.221 --> 00:02:17.331 positions as well as the transition of its management can come with high costs. 00:02:18.221 --> 00:02:20.961 The FIQ runs the risk of creating a leadership vacuum. 00:02:21.406 --> 00:02:24.836 It can disrupt operations, potentially jeopardizing the credit union's 00:02:24.846 --> 00:02:29.406 ability to adequately manage liquidity risk, address cybersecurity threats, 00:02:29.726 --> 00:02:33.786 or ensure continued compliance with consumer protection, bank secrecy, 00:02:34.026 --> 00:02:35.876 and other critical responsibilities. 00:02:36.546 --> 00:02:40.586 The failure of FICUs to adequately plan for succession poses a risk, 00:02:40.846 --> 00:02:44.266 not only to individual credit unions and their member owners, but to 00:02:44.266 --> 00:02:45.896 the credit union system as a whole. 00:02:46.176 --> 00:02:48.506 and to the National Credit Union Share Insurance Fund. 00:02:50.286 --> 00:02:53.666 Two factors have increased the relevance of succession planning for credit unions. 00:02:54.206 --> 00:02:57.116 First is the ongoing trend of industry consolidation. 00:02:57.646 --> 00:03:01.136 The number of FIQs has declined steadily for several decades. 00:03:01.736 --> 00:03:05.266 This decline is largely due to the long running trend of consolidation 00:03:05.316 --> 00:03:07.466 across all depository institutions. 00:03:08.406 --> 00:03:11.716 In some instances, voluntary mergers can be used to create economies 00:03:11.716 --> 00:03:15.476 of scale to offer more or better products and services to members. 00:03:15.961 --> 00:03:19.921 However, an NCOA analysis found that poor succession planning was either 00:03:19.921 --> 00:03:24.691 a primary or a secondary cause for almost a third of FICU consolidations. 00:03:25.621 --> 00:03:29.171 Another reason for a heightened focus on succession planning is the 00:03:29.171 --> 00:03:32.211 ongoing, uh, the ongoing retirements of the Baby Boom generation. 00:03:32.611 --> 00:03:36.866 According to some sources, Approximately 10 percent of credit union chief 00:03:36.866 --> 00:03:42.856 executive officers were expected to retire between 2019 and 2021. 00:03:44.436 --> 00:03:46.976 The NCOA does assess succession planning as part of the 00:03:46.976 --> 00:03:48.436 CAMEL's management component. 00:03:49.016 --> 00:03:53.446 However, there is no NCOA regulation requiring FICUs to implement a 00:03:53.476 --> 00:03:55.296 formal written succession plan. 00:03:55.296 --> 00:04:00.516 As a result, the NCOA lacks a full complement of regulatory tools to 00:04:00.516 --> 00:04:04.216 help address deficiencies in a credit union's succession planning process. 00:04:04.216 --> 00:04:04.286 Thank you. 00:04:05.351 --> 00:04:09.391 The proposed regulatory changes are designed to mitigate these risks, and 00:04:09.391 --> 00:04:13.131 we believe are consistent with the Board's statutory authority to ensure 00:04:13.151 --> 00:04:16.941 a safe and sound system of cooperative credit unions for its member owners. 00:04:17.951 --> 00:04:21.971 To be clear, the proposed requirements would not supplant the vital role 00:04:21.981 --> 00:04:25.661 that credit union member owners and their elected boards have in selecting 00:04:25.661 --> 00:04:27.301 directors and other officials. 00:04:27.901 --> 00:04:30.361 Neither would it dictate management hiring processes. 00:04:31.311 --> 00:04:33.661 The proposal focuses on continuous planning. 00:04:34.106 --> 00:04:38.156 and development to prepare credit unions to handle vacancies and 00:04:38.156 --> 00:04:41.306 transitions successfully and in a safe and sound manner. 00:04:42.066 --> 00:04:45.506 I'll now turn it over to John, who will provide an overview of the proposed rule. 00:04:45.696 --> 00:04:46.286 Thank you, Ariel. 00:04:46.596 --> 00:04:50.806 Good morning, Chairman Harper, Vice Chairman Hoffman, and Board Member Otsuka. 00:04:51.306 --> 00:04:53.776 I would like to briefly summarize the contents of the proposed rule. 00:04:53.936 --> 00:04:56.666 As Ariel noted, the proposal would apply to all consumer 00:04:56.686 --> 00:04:57.746 federally insured credit unions. 00:04:58.101 --> 00:04:59.831 including federally insured state charter credit. 00:05:00.211 --> 00:05:03.171 However, to the extent that a federally insured state charter credit union 00:05:03.221 --> 00:05:07.311 is subject to a state statutory or regulatory requirement that conflicts 00:05:07.321 --> 00:05:09.941 with the proposed rule, the NCA will defer to the state requirement. 00:05:10.491 --> 00:05:12.831 The proposed rule would require the board of directors of the 00:05:12.831 --> 00:05:16.531 federally insured credit union to establish a written succession plan 00:05:16.531 --> 00:05:17.991 that addresses specific positions. 00:05:18.421 --> 00:05:22.081 At a minimum, the succession plan would be required to cover members of the board 00:05:22.081 --> 00:05:26.131 of directors, members of the supervisory committee, management officials, 00:05:26.161 --> 00:05:27.361 and assistant management officials. 00:05:27.361 --> 00:05:31.326 Thank you The Federal Insured Credit Union's Senior Executive Officers and any 00:05:31.326 --> 00:05:34.076 other credit union personnel the Board of Directors deems critical given the 00:05:34.076 --> 00:05:36.746 size, complexity, and risk of operations. 00:05:37.836 --> 00:05:40.126 The succession plan would also be required to address the members 00:05:40.156 --> 00:05:42.856 of the credit committee and loan officers where such officials are 00:05:42.856 --> 00:05:44.186 involved in the daily review of loans. 00:05:45.106 --> 00:05:47.816 In addition, the succession plan would be required to address the 00:05:47.816 --> 00:05:50.046 Federal Insured Credit Union's strategy for recruiting candidates, 00:05:53.966 --> 00:05:56.126 The potential to assume each of the covered positions. 00:05:56.256 --> 00:05:59.266 The strategy must consider how the selection of diversity among 00:05:59.266 --> 00:06:01.926 the employees covered by the succession plan collectively and 00:06:01.936 --> 00:06:04.886 individually promotes the safe and sound operation of the credit union. 00:06:05.536 --> 00:06:07.946 The Board of Directors would be required to review the succession plan 00:06:07.976 --> 00:06:10.966 in accordance with the schedule it establishes, but no less than annually. 00:06:10.986 --> 00:06:15.376 The NCOA recognizes that circumstances might require changes to the planning, 00:06:15.796 --> 00:06:17.346 um, filling specific positions. 00:06:17.346 --> 00:06:23.726 The proposed regulation text accommodates this situation, but as with significant 00:06:23.726 --> 00:06:26.936 deviations in budgets and in strategic plans, it would be expected that the 00:06:26.936 --> 00:06:29.656 board would be informed of changes and the rationale for the changes. 00:06:29.991 --> 00:06:31.581 And document them in its meeting minutes. 00:06:32.201 --> 00:06:35.901 The proposed rule would also amend NCA Regulation 701. 00:06:36.011 --> 00:06:39.841 4b3, which contains education requirements for federal credit union directors. 00:06:40.151 --> 00:06:43.451 The proposed rule would require that directors have a working familiarity 00:06:43.461 --> 00:06:46.661 with the succession plan no later than six months after appointment. 00:06:47.101 --> 00:06:49.831 The expectation is for a federally insured credit union to develop a 00:06:49.831 --> 00:06:52.621 succession plan that is consistent with its size and its complexity. 00:06:53.251 --> 00:06:56.681 As an aid, the proposed rule includes a sample template for a succession 00:06:56.681 --> 00:07:00.291 plan that may be appropriate for some smaller federally insured credit unions. 00:07:00.611 --> 00:07:02.841 So, all federally insured credit unions would benefit from it. 00:07:03.611 --> 00:07:04.891 This concludes our presentation. 00:07:04.941 --> 00:07:07.031 We would be happy to address any questions that you have. 00:07:08.011 --> 00:07:09.811 Chairman Todd Harper: John, deeply impressed that you delivered 00:07:09.811 --> 00:07:11.091 that with just one breath. 00:07:11.091 --> 00:07:18.421 Um, and Ariel, thank you for your presentation on the revised proposed 00:07:18.421 --> 00:07:19.911 succession planning rulemaking. 00:07:20.421 --> 00:07:23.901 This new proposal would require federally insured credit union boards 00:07:24.011 --> 00:07:28.471 of directors to establish succession planning process for key positions. 00:07:28.916 --> 00:07:31.516 This latest proposal also builds on our prior efforts 00:07:31.516 --> 00:07:33.216 to issue a rule in this area. 00:07:33.616 --> 00:07:38.206 And as one of the commenters in our prior rulemaking, uh, noted, the costs 00:07:38.206 --> 00:07:43.276 associated with this rulemaking are, quote, a burden worth bearing, unquote. 00:07:43.711 --> 00:07:46.961 I could not agree more and strongly support this rulemaking. 00:07:47.581 --> 00:07:52.091 One of the NCUA's supervisory priorities for 2023 was a review 00:07:52.091 --> 00:07:55.511 of the credit union's approach to succession planning for senior leaders, 00:07:55.771 --> 00:07:59.141 including any written succession plan the credit union established. 00:07:59.521 --> 00:08:03.601 In a broader analysis of this exam priority for a large subset of 00:08:03.601 --> 00:08:08.281 examined credit unions, we found that roughly one in four credit unions 00:08:08.531 --> 00:08:13.786 either lacked Uh, succession plan or had an inadequate succession plan. 00:08:14.146 --> 00:08:16.746 That finding demonstrates our need to act now. 00:08:17.066 --> 00:08:20.636 Without a rule, we can only encourage credit unions to adopt effective 00:08:21.026 --> 00:08:24.206 succession plans through exam findings. 00:08:24.436 --> 00:08:28.366 A rule would allow us to require such planning through a document of resolution. 00:08:29.006 --> 00:08:32.036 The continued health and success and diversity of the credit union 00:08:32.036 --> 00:08:34.106 system requires foresight by all. 00:08:34.446 --> 00:08:37.726 That includes the NCUA and the credit union leaders who serve as 00:08:37.726 --> 00:08:39.266 the stewards of their member owned. 00:08:39.641 --> 00:08:42.271 Uh, their members, owners, financial security. 00:08:42.791 --> 00:08:46.261 After all, as Benjamin Franklin once reportedly said, if you 00:08:46.261 --> 00:08:48.281 fail to plan, you plan to fail. 00:08:48.731 --> 00:08:51.521 Therefore, it isn't surprising that the term succession planning 00:08:51.761 --> 00:08:55.651 includes the word success in the first seven letters of the phrase. 00:08:56.326 --> 00:08:59.716 Regardless of the economic environment, the consolidation of credit unions has 00:08:59.716 --> 00:09:02.136 been a constant over several decades. 00:09:02.436 --> 00:09:06.806 One reason why, and Ariel, you noted this, so many mergers are occurring is the 00:09:06.806 --> 00:09:10.826 absence of effective succession planning, especially in smaller credit unions. 00:09:11.116 --> 00:09:14.716 We see that factor frequently cited as a reason for a merger. 00:09:15.286 --> 00:09:19.076 With this new proposal, the NCUA has revised its 2022 succession 00:09:19.076 --> 00:09:22.246 planning proposal to account for the public comments we received. 00:09:22.726 --> 00:09:27.286 Several commenters have asked for greater details and specifics in the proposal. 00:09:27.701 --> 00:09:30.071 This proposal provides those specifics. 00:09:30.291 --> 00:09:34.341 What's more, the revised proposal the Board is considering today would 00:09:34.341 --> 00:09:38.181 strengthen succession planning efforts of both Federal Credit Unions and Federally 00:09:38.181 --> 00:09:40.281 Insured State Chartered Credit Unions. 00:09:40.691 --> 00:09:43.871 Generally, the proposed rule would require all Federally Insured Credit 00:09:43.881 --> 00:09:48.051 Unions to have a succession plan that covers the Board of Directors, the 00:09:48.051 --> 00:09:55.266 Supervisory Committee, and And in any other personnel, the Board of Directors 00:09:55.266 --> 00:10:00.216 deems critical given the credit union's size, complexity, or risk of operations. 00:10:00.586 --> 00:10:04.006 The succession plan would also address the members of the credit 00:10:04.006 --> 00:10:07.706 union, uh, credit committee and loan offices where such officials are 00:10:07.706 --> 00:10:09.716 involved in the daily review of loans. 00:10:10.096 --> 00:10:13.986 And the Credit Union's Board of Directors would be required to review the succession 00:10:13.986 --> 00:10:16.326 plan no less than annually, as noted. 00:10:16.326 --> 00:10:16.341 it. 00:10:17.081 --> 00:10:21.611 In a prior role before joining the NCUA board, I served as a board member and 00:10:21.611 --> 00:10:27.041 officer for a small non profit with a budget of approximately 600, 000 a year. 00:10:27.551 --> 00:10:32.081 Without any contractors or money spent, that board was able to research, 00:10:32.081 --> 00:10:36.301 develop, and approve an effective succession plan within just a few months. 00:10:36.571 --> 00:10:40.241 And that succession plan proved effective a short time later when 00:10:40.241 --> 00:10:41.841 the executive director departed. 00:10:42.326 --> 00:10:44.686 All credit unions would benefit from having effective 00:10:44.686 --> 00:10:46.236 succession plans in place. 00:10:46.786 --> 00:10:50.786 As part of this latest proposal, the NCUA has developed a draft template. 00:10:50.796 --> 00:10:54.376 This is an important piece for use by smaller credit unions. 00:10:54.626 --> 00:10:57.366 The NCUA Board would like to receive comments from credit union 00:10:57.366 --> 00:10:59.426 stakeholders on the template as well. 00:10:59.756 --> 00:11:03.066 While the proposed rule would not make it mandatory for credit unions 00:11:03.066 --> 00:11:07.211 to use the NCUA template, the NCUA Board recognizes that this Some 00:11:07.211 --> 00:11:10.561 credit unions may experience a cost if they don't already have a 00:11:10.561 --> 00:11:12.911 succession planning process in place. 00:11:13.271 --> 00:11:15.921 This template is intended to reduce the time and effort 00:11:16.151 --> 00:11:17.751 to develop a succession plan. 00:11:18.191 --> 00:11:22.181 Any feedback from stakeholders to improve the template would be very helpful. 00:11:22.791 --> 00:11:27.011 The NCOA expects a credit union would develop a succession plan that is 00:11:27.011 --> 00:11:29.431 consistent with its size and complexity. 00:11:29.781 --> 00:11:33.451 Therefore, smaller institutions may have a simple succession plan that 00:11:33.451 --> 00:11:35.541 addresses a few key leadership positions. 00:11:35.596 --> 00:11:40.116 more complex institutions would have more extensive plans for 00:11:40.116 --> 00:11:41.566 a variety of critical roles. 00:11:42.151 --> 00:11:46.181 In either instance, the succession plan must consider how the selection, 00:11:46.201 --> 00:11:50.321 skill, experience, and diversity of the covered employees collectively 00:11:50.351 --> 00:11:54.481 and individually promote the safe and sound operation of the credit union. 00:11:55.201 --> 00:11:56.781 And I can't say this enough. 00:11:57.201 --> 00:12:01.581 Succession planning is vital to the long term success of any 00:12:01.601 --> 00:12:04.041 institution, including credit unions. 00:12:04.501 --> 00:12:08.321 A credit union board's failure To plan for the transition of its management 00:12:08.321 --> 00:12:12.741 and key decision makers could come with high costs, including the potential 00:12:12.801 --> 00:12:16.901 for an unanticipated merger of the credit union if key personnel depart. 00:12:17.401 --> 00:12:22.101 In my view, it's better to maintain many small credit unions serving a wide 00:12:22.101 --> 00:12:27.041 variety of purposes and niche markets than continuing to consolidate credit 00:12:27.051 --> 00:12:29.591 unions into ever larger institutions. 00:12:30.296 --> 00:12:36.106 What's more, a credit union's failure to adequately plan for its succession 00:12:36.336 --> 00:12:39.696 can pose risks to the system as a whole and the share insurance fund, 00:12:39.986 --> 00:12:41.886 which the NCUA is tasked to protect. 00:12:42.306 --> 00:12:46.126 For these reasons, this revised succession planning proposal is an important 00:12:46.126 --> 00:12:50.896 step to ensuring credit unions plan for and are successful in the future. 00:12:51.556 --> 00:12:54.716 One last thing that I do want to add, um, uh, before I 00:12:54.746 --> 00:12:56.154 recognize the Vice Chairman, Mr. 00:12:56.154 --> 00:12:56.181 Chairman. 00:12:56.641 --> 00:12:59.741 Please know that we are very open to changes in this. 00:12:59.821 --> 00:13:04.801 We first proposed a rule that was relatively easy, 00:13:04.961 --> 00:13:06.641 relatively non prescriptive. 00:13:06.691 --> 00:13:08.781 This rule is a little bit more prescriptive. 00:13:09.101 --> 00:13:13.031 If we need to move it back one way or the other, dial it up, dial it down, 00:13:13.271 --> 00:13:16.881 I am certainly open to working with my fellow board members on that point. 00:13:17.541 --> 00:13:20.301 This proposal will be open for a 60 day comment period. 00:13:20.606 --> 00:13:23.636 And I encourage all interested stakeholders to provide 00:13:23.636 --> 00:13:24.666 substantive comments. 00:13:24.946 --> 00:13:27.926 That concludes my remarks, and I now recognize the Vice Chairman. 00:13:29.196 --> 00:13:29.686 Vice Chairman Kyle Hauptman: Thank you, sir. 00:13:30.206 --> 00:13:31.966 And thank you for your presentation, Ariel and John. 00:13:32.016 --> 00:13:35.576 I appreciate the hard work staff has put into this proposed rule and, uh, updating 00:13:35.576 --> 00:13:37.156 from the one we did two years ago. 00:13:37.716 --> 00:13:41.146 Uh, I also agree, successor planning is important and recognize it's 00:13:41.146 --> 00:13:43.956 a real challenge for some credit units, especially smaller ones, 00:13:44.386 --> 00:13:47.006 uh, and I appreciate the intent to assist small credit units. 00:13:47.046 --> 00:13:49.626 I'm not convinced this rulemaking is the best approach. 00:13:49.831 --> 00:13:52.741 In fact, I'm concerned regulation in this area could make things more difficult. 00:13:53.351 --> 00:13:57.401 In January 2022, I voted in favor of a proposed rule on succession planning, 00:13:57.401 --> 00:14:01.391 partly because I was genuinely interested in hearing from the stakeholders. 00:14:03.161 --> 00:14:07.601 I appreciate the 26 commenters who shared their thoughts and ideas, although 00:14:07.601 --> 00:14:10.891 the proposed rule we're talking about today is not the same one as 2022. 00:14:11.451 --> 00:14:14.911 Stakeholder comments from then have helped shape my decision on this new rule. 00:14:15.381 --> 00:14:17.631 Today's rule is almost twice the size of the previous one. 00:14:17.761 --> 00:14:19.151 It now includes state chartered. 00:14:27.446 --> 00:14:31.106 This is one reason why most of the comments have been negative, both 00:14:31.106 --> 00:14:36.596 on the old one and, and through more informal channels, um, on this new one. 00:14:37.726 --> 00:14:40.766 This plan also includes a comprehensive template intended to 00:14:40.776 --> 00:14:42.086 make things easier for credit unions. 00:14:42.336 --> 00:14:43.086 I appreciate the effort put in. 00:14:44.611 --> 00:14:46.311 I fear it may be daunting for many. 00:14:46.861 --> 00:14:49.881 Additional data was included to justify the need for a rule, but many of the 00:14:49.881 --> 00:14:53.661 commenters pointed out the data on murders went back 10 years and lacked the rigor 00:14:53.661 --> 00:14:55.371 necessary to draw accurate conclusions. 00:14:55.771 --> 00:15:00.401 Succession planning was included in the 2023 Supervisory Priorities and 00:15:00.401 --> 00:15:04.291 in the 2022 CAMELS Letter, and I'm not sure if we've measured those results. 00:15:04.691 --> 00:15:07.131 How many more credit unions added or improved their succession 00:15:07.131 --> 00:15:08.461 plans because of that guidance? 00:15:09.341 --> 00:15:10.361 Do you have a handle on that? 00:15:12.246 --> 00:15:13.396 We don't have the analysis. 00:15:14.346 --> 00:15:17.496 Without measuring that impact, we can't claim the guidance was ineffective. 00:15:17.936 --> 00:15:20.456 Nor can we assume that new guidance will be more effective. 00:15:20.576 --> 00:15:20.596 We 00:15:22.676 --> 00:15:25.776 certainly can't conclude that this much longer rule of more paperwork 00:15:25.776 --> 00:15:28.156 would be more effective than the guidance which we haven't even 00:15:28.156 --> 00:15:29.406 looked at to see if it did anything. 00:15:29.776 --> 00:15:32.906 I'm inclined to agree with my former colleague, Rodney Hood, who, in 00:15:32.906 --> 00:15:36.216 voting against that proposal in 2021, said guidance is a better 00:15:36.216 --> 00:15:37.546 way to address succession planning. 00:15:37.656 --> 00:15:40.846 I recall a small credit union CEO, I believe from one of the southern states, 00:15:41.266 --> 00:15:44.256 telling me that if we passed a succession planning rule, they would immediately 00:15:44.256 --> 00:15:45.466 look to merge with another credit union. 00:15:47.426 --> 00:15:49.046 That would reduce the number of credit unions. 00:15:49.636 --> 00:15:55.216 Not keep it higher because they felt unable to satisfy the NCUA's requirements. 00:15:55.666 --> 00:15:57.456 They would promote murders, not reduce them. 00:15:58.116 --> 00:16:00.656 We also heard from credit unions that have successfully managed 00:16:00.686 --> 00:16:04.496 leadership transitions but were still against the 2022 proposed rule. 00:16:05.276 --> 00:16:06.186 Their reasoning was twofold. 00:16:06.196 --> 00:16:09.446 One, the rule would just be another burden during exams. 00:16:09.746 --> 00:16:14.136 And two, their prior successions that went very well didn't necessarily 00:16:14.136 --> 00:16:18.016 follow what they would have written if NCUA had had a rule back then. 00:16:19.116 --> 00:16:21.556 They'd feel pressured to follow their plan that they wrote. 00:16:21.966 --> 00:16:25.736 Or be penalized for not taking their plan seriously, because they 00:16:25.736 --> 00:16:29.766 would have on the record a plan they gave to their regulator insurer. 00:16:30.056 --> 00:16:32.166 The data didn't follow at all, so what's the point of the next one? 00:16:33.296 --> 00:16:36.436 Examiners already have the authority to question the sufficiency of a federally 00:16:36.436 --> 00:16:39.676 insured credit union's plan to manage vacancies and executive positions. 00:16:39.976 --> 00:16:42.596 This authority is valid in connection to safety and soundness and 00:16:42.596 --> 00:16:43.886 should be considered during exams. 00:16:44.406 --> 00:16:49.506 However, mandating a prescribed succession plan and the paperwork and process, 00:16:49.926 --> 00:16:51.506 it goes beyond safety and soundness. 00:16:51.526 --> 00:16:53.686 We're not talking about succession planning, we're talking about fulfilling 00:16:53.686 --> 00:16:55.336 NCUA's paperwork requirements. 00:16:55.846 --> 00:16:59.396 The people who are very good at succession planning still object to our rule. 00:17:00.396 --> 00:17:02.576 I agree with commenters that regulatory authority should not 00:17:02.576 --> 00:17:04.466 substitute for sound board governance. 00:17:04.806 --> 00:17:08.696 It should not replace or infringe upon the fiduciary duty of the board of directors. 00:17:09.246 --> 00:17:13.586 Simply requiring a succession plan documentation will not address 00:17:13.586 --> 00:17:16.496 the root cause of difficulties in finding qualified candidates. 00:17:17.026 --> 00:17:20.506 Ultimately, succession planning is a key responsibility of management. 00:17:21.631 --> 00:17:23.721 Credit union leadership must address successional planning, 00:17:23.761 --> 00:17:24.881 even if it is difficult. 00:17:25.801 --> 00:17:29.661 The cooperative business model is meant to give individual members a greater choice 00:17:29.661 --> 00:17:31.101 regarding their credit union's direction. 00:17:31.111 --> 00:17:35.081 When members are forced to vote for a merger due to the lack of CEO succession 00:17:35.081 --> 00:17:38.811 plan, they lose that choice and ultimately they lose that native credit union. 00:17:39.251 --> 00:17:40.971 There's nothing inherently wrong with mergers, even as 00:17:40.971 --> 00:17:42.031 part of a succession plan. 00:17:42.761 --> 00:17:45.651 However, mergers should be deliberate, intentional, and supported by membership. 00:17:46.301 --> 00:17:51.551 The FDIC and the OCC have issued guidance on succession planning, with the OCC 00:17:51.551 --> 00:17:55.101 suggesting that it be a regular topic of discussion among the Board of Directors. 00:17:56.741 --> 00:17:58.881 When considering any proposed rule, I'm concerned about the 00:17:58.881 --> 00:18:01.591 needless burdens it may place on already stressed credit unions. 00:18:01.901 --> 00:18:05.631 So, today's vote is not about whether succession planning is important. 00:18:06.741 --> 00:18:11.371 Today's vote is not about whether some credit unions out there really ought to 00:18:11.381 --> 00:18:12.771 think more about succession planning. 00:18:13.861 --> 00:18:17.656 It's about whether this rule, as written We'll do more good than harm. 00:18:18.386 --> 00:18:21.376 I don't feel it passes that test, thus I'll be voting against it. 00:18:21.606 --> 00:18:22.043 Thank you, Mr. 00:18:22.043 --> 00:18:22.280 Chairman. 00:18:22.280 --> 00:18:23.156 That concludes my remarks. 00:18:23.526 --> 00:18:25.626 Chairman Todd Harper: I, as always, I appreciate the 00:18:25.626 --> 00:18:27.276 thoughtfulness of the gentleman. 00:18:27.526 --> 00:18:28.406 Board Member Otsuka. 00:18:29.206 --> 00:18:29.756 Board Member Tanya Otsuka: Thank you. 00:18:30.296 --> 00:18:32.586 And thanks, John and Ariel, for your presentation on the 00:18:32.586 --> 00:18:34.136 NPR and succession planning. 00:18:34.996 --> 00:18:36.476 Appreciate the work that you guys put in. 00:18:36.996 --> 00:18:37.586 Um. 00:18:38.151 --> 00:18:41.561 I also want to thank Chair Harper for re proposing this rule and creating 00:18:41.561 --> 00:18:47.211 the opportunity for us, uh, to see comments on the most effective 00:18:47.211 --> 00:18:49.751 version, um, which I, I do support. 00:18:50.581 --> 00:18:52.331 So bear with me with this anecdote. 00:18:52.341 --> 00:18:53.551 It does mention a bank. 00:18:54.051 --> 00:18:59.921 Um, back in 2019, I recall a conversation at a community bank conference 00:18:59.951 --> 00:19:01.531 with the CEO of a very small bank. 00:19:02.281 --> 00:19:04.871 He explained that the biggest problem facing his institution was 00:19:04.871 --> 00:19:08.361 attracting talent and training staff to prepare for a change in leadership. 00:19:08.931 --> 00:19:11.561 He and his board were approaching retirement and he wanted to be 00:19:11.561 --> 00:19:15.281 sure he could ensure the long term viability of the institution with 00:19:15.281 --> 00:19:16.791 the right people taking the reins. 00:19:17.521 --> 00:19:21.241 And since that time, I mean, that, I remember that conference, I remember 00:19:21.241 --> 00:19:22.681 that conversation very vividly. 00:19:22.721 --> 00:19:27.091 It really resonated with me because since that time, I have had so many similar 00:19:27.091 --> 00:19:32.651 conversations with credit union executives and, and other credit union leaders 00:19:32.651 --> 00:19:34.341 who are facing this same challenge. 00:19:35.341 --> 00:19:38.031 Um, Transcripts As Chair Harper mentioned, one of the goals of 00:19:38.031 --> 00:19:41.011 the rule is to help ensure the continuity of small credit unions. 00:19:41.621 --> 00:19:44.351 Small credit unions are often left with little choice but to merge when their 00:19:44.351 --> 00:19:47.541 leadership retires or leaves because of the difficulties associated with 00:19:47.541 --> 00:19:49.591 finding new talent on short notice. 00:19:50.571 --> 00:19:54.231 Or worse, and I think this is where this rule can play a role, the 00:19:54.231 --> 00:19:58.081 lack of leadership and the lack of thoughtfulness results in serious 00:19:58.091 --> 00:20:02.161 financial and operational problems, which hurts members and puts the viability 00:20:02.161 --> 00:20:03.961 of the entire institution at risk. 00:20:04.551 --> 00:20:08.171 And that is what can also put the Share Insurance Fund at risk. 00:20:08.861 --> 00:20:12.131 You know, I know it's been discussed, but yes, there are many credit unions 00:20:12.131 --> 00:20:16.571 who are taking succession planning seriously, who are doing that, who are 00:20:16.571 --> 00:20:21.291 thinking ahead, but unfortunately there are some that are not and we've seen that. 00:20:23.111 --> 00:20:28.891 Um, and so I think that, that is where our responsibility really comes into play. 00:20:29.641 --> 00:20:33.211 And while of course our examiners already look at management as part 00:20:33.211 --> 00:20:37.751 of the supervisory process, a rule provides clearer guidance to both 00:20:37.751 --> 00:20:44.081 examiners and credit unions, um, on what is expected and how to assess that. 00:20:45.071 --> 00:20:47.261 for those sound managerial practices, 00:20:49.721 --> 00:20:54.601 ensuring that credit unions don't fail due to lack of leadership squarely 00:20:54.601 --> 00:20:59.121 within, um, our responsibility of ensuring a safe and sound system. 00:20:59.761 --> 00:21:06.516 Um, you know, I, I know that we often, we are concerned about, you know, You know, 00:21:06.696 --> 00:21:08.466 more paperwork, nobody likes paperwork. 00:21:09.056 --> 00:21:11.586 Um, I also don't like paperwork. 00:21:12.626 --> 00:21:16.156 But I think we have a responsibility as regulators to make sure that 00:21:16.156 --> 00:21:17.746 our share insurance fund is safe. 00:21:18.056 --> 00:21:19.936 And that's ultimately where the buck stops. 00:21:20.896 --> 00:21:24.666 The proposed rule would require federal credit unions to establish and adhere 00:21:24.666 --> 00:21:26.456 to processes for succession planning. 00:21:26.796 --> 00:21:30.336 This is a gap in our regulatory framework and one this proposal begins to fill. 00:21:30.356 --> 00:21:34.061 And again, this Chair Harper's point, you know, I am interested in seeking 00:21:34.061 --> 00:21:35.751 comments on this revised version. 00:21:36.361 --> 00:21:39.231 It would require credit unions to be proactive in thinking through 00:21:39.231 --> 00:21:42.501 how to maintain critical leadership positions such as officers of the 00:21:42.501 --> 00:21:46.001 board and senior management officials to ensure continuity of operations. 00:21:46.721 --> 00:21:49.001 This rule is not extremely prospective. 00:21:50.026 --> 00:21:54.486 Prescriptive, excuse me, but instead provides basic standards for developing 00:21:54.486 --> 00:21:56.016 an effective succession plan. 00:21:56.556 --> 00:21:59.586 And again, the NCUA understands the differing needs of credit unions, 00:21:59.596 --> 00:22:04.636 especially small and low income designated credit unions, um, and 00:22:04.636 --> 00:22:08.976 I, I understand that the staff wrote the rule in mind, with that in mind, 00:22:09.026 --> 00:22:10.766 uh, to provide enough flexibility. 00:22:11.896 --> 00:22:14.896 And in that vein, I would like to highlight that although it is not part 00:22:14.916 --> 00:22:19.096 of the regulatory text, you know, I think it is important for MDIs to account 00:22:19.096 --> 00:22:23.536 for retaining their MDI status as they think about succession planning, as the 00:22:23.536 --> 00:22:28.176 composition of their leadership team is a criteria to being designated as an MDI. 00:22:28.696 --> 00:22:32.586 Um, I mentioned this at the top, the board recently reaffirmed our commitment 00:22:32.596 --> 00:22:36.636 to preserving MDIs and this is another avenue through which we can execute this 00:22:36.646 --> 00:22:41.291 goal and think about, um, you know, the preservation of MDIs because I think they 00:22:41.291 --> 00:22:43.981 are so important to so many communities. 00:22:44.461 --> 00:22:47.151 So just, um, a couple questions for staff. 00:22:47.201 --> 00:22:51.101 Um, many times we focus on how our rules, including this one, 00:22:51.101 --> 00:22:55.551 will, um, uh, sorry, excuse me. 00:22:55.861 --> 00:23:01.171 Many times we focus on how our rules will affect credit unions based on cost. 00:23:01.171 --> 00:23:02.721 How much will this cost credit unions? 00:23:03.511 --> 00:23:05.221 Um, which I think is an important. 00:23:07.071 --> 00:23:12.471 However, can you speak to the potential savings and benefits of this rule, um, 00:23:12.591 --> 00:23:18.551 and ways that they can, it can provide credit unions, uh, long term benefits? 00:23:18.921 --> 00:23:21.851 How might this outweigh the costs associated with developing 00:23:21.851 --> 00:23:25.441 these plans, or at least at the initial, uh, at the outset? 00:23:26.531 --> 00:23:27.231 Staff 1: for your question. 00:23:27.491 --> 00:23:30.241 Creating succession plans helps credit unions prepare for key, 00:23:30.631 --> 00:23:33.141 Managerial changes, whether they're expected or unexpected. 00:23:34.531 --> 00:23:37.681 Some potential benefits of succession planning include maintaining business 00:23:37.711 --> 00:23:41.201 continuity, reducing disruptions in operations and member services, 00:23:41.611 --> 00:23:47.671 knowledge transfer amongst employees, cross training, and employee retention. 00:23:48.431 --> 00:23:51.731 These benefits can provide a more seamless transition following the loss 00:23:51.741 --> 00:23:54.421 of a key employee, both internally and for credit union membership. 00:23:55.131 --> 00:23:59.181 As you know, the proposed succession plan requirements will impose some compliance 00:23:59.181 --> 00:24:00.501 costs on federally insured credit unions. 00:24:00.531 --> 00:24:03.161 However, we believe the benefits of a strengthened planning 00:24:03.161 --> 00:24:04.371 process outweigh the costs. 00:24:05.331 --> 00:24:08.351 While the benefits of the regulatory changes are difficult to quantify at 00:24:08.351 --> 00:24:12.291 present, should the rule be finalized, we believe that its cost effectiveness 00:24:12.311 --> 00:24:13.721 will be demonstrated over time. 00:24:13.961 --> 00:24:16.641 We also know that the rule contains several elements that mitigate the 00:24:16.641 --> 00:24:18.251 potential costs on credit unions. 00:24:18.301 --> 00:24:22.061 For example, the rule provides a sample template that may be used by 00:24:22.061 --> 00:24:23.521 credients in developing their plans. 00:24:23.581 --> 00:24:26.791 The NCOA also offers training and other resources to aid credients in 00:24:26.791 --> 00:24:28.061 developing their succession plans. 00:24:28.161 --> 00:24:31.291 For example, the NCOA has posted a video series on succession planning 00:24:31.301 --> 00:24:32.431 on its learning management system. 00:24:33.441 --> 00:24:33.801 Board Member Tanya Otsuka: Great. 00:24:34.071 --> 00:24:34.851 Thank you for that. 00:24:34.871 --> 00:24:36.931 Um, I appreciate that. 00:24:37.011 --> 00:24:41.331 Um, so I also think it's important for credit unions to understand 00:24:41.381 --> 00:24:45.451 what the expectations are when it comes to how we evaluate management. 00:24:45.726 --> 00:24:48.486 during the examination and supervisory process, and that 00:24:48.486 --> 00:24:49.806 includes succession planning. 00:24:50.366 --> 00:24:55.926 Um, can you explain how this proposed rule would provide clarity for credit unions 00:24:55.936 --> 00:24:57.796 and examiners who are examining them? 00:24:58.926 --> 00:24:59.746 Staff 1: Thank you for the question. 00:24:59.916 --> 00:25:03.256 Currently, Letter to Credit Unions 22 CU 05 provides that succession 00:25:03.256 --> 00:25:06.836 planning is a factor to consider when assessing the management of a credit 00:25:06.836 --> 00:25:08.376 union under the CAMELS rating system. 00:25:08.576 --> 00:25:11.756 Accordingly, the N2A currently assesses succession planning under the CAMELS 00:25:11.756 --> 00:25:15.116 management component as part of the overall safety and soundness evaluation 00:25:15.136 --> 00:25:16.286 of the credit union's operations. 00:25:16.641 --> 00:25:20.091 However, there is no regulation requiring federally insured credeans to implement 00:25:20.091 --> 00:25:23.821 a formal written succession plan and as a result, a credean's failure to 00:25:23.821 --> 00:25:28.631 establish a plan or the inadequacy of its succession planning process will not in 00:25:28.631 --> 00:25:32.841 and of itself, uh, warrant an examiner finding or a document and resolution item. 00:25:33.541 --> 00:25:35.071 Uh, the, the absence, 00:25:37.241 --> 00:25:40.021 the absence of the specific regulation on this topic also means that there 00:25:40.031 --> 00:25:43.431 are no requirements as to the, what constitutes an acceptable 00:25:43.451 --> 00:25:46.691 succession plan and the regulation would therefore establish a needed. 00:25:47.046 --> 00:25:49.806 Clearly articulated and consistently enforceable set of 00:25:49.806 --> 00:25:50.766 succession planning standards. 00:25:51.966 --> 00:25:52.426 Board Member Tanya Otsuka: Gotcha. 00:25:52.486 --> 00:25:53.216 Thank you for that. 00:25:53.216 --> 00:25:57.306 Thank you for your responses and adding further context as to, uh, 00:25:57.316 --> 00:26:01.536 why we are proposing this rule, um, and why it's needed to help preserve 00:26:01.536 --> 00:26:03.056 our system of cooperative credit. 00:26:03.476 --> 00:26:04.676 Um, thanks again. 00:26:04.676 --> 00:26:05.836 I turn it back over to Chair 00:26:05.846 --> 00:26:06.266 Chairman Todd Harper: Harper. 00:26:06.546 --> 00:26:07.206 Thank you so much. 00:26:07.486 --> 00:26:11.916 Um, one question I want to build on off of, uh, the questions that you had. 00:26:12.551 --> 00:26:16.911 Um, oftentimes I hear with small credit unions, the manager of 30 00:26:16.921 --> 00:26:19.331 years announces she's going to retire. 00:26:19.941 --> 00:26:26.491 Her salary has remained relatively flat and isn't keeping up with market rates. 00:26:26.891 --> 00:26:31.721 Could a benefit of this proposal be benchmarking and helping to the 00:26:31.721 --> 00:26:35.471 credit union to ensure that it's, it's growing and building itself 00:26:35.471 --> 00:26:38.821 in a way and its budget that it can attract talent at a later point? 00:26:39.641 --> 00:26:40.221 Staff 1: Absolutely. 00:26:40.231 --> 00:26:42.431 Understanding the cost of replacing the skills. 00:26:42.741 --> 00:26:45.931 It's unnecessary to meet the, the roles that that person, that key 00:26:45.931 --> 00:26:47.511 employee fills is, is absolutely. 00:26:48.011 --> 00:26:50.931 Um, necessary for credit unions to be forward looking and, and not be 00:26:50.931 --> 00:26:53.161 looking at that when the time comes. 00:26:53.471 --> 00:26:53.621 Chairman Todd Harper: Yeah. 00:26:53.621 --> 00:26:57.901 I, I also know that there was an initiative a few years ago, um, to 00:26:57.911 --> 00:27:02.901 bring in young NBAs who had recently completed their training into the, 00:27:02.911 --> 00:27:05.281 uh, the credit union, uh, system. 00:27:05.541 --> 00:27:09.851 Uh, small credit unions are a perfect place for a young, uh, person with 00:27:09.851 --> 00:27:13.651 executive training to, to cut their teeth and, and, and to grow overall. 00:27:13.691 --> 00:27:14.071 Five minutes. 00:27:14.071 --> 00:27:14.086 Okay. 00:27:14.246 --> 00:27:14.896 Yeah, of course. 00:27:14.966 --> 00:27:16.166 Vice Chairman Kyle Hauptman: Uh, only because you jumped in. 00:27:16.226 --> 00:27:17.226 Yeah, no, absolutely. 00:27:17.656 --> 00:27:21.636 Um, the FDIC has no similar rule, is that correct? 00:27:23.066 --> 00:27:23.506 Okay. 00:27:24.206 --> 00:27:25.716 Tanya, you were with the FDIC for years. 00:27:26.146 --> 00:27:28.646 Do you know why they don't have a rule like this forcing banks to 00:27:28.686 --> 00:27:29.696 fill out this kind of paperwork? 00:27:31.036 --> 00:27:33.946 Board Member Tanya Otsuka: Not off the top of my head, but there are a lot of rules 00:27:33.976 --> 00:27:38.636 that the FDIC doesn't have that we have and that we have that they don't have. 00:27:38.676 --> 00:27:43.606 And so, you know, I think that given some of the things that we've seen, 00:27:43.626 --> 00:27:48.276 you know, Um, with credit unions, I do think that this proposal makes sense for 00:27:48.276 --> 00:27:50.296 us to again solicit more feedback on. 00:27:50.496 --> 00:27:50.996 But yeah. 00:27:51.326 --> 00:27:51.786 But yeah. 00:27:51.996 --> 00:27:54.146 Vice Chairman Kyle Hauptman: We don't have to copy the FDIC by any means. 00:27:54.176 --> 00:27:56.146 I'm actually trying to figure out if it's a good idea. 00:27:56.146 --> 00:27:58.386 When you were at the FDIC, did you advocate for such a rule? 00:28:00.066 --> 00:28:02.376 Board Member Tanya Otsuka: Um, at the, while I was at the FDIC, 00:28:02.416 --> 00:28:04.546 I was a staff attorney and, uh, 00:28:04.926 --> 00:28:05.746 Vice Chairman Kyle Hauptman: no, I did not 00:28:05.796 --> 00:28:06.796 Board Member Tanya Otsuka: advocate for such a rule. 00:28:07.156 --> 00:28:07.186 Vice Chairman Kyle Hauptman: Okay. 00:28:07.236 --> 00:28:10.476 But Congress can put a rule like this any time they wish. 00:28:10.876 --> 00:28:12.796 When you worked for the Chairman of the Senate Bank Committee, 00:28:12.826 --> 00:28:15.356 did you suggest that they put forth legislation to do this? 00:28:18.411 --> 00:28:21.171 Board Member Tanya Otsuka: I don't know how my work on the Senate 00:28:21.181 --> 00:28:23.601 Banking Committee and whether I advocated for something like this 00:28:23.601 --> 00:28:27.241 or not has any bearing on whether I support the proposal right now. 00:28:27.941 --> 00:28:28.901 Vice Chairman Kyle Hauptman: It doesn't have any bearing on it, 00:28:28.901 --> 00:28:30.401 but good ideas are good ideas. 00:28:30.611 --> 00:28:33.771 And one regulatory body forcing them, or Congress can do it. 00:28:33.781 --> 00:28:35.861 We wouldn't even be talking about it if Congress mandated it. 00:28:36.261 --> 00:28:37.751 Uh, we have to do what Congress wants. 00:28:37.931 --> 00:28:39.931 So, I'm just saying if it was a good idea. 00:28:40.626 --> 00:28:44.286 Uh, at another agency, it seems like it would be a good idea here. 00:28:44.306 --> 00:28:48.496 If it was a good idea here, it would be a good idea for Congress to do it. 00:28:48.586 --> 00:28:50.706 Who probably should be making most of these decisions anyway. 00:28:50.766 --> 00:28:51.686 That's what I wanted to mention. 00:28:51.686 --> 00:28:54.376 But, in terms of attracting talent, small credit unions, it is hard. 00:28:54.826 --> 00:28:57.306 One great way to do it is make the job less of a pain. 00:28:57.426 --> 00:28:58.806 A lot of these are labors of love. 00:28:58.806 --> 00:29:00.881 You mentioned a person whose pay hasn't risen in years. 00:29:01.381 --> 00:29:02.561 Hey, would you like to run a credit union? 00:29:02.561 --> 00:29:03.011 How's the pay? 00:29:03.011 --> 00:29:03.611 Not very good. 00:29:03.611 --> 00:29:04.051 What do you do? 00:29:04.061 --> 00:29:06.981 Well, I spent an enormous amount of time filling out paperwork for my regulator 00:29:07.291 --> 00:29:08.851 and rushing to meet their deadlines. 00:29:09.351 --> 00:29:10.851 That's not a job that attracts a lot. 00:29:10.921 --> 00:29:12.621 Why, uh, is it because you're risky? 00:29:12.621 --> 00:29:13.881 No, we have 800, 000 in assets. 00:29:15.301 --> 00:29:17.771 We're a microscopic risk to the fund, but still we are forced 00:29:17.771 --> 00:29:18.621 to do all this paperwork. 00:29:18.761 --> 00:29:22.091 So if we really want to attract talent, we can make the job more attractive and 00:29:22.091 --> 00:29:23.841 it's UA has some role to play in that. 00:29:24.731 --> 00:29:25.161 I'm done now. 00:29:26.291 --> 00:29:29.961 Chairman Todd Harper: Fair enough and, um, just one, uh, two final points. 00:29:29.961 --> 00:29:33.641 One is, Just, just because one agency hasn't acted first doesn't 00:29:33.641 --> 00:29:35.041 mean that we can't act first. 00:29:35.111 --> 00:29:35.591 Absolutely. 00:29:35.871 --> 00:29:41.181 Um, uh, and second, I do want to reiterate this, um, to the Vice Chairman. 00:29:42.201 --> 00:29:47.201 This is an open, fluid process, um, I, you know, at the end of the day where we 00:29:47.201 --> 00:29:49.921 ultimately land with something in final. 00:29:50.261 --> 00:29:53.471 Uh, I, I want to share the commitment that, you know, we will 00:29:53.971 --> 00:29:56.761 continue to have the discussions and where we might be able to land. 00:29:57.061 --> 00:30:00.361 The intent here is, is a good one. 00:30:00.681 --> 00:30:05.221 Um, the execution is what I'm hearing, um, uh, overall. 00:30:05.931 --> 00:30:07.711 Board Member Otsuka, is there a motion? 00:30:08.551 --> 00:30:10.531 Board Member Tanya Otsuka: I move that the board proposed proposed rules 00:30:10.531 --> 00:30:16.081 succession planning 12 C FFR part 7 0 1 and 7 41 for a 60 day comment period as 00:30:16.081 --> 00:30:17.431 attached to the board action memorandum. 00:30:17.581 --> 00:30:19.021 Chairman Todd Harper: Is there a second to the motion? 00:30:20.081 --> 00:30:20.831 Hearing none. 00:30:20.831 --> 00:30:22.031 I second the motion. 00:30:22.151 --> 00:30:23.531 All those in favor say aye. 00:30:23.741 --> 00:30:24.101 Aye. 00:30:24.131 --> 00:30:24.551 Aye. 00:30:24.641 --> 00:30:25.871 All those opposed say nay. 00:30:25.871 --> 00:30:25.901 Aye. 00:30:26.801 --> 00:30:30.791 The ayes have it and let the record show that the motion passes two to one. 00:30:31.901 --> 00:30:32.456 Thank you both. 00:30:32.856 --> 00:30:34.266 Samantha: This concludes this item. 00:30:34.966 --> 00:30:39.126 If your Credit union could use assistance with your exam, reach out to Mark Treichel 00:30:39.126 --> 00:30:41.876 on LinkedIn, or at mark Treichel dot com. 00:30:42.426 --> 00:30:45.046 This is Samantha Shares and we Thank you for listening.