Detailed Board Training Course Outline

Please keep a copy of this outline within your training records to show to NCUA or other examiners.

The Credit Union Business Model

  1. How do you form a credit union?
  2. State or Federal
    1. Field of membership
  3. Dollars and cents
  4. Business model
    1. Highly regulated


Credit Unions and our Industry

  1. History
    1. Birth of the movement
      1. Europe
      2. Canada
    2. History in United States
      1. First credit union
      2. Major milestones
  2. Nature
    1. Cooperative
    2. Common bond
    3. Democratically-controlled
    4. Volunteer leadership
    5. Limited powers
    6. Taxation
    7. Products and services
  3. Organization
    1. Elected board of directors
    2. Supervisory committee
  4. Credit Union Language
    1. Members versus customer
    2. Dividends versus interest
    3. Shares versus deposit


Role of the Board

  1. The Board of directors
    1. General responsibility
    2. Who is eligible
      1. Nominating committee
      2. Bylaws (explain bylaws)
    3. How are they elected
    4. Number, terms, vacancies
    5. Compensation
  2. Specific duties
    1. Membership applications
    2. Fidelity coverage
    3. Fill vacancies on board and credit committee
    4. Appoint members of supervisory committee/credit committee
    5. Investments
    6. Number and class of share accounts
    7. Loans, loan officers and lending policies
    8. Interest refunds
    9. Loan officers
    10. Par value of shares
    11. Hire and compensate officers and employees
    12. Executive committees
    13. Establish share rates
    14. Establish all necessary internal controls
    15. Do all other things "necessary and proper."
  3. Corporate Governance
    1. Hiring and working with CEO
    2. Strategic planning
    3. The board meeting
      1. The "Board Pack"
      2. Key ratios
      3. Rules governing meetings
    4. Risk management
    5. Overview: Too little or too much?
    6. Relationship with supervisory committee
    7. Member special meetings


Fiduciary Duties and Ethics

  1. Ethics
    1. What are NCUA's expectations?
    2. Why should we care?
      1. U.S. Sentencing Commission
      2. Reputation risk
      3. Member expectations
    3. The Bank Bribery Act
  2. Fiduciary duties
    1. What are fiduciary duties?
    2. Which apply to credit union volunteers?
      1. Duty of care
      2. Duty of loyalty
      3. Other duties?
      4. Overview of NCUA's fiduciary duties for federal credit union directors rule
    3. Liability issues


How Credit Unions are Examined

  1. Why does NCUA examine credit unions?
    1. Protection of insurance fund
    2. Compliance with rules and regulations
  2. Risk-based examination process
    1. Explanation of risk-based exams
      1. Maximize efforts on weakest institutions
      2. Maximize use of agency resources
    2. Minimum areas of examiner review
    3. What examiners will inspect
      1. 5300 call report data
      2. Supervisory committee audits
      3. Bank Secrecy Act compliance
      4. Past exam findings
      5. Credit union policies and procedures
      6. Employee/official interviews
  3. What are they looking for?
    1. Overview of CAMEL rating system
    2. Capital adequacy
    3. Asset quality
    4. Management
    5. Earnings
    6. Liquidity
    7. Your credit union's CAMEL rating and what it means
  4. Joint conferences and exit meetings
    1. Credit union expectations
    2. NCUA responsibilities
    3. Communication during the exam
  5. NCUA administrative powers


How Credit Unions are Regulated

  1. Credit union powers
    1. The Federal Credit Union Act
    2. Explicit and incidental powers
    3. Limitations
  2. What governs credit union operations
    1. NCUA
      1. Federal Credit Union Act
      2. NCUA regulations and guidance
    2. Dual chartering system
    3. Congressional mandates
    4. Other federal regulators
      1. U.S. Department of the Treasury
      2. The IRS
      3. Federal Reserve
      4. Financial Accounting Standards Board
    5. Consumer Financial Protection Bureau
    6. Contracts
    7. Litigation risk
    8. Reputation risk
    9. Risk management
    10. Your credit union
      1. Vision statements
      2. Strategic plan
      3. Ethics guidelines
      4. Appetite for risk
      5. Policies and procedures
  3. Two-way street
    1. Interaction with lawmakers
    2. Interaction with regulators


Managing Risk

  1. Overview of risk and the role of the board in managing it
    1. What is risk
    2. Responsibility of board to manage risk
    3. Examples of how risk adversely affect credit unions
  2. What types of risk affect federal credit unions
    1. Credit risk
    2. Interest rate risk
    3. Liquidity risk
    4. Transactional risk
    5. Compliance risk
    6. Strategic risk
    7. Reputation risk
  3. How does NCUA expect credit unions to manage risk
    1. Risk identification
    2. Risk measurement
    3. Risk control
    4. Risk monitoring
  4. Other areas involving risk management
    1. The Bank Secrecy Act
    2. Information security
    3. Identity theft prevention
    4. Vendor management


Credit Union Financials

  1. Overview
  2. Key account concepts
  3. Financial report ratios
  4. ALM and investments
  5. Interest rate risk
  6. How to manage risk
  7. Important risk management ratios
  8. Policies needed
  9. Liquidity
  10. Key ratios to review
  11. Summary


The Supervisory Committee

  1. The supervisory committee
    1. General responsibility
    2. Who is eligible and how are they selected
    3. Number, terms, vacancies
    4. Compensation
    5. Suspension
  2. Specific duties
    1. The audit
    2. Verification of accounts
  3. Other duties
    1. Internal audit
    2. Resolution of member complaints
    3. Strengthening internal controls
    4. Reviewing management's corrective actions
    5. Special meetings
      1. Removal meetings
      2. Membership meetings


Political Involvement

  1. The credit union as a political being
  2. Lobbying and the role of the board of directors
  3. Two-way street
    1. Interaction with lawmakers


BSA and OFAC

  1. Enforcement actions
  2. Overview of the regulations
  3. A board's responsibility
  4. Ensure your credit union maintains an effective Bank Secrecy Act (BSA)/AML internal control structure
    1. Program requirements
    2. Internal controls
    3. Risk assessment
    4. Recordkeeping
    5. Reporting
    6. Dealing with suspicious activity
    7. Member due diligence
    8. CIP
  5. Audit deficiencies
  6. BSA compliance officer
  7. OFAC laws and regulations
  8. SARs