NCUA Region III Director Alonzo Swann Shares Insight on Small CUs, Examination Process, How Katrina Affected his Region

ATLANTA – In the 22 years he’s been with NCUA, Alonzo Swann, who currently serves as the regulator’s Region III director, has seen how the credit unions have grown in their services and delivery methods. As regional director, Swann is responsible for the oversight of the chartering program for federal credit unions and the examination and supervision programs for all federally insured credit unions in Alabama, Florida, Georgia, Indiana, Kentucky, Mississippi, North Carolina, Puerto Rico, Ohio, South Carolina, Tennessee and the Virgin Islands. He joined NCUA as an examiner in Gary, Indiana in 1983 and has held various positions within the agency prior to becoming regional director, including associate regional director of field operations in the Chicago regional office. Outside of credit union land, Swann is currently a lieutenant colonel in the Air Force Reserves and had spent four years on active duty in the U.S. Air Force in England. The married father of three children and four grandchildren recently talked with Credit Union Times about the credit union examination process, Hurricane Katrina’s impact on his region and the future of smaller credit unions. CU Times: Several of the credit unions in Alabama and Mississippi were recently impacted by Hurricane Katrina. Those states are among those under your regional watch. Has your office coordinated anything outside of NCUA’s national office for these credit unions? Swann: Anytime we have a hurricane forecast, we contact federally-insured credit unions to make sure we have up-to-date contact information. They are very aware of our disaster preparedness plan. We want to make sure we get through this together. We had staff in the affected areas (where Katrina struck). Right after (the hurricane hit), we checked to make sure everyone was safe. One examiner did evacuate to the Biloxi area. Eighty percent of Mississippi did not have power. Forty-one federal credit union between the (Mississippi and Alabama) – that was our primary focus. As we speak, all credit unions have been accounted for. This (hurricane) was very different. Remember, we had four last year in Florida. In our case, some people didn’t evacuate. The communications was bad at first. Between us, the leagues, and corproates, we were able to get in touch with everyone. We established a toll-free call center for members. CU Times: What have been some of the most pressing issues for credit unions in your region over the past few years? Swann: Credit unions have become more complex. The challenge is to make sure the management structure and systems keep up with the complexities. Those complexes are driven by member expectations and services and delivery. Information technology has become a big player. Most credit unions have adjusted to those complexities. CU Times: At the African-American Credit Union Coalition’s annual meeting in Atlanta in 2004, you talked about small credit unions and how they will be put under the examiner microscope more so that those that have the means to stay operating, can. Is this still the case and what measures have been made here over the past year or so? Swann: I need to clarify because there was a segue there where I said (the changes) are across the spectrum for all credit unions not just small credit unions. There are a large number of mergers occurring and in my region, it’s been with the smaller credit unions. We wanted to review our process to stem that tide with economic development specialists. We wanted to be sure our regulatory process was not contributing to their mergers. We wanted to be sure we are able to assist them in any way we could. NCUA has a centralized office for small credit union initiatives. CU Times: Your experience with NCUA spans more than 20 years including your start with the agency as an examiner in Gary, Indiana. What would say are some of the most pressing issues for examiners to keep their eyes on today? Swann: We changed our examination process to risk-based examinations. We’re trying to look at the big picture items that affect credit unions. Before, we used to go through a checklist of things and now we look at major components of areas. We focus on major strategic issues and this allows us to focus our time and attention on the most pressing issues in credit unions. It ensures we “major in majors.” CU Times: Are there enough examiners to do the job effectively? Swann: Absolutely. We’re staffed very well and we have plenty of time to do (the exam). We have enough flexibility to adjust priorities. CU Times: Are credit unions hiring more full-time compliance personnel so that they can be ready should NCUA pay a visit? Swann: Not that I’m aware of. From my perspective, they’ve always provided the appropriate attention. I do know that most credit unions are adhering to the regulations. CU Times: The average NCUA examiner – what does his or her professional background look like? Swann: Everyone has at least nine hours of accounting. It varies. We’re not looking for one specific area. We look at business majors across the spectrum. We’ve taken finance majors and straight business majors. We’re getting a pretty good balance. CU Times: Is the examination process more of a challenge when larger, more sophisticated credit unions take in more “plain vanilla” credit unions? Swann: When we moved to risk-based exams, we developed a concept called subject matter examiner. We focused training down several paths to get more specialization in other areas such as information technology, capital markets, specialized lending, record keeping, internal control and small credit unions. The benefit is when you go into a complex credit union, you can design an exam team based on the complexities of the credit union. We can look for additional folks that can be brought on board with that additional training. CU Times: Membership for credit unions appears to be on a slight rise after a few years of stagnancy. What needs to happen to make the numbers increase? Swann: Most are doing a good job, at least that’s we see in our region. Understanding field of membership, addressing service and delivery methods that target anyone within the (FOM) is important. [email protected]