MAXX Sessions Highlight CECL Prep, Benefits Trends: Onsite Coverage

SPOKANE, Wash. – The Northwest Credit Union Association’s annual convention drew around 1,000 attendees this week, including professionals from credit unions in the league’s three states of Washington, Oregon and Idaho. The first full day of the convention featured sessions led by experts in numerous topics that keep executives up at night, including talent retention and CECL, and concluded with the Credit Unions for Kids Masquerade Auction.

HR Execs Focus on Non-Core Benefits, Generational Needs

Benefits matter to organizations that want to retain their employees – for baby boomers who may want to retire, keeping their benefits is the top reason why they choose to stay at work. In addition, improved benefits is the second most popular motive for any worker to keep their job (after an increase in pay), according to an Aflac survey.

Donna Losch, SVP and senior consultant for Brown & Brown Insurance in Tacoma, Wash., emphasized these facts in her talk that detailed the challenge employers face in trying to develop benefits plans that will meet employees’ needs while staying within budget. She said employers are currently operating in a job seekers’ market where the number of millennials and Gen Zers in the workforce are growing rapidly, with millennials expected to comprise 75% of the workforce in 2025. “Each of those generations brings a different set of values, wants and needs in terms of how they view your benefits package,” she said.

While managing core benefits (pay, health care, retirement and vacation/paid time off) takes up a large portion of HR executives’ energy, Losch said employers are focusing on non-core benefits now more than ever to meet the demands of today’s workers. Popular non-core benefits include:

• Remote work options;
• Unlimited PTO, which Losch noted does not always work well because employees tend to not use their PTO when they’re not forced to;
• Child care benefits through partnerships with local day care centers (onsite day cares tend to carry too many risks);
• Private offices and workspaces (workers have found the “open office” trend to be too distracting, she noted);
• Benefit offerings for part-time workers;
• Student loan repayment;
• Assistance with fertility and adoption services;
• Financial wellness (employees suffering from financial difficulties can become highly distracted at work, Losch said); and
• Small inclusion and recognition efforts, such as a paid lunch or happy hour for employees who have gone the extra mile.

Using the Time Before the CECL Deadline Wisely

The effective date of the Current Expected Credit Loss (CECL) standard may have been delayed until January 2023, but if credit unions want to be fully prepared for the new compliance requirements, they should not slow or procrastinate their efforts, Scott Blakeslee, CECL product director for Visible Equity of Salt Lake City, Utah, warned attendees in his session. He said there are three key things credit unions should be doing to prepare for the CECL standard – which is designed to give financial statement users decision-useful information about a financial institution’s expected credit losses – despite the delay:

1. Get your data ready. “This relates to flexibility and being able to use as many CECL methodologies as possible, so the more data, the better,” Blakeslee said. He encouraged credit unions to look at each CECL method, consider the data requirements, and then look at their own data preparation efforts to see if it’s possible to run parallel calculations for each method.

He also emphasized that credit unions that can answer these three questions about the quality of their data are likely to be in good shape: What variables do I have and not have? Are my balances correct? And, how much historical data do I have stored?

2. Assess CECL methodologies and the results. This equates to running parallel methodologies along with your allowance for loan and lease losses (ALLL), Blakeslee explained. The steps comprise of properly segmenting your portfolio, calculating your base loss rates using different CECL methods (these methods should be placed into two buckets, historical loss rate and probability of default methods), making direct and forecast adjustments, and individually reviewing loans with unique risk characteristics.

When assessing the various CECL methods, he recommended considering three factors: Feasibility (can you use the method based on the amount of data you have?), performance (when you compare a historical data set with the actual results for a comparable time period, how accurate is it?), and management judgement (can managers explain the pros and cons of the method?).

3. Prepare documentation and reporting. This entails creating the CECL disclosures, and ensuring your credit union is prepared for auditors and examiners. “You need to take advantage of this extra time,” Blakeslee said in conclusion. “It’s going to be challenging and require some effort, but it’s doable.”

Masquerade Auction Raises $872,000 for Children’s Hospitals

On Tuesday night, the NWCUA hosted the Credit Unions for Kids Masquerade Auction, which raised nearly $872,000 for the eight Children’s Miracle Network hospitals that treat patients in Idaho, Oregon and Washington.

Notably, a Disneyland Vacation, donated by the $88 million, Portland, Ore.-based IBEW and United Workers Federal Credit Union, was in turn donated by bidders to five-year-old Elliott Naftzger, who served as the auction’s Miracle Child. Elliott was born with a life-threatening heart condition and underwent her first open heart surgery when she was just four days old. Her treatments have been successful and today, she’s thriving, according to the NWCUA. Elliott, her parents Rachel and Carter, and her big brother Edmond will soon enjoy a trip to the Magic Kingdom.

In addition, attendees bid on wine country getaways, coastal vacations and other travel packages, and each CMN hospital in the Northwest will receive a toy-filled electric car that will either be donated to a patient or kept in the hospital to transport kids from their rooms to their medical appointments, the NWCUA said.