News from the Division of Financial Institutions
Thoughts From Superintendent Allard
Welcome to the winter edition of Credit Union News. In reflecting on a very strong 2019, we continue to have an Ohio state-chartered credit union industry that is financially strong, as well as successful in providing member services. At the Division, we are fortunate to have experienced skilled examiners and supervisors in our credit union section, including dedicated information technology risk examiners. During the year, the Division worked with the industry to implement statutory changes, as well as make changes to the Ohio Administrative code to further provide Ohio state-chartered credit unions opportunities to benefit their organizations. Our credit union section had a very strong year from an industry outreach perspective. We held four highly successful regional meetings in the spring and fall. These meetings were well attended and generated discussion that benefited all participants. Additionally, our second Credit Union Director College conducted by our credit union staff was well attended and received. This session provided information to Ohio credit union directors on corporate governance and the regulatory examination framework.   
 
We at the Division are looking forward to new opportunities in the coming year. In early 2020, we are convening a meeting of information technology leaders from our state-chartered banks and credit unions to discuss and better understand technologies that are being utilized to deliver financial services. This is an initial meeting that will likely result in further conversations between industry leaders, and federal and state regulators. We are very pleased that Credit Union Day is returning on April 28, 2020.  Please mark this date on your calendar and plan to attend the event at the Hilton Columbus Downtown. 
 
As always, if you have any questions on these or any other topics, please contact me directly at Kevin.Allard@com.ohio.gov or (614) 728-2631. Happy Holidays to you and yours!

Examination Focus for 2020
Ida Neely, Chief Examiner for Credit Unions

As we prepare for the 2020 examination period, our thoughts turn to the “hot topics” that remain an examination concern, as well as areas where we see an increased risk/trend that may warrant closer review. With those thoughts in mind, the following are some of our 2020 focus points.

Bank Secrecy Act (BSA) Compliance
The chance that BSA Compliance will never be a hot topic during examinations is very slim. Now, in addition to what is known as the normal BSA review, there is an increased focus on Beneficial Ownership reviews and Marijuana Related Business (MRB) accounts.

Although a credit union may have made the decision not to participate in a MRB book of business, it must have policies and procedures in place that will identify how they will monitor its existing membership base and new members to ensure safeguards are in place.

Concentration Limits
The review will be for areas of lending where there is potentially an increase in risk to the viability of the credit union, e.g. credit cards, student loans, indirect loans, mortgage lending, member business lending. Some triggers for this review could be because it is a new book of business for the credit union, a sharp increase/decrease of balances, and a spike in delinquency for the loan type.

Student Loan Deferments
This review will be to identify whether the credit union is fully aware of the total dollar amount of debt that is in deferment and the potential risk of non-repayment. The examiner will be looking to identify how this debt is being monitored/reviewed, what triggers a reinstatement of the deferred loan, and the collection processes/procedures when the deferment has ended.  In addition, and if applicable, examiners will review the ALLL allocation and methodology that the credit union has implemented. 

Information Technology (IT)/Cybersecurity
Vulnerabilities of a credit union’s IT system remains an area of concern. At a minimum, each examination will see the completion of an information questionnaire to be reviewed by the Division’s IT Supervisor to identify if there is a need to perform a more detailed IT examination. In addition, the Division’s IT Examination Team will be adding examination hours and will make every attempt to join the Credit Union Examiners while onsite. Finally, credit union insurers may perform IT examinations as part of the joint examination process. The depth of examination oversight should create a more robust number of hours that will dedicated to ensuring the necessary safety and soundness of membership data.

Current Expected Credit Losses (CECL)
While the implementation of CECL continues to be pushed out, the eventual implementation will have a significant impact on financial institutions. With that in mind, the examination focus will be to see where the credit union is in the process of determining the implementation, if any “mock” studies have been performed to determine the financial impact the requirement will have on the credit union, e.g. ALLL impact, have underwriting policies changed as a result of CECL and has the credit union determined how the data processor for the credit union will aid in this requirement.

While the examination focus can very quickly change due to a current event, this listing should provide insight to just a few of the areas that are to be reviewed. We ask that you remember to reach out to your examiner and ask questions. We all have the same goal, the protection of your members through the safety and soundness of your credit union.
Ohio Secretary of State Filings
Dina Messina, Corporate Administrator

The Division of Financial Institutions is changing its process of filing Ohio Secretary of State (SOS) forms. Currently, a credit union submits Ohio SOS forms with their application paperwork to the Division. Then, the Division goes through its approval process and physically files the Ohio SOS forms with the Ohio SOS office on behalf of the credit union. To streamline the corporate filing process for mergers, articles of incorporation amendments, name changes, field of membership changes, etc., credit unions will be able to file these forms themselves online using the Ohio SOS website .
 
Please be mindful that credit unions are still required to obtain the Division’s approval prior to filing any forms with the Ohio SOS. However, once a credit union receives its certification letter, the credit union may file the certification letter along with the applicable Ohio SOS form and filing fee online using the Ohio SOS website. To file any Ohio SOS form, a credit union will first need to create an online business account with the Ohio SOS, which can be completed here .
 
If there are questions about the timing of filings or which documents should be filed, please contact Dina Messina, Corporate Administrator, at (614) 644–9576 or dmessina@com.ohio.gov
Trade Names
Dina Messina, Corporate Administrator

Trade names have become an increasingly popular trend for credit unions. Lately, credit unions have used trade names to “brand” their credit union branch locations acquired through merger as an attempt to keep the merging credit union members’ identity.
 
Subject to O.R.C. 1733.44, a credit union may adopt one or more trade names to conduct its business. This section requires that the credit union: give written notice of the proposed trade name to the Superintendent at least 30 days before using the trade name; register the proposed trade name with the Ohio Secretary of State (SOS) pursuant to the laws of Ohio, accompanied by any written documentation issued by the Superintendent relating to the right to use, denial to use, or termination of a trade name; and continue to use its official charter name in communications with the Division of Financial Institutions and other legal documents.
 
A credit union’s first step when thinking about using a trade name should be to check the Ohio SOS website to ensure the proposed name is not already being used.
 
The Ohio statute referenced above concerning trade names can be found here . Questions relating directly to trade name filings should be directed to the Ohio SOS website .