Why Credit Unions Should Benefit and Drive Communities

Megan Weis: Today, my guest is Steven Arbaugh. Steven is the executive vice president of finance and accounting and the chief financial officer of the State Employees' Credit Union of Maryland, SECU, the largest credit union in Maryland. He graduated from Towson University in 1978 with a bachelor of science degree in business administration and from Loyola College in 1983 with a master's degree in finance. Prior to joining SECU, in 2008, Steve spent 30 years in commercial banking working for Provident Bank of Maryland, starting as an accounting clerk in 1978 and working his way to the position of director of asset/liability management and treasury operations.

Utilizing the fundamental principles of business he learned while at Towson and Loyola, Steve developed leadership skills in strategic planning, enterprise risk management, asset/liability management, mergers and acquisitions, investment and derivative portfolio management, and organizational change management. Steve is a past chairman of the Credit Union National Association, or CUNA, Finance Council, where he also served as chairman of the membership and regulatory committees and on the CUNA council's executive committee.

He worked directly with the National Credit Union Administration in restructuring the 5300 Call Report and the Financial Accounting Standards Board in the development of current expected credit losses, CECL, standards, and assessing the potential impact on credit unions. He co-founded the Maryland/DC Credit Union Association's CFO Roundtable, which meets quarterly with CFOs from Maryland and DC and surrounding states to share ideas and discuss challenges in maintaining the safety and soundness of their respective financial institutions.

Steve was the Smart CEO Magazine CFO Executive Management Award winner in 2014 and is an honorary member of the Beta Gamma Sigma International Honor Society and was the 2016 Towson University Alumni Volunteer Service Award, the winner. In 2019, he was awarded the Best in Finance CFO Award by the Baltimore Business Journal. In 2022, Steve was named the CUNA Finance Council professional of the year. Steve, thank you so much for joining me on today's episode.

Steven Arbaugh: I look very forward to speaking with you.

Megan: Today, we're going to be discussing a little bit about your career, some of the specific challenges associated with working for a credit union, and the importance of making a positive impact on the community. I'm excited to learn from you, so let's get started.

Steven: Okay.

Megan: As always, let's start with you and your story. How is it that you got to where you are today?

Steven: Okay. As you said, my name is Steve Arbaugh, and I'm the executive vice president of finance and accounting and the chief financial officer at SECU. We are Maryland's largest credit union. Prior to joining SECU in 2008, I spent 30 years in commercial banking here in Baltimore. It was one of those situations where SECU was looking for a treasure at the time, and I felt the need to get out of commercial banking, so I made the switch.

It was probably one of the best decisions I made in my career. In commercial banking, you have to deal a lot with the dividend and hitting the share price. I had responsibility for matching all those investor relations when I was in commercial banking. To come over to the credit union space where it's all about the member, it's been quite rewarding the past 15 years in the credit union industry.

I served as a chair of the CUNA Finance Council. I've been on the council for the past 11 years. It was one of the first things I did when I came into the credit union industry. I knew very little about the credit union industry at the time. The first thing I did was google "what is a credit union?" One of the challenges that all of us in the credit union space face is awareness. I made the decision to come over. I joined the CUNA Finance Council as a way of expanding my knowledge of what the credit union industry is and what are the issues facing CFOs. I also helped establish the CUNA risk and compliance council that addresses risk management throughout the credit union industry.

I co-founded the Maryland/DC Credit Union Association CFO Roundtable. We gather finance professionals from Maryland, DC, and surrounding states and we meet quarterly to share the stories about what's going on in our institutions and discuss the challenges we all face in maintaining the safety and soundness of our respective financial institutions. We've been doing that for about the past seven years. It's been very popular here in Maryland.

I also served as treasurer on the board of the Credit Union Foundation of Maryland DC. On that board, our sole purpose was to provide resources to smaller credit unions in the community they serve and with emphasis on financial literacy and leadership development and education. More recently, I was deeply honored to be recognized as the 2022 professional of the year by the CUNA Finance Council. I was very involved with that, like I said, for 11 years, and I will continue to support all the efforts of the council in the development of future finance professionals going forward.

Megan: When you made the transition from a commercial bank to a credit union, was it a difficult one, or was it all just a breath of fresh air?

Steven: For me, it was a breath of fresh air. I started out working for a mutual savings bank, which is a commercial banking equivalent to a credit union where the depositors or the members have ownership of the business. In my time in a commercial bank, we converted over to a publicly held commercial bank. Then the member becomes less important at that point because you got to worry about the investor and the shareholder and all that goes along with being a publicly held company.

It was a breath of fresh air for me to get back into an industry where we have to be concerned about making a profit because we have to pay our salaries and we got to turn on the lights and we have to stay up with technology and all that. At the end of the day, if we're able to generate enough income, the money is spent on developing the credit union going forward and preparing us for the future, and returning as much value as we possibly can to members.

Megan: What are the reasons that someone banks with a credit union versus a commercial bank? You might have just touched on it a bit with reasons why you left a commercial bank, but what's in it for the consumer?

Steven: Credit unions, because we don't have to pay the dividends-- This is by no means a knock on the commercial bank because, as I said, I spent 30 years in the industry, but we don't have to pay the dividends every quarter, and we can invest those dividends back into the business, which generally allows us to have very competitive loan rates and very competitive deposit rates. Generally, credit unions are able to keep their fees quite reasonable compared to other financial institutions.

We work very hard here at SECU to advance our technology and do all those things that we need to do to be relevant going into the future, but a lot of what we do is relationship banking. We did not get hit too hard during the Great Depression back in '08 and '09 because we know our members. We have relationships with our members. We'll work with them if they get in trouble with their loans and things like that. For us, even though we are 5 billion in assets and the largest credit union in Maryland, we strive to maintain that relationship with the member.

Megan: I'm just curious, can anyone bank with a credit union, or do you need specific qualifications?

Steven: Credit unions get a tax break because they have what we call a limited field of membership. For us, you have to be, obviously, a state employee with SECU being the state employee's credit union, or there are other ways to join through affiliations with businesses that work with the state and the state school system, and the state hospital system.

There are credit unions serving just about any type of member depending on where they work or live. The best thing to do for somebody looking to possibly join a credit union is just google credit union in their respective states and see what the required fields of membership are, or just call the credit union and find out if there's a way that they might be able to qualify for membership, but it is a limited field of membership. There are requirements to join.

Megan: This is pretty impressive, but SECU membership has increased by 2% over the last five years, but assets have grown 45% from 3.29 billion to just over 5 billion. Can you talk about your growth strategy?

Steven: A lot of that growth has taken place over the past three years. The pandemic really helped SECU speed up its long-term growth strategy. We've had branches for over 70 years, and we put members at the heart of everything we do. We listen to their feedback and remain diligent in meeting and also anticipating their needs. That helps us make investment decisions here at SECU. We're really embracing innovative technology now similar to what all of our peer financial institutions are doing. We've redone all of our financial centers in trying to increase the flexibility of their banking options with ITM machines, appointments, and service banking.

When you enter one of our financial centers, we have interactive teller machines and access to online banking so people can do things after hours if they choose to do so. One of the areas of focus right now for us is on self-service of the member because, quite frankly, we have the brick-and-mortar branches like most financial institutions do. Most of our members are looking for convenience, and a lot of that convenience is off hours. We're trying to get members as self-serving as possible through, like I said, our online banking and our interactive teller machines.

During the pandemic, with our branches being closed for months at a time, we heavily invested in what we call our virtual financial center, which offers members greater flexibility to in-person banking through the digital experience. When you enter the lobby of their virtual financial center, members receive an experience very similar to what they would expect when visiting a physical SECU location. It's just that it's all done virtually. Similar to when you're having a Zoom or a WebEx meeting, you can get all your questions answered. That allows us to offer many more hours of service to our members off hours and those types of things.

Right now, we've got about 10% of our new membership growth coming in through virtual appointments. Our virtual member advisor team continues to grow, but we believe that that is probably the wave of the future, the virtual banking centers, and we've made a pretty big investment net here at SECU.

Megan: Yes. It sounds like you guys are making very smart investments. I heard somewhere that COVID sped up digitization by at least a decade. I'm not surprised that that's the wave of the future.

Steven: Yes. You're spot on with that. My children are very tech-savvy. They would much prefer to jump on a WebEx or Zoom if they need financial advice as opposed to getting in the car and driving to a branch or whatever, especially given the cost of gas and the time value of money and all that nowadays. We're going to really push the virtual financial center going forward for sure.

Megan: Let's talk about inflation. We're seeing rates of inflation that we haven't seen since the early '80s, somewhere between 8% and 9%. What does this mean to a bank, and specifically, a credit union when inflation gets this high?

Steven: Well, obviously, the feds started to raise rates here, and it looks like they're going to be raising rates for the near future here. That's put-- That's obviously driven up our loan rates. As rates increase in market here, we have to increase our loan rates to maintain our margin so we can make a profit to stay in business. We're also raising our deposit rates in response to the fed raising rates as well.

The biggest impact of the SECU and probably the most financial institutions, if you look at our expense structure, our biggest expenses in our employees' compensation, employee benefits, and all that. We have chosen to increase our minimum wage here in 2022. We recently went to $15 an hour, and indications are the marketplace we're most likely going to be going higher in the future here. The biggest impact from inflation has been on the fact that we have raised those minimum wages for a couple of hundred people that we have working in our branches, which is a very good thing for them, especially in this inflationary environment, but that has the trickle up the impact of--

If you raise those wages from the top down, then you got to make sure that your managers are being properly paid and everything. It has a tendency to drive your overall compensation cost structure up, especially with the job market that we have right now where sometimes it's hard to find talent with the job market being as tight as it is. The biggest impact to us has been on compensation.

We obviously are managing all of our expenses across the board, try to make sure we're doing things as efficiently as we can so we can pay the salaries that we need to pay here at SECU to attract the talent that we want to bring into the organization, attract and maintain the talent that we have in the organization. That's a key point right now, which is retaining your existing employees.

Megan: Definitely, yes. It's much more expensive to lose an employee and have to go out and find one than it is to just retain them.

Steven: Yes. Obviously, there's a cost with onboarding and training someone. The last thing you want to do is spend 6 or 12 months training someone and getting them to know the business to have them to jump ship to go work somewhere else once they've developed the skills. Retention is very important. I know we're doing everything we can here at SECU to promote job satisfaction and then high employee engagement scores.

One of the things that we found here is communication is the key. We have ongoing all-employee meetings or WebExes right now to let everybody know what's going on around the organization. We're also very high on making sure that all of our employees understand the goals that we have, both the financial goals and the membership goals, and the member experience goals. Everybody in the organization is aware of all those goals, and everybody knows what their contribution is to maintaining the overall goals of the organization.

You can be in a back office. I obviously have the accounting function here. You can be in the back office function and say, "Well, how am I going to help membership growth or whatever?" When somebody has a member in the branch, and if they're having an issue and they need to call in the finance and accounting to get a wire or some other situation resolved, being able to answer that phone in my area and quickly respond to the member is important because that drives the member's satisfaction, and it helps with the relationship with that member. Everybody in the organization, whether it's the frontline or back office, everybody in the organization knows what their contribution is to the end goals.

Megan: Yes, that's important for people to know that the work they're doing matters and it's making a difference. Recently, SECU exceeded $5 billion in assets, as I mentioned, and to celebrate that, you guys are donating a million dollars to the community for grants over the next five years. Why is it important for businesses to have good relations with their communities? I assume it's especially important for credit unions.

Steven: Yes. For businesses, obviously having good relationships with your communities, it not only fosters goodwill amongst the locals who are also your potential customers, but it also helps the community thrive as a whole. The credit union movement was built on the idea of helping people in the communities we serve, and SECU has always embraced that commitment. We take our responsibility to support our communities very seriously here. A couple of years ago, we formed the SECU Maryland Foundation, which is SECU's philanthropic which aims to create a stronger Maryland by empowering our members' access to education, and we support health and wellness all throughout the state.

The foundation really helps us with our-- it serves as the catalyst for our community development. We awarded $115,000 in scholarships earlier this year. Over the past probably 10 years, we've contributed almost $815,000 to scholarships since our scholarship program was founded. We gave away $120,000 to local nonprofits and charity partners, including the Kennedy Krieger Institute and Special Olympics. Every October of every year, we have what we call Kindness Day where we solicit our employees as well as many of the businesses throughout the state to perform acts of kindness through the kindness campaign.

It's just a way of getting people to treat people with respect and show appreciation. Like you said, recently, we committed a million dollars in community grants over the next five years, because we just believe it's very important to give back to the community. We believe if we have a presence in the community, that's one way for us to build awareness and to, quite frankly, grow our membership base. We're going to do everything we can to give back to the community.

Megan: How can accompany maybe decide how much is appropriate to spend on community and benefiting the community? It's such a hard thing to quantify the benefits of that spending, although a lot of them are priceless. What's your advice on how much?

Steven: It's funny you asked that question because I just run something on that the other day. Based on SECUs' budget for 2022, it looks like we're giving about 2% of our projected earnings back to the community, so I don't know if that's going to be our goal going forward. 2% based on our earnings this year is about $600,000, and that's what we're hoping to be the total give out of the foundation back to the community this year. It is a fine balance. As you said, some of it is priceless, and you got to look at it as almost being a marketing budget that's being added. It helps you build awareness.

Not only that, but we have a lot of employees here at SECU who really value community service. They want to participate, they want to volunteer. Not only is it helping get SECUs' name out there, not only is it helping the communities we serve, but it's also rewarding to the employees who are helping others in need out there in the community. It's a very rewarding experience. I know personally, I've done a lot of volunteer work over the years, and it's very satisfying. It's very satisfying at the end of the day.

Megan: You mentioned this, but you recently won the CUNA Finance Council's 2022 professional of the year award. First of all, CUNA, it's Credit Unions of North America?

Steven: Credit Union National Association.

Megan: Okay. What does this award mean to you and your career?

Steven: I was incredibly honored to be recognized by my peers for such a prestigious award. We accomplished a lot here at SECU during the pandemic and kept our members connected during a hard time. I guess it's the body of my work that I've done over the years. I've served on a lot of boards around town here at universities and the Credit Union Foundation of Maryland. I also served on Maryland Council on Economic Education. I was chair of that, where we educate teachers throughout the state. We can talk a little bit more about that in a couple of minutes here.

I think the award was very humbling, to me. I think it was the result of my body of work over the years, the things I've done. We talked about the CFO Roundtable, and things I do with the CUNA Finance Council. I always strive to help others and my peers at the CFO level. It's not even so much as CFO. There are a lot of people out there who want to be CFOs who I've mentored over the years and given advice to. It was a tremendous honor. We've got over 1,300 members of CUNA Finance Council, and to be recognized as the professional of the year, was very humbling.

Megan: Yes, absolutely. What an amazing achievement, and congratulations on that. Are there any other awards that you would like to win in your professional life or any other things you have your sight set on?

Steven: When I look back on it, I was on the board at Towson University, and I got the Volunteer of the Year award there. I was a couple of years ago, I the Baltimore Business Journal Finance Professional of the Year here in Baltimore. I'm an honorary member of Beta Gamma Sigma. I don't know professionally that there's a lot more I want to achieve at this point. I've actually only got a couple more years to go in my career, and my main goal right now is to develop the people that I'm working with here at SECU to continue the legacy that we've created here in finance and accounting at SECU.

Jokingly, my next goal was to be the grandfather of the year with my five grandchildren, but that's not a professional award.

Megan: Sounds like you spent a lot of time giving back or paying forward. Very commendable.

Steven: I think with being part of the credit union movement, where one of our goals is just to drive that community involvement, I just felt it was something that I not only needed to do because of my role here at SECU, it's something that I wanted to do. I found it to be extremely rewarding to be on this volunteer board.

Megan: Still on awards, for the third consecutive year, SECU received a top spot on the Forbes list of best in-state credit unions. They were placed in the top five to be exact. How have you been able to accomplish this now three times in a row, and specifically, what's been your contribution to this accomplishment?

Steven: Just to talk a little bit about the award itself. Forbes, when they give out this award, partner with market research firms and do in-depth interviews with citizens in all 50 states regarding their banking relationships. This award is particularly special at SECU in that it reflects the positive sentiment from our past and current members, so we're thankful that they recognize the good work that we're doing.

We're just so thrilled that SECU is not only recognized in the top five list, but more so it's a direct reflection of member feedback. It goes back to what I talked about at the beginning of the podcast here, Megan. We strive for member relationships and build that member relationships. We've never been focused on driving profit or profitability here. We've been a firm believer over the years that if we developed relationships that our members that the profitability will follow.

When I talk about profitability, it's nice to have a member come to us for an indirect auto loan or a CD or whatever, but we're really looking to deepen those relationships. Just by asking the questions when we're face to face with the member either in person in the branches or at our virtual financial centers, now is there anything we can be doing as a credit union to help you with your financial journey? Do you need an auto loan, or home equity, looking to refinance your mortgage? Are you okay with your credit card? Can we offer any advice on how to manage your debt?

We also have an arm of SECU here called SECU Financial Partners which is our wealth management. The part of our credit union where if members want to look at some more sophisticated investments like annuities and stocks and bonds and those types of things and we can't provide that service within the credit union itself, we can direct them to SECU Financial Partners and hook them up with a wealth management professional who can help them with their investment needs. We branched out in that area over the past couple of years. We just continue to do the things that help our members.

Being $5 billion, that might sound like a lot, but relative to the big financial institutions that are trillions of dollars or whatever, we're a small fish in a pond. We have to be aware of where we spend our limited resources on marketing and technological developments and all those types of things. We survey our members on a regular basis, and we focus on spending money throughout the organization that will improve that member experience.

We've got a whole team of professionals here at SECU that do nothing but look at the member experience and how we can improve that for them, and we make investments accordingly. I guess that's one of the reasons we've been able to get that top-five spot three years running here.

Megan: I'd like to come back to SECU. [laughs] It sounds like a wonderful place to do your banking.

Steven: I'll see if we could qualify you.

Megan: [laughs] You mentioned this also, that you've created a round table for finance professionals to network and share information. Talk to us about what was the impetus behind this and how exactly it works.

Steven: First of all, I have to give credit to Bill Kennedy who's a fellow CFO here in Maryland. It was his idea. He came up with the question, "How do we take all the work that we've done on a national level at the CUNA Finance Council and bring it locally?" What I mean by that is the CUNA Finance Council, like I said, has over 1,300 members. There's a website where you can go to interact with your peers on a regular basis. If you've got questions about how to do something in your finance or accounting shop, then there's an annual conference that most of our CUNA Finance Council members attend.

The biggest feedback that I got from being chair over this for two years was the fact that people value networking as the top reason for joining the council. By networking, I mean being able to reach out to your peers or attend events or webinars, or podcasts like you're doing just to learn more about the business.

Bill took the idea and said, "Is there anything that we can do locally here?" We came up with the ideas like, why don't we just start a quarterly all-day session through the Maryland DC Credit Union Association? Why don't we see if CFOs would want to come in similar to what they do at the national convention on annual basis? Would they be willing to come in on a quarterly basis just to sit down all day and talk about the business?

The format of the day was I would basically spend the first hour talking about what we were doing at SECU and ask around the room just issues that my peers were facing. We didn't limit it to just CFOs; we included all financial professionals because, as I said earlier, a lot of people out there strive to be CFOs at their organizations possibly as a career goal. It was good for them to have the ability to interact with other CFOs to see what we were doing.

We spent an hour, an hour and a half just talking about that. Then we would always have an outside bender come in, somebody like the Federal Home Loan Bank or some asset liability management firm to just talk for a couple of hours about opportunities. Just to give us an education on what's going out there with the investments, what's going on out there with asset liability management or borrowings, or whatever we chose as a topic for the meeting. We would have a vendor, too, come in, and then we'd have a couple of hour wrap up at the end of the day just to talk about things we had learned from the vendor and just to keep the conversation going on, what our respective shops were doing.

Like I said earlier, all of us have our unique fields of membership. Professionals are more than willing to share what's going on in their respective shops because of that limited field of membership. People are willing to share ideas. It got a lot of traction to where, pre-pandemic, we were having up to 80, 85 CFOs and finance professionals come in from Maryland, DC, and the surrounding states for this all-day session. Then the pandemic hit. We had to go virtual with it. We're just starting up the in-person meetings again here in the fall. It's just been very rewarding.

It obviously allows you to meet a lot of your peers around town. If you do have a question, you just pick up the phone and give them a call or shoot them an email. I know it's made my job easier over the years, and hopefully, I've been able to return the favor through networking and helping other people too who might be facing issues in their respective credit unions.

Megan: The fact that you were able to get 85 finance professionals to spend an entire day speaks to the value of that round table.

Steven: Yes. It's been widely successful. We thought about trying to get it going on a national level, but when you think about it, there are a lot of credit unions in Maryland, DC, and surrounding state regions to where if you're in Northern Virginia, Southern Pennsylvania, or Delaware where we had people driving, you can be in Baltimore in an hour, hour and a half for most of those locations. People were willing to make the drive in and, obviously, they have kept that going for seven years. Even though the pandemic, obviously, we must be adding some value to the work that's being done in that.

Bill and I have taken a step back. Seven years of volunteer work got to be time to turn it over to some other individuals which we've done. We're still going to be part of the process, but I'm very confident that we built a foundation. That round table is going to be something that continues here in Maryland, DC, and the surrounding states.

Megan: In the course of these round tables, what's the most common challenge you hear?

Steven: It's really funny, but prior to the pandemic, retention and attracting talent into the credit unions was a big thing, and that only got harder here during the pandemic. A lot of people if they have the ability to work remotely, they’re electing to do so. I know here at SECU, we're running a hybrid model right now where if you want to come into the office, you're more than welcome to come into the office. If you want to work from home remotely, like you've been doing for the past two years, that works also. We're trying to find the balance right now about how many days a week should we have people in the office and all those kinds of things.

You always face the other side that people may opt to leave if you ask them to come into the office on a regular basis now that they've been working for a couple of years. It's a challenge that we're all facing, but we're making it work here at SECU. The executive team, obviously, which I am a member of, we're trying to be in the office on Tuesdays and Thursdays on a fairly regular basis. If our staff wants to come in and have in-person meetings, which we still want to do, obviously, there's such a great benefit of being in person to person.

I happen to attend the board meetings here at SECU. It's so much easier to sit around the board table and read the board members, are they understanding what we're saying? Are they agreeing with what we're saying? It's so much harder to read to room on a WebEx when you can only see a couple of people at a time. It really makes it hard to read the room. There's significant value in face-to-face meetings. I know we're trying to find the perfect balance of that here at SECU. I would imagine that a lot of organizations are struggling with remote work environments and in-person and all that kind of stuff, what to do going forward.

Megan: Absolutely. The balancing act.

Steven: That's one of the things that's going on right now. Right now, we're obviously all dealing with the rising rate environment. Most of the credit unions, like the banks, our earnings will continue to be solid here in the rising rate environment, but you got to be aware of the fact that, as I said, loan rates are going up. Loan demand is most likely going to slow down. We've already seen that in the mortgage business where mortgage applications are half of what they were a year ago. There's obviously pressure to raise our deposit rates to stay competitive with the online banks and all that kind of stuff.

It's changing interest rates. Obviously, have a big impact on the profitability of the balance sheet, on the net interest margin, and everything. That's been a big topic of discussion lately, what are people doing with their loan rates and deposit rates? It's funny you mentioned this because I just had a conversation with my CEO here earlier this week about we need to be looking ahead here to 2023 and 2024 because we possibly could be going into another recession here right now.

We know that in a recession, members obviously have-- some of them have a harder time paying their bills, and we need to be able to work with the members through those relationships. We have to be able to keep them able to pay their loans and work with them if they run into trouble. The looming recession is also something out there that I think all of us CFOs need to be concerned about right now because it will have an impact on our bottom line at some point.

Megan: I read somewhere that you don't know you're in a recession until your two quarters in, so I often wonder if we're already there.

Steven: First quarter was negative growth, and a lot of people are projecting that we may already be in a recession here when they release a second-quarter GDP a couple of weeks from now. I don't know, for some reason, it doesn't feel like a recession right now. I go out there. My wife and I obviously got to restaurants and all that kind of stuff. It still seems like the economy's doing fairly well here, but with the impact of inflation and increasing gas prices and all that, it got to hit the pocketbook at some point. We just want to make sure that we're there to meet the member's needs.

We're seeing big increases in credit card activity right now just because with the price of everything, I think more people are maybe starting to build up those credit card balances and all those kinds of things that go along with the slowing economy and rising prices.

Megan: Speaking of things like round tables and CUNA, what are the benefits of having a peer-to-peer network and networking in general?

Steven: I think all of us have-- I'll just throw out some examples here right now. All of us have various policies and procedures that we have to have on the financing side. We got investment policies, we got derivative policies, we got impermissible policies. We got policies all over the place. Having a network, you can always reach out to your others and say, what are the limits you're placing in your policies? How much liquidity do you want to have in your organization? Do you have any concentration risk problems too heavy and indirect autos or the mortgage business or whatever? Just being able to talk to other credit unions and see what they're doing.

We all have a common regulator, the NCUA-- I'm sorry, the NCUA is our regulator, and National Credit Union Administration is our regulator. They're in all the shops around town mostly on an annual basis. It's nice to be able to have these round tables and to be able to pick up the phone and say, "Oh, I see the regulators were just in your shop last month. Well, they're coming into my credit union in a couple of months here. Is there anything I should be looking for? What is the focus of their examinations? What are the things that we should be prepared to answer when they come in here?"

Things like that, and what are you doing? What are you doing with your investment portfolios in this volatile rate environment? Anything related to the finance and accounting functions, it's just nice to be able to talk to other people about what they're doing so you don't have to reinvent the wheel.

Megan: Yes. That's a good point. Lastly, as a CFO, what's keeping you up at night? We've talked about talent, attrition, retention, and inflation. Maybe those are the two things that are keeping you up at night.

Steven: I think it's all of the above. Obviously, we need to keep our net interest margin strong in this environment because, as I said, we're probably going to start to see some credit losses in the industry here going forward if we are, in fact, in a recession. We need to keep our earnings stable. We have an enterprise risk manager function here at the organization. We have a chief risk officer whose role is to just identify all the risks throughout the organization. The ones that I believe we are most focused on right now, or, like you just said, what are the risks of a recession and just retention and attracting new employees?

Just being able to, as I said earlier, just determine how to allocate our limited resources. We're starting to put together SECU's budget for 2023. We're making everybody go through an exercise, through the strategic planning process to identify any specific products or expenditures that they would like to make in their respective areas. As a CFO, myself, and the rest of the executive leadership team, we need to go through and prioritize those possible expenditures for next year because quite frankly, we can't do everything.

Like I said earlier, we're going to focus on the ones that provide the greatest member value. Those are the ones that we're going to spend most of our resources on in 2023. I can tell you a lot that is just continued development of our channels, online banking, mobile banking, and the virtual banking center that I talked about earlier. I know we're going to be spending dollars in each one of those respective areas.

Megan: Steve, thank you so much for being my guest today.

Steven: Thank you very much, Megan. It was a real pleasure speaking with you, and I look forward to speaking with you in the future.

Megan: I really enjoyed speaking with you as well and hearing about all your experiences and the resulting insights. I appreciate you taking the time to be with us today. I wish you and SECU all the best. To our listeners, please tune in next week. Until then, take care.