Check your rear-view mirror but focus on what’s ahead to find the best route to your credit union’s future financial goals.

Rob Johnson, president/principal at c. myers, offers that advice to credit union board and executive leaders who want to accelerate the timeline for making vital financial and strategic decisions.

He says financial conversations at board meetings are too often based on reams of paper that serve as a rearview mirror looking back at the credit union’s financial performance and history. But those numbers often fail to convey the challenges and opportunities facing credit unions in a time of rising interest rates, an evolving digital marketplace, and consumer uncertainty.

Despite industry changes, some boards are having the same meetings they did 10 years ago, Johnson says. “Leadership teams and boards are dealing with a lot more complicated questions than in the past.”

For better financial conversations, credit union leaders need to combine reports that highlight key metrics of financial performance with conversations that examine the future. 

Focusing on strategic objectives will keep those conversations meaningful by identifying potential obstacles.

To break the cycle of meeting routines, Johnson advises board members and executives to ask themselves:  

•  What do you want to get out of meetings?
•  What type of discussion do you want to occur, and on which financial and strategic topics?
•  What engagement do you want to see in your
   meetings?  
•  What problems are you trying to solve? 

Where numbers fall short

Johnson notes that credit union leaders are accustomed to dealing in numbers, past performance, and the carefully crafted budget projections that guide costs and earnings.

“The challenge is there aren’t many facts about what will happen in the future,” Johnson says. “So, how do leadership teams adjust their thinking on that front?”

One effective approach is creating scenarios that combine financial estimates with observations about the economy, competitive issues, and member needs. When possible, connect these conversations to the credit union’s overall strategy.

Ultimately, you want the management team and board to discuss the “so what” of financials, Johnson says. While numbers matter, he says directors should focus on how the numbers could change and what might cause those changes, including potential unintended consequences.

Tying conversations to strategic goals makes them more meaningful, he adds.

As interest rates rise, for example, executives can project the impact on loan and deposit growth. That will help the board understand how interest rates connect to the credit union’s business model.

“The numbers should help tell that story, but they should never be the whole story,” Johnson says. 

Thoughtful highlighting

You can create time for “so what” conversations during board meetings by developing a routine for delivering financial information. Both timing and content should be consistent to make it easier for the board to review financial metrics and allow time for thoughtful consideration of both achievements and difficulties.

Julie Renderos, executive vice president/chief financial officer (CFO) at $15 billion asset Suncoast Credit Union in Tampa, Fla., compiles and delivers information for directors via an online portal at least one week before the board meets. The 20-page financial document includes the balance sheet, income statement, expenses and income, and other key information.

Each quarter, she adds trends comparing Suncoast to peers in Florida and nationwide.

The document’s financial narrative highlights important developments. These highlights often reappear in Renderos’ monthly board presentation to tie them to Suncoast’s strategic plan and current trends. 

Renderos looks for opportunities to educate the board about developing issues.

“I’ll highlight different issues at different times,” she says. “Most recently, we’ve seen our mutual funds have a nonoperating loss because as interest rates rise the value drops. That’s a way for me to educate board members on the total return of mutual funds.”

A consent agenda addresses routine matters quickly, leaving time for conversations that “keep the board focused on the horizon,” Renderos says, noting that the full board packet for each monthly meeting can contain 400 to 500 pages.

“As we’ve grown, the board is responsible for more information,” she says.

For example, passing the $10 billion asset threshold required a capital plan for stress testing, which led the board to create an enterprise risk management committee for oversight.

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