FFIEC Members Adopt Policy Statement on the Report of Examination

The Federal Financial Institutions Examination Council (FFIEC) members today issued principles to promote consistency, clarity and ease of reference for the presentation of information in examination reports. The FFIEC Policy Statement on the Report of Examination was developed as part of the FFIEC’s Examination Modernization Project, which is aimed at reducing unnecessary regulatory burden on community financial institutions.

The federal banking agencies, consisting of the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), are rescinding their 1993 Interagency Policy Statement on the Uniform Core Report of Examination, and replacing it with this FFIEC policy statement.

The FFIEC was established in March 1979 to prescribe uniform principles, standards, and report forms and to promote uniformity in the supervision of financial institutions. It also conducts schools for examiners employed by the five federal member agencies represented on the FFIEC and makes those schools available to employees of state agencies that supervise financial institutions. The Council consists of the following six voting members: a member of the FRB; the Chairman of the FDIC; the Director of the Consumer Financial Protection Bureau (CFPB); the Comptroller of the Currency; the Chairman of the NCUA; and the Chairman of the State Liaison Committee (SLC).

Media Contacts
Agency Contact Phone
FDIC Julianne Fisher Breitbeil 202.898.6895
FRB Darren Gersh 202.452.2955
NCUA John Fairbanks 703.518.6330
OCC Stephanie Collins 202.649.6870
SLC James Kurtzke 202.728.5733
CFPB David Eskola 202.435.7425

Board Approves Share Insurance Equity Distribution in 2019

ALEXANDRIA, Va. (March 7, 2019) – The National Credit Union Administration Board today approved a $160.1 million equity distribution from the National Credit Union Share Insurance Fund that will be paid to eligible credit unions in the second quarter of 2019.

“While continuing to advance the objectives of protecting member deposits and maintaining a safe and sound credit union system, we have worked prudently to issue the second largest distribution in the history of the Share Insurance Fund,” NCUA Board Chairman, J. Mark McWatters said. “This action, along with others taken by the NCUA Board, including closing the Stabilization Fund in 2017, kept $1.3 billion at work in credit unions by negating the need for insurance fund premiums and put nearly $900 million back to work in credit unions and their communities with the last two Share Insurance Fund distributions.”

“This is the second largest distribution to credit unions in the history of the Share Insurance Fund — only last year’s distribution was larger,” NCUA Board Member Rick Metsger said. “I am pleased that NCUA’s successful management of the NGN program and its successful lawsuits against the firms that sold toxic assets to corporate credit unions have made it possible for us to return funds to credit unions two years in a row.”

A financial institution that filed a quarterly Call Report as a federally insured credit union for at least one reporting period in calendar year 2018 will be eligible for a pro rata distribution. The eligibility criteria for credit unions to receive an equity distribution is detailed in a final rule approved by the NCUA Board in February 2018.

Based on the total of insured shares reported in the fourth quarter Call Reports, the equity ratio of the Share Insurance Fund was 1.39 percent at the end of 2018, which is above the Board approved normal operating level of 1.38 percent. To reduce the equity ratio to the approved normal operating level, a $160.1 million distribution is required.

The NCUA Board will continue to monitor the health and risk exposure of the Share Insurance Fund, and will evaluate the normal operating level each year to determine its appropriate level, based on an analysis of data and trends as they evolve overtime.

Additional information on the Share Insurance Fund’s equity ratio and normal operating level is available on the NCUA’s website.

NCUA Board’s Partnership Transformed Regulatory Structure

ALEXANDRIA, Va. (March 12, 2019) – By working together in a bipartisan manner, the NCUA Board enacted a number of regulatory reforms and modernization initiatives to meet its statutory obligation of ensuring a safe and sound credit union system while providing credit unions with measures of regulatory relief, National Credit Union Administration Board Chairman J. Mark McWatters and Board Member Rick Metsger said today.

“Over a period spanning both of our chairmanships, we oversaw a reform and modernization effort allowing both the NCUA and the credit union system to navigate a rapidly evolving financial services marketplace while still maintaining safety and soundness,” McWatters said. “I want to thank Rick for his support and willingness to work with me on our shared regulatory reform agenda.”

“What I am most proud of over the last three years is that we implemented these reforms, through a bipartisan — or, more accurately, non-partisan — consensus of what needed to be done,” Metsger said. “It has truly been a partnership and one that has benefited credit unions, their members, and the nation as a whole.”

Chairman McWatters and Board Member Metsger made these remarks while participating in a panel discussion at the Credit Union National Association’s annual Governmental Affairs Conference in Washington, D.C.

During McWatters’ and Metsger’s tenure as a two-person Board, the NCUA undertook several initiatives strengthening the credit union system and enhancing the agency’s ability to execute its mission in a more efficient and effective manner. Key accomplishments include:

  • Implementing an extended examination cycle for well-capitalized and well-managed credit unions;
  • Modernizing the NCUA’s field-of-membership rules to promote greater access to affordable financial services;
  • Closing the Temporary Corporate Credit Union Stabilization Fund in 2017 and transferring its assets and obligations to the National Credit Union Share Insurance Fund.
  • Returning nearly $900 million in share insurance dividends to eligible institutions in 2018 and 2019;
  • Implementing an agency-wide realignment consolidating several agency functions and closing two regional offices;
  • Delaying the implementation date of the 2015 risk-based capital rule for one year and raising the asset threshold defining complex credit unions;
  • Improving and centralizing the NCUA’s appeal process to make it more efficient, consistent, and transparent;
  • Making sizeable investments in new technology allowing the agency to conduct its examination and supervision functions in the future more efficiently and with fewer disruptions to credit union operations; and
  • Enhancing the transparency and accountability of the NCUA’s decisions, operations, and budget.

The panel discussion also addressed potential future challenges for the credit union system and for the NCUA. Both Board Members agreed that increasing cybersecurity risks, fluctuating interest rate risks, changing demographics, growing competition from new financial service providers, and continuing industry consolidation are significant challenges for federally insured credit unions going forward.

“All credit unions need to consider whether their product and service mix is consistent with their members’ future needs,” Metsger said. “This will require new ideas and investments in people, processes, and technology. The old ways of doing things will not work in this era of fintechs, mobile banking, and increasing competition. Each one of us, the regulator and the regulated, have a role to play in shaping the future of the credit union movement.”

McWatters added that these challenges mean the NCUA must modernize its examination and supervision program, replace outdated technology and systems, and reduce its regulatory footprint where possible.

“The NCUA has several initiatives in process to improve and modernize how the agency conducts its examination and supervision program,” McWatters said. “This means modifying our processes and procedures, leveraging technology, collaborating with state supervisors, and moving to more off-site supervision. It will take time to develop and implement these improvements and systems, but they will transform how the agency approaches its safety and soundness mission in the future.”

NCUA Releases 2018 Annual Report

ALEXANDRIA, Va. (March 13, 2019) – The National Credit Union Administration today released its 2018 Annual Report, highlighting the agency’s activities, policy initiatives, and accomplishments for 2018.

“The annual report highlights a very productive year for the NCUA,” NCUA Board Chairman J. Mark McWatters said. “Along with the largest Share Insurance Fund dividend ever paid, we took significant steps to streamline our regulatory structure, make the agency’s operations more efficient, and expand access to affordable financial services. By working together, the NCUA Board created sound public policy that will allow the agency and the credit union system to meet future challenges and opportunities.”

During 2018, the NCUA undertook several initiatives to reduce the regulatory burden and improve its operations over the long-term. The most signification actions were:

  • Distributing $735.7 million in Share Insurance Fund dividends to more than 5,700 eligible institutions — the largest distribution in the fund’s history;
  • Approving five substantive changes to the NCUA’s regulatory structure that balanced safety and soundness with regulatory relief;
  • Creating a blueprint for future regulatory reform and a mechanism for the public to view progress in meeting these goals;
  • Completing the last phases of the agency’s 2017 realignment by closing two regional offices and moving to a new, three-region structure at the start of 2019; and
  • Making sizeable investments in new technology and systems that will allow the agency to carry out its examination and supervision program more efficiently and with a reduced regulatory footprint in the future.

The 2018 Annual Report documents the NCUA’s performance in meeting its strategic goals and objectives as detailed in the 2018–2022 Strategic Plan. The report contains the audited financial statements for the agency’s four funds, which earned unmodified or “clean” opinions for 2018. It also provides assurances of the agency’s compliance with federal financial management guidelines, regulations, and relevant laws, and data on credit union financial performance during the year.

Closed Board Meeting – March 14, 2019

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.

“Protecting credit unions and the consumers who own them through effective regulation”

Senate Confirms Hood and Harper to NCUA Board

Chairman McWatters Welcomes New Members

ALEXANDRIA, Va. (March 14, 2019) – The U.S. Senate today confirmed Rodney Hood and Todd Harper as National Credit Union Administration Board Members.

“I congratulate Rodney Hood and Todd Harper, and I look forward to working with both of them in a collegial, bipartisan manner,” NCUA Board Chairman J. Mark McWatters said. “In that same spirit, I would like to thank Board Member Rick Metsger for his more than five years of service to the agency and for creating a true collaborative partnership that benefited the agency and the credit union community.

Both new Board Members will begin their terms after they are sworn into office. Rodney Hood will replace Board Member Rick Metsger, whose term expired in August 2017. His term will run until August 2023. Todd Harper fills the vacancy created when former Chairman Debbie Matz retired in 2016. His term will end in April 2021

President Donald J. Trump nominated Rodney Hood on January 19 and announced his intent to nominate Todd Harper on February 1. The Senate Banking Committee held its confirmation hearing February 14 and unanimously approved both nominees on February 26.

Share Insurance Fund Closed 2018 with $226.5 Million Net Income, Net Position of $15.7 Billion

Board Action Bulletin

ALEXANDRIA, Va. (March 14, 2019) – The National Credit Union Administration Board held its third open meeting of 2019 at the agency’s headquarters today and unanimously approved one item:

  • A final rule making regulations regarding loans and lines of credit to members clearer and easier to follow.

The Chief Financial Officer briefed the Board on the performance of the National Credit Union Share Insurance Fund.

Share Insurance Fund Continues Positive Trends

The Share Insurance Fund reported a net income of $226.5 million and a net position of $15.7 billion for 2018.

The fund’s assets declined to $15.8 billion at the end of the year from $16.7 billion at the end of 2017.

As of Dec. 31, 2018, the Share Insurance Fund’s calculated equity ratio was 1.39 percent. The equity ratio is calculated on an insured share base of $1.1 trillion. As the equity ratio was higher than the normal operating level of 1.38 percent, the Board, by notation vote March 6, approved a $160.1 million Share Insurance Fund distribution to eligible federally insured credit unions.

For the fourth quarter of 2018:

  • The number of CAMEL codes 4 and 5 credit unions decreased to 193 from 203 in the third quarter of 2018. Assets for these credit unions increased 2.6 percent from the third quarter of 2018, to $11.8 billion from $11.5 billion.
  • The number of CAMEL code 3 credit unions decreased to 940 from 1,001 in the third quarter of 2018. Assets for these credit unions decreased 5.7 percent from the third quarter of 2018, to $52.7 billion from $55.9 billion.

There were eight involuntary liquidations and assisted mergers during 2018, compared to 10 credit union failures in 2017. The total amount of losses associated with failures in 2018 was $792.5 million, compared to $24.4 million the previous year.

The Chief Financial Officer reported the agency’s four funds—the Share Insurance Fund, the Operating Fund, the Central Liquidity Facility and Community Development Revolving Loan funds—each received an unmodified, or “clean,” audit opinion with no reportable conditions for 2018 from the agency’s independent auditor, KPMG LLP.

Final Lending Rule Gives Clarity and Eases Compliance

Credit unions will find compliance with NCUA regulations covering loans and lines of credit to members easier following the Board’s approval of a final rule amending those regulations.

The final rule, part of the agency’s ongoing regulatory reform agenda, makes the regulation easier to follow in three ways:

  • Putting all maturity limits applicable to federal credit union loans in one section;
  • Clarifying that the maturity for a new loan under GAAP is calculated from the new date of origination; and
  • Clearly describing the limits for loans to a single borrower or group of associated borrowers.

The final rule will become effective 30 days after publication in the Federal Register.

The NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at www.ncua.gov. The NCUA also live streams, archives and posts videos of open Board meetings online.

NCUA: Q4 2018 State Credit Union Data Report Now Available

ALEXANDRIA, Va. (March 14, 2019) – Federally insured credit unions generally saw continued positive trends in the fourth quarter of 2018, according to the latest NCUA Quarterly U.S. Map Review.

The review tracks performance indicators for federally insured credit unions in all 50 states and the District of Columbia and includes information on two important state-level economic indicators: the unemployment rate and home prices.

Nationally, overall membership growth continued and the strongest growth continued to be concentrated in larger credit unions. Eighty-eight percent of federally insured credit unions reported positive net income during 2018. Median annual loan growth in the year ending in the fourth quarter was 5.9 percent, and median annual asset growth was 1.7 percent.

February 2019 NCUA Board Meeting Video Available

ALEXANDRIA, Va. (March 15, 2019) – The video recording of the Feb. 14, 2019, open meeting of the National Credit Union Administration Board is now available on the agency’s website.

The NCUA posts archived videos of past Board meetings on its Board Meetings, Agendas, and Results webpage, and each video remains on the page for one year.

At the February open meeting, the Board unanimously approved one item:

  • A proposed rule to clarify and provide additional flexibility in the agency’s regulation covering required credit union supervisory committee audits.

The Office of the General Counsel briefed the Board on a final interagency rule covering loans in special flood hazard areas.

The NCUA posts board meeting videos as part of the agency’s ongoing efforts to provide transparency and to allow those unable to attend Board meetings the opportunity to become better informed. An interval between the meeting and posting is necessary for the videos to comply with Section 508 of the Rehabilitation Act for the hearing and visually impaired.

The Board Meetings, Agendas, and Results page also has Board agendas, which are posted at least one week in advance of each open meeting; copies of Board Action Bulletins, which summarize the meetings; copies of Board memorandums; and other documents.

Registration Open for April 11 CECL Webinar

ALEXANDRIA, Va. (March 25, 2019) – Registration is now open for an “Ask the Regulators” webinar on coming changes to the Current Expected Credit Losses accounting standard.

The April 11 webinar, scheduled to begin at 2 p.m. Eastern, will cover the significant differences financial institutions should expect in their accounting procedures following the CECL changes, scheduled for 2022. Participants will use the registration link to log into the webinar.

The webinar will focus on how CECL changes will affect smaller institutions and will include a detailed discussion of the weighted average remaining maturity method for estimating the allowance for credit losses. There will be a question-and-answer session, and participants also may submit questions in advance at [email protected].

The webinar, hosted by the Federal Reserve Bank of St. Louis, will be presented by staff from the NCUA, the Financial Accounting Standards Board, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and the Conference of State Bank Supervisors.

The NCUA will post updated frequently asked questions about the anticipated CECL changes in the near future.

The webinar will be archived approximately three weeks following the live event. The archive will require a separate registration.