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Board Briefed on Progress of Diversity and Inclusion in Credit Union System

ALEXANDRIA, Va. (Nov. 19, 2020) – Using a live audio webcast, the National Credit Union Administration Board held its tenth open meeting of 2020 and unanimously approved:

• A proposed rule to amend its regulations by removing the prohibition on the capitalization of interest in connection with loan workouts and modifications.
• The reprogramming of unspent money in the 2020 travel budget to fund NCUA’s activities related to the coronavirus pandemic and the agency’s Central Office renovation.

The Director of the Office of Minority and Women Inclusion briefed the NCUA Board on the state of credit union diversity and the 2019 Credit Union Diversity Self-Assessment results. The Chief Financial Officer also briefed the Board on the National Credit Union Share Insurance Fund’s performance during the third quarter of 2020.

Proposed Rule on Capitalization of Interest Provides Relief

The Board approved a proposed rule (opens new window) that removes the prohibition on the capitalization of interest in connection with loan workouts and modifications.

“At the onset of the COVID-19 pandemic roughly nine months ago, that priority shifted into high gear as I worked with agency staff on COVID-relief measures that would allow credit unions the flexibility to work with borrowers experiencing economic hardship as a result of the pandemic,” Chairman Rodney E. Hood said. “Today’s proposed rule continues to move toward those relief efforts.”

The Board determined that the current prohibition on authorizing additional advances to finance unpaid interest might be overly burdensome and, in some cases, hamper a federally insured credit union’s good-faith efforts to engage in loan workouts with borrowers facing difficulty because of the economic disruption that the COVID-19 event has caused. Advancing interest may avert the need for alternative actions that would be more harmful to borrowers.

The proposed rule would establish documentation requirements to help ensure that the addition of unpaid interest to the principal balance of a mortgage loan does not hinder the borrower’s ability to become current on the loan. The proposed change would apply to workouts of all types of member loans, including commercial and business loans.

Comments are due 60 days from publication in the Federal Register.

Board Briefed on Results of the 2019 Credit Union Diversity Self-Assessment

The Director of the Office of Minority and Women Inclusion briefed (opens new window) the NCUA Board on the Voluntary Credit Union Diversity Self-Assessment and the results for 2019 (opens new window); the NCUA’s initiatives to promote diversity, equity, and inclusion within the credit union system; and the progress that’s been made.

“Given the challenging times our nation is currently facing, there is a heightened interest and emphasis on diversity, equity, and inclusion,” Chairman Rodney E. Hood said. “Tremendous benefits in growth, talent, and innovation are possible when a credit union’s employees, managers, and board of directors reflect the diversity of the communities they serve.”

The NCUA has collected diversity data from credit unions through the Diversity Self-Assessment for four years. In 2019, 118 credit unions submitted self–assessments, compared to 81 self-assessments submitted in 2018. A majority (56 percent) of these credit unions reported a leadership and organizational commitment to diversity, and 48 percent reported taking steps to implement employment practices that demonstrate that commitment.

Approximately 200 unique credit unions submitted a self–assessment to the NCUA’s OMWI for at least one of the four years the assessment has been available. Credit unions that submitted the self-assessment more than once showed marked improvement in their diversity and inclusion levels from year-to-year.

The Credit Union Diversity Self-Assessment (opens new window) outlines best practices for creating a more diverse and inclusive credit union, and increasingly, it is being used by credit unions to assess and monitor their diversity-related efforts. The NCUA now accepts self-assessments year-round. The cut-off date for annual submissions is January 15 of the following year.

Share Insurance Fund Remains Strong

The National Credit Union Share Insurance Fund reported (opens new window) $19.2 billion in assets as of the third quarter of 2020. The fund also reported $46.6 million in net income year-to-date.

The Share Insurance Fund in October received additional capitalization deposits of approximately $1.5 billion from insured credit unions after the NCUA invoiced for its semi-annual contributed capital adjustment for credit unions with $50 million or more in assets.

Additionally, for the third quarter of 2020:

• The number of CAMEL codes 4 and 5 credit unions decreased 1.8 percent from the end of the second quarter, from 166 to 163. Assets for these credit unions decreased 5 percent for the same period from $10.3 billion to $9.7 billion.
• The number of CAMEL code 3 credit unions decreased 2.3 percent from the end of the second quarter, from 785 to 767. Assets for these credit unions decreased 8.9 percent for the same period from $44.6 billion to $40.6 billion.

There were no federally insured credit union failures in the third quarter that caused a loss to the Share Insurance Fund. Total year-to-date losses associated with one failure in 2020 is $1.6 million.

The third-quarter figures are preliminary and unaudited. Additional information on the performance of the Share Insurance Fund is available online.

Unspent Travel Budget Repurposed for COVID-19 Response, Renovations

The NCUA Board approved reprogramming $4.3 million from the agency’s projected unspent 2020 travel budget to fund pandemic response activities. This includes COVID-related renovations to the NCUA’s Central Office building, such as updating the building’s HVAC system.

The Office of the Chief Financial Officer updated its midsession projection for travel-related spending and now estimates at least $18 million will remain unspent due to the COVID-19 pandemic. The office previously projected $13 million of unspent travel for 2020.

Additional information on this reprogramming can be found on the agency’s website (opens new window).

(Nov. 19, 2020) – Federal financial institution regulatory agencies today issued a joint fact sheet clarifying that bank and credit unions compliance efforts to meet Bank Secrecy Act due diligence requirements for customers that are charities and other nonprofit organizations should be based on the money laundering risks posed by the customer relationship.

The fact sheet highlights the importance of legitimate charities and nonprofit organizations having access to financial services and being able to transmit funds through legitimate and transparent channels, especially in the context of responding to the coronavirus pandemic. It also clarifies that charities and nonprofit organizations as a whole do not present a uniform or unacceptably high risk of being used or exploited for money laundering, terrorist financing, or sanctions violations, and that banks and credit unions must develop risk profiles that are appropriate for the risks presented by each customer. Additionally, it provides examples of customer information that may be useful to banks and credit unions in determining those risk profiles.

The fact sheet does not alter existing Bank Secrecy Act/anti-money laundering legal or regulatory requirements or establish new supervisory expectations. It was developed by the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, the National Credit Union Administration, and the Office of the Comptroller of the Currency.

Attachment
Joint Fact Sheet on Bank Secrecy Act Due Diligence Requirements for Charities and Non-Profit Organizations

Agency	Contact	Phone
Federal Reserve	Darren Gersh	202.452.2955
FDIC	LaJuan Williams-Young	202.898.3876
NCUA	Laura Todor	703.518.1149
OCC	Stephanie Collins	202.649.6870

ALEXANDRIA, Va. (Nov. 18, 2020) – National Credit Union Administration Chairman Rodney E. Hood issued the following statement today commending Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, who announced his intention to depart at the end of the year.

“Working alongside Chairman Clayton on the Financial Stability Oversight Council, I saw firsthand the professionalism and business acumen that has defined his success at the SEC and throughout his career. We shared a passion for public service and in promoting diversity, inclusion, and opportunity within our agencies and in the broader financial services sector. With sincerest appreciation for his friendship and public service, I wish him all the best in his future endeavors.”

ALEXANDRIA, Va. (Nov. 16, 2020) – National Credit Union Administration Chairman Rodney E. Hood issued the following statement upon learning of the passing of former NCUA Chairman Roger Jepsen.

I, along with the NCUA family, was saddened to hear the news of Senator Roger Jepsen. He was well-liked and respected in the credit union community.

Senator Jepsen had a distinguished career that included serving as a member of the Iowa Senate, as Lieutenant Governor of Iowa, and as United States Senator from Iowa. He was appointed Chairman of the NCUA by President Reagan in 1985 and continued to serve in that role until 1993.

He led the agency during a period of great change, overseeing more than 14,000 credit unions nationwide, the conversion of more than 400 state-chartered credit unions to federal insurance coverage, and the adoption by the agency of the CAMEL rating system.

Senator Jepsen will be missed, and the thoughts and prayers of past and present NCUA employees are with his family and loved ones.

ALEXANDRIA, Va. (Nov. 16, 2020) – Municipal Credit Union today reported completing the next step in its recovery plan with the appointment of Kyle Markland as the permanent Chief Executive Officer. Municipal Credit Union has operated under the conservatorship of the National Credit Union Administration since May 2019.

“The placement of Kyle Markland as the permanent CEO is a key step in the credit union’s recovery and lays the groundwork for its continued financial health and safety and soundness,” said John Kutchey, Regional Director for the NCUA’s Eastern Region.

Markland has an extensive credit union career. He joins Municipal after most recently serving as Chief Operating Officer for Bethpage Federal Credit Union in Long Island, New York. In this role, Markland led several functional areas and strategic planning for the largest credit union in New York. Previously, he served as President/CEO for Affinity Plus Federal Credit Union in St. Paul, Minnesota, and Executive Vice President/CFO for Bellco Credit Union in Greenwood Village, Colorado. Markland also held roles with GTE Federal Credit Union and Suncoast Schools Federal Credit Union.

Markland earned a Master of Business Administration from Regis University in Denver, Colorado, and a Bachelor of Science in Accounting from the University of South Florida in Tampa, Florida.

Municipal Credit Union has improved financial results, reporting a year-to-date net income of $30.2 million through September 30, 2020.

Credit union member deposits remain protected by the National Credit Union Share Insurance Fund. Administered by the NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund separately protects IRA and KEOGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States.

Municipal Credit Union is the oldest credit union in New York and one of the oldest in the country. Established in 1916 and headquartered in New York City, Municipal Credit Union has assets of more than $3.7 billion and more than 500,000 members, according to its most recent Call Report. For more information about Municipal Credit Union, visit www.nymcu.org (opens new window).

ALEXANDRIA, Va. (Nov. 16, 2020) – Federally insured credit unions can learn more about the National Credit Union Administration’s response to the COVID-19 pandemic by participating in a webinar hosted by the agency on Thursday, December 3, beginning at 1 p.m. Eastern.

During the webinar, NCUA staff will also discuss recently issued guidance and regulations, as well as other agency initiatives.

Online registration for this hour-long webinar is now open (opens new window). Registration is limited to no more than 2,500 participants on a first-come, first-served basis. Participants will be able to log into the webinar and view it on their computers or mobile devices using the registration link. They should allow pop-ups from this website.

Participants may submit questions in advance to [email protected] by noon Eastern on Wednesday, December 2. The email’s subject line should read “NCUA COVID-19 Update.”

Please email technical questions about accessing the webinar to [email protected]. This webinar will be closed-captioned and archived online approximately three weeks following the live event.

Agency Now Accepting Comments and Budget Briefing Presentation Requests

ALEXANDRIA, Va. (Nov. 13, 2020) – The National Credit Union Administration’s draft staff budget for 2021–2022 is now available on the agency’s website for review and comment and has been submitted for publication in the Federal Register (opens new window). The public comment period is open until Dec. 11.

“As we consider the draft staff budget for 2021–2022, the NCUA remains firm in its commitment to be a sound and prudent steward of the funds we collect from credit unions and any other resources entrusted to us,” NCUA Chairman Rodney E. Hood said. “This responsibility includes holding ourselves accountable by maximizing our resources and upholding transparency by inviting the public to comment on our proposed budget. Through this process, stakeholders are aware of how and why we allocate resources in the service of our safety and soundness mission.”

The draft 2021 operating budget is $315.6 million, which is 0.1 percent lower than the comparable 2020 budget. The draft 2021 capital budget is $18.8 million, or 24.8 percent lower than 2020. Largely because of surplus travel funds from 2020 and a lower estimated travel budget for 2021 due to anticipated COVID-19 travel restrictions, the NCUA is able to lower its operating budget for 2021 without compromising its mission of protecting the safety and soundness of the credit union system.

The draft staff budget summary and detailed budget justifications (opens new window) can be found on the Budget and Supplementary Materials page of NCUA.gov.

The agency will hold a public budget briefing on Wednesday, Dec. 2 beginning at 10 a.m. Eastern. The meeting will be livestreamed on NCUA.gov.

To Comment on the Proposed Budget:

• Email comments to [email protected] by Dec. 11.
• Comments should provide specific, actionable recommendations.

To Request a Presentation at the Dec. 2 Budget Briefing:

• Email your request to [email protected] by Nov. 20.
• Include the presenter’s name, title, affiliation, mailing address, email address, and telephone number.
• The Board Secretary will notify approved presenters and give them their allotted presentation times.
• Email a copy of your presentation to [email protected] by 5 p.m. Eastern on Nov. 30.

The Board is scheduled to approve a final budget at its Dec. 17 open meeting.

ALEXANDRIA, Va. (Nov. 12, 2020) – National Credit Union Administration Chairman Rodney E. Hood today testified during a hearing before the U.S. House Committee on Financial Services. He discussed the safety, soundness, and diversity of federally insured credit unions, and the NCUA’s efforts during the ongoing COVID-19 emergency.

Chairman Hood provided the Committee with a state of the credit union system and the National Credit Union Share Insurance Fund, and detailed the agency’s efforts to provide regulatory relief, help credit unions address emerging risks, and support small, low-income, and minority credit unions during the ongoing COVID-19 emergency. He also discussed the agency’s new financial inclusion initiative, ACCESS: Advancing Communities through Credit, Education, Stability, and Support.

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ALEXANDRIA, Va. (Nov. 10, 2020) – On the eve of Veterans Day, National Credit Union Administration Chairman Rodney E. Hood encouraged federally insured credit unions to help our nation’s military, veterans, and their families gain greater access to affordable credit and financial services.

“I want to express my deep gratitude and sincere appreciation to our nation’s veterans for their courageous and selfless service to our country,” Chairman Hood said. “Each of them have made extraordinary sacrifices in the name of freedom, liberty, and peace. That is why it’s so important the NCUA and the credit union system work together to ensure greater financial inclusion for our nation’s service members, veterans, and their families.”

Expanding the availability of safe and affordable credit to meet the needs of diverse and underserved communities is a pillar of the NCUA’s financial inclusion initiative, ACCESS: Advancing Communities through Credit, Education, Stability, and Support. To learn more about the ACCESS initiative, visit www.ncua.gov/access.

In May, the agency announced it would include active duty military members with Army/Air Post Office or Fleet Post Office mailing addresses in its analysis when determining if a credit union qualifies for low-income designation. Under this new methodology, the majority of active duty military members count as low-income.

“We have taken an important first step by changing our methodology for how military members are considered in the low-income designation,” Hood said. “I encourage all credit unions with military members to consider this designation, which can provide eligible credit unions with greater opportunities to build more secure financial futures for our service members, veterans, and their families.”

There are several benefits for credit unions that carry a low-income designation, including an exemption from the statutory cap on member business lending, eligibility for grants and loans from the Community Development Revolving Loan Fund, the ability to accept deposits from non-members, and the authorization to obtain supplemental capital.

Additional information about the updated methodology and the options credit unions have to incorporate their military members into the low-income designation process are available in a Letter to Credit Unions issued in May.

The NCUA will work with credit unions on an individual basis to determine what types of additional information would be most helpful in determining whether members qualify as low income. The agency will continue to analyze available data periodically to ensure the low-income designation properly accounts for all military members.

Credit unions should contact the NCUA’s Office of Credit Union Resources and Expansion at [email protected] or 703.518.1150 for additional information about the low-income designation.

The NCUA will also be closed in observance of the Veterans Day holiday on Nov. 11.

ALEXANDRIA, Va. (Nov. 10, 2020) – National Credit Union Administration Chairman Rodney E. Hood today testified during a hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

Chairman Hood provided the Committee with a state of the credit union system and the National Credit Union Share Insurance Fund, and detailed the agency’s efforts to provide regulatory relief, help credit unions address emerging risks, and support small, low-income, and minority credit unions during the ongoing COVID-19 emergency. He also discussed the agency’s new financial inclusion initiative, ACCESS: Advancing Communities through Credit, Education, Stability, and Support.

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