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ALEXANDRIA, Va. (Dec. 23, 2020) – The National Credit Union Administration Board unanimously approved, by notation vote, a notice of proposed rulemaking (opens new window) that would amend the agency’s Suspicious Activity Report (SAR) regulation.

The proposed regulation would permit the NCUA to issue, on a case-by-case basis, exemptions from SAR filing requirements to federally insured credit unions, when the exemption is consistent with safe and sound practices and can improve the effectiveness and efficiency of Bank Secrecy Act reporting. The proposed rule would also make it possible for the NCUA to grant exemptions, in conjunction with the Financial Crimes Enforcement Network, to federally insured credit unions that develop innovative solutions to meet Bank Secrecy Act requirements.

The NCUA expects these amendments will reduce regulatory burdens on federally insured credit unions and encourage technological innovation within the credit union system.

These proposed changes are part of a coordinated effort between the NCUA, FinCEN, and the federal banking agencies to improve the efficiency and effectiveness of Bank Secrecy Act compliance programs and facilitate greater innovation within the banking sector.

Comments on the proposed rule (opens new window) will be accepted for 30 days after publication in the Federal Register.

ALEXANDRIA, Va. (Dec. 21, 2020) – J. Owen Cole, Associate Director of the Policy and Markets Division in the NCUA’s Office of Examination and Insurance, announced his retirement effective at the end of December.

“Owen Cole has been a tremendous asset to the NCUA and his accomplishments have made an immeasurable impact on both the agency and our nation’s system of cooperative credit,” NCUA Chairman Rodney Hood said. “In each of the roles held by Owen, he unfailingly gave his best and personified hard work and dedication in support of the NCUA’s strategic goals.”

Cole served in various roles during his 27-year tenure at the NCUA, including Senior Investment Officer, Director of the Division of Risk Management, Associate Regional Director of Operations, Deputy Executive Director, and Acting Chief of Staff.

He also served as President of the NCUA Central Liquidity Facility, which addresses potential credit union system liquidity risks. “Owen’s leadership in this important position helped to ensure that credit unions can continue to meet their member’s needs despite the economic challenges associated with the ongoing COVID-19 pandemic as well as previous financial crises,” Hood said.

Prior to joining the NCUA, Cole enjoyed a 10-year commercial banking career at the Riggs National Bank, where he served as a Vice President in the bank’s Treasury Division.

ALEXANDRIA, Va. (Dec. 21, 2020) – National Credit Union Administration Vice Chairman Kyle S. Hauptman announced today the appointment of Sarah Canepa Bang as his Senior Advisor.

“I am thrilled to have Sarah in this critical role,” Vice Chairman Hauptman said. “Her experience managing credit union service organizations at the highest level, along with her knowledge of the credit union industry, regulations, and policy administration will be of immense value to me, the Board, and the NCUA.”

Bang has broad experience in the credit union industry that includes serving as Executive Vice President of Industry Relations, and as President, Chief Strategy Officer at CO-OP Financial Services. Previously, she was Chief Executive Officer at Financial Service Centers Cooperative, Inc. and Executive Vice President of Oregon Credit Union League and Affiliates.

Bang holds a bachelor of arts and a bachelor of science from University of Wisconsin, Madison.

ALEXANDRIA, Va. (Dec. 21, 2020) – Credit unions can learn more about the issue of human trafficking and how to spot the warning signs during a webinar hosted by the National Credit Union Administration on Thursday, January 7, at 2 p.m. Eastern.

This webinar is presented in partnership with the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (opens new window) unit and with involvement from The Knoble (opens new window), a non-profit organization of financial services professionals working to combat human trafficking, child exploitation, financial crime, and elder financial abuse.

The webinar will provide an overview of human trafficking and its impact on communities, law enforcement’s efforts to combat it, and potential red flags in credit unions. Attendees will also learn how to report concerns about human trafficking to the proper authorities.

Registration for this 90-minute webinar is open (opens new window) to all credit unions interested in learning more about the prevalence of human trafficking and detection methods from a credit union’s perspective. There is no charge for attending the webinar.

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 can submit questions in advance to [email protected] with the subject line “Human Trafficking.” Participants with technical questions about accessing the event can email [email protected].

The webinar will be closed captioned and archived on the NCUA’s public website and Learning Management Service (opens new window) approximately three weeks following the live event.

ALEXANDRIA, Va. (Dec. 18, 2020) – The National Credit Union Administration Board approved the designation of Board Member Kyle S. Hauptman as Vice Chairman of the NCUA, effective immediately, pursuant to the requirements of NCUA’s Rules and Regulations.

“I thank President Trump for this honor and the trust he has placed in me,” Vice Chairman Hauptman said. “As Vice Chairman of the NCUA, I look forward to working with credit unions, my fellow Board Members, and Congress on solutions that provide regulatory relief for the credit union community and expand the use of technology to reach underserved communities. 

“I am committed to the NCUA Board’s obligation to protect America’s $1.79 trillion credit union system, which is dedicated to serving those of modest means, and ensuring the safety and soundness of the National Credit Union Share Insurance Fund.”

President Donald J. Trump announced the nomination of Hauptman on June 15. The U.S. Senate Banking, Housing, and Urban Affairs Committee held its confirmation hearing on July 21, and the Senate approved his nomination on Dec. 2. Hauptman took the oath of office on Dec. 14. 

Before serving on the NCUA Board, Hauptman was Senator Tom Cotton’s (R-Arkansas) advisor on economic policy, as well as Staff Director of the Senate Banking Committee’s Subcommittee on Economic Policy. Before joining Senator Cotton’s office, Hauptman served on President Donald J. Trump’s transition team in 2016.

Previously, he held the position of Executive Director of the Main Street Growth Project and Senior Vice President at Jefferies & Co. He also worked at Lehman Brothers as a bond trader in New York City and their international offices in Tokyo and Sydney. Hauptman served as a voting member on the U.S. Securities and Exchange Commission Advisory Committee on Small and Emerging Companies from 2016–2017.

Board Action Bulletin

Approves Final Annual Operating Fee Assessment Rule

ALEXANDRIA, Va. (Dec. 18, 2020) – Through a live audio webcast, the National Credit Union Administration Board today held the second of two consecutive open meetings in December. At the meeting, the Board approved three items:

• Operating, capital, and National Credit Union Share Insurance Fund budgets for 2021 and 2022;
• A final rule on the annual operating fee assessment; and
• A final notice on the overhead transfer rate and the operating fee schedule methodologies.

Agency Budgets Approved for 2021, 2022

By a 2-1 vote, the NCUA Board approved the agency’s budgets for 2021 and 2022 (opens new window). Combined, the 2021 operating, capital, and National Credit Union Share Insurance Fund administrative budgets will be $341.4 million. The combined budgets for 2022 will be $343.5 million.

Budget	2021	2022
Operating budget	$314.6 million	$316.9 million
Capital budget	$18.8 million	$18.9 million
Share Insurance Fund budget	$8.0 million	$7.7 million

The budget supports a total of 1,192 full-time employees for 2021, and 1,187 full-time employees in 2022.

Annual Operating Fee Assessment Final Rule Approved

The Board unanimously approved a final rule (opens new window) that amends the NCUA’s regulation governing assessment of an annual operating fee to federal credit unions.

The final rule:

• Amends the current rule to exclude from total assets any loan a federal credit union reports under the Small Business Administration’s Paycheck Protection Program (PPP) or similar future programs approved for exclusion by the NCUA Board;
• Deletes from the current regulation references to the Credit Union System Investment Program and the Credit Union Homeowners Affordability Relief Program, both of which no longer exist;
• Amends the period used for the calculation of a federal credit union’s total assets; and
• Incorporates minor technical changes.

This final rule is effective 30 days after date of publication in the Federal Register.

Board Approves Issuing Final Notice on OTR and Operating Fee Schedule Methodologies

Staff from the NCUA’s Offices of Examination and Insurance and Chief Financial Officer briefed the Board on a final notice (opens new window) on the overhead transfer rate and the operating fee schedule methodologies.

Specifically, the offices sought approval to issue a final notice on these two matters:

• The existing principles-based overhead transfer rate methodology adopted in 2017; and
• Clarifications and changes to the agency’s methodology in determining how it apportions operating fees charged to federal credit unions.

The Board unanimously approved issuing the final notice.

The NCUA tweets all open Board meetings live. Follow @TheNCUA (opens new window) 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.

Board Action Bulletin

Proposes Rules on Shared Facility Requirements, Mortgage Servicing Rights, Overdraft Policy

ALEXANDRIA, Va. (Dec. 17, 2020) – Through a live audio webcast, the National Credit Union Administration Board today held the first of two consecutive open meetings in December. At today’s meeting, the Board approved these five items:

• A proposed rule revising the definition of a service facility for multiple common bond federal credit unions;
• A temporary final rule that extends regulatory relief measures in response to COVID-19.
• A proposed rule that permits federal credit unions to purchase mortgage-servicing rights from other federal credit unions under certain conditions;
• A proposed rule on overdraft policy; and
• A final rule on subordinated debt.

The Board also received a staff briefing on the National Credit Union Share Insurance Fund’s 2021 normal operating level.

Field of Membership Shared Facility Requirements Proposed

The definition of a service facility for multiple common-bond federal credit unions outlined in the NCUA’s Chartering and Field of Membership Manual would be revised by a proposed rule (opens new window) (Part 701, Appendix B) approved 2-1 by the Board.

“Today’s action is good public policy and will allow individuals greater access to affordable products and services—especially in underserved and low-income areas,” Chairman Hood said during consideration of the rule. “Removing barriers so that federal credit unions can serve additional members has been a key part of my focus on financial inclusion. And these are changes that really should have happened a long time ago.”

The Board is proposing to include any shared branch, shared ATM, or shared electronic facility in the definition of “service facility” for a multiple common-bond federal credit union that participates in a shared branching network. The federal credit union does not need to be an owner of the shared branch network for the shared branch or shared ATM to be a service facility. These changes would apply to the definition of a service facility for additions of select groups to the fields of membership of multiple common-bond federal credit unions and for expansions into underserved areas.

The Board is also seeking comments about whether it should further amend the definition of “service facility” to include a federal credit union’s interactive website or mobile banking application.

Comments on the proposed rule must be received within 30 days of publication in the Federal Register.

Regulatory Relief in Response to COVID-19 Extended

The Board unanimously approved an extension of the effective date of its temporary final rule, which modified certain regulatory requirements to help ensure that federally insured credit unions remain operational and can properly conduct appropriate liquidity management to address economic conditions caused by the COVID-19 pandemic.

Specifically, the temporary final rule (opens new window) issued by the Board in April 2020:

• Raised the maximum aggregate amount of loan participations that a federally insured credit union may purchase from a single originating lender to the greater of $5,000,000 or 200 percent of the credit union’s net worth;
• Suspended limitations on the eligible obligations that a federal credit union may purchase and hold; and
• Suspended the required timeframes for the occupancy or disposition of properties not being used for federal credit union business or that have been abandoned.

Each of these temporary modifications would have expired on December 31, 2020. Due to the continued effects of COVID-19 on credit unions and their members, the Board decided to extend these measures until December 31, 2021.

Proposed Rule to Permit Purchase of Mortgage Servicing Rights

The Board approved 2-1 a proposed rule (opens new window) to amend its investment regulation to permit federal credit unions to purchase mortgage servicing rights from other federally insured credit unions under certain conditions.

“The time has come for the NCUA to permit federal credit unions to purchase mortgage servicing rights from other federally insured credit unions,” Hood said. “The ability to do this will provide flexibility for federal credit unions to manage their mortgage servicing lines of business, and create liquidity in the credit union system while providing a more diverse business and investment opportunity for purchasers of mortgage servicing rights.”

Under the proposed rule, eligible federal credit unions may purchase the mortgage servicing rights of loans that the federal credit union is otherwise empowered to grant, provided these investments are consistent with safety and soundness and made in accordance with the federal credit union’s policies and procedures that address the risk of these investments and servicing practices.

Comments on the proposed rule must be received within 30 days of publication in the Federal Register.

Proposed Overdraft Rule to Provide Flexibility

The Board approved 2-1 a proposed rule (opens new window) that would require federal credit unions to modify the requirement that a federal credit union’s written overdraft policy.

Said Chairman Hood, “If a participating member’s account is overdrawn, the credit union will, for a fee, cover the transaction. In some cases, overdraft protection can serve as a form of short-term credit, offering credit union members greater peace of mind and flexibility in managing their finances. During times of economic stress, in particular, access to short-term credit can be especially helpful. For a working parent on a reduced income, or a small business owner trying to keep her head above water until economic recovery begins, a quick source of affordable credit could help bridge the gap.”

Specifically, the proposed rule would modify the requirement that a federal credit union’s written overdraft policy establish a time limit, not to exceed 45 calendar days, for a member to either deposit funds or obtain an approved loan from the federal credit unions to cover each overdraft.

The proposed rule would remove the 45-day limit and replace it with a requirement that the written policy must establish a specific time limit that is both reasonable and applicable to all members, for a member either to deposit funds or obtain an approved loan from the federal credit unions to cover each overdraft.

Comments on the proposed rule must be received within 30 days of publication in the Federal Register.

Final Rule on Subordinated Debt Approved

The Board unanimously approved a final rule (opens new window) that amends various parts of the NCUA’s regulations to permit low-income designated credit unions, complex credit unions, and new credit unions to issue subordinated debt for purposes of regulatory capital treatment.

“Federal credit unions borrowing in the form of subordinated debt is squarely within the statutory authority provided under law,” Hood said. “I support giving complex credit unions the authority to prudently use subordinated debt as an additional tool to comply with risk-based capital requirements, and newly chartered credit unions the ability to use this tool to get up and running. I am pleased with the balance we’ve struck with this final rule.”

The Board is finalizing the rule largely as proposed in January 2020, except for a few changes to various sections based on the comments received.

These changes include:

• Amending the definition of accredited investor;
• Providing a longer timeframe in which a credit union may issue subordinated debt after approval;
• Reducing the required number of years of pro forma financial statements an issuing credit union must provide with its application;
• Clarifying the prohibition on subordinated debt issuances outside of the United States; and
• Clarifying that the NCUA Board will publish a fee schedule only if it makes a determination to charge a fee.

This rule is effective January 1, 2022.

Normal Operating Level to Remain at 1.38 Percent

Staff from the NCUA’s Offices of Examination and Insurance and Chief Economist briefed the Board on the National Credit Union Share Insurance Fund’s normal operating level (opens new window) for 2021 and recommended the level remain unchanged at 1.38 percent.

The recommendation was based on a calculation of the normal operating level using 2020 data and the Board-approved methodology. In determining the recommendation, the following issues were considered:

• Potential impact of a moderate recession on the Share Insurance Fund;
• Potential decline of value in claims on corporate estates; and
• Projected decline in the equity ratio.

The agency reviews the normal operating level annually.

The NCUA tweets all open Board meetings live. Follow @TheNCUA (opens new window) 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.

ALEXANDRIA, Va. (Dec. 16, 2020) – Federally insured credit unions experienced double-digit asset and share-and-deposit growth over the year ending in the third quarter of 2020, according to the latest NCUA Quarterly U.S. Map Review (opens new window).

Nationally, median asset growth over the year ending in the third quarter of 2020 was 12.0 percent as compared to 1.9 percent in the third quarter of 2019. Median growth in shares and deposits over the year ending in the third quarter of 2020 was 13.4 percent as compared to 1.5 percent during the year ending in the third quarter of 2019.

Among the other highlights in the report, and compared to third quarter 2019, membership was down slightly at the median, loans outstanding declined 0.6 percent at the median, the median total delinquency rate was 47 basis points as compared to 61 basis points, the loan-to-share ratio was 62 percent as compared to 71 percent, the median annualized return on average assets was 42 basis points as compared to 65 basis points, and 82 percent of federally insured credit unions had positive net income as compared to 89 percent.

The NCUA’s Quarterly U.S. Map Review tracks performance indicators for federally insured credit unions in all 50 states and the District of Columbia and includes information on the unemployment rate and home prices for U.S. states and territories.

ALEXANDRIA, Va. (Dec. 14, 2020) – The Honorable Kyle S. Hauptman became the 24^th Board Member of the National Credit Union Administration following a swearing-in ceremony held today at the agency’s Alexandria, Virginia, headquarters.

NCUA Chairman Rodney E. Hood delivered the oath of office to Hauptman.

“I am proud to have been nominated by President Trump and confirmed by the U.S. Senate,” said Board Member Hauptman following his swearing-in. “It is an honor to serve on the Board of the National Credit Union Administration.”

Hauptman stated that he has three priorities as a Board member: managing the fallout from the current pandemic and economic downturn, expanding the role of technology, and aligning incentives.

“Credit unions were chartered to serve those of modest means. I plan to work with credit unions, my fellow Board Members, and Congress on solutions for those facing financial stress,” said Hauptman. “I want to expand technology’s role in reaching the underserved because innovation can provide more inclusive financial services. And, I have always believed that you get what you incentivize. The practice of less-frequent exam cycles for credit unions with the highest marks, for example, will incent them to maintain that benefit and allow the NCUA to focus more of its attention on problematic credit unions.”

President Donald J. Trump announced the nomination of Hauptman on June 15. The U.S. Senate Banking, Housing, and Urban Affairs Committee held its confirmation hearing on July 21, and the Senate approved his nomination on Dec. 2. Hauptman’s tenure will run through Aug. 2, 2025.

Prior to serving on the NCUA Board, Hauptman was Senator Tom Cotton’s (R-Arkansas) advisor on economic policy, as well as Staff Director of the Senate Banking Committee’s Subcommittee on Economic Policy. Before joining Senator Cotton’s office, Hauptman served on President Donald J. Trump’s transition team in 2016.

Previously, he held the position of Executive Director of the Main Street Growth Project and Senior Vice President at Jefferies & Co. He also worked at Lehman Brothers as a bond trader in New York City and in their international offices in Tokyo and Sydney. Hauptman served as a voting member on the U.S. Securities and Exchange Commission Advisory Committee on Small and Emerging Companies from 2016–2017.

Board Member Hauptman holds a master’s in business administration from Columbia Business School and a bachelor of arts from University of California, Los Angeles.

ALEXANDRIA, Va. (Dec. 10, 2020) – To ensure a transparent and open discussion of several policy issues affecting federally insured credit unions, the National Credit Union Administration Board’s December meeting will occur over a two-day period. 

The NCUA Board will meet on Thursday, Dec. 17 and on Friday, Dec. 18. Each open meeting begins at 10 a.m. Eastern and will be livestreamed on NCUA.gov. Agendas for both days are now available the agency’s public website. Copies of Board Action Memorandums and other documents related to the items considered will available online at the start of each meeting. 

For additional information about NCUA Board meetings, please visit the NCUA’s public website.