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ALEXANDRIA, Va. (Jan. 7, 2020) – The National Credit Union Administration today issued its annual letter to credit unions listing its 2020 supervisory priorities as well as updates on regulations and the agency’s modernization programs.

The full letter is available in the Letters to Credit Unions and Other Guidance section of NCUA.gov.

“This is going to be an exciting and productive year for the NCUA,” Chairman Rodney E. Hood said. “We made important strides in 2019 towards updating regulations, easing burdens on credit unions, as well as modernizing our examination process. These efforts will continue in the new year.

“Credit unions and their members can be assured the NCUA’s commitment to safety and soundness and to protecting the Share Insurance Fund is the foundation for everything we do,” Hood said. “By providing a modern regulatory system and supervision framework that is effective without being excessive, we will maintain a strong credit union system that promotes innovation, inclusion, and member services.”

The agency’s 2020 supervisory priorities are:

• Bank Secrecy Act and anti-money-laundering compliance;
• Consumer financial protection;
• Cybersecurity;
• Credit risk and liquidity risk;
• Continue monitoring the implementation of  the new standard for current expected credit losses, or CECL; and
• Planning for the transition from the London Interbank Offered Rate, or LIBOR, as the benchmark for setting interest rates.

The letter also describes the NCUA’s modernization efforts, including the planned general release of NCUA Connect, the agency’s new user portal, and MERIT, the new examination platform.

Finally, the letter summarizes statutory and regulatory updates, including additional guidance on serving legal hemp businesses; changes in the appraisal threshold for commercial real estate transactions; the amended supervisory committee audits rule, which took effect Jan. 6; and the amended public unit and nonmember shares rule, which takes effect Jan. 29.

ALEXANDRIA, Va. (Dec. 17, 2019) – Federally insured credit unions generally saw continued positive trends in the third quarter of 2019, according to the latest NCUA Quarterly U.S. Map Review (opens new window).

Growth trends in the credit union system continued in the third quarter of 2019, though loan growth slowed from a year earlier. Median loan growth in the year ending in the third quarter was 3.8 percent, and median asset growth was 1.9 percent. Almost 90 percent of federally insured credit unions reported positive net income at the end of the quarter.

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.

Board Action Bulletin

Risk-Based Capital Rule Delayed; Normal Operating Level Stays at 1.38 Percent

ALEXANDRIA, Va. (Dec. 12, 2019) – The National Credit Union Administration Board held its eleventh open meeting of 2019 at the agency’s headquarters today and approved two items:

• Operating, capital, and National Credit Union Share Insurance Fund budgets for 2020 and 2021.
• A two-year delay for the effective date of the agency’s risk-based capital rule.

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

Agency Budgets Set for 2020, 2021

Board members approved, by a 2 to 1 vote, the agency’s budgets for 2020 and 2021 (opens new window). The combined operating, capital, and Share Insurance Fund administrative budgets for 2020 will be $347.4 million. The combined budgets for 2021 will be $360.1 million.

Budget	2020	2021
Operating budget	$315.9 million	$328 million
Capital budget	$25.1 million	$25.2 million
Share Insurance Fund budget	$6.5 million	$6.9 million

Operating budgets for both years assume 1,185 full-time equivalent positions.

Overhead Transfer Rate Set at 61.3 Percent; Operating Fee Rises 1.13 Percent

The 2020 overhead transfer rate will be 61.3 percent, and the operating fee will increase by an average of 1.13 percent for natural-person federal credit unions with assets of more than $1 million.

Detailed information on the overhead transfer rate and operating fee is available in the 2020–2021 Budget Justification (opens new window).

Federal credit unions will fund 70 percent of the NCUA’s 2020 operating budget, and federally insured, state-chartered credit unions will fund 30 percent.

The NCUA will charge federal credit unions the operating fee in March 2020, and payments will be due in April 2020.

The NCUA uses the operating fee to pay the agency’s costs of regulating federal credit unions. The overhead transfer rate is a transfer from the Share Insurance Fund to cover insurance-related expenses paid by both federal credit unions and federally insured, state-chartered credit unions.

Risk-Based Capital Implementation Delayed to 2022

The NCUA’s risk-based capital rule will become effective on Jan. 1, 2022, under a final rule (opens new window) approved by a 2 to 1 vote.

Normal Operating Level Remains at 1.38 Percent 

The normal operating level (opens new window) of the National Credit Union Share Insurance Fund will remain at 1.38 percent.

The normal operating level is the equity level set by the NCUA Board based on an economic stress analysis. The Federal Credit Union Act allows the NCUA Board to set the normal operating level between 1.20 percent and 1.50 percent. Funds available beyond the established normal operating level are distributed to credit unions when all of the statutory criteria are met.

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. 6, 2019) – Data on the financial performance of federally insured credit unions for the quarter ending Sept. 30, 2019, are now available (opens new window) from the National Credit Union Administration.

Beginning with the third-quarter data report, the NCUA has added a new feature: a spreadsheet listing all federally insured credit unions active as of Sept. 30, including key metrics.

The NCUA’s Quarterly Data Summary Reports include an overview of the quarterly Call Report data as well as tables showing the recent history of major credit union performance indicators.

The NCUA also makes extensive credit union system performance data available in the Credit Union Analysis section of NCUA.gov. The analysis section includes quarterly data summaries as well as detailed financial information and a graphics package illustrating financial trends in federally insured credit unions.

WASHINGTON – Five Federal financial regulatory agencies today issued a joint statement on the use of alternative data in underwriting by banks, credit unions, and non-bank financial firms.

The statement from the Federal Reserve Board (Federal Reserve), the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA) notes the benefits that using alternative data may provide to consumers, such as expanding access to credit and enabling consumers to obtain additional products and more favorable pricing and terms. The statement explains that a well-designed compliance management program provides for a thorough analysis of relevant consumer protection laws and regulations to ensure firms understand the opportunities, risks, and compliance requirements before using alternative data.

Alternative data includes information not typically found in consumers’ credit reports or customarily provided by consumers when applying for credit. Alternative data include cash flow data derived from consumers’ bank account records. The agencies recognize that use of alternative data in a manner consistent with applicable consumer protection laws may improve the speed and accuracy of credit decisions and may help firms evaluate the creditworthiness of consumers who currently may not obtain credit in the mainstream credit system.

Attachment: Interagency Statement on the Use of Alternative Data in Credit Underwriting (opens new window)

Agency	Contact	Phone
Federal Reserve	Susan Stawick	202.452.2955
FDIC	Brian Sullivan	202.898.6534
OCC	Paul Ross	202.649.6870
CFPB	Marisol Garibay	202.435.5160
NCUA	John Fairbanks	703.518.6336

Board Action Bulletin

NCUA Seeks Comment on Higher Real Estate Appraisal Threshold

ALEXANDRIA, Va. (Nov. 21, 2019) – The National Credit Union Administration Board held its tenth open meeting of 2019 at the agency’s headquarters today and unanimously approved two items:

• A final interpretive ruling and policy statement to expand career opportunities for individuals convicted of certain minor offenses.
• A proposed rule raising the threshold for requiring a residential real estate appraisal from $250,000 to $400,000.

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

Policy Changes Would Offer Second Chances on Some Prohibitions

The NCUA Board approved a final interpretive ruling and policy statement (opens new window) allowing people convicted of certain minor offenses to return to work in the credit union industry without applying for the Board’s approval.

“I am pleased with the NCUA Board’s approval of the final second chance rule,” NCUA Chairman Rodney E. Hood said. “The second chance final rule expands the list of exceptions to the application requirement, providing employment opportunities to those who pose no risk to the safety and soundness of the credit union system. This adjustment is not only about regulatory relief, but also it is simply the right thing to do. Expanding career opportunities for those who have taken responsibility for past indiscretions is consistent with Americans’ shared values of forgiveness and redemption.”

Section 205(d) of the Federal Credit Union Act prohibits anyone convicted of a criminal offense involving dishonesty or breach of trust, or who has entered into a pretrial diversion or similar program in connection with a prosecution for such an offense, from participating in the affairs of an insured credit union. An individual in those circumstances must apply to the NCUA Board for its consent in order to work in a credit union.

The policy change expands the list of exceptions to the application requirement. Specifically, convictions or program entries for offenses involving insufficient funds checks of aggregate moderate value, small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults will not require an application.

Since the Board’s initial proposal in July, the Federal Deposit Insurance Corporation issued a notice of proposed rulemaking (opens new window) that also aims to expand employment opportunities in the banking system for those with a history of minor, non-violent offenses.

The interpretive rule and policy statement will become effective 30 days after publication in the Federal Register.

Proposed Rule Would Lift Residential Real Estate Appraisal Threshold

The threshold for requiring appraisals for real estate transactions secured by single 1-to-4-family residential property would increase from $250,000 to $400,000 under a proposed rule (opens new window) approved by the NCUA Board.

“The NCUA has taken another positive step forward in regulatory reform by raising the appraisal level for residential mortgage loans,” Hood said. “The process of securing a loan and purchasing a home can be time-consuming and stressful, particularly for middle- and working-class borrowers and those who live in underserved areas. So any reasonable steps we can take to reduce the time needed to complete real estate transactions, to simplify the process, and to lower costs are well worth considering.”

Federally insured credit unions would still need to obtain a written estimate of market value for properties that fall below the appraisal threshold, and the proposed rule incorporates the existing statutory requirement that appraisals be subject to appropriate review for compliance with the Uniform Standards of Professional Appraisal Practice.

The proposed change would align the NCUA’s appraisal rule with a final rule issued in October by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

Comments on the proposed rule must be received within 60 days of publication in the Federal Register.

Strong Share Insurance Fund Operating Trends Continue

The National Credit Union Share Insurance Fund (opens new window) posted net income of $24.0 million in the third quarter of 2019, primarily due to strong investment income earnings.

The Share Insurance Fund’s net position was $16.7 billion at the end of the third quarter, and the equity ratio was 1.33 percent. The NCUA calculated the equity ratio on an insured share base of $1.2 trillion.

Third-quarter investment and other income was $80.1 million or a 1.4 percent decrease in income from $81.2 million during the second quarter of 2019. Operating expenses were $48.2 million. The provision for insurance losses increased by $7.9 million.

For the third quarter of 2019, the Chief Financial Officer reported:

• The number of CAMEL codes 4 and 5 credit unions decreased 2.0 percent from the second quarter of 2019 to 200 from 204. Assets for these credit unions increased 1.8 percent from the second quarter of 2019 to $11.2 billion from $11.0 billion.
• The number of CAMEL code 3 credit unions decreased 1.3 percent from the second quarter of 2019 to 861 from 872. Assets for these credit unions decreased 13.9 percent from the second quarter of 2019 to $43.4 billion from $50.4 billion.

Two federally insured credit unions failed through the third quarter of 2019, compared to six through the third quarter of 2018. Total year-to-date losses associated with failed credit unions is $40.3 million, compared to $752.5 million in the third quarter of 2018.

The third quarter figures are preliminary and unaudited.

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. (Nov. 20, 2019) – National Credit Union Administration Chairman Rodney E. Hood today announced that Frank Kressman will serve as the agency’s Acting General Counsel.

“Yesterday morning, Mike McKenna shared his decision to retire after over 30 years of service to the NCUA,” said Chairman Hood. “During this initial transition, Frank Kressman will serve as the Acting General Counsel while we continue to conduct our search for the next General Counsel of the NCUA.”

The NCUA Board approved Kressman’s selection unanimously. 

Kressman previously served as a Deputy General Counsel to the NCUA. He joined the agency in 1998 as a staff attorney.

Eastern Financial Florida Credit Union is Open and Operating; Member Accounts are Safe and Federally Insured 

April 24, 2009, Alexandria, Va. – The National Credit Union Administration (NCUA) today assumed control of the operations of Eastern Financial Florida Credit Union, a state-chartered, federally insured credit union headquartered in Miramar, Florida.

The Florida Office of Financial Regulations, Bureau of Credit Union Regulation appointed NCUA as conservator today after placing Eastern Financial Florida Credit Union into conservatorship. NCUA has assumed control of the credit union and has appointed officials from Space Coast Credit Union of Melbourne, Fla., to temporarily manage Eastern Financial Florida Credit Union’s day-to-day operations. NCUA’s goal is to continue credit union service to the members and ensure safe and sound credit union operations.

Service continues uninterrupted at Eastern Financial Florida Credit Union and members are free to make deposits, access funds, make loan payments and use share drafts. While the credit union was placed into conservatorship because of declining financial condition, the decision to conserve a credit union enables the institution to continue normal operations with expert management in place.

Member accounts are insured to at least $250,000 coverage provided by the National Credit Union Share Insurance Fund, a federal fund backed by the full faith and credit of the U.S. Government. Members with questions about their insurance coverage can contact NCUA’s Share Insurance Call center at 1-800-755-1030, Press 1, Monday through Friday during normal business hours.  

Eastern Financial Florida Credit Union was originally chartered in 1937 and today serves Broward, Miami-Dade, Palm Beach, Hillsborough, Pinellas counties and the Jacksonville area. The credit union has approximately $1.6 billion in assets and just over 200,000 members.

The credit union is open, operating and serving its members

Alexandria, VA, October 23, 2009 – The National Credit Union Administration (NCUA) today assumed control of operations at First Delta Federal Credit Union of Marks, Mississippi.  NCUA’s goal is to continue credit union service to the members and ensure safe and sound credit union operations.

Service to First Delta Federal Credit Union’s 5,500 members will continue uninterrupted.  Members can continue to conduct normal financial transactions – deposit and access funds, make loan payments and use share drafts. First Delta Federal Credit Union is a full service credit union, with assets of $5 million, that provides financial service to people residing in Quitman, Panola, Tallahatchie and Coahoma counties in the state of Mississippi.

The decision to conserve a credit union enables the institution to continue normal operations with expert management in place correcting previous service and operational weaknesses.

Member deposits are safe. Their accounts are insured up to at least $250,000 by the National Credit Union Share Insurance Fund (NCUSIF), a federal fund managed by NCUA and backed by the full faith and credit of the U.S. Government.

The Federal Credit Union Act authorizes the NCUA Board to appoint itself conservator when necessary to conserve the assets of a federally insured credit union, protect members’ interests or protect the NCUSIF. 

Two new corporates will assume existing business, ensure continuity in system

ALEXANDRIA, Va. (October 5, 2010) – The National Credit Union Administration today announced the creation of two bridge corporate credit unions to assume operations of U.S. Central Corporate Federal Credit Union (US Central) and Western Corporate Federal Credit Union (WesCorp).

These actions, which were originally announced in conjunction with the unveiling of NCUA’s Corporate System Resolution Plan on September 24, comprise an important next phase in the transition of corporate credit unions currently under NCUA conservatorship.

The newly created institutions will be known as U.S. Central Bridge Corporate Federal Credit Union and Western Bridge Corporate Federal Credit Union. 

“The creation of bridge corporates is an important interim step toward an orderly transition which will allow consumer credit unions to exercise real choice about the future of the corporate system,” stated NCUA Chairman Debbie Matz.

NCUA is implementing a “Good Bank/Bad Bank” model to facilitate the corporate resolution process. Bridge corporate credit unions (“good banks”) are chartered by the NCUA Board to purchase and assume “good” assets and member share deposits from the conserved corporate credit unions (“bad banks”). Bridge corporate credit unions will be highly liquid and operated to ensure stability and minimize disruption of service to member credit unions. 

Other bridge corporate operational highlights include:

• No new service offerings, except in instances where there is a need to enhance the security and functionality of existing services;
• Fields of membership will be identical to those of the conserved credit unions they replace;
• New loans will be provided primarily for settlement purposes, and existing loans will continue to be serviced;
• Bridge corporate balance sheets will consist of assets and liabilities sufficient to sustain operational activities of the bridge corporate;
• Payments and settlement activities will be the focus of the bridge corporates. Funding will not be secured to build an asset portfolio above this stated purpose;
• Bridge corporates will not accept new members; and
• In the interest of continuity of service at bridge corporates, critical staff will be encouraged to transition to the bridge corporate.

NCUA is committed to operating bridge corporates in a way that minimizes disruption of services provided to members. However, the bridge corporate cannot operate indefinitely. Bridge leadership will consult with members to develop a viable long-term plan that would enable the delivery of services transferring the bridge corporate’s operations to a newly chartered corporate credit union, or selling operations to another entity capable of providing uninterrupted services.

Should a bridge corporate’s members decide not to support the plan or another entity not be identified, NCUA is committed to operating the bridge corporate for sufficient time so that members can find individual solutions. This process could take up to 24 months.