Board Approves Second-Chance Policy Changes

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 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 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 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 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 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.

Kressman Named Acting General Counsel, McKenna Retires

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 Placed In Conservatorship

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.

First Delta Federal Credit Union Placed Into Conservatorship

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. 

NCUA Charters “Bridge” Corporate Credit Unions

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 corporatesFunding 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.

NCUA Charters Additional “Bridge” Corporate FCUs

New corporates will assume existing business, ensure continuity

November 8, 2010, Alexandria, Va. – The National Credit Union Administration today announced the creation of two new bridge corporate credit unions assuming the operations of Members United Corporate of Warrenville, Ill., and Southwest Corporate of Plano, Texas. 

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

 The newly created institutions will be known as Members United Bridge Corporate Federal Credit Union and Southwest Bridge Corporate Federal Credit Union. 

 NCUA has implemented 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 were retained at 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. 

Financial Regulators Revise Business Continuity Management Booklet to Stress to Examiners the Value of Resilience to Avoid Disruptions to Operations

The members of the Federal Financial Institutions Examination Council (FFIEC) today emphasized that examiners understand how management of banks and other regulated entities, including depository financial institutions, nonbank financial institutions, bank holding companies, and third-party service providers, have prepared their operations to avoid disruptions and to recover services.

The updated Business Continuity Management booklet focuses on enterprise-wide approaches that address technology, business operations, testing, and communication strategies critical to the continuity of the business. The booklet describes principles and practices for information technology (IT) and operations designed to achieve safety and soundness, consumer financial protection, and compliance with applicable laws, regulations, and rules.

As the booklet makes clear, business continuity focuses on more than just the planning process to recover operations after an event. Business continuity also includes the continued maintenance of systems and controls for the resilience and continuity of operations. Business continuity is an integral part of the risk management life cycle of an entity’s systems, processes, and operations.

The Business Continuity Management booklet describes principles to help examiners determine whether management addresses risks related to the availability of critical financial products and services. The booklet uses common terms and builds on widely used standards to facilitate effective supervision. The updated examination procedures will also help examiners assess the adequacy of an entity’s overall business continuity management program.

The Business Continuity Management booklet is part of the FFIEC Information Technology Examination Handbook (IT Handbook) and replaces the Business Continuity Planning booklet issued in February 2015.

The IT Handbook is available at http://ithandbook.ffiec.gov/.

Attachment:
Business Continuity Management booklet (PDF)

Agency Contact Phone
Federal Reserve Darren Gersh 202.452.2955
CFPB Marisol Garibay 202.435.5160
FDIC Julianne Breitbeil 202.898.6895
NCUA Ben Hardaway 703.518.6333
OCC Stephanie Collins 202.649.6870
SLC Jim Kurtzke 202.728.5733

St. Paul Croatian Federal Credit Union Placed In Conservatorship

St. Paul Croatian Federal Credit Union is Open and Operating; Member Accounts are Safe and Federally Insured.

April 23, 2010, Alexandria, Va. — The National Credit Union Administration (NCUA) today assumed control of the operations of St. Paul Croatian Federal Credit Union, a federally chartered and federally insured credit union headquartered in Eastlake, Ohio.

Service continues uninterrupted at St. Paul Croatian Federal Credit Union. 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.

St. Paul Croatian Federal Credit Union was originally chartered in 1943 and serves members of St. Paul’s Croatian Parish in Cleveland, Ohio, spouses of persons who died while in the field of membership of this credit union, employees of the credit union, persons retired as pensioners or annuitants from the credit union, members of their immediate families, and organizations of such persons. The credit union has approximately $238.8 million in assets and almost 5,400 members.

St. Paul Croatian Federal Credit Union is the second federally insured credit union conserved in 2010.

Family First Federal Credit Union Placed Into Conservatorship

Family First is open, operating and serving its members

July 30, 2010 Alexandria, Va. – The National Credit Union Administration (NCUA) today assumed control of operations at Family First Federal Credit Union of Orem, Utah. NCUA’s goal is to continue credit union service to the members and ensure safe and sound credit union operations.

Service to Family First Federal Credit Union’s 19,476 members will continue uninterrupted. Members can conduct normal financial transactions – deposit and access funds, make loan payments and use share drafts. Family First Federal Credit Union is a full service credit union, with assets of $139.5 million, that provides financial service to people residing in Utah County, Utah.

Family First Federal Credit Union was placed into conservatorship due to declining financial condition. The credit union is not adequately capitalized under standards set forth in the Federal Credit Act, and has earnings insufficient to enable it to continue under present management. The credit union’s problems stemmed from problems in its loan portfolio.

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.

New Hope Community Development Federal Credit Union Placed In Conservatorship

New Hope Community Development Federal Credit Union is Open and Operating; Member Accounts are Safe and Federally Insured

July 22, 2009, Alexandria, Va. — The National Credit Union Administration (NCUA) today assumed control of the operations of New Hope Community Development Federal Credit Union, a federally chartered and federally insured credit union headquartered in Birmingham, Alabama.

Service continues uninterrupted at New Hope Community Development Federal 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.

New Hope Community Development Federal Credit Union was originally chartered in 1996 and serves the West End community of Birmingham, Alabama. The credit union has approximately $1.3 million in assets and just over 900 members.

The National Credit Union Administration (NCUA) is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 89 million account holders in all federal credit unions and the vast majority of state-chartered credit unions. NCUA is funded by credit unions, not tax dollars.