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HeritageWest Federal Credit Union Members Now Served by Chartway Federal Credit Union; Member Accounts are Safe and Federally Insured

ALEXANDRIA, Va. (December 31, 2009) – The National Credit Union Administration (NCUA) today liquidated HeritageWest Federal Credit Union of Tooele, Utah, and accepted Chartway Federal Credit Union’s offer to purchase and assume the credit union.

 

Chartway Federal Credit Union purchased and assumed HeritageWest Federal Credit Union’s assets, loans and shares, enabling HeritageWest members to continue to receive uninterrupted credit union service. HeritageWest Federal Credit Union’s declining financial condition led to its closure and subsequent purchase and assumption by Chartway Federal Credit Union. At closure, HeritageWest Federal Credit Union had $311 million in assets and served 40,000 members.

Chartway Federal Credit Union is a full service credit union and its new members will have access to a broad array of financial services offered throughout the United States. With assets of $1.2 billion, Chartway FCU serves approximately 154,000 members located throughout the country. Chartway has 52 branch locations in Arkansas, Florida, Georgia, New Jersey, North Carolina, Ohio, Rhode Island, Texas, and Virginia and also serves its members through nearly 4,000 shared service locations nationwide.

Member accounts are insured to at least $250,000 by the National Credit Union Share Insurance Fund, a federal insurance fund backed by the full faith and credit of the U.S. Government. This is the 15th federally insured credit union liquidation in 2009.

Members Now Served By Self-Help Federal Credit Union

ALEXANDRIA, Va. (January 8, 2010) – The National Credit Union Administration (NCUA) was today appointed liquidating agent of Kern Central Credit Union (Kern Central) of Bakersfield, California, by the California Department of Financial Institutions (DFI).

Self-Help has $75.2 million in assets and serves approximately 15,000 members. It is a full service credit union located in Durham, North Carolina. Self-Help will continue to operate Kern Central’s 3 branch locations. In addition, the new members will have access to a broad array of financial services offered across the United States through Self-Help’s six branch offices in California and a shared branching network with over 5,500 sites nationwide.

At liquidation, Kern Central had approximately $34.9 million in assets and served approximately 8,400 members. Kern Central was established in 1974 to serve employer groups within a 25-mile radius. The credit union subsequently expanded its field of membership to serve individuals working and living in Kern County, California. This is the first federally insured credit union liquidation in 2010.

Board Action Bulletin

The NCUA Board appointed Elizabeth Whitehead Region V Director.

The NCUA Board considered one supervisory matter that remains confidential at this time.

The NCUA Board considered two personnel matters that remain confidential at this time.

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

National Credit Union Share Insurance Fund report

 

NCUA’s Chief Financial Officer reported $78.4 million was added to NCUSIF reserves in December. The Fund’s reserve balance totaled $758.7 million for natural person credit unions at year-end 2009. NCUSIF reserves totaled $278.3 million at year-end 2008. The Temporary Corporate Credit Union Stabilization Fund (TCCUSF) reserve balance was $5.33 billion December 31, 2009.

 

Year 2009 ended with an NCUSIF equity ratio of 1.24 percent, somewhat lower than projected, based on higher than expected share growth in the nation’s federally insured credit unions and a higher than expected addition to loan loss reserves near year-end.

 

NCUSIF 2009 revenue and expense includes investment income of $188.8 million, premium income of $727.5 million, operating expense of $133.3 million, and insurance loss expense of $615.1 million. Through December 31, 2009, NCUSIF net income was $191.2 million.

 

Twenty-eight federally insured credit unions failed during 2009 with charges to reserves of $124.4 million — 16 involuntary liquidations (10 became purchase and assumptions) and 12 assisted mergers.

 

With a net increase of 80 institutions during 2009, there were 351 problem code credit unions at year-end 2009, with shares of $41.6 billion representing 5.82 percent of total insured shares. In comparison, 271 problem code credit unions held shares of $16.3 billion representing 2.70 of total shares at year-end 2008.

 

Posing additional concern to NCUA, currently there are 1,668 code 3 credit unions, an increase of 134 from year-end 2008. These institutions represent $98.6 billion, or 13.67 percent of total insured shares. Currently, nearly 20 percent of insured shares are held in troubled or stressed credit unions.

 

Chairman Debbie Matz emphasized that NCUA is diligently working to resolve the problems of code 4 and 5 credit unions and closely tracking code 3 credit unions. Striving to sustain and return these institutions to safe operating levels, supervision is being stepped-up to stem the tide of increased problems. NCUA examiners will be onsite to assist credit unions with signs of stress.

 

Redundant credit card rule amended

 

The NCUA Board withdrew the portion of the Unfair or Deceptive Acts or Practices (UDAP) rule, Part 706, created to prohibit unfair and deceptive acts and practices related to consumer credit cards to prevent unnecessary confusion for credit union regulatory compliance. Set to become effective in July 2010, the UDAP rule duplicates, overlaps, and in some provisions conflicts with the more recent Credit CARD Act of 2009 and new Regulation Z provisions, which become effective February 22, 2010.

 

Essentially, the Credit CARD Act of 2009 and new Regulation Z provisions limit and place requirements on the same credit card practices that were the focus of the UDAP Rule, including: limiting the ability of credit card issuers to raise interest rates, limiting fees on subprime credit cards, providing for fair allocation of payments and limiting late fees.

 

Under the Truth in Lending Act and Regulation Z, NCUA has enforcement authority for federal credit unions, and the Federal Trade Commission has authority for state-chartered credit unions.

 

Complying with an Office of Federal Register request, the withdrawal is effective July 1, 2010, the original effective date of the UDAP rule.

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

National Credit Union Share Insurance Fund report

 

NCUA’s Chief Financial Officer reported the Fund’s reserve balance totaled $726.4 million January 31, 2010, with $34.3 million charged to losses during January. NCUA collected a special assessment from federally insured credit unions in December 2009, and in early February 2010, NCUA paid Treasury $311 million, making the initial payment on $1 billion the Temporary Corporate Credit Union Stabilization Fund borrowed from Treasury.

 

January 2010 ended with an NCUSIF equity ratio of 1.24 percent based on expected share growth in the nation’s federally insured credit unions. The equity ratio will be recalculated when actual year-end 2009 data is available within the next few weeks.

 

Two federally insured credit unions failed during January 2010 — 1 involuntary liquidation and 1 assisted merger.

 

There were 357 problem code credit unions at January 31, 2010, with shares of $42.0 billion representing 5.82 percent of total insured shares. In comparison, 271 problem code credit unions held shares of $16.4 billion representing 2.67 percent of total shares January 31, 2009.

 

Posing additional concern, currently there are 1,665 code 3 credit unions. These institutions represent $98.8 billion, or 13.69 percent of total insured shares.

 

During 2010, NCUSIF’s annual revenue and expenses are projected to include investment income of $216 million, other income of $55.2 million, operating expense of $174.0 million, and insurance loss expense of $750 million. Through December 31, 2010, annual projections indicate NCUSIF will face a net loss of $652.8 million.

 

Chairman Matz reiterated that NCUA is diligently working to resolve the problems of code 4 and 5 credit unions and closely tracking code 3 credit unions. NCUA is committed to sustain and return these institutions to safe operating levels.

 

Briefing details adopted interim capital rule

The NCUA Board heard an informational briefing on the interim final rule, approved by notation vote February 9^th, designed to add flexibility to the redemption of secondary capital by low-income designated credit unions (LICUs).

 

The Board acted quickly to enable LICUs to participate when the U.S. Treasury issued details of a new Community Development Capital (CDC) Initiative, a program to expand financial institution lending in low-income areas. Prior to Board action, LICUs were limited in the percentage of secondary capital they could redeem prior to maturation.

 

With approval by an NCUA regional director, the interim final regulation permits redemption of all or part of government-funded secondary capital and its matching secondary capital after it has been on deposit for two years. The amended rule’s effect is to allow LICUs to redeem secondary capital accepted under the CDC Initiative before interest rates escalate to 9 percent during the last five years of maturity. The amendment also changes the loss distribution procedures applicable to secondary capital by making CDC Initiative secondary capital senior to any required matching secondary capital.

 

The interim final rule has a 30-day comment period.

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

The NCUA Board considered a supervisory matter that remains confidential at this time.

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.

Members Now Served by Shreveport Federal Credit Union; Member Accounts are Safe and Federally Insured

Shreveport Federal Credit Union purchased and assumed Friendship Community Federal Credit Union’s assets, loans and shares, enabling Friendship Community members to continue to receive uninterrupted credit union service. Friendship Community Federal Credit Union’s declining financial condition led to its closure and subsequent purchase and assumption by Shreveport Federal Credit Union. At closure, Friendship Community Federal Credit Union had $861,696 in assets and served 685 members.

Shreveport Federal Credit Union is a full service credit union and its new members will have access to a broad array of financial services offered throughout the United States. With assets of $76 million, Shreveport Federal Credit Union serves approximately 14,500 members located throughout the country. The credit union has four branch locations in Louisiana, will maintain an office in Clarksdale, Mississippi, and also serves its members through nearly 4,000 shared service locations nationwide.

Member accounts are insured to at least $250,000 by the National Credit Union Share Insurance Fund, a federal insurance fund backed by the full faith and credit of the U.S. Government. This is the 2nd federally insured credit union liquidation in 2010.

Schools First Federal Credit Union; Member Accounts are Safe and Federally Insured

SchoolsFirst Federal Credit Union purchased and assumed Mutual Diversified Employees Federal Credit Union’s assets, loans and shares, enabling its members to continue to receive uninterrupted credit union service. Mutual Diversified’s declining financial condition led to its closure and subsequent purchase and assumption. At closure, Mutual Diversified Employees Federal Credit Union had $6.1 million in assets and served 748 members.

SchoolsFirst Federal Credit Union of Santa Ana, California, is a full service credit union and its members have access to a broad array of financial services. With assets of $8 billion, SchoolsFirst Federal Credit Union serves approximately 433,521 members through 27 branch locations and 6 express centers in Southern California.

Member accounts are insured to at least $250,000 by the National Credit Union Share Insurance Fund, a federal insurance fund backed by the full faith and credit of the U.S. Government. This is the 3rd federally insured credit union liquidation in 2010.

Members Now Served by First Choice Federal Credit Union; Member Accounts are Safe and Federally Insured

ALEXANDRIA, Va. (March 5, 2010) – The National Credit Union Administration (NCUA) today liquidated Lawrence County School Employees Federal Credit Union (Lawrence FCU) of New Castle, Pennsylvania, and accepted New Castle, Pennsylvania, based First Choice Federal Credit Union’s offer to purchase and assume the credit union.

First Choice Federal Credit Union is a full service credit union and its members have access to a broad array of financial services. With assets of $22.3 million, its two branch locations serve approximately 4,415 members who either live, work, worship, or attend school in Lawrence County, Pennsylvania or work for one of the companies in its field of membership.

Member accounts are insured to at least $250,000 by the National Credit Union Share Insurance Fund, a federal insurance fund backed by the full faith and credit of the U.S. Government. This is the 4th federally insured credit union liquidation in 2010.

Board Action Bulletin

National Credit Union Share Insurance Fund report

 

NCUA’s Chief Financial Officer reported the Fund’s reserve balance totaled $726.1 million February 28, 2010, with $1.5 million charged to insurance loss expense thus far in 2010.

 

February 2010 ended with an NCUSIF equity ratio of 1.23 percent based on the amount of shares held by the nation’s federally insured credit unions at year-end 2009. Once credit unions are billed for their 1 percent capitalization deposit adjustment, due in April, the equity ratio will rise to 1.26 percent.

 

Six federally insured credit unions have failed thus far in 2010 at a cost to the Fund of $6.7 million — 4 were involuntary liquidations and 2 were assisted mergers.

 

There were 337 CAMEL code 4&5 credit unions at February 28, 2010; 20 fewer than were reported last month.

 

The current distribution of federally insured credit union assets by CAMEL code follows:

• 81.37 percent of assets are held in CAMEL code 1&2 credit unions;
• 13.25 percent of assets are in CAMEL code 3 credit unions; and
• 5.38 percent of assets are held in CAMEL code 4&5 credit unions.

 

Through February, NCUSIF’s annual revenue and expenses included total income of $42.7 million, total expenses of $23.2 million, resulting in net income of $19.5 million.

 

During February, the Temporary Corporate Credit Union Stabilization Fund made a payment of $310 million on the $1 billion note payable to the U.S. Treasury.

 

Proposal establishes federal credit union director duties, clarifies

merger and conversion requirements       

 

The NCUA Board issued a proposed rulemaking, with a 60-day comment period, that addresses several related areas affecting federal credit union operations, and it acts to protect member rights. The proposal documents and clarifies the fiduciary duties and responsibilities of federal credit union directors. It also adds new provisions establishing procedures for insured credit unions merging into banks, and it would amend some existing regulatory procedures related to insured credit unions merging with other credit unions and converting to

banks.

 

Following-up on issues addressed in an Advance Notice of Proposed Rulemaking (ANPR) issued in 2008, the proposed rulemaking includes a new §701.4, which defines the general authorities as well as management and fiduciary duties of federal credit union directors. This section responds to the need to provide federal credit union directors with uniform standards.

 

Revisions to Part 708a address credit union conversions to mutual savings banks and credit union mergers into banks. Proposed Part 708a would better protect the secrecy and integrity of the voting process during conversion to a mutual savings bank by providing members with additional information about how the conversion could affect them, and it requires converting credit unions to provide copies of correspondence with other agencies related to the conversion.

 

The proposed rule would define and standardize procedures for credit union mergers into banks. Based on NCUA’s right and responsibility to regulate both the procedures and basic aspects of a credit union’s merger into a bank, the regulation would establish the procedures and requirements for obtaining approval of the NCUA Board and credit union members.

 

Proposed Part 708b revisions address credit union mergers with other credit unions and termination or conversion of NCUA federal deposit insurance status. The proposal adds balloting and procedure requirements to protect the integrity of the vote and ensure full and accurate disclosure to the members and to NCUA.

 

2011-2016 Strategic Plan presented to public

 

The NCUA Board heard a briefing on the NCUA Strategic Plan 2011–2016. The plan focuses on ensuring and maintaining confidence in a dynamic, safe and sound credit union system.

The plan was developed around four main objectives that include:

• Provide a broad, general, transparent roadmap of program and support operations;
• Encourage an innovative, flexible regulatory environment that increases access to financial services for all those eligible for credit union service;
• Increase alignment between essential mission functions and long-term strategic goals; and
• Align well-trained staff with existing resources and emerging issues.

The NCUA Strategic Plan 2011–2016 was issued with a 60-day public comment period.

 

Safety & soundness revisions proposed for RegFlex

 

The NCUA Board approved, by a 2 to 1 vote, proposed rule revisions to NCUA’s Regulatory Flexibility Program to enhance safety and soundness for credit unions and adjust to the decline in the economy.

 

Amending Parts 701, 723 and 742, the proposal would revise RegFlex provisions affecting fixed assets, member business loans (MBLs), stress testing of investments, and discretionary control of investments. Some of these revisions will require conforming amendments to NCUA’s fixed assets and MBL rules. The proposal was issued with a 60-day comment period.

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.