Credit Unions in Florida, Southeast Should Prepare for Hurricane Matthew

ALEXANDRIA, Va. (Oct. 5, 2016) – Credit unions in Florida and parts of the Eastern Seaboard should take steps to prepare for the arrival of Hurricane Matthew early Friday morning, the National Credit Union Administration said today.

“We’re reminding credit unions and their members to take the necessary precautions to stay safe,” NCUA Board Chairman Rick Metsger said. “Even if the storm loses strength, areas in its path should be ready for heavy rains, high winds and flooding. If they haven’t already, credit unions should review their disaster recovery plans and be prepared for increased needs for member services. Members also should take steps in case public services and transportation are disrupted, including having cash on hand if their communities lose power and credit union branches and ATMs become unavailable.”

Hurricane Matthew is currently located off the northern coast of Cuba, travelling north, northwest. Matthew is predicted to pass very close to the central Florida coast late Thursday or early Friday and potentially make landfall in that area.

In addition, hurricane-force winds and rain could affect coastal communities from Miami, Florida, to Virginia Beach, Virginia, beginning Thursday morning and lasting through Sunday afternoon. The primary threats are extreme winds, heavy, sustained rains with flooding and possible tornadoes. Storm surges up to fifteen feet or greater are possible in the immediate landfall area.

NCUA is watching the storm closely, and the agency will monitor the conditions of credit unions in Matthew’s path. NCUA will be ready to assist credit unions with maintaining or restoring operations, if necessary. The agency maintains a hurricane and disaster information page on its website with more material on preparedness and staying safe.

Credit union members with questions may contact NCUA’s Consumer Assistance Center at 800-755-1030 Monday through Friday between 8 a.m. and 5 p.m. Eastern. NCUA’s Office of Small Credit Union Initiatives can provide urgent needs grants of up to $7,500 to low-income credit unions that experience sudden costs to restore operations interrupted by the storm.

The National Weather Service has an information page on Matthew, and the Federal Emergency Management Agency has an information page on being prepared for hurricanes.

Credit union member deposits remain protected by the National Credit Union Share Insurance Fund. Administered by 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.

Members with questions about their insurance coverage can find information online at the Share Insurance Coverage page of NCUA’s MyCreditUnion.gov website.

Metsger Asks CFPB to Exempt Payday Alternative Loans in Proposed Rule

Chairman Says NCUA Regulations Provide Necessary Consumer Protection

ALEXANDRIA, Va. (Oct. 5, 2016) – National Credit Union Administration Board Chairman Rick Metsger says NCUA’s payday alternative loan rules protect consumers, and he has asked the Consumer Financial Protection Bureau to fully exempt these loans from its final payday lending rule.

In a letter to CFPB, Metsger said payday alternative loans offered by federal credit unions are “a safe, more affordable product” than typical payday loans, which can saddle consumers with unmanageable debt.

“We respectfully request the Bureau exempt FCUs completely from its final rule for loans made under and consistent with NCUA’s PALs regulation,” Metsger said in his letter. “As the prudential regulator for federal credit unions, NCUA already ensures that members receive the type of protections the Bureau is seeking to address. The Bureau should therefore defer to determinations of the FCU prudential regulator about this product.

“The National Credit Union Administration fully supports the goals of the proposed rule,” Metsger said. “NCUA continues to review its existing regulations and may consider enhancements to the PALs regulation. Additional rules from sister agencies will unnecessarily increase compliance burdens.”

Metsger said CFPB has acknowledged it “has not observed evidence that lenders making loans under the NCUA program participate in widespread questionable payment practices.”

NCUA in 2010 approved a payday alternative loan rule that included, among other conditions:

  • Loans may be for $200 to $1,000 to borrowers who have been credit union members for at least one month;
  • Terms of one to six months;
  • A maximum $20 application fee;
  • No rollovers are allowed; and
  • An interest rate of up to 28 percent APR if all other conditions are met.

The Consumer Financial Protection Bureau in June issued its proposed rule to regulate loans with terms of less than 45 days and those with terms longer than 45 days that have annual percentage interest rates greater than 36 percent and are either paid from a consumer’s account or income or are secured by the consumer’s vehicle. The proposed rule also covers some longer-term loans at less than 36 percent interest and includes only a conditional exemption for loans under NCUA’s PALs regulation. Comments on the proposed rule are due by Oct. 7.

NCUA Economic Update Video Now Available

ALEXANDRIA, Va. (Oct. 6, 2016) – After the financial turmoil and increased economic uncertainty following the United Kingdom’s decision to leave the European Union in June, underlying economic trends—mostly favorable—reasserted themselves in the U.S., according to a new Economic Update released today by the National Credit Union Administration.

The latest video in the agency’s Economic Update YouTube series is available here.

“Steady improvement in labor market conditions is boosting household income and appears to be starting to lift wages,” said NCUA Chief Economist Ralph Monaco. “Improvements in stock prices and rising home prices are lifting household wealth, and consumer optimism is relatively high.” 

Although the national outlook appears positive, Monaco warns that credit unions with ties to some areas of the country and some industries that are underperforming may face challenges. 

NCUA’s Economic Update video series is an ideal information resource for credit union board members, loan officers and management and is available on NCUA’s YouTube channel.

Extended Exam Cycle Could Begin in 2017

Exam Flexibility Initiative Makes 10 Recommendations to Improve Exam Process

ALEXANDRIA, Va. (Oct. 6, 2016) – Well-managed, low-risk federal credit unions with assets of less than $1 billion could move to an extended examination cycle beginning next year, pending approval by the NCUA Board.

The extended exam cycle is one of 10 recommendations the agency’s Exam Flexibility Initiative working group included in a report now available online. A comprehensive list of frequently asked questions and a summary of stakeholder comments are also available on the Exam Flexibility Initiative’s webpage.

“NCUA is committed to improving operations, responding to change, and finding ways to meet the needs of the credit unions we regulate while protecting the members whose money we insure,” NCUA Board Chairman Rick Metsger said. “We want to be more efficient and more effective while always putting safety and soundness first. We launched this initiative last May as part of the continual quality improvement program, and the working group has been diligent about gathering information and suggestions from credit union stakeholders throughout the process. I am looking forward to discussing the working group’s recommendations at our next Board meeting.”

NCUA Region IV Director C. Keith Morton, who led the internal working group, said stakeholder comments were important.

“We appreciate the credit union executives who participated in stakeholder conference calls discussing the challenges with NCUA’s current examination program.” Morton said. “We received thoughtful, constructive, and informative feedback and recommendations. This was very helpful to NCUA as we evaluated various actions appropriate to address concerns.”

The NCUA Board is scheduled to consider the working group’s recommendations as part of the agency’s 2017–2018 budget, scheduled to come before the Board at its Nov. 17 open meeting.

With Board approval, the following recommendations would become effective Jan. 1, 2017:

  • An extended exam cycle for well-managed, lower risk federal credit unions;
  • Enhanced examinations of small federal credit unions;
  • Enhanced coordination of exams for federally insured, state-chartered credit unions; and
  • Establishment of an NCUA and state supervisor working group.

NCUA could make other changes as of July 1, 2017, including improvements in examination planning and the issuance of a post-exam survey, if the Board approves those recommendations.

FFIEC Announces Webinars in Observance of Cybersecurity Awareness Month

The Federal Financial Institutions Examination Council (FFIEC) will host two webinars for financial institutions in October in recognition of National Cybersecurity Awareness Month.

  • Mobile Financial Services — Appendix E of the Retail Payment System Booklet, October 13, 2016, at 3 p.m. Eastern. The FFIEC members updated the Information Technology examination handbook on April 29 to address financial institutions’ use of new and emerging technologies, specifically the rapid proliferation and technological advancements in the use and capabilities of mobile devices with respect to financial services. This webinar will provide an overview of the contents of the Appendix E of the Retail Payments Systems booklet and an opportunity to receive answers to questions regarding mobile financial services. Registration is available at the following URL, https://www.webcaster4.com/Webcast/Page/583/17539.
  • Getting the Most Out of Your FS-ISAC Membership, October 31, 2016, 1 p.m. Eastern. On Nov. 3, 2014, the FFIEC members issued a statement on Cybersecurity Threat and Vulnerability Monitoring and Sharing that encouraged financial institutions to join the Financial Services-Information Sharing and Analysis Center (FS-ISAC). Many financial institutions have expressed a desire to gain a better understanding on how to filter and utilize the information they receive through this membership service. This webinar will feature a guest speaker from the FS-ISAC who will provide tips on how to manage the information flow and filter information through the membership portal. Registration is available at https://www.webcaster4.com/Webcast/Page/583/17540.

The target audience is members of the financial services sector. All registration requests will be reviewed and access may be denied for non-sector registrants.

Other recent FFIEC actions addressing cybersecurity are available at http://www.ffiec.gov/cybersecurity.htm.

NCUA Hosting Loan Underwriting Webinar

Learn to Better Decipher Lending Basics to Grow Loans and Net Income

ALEXANDRIA, Va. (Oct. 12, 2016) – Credit unions can learn new ways of approaching consumer loan underwriting in an upcoming webinar hosted by the National Credit Union Administration.

The 90-minute webinar, “Loan Underwriting: Back to the Basics!! – Looking Beyond the FICO Score” will be held Wednesday, Nov. 9, 2016, beginning at 2 p.m. Eastern. Online registration is available here. Participants will use this same link to log into the webinar. Registrants should allow pop-ups from this website. There is no charge to participate.

Tom Penna, Jr., economic development specialist with NCUA’s Office of Small Credit Union Initiatives, will be joined by Julie Wooding, principal consultant of Fair Isaac Corporation; Leslie Johnson, chief executive officer of Calcoe Federal Credit Union; Tyler Valentine, chief executive officer of Laramie Plains Federal Credit Union; and Lin Li, credit risk program officer with NCUA’s Office of Examination and Insurance.

The panel’s in-depth discussion of underwriting techniques will include:

  • Understanding popular scoring models,
  • Use of these models for developing risk-based lending policies, and
  • Success stories from the two credit union CEOs.

Participants may submit questions in advance at [email protected]. The email’s subject line should read, “Loan Underwriting: Back to the Basics.” Participants with technical questions about accessing the webinar may email [email protected]. This webinar will be closed captioned and then archived online here approximately three weeks following the live event.

NCUA’s Office of Small Credit Union Initiatives fosters credit union development and the effective delivery of financial services for small credit unions, new credit unions, minority depository institutions and credit unions with a low-income designation.

September 2016 NCUA Board Video Available

ALEXANDRIA, Va. (Oct. 12, 2016) – The video recording of the Sept. 15, 2016, open meeting of the National Credit Union Administration Board is now available on the agency’s website.

Archived videos of past Board meetings may be viewed here, and each video remains on the site for one year.

At the September meeting, the Office of Examination and Insurance briefed the Board on the rapidly changing nature of cybersecurity. The Chief Financial Officer briefed the Board on the performance of the Temporary Corporate Credit Union Stabilization Fund, which performed well in the first half of 2016.

NCUA posts these videos as part of the agency’s ongoing efforts to provide transparency and to allow those unable to attend Board meetings the opportunity to become better informed. An interval between the meeting and posting is necessary for the videos to comply with Section 508 of the Rehabilitation Act for the hearing and visually impaired.

The Board Actions page of NCUA’s website has more information, including Board agendas, which are posted at least one week in advance of each open meeting, copies of Board Action Bulletins, which summarize the meetings, copies of Board memorandums and other documents.

NCUA Posts 2017–2018 Budget Proposal

Agency Now Accepting Comments and Requests to Attend Budget Briefing

ALEXANDRIA, Va. (Oct. 14, 2016) – A detailed summary of the National Credit Union Administration’s 2017–2018 budget proposal is now available online, and the agency is accepting comments as well as requests to attend its Oct. 27 budget briefing.

“NCUA continues to provide a level of budget transparency that is considerably more than any other federal financial institutions regulator,” NCUA Board Chairman Rick Metsger said. “We post our budget documents on our website, and the summary of the staff-proposed budget will give stakeholders an early look at what the Board will consider later this year. The briefing itself offers another level of engagement, and we are taking comments online, as well. While final decisions always remain with the Board, stakeholders can contribute ideas in advance for the Board’s consideration.”

A detailed description of the budget proposal that will be discussed at the upcoming budget briefing is available on the agency’s
budget resource center.

NCUA will accept written comments on the proposed budget by email at
[email protected] until 5 p.m. Friday, Nov. 4. Comments should provide specific, actionable recommendations rather than general remarks about the size or structure of the budget.

The Oct. 27 budget briefing will be held in the NCUA Board meeting room beginning at 2 p.m. Eastern and run for approximately two hours. Due to space considerations, a limited number of people will be able to sit in the Board room, but an overflow room will be available with a livestream from the briefing. The livestream also will be available through a link on
ncua.gov.

If you wish to attend the briefing and deliver a statement, you must email a request to
[email protected] before noon Eastern on Thursday, Oct. 20. Your request must include your name, title, affiliation, mailing address, email address, and telephone number.

NCUA will work to accommodate as many public statements as possible. Prior to the briefing, NCUA will contact those we are able to accommodate to confirm the amount of time they will have available.

If you wish to attend the briefing and you are not making a presentation, you will be admitted on a first-come, first-served basis beginning at 1 p.m. Eastern on the day of the briefing. Attending the monthly open Board meeting, scheduled to begin at 9 a.m. Eastern on Oct. 27, does not automatically guarantee you a seat in the budget briefing.

FFIEC Issues Frequently Asked Questions Guide on the Cybersecurity Assessment Tool

The Federal Financial Institutions Examination Council (FFIEC), on behalf of its members, today issued a frequently asked questions (FAQ) guide related to the Cybersecurity Assessment Tool (Assessment). The FAQ guide answers questions and clarifies points in the Assessment and supporting materials based on questions received by the FFIEC members over the course of the last year.  

The FFIEC members developed the Assessment to help financial institutions’ management determine their risk profile and determine the institutions’ inherent risks and cybersecurity preparedness. The Assessment provides a repeatable and measurable process that financial institutions’ management may use to measure their cybersecurity preparedness over time. Use of the tool is voluntary, and financial institution management may choose to use the Assessment or another framework, or another risk assessment process to identify inherent risk and cybersecurity preparedness.

Management of financial institutions and management of third-party service providers are primarily responsible for assessing and mitigating their entities’ cybersecurity risk. Financial institutions can find the latest information about cybersecurity risk management at
www.ffiec.gov/cybersecurity.htm  

NCUA to Repay Treasury in Full

Agency Plans to Make $1 Billion Payment in October

ALEXANDRIA, Va. (Oct. 18, 2016) – By Oct. 31, the National Credit Union Administration plans to fully repay the $1 billion outstanding balance on the agency’s borrowing line with the U.S. Treasury.

“This marks an historic moment for both NCUA and the entire credit union system,” NCUA Board Chairman Rick Metsger said. “The success of the corporate resolution program is a testament to the hard work and perseverance of our entire team, and I extend my deep personal gratitude to all of them for making this possible.”

When that payment is made, the Temporary Corporate Credit Union Stabilization Fund’s outstanding borrowings from the U.S. Treasury will be fully repaid. NCUA’s $6 billion borrowing line with Treasury remains available to satisfy future agency contingent funding needs, including obligations of the NCUA Guaranteed Notes Program.

While Treasury borrowings will be repaid, no funds will be available to provide federally insured credit unions with an immediate rebate of Stabilization Fund assessments. Additionally, no funds are available for any recoveries by investors with claims for depleted capital of the failed corporate credit unions. NCUA must first satisfy any outstanding senior obligations of the Stabilization Fund and corporate credit union asset management estates.

Possible rebates or recoveries are based on projections that can change over time. Projected values of the Stabilization Fund and the corporate credit union asset management estates may not be realized until 2021. Future changes in the economy or the performance of the legacy assets that secure the NCUA Guaranteed Notes could change their value.

NCUA will provide additional information in the near future related to the timing of potential rebates and capital recoveries.