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ALEXANDRIA, Va. (Nov. 20, 2018) – The video recordings of the National Credit Union Administration’s Oct. 17, 2018, public budget briefing and Oct. 18, 2018, open Board meeting are now available on the agency’s website.

The NCUA posts videos of past Board meetings on the Board Actions webpage. Videos of the annual budget briefings, along with extensive materials related to the agency’s budget, are posted on the Budget and Supplementary Materials page.

At the October open meeting, the Board unanimously approved two items:

• A supplemental final rule that amends the agency’s 2015 risk-based capital rule to delay the effective date of the rule until Jan. 1, 2020 and raise the asset threshold for a complex credit union from $100 million to $500 million.
• A proposed rule to clarify, update, and simplify federal credit union bylaws.

The NCUA posts these videos as part of the agency’s ongoing efforts to provide transparency and to allow those unable to attend Board meetings or budget briefings 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.

ALEXANDRIA, Va. (Nov. 26, 2018) – The National Credit Union Administration has selected Andrew Leventis as its new Chief Economist.

Leventis will begin his duties on Dec. 10. He succeeds Ralph Monaco, who is retiring at the end of the year after seven years with the NCUA and more than 26 years in public service.

“I want to congratulate Andrew on his selection and welcome him to the NCUA,” Board Chairman J. Mark McWatters said. “I also want to congratulate Ralph on his retirement and thank him for his exemplary service to this agency. I have depended on his guidance and judgment, and I’m confident Andrew will continue that level of professionalism.”

Leventis joins the NCUA from the Federal Housing Finance Agency, where he served since 2005, most recently as Deputy Chief Economist. Prior to his government service, he had extensive private-sector experience as an economist and decision engineer.

Leventis holds master’s and doctoral degrees in economics from Princeton University and a bachelor’s degree in quantitative economics from Stanford University.

The Federal Financial Institutions Examination Council today provided a second update on its Examination Modernization Project.

The project identifies and assesses ways to improve the effectiveness, efficiency, and quality of community financial institutions safety and soundness examination processes, particularly through increased use of technology.  The project is a follow-up to the review of regulations under the Economic Growth and Regulatory Paperwork Reduction Act.  FFIEC members with safety and soundness examination responsibilities expect these efforts to help reduce unnecessary regulatory burden on community financial institutions.

On March 22, 2018, the FFIEC issued a press release (opens new window) providing a first update on the Examination Modernization Project.  That update noted the steps taken to improve the examination process, which included the identification of areas with the potential for the most meaningful supervisory burden reduction.  This second update is focused on tailoring examination plans and procedures based on risk, which is another area that holds promise for reducing burden.

A risk-focused supervision process is where more resources are used to address institutions or areas that present heightened risk versus those that do not.  As an initial step in enhancing their respective risk-focused approaches to supervision, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the State Liaison Committee reviewed and compared principles and processes for risk focusing examinations of community financial institutions.  This review concluded that the state and federal regulators have developed and implemented similar programs and processes for risk tailoring examinations.  Common risk tailoring principles and practices include:

• Recognizing there are financial institutions, or areas within institutions, that present low risk, and in those cases, minimum examination procedures are generally sufficient to assess the institution’s condition and risks.
• Allocating more examination resources to higher risk areas and fewer resources to lower risk areas.
• Using data from the quarterly Call Report filings to monitor changes to the institution’s business model, complexity, and risk profile between examinations.
• Leveraging available information, including analyses and conclusions from ongoing offsite monitoring and previous examinations to determine the financial institution’s risk profile and the scope of the next examination.
• Considering the financial institution’s ability to identify and control risks when risk-focusing examinations.
• Tailoring the pre-examination request list to the institution’s business model, complexity, and risk profile.
• Contacting institutions between examinations or prior to finalizing the scope of the examination to help inform an examiner’s assessment of an institution’s risk profile.
• Following up between examinations on institutions’ actions taken to address areas in need of improvement.

The FRB, FDIC, NCUA, OCC, and SLC each committed to issue reinforcing and clarifying examiner guidance to their examination staffs on these risk-focused examination principles if necessary.  Examiner guidance has or will cover the following community financial institution examination risk-focusing practices:

• Consider the unique risk profile, complexity, and business model of the institution when developing an examination plan.
• Analyze existing information such as Call Report data, publicly available information, and confidential supervisory information to help identify areas of higher and lower risk when planning examinations.
• Monitor financial institutions between examinations.
• Tailor the document request list based on the financial institution’s business model, complexity, risk profile and planned scope of review.
• Apply examination procedures in a way that reduces the level of review of low risk institutions or low risk areas.
• Discuss financial conditions, risk profiles, new or expanded business lines, and pertinent new supervisory or regulatory information with institution management prior to finalizing the scope of review.

Examiners will generally discuss the examination plan and its rationale with institution management at the beginning of the examination.

The FFIEC members may take further actions on the other areas of the examination process as the Examination Modernization Project progresses.

The FFIEC was established in March 1979 to prescribe uniform principles, standards, and report forms and to promote uniformity in the supervision of financial institutions.  It also conducts schools for examiners employed by the five federal member agencies represented on the FFIEC and makes those schools available to employees of state agencies that supervise financial institutions.  The Council consists of the following six voting members: a member of the FRB; the Chairman of the FDIC; the Director of the Bureau of Consumer Financial Protection (BCFP); the Comptroller of the Currency; the Chairman of the NCUA; and the Chairman of the SLC.

Read the latest issue of The NCUA Report online

ALEXANDRIA, Va. (Nov. 27, 2018) – The National Credit Union Administration released today the fourth quarter edition of its online newsletter.

The latest issue of The NCUA Report features a joint column from NCUA Board Chairman J. Mark McWatters and Board Member Rick Metsger, as well as articles from several NCUA offices on the agency’s initiatives and information on regulatory, supervisory, and compliance issues affecting federally insured credit unions.

Articles in the fourth quarter 2018 issue include:

• Board Message: Working Together Works Better
• How to Submit Requests to Serve A Local Community Using the Narrative Approach
• How the Enterprise Solution Modernization Program Will Benefit Credit Unions
• Agencies and Institutions Gather to Discuss Improving Diversity
• How NCUA’s Revised Merger Rule Will Impact Mergers Going Forward

The NCUA Report newsletter highlights important regulatory information that credit union managers, staff, and volunteers need to know. Users can access The NCUA Report’s articles in HTML format or view the entire issue as an interactive PDF file (opens new window). Previous issues are available on the NCUA’s website.

The next quarterly issue of the newsletter will be available in February 2019. If interested, users can subscribe to NCUA’s online newsletter (opens new window).

ALEXANDRIA, Va. (Dec. 3, 2018) – The National Credit Union Administration, the Financial Crimes Enforcement Network and three other federal depository institutions regulators issued today a joint statement encouraging depository institutions to explore innovative approaches to meet their Bank Secrecy Act and anti-money laundering compliance obligations and to further strengthen the financial system against illicit financial activity.

The joint-agency statement (opens new window) recognizes that private sector innovation, including new ways of using existing tools or adopting new technologies, can help combat money laundering, terrorist financing, and other illicit financial activity. Depository institutions are encouraged to implement innovative approaches responsibly where appropriate. The statement also makes clear that regulators are committed to continued engagement with the private sector to modernize and innovate in their BSA/AML compliance programs.

The NCUA establishes no new supervisory expectations related to the use of innovative strategies or technology like those discussed in the joint-agency statement and a credit union’s participation in such innovations related to BSA/AML compliance will not affect the agency’s assessment.

Regulators also welcome industry’s feedback on how they can best support innovative efforts through supervisory processes, regulations, and guidance. Those wishing to share such feedback in writing may do so by sending their submission electronically to FinCEN at [email protected].

Today’s statement is the result of a working group formed by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, FinCEN, the NCUA, the Office of the Comptroller of the Currency and Treasury’s Office of Terrorism and Financial Intelligence aimed at improving the effectiveness and efficiency of the BSA/AML regime.

ALEXANDRIA, Va. (Dec. 6, 2018) – Data on the financial performance of federally insured credit unions for the quarter ending Sept. 30, 2018, are now available from the National Credit Union Administration.

The NCUA’s Quarterly Credit Union 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 graphics packages illustrating financial trends in federally insured credit unions.

ALEXANDRIA, Va. (Dec. 12, 2018) – On Jan. 1, 2019, the National Credit Union Administration and six state credit union regulators will launch an alternating examination pilot program for a select group of federally insured, state-chartered credit unions.

The NCUA has posted frequently asked questions (opens new window) about the pilot program on its website. Additional information specific to each state’s program will be available in the near future. The six participating state regulators are the California Department of Business Oversight, the Florida Division of Financial Institutions, the New Hampshire Banking Department, the Oklahoma State Banking Department, the South Carolina Office of the Commissioner of Banking, and the Texas Credit Union Department.

The pilot will evaluate three alternating examination program approaches:

• Alternating lead—the NCUA and state regulators conduct joint examinations of federally insured, state-chartered credit unions, alternating which agency serves as lead each cycle.
• Alternating with limited participation—the NCUA and state regulators alternate conducting examinations with some involvement from the other agency.
• Alternating—the NCUA and state regulators alternate conducting examinations independently.

The pilot program, based on recommendations in the 2016 Exam Flexibility Initiative report (opens new window), will run for one full alternating cycle, approximately three years. It will help the NCUA and state regulators determine how an alternating examination program could improve coordination and make the best use of federal and state resources.

The pilot program is the result of ongoing work by a joint NCUA-State Supervisor working group comprised of representatives from the NCUA, several state regulators, and the National Association of State Credit Union Supervisors. The working group studies ways to improve supervisory efficiencies, maintain a sound supervisory program, and reduce the burden on federally insured, state-chartered credit unions.

ALEXANDRIA, Va. (Dec. 12, 2018) – Federally insured credit unions generally saw continued positive trends in the third quarter of 2018, according to the latest NCUA Quarterly U.S. Map Review.

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.

Nationally, overall membership continued to grow, concentrated in larger credit unions. Eighty-eight percent of federally insured credit unions reported positive net income during the first three quarters of 2018. Median annual loan growth in the year ending in the third quarter was 5.9 percent and median annual asset growth was 1.7 percent.

Board Action Bulletin

Agency Will Return to Three-Year Rolling Regulation Reviews in 2019

ALEXANDRIA, Va. (Dec. 13, 2018) – The National Credit Union Administration Board held its eleventh open meeting of 2018 at the agency’s headquarters today and unanimously approved three items:

• Lowering the normal operating level of the National Credit Union Share Insurance Fund to 1.38 percent from 1.39 percent.
• Posting the final report of the agency’s Regulatory Reform Task Force in the Federal Register, following a briefing by the Office of the General Counsel.
• A final rule making technical amendments to agency regulations to correct minor drafting errors and rescind certain unnecessary provisions.

The offices of the Chief Economist, General Counsel, and Examination and Insurance briefed the Board about the use of blockchain and other financial technologies (opens new window) by credit unions.

Board Lowers Normal Operating Level

The normal operating level (opens new window) of the National Credit Union Share Insurance Fund is now 1.38 percent, down from the previous level of 1.39 percent, set in 2017.

The normal operating level is the equity ratio set by the NCUA Board based on forecasted needs. 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 may be distributed to credit unions.

The agency intends to review the normal operating level annually.

Task Force Recommends Return to Regulation Review

The NCUA will return to its former practice of conducting three-year rolling reviews of its regulations and will post progress reports on its reform efforts on NCUA.gov every six months, following recommendations made by the agency’s Regulatory Reform Task Force (opens new window).

The final report (opens new window), which serves as the agency’s blueprint for future regulatory reform, makes detailed recommendations and is available on the NCUA.gov website and will be posted in the Federal Register. A report summary (opens new window) is also posted on the agency’s website.

The task force issued its first report (opens new window) in August 2017, which made detailed recommendations for amending or repealing regulations that were outdated, ineffective, or excessively burdensome. Since that report was issued, the agency has completed 10 of its recommendations and either proposed rules or begun action on five others.

The NCUA established the task force in 2017 to oversee the implementation of the agency’s regulatory reform agenda. That agenda was consistent with the purpose of Executive Order 13777, which was aimed at alleviating unnecessary regulatory burdens. While the NCUA, as an independent agency, was not required to comply with that order, the agency complied with its spirit.

Agency Seeks Comments on New Financial Technologies

The NCUA is seeking comments on the use of emerging financial technologies, such as blockchain and cryptocurrencies, and NCUA’s role in safeguarding the credit union system.

The agency’s Blockchain Working Group briefed the Board about opportunities and risks represented by these technologies and identified challenges around their use, including safety and soundness and regulatory compliance.

Credit unions may contact the working group by email at [email protected] with comments or concerns about new financial technologies, their plans to use them, and the possible impact on the credit union system.

Board Approves Rule Amending NCUA Regulations

The Board approved a final rule (opens new window) making technical amendments to NCUA regulations to correct minor drafting errors and rescind certain unnecessary provisions that are no longer applicable to credit unions.

These are language changes that do not substantially affect credit unions.

The final rule will become effective upon publication in the Federal Register.

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. 14, 2018) – The video recording of the Nov. 15, 2018, 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 November open meeting, the Board unanimously approved two items:

• Operating, capital, and Share Insurance Fund budgets for 2019 and 2020 to fund the agency’s essential activities and strategic priorities.
• A proposed rule to update fidelity bond requirements for corporate and natural-person credit unions, as part of the agency’s regulatory reform agenda.

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

The NCUA posts board meeting 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 the 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.