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Board Action Bulletin

Assets of CAMEL Code 3, 4 and 5 Credit Unions Fall for 10th Straight Quarter

ALEXANDRIA, Va. (April 18, 2013) – 
The National Credit Union Administration (NCUA) Board convened its fourth scheduled open meeting of 2013 at the agency’s headquarters here today. The Board received updates on the performance of the National Credit Union Share Insurance Fund (Share Insurance Fund) and Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund) for the first quarter of 2013.

“The Share Insurance Fund and the Stabilization Fund reflect an improving economy, a resilient credit union industry, continued prudent financial management, and common-sense regulation,” NCUA Board Chairman Debbie Matz said. “Assets at risk in credit unions with CAMEL codes 3, 4 and 5 have dropped for 10 straight quarters and with that, so has our level of exposure to potential losses. While we cannot predict the future with certainty, the growing strength of credit unions as a whole is a very positive sign.”

At the end of March 2013, credit unions with CAMEL codes 3, 4 and 5 held 12.6 percent of the industry’s assets—down significantly from the high of 21.9 percent at year-end 2010.

Share Insurance Fund Trends Continue in Positive Direction
NCUA’s Share Insurance Fund ended the first quarter of 2013 with net income of $9.4 million and an equity ratio of 1.31 percent, exceeding the statutory normal operating level of 1.30 percent. The equity ratio is calculated on the year-end 2012 insured base of $839 billion.

For the first quarter, investment and other income was $50.7 million, operating expenses were $32.3 million, and insurance loss expenses were $9.0 million, respectively.

Also for the first quarter, the Chief Financial Officer reported:

• The number of CAMEL code 4 and 5 credit unions dropped 8.1 percent to 339. More than half were credit unions with less than $10 million in assets.

• Assets of the CAMEL code 4 and 5 credit unions fell 11.6 percent, to $16.8 billion from $19.0 billion at the end of 2012.

• The number of CAMEL code 3 credit unions dropped to 1,558 during the quarter from 1,571 at the end of 2012. Approximately half were credit unions with assets less than $10 million.

• Assets of the CAMEL code 3 credit unions fell by 4.1 percent, to $114.4 billion from $119.3 billion at the end of 2012.

Four federally insured credit unions failed in the first quarter of 2013. The total amount of losses associated with these failures is $75,000.

The reserve balance for the Share Insurance Fund was reduced from $412.5 million to $330.4 million during the first quarter.

Stabilization Fund Stays Steady
The Chief Financial Officer also reported on the Stabilization Fund’s operations. Overall, the financial condition of the Stabilization Fund remains consistent with year-end 2012.

The Stabilization Fund had $5.1 billion in outstanding borrowings with the U.S. Treasury on March 31, 2013. The total net position of the Stabilization Fund was a deficit of $3.5 billion, a slight improvement from year-end based on net income of $14.4 million in the first quarter.

The March 31, 2013, financial statements for the Share Insurance Fund and the Stabilization Fund are preliminary and unaudited.

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. NCUA also live streams, archives and posts

videos of open Board meetings online.

Member Deposits Protected up to $250,000; Consumer Service Hotline Open

ALEXANDRIA, Va. (May 3, 2013) – The National Credit Union Administration (NCUA) today liquidated Lynrocten Federal Credit Union of Lynchburg, Va.

NCUA made the decision to liquidate Lynrocten Federal Credit Union and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations. 

Member deposits are federally insured by the National Credit Union Share Insurance Fund up to $250,000. NCUA’s Asset Management and Assistance Center will issue correspondence to individuals holding verified share accounts in the credit union within one week.

Members with additional questions about their insurance coverage may contact NCUA’s Consumer Assistance Center toll free at 800-755-1030. The Center answers calls Monday through Friday between 8 a.m. and 5 p.m. Eastern. Individuals may also visit the MyCreditUnion.gov (opens new window)website at any time for more information about their insurance coverage.

Lynrocten Federal Credit Union served 1,068 members and had assets of approximately $13.8 million, according to the credit union’s most recent Call Report. Chartered in 1936, Lynrocten Federal Credit Union served the employees of Rock-Tenn Company and their immediate family members.

Lynrocten Federal Credit Union is the sixth federally insured credit union liquidation in 2013.

Board Action Bulletin

Board also Approves Amendments to Agency Regulations

ALEXANDRIA, Va. (May 16, 2013) – The National Credit Union Administration (NCUA) Board convened its fifth scheduled open meeting of 2013 at the agency’s headquarters here today. The Board unanimously approved:

• A proposed rule giving well-managed federally insured credit unions with more than $250 million in assets limited authority to purchase specified derivatives to manage interest-rate risk upon agency approval.

• A series of technical amendments, including the transfer of authority under the Dodd-Frank Act for rulemaking for certain consumer protection laws to the Consumer Financial Protection Bureau.  

Board members also received a briefing on a proposed supplemental interagency rule amending a recently issued rule concerning appraisals for higher-priced mortgages. The supplementary rule creates new exemptions for existing manufactured homes, certain refinancings and transactions of $25,000 or less. The current interagency rule, issued Jan. 18, 2013 and effective Jan. 18, 2014, requires creditors issuing higher-priced mortgages to obtain an appraisal or appraisals meeting certain specified standards.

Rule Allows Derivatives as Interest-Rate Risk Hedge in Limited Circumstances

As part of its strategy for helping credit unions manage interest-rate risk, the NCUA Board proposes allowing certain well-managed credit unions with assets above $250 million, and with appropriate safeguards in place, to purchase limited amounts of simple derivatives—interest rate swaps and interest rate caps—as a hedge against that risk.

Board Chairman Debbie Matz explained the agency’s action comes after years of careful analysis and several advance notices of proposed rule-making seeking public comment. Currently, derivatives are among the instruments specifically prohibited by NCUA.

“Working with credit unions to manage interest-rate risk exposure is a top priority for NCUA,” Matz said. “The negative impact on balance sheets when rates rise, especially if they rise rapidly, will significantly reduce the earnings and net worth of exposed credit unions. NCUA urges credit unions to prepare for this event. After careful evaluation, the NCUA Board is proposing to allow eligible credit unions, which hold nearly 80 percent of industry assets, to purchase simple types of derivatives with certain safeguards to hedge interest-rate risk.”

NCUA has been evaluating pilot programs for limited derivatives use since 1999. That evaluation process satisfied the Board that certain credit unions can operate a limited derivatives program to hedge interest-rate risk in a safe and sound manner, provided they have sufficient experience, management capacity and infrastructure in place before beginning such a program. The Board proposes to allow the use of external service providers in limited ways when credit unions meet particular conditions and observe particular restrictions. NCUA coordinated with representatives of state credit union supervisors to develop the proposed rule.

Eligible federally chartered credit unions must apply and obtain approval from NCUA through their applicable Regional Director or the Office of National Examinations and Supervision. Eligible credit unions that are federally insured and state-chartered and are located in states that permit these investments must obtain approval from NCUA and their state supervisory authority. Credit unions applying for the authority must demonstrate how derivatives will be part of an overall interest-rate risk mitigation plan.

Credit unions may apply for one of two levels of authority under the proposed rule. The levels differ in the amount of transactions permitted, the expertise and systems requirements associated with operating a derivatives program, and certain application requirements. Only credit unions with a CAMEL code of 1, 2, or 3 and a management component of 1 or 2 may apply. Credit unions seeking Level II authority must demonstrate why Level I authority is insufficient to meet their interest-rate risk mitigation needs.

The Board is requesting specific comment on whether to institute a fee structure for credit unions that take advantage of this rule once it is finalized. Total program costs will vary based on the number of applications received, which NCUA initially estimates will range between 75 to 150 credit unions for 2014. NCUA estimates a program cost range for 2014 between $6.25 million and $10.75 million, reflecting one-time start-up costs and costs of qualifying, processing and supervising a variable number of credit unions seeking derivatives authority. Thereafter, program costs are projected to decline in 2015 to between $2.05 million to $3.85 million.

The Board issued the proposed rule with a 60-day comment period, once published in the Federal Register.

Regulatory Review Yields Amendments; New NCUA Structure Formalized

Board members approved a rule making technical amendments to several NCUA regulations as part of the agency’s three-year rolling review process.

The rule makes a number of nomenclature changes to NCUA’s regulations to reflect changes to NCUA’s office structure, including the transfer of duties and the creation of the new Office of National Examinations and Supervision. Finally, consistent with the transfers of authority to the Consumer Financial Protection Bureau (CFPB) made under Title X of the Dodd-Frank Act, the rule removes certain provisions of NCUA’s regulations that have been republished by the CFPB and includes updated cross citations to the republished regulations.

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. NCUA also live streams, archives and posts videos of open Board meetings online.

Board Action Bulletin

The NCUA Board unanimously approved placing First Kingdom Community Federal Credit Union into conservatorship.

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

The NCUA Board considered an appeal under Section 701.14 and Part 747, Subpart J of NCUA’s Rules and Regulations that remains confidential at this time.

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. NCUA also live streams, archives and posts

videos of open Board meetings online.

Member Deposits Remain Insured up to $250,000

ALEXANDRIA, Va. (May 16, 2013) – The National Credit Union Administration (NCUA) today assumed control of First Kingdom Community Federal Credit Union of Selma, Ala. 

During the conservatorship, NCUA will work to resolve issues affecting the institution’s safety and soundness. Deposits at First Kingdom Community Federal Credit Union remain protected. Administered by NCUA, the National Credit Union Share Insurance Fund continues to insure individual accounts at First Kingdom Community Federal Credit Union up to $250,000. The Share Insurance Fund, like the FDIC’s Deposit Insurance Fund, has the backing of the full faith and credit of the U.S. Government.

Chartered in 2007, First Kingdom Community Federal Credit Union serves 76 members and has assets of approximately $88,400, according to its most recent Call Report.

First Kingdom Community Federal Credit Union is a community charter credit union serving persons who live, work, worship, or attend school in, Dallas County, Ala.; businesses and other legal entities located in the county; spouses of persons who died while within First Kingdom’s field of membership; employees of the credit union; volunteers in the community; members’ immediate family or household; and organizations of such persons. 

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 Share Insurance Fund. First Kingdom Community Federal Credit Union is the second federally insured credit union placed into conservatorship during 2013.

Members who have questions about the conservatorship may review the First Kingdom Community Federal Credit Union Frequently Asked Questions document attached to this release and found online here (opens new window). 

Member Deposits Protected up to $250,000; Consumer Service Hotline Open

ALEXANDRIA, Va. (May 23, 2013) – The National Credit Union Administration (NCUA) today liquidated Electrical Workers #527 Federal Credit Union of Texas City, Texas.

NCUA made the decision to liquidate Electrical Workers #527 Federal Credit Union and discontinue its operations after determining the credit union was insolvent and had no prospect for restoring viable operations.

Member deposits are federally insured by the National Credit Union Share Insurance Fund up to $250,000. NCUA’s Asset Management and Assistance Center will issue checks to individuals holding verified share accounts in the credit union within one week. 

Electrical Workers #527 Federal Credit Union served 527 members and had assets of $622,857, according to the credit union’s most recent Call Report. Chartered in 1963, Electrical Workers #527 Federal Credit Union served a number of select groups centered primarily on electrical workers in the Texas City area.

Electrical Workers #527 Federal Credit Union is the seventh federally insured credit union liquidation in 2013.

ALEXANDRIA, Va. (June 17, 2016) – The National Credit Union Administration (NCUA) yesterday returned control of the Arrowhead Central Credit Union to its members. The largest credit union in California’s Inland Empire became the first credit union since 2007 to emerge from NCUA conservatorship.

“This is an extraordinary success story resulting from an extraordinary effort,” said NCUA Board Chairman Debbie Matz, who will share her perspective in her Chairman’s Corner column in the June issue of The NCUA Report. “Arrowhead provided essential financial services for more than 100,000 ethnically diverse members. When the credit union was on the brink of failing in June of 2010, NCUA, working with the California Department of Financial Institutions, placed Arrowhead into conservatorship. From day one, we were dedicated to restoring sound operations and safeguarding members’ hard-earned money.”

When NCUA took control, Arrowhead’s net worth ratio was down to 3.0 percent and falling fast. The credit union was on pace to lose nearly $4 million in 2010.

Since then, Matz said, “NCUA staff, a new leadership team, and our Advisory Board of 10 dedicated volunteers did a remarkable job getting Arrowhead on the path toward recovery.”

This involved focusing on Arrowhead’s core business, strengthening loan underwriting, controlling costs, and steadily following the NCUA-approved Net Worth Restoration Plan.

After nearly three years of conservatorship, this month the NCUA Board voted to return control of Arrowhead back to its members. The NCUA-recruited advisory board is now Arrowhead’s new Board of Directors and Supervisory Committee. At their first Board meeting yesterday, Arrowhead reported a net worth ratio of 10.5 percent, quarterly net income of $5.6 million, and membership of more than 116,000.

“This historic success story was made possible thanks to years of tireless, collaborative efforts,” Matz concluded. “NCUA staff, the California Department of Financial Institutions, Arrowhead’s interim and current management teams and staff, the new Board of Directors, and members never wavered in their commitment to save this credit union. Together, we pulled Arrowhead from the brink of insolvency to become a strong credit union again, providing essential financial services for its community.”

Arrowhead Central Credit Union, established in 1949, is a federally insured, state-chartered credit union that operates 11 branches. With more than 116,000 members and nearly $755 million in assets, Arrowhead is the largest credit union in California’s Inland Empire. Membership at Arrowhead is open to individuals and their family members who live, work, worship or attend school in San Bernardino and Riverside counties in California. For more information, visit www.arrowheadcu.org.

Member Deposits Remain Protected up to $250,000 by the Share Insurance Fund

ALEXANDRIA, Va. (May 31, 2013) – The National Credit Union Administration (NCUA) today announced the liquidation of the First Kingdom Community Credit Union of Selma, Ala.

Riverdale Credit Union of Selma immediately assumed First Kingdom Community Federal Credit Union’s members’ shares. The new Riverdale Credit Union members will experience no interruption in services. Riverdale Credit Union is a federally insured, state-chartered credit union with assets of $59.7 million serving 8,360 members.

The accounts of the new Riverdale Credit Union members remain federally insured by the National Credit Union Share Insurance Fund up to $250,000. Administered by NCUA, the fund has the backing of the full faith and credit of the U.S. Government.

NCUA placed First Kingdom Community Federal Credit Union into conservatorship on May 16, 2013. NCUA made the decision to liquidate First Kingdom and discontinue its operations after determining this was the best course of action for continued member service. First Kingdom served 76 members and had deposits of $88,359, according to the credit union’s most recent Call Report.

Chartered in 2007, First Kingdom Community Federal Credit Union was a community charter credit union serving persons who live, work, worship, or attend school in, Dallas County, Ala.; businesses and other legal entities located in the county; spouses of persons who died while within First Kingdom’s field of membership; employees of the credit union; volunteers in the community; members’ immediate family or household; and organizations of such persons.

Member Deposits Protected up to $250,000 by the Share Insurance Fund

ALEXANDRIA, Va. (May 31, 2013) – The National Credit Union Administration (NCUA) today liquidated NCP Community Development Federal Credit Union (NCP) of Norfolk, Va. Chartway Federal Credit Union of Virginia Beach, Va., assumed NCP’s member shares.

The accounts of the new Chartway members remain federally insured by the National Credit Union Share Insurance Fund up to $250,000. Administered by NCUA, the fund has the backing of the full faith and credit of the U.S. Government. The new Chartway members will experience no interruption in services.

Chartway is a federal credit union with more than 188,000 members and assets of $1.9 billion.

NCUA placed NCP into conservatorship on Feb. 8, 2013, to protect the credit union’s financial stability and operations. NCUA made the subsequent decision to liquidate NCP and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations. NCP served 709 members and had assets of $1.6 million, according to the credit union’s most recent Call Report.

Chartered in 1999, NCP served certain underserved communities in Norfolk, Chesapeake and Portsmouth, Va.

NCP is the eighth federally insured credit union liquidation in 2013. 

Board Action Bulletin

The NCUA Board unanimously approved placing PEF Federal Credit Union into conservatorship.

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. NCUA also live streams, archives and posts

videos of open Board meetings online.