Board Action Bulletin
The NCUA Board considered four share insurance appeals arising out of the liquidation of Taupa Lithuanian Credit Union. The Board unanimously approved three of the appeals, and denied one appeal.
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Board Action Bulletin
ALEXANDRIA, Va. (March 20, 2014) – The National Credit Union Administration Board convened its third scheduled open meeting of 2014 at the agency’s headquarters here today. Board Members received an update on the Temporary Corporate Credit Union Stabilization Fund and unanimously approved a joint agency proposed rule on minimum requirements for appraisal management companies.
Net Position of Stabilization Fund Improves by Nearly $3.4 Billion
NCUA’s Chief Financial Officer reported on the Stabilization Fund’s operations, based on audited information. For 2013, the net position of the Stabilization Fund improved by nearly $3.4 billion from a $3.5 billion deficit at Dec. 31, 2012, to a $142.2 million deficit at Dec. 31, 2013.
“Effectively managing the Stabilization Fund to minimize federally insured credit union assessments is a top NCUA priority,” NCUA Board Chairman Debbie Matz said. “Settlements with JPMorgan Chase and Bank of America, coupled with improvements in anticipated future cash flows from legacy assets of the NCUA Guaranteed Notes program, led to a sizable improvement in the Stabilization Fund’s net position in 2013. I’m hopeful we can forgo charging assessments not only in 2014, but in future years as well.”
The NCUA Board announced at the November 2013 meeting there is no planned Stabilization Fund assessment for 2014.
The Stabilization Fund had $2.9 billion in outstanding borrowings with the U.S. Treasury on Dec. 31, 2013, a decrease of $2.2 billion for the year.
When the Stabilization Fund has outstanding borrowings from the U.S. Treasury, the Federal Credit Union Act requires NCUA to make a distribution from the Share Insurance Fund if the Share Insurance Fund has an equity ratio above the normal operating level of 1.30 percent at year’s end. As a result, NCUA transferred $95.3 million to the Stabilization Fund, which will reduce future cash needs of the Stabilization Fund. Before the transfer, the Share Insurance Fund equity ratio was 1.31 percent.
The Stabilization Fund recently received an unmodified, or clean, audit opinion for the fifth year in a row from the independent auditor KPMG LLP.
Proposed Joint Agency Rule Points Out Need for Vendor Authority
Board members approved a proposed joint agency rule on minimum requirements for appraisal management companies, but Chairman Matz noted that NCUA will not be able to enforce it because of a statutory obstacle.
“We face a regulatory blind spot,” Matz said. “NCUA can approve this interagency rule, which would strengthen regulation of appraisal management companies and should help prevent conflicts of interest, but we are unable to enforce it. NCUA remains the only financial services regulator lacking the necessary authority to examine vendors for safety and soundness and compliance with laws and regulations. NCUA will continue to call on Congress to provide this authority.”
Six federal financial regulatory agencies, including NCUA, are proposing the rule to implement the requirements of Section 1124 of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 as added by Section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The intent is to better ensure the quality of appraisals and assure compliance with the Truth in Lending Act.
The proposed rule would set minimum requirements for registration and supervision of appraisal management companies, which serve as intermediaries for appraisers and lenders and provide appraisal services. These requirements would apply to states that elect to establish an agency with authority to register and supervise appraisal management companies. Under the proposed rule, an appraisal management company that is a subsidiary of a financial institution and regulated by a federal financial services regulatory agency would not be required to register with a state, but would otherwise be required to meet the same minimum requirements as other appraisal management companies.
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.
ALEXANDRIA, Va. (March 21, 2014) – The Kansas Department of Credit Unions today liquidated Parsons Pittsburg Credit Union of Parsons, Kan., and named the National Credit Union Administration as liquidating agent.
Golden Plains Credit Union of Garden City, Kan., immediately assumed Parsons Pittsburg Credit Union’s members, assets, shares and loans. Golden Plains is a federally insured, state-chartered credit union with $418.5 million in assets and 59,413 members, according to its most recent Call Report.
The new Golden Plains Credit Union members will experience no interruption in services, and their accounts 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.
Members with questions about their accounts may contact Golden Plains Credit Union’s Parsons office at 620-421-3080 between 9 a.m. and 3 p.m. Central time Monday through Thursday and 9 a.m. and 5 p.m. on Friday. They may also contact the Call Center in Garden City between 9 a.m. and 6 p.m. Monday through Friday and 9 a.m. and 1 p.m. on Saturday at 620-275-2151 or 800-825-7661.
The Kansas Department of Credit Unions made the decision to liquidate Parsons Pittsburg Credit Union and discontinue its operations after determining the credit union was insolvent and had no prospect for restoring viable operations on its own. At the time of liquidation and subsequent purchase by Golden Plains Credit Union, Parsons Pittsburg Credit Union served 1,466 members and had assets of $13.4 million, according to its most recent Call Report.
The Administrator of the Kansas Department of Credit Unions placed Parsons Pittsburg Credit Union into conservatorship on Jan. 24, 2014, and named NCUA as agent to handle the credit union’s day-to-day operations.
Chartered in 1951, Parsons Pittsburg Credit Union served persons residing or employed within a 45-mile radius of Labette, Bourbon, Cherokee or Crawford counties in Kansas. The credit union also operated a branch in Pittsburg, Kan.
Parsons Pittsburg Credit Union is the third federally insured credit union liquidation in 2014.
ALEXANDRIA, Va. (March 31, 2014) – The National Credit Union Administration today liquidated Mayfair Federal Credit Union of Philadelphia.
Freedom Credit Union of Warminster, Pa., immediately assumed Mayfair’s members and deposits as well as a portion of the loan portfolio and other assets. Freedom Credit Union is a federally insured, state-chartered credit union serving more than 60,000 members and holding nearly $623 million in assets, according to its most recent Call Report.
The new Freedom Credit Union members will experience no interruption in services, and their accounts 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.
Members with questions about their accounts may contact Freedom Credit Union’s Call Center at 215-612-5900. The Call Center is open between 8 a.m. and 6 p.m. Monday through Thursday, 8 a.m. and 7 p.m. on Friday, and 9 a.m. and 1 p.m. on Saturday.
NCUA placed Mayfair into conservatorship in 2013 to protect the credit union’s financial stability and operations. NCUA made the subsequent decision to liquidate and discontinue operations after determining the Mayfair was insolvent with no prospect for restoring viable operations.
At the time of liquidation and subsequent purchase and assumption by Freedom Credit Union, Mayfair served 1,519 members and had assets of $14.3 million, according to the credit union’s most recent Call Report. Chartered in 1936, Mayfair served a low-income community in Philadelphia.
Mayfair Federal Credit Union is the fourth federally insured credit union liquidation in 2014.
Board Action Bulletin
ALEXANDRIA, Va. (April 24, 2014) – The National Credit Union Administration Board convened its fourth scheduled open meeting of 2014 at the agency’s headquarters here today. The Board approved three items:
A final rule to provide greater security for the credit union system by requiring capital planning and stress testing for credit unions with assets greater than $10 billion.
A proposed rule to clarify requirements for associational common bond groups for federal credit union membership and streamline approval of recognized groups.
An expansion of CME Federal Credit Union’s community charter to serve eight counties in the vicinity of Columbus, Ohio.
The Chief Financial Officer also provided the Board with an update on the performance of the National Credit Union Share Insurance Fund, which remains stable.
Board Approves Final Stress Testing Rule for Largest Credit Unions
The safety and soundness of the credit union system will be enhanced with the Board’s approval of a final rule (Part 702) requiring federally insured credit unions with assets of $10 billion or more to develop and maintain a capital plan and providing for comprehensive, independent stress testing on all covered credit unions.
“NCUA has spent five years building a stronger regulatory framework, based on the hard lessons learned during the financial crisis,” NCUA Board Chairman Debbie Matz said. “This final rule on capital planning and stress testing is designed to protect the system against a future crisis. Federally insured credit unions with assets of at least $10 billion, by virtue of their sheer size, pose the largest potential risk to the Share Insurance Fund. This rule requires that in
advance of a worst-case scenario, the largest credit unions will be prepared to increase their capital buffers in order to
protect the Share Insurance Fund.”
Stress testing is a forward-looking tool designed to evaluate whether a financial institution is holding sufficient capital to survive adverse economic events and make adjustments before a crisis occurs. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires certain financial institutions with more than $10 billion in assets to conduct annual stress tests. The NCUA Board determined it is equally important for federally insured credit unions of comparable size to undergo stress testing.
“I was pleased to see that all the comments we received on the proposed rule supported the concept of stress testing,” Matz said. “The concerns we have heard focus on how it should be implemented. This final rule and forthcoming guidance will address most of those concerns.”
Under the new rule, covered credit unions will submit an annual capital plan to NCUA for approval. NCUA will conduct the supervisory stress tests beginning this year, and the rule makes it possible for covered credit unions to conduct their own stress tests after three years if they meet certain benchmarks. Results will remain confidential during the first three years.
Currently, four credit unions exceed $10 billion in assets. A fifth credit union is projected to exceed this asset threshold before the cut-off date for the 2014 stress testing cycle begins.
Approved by a 2–1 vote, the new rule, available online
here (opens new window), will become effective 30 days after publication in the
Federal Register.
Proposed Associational Common Bond Rule Would Increase Clarity, Flexibility
The Board unanimously approved a proposed rule (Part 701) to define more clearly which associational groups do and do not qualify for membership of a federal credit union. The proposed rule would provide automatic approval for associations that do qualify.
“This regulatory relief provision is consistent with my Regulatory Modernization Initiative and would resolve an enforcement issue that arose last summer,” Matz said. “Several federal credit unions with associational groups were advertising that membership was open to anyone. Without qualifying language, that description can be inaccurate or deceptive. So, we propose to expand the ‘totality of circumstances’ test to reflect traits of legitimate associations. At the same time, the regulatory relief provision would remove unnecessary steps to approve automatically associational groups we know are legitimate.”
The proposed rule would:
Establish a threshold requirement that an association not be formed primarily for expanding the federal credit union’s membership.
Expand the criteria of the test on totality of circumstances, which determines if an association satisfies the associational common bond requirements and qualifies for inclusion in the federal credit union’s field of membership.
Grant automatic qualification under the associational common bond rules to certain categories of groups NCUA has approved in the past, like scouting groups, labor unions, electrical cooperatives, churches, ethnic organizations, and homeowner and alumni associations.
Comments on the proposed rule, available online here, must be received within 60 days of publication in the Federal Register.
CME Federal Credit Union Now Able to Serve 736,000 More in Columbus Area
More than 736,000 additional people living in an eight-county area surrounding Columbus, Ohio, are now potential members of CME Federal Credit Union, headquartered in Columbus, after the NCUA Board unanimously approved an expansion of the credit union’s community charter.
CME will now serve 1.8 million people who live, worship, attend school in, work or regularly conduct business in, as well as businesses and other legal entities located in, Delaware, Fairfield, Franklin, Licking, Madison, Morrow, Pickaway and Union counties.
Chartered in 1935 to serve city firefighters in Columbus, CME received NCUA approval in 2002 to convert to a community charter to serve Franklin County. CME currently has 28,046 members and assets of $224.4 million, according to its most recent Call Report. Before the expansion, the credit union had a potential field of membership of 1.1 million.
Board approval is required for community charters to serve a population of more than 1 million.
Share Insurance Fund Remains Steady
The Share Insurance Fund ended the first quarter of 2014 with a net loss of $300,000 and an equity ratio of 1.30 percent. NCUA calculated the ratio on an insured share base of $866.3 billion. The assets of troubled credit unions, those rated CAMEL code 4 or 5, also remained steady at 1.3 percent of federally insured credit union assets for the first quarter.
For the first quarter, investment and other income was $51.7 million, operating expenses were $41.7 million, and the provision for insurance losses was $10.3 million.
“NCUA’s core mission is to protect the Share Insurance Fund and the safety and soundness of the credit union system,” Matz said. “The number of troubled credit unions continues to decline, and insurance losses for the first quarter came in lower than expected. The steady position of the fund reflects the stability of the system overall and NCUA’s prudent management.”
Six federally insured credit unions failed during the first quarter of 2014. The total amount of losses associated with failures in the first quarter was $18.6 million.
Also for the first quarter, the Chief Financial Officer reported:
The number of CAMEL code 4 and 5 credit unions declined 9.7 percent from the first quarter of 2013, to 306.
Assets of the CAMEL code 4 and 5 credit unions were $13.6 billion, a decline of 19 percent from the first quarter of 2013.
The number of CAMEL code 3 credit unions declined 5.6 percent from the first quarter of 2013, to 1,471.
Assets of CAMEL code 3 credit unions were $107 billion, a decline of 6.5 percent from the first quarter of 2013.
NCUA did not assess a Share Insurance Fund premium in 2013. In November 2013, staff recommended to the NCUA Board a premium range of zero to five basis points of insured shares for 2014. The Board will decide whether or not to charge a premium for 2014 at the open meeting on July 31.
The first-quarter figures are preliminary and unaudited.
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@TheNCUA (opens new window) on Twitter, and access Board Action Memorandums and NCUA rule changes at
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Board Action Bulletin
The NCUA Board unanimously approved a special delegation of authority to the President of AMAC in connection with certain share insurance determinations arising out of the liquidation of Taupa Lithuanian Credit Union.
The NCUA Board unanimously denied three share insurance appeals, arising out of the liquidation of Taupa Lithuanian Credit Union.
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@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
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ALEXANDRIA, Va. (May 16, 2014) – The Director of the Michigan Department of Insurance and Financial Services today placed Health One Credit Union into conservatorship and named the National Credit Union Administration as agent to handle the credit union’s day-to-day operations. Health One Credit Union is a Michigan-chartered, federally insured credit union headquartered in Detroit.
Deposits at Health One Credit Union remain protected. Administered by NCUA, the National Credit Union Share Insurance Fund continues to insure individual accounts at Health One Credit Union up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund also 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.
The Michigan Department of Insurance and Financial Services placed Health One into conservatorship because of the recent discovery of unsafe and unsound practices. While continuing normal member services, the two agencies will work to resolve issues affecting the credit union’s safety and soundness. Members can continue to conduct normal financial transactions, deposit and access funds, make loan payments and use shares.
Health One Credit Union has 3,882 members and assets of $18.2 million, according to the credit union’s March 31, 2014, Call Report. Chartered in 1957, Health One Credit Union serves residents of Macomb, Oakland, Washtenaw and Wayne counties in Michigan, as well as other select groups. The credit union also operates a branch in Cleveland, Ohio.
Board Action Bulletin
ALEXANDRIA, Va. (May 22, 2014) – The National Credit Union Administration Board convened its fifth scheduled open meeting of 2014 at the agency’s headquarters here today. The Board unanimously approved two items:
A notice of regulatory review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 to identify rules needing modification, simplification or repeal.
An application from AERO Federal Credit Union of Glendale, Ariz., to serve underserved portions of Maricopa County, Ariz., and Bernalillo County, N.M.
The Chief Financial Officer also briefed the Board on the performance of the Temporary Corporate Credit Union Stabilization Fund, which had an improved net position in the first quarter of 2014.
Net Position of Stabilization Fund Improves by More than $100 Million
NCUA’s Chief Financial Officer reported on the Stabilization Fund’s operations, based on preliminary and unaudited information.
In the first quarter of 2014, the net position of the Stabilization Fund improved by $101.8 million from a $142.2 million deficit on Dec. 31, 2013, to a $40.4 million deficit on March 31, 2014. The improvement in the net position primarily resulted from improvements in projected cash flows relating to legacy assets in the NCUA Guaranteed Notes program.
“The continual improvement of the Stabilization Fund is the product of many factors,” NCUA Board Chairman Debbie Matz said. “The anticipated cash flows from the legacy assets are growing along with the economy, and NCUA’s ongoing efforts to hold Wall Street firms accountable for sales of faulty securities have resulted in recoveries that have strengthened the Stabilization Fund’s net position. We will continue to keep a very close watch, and I remain hopeful we will not need to charge any more assessments in the future.”
The Board announced in November 2013 there is no planned Stabilization Fund assessment for 2014. The Stabilization Fund had $101.8 million in net income during the first quarter, and $2.9 billion in outstanding borrowings with the U.S. Treasury on March 31, 2014. All obligations are scheduled to be repaid before the Stabilization Fund expires in June 2021.
NCUA Begins Comprehensive Regulatory Review Process
NCUA regulations, already subject to the agency’s self-imposed three-year rolling review, will also be reviewed under the Economic Growth and Regulatory Paperwork Reduction Act with the Board’s approval of a Notice and Request for Comment.
The law requires the Federal Financial Institutions Examination Council and its member federal banking agencies to review their regulations at least once every 10 years to identify any rules that might be outdated, ineffective, unnecessary, insufficient or excessively burdensome. NCUA is not required to participate, but the agency has elected to do so.
“This interagency review aligns perfectly with NCUA’s ongoing Regulatory Modernization Initiative,” Matz said. “Under my initiative and President Obama’s Executive Order 13579, we are committed to regular retrospective analysis of our rules with an eye towards streamlining, modernizing or even repealing regulations when appropriate. We are eager to hear new ideas about changing existing rules, and we’ll consider every recommendation to improve them.”
Matz said that, in addition to taking written comments, NCUA will host three Listening Sessions this summer where stakeholders will have an opportunity to discuss their ideas.
Under the interagency review, each agency will publish several categories of rules for public comment at regular intervals over the next two years. The categories are: Agency Programs, Applications and Reporting, Capital, Consumer Protection, Corporate Credit Unions, Directors, Officers and Employees, Money Laundering, Powers and Activities, Rules of Procedure and Safety and Soundness. Thirty-three NCUA regulations in the Applications and Reporting and Powers and Activities categories will be the first reviewed.
AERO Federal Credit Union to Expand into Two Underserved Areas
More than 2 million people living in underserved communities in and around Phoenix, Ariz., and Albuquerque, N.M., are now potential members of AERO Federal Credit Union after the NCUA Board approved an expansion of the credit union’s field of membership.
The new areas AERO will serve comprise 413 census tracts in Maricopa County, Ariz., and 81 census tracts in Bernalillo County, N.M., including portions of seven Native American reservations that have virtually no financial services. Headquartered in Glendale, Ariz., and chartered in 1958, AERO is a multiple common-bond credit union. AERO had 15,802 members and $214.7 million in assets, according to its most recent Call Report.
The underserved portions of Maricopa County AERO plans to serve have a population of more than 1 million, which requires NCUA Board approval for expansion.
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@TheNCUA (opens new window) on Twitter, and access Board Action Memorandums and NCUA rule changes at
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Board Action Bulletin
The NCUA Board unanimously denied a share insurance appeal arising out of the liquidation of Taupa Lithuanian Credit Union.
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ALEXANDRIA, Va. (May 23, 2014) – The Virginia State Corporation Commission has closed Life Line Credit Union, Inc., of Richmond, Va., and appointed the National Credit Union Administration Board as receiver to act as liquidating agent.
Virginia Credit Union, Inc., headquartered in North Chesterfield, Va., assumed all member shares. Virginia Credit Union is a federally insured, state-chartered credit union with assets of nearly $2.6 billion and 232,855 members, according to the credit union’s most recent Call Report.
Life Line Credit Union members will now become members of Virginia Credit Union and should experience no interruption in deposit services. Members with questions about share accounts may contact Virginia Credit Union weekdays beginning May 27 at 804-323-6800 or toll-free at 800-285-6609 between 8 a.m. and 6 p.m. Eastern.
The accounts of the new Virginia Credit Union members remain insured 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. Individuals may also visit the MyCreditUnion.gov (opens new window) website at any time for more information about their insurance coverage.
NCUA’s Asset Management and Assistance Center will take charge of Life Line’s assets and loans and will issue correspondence to individuals who have loans with the credit union in the near future. Members with further questions about their loans may call toll-free at 877-715-0777 Monday through Friday between 9 a.m. and 6 p.m., Eastern.
The Virginia State Corporation Commission made the decision to close Life Line and discontinue its operations after determining the credit union is insolvent and has no reasonable prospect for restoring viable operations. At the time of liquidation and subsequent assumption by Virginia Credit Union, Life Line was a federally insured, state-chartered credit union that served 2,076 members and had assets of $7.9 million, according to its most recent Call Report. Chartered in 1969, Life Line served employees of the Bon-Secours Richmond Health System and Central Virginia Health Network.
Life Line Credit Union is the fifth federally insured credit union liquidation in 2014.
