Board Action Bulletin
The NCUA Board considered four supervisory 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
Truth in Savings Rule Finalized to Update Overdraft Disclosures
The NCUA Board approved final rule Part 707 clarifying provisions affecting electronic disclosures of overdraft fees, overdraft fee disclosure terminology, and retail sweep accounts.
The Truth in Savings Act requires NCUA to promulgate substantially similar regulations within 90 days of the effective date of Federal Reserve’s rules. The attached rule is substantively identical to the Federal Reserve’s 2010 final rule, but contains changes in nomenclature and minor editorial and reference changes. The rule is unchanged from the interim final rule the Board issued at the July 2010 Board meeting.
Supervisory Review Committee Authorized to Hear Grant Appeals
The NCUA Board issued an interim final Interpretive Ruling and Policy Statement (IRPS) that combines IRPS 95-1 and IRPS 02-1 and adds denials of technical assistance grant reimbursements to the list of items credit unions can appeal to NCUA’s Supervisory Review Committee.
This IRPS is effective when published in the Federal Register and was issued with a 30-day comment period.
NCUA Sets Strategic Goals for 2011
The NCUA Board approved the NCUA Annual Performance Budget (APB) 2011, which serves as the agency’s annual plan. The plan outlines NCUA objectives, strategies and initiatives for the year. It also provides guidance and serves as a tool that illustrates how staff contributes to meeting agency goals and objectives.
High-priority goals include monitoring risks in federally insured credit unions and continuing to stabilize the corporate credit union system.
A cross-agency working group developed the initial draft NCUA Annual Performance Budget 2011 using input from all offices and regions. All regional and central office leadership provided concurrence.
Some significant enhancements to NCUA’s APB include: a description of agency programs and offices that contribute to goals; a clearer connection between annual objectives and strategic goals, and the addition of annual measures for each objective in addition to strategic measures. Overall, the plan is an improved management tool and offers the public and staff increased transparency.
The NCUA Strategic Plan 2011-2016 is available in NCUA’s website at this web page.
NCUSIF Ends Year with Strong Equity; TCCUSF Repays Treasury
The National Credit Union Share Insurance Fund (NCUSIF) equity ratio was 1.28 percent at December 31, 2010, based on projected collections related to the increase in estimated insured shares. The year ended with a $1.26 billion NCUSIF reserve balance — $749.1 million was added to insurance loss expense reserves over the year and $317.2 million in losses were charged against the reserve account. NCUSIF 2010 net income totaled $283.6 million.
At year-end, 368 federally insured credit unions, with assets of $43.8 billion and shares of $38.9 billion, were designated CAMEL code 4 or 5. In addition, 1,827 CAMEL 3 credit unions had assets of $156.7 billion and shares of $138.4 billion. Overall, 22.2 percent of all credit union assets were in CAMEL code 3, 4 or 5 credit unions.
Through December, 28 federally insured credit unions failed in 2010 — 18 liquidations and 10 assisted mergers. The NCUSIF cost of failures was $220.7 million during 2010.
The Temporary Corporate Credit Union Stabilization Fund (TCCUSF) total liabilities and net position was $373.5 million at year-end 2010. A $4 billion loan to stabilize the corporate credit union system was repaid to TCCUSF and subsequently repaid to Treasury on December 21. TCCUSF ended the year with no outstanding Treasury borrowings.
Financial data reported for both the Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund are preliminary and unaudited.
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 one personnel 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.
ALEXANDRIA, Va. (February 4, 2011) — The National Credit Union Administration (NCUA) today was appointed liquidating agent of Oakland Municipal Credit Union of Oakland, by the California Department of Financial Institutions (DFI); and Western Federal Credit Union of Manhattan Beach, California, immediately purchased and assumed Oakland Municipal’s assets, liabilities and members.
The new Western Federal Credit Union members will experience no interruption in credit union service, and their accounts remain federally insured up to at least $250,000 by the National Credit Union Share Insurance Fund (NCUSIF). Western Federal Credit Union is a large, full service institution with $1.5 billion in assets and 148,000 members. Western Federal Credit Union will continue to serve members of Oakland Municipal Credit Union at the existing branch office located at 150 Frank H. Ogawa Place.
At closure, Oakland Municipal had approximately $88 million in assets and served 7,800 members. The credit union was established in 1964 to serve employees of Oakland area federal, state, and local government. This is the first federally insured credit union liquidation in 2011.
ALEXANDRIA, Va. (February 15, 2011) — The National Credit Union Administration (NCUA) today placed Family First Federal Credit Union of Orem, Utah, into liquidation and Security Service Federal Credit Union of San Antonio, Texas, purchased and assumed Family First’s assets, liabilities and members.
The new Security Service Federal Credit Union members will experience no interruption in credit union service, and their accounts remain federally insured up to at least $250,000 by the National Credit Union Share Insurance Fund (NCUSIF). Security Service Federal Credit Union is a full-service institution with $6 billion in assets and 800,000 members.
NCUA assumed control of operations at Family First Federal Credit Union on July 30, 2010, with a goal of continuing credit union service to the members at a safe, sound credit union.
At closure, Family First had approximately $119 million in assets and served 18,000 members. The credit union was established in 1947 to serve employees of the Geneva Steel Company. This is the 2nd federally insured credit union liquidation in 2011.
Board Action Bulletin
Board extends 18-percent loan interest rate ceiling
The NCUA Board voted to extend the 18-percent interest rate ceiling on loans made by federal credit unions (FCUs) through September 10, 2012. The ceiling applies to all FCU lending except originations under the short-term small-dollar program, where payday alternative loans can be made under certain terms at annual percentage rates up to 28 percent.
In March 1980, Congress set a 15-percent ceiling on FCU loans and authorized the NCUA Board to raise it for periods not to exceed 18 months if money-market interest rates and credit union safety and soundness warranted. The current 18-percent ceiling has been in place since May 1987; the Board last extended that ceiling in July 2009.
Proposed incentive-based compensation rule required by law
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the NCUA Board voted to approve a draft interagency proposed rule establishing general requirements for incentive-based compensation arrangements for “covered” financial institutions. Dodd-Frank requires the NCUA, Federal Reserve, FDIC, Federal Housing Finance Agency, OCC, OTS, and SEC to jointly prescribe regulations or guidelines with respect to incentive-based compensation practices at financial institutions with total assets of $1 billion or more.
Each agency must individually review and approve the proposed rule before they jointly issue and send it to the Federal Register for publication.
Most components of NCUA’s proposed rule apply to credit unions with total assets of $1 billion or more. Where permitted by law, the NCUA Board voted to apply some components only to credit unions with total assets of $10 billion or more.
Proposal components that apply to credit unions with total assets of $1 billion or more include:
Prohibition against incentive-based compensation arrangements that encourage executive officers, employees, directors, or principal shareholders (covered persons) to expose the credit union to inappropriate risks by providing excessive compensation;
Prohibition against covered credit unions establishing or maintaining any incentive-based compensation arrangements for covered persons that encourage inappropriate risks by the covered credit union that could lead to material financial loss;
Requirement that covered credit unions provide certain information to their appropriate Federal regulator(s) concerning their incentive-based compensation arrangements for covered persons; and a
Requirement that covered credit unions maintain policies and procedures appropriate to their size, complexity and use of incentive-based compensation to help ensure compliance with these requirements and prohibitions.
Proposal components that apply to credit unions with assets of $10 billion or more include the following requirements:
Covered credit unions with $10 billion or more in total assets defer at least 50 percent of the annual incentive-based compensation of its executive officers for a period of at least 3 years and adjust the deferred payments to reflect losses or risks to the credit union that become known during the deferral period.
Board of directors of a covered credit union with $10 billion or more in total assets identify covered persons (other than executive officers) who have the ability to expose the credit union to substantial losses and approve the incentive-based compensation arrangements for these covered persons after determining that the arrangements effectively balance the financial rewards to the covered person with the risk to the credit union. An example of a credit union employee, other than an executive officer, who could expose a credit union to substantial losses as “a material risk taker” might be a loan officer with approval authority below the executive officer level.
When all agencies involved in the rulemaking approve the incentive-based compensation proposal, it will be issued with a 45-day comment period.
Proposal removes term “credit ratings”; offers alternatives
In another action required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the NCUA Board issued proposed rules to remove references to nationally recognized statistical rating organization (NRSRO) credit ratings in NCUA regulations and to substitute other standards of credit worthiness.
The proposed amendments would replace NRSRO ratings with either narrative standards or a credit union’s own internal standard. Under the proposal, credit unions would be required to explain how the securities it purchases or counterparties with which it does business meet the applicable standards. Credit unions would be required to develop, maintain and apply criteria for assessing the creditworthiness of securities and counterparties.
The proposal is issued with a 60-day comment period.
Corporate credit union chartering guidelines updated
The NCUA Board issued a final Interpretive Ruling and Policy Statement (IRPS) that provides the requirements and process for chartering a corporate federal credit union. NCUA issued the updated IRPS to ensure chartering guidance is available for those interested in forming a new corporate federal credit union.
The IRPS, Corporate Federal Credit Union Chartering Guidelines, is effective 30 days following publication in the Federal Register.
NCUSIF begins 2011 with 1.28 percent equity ratio
The National Credit Union Share Insurance Fund (NCUSIF) equity ratio was 1.28 percent at January 31, 2011. NCUSIF ended the month with a $1.23 billion reserve balance.
NCUSIF reported net income of $11.4 million during January 2011. No credit union failures occurred in January and no insurance loss expense was recorded.
There were 369 federally insured credit unions designated as CAMEL code 4 or 5 as of January 31, with assets of $42.9 billion and shares of $38.2 billion. In addition, 1,819 CAMEL code 3 credit unions had assets of $154.5 billion and shares of $136.5 billion. Overall, 21.85 percent of all credit union assets were in CAMEL code 3, 4 or 5 credit unions.
The Temporary Corporate Credit Union Stabilization Fund (TCCUSF) total liabilities and net position was $377.1 million at January 31, 2011.
Financial data reported for both the Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund are preliminary and unaudited.
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, prior to the meeting, unanimously approved deleting one of the creditor claim appeals from the agenda.
The NCUA Board voted unanimously to uphold the decisions of the Asset Management and Assistance Center denying two insurance appeals and one creditor claim appeal.
The NCUA Board unanimously approved placing Greensburg Community Federal Credit Union into conservatorship.
The NCUA Board considered one 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.
ALEXANDRIA, Va. (February 17, 2011) – The National Credit Union Administration (NCUA) today assumed control of operations at Greensburg Community Federal Credit Union of Greensburg, Pennsylvania. NCUA’s goal is to continue credit union service to the members and ensure safe and sound credit union operations.
Member deposits are safe. Their accounts are insured up to at least $250,000 by the National Credit Union Share Insurance Fund (NCUSIF), a federal fund managed by NCUA and backed by the full faith and credit of the U.S. Government.
Service to Greensburg Community Federal Credit Union’s 983 members continues uninterrupted. Members can conduct normal financial transactions – deposit and access funds, make loan payments and use share drafts. Greensburg Community Federal Credit Union has assets of $2.2 million, providing financial services to persons who live, work, worship, or go to school in, and business and other legal entities within a radius of three miles of the U.S. Post Office in Greensburg, Pennsylvania.
The decision to conserve a credit union enables the institution to continue normal operations with expert management in place correcting previous service and operational weaknesses. This is the first federal credit union conservatorship of 2011.
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 NCUSIF.
Member Accounts Remain Safe and Federally Insured
ALEXANDRIA, Va. (February 23, 2011) — The National Credit Union Administration (NCUA) today placed NYC OTB Federal Credit Union, located in New York, New York, into liquidation.
NCUA made the decision to close NYC OTB Federal Credit Union and discontinue its operation after determining the credit union is insolvent and has no prospects for restoring viable operations. NYC OTB’s sponsor closing and the credit union’s subsequent declining financial condition led to the closure. At the time of the liquidation, the $1,456,884 credit union, chartered in 1972, served 868 members of the New York City Off-Track Betting Corporation in New York City. This is the third federally insured credit union liquidation in 2011.
NCUA’s Asset Management and Assistance Center will issue checks to individuals holding verified share accounts in NYC OTB Federal Credit Union within one week.
Member accounts are insured up to $250,000, with coverage provided by the National Credit Union Share Insurance Fund, a federal fund backed by the full faith and credit of the U.S. Government. Members with questions about their insurance coverage can contact NCUA’s Share Insurance Call center at 1-800-755-1030, Press 1, Monday through Friday during normal business hours.
ALEXANDRIA, Va. (March 4, 2011) — The National Credit Union Administration (NCUA) today was appointed liquidating agent of Wisconsin Heights Credit Union of Ogema, Wisconsin, by the Wisconsin Office of Credit Unions.
NCUA immediately signed an agreement with CoVantage Credit Union of Antigo, Wisconsin, to assume the members, assets and liabilities of Wisconsin Heights Credit Union. Wisconsin Heights Credit Union’s members will experience no interruption of credit union service. Their accounts remain federally insured by the National Credit Union Share Insurance Fund (NCUSIF) up to at least $250,000.
CoVantage Credit Union serves the people who live or work in the Wisconsin counties of Brown, Clark, Florence, Forest, Langlade, Lincoln, Marathon, Menominee, Oconto, Oneida, Outagamie, Portage, Shawano, Waupaca and Wood; or Dickinson and Iron counties in Michigan. CoVantage Credit Union has $861 million in assets and serves over 62,000 members.
CoVantage Credit Union is a full-service credit union with eight branches in Wisconsin and two branches in the Upper Peninsula of Michigan.
Wisconsin Heights Credit Union’s declining financial condition led to its closure and subsequent purchase and assumption. At closure, Wisconsin Heights Credit Union had $713,000 in assets and served 501 members. Wisconsin Heights Credit Union is the fourth federally insured credit union liquidation in 2011.
