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Agency Honored in Four Categories Recognizing Employees’ Efforts 

ALEXANDRIA, Va. (Feb. 17, 2016) – National Credit Union Administration employees pledged $101,179 to the 2015 Combined Federal Campaign of the National Capital Area, earning multiple honors from the world’s largest workplace giving campaign.

“NCUA’s employees are both dedicated public servants and model corporate citizens,” NCUA Board Chairman Debbie Matz said. “This year, the generosity of NCUA’s workforce exceeded our prescribed goal by more than 40 percent. The agency’s CFC pledge is making a significant difference in people’s lives locally, across the country and around the world.”

NCUA received awards from CFCNCA in four categories:

• The President’s Award, for reporting units with a 75 percent participation rate or per capita pledges to the campaign of at least $275. NCUA’s per capita pledge was $294.
• The Summit Award, for departments or agencies that achieve an increase of three percent in total dollars raised from the previous year. NCUA increased its contribution by more than 22.5 percent.
• The Participation Achievement Award, for entities that grow employee participation by at least two percent from the previous year. NCUA participation rose by 15 percent.
• The eGiving Award, for reporting units with at least a 10 percent increase in paperless pledges and a minimum of 10 paperless payroll donations. NCUA staff made 95 paperless donations.

NCUA staffers organized several fundraising events, including a chili cook-off, a bake sale, and an auction, during the pledge drive.

Coordinated by the Office of Personnel Management, the Combined Federal Campaign (opens new window) is the world’s largest annual workplace charity effort, with almost 200 campaigns throughout the country and overseas, raising millions of dollars each year. Pledges made by federal civilian, military and postal workers during the campaign season, which runs from Sept. 1 through Dec. 15, support eligible non-profit organizations providing health and human-service benefits.

Board Action Bulletin

Share Insurance Fund Continues Positive Trends in 2015

ALEXANDRIA, Va. (Feb. 18, 2016) – The National Credit Union Administration Board held its second open meeting of 2016 at the agency’s headquarters here today and approved a final rule giving federally insured credit unions greater flexibility and autonomy to offer member-business loans in a safe and sound manner.

The Chief Financial Officer also briefed the Board on the performance of the National Credit Union Share Insurance Fund, which had a net income of $61.3 million for 2015.

Final Member-Business Lending Rule Ushers in a “New Era”

Credit unions will have greater latitude to make commercial lending decisions under a new member-business lending rule (Part 723) unanimously approved by the Board.

“With this final rule, we begin a new era,” NCUA Board Chairman Debbie Matz said. “Today, the vast majority of credit unions making these loans have well-established member-business lending infrastructures and risk management in place.  So, it is time to transition from prescriptive limits to over-arching principles that will provide greater flexibility for credit unions to serve more member businesses.”

Part of the agency’s Regulatory Modernization Initiative, the final rule moves from prescriptive limits on credit unions—such as collateral and security requirements, equity requirements and loan limits—to principles-based regulation. As such, the rule eliminates the current member-business loan waiver process.

The increased flexibility provided by the final rule will give federally insured credit unions greater autonomy to develop and maintain member-business lending programs that best fit their members’ needs and strategic goals. Credit unions making member-business loans will need to have the people, processes and policies in place to ensure safety and soundness.

Key changes in the final rule include:

• Giving credit union loan officers the ability, under certain circumstances, to not require a personal guarantee;
• Replacing explicit loan-to-value limits with the principle of appropriate collateral and eliminating the need for a waiver;
• Lifting limits on construction and development loans;
• Exempting credit unions with assets under $250 million and small commercial loan portfolios from certain requirements; and
• Affirming that non-member loan participations do not count against the statutory member-business lending cap.

The changes finalized today are fully consistent with the requirements of the Federal Credit Union Act. The final rule does not expand credit unions’ business loan authority or modify the statutory limit on member-business lending.

Speaking about the benefits of the rule, Matz said, “Safely expanding business lending will diversify portfolios and revenue sources, improving the ability of credit unions to withstand economic downturns. It will also grow small businesses, which may not be able to obtain capital from other sources, and strengthen communities by creating jobs and fostering economic development.”

The credit union system’s total member-business lending portfolio has grown 14-fold, to $56 billion, from only $4 billion in 2000. Federally insured credit unions have generally conducted business lending safely, and the vast majority of credit unions making these loans today have well-established business lending infrastructures and solid risk management in place. Declining delinquencies and charge-offs for credit unions’ commercial loans overall indicate the solid performance of these loans.

The rule empowers credit unions to write their own policies and limits appropriate to servicing members and within their capacity. Approximately 660 smaller credit unions that currently engage in a small level of commercial lending would be exempt from the requirement to establish a commercial loan policy and hire commercial lending staff.

Additionally, the new member-business lending rule establishes a baseline minimum safety and soundness standard to protect the Share Insurance Fund. States may choose to impose higher standards, but not lower. The seven states with pre-approved member-business lending rules are grandfathered, and any state may submit a new rule for NCUA review.

No additional funds will be budgeted to implement the final rule. An incremental one-time cost of $960,000 in 2016 for staff training is already included in the Board-approved 2016 Operating Budget. NCUA also will train state examiners and provide supervisory guidance for examiners and credit unions before the full implementation date.

Most provisions of the final rule, available online
here, become effective Jan. 1, 2017. Removal of the personal guarantee requirement is effective 60 days after publication in the
Federal Register.

Share Insurance Fund Continues Strong Positive Trends

The Share Insurance Fund ended 2015 in a strong position due to continued improvement in the performance of federally insured credit unions, a strengthening economy and a decline in insurance and guarantee program liabilities.

The Share Insurance Fund ended 2015 with a 1.26 percent equity ratio. NCUA calculated the ratio on an insured share base of $961.3 billion, a 6.5 percent increase from the previous year’s insured base of $903 billion. When the Share Insurance Fund bills for the one percent capital deposit adjustment in March, the equity ratio is projected to increase to 1.29 percent.

The net position of the Share Insurance Fund was $12.2 billion at the end of 2015.

“The staff overseeing the Share Insurance Fund has an important responsibility, and the fund’s solid financial performance, backed by seven consecutive clean audits, clearly demonstrates how well they assume that responsibility,” Matz said. “NCUA’s first priority is to protect the fund and the deposits of more than 102 million credit union member accounts, and we take that job very seriously.”

Backed by the full faith and credit of the U.S. Government, the Share Insurance Fund insures member accounts up to $250,000. No member of a federally insured credit union has ever lost a penny of shares insured by NCUA.

Overall, the amount of assets in CAMEL codes 3, 4 and 5 credit unions has decreased 52.2 percent since peaking at $205.6 billion in September 2010. The continuation of these positive trends and other factors contributed to a net decrease of $13.4 million, or 7.5 percent, in the Share Insurance Fund’s reserve for insurance losses during 2015.

Year over year, the Chief Financial Officer reported:

• The number of CAMEL codes 4 and 5 credit unions fell 20.3 percent to 220 at the end of 2015, down from 276 at the end of 2014.
• Assets in CAMEL codes 4 and 5 credit unions fell 25.2 percent to $8.6 billion at the end of 2015, down from $11.5 billion at the end of 2014.
• The number of CAMEL code 3 credit unions declined 10.6 percent to 1,261 at the end of 2015, down from 1,411 at the end of 2014.
• Assets in CAMEL code 3 credit unions declined 6.0 percent to $89.7 billion at the end of 2015, down from $95.4 billion at the end of 2014.

There were 16 involuntary liquidations and assisted mergers during 2015, compared to 15 credit union failures in 2014. The total amount of losses associated with failures in 2015 was $14.8 million, a decrease of 63.4 percent from $40.4 million the previous year. Fraud was a contributing factor in 11 of these failures, at a cost of $12.3 million during 2015, compared to 7 of 15 failures in 2014 at a cost of $36.5 million.

The Chief Financial Officer also reported the Share Insurance Fund and the agency’s three other permanent funds—the Operating Fund, the Central Liquidity Facility and the Community Development Revolving Loan Fund—each received an unmodified, or “clean,” audit opinion with no reportable conditions for 2015 from the agency’s independent auditor, KPMG LLP.

Because of the positive performance, NCUA did not assess a Share Insurance Fund premium in 2015. At the Board’s open meeting in November 2015, the Board received a briefing on the proposed premium range for 2016. Staff recommended a range of zero to six basis points.

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.

Learn Best Practices for Creating Clear and Effective Management Policies

ALEXANDRIA, Va. (Feb. 19, 2016) – Credit union board directors who want to improve their strategic policymaking skills can get valuable information from a new video module released today by the National Credit Union Administration.

The new video module, “Credit Union Policies and Procedures,” along with a summary of best policy practices and resources, is available online here.

Vanessa Lowe, an economic development specialist with NCUA’s Office of Small Credit Union Initiatives, narrates the three segments included in the module. The videos explain how board members can work to develop successful strategic policies, an essential ingredient in effective leadership. Board members are responsible for setting the strategy and direction of their credit unions’ futures, so being involved in policy development helps with the successful delegation of day-to-day operations to the credit union’s management.

The video module covers important components of effective policies and procedures, including:

• How the board is responsible for the development of key policies;
• Major policies all credit unions should have in place; and
• Key differences between policies and procedures.

A quiz at the conclusion of the module assesses the viewer’s knowledge. Finishing the quiz successfully earns the viewer a certificate of completion.

The online training module is part of a video series created by NCUA’s Office of Small Credit Union Initiatives covering a variety of subjects important to credit union board members. The 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.

NCUA Participating in Military Saves Financial Readiness Fair at the Pentagon

ALEXANDRIA, Va. (Feb. 22, 2016) – Consumers now have a new interactive learning tool from the National Credit Union Administration to help them understand what it means to save and borrow at a federally insured credit union.

NCUA’s new interactive infographic, “What Is a Credit Union?” is available online here (opens new window). NCUA launched the new tool in conjunction with America Saves and Military Saves Week.

“Educating consumers about saving is a fundamental mission of credit unions and a key part of NCUA’s job,” NCUA Board Chairman Debbie Matz said. “We all have more work to do, especially as 64 percent of Americans don’t have enough cash on hand to handle a $1,000 emergency. This week is a great time for credit unions to help their members assess their financial status and take control of their financial well-being.”

Credit unions participating in America Saves and Military Saves Week are encouraged to promote automatic savings deposits, financial counseling and incentivized savings products, such as no-fee savings accounts with low opening balance requirements.

During America Saves Week (opens new window) and Military Saves Week (opens new window), which both run Feb. 22–27, consumers can visit NCUA’s MyCreditUnion.gov (opens new window)website and find links to savings tips and other useful information. NCUA’s consumer Twitter feed, @MyCUgov (opens new window), will provide savings tips all week long on topics such as saving for retirement, planning for unexpected emergencies, preparing for tax time, and setting up automatic savings. NCUA also will provide education resources to servicemembers and civilians at the Defense Department’s Financial Readiness Fair during Military Saves Week Feb. 22–26.

Credit unions are encouraged to retweet @MyCUgov savings tips to their members. Credit unions are also encouraged to visit NCUA’s financial literacy (opens new window) calendar to access a list of annual financial literacy events and learn more about opportunities to promote and engage with their members throughout the year.

America Saves and Military Saves Week are national campaigns that unite government, nonprofit and corporate groups to encourage individuals and families to save and build personal wealth. America Saves Week is coordinated by America Saves (opens new window) and the American Savings Education Council (opens new window). Military Saves (opens new window)is part of the Defense Department’s Financial Readiness Campaign and has partnered with the department since 2003.

Managed by the Consumer Federation of America (opens new window), both initiatives encourage saving, reducing debt and building wealth. Credit unions can partner with local savings campaigns and consumer organizations to offer motivational workshops and obtain posters, brochures and other resources.

Under the Federal Credit Union Act, promoting financial literacy is a core credit union mission. While credit unions serve the needs of their members and promote financial literacy within the communities they serve, NCUA works to reinforce credit union efforts, raise consumer awareness and increase access to credit union services. NCUA also participates in national financial literacy initiatives, including the Financial Literacy and Education Commission, an interagency group created by Congress to improve the nation’s financial literacy and education.

WASHINGTON (Feb. 22, 2016) – In a speech before the Governmental Affairs Conference sponsored by the Credit Union National Association, National Credit Union Administration Board Member J. Mark McWatters outlined a 21-point program to achieve what he called true regulatory relief.

McWatters laid out a broad-based proposal he said is a comprehensive approach to realizing the type of regulatory relief that is proportionate to the total burden credit unions face.

McWatters’ wide-ranging proposal covered areas of relief for credit unions that included minimizing threats to the National Credit Union Share Insurance Fund; suggestions for reviewing policies, rules, or guidance that may be out-of-date; an examination appeals process; a longer examination cycle; accountability for inappropriate examiner conduct and increased transparency and disclosure as it relates to examination findings and actions, administrative actions during the corporate crisis and stress testing methodology.

He also called for continued efforts to address fraud, a decrease—or at a minimum, a material reduction—in the growth of NCUAs operating budget, and preservation of minority and women owned credit unions.

Reaffirming his commitment to the credit union community, McWatters concluded his remarks with the promise that he would continue to advocate for true regulatory relief and a proper business approach to the supervision of credit unions. He welcomed the input of the industry and urged their continued suggestions and involvement.

The full text of Board Member McWatters’ remarks is available online here.

NCUA Board Vice Chairman Says Agency and Credit Unions Must Embrace Change

WASHINGTON (Feb. 23, 2016) – Saying credit unions and the National Credit Union Administration both must keep pace with a rapidly changing financial industry and economic environment, NCUA Board Vice Chairman Rick Metsger today pledged to take specific steps to do just that.

“As a regulator, a steward of the credit union system, it is incumbent on me not only to set safety parameters to protect your health, but also to ensure you have the flexibility to meet the evolving and diverse needs of your members,” Metsger said. “We have to provide effective supervision without impeding innovation. You should expect a regulator who listens, gives thoughtful analysis and then leads. We need to give you an opportunity to succeed, not set you up for failure.”

Metsger delivered his remarks to an audience of nearly 5,000 at the Credit Union National Association’s annual Governmental Affairs Conference. The text of his prepared remarks is available online here.

Metsger said NCUA has been “aggressively addressing the changing needs of consumers by putting greater control and responsibility into the hands of credit union boards of directors and management,” and he presented four “important and achievable goals” for 2016:

• • Deliver a final field-of-membership rule consistent with the Federal Credit Union Act that will allow credit unions to better serve their communities;
  • Work with NCUA’s Office of Small Credit Union Initiatives to offer, as an alternative to mergers, the Network Credit Union concept allowing credit unions to band together under one charter yet retain their identities;
  • Review key NCUA processes and develop recommendations for improvements; and
  • Continue to ensure credit unions’ ability to meet members’ needs.

“Let’s all be committed, as regulator and regulated, to embrace market evolution with flexibility where needed, restraint where prudent and the wisdom to know the difference,” Metsger said.

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

ALEXANDRIA, Va. (Feb. 24, 2016) – The National Credit Union Administration today liquidated the Mildred Mitchell-Bateman Hospital Federal Credit Union of Huntington, West Virginia.

Member deposits are federally 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.

NCUA’s Asset Management and Assistance Center will issue correspondence in the near future to members holding verified share accounts at the credit union. Members with additional questions about their insurance coverage may contact the Asset Management and Assistance Center toll-free at 877-715-0777 Monday through Friday between 9 a.m. and 6 p.m. Eastern. Members may also visit the Share Insurance section (opens new window) of NCUA’s MyCreditUnion.gov (opens new window)website at any time for more information about their insurance coverage.

NCUA made the decision to liquidate Mildred Mitchell-Bateman Hospital Federal Credit Union and discontinue operations after determining the credit union was insolvent and had no prospect for restoring viable operations.Chartered in 1980, Mildred Mitchell-Bateman Hospital Federal Credit Union served 57 members and had assets of $27,039, according to the credit union’s most recent Call Report. Mildred Mitchell-Bateman

Hospital Federal Credit Union primarily served employees, doctors, medical staff and technicians of the Mildred Mitchell-Bateman Hospital who work in Huntington.

Mildred Mitchell-Bateman Hospital Federal Credit Union is the second federally insured credit union liquidation in 2016.

Learn how Mergers can be an Effective Growth Strategy 

ALEXANDRIA, Va. (Feb. 26, 2016) – Credit unions contemplating mergers can get valuable information in an upcoming webinar, “Mergers as a Growth Strategy,” hosted by the National Credit Union Administration.

This 90-minute webinar will be held Wednesday, March 9, beginning at 2 p.m. Eastern. Online registration is available here (opens new window). Participants will use this same link to log into the webinar. Registrants should allow pop-ups from this website. There is no charge.

Vanessa Lowe, an economic development specialist with NCUA’s Office of Small Credit Union Initiatives, hosts a panel that includes Paul Nyman, a board member of Horizon Federal Credit Union; John McKenzie, president of the Indiana Credit Union League; Bob Jones, an economic development specialist with the Office of Small Credit Union Initiatives; and Richard Schulman, an attorney with Esp Kreuzer Cores, LLP. The topics considered during the webinar include: 

Participants may submit questions in advance at [email protected]. The subject line of the email should read, “Mergers as a Growth Strategy.” 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.

More than 23,000 Will Gain Access to Affordable Financial Services in Texas

ALEXANDRIA, Va. (Feb. 26, 2016) – The National Credit Union Administration’s Office of Consumer Protection today announced the approval of federal insurance of member’s accounts for a credit union recently chartered by the State of Texas Credit Union Department.

Jafari No-Interest Credit Union will serve approximately 23,191 potential members of three religious associations located in Texas. The credit union expects to open in the spring of this year and plans to offer regular share accounts, unsecured loans, share-secured loans and vehicle loans.

Member accounts will be 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 members’ interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund separately protects IRA and KEOUGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States.

ALEXANDRIA, Va. (March 1, 2016) – The Temporary Corporate Credit Union Stabilization Fund has received a seventh consecutive clean audit opinion, the National Credit Union Administration announced today.

During 2015, the Stabilization Fund’s financial condition remained stable, maintaining sufficient available liquidity to meet its obligations. This was the second consecutive year in which the Stabilization Fund had a positive net position. NCUA’s Chief Financial Officer will provide a detailed report at the scheduled March 24 open Board meeting.

“Credit unions have been spared billions of dollars in potential losses since 2009 because of the careful management of the Temporary Corporate Credit Union Stabilization Fund,” NCUA Board Chairman Debbie Matz said. “NCUA remains committed to effective and transparent management for the Stabilization Fund, and, if present trends continue, the agency does not expect to charge credit unions assessments for the Stabilization Fund in the future.”

KPMG LLP, the independent firm that audits the Stabilization Fund’s financial statements, issued an unmodified audit opinion with no reportable findings. The Office of the Inspector General released its report on the Stabilization Fund’s 2015 audited financial statements today. The Inspector General’s report and the Stabilization Fund’s financial statements are available online here (opens new window).

Managed by the NCUA Board, the Stabilization Fund is a revolving fund in the U.S. Treasury. The Stabilization Fund gives NCUA the necessary flexibility to manage costs to the credit union system resulting from losses on faulty mortgage-backed securities purchased by five failed corporate credit unions that NCUA liquidated during the financial crisis. The Stabilization Fund is currently scheduled to close in 2021.

With the 2015 Stabilization Fund audit complete, NCUA will soon update its two public website sections detailing Corporate System Resolution Costs and NCUA Guaranteed Notes Program information through the final quarter of 2015. NCUA will produce updated questions and answers covering final 2015 data on the total actual losses and implied write-downs on the failed corporates’ legacy assets and the most recent estimated loss projection ranges.