Markets Wired

ALEXANDRIA, Va. (July 6, 2016) – Firm labor markets and increasing consumer spending means credit risk is likely to remain low in most areas, according to a new Economic Update video released today by the National Credit Union Administration.

The latest installment of NCUA’s economic series, available here (opens new window), features three segments, making it easier for viewers to get the information relevant to them.

In the opening segment, NCUA Chief Economist Ralph Monaco reviews current economic trends and how they could affect credit union income and costs. Topics covered include recent labor market developments, housing market improvements and household spending.

In the second segment, Monaco focuses on interest rates and the outlook going forward. The mixed bag of U.S. economic statistics and heightened concern about foreign economic developments were enough to convince Federal Reserve policymakers to put off increases in short-term interest rates until later this year, at the earliest.

“The timing and pace of future rate increases will depend on how the economy performs,” Monaco said. “For most credit unions, if they are alert to changing conditions, the likely rate environment should be manageable.”

The final segment examines Brexit—the United Kingdom’s recent decision to leave the European Union and the implications for the United States and, potentially, for the credit union sector.

According to Monaco, the Brexit vote has dimmed the outlook for growth in other countries over the next few years and raised financial market uncertainty. That may eventually translate into somewhat slower U.S. growth directly, with much of the effect showing up in manufacturing and commodities production.

“Brexit reminds us that economic circumstances can change quickly,” Monaco said. “Credit unions need to be aware and ready to adapt to potential changes that can affect the financial health of their membership.”

NCUA’s Economic Update video series is an ideal information resource for credit union board members, loan officers and management. It is available on NCUA’s YouTube channel (opens new window).

Learn How Social Media Improve Your Credit Union’s Bottom Line 

ALEXANDRIA, Va. (July 12, 2016) – Credit unions can learn how to use social media to increase their web traffic, improve their brand identity and boost their lending during the National Credit Union Administration’s upcoming webinar, “Marketing – Effective Use of Social Media,” on Wednesday, Aug. 10, starting at 2 p.m. Eastern.

Lauren Bethea, economic development specialist with NCUA’s Office of Small Credit Union Initiatives will lead a panel that includes: 

• Kenneth C. Bator, CEO, Bator Training and Consulting, Inc. 
• Christopher Dukes, Intern, Office of Small Credit Union Initiatives, NCUA
• Kenzie Snowden, Social Media and Outreach Specialist, Office of Public and Congressional Affairs, NCUA
• Jeff Snyder, Communications Officer Pennsylvania Credit Union Association

During this webinar, the panel will discuss how to create a social media plan, define your credit union’s target audience, determine what messages you want to send to your audience, and how to have meaningful interactions with them. 

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 to participate in this 90-minute webinar.

Participants may submit questions in advance at [email protected]. The subject line of the email should read, “Marketing – Effective Use of Social Media.” Participants with technical questions about accessing the webinar may email [email protected]. 

ALEXANDRIA, Va. (July 13, 2016) – National Credit Union Administration Board Chairman Rick Metsger and Board Member J. Mark McWatters both issued statements welcoming President Barack Obama’s intent to nominate John Herrera of North Carolina to the NCUA Board:

“I congratulate John Herrera and hope the Senate acts quickly on his nomination,” Metsger said. “John’s experience creating the Latino Community Credit Union and at Self-Help Services will broaden the Board’s perspective and strengthen its ability to fulfill the mandate of the Federal Credit Union Act, including serving persons of modest means. I look forward to working with him to protect the deposits of America’s more than 103 million credit union members, and to expand the availability of not-for-profit cooperative financial services to unbanked and underbanked communities.”

“I congratulate John Herrera on his selection by President Obama to serve on the NCUA Board,” McWatters said. “John’s experience in working with underserved communities and involvement in creating a thriving credit union will provide much value to NCUA, federally insured credit unions and all credit union members. I wish him success as he proceeds through the nomination and confirmation process.”

Herrera is vice president of Latino and Hispanic affairs for Self-Help Services, a non-profit community development financial institution. Herrera also was a cofounder of the Latino Community Credit Union in 2000 and serves as vice chairman of the credit union’s board. It has become the largest Latino-focused credit union in the country, with 62,203 members, 11 branches, and $216.8 million in assets.

In 2013, Herrera was recognized by the White House as an Immigrant Innovator Champion of Change. From 2003 to 2010, he was a commissioner on the North Carolina Credit Union Commission. Herrera received a bachelor’s degree from the University of Delaware and a graduate degree from North Carolina State University.

ALEXANDRIA, Va. (July 14, 2016) – Credit unions interested in the National Credit Union Administration’s updated interest rate risk supervision and plans for possibly adding an “S” to the CAMEL rating can get valuable information from an upcoming agency webinar.

The webinar, “Interest Rate Risk Supervision and Adding ‘S’ to CAMEL,” is scheduled to be held Thursday, Aug. 18, beginning at 2 p.m. Eastern. There is no charge.

A panel of NCUA staff members—Larry Fazio, Director of Examination and Insurance; J. Owen Cole, Director of the Division of Capital and Credit Markets; senior capital markets specialist Thomas Fay; and economist Scott Borger—will brief participants on the agency’s revised interest rate risk supervision procedures and its plans to consider adding an “S” (for “sensitivity to market risk”) to the CAMEL rating system. Questions to be covered include:

• What are the key changes to interest rate supervision?
• Why is NCUA making changes?
• How do these changes benefit credit unions and NCUA supervision?
• What are the key dates of the revised interest rate risk supervision program?
• What are the timeline and the process for considering adding an “S” rating?

Online registration for this webinar is now open
here (opens new window). Participants also will use this link to log into the webinar. Registrants should allow pop-ups from this website. Participants may submit questions in advance at
[email protected]. The subject line of the email should read, “IRR Supervision Program.” 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.

In advance of this webinar, participants can view
the video of NCUA’s June 2016 open Board meeting, which includes a presentation by the Office of Examination and Insurance on these subjects.

New Resources Educate Consumers about Rights When Sending Money Abroad

ALEXANDRIA, Va. (July 15, 2016) – Consumers have new ways to learn about their rights and protections when sending money internationally through a new video and brochure released today by the National Credit Union Administration.  

The video, available here (opens new window), and brochure (opens new window) offer an overview of consumer protections provided under a rule (opens new window) issued by the Consumer Financial Protection Bureau (opens new window). Consumers can also find basic information on sending money domestically and internationally on NCUA’s dedicated Wire and Remittances Transfer (opens new window) page. All resources are available in Spanish (opens new window).

Consumers who use remittance services offered by certain covered remittance providers are entitled to a number of protections, including:

• disclosures showing actual exchange rates, fees, and the amount of money to be delivered in the local currency before the consumer makes a payment;
• a receipt confirming the payment;
• the right to cancel the transaction within 30 minutes of making the payment; and
• the right to dispute errors and have them resolved.

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.

ALEXANDRIA, Va. (July 18, 2016) – Consulting services provided by the National Credit Union Administration to 161 federally insured credit unions will help them grow, innovate and provide better member services, the agency announced today.

“Through the agency’s consulting services, NCUA is helping credit unions do a better job of providing affordable financial services to their members,” NCUA Board Chairman Rick Metsger said. “Thinking back to my own experience as a credit union board member, I learned the importance of the type of strategic thinking and planning our consulting program provides. I hope eligible credit unions will consider applying for our consulting program in the future.”

Credit unions chosen for the consulting program work with an experienced NCUA economic development specialist for a six-month semester. Almost half of the credit unions selected to receive consulting services during the second half of 2016 have assets of less than $10 million. Fifty-two percent are low-income-designated credit unions, and 16 percent have both the low-income and minority depository institution designation. 

Offered through NCUA’s Office of Small Credit Union Initiatives, the consulting services provide participating credit unions with assistance in developing growth strategies, planning for new products, creating succession plans, and other activities. The services are provided at no charge. A credit union can nominate itself or be nominated by an NCUA or state examiner. To be eligible for consulting assistance, a credit union must have assets of less than $100 million, have been chartered for fewer than 10 years, have a low-income designation, or be a minority depository institution.

NCUA is now accepting consulting program nominations for the first semester of 2017. An online nomination form is available here [link no longer available], and the deadline for submitting nominations is Nov. 30 at 5 p.m. Eastern.

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.

Los nuevos recursos informan a los consumidores sobre los derechos al enviar dinero al exterior

ALEXANDRIA, Va. (15 de julio de 2016) – Los consumidores tienen nuevas formas de informarse sobre los derechos y las protecciones de los que gozan al enviar dinero al exterior a través de un video y un folleto nuevos divulgados hoy por la Administración Nacional de Cooperativas de Ahorro y Crédito.

El video, disponible aquí (opens new window), y el folleto (opens new window) ofrecen una descripción general de las protecciones del consumidor otorgadas por una regla (opens new window) emitida por la Oficina para la Protección Financiera del Consumidor (opens new window). Los consumidores también pueden encontrar información básica sobre cómo enviar dinero dentro y fuera del país en la página de transferencias electrónicas y de remesas (opens new window) exclusiva de la NCUA.

Los consumidores que utilizan los servicios de remesas ofrecidos por ciertos proveedores de remesas tienen derecho a una cantidad de protecciones, entre las que se incluyen:

• divulgaciones de las tasas vigentes de cambio, cargos y la cantidad de dinero a ser entregada en moneda local antes de que el consumidor haga el pago;
• un recibo de confirmación del pago;
• el derecho a cancelar la transacción dentro de los 30 minutos de realizado el pago; y
• el derecho de disputar errores que deberán ser solucionados.

En virtud de la Ley de Cooperativas Federales de Ahorro y Crédito, promover la educación financiera es una misión primordial de las cooperativas de ahorro y crédito. Mientras que las cooperativas de ahorro y crédito satisfacen las necesidades de sus socios y promueven la educación financiera dentro de las comunidades donde prestan servicio, la NCUA trabaja para reforzar los esfuerzos de las cooperativas de ahorro y crédito, concientizar a los consumidores y aumentar el acceso a los servicios de las cooperativas de ahorro y crédito. La NCUA también participa en las iniciativas para la educación financiera a nivel nacional, incluyendo la Comisión Federal de Educación Financiera, un grupo entre agencias creado por el Congreso para mejorar la educación financiera de la nación.

Twitter Chat to Educate Servicemembers and Families on Protecting Financial Security

ALEXANDRIA, Va. (July 19, 2016) – In recent years, servicemembers have become particularly vulnerable to predatory lenders, so the National Credit Union Administration and the Federal Trade Commission will be providing information to empower servicemembers, veterans and their families to be informed consumers in an upcoming #NCUAChat.

The live chat is scheduled for Wednesday, July 27, beginning at 11 a.m. Eastern. Kenneth Worthey, a Financial Literacy and Outreach Analyst with NCUA’s Office of Consumer Protection, and FTC staff will discuss how servicemembers can protect themselves and their families from payday, auto and student loan predatory lending.

During the chat, NCUA and FTC will also share resources from their consumer sites, MyCreditUnion.gov (opens new window) and Just for You: Military Families (opens new window).

Credit unions and consumers are encouraged to follow @MyCUgov (opens new window) on Twitter and contribute to the conversation using the #NCUAChat hashtag. Participants may submit questions in advance to [email protected].

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.

Read the Latest Issue of “The NCUA Report” Online

ALEXANDRIA, Va. (July 20, 2016) – The United Kingdom’s decision to leave the European Union and the stock market’s reaction to the vote shows that credit unions need to ready for a number of potential economic and interest rate scenarios.

In the latest issue of the National Credit Union Administration’s monthly newsletter, an analysis by the Office of the Chief Economist finds that Brexit could potentially affect the energy and manufacturing sectors leading to slower economic growth in the United States, as well as push long-term rates down, further compressing credit union net interest margins.

The July 2016 issue of The NCUA Report—now available in HTML—can be found online here. 

The agency’s newsletter features columns from NCUA Board Chairman Rick Metsger and Board Member J. Mark McWatters, as well as articles from several NCUA offices on the agency’s initiatives and information on supervisory, regulatory and compliance issues that are important to all federally insured credit unions.

Articles in this month’s issue include:

• Chairman’s Corner: Money Changes Everything
• Board Member McWatters’ Perspective: A Public Hearing Is The First Step Toward a Better NCUA Budget
• Board Actions: NCUA Outlines Plans for Adding “S” to Credit Union CAMEL Ratings
• With Margins Shrinking, Effective Liquidity Management Is Critical
• Corporate System Resolution Program Reaches an Important Milestone

Published monthly, The NCUA Report is NCUA’s flagship publication. The newsletter highlights important Board actions and key issues that credit union managers, staff and volunteers need to know. If interested, you can subscribe to the online version of the newsletter here (opens new window). Previous issues of The NCUA Report are available online here (opens new window). 

Board Action Bulletin

2016 Mid-Session Budget Review Projects $2.7 Million in Reduced Spending

ALEXANDRIA, Va. (July 21, 2016) – The National Credit Union Administration Board held its seventh open meeting of 2016 at the agency’s headquarters here today and unanimously approved one item: 

• The agency’s 2017–2021 Strategic Plan, which updates NCUA’s performance goals for measuring annual examinations and describes the agency’s strategic goals in the areas of safety and soundness, consumer protection and financial literacy, and workforce development and diversity.

The Board also received briefings from the Chief Financial Officer on the revised 2016 agency budget estimates and the performance of the National Credit Union Share Insurance Fund, which grew to more than $13 billion in the second quarter of 2016.

Strategic Plan Fulfills Commitment to Provide Examination Flexibility

NCUA’s 2017–2021 Strategic Plan, approved unanimously by the Board, updates the agency’s performance goals for examinations. The plan is part of NCUA’s overall efforts to modernize the examination process.

“The agency’s new strategic plan prioritizes continual quality improvement to make our operations both more efficient and effective, rather than the adoption of new rules 

and regulations,” NCUA Board Chairman Rick Metsger said. “We will focus on upgrading our technology, systems and processes to improve the quality of our examinations and supervision, while simultaneously reducing the onsite burden on credit unions and improving the quality of life for our examiners.”

In adopting the plan, the Board retired two agency performance goals requiring the examination each calendar year of all federally insured, state-chartered credit unions with more than $250 million in assets and every federal credit union. The Board then established an interim goal of completing an efficient and effective federal and state examination process through the end of 2016.

“This change will give our regional offices greater flexibility to schedule exams when they are needed, and when they make the most sense, rather than basing them on an arbitrary calendar-year requirement,” Metsger said. “This change alone does not extend the examination cycle. How and whether we further change the exam cycle will be determined by the Board after we have received recommendations from the Exam Flexibility Initiative.”

In May, Chairman Metsger established an internal working group known as the Exam Flexibility Initiative to obtain stakeholder feedback and evaluate the agency’s examination and supervision program. The Board expects to receive recommendations from the working group in September.

The new strategic plan also summarizes internal and external factors affecting the agency and the credit union system, evaluates NCUA programs and risks and provides goals and objectives. The agency’s three strategic goals described in the five-year plan are:

Copies of the 2017–2021 Strategic Plan, as well as previous strategic plans and annual performance plans, are available online here.

2016 Mid-Year Budget Review Estimates $2.7 Million in Less Spending

NCUA’s Chief Financial Officer reported that agency expenditures are projected to decline by approximately $2.7 million for 2016, based on current projections of the agency’s needs.

“This agency continues to be a good steward of its funds and a leader in budget transparency,” Metsger said. “We provide more information, more often, on our website than any other federal financial institutions regulator. We never stop looking for ways to economize. While there is always more to do, we have a record to be proud of.”

While the agency projects a reduction in 2016 spending, several open obligations from prior years affect the amount of cash needed. Because the Operating Fee is partially determined by the agency’s cash needs, staff therefore recommended no reduction in Operating Fee collections for 2017 at this time.

NCUA’s revised estimate for its 2016 operating budget will be $288.2 million, including decreases in every major budget category. The largest change in the estimate comes from $1.9 million in lower employee pay and benefits expenses associated with vacant positions. The revised costs are based on current projections of staffing trends through the end of the year.

Travel costs and administrative costs are reduced by $323,000 and $234,000, respectively. Rent, communications, and utilities costs are reduced by $30,000. Contracted services costs are reduced by $191,000.

Board members approved a rolling two-year budget at their November 2015 open meeting, a return to former agency practice. The 2017 budget is scheduled to be reviewed at the Board’s open meeting in November. Before the Board votes on the 2017–2018 budget in November, the agency will host a budget briefing for stakeholders in October.

As part of its ongoing commitment to transparency in the budget process, NCUA continues to make extensive budget information available online here.

Share Insurance Fund Maintains Consistent Trends

Because of continued improvement in the performance of federally insured credit unions, the second quarter of 2016 saw consistent trends in income and operating expenses for the Share Insurance Fund.

During the second quarter, the Share Insurance Fund had a net loss of $21.8 million. Despite the quarterly loss, the fund had $2.2 million in net income for the first half of 2016.

As of June 30, 2016, the calculated equity ratio, based on estimated insured shares of $993.5 billion, dropped to 1.24 percent. When the next one-percent deposit capital adjustment is collected in October for all federally insured credit unions with assets of $50 million or greater, the equity ratio is estimated to be 1.27 percent, consistent with the agency’s expectations, but the ratio may differ if loss patterns change. NCUA will invoice for the adjustment in September.

Second-quarter investment and other income was $56.9 million. Operating expenses were $52.8 million. The provision for insurance losses increased by $25.9 million. Overall, the amount of assets in CAMEL code 3, 4 and 5 credit unions has decreased 54 percent since reaching a high of $205.6 billion in September 2010.

For the second quarter of 2016, the Chief Financial Officer reported:

Six federally insured credit union failed during the second quarter. Fraud was a contributing factor in all six failures.

For the first six months of 2016, there have been a total of 11 failures. The total losses associated with failures through the second quarter were $8.5 million.

The second-quarter Share Insurance Fund figures 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.