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Most Recent Settlement Resolves Cases in New York and Kansas Federal Courts

ALEXANDRIA, Va. (Dec. 10, 2015) – The National Credit Union Administration today announced a settlement with Morgan Stanley for $225 million to resolve claims arising from losses related to corporate credit unions’ purchases of faulty residential mortgage-backed securities.

“NCUA continues to pursue recoveries on behalf of the corporate credit unions against the financial firms we maintain contributed to the corporates’ losses,” NCUA Board Chairman Debbie Matz said. “These actions fulfill our statutory obligation to act in order to minimize costs to the credit union system resulting from the crisis. They also promote accountability and ensure consumers remain protected.”

NCUA Associate General Counsel John Ianno recognized the U.S. Justice Department’s involvement in the litigation.

“We appreciate the efforts of the Department of Justice, with whom we have worked closely in achieving this favorable resolution,” Ianno said.

The settlement covers claims asserted in 2013 by the NCUA Board on behalf of U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union. NCUA will dismiss pending suits against Morgan Stanley in federal district courts in New York and Kansas. Morgan Stanley does not admit fault in the settlement.

Net proceeds from this settlement and others are used to pay claims against the failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund. Stabilization Fund recoveries reduce borrowings from the U.S. Treasury and eliminate the need for assessments to federally insured credit unions.

NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in these securities on behalf of failed financial institutions.

NCUA continues to pursue litigation in federal courts in New York, Kansas and California against financial firms, including RBS, Goldman Sachs, UBS and Credit Suisse, based on the sale of faulty securities that caused the collapse of five corporate credit unions. The agency, on behalf of the failed corporates, has other litigation pending against securities firms alleging violations of state and federal anti-trust law by manipulation of interest rates through the London Interbank Offer Rate system. NCUA also has pending suits against financial firms alleging their failure to perform their duties as trustees of residential mortgage-backed securities trusts.

Median Asset and Deposits Growth Up, Median Delinquency Rates Down

ALEXANDRIA, Va. (Dec. 11, 2015) – Median loan growth in federally insured credit unions was 4.1 percent during the year ending Sept. 30, 2015, and all states reported positive growth, according to state-level data compiled by the National Credit Union Administration and released today.

Nationally, median asset growth over the year ending Sept. 30 was 2.4 percent, while median growth in shares and deposits was 2.3 percent. The median loan-to-share ratio was up 2.0 percentage points from a year earlier. Aggregate annualized return on average assets in the first three quarters of 2015 was 80 basis points, down slightly from the same period a year earlier. The median total delinquency rate declined to 0.8 percent from 0.9 percent a year earlier. Overall membership in credit unions continued to grow, although the median rate of growth was negative 0.2 percent. Membership growth continued to be concentrated in larger credit unions. Overall, 52 percent of federally insured credit unions had fewer members at the end of the third quarter of 2015 than a year earlier.

The NCUA Quarterly U.S. Map Review, available here, tracks performance indicators for federally insured credit unions in the 50 states and the District of Columbia. The review also includes information on two key state-level economic indicators: unemployment rates and home price changes.

Median Loan Growth Rates Positive in Every State; Idaho, Alaska Highest

Nationally, median growth in loans outstanding was 4.1 percent during the year ending in the third quarter of 2015, up from 3.5 percent in the year ending in the third quarter of 2014. The highest median growth rates for loans were in Idaho (10.0 percent) and Alaska (9.0 percent). Arkansas (0.3 percent) had the lowest median loan growth, followed by New Jersey (0.7 percent).

Utah, Nevada Credit Unions Post Highest Aggregate Returns on Average Assets

Nationally, the annualized aggregate return on average assets at federally insured credit unions was 80 basis points during the first three quarters of 2015, down from 83 basis points a year earlier. The aggregate return on average assets was positive in every state during the first three quarters of 2015.

Utah (139 basis points) had the highest aggregate return, followed by Nevada (113 basis points). New Jersey (22 basis points) and Connecticut (34 basis points) posted the lowest aggregate returns on average assets.

Median Asset Growth Rate 2.4 Percent; Idaho and New Hampshire Highest

Median asset growth was 2.4 percent nationally in the year ending in the third quarter of 2015, up from 1.4 percent a year earlier. Median asset growth was highest in Idaho (6.3 percent), followed by New Hampshire (5.7 percent). The median level of assets was unchanged in New Jersey and grew in all other states.

Median Shares and Deposits Growth Up; Alaska and New Hampshire Lead

Nationally, federally insured credit unions’ median growth rate in shares and deposits was 2.3 percent in the year ending in the third quarter of 2015, up from 1.1 percent during the previous year. The median growth rate in shares and deposits was highest in Alaska (7.6 percent) and New Hampshire (6.9 percent). The median growth rate in shares and deposits was negative in New Jersey (-0.6 percent) and Delaware (-0.2 percent).

Idaho, Vermont Show Highest Median Loan-to-Share Ratios

Nationally, the median ratio of loans outstanding to total shares and deposits was 62 percent at the end of the third quarter of 2015, compared to 60 percent at the end of the third quarter of 2014. The median loan-to-share ratio was highest among credit unions in Idaho (88 percent) and Vermont (82 percent). The median loan-to-share ratio was lowest in Hawaii (43 percent) and Delaware (46 percent).

Median Total Delinquency Rate Declines from 2014

The median delinquency rate at federally insured credit unions was 0.8 percent nationally in the third quarter of 2015, down from 0.9 percent a year earlier. Five states—California, Colorado, North Dakota, Oregon and South Dakota—shared the lowest median delinquency rate (0.4 percent). Delaware (1.5 percent) reported the highest median delinquency rate, followed by the District of Columbia and New Jersey (both 1.4 percent).

Membership Growth Remains Concentrated in Larger Credit Unions

Overall membership in federally insured credit unions continued to grow in the year ending in the third quarter of 2015, with growth again concentrated in larger institutions. The median membership growth rate was negative 0.2 percent. Nationally, 52 percent of federally insured credit unions had fewer members than a year earlier. Credit unions with falling memberships tend to be small; about 75 percent had less than $50 million in assets.

Alaska (3.9 percent) had the highest median membership growth rate, followed by Idaho (3.4 percent). Median membership growth was negative in 23 states, with Pennsylvania (-2.2 percent) ranking lowest.

ALEXANDRIA, Va. (Dec. 15, 2015) – The National Credit Union Administration announced today the December 2015 issue of The NCUA Report is now available online (opens new window).

This latest issue includes columns from NCUA Board Chairman Debbie Matz, Vice Chairman Rick Metsger and Board Member J. Mark McWatters. Additionally, it contains 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.

The articles in this month’s edition include:

• Proposed Rule on Field of Membership Offers Regulatory Relief, Growth Opportunities
• Chairman’s Corner: Future of Credit Unions Depends on Viable Membership Fields
• Vice Chairman Metsger’s Perspective: Members: The Heart and Soul of Every Credit Union
• Board Member McWatters’ Perspective: Exam Appeals: Credit Unions Deserve a Better Process
• Board Actions: Two-Year Budget Approved with Smallest Percentage Increase Since 2007
• Great Flexibility Means Credit Union Boards Have to Be Engaged
• Help Keep Your Members Safe This Holiday Season

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. Interested readers can subscribe to the online version of the newsletter here (opens new window). For previous issues of The NCUA Report, go to http://go.usa.gov/cghah (opens new window).

ALEXANDRIA, Va. (Dec. 15, 2015) – National Credit Union Administration Board members have agreed to add an item to the agenda of the closed Board meeting set for Thursday, Dec. 17, 2015.

The Board will now receive a briefing on a supervisory matter.

The agendas for the Dec. 17 open and closed meetings are available online
here.

ALEXANDRIA, Va. (Dec. 16, 2015) – The video recording of the November 2015 open meeting of the National Credit Union Administration Board is now available on the agency’s website.

Archived videos of past Board meetings may be viewed here, and each video remains on the site for one year.

The November open Board meeting’s agenda consisted of six items:

• A proposed rule to modernize field-of-membership requirements for federal credit unions, cut regulatory red tape and increase consumers’ access to affordable financial services;
• An Operating Budget increase of 4.1 percent for each of the next two years—the smallest increase since 2007—to fund the agency’s critical activities and address strategic priorities;
• The 2016–2017 Annual Performance Plan to establish NCUA’s goals for the coming year;
• A delegation to the Office of Examination and Insurance to administer the Board-approved methodology for calculating the Overhead Transfer Rate, which will be 73.1 percent in 2016;
• A delegation to the Office of the Chief Financial Officer to administer the Board-approved methodology for calculating the federal credit union Operating Fee, which will be 0.47 percent in 2016; and
• A briefing from the Chief Financial Officer on the performance of the Temporary Corporate Credit Union Stabilization Fund, which remained in a positive net position.

NCUA posts these videos as part of the agency’s ongoing efforts to provide transparency and to allow those unable to attend Board meetings the opportunity to become better informed. An interval between the meeting and posting is necessary for the videos to comply with Section 508 of the Rehabilitation Act for the hearing and visually impaired.

The Board Actions page of NCUA’s website has more information, including Board agendas, which are posted at least one week in advance of each open meeting, copies of Board Action Bulletins, which summarize the meetings, copies of Board memorandums and other documents.

ALEXANDRIA, Va. (Dec. 16, 2015) – Consumers now have a new information resource to help learn about and protect themselves against fraud with the launch of the National Credit Union Administration’s new
Fraud Prevention Center (opens new window).

Each year, scam artists and identity thieves steal billions of dollars from unsuspecting consumers. They use the telephone, email, text messaging, postal mail and the internet to steal information or trick consumers into handing over money. The new Fraud Prevention Center helps consumers learn how to recognize common scams, take action if they think they are victims of fraud and protect their finances.

With the site’s easy-to-use navigation and mobile-responsive design, users can access a number of resources from NCUA and other federal partners. The Fraud Prevention Center has sections covering a variety of topics, including:

• Frauds and Scams: learn about the newest and most common types of frauds or scams, what to do if you become a victim of fraud and how to report a scam;
• Identity Theft: discover what steps you can take to prevent and report identity theft;
• Online Security: get tips for staying safe online;
• Fraud Alerts: stay a step ahead with the latest information and practical tips about recent frauds and scams; and
• Fraud Resources: visit other NCUA partners for additional fraud prevention resources.

The Fraud Prevention Center is also accessible through NCUA’s newly redesigned online
Consumer Assistance Center (opens new window).

NCUA supports credit unions and their members with financial literacy and consumer protection resources available without cost at
MyCreditUnion.gov (opens new window). NCUA also provides up-to-date financial education information on the agency’s
YouTube channel (opens new window),
Facebook (opens new window) page and consumer
Twitter (opens new window) feed.

Board Action Bulletin

Stakeholder Comments Invited on All Safety and Soundness Regulations

ALEXANDRIA, Va. (Dec. 17, 2015) – The National Credit Union Administration Board convened its eleventh open meeting of 2015 at the agency’s headquarters here today and unanimously approved two items:

• A final rule to provide enhanced pass-through share insurance coverage for real estate agents’ escrow accounts, prepaid funeral accounts and other escrow accounts similar to lawyers’ trust accounts.
• A notice to stakeholders of the opportunity to comment on regulations covering rules of procedure and safety and soundness for possible modification, simplification or repeal.

Final Rule Provides Enhanced Share Insurance

Coverage for Certain Accounts
The Board approved a final rule (Part 745) amending the agency’s regulations to expand share insurance coverage for certain types of accounts.

Specifically, the Credit Union Share Insurance Fund Parity Act of 2014 requires enhanced, pass-through share insurance coverage for lawyers’ trust accounts and other similar escrow accounts. Before enactment, NCUA’s insurance coverage had been limited only to those clients of the attorney who were also members of the insured credit union where the attorney established the lawyers’ trust account.

Under the new law, only the lawyer or person administering the escrow account must be a member of the federally insured credit union in which such account is maintained for share insurance coverage to flow through to each client or principal, regardless of that person’s membership status.

The final rule will provide greater clarity and regulatory certainty around broad categories of other escrow accounts that automatically would receive pass-through share insurance coverage. These accounts include real estate agents’ escrow accounts and prepaid funeral accounts. Under the final rule, NCUA also may provide share insurance coverage for other similar escrow accounts on a case-by-case basis, where a licensed professional or other individual serving in a fiduciary capacity holds funds for the benefit of a client as part of a transaction or business relationship.

“This rule is very nuanced, because we have to walk a fine line between the membership requirements in the Federal Credit Union Act and the exceptions provided in the Share Insurance Parity Act,” NCUA Board Chairman Debbie Matz said. “This principles-based approach leaves the door open for other similar escrow accounts to be established in the future.”
Matz said some commenters on the proposed rule suggested extending pass-through share insurance coverage to pre-paid cards. But she said using funds from the National Credit Union Share Insurance Fund to pay non-members holding pre-paid cards from a failed credit union is not permissible and not good policy.

The final rule, available online
here (opens new window), becomes effective 30 days after publication in the
Federal Register. NCUA will issue guidance, written in plain English, for examiners and credit unions before the rule becomes effective.

Board Invites Comments on Safety and Soundness, Procedural Regulations
Credit union stakeholders and the general public will have an opportunity to comment on two categories of NCUA regulations after the Board approved a notice and request for comment.

The Economic Growth and Regulatory Paperwork Reduction Act of 1996 requires the Federal Financial Institutions Examination Council and its federal banking agency members to review regulations every 10 years to identify those that might be outdated, ineffective, unnecessary or unduly burdensome.

“NCUA voluntarily participates in this interagency regulatory review process, which complements our own rolling three-year reviews and my Regulatory Modernization Initiative,” Matz said. “We look forward to reading the comments, and we will consider all ideas as we continue to improve NCUA regulations and ease unnecessary burdens on credit unions.”

The two categories of rules covered in this fourth, and final, review will be rules of procedure and safety and soundness. Stakeholders may comment on matters within these categories covered by 16 existing rules, including subparts. The rules covered include involuntary and voluntary liquidations, lending, investment and deposit activities, examinations and appraisals, among others.

Comments under this notice, available
here (opens new window), must be received within 90 days of publication in the
Federal Register.

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. (Dec. 17, 2015) – The National Credit Union Administration is warning consumers about a telephone scam in which consumers are contacted by a caller claiming to work for NCUA and asking for personal and financial information.

The caller tells the consumer her or his credit card or debit card has been frozen or blocked. The caller then asks for the consumer’s Social Security number, account number, date of birth and home address to supposedly verify the information.

Consumers should not provide this or any other information to the caller.

NCUA would not request personal or financial information in this manner. See NCUA’s Privacy Policy for more information.

NCUA offers extensive information to help consumers identify frauds and scams at its Fraud Prevention Center (opens new window).

Consumers who suspect they may have become victims of identity theft should immediately contact their financial institutions and, if necessary, close existing accounts and open new ones. NCUA urges consumers also contact the three major credit bureaus—Equifax (866-349-5191), Experian (888-397-3742) and TransUnion (800-916-8800)—to request a fraud alert be placed on their credit reports.

NCUA supports credit unions and their members with financial literacy and consumer protection resources available without cost at MyCreditUnion.gov (opens new window). NCUA also provides up-to-date financial education information on the agency’s YouTube channel (opens new window), Facebook (opens new window) page and consumer Twitter (opens new window) feed.

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

ALEXANDRIA, Va. (Dec. 18, 2015) – The National Credit Union Administration today liquidated Bethex Federal Credit Union of Bronx, New York. 

USAlliance Federal Credit Union of Rye, New York, immediately assumed Bethex Federal Credit Union’s assets, member shares and most loans. USAlliance is a federally chartered credit union with a low-income credit union designation that has 83,102 members and assets of $1.07 billion, according to the credit union’s most recent Call Report.

The new USAlliance members should experience no interruption in services, and the existing Bethex Federal Credit Union office will remain open. Members’ accounts 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.

Members with questions about their accounts may contact USAlliance Federal Credit Union at 800-431-2754 between 7:30 a.m. and 7 p.m. Monday through Friday and 9 a.m. and 1 p.m. on Saturday.

NCUA placed Bethex Federal Credit Union into conservatorship on Sept. 18, 2015. NCUA made the decision to liquidate Bethex and discontinue its operations after determining the credit union was insolvent with no prospect for restoring viable operations on its own.

At the time of liquidation and subsequent purchase by USAlliance, Bethex served 5,824 members and had assets of $12.2 million, according to the credit union’s most recent Call Report. Chartered in 1970, Bethex Federal Credit Union served various groups in New York City.

Bethex Federal Credit Union is the tenth federally insured credit union liquidation in 2015.