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

ALEXANDRIA, Va. (June 29, 2018) – The Kentucky Department of Financial Institutions today appointed the National Credit Union Administration as liquidating agent of Louisville Metro Police Officers Credit Union of Louisville.

Commonwealth Credit Union of Frankfort, Kentucky, immediately assumed Louisville Metro Police Officers Credit Union’s membership, shares, loans, and all other assets. Commonwealth Credit Union is a federally insured, state-chartered credit union with 98,376 members and assets of $1,185,612,654, according to the credit union’s most recent Call Report.

Members of Louisville Metro Police Officers Credit Union will now become members of Commonwealth Credit Union. New Commonwealth Credit Union members should experience no interruption in services, and their accounts remain federally insured by the National Credit Union Share Insurance Fund. Administered by the 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 Commonwealth Credit Union at 502.564.4775 or 800.228.6420 between 8 a.m. and 5 p.m. Eastern time Monday through Friday. Members also may find insurance coverage information on the Share Insurance Coverage (opens new window) page of the NCUA’s consumer website, MyCreditUnion.gov (opens new window).

The decision to liquidate Louisville Metro Police Officers Credit Union and discontinue its operations was made after determining the credit union was insolvent and had no prospect for restoring viable operations.

At the time of liquidation and subsequent purchase by Commonwealth Credit Union, Louisville Metro Police Officers Credit Union served 3,349 members and had assets of approximately $20 million, according to the credit union’s most recent Call Report.

Chartered in 1942, Louisville Metro Police Officers Credit Union served employees of the Louisville Police Department and other select employee groups, which include law enforcement personnel and their immediate family members, railroad personnel, and various warehouse and manufacturing personnel.

Louisville Metro Police Officers Credit Union is the third federally insured credit union liquidation in 2018.

ALEXANDRIA, Va. (July 17, 2018) – Next week, the National Credit Union Administration will pay dividends for more than 5,700 institutions eligible for the $735.7 million Share Insurance distribution, the agency announced today.

Statements will be mailed to dividend recipients this week, indicating the amounts they will receive. An institution that filed a quarterly Call Report as a federally insured credit union for at least one reporting period in calendar year 2017 will be eligible for a pro rata distribution. The NCUA Board approved a final rule (opens new window) at its February 2018 meeting that details eligibility criteria.

“The NCUA’s prudent management of the corporate resolution process provided the ability to close the Stabilization Fund four years early,” NCUA Board Chairman J. Mark McWatters said. “Through a collaborative, bipartisan process among the Board members and a great deal of diligent work by staff, the NCUA has been able to avoid a premium assessment and safely distribute funds to credit unions that can be put to work building local communities, creating new businesses, and improving the lives of members across the country while advancing the objectives of protecting member deposits and maintaining a safe and sound credit union system.”

“As we have noted before, this is the largest Share Insurance distribution in this agency’s history,” Board Member Rick Metsger said, “larger, even, than the cumulative amount of all previous cash distributions since the Share Insurance Fund was capitalized. This is a significant benefit to credit unions and will support a lot of provident and productive purposes.”

The NCUA Board gave unanimous approval to the distribution at its February 2018 open meeting. The distribution was possible after the Board voted unanimously at its September 2017 open meeting to close the Temporary Corporate Credit Union Stabilization Fund and transfer the Stabilization Fund’s assets and obligations to the National Credit Union Share Insurance Fund, as required by law.

More information on the Share Insurance distribution, including the method the NCUA used to determine each institution’s share, can be found online here [link no longer available]. Information about the Stabilization Fund closure, the transfer of assets and obligations to the Share Insurance Fund, and setting the Share Insurance Fund’s normal operating level at 1.39 percent are all available [link no longer available].

Prior to the Board’s actions in September 2017 and February 2018, the Stabilization Fund was scheduled to expire in 2021. Net legal recoveries of more than $3.8 billion won by the NCUA on behalf of five failed corporate credit unions decreased the costs to the Stabilization Fund and made funds available for this distribution.

 

ALEXANDRIA, Va. (July 18, 2018) – Nine federally insured credit unions subject to civil monetary penalties for filing late Call Reports in the fourth quarter of 2017 have agreed to penalties totaling $3,109, the National Credit Union Administration announced today.

A list of credit unions filing late in the fourth quarter of 2017 and agreeing to pay civil monetary penalties is available online here (opens new window). The assessment of penalties primarily rests on three factors: the credit union’s asset size, its recent Call Report filing history, and the length of the filing delay.

Individual penalties for the fourth quarter ranged from $302 to $471. The median penalty was $315. The Federal Credit Union Act requires the NCUA to send any funds received through civil monetary penalties to the U.S. Treasury.

Seven of the nine credit unions agreeing to pay penalties for the fourth quarter had assets of less than $10 million. Two credit unions had assets between $10 million and $50 million. All nine had been late in a previous quarter.

A total of 17 credit unions filed Call Reports late for the fourth quarter of 2017. The NCUA consulted regional offices and, when appropriate, state supervisory authorities to review each case. That review determined there were mitigating circumstances in six cases that led to credit unions not being penalized. The NCUA informed the remaining credit unions of the penalties they faced and advised them they could reduce their penalties by signing a consent agreement. NCUA also said it would initiate administrative hearings against credit unions that did not consent. Two credit unions requested and received waivers.

Twenty-five credit unions agreed to penalties in the fourth quarter of 2016.

The NCUA sends reminder messages about Call Report filing deadlines that include information on how to receive technical support to handle filing problems. The agency also has created an automated reminder email system that contacts credit unions that have not filed their Call Reports and confirms successful filing. The agency has produced a video (opens new window) describing how to file Call Reports.

ALEXANDRIA, Va. (July 24, 2018) – The video recording of the June 21, 2018, 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.

At the June open meeting, the Board unanimously approved two items:

• A final rule amending the agency’s regulations governing its chartering and field-of-membership rules with respect to applicants for a community charter approval, expansion, or conversion.
• A final rule to provide members of federally insured credit unions with greater transparency when those credit unions seek voluntary mergers.

The Office of General Counsel briefed the Board on a final rule approved by notation vote on May 30, 2018 that made conforming amendments to the NCUA’s member business loan regulations.

The agency’s Deputy Executive Director, Chief Information Officer, and Business Innovation Director briefed the Board on the progress of the agency’s Enterprise Solution Modernization program.

The 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 the 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.

Share Insurance Fund Protects Member Deposits to $250,000

ALEXANDRIA, Va. (July 31, 2018) – The Michigan Department of Insurance and Financial Services today liquidated the Greater Christ Baptist Church Credit Union of Detroit and appointed the National Credit Union Administration as liquidating agent.

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.

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

The Michigan Department of Insurance and Financial Services made the decision to liquidate the Greater Christ Baptist Church Credit Union and discontinue its operations after determining the credit union was in an unsafe and unsound condition.

Originally chartered in 1957, Greater Christ Baptist Church Credit Union was a federally insured, state-chartered credit union that served 396 members and had assets of $608,330, according to the credit union’s most recent Call Report. Greater Christ Baptist Church Credit Union served members of Greater Christ Baptist Church in Detroit, employees of the credit union, and related parties.

Greater Christ Baptist Church is the fourth federally insured credit union liquidation in 2018.

The NCUA Board issued a Notice of Charges against Alan S. Kaufman, former CEO of Melrose Credit Union.

The NCUA Board approved the merger of Preferred Community Bank into Achieva Credit Union.

The NCUA Board approved the merger of Bay Ridge Federal Credit Union into Island Federal Credit Union.

Board Action Bulletin

Budget Review Projects Nearly $8.5 Million Operating Budget Net Savings

ALEXANDRIA, Va. (Aug. 2, 2018) – The National Credit Union Administration Board held its seventh open meeting of 2018 at the agency’s headquarters today and unanimously approved five items:

• A proposed supplemental rule amending the agency’s prompt corrective action regulations to delay the effective date of the risk-based capital rule and raise the asset threshold defining a complex credit union.
• A $675,000 operating fund budget transfer to pay for cybersecurity improvements and employee relocation costs associated with the agency’s reorganization.
• Continuation of the current 18 percent annual interest rate limit for loans—with the exception of loans originated under the payday alternative loan program—through March 10, 2020.
• A final rule creating new suspension and debarment procedures to better protect the federal government’s interest in only doing business with presently responsible contractors.
• A proposed rule to add specificity and clarity to current regulations covering loans and lines of credit granted to members and to provide credit unions with regulatory relief.

The Chief Financial Officer briefed the Board on the agency’s revised 2018 budget estimates, which currently project a reduction in the agency’s operating fund budget of almost $8.5 million.

Proposed Risk-Based Capital Rule Has One-Year Delay, Raises Asset Threshold for Complex Credit Unions

Ninety percent of federally insured credit unions would be exempt from the NCUA’s risk-based capital rule, and covered credit unions would have an additional year to prepare, under a proposed supplemental rule (Part 702) approved by the Board.

“The proposed changes to the risk-based capital rule, reached through a collaborative and bi-partisan process, if finalized, would allow the agency to provide federally insured credit unions with a measure of regulatory relief without impairing the safety and soundness of the National Credit Union Share Insurance Fund,” NCUA Board Chairman J. Mark McWatters said.

“This proposed rule is a substantive solution, not just another delay,” Board Member Rick Metsger said. “It will give the agency time to finalize its systems and give the handful of complex credit unions who do not have adequate risk-based capital time to raise capital or adjust their balance sheets to achieve compliance and protect their members. This proposed rule continues the NCUA’s tradition of nonpartisan problem-solving. Most importantly, it will better position the Share Insurance Fund, and the system, for the next set of challenges they face.”

The proposed rule would delay the current effective date of the risk-based capital rule approved in October 2015 to Jan. 1, 2020. The current effective date is Jan. 1, 2019.

The proposed rule also could raise the current $100 million asset threshold for defining a complex credit union to $500 million. As a result, 90 percent of credit unions—based on Dec. 31, 2017, Call Report data—would be exempt from the rule. Under the proposed rule, more than 98 percent of all complex credit unions would be considered well-capitalized.

If the rule is finalized, during the one-year delay, the NCUA’s current prompt corrective action requirements would remain in effect.

Comments on the proposed rule, available online here (opens new window), must be received within 30 days of publication in the Federal Register.

Almost $8.5 Million in Operating Budget Net Savings Projected

The Chief Financial Officer reported the NCUA expects net savings of nearly $8.5 million in its 2018 Operating Fund Budget, primarily due to reduced staff levels from the agency’s reorganization.

The Board approved a $291.8 million Operating Fund Budget at its November 2017 meeting. Current estimates show the agency will have 70 fewer full-time equivalent positions than the 1,183 positions originally planned in the 2018 budget, resulting in a decrease in salary and benefits costs.

The mid-year budget review also reported estimated reductions for travel ($632,000); rent, communications, and utilities ($91,000); administrative costs ($155,000); and contract costs ($102,000). The $15.4 million Capital Projects Budget remained unchanged. The review projected $325,000 savings in the $8.1 million Share Insurance Fund Administrative Budget.

The mid-year budget review presentation is available on the agency’s Budget and Supplementary Materials page.

18 Percent Loan Interest Rate Ceiling Extended to March 2020

After reviewing trends in money-market rates and current conditions among federal credit unions, the Board extended the current interest rate ceiling of 18 percent on most federal credit union loans through March 10, 2020.

The Federal Credit Union Act caps the interest rate on federal credit union loans at 15 percent; however, the NCUA Board has discretion to raise that limit for 18-month periods if interest-rate levels could threaten the safety and soundness of credit unions. The 18 percent cap applies to all federal credit union lending except originations made under NCUA’s consumer-friendly payday alternative loan program, which are capped at 28 percent.

An NCUA staff analysis found money market rates have risen between December 2017 and June 2018, and lowering the interest rate could have an adverse effect on the safety and soundness of credit unions. The Federal Credit Union Act requires both those conditions exist for the Board to allow the interest rate ceiling to be higher than 15 percent. The analysis found that a reduction in the loan rate cap could also force credit unions to restrict the flow of credit, particularly to low-income members.

The Board will continue to monitor market rates and credit union financial conditions to determine whether a change should be made to the maximum loan rate. The Board may take action sooner than 18 months if circumstances warrant.

Details of the staff analysis are available online here (opens new window).

Final Rule Will Improve Agency’s Procurement Practices

The NCUA is adopting new contractor suspension and debarment procedures to protect the federal government’s interest is doing business with responsible contractors under a final rule approved by the Board.

Although the NCUA is not required to follow federal government acquisition laws and regulations, the agency believes those include best practices, and suspension and debarment procedures have proven to be an important part of government procurement. These procedures would protect the agency by helping ensure the NCUA does business only with presently responsible contractors. The NCUA will only solicit offers from, award contracts to, or consent to subcontracts with presently responsible contractors.

The final rule, available online here (opens new window), will become effective 30 days after publication in the Federal Register.

Proposed Lending Rule Changes Would Provide Clarity and Ease Compliance

As part of the agency’s ongoing regulatory reform agenda, the NCUA Board proposed to amend its regulations (Part 701) regarding loans and lines of credit to members.

The proposed rule would make those regulations more user-friendly by:

• Identifying in one section the various maturity limits applicable to federal credit union loans;
• Clarifying that the maturity for a new loan under GAAP is calculated from the new date of origination;
• Expressing clearly the limits for loans to a single borrower or group of associated borrowers; and
• Seeking comment on whether the agency should provide for longer, more flexible maturity limits on certain loans.

Comments on the proposed rule, available online here (opens new window), must be received within 60 days of publication in the Federal Register.

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.

NCUA Seeking Millions from the Melrose CEO for Breach of Duties

ALEXANDRIA, Va. (Aug. 7, 2018) – The National Credit Union Administration Board, under an infrequently used authority, has filed administrative charges against Alan S. Kaufman, former chief executive officer, treasurer, and board member of Melrose Credit Union.

The NCUA is seeking a prohibition order against Kaufman and is requesting he be ordered to pay restitution of at least $3.5 million. In addition, the NCUA Board assessed Kaufman with a civil money penalty of $1 million.

The seven-count notice of charges (opens new window) was filed with the Office of Financial Institution Adjudication. The NCUA alleges that Kaufman breached his fiduciary duties to Melrose by placing his own interests above those of the credit union, that he engaged in unsafe or unsound practices, and that he violated applicable laws and regulations. The notice further alleges that Kaufman benefitted from his actions and that he caused “severe financial loss” to Melrose.

“These practices and breaches involved personal dishonesty by Kaufman and demonstrated Kaufman’s unfitness to serve as a director, officer, and to otherwise participate in the conduct of the affairs of an insured credit union,” the charges state.

Kaufman joined Melrose in 1984 and, in 1998, became CEO, treasurer, and a member of the board. On July 5, 2016, the Melrose Board removed Kaufman from his position as CEO of Melrose and later that year, Kaufman was removed as a board member and secretary for Melrose.

ALEXANDRIA, Va. (Aug. 9, 2018) – Minority credit unions play a vital role in providing affordable financial services in the nation’s most underserved communities and the agency is looking at new ways to support them, NCUA Board Chairman J. Mark McWatters said today.

“Unfortunately, minority credit unions are too often the only federally insured financial institution available in rural and urban communities that have been historically unserved by traditional financial institutions,” McWatters said. “Their presence in these communities provides an alternative to actors that engage in unfair practices at the expense of consumers. It’s that commitment to serve that makes minority credit unions the embodiment of the credit union philosophy of people helping people.”

McWatters spoke today before more than 300 attendees at the African-American Credit Union Coalition’s Annual Meeting in Atlanta, Georgia.

As of the end of the first quarter of 2018, there were 564 credit unions classified as minority depository institutions, accounting for 10 percent of all federally insured credit unions. Collectively, these credit unions had more than 4.3 million members and $42 billion in assets.

McWatters noted that minority credit unions face a number of challenges such as competitive pressure from alternative financial service providers, the lack of adequate resources, higher delinquency rates, and the inability to take advantage of economies of scale. He added that the NCUA has resources available through its Office of Credit Union Resources and Expansion to help minority credit unions grow and provide new products and services.

“The NCUA has a statutory obligation to preserve minority depository institutions and encourage the creation of new ones, and it is one that we take seriously,” McWatters said. “The agency is exploring additional ways it can provide minority credit unions with support through training, grants and other initiatives. Recent regulatory changes like those to our field-of-membership rules will also provide these credit unions with new and better opportunities for growth.”

McWatters added that the NCUA Board is considering additional ways to modernize the regulatory structure to give credit unions the flexibility they need to compete, while still maintaining safety and soundness. The 2017 advanced notice of proposed rulemaking on alternative capital and the recent proposal to provide additional payday alternative loan options are two examples of the regulatory changes being considered that could assist minority credit unions in meeting the needs of their communities, he said.

Finally, McWatters stressed the continued need for women and minorities to have greater representation on credit union boards.

“The demographics of the country and credit union members are changing. For credit unions to remain in touch with their members and true to their mission of service, greater representation of women and minorities is essential,” McWatters said. “I encourage the credit union community to address this issue aggressively and to look for ways to invite more women and minorities into the boardroom and positions of leadership. It is the right thing to do, and it is long overdue.”

ALEXANDRIA, Va. (Aug. 13, 2018) – Financial regulatory agencies, non-profits, schools financial institutions, and the military must work together to improve the personal finance knowledge of service members and their families to prevent them from being financially exploited, NCUA Board Chairman J. Mark McWatters said today.

McWatters was the keynote speaker today at the Defense Credit Union Council’s Annual Conference in Williamsburg, Virginia.

“Service members and their families face unique financial challenges, whether serving on active duty, returning to civilian life, or living as a veteran,” McWatters said. “A strong foundation of personal finance knowledge, knowing how to save and create a budget, and understanding the value and importance of money, is essential in today’s rapidly evolving financial marketplace. Not only does it affect an individual’s financial well-being, it also has implications for the economic well-being of the nation and, in the case of service members, our military’s readiness.”

Research by members of the Financial Literacy and Education Commission has documented the benefits of financial literacy and personal financial education. Yet, only 17 states require high school students to take a personal finance course before graduation. The result, McWatters said, is that too many of the young men and women entering the military lack a basic understanding of financial concepts or don’t know how to apply them to real-world financial situations.

“The financial decisions these young soldiers, airmen, sailors and marines make today will affect them for the rest of their lives,” McWatters said. “It is important that they start off on the right path. Military credit unions play an essential role in educating these young service members and I encourage you to continue to do so.”

The NCUA through its consumer website, MyCreditUnion.gov (opens new window), has resources available in a variety of formats, including brochures, videos and interactive learning tools to help credit unions with their financial education programs, McWatters added.

During his remarks, McWatters also touched on the need for all credit unions to continuously innovate their systems, technology and thinking to keep pace with changing consumer behavior and financial needs. Specifically, he noted that there continues to be strong and consistent demand for short-term, small dollar loans and that credit unions can be a viable alternative for people of modest means, including members of the military, in need of these types of financial products.

“It’s important that credit unions consider the future possibilities from this type of engagement,” McWatters said. “It may begin with a small dollar loan. But, if you combine that loan with financial education and other services, you have the building blocks of a financial relationship that benefits both the borrower and the credit union in the long-term. These products could be a first step in bringing the millions of unbanked and underbanked into the not-for-profit, cooperative credit system.