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The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the state regulators recognize the serious impact of Hurricane Florence on the customers, members, and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

A complete list of the affected disaster areas can be found at www.fema.gov (opens new window).

Lending: Financial institutions should work constructively with borrowers in communities affected by Hurricane Florence. Prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism. Modifications of existing loans should be evaluated individually to determine whether they represent troubled debt restructurings. This evaluation should be based on the facts and circumstances of each borrower and loan, which requires judgment, as not all modifications will result in a troubled debt restructuring. In supervising institutions affected by Hurricane Florence, the agencies will consider the unusual circumstances these institutions face. The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound practices as well as in the public interest.

Temporary Facilities: The agencies understand that many financial institutions may face staffing, power, telecommunications, and other challenges in re-opening facilities after Hurricane Florence. In cases in which operational challenges persist, the primary federal and/or state regulator will expedite, as appropriate, any request to operate temporary facilities to provide more convenient availability of services to those affected by Hurricane Florence. In most cases, a telephone notice to the primary federal and/or state regulator will suffice initially to start the approval process, with necessary written notification being submitted shortly thereafter.

Publishing Requirements: The agencies understand that the damage caused by Hurricane Florence may affect compliance with publishing and other requirements for branch closings, relocations, and temporary facilities under various laws and regulations, as applicable. Institutions experiencing disaster-related difficulties in complying with any publishing or other requirements should contact their primary federal and/or state regulator.

Regulatory Reporting Requirements: Institutions affected by Hurricane Florence that expect to encounter difficulty meeting the agencies’ reporting requirements should contact their primary federal and/or state regulator to discuss their situation. The agencies do not expect to assess penalties or take other supervisory action against institutions that take reasonable and prudent steps to comply with the agencies’ regulatory reporting requirements if those institutions are unable to fully satisfy those requirements because of the effects of Hurricane Florence. The agencies’ staffs stand ready to work with affected institutions that may be experiencing problems fulfilling their reporting responsibilities, taking into account each institution’s particular circumstances, including the status of its reporting and recordkeeping systems and the condition of its underlying financial records.

Community Reinvestment Act (CRA): Financial institutions, as applicable, may receive CRA consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas in their assessment areas or in the states or regions that include their assessment areas. For additional information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment at https://www.ffiec.gov/cra/qnadoc.htm (opens new window).

Investments: The agencies realize local government projects may be negatively affected by Hurricane Florence. Institutions should monitor municipal securities and loans affected by Hurricane Florence. Appropriate monitoring and prudent efforts to stabilize such investments are encouraged.

For more information, refer to the Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster, which is available as follows:

CSBS: https://www.csbs.org/interagency-supervisory-examiner-guidance-institutions-affected-major-disaster (opens new window)
FDIC: https://www.fdic.gov/news/news/financial/2017/fil17062.html (opens new window)
FRB: https://www.federalreserve.gov/supervisionreg/srletters/sr1714a1.pdf (opens new window)
OCC: https://www.occ.gov/news-issuances/bulletins/2017/bulletin-2017-61.html (opens new window)
NCUA: https://www.ncua.gov/Resources/Documents/SL-17-02-examiner-guidance-institutions-affected-major-disaster-enclosure.pdf (opens new window)

ALEXANDRIA, Va. (Sept. 14, 2018) – Federally insured credit unions generally saw continued positive trends in the second quarter of 2018, according to the latest NCUA Quarterly U.S. Map Review.

The review tracks performance indicators for federally insured credit unions in all 50 states and the District of Columbia and includes information on two important state-level economic indicators: the unemployment rate and home prices.

Nationally, overall membership continued to grow, concentrated in larger credit unions. Eighty-five percent of federally insured credit unions reported positive net income during the first half of 2018. Median loan growth was 5.4 percent and median asset growth was 2.1 percent during the year ending in the second quarter.

Board Action Bulletin

Share Insurance Fund Posts $32.5 Million in Net Income in Second Quarter

ALEXANDRIA, Va. (Sept. 20, 2018) – The National Credit Union Administration Board held its eighth open meeting of 2018 at the agency’s headquarters today and unanimously approved two items:

• A proposed rule amending the agency’s regulation requiring real estate appraisals for certain transactions to provide a measure of regulatory relief.
• A request from the Texas Credit Union Department to revise its member business lending rule to provide parity with the NCUA’s rule following changes made in June 2018.

The Chief Financial Officer briefed the Board on the second-quarter performance of the National Credit Union Share Insurance Fund, which continued recent growth trends.

The Office of the General Counsel briefed the Board on the adoption of a resolution to appoint two administrative law judges in the Office of Financial Institution Adjudication.

 

Proposed Appraisal Rule Provides Relief, Clarity

As part of the NCUA’s regulatory relief agenda, the Board approved a proposed rule (opens new window) (Part 722) to amend the agency’s real estate appraisal requirements for certain transactions.

The proposed rule would provide a measure of regulatory relief and increased clarity by:

• Increasing the threshold for required appraisals in non-residential real estate transactions from the current $250,000 to $1 million;
• Reorganizing the appraisal regulation to make it easier to determine when a written estimate or an appraisal is required; and
• Incorporating the rural exemption contained in the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155.

Comments on the proposed rule must be received within 60 days of publication in the Federal Register.

 

Investment Earnings Give Share Insurance Fund $32.5 Million Net Income

The National Credit Union Share Insurance Fund (opens new window) posted a net income of $32.5 million in the second quarter of 2018, primarily due to the strong investment income earnings.

The Share Insurance Fund’s net position remained at $15.0 billion. As of June 2018, the calculated equity ratio is 1.35 percent, based on insured shares of $1.1 trillion. Second-quarter investment and other income was $76.0 million. Operating expenses were $47.5 million. The provision for insurance losses decreased overall by $4.0 million.

For the second quarter of 2018, the Chief Financial Officer reported:

• The number of CAMEL codes 4 and 5 credit unions increased 5.0 percent from the first quarter of 2018 to 210 from 200. Assets for these credit unions increased 40.2 percent from the first quarter of 2018, to $12.9 billion from $9.2 billion.
• The number of CAMEL code 3 credit unions declined 2.1 percent from the first quarter of 2018 to 1,032 from 1,054. Assets for these credit unions increased 3.3 percent from the first quarter of 2018, to $59.3 billion from $57.4 billion.

Three federally insured credit unions failed through the end of the second quarter of 2018, compared to two through the end of the second quarter of 2017. Total losses associated with credit union failures are $1.5 million through the end of the second quarter, compared to $3.8 million through the end of the second quarter of 2017.

The second-quarter figures are preliminary and unaudited.

 

Texas Member Business Lending Rule Changes Approved

The Board approved a request from the Texas Credit Union Department to revise its member business lending rule (opens new window) to provide parity with the NCUA’s rule.

Under the NCUA’s rule, states that wish to have their own versions must receive Board approval. The NCUA Board originally approved the Texas member business lending rule in 1999 and has approved subsequent changes, most recently in December 2016.

The revised Texas rule will apply to both federally insured and privately insured, state-chartered credit unions in Texas.

 

Resolution Appointing Administrative Law Judges Adopted

The NCUA Board, by notation vote on Aug. 28, 2018, approved the appointment of two administrative law judges (opens new window) in the Office of Financial Institution Adjudication.

The OFIA is the office that houses administrative law judges and staff for administrative proceedings conducted by the NCUA, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve Board. A recent U.S. Supreme Court decision in Lucia et al. v. Securities & Exchange Commission held that administrative law judges must be appointed by the head of the agency in order to comply with the Constitution’s Appointments Clause, requiring the NCUA’s procedural action.

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.

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NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov (opens new window), NCUA also educates the public on consumer protection and financial literacy issues.

“Protecting credit unions and the consumers who own them through effective regulation”

Grants Up to $7,500, Agency Can Assist Credit Unions with Applications

ALEXANDRIA, Va. (Sept. 24, 2018) – Low-income credit unions sustaining damage from Hurricane Florence are eligible for urgent needs grants (opens new window) up to $7,500 from the National Credit Union Administration to help restore operations.

Credit unions can apply through the NCUA’s CyberGrants management system (opens new window). Severely affected credit unions may contact their NCUA examiners to apply.

Credit unions may apply for funds to repair or replace credit union office property, machinery, equipment, fixtures, and leasehold improvements. Grant funds may also be used to resume operations, such as reconstructing data or reestablishing network systems. Funds will be provided to the extent that the expenditures requested by the credit union are not reimbursable under an insurance policy.

Credit unions should receive notice of approval within two weeks of application. At that point, they can pay for necessary repairs or replacements and expect to receive their grants within two weeks after submitting a reimbursement request.

Credit unions with questions about the urgent needs grants process can contact CURE by email at [email protected] or by telephone at 703-518-6610.

Agency Now Accepting Comments and Budget Briefing Presentation Requests

ALEXANDRIA, Va. (Sept. 26, 2018) – The National Credit Union Administration’s proposed 2019-2020 budget is available for review and comment.

“The NCUA remains committed to a fully transparent and accountable budget process,” NCUA Board Chairman J. Mark McWatters said. “We appreciate thoughtful, specific suggestions from stakeholders on making the most efficient and effective use of the resources credit unions provide. While final decisions always remain with the Board, receiving and reviewing public comments is an important part of our process.”

The NCUA posted the proposed budget summary (opens new window) and detailed budget justification (opens new window) on the Budget and Supplementary Materials page of NCUA.gov and will publish the proposal in the Federal Register. The proposed 2019 operating budget is $304.4 million and includes a decrease of 10 positions from the authorized 2018 staffing levels.

The public comment period is open until Oct. 26. The agency will hold a budget briefing on Oct. 17 at 10 a.m. Eastern in its Central Office boardroom. The briefing will be livestreamed on NCUA.gov. Individuals attending the briefing will be admitted on a first-come, first-served basis beginning at 9 a.m. Eastern. An overflow room will be available.

The Board is scheduled to approve a final budget at its Nov. 15 open meeting.

To comment on the proposed budget:

• Email your comments to [email protected] by Oct. 26.
• Comments should provide specific, actionable recommendations.

To request a presentation at the Oct. 17 budget briefing:

• Email your request to [email protected] by Oct. 9.
• Include the presenter’s name, title, affiliation, mailing address, email address, and telephone number.
• The Board Secretary will notify approved presenters and give them their allotted presentation times.
• Email a copy of your presentation to [email protected] by Oct. 15.

Member Deposits Protected to $250,000; Member Services Uninterrupted

ALEXANDRIA, Va. (Oct. 1, 2018) – The National Credit Union Administration on Sept. 30 liquidated LOMTO Federal Credit Union of Woodside, New York.

Teachers Federal Credit Union, of Hauppauge, New York, assumed LOMTO’s members and most shares as well as some loans and other assets. Teachers Federal Credit Union serves 300,541 members and has assets of nearly $6.1 billion, according to the credit union’s most recent Call Report.

New Teachers Federal 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.

Teachers Federal Credit Union has posted information for its members on its website (opens new window), and members with questions may contact the credit union at 631-698-7000 between 8 a.m. and 5 p.m. Eastern on Mondays, Tuesdays, Wednesdays, and Saturdays and between 8 a.m. and 6 p.m. Eastern on Thursdays and Fridays. Members also may find insurance coverage information on the Share Insurance Coverage page (opens new window) of the NCUA’s consumer website, MyCreditUnion.gov (opens new window).

The NCUA has retained some of LOMTO members’ loans. Members should contact the NCUA’s Asset Management and Assistance Center to see if their loans have been retained:

LOMTO Federal Credit Union

c/o National Credit Union Administration
4807 Spicewood Springs Road, Suite 5100
Austin, Texas 78759
512-231-7940

The existing LOMTO offices located at 5024 Queens Boulevard in Woodside and at 180 Riverside Boulevard, New York, New York, will remain open.

Chartered in 1936, LOMTO served various select employee groups in the greater New York City area as well as an underserved area in New York City. At the time of liquidation and subsequent purchase by Teachers Federal Credit Union, LOMTO served 2,283 members and had assets of approximately $156 million, according to the credit union’s most recent Call Report.

LOMTO Federal Credit Union is the sixth federally insured credit union liquidation in 2018.

Chairman Urges Field-of-Membership Changes, Third-Party Vendor Authority

ALEXANDRIA, Va. (Oct. 2, 2018) – Congress could bolster consumer access and better protect credit unions and members by making legislative changes proposed today by NCUA Board Chairman J. Mark McWatters.

McWatters testified before the Senate Committee on Banking, Housing, and Urban Affairs. His oral (opens new window) and written (opens new window) statements are available on the NCUA’s website.

“While the NCUA Board can provide federally insured credit unions with meaningful regulatory relief, Congressional action is required to provide additional flexibility in some areas,” McWatters said. “Congressional action can provide new avenues for growth without sacrificing the safety and soundness of the credit union system.”

 

Expanding Access

Chairman McWatters encouraged lawmakers to make changes to the Federal Credit Union Act to open up access for more underserved households to credit union membership.

For example, the Federal Credit Union Act permits only federal credit unions with multiple common bond charters to add underserved areas to their fields of membership. Allowing all federal credit unions to add underserved areas would give more people access to federally insured financial institutions and would make more credit unions eligible for Community Development Financial Institutions Fund programs.

McWatters’ other recommendations included allowing chartering of web-based communities and permitting credit unions to add people living in a census tract where current projections would indicate they qualify as low-income.

 

Protecting Credit Unions and Members

The NCUA is the only federal financial institutions regulator that does not have authority to examine and supervise third-party vendors, and Congress should correct that, McWatters said.

Noting the rapid growth of technology in the financial sector and growing cybersecurity risks, McWatters said credit unions are increasingly using credit union service organizations and other third-party vendors to provide technology services.

Noting a 2015 Government Accountability Office report supporting the NCUA receiving third-party vendor authority, McWatters said, “To manage the systemic risk fintech poses to the credit union system, the NCUA needs vendor authority comparable to our Federal Financial Institutions Examination Council counterparts.”

 

Reducing burdens, increasing efficiency

McWatters described the NCUA’s progress in reducing regulatory burdens on credit unions and making the agency more efficient, effective, transparent, and accountable while continuing to protect more than 114 million credit union members and the safety and soundness of the National Credit Union Share Insurance Fund.

Notable among these accomplishments, the NCUA:

• Created a Regulatory Reform Task Force that reviewed all its regulations and proposed a four-year, tiered regulatory relief plan that is well under way;
• Proposed or adopted amendments to its capital rules to reflect the safety and soundness risks currently present in the credit union system;
• Gave credit unions greater flexibility in their lending activities;
• Extended examination cycles up to 18 months to reduce the agency’s presence in well-run credit unions; and
• Launched a program to expand use of technology in examinations, data collection, and reporting.

McWatters said the NCUA implemented parts of the Economic Growth, Regulatory Relief, and Consumer Protection Act having a substantial impact on credit unions. The agency:

• Published a proposed 2019-2020 budget in the Federal Register; the agency is taking public comments and will hold a budget briefing;
• Changed its member business lending rule has been changed to exempt loans fully secured by 1-to-4-family dwellings, regardless of the borrower’s occupancy status; and
• Modified appraisal requirements for certain rural real estate transactions.

McWatters stressed the NCUA Board’s bipartisan process that produced these accomplishments.

“I wish to thank my Democratic colleague, Rick Metsger, for diligently working with me in a collegial and collaborative manner for over 28 months to accomplish our shared administrative and regulatory agenda,” he said.

 

WASHINGTON—The federal depository institutions regulators and the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) today issued a statement to address instances in which certain banks and credit unions may decide to enter into collaborative arrangements to share resources to manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively. Collaborative arrangements as described in the statement generally are most suitable for financial institutions with a community focus, less complex operations, and lower-risk profiles for money laundering or terrorist financing. The statement, which was issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, FinCEN, the National Credit Union Administration, and the Office of the Comptroller of the Currency, explains how these institutions can share BSA/AML resources in order to better protect against illicit finance risks, which can in turn also reduce costs. Today’s joint statement is a result of a working group recently formed by these agencies and Treasury’s Office of Terrorism and Financial Intelligence aimed at improving the effectiveness and efficiency of the BSA/AML regime.

“This joint statement is part of a broader effort to work closely with our regulatory partners to strengthen the anti-money laundering defenses across the U.S. financial system,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence. “The joint statement allows community-focused banks and credit unions to share certain anti-money laundering resources in order to better protect against illicit actors seeking to abuse those types of institutions. Such resource sharing must be approached with careful due diligence and thorough consideration of the risks and benefits.”

Among other things, today’s joint statement aims to:

• Highlight the potential benefits of collaborative arrangements that pool resources, such as staff, technology, or other resources, to increase operational efficiencies, reduce costs, and leverage specialized expertise; and
• Outline risk considerations and mitigation measures associated with the use of collaborative arrangements.

The joint statement acknowledges that banks and credit unions may benefit from using shared resources to manage certain BSA/AML obligations more efficiently and effectively. However, it notes that financial institutions should approach the establishment of collaborative arrangements like other business decisions, with due diligence and thorough consideration of the risks and benefits. Banks and credit unions are encouraged to contact their primary federal regulator with questions regarding sharing BSA resources, and should refer to other relevant guidance.

View Joint Interagency Statement on Sharing Bank Secrecy Act Resources (opens new window)

ALEXANDRIA, Va. (Oct. 5, 2018) – Ten federally insured credit unions subject to civil monetary penalties for filing late Call Reports in the first quarter of 2018 have agreed to penalties totaling $4,133, the National Credit Union Administration announced today.

The NCUA has published a list of credit unions (opens new window) that filed late in the first quarter of 2018 and agreed to pay civil monetary penalties. Assessing penalties primarily rests on three factors: the credit union’s asset size, its Call Report filing history, and the length of the filing delay.

Individual penalties for the first quarter of 2018 ranged from $150 to $920. The median penalty was $415. The Federal Credit Union Act requires the NCUA to send any funds received through civil monetary penalties to the U.S. Treasury.

Eight of the 10 credit unions that agreed to pay penalties for the first quarter had assets of less than $10 million. One credit union had assets between $10 million and $50 million, and one credit union had assets between $50 million and $250 million. All 10 had been late in at least one prior quarter.

Overall, 12 credit unions filed Call Reports late for the first quarter of 2018. Two credit unions requested and received waivers. The NCUA informed the other credit unions of the penalties they faced and advised them they could reduce their penalties by signing a consent agreement. NCUA stated it would initiate administrative hearings against credit unions that did not sign the agreement.

Twelve credit unions agreed to penalties in the first quarter of 2017.

The NCUA provides detailed online guidance for filing Call Reports, including an instructional video (opens new window). The agency sends reminder messages about Call Report filing deadlines that include information on getting 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.