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NCUA Awards $2 Million in Grants to 203 Low-income Credit Unions

ALEXANDRIA, VA. (Oct. 24, 2018) – Through consistent, bipartisan collaboration, the NCUA Board is revising the agency’s regulations to relieve the regulatory, reporting, and examination burdens of federally insured credit unions, NCUA Board Chairman J. Mark McWatters said today.

McWatters spoke to attendees of the National Federation of Community Development Credit Unions’ Annual Conference in Clearwater, Florida. During his remarks, McWatters said that his collaborative partnership with Board Member Rick Metsger has resulted in more than two dozen substantive changes to NCUA’s regulatory structure, resulting in less burdens on credit unions while enhancing access to affordable financial services, including for consumers in unbanked and underserved communities.

McWatters also announced the awarding of $2 million in Community Development Revolving Loan Fund grants to 203 low-income credit unions. These funds will be used for digital services and security programs, outreach to underserved areas, and leadership development and training for credit union staff.

Congress created the Community Development Revolving Loan Fund, which the NCUA administers, to provide grants and loans to credit unions serving low-income communities. The agency received applications from 243 credit unions for more than $2.5 million in funding requests during its 2018 grant round.

Expanding access to affordable financial services has been a priority of Chairman McWatters since he joined the NCUA Board in 2014. As Chairman, he has proposed and recommended regulatory and legislative changes that would provide new opportunities for credit unions to serve unbanked and underserved communities. 

During his remarks, McWatters also noted there continues to be strong and consistent demand for short-term, small dollar loans. A viable short-term loan program provided by credit unions could be an alternative to high-priced payday loans and a way to break the cycle of debt that traps millions of consumers, he argued. Additionally, such a loan program could be a first step in bringing the millions of unbanked and underserved populations into the credit union system, he said.

In June, the NCUA Board proposed amendments to the NCUA’s payday alternative loan regulations to provide federal credit unions with additional market-based, payday alternative loan options. Adjustments to the proposal are being considered to better meet the needs of consumers.

ALEXANDRIA, VA. (Oct. 25, 2018) – Credit unions can learn more about recent changes to the Home Mortgage Disclosure Act and other federal consumer financial protection laws and regulations during a Nov. 14 webinar hosted by the National Credit Union Administration.

Online registration for the “NCUA HMDA and Consumer Compliance Regulatory Update Webinar,” is now open (opens new window). Participants will use this link to log into the webinar and to view it on mobile devices, and they should allow pop-ups from this website. The webinar is scheduled to begin at 2 p.m. Eastern.

This webinar will cover amendments to the Home Mortgage Disclosure Act and other consumer financial protection laws made by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act. It will also include discussions on the Bureau of Consumer Financial Protection’s Interpretive and Procedural Rule implementing the HMDA changes.

Registrants can submit questions in advance at [email protected]. The email’s subject line should read, “NCUA HMDA and Consumer Compliance Regulatory Update Webinar.” Please email technical questions about accessing the webinar to [email protected].

This webinar will be closed captioned and then archived online approximately three weeks following the live event.

The Office of Consumer Financial Protection is responsible for the NCUA’s consumer financial protection program. Within the office, the Division of Consumer Compliance Policy and Outreach is responsible for consumer financial protection compliance policy, rulemaking and outreach, fair lending examinations, and interagency coordination on consumer financial protection compliance matters.

McWatters—Investing in Fundamentals: Cybersecurity, Access, Human Capital

ALEXANDRIA, Va. (Oct. 31, 2018) – The National Credit Union Administration has awarded $2 million in grants to help 203 low-income credit unions improve digital services and security, increase outreach to underserved communities, and train employees.

“These are investments in fundamentals: protecting credit unions and their members, expanding access to affordable financial services, and building human capital,” NCUA Board Chairman J. Mark McWatters said. “In particular, helping credit unions detect and defend against cyberattacks is essential to keeping members safe and the financial system secure.”

Grant awards ranging from $1,300 to $20,000 were made to credit unions in 42 states and the District of Columbia (opens new window). Forty-four credit unions are first-time grant recipients. Twenty-eight are minority depository institutions. A total of 243 credit unions made grant requests of $2.5 million in this year’s grant round.

The NCUA made awards in three categories:

• Digital services and security: 141 grants totaling $1,251,670;
• Leadership development: 40 grants totaling $350,760; and
• Underserved outreach: 22 grants totaling $397,570.

The NCUA’s Office of Credit Union Resources and Expansion administers grant funding provided by the Community Development Revolving Loan Fund, which offers grants and loans to credit unions serving low-income communities. Since 2001, Congress has provided the NCUA with $20.8 million for these grants.

The Office of Credit Union Resources and Expansion supports low-income-designated credit unions; credit unions interested in a low-income designation; minority credit unions; credit unions seeking changes in their charters, bylaws, or fields of membership; and groups organizing to start new credit unions.

The Federal Financial Institutions Examination Council (FFIEC) members issued a joint statement alerting financial institutions to recent actions taken by the Department of Treasury’s Office of Foreign Asset Control (OFAC) under their Cyber-Related Sanctions Program and to the potential impact it may have on financial institutions’ risk-management programs.

The statement describes the issues a financial institution should consider regarding the effect of sanctions on the operations of the financial institution and the implications of the continued use of products or services provided by a sanctioned entity.

Since the program’s inception, OFAC has issued sanctions against entities that are responsible for, are complicit in, or that have engaged in, certain malicious cyber-enabled activities, and providing material and technological support to malicious cyber actors that have targeted U.S. organizations. Some sanctioned entities (opens new window) may offer services to financial institutions that operate in the United States. As a result of OFAC’s sanctions, all property and interests in property of the designated persons subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

Financial institutions should refer to OFAC resources or the FFIEC’s Information Technology Examination Handbook (opens new window) for information on requirements and expectations regarding OFAC-related compliance and operational risk management.

Attachment: Joint Statement (opens new window)

Federal Credit Unions Serve More Than 15 Million Service Members and Veterans

ALEXANDRIA, Va. (Nov. 9, 2018) – National Credit Union Administration Board Chairman J. Mark McWatters and Board Member Rick Metsger today issued statements on the eve of the 2018 observance of Veterans Day.

“On Veterans Day, we remember those who, in Gen. Douglas MacArthur’s words, ‘stand up in the storm,’” McWatters said. “We recognize the men and women in our nation’s armed forces and those who have served before, and we thank them for their dedication. They and their families make many sacrifices on our behalf, and we, in turn, have a responsibility to them. More than 15 million American service members, veterans, and their families belong to federal credit unions, and the credit union community will continue to provide them with affordable financial services.”

“This year marks the one hundredth anniversary of the end of World War I, which was once thought to be the ‘War to End All Wars,’” Metsger said. “The hard lessons of the last century have taught us, however, that there will always be threats to our security. Members our armed forces, veterans, and their families have earned our deepest gratitude for taking on the task of meeting those threats. Credit unions and this agency are committed, in return, to helping provide financial security through a safe and sound system of cooperative credit.”

The NCUA offers financial information tailored for service members and their families on its MyCreditUnion.gov (opens new window) consumer information website, and the agency joined the Federal Trade Commission to produce a new video on financial considerations affecting service members who are leaving active duty (opens new window).

The NCUA’s offices will be closed Nov. 12 in observance of the Veterans Day holiday.

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 California Department of Business Oversight recognize the serious impact of the California wildfires 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 the California wildfires. 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 the wildfires, 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 the wildfires. 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 the wildfires. 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 wildfires 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 the wildfires 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 the wildfires. 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 the wildfires. Institutions should monitor municipal securities and loans affected by the wildfires. 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 available from each regulator.

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)

Board Action Bulletin

ALEXANDRIA, Va. (Nov. 15, 2018) – The National Credit Union Administration Board held its tenth open meeting of 2018 at the agency’s headquarters today and unanimously approved two items:

• Operating, capital, and Share Insurance Fund budgets for 2019 and 2020 to fund the agency’s essential activities and strategic priorities.
• A proposed rule to update fidelity bond requirements for corporate and natural-person credit unions, as part of the agency’s regulatory reform agenda.

The Chief Financial Officer briefed the Board on the third-quarter performance of the National Credit Union Share Insurance Fund.

Agency Budgets Set for 2019, 2020

Board members approved the budgets for 2019 and 2020. The combined operating, capital, and Share Insurance Fund administrative budgets for 2019 will be $334.8 million, a 1.1 percent increase from the 2019 funding levels approved by the Board at its November 2017 meeting. The combined budgets for 2020 will be $343.9 million, a 2.7 percent increase from 2019.

Operating budgets for both years assume 1,178 full-time equivalent positions.

Operating Budgets

Budget Component	2019	2020
Operating budget	$304.4 million	$316.2 million
Capital budget	$22 million	$18.6 million
Share Insurance Fund budget	$8.4 million	$9.1 million
Full-time equivalents	1,178	1,178

The NCUA Board adopted the budget plan after providing credit union stakeholders with a detailed description of the proposed budgets at its October 17 public briefing and considering their comments.

Overhead Transfer Rate Set at 60.5 Percent; Operating Fee Rises 2.0 Percent

The 2019 overhead transfer rate will be 60.5 percent, and the operating fee will increase by an average of 2.0 percent for natural-person credit unions with assets of more than $1 million.

Detailed information on the overhead transfer rate and operating fee is available in the 2019-2020 Budget Justification (opens new window).

Federal credit unions will fund 70.5 percent of the NCUA’s 2019 operating budget, and federally insured, state-chartered credit unions will fund 29.5 percent.

The NCUA will charge the fee in March 2019, and payments will be due April 17, 2019.

The NCUA uses the operating fee to pay the agency’s costs of regulating federal credit unions. The overhead transfer rate is a transfer from the Share Insurance Fund to cover insurance-related expenses paid by both federal credit unions and federally insured, state-chartered credit unions.

Share Insurance Fund Posts Net Income of $93.5 Million

The National Credit Union Share Insurance Fund (opens new window) posted net income of $93.5 million in the third quarter of 2018, primarily due to the decrease in the provision for insurance losses.

Third-quarter total income was $76.5 million. Operating expenses were $51.1 million. The provision for insurance losses decreased overall by $70.9 million. The fund’s net position was $15.5 billion at the end of the third quarter.

As of June 30, 2018, the Share Insurance Fund’s calculated equity ratio was 1.35 percent, based on insured shares of $1.1 trillion.

As of the end of the third quarter, six federally insured credit unions had failed, and Share Insurance Fund losses were $744.9 million. Fraud was a contributing factor in one credit union failure in the third quarter.

For the third quarter of 2018:

• The number of CAMEL codes 4 and 5 credit unions declined 3.3 percent from the second quarter of 2018 to 203 from 210. Assets for these credit unions declined 10.9 percent from the second quarter of 2018, to $11.5 billion from $12.9 billion.
• The number of CAMEL code 3 credit unions declined 3.0 percent from the second quarter of 2018 to 1,001 from 1,032. Assets for these credit unions declined 5.7 percent from the second quarter of 2018, to $55.9 billion from $59.3 billion.

The third-quarter figures are preliminary and unaudited.

Proposed Rule Updates Fidelity Bond Requirements

The Board approved proposed amendments to fidelity bond requirements (opens new window) to ensure safe and sound credit union operations and protect the National Credit Union Share Insurance Fund.

The proposed rule would:

• Strengthen oversight of fidelity bond coverage by a credit union’s board of directors;
• Ensure there is adequate time to discover and file claims following a credit union’s liquidation;
• Formalize the Office of General Counsel’s September 2017 legal opinion (opens new window) permitting a natural-person credit union to extend bond coverage to certain credit union service organizations; and
• Clarify the documents subject to the NCUA Board’s approval and require all bond forms receive approval every 10 years.

The changes are part of the agency’s regulatory reform agenda.

Comment on the proposed rule 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.

ALEXANDRIA, Va. (Nov. 16, 2018) – Six federally insured credit union liquidations in the first three quarters of 2018 resulted in a $744.9 million loss to the National Credit Union Share Insurance Fund.

The six liquidated credit unions were: St. Elizabeth’s Credit Union, First Jersey Credit Union, Louisville Metro Police Officers Credit Union, Greater Christ Baptist Church Credit Union, Melrose Credit Union, and LOMTO Federal Credit Union.

The NCUA maintains a Conservatorships and Liquidations webpage with more information.

At the NCUA’s Nov. 15 open Board meeting, the Chief Financial Officer reported $744.9 million in losses to the National Credit Union Share Insurance Fund due to the six credit union failures through Sept. 30. That figure is the loss calculated at the time each credit union was liquidated. The loss figure can change depending on the performance of the remaining assets of the credit unions.

The NCUA continues to evaluate all courses of action that will maximize potential recoveries from the assets of the liquidated credit unions and minimize losses to the Share Insurance Fund. The fund has sufficient equity and reserves to cover anticipated losses.

The Federal Financial Institutions Examination Council (FFIEC) will hold a webinar on December 6, 2018, to promote awareness and understanding of efforts to develop alternative reference rates to LIBOR, because of the uncertainty as to continued availability of LIBOR after 2021.

The December webinar will provide participants with background information on LIBOR and recent developments in the market, including initiatives of the Alternative Reference Rates Committee (ARRC (opens new window)). The agencies will also answer questions submitted by participants.

This webinar and other communication activities are part of a broader FFIEC initiative that will inform supervised financial institutions and examiners about the potential transition from LIBOR, including the effect on institutions and financial products. Staff from FFIEC member agencies will supplement information produced by the ARRC to clarify and highlight potential impacts to supervised financial institutions and to answer questions about the potential transition from LIBOR to an alternative reference rate.

To register, please visit the industry outreach registration website (opens new window).

ALEXANDRIA, Va. (Nov. 20, 2018) – The National Credit Union Administration Board today released its monthly meeting schedule for 2019. Open Board meetings are scheduled to begin at 10 a.m. Eastern on the following dates:

• Jan. 17
• Feb. 14
• March 14
• April 18
• May 16
• June 20
• July 18
• Sept. 19
• Oct. 24
• Nov. 21
• Dec. 12

No meeting is scheduled for August. The meeting schedule is subject to change. The Board meeting calendar is available online on the agency’s website.

Agendas are posted on the NCUA’s public website one week in advance of each open Board meeting. Copies of Board memorandums and other documents related to the items considered are available online at the start of each meeting.

The NCUA’s Board holds open meetings at the agency’s central office located at 1775 Duke St., Alexandria, Virginia, and offers a livestream available through the NCUA.gov website. The NCUA also provides live updates during all open Board meetings on Twitter; follow @TheNCUA (opens new window).