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
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:
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.
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.
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.
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).
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.
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:
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.
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.
ALEXANDRIA, Va. (Aug. 17, 2018) – The National Credit Union Administration has selected Matthew J. Biliouris as the Director of the Office of Consumer Financial Protection in the NCUA Headquarters.
Matt has been serving as the Acting Director of the Office of Consumer Financial Protection and previously served as the office’s Deputy Director. The Office of Consumer Financial Protection is responsible for overseeing the agency’s consumer financial protection policy and rulemaking efforts, fair lending examination program, consumer assistance center, and interagency coordination on consumer financial protection compliance matters.
“A long-time veteran of the NCUA, Matt has been an enthusiastic and capable leader in various positions during his 26-year career with the agency,” NCUA Board Chairman J. Mark McWatters said. “Having served as the Deputy Director of the Office of Consumer Financial Protection for the last five years, coupled with his experience in management and financial services, Matt is well-positioned to serve the agency and the credit union system.”
Matt began his career with the NCUA in 1992, as an examiner in Portland, Maine. During his 26-year career with the NCUA, Matt has served as a supervision analyst in the Mid-Atlantic Regional Office, information systems officer and program officer in the Office of Examination and Insurance, special assistant to the executive director, and director of supervision in the Office of Examination and Insurance. Matt also served an extended detail as a special assistant to then-NCUA Chairman Michael Fryzel.
ALEXANDRIA, Va. (Aug. 17, 2018) – Ukrainian Future Credit Union, of Warren, Michigan, has merged into Selfreliance Ukrainian American Federal Credit Union, of Chicago, Illinois, effective today, the National Credit Union Administration announced.
The new Selfreliance Ukrainian American Federal Credit Union members should experience no interruption in services, and member deposits remain protected 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 may visit the Share Insurance section of NCUA’s MyCreditUnion.gov (opens new window) website at any time for more information about their insurance coverage.
New Selfreliance Ukrainian American Federal Credit Union members with questions about their accounts can call the credit union at 586-757-1980 Mondays and Tuesdays from 9:30 a.m. to 5:30 p.m., Wednesdays from 11:30 a.m. to 5 p.m., Thursdays from 9 a.m. to 5:30 p.m., Fridays from 9 a.m. to 6:30 p.m., and Saturdays from 9 a.m. to 1 p.m. All times are Eastern. Members can visit Selfreliance Ukrainian American Federal Credit Union’s website (opens new window) for more information about the credit union, its services and branches.
Members may continue to transact business at all former Ukrainian Future Credit Union locations: 26495 Ryan Road in Warren, 11838 Joseph Campau Street in Hamtramck, and 7345 Orchard Lake Road in West Bloomfield.
Prior to the merger, Selfreliance Ukrainian American Federal Credit Union served 20,359 members and had assets of $485.9 million, according to the credit union’s most recent Call Report. At the time of the merger, Ukrainian Future Credit Union was a federally insured, state-chartered credit union with 3,652 members and assets of $77.9 million, according to the credit union’s most recent Call Report. Chartered in 1961, Ukrainian Future Credit Union served members of the Future Ukrainian-American Aid Association of Detroit.
The Michigan Department of Insurance and Financial Services placed Ukrainian Future Credit Union into conservatorship on Feb. 23, 2018, and appointed the National Credit Union Administration as conservator. The two agencies worked together to address issues affecting the credit union’s safety and soundness and determined that merging Ukrainian Future Credit Union into Selfreliance Ukrainian American Federal Credit Union was in the best interests of the members.
ALEXANDRIA, Va. (Aug. 23, 2018) – The National Credit Union Administration released today the third quarter edition of its online newsletter.
The latest issue of The NCUA Report features a column from NCUA Board Chairman J. Mark McWatters as well as articles from several NCUA offices on the agency’s initiatives and information on regulatory, supervisory, and compliance issues affecting federally insured credit unions.
Articles in the third quarter 2018 issue include:
The NCUA Report newsletter highlights important regulatory information that credit union managers, staff, and volunteers need to know. Users can access The NCUA Report’s articles in HTML format or view the entire issue as an interactive PDF file (opens new window). Previous issues are available online here.
The next quarterly issue of the newsletter will be available in November 2018. If interested, users can subscribe to NCUA’s online newsletter here (opens new window).
ALEXANDRIA, Va. (Aug. 28, 2018) – The National Credit Union Administration has granted a federal charter and Share Insurance Fund coverage to Everest Federal Credit Union in Jackson Heights, New York.
“The first credit union to serve the Nepalese diaspora, Everest Federal Credit Union is ideally situated to provide affordable financial services to the Nepalese community.” NCUA Chairman J. Mark McWatters said. “I congratulate them on their new charter.”
Everest Federal Credit Union will serve the approximately 15,000 members of the Non Resident Nepalis National Coordination Council of USA. The new credit union will provide members access to much-needed affordable financial services. During its first year of operations, the credit union plans to offer:
Everest Federal Credit Union’s charter became effective August 24, and it is the first NCUA charter this year.
The Non Resident Nepalis National Coordination Council preserves the cultural heritage of the Nepalese community while advocating for the welfare and rights of its members. The Council is part of the Non Resident Nepali Association, which helps Nepalese community organizations and members foster friendship and understanding in the United States.
ALEXANDRIA, Va. (Aug. 31, 2018) – The National Credit Union Administration today liquidated Melrose Credit Union of Briarwood, New York.
Teachers Federal Credit Union, of Hauppauge, New York, immediately assumed all of Melrose’s members and shares as well as some loans and other assets. Teachers Federal Credit Union is a federal credit union that 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 can 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 (opens new window) page of the NCUA’s consumer website, MyCreditUnion.gov (opens new window).
The NCUA has retained some Melrose loans. Members should contact the NCUA’s Asset Management and Assistance Center to see if their loans have been retained:
Melrose Credit Union
c/o National Credit Union Administration
4807 Spicewood Springs Road, Suite 5100
Austin, Texas 78759
512.231.7940
The existing Melrose office located at 13930 Queens Blvd., Briarwood, will remain open.
The NCUA made the decision to liquidate Melrose and discontinue its operations after determining the credit union was insolvent and had no prospect for restoring viable operations. The New York State Department of Financial Services placed Melrose into conservatorship on Feb. 10, 2017, and named the NCUA as conservator.
Chartered in 1922, Melrose served eligible members subject to the provisions of its bylaws, which could include any person upon approval for membership. At the time of liquidation and subsequent purchase by Teachers Federal Credit Union, Melrose served 19,864 members and had assets of approximately $1.1 billion, according to the credit union’s most recent Call Report.
Melrose is the fifth federally insured credit union liquidation in 2018.
