WASHINGTON (3/12/08)—Key National Credit Union Administration (NCUA) officials detailed the agency’s 2008 examination issues last week, stating generally that credit unions are in good shape despite experiencing increasing pressure on liquidity. Five NCUA representatives discussed “Hot CU Exam Topics for ‘08” for a credit union audience gathered for a break-out session during the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference held here. The session spanned topics from loan delinquencies, member business lending issues, third-party vendor relationships, and 5300 call reports. The panel, led by Joy Lee, NCUA's director of supervision, starting by noting increasing pressure on liquidity as the loan-to-share ratio has risen at federally insured credit unions to almost 84%. Matthew Biliouris, program officer in NCUA's office of examination and insurance, said, however, that while the overall delinquency rate is rising, it remains at less than 1% of total loans. He said that the agency is watching in particular the increased delinquencies in member business loans (MBL) and loan participations, and is monitoring real estate loans. Margaret Ross, NCUA's new member business lending program officer, elaborated on the agency's concerns about MBL and loan participation programs. She cited among those concerns:
* Inadequate cash flow analysis; * Incomplete loan write-ups; * Lack of understanding the business risk; and * Lack of understanding of concentration risk.
Dominick Nigro, an NCUA information systems officer, reviewed the agnecy’s recent supervisory letter on evaluating third party relationships, and outlined the elements of an effective due diligence program. Amber Littleton, a risk management officer at NCUA, announced a plan to move to an online 5300 call report om 2009 and an online filing of the annual report of officials form. The online call report, she said, will enable multiple people to input information simultaneously and allow the credit union to correct prior period call reports. In addition, there will be a "credit union online profile," which will include information that the credit union has to file with NCUA, but which changes infrequently, such as branch information. Littleton said benefits of this change include: Multiple access from credit union computers; elimination of mailing and printing delays; and self-management of information changes. The 5300 software will be eliminated, but provision will be made for small credit unions still operating manually. Use the resource link below to access the panel's PowerPoint presentation.