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The NCUA issued
a final fixed assets rule and a final stress testing rule at the July open
Board meeting. The Board was also
briefed by agency staff on the condition of the Temporary Corporate Credit
Union Stabilization Fund and the share insurance fund, and received a mid-year
The final rule eliminates the 5% aggregate limit
on investments in fixed assets that is currently in place for federal credit
unions with $1,000,000 or more in assets. This is a change that CUNA has
advocated in our comment letters on the 2014 and 2015 proposals. Instead of
applying the current aggregate limit, ownership of fixed assets will be
monitored through the supervisory process and guidance. The final rule also establishes a single
six-year time period for partial occupancy of premises and discontinues the
30-month requirement for partial occupancy waiver requests. We expect NCUA will issue supervisory
guidance soon to help credit unions comply with the rule. The final rule will be effective 60 days
after publication in the Federal Register.
The Board approved
a final rule amending the regulation governing
capital planning and stress testing for federally-insured credit unions with assets
of $10 billion or greater. The final
rule changes the required dates for the stress testing and capital planning cycle.
Credit unions will now be required to
submit capital plans to NCUA by May 31, instead of the former deadline of Feb.
28. NCUA will have until Aug. 31 to
provide stress testing results to covered credit unions and accept or reject
their capital plans. The final rule will
become effective Jan. 1, 2016.
reported that the performance of legacy assets of five failed corporate credit
unions and the NCUA Guaranteed Notes Program have led them to the conclusion
that future assessments are unlikely.
This projection was based on point-in-time projections using the best
available modeling techniques and assumptions.
Staff cautioned that actual results can vary due to changes in economic
conditions and other factors.
noted that both ends of the range of net projected remaining assets were
negative. This was due to a combination
of economic recovery and the $1.75 billion in settlements with firms that sold
faulty mortgage-backed securities to the five failed corporate credit unions. The stabilization fund is currently
projected to conclude in 2021 with a surplus of $700 million to $2.5 billion,
and federally insured credit unions could receive a rebate after the fund
briefed the Board on the status of the National Credit Union Share Insurance
Fund (NCUSIF). Staff noted that the
NCUSIF ended the second quarter of this year with an equity ratio of 1.29% and
continued to reflect stable trends in income and operating expenses. Investment and other income was at $55.2
million, and operating expenses were at $49.9 million. The fund also reflected a net loss for the
quarter of $8.8 million. The equity
ratio, calculated on an estimated insured base of $935.6 billion, reflected an
additional 1% capitalization deposit that will be billed in September. Staff further noted that the amount of assets
in CAMEL codes 3, 4, and 5 credit unions decreased 49% since reaching a high of
$205.6 billion in September 2010.
continuation of various positive trends and other factors contributed to a
slight decrease of $400,000 in the Fund’s provision for insurance losses during
the first two quarters of 2015, according to staff.
NCUA conducted its annual agency-wide
mid-session budget review. As a result
of the review, the agency’s mid-year operating budget represented a $1.3
million decrease in the adopted budget for fiscal year 2015.
The capital budget saw an increase of $1.61
million, $1.3 million of which was due to the NCUA requiring enhanced data center
facility capabilities and more secure services for sensitive information and
mission-critical applications. Equipment and safety upgrades also added an
A number of NCUA areas saw savings, however,
offsetting the $1.61 million with approximately $2.945 million in savings.
Those include savings in:
When the 2015 budget was proposed in
November, board member J. Mark McWatters highlighted a list of 11 items he wanted to see present in future
agency budgets. During Thursday’s
meeting, NCUA Chair Debbie Matz said the agency had completed eight of those
items - one is in the planning stage and two did not seem relevant to the
budget. Despite Matz’s comments, McWatters cast the dissenting vote for
the budget reprogramming which passed on a 2-1 vote.
If you have any questions regarding these issues, please do not hesitate to contact Lance Noggle,
Andy Price, or Elizabeth
Champion for the Credit Union Movement
Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
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