At today's Board meeting, NCUA received a report of the National Credit Union Share Insurance Fund Quarterly Report, authorized for publication a Proposed Interagency Rule, Parts 741 and 751, Incentive Based Executive Compensation, and a Proposed Rule, Parts 701 and 721, Federal Credit Union Occupancy, Planning, and Disposal of Acquired and Abandoned Premises, Incidental Powers. 

National Credit Union Share Insurance Fund Quarterly Report.

Rendell L. Jones, chief Financial Officer presented the Quarterly Report of the National Credit Union Share Insurance Fund.  Jones reported Total Income of $57.3 million and a net income of $24.0 million.  The Ending Reserve Balance was reported at $152.2 million.  The number of problem credit unions (CAMEL Code 4/5) ending 1^st quarter was at 218, down 2 from the previous quarter, with the percent of CAMEL code 4/5 to shares at a 0.78% ratio.  The number of CAMEL Code 3 credit unions fell to 1,212 from a previous number of 1,261.  The number of credit union failures for 2016 was 6.

Proposed Interagency Rule, Parts 741 and 751, Incentive Based Executive Compensation.

This is a joint rule by all the prudential banking regulators and the SEC to implement provisions of the Dodd-Frank Act.  Dodd-Frank requires regulations or guidelines to prohibit incentive-based payment arrangements in financial institutions that the Agencies determine encourage inappropriate risks by providing excessive compensation or that could lead to material financial loss.  The act also requires regulations or guidelines that require financial institutions to disclose information about the structure of their incentive-based compensation arrangements in sufficient detail to allow regulators to determine whether the arrangements provide excessive compensation or could lead to material financial loss.  

This proposed rule applies to credit unions with assets of $1 billion or more divided into three levels:  1.  Level 1 - $250 billion and above; 2. Level 2 - $50 billion - $250 billion; and 3. Level 3 - $1 billion - $50 billion.  The rule addresses requirements for the structure of compensation for senior executive officers and significant risk takers at Level 1 and Level 2 institutions.  Additionally, all covered institutions must annually create and retain for 7 years records documenting the structure of incentive-based compensation arrangements and receive appropriate oversight from the credit union’s board.  All covered institutions are subject to the general prohibition on compensation arrangements that encourage inappropriate risks.

Proposed Rule, Parts 701 and 721, Federal Credit Union Occupancy, Planning, and Disposal of Acquired and Abandoned Premises, Incidental Powers.

This proposed rule amends the regulations governing a Federal Credit Union’s occupancy, planning, and disposal of acquired and abandoned premises, and its regulation regarding incidental powers.  It eliminates a requirement that an FCU must plan for, and eventually achieve full occupation of acquired premises.  It does retain the requirement that a credit union “partially occupy” a premises defined as use on a full-time basis of at least 50% of the premises, or by a combination of the credit union and a CUSO controlled by the credit union.  It further amends the excess capacity provision to clarify that an FCU may lease or sell excess capacity in its facilities, but it does not need to anticipate that the capacity will ultimately be occupied by the FCU in the future.