Removing Barriers Blog

Summary of July 21 NCUA Board Meeting
Posted July 21, 2016 by CUNA Advocacy

The NCUA received a Report of the National Credit Union Share Insurance Fund (Quarterly Report), adopted NCUA’s 2017-2021 Strategic Plan, and received a Board Briefing on NCUA’s 2016 Mid-Session Budget.  Following the open board meeting the Board considered a Supervisory Matter and a Merger Request, both of which were closed to the public.

National Credit Union Share Insurance Fund Quarterly Report

The Board received a Quarterly Report on the NCUSIF indicating Total Income of $56.1 Million and Net Loss of $21.8 Million for the quarter ending June 30, 2016.  The Balance Sheet showed Total Liabilities and Net Position of $13,014 Million.  The number of problem Credit Unions CAMEL Code 4/5 decreased to 209 and the number of CAMEL Code 3 reduced to 1,201.  The number of credit union failures in 2016 sits at 11 with 10 of those being involuntary and 1 an assisted merger.

NCUA’s 2017 – 2021 Strategic Plan.

The Board adopted changes to the 2017 – 2021 Strategic Plan that includes the agency’s three strategic goals:  1.  Ensure a Safe and Sound Credit Union System; 2. Promote Consumer Protection and Financial Literacy; and 3. Cultivate an Inclusive, Collaborative Workplace at NCUA that Maximizes Productivity and Enhances Impact.

Notably the NCUA removed two existing performance goals that measured annual exams within the 2014-2017 Strategic Plan and the 2016-2017 Annual Performance Plan as follows:

  1. Examine all federal credit unions annually; and
  2. Examine all federally insured state credit unions with assets above $250 million annually.

While this removal does not immediately change the examination cycle for credit unions, it does set the stage for later improvements as being contemplated by the Exam Flexibility Initiative.  The NCUA will further need to remove the requirements from the National Supervisory Policy Manual.

Also of note is the inclusion of a strategic item the reinforces the NCUA’s commitment to small credit unions as follows:

Support the success of small credit unions through training, consulting, grants and loans, partnership opportunities and resources.

NCUA acknowledges that the details of the strategic plan are being updated to reflect a different financial world and new regulations either adopted or forthcoming on Capital, Stress Testing, and Liquidity Rules.  It further reflects their focus on upgrading technology and processes designed to reduce the burden on credit unions.

Board Briefing, 2016 Mid-Session Budget

The Board received a Briefing on the 2016 Mid-Session Budget Review where it provided a summary of Revised Estimates for the 2016 Budget.  NCUA highlighted that there is a $1.9 million reduction in pay and benefits as a result of having 1,214 FTEs below the 1,247 budgeted (33 unused FTEs).  There was a $234,000 in Administrative costs and various other reductions.  NCUA provided a breakdown of various expenses including a breakdown of Contracted Services.  Albeit recognizing these savings, NCUA is not recommending a reduction for 2017 as it states it must maintain adequate cash balances to meet current and future obligations.  It indicates several open obligations from prior years are impacting the amount of cash needed. 

NCUA stated that the Overhead Transfer Rate did not need a ‘true-up” because it does not pay budgeted expenses at the beginning of the year, and only charges actual expenses to the SIF as they occur monthly.

What was not discussed is the overall increase in NCUA’s budget from the prior year as a combination of the funding received from the OTR and the Operating Fee.