NCUA July Board Meeting

The National Credit Union Administration (NCUA) July board meeting is always highly anticipated by credit unions, as the budget is updated, assessments come due, and important rules are proposed.

“Even though the news this month was positive compared to expectations, concerns remain over rising costs and continued corporate stabilization assessments,” said John Trull, director of regulatory advocacy for the Northwest Credit Union Association (NWCUA).

As anticipated the NCUA released a rule requiring credit unions to file call reports electronically and issued a proposal creating a Minority Credit Union Program.

Corporate Stabilization and Insurance Fund Premium

The NCUA Board set the 2013 Stabilization Fund assessment at 8 basis points of insured shares as of June 30. These funds are used to offset the impact of failed corporate credit unions on the National Credit Union Share Insurance Fund.

The 2013 assessment is 1.5 basis points lower than the 2012 assessment. It is also at the lowest end of the projected range of 8 to 11 basis points announced for budgeting purposes at the November 15, 2012 open board meeting.

“The eight basis point assessment is as low as credit unions could have expected,” said Trull. “Even so the assessment affects the profitability of a number of small credit unions and has the potential to put other credit unions below 6% net worth.” 

The NCUA also indicated that there will not be a Share Insurance Fund Premium this year.

2013 Budget

As reported in Anthem last week, The NCUA lowered its 2013 budget forecast by $2.6 million with the majority of savings due to a net decrease of $6.3 million in employee pay and benefits.

The NCUA went over its expected contracting budget by $3,772,745 mainly because of information technology and security updates. Key IT deliverables expected in 2013 include:

  • Deployment of the Emergency Notification Management System.
  • Completion of the overdue maintenance of NCUA legacy applications.
  • Strengthening of NCUA’s internal cyber security program.
  • Deployment of new travel management system which will increase efficiency and reduce paperwork.

While the effects of sequestration are impacting the military, NCUA’s revised budget of $248.8 million for 2013 represents a nearly $14 million dollar increase over the $234.9 million 2012 revised budget released last July.

Minority Credit Union Program

The Board issued for comment a proposed interpretive ruling and policy statement providing the basis for creating a Minority Depository Institution Preservation Program. The rule would define a minority depository institution as a federally insured credit union with more than 50 percent of management and 50 percent of its current or potential membership falling within one of four eligible minority groups. Eligible minority groups include Black American, Native American, Hispanic American, or Asian American.

The program’s objectives would include:

  • Preserving current minority credit unions and encouraging new ones.
  • Providing technical assistance, training and educational programs.

Preserving the minority character of the credit unions in cases of merger or acquisition.

 

The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions about these or any regulatory issues, please contact Director of Regulatory Advocacy John Trull at jtrull@nwcua.org, or at 503.350.2209.

Posted in NCUA.