CURE Expanding Resources for Credit Unions

May 2019
CURE Expanding Resources for Credit Unions

Board Action Bulletin

Proposed Rule Would Raise Nonmember Capital Limit

ALEXANDRIA, Va. (May 23, 2019) – The National Credit Union Administration Board held its fifth open meeting of 2019 at the agency’s headquarters today and unanimously approved one item:

  • A proposed rule allowing a federal credit union to accept nonmember and public unit shares up to 50 percent of its unimpaired capital and surplus.

The Director of the Office of Credit Union Resources and Expansion briefed the Board on the office’s upcoming activities.

The Chief Financial Officer briefed the Board on the performance of the National Credit Union Share Insurance Fund.

CURE Offering Assistance for Chartering, Low-Income Designation

The NCUA’s Office of Credit Union Resources and Expansion will offer more resources for credit unions to identify low-income areas they might serve and to assist people organizing credit unions with the chartering process.

The NCUA has a new online low-income designation area workbook that organizing groups and existing credit unions can use to research low-income areas they can target for possible member recruitment and outreach.

A new chartering modernization effort is under way that will automate and streamline the process. The NCUA plans to open a new web portal with information to assist credit union organizers. The agency will offer pre-developed business models that organizing groups can use.

The NCUA also makes training available for all credit unions, including minority depository institutions, through its Learning Management Service and hosts WebEx online meetings and teleconferences for credit unions to discuss management issues, grants and loans, and other topics.

Low-income credit unions interested in 2019 Community Development Revolving Loan Fund grants can submit applications from June 2 through July 20. The NCUA will administer approximately $2 million in grants to the most qualified applicants, subject to the availability of funds.

Share Insurance Fund Follows Recent Overall Trends

The Share Insurance Fund reported a net income of $16.1 million and a net position of $15.8 billion for the first quarter of 2019.

The fund’s total assets increased to $16.2 billion at the end of the quarter from $15.8 billion at the end of the fourth quarter of 2018.

The NCUA Board approved a $160.1 million Share Insurance distribution in March. The distribution was made this week for more than 5,500 eligible federally insured credit unions. It is the second largest Share Insurance distribution in the history of the fund. The agency has, in the past 11 months, made nearly $900 million in equity distributions.

For the first quarter of 2019:

  • The number of CAMEL codes 4 and 5 credit unions increased to 202 from 193 at the end of the fourth quarter of 2018. Assets for these credit unions held steady from the fourth quarter of 2018 to the first quarter of 2019 at $11.8 billion.
  • The number of CAMEL code 3 credit unions decreased to 905 from 940 at the end of the fourth quarter of 2018. Assets for these credit unions decreased 4.2 percent from the fourth quarter of 2018, to $50.5 billion from $52.7 billion.

Share Insurance Fund reserves for possible losses increased by $36.1 million during the quarter. There was one involuntary liquidation in the first quarter of 2019 projected to cause a loss to the fund.

The first-quarter figures are preliminary and unaudited.

Proposed Rule Raises Nonmember Shares Limit to 50 Percent

Federal credit unions would be able to accept nonmember and public unit shares up to 50 percent of paid-in and unimpaired capital and surplus under a proposed rule approved by the Board.

The proposed rule is part of the agency’s regulatory reform agenda.

Under the Federal Credit Union Act, a federal credit union may have up to 20 percent of total shares, or $3 million, whichever is greater, from nonmembers under certain circumstances. A federal credit union can also request a waiver from this limit from an NCUA regional director, and that waiver request must include a specific, written plan for how the additional shares would be used.

The proposed rule would raise the nonmember share limit to 50 percent and eliminate the waiver request process. A federal credit union would be required to develop a specific use plan if its nonmember shares, combined with its borrowings, exceeds 70 percent of paid-in and unimpaired capital and surplus.

Comments on the proposed rule must be received within 60 days after publication in the Federal Register.

The NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at www.ncua.gov. The NCUA also live streams, archives and posts videos of open Board meetings online.

Last modified on
05/23/19