NCUA Board OK's Rule Designed to Simplify Loan Regs; Gets Update on NCUSIF

ALEXANDRIA, Va. –During its meeting here today, the NCUA Board approved a rule designed to make regulations regarding loans and lines of credit to members clearer and easier to follow. The board was also given an update on the performance of the National Credit Union Share Insurance Fund.

The approval of a final rule amending its regulations around loans and lines of credit will be easier to follow, according to the agency, for three reasons:Followin

  • It puts all maturity limits applicable to federal credit union loans in one section
  • It clarifies the maturity for a new loan under GAAP is calculated from the new date of origination
  • It clearly describes the limits for loans to a single borrower or group of associated borrowers

The final rule will become effective 30 days after publication in the Federal Register.

Following passage of the new rule, Lucy Ito, president of NASCUS, said, “NASCUS appreciates NCUA’s efforts to bring clarity to its rules, reduce the regulatory burden, and make compliance easier. While not all NCUA lending limits apply to state-chartered credit unions, we are carefully reviewing the final rule to determine its impact on state-chartered credit unions and to ensure there are not any unintended consequences for the institutions."

Report on NCUSIF

Separately, NCUA CFO Rendell Jones offered the following update on the shape of the NCUSIF:

  • The fund reported a net income of $226.5 million and a net position of $15.7 billion for 2018
  • The fund’s assets declined to $15.8 billion at the end of the year from $16.7 billion at the end of 2017
  • As of Dec. 31, 2018, the Share Insurance Fund’s calculated equity ratio was 1.39%. The equity ratio is calculated on an insured share base of $1.1 trillion. As reported earlier, the equity ratio was higher than the normal operating level of 1.38%, the board, by notation vote on March 6, approved a $160.1 million Share Insurance Fund distribution to eligible federally insured credit unions

Fourth Quarter Performance

In addition, Jones reported for the fourth quarter of 2018:

  • The number of CAMEL codes 4 and 5 credit unions decreased to 193 from 203 in the third quarter of 2018. Assets for these credit unions increased 2.6% from the third quarter of 2018, to $11.8 billion from $11.5 billion
  • The number of CAMEL code 3 credit unions decreased to 940 from 1,001 in the third quarter of 2018. Assets for these credit unions decreased 5.7% from the third quarter of 2018, to $52.7 billion from $55.9 billion
  • There were eight involuntary liquidations and assisted mergers during 2018, compared to 10 credit union failures in 2017. The total amount of losses associated with failures in 2018 was $792.5 million, compared to $24.4 million the previous year
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Copyright Year: 2019
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