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Dec. 15, 2017

State CU lending, memberships
continue surge through third quarter

Lending at federally insured, state-chartered credit unions was up 10.8% over the year ending Sept. 30, 2017, and memberships continued to surge, posting a 4% increase over the same period, according to figures released this week by the NCUA. The lending surge was slightly faster than that recorded by federal credit unions, at 10.4%. Membership at federals rose at about the same rate as that at FISCUs (4.1%).

Assets at FISCUs grew by 7% for the period, and now account for 48.2% of all at federally insured credit unions for a total of $658 billion. FCUs assets were up by 6.5%, for a total of $706 billion. NASCUS estimates that, including asset figures for state-chartered privately insured credit unions (PICUs) from mid-year, state-chartered credit unions overall now hold $674 billion in assets, or 49.4% of all credit union assets.

NASCUS estimates there are about 53 million memberships in the state-chartered CUs (based on the NCUA third quarter numbers, and mid-year numbers for the PICUs), and about 59 million in FCUs (for a total of 112 million; up 4.3 million over the year period).

Overall, NCUA said federally insured credit unions increased their lending in the one-year period ending Sept. 30 by $90 billion (for a total of $937 billion), largely driven by real estate loans (up $41.5 billion, or 9.9%) and auto loans (up $36 billion, or 12.4%), for totals of $462.5 billion and $198 billion, respectively.

Real estate loan totals made up nearly half of all loan amounts at the credit unions, at 49.4%. Auto loan amounts accounted for just more than one-third of all loan dollars, at 35.4%.

Savings at the credit unions were up $65 billion (6.4%), to $1.08 trillion.

The federal regulator also reported:

  • The loan-to-share ratio was 81.4% at end of 3Q ’17, up from 78.6% at the end of the same period in 2016.
  • Credit unions’ combined net worth ratio was 10.89% in the third quarter of 2017, compared to 10.85% the year before.
  • Interest income was up 10.8% ($4.6 billion) to $46.7 billion; non-interest income increased 4.4% ($0.8 billion) to $17.8 billion.
  • Net income was $10.5 billion at the end of the one-year period, up 7.8%.

NCUA Releases Q3 2017 Credit Union System Performance Data


Final rules that would change the time range for considering federal credit union insolvency through emergency mergers, and some reorganization at headquarters, were both approved unanimously Thursday by the National Credit Union Administration (NCUA) Board.

The rules, approved by the board at its regular monthly meeting (and, at seven minutes, one of its shortest), will both take effect next month; the reorganization on Jan. 6, and the emergency mergers rule probably by mid-month (at the end of 30 days following publication in the Federal Register).

The emergency mergers rule, according to NCUA, amends the definition of “in danger of insolvency” in the agency’s Chartering and Field of Membership Manual. The current definition requires the agency to project a credit union to fall into at least one of three net worth categories over a period of time in order to be found in danger of insolvency.

“The rule lengthens the time period for two of the three current categories by six months and adds a fourth category to include credit unions that have been granted or received Section 208 assistance within the 15 months before an ‘in danger of insolvency’ determination has been made,” the agency said in a release.

The rule does not affect the other statutory criteria for authorizing an emergency merger.

According to NCUA staff, the final rule is intended to ensure that those credit unions that are in need of a merger are able to receive one. Further, they said, the rule does not mean that credit unions receiving 208 assistance will automatically be subject to a merger.

NCUA Board Chairman J. Mark McWatters observed at the meeting that the rule will effectively result in the agency catching problem credit unions earlier – and thus writing smaller checks to resolve the problems.

In other action, the board approved a reorganization (proposed in July) that eliminates or consolidates several offices at agency headquarters. Under the rule, the Office of Small Credit Union Initiatives (OSCUI) is eliminated, with most of its functions absorbed into a new office dubbed “Office of Credit Union Resources and Expansion” (OCURE). The new office will also include federal credit union chartering and field of membership functions, and the minority depository institution preservation program of the Office of Minority and Women Inclusion (OMWI).

In addition, the agency is renaming the Office of Consumer Financial Protection and Access to “Office of Consumer Financial Protection.”

NCUA is also planning to consolidate its five regions into three, but that consolidation will not be completed until Dec. 31, 2018. The board said it would issue another rule next year concerning the reduction of regional offices, which will take effect in 2019.

NCUA Board Approves Central Office Reorganization, Emergency Mergers Rules


Legislation that would require federal banking agencies to provide banks or credit unions written justification of any request to terminate or restrict a members’ or customer’s account (except for national security) was agreed to by the House this week.

The bill, H.R. 2706, the Financial Institution Customer Protection Act of 2017, passed 395-2; it heads now to the Senate for consideration.

According to its sponsors (including its author Blaine Luetkemeyer (R-Mo.)), the bill was introduced in response to “Operation Choke Point,” an initiative of the Federal Deposit Insurance Corporation (FDIC).

The measure also requires the federal banking agencies to issue an annual report to Congress that describes the number of member/customer accounts the agency requested or caused to be closed and the legal authority on which the agency relied, according to the House Financial Services Committee,

In other action, the House approved a bill that provides a legal safe harbor from escrow requirements for smaller financial institutions, amending the Truth in Lending Act in the process. The Community Institution Mortgage Relief Act (H.R. 3971, introduced by Rep. Claudia Tenney, R-N.Y.) applies to institutions with less than $10 billion in assets holding loans in portfolio for three years. It also makes key changes for servicers that annually service 20,000 or fewer mortgage loans.

House Passes Bipartisan Bills to Help Consumers


Repealing NCUA’s 2015 rule on “risk-based capital” (RBC) is the aim of still more legislation sent to the House floor by the Financial Services Committee this week, along with other bills that would affect credit union regulation.

The “Common Sense Credit Union Capital Relief Act of 2017” (H.R. 4464), introduced by Rep. Bill Posey (R-Fla.) was approved by the committee, 33-25. Spare in words (section two of the bill, which contains the relevant action, includes 45 words, including nine describing the section of law it pertains to), the bill nonetheless would erase one of the most-debated rules ever issued by NCUA. Scheduled to take effect in 2019, the RBC rule sets net worth and risk-based capital standards for “complex credit unions.”

If enacted, the bill would declare the rule to have “no force or effect, and any regulation revised by that rule shall be applied as if that rule had not been issued.”

Also sent to the floor by the committee:

  • H.R. 4545, the Financial Institutions Examination Fairness Reform Act (approved 50-10 and introduced by Rep. Scott Tipton (R-Colo.)), which establishes deadlines for federal financial institution regulatory agency issuance of final exam reports and establishes the right to appeal a material supervisory determination to an Office of Independent Exam Review within the Federal Financial Institutions Examination Council (FFIEC). This bill also establishes an appeals process that agencies can use to challenge any determinations made by Office of Independent Exam Review if the agency deems such rulings pose an “imminent threat to safety and soundness”., it was approved 50-10.
  • H.R. 1457, the Making Online Banking Initiation Legal and Easy (MOBILE) Act of 2017 (approved 60-0 and also introduced by Rep. Tipton) authorizes a financial institution, upon an individual's request, to record personal information from a scan, copy, or image of such individual's driver's license or personal identification card and store the information electronically for the purpose of verifying the identity of a customer and preventing fraud or criminal activity, and requires the financial institution to delete the image after using it for the permitted purpose. 
  • H.R. 435, the Credit Access and Inclusion Act of 2017 (approved 60-0, and introduced by Rep. Keith Ellison (D-Minn.), the bill amends the Fair Credit Reporting Act (FCRA) to authorize the Department of Housing and Urban Development (HUD) to furnish consumer credit reports to include an individual’s payment history from: (1) housing rental payments including on HUD subsidized properties and (2) payment history for utility and telecommunications contracts.
  • H.R. 2219, End Banking for Human Traffickers Act (approved 59-0, and introduced by Rep. Ed Royce (R-Calif)., the bill is intended to help law enforcement and financial institutions identify and report suspected human traffickers so they can be prosecuted. The bill adds the Treasury Secretary to the President’s Interagency Task Force to Monitor and Combat Trafficking, requires the task force to submit recommendations to Congress for the revision of anti-money laundering (AML)programs to specifically target money laundering related to human trafficking, requires the FFIEC to review and enhance procedures to improve AML programs to target human trafficking operations, and requirea the State Department to report on efforts to eliminate money laundering related to human trafficking and the number of investigations, arrests, indictments, and convictions in money laundering cases related to human trafficking.
  • H.R. 2948, amends the S.A.F.E. Mortgage Licensing Act of 2008 (introduced by Rep. Steve Stivers, R-Ohio) to provide a temporary license for loan originators moving from a financial institution to a state-licensed non-bank originator, or moving interstate to a state-licensed loan originator in another state. 


Losses piling up from credit union loans for taxi cab medallions that are falling in value may require the federal fund that insures savings in credit unions to increase loss reserves, NCUA Board Member Rick Metsger said last week. Those losses, he added, also indicate the continuing need for a “risk-based capital” rule.

Speaking to the Oregon Department of Financial Services CEO Roundtable in Salem (with NASCUS President and CEO Lucy Ito present), said lower prices for New York taxi medallions at two recent public auctions, plus a continued increase in “already high” delinquency rates on medallion loans, indicated that reserves for the National Credit Union Share Insurance Fund (NCUSIF) may have to be increased soon.

Metsger pointed to the loan losses as a reason the agency increased the “normal operating level” (NOL) of the insurance fund from 1.3% of total insured shares to 1.39% earlier this year. (The NOL is the level of reserves relative to the savings insured that the agency determines it will need address losses.)

“We have known, and warned about, this risk for some time,” Metsger said, according to a release from the agency. “But the bill is about to come due. Unfortunately, a lot of credit unions that followed supervisory guidance and lent prudently will have to pay for losses incurred by a small number of credit unions that gambled on a market that was disrupted and a bubble that burst.”

In other comments, Metsger said the taxi medallion losses indicated the need for a “risk-based” capital system. NCUA is scheduled to institute such a system for federally insured credit unions in 2019; Congress, in the meantime, is looking at repealing the rule.

“I am happy to consider changes in our risk-based capital rule that will strengthen the system,” Metsger said. “But, trade groups seeking to repeal the rule completely ignore the fact that the adoption of a risk-based capital rule is both required by federal law and good public policy that protects credit union members. The situation with the taxi medallion credit unions only adds an exclamation point to this fact. It is a prime example of why we need a strong risk-based capital system.”

Metsger Discusses Taxi Medallion Credit Unions and Risk-Based Capital Rule


After nine years in limbo – and more than 46 years of the previous one – NCUA received a new “seal of office” this week, following an executive order by President Donald Trump. The new seal – which was first proposed in 2008 – features the imposition of an eagle, three stars (representing the agency’s board) and the date of the enabling act for federal credit unions. It replaces the venerable blue mark – described variously as an up-pointing arrow, a stylized version of an umbrella, or the roof of a house – that has been the agency’s symbol since 1971.

Following approval by the NCUA Board nine years ago, the seal was sent to President George W. Bush with a request to issue an executive order officially approving the seal. However, the White House never issued the order, and the request apparently foundered after that.

Until last week, that is. In a statement, NCUA Board Chairman J. Mark McWatters said the new mark “readily and clearly conveys confidence and security, and identifies the NCUA as an integral part of the federal government.” (Then-NCUA Chairman JoAnn Johnson issued a similarly worded statement in 2008 about the new seal version.) The new seal will be used, NCUA said, on its public websites, publications, official letterhead, facilities and other material. Logos and signage for the National Credit Union Share Insurance Fund are not affected by this change, NCUA pointed out.

Executive Order Establishes New Agency Seal

NCUA Seal Shows Commitment to Credit Union Members (2015) 

NCUA seeks a new agency seal (2008)


A look at the Senate’s regulatory relief legislation (S.2155), tax reform efforts and the future of the CFPB were all addressed in the NASCUS Legislative and Regulatory Affairs (L&R) Committee teleconference this week. NASCUS hosts the teleconference each month for committee members and interest participants of the state credit union system. Other subjects addressed during the call: interstate branching, NCUA rules and regulations affecting state-chartered credit unions, and updating the NASCUS State System Profile.

NASCUS 2017-18 L&R Committee roster, mission

BRIEFLY: Commissioner takes seat in MN; change in CO; CU conserved in KY

Patty Salazar is serving as interim commissioner of the division of financial services for the Colorado Department of Regulatory Agencies (DORA) following the departure of Chris Myklebust from DORA, reportedly to go into business for himself. Salazar also continues as deputy executive director of DORA … Jessica Looman is the new Commissioner of the Minnesota Department of Commerce, succeeding Commissioner Mike Rothman, who recently stepped down after seven years of service ... NCUA said today it has conserved Louisville Metro Police Officers Credit Union of Louisville, Ky., a $28 million credit union with 3,500 members, "to correct operational weaknesses."

Information Contact:
Patrick Keefe,