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July 20, 2018

At Summit, NASCUS leader outlines
key issues in 'state of the state system'

NCUA’s new method for determining the “overhead transfer rate” (OTR), the growth of state charters vis-à-vis federals, and field of membership were all topics – among others – addressed by NASCUS leader Lucy Ito in her “state of the state system” presentation before the 2018 State System Summit this week.

Overall, however, she stated that the dual chartering system by federal and state authorities is “alive and well.”

Kicking off the three-day program (held at the Disney Yacht and Beach Club resort in Orlando), NASCUS President and CEO Lucy Ito briefed the audience of credit union regulators, CEOs and state system leaders on current issues and trends for state-chartered credit unions. (In the graphic: breakdown, by assets and members, of state- and federally chartered credit unions, presented by Ito during her presentation.)

Regarding the OTR (which determines the rate at which funds from the National Credit Union Share Insurance Fund (NCUSIF) are transferred to the operating budget of NCUA to cover “insurance-related” expenses of the agency), Ito noted that the method adopted by the agency board last year promotes greater transparency, clarity and fairness. She also noted that the new method helps to preserve the equity in the insurance fund. By lowering the OTR for 2018 to 61.5% from a high of 73.1% in 2016, the new OTR preserves approximately $34.8 million annually, she pointed out.

In other comments, Ito noted:

  • New NCUA field of membership rules have dramatically slowed the trend of federal charters converting to state charters. She pointed out that, from 2012-15 there was marked conversion of FCUs to state charters, which she said was due to greater growth opportunities from state charters over the federal charter. However, in 2016-17, she said, that trend virtually stopped as many credit unions waited to see what NCUA’s new FOM rules would deliver following the agency’s announcement the new rules were coming. (An exception is Mississippi, which she said in 2017 had enacted new rules for state charters, prompting 15 conversions from state to FCU). Through March of this year, she noted, there are no conversions in either direction.
  • The dual chartering system is “alive and well,” and “working as it should be.” The NASCUS leader also applauded NCUA for making the FOM rule changes and pointed out that growth of charters between state and federal credit unions “is not a contest.” However, she did call recent trends “a wake-up call for state field of membership rules.” “We need to look at our chartering rules and interstate branching laws,” she said, noting NASCUS’ continuing efforts to promote interstate branching at the national level.”

The Summit ran Sunday through Thursday in Orlando.


Federally insured credit unions across the country should be receiving statements this week from NCUA outlining their share of a nearly $736 million payout of funds left over in the now-closed program to resolve “corporate” credit unions that failed as a result of the 2008-09 financial crisis.

The credit unions should begin receiving their funds from the payout -- $735.7 million – next week, NCUA said Tuesday in a release.

The agency said the statements mailed to credit unions this week will indicate the amounts in “dividends” they will receive. “An institution that filed a quarterly Call Report as a federally insured credit union for at least one reporting period in calendar year 2017 will be eligible for a pro rata distribution,” the agency said, noting that the NCUA Board in February approved the final rule detailing the eligibility criteria.

The agency also pointed out in its release that the dividend distribution resulted from the decision by the board to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) in October 2017 and transfer that fund’s assets and obligations to the National Credit Union Share Insurance Fund (NCUSIF), as required by law.

The board said last fall it closed the TCCUSF because the fund had “served its purpose of retaining the resolution costs of the five failed corporate credit unions within the credit union system, at no cost to taxpayers.”

The distribution of nearly $736 million is the amount of funds above the “normal operating level” (NOL) of 1.39% of reserves in the insurance fund relative to insured shares of credit unions. Under the law, the reserves above the NOL are available for distribution to credit unions.

Federally insured credit unions paid special assessments to the NCUSIF earlier this decade to cover the costs of closing (resolving) the corporate credit unions. The assessments funded the TCCUSF, which was scheduled to expire in 2021.

However, as NCUA pointed out in its release, net legal recoveries of more than $3.8 billion won by the NCUA on behalf of five failed corporate credit unions decreased the costs to the TCCUSF and made funds available for the distribution next week.

$736 Million Share Insurance Distribution Payments to Occur Week of July 23


A broad, bipartisan capital-formation measure that would also delay the risk-based capital rule for credit unions and provide a safe harbor for financial institutions keeping some suspicious accounts at regulators’ request was overwhelmingly passed by the House this week 406-4; it now heads to the Senate.

The package (S.488, the Jobs and Investor Confidence Act of 2018) reflects an agreement between House Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Ranking Member Maxine Waters, D-Calif., and includes 32 measures previously approved by the House or the Financial Services Committee, many with strong bipartisan support.

The legislation will now head to the Senate, where Majority Leader Mitch McConnell (R-Ky.) has committed to bring the bill up for a vote, the House committee said in a release this week.

Titled the JOBS and Investor Confidence Act of 2018 (also called JOBS Act 3.0) the bill was taken up by the House as an amendment to a narrower, previously Senate-passed bill (S. 488).

The bill would delay the effective date of NCUA’s risk-based capital rule by two years, to Jan. 1, 2021. The rule, published in 2015, is currently set to take effect Jan. 1, 2019. The provision comes from a separate bill (H.R. 5288, the Common Sense Credit Union Capital Relief Act) sponsored by Reps. Bill Posey (R-Fla.) and Denny Heck (D-Wash, which was also included in a House spending bill this week; see next item). Other provisions include:

  • Safe harbor for keeping certain suspicious accounts open: Section 1901 would provide a safe harbor for financial institutions that maintain a customer account at the request of a federal, state, tribal or local law enforcement agency.
  • Disclosure for charitable mortgage transactions: Section 2101 would allow certain non-profits that are conducting charitable mortgage loan transactions to use either the truth in lending (TIL), good faith estimate (GFE), and HUD-1 forms, or those required under the TILA-RESPA Integrated Disclosure (TRID) rule.

HR 5288, Common Sense Credit Union Capital Relief Act of 2018

JOBS and Investor Confidence Act of 2018


Meanwhile, Thursday the House approved an appropriations financial services bill holding provisions similar to some contained in the JOBS Act 3.0, including modifications of credit union risk-based capital requirements and creation of an examination review office, among other things.

Like the JOBS Act bill, H.R. 6147 would delay by two years NCUA’s risk-based capital rule. However, the bill contains additional provisions of interest to credit union regulation, including creation of an Office of Independent Examination Review within the FFIEC, plus establishment of an independent process for appealing material supervisory findings.

Also included in the bill (which passed 217-199) were provisions that would:

  • Remove certain premiums and title insurance from points and fees calculation for determining whether a mortgage is a "high-cost mortgage" (Mortgage Choice Act, H.R. 1153). (A high-cost mortgage designation restricts the terms of the loan and requires a lender to make certain disclosures to the borrower.)
  • Provide credit unions sufficient flexibility to ensure that their members have access to the privacy policy pertinent to their relationship with the credit union. (Privacy Notification Technical Clarification Act).
  • Amend the Real Estate Settlement Procedures Act (RESPA) to require the BCFP to allow the accurate disclosure of title insurance premiums and any potential available discounts to homebuyers (TRID Improvement Act of 2018, H.R. 5078);
  • Create – for the first time -- an inspector general position within the BCFP.


John Kolhoff is the new chairman of the NASCUS Regulator Board, as former chairman Mary Ellen O’Neill remains in leadership as immediate past chairman of the association, in the result of board reorganization that took place this week during leadership meetings at the NASCUS State System Summit.

Also, Rick Stipa has been elected chairman of the NASCUS Credit Union Advisory Council, also the result of reorganization by that body during the leadership meetings. Stipa replaces Patty Idol in the position, who remains in leadership as immediate past chairman of the council.

Kolhoff is director of the Office of Credit Unions for the Michigan Department of Insurance and Financial Services, a position he has held since 2013. He has held various positions with the Michigan agency since 1994. He was previously chairman of the NASCUS Board from September 2013 to July 2014; he has served as a NASCUS Board member since 2011 (and as a member of the board of trustees for the National Institute of State Credit Union examination (NISCUE), including as chairman, from January 2008 to September 2013.) Kolhoff was also re-elected to the NASCUS Board for a three-year term this year; his term as chairman runs one year.

Stipa is president and CEO of TruMark Financial Credit Union in Trevose, Pa., a position he has held since 2001. Since 1992, he has served as a president and CEO of a financial institution. He was appointed to the NASCUS Credit Union Advisory Council in 2014. Among other things, he has also previously served on the Federal Reserve Bank of Philadelphia’s Credit Union Advisory Council, and the PSCU Strategic Planning Committee, and as a director and vice-chair of the Pennsylvania Credit Union Association. Stipa’s term as chairman of the CU Advisory Council also runs for one year.

Also elected to NASCUS leadership this week for the NASCUS Regulator Board were: vice chairman, Bryan Schneider, Secretary of the Illinois Department of Financial and Professional Regulation, and; secretary/treasurer, Steve Pleger, Senior Deputy Commissioner of the Georgia Department of Banking & Finance.

Elected to the NASCUS CU Advisory Council leadership were: vice chairman, Mike Williams, President/CEO, Colorado Credit Union, Littleton, Colo., and; secretary, Jason Boesch, Manager, Energize Credit Union, Oklahoma City, Okla.

Press release: NASCUS Regulator Board and CU Advisory Council members seated


Also in conjunction with the leadership meetings this week at the Summit in Orlando, the results of this spring’s elections for positions on the NASCUS Board were announced, which include:

  • For the NASCUS Regulator Board: John Kolhoff (MI) and Mary Ellen O’Neill, Director, Financial Institution Division, Connecticut Department of Banking. Both were elected to three-year terms.
  • For the NASCUS Credit Union Advisory Council: Patty Idol, President and CEO, Mountain Credit Union, Waynesville, N.C.; Cathie Tierney, President and CEO, Community First Credit Union, Appleton, Wis.; and Mike Williams (CO). All were re-elected to three-year terms.

Continuing their service on the NASCUS Regulator Board are directors: Rose Conner (North Carolina); Janet Powell (Oregon); Kim Santos (Wisconsin) and; Charles Vice (Kentucky).

Those continuing service on the NASCUS CU Advisory Council are directors: Mike Ryan (BECU, Washington); Cathie Tierney (Community First CU, Wisconsin); Brian Wolfburg (VyStar CU, Florida), and; Jeff Dahlstrom (Southeast Financial CU, Tennessee.

Members of the Regulator Board are elected by regulator members of the association, made up of all state credit union regulatory agencies across the nation. Advisory Council members are elected by credit union members of the council, which are mostly state-chartered credit unions from across the nation. The council advises the Regulator Board on issues of importance to credit unions.

BRIEFLY: Texas’ Feeney to step down; BCFP nominee faces grilling; 9 late filers fined

Texas Credit Union Commissioner Harold Feeney will retire at the end of the year, he announced this week, after 23 years of service. Among other things over the nearly quarter-century of service, he led the agency through two sunset reviews by the Texas legislature, fostered the reauthorization of private share insurance for state credit unions. He is a former Arizona regulator and has served on NASCUS’ Prudential Standards Committee for the last several years … Nominee for BFCP Director Kathleen "Kathy" Kraninger appeared before the Senate Banking Committee Thursday in a sometimes-contentious hearing on her nomination to succeed John "Mick" Mulvaney to lead the consumer bureau. She provided little insight to her views during the session, but many observers also said she did little to threaten her ultimate confirmation to a five-year term to leading the agency ... Nine credit unions – all FCUs -- have agreed to pay a total $3,109 in penalties for filing late fourth quarter 2017 call reports, NCUA said this week, ranging from $302 to $471; the median penalty was $315. All told, for fourth quarter 2017, 17 credit unions filed call reports late, the agency said. Six of the eight that were not assessed CMPs were determined to have “mitigating circumstances,” following review with the agency’s regional offices (and state supervisors, in some cases). The remaining two credit unions requested and received waivers.

Nine Credit Unions Agree to Late-Filing Penalties for Fourth Quarter of 2017

Information Contact:
Patrick Keefe,