NCUA Regional Director Hears CU Concerns, Discusses Issues

L-R: Diana Dykstra, President and CEO of the California and Nevada Credit Union Leagues; Cherie Freed, Region V Director of the National Credit Union Administration (NCUA); Rick Schmidt, CEO of WestStar CU in Nevada; and Hank Barrett, CEO of Valley First CU in California
L-R: Diana Dykstra, President and CEO of the California and Nevada Credit Union Leagues; Cherie Freed, Region V Director of the National Credit Union Administration (NCUA); Rick Schmidt, CEO of WestStar CU in Nevada; and Hank Barrett, CEO of Valley First CU in California

Yesterday, representatives from the California and Nevada Credit Union Leagues met with National Credit Union Administration (NCUA) Region V Director Cherie Freed and members of her senior staff, including Associate Regional Director of Operations Linda Thompson and Director of Supervision Kim Twieg.

This was an annual meeting where state credit union league presidents and representatives throughout Region V meet for an open dialog with the NCUA. Topics predominately centered around exam issues, but also included field of membership matters, cannabis banking, and the Financial Accounting Standards Board’s (FASB) new accounting standard for current expected credit losses (CECL).

The following were a few of the discussion points:

  • Staffing: The region is down 13 positions and one supervisor is retiring. Due to President Donald Trump’s federal civilian hiring freeze, these positions are not being filled at this time. Existing employees may transfer within the agency to vacant positions; but no new hires. This is a strain on the region.
  • Regional Concerns: Indirect lending growth is accompanied by indirect loan delinquency growth, and there is some concern that loan volume is masking the delinquency ratio. Region V credit unions are the top sellers of participation loans, with two credit unions in the region having a high concentration of taxi medallion loans. The NCUA does not have the data available to match buyers and sellers to know who are interconnected.
  • Call Report: There is a working group reviewing changes to the call report; any proposed changes would be put forth for comment before adoption.
  • AIRES Modernization: Rollout and implementation of changes to the AIRES exam system is at least three years out.
  • “CAMEL”: While there is discussion on adding Sensitivity to the CAMEL system, it is not yet approved by the NCUA board and would also be at least three years before rollout.
  • Region Consolidation: With the reduction of the number of credit unions over time, NCUA is considering consolidating the regions. There is an internal working group developing a recommendation.
  • Audit Reports: Examiners are asking credit unions to have their third-party audits sent directly to the NCUA by the audit firm. Freed noted this is in response to a recommendation from the Office of the Inspector General (OIG) in their semi-annual report to Congress. She noted the American Institute of CPAs (AICPA) is working through the related issues with NCUA’s central office. Examiners sometimes work with the supervisory committee to have them authorize the audit firm to send the report to the NCUA.
  • Credit Union Owned Life Insurance (CUOLI): Freed shared there is no appetite by the agency to change the regulation. However, examiner guidance will be updated soon and credit unions can use the guidance as a resource.
  • Joint State Exams: As part of the Exam Flexibility Initiative, there is a working group with state examiners. A “Working Agreement” draft will go to the working group by the end of this month. A final working agreement would allow regions to modify the agreement with individual states to fit their needs. The first objectives of the working group are to have a system for combined requests lists and to have effective use of staff.
  • Exam Notice: Also under the Exam Flexibility Initiative, credit unions should receive up to four weeks notice of their exam; previously, the requirement was a five-day notice.
  • Specialists: There is a program underway to improve utilization of specialists. Specialists will work with Supervisory Examiners (SEs) and Subject Matter Examiners at least once a year. This should improve the SEs’ connection with, and utilization of, the specialists.
  • Cannabis Banking: A discussion took place as to the current efforts in each of the states represented at the meeting. Concern was expressed that the president’s administration may rescind the “Cole Memo.” In that event, the Leagues noted that prudential regulators must provide sufficient warning and strongly urged the regional director to pass along any information as she hears things.
  • FASB and “CECL”: The NCUA has a working group that includes credit union representatives. It is developing guidance for credit unions.

Overall, the meeting was productive, with Freed and her staff listening and taking note of the concerns raised.

Pin It