Approved: Strategic Plan; Service Facility Definition Final Rule

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During this week's National Credit Union Administration (NCUA) monthly board meeting, the NCUA board approved two items: the publication of NCUA’s draft Strategic Plan 2022–2026 for public comment; and a final rule that changes the definition of a service facility in the agency’s chartering in field-of-membership (FOM) requirements.

In addition, the NCUA board was briefed on the performance of the National Credit Union Share Insurance Fund (NCUSIF) in the third quarter of 2021, along with the agency’s modernized examination tools and response to the COVID-19 pandemic. 

Share Insurance Fund Quarterly Report
The National Credit Union Share Insurance Fund reported a net income of $58.6 million and $20.9 billion in assets for the quarter ending Sept. 30, 2021. The Share Insurance Fund also reported $59.8 million in total income for the third quarter of 2021. 

The Share Insurance Fund in October received additional capitalization deposits of approximately $1.1 billion from insured credit unions after the NCUA invoiced for its semi-annual contributed capital adjustment for credit unions with $50 million or more in assets.

Additionally, for the third quarter of 2021:

  • The number of CAMEL codes 4 and 5 credit unions decreased 2.1 percent from the end of the second quarter, to 141 from 144. Assets for these credit unions decreased 3.3 percent from the second quarter to $8.8 billion from $9.1billion.
  • The number of CAMEL code 3 credit unions decreased 0.7 percent from the end of the second quarter, to 759 from 764. Assets for these credit unions decreased 1.5 percent from the second quarter to $47.4 billion from $48.1 billion.

At the end of the third quarter of 2021, there were six federally insured credit union failures that cost the Share Insurance Fund $4.8 million in losses.

The third-quarter figures are preliminary and unaudited. Additional information on the performance of the Share Insurance Fund is available on NCUA.gov.

NCUA’s 2022-2026 Strategic Plan
The board approved the NCUA Draft Strategic Plan 2022-2026 for a 60-day comment period. The draft plan provides the agency’s proposed strategic goals and objectives for the next five years. The draft plan summarizes an analysis of the internal and external environment impacting NCUA and evaluates programs and risks. The draft plan also includes sample measures the agency can use to monitor performance, and strategies that describe how the agency will achieve its strategic goals and objectives.

The three draft strategic goals for 2022 to 2026 are to:

  • Ensure a safe, sound, and viable system of cooperative credit that protects consumers.
  • Improve the financial well-being of individuals and communities through access to affordable and equitable financial products and services.
  • Maximize organizational performance to enable mission success.

Final Rule on Shared Services Facilities (Part 701)
The Board adopted a final rule to amend its chartering and field of membership (FOM) rules to modernize requirements related to service facilities for multiple common bond (MCB) FCUs. The final rule provides that shared locations are service facilities for purposes of MCB FCU additions of groups, regardless of whether the FCU has an ownership interest in the shared branching network providing the locations. Shared locations, including electronic facilities offering required services such as video teller machines, are also service facilities for purposes of MCB FCU additions of underserved areas, regardless of whether the FCU has an ownership interest. The final rule does not include other changes proposed to the definition of service facility; accordingly, ATMs continue to be excluded from the definition of service facility for additions of underserved areas.

This rule becomes effective 30 days after publication in the Federal Register.

Board Briefings
The board also received briefings on the following:

  • NCUA’s Modernized Examination Tools: The board was briefed on the agency’s modernized examination tools. This included a look at Admin Portal (an application to manage a credit union’s tool users), MERIT (NCUA’s modernized examination tool replacing AIRES), and DEXA (an application to upload member loan and share data).

Staff noted that so far over 1,200 NCUA and SSA staff have received MERIT training. In addition, between NCUA, SSAs, and credit unions, there are almost 3,400 users of NCUA’s modernized examination tools.

  • Update to NCUA’s Response to the COVID-19 Pandemic: The board received an update on the agency’s response to the pandemic. Throughout the pandemic, the NCUA focused on three priorities: 1) Protecting the health and safety of NCUA staff and contractors, so the agency can continue to perform its mission; 2) Assessing the impact of COVID-19 on credit union members and operations; and 3) Analyzing how the pandemic will affect the future financial condition of credit unions and the Share Insurance Fund.

The presentation also included lessons learned from conducting virtual examinations during the pandemic. NCUA staff noted challenges with some, particularly smaller, credit unions providing documents electronically. They also noted some communication challenges, stating in-person meetings are likely a better way to communicate effectively.

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