Interagency CECL policy statement approved by NCUA board


The NCUA board of directors approved a final interagency policy statement regarding allowances for credit losses at its monthly meeting on Thursday, Feb. 20.

NCUA in October joined other financial regulators in issuing the proposed interagency policy statement on the Financial Accounting Standards Board’s CECL standard. The new standard introduces a new methodology for estimating allowances for credit losses.

The NCUA, along with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency are issuing the policy and guidance in response to changes in generally accepted accounting principles promulgated by the Financial Accounting Standards Board.

The new policy statement is expected to be published in the Federal Register once it is approved by the four regulators.

The board also approved a proposed rule regarding corporate credit unions. The proposal is intended to update, clarify and simplify several provisions in the agency’s corporate credit union regulations, according to the NCUA.

Additionally, the board heard two briefings. The first included results of a study that indicated that credit union mortgage rates are lower than other financial institutions’ rates. “The Chief Economist’s report observes that the discount in mortgage rates generally would reduce the life-of-the loan payments by thousands of dollars,” the study stated.

Analyzing 2018 Home Mortgage Disclosure Act data and applying appropriate filters to remove likely errors, the study found that:

  • mortgage loans originated by credit unions generally carried lower interest rates than mortgage loans originated by other lenders;
  • the median interest-rate spread for credit union mortgages was nine to 14 basis points lower than for other originators;
  • the discount in rates for credit union loans generally was observed in both urban and rural areas; and
  • statistics for three credit risk indicators — credit scores, combined loan-to-value ratios, and debt-to-income ratios — suggested that differences in mortgage rates were not likely the result of differences in credit risk.

A second board briefing indicated that the Share Insurance Fund continues positive trends, with assets rising to $16.7 billion at the end of the year from $15.8 billion at the end of 2018.

The Share Insurance Fund also reported a net income of $169.7 million and a net position of $16.6 billion for 2019, and as of Dec. 31, 2019, the calculated equity ratio was 1.35%, an increase from 1.33% reported as of June 30, 2019, according to the NCUA.

For more information on yesterday’s board meeting, visit NCUA’s website. The board’s next meeting is March 19.



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