NCUA board reports decrease in share insurance fund, approves two measures

Utilizing a live audio webcast Thursday, the NCUA’s board of directors held its monthly meeting, providing an update on the National Credit Union Share Insurance Fund and MERIT, and unanimously approved two other measures.

The Share Insurance Fund reported a net income of $20.5 million and $17.7 billion in assets for the second quarter of 2020 and $72.1 million in total income for the second quarter of 2020.

The equity ratio of the Share Insurance Fund, as of June 30, is 1.22%, below the board-approved normal operating level of 1.38%, with the NCUA saying that the primary driver for this change is the rapid growth in insured shares, which increased nearly 13% from December 2019.

“As the result of extraordinary growth in insured shares during the first and second quarters of 2020, we see from today’s presentation that the equity ratio has seen a significant drop from where it was as of Dec. 31, 2019,” said Rodney Hood, NCUA chairman. “While we remain above the minimum equity ratio for the Share Insurance Fund, vigilance is needed to manage and monitor this situation.”

The board also approved a final rule that temporarily amends the NCUA’s regulations requiring all federally insured credit unions to provide appraisals for certain real estate-related transactions.

The final rule defers the requirement to obtain an appraisal or written estimate of market value for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development and construction of real estate.

Additionally, the final rule allows credit unions to extend liquidity to creditworthy households and businesses in light of recent strains on the U.S. economy due to the COVID-19 pandemic and credit unions should make best efforts to obtain credible estimates of the value of real property collateral before closing loans, and otherwise underwrite loans consistent with safety and soundness principles, according to the NCUA.

“The current public health crisis and subsequent social distancing directives have created difficulties for lenders to obtain required appraisals on a timely basis,” Hood said. “By deferring appraisals and evaluations up to 120 days, this rule will help bring relief and liquidity to homeowners and businesses.”

The board also unanimously approved an interagency order regarding exemption from the requirements found in Section 326(a) of the USA PATRIOT Act for loans extended to facilitate the purchase of property and casualty insurance policies, which will become effective after all federal banking agencies approve it.

 “The customer identification program requirements under the Bank Secrecy Act’s regulations are an important tool to deter or prevent money laundering or terrorist financing,” Hood said.

Finally, the board was also briefed on the Enterprise Solution Modernization Program’s Modern Examination and Risk Identification Tool, which will replace the agency’s legacy examination platform. MERIT and its associated systems will allow users to securely transfer documents to an examiner, securely access and download examination reports and provide status updates on findings, according to the NCUA.

Additional details about Thursday’s meeting can be accessed on NCUA’s website. The next NCUA board meeting is Oct. 15.

Leave a Reply