At its December meeting held Thursday, the NCUA board of directors approved four items:
- the operating, capital, and National Credit Union Share Insurance Fund budgets for 2022 and 2023;
- a final rule creating a simplified measure of capital adequacy for complex credit unions;
- a final rule permitting federal credit unions to purchase mortgage servicing rights from other federally insured credit unions; and
- a final rule amending the NCUA’s subordinated debt rules to facilitate investments from the U.S. Treasury’s Emergency Capital Investment Program.
In addition, the NCUA Board approved the National Credit Union Share Insurance Fund’s normal operating level in 2022. As unanimously approved by the board, the normal operating level for the National Credit Union Share Insurance Fund is now 1.33%, down from the previous level of 1.38%, which was set in 2020 and remained unchanged in 2021.
Budget
The board of directors unanimously approved the agency’s budgets for 2022 and 2023. In approving the final 2022 budget, the board also approved a $15 million credit against the 2022 operating fee, reducing by approximately 12% the amounts that would otherwise be due from credit unions that pay the fee.
Combined, the 2022 operating, capital and Share Insurance Fund administrative budgets will be $339.5 million, a decrease of $1.9 million, or 0.6%, compared to the 2021 board-approved budget levels. The combined budgets for 2023 are estimated at $381.3 million.
Calling the budget approval a “compromise,” Washington Credit Union Daily reported that many of the staffing increases included in a draft 2022 budget proposed last month were eliminated, and the funding levels in the 2022 budget were cut by $5.9 million from the draft budget.
Complex credit union leverage ratio
The board of directors unanimously approved a final rule that simplifies the risk-based capital requirements for eligible complex credit unions. Under the final rule, a complex credit union that maintains a minimum net worth ratio that meets other qualifying criteria is eligible to opt into the complex credit union leverage ratio framework if they have a minimum net worth ratio of 9%. Henry Meier, the New York Credit Union Association’s SVP and general counsel, provides some insight into this final rule in his blog, New York’s State of Mind, today.
Mortgage servicing rights
The board of directors unanimously approved a final rule that amends the NCUA’s investment regulation to permit federal credit unions to purchase mortgage servicing assets from other federally insured credit unions subject to specific requirements. Under the final rule, federal credit unions with a CAMELS composite rating of 1 or 2, including a Management component rating of 1 or 2, may purchase the mortgage servicing rights of loans from federally insured credit unions in certain circumstances.
Subordinated debt
A final rule that amends the subordinated debt rule finalized in December 2020 was unanimously approved by the board of directors.
Specifically, the final rule amends the definition of “Grandfathered Secondary Capital” to include any secondary capital issued to the U.S. government, or one of its subdivisions under a secondary capital application approved before Jan. 1, 2022, irrespective of the date of issuance.
This amendment will benefit eligible low-income credit unions that are either participating in the U.S. Department of the Treasury’s Emergency Capital Investment Program or other programs administered by the U.S. government that can be used to fund secondary capital, if they do not receive the funds for such programs by Dec. 31, 2021.
The next NCUA board meeting is at 10 a.m. on Jan. 27 and can be livestreamed at ncua.gov.