Proposed rule would change appraisal requirement threshold, exempt some transactions
Share insurance fund posts $32.5 million in net income in second quarter
ALEXANDRIA, VA (September 20, 2018) — The National Credit Union Administration Board held its eighth open meeting of 2018 at the agency’s headquarters today and unanimously approved two items:
- A proposed rule amending the agency’s regulation requiring real estate appraisals for certain transactions to provide a measure of regulatory relief.
- A request from the Texas Credit Union Department to revise its member business lending rule to provide parity with the NCUA’s rule following changes made in June 2018.
The Chief Financial Officer briefed the Board on the second-quarter performance of the National Credit Union Share Insurance Fund, which continued recent growth trends.
The Office of the General Counsel briefed the Board on the adoption of a resolution to appoint two administrative law judges in the Office of Financial Institution Adjudication.
Proposed Appraisal Rule Provides Relief, Clarity
As part of the NCUA’s regulatory relief agenda, the Board approved a proposed rule (Part 722) to amend the agency’s real estate appraisal requirements for certain transactions.
The proposed rule would provide a measure of regulatory relief and increased clarity by:
- Increasing the threshold for required appraisals in non-residential real estate transactions from the current $250,000 to $1 million;
- Reorganizing the appraisal regulation to make it easier to determine when a written estimate or an appraisal is required; and
- Incorporating the rural exemption contained in the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155.
Comments on the proposed rule must be received within 60 days of publication in the Federal Register.
Investment Earnings Give Share Insurance Fund $32.5 Million Net Income
The National Credit Union Share Insurance Fund posted a net income of $32.5 million in the second quarter of 2018, primarily due to the strong investment income earnings.
The Share Insurance Fund’s net position remained at $15.0 billion. As of June 2018, the calculated equity ratio is 1.35 percent, based on insured shares of $1.1 trillion. Second-quarter investment and other income was $76.0 million. Operating expenses were $47.5 million. The provision for insurance losses decreased overall by $4.0 million.
For the second quarter of 2018, the Chief Financial Officer reported:
- The number of CAMEL codes 4 and 5 credit unions increased 5.0 percent from the first quarter of 2018 to 210 from 200. Assets for these credit unions increased 40.2 percent from the first quarter of 2018, to $12.9 billion from $9.2 billion.
- The number of CAMEL code 3 credit unions declined 2.1 percent from the first quarter of 2018 to 1,032 from 1,054. Assets for these credit unions increased 3.3 percent from the first quarter of 2018, to $59.3 billion from $57.4 billion.
Three federally insured credit unions failed through the end of the second quarter of 2018, compared to two through the end of the second quarter of 2017. Total losses associated with credit union failures are $1.5 million through the end of the second quarter, compared to $3.8 million through the end of the second quarter of 2017.
The second-quarter figures are preliminary and unaudited.
Texas Member Business Lending Rule Changes Approved
The Board approved a request from the Texas Credit Union Department to revise its member business lending rule to provide parity with the NCUA’s rule.
Under the NCUA’s rule, states that wish to have their own versions must receive Board approval. The NCUA Board originally approved the Texas member business lending rule in 1999 and has approved subsequent changes, most recently in December 2016.
The revised Texas rule will apply to both federally insured and privately insured, state-chartered credit unions in Texas.
Resolution Appointing Administrative Law Judges Adopted
The NCUA Board, by notation vote on Aug. 28, 2018, approved the appointment of two administrative law judges in the Office of Financial Institution Adjudication.
The OFIA is the office that houses administrative law judges and staff for administrative proceedings conducted by the NCUA, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve Board. A recent U.S. Supreme Court decision in Lucia et al. v. Securities & Exchange Commission held that administrative law judges must be appointed by the head of the agency in order to comply with the Constitution’s Appointments Clause, requiring the NCUA’s procedural action.
The NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at www.ncua.gov. The NCUA also live streams, archives and posts videos of open Board meetings online.
About National Credit Union Administration (NCUA)
The NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, the NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 124 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. The NCUA also protects consumers and educates the public on consumer protection and financial literacy issues.