News from the NCUA:

NCUA Changing Q2 Call Reports to Reflect Coronavirus

The National Credit Union Administration has announced changes to second-quarter call reports as a result of the Coronavirus Aid, Relief, and Economic Security Act and recent amendments to the agency’s own regulations as a result of the pandemic, reports the Credit Union Journal.

The modifications include:

  • New accounts to capture both the number and dollar amount of forbearance loans credit unions have granted. Those loans will not be reported on either delinquency or troubled-debt restructuring schedules.
  • Sections to specify both the number and dollar amount of loans credit unions have issued through the Small Business Administration’s Paycheck Protection Program.
  • An account capturing the amount of PPP loans pledged as collateral to the PPP Lending Facility.
  • Risk-based net worth calculations will also be modified to apply a zero-risk rating to PPP loans. Similarly, PPP loans pledged as collateral to the PPPLF will be excluded from total assets.
  • The asset threshold requirement for risk-based net worth has been changed from $50 million to $500 million.

While call reports for the quarter ending March 30 offered a glimpse into how credit unions have been affected by the pandemic, second-quarter call reports are likely to give a much clearer of the impact. First-quarter 5300s were initially due to the agency by April 26 but the agency extended that deadline by 30 days without fear of penalty. A recent report from S&P Global Market Intelligence found that as of May 15 roughly 9% of the industry, nearly 500 credit unions, had not filed their call reports, including at least 20 CUs with more than $1 billion in assets.

The agency has not yet said if it will extend the filing deadline for call reports for the quarter ending June 30.

Source: Credit Union Journal, May 28, 2020

Harper: Joining the CLF Will Bolster the System’s Access to Liquidity

Credit unions can significantly bolster the entire system’s access to emergency liquidity by joining the Central Liquidity Facility, National Credit Union Administration Board Member Todd M. Harper said.

“Through my experiences in working on Capitol Hill during the last financial crisis, I knew disruption in the financial markets could quickly turn into liquidity shortfalls,” Board Member Harper said. “I strongly encourage all consumer credit unions that do not already belong to or have access to an agent for the Central Liquidity Facility to join as soon as possible. By joining the CLF, you will be demonstrating the best of the cooperative nature of the credit union movement.”

Harper made these remarks remotely during the Credit Union National Association’s Examination and Supervision Committee Meeting on Thursday, May 21. The full text of his remarks is available on the NCUA’s public website.

View the entire press release​

Letter to Credit Unions (20-CU-16)
Low-Income Designations: Qualification of Military Personnel

On May 7, 2020, the NCUA announced it was updating and improving its approach to determining whether a credit union qualifies for the low-income designation by fully considering military personnel. The new approach will provide full benefit to credit unions with military members as they seek a low-income designation pursuant to the Federal Credit Union Act and the regulations in 12 CFR 701.34.

The NCUA’s primary methodology for determining low-income status is to geocode members’ addresses obtained from AIRES downloads, and assign incomes based on those addresses. However, the geocoding process cannot account for military personnel with Army/Air Post Office (APO) or Fleet Post Office (FPO) mailing addresses. As a result, they were excluded from the analysis as to whether the majority of the credit union’s membership are low-income members.

Read the Letter to Credit Unions

Letter to Credit Unions (20-CU-17)
Update to Offsite Examination and Supervision Approach

The NCUA is monitoring the impact of the COVID-19 pandemic and will continue to update its examination and supervision approach to help ensure the safety of personnel and the safety and soundness of the credit union system.

In March 2020, the NCUA provided information on their examination and supervisory priorities during the COVID-19 pandemic in Letter to Credit Unions 20-CU-05, Offsite Examination and Supervision Approach. While the NCUA’s priorities remain the same as outlined in that guidance letter, the agency has updated its approach for conducting examinations offsite. This letter provides information on changes to the NCUA’s examination and supervision approach, effective June 1, 2020.

The key components of their updated approach include continuing offsite work and a return to issuing examination reports.

Read the Letter to Credit Unions

NCUA to Host Bank Secrecy Act Webinar
Register to Learn Best Practices for a Strong BSA Compliance Program

Credit unions will receive valuable information on best practices in Bank Secrecy Act programs and avoiding pitfalls from non-compliance during a National Credit Union Administration webinar, “The Bank Secrecy Act: Review and Reminders,” scheduled for June 17 from 3:00 – 4:30 pm.

Participants will use this same link to log into the webinar and should allow pop-ups from this website. There is no charge to participate.

Online registration is available here.

View the entire press release​