AUSTIN, Texas–Credit union CFOs here were given an update on where NCUA will be focused this year and in the near future.
Tracy Bombarger, association regional director-operations in the agency’s Region IV office, reviewed a number of trends and other issues NCUA has been watching in remarks to the CUNA CFO Council annual meeting here.
Among those issues:
Transparency and Accountability
“This board has really focused on transparency and accountability,” said Bombarger. “This board has been very diligent about opening everything they can think of to the public eye and making sure they get input from the credit union industry. The two board members have been able to accomplish a lot.”
Restructuring of the Regions
As shown at right, Bombarger offered a preview of the three regions of oversight to which NCUA is moving, down from the current five. The three regional offices will eventually be headquartered out of Alexandria, Va., Austin, Texas and Tempe, Ariz.
Regulatory Reform
“This is definitely a new approach for us,” said Bombarger, noting NCUA is required to review each of its rules once every three years, and it has traditionally reviewed one-third of its regs per year. “This year they took a whole new approach. In August, the board issued a regulatory reform agenda and are looking at all the rules in totality. They took all the different pieces they felt needed to be changed and put it on a matrix looking at impact and the degree of effort required to take these changes.”
That has led to a three-tier matrix, following comments that were filed by November of 2017. A task force is now reviewing those suggestions. Bombarger also reminded that the bylaws have also been out for comment. The deadline for comment was yesterday.
Call Report Modernization
The call report needs a “big overhaul,” acknowledged Bombarger, who called the move a “good one.”
Comments on call report modernization were due by April 2. NCUA has sought input on how it can enhance the value of data collected, improve the user experience, protect the security of the data collected, and minimize the reporting burden.
“We need to change, just like the small credit unions, so we can be viable and survive,” said Bombarger of all the changes taking place.
As part of the exam modernization, NCUA is currently piloting the Flexible Exam Program in a limited number of CUs out of its Austin office. Over the next two-to-three years it will be looking at Enterprise Solutions Modernization (which is a change to its examination tool away from AIRES), and then over the next three to seven years will be exploring a Virtual Examination Program, she said.
Court Ruling
The March 29 U.S. District Court rule that invalidated combined statistical areas up to 2.5 million as a local community, and a rural district of up to one million has affected approximately 40 credit unions, according to Bombarger. She said that while the agency is reviewing whether to appeal the decision, it has also reached out individually to each of those 40 credit unions to see what the best approach is from here on out.
2018 Priorities
For 2018, Bombarger said NCUA’s supervisory priorities include cybersecurity, Bank Secrecy Act (especially if a CU serves MSBs, plus customer due diligence for all CUs), internal controls, interest rate and liquidity risk, compliance (with a special focus on the new HMDA requirements that 48 data fields be collected), and auto and commercial lending (it has concerns about auto loans of extended terms, and is watching the $30-billion-per-year growth in indirect lending, as well).
“The one thing we thought we were going to see last year when we changed our member business lending rule and took the gloves off and was no longer prescriptive was that we would see commercial lending take off. But that’s really not what we’ve seen,” said Bombarger. “We were pleased to see credit unions taking their time with this.”