By Pat Keefe
ALEXANDRIA, Va.--Credit unions with $100 million or less in assets -- about three in every four federally insured credit unions -- will be eligible for the designation "small entity," and thus additional regulatory relief, under a proposal issued by the NCUA Board today.
However, while large in number, those credit unions account for only about 10% of all federally insured CU assets, and 15% of FICU members.
Credit unions now designated "small entity" are excluded more from the risk-based net worth requirements under NCUA’s Prompt Corrective Action rule, and exempt from the requirement to adopt and implement interest rate risk policies. Additionally, the NCUA Board uses the threshold when issuing proposed and final rules, to determine whether to exempt small credit unions from a rule’s requirements or to modify the rule to address the needs of small credit unions.
While the board unanimously approved the proposal for a 60-day comment period, Board Member Mark McWatters said he hoped the final rule would raise the threshold to no less than $250 million, “and preferably $500 million.”
The current threshold is $50 million, adopted in 2013. About 65% of all FICUs are currently eligible for the designation.
In other action at the board meeting, the first in history to be "live-streamed" via the Internet:
- Approved a request from Taunton FCU of Taunton, Mass., to expand to community charter;
- Heard a report on the National Credit Union Insurance Fund (NCUSIF) for 2014, which showed the fund equity at 1.29% at year-end, and net income for the fund at $75.9 million. The fund was budgeted to show a net loss for the year of $140 million.
Year over year, NCUA CFO reported that:
- The number of CAMEL codes 4 and 5 credit unions fell 10.1 percent, to 276 at the end of 2014 from 307 at the end of 2013.
- Assets in CAMEL codes 4 and 5 credit unions fell 16.7 percent, to $11.5 billion at the end of 2014, down from $13.8 billion for year-end 2013.
- The number of CAMEL code 3 credit unions declined 4.7 percent, to 1,411 at the end of 2014 from 1,480 at the end of 2013.
- Assets in CAMEL code 3 credit unions declined 12.2 percent, to $95.4 billion at the end of 2014 from $108.6 billion at the end of 2013.
There were 15 involuntary liquidations and assisted mergers during 2014, compared to 17 credit union failures in 2013. The total amount of losses associated with failures in 2014 was $40.4 million, a decrease of 39.5 percent from $66.8 million the previous year. Fraud was a contributing factor in seven of these failures, at a cost of $36.5 million during 2014.