NCUA Board OK’s Texas biz-loan rule for CUs; briefed on NCUSIF, admin law judges

The federal regulator of credit unions on Thursday approved recent changes to a Texas regulation on credit union member business lending (MBL), action that affirms the Texas regulator’s MBL regulation remains consistent with NCUA rules.

NCUA Board meeting Sept. 20, 2018.

The NCUA Board’s action gives parity to the Texas regulation with regard to NCUA’s own MBL rule changes finalized this June.

Thursday’s open board meeting had four agenda items in all. Besides approving Texas’ business lending reg, the NCUA Board issued issued a proposed rule for comment raising from $250,000 to $1 million the threshold for the agency’s appraisal requirements for credit unions’ commercial real estate loans (read more here); heard a briefing on second-quarter results for the National Credit Union Share Insurance Fund (NCUSIF); and heard a briefing regarding the agency’s recent action regarding administrative law judges.

NCUSIF 2Q net income at $32.5 million

Preliminary, unaudited figures for the NCUSIF show the fund had an estimated equity ratio as of June 30 of 1.35%, based on insured shares of $1.1 trillion, the agency’s chief financial officer reported Thursday. The fund posted $32.5 million in net income in the second quarter, primarily due to strong investment income earnings. The fund’s net position remained at $15 billion. Second-quarter investment and other income was $76 million, and operating expenses totaled $47.5 million.

The provision for insurance losses decreased overall by $4 million. The number of CAMEL code 4 and 5 credit unions rose 5% from the first quarter (to 210 from 200) and held $12.9 billion in assets. By contrast, CAMEL 4 and 5 credit unions held $9.2 billion in assets during the first quarter. The number of CAMEL 3 credit unions declined 2.1% from the first quarter (to 1,032 from 1,054) and held $59.23 billion in assets. In the first quarter, CAMEL 3 credit unions held a total of $57.4 billion in assets.

The agency’s CFO reported that three federally insured credit unions failed through the end of the second quarter of 2018, up one from the same period last year. 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.

Administrative law judges appointed

The agency board, by notation vote Aug. 28, approved the appointment of two administrative law judges in the Office of Financial Institution Adjudication (OFIA), which houses administrative law judges and staff for administrative proceedings conducted by the NCUA, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve Board.

A June 21 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 August action by the NCUA Board allowed pending proceedings to move forward without interruption, staff said.

NCUA Board Sept. 20 meeting agenda, document links

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