By Credit Union Exam Solutions Inc.
The podcast currently has 67 episodes available.
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# NCUA Chairman's Congressional Testimony: State of Credit Unions in 2024
## Episode Overview
A deep dive into NCUA Chairman Todd M. Harper's testimony before the House Financial Services Committee, covering the current state of the credit union system, key challenges, and regulatory initiatives.
## Key Points
### Credit Union System Performance
- Total assets nearly $2.3 trillion
- Total outstanding loans exceed $1.6 trillion
- Net worth ratio: 10.84%
- Return on average assets: 0.69%
- Warning signs: rising delinquency rates, declining capital levels
### Major Concerns
- One in five credit unions rated as troubled (CAMELS 3, 4, or 5)
- Number of troubled complex credit unions tripled in Q2 2024
- Commercial real estate showing stress due to hybrid work environments
- Rising consumer financial stress affecting loan performance
### Cybersecurity Initiatives
- Deployed updated Information Security Examination procedures
- Received 1,000+ reportable cyber incidents since September 2023
- 70% of cyber incidents related to credit union vendors
- Expanded partnerships with CISA and FBI
### Consumer Protection Efforts
- Focus areas: overdraft programs, fair lending, auto lending
- Eight credit unions referred to DOJ for discrimination in 2024
- First-ever race-based redlining settlement against a credit union
- New requirements for large credit unions to disclose overdraft fees
### Minority Depository Institutions (MDIs)
- 490 MDI credit unions serving 6.6+ million members
- Combined assets over $90 billion
- 39 MDIs received nearly $1.4 million in technical assistance grants
- Average asset size: $183 million
### Legislative Requests
1. Restore third-party vendor oversight authority
2. Reform Central Liquidity Facility
3. Provide more flexibility in Share Insurance Fund management
4. Increase Community Development Revolving Loan Fund to $10 million
## Hurricane Response
- Detailed response to Hurricanes Helene and Milton (Sept/Oct 2024)
- Provided emergency grants and loans to affected credit unions
- Extended regulatory filing deadlines
- Supported cash needs during telecommunications outages
## Notable Statistics
- Share Insurance Fund equity ratio: 1.28%
- Share Insurance Fund net income: $154.3 million
- Insured shares and deposits: $1.76 trillion
- Uninsured shares and deposits: $169.4 billion
## Contact Information
For more information: [ncua.gov](https://ncua.gov)
## Additional Resources
- NCUA's Financial Technology and Digital Asset webpage
- Credit Union Diversity Self-Assessment tool
- Automated Cybersecurity Evaluation Toolbox (ACET)
*Show notes based on testimony delivered November 20, 2024*
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
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Hello, this is Samantha Shares. This episode covers N C U A’s Authority to Assess Civil Money Penalties as outlined in its Enforcement Manual.
The following is an audio version of manual. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.
And now civil money penalties.
1. What are civil money penalties?
The FCU Act section206(k), 12 U.S.C. section1786(k), contains N.C.U.A.'s authority to issue civil money penalties; N.C.U.A. Rules and Regulations. Section 747, Subpart A, contains the rules and regulations governing civil money penalty administrative hearings. The N.C.U.A.
Board may assess civil money penalties against either a credit union or an institution affiliated party (see definition of institution-affiliated party above). The FCU Act specifies three tiers of civil money penalties, as follows:
► First tier. Any credit union or institution-affiliated party that violates a law or regulation, a final order of the N.C.U.A. Board, a published agreement with the Board (such as a published Letter of Understanding and Agreement), or a condition imposed in a published writing by the Board in connection with the granting of any application (such as the Insurance Agreement), may receive a penalty of not more than 5,000 dollars for each day of the violation. First tier penalties may apply to credit unions that, even after warnings, repeatedly submit late or substantially inaccurate call reports.
► Second tier. If the credit union or institution-affiliated party commits a first tier violation, and exhibits reckless conduct or a breach of fiduciary duty, and the violation, practice or breach is part of a pattern of misconduct, or causes more than a minimal loss to the credit union, or results in a monetary gain or other benefit to the institution-affiliated party, then the N.C.U.A. Board may assess a civil money penalty of not more than 25,000 dollars per day for each day of the violation.
► Third tier. Any credit union or institution-affiliated party that knowingly commits the first tier violations, knowingly engages in unsafe or unsound practices, knowingly breaches any fiduciary duty, or knowingly or recklessly causes a substantial loss to the credit union or a substantial monetary gain or other benefit to a party because of the violation, breach, or practice, may receive assessment of a civil money penalty of not more than $1,000,000 per
day for each day of the violation, or in the case of a credit union, 1 percent of assets, whichever is less.
2. How are civil money penalties assessed?
The normal administrative procedure for a civil money penalty action is as follows:
1. The regional director notifies the party of his or her intent to recommend to the N.C.U.A. Board the issuance of a civil money penalty, requesting a written response from the party.
2. The N.C.U.A. Board issues a Notice of Assessment, setting forth a statement of the law and facts on which it bases the assessment.
3. The assessed party has 90 days to make payment, but may request a hearing within 20 days.
4. An administrative law judge will hold a formal hearing if requested.
5. After the administrative hearing, the administrative law judge submits a recommended decision to the N.C.U.A. Board.
6. The N.C.U.A. Board issues its final order.
7. An institution-affiliated party or credit union may appeal to the U.S. Court of Appeals within 20 days of receipt of the final order.
This concludes the N.C.U.A. civil money penalty authorities and policies.
If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com. This is Samantha Shares and we Thank you for listening.
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
www.marktreichel.com
https://www.linkedin.com/in/mark-treichel/
Episode Summary
This episode covers the National Credit Union Administration's (NCUA) examiner guidance on Preliminary Warning Letters (PWLs) to credit unions, as outlined in the National Supervision Policy Manual.
## Key Points
1. Purpose of Preliminary Warning Letters (PWLs):
- Issued when a credit union's problems are serious or persistent
- Used when a credit union's board is unwilling to sign a Letter of Understanding and Agreement (LUA)
- Supports potential formal administrative action
2. Content of a PWL:
- Written from the Regional Director's perspective
- Lists serious areas of concern and cites relevant regulations
- Includes required actions and timeframes for resolving issues
3. Process for Issuing a PWL:
- Examiners draft PWLs after examinations or supervision contacts
- Division of Supervision (DOS) reviews and processes for Regional Director approval
- Can be hand-delivered or mailed, depending on severity of issues
4. Supervision of Credit Unions with PWLs:
- Follow-up examinations typically every 120 or 180 days
- Examiners document compliance with PWL in Status Updates
- PWLs usually not outstanding for longer than 12 months
5. Terminating a PWL:
- Recommended when credit union meets specific performance standards
- Examiners prepare draft removal letter for Regional Director's signature
## Sponsor
Credit Union Exam Solutions Inc. - Offering assistance with NCUA examinations
## Additional Resources
- Sample PWLs and BSA-specific PWL templates mentioned
- Reference to NCUA Instruction 4820, Enforcement Manual
## Call to Action
For credit unions needing assistance with exams, contact Mark Treichel on LinkedIn or at marktreichel.com.
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
www.marktreichel.com
https://www.linkedin.com/in/mark-treichel/
Hello, this is Samantha Shares. This episode covers N C U A’s authority to Involuntarily Liquidate a Credit Union.
The following is an audio version of N.C.U.A.’s Liquidation authorities. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.
And now liquidations.
INVOLUNTARY LIQUIDATIONS
1. What is the purpose of this chapter?
This chapter provides guidance in processing involuntary liquidations.
2. What are the types of involuntary liquidations?
a. Title I involuntary
Undersection120 of the FCU Act, 12 U.S.C. section1766, the NCUA Board can place a solvent federal credit union into involuntary liquidation for violations of its charter, its bylaws, the FCU Act, or the NCUA Rules and Regulations. Also, under section120, 12 U.S.C. section1766, the NCUA Board can place a federal credit union into involuntary liquidation upon finding that the board or liquidating agent did not conduct a voluntary liquidation in an orderly or efficient manner or in the best interests of the members.
The rules and regulations relating to these administrative proceedings are contained in NCUA Rules and Regulations section747, Subpart E. The effect of this action is the elimination of a federal credit union as a legal entity after due process provided for by section120(b) of the FCU Act, 12 U.S.C. section1766, and Part 747, Subpart E, of the NCUA Rules and Regulations. It is the most drastic enforcement action that can be taken against a solvent federal credit union.
Since Title I liquidation is not a commonly used administrative action, examiner involvement will differ from case-to-case.
b. Title II involuntary
Section 207 of the FCU Act, 12 U.S.C. section1787, requires the NCUA Board to close for liquidation any federal credit union it deems bankrupt or insolvent. In these cases, the NCUA Board must also appoint itself as liquidating agent. In addition, the NCUA
Board can accept appointment as liquidating agent of a bankrupt or insolvent federally-insured, state-chartered credit union.
c. Purchase and assumption
A purchase and assumption (P&A) is an action similar to a merger, but unlike a merger the NCUA Board places the credit union into involuntary liquidation first. In a P&A, another credit union or another financial institution assumes all or part of the assets, liabilities, and shares.
3. What are the goals for an involuntary liquidation?
The primary goals of an involuntary liquidation are:
► Prompt return of members' shares.
► Payment to the creditors.
► Disposition of the remaining assets to the NCUSIF.
4. What are the grounds for an involuntary liquidation of an insolvent credit union pursuant to section207 of FCU Act?
The grounds for this most severe action is insolvency or bankruptcy as defined in
section700.2(e) of NCUA Rules and Regulations.
For a liquidation pursuant to section207, 12 U.S.C. 1787, of the FCU Act, the credit union has no right to a pre-closure administrative hearing. The federal credit union's charter is immediately revoked and the credit union is placed into involuntary liquidation. The credit union may, however, challenge the action in U.S. District Court within 10 days. It is critical, therefore, that the finding of insolvency be based upon tangible evidence and indisputable circumstances using the most current information available.
The examiner prepares a supplemental memorandum for the liquidation package that contains all significant data to support the recommended action, including an analysis of the various exceptions to insolvency set forth in section700.2(e) of the regulations. It is imperative that the administrative record adequately supports insolvency. The examiner must be prepared to testify in court to establish the reasonableness of the insolvency calculation. For this reason, involuntary liquidations require the concurrence of the Office of General Counsel to ensure that the liquidation package is legally sufficient.
A Notice of Revocation of Charter and Involuntary Liquidation and Appointment of a Liquidating Agent will be served on the federal credit union. The order is effective immediately upon service, and all assets, books and records of the credit union immediately become the property of the NCUA. Agents for the Liquidating Agent will be appointed as provided in section207(a) of the FCU Act, 12 U.S.C. section1787.
5. What are the grounds for an involuntary liquidation of a solvent credit union?
Pursuant to the authority in section120(b)(1) of the FCU Act, 12 U.S.C. section1766(b)(1), the NCUA Board may suspend or revoke the charter of a federal credit union that has violated any provision of its charter, its bylaws, the FCU Act, or NCUA regulations. This type of action may also be taken for reasons of bankruptcy, but generally liquidation of insolvent credit unions are initiated under section207 of the FCU Act, 12 U.S.C. section1787.
Examples of conditions that may warrant recommending revocation of charter in a solvent credit union include:
► Abandonment of the credit union's operations and affairs by the officials.
► Plant closing and officials refusing to vote to present the question of liquidation to the members. Such plant closing may force insolvency under the concept of an ongoing concern, or may cause a dissipation of the assets and expose the creditors and the NCUSIF to a greater than normal risk.
► Other specific serious violations of its charter, its bylaws, the FCU Act, or regulations that cannot be reversed and that may cause insolvency.
► Serious operational deficiencies that the officials have not acted to correct and which, if allowed to continue, may cause insolvency.
Abandonment shall be deemed to have occurred when all or most of the elected and the appointed officials have demonstrated by their actions, or failure to act, an intent to end operations. Proof is evidenced when an active quorum cannot or will not be formed by the remaining officials.
The examiner recommends a Notice of Intent to Revoke Charter whenever the timeframe for due process will not create a greater risk of loss to the members, the creditors, and the NCUSIF than exists at the time of the recommendation. The examiner should be aware that the credit union will continue ...
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Show Notes: NCUA Board Cybersecurity Briefing - October 2024
🎙️ With Flying Colors - A Credit Union Examination Podcast
Hosted by Samantha Shares
Sponsored by Credit Union Exam Solutions Inc.
Episode Overview:
Join us for a comprehensive breakdown of the NCUA's October 2024 cybersecurity briefing, where key officials provided critical insights into the current threat landscape facing credit unions.
📊 Key Statistics:
- 1,072 cyber incidents reported (Sept 2023 - Aug 2024)
- 742 incidents (70%) involved third-party vendors
- 13 major service provider events affected multiple credit unions
- Financial services is 5th most targeted critical infrastructure sector
- Ransomware demands typically range from $1M-$10M
🔑 Main Discussion Points:
1. Current Cyber Threat Landscape:
- Ransomware attacks
- Business email compromises
- ATM security issues
- Third-party provider outages
2. Emerging Threats:
- Malvertising attacks
- Social engineering tactics
- Web application vulnerabilities
3. NCUA Recommendations:
- Maintain offline encrypted backups
- Implement zero trust architecture
- Create incident response plans
- Strengthen vendor risk management
🚨 Incident Reporting Requirements:
- 72-hour reporting window
- Contact methods:
- Phone: 1-833-CYBERCU (1-833-292-3728)
- Email: [email protected]
- New web form coming December 2024
📱 Pro Tip: Save the NCUA cyber incident reporting number in your contacts for quick access during emergencies.
🔗 Resources Mentioned:
- NCUA Cybersecurity Resources Page
- Letter to Credit Unions 24-CU-02 (October 21, 2024)
- NCUA's Automated Cybersecurity Examination Tool (ACET)
- CISA Cybersecurity Resources
💡 Key Takeaway:
Cybersecurity threats to credit unions continue to evolve and increase, with third-party vendors representing a significant vulnerability in the system. Credit unions must remain vigilant and maintain strong cyber hygiene practices.
📞 Contact Information:
- For exam assistance: Visit marktreichel.com
- Connect with Mark Treichel on LinkedIn
🎧 Next Episode:
Stay tuned for more insights on credit union examination success strategies.
#CreditUnions #Cybersecurity #NCUA #FinancialServices #RiskManagement
Sponsored by Credit Union Exam Solutions Inc. - Over 240 years of combined NCUA experience helping credit unions save time and money on examinations.
Note: This podcast is educational and does not constitute legal advice.
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
www.marktreichel.com
https://www.linkedin.com/in/mark-treichel/
🎙️ Episode Summary
Join us for an inside look at the NCUA's October 2024 board meeting, where we explore groundbreaking developments in new credit union charters and field of membership expansions. From innovative pilot programs to surging underserved area applications, discover how the credit union movement is evolving to serve more communities.
⏰ Timeline
00:00 - Introduction
02:15 - Overview of 2024 New Charters
05:30 - Provisional Charter Pilot Program
10:45 - Field of Membership Updates
15:20 - Underserved Area Applications Surge
20:10 - Process Improvements
25:30 - Future Outlook
🔑 Key Points
• NCUA has chartered 3 new credit unions in 2024
• Provisional Charter Pilot helping address startup capital challenges
• 87 underserved area applications YTD (up from 32 in 2020)
• New credit unions serving 15,000+ members with $51.9M in assets
💡 Featured Credit Unions
- Tribe Federal Credit Union (Minneapolis, MN)
- MDI & low-income designation
- Serving Minneapolis community
- Fairbreak Federal Credit Union (Memphis, TN)
- MDI & low-income designation
- Serving Memphis area
📊 Notable Statistics
- New CU Performance:
• $51.9M total assets
• $34.8M share deposits
• $15.4M loans
• ~15,000 members served
- Processing Times:
• 152 days avg. review time (2023)
• 215 days avg. review time (2024)
🎯 NCUA Initiatives
• Provisional Charter Program
• Enhanced CAPRI online system
• Streamlined application tracking
• Improved transparency in charter process
💭 Memorable Quote
"The test of our progress is not whether we add to the abundance of those who have so much, it is whether we provide enough for those who have so little." - FDR
🔗 Resources Mentioned
• NCUA New Charter Website
• CAPRI System
• Charter Application Guidelines
• Field of Membership Manual
📝 Action Items for Credit Unions
1. Check NCUA website for charter templates
2. Review underserved area requirements
3. Explore CAPRI system updates
4. Connect with CURE office for guidance
👥 Featured Speakers
• Todd Harper - NCUA Chairman
• Kyle Hauptman - Vice Chairman
• Tonya Otsuka - Board Member
• Martha Ninichuk - Director, Office of Credit Union Resources and Expansion
• Leilani Stamper - Consumer Access Division Director
📅 Next Steps
• Provisional Charter Program review (End of 2024)
• CAPRI system enhancement for community/underserved applications (Q1 2025)
• Recommendations for program future (2025)
#CreditUnions #FinancialInclusion #NCUA #Banking #Cooperation
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
www.marktreichel.com
https://www.linkedin.com/in/mark-treichel/
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2024 September NCUA Board Meeting: Simplified Share Insurance Rules
This episode covers the NCUA's final rule on simplifying share insurance coverage, focusing on trust accounts and mortgage servicing accounts. The discussions include details on the changes, their implications, and responses to questions and comments from the NCUA board members.
Introduction
Final Rule on Part 745
Presentation of the Final Rule
Simplification of Trust Accounts
Comments and Further Discussion
Mortgage Servicing Accounts
Record Keeping Regulations
Board Members' Questions
Conclusion
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
www.marktreichel.com
https://www.linkedin.com/in/mark-treichel/
Hello, this is Samantha Shares. This episode covers The Defense Credit Union Council’s letter to N C U A’s Chairman Todd Harper regarding his support for imposing Community Reinvestment Act on credit unions.
The following is an audio version of that advisory and the press release. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.
And now the letter.
October 15, 2024 Chairman Todd M. Harper
National Credit Union Administration
Dear Chairman Harper,
Our members noted your recent social media posts and comments indicating support for imposing Community Reinvestment Act (C R A) provisions on credit unions and soliciting input on the issue. On behalf of the Defense Credit Union Council (D C U C) and our nearly 200 members and 40 million members of defense credit unions, as well as the entire credit union movement, we are writing to express our deep concerns regarding the potential application of C R A to credit unions.
This decision should not be made in haste or in response to news stories about the actions of one or two credit unions. It would be a public policy failure to universalize the recent “redlining” violation of one particular credit union and apply remedies for that misdeed into a regulatory burden that is wholly inappropriate for the member-owned cooperative credit union industry. Additionally, the fact that the “redlining” finding by the Department of Justice was uncovered without C R A being applicable to credit unions strongly suggests that this remedy would not address whatever problem you assert should lead to C R A for part or all of the credit union movement.
Our members take their mission seriously as not-for-profit, member-owned cooperatives with a distinct mission to serve their members, especially those of modest means. This cooperative structure has always served to ensure that credit unions are inherently focused on meeting the financial needs of their members, unlike for-profit banks, which have external shareholders to satisfy. Credit unions already serve low- and moderate-income individuals and communities without the need for additional regulatory mandates. Imposing expensive C R A requirements on credit unions is redundant and unnecessary and eliminate the number of credit unions currently serving their members’ best interests along with those who are economically disadvantaged.
Data consistently shows that credit unions, including Defense Credit Unions, have an exemplary record of providing affordable financial services to underserved populations. Many credit unions, particularly those serving military bases and defense personnel, operate in areas where banking options are limited, and the financial needs of service members are distinct. By offering low-cost loans, financial literacy programs, and savings products, credit unions fulfill their mission of promoting financial inclusion and security.
Since the C R A was enacted to address the issue of discriminatory lending practices (i.e., “redlining”) by for-profit, shareholder-driven banks, why punish all credit unions? Credit unions, by definition, do not engage in the practices that C R A was designed to combat. The fundamental difference in structure and purpose between banks and credit unions makes C R A an ill-fitting regulatory framework on the latter. Plus, credit unions are already held accountable to their members, ensuring that their activities benefit the communities they serve.
Finally, the N C U A, as the independent regulator of federally insured credit unions, has a critical role in protecting and promoting the unique cooperative model of credit unions. We commend the N C U A for consistently opposing the application of C R A to credit unions and urge the agency to continue to advocate against any such proposals. Particularly since credit unions are already subject to extensive regulatory oversight and examination by the N C U A.
We strongly urge the National Credit Union Administration (N C U A) to continue its long- standing opposition to such requirements and request a meeting with your office and our member CEOs to discuss this issue in greater detail.
Chairman Harper, we have a shared interest in protecting and empowering consumers, and we look forward to working constructively with you and your team to arrive at workable solutions that improve member access and service.
Thank you for your attention to this matter and for protecting the unique role that credit unions play in the financial services landscape, particularly for our nation’s defense and military communities.
Sincerely,
Jason Stverak
Chief Advocacy Officer D C U C
This concludes the Letter
If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com. This is Samantha Shares and we Thank you for listening.
Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!
We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.
Hire us and gain:
• Peace of mind during your exam process
• Insider knowledge of NCUA procedures and expectations
• Strategies to address potential issues before they become problems
• Continuous access to our extensive subject matter expertise
With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.
Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.
www.marktreichel.com
https://www.linkedin.com/in/mark-treichel/
Hello, this is Samantha Shares. This episode covers the National Credit Union Administration’s Letter to credit unions 24 dash C U 2 Board of Director Engagement in Cybersecurity Oversight
The following is an audio version of that letter. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.
And now the letter.
Board of Director Engagement in Cybersecurity Oversight
To
Federally Insured Credit Unions
Subject
Cybersecurity
Dear Boards of Directors and Chief Executive Officers:
The frequency, speed, and sophistication of cyberattacks have increased at an exponential rate. Foreign adversaries and cyber-fraudsters continue to target all sectors of our nation’s critical infrastructure — including credit unions and other financial institutions. From September 1, 2023, the effective date of the N C U A’s cyber incident notification rule, through August 31, 2024, federally insured credit unions reported 1,072 cyber incidents. Seven out of ten of these cyber incident reports were related to the use or involvement of a third-party vendor.
A recent ransomware attack on a credit union has been attributed to malvertising a relatively new cyberattack technique that injects malicious code within digital ads. For this type of attack to work, the user doesn’t even have to physically click on a link for the system to become infected. Instead, a simple internet search can result in malvertising that exploits the vulnerabilities in an internet browser. Credit union cybersecurity teams should focus on standardizing and securing web browsers and deploying ad blocking software to protect against this threat.
Given the proliferation of sophisticated information security threats and the importance of safeguarding the assets and information of your members, the N C U A urges credit union boards of directors to prioritize cybersecurity as a top oversight and governance responsibility. Credit union board directors like you must ensure that a credit union’s senior leadership is highly focused on managing cyber risks and that your credit union has the necessary resources to maintain an effective cybersecurity program that aligns with the products, services, and risk profile of your institution.
The following are four key areas your board of directors should focus on:
Provide for Recurring Training
Your board should engage in ongoing education about current cybersecurity threats, trends, and best practices. The N C U A provides various resources to assist, including training webinars, web-based learning resources(Opens new window), and written guidance. Your credit union board needs to stay aware of the specific cyber risks that pertain to your credit union’s operations and the implications of these risks. Board members don’t need to be technical experts, but they must know enough about cybersecurity to provide effective oversight and direction for the executive team and subject matter experts.
Furthermore, your board should ensure the credit union’s employees receive regular cybersecurity education to maintain high awareness and preparedness across the organization. This education should emphasize the importance of a security-minded culture and adherence to important information security practices to mitigate the risk of cyber incidents.
Approve Information Security Program
Your board must approve a comprehensive information security program that meets the requirements of part 748of the N C U A’s regulations, which includes risk assessments, security controls, and incident response plans. Your credit union board should review the program at least annually to ensure it adapts to the evolving threat landscape and incorporates lessons learned from past incidents.
Oversee Operational Management
Your board is responsible for overseeing management of the credit union, focusing on the following cybersecurity areas:
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Hello, this is Samantha Shares. This episode covers The American Bankers Association Trade group’s letter to N C U A Board Chairman Todd Harper on N C U A’s on the agencies improved transparency. This letter demonstrates the challenges of N C U A’s recent public comments that are negative towards credit unions. The letter uses these references to attack N C U A and credit unions.
The following is an audio version of that letter. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.
And now the letter.
October 15, 2024
The Honorable Todd. Harper Chairman
National Credit Union Administration
Dear Chairman Harper:
The American Bankers Association (A B A) commends the National Credit Union Administration (N C U A) for its renewed focus on credit union transparency. As credit unions grow and become more complex, proper disclosure of pertinent information to credit union member-owners and the public gains importance. In addition to recent reporting changes for credit unions with more than $1 billion in assets regarding fee practices,1 a new proposal on executive compensation transparency for federal credit unions will provide greater accountability within the credit union system. With the White House Office of Management and Budget indicating that the N C U A may issue a Notice of Proposed Rulemaking as soon as this month,2 we urge the N C U A to implement additional transparency requirements relating to the increasingly complex and
concerning activities of some credit unions, namely merger transactions involving banks. Specifically, we urge the N C U A to require such credit unions to receive membership approval, disclose financial terms, and
demonstrate how combinations with banks might impact consumers, communities, and taxpayers.
In 2007, the N C U A organized an Outreach Task Force in response to inquiries from Congress3 – and a subsequent report by the Government Accountability Office4 – on credit unions. Among other topics, the Task Force examined N C U A policies and procedures on senior executive compensation. Although state-chartered
credit unions disclose compensation data for key employees through IRS Form 990 like most other nonprofit organizations, federal credit unions are exempt from doing so given their status as federal instrumentalities. In its 2008 report to the N C U A Board, the Task Force concluded that disclosure of senior executive compensation would be “consistent with prevalent public policy and should enhance accountability to the [credit union]
members,” and align with “federal credit unions’ member-owned, demoC R Atically-controlled status.”5
Due to their cooperative structure, credit unions afford their members “the right to vote on strategic federal credit union decisions including the directors, mergers, and conversions.”6 Because the results of such votes can directly affect senior executive compensation, the “Task Force concluded members should know or have access to senior executive officer compensation information when deliberating on how to cast their vote.”7
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Given the importance of merger transactions in the life of an organization, transparency about the possible personal incentives of management related to the transaction is especially important.
While mergers between credit unions and the acquisitions of credit unions by banks require membership votes, the acquisitions of banks by credit unions do not.8 In December 2023, the N C U A’s Director of the Office of Examination and Insurance stated in a memorandum to you that “a credit union's purchase of a bank is typically a strategic action to expand its geographic footprint or to grow a loan program.”9 The
memorandum noted that the N C U A approved 64 bank transactions with credit unions between 2011 and September 30, 2023, “a small portion of the overall consolidation occurring in the financial services
marketplace.”10
However, credit union acquisitions of banks now represent a much larger share of total transactions.
According to an October 3, 2024 report from the American Banker, “about 90 bank sales were announced
through September,” and “credit union buyers were involved in nearly a fifth of the deals to date this year.”11 The 18 deals announced so far in 2024 have already eclipsed the record 16 set in 2022, and total bank assets targeted by credit unions so far this year – more than $9 billion – have surpassed 2022’s record $5.15
billion.12 C N B C also reported that you are aware of “12 more potential deals that are in the works.”13
Credit unions have a statutory mission to serve those of modest means connected through a common bond in a local area. That mission of service, and their not-for-profit structure, has justified their exemption from most taxes and the Community Reinvestment Act (C R A) for decades. As growth-oriented credit unions pursue new markets and commercial lending via bank acquisitions, legislators, regulators, and even some within the credit union movement have raised objections.
To the detriment of credit union member-owners whose capital is used to finance these transactions, terms are rarely disclosed. For the few credit unions that have publicized such information, cash offers to bank shareholders ranged from $26.2 million14 to $231.2 million15 this year.
In its newly released bank merger policy statement, the Federal Deposit Insurance Corporation (FDIC) acknowledged that acquisitions of banks by credit unions “may have a negative impact on state and local government budgets and communities, which could necessitate an increase in taxes.”16 The FDIC specified that it may require credit unions to “provide additional information to enable the FDIC to evaluate the convenience and needs statutory factor, as credit unions are not subject to the C R A.”17
Several states have also determined that credit unions are unable to acquire banks under state law.
Mississippi and Tennessee have enacted legislation on this issue whereas other states have made regulatory determinations.
Although the N C U A issued a proposed rule on combination transactions with non-credit unions in January 2020 due to “a desire to add even more transparency,”18 it n...
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