|Addressing attendees of the California Credit Union League’s 2014 Government Relations Rally in Sacramento (L-R): Jan Owen, Commissioner for the California Department of Business Oversight (DBO), and Erick Orellana, Deputy Commissioner of Credit Unions for DBO|
DBO REPS ADDRESS 'CUOLI' INVESTMENTS
updated 04/14/14 01:05 PM
State CU Update Given
California Department of Business Oversight (DBO) Commissioner Jan Owen and Deputy Commissioner of Credit Unions Erick Orellana gave attendees an overview of the department during the California Credit Union League’s 2014 Government Relations Rally (GRR) last week in Sacramento and welcomed questions from attendees.
When asked about the processing time for Credit Union Owned Life Insurance (CUOLI) applications, Orellana indicated a decision and response to a credit union should take no more than five weeks once DBO receives a complete application.
In a February bulletin sent to credit unions, the DBO stated that, “with the proper due diligence and controls in place, and when installed as part of a well-developed and specialized financing strategy, the DBO generally does not object to the use of CUOLIs.” However, the department expects credit union boards of directors “to exercise reasonable care, skill, and caution when performing its pre-purchase analysis of any such investments.”
Additional guidance is included in the bulletin, including liquidity and concentration risks. The DBO views any concentration of CUOLI in excess of 25 percent of a credit union’s net worth to be a concern. This 25 percent limit is in line with the 2004 Federal Financial Institutions Examination Council (FFIEC) guidance. To view the entire posting, click here and scroll down to the CUOLI Investments for Credit Unions section of February’s posted bulletin.
Orellana also gave an update on the financial health of state-licensed credit unions, and how the department is working with credit unions every day. State-licensed credit unions hold a little more risk than the average credit union in California, but they are “stable and strong,” and financial data keeps improving, Orellana said.
“It’s crucial you are here and tell your story,” Owen said the day before credit union leaders met with state legislators. With respect to questions for the DBO, “we have an open-door policy, and we expect to hear from you,” she said. “We’re here to help.”