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NCUA: MDI Program; CAMELS Update; March Meeting Cancelled

The National Credit Union Administration (NCUA) Board held its second open meeting of 2024 and adopted revisions to an interpretive ruling and policy statement (IRPS) 13-1, governing the Minority Depository Institution Preservation Program for credit unions. In addition, the Board was briefed on the performance of the National Credit Union Share Insurance Fund for the fourth quarter of 2023.

Changes to MDI Preservation Program Will Help Under-Resourced Communities
The NCUA Board unanimously approved a final interpretive ruling and policy statement that reflects the transfer of the MDI preservation program administration from the agency’s Office of Minority and Women Inclusion to its Office of Credit Union Resources and Expansion, updates the program’s features, and clarifies the requirements for a credit union to receive and maintain an MDI designation, among other changes.

“The final MDI policy statement will better enable hundreds of MDI credit unions to meet the needs of their members and communities,” Chairman Harper said. “Policy changes like this one make our country stronger.”

The revised policy statement is effective 30 days after date of publication in the Federal Register.

CAMELS Code 3 Credit Union Assets Increase in Fourth Quarter of 2023
The Chief Financial Officer briefed the NCUA Board on the performance of the Share Insurance Fund for the quarter ending on December 31, 2023. The Share Insurance Fund reported a net income of $71.7 million, $21.4 billion in assets, and $126.2 million in total income for the fourth quarter of 2023. As of the fourth quarter of 2023, the equity ratio was 1.30 percent.

“Overall, the Share Insurance Fund’s performance in the fourth quarter of 2023 was strong,” Chairman Harper said. “While we should recognize those positive things, today’s presentation also illustrates why we cannot become complacent in the supervision of federally insured credit unions. In recent quarters, the NCUA has seen growing signs of financial strain on credit union balance sheets and consumer financial stress. And, we continue to see that financial stress manifest itself in the number of credit unions and the percentage of assets held by composite CAMELS code 3, 4, and 5 credit unions.”

Additionally, for the fourth quarter of 2023:

  • The number of composite CAMELS code 3 credit unions decreased from 777 to 776 at the end of the fourth quarter. Assets for these credit unions increased from the third quarter to $160.2 billion from $131.7 billion.
  • The number of composite CAMELS codes 4 and 5 credit unions decreased from 131 to 125 at the end of the fourth quarter. Assets for these credit unions increased from $5.4 billion to $5.5 billion.

“I cannot emphasize enough the importance of liquidity planning for financial institutions of all sizes, especially following the Federal Reserve Board’s decision to close the Bank Term Funding Program as scheduled on March 11,” Chairman Harper said. “Credit unions will need to ensure they have ready sources of liquidity available should they need it. In fact, access to the NCUA’s Central Liquidity Facility and the Federal Reserve’s Discount Window should be part of participating credit unions’ broader liquidity risk management plans for a variety of contingencies, not just during times of crisis.”

At the end of the fourth quarter of 2023, three federally insured credit union failures cost the Share Insurance Fund approximately $1.4 million in losses.

Additional information on the performance of the Share Insurance Fund is available on the NCUA’s website.

March Board Meeting Canceled
The NCUA Board has agreed not to meet in March. The next NCUA Board meeting will take place on April 18, 2024.

Access the ‘Compliance Hotline’
Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:

Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!

Additionally, other League-member compliance resources include:

  • ViClarity
  • CU PolicyPro
  • ComplySight
  • InfoSight
  • CU Store
  • Record Retention Guide
  • GRC Technology Solutions

For more information, email Lisa Quaranta.

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