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NCUA Update

Buddy Gill, Senior Advisor Office of the Chairman of the Board. NCUA Update. For The Georgia Credit Union League May 15, 2015. TOPICS WE’LL COVER TODAY. Major Industry Trends Share Insurance Fund Corporate Stabilization Resolution Program RBC Update

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NCUA Update

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  1. Buddy Gill, Senior Advisor Office of the Chairman of the Board NCUA Update For The Georgia Credit Union League May 15, 2015

  2. TOPICS WE’LL COVER TODAY • Major Industry Trends • Share Insurance Fund • Corporate Stabilization Resolution Program • RBC Update • Quick Overview 2015 Supervisory Priorities including Cyber Security, IRR • 2015 Regulatory Modernization and Reg Relief • Q&A NCUA Update

  3. Credit Unions Have Recovered Trends in U.S. FICUs 3RD Qtr. 2012 Year-End 2009 Year-End 2010

  4. GA Credit Unions in 2014Q4 Compared with U.S. Credit Unions 3RD Qtr. 2012 Year-End 2009 Year-End 2010

  5. Credit Unions Have Recovered Trends in GA FICUs 3RD Qtr. 2012 Year-End 2009 Year-End 2010

  6. GA and U.S. Credit Unions in 2014Q4 Smaller vs. Larger Credit Unions 3RD Qtr. 2012 Year-End 2009 Year-End 2010

  7. GA and U.S. Unemployment Trends 3RD Qtr. 2012 Year-End 2009 Year-End 2010

  8. CU Performance and Unemployment

  9. In the Aggregate, CUs Growing NCUA Update

  10. CU Consolidation Trend Spans 25+ Years NCUA Update

  11. Low Income CUs More than Double since 2011 NCUA Update

  12. Share Insurance Fund Update • 6,273 FICUs holding $902 billion in insured deposits • $12 billion milestone, 1.29% equity ratio • $214M total income, $138M operating expenses, net gain $76 million • 15 CU failures in 2014; liquidation charges of $44M NCUA Update

  13. Distribution of Assets in CAMEL Codes FY 09 - FY 14 NCUA Update

  14. Appx. $7 Billion Potential Impact on Share Insurance Fund in 2008 if Congress had not Created the Stabilization Fund NCUA Update

  15. NCUA Won Legal Settlements: $1.7 Billion • JP Morgan (largest @ $1.4 Billion) • Citigroup • Deutsche Bank • HSBC • Bank of America …19 various NCUA filed legal actions remain pending… NCUA Update

  16. Corporate System Resolution Costs From NCUA Website: CU Resources and Information, Corporate System Resolution Costs NCUA Update

  17. Corporate Stabilization Fund: Summary • Performing better than original baseline forecast • Projected assessment range negative on both ends; no future assessments expected • Stabilization Fund net balance now positive due to $1.7B in legal recoveries plus improving housing market, economy • NCUA still owes US Treasury $2.6 billion • Any potential Stabilization assessment rebates to CUs only possible AFTER: • All NGNs mature by 2021 • All US Treasury borrowings are paid in full (first) • Five failed corporate asset management estates completely liquidated • Program statutorily ends in 2021 NCUA Update

  18. Revised RBC Addressed Your Comment Letters NCUA Update

  19. Major Changes to Risk-Based Capital • CUs below $100 million will be exempt • Risk-based threshold to be “Well Capitalized” lowered to 10.0% • Weighted Average Life removed from all risk weights • Key risk weights are significantly lower • Four years to implementation in 2019

  20. TOPICS WE’LL COVER TODAY • Major Industry Trends • Share Insurance Fund • Corporate Stabilization Resolution Program • RBC Update • Quick Overview 2015 Supervisory Priorities including Cyber Security, IRR • 2015 Regulatory Modernization and Reg Relief • Q&A NCUA Update

  21. NCUA Update

  22. 2015 NCUA Supervisory Priorities • Cybersecurity • Interest Rate Risk • Bank Secrecy Act Compliance • Liquidity and Contingency Funding Plans • TILA-RESPA Integrated Disclosure Rule (CFPB) • Ability-to-Repay and Qualified Mortgage Standards Rule • Lending Programs: Indirect, 3rd party, Subprime • Small CU Exam Program NCUA Update

  23. http://www.ncua.gov/Resources/Pages/cyber-security-resources.aspxhttp://www.ncua.gov/Resources/Pages/cyber-security-resources.aspx NCUA Update 23

  24. Interest Rates: Federal Reserve Outlook

  25. NCUA Monitoring CU Unrealized Losses

  26. High Historical Net Long-Term Assets Held by CUs

  27. Since 2011, NCUA Taken Reg Relief Actions NCUA Update

  28. Reg Relief Proposed Measures Up for 2015 • Finalize the Fixed Assets rule, eliminate cap and waiver process • Allow Supplemental Capital for RBC Purposes; working group • Modernize FOM rules; working group • Permit Asset Securitization for large, qualified CUs • Modernize MBL rules, eliminate waiver process NCUA Update

  29. Must Modernize and Do Reg Relief Responsibly… NCUA Update

  30. Possible Upcoming Board Actions • If any Congressional legislation, NCUA acts • Remaining Dodd-Frank Act (Inter-agency) • Dodd-Frank Diversity Standards/Self-Assessment (Voluntary) • Incentive compensation for $1B+ CUs • Finalize in 2015: • Revised Risk-Based Capital • Raise Small CU Asset Threshold • Asset Securitization • Fixed Asset Rule NCUA Update

  31. Contacting the Office of the Chairman Feel free to contact our office with questions or comments. Chairman:Debbie Matz dmatz@ncua.gov Chief of Staff:Steve Bosack sbosack@ncua.gov Senior Advisor:Buddy Gill bgill@ncua.gov Asst./Scheduler:Angela Sanders asanders@ncua.gov Phone:703-518-6301 31

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