May 25, 2023 — The NCUA Board had two items on the May agenda, the Share Insurance Fund (SIF) quarterly board briefing and a proposed rule that would amend Part 721 of NCUA Rules and Regulations specific to Charitable Donation Accounts.
The SIF briefing was based on quarter end, March 31, 2023. The SIF remains strong with a total income of $90.9 million and a net income of $42 million.
There were two credit union failures in the first quarter, one involuntary liquidation without a purchase and assumption and one involuntary merger. It was noted during this portion of the briefing that fraud was not a contributing factor in these credit unions. Additionally, the number of credit unions with a CAMELS rating of 4/5 increased slightly from 122 as of December 31, 2022, to 127 on March 31, 2023, while credit unions with a CAMELS rating of 3 also increased slighted from 769 to 779, and credit unions with a 1/2 rating decreased from 3,889 to 3,815. The majority of credit unions falling into categories 3, 4, and 5 were $100 million or less in assets.
Finally, the Board was presented with the projected equity ratio calculation for June 30, 2023, of 1.25 percent. It was noted during the briefing that the decrease of .5% from 1.30% reflects historical trend data over the years and is primarily due to projected growth in insured shares.
Notice of Proposed Rulemaking – Charitable Donation Accounts
The Board also unanimously approved a Notice of Proposed Rulemaking to amend the charitable donation accounts section of the NCUA’s incidental powers regulation. Specifically, the proposal would add “war veterans’ organizations,” as defined under section 501(c)(19) of the Internal Revenue Code, to the definition of a “qualified charity” in which a federal credit union may contribute to using a charitable donation account. The proposed rule will also seek comments on whether there are other groups, entities, or organizations the Board should consider adding to the definition of a “qualified charity” to inform potential future rulemaking in this area.
Currently, federal credit unions may only use a charitable donation account to fund donations to qualified charities and nonprofit entities under the Internal Revenue Code as 501(c)(3). Comments on the proposed rule will be due 60 days after publication in the Federal Register.
|Comments From the NCUA Board|