Aug. 25, ’17 NASCUS Report

State System Summit next week
with four days of dialog, networking

Four days of sessions devoted to dialog, exchange, learning and networking about the state credit union system and the challenges, opportunities and future it faces get underway next week in San Diego when NASCUS hosts its 2017 State System Summit, Tuesday through Friday.

“With more than 22 hours of presentation and discussion, we have designed a program for the state system that allows it to absorb the latest in trends and key issues, with an emphasis on the future,” said NASCUS President and CEO Lucy Ito about the program. “We have chosen topics, in consultation with our members, that reflect the interests of the state system, and especially how to effectively address and resolve issues that have arisen in those topics.”

Among the subjects under discussion: the state of the state credit union system, fintech, what’s ahead for the CFPB, the future of the corporate system, the evolving field of membership (FOM), latest trends in the economy, alternative capital, marijuana business banking issues on the horizon, cybersecurity, the legislative and political outlook, and key legal challenges by community banks to credit union lending.

NCUA Board Member Rick Metsger will address the group, and the “Next Big Idea” competition winner – sponsored by the National Association of Credit Union Service Organizations (NACUSO) – will be presented and demonstrated.

Additionally, Terry West, former CEO of VyStar Credit Union in Jacksonville, Fla., will be honored with the Pierre Jay Award. The award represents the state credit union system’s recognition of individuals, programs or organizations whose contributions have benefited the state credit union system in a significant way. Honorees are selected who have demonstrated outstanding service, leadership and commitment to NASCUS and the state system.

The Summit is also the opportunity for NASCUS’ leadership and committees to gather to consider issues of importance to the membership. Among the meetings: the NASCUS Legislative and Regulatory Committee, which meets Tuesday from 11 a.m. to 1:15 p.m. to discuss the latest developments in the Congress and the federal regulatory agencies that have an impact on the state system. The meeting is open to all (including drop-ins from the San Diego area – Summit registration not required) in the Plaza AB rooms (second floor) of the headquarters hotel, the Westin Gaslamp Quarter Hotel in San Diego.

Agenda: 2017 NASCUS State System Summit

Pierre Jay Award/Terry West, 2017 honoree


The proposed methodology for determining the overhead transfer rate (OTR) is a “marked improvement” over the method in now in place, NASCUS will tell NCUA in its official comment letter – but the association will have additional recommendations for improving the proposal.

NASCUS is still developing its comment letter (which must be filed by next Tuesday, Aug. 29) on the OTR, which is the rate at which the federal agency transfers funds from the National Credit Union Share Insurance Fund (NCUSIF) to the budget of NCUA to cover insurance-related expenses of the agency. But NASCUS has settled on several recommendations in its letter, including:

  • Commending NCUA for acknowledging it has safety and soundness responsibilities as the prudential regulator of federal credit unions. That recognition is central to a proposed “principles-based” approach allocating the NCUA’s examination time and costs evenly between its chartering and insurance-related responsibilities. NASCUS and the state system will accept the adoption of this approach.
  • Taking another look at the proposed expense allocations by NCUA for computing the OTR. NASCUS notes that the changes in the proposal make significant improvements in the allocation of costs, but further refinements can and should be made. NASCUS accepts some of the allocations, but suggests changes to others (such as allocating 25% of expenses of its CUSO and third-party workload hours to safety and soundness of federal credit unions).
  • Reiterating that the OTR methodology is subject to notice and comment rulemaking requirements under the Administrative Procedure Act. NASCUS will recommend that public comment on the OTR be sought at least every three years, whenever the methodology is changed, and any time the OTR changes by more than 2% (in either direction) in any given year.

“There are more points that NASCUS will make in its letter when filed, but these make up a sizable portion of our views,” said NASCUS President and CEO Lucy Ito. “We hope that the state system member and others can use these points to supplement their own when they finalize their comments between now and next week. We will post our comment as soon as we can after it is finalized and transmitted to the agency.”

NASCUS Summary: NCUA Proposed revised Overhead Transfer Rate Methodology


Meanwhile, NASCUS is also preparing comment letters on several other proposals, including that to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) and merge it into the NCUSIF. Comments are due Sept. 5, although NCUA has requested that commenters file sooner so the agency has more time to consider views before the planned implementation date of Oct. 1. The proposal also recommends raising the “normal operating level” of the insurance fund from its current 1.33% to 1.39%, and changing the policy by which the NCUA board sets the NCUSIF’s normal operating level in the future.

Other comments are being prepared for: proposed changes to how NCUA calculates equity distributions from the insurance fund, including a provision to prohibit federally insured credit unions that terminate insurance from receiving equity distributions in the same year that they leave federal insurance (comments due Sept. 5), and; revisions to the agency’s rules affecting corporate credit unions (comments due Sept. 1).

According to NCUA’s website, as of today (Friday, Aug. 25), it has posted 22 comments on closing and merging the TCCUSF, eight comments on equity fund distributions and 23 comments on the corporate credit union revisions.

NASCUS Summary: Proposed Rule, Corporate Credit Unions


Credit unions and banks making fewer than 500 home equity loans annually would not be required to report those loans under the Home Mortgage Disclosure Act (HMDA) through calendar years 2018-19, under a final rule announced by the CFPB Thursday. Previously, financial institutions making 100 or more such loans in each of the last two years were required to make the reports. The bureau said it made the change so that it could consider whether to make a permanent adjustment. “This temporary increase in the threshold will provide time for the Bureau to consider whether to initiate another rulemaking to address the appropriate level for the threshold for data collected beginning Jan. 1, 2020,” CFPB stated in the release. The change, CFPB noted, was initially proposed last month.

Additionally, the bureau said it made “clarifications, technical corrections, and minor changes to the HMDA regulation” that include clarifying certain key terms. Those include “temporary financing” and “automated underwriting system.” The changes finalized today will also, CFPB said, “establish transition rules for reporting certain loans purchased by financial institutions.” Another change will facilitate reporting the census tract of a property, using a geocoding tool that will be provided on the Bureau’s website. These changes were initially proposed in April 2017.

Final rule temporarily changing mortgage data rule reporting threshold for community banks and credit unions


“Know Before You Owe” overdraft and “financial empowerment” initiatives are on the agenda for the next meeting of the CFPB’s Credit Union Advisory Council (CUAC), set for Sept. 7 in Washington. The 3:30-5:15 p.m. meeting is open to the public, if those interested let the bureau know they plan to be there, and RSVP to cfpb[email protected] by noon, Wednesday, Sept. 6 (and include ‘‘CUAC’’ in the subject line of the RSVP).

Meanwhile, three representatives of state-chartered credit unions are among four new members named to CUAC, the bureau announced this week. The state-credit union representatives are: Kayce Bell, Chief Development Officer, Alabama Credit Union, Tuscaloosa, Ala.; Jack Fallis, President and CEO, Global Credit Union, Spokane, Wash.; and David Tuyo, Senior Executive Vice President and Chief Financial and Operations Officer, Power Financial Credit Union, Pembroke Pines, Fla. Luis Peralta, Chief Administrative Officer of Kinecta Federal Credit Union, Manhattan Beach, Calif. was also named to the council. In a statement, CFPB Director Richard Cordray said that the bureau’s councils play an important role ensuring that the agency is hearing from a wide array of perspectives in the consumer financial marketplace.


John Turpish, executive vice president/chief financial officer for VyStar Credit Union of Jacksonville, Fla., has been appointed to the NASCUS Credit Union Advisory Council by Chairman Patty Idol. Turpish takes the seat of Terry West – former president and CEO of VyStar – who retired earlier this month. Turpish has been with VyStar for 13 years; he previously served at ESL Federal Credit Union in Rochester, N.Y., as senior vice president and chief financial officer for seven years before that. He has also held executive positions at various banking companies and as an audit manager for Ernst and Young.


For those of you who want to share with others your enthusiasm for NASCUS – but didn’t quite have the words for doing so – you now have both words and pictures to make your case, with a new infographic from NASCUS. The one-pager, according to NASCUS Vice President of Member Relations Alicia Valencia Erb, emphasizes that NASCUS is the ONLY trade association that focuses solely on state-chartered credit union issues. The infographic outlines who can join, top issues on NASCUS’ radar, educational offerings, engagement actions, accreditation-certification programs, and the national scope of NASCUS’ reach. Get it today – and share!

NASCUS Infographic: What NASCUS is about

ICYMI: What we did in August

Just on the chance that you had plenty to do in August, and may have missed some of our earlier reporting, here’s a quick run-down of what NASCUS did for the state system in August, 2017:

  • Submitted four comment letters: Our letters offered the state system view on NCUA proposals about its supervisory committee, appeal procedures, mergers of federally insured credit unions, and the agency’s regulatory review. (More comment letters, being worked on now, will be submitted in the last week of the month – and in the first week of September).
  • Developed three summaries: We posted summaries of three CFPB rules and actions: on the the arbitration rule, and proposals on mortgage disclosures and prepaid accounts.
  • Honored a state system leader: We announced the 2017 Pierre Jay Award, honoring former VyStar CEO Terry West for service, leadership and commitment.
  • Hosted three educational events: We hosted both an industry day and an examiners’ school in Ohio (both with the Ohio Division of Financial Institutions), and we will host the 2017 NASCUS State System Summit next week in San Diego.

Comment letters:


AROUND THE STATES: VA commissioner marks milestone

Joe Face, Virginia Commissioner of Financial Institutions since July 1, 1997, is now the longest-serving commissioner in the history of the state’s Bureau of Financial Institutions, having surpassed his predecessor, Sid Bailey, who served for 20 years (from June 1, 1977, through June 30, 1997). Overall, Face has worked for the BFI for 38 years. Of the current state banking department heads nationwide, he has the fourth longest tenure in that capacity. A strong supporter of the state credit union system, he represents the state system on the FFIEC’s State Liaison Council (SLC) as the state representative at large, along with state CU regulators Mary Hughes (ID, the NASCUS representative on the Council ) and Greg Gonzales (TN, the CSBS representative on the group). He told the agency’s newsletter that his philosophy as a regulator is simple: “I try to remember that we are public servants, we work for the citizens of the Commonwealth, and they are counting on us to make sure their money is safe and that they are treated fairly under the law.”

BRIEFLY: Nov. 20 for reg reform comments; HMDA exam testing; NR takes a break

Comments are due Nov. 20 for NCUA’s sweeping “regulatory reform agenda” announced just last week; that’s a 90-day comment period … New FFIEC Home Mortgage Disclosure Act (HMDA) Examiner Transaction Testing Guidelines for all financial institutions that report HMDA data were released Tuesday, and the CFPB has published a “what you need to know” about them. The Guidelines will apply to the examination of HMDA data collected beginning in 2018 and reported beginning in 2019 … NASCUS Report is taking a break next week; publication will resume with the issue of Friday, Sept. 8


Information Contact:
Patrick Keefe, [email protected]

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