Newsroom

The NCUA Board Thursday approved of two final rules: one on capital planning and stress testing, and the other on advertising provisions. NAFCU is supportive of both these efforts to provide credit unions greater flexibility, and its recommendations to provide more credit union relief in the agency's capital planning and stress testing rulemaking were adopted into the final rule.

Capital planning and supervisory stress testing rulemaking

During its October board meeting, the NCUA issued a proposed rule to amend its regulations regarding capital planning and stress testing for covered credit unions. The final rule makes certain modifications from the proposal – namely, adjusted asset thresholds and capital plan requirements for tier I and II covered credit unions.

As urged by NAFCU, the final rule removes the requirement that credit unions within tiers I and II formally submit a capital plan to the NCUA by May 31 each year. In the final rule, these credit unions only must develop and maintain an annual capital plan that will be reviewed as part of the supervisory process. This change is in line with NAFCU's recommendation that covered credit unions' capital plans be reviewed through the supervisory process. This change will allow NCUA examiners to more efficiently communicate concerns or questions regarding capital plans using a risk-based approach. Consistent with the proposal, the final rule also requires tier II and III credit unions to conduct their own annual stress testing, an arrangement that NAFCU had previously urged the NCUA to allow.

The final rule also removes the three-year phase-in period for tier I and II covered credit unions in favor of a strict asset-size threshold. NAFCU had requested that the NCUA define the credit union tiers in terms of complexity and financial condition as opposed to just asset size.

In order to accommodate these changes, the NCUA's 2018 budget for stress testing will increase from $1,450,000 to $2,165,000 based on the additional stress tests. The board had also approved of a National Credit Union Share Insurance Fund administrative budget for 2018 of $7,376,000, which will now increase to $8,089,100.

This final rule is effective June 1.

Advertising rulemaking

The NCUA Board on Thursday also finalized its rule revising certain provisions of the agency's advertising rule, giving credit unions greater flexibility in their advertising requirements. Along with being allowed to use any of the three current versions of the agency's advertising statement, the NCUA approved of a fourth version – "insured by NCUA." The board also expanded a current exemption from the advertising statement requirement regarding radio and television advertisements, and eliminated the requirement to include the advertising statement on statements of condition that are legally required to be published.

NAFCU is supportive of the NCUA's advertising changes, but also recommended the NCUA do more to account for the rise of social media and mobile communications by exempting those types of communications from the requirement to display the official advertising statement.

This final rule becomes effective 30 days following its publication in the Federal Register.