ALEXANDRIA, Va.-The NCUA Board zipped through a brief monthly meeting last week that ended with holiday wishes from both board members. The NCUA Board approved changes to state member business lending rules from Texas and Missouri. Both rules were looking to implement recent changes to NCUA's own regulation by providing waivers to the states' credit unions without first seeking NCUA approval. They must only notify the agency that they are providing the waiver. “It's been rather a lengthy process.” Texas credit union regulator Harold Feeney explained. “Heretofore, NCUA has reserved the right to approve the waivers.” But, with some negotiating and convincing the agency there were no additional safety and soundness concerns, and it sailed through. Feeney said Texas has had its own business lending rule since 1999 and that there have only been two to three waivers provided each year. “It hasn't been a big issue but as credit unions get more involved, it may facilitate them being able to serve their members better and a little faster,” he said. The Texas rule also codified the 100% business vehicle financing in NCUA's regulation. The changes to the Missouri regulation were similar, according to Director of Missouri's Division of Credit Unions John P. Smith. It will provide “one stop shopping,” he said, to the state credit unions regarding the regulator they have to answer to for the waivers. He emphasized that 92% of credit union assets in Missouri were with state chartered credit unions. Smith explained that Missouri's rule also added a minimum two-year experience requirement, while previously the rule did not specify a time frame, and allows credit unions to conform to Small Business Administration maturity and collateral requirements for guaranteed loans. However, Missouri's old rule is in effect until it gets through the state's process of publication in the Missouri Register, then to a legislative committee and a 30-day effective date. Smith estimated the rule would become effective early in 2005. NASCUS Executive Vice President of Governmental Affairs Sandra Troutman said she learned that there were currently only 16 business loans from credit unions in Missouri accounting for 0.2% of assets, but that number was growing steadily. So far there have been no defaults or charge offs. Troutman added that NCUA Board Member Debbie Matz pointed out that NCUA had used state rules to update its own and vice versa, demonstrating “the dual chartering system at its best.” As a final order of business, the NCUA Board approved a 1.3% operating level for the National Credit Union Share Insurance Fund. The Credit Union Membership Access Act requires the level be set between 1.2% and 1.5%; NCUA has set it at 1.3% since 2000. At mid-year, the equity ratio was at 1.28%, but that is expected to slip to 1.26% by year-end, according to NCUA Chief Financial Officer Dennis Winans, leaving credit unions without a refund. If the equity ratio reaches above 1.3% NCUA sends out a rebate to federally insured credit unions. Between 1.2% and 1.3%, the agency has the option of assessing a premium, but if the ratio falls below 1.2%, NCUA must charge credit unions. The NCUSIF's reserves rose $12.3 million by Nov. 30, 2004 to $85.9 million. The Office of Examination and Insurance, following a recommendation from the Government Accountability Office, is reviewing its reserving methodology and looking to switching to a system similar to the Federal Deposit Insurance Corporation's. This includes looking at a two-year history of the fund rather than the current five years and defining more risk categories. Deloitte Touche will perform added analysis of this year's financial statements to check the adequacy of the Funds reserves using actuarial methodologies. -

[email protected]