ATLANTA — It continues to be a thorny issue for the industry even as the NCUA reassures credit unions that it is beefing up training for its examiners from hiring outside consultants to revamping courses.
Nearly 45% of the NCUA's examiners have been on staff for less than three years, said Robert Parrish, supervision analyst for NCUA Region III speaking at the Member Business Solutions LLC's Credit Union Small Business Summit last week. Examiners who are in the grade 12 category are required to attend all three levels of training course work.
Parrish acknowledged that the Federal Financial Institutions Examination Council puts out many guidance letters on issues related to job responsibilities. Unfortunately, some may get lost in the shuffle of everything going on with an examiner's day to day schedule. He said the revamped real estate and commercial lending courses have been in place since the latter part of 2009.
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In his session on member business lending, Parrish addressed other areas including best practices for commercial loan workouts. He said he is seeing cases where a CU's data systems are not equipped to handle loan workout situations, thus making it difficult to analyze the risk in their portfolios. While a risk rating system should address problem loans, Parrish said in situations where CUs have seen an increase in problem loans and workouts, there is no corresponding adjustments to the system.
"We do have a handful of credit unions with some concerns," Parrish said without providing specific details. "The regulator is working on dealing with these."
Another area of concern is a decline in the geographic locations where collateral is located, Parrish said. Construction and development lending where a project might be 80% complete could impact the appraisal value. Parrish urged CUs to include update information with the appraisal analysis that addresses property condition, geographic market and project status.
As loan workouts have increased so have member requests for MBL waivers. Parrish said what routinely sends a request to the denial folder is CUs simply not having all of the information NCUA requires in the waiver package. By law, the regulator has 45 days to submit a decision and since it's racing against that clock, Parrish said there is no time to reroute requests back to CUs for missing documents. A federal credit union's waiver submission to a state regulator before sending it to NCUA can also stall the process.
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