NCUA Priorities for 2019

2/8/2019 - By Stephen Helms-MacBeth, CRCM, CAFP

The National Credit Union Administration (NCUA) has outlined their primary areas of supervisory focus for 2019, in its Letter to Credit Unions, 19-CU-01.

Below we provide a brief synopsis of the core areas:

Bank Secrecy Act (BSA) Compliance – Focus on policies, procedures, and processes to address compliance with customer due diligence and for identifying/verifying beneficial owner(s) of legal entities.

Concentrations of Credit – Continued focus on the concentration of loan products and risk characteristics.

Consumer Compliance – HMDA reviews of the 2018 HMDA data collection will evaluate good faith efforts to comply with the data collection and reporting requirements. The NCUA does not intend to require data resubmission unless data errors are material, as previously detailed in 17-CU-09. Additionally, the NCUA will focus on adverse action notifications (Regulation B), overdraft policies, procedures, and practices (Regulation E), and compliance with the Military Lending Act.

Current Expected Credit Losses (CECL) – Focus on efforts to prepare for CECL, including if an analysis has been performed and how it may alter the Allowance for Loan and Lease Losses (ALLL) funding needs.

Information Systems and Assurance – The security, confidentiality, and integrity of Credit Union member information remains a key supervisory priority. Examiners will continue conducting information maturity assessments using the Automated Cybersecurity Examination Toolbox and will assess Credit Unions with over $250 million in assets that have not previously received the assessment. Two additional areas of supervisory focus will be to ensure Credit Unions are identifying, correcting, and controlling inherent risks to appropriate residual risk levels for IT risk management, and ensuring proper oversight of service provider arrangements.

Liquidity and Interest Rate Risks – Projected economic fluctuations in 2019 make this an increased area of emphasis. Examiners will consider the potential effects of rising rates, member preference shifts in response to market sensitivity, and management’s ability to meet liquidity needs.

“This article is current as of January 29, 2019, and may not be updated for regulatory changes occurring after this date."

About the Author | Stephen Helms-MacBeth, CRCM, CAFP
Stephen is a manager in the Financial Institution Advisory Group at Saltmarsh, Cleaveland & Gund. He has been working in the financial institutions industry since 1992, concentrating primarily on compliance, operations and policies and procedures. Connect with Stephen on LinkedIn.