Vice Chairman Hood Honors John Milazzo, President & CEO of Campus FCU

February 11, 2009, Alexandria, VA –– National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood honored the president and CEO of Campus Federal Credit Union, with the Vice Chairman’s Award for Distinguished Service for his leadership of the Blueprint 2020 Initiative Task Force. Exemplifying dedication to the credit union mission of “People Helping People,” Mr. Milazzo has helped bring to light the significant benefits of recruiting, training, and retaining individuals for careers in the credit union industry. 

The Task Force found conclusive evidence suggesting opportunities exist for credit unions to increase student membership, employment and participation in their organizations. Nearly all the options have one common thread running through them…a partnership between credit unions and institutions of secondary and/or post-secondary learning. If credit unions want to be successful in attracting the attention of young people, they would be well advised to network with career services counselors of local high schools, colleges and universities.

Vice Chairman Hood thanked Mr. Milazzo for his commitment and Caralluma enthusiasm to the Blueprint 2020 Initiative while also serving as the Chairman of the National Association of Federal Credit Unions (NAFCU)

“I have always believed that if you want something done in a timely manner, give it to a busy person.” Hood said “The Task Force findings are encouraging credit unions to look toward the future and to pursue human capital. This, coupled with John’s years of service, will leave a lasting impact on the credit union industry.”

The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions.  NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 89 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions.

-NCUA-

Voluntary Corporate Guarantee Program Participants Announced

March 2, 2009, Alexandria, Va. – The National Credit Union Administration’s Voluntary Temporary Corporate Credit Union Share Program (TCCUSGP) began March 1, 2009.  Only those corporates listed below are participating in the voluntary guarantee program.  The TCCUGSP was approved by the NCUA Board January 28, 2009 and consisted of a temporary guarantee by the National Credit Union Share Insurance Fund (NCUSIF) of all shares (excluding paid-in-capital and membership capital accounts) at all corporate credit unions.  The voluntary guarantee is effective March 1, 2009, expires December 31, 2010 and only encompasses participating corporates.

The guarantee provides members who have NCUSIF-insured share accounts at Caralluma corporates with excess coverage above the NCUSIF insurance limits.  The NCUSIF guarantee applies to all share amounts above $250,000, and the NCUSIF insurance coverage applies to all share amounts below $250,000.  The net effect is that during the period of the guarantee, the entire share account will be treated by the NCUSIF as if it was insured. 

Corporate credit unions participating in the voluntary TCCUSGP are:

Central Corporate Credit Union
Constitution Corporate Federal Credit Union
Corporate America Credit Union
Corporate Central Credit Union
Corporate One Federal Credit Union
First Corporate Credit Union
Georgia Central Credit Union
Kansas Corporate Credit Union
Kentucky Corporate Federal Credit Union
Louisiana Corporate Credit Union
Members United Corporate Federal Credit Union
Mid-Atlantic Corporate Federal Credit Union
Missouri Corporate Credit Union
Southeast Corporate Federal Credit Union
Southwest Corporate Federal Credit Union
SunCorp Credit Union
Treasure State Corporate Credit Union
Tricorp Federal Credit Union
U.S. Central Federal Credit Union
VACORP Federal Credit Union
Volunteer Corporate Credit Union
West Virginia Corporate Credit Union
Western Corporate Federal Credit Union

This guarantee is separate from the temporary corporate credit union liquidity guarantee program announced on October 16, 2008.

The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions.

-NCUA-

Weekly Corporate Credit Union Update – April 10, 2009

April 10, 2009, Alexandria, Va. – The National Credit Union Administration (NCUA) today issued a summary of the agency’s analysis of the distressed securities held by U.S. Central Federal Credit Union (U.S. Central) and Western Corporate Federal Credit Union (WesCorp).  The summary is available online at http://www.ncua.gov/Resources/CorporateStabilization/index.aspx.

Chairman Fryzel stated, “I recognize that until now credit unions have not had an opportunity to better understand the nature of the securities held by WesCorp and U.S. Central and the stress they are under.  The incomplete or insufficient nature of available information has led some to question the necessity of the NCUA’s actions and level of expected credit losses being projected.  The outline released today of the portfolios of WesCorp and U.S. Central, and NCUA’s associated summary analysis, provides a concise synopsis of the respective portfolios and enables informed parties to appreciate the scope and severity of the stress on these investments.  Though virtually all of the securities purchased by these two corporate credit unions were AAA or AA rated at the time of purchase, the summary clearly demonstrates how the nature of the securities and the deterioration in the economy have resulted in significant expected credit losses.  In the near future NCUA will also be releasing a summary of the PIMCO report.

“I am also aware of the many questions surrounding how member credit unions will account for any impairment or write-down of paid-in-capital and membership capital accounts at corporate credit unions.  NCUA will be issuing guidance next week on this subject.

“The comment period for the Advanced Notice of Proposed Rulemaking closed on April 6, 2009.  NCUA received almost 500 comment letters and is in the process of analyzing them for incorporation into a proposed rulemaking to reform the prudential regulatory regime corporate credit unions will operate under going forward.  Implementation of any restructuring of the corporate credit union system will be a deliberate process that will take time, but it is vital NCUA moves purposefully in reforming the regulatory foundation upon which to build the future of the system.”

Normal operations continue without interruption at U.S. Central and WesCorp.  The following items specific to U.S. Central and WesCorp are of note:

U.S. Central and WesCorp have established a process for members to request the CUSIP numbers and par values for the securities held respectively by each corporate credit union.  Recipients of this information are subject to the terms of a non-disclosure agreement.Liquidity remains stable.  Seasonal outflows of funds typically occur in April and May, so it is important credit unions continue to support liquidity in corporate credit unions to prevent the selling of distressed assets into the current dysfunctional market. As part of the conservatorship management teams’ fiduciary responsibility, the review of all private label mortgage backed securities by one of U.S. Central’s and WesCorp’s external vendors respectively is underway.  The goal remains to have each analysis by late April or early May for posting March 31, 2009 financial statements.  These reviews will aid in determining the level of Other-Than-Temporary-Impairment (OTTI) charges both corporate credit unions will record, as well as finalizing the outstanding CPA audits.  This is part of an ongoing process to improve the management of these portfolios.Extensive reviews of all contracts, third-party relationships, and operational efficiencies are ongoing at both corporate credit unions.Member communication and outreach efforts continue.  WesCorp is scheduling a conference call for next Wednesday, April 15, 2009 from 2:30-3:30 P.M. Pacific Time designed for small to medium sized member credit unions.  U.S. Central is still planning to host a conference call with members on April 14, 2009.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

-NCUA-

Weekly Corporate Credit Union Update – May 1, 2009

May 1, 2009, Alexandria, Va. – Normal operations continue without interruption at U.S. Central Federal Credit Union (U.S. Central) and Western Corporate Federal Credit Union (WesCorp).  The following items specific to U.S. Central and WesCorp are of note:

The reviews of all private label mortgage backed securities by Clayton Fixed Income Services, Inc., at both U.S. Central and WesCorp have been completed. The range of estimated credit losses are as follows:The March 31, 2009, financial statements will be released by each corporate credit union within the next week.  The Other-Than-Temporary-Impairment (OTTI) charges to be reflected on the March 31, 2009, financial statements for U.S. Central and WesCorp are $2.3 billion and $5.8 billion respectively.  This will result in extinguishment of all Paid-in-Capital (PIC) and Membership Capital Accounts (MCA) at WesCorp.  For U.S. Central, all PIC and 63% of MCAs will be exhausted.  Guidance will be issued for holders of PIC and MCA accounts in the Japonesque Power Eyelash Curler form of a Letter to Credit Unions.Renewed liquidity pressures are mounting from normal seasonal outflows that typically occur during this time period.  Both corporate credit unions have been working to establish contingent market funding sources, which remain limited due to the broader problems in the credit markets. Member communication and outreach efforts continue.  The following is a summary of communications efforts for each corporate credit union: U.S. Central - Periodic member teleconferences continue.  An in-person member meeting was held on April 29, 2009. WesCorp – A webcast is scheduled for next Thursday, May 7, at 11:00 A.M. Pacific Time.  A series of town hall meetings are scheduled to kick off on May 18, 2009.

Chairman Fryzel stated, “NCUA continues to make contingency plans for potential liquidity needs during this period of normal seasonal outflows.  The NCUA Board at its May meeting will be considering changes to the Temporary Corporate Credit Union Liquidity Guarantee Program to provide longer term funding options and other enhancements.  As liquidity pressures mount from seasonal patterns, I encourage all credit unions to continue to support liquidity needs by keeping all surplus funds within the credit union system.”

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

-NCUA-

Weekly Corporate Credit Union Update – April 24, 2009

April 24, 2009, Alexandria, Va. – The National Credit Union Administration (NCUA) Board this week took actions to ensure corporate credit unions are able to continue providing services to members and to enhance the Temporary Corporate Credit Union Share Guarantee Program. 

Chairman Fryzel stated, “We anticipate some corporate credit unions will reflect losses that will be absorbed by capital when they post their March 31, 2009, financial statements, or should they restate their December 31, 2008, financial statements.  As many of the functions that corporate credit unions perform are tied to the level of capital, there was a serious concern that they would be unable to provide normal daily operational services to their member credit unions after recording capital losses.  To avoid any disruption of critical services, the NCUA Board has issued an order that will permit corporate credit unions to use the capital level as reported on their November 30, 2008, NCUA 5310 Call Report, for purposes of determining regulatory compliance with capital-based requirements and regulations in the corporate rule.  However, the OCCU Director has been delegated the authority to restrict or modify this general waiver as it applies to a particular corporate credit union based on safety and soundness considerations.  We believe this will allow corporate credit unions to continue to meet members’ needs while also ensuring corporates do not take additional undue risk. 

“The Board also took action to modify the Temporary Corporate Credit Union Share Guarantee Program.  The program was adopted to ensure credit union confidence in the corporate system and maintain an adequate level of liquidity so that corporates would not be forced to sell securities in this current distressed market.  The original program was scheduled to expire on December 31, 2010.  There is concern that a significant amount of shares may be scheduled to mature on the Program expiration date – leading to an unintended negative impact on liquidity.  Going forward, there will be a quarterly reassessment of the liquidity needs in the corporate system, and if it is determined the need exists, the program will be extended.  The Board has authorized quarterly extensions of the guarantee through December 31, 2012.  If the extensions are granted, the final guarantee will expire on December 31, 2014.  All corporate credit unions will have the opportunity to participate in the modified Temporary Corporate Credit Union Share Guarantee Program.

“The NCUA recently posted the March 31, 2009, financial statements for the share insurance fund.  Questions have arisen as to the $10 billion in borrowings noted in the financial statements.  It is standard agency procedure as part of any conservatorship action to conduct pre-planning for contingency needs.  With the conservatorship actions taken at U.S. Central Federal Credit Union (U.S. Central) and Western Corporate Federal Credit Union (WesCorp), NCUA prepositioned funding to address any unusual outflows of member funds.  This short-term loan was to prevent any disruption in the normal processing of payments for the millions of natural person credit union members flowing through these corporate credit unions.  This preventative liquidity loan was taken as a deliberate precaution and the funds were not in response to an actual liquidity shortfall.  In fact, there have been no material share outflows since the conservatorships.”

Normal operations continue without interruption at U.S. Central and WesCorp.  The following items specific to U.S. Central and WesCorp are of note:

The reviews of all private label mortgage backed securities by Clayton Fixed Income Services, Inc., at both U.S. Central and WesCorp are nearing completion.  The results of these reviews, taken with NCUA’s own analysis, will assist in finalizing the level of Other-Than-Temporary-Impairment (OTTI) charges both corporate credit unions will record.  This information will be the last step for both corporates in finalizing their 2008 audited financial statements.  The March 31, 2009, financial statements are expected to be released in May. Liquidity remains stable.  The support of member credit unions has been critical to maintaining adequate liquidity in the corporate credit union system.  Seasonal outflows normally associated with April and May have begun.  It is anticipated the Temporary Corporate Credit Union Share Guarantee Program will continue to instill member confidence in retaining deposits at their corporate credit unions.  Member communication and outreach efforts continue.  The following is a summary of communications efforts for each corporate credit union:

- U.S. Central - Periodic member teleconferences continue.  A teleconference was held on April 22.  An in-person member meeting is scheduled for April 29, 2009.

- WesCorp - Member teleconferences scheduled for Tuesday, Wednesday, and Thursday each week began on April 15 and will continue through May 15.  Town hall meetings are scheduled to kick off on May 18, 2009.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

-NCUA-

Weekly Corporate Credit Union Update – April 17, 2009

April 17, 2009, Alexandria, Va. – The National Credit Union Administration (NCUA) today issued a summary of the Pacific Investment Management Company LLC (PIMCO) analysis of residential mortgage backed securities held by corporate credit unions.  The summary is available online at http://www.ncua.gov/Resources/CorporateStabilization/index.aspx.

Chairman Fryzel stated, “Though NCUA cannot divulge PIMCO’s proprietary techniques and valuations of specific bonds, the summary released today addresses the depth and scope of their analysis.  PIMCO’s expert understanding of the complex bond structures, robust modeling techniques, and knowledge of market and economic conditions enabled development of high quality assumptions.  As a result, NCUA is able to have a high degree of confidence for the range of expected credit losses on the distressed securities.

“NCUA continues its review of the almost 500 comments received for the Advanced Notice of Proposed Rulemaking on corporate credit union regulatory reform.  I have made a commitment to the Administration, to Congress and to the credit union system that NCUA will undertake a broad and comprehensive reform of the corporate system.  We have initiated a rulemaking process that will yield results.”

Normal operations continue without interruption at U.S. Central Federal Credit Union (U.S. Central) and Western Corporate Federal Credit Union (WesCorp).  The following items specific to U.S. Central and WesCorp are of note:

The review of all private label mortgage backed securities by Clayton Fixed Income Services, Inc., is underway at both U.S. Central and WesCorp.  These reviews were important in determining the level of Other-Than-Temporary-Impairment (OTTI) charges both corporate credit unions will record, as well as finalizing the outstanding CPA audits.  Though NCUA used PIMCO to supplement NCUA’s own analysis, receipt of Clayton’s review of expected credit losses will have the added benefit of Caralluma Fimbriata helping to more fully inform NCUA of projected loss exposure for the share insurance fund.  The goal remains to have Clayton’s analysis for each corporate credit union by late April or early May for posting March 31, 2009 financial statements.Liquidity remains stable.  Credit unions have demonstrated substantial support for corporate credit union liquidity to date.  As a result of this support corporate credit unions have replaced essentially all external borrowings with more stable in-system funding sources, decreasing the reliance on external funding by $22 billion since December 2008.  Seasonal outflows of funds typically occur in April and May, and again later in the year, so it is important credit unions continue to support the corporate stabilization initiatives designed to increase and safeguard natural person share deposits in the corporate system.Extensive reviews of all contracts and third-party relationships continue.  To date since the corporate credit unions were placed into conservatorship, 15 contracts for a total of $5.8 million were canceled at U.S. Central and 7 contracts for a total of $0.8 million were canceled at WesCorp.Comprehensive reviews of the operations of each corporate credit union are ongoing.  The conservatorship management teams continue to make adjustments to staffing and business lines to ensure operational efficiency.  Corporate fleet vehicles for the former CEOs were sold.  Any political fundraising and lobbying efforts the corporate credit unions were involved in have been discontinued. Member communication and outreach efforts continue.  The following is a summary of communications efforts for each corporate credit union: U.S. Central - Periodic member teleconferences continue.  Teleconferences were held on March 21, 24, and 31 and on April 14.  The next scheduled in-person member meeting is on April 29, 2009.  WesCorp - Member teleconferences scheduled for Tuesday, Wednesday, and Thursday each week began on April 15 and will continue through May 15.  Webinars and teleconferences were held on March, 24 and April 7.  Town hall meetings at member credit union locations are in process of being scheduled.  The annual meeting is scheduled for May 19, 2009.

OTTI Charges
NCUA will be issuing guidance on any extinguishment of paid-in-capital and membership capital accounts at corporate credit unions when the March 31, 2009, financial statements for WesCorp and U.S. Central are released.  These financial statements will reflect the Other-Than-Temporary-Impairment (OTTI) charges that will be necessary to comply with generally accepted accounting principles and satisfy audit requirements.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

-NCUA-

Weekly Corporate Credit Union Update – May 29, 2009

May 29, 2009, Alexandria, Va. – Normal operations continue without interruption at U.S. Central and WesCorp.  The following items specific to U.S. Central and WesCorp are of note:

An executive summary of the Valuation Report and Analysis of all private label mortgage backed securities completed by Clayton Fixed Income Services, Inc., is available to member credit unions, subject to a signed Non-Disclosure Agreement.  To date the corporate credit unions are successfully meeting member needs for the seasonal outflow of funds that normally occurs at this time of the year. All Corporate Credit Unions can participate in NCUA’s revised Temporary Corporate Credit Union Liquidity Guarantee Program and we anticipate that most intend to participate.Member communication and outreach efforts continue.  The following is a Japonesque Precision Lash Curler summary of communications efforts for each corporate credit union: U.S. Central – As part of its continuing efforts to ensure active and ongoing communication with member credit unions, U.S. Central has scheduled another liquidity call to ensure for next week.WesCorp – A series of town hall meetings are scheduled through June 9.  Future town hall meetings will take place in Vacaville, CA; Fresno, CA; Las Vegas, NV; San Francisco, CA; Tukwila, WA; Boise, ID; and Honolulu, HI.

Webinar - June 24, 2009
NCUA staff is finalizing recommended action for Board consideration to implement the recently passed Corporate Credit Union Stabilization Fund legislation.  NCUA will be hosting a webinar following the June Board meeting to discuss Board approved action and present guidance to the industry, as well as to provide participating credit unions an opportunity to submit questions to NCUA staff.  Specific details of the upcoming webinar will be provided in a subsequent general media release and will also be contained in weekly corporate credit union update releases.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

Vice Chairman Hood Discusses “Making Home Affordable” Loan Modification Program With Virginia Credit Unions

March 6, 2009, Alexandria, VA – National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood today addressed the NCUA Office of Small Credit Union Initiatives Workshop in Richmond, VA.  With the new programs implemented within the credit union industry in order to deal with the current economic crisis facing all financial institutions, Mr. Hood took this opportunity to discuss the most recent developments with leaders from small credit unions across Virginia.

NCUA, in conjunction with the other federal financial regulatory agencies, issued a statement of support for the recently approved legislation dealing with distressed mortgages.  The Vice Chairman reiterated the fact that NCUA encourages credit unions that service or hold residential mortgage loans to participate in the “Making Home Affordable” Loan Modification Program.  The goal of this program is to promote sustainable loan modification for at-risk homeowners.

“The ultimate objective is to assist responsible homeowners avoid foreclosure Darvas System and reduce the descending home values across the country,” said Hood.  For details regarding this program, please visit the U. S. Treasury website at http://www.ustreas.gov/press/releases/tg48.htm.

Vice Chairman Hood also referenced the announcement made today by NCUA Chairman Michael E. Fryzel regarding modifications made to the NCUA Call Report in order to provide a more accurate picture of expenses as they relate to the Corporate Stabilization Program.  In essence, the report will now show the expense resulting from the stabilization action as a separate line item on the Income Statement within the Call Report.  Furthermore, it will show the net income prior to the stabilization expense as well as after this expense is incurred. 

In closing, Hood told the attendees that a letter to credit unions will be issued with additional details regarding the new version of the 5300 Call Report, and he encouraged everyone to visit the NCUA website at www.ncua.gov as it is constantly updated with recent developments. 

The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 89 million account holders in all federal credit unions and the majority of state-chartered credit unions.

-NCUA-

Weekly Corporate Credit Union Update – June 5, 2009

June 5, 2009, Alexandria, Va. – Information related to the PIMCO review of corporate credit unions available under the Freedom of Information Act (FOIA) has been posted under a link titled “Frequently Requested Records” on the FOIA section of NCUA’s website.  The list of corporate credit unions participating in the revised Temporary Corporate Credit Union Share Guarantee Program (TCCUSGP) is also posted on NCUA’s website.  All but two corporate credit unions are participating in the revised TCCUSGP.  A letter to all corporate credit unions is going out today providing information on the revised TCCULGP.

Normal operations continue without interruption at U.S. Central and WesCorp.  The following items specific to U.S. Central and WesCorp are of note:

U.S. Central and WesCorp continue successfully meeting member needs for the seasonal outflow of funds that normally occurs at this time of the year.Member communication and outreach efforts continue.  The following is a summary of communications efforts for each corporate credit union: U.S. Central – A conference call was held on June 2, as part of its continuing efforts to ensure active and ongoing communication with member credit unions.  Another call is scheduled for next week.WesCorp – A series of town hall meetings with member credit unions were held over Caralluma the last few weeks.  The next town hall meetings will take place in Honolulu on June 9 and Portland on June 23.Wescorp is in the process of revising its budgets and strategic plan.  Transformations in the check processing industry and consumer payment preferences provide an opportunity to consolidate operations in response to the new environment.  In keeping with industry trends and to minimize the expenses that reflect in fees charged to members, WesCorp will be consolidating branch processing facilities.  These consolidations will take place from December 2009 through approximately June 2010 as facility leases expire in San Leandro, Seattle, Spokane, and Salt Lake City.  As these consolidations occur WesCorp will continue to provide paper check collection processing for those members who have not converted to imaging.WesCorp’s conservatorship board convened this week to hold its monthly board meeting.  The next board meeting will be held on June 25. U.S. Central conservatorship board’s next meeting will be held on June 23.U.S. Central members have formed an audit group to help ensure consistency in addressing impairment issues.

NCUA Webinar - June 24, 2009
NCUA has scheduled the corporate credit union update webinar for Wednesday, June 24, at 1:00 P.M. Eastern Time.  Registration for the webcast will open on Friday, June 19.  Participants will be able to register up to 1 hour prior to the start of the conference.  A link with the registration information will be posted on NCUA’s website at www.ncua.gov on June 19.

Due to the continuing progress being made in stabilizing the corporate network, updates on the situation will now be provided periodically on an as-needed basis.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

Statement of Chairman Fryzel Regarding Today’s Financial Stability Plan Announcement By U.S. Treasury Secretary Geithner

February 10, 2009, Alexandria, VA –– “Today marks a new day in the process of the federal government’s broad response to the financial crisis. Updated initiatives announced by Treasury Secretary Geithner under the terms of the Financial Stability Plan will hopefully provide credit unions with access to workable and useful tools to deploy in mitigating the market instability. Over the coming days I intend to restate my earlier requests to the Secretary to make funds available to credit unions through an asset purchase program called for in Darvas Trading System statute, and to ensure that rules are written to give credit unions the ability to take advantage of any new-created aspects of the federal response.

The Secretary’s announcement of a comprehensive stress test for major banking institutions is also significant. NCUA undertook a similar stress test of the National Credit Union Share Insurance Fund in late 2008 as part of its overall efforts to better prepare for all contingencies associated with the continuing market distress, and considers this approach critical given the volatile and uncertain nature of the economic landscape.

Finally, I commend Secretary Geithner for his focus on the importance of banks to increase lending. Credit unions have continued to exhibit strong loan growth, but I realize that all sectors of the financial services industry must do their part for the American consumer if the Nation is to regain strong financial footing.

NCUA is anxious to do its part to contribute to the economic recovery, and understands that a wide variety of responses by both the federal government and private sector is essential to ultimate success.”

Weekly Corporate Credit Union Update – May 15, 2009

May 15, 2009, Alexandria, Va. – Normal operations continue without interruption at U.S. Central Federal Credit Union (U.S. Central) and Western Corporate Federal Credit Union (WesCorp).  The following items are of note:

The release of WesCorp’s year-end audited financial statements is imminent.  The March 31, 2009, financial statements were posted on May 1, 2009.U.S. Central released its March 31, 2009, financial statements on May 13, 2009.  U.S. Central met with its external auditors this week and remaining audit procedures are in the process of being finalized.  Year-end audited financial statements expected by mid June.  U.S. Central previously reported to its members that 100% of paid-in-capital (PIC) was exhausted and 63% of membership capital shares (MCS) were depleted by losses exceeding retained earnings.  Though U.S. Central’s best estimate of credit losses is still $2.3 billion, discounting the cash flows from these losses in accordance with Generally Accepted Accounting Principles (GAAP) results in a reduction in OTTI charges to $1.8 billion.  As a result, MCAs are depleted by 23%, not 63% as originally reported on April 30.Readers of both WesCorp’s and U.S. Central’s financial statements should keep in mind recent changes adopted by the Financial Accounting Standard Board for OTTI accounting when comparing year-end 2008 to March 31, 2009 financial statements.  Both corporate credit unions have elected to early-adopt the provisions of FASB Staff Position No. FAS 115-2 for the quarterly reporting period ended March 31, 2009.  This new GAAP modifies how OTTI is measured and recorded.  In those instances in which OTTI exists, the impairment is separated into 1) the amount of impairment related to credit losses and 2) the amount of the impairment related to all other factors.  Only the credit losses are recorded as a reduction to earnings, while the amount of impairment related to all other factors is recorded as an unrealized loss in other comprehensive income.Both WesCorp and U.S. Central have reclassified as available-for-sale those securities that had been classified as held-to-maturity.  This is not a signal of a change in strategy, only an accounting recognition.  The securities classified as held-to-maturity for the most part were subject to OTTI charges.  The accounting treatment was thus essentially equivalent to securities classified as available-for-sale, so operationally it was simpler and more transparent to treat all securities as available-for-sale as a reader of the financial statements can clearly ascertain the unrealized market losses on the securities.  This also provides consistent analysis and reporting going forward.Member communication and outreach efforts continue.  WesCorp will hold a town hall meeting on Monday next week.  U.S. Central held a member call on Thursday this week.NCUA will be issuing guidance in the form of a Letter to Credit Unions for holders of corporate credit union PIC and MCS accounts explaining the implications of exhausted and depleted PIC and MCS.  On May 13, 2009, NCUA issued a letter to corporate credit unions addressing revisions to the Temporary Corporate Credit Union Share Guarantee Program, the NCUA Board order related to regulatory compliance for capital based limitations, the payment of dividends, and on waiving bylaw provisions related to replenishment of MCS.Later this month, the NCUA Board will be considering changes to the Temporary Corporate Credit Union Liquidity Guarantee Program to enhance liquidity by providing longer term funding options for all corporate credit unions.  Credit union support of corporate system liquidity continues to be key to ensuring a successful strategy of mitigating losses on the distressed securities.

Chairman Fryzel stated, “I look forward to testifying next week at the House Committee on Financial Services hearing on H.R. 2351, The Credit Union Share Insurance Stabilization Act.  NCUA has been successful to date in stabilizing the corporate credit union system.  These essential actions have come at a cost.  This, as well as other, important legislation will aid in providing NCUA with tools to resolve the current crisis in a manner that spreads out the cost to insured credit unions.  In addition, I remain committed to working with Congress and the credit union system to pursue necessary reforms to the corporate credit union regulatory framework.”

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

Upcoming Webcast Will Provide Corporate Stabilization Update

February 10, 2009, Alexandria, Va. – The National Credit Union Administration will host a webcast this Thursday to provide the credit union community with an update on the corporate credit union stabilization program.

The webcast will include a discussion of the NCUSIF reserving methodology as well as exploration of some alternatives presented by corporate system stakeholders. Specific details about the update on the corporate stabilization plan webcast follow:

Date:   Thursday, February 12, 2009

Time:  2 p.m. EST

Duration:  2 hours

Register:   Registration for the webcast will open Wednesday morning, February 11.  Participants for the NCUA Update on Corporate Stabilization Plan should register online at NCUA’s website, http://www.ncua.gov. Registration is open until 1:45 p.m. EST on Thursday, February 12th. 

Participants will be able to submit questions throughout the webcast via the Internet. Instructions will be provided at the beginning of the webcast. Presenters will address as many of the questions as possible. Speakers will include NCUA Executive Director Dave Marquis, Acting E&I Director John Kutchey, and Loss/Risk Analysis Officer Steve Farrar.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

-NCUA-

Vice Chairman Hood Touts Value Health Savings Accounts (HSA) Bring to the Credit Union Community

March 20, 2009, Alexandria, Va. –National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood addressed the Members Health Network 1st Annual Credit Union HSA Roundtable at Allegacy Federal Credit Union, one of the nation’s top 100 credit unions in assets, located in Winston-Salem, NC. The event gathered credit union leaders in an effort to provide a forum to discuss what is working, what challenges remain and what the future looks like for credit union leadership in the emerging HSA market. The event focused specifically on the unique opportunities facing credit unions to expand member services while advancing business development through HSA programs.  

“I would like to applaud the Members Health Network and Allegacy FCU for organizing this valuable dialogue, particularly during the current economic climate – this is truly an example of American innovation in the credit union spirit of ‘People Helping People.’ Despite the mounting uncertainty in today’s financial arena, you are taking a proactive approach to making a difference that will not only serve to benefit your financial institutions, but most importantly, the members you serve,” said Hood.

Credit unions that make HSA’s available provide an exceptional advantage in that they offer a duel relevancy – to both the businesses and individual in their field of membership. Hood went on to highlight these potential benefits:

Businesses – offers increased opportunity for the sale of other business services through strategic HSA programs that help the employer adopt HSA Eligible plans, HSA education, and employee satisfaction.Employee/Individuals – Increased membership to whom credit unions can offer other valuable products and services unique to that credit union.

A recent Wall Street Journal article stated: “Credit unions are Caralluma Fimbriata more able – and willing – than most of their banking counterparts to dole out money to small businesses.” The Vice Chairman further noted statistics from CUNA which said that 27% of credit unions in the U.S. offer business loans, and that amount was up 18% to almost $33 billion last year. As more credit unions begin to offer HSA’s, they will be better positioned to be a full service provider for businesses.

According to the U.S. Government Accountability Office, since first authorized by the federal government January 1, 2004, the number of HSA accounts has increased substantially to over 3 million accounts nationwide. Industry experts expect that by 2010 this number will be between 10-15 million people with accumulated assets ranging from $10 to $62 billion.

Vice Chairman Hood stressed the importance of moving quickly to develop effective strategies. “Credit unions must embrace a proactive strategy to stay competitive in the marketplace while continuing to focus on education for both the credit union employees as well as the consumer. Given the close relationship between credit unions and their members, you are well-poised to spread awareness of HSA’s before other larger financial institutions.”

In closing, Mr. Hood directed the attendees to the Members Health Network website at: http://www.membershealth.net/ where they have detailed information regarding their platform as well as web-based advisory tools that can be customized to meet the educational needs of individual credit union.

The National Credit Union Administration is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF), insuring the savings of nearly 89 million members in all federal credit unions and the vast majority of state-chartered credit unions. NCUA is supported by credit unions, not federal tax dollars.

-NCUA-

Valley Credit Union Put into Receivership; Citizens Equity First Credit Union Purchases and Assumes Assets

January 2, 2009 Alexandria, Virginia - The National Credit Union Administration (NCUA) today was appointed receiver of Valley Credit Union (Valley) of San Jose, California by the California Department of Financial Institutions (DFI).  NCUA had been operating Valley as conservator since the California DFI placed Valley into conservatorship on September 2, 2008.    

Immediately following that appointment as Valley receiver, NCUA entered into an agreement with Citizens Equity First Credit Union (CEFCU) of Peoria, Illinois, to sell certain assets and liabilities of Valley to CEFCU.  At the time of receivership, Valley had approximately $205 million in assets. Valley was established in 1953 to serve members of the telecommunications industry and grew to serve over 25,000 members. 

Members of Valley experienced no interruption of Darvas Method credit union service as their credit union was purchased by Citizens Equity First Credit Union (CEFCU).  CEFCU will continue operating branches of Valley, and member accounts remain federally insured by the National Credit Union Share Insurance Fund (NCUSIF) up to at least $250,000. 

Citizens Equity First Credit Union is a state-chartered, federally insured institution chartered in 1937.  It is a full service, $3.6 billion credit union with more than 235,000 members in all 50 states and around the world.    

The National Credit Union Administration is the independent federal agency that charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates the National Credit Union Share Insurance Fund (NCUSIF), insuring the savings more than 87 million members in all federal credit unions and many state-chartered credit unions. NCUA operations are funded by credit unions, not tax dollars.

                                                            -NCUA-

Vice Chairman Hood Discusses the Corporate Stabilization Program with Credit Union Members in Louisiana and Texas

February 13, 2009, Alexandria, Va. – National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood addressed the Louisiana Credit Union League’s Large Asset Roundtable in Baton Rouge, LA on Wednesday, February 11th; followed by the Texas Credit Union League’s Small Credit Union Meeting in Houston, TX on Thursday, February 12th.  Mr. Hood took these opportunities to discuss and explain the recent action taken by the NCUA Board in an effort to stabilize the corporate credit unions.

“During these times of economic uncertainty, I feel that communication regarding the recent actions of the NCUA Board in an effort to stabilize the corporate credit unions is critical.  I hope that other credit union’s throughout the country follow your lead and take a proactive approach to provide our Agency with ideas and feedback regarding the corporate stabilization plan,” said Hood.

Corporate credit unions provide investment and liquidity services to natural person credit unions, thus support of the corporate credit union system is essential as they face unprecedented strains on liquidity and capital due to extraordinary market disruptions.  The recent actions taken by the NCUA Board provide natural person credit unions important safeguards by drawing upon the significant aggregate levels of capital currently in the credit union system.

The Vice Chairman went on to outline the actions approved by the NCUA Board which are designed to maintain liquidity, strengthen capital, and restructure the corporate system:

Guarantee uninsured shares at all corporate credit unions through February 2009, and establish a voluntary guarantee program for uninsured shares of all corporate credit unions through December 31, 2010.Issue a $1 billion capital note to U.S. Central Corporate Federal Credit Union (U.S. Central).Issue an Advanced Notice of Public Rulemaking (ANPR) on restructuring the corporate credit union system.Declare a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.30 percent, which will be collected in 2009.

For a complete and detailed explanation of the actions concerning NCUA’s Corporate Stabilization Program, please visit: http://www.ncua.gov/Resources/CorporateStabilization/index.aspx

In closing, Hood reiterated the importance of working together in the cooperative spirit that is the foundation of the credit union system.  “It is imperative that all natural person credit unions continue to maintain their deposits in and continue their support of the corporate credit union system.  We need everyone to work toward a safe and common goal of creating a safe and secure financial industry for the entire nation.  The challenges ahead are many, but so too are the opportunities for you to demonstrate the credit union philosophy of People Helping People.”

The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 89 million account holders in all federal credit unions and the majority of state-chartered credit unions.

-NCUA-

Vice Chairman Hood Addresses Concerns of Natural Person Credit Unions During a Credit Union League Town Hall Forum

March 4, 2009, Alexandria, VA – National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood addressed the North Carolina Credit Union League’s Town Hall Meeting yesterday at Carolina’s Telco FCU in Charlotte, N.C.  Mr. Hood took the opportunity to discuss and explain the recent action taken by the NCUA Board in an effort to stabilize the corporate credit unions. More specifically, the Vice Chairman addressed questions concerning the recent supervisory letter sent to all NCUA field staff that focused on supervision considerations for natural person credit unions in light of the announced corporate stabilization efforts.

“During these times of economic uncertainty, I feel that communication regarding the recent actions of the NCUA Board in an effort to stabilize the corporate credit unions is critical.  I hope that other credit union’s throughout the country follow your lead and take a proactive approach to provide our Agency with ideas and feedback regarding the corporate stabilization plan,” said Hood.

Hood made clear that examiners must distinguish between the impact of the actions taken by the NCUA Board and the decisions made by the credit union’s management.  The recent letter sent to examiners outlines their responsibilities in the following areas:

Assessment of earningsAssessment of net worthPrompt corrective action and net worth restoration plansDue diligenceCAMEL rating system

It is important to note that credit unions that have chosen to participate in the Credit Union System Investment Program (CU SIP) may temporarily experience a reduction in their average asset ratio and dilution of their net worth ratio due to additional funds on their balance sheet.  However, such credit unions are voluntarily participating in this program and such actions are being taken to specifically address the larger market liquidity needs currently plaguing the credit union system.  The results will allow natural person credit unions to continue safely supporting the corporate system by maintaining their current deposits and placing any excess liquidity in their corporate credit union.  This concept of cooperation is the very foundation and nature of the credit union system.

The Vice Chairman went on to answer a myriad of questions regarding the impact of current legislation on their natural person credit unions.  Recognizing the challenges posed by our current economy, Mr. Hood was able to look beyond the present and strike an optimistic tone for the future of the credit union industry…“There has never been a better opportunity for credit unions to demonstrate our mission of ‘People Helping People.’  This is your time to be bold, be heard, and be there.” 

For a complete and detailed explanation of the actions concerning NCUA’s Corporate Stabilization Program, please visit: http://www.ncua.gov/Resources/CorporateStabilization/index.aspx

The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 89 million account holders in all federal credit unions and the majority of state-chartered credit unions.

-NCUA-

Weekly Corporate Credit Union Update – May 8, 2009

May 8, 2009, Alexandria, Va. – Normal operations continue without interruption at U.S. Central Federal Credit Union (U.S. Central) and Western Corporate Federal Credit Union (WesCorp).  The following items are of note:

WesCorp posted on its website the March 31, 2009, financial statements on Friday, May 1, 2009.  The Other-Than-Temporary-Impairment (OTTI) charges reflected on these financial statements are $5.8 billion.  This resulted in the exhaustion of all Paid-in-Capital (PIC) and Membership Capital Accounts (MCA) at WesCorp.U.S. Central plans to release its March 2009, financial statements on May 8th.  As reported to its members last week, 100% of PIC and 63% of MCAs have been exhausted.Member communication and outreach efforts continue.  U.S. Central reported no formal member meetings this week.  WesCorp held a webinar for member credit unions on Thursday, May 7th, and begins a series of town hall meetings on May 18th.NCUA will issue guidance next week in the form of a Letter to Credit Unions for holders of corporate credit union PIC and MCA accounts explaining the implications of exhausted PIC and MCA.Later this month, the NCUA Board will be considering changes to the Temporary Corporate Credit Union Liquidity Guarantee Program to provide longer term funding options for all corporate credit unions.

In response to questions raised following the announcement of expected Other-Than-Temporary Impairment charges at the two corporates, Chairman Fryzel stated, “I am aware the announcement last week of U.S. Central’s expected Other-Than-Temporary Impairment charge and resulting impact to PIC and MCAs raised some questions pertaining to NCUA’s $1 billion capital note in U.S. Central.  The OTTI charge results in a 63 percent exhaustion of U.S. Central’s MCA accounts, leaving the balance unencumbered and available as a buffer to absorb losses in front of the NCUSIF capital note.  This understandably generated discussion on the need to fully impair the NCUSIF capital note in NCUA’s reserving for share insurance fund losses.  I want to assure the credit union community that before any final invoices are mailed out NCUA will perform an updated analysis to reflect an accurate and realistic assessment charge, keeping in mind there are some differences between the accounting for OTTI charges at the institution level and reserving requirements for the share insurance fund.”

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

-NCUA-

Vice President Biden in Iraq

US Vice President Joseph r. Biden is welcoming the General Raymond t. Odierno, thus Commanding General of the United States forces in Iraq and James Jeffrey, US Ambassador to Iraq, after Sather air base during August 30.