WASHINGTON—America’s Credit Unions is calling on the National Credit Union Administration to clarify how federal credit unions should comply with existing regulations requiring monthly board reporting and other actions now that a new federal law allows eligible credit unions to hold just six board meetings annually instead of 12.
In an Oct. 15 letter to NCUA Chairman John Crews, the trade association said the recently enacted Credit Union Board Modernization Act (CUBMA) provides important regulatory relief for volunteer directors, but several existing regulations, federal credit union bylaws and agency guidance continue to assume boards meet every month.
The association said those inconsistencies could undermine the intended benefits of the legislation unless the NCUA provides additional guidance.
“Credit unions should not have to continue following essentially the same monthly board process when they are no longer required to meet every month,” America’s Credit Unions stated.
The association welcomed an August communication from the NCUA clarifying that the law’s changes are self-executing and may be implemented once an eligible credit union amends its bylaws.
However, it said questions remain over which information must continue to be provided monthly, which actions can wait until the next regularly scheduled meeting and which responsibilities can be handled by committees or other processes.
Five Areas Where Clarification Is Sought
America’s Credit Unions identified five principal areas in which it said additional regulatory guidance is needed.
1. Monthly Financial Statements and Federal Credit Union Bylaws
The association noted current federal credit union bylaws still require monthly board meetings and direct financial officers to prepare and submit financial statements, including delinquent loan information, within 20 days after each month’s close.
It asked the NCUA to clarify:
- Whether directors must continue receiving separate monthly financial packages even when no board meeting is scheduled.
- Whether management may instead provide more comprehensive financial reports at each scheduled board meeting while continuing to monitor financial performance between meetings.
- How existing bylaws should be revised to reflect the new statutory meeting requirements.
2. Suspicious Activity Report Notifications
Current NCUA regulations require management to promptly notify the board or a designated committee of suspicious activity reports (SARs) filed by the credit union.
Previous agency guidance has generally interpreted prompt notification to mean at least monthly reporting, with immediate notification when serious circumstances warrant it.
America’s Credit Unions asked the agency to clarify whether SAR activity can be reported to the full board at its next regularly scheduled meeting rather than monthly.
It also requested confirmation that designated board committees may continue receiving SAR notifications and that credit unions have flexibility in reporting procedures while ensuring serious matters receive prompt attention.
3. Loans to Directors and Other Officials
NCUA regulations generally require board approval when aggregate loans to a credit union official, including certain loans the official guarantees or cosigns, exceed $20,000 after applicable adjustments.
The association said the requirement could create unnecessary delays when a board meets only six times annually.
It noted that an existing NCUA legal opinion permits executive committees composed of board members to approve such loans, but the opinion also anticipates monthly reporting to the full board.
America’s Credit Unions asked the agency to:
- Confirm executive committees may continue approving loans to officials.
- Clarify whether those loans can be reported at the next regularly scheduled full board meeting.
- Explain whether special meetings or unanimous written or electronic board consent may be used when timely approval is necessary.
The association noted that existing federal credit union bylaws already permit unanimous written or electronic board action without a meeting.
4. Investment and Other Monthly Board Reports
The association also pointed to several provisions of NCUA Part 703 that continue to require monthly investment-related reporting.
Among them are requirements involving securities reports, trading securities and certain equity-linked share certificates.
The association identified these requirements as another area needing clarification to accommodate the reduced board meeting schedule.
5. Board Meeting Scheduling and CAMELS Rating Changes
America’s Credit Unions also requested guidance on how credit unions should schedule board meetings under the new law, particularly when special meetings are necessary or a credit union’s CAMELS examination ratings change.
The association asked the NCUA to address several questions:
- Whether special board meetings count toward the six required annual meetings.
- Under what circumstances special meetings may be used.
- When unanimous written or electronic consent may substitute for a board meeting.
- When a credit union must resume monthly meetings following a downgrade in its CAMELS ratings.
- When a credit union that receives qualifying CAMELS ratings may begin operating under the six-meeting schedule.
The association noted that a federal credit union must return to monthly board meetings if either its composite CAMELS rating or its Management component rating falls to a 3, 4 or 5.
However, it said the NCUA should clarify exactly when that requirement takes effect following a downgrade.
Similarly, the association said guidance is needed on when credit unions receiving qualifying ratings may transition to the reduced meeting schedule.
“This guidance would help credit unions schedule their board meetings and comply with the new requirements,” the association stated.
Seeking Full Benefits of Regulatory Relief
In closing, America’s Credit Unions reiterated its support for the modernization law and said clear regulatory guidance is necessary to ensure federal credit unions can take full advantage of the flexibility Congress authorized.
The association said the legislation offers an opportunity to reduce administrative burdens on volunteer boards while maintaining appropriate oversight and compliance responsibilities.
“America’s Credit Unions strongly supported CUBMA and appreciates the flexibility it provides to FCUs,” the association stated. “We encourage the NCUA to provide clear guidance addressing the issues outlined above so credit unions can fully utilize this flexibility.”
The letter was signed by Luke Martone, regulatory advocacy senior counsel for America’s Credit Unions.
