NCUA Associate Regional Director Tracey Bombarger discussed the NCUA’s 2018 supervisory priorities during a general session Monday at the 2018 CUNA CFO Council Conference in Austin, Texas.

The priorities include:

• Cybersecurity. NCUA has introduced a new tool, the Automated Cybersecurity Exam Tool, for examiners to use, but only in credit unions with more than $1 billion assets, Bombarger says. The tool closely aligns with the Cybersecurity Assessment Tool previously issued by the Federal Financial Institutions Examinations Council. The tool is not yet available for credit unions on the NCUA website, she says, but it will be soon.
• Bank Secrecy Act (BSA). NCUA is focusing closely on credit unions that serve money service businesses as well as the new rule on customer due diligence, Bombarger says.
• Internal controls. “We continue to modify the ways we can identify red flags for fraud in credit unions, follow up on those red flags, and provide training for our staff,” Bombarger says. “We want to make sure they have a certain path they can follow during the exam process depending on what those red flags may be.”
• Interest rate liquidity risk. Previously the NCUA was keeping a closer eye on interest rate risk, but in recent months it has shifted its focus to liquidity risk as cash and short-term investments shrink on the balance sheets of credit unions, particularly larger institutions, Bombarger says. “It’s just something that we’re monitoring more closely.
• Compliance. “This year we’re focusing on Reg E and the Military Lending Act, but for the most part we are focusing on the new HMDA (Home Mortgage Disclosure Act) requirements,” Bombarger says. Under the new requirements, credit unions that must report HMDA have to collect 48 data fields.
• Auto and commercial lending. Bombarger says the agency is wary of auto lending programs with loans that exceed 120% of loan-to-value. She notes that indirect lending at credit unions is growing at a rate of $30 billion a year. “We just want to be sure credit unions have the tools in place to measure and maintain those relationships,” Bombarger says.

She also notes that when NCUA changed its member business lending rule in 2017, it expected to see substantial growth in commercial lending. “That’s really not what we saw,” she says. “Credit unions have been really good about establishing their own internal rules and sticking with them.”

► Visit CUNA News for more conference coverage, and get live updates on Twitter via @CUNA_News, @cumagazine, and @CUNACouncils, and by using the #CFOCouncil hashtag. Learn more about the CUNA CFO Council, a member-led professional society for credit union executives, at cunacouncils.org.