NCUA finalizes merger rule, gives EMS update

June 21, 2018

The NCUA board finalized its final voluntary merger rule and heard briefings on member business lending and its Enterprise Solution Modernization (ESM) program Thursday, in addition to finalizing a CUNA-backed final rule on field-of-membership.

The board was briefed by staff about its change to the member business lending rule made as a result of the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) being signed into law. The board approved the change by notation vote May 30 to exclude loans made on one-to-four-unit, non-resident occupied dwellings from the member business lending cap.

The change became effective June 5.

NCUA’s voluntary merger final rule is designed to help members of federally insured credit unions seeking a voluntary merger become better informed about the merger.

It will:

  • Increase the minimum required time for notice to members before a merger vote to 45 days;
  • Require the merging credit unions to disclose merger-related compensation increases above $10,000 or 15 percent of compensation, whichever is greater, for certain employees and officials of the merging credit union;
  • Clarify the contents and format of the members’ notice to provide better information; and
  • Provide a method to communicate to the NCUA regarding the proposed merger.

The final rule will be effective Oct. 1.

The update on NCUA’s Enterprise Solution Modernization program noted that it has taken additional work outside its original scope, and is moving ahead with several initiatives to streamline agency processes, technology and infrastructure.

The four areas the program is currently focused on are:

  • The Examination and Supervision Solution will replace the present examination system, provide a central user interface and secure transfer capabilities and build infrastructure for all the ESM initiatives;
  • The Credit and Deposit Analytics Solution project, originally designed to replace and improve analytic tools for loan and share data, will await an agency decision on a standardized and expanded data set;
  • Loan and Share Data Modernization will standardize and modernize the member loan and share download for examination. NCUA received public comments on possible expansion and standardization of loan, deposit and investment information collected during examinations. These comments will guide the agency’s efforts in this area, with a primary focus on data security; and
  • The Data Strategy and Framework Initiative will improve data governance, enterprise analytic strategy and staff education.