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Board Approves Joint-Ownership Share Accounts Final Rule

February 2021
Board Approves Joint-Ownership Share Accounts Final Rule

Board Action Bulletin

ALEXANDRIA, Va. (Feb. 18, 2021) – The National Credit Union Administration Board held its second open meeting of 2021 through a live audio webcast and approved a final rule on joint-ownership share accounts. In addition, the Board was briefed on the Share Insurance Fund’s performance during the fourth quarter of 2020 and on the U.S. Department of the Treasury’s Emergency Capital Investment Program.

Board Approves Joint-Ownership Share Account Final Rule

The NCUA Board unanimously approved a final rule amending the NCUA’s regulation governing the requirements for a share account to be separately insured as a joint account. The final rule provides federally insured credit unions with an alternative method to satisfy the membership card or account signature card requirement. For example, under the final rule, the signature card requirement can be satisfied by the credit union having issued a mechanism for accessing the account, such as a debit card, to each co-owner or evidence of usage of the joint share account by each co-owner.

“This final rule would make the share insurance provided by the NCUA to members of federally insured credit unions comparable to deposit insurance of the customers of banks and thrifts,” Chairman Todd M. Harper said. “By maintaining parity between the two federal programs that protect the shares and deposits of consumers, the final rule enhances confidence in the share insurance fund and ensures that credit unions remain on a competitive footing with banks and thrifts.”

Chairman Harper also noted that comments received on the rule emphasized that the change is especially important given the challenges posed by COVID-19 and the resulting economic uncertainty. “Should the pandemic’s economic fallout contribute to the failure of a federally insured credit union, these changes would facilitate the prompt payment of share insurance on joint accounts,” Chairman Harper said.

The final rule is effective 30 days from date of publication in the Federal Register.

Share Insurance Fund Assets Grow; Equity Ratio Stands at 1.26 Percent

The Chief Financial Officer briefed the Board on the performance of the National Credit Union Share Insurance Fund and the status of the fund’s equity ratio, noting that the fund reported a net income of $32.9 million and a net position of $18.9 billion for 2020. Additionally, the fund’s assets rose to $19.1 billion at the end of the year from $16.7 billion at the end of 2019.

As of Dec. 31, 2020, the Share Insurance Fund’s calculated equity ratio was 1.26 percent, an increase from 1.22 percent reported as of June 30, 2020. The equity ratio was calculated on an insured share base of $1.5 trillion. The equity ratio was lower than the Board-approved normal operating level of 1.38 percent.

“The primary factors contributing most significantly to the continuing decline in the equity ratio — strong growth in insured shares and reduced investment returns — remain and will likely continue in the future,” Chairman Harper said. “Any future decision by the Board to assess premiums must be data-driven. History has also shown the importance of building up the resiliency of the Share Insurance Fund, so it can handle the potential issues related to the pandemic’s economic fallout that we know are coming.”

For the fourth quarter of 2020:

  • The number of CAMEL codes 4 and 5 credit unions decreased to 159 from 163 in the third quarter of 2020. Assets for these credit unions increased $0.1 billion from the third quarter of 2020, to $9.8 billion from $9.7 billion.
  • The number of CAMEL code 3 credit unions decreased to 748 from 767 in the third quarter of 2020. Assets for these credit unions remained the same at $40.6 billion from the third quarter of 2020.

One credit union failure incurred a loss to the Share Insurance Fund in 2020, compared to two credit union failures in 2019. The cost of the 2020 failure was $1.6 million.

The Chief Financial Officer also reported the agency’s four funds — the Share Insurance Fund, the Operating Fund, the Central Liquidity Facility and Community Development Revolving Loan Fund — each received an unmodified, or “clean,” audit opinion with no reportable conditions for 2020 from the agency’s independent auditor, KPMG LLP.

Briefing Provides Update on Emergency Capital Investment Program

The NCUA’s Offices of Examination and Insurance, Credit Union Resources and Expansion, and General Counsel briefed the Board on the U.S. Department of the Treasury’s Emergency Capital Investment Program and how it could be leveraged by eligible federally insured credit unions.

“I am deeply committed to advancing economic equity and justice, and today’s briefing raises awareness about this important, albeit short-term, tool that has the potential to make a real difference in the lives of many Americans,” Harper said. “And, the ECIP aligns with the mission of the credit union movement to expand access to affordable financial services to those of modest means.”

Congress created this program as part of the Consolidated Appropriations Act, 2021 to help community-based financial institutions support consumers and local small businesses in low-income and underserved communities disproportionately affected by the economic effects of the COVID-19 pandemic. A federally insured credit union must be certified as a Community Development Financial Institution or as a minority depository institution to participate in the program.

The briefing included information on the program’s eligibility and application requirements; the financial instrument and terms used for this investment, and whether credit unions can use the investment as secondary capital.

Additional information on the Emergency Capital Investment Program from the briefing is available on the NCUA’s website.

The NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at The NCUA also live streams, archives and posts videos of open Board meetings online.

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