[Federal Register Volume 59, Number 148 (Wednesday, August 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18718]


[[Page Unknown]]

[Federal Register: August 3, 1994]


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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 707

 

Truth in Savings

AGENCY: National Credit Union Administration.

ACTION: Final rule; extension of compliance date.

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SUMMARY: The NCUA Board is publishing a change to the compliance date 
to part 707 of the NCUA Rules and Regulations (Truth in Savings). This 
document extends the compliance date for nonautomated credit unions 
that have assets of $2 million or less as of December 31, 1993. The 
extension gives the smaller, nonautomated credit unions more time to 
come into compliance with part 707.

DATES: Effective Date: This document is effective January 1, 1995.
    Compliance Date: The compliance date of part 707 is extended to 
January 1, 1996, for credit unions of an asset size of $2 million or 
less as of December 31, 1993, that are not automated.

FOR FURTHER INFORMATION CONTACT:Richard Schulman, Associate General 
Counsel, or Martin Conrey, Staff Attorney, Office of General Counsel, 
telephone (703) 518-6540.

SUPPLEMENTARY INFORMATION:

(1) Background.

Prior Extensions

    NCUA previously extended the compliance date for part 707, Truth in 
Savings, for certain small, nonautomated credit unions. (Final rule, 59 
FR 13435, March 22, 1994). At that time, the compliance date of part 
707 was extended to March 31, 1995, for credit unions of an asset size 
between $500,000 and $1 million as of December 31, 1993, that are not 
automated. Similarly, the compliance date of part 707 was extended to 
June 30, 1995, for credit unions of an asset size of less than $500,000 
as of December 31, 1993, that are not automated. The compliance date 
remained January 1, 1995, for all other credit unions.

Importance of Small Credit Unions

    The NCUA Board is very concerned with the continued viability of 
small credit unions. As Norman E. D'Amours, NCUA Chairman, explained 
recently:

    Small credit unions are very important to the continuing growth 
of the movement. Like the tender shoots on a large tree, they 
represent the promise of continuing life and health. They serve 
people who badly need their services, and they know their members 
very well. Such a credit union is more likely to take a risk on the 
reputation and character of a member unable to find credit 
elsewhere.

NCUA Letter to Credit Unions No. 153 (April 1994)

    Ten years ago, credit unions under $2 million in size made up about 
two-thirds (10,564) of all federally insured credit unions. Today, such 
credit unions number only 4,132, about one-third of federally insured 
credit unions. In addition, the assets of today's 4,132 smallest credit 
unions are 1.2 percent of total assets in all credit unions, while 
credit unions of $2 million or less accounted for 7.7 percent of total 
assets ten years ago. The average credit union today has $22.5 million 
in assets, compared to $5 million ten years ago.
    However, over two-thirds of these small credit unions are already 
automated or have data processing capabilities. Since these credit 
unions are in a position to begin Truth in Savings compliance on 
January 1, 1995, the Board believes that to grant these credit unions a 
further compliance extension would be contrary to the intent of 
Congress in enacting TISA, and contrary to the interests of their 
credit union members.
    Small credit unions that are not automated present a different 
picture entirely. Because of the many dividend rate, annual percentage 
yield, and annual percentage yield earned calculations required by 
TISA, and the prohibition of the prevalent rollback method of 
calculating dividends, nonautomated credit unions are much more needful 
of adequate resources and time to accomplish meaningful Truth in 
Savings compliance. To this end, the NCUA Board adopted a program to 
place retired NCUA computers with nonautomated credit unions with $2 
million or less in assets. Due to the length of the federal procurement 
process for obtaining new NCUA computers, however, no computers will be 
available to distribute until sometime in 1995. The Board understands 
that many nonautomated credit unions with assets of $2 million or less 
have relied upon previous estimates of earlier delivery dates of 
retired NCUA computers. Therefore, the Board has decided to expand the 
extension for all credit unions eligible for retired NCUA computers 
until January 1, 1996.
    Only a small number of credit unions are affected by this 
extension. NCUA has determined that there are 1,248 credit unions under 
$2 million in assets that have no or grossly inadequate computers or 
data processing capability. Of these credit unions, approximately 1,096 
have less than $1 million in assets and approximately 152 have between 
$1-2 million in assets.
    The compliance date remains January 1, 1995, for all other credit 
unions (automated credit unions under $2 million in assets and all 
credit unions having over $2 million or more in assets). NCUA 
encourages early Truth in Savings compliance by all credit unions as 
soon as they are able in order to meet the Congressional intent of 
universal Truth in Savings coverage of consumer held accounts in 
financial institutions. Each credit union receiving this extension is 
encouraged to begin to comply with TISA and part 707 as soon as its 
board of directors believes the credit union is ready.
    The NCUA Board is well aware that most credit unions start small, 
and historically, the fostering of small credit unions has strengthened 
the entire credit union movement. The Board has supported and 
instituted several small credit union initiatives to continue the 
development of small credit unions. For instance, in NCUA's Region V, a 
``big brother'' partnership program has teamed smaller credit unions 
with larger credit unions, proving that the smallest credit unions can 
be preserved if examiners, other credit unions, and trade associations 
work together cooperatively in the spirit of the credit union movement 
to help those in need. Over 331 small credit unions are benefiting from 
participation in various Region V small credit union programs. NCUA has 
implemented the ``big brother'' program in all other NCUA Regions.
    The NCUA Board recently established an Office of Community 
Development Credit Unions to help implement NCUA's commitment to small, 
low-income, and community credit unions. In addition, the Board 
recently adopted new chartering and field of membership policies 
designed to encourage the creation of new credit unions, and facilitate 
credit union services in financially depressed communities (Final 
Interpretive Ruling and Policy Statement No. 94-1, 59 FR 29066, June 3, 
1994). Moreover, the agency has liberalized its rules governing receipt 
of nonmember deposits by low-income credit unions (Final Rule, 59 FR 
26101, May 19, 1994), and has previously extended the Truth in Savings 
compliance deadline for small credit unions (Final Rule, 59 FR 13435, 
March 22, 1994). A commitment has been made by the Board to provide 
some nonautomated, small credit unions access to laptop computers used 
by credit union examiners as this equipment is replaced with newer 
technology. Credit unions that are not automated and under $2 million 
in assets, and that have not already done so, should contact either 
their appropriate state credit union supervisor or NCUA Regional 
Director no later than October 1, 1994, if interested in participating 
in the laptop computer program.
    By these, and other, initiatives and programs, the Board seeks to 
assure all credit unions that the NCUA Board values small credit unions 
and will work to preserve them. Larger credit unions and the trade 
groups are urged to assist their colleagues in the smallest credit 
unions. The Board believes that such selfless giving lies at the heart 
of the cooperative philosophy and history of the credit union movement. 
Healthy, small credit unions are an absolutely essential part of a 
bright future for all credit unions. With this background, when the 
Board discovered that the extensions previously granted to small, 
nonautomated credit unions would not be sufficient to accomplish all of 
the Board's objectives, the Board decided to grant an additional 
extension.
    It has been shown to the satisfaction of the NCUA Board that small, 
nonautomated credit unions need more time to comply with the complex, 
technical requirements of Truth in Savings than other, larger, more 
automated credit unions. An extended compliance date for affected 
credit unions will enable NCUA and other interested parties to complete 
the extensive training and preparation that is necessary to ensure that 
these credit unions comply with part 707 by the extended compliance 
dates. This action is taken to preserve, educate, and possibly automate 
(by providing retired NCUA computers and by fostering the provision of 
minimal cost computer hardware, software and services by other parties) 
many of these small credit unions; ensure compliance with Truth in 
Savings at the earliest possible date; assist administrative 
convenience; reduce the risk of potential losses to the National Credit 
Union Share Insurance Fund; and to allow time for coordination of this 
effort among NCUA, affected credit unions, data processors and other 
interested parties.
    As stated previously, NCUA intends to use the December 31, 1993, 
NCUA Form 5300 report to determine the requisite nonautomation status 
and asset size for those credit unions filing Form 5300 reports that 
are eligible for the extensions in required compliance. Credit unions 
which do not file Form 5300 reports will be permitted to prove 
nonautomation status and asset size by other means. NCUA will consider 
verified self-certifications, certifications by appropriate state 
supervisory authorities, and other equivalent forms of proof as 
sufficient for eligibility for the extension by non-federally insured 
credit unions. Indeed, with the assistance of the affected credit 
unions, trade groups, and the NCUA regional and central office staffs, 
NCUA is well on its way to having identified credit unions in need of 
Truth in Savings compliance assistance, and in providing various 
educational and other assistance to the affected small, nonautomated 
credit unions.

Administrative Procedure Act

    The extension made to this part is not subject to the notice and 
comment provisions of the Administrative Procedure Act (the ``APA''), 5 
U.S.C. 551 et seq. The extension relates to a few credit unions that 
need more time and assistance in complying with part 707. No major 
changes are contemplated, or made, by this extension. Therefore, the 
NCUA Board has determined that, in this case, the APA notice and 
comment procedures for this extension is impracticable, unnecessary, 
and contrary to the public interest. 5 U.S.C. 553(b)(3)(B).

    By the National Credit Union Administration Board on July 26, 
1994.
Becky Baker,
Secretary of the Board.
[FR Doc. 94-18718 Filed 8-2-94; 8:45 am]
BILLING CODE 7535-01-P